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MAHINDRA & MAHINDRA LIMITED

Notice
THE SIXTY-FOURTH ANNUAL GENERAL MEETING OF MAHINDRA & MAHINDRA LIMITED will be held at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg (New Marine Lines), Mumbai - 400 020 on Wednesday, the 28th day of July, 2010 at 3.00 p.m. to transact the following business: 1. To receive and adopt the audited Balance Sheet as at 31st March, 2010 and the Profit and Loss Account for the year ended on that date and the Reports of the Directors and the Auditors thereon. To declare a dividend on Ordinary (Equity) Shares. To appoint a Director in place of Mr. Keshub Mahindra who retires by rotation and, being eligible, offers himself for re-election. To appoint a Director in place of Mr. Anupam Puri who retires by rotation and, being eligible, offers himself for re-election. To appoint a Director in place of Dr. A. S. Ganguly who retires by rotation and, being eligible, offers himself for re-election. To appoint a Director in place of Mr. R. K. Kulkarni who retires by rotation and, being eligible, offers himself for re-election. To consider and, if thought fit, to pass, with or without modification(s), the following as an Ordinary Resolution: RESOLVED that pursuant to section 224 of the Companies Act, 1956, Messrs. Deloitte Haskins & Sells, Chartered Accountants (ICAI Registration Number 117364W), the retiring Auditors of the Company, be re-appointed as Auditors of the Company to hold office from the conclusion of this Annual General Meeting, until the conclusion of the next Annual General Meeting of the Company at a remuneration to be determined by the Board of Directors of the Company in addition to out of pocket expenses as may be incurred by them during the course of the Audit. SPECIAL BUSINESS 8. To consider and, if thought fit, to pass, with or without modification(s), the following as an Ordinary Resolution: RESOLVED that in accordance with the provisions of section 257 and all other applicable provisions, if any, of the Companies Act, 1956, Mr. A. K. Nanda who was appointed as an Additional Director and who ceases to hold office as per the provisions of section 260 of the Companies Act, 1956 at the ensuing Annual General Meeting and in respect of whom the Company has received a Notice in writing proposing his candidature for the office of Director, be appointed a Director of the Company, liable to retire by rotation. 9. To consider and, if thought fit, to pass, with or without modification(s), the following as a Special Resolution: RESOLVED that the Directors who are neither in the whole-time employment of the Company nor the Managing Director, Executive Director(s) and such of the remainder as may not desire to participate, shall, for a period of five years with effect from 1st November, 2010, be paid remuneration by way of commission up to one per cent of the net profits of the Company, computed in the manner referred to in sections 198, 309 and all other applicable provisions of the Companies Act, 1956, such commission to be distributed amongst and paid to the aforesaid Directors concerned in such proportions as they may from time to time decide between themselves; PROVIDED that none of such Directors shall in any financial year of the Company receive a portion of such commission equal to more than one quarter per cent of the net profits of the Company. 10. To consider and, if thought fit, to pass, with or without modification(s), the following as a Special Resolution: RESOLVED that in accordance with the provisions of the Articles of Association of the Company, sections 79A, 81 and all other applicable provisions, if any, of the Companies Act, 1956 (the Act) including any statutory modification(s) or re-enactment of the Act for the time being in force and the provisions of the Securities & Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 including any modifications thereof or supplements thereto (the Guidelines) and subject to such approvals, consents, permissions and sanctions as may be necessary and subject to such conditions and modifications as may be prescribed or imposed while granting such approvals, consents, permissions and sanctions which may be agreed to by the Board of Directors of the Company (hereinafter referred to as the Board which term shall be deemed to include the Remuneration/Compensation Committee), consent of the Company be accorded to the Board to introduce and implement the Mahindra & Mahindra Limited Employees Stock Option Scheme - 2010 (hereinafter referred to as the Scheme) the salient features of which are detailed in the Explanatory Statement to this Notice and to create, offer, issue and allot at any time to or for the benefit of such person(s) who are in the permanent employment of the Company whether working in India or out of India and Directors of the Company whether Whole-time Directors or not (hereinafter referred to as Employee or Employees), under the Scheme, such number of equity shares and/or equity linked instruments [including Options/Warrants/Restricted Stock Units (Options)], equity shares issued through American Depository Receipts (ADRs) and/or Global Depository Receipts (GDRs) and/or any other instruments or Securities of the Company which could give rise to the issue of equity shares (hereinafter referred to as the Securities) not exceeding 3% of the issued Equity Share Capital of the Company as on 31st March, 2010 i.e. not exceeding 1,73,53,034 equity shares of Rs.5 each (or such other adjusted figure for any bonus, stock splits or consolidations or other reorganisation of the capital structure of the Company as may be applicable from time to time), in one or more tranches, at such price and on such terms and conditions as may be fixed or determined by the Board in accordance with the Scheme, the Guidelines and other provisions of the law as may be prevailing at that time. FURTHER RESOLVED that the Securities may be allotted directly to such Employees or in accordance with the Scheme through any appropriate mechanism including Mahindra & Mahindra Employees Stock Option Trust (the Trust) or any other entity which may be set up for that purpose and that the Scheme may also contain provisions for providing financial assistance to the Employees/the Trust/entity to acquire, purchase or subscribe to the Securities. FURTHER RESOLVED that the new equity shares to be issued and allotted in the manner aforesaid shall rank pari passu in all respects with the then existing equity shares of the Company. FURTHER RESOLVED that for the purpose of creating, offering, issuing, allotting and listing of the Securities and/or for the purpose of complying with any Guidelines or Regulations that may be issued from time to time by any appropriate authority, the Board be authorised on behalf of the Company to make any modifications, changes, variations, alterations or revisions in the Scheme from time to time or to suspend, withdraw or revive the Scheme from time to time, provided such variation, modifications, alterations or revisions are not detrimental to the interests of the Employees. FURTHER RESOLVED that for the purpose of giving effect to this Resolution, the Board be authorised to determine terms and conditions of issue of the Securities and do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary for such purpose and with power on behalf of the Company to settle any questions, difficulties or doubts that may arise in this regard without requiring to secure any further consent or approval of the Shareholders of the Company. 11. To consider and, if thought fit, to pass, with or without modification(s), the following as a Special Resolution: RESOLVED that in accordance with the provisions of the Articles of Association of the Company, sections 79A, 81 and all other applicable provisions, if any, of the Companies Act, 1956 (the Act) including any statutory modification(s) or re-enactment of the Act, for the time being in force and the provisions of the Securities & Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 including any modifications thereof or supplements thereto (the Guidelines) and subject to such approvals, consents, permissions and sanctions as may be necessary and subject to such conditions and modifications as may be prescribed or imposed while granting such approvals, consents, permissions and sanctions which may be agreed to by the Board of Directors of the Company (hereinafter referred to as the Board which term shall be deemed to include the Remuneration/Compensation Committee), consent of the Company be accorded to the Board to extend the benefits of Mahindra & Mahindra Limited Employees Stock Option Scheme 2010 (the Scheme) proposed in Resolution No.10 in this Notice to the Employees whether working in India or out of India and Directors whether Whole-time Directors or not, of subsidiary company(ies), on such terms and conditions as may be decided by the Board.

2. 3. 4. 5. 6. 7.

FURTHER RESOLVED that for the purpose of creating, offering, issuing, allotting and listing of the Securities, the Board be authorised on behalf of the Company to make any modifications, changes, variations, alterations or revisions in the Scheme from time to time or to suspend, withdraw or revive the Scheme from time to time, provided such variation, modifications, alterations or revisions are not detrimental to the interests of the Employees/Directors. FURTHER RESOLVED that for the purpose of giving effect to this Resolution, the Board be authorised to determine terms and conditions of issue of the Securities and do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary for such purpose and with power on behalf of the Company to settle any questions, difficulties or doubts that may arise in this regard without requiring to secure any further consent or approval of the Shareholders of the Company. Notes: A. B. Explanatory Statement as required under section 173(2) of the Companies Act, 1956 is annexed hereto. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER. The instrument appointing a proxy must be deposited with the Company at its Registered Office not less than 48 hours before the time for holding the Meeting. The Companys Registrar and Transfer Agents for its Share Registry Work (Physical and Electronic) are Sharepro Services (India) Private Limited having their office premises at 13AB, Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange Lane, Off Andheri Kurla Road, Sakinaka, Andheri (East), Mumbai 400 072. The Register of Members and Transfer Books of the Company will be closed from 10th July, 2010 to 28th July, 2010 (both days inclusive). The dividend, if declared at the Annual General Meeting, will be paid on or after 29th July, 2010 to those persons or their mandates: (a) whose names appear as Beneficial Owners as at the end of the business hours on 9th July, 2010 in the list of Beneficial Owners to be furnished by National Securities Depository Limited and Central Depository Services (India) Limited in respect of the shares held in electronic form; and whose names appear as Members in the Register of Members of the Company after giving effect to valid share transfers in physical form lodged with the Company/its Registrar and Transfer Agents on or before 9th July, 2010. K. J. H.

Members who have not encashed the dividend warrants so far in respect of the aforesaid periods, are requested to make their claim to Sharepro Services (India) Private Limited well in advance of the above due dates. It may be noted that once the amounts in the unpaid dividend accounts are transferred to IEPF, no claim shall lie against the IEPF or the Company in respect thereof and the Members would lose their right to claim such dividend. Members can avail of the facility of nomination in respect of shares held by them in physical form pursuant to the provisions of section 109A of the Companies Act, 1956. Members desiring to avail of this facility may send their nomination in the prescribed Form No. 2B duly filled in to Sharepro Services (India) Private Limited at the abovementioned address. Members holding shares in electronic form may contact their respective Depository Participants for availing this facility. The Securities and Exchange Board of India has made it mandatory for all companies to use the Bank account details furnished by the Depositories for depositing dividend through Electronic Clearing Service (ECS) to investors wherever ECS and Bank details are available. In the absence of ECS facilities, the Company will print the Bank account details, if available, on the payment instrument for distribution of dividend. The Company will not entertain any direct request from Members holding shares in electronic form for deletion of/change in such Bank details. Further, instructions if any, already given by them in respect of shares held in physical form will not be automatically applicable to shares held in the electronic mode. Members who wish to change such Bank account details are therefore requested to advise their Depository Participants about such change, with complete details of Bank account. The Company has extended the facility of electronic credit of dividend directly to the respective Bank accounts of the Member(s) through the Electronic Clearing Service (ECS)/National Electronic Clearing Service (NECS). The ECS facility is available at Ahmedabad, Bengaluru, Bhubaneshwar, Chandigarh, Chennai, New Delhi, Guwahati, Hyderabad, Jaipur, Kanpur, Kolkata, Mumbai, Nagpur, Patna, Pune and Thiruvananthapuram. Members wishing to avail of this facility are requested to intimate the Companys Registrar and Transfer Agents/Depository Participant in the prescribed form and with the prescribed details. Members located in places where ECS/NECS facility is not available may submit their Bank details. This will enable the Company to incorporate this information on the dividend warrants and thus prevent fraudulent encashment. Members are requested to: a) intimate to the Companys Registrar and Transfer Agents, Sharepro Services (India) Private Limited at the abovementioned address, changes, if any, in their registered addresses at an early date, in case of shares held in physical form; intimate to the respective Depository Participant, changes, if any, in their registered addresses at an early date, in case of shares held in dematerialised form; quote their folio numbers/Client ID/DP ID in all correspondence; and consolidate their holdings into one folio in case they hold shares under multiple folios in the identical order of names.

I.

C.

D.

E. F.

(b)

b)

G.

Under the Companies Act, 1956, dividends that are unclaimed for a period of seven years are required to be transferred to the Investors Education and Protection Fund (IEPF) administered by the Central Government. An amount of Rs.19,53,739 being unclaimed dividend of the Company for the financial year ended 31st March, 2002 was transferred in October, 2009 to IEPF and no claim lies against the Company in respect thereof. Due dates of transferring unclaimed and unpaid dividends declared by the Company for the year 2002-03 and thereafter to IEPF: Financial Year ended Date of declaration of dividend 28th July, 2003 28th July, 2004 28th July, 2005 26th July, 2006 21st March, 2007 30th July, 2007 30th July, 2008 30 July, 2009
th

c) d) L.

Appointment/Re-appointment of Directors Mr. Keshub Mahindra holds 4,02,296 shares, Mr. A. K. Nanda holds 2,75,864 shares, Dr. A. S. Ganguly holds 1,00,000 shares and Mr. R. K. Kulkarni holds 87,576 equity shares of Rs.5 each. Mr. Anupam Puri does not hold any equity shares in the Company. None of the Directors of the Company are inter-se related to each other. In respect of the information to be provided under Clause 49 of the Listing Agreement pertaining to the Directors being appointed/reappointed, Members are requested to kindly refer the Chapter on Corporate Governance in the Annual Report. By Order of the Board NARAYAN SHANKAR Company Secretary

Last date for claiming unpaid / unclaimed dividend 27th August, 2010 26th August, 2011 28th August, 2012 24th August, 2013 19th April, 2014 30th August, 2014 28th August, 2015 30th August, 2016

31st March, 2003 31st March, 2004 31st March, 2005 31st March, 2006 31st March, 2007 (Interim Dividend) 31st March, 2007 31st March, 2008 31 March, 2009
st

Registered Office: Gateway Building, Apollo Bunder, Mumbai - 400 001. email: investors@mahindra.com 29th May, 2010

MAHINDRA & MAHINDRA LIMITED

Explanatory Statement pursuant to section 173(2) of the Companies Act, 1956 Item No. 8 Mr. A. K. Nanda holds a Degree in Law from the University of Calcutta and is a Fellow Member of The Institute of Chartered Accountants of India (FCA) and The Institute of Company Secretaries of India (FCS). Mr. Nanda has also participated in a Senior Executive Programme at the London Business School. He has served the Mahindra Group since 1973 and has held several important positions within the Group for over 37 years including the Company Secretary of the Company from 1987 to 2006. He was inducted to the Board of the Company as an Executive Director in August 1992 and stepped down from his Executive Position with effect from the close of 31st March, 2010 to focus on the social sector and create a favourable ecosystem for Senior Citizens. He was immediately appointed as an Additional Director of the Company with effect from 1st April, 2010 at the Meeting of the Board of Directors held on 30th March, 2010. He holds office upto the date of the forthcoming Annual General Meeting pursuant to section 260 of the Companies Act, 1956 and Article 120 of the Articles of Association of the Company. Mr. Nanda is the Chairman and Director in several companies and is also a Member of various Committees of the Board, details whereof are given in the Chapter on Corporate Governance in the Annual Report. Mr. Nanda holds 2,75,864 Ordinary (Equity) Shares of Rs.5 each in the Company. The Board is of the view that Mr. Nandas knowledge and experience will be of immense benefit and value to the Company and, therefore, recommends his appointment to the Members. Apart from Mr. A. K. Nanda, no other Director is interested or concerned in this item of business. Item No. 9 The Members at the 59th Annual General Meeting of the Company held on 28th July, 2005, had passed a Special Resolution for payment of commission of upto 1% per annum of the net profits of the Company to the Directors of the Company, other than the Directors who are in the whole-time employment of the Company, the Managing Director, Executive Director(s) and such other Directors as may not desire to participate, such commission distributed amongst and paid to the aforesaid Directors in such proportions as they may, from time to time, decide between themselves, subject to a limit of one quarter per cent of the net profits for any such Director. The said Special Resolution would remain in force upto 31st October, 2010. It is now proposed to authorise the payment of commission on the same terms and conditions to the Directors of the Company other than Directors who are in the whole-time employment of the Company, the Managing Director, Executive Director(s) and such other Directors as may not desire to participate, for each of further five years commencing from 1st November, 2010. In terms of sections 198, 309 and all other applicable provisions of the Companies Act, 1956, the approval of the Members is requested for the payment of commission to all the Non-Executive Directors of the Company. The Directors recommend the passing of the Resolution at Item No.9 as a Special Resolution. Except for Mr. Anand G. Mahindra and Mr. Bharat Doshi, all the other Directors of the Company may be considered to be concerned or interested in this item of business. Item Nos. 10 and 11 Stock Options represent a reward system based on performance. They help companies attract, retain and motivate the best available talent. Stock Options also provide a company with an opportunity to optimise its personnel costs. This also provides an opportunity to employees to participate in the growth of

the company, besides creating long term wealth in their hands. In line with this, the Company had formulated an employee stock option scheme called Mahindra & Mahindra Limited Employees Stock Option Scheme in December, 2000 (the 2000 Scheme). As the global business environment is becoming increasingly competitive, it is important to attract and retain qualified, talented and competent personnel in the Company. In view of this, it is necessary to formulate a Scheme which is more attractive than the 2000 Scheme by authorising the Board or the Committee to grant equity shares of the Company to the Employees on excercise of Options at a price equal to or not less than the face value of the equity shares of the Company. Keeping in line with the above, a new Mahindra & Mahindra Limited Employees Stock Option Scheme - 2010 (the Scheme) has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (SEBI ESOP Guidelines) issued by SEBI and other applicable laws. The Scheme has been approved by the Remuneration/Compensation Committee and by the Board of Directors at their Meetings held on 29th May, 2010. The Scheme will also cover any issuance of ADRs/GDRs/other Securities by the Company, as may be permitted from time to time. The Scheme will be operated and administered under the superintendence of the Companys Remuneration/Compensation Committee, which is a Committee of the Board of Directors, the majority of whose Members are Independent Directors. The Remuneration/ Compensation Committee will formulate the detailed terms and conditions of the Scheme including:

Number of options to be granted to any Employee, and in the aggregate; Terms on which the options will vest; The conditions under which options vested in Employees may lapse in case of termination of Employees for misconduct; The exercise period within which an Employee should exercise the options, and lapsing of options on failure to exercise the options within the exercise period; The specified time period within which the Employee shall exercise the vested options in the event of termination or resignation of the Employee; The right of an Employee to exercise all the options vested in him at one time or at various points of time within the exercise period; The procedure for making a fair and reasonable adjustment to the number of options and to the exercise price in case of rights issues, bonus issues and other corporate actions; The grant, vesting and exercise of options in case of Employees who are on long leave; and Any other related or incidental matters.

The salient features of the Scheme are as under: (a) The total number of options to be granted The total number of options that may, in the aggregate, be issued would be such number of options which shall entitle the option holders to acquire in one or more tranches upto 1,73,53,034 equity shares of Rs.5 each which represent 3% of the issued equity share capital of the Company as on 31st March, 2010 (or such other adjusted figure for any bonus, stock splits or consolidations or other re-organisation of the capital structure of the Company as may be applicable from time to time). (b) Identification of classes of employees entitled to participate in the Scheme Persons who are employees including Directors (whether Whole-time Directors or not), as defined in the SEBI ESOP Guidelines for the time being in force and as may be decided by the Remuneration/Compensation Committee from time to time.

The class of Employees eligible for participating in the Scheme shall be determined on the basis of the grade, number of years service, performance, and such other parameters as may be decided by the Remuneration/Compensation Committee in its sole discretion from time to time. The options granted to an Employee will not be transferable to any person and shall not be pledged, hypothecated, mortgaged or otherwise alienated in any other manner. (c) Requirements of vesting and period of vesting Vesting of options may commence after a period of not less than one year from the date of grant. The vesting may occur in one or more tranches, subject to the terms and conditions of vesting, as may be stipulated by the Remuneration/Compensation Committee in its sole discretion. (d) Maximum period within which the options shall be vested The maximum vesting period may extend up to five years from the date of grant of options, unless otherwise decided by the Remuneration/ Compensation Committee. (e) Exercise price or pricing formula Exercise Price means the price at which the Employee is entitled to acquire the equity shares pursuant to the options granted and vested in him/her under the Scheme. The Exercise Price per equity share shall be equal to or not less than the face value of the shares in accordance with the recommendations of the Remuneration/Compensation Committee at the time of grant of options. (f) Exercise period and process of exercise The exercise period may commence from the date of vesting and will expire not later than 5 years from the date of vesting, or such other period as may be decided by the Remuneration/Compensation Committee, from time to time. The options will be exercisable by the Employees by a written application to the Company / Mahindra & Mahindra Employees Stock Option Trust (the Trust) or any other entity which may be set up for this purpose to exercise the options, in such manner, and on execution of such documents, as may be prescribed by the Remuneration/Compensation Committee from time to time. The options will lapse if not exercised within the specified exercise period. The options may also lapse under certain circumstances even before the expiry of the specified exercise period. (g) Appraisal Process for determining the eligibility of Employees to the Scheme The appraisal process for determining the eligibility of the Employee will be specified by the Remuneration/Compensation Committee and will be based on criteria such as the grade of Employee, length of service, performance record, merit of the Employee, future potential contribution by the Employee and/or by any such criteria that may be determined by the Remuneration/Compensation Committee in its sole discretion. (h) Maximum number of options to be issued per Employee and in the aggregate The maximum number of options to be granted per Employee will not exceed 4,00,000 equity shares of Rs.5 each. The aggregate of all such grants shall not exceed 3% of the issued and outstanding equity shares of the Company as on 31st March, 2010.

(i)

Disclosure and accounting policies The Company shall conform to the accounting policies specified by Securities & Exchange Board of India as per the SEBI ESOP Guidelines, amended from time to time.

(j)

Method of Valuation The Company follows the intrinsic value method for computing the compensation cost, if any, for the options granted. The difference between the employee compensation cost so calculated and employee compensation cost that would have been recognised if the Company had used fair value method and its impact on the profits and earnings per share would be disclosed in the Directors Report. The fair value would be determined using the Black Scholes model.

(k)

Other terms The Board or Remuneration/Compensation Committee shall have the absolute authority to vary, modify or alter the terms of the Scheme in accordance with the Regulations and Guidelines as prescribed by the Securities and Exchange Board of India or Regulations that may be issued by any appropriate authority, from time to time, unless such variation, modification or alteration is detrimental to the interest of the Employees. The Securities may be allotted directly to the Employees or in accordance with the Scheme through any appropriate mechanism including the Trust or other entity which may be set up for that purpose and such Scheme may also contain provisions for providing financial assistance to the Employees/Trust/entity to enable the Employees/Trust/entity to acquire, purchase or subscribe to the Securities. As on 31st March, 2010, 1,28,85,038 equity shares of Rs. 5 each were held by the Trust. As on the same date, 98,35,030 options were in force which could be exercisable into 98,35,030 equity shares of Rs. 5 each. Accordingly, the balance available with the Trust is only 30,50,008 equity shares of Rs. 5 each which amounts to 0.53 % of the equity share capital of the Company. It is proposed that these balance shares available with the Trust together with any other shares represented by options that may lapse for any reason, will also be available to the Trust for issuing/ granting Options to the Employees under the Scheme. As the Scheme would entail further shares to be offered to persons other than existing Members of the Company, consent of the Members is sought pursuant to the provisions of section 81 and all other applicable provisions, if any, of the Companies Act, 1956 and as per the requirement of Clause 6 of the SEBI ESOP Guidelines. As per the SEBI ESOP Guidelines, a separate Resolution is required to be passed if the benefits of the Scheme are to be extended to Employees of the subsidiary companies. The Resolution under Item No.11 is being proposed accordingly to cover the Employees and Directors, whether Whole-time Directors or not, of subsidiary company(ies). The Directors who would be eligible or would qualify to join the Scheme may be deemed to be concerned or interested in this item of business to the extent of the options that may be offered to them under the Scheme. Your Directors recommend the Resolutions set out in Item Nos.10 and 11 of the Notice for adoption by the Shareholders as Special Resolutions. By Order of the Board

NARAYAN SHANKAR Company Secretary Registered Office: Gateway Building, Apollo Bunder, Mumbai - 400 001. email: investors@mahindra.com 29th May, 2010

MAHINDRA & MAHINDRA LIMITED

COMMITTEES OF THE BOARD Audit Committee Deepak S. Parekh


Chairman

BOARD OF DIRECTORS Keshub Mahindra


Chairman

Anand G. Mahindra
Vice-Chairman & Managing Director

Nadir B. Godrej M. M. Murugappan R. K. Kulkarni Share Transfer and Shareholders/ Investors Grievance Committee Keshub Mahindra
Chairman

Deepak S. Parekh A. K. Nanda Nadir B. Godrej M. M. Murugappan Narayanan Vaghul A. S. Ganguly R. K. Kulkarni Anupam Puri Arun Kanti Dasgupta
Nominee of Life Insurance Corporation of India

Anand G. Mahindra Bharat Doshi A. K. Nanda R. K. Kulkarni Remuneration/Compensation Committee Narayanan Vaghul
Chairman

Bharat Doshi
Executive Director

Narayan Shankar
Company Secretary

Keshub Mahindra Nadir B. Godrej M. M. Murugappan Loans & Investment Committee Keshub Mahindra
Chairman

Anand G. Mahindra Bharat Doshi A. K. Nanda R. K. Kulkarni Research & Development Committee A. S. Ganguly
Chairman

Bankers Bank of America N.A. Bank of Baroda Bank of India Canara Bank Central Bank of India HDFC Bank Limited Standard Chartered Bank State Bank of India Union Bank of India Auditors Deloitte Haskins & Sells 12, Dr. Annie Besant Road, Opp. Shiv Sagar Estate, Worli, Mumbai 400 018. Advocates Khaitan & Co., One Indiabulls Centre, 13th Floor, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai 400 013. Registered Office Gateway Building, Apollo Bunder, Mumbai 400 001.
1

Anand G. Mahindra Nadir B. Godrej M. M. Murugappan Bharat Doshi

GROUP EXECUTIVE BOARD Anand G. Mahindra


Vice-Chairman & Managing Director

Ramesh Iyer
Managing Director - Mahindra & Mahindra Financial Services Limited

Bharat Doshi
Executive Director and Group Chief Financial Officer

Rajesh Jejurikar
Chief Executive - Automotive Division (Automotive Sector)

Rajeev Dubey
President (HR, After-Market & Corporate Services)

Sanjay Kalra
Chief Executive Officer - Tech Mahindra Limited

Pawan Goenka
President (Automotive & Farm Equipment Sectors)

Harsh Kumar
Managing Director - Mahindra Intertrade Limited

Hemant Luthra
President (Systems & Technologies Sector)

Romesh Kaul
Global Chief Executive Officer - Gears Business, Systech Sector

Anoop Mathur
President (Two-Wheeler Sector)

Bishwambhar Mishra
Chief Executive Officer - Swaraj Division (Farm Equipment Sector)

Uday Y. Phadke
President (Finance, Legal & Financial Services Sector)

Gautam Nagwekar
Chief Executive - Mahindra Division (Farm Equipment Sector)

Ulhas N. Yargop
President (Information Technology Sector)

V. S. Parthasarathy
Executive Vice President - Finance, M&A and Group CIO

Anita Arjundas
Managing Director - Mahindra Lifespace Developers Limited & CEO Real Estate Sector

Ramesh Ramanathan
Managing Director - Mahindra Holidays & Resorts India Limited & CEO Hospitality Sector

Zhooben Bhiwandiwala
Executive Vice President & Managing Partner, Mahindra Partners

Pravin Shah
Chief Executive - International Operations (Automotive & Farm Equipment Sectors)

C. P. Gurnani
Chief Executive Officer - Mahindra Satyam

Rajan Wadhera
Chief Executive - Technology, Product Development and Sourcing (Automotive & Farm Equipment Sectors)

Ruzbeh Irani
Executive Vice President - Corporate Strategy & Chief Brand Officer

Contents Directors Report .................................................................................................................................................. 3

Management Discussion and Analysis .................................................................................................................. 27 Corporate Governance ......................................................................................................................................... 47 Sustainability ........................................................................................................................................................ 73 Accounts .............................................................................................................................................................. 79 Statement pursuant to Section 212 ..................................................................................................................... 129 Consolidated Accounts ......................................................................................................................................... 133

MAHINDRA & MAHINDRA LIMITED

MAHINDRA & MAHINDRA LIMITED

Directors Report
Dear Shareholders
Your Directors present their Report together with the audited accounts of your Company for the year ended 31 March, 2010.
st

Inspite of the global financial crisis, Indias economic growth is steadily gaining momentum, led by a very encouraging re-bound in industrial activity during the year. The sharp increase in consumer durables and capital goods production

Financial Highlights

(Rs. in crores) 2010 20595 1794 18801 3155 371 2784 28 2756 91 2847 749 10 2088 2088 3365 31 5422 210 550 74 4588 2009 14983 1619 13364 1363 292 1071 45 1026 10 1036 58 141 837 31 868 2775 160 30 3773 100 (4) 279 33 3365

this fiscal is particularly heartening as it indicates strengthening consumer and business confidence in the country. Agricultural GDP however, witnessed a decline this year due to the severe drought experienced during the kharif season. Food prices as a consequence, rose alarmingly and food inflation in India has leapfrogged to challenging levels. In these challenging times, the Automotive and Farm Divisions of your Company have clocked one of their best performances reflecting in substantial growth in the net income of the Company by 40.7% to Rs.18,801 crores in the year under review from Rs.13,364 crores in the Financial Year 2009. Consequent to this commendable performance, the profit after tax of the Company for the current year was Rs.2,088 crores as against Rs.837 crores for the previous year.

Gross Income Less: Excise Duty on Sales Net Income Profit before Depreciation, Interest, Exceptional items and Taxation Less: Depreciation/Amortisation Profit before Interest, Exceptional items and Taxation Less: Interest (Net) Profit before Exceptional items and Taxation Add: Exceptional items Profit before Taxation Less: Provision for Tax - Current Tax (including Fringe Benefit Tax) Less: Provision for Tax - Deferred Tax (Net) Profit for the year Add: Profit of Mahindra Holdings & Finance Limited for the period 1st February, 2008 to 31st March, 2008 Balance of profit for the year Balance of profit for earlier years Add: Amount transferred on Amalgamation of Mahindra Holdings & Finance Limited Less: Transfer to Debenture Redemption Reserve Profits available for appropriation Less: General Reserve Credit of Income-tax on Proposed Dividend of previous year Proposed Dividends Income-tax on Proposed Dividends Balance carried forward

Profits
The Profit for the year before Depreciation, Interest, Exceptional items and Taxation was Rs.3,154.59 crores as against Rs.1,362.97 crores in the previous year, an increase of 131.45%. Profit after tax was Rs.2,087.75 crores as against Rs.836.78 crores in the previous year clocking an increase of 149.50%. Your Company continues with its rigorous cost restructuring exercises and efficiency improvements which have resulted in significant savings through value engineering, economising, optimisation of plant capacity utilisation and cost competitiveness in almost
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all areas thereby enabling the Company to take full advantage of the recovery in the economy.

over the previous years volume of 1,53,654 vehicles [includes 1,53,653 MUVs and 1 Light Commercial Vehicle (LCV)]. The domestic sales volume of 44,438 threewheelers was lower by 0.2% as compared to the previous years volume of 44,533 three-wheelers. The Companys domestic MUV sales volumes grew by 39.4% as against the industry MUV sales growth of 26%. The Company strengthened its dominant position in the domestic MUV segment by increasing its market share to 63.3% over the previous years market share of 57.2%. Xylo, which was launched in January, 2009 has been very well accepted in the market. A total of 27,978 Xylos were sold in the year under review. In a very competitive small 4-wheeler cargo segment (0.75 Ton), your Company has launched the Maxximo, a small 4 wheeler cargo vehicle, with 2-cylinder common rail engine, in February, 2010. In the 0.5 Ton Truck load segment, your Company launched a compact Truck Gio. In the Overseas market, despite difficult economic conditions, your Company registered superior growth. During the year under review, your Company sold 10,567 vehicles [including 1,323 vehicles sourced from Mahindra Navistar Automotives Limited (MNAL) and 922 threewheelers] in the Overseas market as compared to 8,501 vehicles [including 693 vehicles sourced from MNAL and 273 three-wheelers] in the previous year registering a growth of 24.3%. Spare parts sales for the year stood at Rs. 514.96 crores (including Exports of Rs. 22.4 crores) as compared to Rs. 362.75 crores (including Exports of Rs.27 crores) in the previous year, registering a growth of 42%. Farm Division: Your Companys Farm Division recorded sales of 1,75,196 tractors as against 1,20,202 tractors sold in the previous year, recording a significant growth of 45.8%. For the

Dividend
Your Directors are pleased to recommend a dividend of Rs.8.75 per Ordinary (Equity) Share and also a Special Dividend of Rs.0.75 per Ordinary (Equity) Share aggregating Rs.9.50 per Ordinary (Equity) Share of the face value of Rs.5 each, payable to those Shareholders whose names appear in the Register of Members as on the Book Closure Date. The Special Dividend is being recommended in the light of the very successful listing of Mahindra Holidays & Resorts India Limited Equity Shares on the Stock Exchanges. In recognition of the impressive performance of the Company, a substantial increase is being made in the proposed dividend as compared to the dividend of Rs.10 per Equity Share paid in the previous year. Also the proposed dividend will be paid on a slightly enlarged capital base of Rs.289.21 crores (as against Rs.278.82 crores in the previous year). The equity dividend outgo for the Financial Year 2009-10, inclusive of tax on distributed profits (after reducing the tax on distributed profits of Rs.17.04 crores payable by the subsidiaries on the dividends receivable from them during the current Financial Year) would absorb a sum of Rs.623.75 crores (as against Rs.312.06 crores comprising the dividend of Rs.10 per Equity Share of Rs.10 each paid for the previous year). Automotive Division: Your Company recorded total sales of 2,36,759 vehicles and 45,360 three-wheelers as compared to 1,61,882 vehicles and 44,806 three-wheelers in the previous year registering a growth of 46.3% and 1.2% in vehicles sales and three-wheeler sales respectively. On the domestic sales front, your Company sold 2,27,114 vehicles [includes 2,14,128 Multi Utility Vehicles (MUVs), 3,722 small 4 wheelers 0.75 Ton cargo and 9,264 mini 4 wheelers 0.5 Ton cargo] registering a growth of 47.8%
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MAHINDRA & MAHINDRA LIMITED

previous year figures, the Company has taken into consideration, the merger of Punjab Tractors Limited with your Company, the appointed date of which was 1 August, 2008. After 3 years of plateauing of the domestic tractor industry and despite one of the worst South-West monsoons, this year saw a strong resurgence with the domestic industry clocking sales of 4,00,203 tractors registering a growth of 31.7% over the last year. Your Company outperformed the industry with domestic sales of 1,66,359 tractors, a growth of 46.9% as compared to 1,13,269 tractors sold in the previous year. This has also helped gain market share which now stands at 41.4% as compared to 40.8% in the previous Financial Year, thus completing 27 years of leadership in the Indian tractor industry. With the slow recovery in international markets, especially in the US, tractor industry exports from India continued to be under strain. In contrast, your Companys exports grew 27.5% to reach 8,837 tractors as compared to 6,933 tractors exported in the previous year. Beyond Agriculture, in the Powergen space under the Mahindra Powerol Brand, your Company sold 48,011 engines in this Financial Year, as against 52,350 engines in the previous year. Your Company retained its leadership position in the genset market catering to the telecom space, while strengthening its presence in the retail segment. Mahindra Defence Systems Division (MDS): Your Company, through Mahindra Defence Systems (MDS) Operating Group, is engaged in three defence related businesses a) Land Systems b) Naval Systems and c) Mahindra Special Services Group (MSSG). In the Land Systems business, your Company provides armouring solutions for light combat vehicles and SUVs as well as high mobility vehicles for defence, police and paramilitary use. Pursuant to an approval accorded by the Shareholders by way of Postal Ballot on 4 April, 2009 this
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business has been hived-off into a wholly owned subsidiary (Mahindra Defence Land Systems Private Limited now rechristened as Defence Land Systems India Private Limited) with effect from 1st July, 2009. Your Company has further signed a Joint Venture Agreement on 30th November, 2009 with BAE Systems Plc. to form a 74:26 Joint Venture for defence land systems products. Once this Joint Venture is operational, it would further expand its product base to include manufacture of artillery products and combat vehicles in technical assistance with BAE Systems Plc. In the Naval Systems business, your Company currently manufactures Sea Mines, Decoy Launchers and composites for various naval and other applications. In the Special Services Group business, your Company provides corporate risk management consultancy services and assists organisations in maintaining their competitive edge by protecting Information, Physical and Personnel assets through implementing the security strategy encompassing people, process and technology. MSSG has been integrated with the MDS Operating Group from 1st April, 2009 in order to synergise the efficiencies with other businesses of MDS. During the year, this business has expanded to Northern and Southern India as well as some international markets.

Management Discussion and Analysis Report


A detailed analysis of the Companys performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

Corporate Governance
Your Company is committed to transparency in all its dealings and places high emphasis on business ethics. Your Company received the Best Governed Company 2009 Award from the Indian Merchants Chamber and the Asian Centre for Corporate Governance and Sustainability. During the year, CRISIL has re-affirmed the highest level rating, (Level 1) for Governance and Value Creation for the fourth
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year in a row. This rating indicates that the capability of the Company with respect to wealth creation for all its stakeholders while adopting strong Corporate Governance practices is the highest. A Report on Corporate Governance along with a Certificate from the Statutory Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

Consequent to the Stock-split, a new International Securities Identification Number (ISIN) INE101A01026 has been created by the Depositories for the Companys Equity Shares of the face value of Rs.5 each.

Finance
Despite prolonged global challenges, the Indian economy showed signs of recovery in most of the Sectors in the Financial Year 2009-10. The risk appetite returned to financial markets as equities and debt raising gained momentum on the back of abundant liquidity. Even though things looked to be on an upswing, Corporates still faced the task of sustaining growth amidst volatilities as well as surging inflation. During the year, keeping in mind the volatile times, your Company continued to focus on managing cash efficiently. Even while financing its ongoing modernisation and growth initiatives, it was ensured that your Company had abundant liquidity. Your Company did not need to tap the capital market and in fact used its strong liquidity at its disposal to repay foreign currency loans aggregating USD 94.5 million without the need for refinancing. As was reported in the previous years Directors Report, your Company had, in July, 2008, issued 9.25% p.a. Unsecured Fully and Compulsorily Convertible Debentures (FCD), each FCD having a face value of Rs. 745 and convertible into one Equity Share of Rs. 10 each in the Company at a price of Rs. 745 per Share. In January, 2010, in accordance with the terms of the issue, the FCDs were converted into Equity Shares of the Company and your Company allotted 93,95,974 Ordinary (Equity) Shares of Rs.10 each, adding Rs. 700 crores to its Net Worth. Your Company follows a prudent financial policy and aims to maintain optimum financial gearing at all times. The Companys total Debt to Equity Ratio was 0.37 as at 31st March, 2010.

Share Capital
Increase in Share Capital During the year under review, your Company allotted: 1) 10,00,000 Ordinary (Equity) Shares of Rs.10 each to the Trustees of Mahindra & Mahindra Employees Stock Option Trust; and 2) 93,95,974 Ordinary (Equity) Shares of Rs.10 each to Golboot Holdings Limited upon compulsory conversion of 93,95,974 Fully and Compulsorily Convertible Debentures.

Sub-division (Stock-split) of Face Value of Equity Shares


Pursuant to the approval received from the Members of the Company by way of Postal Ballot on 11th March, 2010, your Company has on 31st March, 2010, upon sub-division, issued 2 (Two) Ordinary (Equity) Shares of Rs.5 each fully paid-up in the Equity Share Capital of the Company for every 1 (One) Ordinary (Equity) Share of the face value of Rs.10 fully paid-up held by the Members in the Equity Share Capital of the Company as on the Record Date i.e. 30th March, 2010. Post allotment of Equity Shares and sub-division of Equity Shares as aforesaid, the issued, subscribed and paid-up Share Capital of the Company stands at Rs.289.21 crores comprising of 57,84,34,478 Ordinary (Equity) Shares of Rs.5 each fully paid-up and the Authorised Share Capital of the Company stands at Rs.625 crores comprising of 1,20,00,00,000 Ordinary (Equity) Shares of Rs.5 each and 25,00,000 Unclassified Shares of Rs.100 each.
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MAHINDRA & MAHINDRA LIMITED

Your Company has been rated by CRISIL, ICRA Limited (ICRA) and Credit Analysis & Research Limited (CARE) for its Banking facilities under Basel II norms. During the year, CRISIL reaffirmed its rating of AA and revised its rating outlook to AA/ Stable from AA/ Negative for your Companys Long Term Facilities under Basel II. During the year, ICRA also reaffirmed its rating of LAA+ for your Company and also revised its rating outlook from LAA+/ Negative to LAA+/Stable and CARE has maintained a Long Term Rating of CARE AA+.

Your Companys move into the Aerospace segment is supported by a renewed demand for economical air transportation around the world. The Companys investment in component capability addresses the growing needs of both the civil and defence markets and in particular the offset opportunities that have triggered world wide interest in Indian Aerospace.

2. Joint Venture with BAE Systems Plc. Through various initiatives, your Company had

CRISIL, ICRA and CARE have all reaffirmed the highest rating for your Companys Short Term facilities. Your Companys Bankers continue to rate your Company as a prime customer and extend facilities/services at prime rates.

positioned itself to play a major role in the Indian Defence Sector for the manufacture and integration of weapon systems and platforms. Your Company had also been exploring opportunities for partnerships with companies with globally proven high end defence technologies. With this objective in mind, your Company had evaluated various options and identified possibilities for forming separate Joint Ventures/alliances with strategic partners. As mentioned earlier in this Report, your Company has entered into a Joint Venture with BAE Systems Plc. (BAE). BAE is a premier global defence, security and aerospace company delivering a full range of products and services for air, land and naval forces, as well as advanced electronics, security, information technology solutions and customer support services.

Acquisitions and other matters


1. Acquisition of Aerostaff Australia and Gippsland Aeronautics Your Company decided to make a foray into Aerospace Sector with the intention of penetrating into global aerospace supply chain as a credible registered manufacturer of components and assemblies with the leading players in Aerospace and also to become small capacity aircraft manufacturer. To meet these goals, your Company has made 2 acquisitions in Australia as under: Aerostaff Australia (AA) manufactures high-precision close-tolerance aircraft components and assemblies for large aerospace Original Equipment

3. Gear Vertical Mahindra Gears & Transmissions Private Limited (MGTPL) is a subsidiary of your Company. With a view to derive optimum structuring and operational benefits and unlock value in MGTPL, your Company divested 46.66% of the Equity Share Capital in MGTPL in favour of ICICI Venture Fund during the year. Subsequent to the divestment, the holding of your Company in MGTPL stands at 53.34%.

Manufacturers (OEMs). Gippsland Aeronautics (GA) is an established brand in general aviation and has delivered more than 200 FAR 23 certified planes in 32 countries. NM5 is a 5-seater Aircraft designing and manufacturing project which is being developed by your Company with Hindustan Aeronautics Limited. The NM5 initiative compliments the product portfolio of GA.

4. Demerger of Non Fruit Business of Mahindra Shubhlabh Services Limited into the Company Mahindra Shubhlabh Services Limited (MSSL), a subsidiary of your Company, is in the business of a) domestic sales and exports of fresh fruit products and b) production and distribution of Agri Inputs namely Seeds, Seed Potato and Crop Care Products. MSSLs Fruits business is currently focused on exports of grapes to Europe. MSSL proposes to expand its foray into other Fruits businesses. MSSL has till now steadily developed a footprint in Agri Input business, which is strategically an important business to your Company, as it directly relates with the farmer and Farm Tech Prosperity, essential for improving customer bonding, customer loyalty and market penetration of your Company. In view of the Agri Inputs business being a high gestation business, MSSL now intends to streamline its operations and wants to focus only on the Fruits Business and explore strategic options to grow this business domestically and globally in terms of scale and profitability and going forward, the Agri Inputs business would be demerged into your Company owing to its strategic importance and funding resources required for the same. To achieve the above objective, a Scheme of Arrangement between MSSL and your Company and their respective Shareholders was announced by your Company and MSSL on 30 March, 2010 which inter alia envisages demerger of the Agri Inputs Business along with other common assets and liabilities (Non Fruit business) of MSSL into the Company under the provisions of sections 391 to 394 of the Companies Act, 1956. The Appointed Date of the Scheme would be 1st January, 2010 and pursuant to the Scheme, Shares held by the Company and its wholly owned subsidiary, Mahindra Holdings Limited (MHL) in MSSL
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shall stand cancelled. Upon the Scheme becoming effective, the Company shall issue and allot to the Shareholder of MSSL (other than the Company and MHL) as on the Record Date 34,730 fully paid-up Equity Shares of Rs.5 each of the Company. Currently, the Scheme is in process of being filed with the Stock Exchanges and the Honourable High Court of Judicature at Bombay for approval. 5. Mahindra Forgings Limited Qualified Institutional Placement and issue of Warrants to the Company Mahindra Forgings Limited (MFL), a subsidiary of the Company, raised capital by way of a Qualified Institutional Placement (QIP) to Qualified Institutional Buyers accompanied by a simultaneous issue of Warrants to your Company, in terms of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. An amount of Rs.175 crores was raised through a QIP by issue and allotment of Equity Shares of the face value of Rs.10 each at a price of Rs.107.75 per Equity Share to Qualified Institutional Buyers. MFL has also allotted 72,99,270 Warrants on a preferential basis to your Company wherein each Warrant entitles the Company to apply for and be allotted one Equity Share of MFL of the face value of Rs.10 each at a price of Rs.137 per share, in one or more tranches, at any time after the date of allotment of Warrants but on or before the expiry of 18 months from the date of allotment of Warrants. The Company has made an upfront payment of 25% of the aggregate price amounting to approximately Rs.25 crores and has exercised its option to convert 30,00,000 Warrants into Equity Shares. The Company still has an option to convert the balance 42,99,270 Warrants into Equity Shares by 3rd September, 2011. As a result of the above, the Companys shareholding in MFL stands at 50.68%.

MAHINDRA & MAHINDRA LIMITED

6. Acquisition of Shareholding of Renault s.a.s. in Mahindra Renault Private Limited (MRPL) and take over of the business of MRPL as a going concern The Company had entered into a Joint Venture with Renault s.a.s. (Renault) for the manufacture and sale of the Logan sedan car principally for the Indian market in 2005. Mahindra Renault Private Limited (MRPL), a subsidiary of the Company had commenced commercial production of the car badged as Mahindra Renault Logan from February, 2007. The Company had been in discussions with Renault to arrive at a long term solution to MRPLs continuing losses and subsequent to the year end, your Company signed a Framework Agreement with Renault to buyout Renaults Shares in MRPL which would result in MRPL becoming a wholly owned subsidiary of your Company. Renault would continue to support the Company and the Logan through a License Agreement and supply of key components. Through this Agreement, your Company would strive to ensure continuity and build on the positive customer equity that exists for the Logan in India. 7. Going Green Acquisition of Reva Electric Car Company Private Limited Given the concerns about environment, tighter regulation on emission, debate on greenhouse gases and taxation on emission, the demand for electricvehicles (EV) is projected to increase many fold. Most global OEMs are working on EV programs and are at least 1 to 2 years away from commercial production. Your Company is of the view that it should be focused on developing EV capabilities that would assist it to be ready to exploit this opportunity. Keeping in mind the above opportunity and with a view to consolidate its presence in the Automotive

Space, your Company subsequent to the year end decided to acquire a majority stake in Reva Electric Car Company Private Limited (Reva). Established in 1994, Reva launched its first EV in 2001 under the Reva brand and further extended it to London in 2004 under the G-Wiz brand. With the help of its strong engineering team and frugal mindset, it has developed significant proprietary technology which has enabled it to create a fleet of EVs worldwide with over 3,000 vehicles on the road in more than 20 countries including India, the United Kingdom and other countries in Europe. This acquisition would help your Company to compliment its other clean energy initiatives on Hybrid, Hydrogen and Bio-diesel which is an important element in the sustainable mobility strategy of the Company.

Stock Options
On the recommendation of the Remuneration/ Compensation Committee of your Company, the Trustees of the Mahindra & Mahindra Employees Stock Option Trust have granted 4,01,770 Stock Options to Eligible Employees during the year under review. Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the Guidelines) are set out in Annexure I to this Report. Mahindra & Mahindra Limited Employees Stock Option Scheme - 2010 Your Company proposes to introduce a new Employee Stock Option Scheme known as Mahindra & Mahindra Limited Employees Stock Option Scheme 2010 (New Scheme). The New Scheme will facilitate grant of Options to the employees in the form of Stock Options and/ or Restricted Stock Units (RSUs) and /or other instruments (Options) exercisable into Equity Shares. It is proposed

that the Options can be exercised by the employees at a price equal to or not less than the face value of the Equity Shares of the Company. The necessary Resolutions seeking consent of the Members are being sought as proposed in the Notice convening the Annual General Meeting. The New Scheme has been formulated in accordance with the Guidelines and other applicable laws.

New Certifications The Sustainability Reporting System of your Company provides a framework for environmental initiatives, objectives & targets and helps in continually improving its Air, Water and Waste Management performance. All Plants of Automotive Division have been certified with amended standard for ISO 14001: 2004 & OHSAS 18001. Your Companys commitment to environment stems from the Groups abiding concern for the Stakeholders engagement in and around the society. Its nature of operations has a low impact on the environment due to implementation of Environment Management System which provides a healthy work environment to its employees and ensures conduct of environment friendly business. Implementation of Occupational Health & Safety Management System Standard has re-enforced the Companys commitment of Safety and Occupational Health to high levels. OHSAS 18001:2007 is the best existing safety practice which is implemented through the amended management system and all the Plants of the Automotive Division have been certified during the year 2009-10. The individual operational Units of the Automotive Division i.e. Kandivli, Nashik, Igatpuri, Zaheerabad and Haridwar are also certified. The OHSAS system aims to eliminate or minimise risk to employees and other interested parties who may be exposed to Occupational Safety risks associated with its activities. Occupational Health Examination

Industrial Relations
Industrial Relations remained cordial and harmonious throughout the year. As mentioned in the last years Directors Report, the workmen at the Nashik plant of the Automotive Division of the Company resorted to one illegal strike in May, 2009. The Management Discussion and Analysis Report gives an overview of the developments in Human Resources/Industrial Relations during the year.

Safety, Health and Environmental Performance


Health and Safety Your Company continues to demonstrate a strong commitment towards Safety, Occupational Health and Environment. Your Company has a well established Safety, Occupational & Environmental Policy (SH&E). The objectives and targets derived from the Policy are supported by Management Programs. The Safety, Occupational Health & Environment of its employees are embedded as core Organisational values of the Company. The Policy inter alia covers and ensures safety of public, employees, plant and equipment, imparts training to all its employees as per training calendar, carries out statutory safety assurance and audits of its facilities as per legal requirements, conducts regular medical and occupational check-up of its employees and promotes eco-friendly activities.

Your Companys Plants continued its commitment to improve the well being of the employees. During the year 2009-10, all employees in Hazardous operations were medically examined once in six months and other employees from Non-Hazardous operations were examined once in a year. Environmental Initiatives : Air Pollution Management With a clear view on sustaining green business growth,

MAHINDRA & MAHINDRA LIMITED

the need for clean environment was given a renewed focus. By incorporation of new technological upgradations, your Company is now in the process of calculating carbon foot print of Plants location wise and is taking adequate measures to mitigate the causes attributing to it. The Company also has a roadmap to reduce Green House Gas (GHG) emissions by curtailing travel of its employees to client locations for Meetings and discussions and this is achieved by promoting the use of Video Conferencing. Your Company is constantly imbibing the major environment sensitisation drives amongst its employees through various events such as celebrations of World Environment Day, World Ozone Day alongwith active participation of employees families. Your Company has also implemented ambient and work place air monitoring, increased green zones, alongwith effluent treatment and waste monitoring. Water and Waste Water Management Your Company is committed towards resource conservation and has taken various initiatives to achieve waste reduction and resource conservation. Your Company has implemented various water management methods such as recycling and re-use of treated waste water in process. The Company has also introduced rainwater harvesting and recharging within Plant premises and would extend it to other locations as well. Solid Waste Management Your Companys Plants at Kandivli, Nashik, Igatpuri and Zaheerabad believe in responsible disposal of hazardous and non-hazardous waste. The generation of waste to a greater extent has been reduced at source and if adaptable, it is recycled and reused. Your Company is aggressively working towards minimising waste disposal costs and is executing various Management programmes at each location such as vermiculture, bio-gas Plants to convert food waste to manure/cooking gas towards minimisation

of the same. Your Company is conscious towards environment and ensures environment friendly disposal of e-waste. Greenbelt Development Your Company has community partners at each location for green belt development. Mahindra Hariyali was one of the initiatives which was implemented at the Plants at Mumbai and Kanhe and at dealers & distributors across India. Your Companys Plants at various locations have partnered with Non-Governmental Organisations and various academic institutions all located in and around Mumbai, Nashik, Igatpuri, Zaheerabad and Haridwar.

Corporate Social Responsibility


From educating a girl child in Udaipur, providing healthcare to inaccessible areas in Uttarkhand, enabling socially disadvantaged youth become self reliant in Pune, to planting a million trees in India, your Companys Corporate Social Responsibility (CSR) initiatives continue to provide strategic interventions that help the Nation help itself. At Mahindra we call it Transform-nation. CSR continues to be an integral part of the vision of the Mahindra Group and this year too, the Company has pledged 1% of its Profit after Tax for CSR initiatives, largely to benefit the socially and economically disadvantaged sections of Society. Some of the major initiatives your Company has invested in are described below: Mahindra Pride Schools: Mahindra Pride Schools (MPS) unique partnership model speeds its graduates integration into the workforce, where they earn not only a salary but also the respect of their family and peers. Since inception in March, 2007, 1,720 students from socially disadvantaged communities have completed the 3 month course at MPS. MPS provides these youth with livelihood training in sunshine industries
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i.e. Hospitality, Customer Relationship Management, Hardware & Networking and Call Centre Training. All students are required to undergo mandatory courses in English, Life skills and computer applications. There has been 100% placement of all students participating in the placement process. Nanhi Kali: Nanhi Kali, which supports the education of the disadvantaged girl child has been the flagship programme of the K. C. Mahindra Education Trust. Nanhi Kali brings about a complete transformation, by allowing the girls to attend school and learn with dignity. Nanhi Kali sponsorship provides not only academic support classes where concepts of Maths, Science and language are taught to the girls but also provides uniforms, school bags, shoes, etc. which free her family from hidden costs of education. The Mahindra Group independently supports 11,000 girls across India. With support from thousands of individuals and Corporate donors, Project Nanhi Kali now supports the education of over 54,000 underprivileged girl children, in poor urban, remote rural and conflict afflicted tribal communities across 8 States of India. The goal of Nanhi Kali is to provide educational support to 1,00,000 underprivileged girls by 2011. Mahindra All India Talent Scholarships (MAITS): Instituted in 1995, MAITS are awarded to students from lower socio-economic strata to enable them to pursue a job oriented diploma course at a recognised Government Polytechnic Institute in India. Approximately 500 scholarships are given every year for students who undergo a three year course. As a result in the last Financial Year, 1,525 students all over India received financial support through MAITS. Till date, 4,772 students have been MAITS Scholars. A survey of students who have graduated indicate that they have got good jobs and the living standards and economic status of their families have improved.
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Gifting Cochlear Implants: By gifting the power of sound through the donation of Cochlear Implants, the Mahindra Group has changed the life and future of 60 profoundly hearing-impaired, underprivileged children till date. Operations are performed by Dr. Milind Kirtane, Indias leading ENT surgeon and his Team. All beneficiaries are hearing impaired children below the age of 5, belonging to the lower socio-economic strata of Society. Bihar Rehabilitation Project: The river Kosi wreaked havoc in Bihar in 2008 with floods causing incalculable loss of life and property besides snatching away the livelihood of lakhs of people in the State. Following the same, Mahindra Foundation and Mahindra Consulting Engineers Limited (MACE), a subsidiary of the Company have entered into a Memorandum of Understanding (MOU) with the Collector, Madhepura District, Bihar to support the rehabilitation and reconstruction activities in Pattori Gram Panchayat, Singheswar Block, Madhepura District of Bihar for those ravaged by the Kosi floods in 2008. Under the terms of the MOU, MACE would create the complete social infrastructure in Pattori Gram Panchayat. This comprehensive programme includes the construction of permanent houses with provision of basic infrastructural facilities such as water supply and sanitation. Employee Social Options: Employee Social Options (ESOPs) is the unique programme at the Mahindra Group where each employee can do social work by volunteering in various CSR initiatives. Till date, 31,317 employees have volunteered in various initiatives in their local communities. ESOPs were formally launched in 3 new locations of Mahindra Group Mahindra Two Wheelers; Pune, Mahindra Two Wheelers; Pithampur and Mahindra Retail; Bangalore. Some of the notable ESOPs initiatives this year were:

MAHINDRA & MAHINDRA LIMITED

The Lifeline Express in Wardha: This was jointly sponsored and organised by the Farm Division and Mahindra & Mahindra Financial Services Limited, a subsidiary of the Company. The Project was held at Wardha and 1,153 surgeries were performed free of cost and 281 Hearing Aids were distributed. ESOPs Volunteers spent 13,752 man hours in this activity and 30,575 man hours were spent by volunteers from the Community, thus making it an ideal public-private partnership initiative.

to appraise the Shareholders of the initiatives your Company had taken in reporting its Sustainability performance for reviewing its commitments to the Environment and Society, while generating profits. During the year under review, the 2nd Sustainability Report for the year 2008-09 was published, in accordance with the latest Guidelines of the internationally accepted Global Reporting Initiative or the GRI standards. Again this year, this Report was externally assured by Ernst & Young and rated with the highest level of A+ and GRI checked. This 2nd Report reflects that along with your Companys business growth, the Companys responsibility to its stakeholders has also grown, expanded and intensified. Your Companys progression in this journey and its commitment to taking a more responsible and holistic approach to business is reflected by the facts that a) all commitments made in the first Report were satisfactorily met and b) a structured Sustainability road map over a 3 and 5 year time horizon has been drawn, with clear targets for reducing consumption of energy and water and reduction in GHG emission and waste. Details of this Group Level Road Map and further information on various environment related initiatives taken by your Company which would help in achieving the targets in the Road Map, have been elaborated elswhere in the Annual Report. During the year under review, a Carbon foot-printing exercise was undertaken to inventorise GHG emissions from all the Companys business operations under Scope I, II & III emissions as per internationally accepted standards. This would enable your Company to baseline data on its emissions and undertake initiatives towards improving performance in this area. This would be reported in your Companys 3rd Sustainability Report, which would be released shortly. Realising that the equation of business with Environment and Society is undergoing a radical change, through its strategic approach of ALTERNATIVE THINKING your
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Mahindra Hariyali : A Survey was conducted on the survival rate of trees planted in the Financial Year 2008-09. According to the Survey, the survival rate as on 31st May, 2009 of the trees planted during the abovementioned period is 79.49%.

ESOPs AWARDS 2009: is an internal Company award and was institutionalised in 2008 to appreciate and promote healthy competition amongst employees and locations.

Other ESOPs activities also included other initiatives in Education, Health, Environment and Social arenas bringing long-lasting impact. 27 initiatives were conducted in Education (such as distributing educational material, IT/ vocational training, infrastructure development) impacting 24,664 lives. 54 Health initiatives such as medical camps, blood donation camps, Pulse Polio Campaigns, mobile dispensaries, etc. reached out to over 14,573 people. HIV/ AIDS awareness campaigns reached out to over 1,36,560 people in Nashik. For taking care of the Environment, 1,14,862 trees were planted for Gap Filling in Financial Year 2009-10. 71 Social initiatives were conducted such as visiting Old Age Homes, interacting with children, conducting Shraamdan, etc. which reached out to over 78,003 people.

Sustainability Initiative
In the last years Directors Report, a beginning was made

Company is committed to integrate sustainable development for a sustainable business growth. For a detailed information on the Annual Sustainability Reports for the years 2007-08 to 2008-09 please log on to www.mahindra.com/sustainability.

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed; (ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of the profit of the Company for the year ended on that date; (iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) the annual accounts have been prepared on a going concern basis.

Directors
Mr. A. K. Nanda, Executive Director of the Company, after 37 illustrious years of service in the Mahindra Group of which 18 years were as an Executive Director decided to step down from his executive position with effect from the close of 31st March, 2010. Considering his experience and expertise, Mr. A. K. Nanda was appointed as an Additional Director of the Company with effect from 1st April, 2010 at the Meeting of the Board of Directors of the Company held on 30th March, 2010. The Board has placed on record its deep appreciation of Mr. Nandas immense contribution and valuable services during his long association with the Company and acknowledged Mr. Nandas outstanding experience and expertise in serving the Mahindra Group since 1973 including his contribution as Executive Director of the Company from 1992 onwards. The Company has received a Notice from a Member signifying his intention to propose Mr. Nanda for the office of Director at the forthcoming Annual General Meeting. Mr. Keshub Mahindra, Mr. Anupam Puri, Dr. A. S. Ganguly and Mr. R. K. Kulkarni retire by rotation and, being eligible, offer themselves for re-appointment.

Subsidiary Companies
The subsidiary companies of your Company continue to contribute to the overall growth of the Company. Major subsidiaries such as Mahindra & Mahindra Financial Services Limited with a 61.96% growth in its consolidated profits and Mahindra Holidays & Resorts India Limited with a 46.86% growth in its consolidated profits deserve special mention. The consolidated Group Profit for the year after exceptional items, prior period adjustments and tax and after deducting minority interests is Rs.2,478.56 crores as against Rs.1,405.41 crores earned in the previous year. During the year under review, Mahindra Metal One Steel Service Centre Limited, Raigad Industrial & Business Park Limited, Retail Initiative Holdings Limited, Mahindra Retail Private Limited, Mahindra Technologies Services Inc., Mahindra Punjab Tractors Private Limited, Mahindra EcoNova Private Limited, Mahindra Conveyor Systems Private Limited, Tech Mahindra (Nigeria) Limited, Tech Mahindra Bahrain Limited S.P.C. and BAH Hotelanlagen AG became subsidiaries of your Company.

Directors Responsibility Statement


Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors, based on the representations received from the Operating Management, and after due enquiry, confirm that:
6

MAHINDRA & MAHINDRA LIMITED

During the year under review, Mahindra Hinoday Industries Limited, Metalcastello S.p.A., and Mahindra Technologies Inc., ceased to be subsidiaries of the Company. Further, pursuant to an Agreement dated 10th May, 2005, signed between SBC International Inc. [now AT&T International Inc.] (AT&T), Mahindra and Mahindra Limited (the Company), British Telecommunications Plc., Mahindra-BT Investment Company (Mauritius) Limited (MBTM) and Tech Mahindra Limited (Tech Mahindra) which entitled AT&T to exercise certain Options over Equity Shares of Tech Mahindra on achieving certain Milestones by Tech Mahindra at a pre-determined price, AT&T exercised its Options and acquired 98,70,912 Equity Shares of Tech Mahindra, aggregating 8.07% of the paid-up Equity Share Capital of Tech Mahindra on 22nd March, 2010 from MBTM. Upon the exercise of Options by AT&T, the Shareholding of the Company alongwith its subsidiary MBTM in Tech Mahindra stands reduced to 44.01%, resulting in Tech Mahindra ceasing to be a subsidiary of the Company with effect from 22nd March, 2010. Consequently, the subsidiaries of Tech Mahindra viz. Mahindra Logisoft Business Solutions Limited, Tech Mahindra (Americas) Inc., Tech Mahindra GmbH, Tech Mahindra (Singapore) Pte. Limited, Tech Mahindra (Thailand) Limited, Tech Mahindra Foundation, PT Tech Mahindra Indonesia, CanvasM Technologies Limited, CanvasM (Americas) Inc., Tech Mahindra (Malaysia) SDN.BHD, Tech Mahindra (Beijing) IT Services Limited, Tech Mahindra (Nigeria) Limited, Tech Mahindra Bahrain Limited S.P.C. and Venturbay Consultants Private Limited also ceased to be subsidiaries of the Company with effect from 22
nd

wholly owned subsidiaries of Mahindra Aerospace Private Limited which in turn is a subsidiary of your Company. Reva Electric Car Company Private Limited also became a subsidiary of your Company. The Statement pursuant to section 212 of the Companies Act, 1956 containing details of the Companys subsidiaries is attached. The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with Accounting Standard AS21 form part of the Annual Report. In terms of the approval granted by the Central Government under section 212(8) of the Companies Act, 1956, copy of the Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsidiaries have not been attached to the Balance Sheet of the Company. The Company Secretary would make these documents available upon receipt of request from any Member of the Company interested in obtaining the same. However, as directed by the Central Government, the financial data of the subsidiaries have been separately furnished forming part of the Annual Report. The accounts of the individual subsidiary companies shall be uploaded on the Website of your Company. These documents would also be available for inspection at the Head Office of the Company and at the Office of the respective subsidiary companies, during working hours upto the date of the Annual General Meeting.

Auditors
Messrs. Deloitte Haskins & Sells, Chartered Accountants, retire as Auditors of the Company and have given their consent for re-appointment. The Shareholders would be required to elect Auditors for the current year and fix their remuneration. As required under the provisions of section 224(1B) of the Companies Act, 1956, the Company has obtained a written Certificate from the above Auditors proposed to be
7

March, 2010.

Subsequent to the year end, Mahindra Metal One Steel Service Centre Limited has changed its name to Mahindra Electrical Steel Limited and Mahindra Aerospace Australia Pty. Limited and Aerostaff Australia Pty. Limited became

re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said section.

last few months, as indicated by the sharp rise in capital goods production and a normal monsoon forecast for the current year, the prognosis for growth in the current fiscal is positive. However, the rising cost of commodities and the supply constraints on certain critical components are a source of considerable concern and your Company hopes to counter this through an intensive and continuous focus on cost controls, product innovation and customer delight.

Public Deposits and Loans/Advances


Out of the total 17,101 deposits of Rs.166.22 crores from the Public and Shareholders as at 31st March, 2010, 205 deposits amounting to Rs.0.67 crores had matured and had not been claimed as at the end of the Financial Year. Since then, 93 of these deposits of the value of Rs.0.44 crores have been claimed. The 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 32 of the Listing Agreement are furnished separately.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo
Particulars required to be disclosed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in Annexure II to this Report.

Particulars of Employees
The Company had 426 employees who were in receipt of remuneration of not less than Rs.24,00,000 during the year ended 31st March, 2010 or not less than Rs.2,00,000 per month during any part of the said year. However, as per the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report and Accounts are being sent to all the Shareholders of the Company excluding the Statement of particulars of employees. Any Shareholder interested in obtaining a copy of the Statement may write to the Company Secretary of the Company.

Current Year
During the period 1 April, 2010 to 28 May, 2010, 45,821 vehicles were despatched as against 34,797 vehicles during the corresponding period in the previous year. During the same period, 29,699 tractors were despatched as against 24,536 tractors despatched during the corresponding period in the previous year. Economies in many parts of the world have started to stabilise and recover either from recession or severe slow down in the past two years. The Indian Economy has displayed remarkable resilience over the course of the downturn and is expected to grow strongly. The primary driver of growth in the year under review was the Industrial Sector. The index of industrial production grew 10.1% on a year on year basis between April, 2009 to February, 2010 as compared to the 3.1% growth registered in the same period in the last fiscal. With investments picking up in the
st th

For and on behalf of the Board KESHUB MAHINDRA Mumbai, 29 May, 2010
th

Chairman

MAHINDRA & MAHINDRA LIMITED

ANNEXURE I TO THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2010
Information to be disclosed under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999:
(a) Options granted 1,51,80,898

(b) The pricing 1st Tranche formula Average price preceding the specified date - 27th September, 2001

2nd Tranche 3rd Tranche 4th Tranche 5th Tranche 6th Tranche 7th Tranche 8th Tranche 9th Tranche 10th Tranche

Average price preceding the specified date - 30th May, 2003

Discount of 5.13% on the average price preceding the specified date - 31st May, 2004 -

Discount of 4.85% on the average price preceding the specified date - 30th May, 2005

Average price preceding the specified date - 14th September, 2005

Discount of 5.02% on the average price preceding the specified date - 29th May, 2006

Discount of 4.89% on the average price preceding the specified date - 13th September, 2006

Discount of 4.97% on the average price preceding the specified date - 30th July, 2007

Discount of 5.03% on the average price preceding the specified date - 4th August, 2008

Discount of 4.97% on the average price preceding the specified date - 30th July, 2009

Average price

Average of the daily high and low of the prices for the Companys Equity Shares quoted on Bombay Stock Exchange Limited during 15 days preceding 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.

The specified date

(c)

Options vested

82,90,283

(d) Options exercised (e)

45,88,703

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 of options

7,57,165 At the Sixty-first Annual General Meeting of the Company held on 30th July, 2007, the 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. Rs.79,24,98,738. This amount was received by the Trust. 98,35,030

(g) Variation of terms

(h) Money realised by exercise of options (i) Total number of options in force

(j)

Employee-wise details of options granted to: (i) Senior managerial personnel As per Statement attached Names Options granted during the year ended 31st March, 2004* 15,000 15,240 25,920 Names Options granted during the year ended 31st March, 2005* 15,240 15,000** 10,160 5,080

(ii) Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year

Mr. Raghunath Murti Mr. Hemant Luthra Mr. Ramesh lyer *

Mr. Pranab Datta Mr. Rajeev Dubey Mr. Allen Sequeira Mr. Prince M. Augustin

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 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 (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 calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation 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. Nil

Rs.35.61

The Company has calculated the employee compensation cost using the intrinsic value of stock options. Had the fair value method been used, in respect of stock options granted on or after 30th June, 2003, 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 earnings per share would have been lower by Rs.0.48 and Rs.0.44 respectively.

MAHINDRA & MAHINDRA LIMITED

(m)Weighted-average exercise prices and weighted-average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock. (n) A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted-average information: (i) risk-free interest rate, (ii) expected life, (iii) expected volatility, (iv) expected dividends, and (v) the price of the underlying share in market at the time of option grant.

Options Grant Date

Exercise price (Rs.)

Fair value (Rs.) 414.84

4th November, 2009

724.00

The fair-value of the stock options granted on 4th November, 2009 have been calculated using Black-Scholes Options pricing Formula and the significant assumptions made in this regard are as follows:

6.41% 2.50 years 53.56% 2.24% Rs.929.50

STATEMENT ATTACHED TO ANNEXURE I TO THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2010
Name of Senior Managerial Options granted in Options granted in Options granted in Options granted in Options granted in Persons to whom Stock Options have been granted December, 2001* June, 2005** September, 2006 July, 2007 August, 2008

Mr. Deepak S. Parekh Mr. Nadir B. Godrej Mr. M. M. Murugappan Mr. Narayanan Vaghul Dr. A. S. Ganguly Mr. R. K. Kulkarni Mr. Anupam Puri Mr. Bharat Doshi Mr. A. K. Nanda * **

20,000 20,000 20,000 20,000 20,000 20,000 20,000 1,00,000 1,00,000

5,000 5,000 5,000 5,000 5,000 5,000 ***5,000 ***10,000 10,000

Nil Nil Nil Nil Nil Nil Nil ***11,345 ***11,345

Nil Nil Nil Nil Nil Nil Nil ***8,362 ***8,362

Nil Nil Nil Nil Nil Nil Nil ***29,039 ***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, 2010
PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2010 Improving capacity utilisation of cylinder head washing units. Modifying furnace charging sequence. Optimising temperature settings of air conditioners considering seasonal changes. Modification of Air Handling Ducts in paint shop to optimise use of Air Blower power consumption.

A)

Conservation of Energy
The Company has always been conscious of the need for conservation of energy and has been steadily making progress towards this end. Energy conservation initiatives have been implemented at all the plants and offices of the Company by undertaking numerous energy conservation projects. (a) During the year, the Company has taken the following initiatives for conservation of energy: (i) Engineering Initiatives Modification in equipments like oil pumps and motors coupled with system optimisations to reduce energy consumption. Replacement of higher HP motor with lower HP. Installation of heat pumps, metal halide lamps instead of sodium and mercury vapor lamps. Installation of natural draft cooling towers instead of induced draft cooling systems. Installation of capacitor banks, automatic timer circuits for lights and fans. Installation of heat recovery system at ED oven. Shift to LPG Heating from Electric Heating.

(iii) Initiatives Generating Awareness on Energy Consumption Display of sustainability posters at workplace. Idea generation campaign for electrical energy saving. Celebration of Energy Conservation Day on 14th December, 2009 followed by Energy Conservation Week between 14th December, 2009 to 21st December, 2009. Setting up of Stalls inside the Plant premises for awareness of Energy Efficient and Renewable Energy Products. Reward and recognition for energy saving projects.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Waste heat recovery projects in paint shops. Improvement in efficiency of central air conditioning units. Explore application of efficient lighting (LED, Magnetic coupled). Use of renewable energy (Solar and Wind).

(ii) Process Improvement Cycle time reduction of various manufacturing processes.

MAHINDRA & MAHINDRA LIMITED

(c) Impact of the measures at (a) & (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: The measures taken have resulted in lower energy consumption. In the Automotive Division, the Specific Power consumption per equivalent vehicle improved by 15% over the previous year. For the same period, the Farm Equipment Sector achieved an improvement of 3.21% per equivalent tractor. The work done by your Company has received recognition in the form of a number of National and State level awards.

for the Maxximo to give the pick-up segment users a car like driving comfort. Your Company has been working on developing the Scorpio Pick-UP for the US market and in the process, has developed/attained significant capabilities in the field of emission, safety, security and on board diagnostics. The Company has confidence of complying to the latest FMVSS legislations for model year 2010 and further years. In the area of sustainable mobility, the Company developed a Micro Hybrid application on the Pick-UP. This was launched on the new Bolero Maxi Truck and was received very well by the customers. During the year under review, your Companys Automotive Division applied for 24 Patents and 8 Design Registrations. Moving on to the Farm Equipment Sector, in the domestic market, the Farm Division, during the year under review, developed and launched the Yuvraj 215, a 15HP tractor, to meet the needs of the small and marginal farmers. The entire existing range of tractors, i.e. Bhoomiputra, Sarpanch and the flagship Arjun range were upgraded, offering better fuel efficiency, stability and comfort. In the same period, the Swaraj Division developed and launched the Swaraj 843 XM (Xtra Mileage) tractor, the 1st new product from the Swaraj stable after its merger with the Company. In the international space, in the US market, the Compact series of tractors were launched across the country, offering advanced features like Hydrostatic Transmission, allowing the product to be easily operated by all in the household. Your Company developed an Integrated Cabin, which was also introduced in the US market. In China, the 125 HP tractor was launched, significantly expanding your Companys tractor range.

B)

Technology Absorption
Research & Development: 1. Areas in which Research & Development is carried out: During the year under review, the Automotive Division focused technology development efforts in core areas of engine technology, safety, value engineering through the use of modern manufacturing processes, alternate material and developing capabilities in automotive electronics. The Farm Equipment Sector too, focused on improvement in engine technology and new product development. 2. Benefits derived as a result of the above efforts: Some significant achievements for the year under review include the C2 CRDe engine with DOHC which was launched on the Maxximo. The engine delivers higher power and better fuel efficiency, thus delivering significant customer benefit and competitive advantage to your Company. Your Company also developed its first in-house Gasoline Engine which was launched on the Scorpio targeting the overseas markets. In the area of Suspension, a hydro-formed frame and front independent suspension was developed

In the case of Mahindra Powerol, the product range was increased to 320 kVA, at the higher end. At the lower end, the 5kVA genset has been developed and introduced. In AppliTrac, the tracked type self propelled harvester was developed and introduced in the southern rice belt. Keeping in view the future technology requirements, your Companys tractor engines are compliant with the upcoming BS (Trem) IIIA norms in India and has also undertaken a programme to meet the challenging Tier-IV emission norms of USA. During the year in India, the Farm Equipment Sector filed 12 New Patents and 2 New Design Registration applications. 3. Future plan of action Your Company continues its focus on developing new products and technologies to meet the ever growing customer needs, regulatory requirements, competitive pressures and to prepare for the future. Sustainable mobility solutions are a key focus area and your Company will continue to aggressively pursue technology development in this area. Some of the key thrust areas in this direction are weight reduction, fuel efficiency improvement and development of alternative fuel powertrains. Further, safety related technologies are another key area of focus for your Company. On the Farm Equipment side, your Company remains committed to improving farm productivity through a variety of product (Tractors and Implements) and non-product initiatives. The focus will be on delivering new technology to the customer for a multi-fold farm output. Product upgrades, new products and implements will be focus areas.

4. Expenditure on R&D The Company spent Rs.664.86 crores (including Rs.390.72 crores on capital expenditure) on Research and Development work during the year which was approximately 3.23% of the total turnover. Technology Absorption, adaptation and innovation: 1. Efforts, in brief, made towards technology absorption, adaption and innovation The Company has continued its endeavor to absorb advanced technologies for its product range to meet the requirements of a globally competitive market. All of the Companys Vehicles, Engines and Tractors are compliant with the prevalent regulatory norms in India and also in the countries to which they are exported. The Company has also undertaken programs for development of vehicles which would run on alternate fuels like CNG, Bio-diesel, Hydrogen and Electric traction. 2. Benefits derived as a result of the above efforts Compliance with new emission norms introduced in India with effect from 1st April, 2010. Build a knowledge base for the Company. Launch of Bolero Maxi Truck, Gio, Maxximo and Yuvraj. Introduction of Micro Hybrid Technology on a Pick-UP. Development of C2 CRDe engine with DOHC. Development of Electric Version of Maxximo. Development of Integrated Cabin for Tractor. Emphasis on value analysis/value engineering and innovative cost reduction ideas to cut down costs.

MAHINDRA & MAHINDRA LIMITED

3. Imported Technology for the last 5 years


Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. Technology Imported Development of Air Bags on utility vehicle Development of cruise control on utility vehicle Fatigue Lab and track design for MRV, Chennai Sandwich material for noise absorption Development of Nano-Technology for IP etc. Climate control (Heated and Cooled) seats Bio-Diesel and Gas based engine Transmission Design of Compact Tractor Development of Integrated Cabin for Tractor Hydrophilic Nano coated Feature Automatic Transmission for SUV Transmission for new SUV New Generation system for Brakes for SUV New Electricals & Electronics Features CNG engines for LCV Common Rail Diesel on Light commercial vehicle Next generation Common rail adaptation Hydrogen ICE Fuel Cell Vehicle Development 2nd Generation Biofuels (Biomass to Liquid/Gas to Liquid) Hybrid Vehicles Transmission Upgrade Electricals & Electronics Update Design for New Tractor Transmission Start Stop Micro Hybrid New Generation Engine Management System CNG Engines for Pickups/3 Wheelers Electronic Programs for Safety, Stability & Steering Control CAN Based Networking New Airbag Program Advanced Materials Technologies Development of components using alternate materials and advanced manufacturing processes Engine upgrades and Emission improvement technologies New transmissions for compact vehicles and Utility vehicles Technology for NVH management Electrical and electronic technologies in the areas of safety, infotainment and convenience Alternate fuel technologies New suspension system for improved comfort Development of digital service interface Agri Implements Technology transfer Year of Import 2005 2005 2005 2005 2005 2005 2005 2006 2006 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2010 2010 2010 Status In the process of Absorption Technology Absorbed In the process of Absorption Technology Absorbed Technology Absorbed In the process of Absorption Technology Absorbed Technology Absorbed Technology Absorbed In the process of Absorption Technology Absorbed In the process of Absorption In the process of Absorption In the process of Absorption Technology Absorbed Technology Absorbed Technology Absorbed Technology Absorbed In the process of Absorption In the process of Absorption In the process of Absorption In the process of Absorption Technology Absorbed In the process of Absorption Technology Absorbed In the process of Absorption Technology Absorbed Technology Absorbed Technology Absorbed In the process of Absorption Technology Absorbed In the process of Absorption In In In In In In In In the the the the the the the the process process process process process process process process of of of of of of of of Absorption Absorption Absorption Absorption Absorption Absorption Absorption Absorption

C) 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 Mumbai, 29th May, 2010 KESHUB MAHINDRA 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 32 of the Listing Agreement.
Loans and advances in nature of loans to subsidiaries: (Rupees in crores) Name of the Company Mahindra & Mahindra Financial Services Limited Mahindra Intertrade Limited (including loans where there is no interest) Bristlecone India Limited Mahindra Gujarat Tractor Limited Mahindra Shubhlabh Services Limited NBS International Limited Mahindra Forgings Limited Bristlecone Limited Mahindra Overseas Investment Company (Mauritius) Limited Mahindra Engineering & Chemical Products Limited Mahindra Two Wheelers Limited Mahindra Vehicle Manufacturers Limited Mahindra Castings Limited Mahindra Holdings Limited Mahindra Automotive Australia Pty. Ltd. Mahindra Logistics Limited Mahindra USA Inc. 8.03 1.00 0.00 2.00 0.00 72.45 86.86 68.53 41.00 230.00 0.00 25.00 4.51 0.00 0.00 Balances as on 31st March, 2010 0.00 0.00 Maximum outstanding during the year 15.00 0.15 (0.15) 8.03 1.00 2.00 2.00 100.50 72.45 86.86 68.53 46.00 230.00 38.00 25.00 4.51 22.84 7.20

Loans and advances in the nature of loans to firms/companies in which Directors are Interested: (Rupees in crores) Name of the Company Infrastructure Development & Finance Company Limited Balances as on 31st March, 2010 0.00 Maximum outstanding during the year 15.00

Except as indicated above, the Company has not made any loans and advances in the nature of loans to associates or loans and advances in the nature of loans where there is no repayment schedule or repayment beyond seven years or no interest or interest below section 372A of the Companies Act, 1956.

MAHINDRA & MAHINDRA LIMITED

MAHINDRA & MAHINDRA LIMITED

Management Discussion & Analysis


Management Discussion & Analysis Mahindra & Mahindra Limited ("M&M") or ("Mahindra") is the flagship Company of the US$ 7.1 billion Mahindra Group which consists of 105 companies and has businesses large and small in almost every continent of the world. The different Sectors of the Mahindra Group cover a wide spectrum of industries from Tractors to Information Technology, from Automobiles and Two Wheelers to Airplanes, from Financial services and Holidays to Defence and Infrastructure. An investor in M&M has the benefit of the Groups involvement in all these Industries. However, given the poor monsoon and rise in global Positive sentiment and a renewed confidence in the India growth story replaced the fear and uncertainty prevalent in the past year. Your Company used the crisis to reboot and reinvent itself and to reignite its dreams. It took the challenges head on and surged ahead with aspiration, inspiration and motivation. The Automotive Sector contributed to the revival of The Indian Auto Industry with the Mahindra Xylo, which was launched at the height of the recession and which went on to become an immensely successful vehicle. The Farm Equipment Sector crowned 27 years of market leadership, with M&M becoming the single largest tractor Company in the world by volume. Indian Automotive Sector The global Automobile Industry was one of the worst affected by the financial crisis. Global Automobile production declined by 13.5% in the year 2009, after a 3.7% decline in the year 2008 (Source: OICA). Recognising the importance of the Automobile Industry to their economies and employment, many Governments in developed and emerging markets responded with measures to boost demand for Automobiles, especially through providing incentives for scrapping old vehicles (also known as "cash for clunker" Schemes) and by reducing taxes. Helped by the Indian Government's stimulus package (primarily comprising a 6% point reduction in excise duty) and multiple new product launches by manufacturers, the Indian Automobile Industry registered a healthy growth of 27.9% in Financial Year 2010 as compared to a decline of 4.8% in Financial Year 2009. commodity prices, inflation has risen sharply since November, 2009. Containing inflation is likely to remain a key challenge for the Government and policymakers in the near term.

Industry overview and trends


Indian economic growth recovered strongly and relatively faster from the effects of the global financial crisis. The Government responded quickly to the crisis with a large stimulus package including reduction in indirect taxes and other fiscal and monetary measures to boost demand. As a result, industrial growth made rapid strides, registering a double digit increase in the second half of Financial Year 2010, as compared to nearly zero growth in the comparable period of Financial Year 2009.

Industry Structure
The domestic Automotive Industry comprises of Multi Utility Vehicles ("MUVs"), which includes soft tops, hard tops and pick-ups, Light Commercial Vehicles ("LCVs"), three wheelers and C-segment cars. The domestic Tractor Industry is traditionally segmented by horsepower into the low horsepower of 20 hp - 30 hp segment, the middle segment of 30-40 hp and the higher segment of above 40 hp.

Domestic industry sales Passenger vehicles Cars *A1: Mini A2: Compact A3: Mid-size A4: Executive A5: Premium A6: Luxury MPVs UVs Commercial vehicles LCVs Passenger Goods M&HCVs Passenger Goods 3 Wheelers Passenger Goods 2 Wheelers Scooters Motorcycles Mopeds Electric

F-08 15,49,882 12,03,733 69,553 8,59,197 2,25,725 42,195 6,201 862 1,00,865 2,45,284 4,88,088 2,15,912 27,832 1,88,080 2,74,582 38,647 2,35,935 3,64,781 2,34,774 1,30,007 96,54,435 10,50,109 57,68,342 4,13,759 17,068

F-09 15,52,703 12,20,475 49,383 8,85,639 2,41,683 33,638 9,093 1,093 1,06,607 2,25,621 3,84,194 2,00,699 26,952 1,73,747 1,83,495 34,892 1,48,603 3,49,727 2,68,463 81,264 74,37,619 11,48,007 58,31,953 4,31,214 26,445

F-10 19,49,776 15,26,787 63,378 11,28,272 2,76,071 46,346 11,455 1,265 1,50,256 2,72,733 5,31,395 2,86,337 34,421 2,51,916 2,45,058 43,081 2,01,977 4,40,368 3,49,662 90,706 93,71,231 14,62,507 73,41,139 5,64,584 3,001

F-09 0.2% 1.4% -29.0% 3.1% 7.1% -20.3% 46.6% 26.8% 5.7% -8.0% -21.3% -7.0% -3.2% -7.6% -33.2% -9.7% -37.0% -4.1% 14.3% -37.5% -23.0% 9.3% 1.1% 4.2% 54.9%

F-10 25.6% 25.1% 28.3% 27.4% 14.2% 37.8% 26.0% 15.7% 40.9% 20.0% 38.3% 42.7% 27.7% 45.0% 33.6% 23.5% 35.9% 25.9% 30.2% 11.6% 26.0% 27.4% 25.9% 30.9% -88.7%

Source: Society of Indian Automobile Manufacturers * Classification of A1, A2 etc as per Society of Indian Automobile Manufacturers
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MAHINDRA & MAHINDRA LIMITED

Within the overall Automobile Industry, the performance of different segments varied significantly during the year. The passenger car segment, which comprises of 78% of personal vehicles, reported a healthy growth of 25.2%, led by the A2 segment which grew 27.4%. The A4, A5 and A6 segments grew in average of 36-68% indicating the rising income levels, wealth and aspirations of the Indian consumers.

growth was 34.4%. Most of the growth in M&HCV sales came in the second half of the fiscal, partly due to a sharp rebound in industrial growth and partly due to a very low base in the corresponding period of the previous year. Indian Tractor Industry

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2006-07

The Indian Tractor Industry, the world's 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 participates as a significant player, registered a growth of 21.0% as compared to a decline of 7.6% in Financial Year 2009. This growth was driven by increasing prosperity, development of infrastructure and growth in road travel. Interestingly, over 40% of the growth in UV industry volumes was contributed by Mahindra Xylo. The commercial vehicle industry registered a growth of 38.8% during the year. The LCV market showed an increase of 42.7% during the year. This was primarily driven by the small commercial vehicle segment (of less than 1 tonne payload), which grew by 47% (Source: M&M analysis). Medium and Heavy commercial vehicle (M&HCV) segment This growth, despite a weak monsoon and a badly-affected Kharif crop this year, is because the dynamics of the rural economy has undergone some fundamental changes in recent times. The Government has enhanced its support for the Agriculture Sector with increased levels of credit and better minimum support prices. Increased rural outlays including those under initiatives like the National Rural Employment Guarantee Scheme ("NREGS") have helped improve rural incomes. New employment avenues have emerged and on an average, farm incomes now contribute to less than half of rural incomes. All this has resulted in higher rural liquidity, ensuring strong demand, despite the poor monsoon.
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2008-09

2009-10

2010-11

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Industry

Your Company's Performance


Automotive Sector - Leading the Industry Financial Year 2010 was an epochal year for your Company's Automotive Sector. Spurred to rise above the challenges

imposed by a stagnant market and declining customer spend, Mahindra broke new ground. New vehicles were launched, a state-of-the-art factory was inaugurated, even as your Company's ever popular vehicles, the Scorpio and Bolero continued to show good growth in sales volumes: Growth

M&M Domestic sales Passenger Vehicles Cars UVs Light commercial vehicles 3 Wheelers 2 Wheelers

F-08 1,29,849 25,907 1,03,942 55,222 33,927 N/A

F-09 1,19,799 13,423 1,06,376 55,881 44,533 3,014

F-10 1,56,058 5,332 1,50,726 86,217 44,438 70,008

F-09 -7.7% -48.2% 2.3% 1.2% 31.3% N/A

F-10 30.3% -60.3% 41.7% 54.3% -0.2% 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 its Joint Venture subsidiaries Mahindra Navistar Automotives Limited (MNAL) and Mahindra Renault Private Limited (MRPL), sold a total of 2,86,713 vehicles in the domestic market, a growth of 30.0% over the previous year. The Company's domestic UV sales volumes increased 41.7% to 1,50,058 units, as against a growth of 20.0% for industry UV sales. As a result, your Company further strengthened its domination of the domestic UV subsegment, increasing its market share to 55.3% over the previous year's market share of 47.1% (Source: SIAM Data). The Scorpio, Bolero and Xylo continued to lead the Indian market, increasing Mahindra's already dominant marketshare. The Bolero occupied the numero uno slot for the fourth consecutive year, selling more than 70,000 vehicles during the year. In LCVs, M&M has a presence in < 3.5T GVW segment (small commercial vehicles and pick-ups), while its subsidiary MNAL has a presence in the 3.5-7.5MT GVW segment. Bolero was the 9th largest selling passenger vehicle in the country. All other vehicles but one, on the list of top 10 selling vehicles were small cars. Further, the Bolero was ranked No. 1 in the SUV/MPV category in TNS. In Financial Year 2010, your Company's overall LCV sales were 86,217 units, a growth of 54.3% as compared with a growth of 42.7% for the industry. Your Company is the second largest player in the LCV segment with a market share of nearly 30.0%. (Source: SIAM Data).

Scorpio won the Autobild Technology Award for its microhybrid technology. During the year, the Xylo won three important awards - MUV of the Year from NDTV Profit Car and Bike Awards 2009; UV of the Year from CNBC TV 18 Overdrive Awards 2009 and MPV of the year from ZigWheels Car and Bike Awards 2009.

MAHINDRA & MAHINDRA LIMITED

In the passenger car segment, the Logan sold 5,332 units, a decline of 60.3% over the previous year as compared to a growth of 14.2% for the A3-segment.

in terms of performance and features that is much superior to what was hitherto available in the market. In March, 2009 a refreshed version of the Scorpio, called the "Mighty Muscular Scorpio" was launched, which led to more than 20% growth in sales of the brand during the year. Mahindra Navistar Automotives Limited ("MNAL") (a subsidiary of your Company) is developing products to address the full range

The Company recently announced a restructuring of its Joint Venture with Renault s.a.s. France, which it hopes will augment sales.

New products - Inspiration on roads At Mahindra, the customer is king, and their satisfaction is the source of the Company's motivation. Keeping customer focus in view, the Automotive Sector launched new products in Financial Year 2010, which met with encouraging response in the market, on the basis of which your Company is ramping up production to meet market demand. Three new products were launched in the < 3.5T GVW segment. Mahindra was the first

of the commercial vehicle market, some of which were displayed at the Auto Expo in January, 2010 to wide acclaim from media and customers. The commercial launch is expected in the short term. MNAL is expected to have a full range of M&HCVs in the next 3-4 years. New Infrastructure - Aspiring to reach greater heights Your Company is positive on the future of the Indian Automotive Industry and is continuing with its expansion plans. To meet increased customer requirements, the first phase of a brand new manufacturing facility at Chakan, near Pune in Maharashtra, was commissioned in December, 2009. This state-of-the-art plant is owned and operated by Mahindra Vehicle Manufacturers Limited ("MVML"), a wholly owned subsidiary of your Company. In another path breaking initiative, Mahindra commenced partial operations at its brand new research and development facility - Mahindra Research Valley, MRV at
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Company to introduce microhybrid technology in the LCV segment in the Bolero Maxitruck (BMT), which now accounts for more than 30% of BMT volumes. The Company also launched India's first compact truck, the Gio, with a 0.5T payload, with car-like interiors and an attractive price point. By offering attractive finance schemes, the Company expects the Gio to provide self-employment opportunities to rural and semi-urban youth. Mahindra launched the Maxximo, a technologicallyadvanced compact truck with a 0.85T payload. It features the world's first 2-cylinder 4-valve common rail engine. The Maxximo offers a price-value proposition

Chennai. The facility will be expanded further over the next few years and will create a world class R&D infrastructure for product development, testing and validation. The Chakan Plant has the capability to manufacture the Company's range of new generation UVs as well as commercial application vehicles. It will also manufacture Commercial Vehicles for MNAL. Overseas operations - Expanding frontiers In the Global markets, while the overall economic conditions have improved from the nadir of Financial Year 2009, they still remain challenging. The Company's overseas automotive operations recovered in the second half of last year with export sales growing nearly 24% to 10,567 units as compared to 8,501 units in the previous year. Automotive Sector: Overseas volumes

Farm Equipment Sector - The route to the numero uno position The Financial year ended 31st March, 2010 was a landmark year for the business. Your Company became the world's largest tractor Company, in terms of the number of tractors sold, fulfilling a long cherished dream. 'Mahindra Tractors' is an iconic brand and enjoys a strong following in the India rural heartland.
M&M Domestic sales Tractors Domestic Exports F-08 F-09 F-10 F-09 21.4% 25.2% -18.8% F-10 45.8% 46.9% 27.5%

99,042 1,20,202 1,75,196 90,509 1,13,269 1,66,359 8,533 6,933 8,837

In this period, your Company sold 1,66,359 tractors under its Mahindra and Swaraj brands as against 1,13,269 tractors sold in the previous year, a 46.9% increase.

7,560 6,128

This resulted in the market share going up to 41.4% from 40.8% last year and marked the completion of 27 years of leadership of the Farm Equipment Sector in

3,007

2,373

the Indian Tractor Market. The above volumes included the sale of more than 1,00,000 Mahindra branded tractors in the domestic tractor market in a single financial year, the 1st Tractor Company in the country to achieve this distinction.

H1F09

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H2F09

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To build

build its

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New Products - Inspired by India Yuvraj 215 - A revolutionary 15 HP Tractor for the small and marginal farmer, launched in Gujarat. 843 XM - The first Tractor to be launched under the Swaraj brand after the merger of the erstwhile Punjab Tractors Limited with the Company.

Company's heritage and overseas markets, your Company launched a new product, Mahindra Thar. The product has received good response in targeted markets. In addition to the above, your Company sold 1,000 Logan cars in overseas markets through MRPL.
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MAHINDRA & MAHINDRA LIMITED

Arjun, Upgraded

Sarpanch, versions

Exports grew 27.5% this year to touch 8,837 tractors as compared to 6,933 tractors exported last year, outperforming exports registered by the Indian tractor industry which de-grew 6.5% at 36,394 tractors.

Bhoomiputra range launched, enhancing value for the customer. International launches United States Launch of the first hi-tech Integrated Cabin Tractor with both air-conditioning and heating in the US, the first from a tractor that is 'Made in India'. The Compact series of Tractors, another first from an Indian Tractor Company, was launched nation-wide. These products have been very well received in that country. China In China, the inauguration of the Joint Venture Company viz. Mahindra Yeuda (Yancheng) Tractor Company Limited ("MYYTCL") in April, 2009 was accompanied by the launch of the 125HP tractor, thus expanding your Company's product portfolio range up to 125HP. Overseas Operations - Global Reach Mahindra Tractors exported tractors to more than 35 countries across the world.

China is the second largest tractor market in the world with a rapidly growing Chinese market, fuelled by increased Government subsidies focussed on agricultural mechanisation. MYYTCL has been successfully operationalised and has delivered 32% increase in domestic volumes in the first year of operations. The two Joint Ventures of your Company in China together account for the sale of around 30,000 tractors. In the US, the tractor industry continued to face the brunt of the economic down turn, which impacted the sale of tractors by Mahindra USA, Inc.

Beyond Agriculture - New growth engines - Mahindra Powerol Mahindra is a Company on the move. Having been the leading tractor maker for close to three decades now, the Company has diversified in other spheres such as power generators. A leading player in the powergen 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.

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Management ("TIM"). This is a business where your Company will manage telecom towers by providing the entire range of services required, including diesel filling, preventive maintenance, security and surveillance while ensuring world class uptime levels. The business has already contracted more than 7,000 sites for its services. Mahindra Powerol has notched impressive growth in the retail space in Financial Year 2010. It also tested an engine for rice mill application, which was successfully introduced in the market. Mahindra Powerol has expanded its genset product range to 320 kVA at the higher end and introduced a new 5kVA DG at the lower end. Perhaps the most significant product introduction for the retail segment from the Mahindra Powerol stable has been the digital home UPS. With sales of over 7,000 numbers this year, this product is poised to take Mahindra into every home. The Quality Way - Inspiring success Strict adherence to quality is the abiding culture at Mahindra Tractors, across its businesses and activities. Winning the most coveted International Quality accolades such as the Deming Prize and the Japan Quality Medal has inspired it to continue on the exalted path. The Farm Equipment Sector ("FES") has continued on the Total Quality Management ("TQM") path with its own Assessment Model - the Mahindra Excellence Model. To further strengthen its manufacturing capability, the Sector is pursuing the path of Total Productive Maintenance ("TPM") under the guidance of Japan Institute of Plant Maintenance. The rich TQM experience of FES is now being horizontally deployed in the Swaraj Division to accelerate the implementation of best practices. The Sector is relentlessly pursuing its goal of business excellence and is taking this culture across to other businesses in your Company as well.
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Opportunities and threats


The Automotive Sector The current low level of vehicle ownership in India is 14 per 1,000 people as compared with the world average of 120 per 1,000 which implies a huge opportunity for growth of the Automobile Industry. India's Automotive Sector is expected to be one of the fastest growing in the world over the next several years. However, the Company faces increasing competition from the presence of a large number of automotive companies in the country. The Automobile Industry is also a key contributor in economic growth. The Indian Government's Automotive Mission Plan 2016 (AMP 2016) envisages a doubling of Automotive Industry's share of the Indian economy by 2016. However, stricter emission norms and an increased focus on public transportation may discourage use of automobiles as a means of personal transport. The increased investments in infrastructure and the consequent growth in industrial activity will lead to increased goods movement, resulting in a growing demand for commercial vehicles. The Company's subsidiary, MNAL is set to launch a range of medium and heavy commercial vehicles over the next few years. This will ensure the Company's participation in this large and important segment of the Indian Automotive Industry. The Farm Equipment Sector The improvement in rural liquidity and increase in non-agri component of rural incomes is a strong positive since demand will have lesser sensitivity to a single deficient monsoon as compared to earlier periods. Food security and rural development remain high on the Government agenda, with the Union Budget for 2010-2011 showing an increase in agri credit outlay

MAHINDRA & MAHINDRA LIMITED

by 15% to Rs.3.75 lakh crores; interest subvention on crop loans and various initiatives for rural development also have enhanced outlays. This, coupled with significantly low levels of mechanisation in Indian farms compared to the global average, indicates that there is significant growth potential for agricultural mechanisation in the country. Your Company is well poised to leverage this opportunity. The Company may face increased competition from other tractor manufacturers. Amongst your Company's newly launched products, the Yuvraj 215 has the potential to grow significant volumes in the upcoming period by creating an entirely new category and catering to a large group of customers who had no affordable option thus far. Your Company will use every opportunity to leverage synergy both within the Sector as well as with other Mahindra companies to create and improve channel efficiencies, develop cutting edge technologies and introduce a continuous pipeline of product upgradations and new product introductions. Your Company's strategy to make use of low cost manufacturing and sourcing bases in India and abroad will enhance its cost competitiveness. Having achieved Global Leadership, your Company will continue to focus on expanding international volumes. With the 2 Joint Ventures in China, your Company is well poised to participate in the growth in China, one of the fastest growing tractor markets, fuelled by huge Government subsidies for mechanisation. Similarly, with the US market slowly emerging out of a recession, your Company expects the business to resume its growth path. Perhaps the biggest opportunity will emerge as the FES gears up to bring about Farm Tech Prosperity. The possibilities are endless in this area.

Your Company has the will to achieve and go where no other has gone before, to travel the road less travelled and create its own pathways on its continued journey to success and excellence.

Risks and Concerns


The Automotive Sector Competition Given that the Indian Automobile Industry is expected to be one of the fastest growing markets in the world, many global players are significantly expanding their presence in India. There is a concern that this will result in an ever increasing level of competition and intense pressure on the profit margins of all participants. Increased competition will lead to more frequent product launches in all industry segments and raise customer expectations in terms of performance, quality and technology, leading to higher costs. Your Company views all of this as an opportunity and a challenge. Regulations Stringent regulatory norms are being introduced to safeguard the environment, especially in the area of emissions. Many of these measures are likely to result in an increase in costs which cannot always be passed on to customers through price increases in a highly competitive market environment. In India, there is a large differential in taxes levied on small cars and larger vehicles. With the resulting lower price tag for small cars, many customers may opt to postpone large car purchases or buy a small car, which could impact the growth of UVs and the large car segment. Fuel prices and alternate fuels Fuel prices are an important element of the overall cost of ownership for vehicles and tractors. Almost all of the
37

Company's UV models are diesel powered. Diesel is priced lower than petrol. Any reduction in the price differential between petrol and diesel may increase the demand for petrol UVs at the expense of diesel UVs and will be disadvantageous to the Company.

Also, growing urbanisation and vehicle population is leading to growing pollution, congestion and shortage of parking spaces in cities. These trends would likely discourage the use of automobiles as a means of personal transport, though, given the aspirations of Indian consumers, it may not have a significant impact on the demand for personal vehicles. Financial market conditions Availability of credit and affordable interest rates are

There is also a growing customer trend, as well as promotion by the Government, for vehicles powered by CNG, LPG and electric batteries, as well as hybrid powertrains. To mitigate this risk, the Company has developed products powered by alternate energy such as CNG and electricity to provide lower polluting products. The Company has also developed prototypes of a hybrid Scorpio and hydrogen powered threewheeler as well as a bio-diesel powered Scorpio and Bolero, bio-diesel tractors and Gensets. Alternate modes of transportation While the thrust by the Government on development of urban infrastructure would lead to overall economic development and improve living standards, it is also likely to provide of i l y alternate modes d a transport for commuting such as Bus Rapid Transit S y s t e m ("BRTS"), Metrorail, monorails, etc.
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important facilitators for automobile and tractor sales. Any adverse change in these factors would impact demand. However, several strategic tie-ups with multiple banks and financing companies alleviates this concern to some extent. For overseas operations, which are a key thrust area for the Company, rupee appreciation could be a risk for both the Sectors. However, M&M, as a practice, is taking appropriate steps to hedge currency exposure, thus limiting the impact of risk. New projects To maintain and extend its competitive advantage, the Company has created significant new capacity at its new manufacturing plant at Chakan and is simultaneously investing in an aggressive new product development programme. Success of the new product launches and attaining optimal and planned capacity utilisation of the new facility would have an important bearing on the future profitability. To mitigate the associated risks, your Company is taking great care in building new products around the customers' needs and plans to bring in the incremental capacity from this new plant in phases.

MAHINDRA & MAHINDRA LIMITED

Farm Equipment Sector Competition The Indian domestic tractor market, the world's largest, has seen a round of consolidation in the last few years, which includes the coming together of TAFE and Eicher and the acquisition of Punjab Tractors Limited by your Company. Having recorded a significant growth of over 30% in this financial year, the market is expected to see more competition among the existing domestic and international players. Increased competition will lead to more frequent product launches in all industry segments and raise customer expectations in terms of performance, quality and technology, leading to higher costs. Your Company views all of this as an opportunity and a challenge. Regulations and alternative fuels Stringent regulatory norms are being introduced to safeguard the environment, especially in the areas of emissions. Your Company is ahead of the curve, in terms of technology readiness, to meet the changes in norms. In addition, in the area of alternative fuels, your Company's products both in tractors and gensets are compatible with bio-fuels, ensuring the customer can use such fuels, whenever their commercial availability improves. Raw Materials After a year of decline in raw material prices, Financial Year 2011 is expected to see a firming of prices in the international market. While this is an area of concern and will put pressure on margins, your Company will continue to focus on cost re-engineering to minimise the impact of this development.

Strategy Automotive Sector: Expanding the addressable market Your Company is investing significant resources in developing its capacity and capabilities to grow its participation as a full range player in the Indian automobile industry. Entry into new segments - In addition to sports utility vehicles, pick-up trucks, light commercial vehicles and three-wheelers, your Company has recently entered into the Multi Purpose Vehicle segment (through the Xylo), the mini-truck segment (through the Maxximo) and the compact-truck segment (through the Gio). The Company, through its subsidiary MNAL, will enter into the medium and heavy commercial vehicle segment in the near term as well. This will not only provide the Company with a much larger addressable market but will also provide multiple avenues for growth and derisk the business from dependence on a single segment. New products - The Company is refreshing and growing its product portfolio to grow its sales volumes and defend its market position. As part of the Company's aggressive product plan, it is planned to launch a number of new products and multiple variants in the next three years. This includes a new global Sports Utility Vehicle platform to be launched in the near future. Technology upgradation and R&D - The Company is investing in upgrading the technology and quality of its products. An important initiative in this area is the new research facility being set up at Mahindra Research Valley (MRV) in Chennai, which will provide worldclass R&D infrastructure. Further, the impending launch of the Company's products in the US, the most 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 objectives at a globally competitive cost. Overseas markets and partnerships - The Company plans to increase its focus on developing overseas markets through new products and brand building. During Financial Year 2011, the Company plans to enter the US market with a pick-up. The Company also continues to actively search for overseas partners to supplement and strengthen its domestic market in both the Sectors. Farm Equipment Sector: Aspiring for Farm Tech Prosperity Going beyond just being a tractor company, FES aspires to make a difference in the lives of farmers by delivering Farm Tech Prosperity, both in the Indian context, as well as on a global scale, in the immediate and distant future. The Company's customers - the source of inspiration At Mahindra, the Company undertakes research to identify the needs of both its existing and potential customers in order to fulfil their aspirations. These findings inspire the Company to follow the road less travelled. In the past year, FES took many steps along the road, to improve the lives of its customers. Yuvraj 215 There is wealth at the bottom of the pyramid. Research showed that the lower income farmer is still forced to rely on manual labour and bullocks to till his land. With this insight, your Company took upon itself the challenge of creating a suitable solution at a suitable price. FES launched the Yuvraj 215, a 15
4

Yuvraj 215 has received the Golden Peacock Award, 2010 in the Innovative Product/Services category, which has recognised the game changing nature of Yuvraj 215.

HP tractor at an unbeatable price for small and marginal farmers - your Company's contribution towards inclusive growth in the country. This technological marvel meets the needs of over 80% of India's farming populace, whose land holding is less than 5 acres, and for whom a Rs.2.5 lakhs tractor is simply unaffordable. Mahindra Applitrac Research suggests that increasing rural affluence, multiple sources of income in rural India and the success of social

programmes like NREGS are combining to make farm labour scarce and expensive. Also, the productivity levels are very low on Indian farms, far lower than the global average. This is the inspiration for the AppliTrac brand, which offers the Indian farmer, complete mechanisation solutions for a range of crops, helping him deal with labour shortage and also enhance productivity. Mahindra Samriddhi Farmer prosperity is the inspiration that has motivated FES to intensify Mahindra Samriddhi, which is focused on increasing crop productivity. This initiative includes soil and water testing labs, productivity demo farms, agri-clinics and counselling centres. It brings the best of agricultural know-

MAHINDRA & MAHINDRA LIMITED

how within reach of the farmer and helps him increase farm productivity. In the Financial Year ended 31st March, 2010, 75 Samriddhi centres were operational across the country. Samriddhi is motivated by your Company's desire to help millions of farmers across the country get more out of soil, ensuring that there is and will be enough food to feed India's growing population.

Going forward, the success of the Group will depend on individuals and teams that are able to create value for the organisation. The levers of organisation structure and design, reward and recognition, talent acquisition, communication and performance management system are important and are aligned. Leadership development, succession planning and employee engagement demanded extra focus this year, given the prevalent economic situation. To showcase HR practices in various businesses and encourage best practice sharing, the HR Best Practice Award was instituted. The Talent Management process of the Group gave impetus to leadership development programmes with a focus on creating synergy between Satyam Computer Services Limited, Tech Mahindra Limited and the other businesses of the Group. Continuing with leadership development programmes, this year a partnership was forged with the Centre for Creative Leadership, USA in line with the said purpose. A cross-functional team of more than 150 HR, business and IT professionals worked together for harnessing the power of IT through Parivartan Project Harmony, whose basic objective is to create a One Mahindra experience by synergising and creating best practices in 24 HR processes across the Group. 17,000 Officers across 29 Group companies spread over 156 locations experienced this power when the system went live. Your Company continued with its initiative of employer branding through The War Room, event which sees participation from the country's leading Business Schools. The impact of this initiative was significant and there was a marked increase in the number of participating teams this year.
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Outlook
In the long term, the Indian economy is projected to grow rapidly and demand conditions are expected to remain strong. However, in the near term, there are challenges in terms of higher commodity prices, rising inflation and appreciation of the rupee which will have a bearing on demand and profitability. Both the Automotive and Farm Equipment Sectors with their updated product portfolios and their exploration of global horizons, will strive to maintain their leadership position in their respective markets. Simultaneously, your Company will continue its focus on achieving cost leadership through focused cost optimisation, value engineering, improved efficiency measures like supply chain management, countrywide connectivity of all its suppliers and dealers and exploiting synergies between its Sectors.

Material Developments in Human Resources/ Industrial Relations for Automotive and Farm Equipment Sectors
This year, HR in the Mahindra Group continued on its strategic purpose of focusing on the HR Triple Bottom-line by creating a culture of sustained business out performance, extreme care for all stakeholders, starting with customers and employees, and strengthening the core values of the Group.

Industrial Relations remained cordial and harmonious during the year for both the Sectors, apart from a brief illegal tool-down strike by workers at the Nashik Automotive Plant. However, the loss in production was compensated and the Company did not suffer any major loss. Various training programmes were organised at all Plants for developing personal, interpersonal and technical skills of the Company's workmen. These training programs covered a wide range of topics e.g. Positive Attitude, Stress Management, Creativity, Team Effectiveness, Safety and Environment, Quality Tools, TPM, Dexterity and Technical training. The workmen wholeheartedly participated in all training programmes and in many cases on a holiday or after working hours. Workmen at all locations are involved in driving improvement activities. The permanent employee strength of the Company as on 31st March, 2010 was 14,355.

Discussion on Financial Performance with respect to Operational Performance


Overview The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956 and Generally Accepted Accounting Principles ("GAAP") in India. The Group's consolidated financial statements have been prepared in compliance with the standard AS 21 on Consolidation of Accounts and presented in a separate section. The Company has provided segment reporting on a consolidated basis as per standard AS 17 on segment reporting. This information appears along with the consolidated accounts. Financial Information Fixed Assets: As at 31st March, 2010 the Gross Block of Fixed Assets and Capital Work in Progress was Rs.6,240.49 crores as compared to Rs.5,540.62 crores as at 31st March, 2009. During the year, the Company incurred capital expenditure of Rs.946.31 crores (previous year Rs.855.12 crores). The major items of capital expenditure were on New Product Development like the Maximmo, Capacity Enhancement and Research & Development including on the Company's research facility in Chennai. This included the purchase of Intangible assets aggregating Rs.225.28 crores (previous year Rs.170.35 crores). Inventories: Particulars 31st March, 2010 Raw materials and bought out components as a % of consumption Finished goods as a % of gross sales 2.48% 3.31% 4.23% 4.46% 31st March, 2009

Internal Control Systems


The Company maintains adequate internal control systems, which provide, among other things, reasonable assurance of recording the transactions of its operations in all material respects and of providing protection against significant misuse or loss of Company assets. The Company uses an Enterprise Resource Planning ("ERP") package, which enhances the internal control mechanism. The Company has a strong and independent internal audit function. The Chief Internal Auditor reports directly to the Chairman of the Board. Professionally qualified, technical and financial personnel of the internal audit function conduct periodic audits to ensure that the Company's internal control systems are adequate and are complied with.

MAHINDRA & MAHINDRA LIMITED

The reduction in inventory levels is due to the Company's continued focus on supply chain management and better planning and control. Sundry Debtors: Sundry debtors amount to Rs.1,258.08 crores as at 31 st March, the 2010,
st

31st March, 2010 as compared to 7.09% for the previous year. The Company has been able to achieve this improvement in its debtor's level due to its proactive emphasis on collections. Loan Funds: The loans funds have decreased from Rs.4,052.76 crores in the previous year to Rs.2,880.15 crores in the current year. The decrease is primarily on account of the conversion of the Fully and Compulsorily Convertible Debentures into Equity Shares and the repayment of secured Foreign Currency Loans from Banks.

as

compared gone up,

with as a

Rs.1,043.65 crores as at 31 March, 2009. While in absolute terms debtors have percentage of gross sales and income from operations debtors are lower at 6.17% for the year ended

RESULTS OF OPERATIONS Income: (Rs. crores) Particulars Finanical Year - 2010 Amount Gross Sales Income from Operations Gross Sales & Income from Operations Less : Excise Duty on Sales Net Sales & Income from Operations Other Income 19,832.06 564.06 20,396.12 1,794.01 18,602.11 199.35 % 106.61 3.03 109.64 9.64 100.00 1.07 Finanical Year - 2009 Amount 14,268.41 444.62 14,713.03 1,619.35 13,093.68 270.34 % 108.97 3.40 112.37 12.37 100.00 2.06 Inc./(Dec.) % 38.99 26.86 38.63 10.79 42.07 (26.26)

Net Sales, Income from Operations and Other Income: The net sales and income from operations of the Company grew by 42% over the previous year on a growth of 44% in the automotive business and 40% in the Company's tractor business. This growth in the Automotive Sector was driven by the robust growth in domestic UV volumes by 39%, increased exports and the launch of the GIO and the Maximmo in the current

year. The tractor business growth was fuelled by a strong increase in sales in both the domestic and export markets. Other income during Financial Year 2010 at Rs.199.35 crores fell by 26% as compared to the previous year amount of Rs.270.34 crores due to lower dividend income from subsidiaries and lower profit from the sale of investments in the current year.
43

Expenditure: Particulars Financial Year 2010 Amount % to Net Sales and Income from Operations Financial Year 2009 Amount % to Net Sales and Income from Operations

(Rs. crores) Inc./(Dec.) %

Raw materials, Finished and Semi-finished Products Personnel expenses Interest, commitment and finance charges Depreciation/Amortisation Other expenses Total Expenditure

12,332.92 1,198.47 27.81 370.78 2,115.48 16,045.46

66.30 6.44 0.15 1.99 11.37 86.26

9,274.23 1,024.61 45.26 291.51 1,702.21 12,337.82

70.83 7.83 0.35 2.23 13.00 94.23

32.98 16.97 (38.56) 27.19 24.28 30.05

The total expenditure during the year as a percentage of Net sales/Income from Operations is 86.26% as compared to 94.23% in the previous year. Material Cost: For the year ended 31st March, 2010 material cost has increased by 33% which is much lower than increase in net sales and income from operations due to increased volumes in the current year. Thus, as a percentage of net sales, material cost shows a decrease over the previous year. This is mainly due to the full benefit of the decrease in commodity prices in the second half of Financial Year 2009 accruing to the current year and the cost reduction initiatives of the Company. Personnel Cost: Depreciation: Personnel cost has increased by 17% to Rs.1,198.47 crores from Rs.1,024.61 crores in the previous year. This is mainly due to increase in flexible manpower, officers' annual increments and impact of wage agreements signed during the year. Also the current year had the impact of full year charge of the erstwhile Punjab Tractors Limited in the books
44

of the Company as compared to an eight month charge in the previous year. Other Expenses: Other expenses as a percentage of net sales and operating income shows a decrease over the previous year due to the increased income in the current year. However, because of the increase in volumes, the expenses in absolute terms are higher due to increases in freight, power and fuel, warranty and marketing related expenses on incentives, advertisement, sales promotion, etc.

The depreciation for the year ended 31st March, 2010 is at Rs.370.78 crores as compared to Rs.291.51 crores in the previous year due to the full impact in the current year of capitalisation of Xylo related fixed assets and intangibles and due to fresh capitalisation of projects in the current year.

MAHINDRA & MAHINDRA LIMITED

Interest (Net): The interest expense of Rs.27.81 crores (net of interest income Rs.129.04 crores) for the year ended 31st March, 2010 is lower than the interest expense of Rs.45.26 crores (net of interest income Rs.134.12 crores) in the previous year. This is due to the higher earnings from surplus funds and interest on IT refund received during the current year partially offset by increased expense on account of increased fixed deposits and a longer period impact of fully and compulsorily convertible debentures in the current year. Exceptional Items: The profit from Exceptional items during the year ended 31 March, 2010 is Rs.90.75 crores as against Rs.10.27 crores in the last year. The profit in the current year is on account of profit on sale of shares of Mahindra Holidays & Resorts India Limited offered as a part of that company's Initial Public Offering, while in the previous year the exceptional income was on account of surplus on transfer of the Company's Logistics business to its wholly owned subsidiary. Provision for taxation: The provision for current tax, fringe benefit tax and deferred tax for the year ended 31st March, 2010 as a percentage to profit before tax is higher than the previous year, on account of the incremental profits during the year being subjected to tax at the maximum marginal rate of 33.99%.
st

in the current year from Rs.26,919.81 crores in Financial Year 2009. The profit before exceptional items and tax for the current year is Rs.3,779.73 crores as compared to Rs.2,330.51 crores, registering an increase of 62.18% over the previous year. While the Group's performance across all its segments has registered an improvement, the Systech segment faced challenges on account of the situation prevailing in the European countries which are yet to return to normalcy post the global meltdown of 2009 which severely impacted the auto-components industry world over. During the year, there was an exceptional gain of Rs.264.56 crores mainly arising from the sale of shares through an Initial Public Offering of Mahindra Holidays and Resorts India Limited, gains on account of deemed divestitures of the Company's holdings in group companies such as Mahindra Forgings Limited, Tech Mahindra Limited and Mahindra Holidays & Resorts India Limited. The consolidated Group Profit for the year after exceptional items, prior period adjustments and tax and after deducting minority interests is Rs.2,478.56 crores as against Rs.1,405.41 crores earned last year, a growth of 76.36%. During the year, by virtue of exercise of options granted to AT&T, the shareholding of the Company alongwith Mahindra-BT Investment Company (Mauritius) Limited in Tech Mahindra Limited stands reduced to 44.01%, resulting in Tech Mahindra Limited alongwith its subsidiary companies ceasing to be subsidiaries of the Company with effect from 22nd March, 2010. Accordingly as on 31st March, 2010, Tech Mahindra Limited is a Joint Venture of the Company. As on 31st March, 2010 the Group comprised of 90 Subsidiaries, 5 Joint Ventures and 10 Associates. Tech Mahindra Limited, the Group's IT arm, registered a total income (Consolidated) of Rs.4,700.77 crores as against
st

Consolidated Financial Position of the M&M Group


The current year has witnessed a strong sales performance which has translated to healthy growth in both, revenues and profits of the Group. The Gross turnover for the year ended 31 March, 2010 of Consolidated Mahindra Group is Rs.33,790.10 crores as against Rs.28,991.99 crores for the previous year. The Group's net turnover grew by 17.71% to Rs.31,687.97 crores

Rs.4,426.86 crores in Financial Year 2009 - an increase of 6.19%. Its Net Profit, after share of minority interest, was lower at Rs.700.42 crores during Financial Year 2010 as against Rs.1,014.37 crores in the previous year.
45

The Group's Finance company, Mahindra & Mahindra Financial Services Limited (Consolidated), witnessed a revenue growth of 13.93% over the previous year. Having put in place various initiatives towards improving cashflows, reducing interest costs through broad basing the borrowing profile and establishing banking relationships, it reported a total income of Rs.1,595.60 crores during the current year as compared to Rs.1,400.45 crores in the last year. With a network of 459 offices it is one of the leading NBFCs in financing of utility vehicles, tractors and cars. Its consolidated profit after tax for Financial Year 2010 grew by 61.96% Segment Results (before exceptional item):

from Rs.219.70 crores in the previous year to Rs.355.82 crores in the current year. Mahindra Holidays & Resorts India Limited, during the year under review, continued to grow towards dominance in the Holiday Segment with membership growing by 18.38% from 92,825 numbers to 1,09,884 numbers. The total income (Consolidated) grew by 17.90% from Rs. 442.12 crores to Rs. 521.28 crores. The profit after tax for the year registered an increase of 46.86% increasing from Rs.79.71 crores in Financial Year 2009 to Rs.117.06 crores in Financial Year 2010.

The results achieved by major business segments of the Group are given below: (Rupees Crores) Segments 1. 2. 3. 4. 5. 6. 7. 8. 9. Automotive Farm Equipment Financial Services Steel Trading & Processing Infrastructure Hospitality IT Services Systech Others Financial Year 2010 1,260.64 1,406.66 524.21 82.64 121.72 158.01 1,026.36 (108.08) (108.08) Financial Year 2009 257.72 667.85 333.91 94.80 80.00 93.66 1,126.28 23.86 (46.71)

Disclaimer
Certain statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Company's operations include raw material availability and prices, cyclical demand and pricing in the Company's principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.
46

MAHINDRA & MAHINDRA LIMITED

47

48

MAHINDRA & MAHINDRA LIMITED

Corporate Governance
Your Company is committed to transparency in all its dealings and places high emphasis on business ethics. The Company believes that sound Corporate Governance is critical for enhancing and retaining investor trust and your Company always seeks to ensure that its performance goals are met with integrity. The Company is of the view that good governance goes beyond good working results and financial propriety and is a pre-requisite to attainment of excellent performance in terms of stakeholder value creation. Your Company practices a culture that is built on core values and ethics. During the year CRISIL has re-affirmed the highest level rating GVC Level 1 for Governance and Value Creation for the fourth year in a row. This has been possible through sustained efforts and commitment to the highest standards of corporate conduct. Your Company has also received the Best Governed Company 2009 Award from the Indian Merchants Chamber and the Asian Centre for Corporate Governance and Sustainability. A Report on compliance with the Code of Corporate Governance as prescribed by the Securities and Exchange Board of India and incorporated in the Listing Agreement is given below. Company. Mr. A. K. Nanda, Executive Director of the Company, has resigned with effect from the close of working hours on 31 st March, 2010 and has been appointed as a Non-Executive Director on the Board of Directors of the Company, with effect from 1st April, 2010. The Chairman and the Vice-Chairman & Managing Director, though Professional Directors in their individual capacities, belong to the Companys promoter group. The remaining Non-Executive Directors comprising of eight Independent Directors (including the Nominee Director) and one NonIndependent Non-Executive Director possess the requisite qualifications and experience in general corporate management, finance, banking, insurance and other allied fields which enable them to contribute effectively to the Company in their capacity as Directors of the Company. Apart from reimbursement of expenses incurred in the discharge of their duties, the remuneration that these Directors would be entitled under the Companies Act, 1956 as Non-Executive Directors and the remuneration that a Director may receive for professional services rendered to the Company through a firm in which he is a partner, none of these Directors has any other material pecuniary relationships or transactions with the Company, its Promoters, its Directors, its Senior Management or its Subsidiaries and Associates which in their judgment would affect their independence. None of the Directors of the Company are inter-se related to each other. Professional fees for the year to Khaitan & Co., Advocates & Solicitors, in which Mr. R. K. Kulkarni, Non-Executive Director is a partner amounts to Rs.112.77 lakhs. The Senior Management have made disclosures to the Board confirming that there are no material, financial and/ or commercial transactions between them and the Company which could have potential conflict of interest with the Company at large.
4

I. Board of Directors
The composition of the Board is in conformity with Clause 49 of the Listing Agreement, as amended from time to time. The NonExecutive Chairman of the Company is a Promoter and the number of Non-Executive Independent Directors is more than one-half of the total number of Directors. The Board reviews and approves strategy and oversees the actions and results of management to ensure that the long term objectives of enhancing stakeholders value are met. The Vice-Chairman & Managing Director alongwith Executive Directors are Whole-time Directors of your

A. Composition of the Board


Currently, the Board comprises of twelve Directors. The names and categories of Directors, the number of Directorships and Committee positions held by them in the companies are

given below. None of the Directors on the Board is a Member on more than 10 Committees and Chairman of more than 5 Committees (as specified in Clause 49 of the Listing 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 Memberships+ Committee Chairmanships+ Directorships $

NON-EXECUTIVE Mr. Keshub Mahindra (Chairman) Mr. Deepak S. Parekh Mr. A. K. Nanda# Mr. N. B. Godrej Mr. M. M. Murugappan Mr. Narayanan Vaghul Dr. A. S. Ganguly Mr. R. K. Kulkarni Mr. Anupam Puri Mr. Arun Kanti Dasgupta EXECUTIVE Mr. Anand G. Mahindra (Vice-Chairman & Managing Director) Mr. Bharat Doshi (Executive Director) # Promoter 1 13 Independent Non-Independent Independent Independent Independent Independent Independent Independent Independent 7 8 3 5 2 2 7 2 2 5 4 1 4 1 1 3 12 15 14 8 5 5 8 5 5 Promoter 1 1 6

Non-Independent

10

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.

MAHINDRA & MAHINDRA LIMITED

B. Board Procedure
A detailed Agenda folder is sent to each Director in advance of Board and Committee Meetings. To enable the Board to discharge its responsibilities effectively, the Vice-Chairman & Managing Director apprises the Board at every Meeting of the overall performance of the Company, followed by presentations by the Sector Presidents. A detailed functional Report is also placed at Board Meetings. The Board also inter alia reviews strategy and business plans, annual operating and capital expenditure budgets, investment and exposure limits, compliance reports of all laws applicable to the Company, as well as steps taken by the Company to rectify instances of non-compliances, review of major legal issues, minutes of the Board Meetings of your Companys unlisted subsidiary companies, significant transactions and arrangements entered into by the unlisted subsidiary companies, adoption of quarterly/half-yearly/annual results, significant labour issues, transactions pertaining to purchase/disposal of property(ies), major accounting

provisions and write-offs, corporate restructuring, Minutes of Meetings of the Audit and other Committees of the Board and information on recruitment of Officers just below the Board level, including the Company Secretary and Compliance Officer.

C. Number of Board Meetings, Attendance of the Directors at Meetings of the Board and at the Annual General Meeting
During the year 1st April, 2009 to 31st March, 2010, Six Board Meetings were held on the following dates 9th April, 2009, 28th May, 2009, 30th July, 2009, 29th October, 2009, 25th January, 2010 and 30th March, 2010. The gap between two Meetings did not exceed four months. These Meetings were well attended. The Sixty-third Annual General Meeting (AGM) of the Company was held on 30th July, 2009. The attendance of the Directors at these Meetings is as under:

Directors Mr. Keshub Mahindra Mr. Anand G. Mahindra Mr. Deepak S. Parekh Mr. N. B. Godrej Mr. M. M. Murugappan Mr. Bharat Doshi Mr. A. K. Nanda Mr. Narayanan Vaghul Dr. A. S. Ganguly Mr. R. K. Kulkarni Mr. Anupam Puri Mr. Arun Kanti Dasgupta

Number of Board Meetings Attended 5+ 6 4 6 5+ 6 6 6 6 6 5 4

Attendance at the AGM Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 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.

D. Meetings of Independent Directors


The Independent Directors of the Company meet before the Board Meeting to examine various Corporate Governance issues, functioning of the Company and of the Group and other issues without the presence of ViceChairman & Managing Director or Executive Directors or Management Personnel. These Meetings are conducted in an informal and flexible manner to enable the Independent Directors to discuss matters pertaining to the affairs of the Company and put forth their views and recommend their suggestions to the Board.

Manufacturing Company Limited, Indian Institute for Human Settlements and Prudential Management & Services Private Limited. He was also appointed by the Government of India to serve on a number of Committees including the Sachar Commission on Company Law & MRTP; Central Advisory Council of Industries, etc. Mr. Mahindra is associated with several Committees. He is a Member of Prime Minister's Council on Trade & Industry, New Delhi, Apex Advisory Council - ASSOCHAM, Deputy Chairman & Trustee - Employers' Federation of India, President of the Governing Council - University of Pennsylvania Institute for the Advanced Study of India, New Delhi and Member of United World Colleges (International), U.K., amongst other companies. Mr. Mahindra was the President of Bombay Chamber of Commerce & Industry, President of ASSOCHAM, President of Indo-American Society and Chairman of Indian Institute of Management, Ahmedabad. Mr. Mahindra has been recipient of prestigious awards including 1989 Business India - Businessman of the Year; 1994 The Sir Jehangir Ghandy Medal for Industrial Peace XLRI, Jamshedpur; 1998 IMC Diamond Jubilee Endowment Trust Award; 2000 Dadabhai Naoroji International Award for Excellence & Lifetime Achievement; 2003 All India Management Association Lifetime Achievement Award for Management; 2006 Lakshya Business Visionary Award NITIE; 2007 Indian Business School (IBS) Kolkata Lifetime Achievement Award presented by the Institute of Chartered Financial Analysts of India (ICFAI); 2007 Ernst & Young Entrepreneur of the Year Lifetime Achievement Award; 2008 Society of Indian Automobile Manufacturers (SIAM) Award for 'Lifetime Contribution to the Automotive Industry'; 2009 CNBC TV 18 India Business Leaders Lifetime Achievement Award 2008; 2009 ACMA Lifetime Achievement Award and very recently 2009 Economic Times Lifetime Achievement Award.

E. Directors seeking appointment/re-appointment


Mr. Keshub Mahindra, Mr. Anupam Puri, Dr. A. S. Ganguly and Mr. R. K. Kulkarni retire by rotation and, being eligible, have offered themselves for re-appointment. Mr. A. K. Nanda resigned as the Executive Director of the Company and also as a Director of the Company with effect from the close of working hours on 31st March, 2010. He was appointed as an Additional Director of the Company with effect from 1st April, 2010 and will hold office upto the next Annual General Meeting of the Company. Mr. Keshub Mahindra Mr. Keshub Mahindra, Chairman of Mahindra & Mahindra Limited, is a Graduate from Wharton, University of Pennsylvania, USA. After joining the Company as a Director in 1948, he became the Chairman in 1963. He is a well-known philanthropist who redefined Corporate Governance by effectively channelising funds into the social sector. Mr. Keshub Mahindra is Chairman of Mahindra Ugine Steel Company Limited, Chairman of the Board of Governors of Mahindra United World College of India, Vice-Chairman of Housing Development Finance Corporation Limited, Chairman of Kema Services (International) Private Limited, Chairman of Tech Mahindra Foundation, Chairman of Mahindra Holdings Limited and Director of Bombay Burmah Trading Corporation Limited, The Bombay Dyeing &
5

MAHINDRA & MAHINDRA LIMITED

Mr. Keshub Mahindra is a Member of the following Board Committees:

Sr. No. 1.

Name of the Company Mahindra & Mahindra Limited

Name of Committee Share Transfer and Shareholders/ Investors Grievance Committee Loans & Investment Committee Remuneration/Compensation Committee Compensation Committee Remuneration Committee Remuneration Committee

Position held Chairman Chairman Member Chairman Chairman Member

2. 3. 4.

Housing Development Finance Corporation Limited Bombay Dyeing & Manufacturing Company Limited Bombay Burmah Trading Corporation Limited

Mr. Keshub Mahindra holds 4,02,296 Ordinary (Equity) Shares in the Company. Mr. Anupam Puri Mr. Anupam Puri holds a M. Phil in Economics from Nuffield College, Oxford University, 1969; an M.A. in Economics from Balliol College, Oxford University, 1967; and a B.A. in Economics from Delhi University, India, 1965. Mr. Puri was a Management Consultant with McKinsey & Company from 1970 to 2000. He worked globally with corporate clients in several industries on strategy and organisational issues and also served several Governments and multilateral

institutions on public policy. Mr. Anupam Puri spearheaded the development of McKinseys India practice, oversaw the Asian and Latin American offices and was an elected Member of the Board. He is currently a Member of the Board at Dr. Reddys Laboratories Limited, Mahindra & Mahindra Limited, Mumbai Mantra Media Limited and Tech Mahindra Limited as well as Chairman of the Advisory Board of Corsair Capital. Mr. Anupam Puri is a Member of the following Board Committees:

Sr. No. 1. 2.

Name of the Company Dr. Reddys Laboratories Limited Tech Mahindra Limited

Name of Committee Governance and Compensation Committee Audit Committee Compensation Committee

Position held Chairman Member Member Member

3.

Mumbai Mantra Media Limited

Audit Committee

Mr. Anupam Puri does not hold any Share in the Company.

53

Dr. A. S. Ganguly Dr. Ganguly is currently the Chairman of Firstsource Solutions Limited (formerly ICICI OneSource Limited) and ABP Private Limited (Ananda Bazar Patrika Group) and has been a Director on the Central Board of the Reserve Bank of India, since November, 2000. (Dr. Ganguly has resigned from the RBI Board effective 18.11.2009). Dr. Ganguly also currently serves as a Non-Executive Director of Mahindra & Mahindra Limited, Wipro Limited, Tata AIG Life Insurance Company Limited, Hemogenomics Private Limited and a Director on the Advisory Board of Microsoft Corporation (India) Private Limited and the Blackstone Group. Dr. Ganguly has been recently appointed a Director on the Board of Dr. Reddys Laboratories Limited. He is a Member of the Prime Ministers Council on Trade and Industry as well as the Investment Commission and the India-USA CEO Council, set up by the Prime Minister of India and the President of the USA. He is also a Member of the Rajiv Gandhi Foundation and National Knowledge Commission to the Prime Minister. More recently, Dr. Ganguly was nominated to the Rajya Sabha and sworn in as a Member of Parliament on 30th November, 2009. Dr Ganguly is a former Member of the Board of British Airways Plc. (1996-2005). Dr. Ganguly graduated with Distinction from the Bombay University and has obtained the M.S. and Ph.D. degrees Dr. Ganguly is a Member of the following Board Committees: Sr. No. 1. 2. 3. Name of the Company Mahindra & Mahindra Limited Tata AIG Life Insurance Company Limited Firstsource Solutions Limited

from the University of Illinois, USA. Dr. Gangulys principal professional career spanned 35 years with Unilever Plc./ N.V. He was the Chairman of Hindustan Lever Limited from 1980 to 1990 and a Member of the Unilever Board from 1990 to 1997, with responsibility for world-wide research and technology. During his career, he has served several public bodies, the principal among them, as Member, Science Advisory Council to the Prime Minister of India (1985-89) and the UK Advisory Board of Research Councils (1991-94). Dr. Ganguly is a recipient of the Padma Bhushan, one of Indias highest honours (1987); he was made an Hon. Professor by the Chinese Academy of Science, Shanghai (1996). The University of Illinois, College of Food and Nutrition selected Dr. Ganguly as their Outstanding Alumnus in 1997 and he is the recipient of the International Alumni Award for Exceptional Achievement for the academic year 2003-2004, from the University of Illinois. In 2006, Dr. Ganguly was awarded the CBE (Hon) by the United Kingdom. In 2008, Dr. Ganguly received the Economic Times Lifetime Achievement Award and more recently, he has been the recipient of the Padma Vibhushan, Indias second highest civilian award. Dr. Ganguly has authored three books Industry & Liberalisation(1994),Strategic Manufacturing for Competitive Advantage (1998) and Business Driven R&DManaging Knowledge to Create Wealth (1999), besides several publications in Science, Technology and Management.

4. 5.

Wipro Limited Microsoft Corporation India Private Limited

Name of Committee Research & Development Committee Remuneration Committee Audit Committee Compensation cum Board Governance Committee Investors /Shareholders Grievance Committee Investment Committee Committee for Issue of Securities (FCCB Committee) Strategy Committee Corporate Governance Committee Advisory Board

Position held Chairman Chairman Member Chairman Chairman Member Chairman Chairman Chairman Chairman

Dr. Ganguly holds 1,00,000 Ordinary (Equity) Shares in the Company.


54

MAHINDRA & MAHINDRA LIMITED

Mr. R. K. Kulkarni Mr. R. K. Kulkarni, B.Sc., LL.M, is a practicing Advocate and Solicitor and is a Senior Partner in Khaitan & Co., Advocates & Solicitors. He has immense experience in all aspects of Corporate law; Mergers & Acquisitions such as due diligence, structuring documentation involving listed companies, cross-border transactions in Capital Markets - such as advice and documentation relating to domestic IPOs and GDR/ FCCB offerings of securities by Indian companies; in Securities Law such as insider trading, takeover-code, public offers, buyback of securities, etc., in Restructuring such as advice and documentation involving creditors restructuring, sick companies, demergers, spin offs, sale of assets, etc. in privatisation such as advice and documentation in relation of privatisation of Government business and companies in India on behalf of several bidders, etc., in Foreign Investment, Joint Venture and Foreign Collaboration such as advice and documentation,

obtaining regulatory approvals, Joint Venture and licensing, shareholder agreements and arrangements, technology transfers, import of plant and equipment, etc., in Infrastructure and Project Financing such as advice and documentation relating to corporate financing, debt issues, including concession agreements, construction contracts, operation & maintenance contracts, etc. He also has considerable experience in litigation having handled writs and civic litigation. He advises a range of large Indian and multinational clients in various business Sectors, including infrastructure, power, telecom, automobile, engineering steel, cement, agriculture and agri-products, software and information technology, retail services, etc. He is on the Board of various companies viz. Mahindra & Mahindra Limited, Alternate Brand Solutions (India) Limited, Elantas Beck India Limited, Caprihans India Limited, Entertainment Network (India) Limited, INEOS ABS (India) Limited, Tech Mahindra Limited, Shamrao Vithal Co-op Bank Limited, R&P Management Communications Private Limited and Venturbay Consultants Private Limited.

Mr. R. K. Kulkarni is a Member of the following Board Committees: Sr. No. 1. Name of the Company Mahindra & Mahindra Limited Name of Committee Audit Committee Share Transfer and Shareholders/ Investors Grievance Committee 2. Elantas Beck India Limited Audit Committee Shareholders/Investor Grievance Committee 3. 4. 5. 6. Caprihans India Limited Entertainment Network (India) Limited INEOS ABS (India) Limited Tech Mahindra Limited Audit Committee Audit Committee Remuneration Committee Audit Committee Remuneration Committee Remuneration Committee Chairman Member Member Member Member Chairman Chairman Chairman Position held Member Member

Mr. Kulkarni holds 87,576 Ordinary (Equity) Shares in the Company.

55

Mr. A. K. Nanda Mr. A. K. Nanda holds a Degree in Law from the University of Calcutta, is a fellow member of The Institute of Chartered Accountants of India (FCA) and a fellow member of The Institute of Company Secretaries of India (FCS). Mr. Nanda has also participated in a Senior Executive Programme at the London Business School. He joined the Mahindra Group in 1973. He has held several important positions within the Group over the 37 years he was with the Company. He was inducted to the Board of Mahindra & Mahindra Limited (M&M) in August, 1992 and resigned as Executive Director in March, 2010 to focus on the social sector and create a favourable ecosystem for senior citizens. He was immediately appointed as a Non-Executive Director of M&M. He is currently the Chairman of Mahindra Holidays & Resorts India Limited, Mahindra Lifespace Developers Limited, Owens Corning (India) Limited, Mahindra Consulting Engineers Limited, Mahindra Construction Company Limited, Mahindra Infrastructure Developers Limited, Mahindra World City (Maharashtra) Limited, Knowledge Township Limited, Vice-Chairman of Mahindra World City Developers Limited and Director of Mahindra Water Utilities Limited, Mahindra Holidays and Resorts (USA) Inc., MHR Hotel Management GmbH, Mahindra Holdings Limited,

Mahindra World City (Jaipur) Limited, Mumbai Mantra Media Limited and Union Bank of India. He is also on the Advisory Boards of Barco Company Limited and Schneider Electric India Private Limited and elected as a Member of the Supervisory Board of BAH Hotelanlagen AG. Mr. Nanda is also the Chairman of CII Western Region, Chairman Emeritus of the Indo-French Chamber of Commerce, Member of the Governing Boards of the Council of EU Chambers of Commerce in India and Bombay First. He was the Chairman of CII National Committee on Water from April, 2007 to March, 2009. Mr. Nanda has been honoured with an Award of Chevalier de la Legion dHonneur (Knight of the National Order of the Legion of Honour) by the President of the French Republic, Mr. Nicolas Sarkozy. Mr. Nanda has also been awarded with the Real Estate Person of the Year Award from GIREM Leadership Awards in India. Mr. Nanda has also been awarded with the CA Business Achiever Award - Corporate at The Institute of Chartered Accountants of India Award 2009 and Lifetime Achievement Award for his outstanding contribution to the Hospitality Industry and the Service Sector by the Golden Star Awards 2010. Mr. A. K. Nanda is a Member of the following Board Committees:

56

MAHINDRA & MAHINDRA LIMITED

Sr. No. 1.

Name of the Company Mahindra & Mahindra Limited

Name of Committee Share Transfer and Shareholders/ Investors Grievance Committee Loans & Investment Committee

Position held Member

Member Member Member Member Member Chairman

2.

Mahindra Holidays & Resorts India Limited

Loans & Investment Committee Remuneration Committee Inventory Approval Committee IPO Committee Share Allotment/Transfer cum Investor Grievances Committee

3.

Owens Corning (India) Limited

Audit Committee Remuneration Committee

Chairman Member Member Chairman Chairman Member Member Member Member Member Member Member Chairman Member Chairman Member Member Member

4. 5.

Mahindra Construction Company Limited Mahindra Lifespace Developers Limited

Remuneration Committee Investors Grievance and Shareholders Committee Loans & Investment Committee Remuneration Committee Share Allotment Committee

6. 7.

Mahindra Infrastructure Developers Limited Mahindra World City (Jaipur) Limited

Audit Committee Audit Committee Capital Issue Committee Land Lease Committee Loans & Investment Committee Remuneration Committee

8. 9. 10. 11.

Mahindra World City (Maharashtra) Limited Mahindra Holdings Limited Mahindra World City Developers Limited Union Bank of India

Capital Issue Committee Audit Committee Remuneration Committee Shareholders /Investors Grievance Committee Remuneration Committee

Mr. A. K. Nanda holds 2,75,864 Ordinary (Equity) Shares in the Company.

57

F. Codes of Conduct
The Board has laid down two separate Codes of Conduct (Codes), one for Board Members and other for Senior Management and Employees of the Company. These Codes have been posted on the Companys website http:// www.mahindra.com. All Board Members and Senior Management Personnel have affirmed compliance with these Codes. A declaration signed by the Vice-Chairman & Managing Director to this effect is enclosed at the end of this Report.

(Committee) considers the performance of the Company, the current trends in the industry, the qualification of the appointee(s), their experience, past performance and other relevant factors. The Board/ Committee regularly keeps track of the market trends in terms of compensation levels and practices in relevant industries through participation in structured surveys. This information is used to review the Companys remuneration policies.

G. CEO/CFO Certification
As required under Clause 49 V of the Listing Agreement with the Stock Exchanges, the Vice-Chairman & Managing Director and the Group Chief Financial Officer of the Company have certified to the Board regarding the Financial Statements for the year ended 31st March, 2010. The eligible Non-Executive Directors are paid commission upto a maximum of 1% of the net profits of the Company as specifically computed for this purpose. A commission of Rs.144 lakhs has been provided as payable to the eligible Non-Executive Directors in the accounts of the year under review.

B. Remuneration to Non-Executive Directors for the year ended 31st March, 2010

II. Remuneration to Directors


A. Remuneration Policy
While deciding on the remuneration for Directors, the Board, Remuneration/ Compensation Committee

During the year under review, the Non-Executive Directors were paid a commission of Rs.96 lakhs (provided in the accounts 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 32.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 #

Mr. Keshub Mahindra Mr. Deepak S. Parekh Mr. N. B. Godrej Mr. M. M. Murugappan Mr. Narayanan Vaghul Dr. A. S. Ganguly Mr. R. K. Kulkarni Mr. Anupam Puri Mr. Arun Kanti Dasgupta (Nominee of LIC) # The Commission is paid to the Nominating Financial Institution.
58

MAHINDRA & MAHINDRA LIMITED

Non-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 as under: Directors Sitting Fees for the Board and Committee Meetings paid during the year ended 31st March, 2010 (Rs. in Lakhs) Mr. Keshub Mahindra Mr. Deepak S. Parekh Mr. N. B. Godrej Mr. M. M. Murugappan Mr. Narayanan Vaghul Dr. A. S. Ganguly Mr. R. K. Kulkarni Mr. Anupam Puri Mr. Arun Kanti Dasgupta (Nominee of LIC) * 1.60 1.70 2.20 2.40 1.80 1.00 2.10 0.60 0.50 ** 4,02,296 1,12,180 3,58,884 1,00,000 1,00,000 1,00,000 87,576 Nil Nil No. of Ordinary (Equity) Shares held as on 31st March, 2010

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 NonExecutive Directors which have vested in June, 2006 can be exercised in three tranches over a period of five years from the date of vesting at an Original Exercise Price of Rs.454 per share. 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. 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 Subdivision 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 to each of the Directors are given in the Statement attached to Annexure I to the Directors Report.

C. Remuneration paid/payable to Managing/Executive Director(s) (Whole-time Directors) for the year ended 31st March, 2010:
Remuneration to Whole-time Directors is fixed by the Remuneration/ Compensation Committee which is
(Rs. In Lakhs) Directors Salary Commission Companys Contribution to Funds* 17.66 Perquisites and allowances Total

subsequently approved by the Board of Directors and Shareholders at a General Meeting. Following is the remuneration paid/payable to the Wholetime Directors during the year ended 31st March, 2010:

Contract Period

No. of Options granted in June, 2005$ Nil

No. of Options granted in September, 2006 $$ Nil

No. of Options granted in July, 2007$$$ Nil

No. of Options granted in August, 2008$$$$ Nil

Mr. Anand G. Mahindra (Vice-Chairman & Managing Director) Mr. Bharat Doshi (Executive Director) Mr. A. K. Nanda** (Executive Director)

65.42

130.85

50.73

264.66

4th April, 2007 to 3rd April, 2012 28th August, 2007 to 27th August, 2012 28th August, 2007 to 27th August, 2012

59.33

89.00

16.02

19.46

183.81

10,000

11,345

8,362

29,039

59.33

89.00

16.02

48.29

212.64

10,000

11,345

8,362

24,890

* Aggregate of the Companys 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 $ $$ June, 2005 September, 2006 Vesting period Already vested in June, 2006 Four equal instalments in September 2007, 2008, 2009 and 2010 respectively Four equal instalments in July, 2008, 2009, 2010 and 2011 respectively Four equal instalments in August 2009, 2010, 2011 and 2012 respectively Exercise period Within five years from the date of vesting On the date of Vesting or within five years from the date of Vesting On the date of Vesting or within five years from the date of Vesting On the date of Vesting or within five years from the date of Vesting Exercise price Rs.454 per share# Rs.616 per share

$$$

July, 2007

Rs.762 per share

$$$$

August, 2008

Rs.500 per share

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.

MAHINDRA & MAHINDRA LIMITED

III. Risk Management


Your Company has a well-defined risk management framework in place. The risk management framework adopted by the Company is discussed in detail in the Management Discussion and Analysis Chapter of this Annual Report. Your Company has established procedures to periodically place before the Board, the risk assessment and minimisation procedures being followed by the Company and steps taken by it to mitigate these risks.

the terms of reference. The Audit Committee has been granted powers as prescribed under Clause 49 II (C). The Meetings of the Audit Committee are also attended by the Vice-Chairman & Managing Director, the Executive Directors of the Company, the President-Finance, Legal and Financial Services Sector, the Statutory Auditors, Chief Internal Auditor and the Company Secretary. The Chairman of the Audit Committee, Mr. Deepak S. Parekh was present at the 63rd Annual General Meeting of the Company held on 30th July, 2009.

IV. Committees of the Board


A. Audit Committee
This Committee comprises solely of Independent Directors viz. Mr. Deepak S. Parekh (Chairman of the Committee), Mr. R. K. Kulkarni, Mr. N. B. Godrej and Mr. M. M. Murugappan. All the Members of the Committee possess strong accounting and financial management knowledge. The Company Secretary is the Secretary to the Committee. The terms of reference of this Committee are very wide. Besides having access to all the required information from within the Company, the Committee can obtain external professional advice whenever required. The Committee acts as a link between the Statutory and the Internal Auditors and the Board of Directors of the Company. It is authorised to select and establish accounting policies, review reports of the Statutory and the Internal Auditors and meet with them to discuss their findings, suggestions and other related matters. The Committee is empowered to inter alia review the remuneration payable to the Statutory Auditors and to recommend a change in Auditors, if felt necessary. It is also empowered to review Financial Statements and investments of unlisted subsidiary companies, Management Discussion & Analysis, material individual transactions with related parties not in normal course of business or which are not on an arms length basis. Generally all items listed in Clause 49 II (D) of the Listing Agreement are covered in

The Committee met seven times during the year under review. The Committee Meetings were held on the following dates 21st May, 2009, 28th May, 2009, 30th July, 2009, 29th October, 2009, 2nd December, 2009, 25th January, 2010 and 30th March, 2010. The gap between two Meetings did not exceed four months. The attendance at the Meetings is as under: Members Number of Meetings attended Mr. Deepak S. Parekh (Chairman) Mr. R. K. Kulkarni Mr. N. B. Godrej Mr. M. M. Murugappan 6 7 6 5+

+ In addition to attending five Audit Committee Meetings, Mr. M. M. Murugappan participated in one Meeting through teleconference. No sitting fee was paid for participation through teleconference.

B. Remuneration/Compensation Committee
The role of the Remuneration/Compensation Committee is to review market practices and to decide on remuneration packages applicable to the Vice-Chairman & Managing Director, the Executive Directors and Senior Executives of the Company. During the course of its review, the Committee also decides on the commission of the Directors and/or other incentives payable, taking into account the
6

individuals performance as well as that of the Company. The Committee has formulated and administers the Mahindra & Mahindra Limited Employees Stock Option Scheme and also attends to such other matters as may be prescribed from time to time. The scope of the Remuneration/Compensation Committee is enhanced to include the function of a Nomination Committee, which would, inter alia include recommendations for new appointment and removal of Board Members, scrutinising nominations for Board Members with reference to their competencies, qualifications, experience, track record, integrity, etc., assessment of the necessary and desirable competencies of Board Members, appointing, retaining and managing the necessary talent pool commensurate with the size and operations of the Company including Board Members, etc. The Committee comprises of a majority of Independent Directors and includes the Chairman of the Company. Mr. Narayanan Vaghul is the Chairman of the Committee. Mr. Keshub Mahindra, Mr. N. B. Godrej and Mr. M. M. Murugappan are the other Members of the Committee. The Committee met four times during the year under review. The attendance at the Meetings is as under: Members Mr. Narayanan Vaghul (Chairman) Mr. Keshub Mahindra Mr. N. B. Godrej Mr. M. M. Murugappan Number of Meetings attended 4 3 3 4

on the Committee. Mr. Narayan Shankar, Company Secretary is the Compliance Officer of the Company. The Committee meets as and when required, to inter alia deal with matters relating to transfer of shares and monitor redressal of complaints from Shareholders relating to transfers, non-receipt of Balance Sheet, non-receipt of dividends declared, etc. With a view to expedite the process of share transfers, necessary authority has been delegated to approve the transfers of not more than 5,000 Ordinary (Equity) Shares per transfer, provided the transferee does not hold one lakh or more Ordinary (Equity) Shares in the Company. The Committee met two times during the year and all Members of the Committee attended the same. During the year, 19 complaints were received from the Shareholders, all of which have been attended to/resolved to date. As of date, there are no pending share transfers pertaining to the year under review.

D. Research & Development Committee (a voluntary initiative of the Company)


The Research & Development (R&D) Committee, which was constituted by the Board in 1998, provides direction on the R&D mission and strategy and key R&D and technology issues. The Committee also reviews and makes recommendations on skills and competencies required and the structure and the process needed to ensure that the R&D initiatives result in products that are in keeping with the business needs. Dr. A. S. Ganguly is the Chairman of the Committee. Mr. Anand G. Mahindra, Mr. N. B. Godrej, Mr. Bharat Doshi and Mr. M. M. Murugappan are the other Members of the Committee.

C. Share Transfer and Shareholders/Investors Grievance Committee


The Companys Share Transfer and Shareholders/Investors Grievance Committee functions under the Chairmanship of Mr. Keshub Mahindra, Chairman of the Board and a Non-Executive Director. Mr. Anand G. Mahindra, Mr. R. K. Kulkarni, Mr. Bharat Doshi and Mr. A. K. Nanda are also
6

E. Loans & Investment Committee (a voluntary initiative of the Company)


The Committee approves of the making of loans and investment, disinvestment, borrowing moneys and related aspects of fund management in accordance with the

MAHINDRA & MAHINDRA LIMITED

Guidelines prescribed by the Board. Mr. Keshub Mahindra is the Chairman of the Committee. Mr. Anand G. Mahindra, Mr. R. K. Kulkarni, Mr. Bharat Doshi and Mr. A. K. Nanda are the other Members of the Committee.

C. Code for Prevention of Insider Trading Practices


The Company has instituted a comprehensive Code of Conduct for Prevention of Insider Trading for its designated employees, in compliance with Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as amended from time to time. The Code lays down Guidelines, which advises them on procedures to be followed and disclosures to be made, while dealing with shares of the Company, and cautioning them of the consequences of violations.

V. Subsidiary Companies
Clause 49 defines a material non-listed Indian subsidiary as an unlisted subsidiary, incorporated in India, whose turnover or net worth (i.e. paid-up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year. Under this definition, the Company did not have any material non-listed Indian subsidiary during the year under review. The Subsidiaries of the Company function independently, with an adequately empowered Board of Directors and sufficient resources. For more effective governance, the Minutes of Board Meetings of Subsidiaries of the Company are placed before the Board of Directors of the Company for their review.

VII. Shareholder Information


1. 64rd Annual General Meeting Date Time : : 28th July, 2010 3:00 p.m. Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg (New Marine Lines), Mumbai - 400 020. 2. Dates of Book Closure Dates of Book Closure for Dividend will be from 10th July, 2010 to 28th July, 2010, both days inclusive. 3. Date of Dividend Payment Date of payment of Dividend would be on or after 29th July, 2010. 4. Financial Year of the Company The financial year covers the period from 1st April to 31st March. Financial Reporting for: Quarter ending 30th June, 2010 Half-year ending 30th September, 2010 Quarter ending 31st December, 2010 End January, 2011
63

Venue :

VI. Disclosures
A. Disclosure of transactions with Related Parties
During the financial year 2009-10, there were no materially significant transactions entered into between the Company and its promoters, Directors or the management, subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. Further details of related party transactions are presented in Note Number 29 in Schedule XIV to Annual Accounts of the Annual Report.

B. Disclosure of Accounting Treatment in preparation of Financial Statements


The Company has followed the Accounting Standards laid down by The Companies (Accounting Standards) Rules, 2006 in preparation of its financial statements.

End July, 2010

End October, 2010

Year ending 31st March, 2011 End May, 2011

Post allotment of Equity Shares and sub-division of Equity Shares as aforesaid, the issued, subscribed and paid-up Share Capital of the Company stands at Rs.289.22 crores comprising of 57,84,34,478 Ordinary (Equity) Shares of Rs.5 each fully paid-up (prior to Stock-split: 28,92,17,239 Equity Shares of Rs.10 each) and the Authorised Share Capital of the Company stands at Rs.625 crores comprising of 1,20,00,00,000 Ordinary (Equity) Shares of Rs.5 each and 25,00,000 Unclassified Shares of Rs.100 each.

Note: The above dates are indicative. 5. Registered Office Mahindra & Mahindra Limited Gateway Building, Apollo Bunder, Mumbai - 400 001. 6. Listing on Stock Exchanges The Companys Shares are listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The Global Depositary Receipts (GDRs) of the Company are listed on the Luxembourg Stock Exchange and are also admitted for trading on International Order Book (IOB) of the London Stock Exchange. The US $200 million Zero Coupon Foreign Currency Convertible Bonds (FCCBs) due for redemption in 2011 are listed at Singapore Exchange Securities Trading Limited. The requisite listing fees have been paid in full to all these Stock Exchanges. 7. Sub-division of Face Value of Equity Shares (Stocksplit) Pursuant to the approval received from the Members of the Company by way of Postal Ballot on 11 March, 2010, the Company has on 31 March, 2010, upon sub-division, issued 2 (Two) Ordinary (Equity) Shares of Rs.5 each fully paid-up in the Equity Share Capital of the Company for every 1 (One) Ordinary (Equity) Share of the face value of Rs.10 fully paid-up held by the Members in the Equity Share Capital of the Company as on the Record Date i.e. 30th March, 2010.
st th

8. Stock Code 1. Bombay Stock Exchange Limited (BSE) : 500520 2. National Stock Exchange of India Limited (NSE): M&M 3. Demat International Security Identification Number (ISIN) in NSDL and CDSL for Equity Shares: INE101A01018 (Old for Equity Shares of Rs.10 each) INE101A01026 (New for Equity Shares of Rs.5 each) 4. Corporate Identity Number:

L65990MH1945PLC004558 5. FCCBs, Singapore Exchange Securities Trading Limited (ISIN): XS0250972543 6. GDRs, Luxembourg Stock Exchange (ISIN): USY541641194

64

MAHINDRA & MAHINDRA LIMITED

9. Stock Performance The performance of the Companys shares relative to the BSE Sensitive Index is given in the chart below:

M&M on BSE 1200 1000

BSE Sensex 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0

M&M on BSE

800 600 400 200 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 Companys shares relative to the NSE Sensitive Index (S&P CNX Nifty Index) is given in the chart below:

M&M on NSE 1200 1000

NSE Nifty 6000 5000

M&M on NSE

600 400 200 0

3000 2000 1000 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.

NSE NIFTY

800

4000

BSE SENSEX

65

10. Stock Price Data: Equity Shares Bombay Stock Exchange Limited High Rs. April, 2009 May, 2009 June, 2009 July, 2009 August, 2009 September, 2009 October, 2009 November, 2009 December, 2009 January, 2010 February, 2010 March, 2010* 503.00 700.00 824.00 892.00 942.70 909.80 981.00 1092.00 1098.70 1196.70 1065.80 1154.00 Low Rs. 377.50 486.75 669.05 643.30 735.20 809.00 865.00 878.00 1005.00 985.00 950.25 535.45 National Stock Exchange of India Limited High Rs. 504.55 698.00 829.00 889.80 943.95 910.00 981.40 1091.00 1094.00 1199.00 1065.50 1154.95 Low Rs. 377.50 484.60 660.15 644.10 734.00 808.00 866.00 879.00 1005.00 987.75 950.00 515.00 GDRs Luxembourg Stock Exchange High US $ 9.74 14.50 17.07 17.93 19.51 18.53 21.05 23.04 23.26 26.10 22.86 25.02 Low US $ 7.73 10.00 14.03 13.80 15.20 16.63 18.65 18.87 21.54 21.75 20.52 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: +91-22-22825484
66

MAHINDRA & MAHINDRA LIMITED

12. Share Transfer System Trading in Ordinary (Equity) Shares of the Company through recognized Stock Exchanges is permitted only in dematerialised form. Shares sent for transfer in physical form are registered and returned within a period of thirty days from the date of receipt of the documents, provided the documents are valid and complete in all respects. With a view to expedite the process of share transfers, Mr. A. K. Nanda, Executive Director as well as Mr. Narayan Shankar, Company Secretary of the Company were severally authorised to approve the transfers of not more than 5,000 Ordinary (Equity) Shares 13. Distribution of Shareholding as on 31st March, 2010 Number of Shares held 1 to 500 501 to 1000 1001 to 5000 5001 to 10000 10001 and above Total Shareholding Pattern as on 31st March, 2010: Sr. No. Category of Shareholders 1. 2. 3. 4. 5. 6. 7. 8. 9. * **

per transfer, provided the transferee does not hold one lakh or more Ordinary (Equity) Shares in the Company. Since, Mr. A. K. Nanda ceased to be an Executive Director of the Company, Mr. Bharat Doshi, Executive Director and Group Chief Financial Officer or Mr. Uday Y. Phadke, President Finance, Legal and Financial Services Sector or Mr. Narayan Shankar, Company Secretary of the Company have now been severally authorised to approve the transfers of not more than 5,000 Ordinary (Equity) Shares per transfer, provided the transferee does not hold one lakh or more Ordinary (Equity) Shares in the Company. The Share Transfer and Shareholders/Investors Grievance Committee meets as and when required to consider the other transfer proposals and attend to Shareholder grievances.

Number of Shareholders 1,34,427 8,391 7,794 944 1,132 1,52,688

Number of Shares held 1,15,27,754 61,57,823 1,62,32,135 66,46,410 53,78,70,356 57,84,34,478

Percentage of Shareholding 1.99 1.06 2.81 1.15 92.99 100.00

Total Holdings

Holdings in Percentage

Promoters and Promoter Group 15,23,69,592 26.34 Mutual Funds/UTI 2,40,86,073 4.16 Banks, Financial Institutions, Insurance Companies, 12,01,02,772 20.76 Central and State Government FIIs* 13,53,37,813 23.40 Foreign Bodies 1,87,91,948 3.25 Private Corporate Bodies 4,42,23,273 7.65 Indian Public 5,02,73,902 8.69 NRIs/ OCBs/ Foreign National ** 33,30,113 0.58 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 98.47% of the paid-up Equity Share Capital is held in a dematerialised form with National Securities Depository Limited and Central Depository Services (India) Limited as on 31st March, 2010. The market lot of the share is one share, as the trading in the Equity Shares of the Company is permitted only in dematerialised form. Non-Promoters holding is 73.66% and the stock is highly liquid. 15. Outstanding GDRs / ADRs / Warrants or any Convertible Instruments, Conversion date and likely impact on equity 2,99,18,992 GDRs were outstanding as at 31st March, 2010. Since the underlying Ordinary (Equity) Shares represented by GDRs have been allotted in full, the outstanding GDRs have no impact on the Equity of the Company. 2000 Zero Coupon Convertible Bonds (due 2011) of US$ 1,00,000 each (FCCBs) aggregating US$ 200 million issued in April, 2006, may at the option of the Bondholder, be converted into around 96,35,156 Equity Shares/GDRs each GDR representing One Equity Share of the Company at an initial conversion price of Rs.922.04 at any time between 7th May, 2006 and 7th March, 2011. In the year 2008-2009, the Company had repurchased 105 FCCBs aggregating US$ 1,05,00,000 at a discount and the same have been cancelled upon repurchase. Till date, no conversion of any FCCBs has taken place. Consequent to sub-division of each Ordinary (Equity) Share of the face value of Rs.10 fully paid-up in the Equity Share Capital of the Company into 2 Ordinary (Equity) Shares of the face value of Rs.5 each fully paid-up, the initial conversion price of Rs.922.04 was adjusted to Rs.461.02 per share with effect from 31st March, 2010. As of date, FCCBs amounting to US$ 18,95,00,000 convertible into around 1,82,58,622 Equity Shares/GDRs are outstanding.
68

16. Plant Locations The Companys manufacturing facilities are located at Kandivali, Nashik, Igatpuri, Nagpur, Zaheerabad, Jaipur, Rudrapur, Haridwar, Chakan and Mohali. 17. Address for correspondence Shareholders may correspond with the Registrar and Transfer Agents at: 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 on all matters relating to transfer/dematerialisation of shares, payment of dividend and any other query relating to Equity Shares or Debentures of the Company. The Company has also designated investors@mahindra.com as an exclusive email ID for Investors for the purpose of registering complaints and the same has been displayed on the Companys website. Shareholders would have to correspond with the respective Depositary Participants for Shares held in demateralised form. For all investor related matters, the Company Secretary & Compliance Officer can be contacted at: Mahindra Towers, 5th Floor, Dr. G. M. Bhosale Marg, Worli, Mumbai - 400 018. Telephone Nos.: +91-22-24905624 & +91-22-24975074 Fax: +91-22-24900833 email: investors@mahindra.com The Company can also be visited at its website: http://www.mahindra.com

MAHINDRA & MAHINDRA LIMITED

VIII. Other Disclosures


1. Details of General Meetings and Special Resolutions passed Annual General Meetings (AGM) held during the past 3 years and the Special Resolutions passed therein: Year 2007 Date 30th July, 2007 Time 3.30 p.m. 1. Special Resolutions passed 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. 4. Alteration of Article 3 of the Articles of Association of the Company. 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 2009 30th July, 2008 30th July, 2009 3.30 p.m. 3.30 p.m. No Special Resolution was passed at the AGM. 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 2007 Date 20th April, 2007 Time 11.00 a.m. Special Resolution passed 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 Chavan Centre, General Jagannathrao Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai - 400 021.

Details of Resolutions passed through Postal Ballots durings the year 2009-10: Date of Board Meeting Description % of Valid Votes in favour of the Resolution 25th January, 2010 1. Ordinary Resolution to sub-divide each of the Ordinary (Equity) Share of the Face Value of Rs.10 into 2 Ordinary (Equity) Shares of the Face Value of Rs.5 each. 2. Ordinary Resolution to amend Clause 5 of the Memorandum of Association of the Company. 3. Special Resolution to amend Clause 3 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 namely Companies (Passing of the Resolution by Postal Ballot) Rules, 2001. 2. Details of non-compliance etc. The Company has complied with all the requirements of regulatory authorities. During the last three years, there were no instances of non-compliance by the Company and no penalty or strictures were imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to the capital markets. 3. Means of Communication The quarterly, half-yearly and yearly results are published in Business Standard and Sakal which are national and local dailies respectively. These are not sent individually to the Shareholders. The Companys results and official news releases are displayed on the Companys website http://www.mahindra.com Presentations are also made to international and national institutional investors and analysts which are also put up on the website of the Company.
7

Scrutinizer for conducting the Postal Ballot

99.99

Mr. Taizoon M. Khumri, Practising Company 99.90 Secretary, Mumbai 99.90

The Company has been regularly posting information relating to its financial results and shareholding pattern on Corporate Filing and Dissemination System (CDFS) viz. www.corpfiling.co.in, the common platform launched by BSE and NSE for electronic filing by listed companies. 4. Management Discussion and Analysis Report Management Discussion and Analysis Report (MDA) has been attached to the Directors Report and forms part of this Annual Report. 5. Compliance with Mandatory requirements The Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement relating to Corporate Governance. 6. Compliance with Non-mandatory requirements a. Office of the Chairman The Company has provided the Chairman

MAHINDRA & MAHINDRA LIMITED

(Non-Executive) with a full-fledged office, the expenses of which are borne by the Company. The Chairman is reimbursed all expenses incurred in the performance of his duties. b. Remuneration Committee The Company has set up the Remuneration/ Compensation Committee long before application of Clause 49 of Listing Agreement. c. Audit Qualifications During the year under review, there is no audit qualification in the Companys financial statements. The Company continues to adopt best practices to ensure regime of unqualified financial statements. The Company has not adopted the other nonmandatory requirements as specified in Annexure I D of Clause 49. 7. Compliance with the Corporate Governance Voluntary Guidelines, 2009 In December, 2009 the Government of India, Ministry of Corporate Affairs (MCA) had issued Corporate Governance Voluntary Guidelines 2009 (the Guidelines). MCA has clarified that the Guidelines were

prepared and disseminated for consideration and adoption by Corporates and may be voluntarily adopted by public companies with the objective to enhance not only the economic value of the enterprise but also the value for every stakeholder who has contributed in the success of the enterprise and set a global benchmark for good Corporate Governance. MCA after taking into account the experience of adoption of these Guidelines by Corporates and after consideration of the feedback received from them would review the Guidelines for further improvements after a period of one year. The Company has been a strong believer in good Corporate Governance and has been adopting the best practices that have evolved over the last two decades. The Company is in substantial compliance with the Guidelines and it will always be the Companys endeavour to attain the best practices in Corporate Governance.

Mumbai, 29th May, 2010.

DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49 OF THE LISTING AGREEMENT


To The Members of Mahindra & Mahindra Limited I, Anand G. Mahindra, Vice-Chairman & Managing Director of Mahindra & Mahindra Limited declare that all the Members of the Board of Directors and Senior Management Personnel have affirmed compliance with the Code of Conduct for the year ended 31st March, 2010.

Anand G. Mahindra Mumbai, 29 May, 2010


th

Vice-Chairman & Managing Director

CERTIFICATE
To The Members of Mahindra & Mahindra Limited We have examined the compliance of conditions of Corporate Governance by Mahindra & Mahindra Limited, for the year ended on 31st March, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges in India. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of the Corporate Governance as stipulated in the above mentioned Listing Agreement. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117364W)

B.P. Shroff (Partner) Mumbai, 29 May, 2010


7
th

Membership Number: 34382

MAHINDRA & MAHINDRA LIMITED

73

74

MAHINDRA & MAHINDRA LIMITED

75

Financial Position at a Glance


(Rupees in crores) 2010 Gross Fixed Assets Net Fixed Assets Investments Foreign Currency Monetary Item Translation Difference Account Asset/(Liability) Inventories Debtors Other Current Assets Misc. Expenditure not written off Long-term Borrowings Short-term Current Liabilities and Provisions Deferred Tax Liability/(Asset) (Net) Equity Capital Reserves Net Worth Book Value Per Share (Rupees) 79 5197 240 283 7544 7827 368 4798 (18) 273 4989 5262 400 3240 57 239 4111 4350 180.87 78 2666 20 238 3315 3553 46 2052 147 233 2676 2909 111 1760 190 112 1875 1987 174.46 78 1329 203 116 1659 1775 150.89 68 1095 177 116 1454 1570 130.56 185 1051 138 116 1388 1504 128.26 344 927 111 1958 2069 165.50 (3) 1189 1258 3595 4 2801 18 1061 1044 2959 13 3685 1084 1005 1555 14 2187 878 701 2169 18 1558 879 638 1232 18 837 760 512 1028 24 941 500 400 625 10 652 457 517 640 40 1072 469 648 616 1192 553 632 529 224 791 6240 3703 6398 2009 5541 3214 5786 2008 4203 2361 4215 2007 3510 1871 2238 2006 3065 1555 1669 2005 2810 1475 1190 2004 2559 1391 1111 2003 2489 1466 862 2002 2417 1537 800 2001 2231 1483 710

@138.03 192.12

147.98 *123.29

@ 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 LIMITED

Summary of Operations
(Rupees in crores) 2010 Income @ Materials Direct Indirect Excise Duty (Net) Personnel Interest (Net) @ Depreciation (Net) Other Expenses Exceptional items (Income)/Expense Profit before tax for the year Tax for the year - Current Deferred Tax Liability/(Asset) Adj. pertaining to Prev. Years Balance profit Dividends Equity Dividend (%) Earnings per Share (Rupees) * Vehicles produced ** (Units) Vehicles sold ** (Units) Tractors produced (Units) Tractors sold (Units) @ Interest income netted off in interest expense 20595 12333 105 1807 1198 28 371 1997 (91) 2847 749 10 2088 #+624 #190.00 37.97 284516 282119 173276 175196 129 2009 14983 9274 91 1587 1025 45 292 1643 (10) 1036 58 141 31 868 +312 100.00 15.92 201993 206688 119098 120202 89 2008 13238 7726 89 1584 868 24 239 1474 (173) 1407 279 25 1103 +321 115.00 23.12 2007 11558 6828 79 1335 666 (67) 209 1192 (122) 1439 366 (15) 19 1069 +325 115.00 22.58 2006 9451 5714 68 1136 553 (18) 200 909 (210) 1099 285 (43) 857 +278 2005 7804 4603 60 1055 465 (6) 184 743 (14) 714 215 (14) 513 +172 2004 6001 3353 43 955 421 52 165 603 (29) 438 63 26 349 +118 90.00 7.51 2003 4597 2500 39 785 385 87 165 496 (57) 197 12 39 146 + 72 55.00 3.14 87088 86890 45183 47028 29 2002 3997 2117 32 677 375 83 139 476 17 81 3 (25) 6 97 56 50.00 2.16 66256 65338 54524 58006 33 2001 4353 2359 49 755 401 62 140 443 15 129 8 121 +67 55.00 2.73 63146 62927 80261 79237 51

100.00 130.00 19.04 11.52

196956 169557 148213 148025 117670 195077 169679 147591 145024 117399 98917 103847 99042 102531 63 87 87075 85029 45 67115 65390 36 50102 49576 25

# 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)
2400
18801 2088

Earnings Per Share (Rs.)


48

20000

2100

18000
40
37.97

16000 1800
13364

14000
32

10221

Net Income

EPS (Rs.)

1500

11672

12000

PAT

1200
8327 1068 1103

10000

24
19.04

22.58

23.12

900
857 868

8000
16

6000

15.92

600 4000 300


8

2000

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010


Net Income Profit After Tax

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

Net Segmental Revenue F-2010


0.8

Debt Equity Ratio

Farm Equipment 42.6%

Others 0.4%

0.7
0.60

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 2010

78

MAHINDRA & MAHINDRA LIMITED

79

80

MAHINDRA & MAHINDRA LIMITED

Auditors Report to the members of Mahindra & Mahindra Limited


1. We have audited the attached Balance Sheet of Mahindra & Mahindra Limited as at 31st March, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

2.

(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1) (g) of the Companies Act, 1956.

3.

4.

(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; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117364W) B. P. Shroff Partner (Membership No.34382) 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 Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification. (c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. ii. In respect of its inventory: (a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals. (b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. (c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. iii. The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us: vi. (a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered. (b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.

vii. In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business. viii. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of manufacture of motor vehicles and tractors and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other product of the Company. ix. According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Value Added Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable.

iv.

v.

82

MAHINDRA & MAHINDRA LIMITED

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not Statute Nature of Dues Income-Tax Forum where Dispute is pending Appellate Authority Tribunal Level Appellate Authority Commissioner (Appeals) Sales Tax Laws Sales Tax High Court Appellate Authority Tribunal Level Appellate Authority Commissioner (Appeals) Service Tax Laws Service Tax

been deposited as on 31st March, 2010 on account of disputes are given below: Period to which the amount relates 2004-2007 1999-2008 1987-2008 1987-2007 1989-2010 2007-2008 2002-2010 1991-1996 1987-2009 1994-2010 1992-2001 Amount involved (Rs. in crores) 8.12 5.99 181.87 0.39 24.71 1.16 6.09 418.22 221.49 34.83 6.31

Income-Tax Laws

Appellate Authority Tribunal Level Appellate Authority Commissioner

Excise Duty Laws

Excise Duty

Supreme Court Appellate Authority Tribunal Level Appellate Authority Commissioner

Customs Duty Laws

Customs Duty

Appellate Authority Tribunal Level

x.

The Company does not have accumulated losses as at 31st March, 2010 and has not incurred cash losses during the financial year ended on that date and in the immediately preceding financial year. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks, financial institutions and debenture holders.

the Balance Sheet, we report that funds raised on short term basis have not been used during the year for long term investments. xviii. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956, during the year. xix. According to the information and explanations given to us, the Company has created security in respect of the debentures issued in earlier years. xx. The Company has not raised any money by public issue during the year. xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of significant fraud on or by the Company, noticed or reported during the year nor have we been informed of such case by the management.

xi.

xii. In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xiii. The provisions of any special statute as specified under the clause (xiii) of the said Order are not applicable to the Company. xiv. In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of paragraph 4(xiv) of the Order are not applicable to the Company. 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 the interest of the Company. xvi. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained. xvii. In our opinion and according to the information and explanations given to us and on an overall examination of

For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117364W) B. P. Shroff Partner (Membership No.34382) MUMBAI, 29th May, 2010
83

Balance Sheet
I.

as at 31st March, 2010

Rupees crores Schedule SOURCES OF FUNDS : SHAREHOLDERS FUNDS : Capital ................................................ Employee Stock Options Outstanding ................................. Reserves and Surplus ........................................................... LOAN FUNDS : (a) Secured Loans .............................................................. (b) Unsecured Loans .......................................................... DEFERRED TAX LIABILITY (Net) [Note 22] ............................ FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT ........................................................ Total .......... II. APPLICATION OF FUNDS : FIXED ASSETS : Gross Block .......................................................................... Less : Depreciation .............................................................. Net Block ............................................................................. CAPITAL WORK-IN-PROGRESS (INCLUDING CAPITAL ADVANCES) ......................................................................... INVESTMENTS ...................................................................... DEFERRED TAX ASSET (Net) [Note 22] ................................ FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT ........................................................ CURRENT ASSETS, LOANS AND ADVANCES : (a) Inventories .................................................................... (b) Sundry Debtors ............................................................ (c) Cash and Bank Balances ............................................... (d) Other Current Assets .................................................... (e) Loans and Advances ..................................................... CURRENT LIABILITIES AND PROVISIONS : (a) Current Liabilities .......................................................... (b) Provisions ..................................................................... NET CURRENT ASSETS ......................................................... MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED) .............................................. Total .......... NOTES ON ACCOUNTS ........................................................ In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants M. M. Murugappan N. Vaghul R. K. Kulkarni A. S. Ganguly A. P. Puri N. B. Godrej A. K. Dasgupta Deepak S. Parekh XIV IV 2010 2009

I II

282.95 8.01 7,535.81 7,826.77

272.62 6.55 4,982.91 5,262.08 981.00 3,071.76 2,880.15 240.33 3.46 10,950.71 4,052.76 9,314.84

III A III B

602.45 2,277.70

5,276.29 2,537.77 2,738.52 964.20 V 3,702.72 6,398.02 VI VI VI VI VI A B C D E 1,188.78 1,258.08 1,743.23 50.87 1,801.43 6,042.39 VII A VII B 3,400.00 1,796.54 5,196.54 845.85 VIII 4.12 10,950.71

4,893.89 2,326.29 2,567.60 646.73 3,214.33 5,786.41 18.27 18.11 1,060.67 1,043.65 1,574.43 1.56 1,382.62 5,062.93 3,520.20 1,277.56 4,797.76 265.17 12.55 9,314.84

B. P. Shroff Partner

Keshub Mahindra Anand G. Mahindra Directors Bharat Doshi

Chairman Vice Chairman & Managing Director Executive Director Company Secretary Mumbai, 29th May, 2010

Narayan Shankar

Mumbai, 29 May, 2010


84

th

MAHINDRA & MAHINDRA LIMITED

Profit and Loss Account

for the year ended 31st March, 2010

Rupees crores Schedule SALES - Traded and Manufactured Goods .............................................................. Less : Excise Duty on Sales (Net) ............................................................................. Net Sales ................................................................................................................. Income from Operations ......................................................................................... Other Income .......................................................................................................... Net Income .............................................................................................................. EXPENDITURE : Raw Materials, Finished and Semi-finished Products ............................................... Excise Duty ............................................................................................................... Personnel ................................................................................................................. Interest, Commitment and Finance Charges (Net) ................................................... Depreciation/Amortisation [Note 5(c)(i)] .................................................................. Other Expenses ........................................................................................................ Less : Cost of Manufactured Products Capitalised .................................................. Profit before exceptional items and taxation ........................................................... Add : Exceptional Items [Note 21] .......................................................................... Profit before taxation .............................................................................................. Less : Provision for Tax - Current Tax (including Fringe Benefit Tax) .................... - Deferred Tax (Net) ......................................................... Profit for the year .................................................................................................... Add : Profit of Mahindra Holdings and Finance Limited for the period 1st February, 2008 to 31st March, 2008 ................................................................ Balance of Profit for the year .................................................................................. Balance of Profit for earlier years ............................................................................ Amount Transferred on Amalgamation of Mahindra Holdings and Finance Limited [Note 23(a)] ................................................................................................ Less : Transfer to Debenture Redemption Reserve (Net) .......................................... Total of Profit and Loss Account balances shown above ........................................ Less : General Reserve ....................................................................................................... Credit of Income-tax on Proposed Dividend of Previous Year ................................. Proposed Dividend ................................................................................................... Income-tax on Proposed Dividend ........................................................................... Balance for 2009-2010 and earlier years carried to Balance Sheet ......................... EARNINGS PER SHARE [Note 24] : (Face value Rs. 5/- per share) (Rupees) Basic ........................................................................................................................ Diluted ..................................................................................................................... NOTES ON ACCOUNTS ............................................................................................ In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants M. M. Murugappan N. Vaghul R. K. Kulkarni A. S. Ganguly A. P. Puri N. B. Godrej A. K. Dasgupta Deepak S. Parekh IX A IX B 2010 19,832.06 1,794.01 18,038.05 564.06 199.35 18,801.46 X XI XII XIII 12,332.92 13.29 1,198.47 27.81 370.78 2,161.74 16,105.01 59.55 16,045.46 2,756.00 90.75 2,846.75 749.33 9.67 2,087.75 2,087.75 3,365.32 (30.95) 3,334.37 5,422.12 210.00 549.52 74.23 4,588.37 2009 14,268.41 1,619.35 12,649.06 444.62 270.34 13,364.02 9,274.23 (32.30) 1,024.61 45.26 291.51 1,777.34 12,380.65 42.83 12,337.82 1,026.20 10.27 1,036.47 58.51 141.18 836.78 30.73 867.51 2,775.48 159.94 (29.62) 2,905.80 3,773.31 100.00 (4.07) 278.83 33.23 3,365.32

37.97 35.61 XIV

15.92 15.01

B. P. Shroff Partner

Keshub Mahindra Anand G. Mahindra Directors Bharat Doshi

Chairman Vice Chairman & Managing Director Executive Director Company Secretary Mumbai, 29th May, 2010
85

Narayan Shankar

Mumbai, 29 May, 2010

th

Cash Flow Statement


A.

for the year ended 31st March, 2010

Rupees crores 2010 CASH FLOW FROM OPERATING ACTIVITIES : Profit before exceptional items and taxation .......................................... Adjustments for : Net Profit earned by Mahindra Holdings and Finance Limited from 1st February, 2008 to 31st March, 2008 ..... Taxes and other adjustments on above ........................................... Adjustments for : Depreciation/Amortisation .................................. (Profit)/Loss on Exchange (Net) ....................................................... Investment and Interest Income ...................................................... Interest, Commitment and Finance charges .................................... Amortisation of Expenses ................................................................ Profit on sale of investments (Net) .................................................. Loss on fixed assets sold/scrapped/written off (Net) ....................... Excess of cost over fair value of current investments (Net) ............. Operating Profit before Working Capital changes .................................. Changes in : Trade and other receivables ............................................................. Inventories ....................................................................................... Trade and other payables ................................................................ Miscellaneous Expenditure (to the extent not written off or adjusted) incurred during the year ........................................................................ Cash generated from operations ............................................................ Income Taxes paid (Net of refunds) ........................................................ NET CASH FROM OPERATING ACTIVITIES ............................................... B. CASH FLOW FROM INVESTING ACTIVITIES : Purchase of fixed assets ......................................................................... Sale of fixed assets ................................................................................. Purchase of investments ......................................................................... Sale of investments ................................................................................ Interest received ..................................................................................... Dividends received .................................................................................. Inter corporate deposits (Net) ................................................................ Exceptional Items : Sales Proceeds (Net) on sale of Long Term Investments ......................... NET CASH USED IN INVESTING ACTIVITIES ............................................ 92.14 (1,345.44) (1,941.00) (967.06) 6.36 (19,022.10) 18,490.89 100.74 87.26 (133.67) (929.74) 14.58 (17,118.59) 16,195.73 79.87 137.13 (319.98) (458.69) (133.84) 588.08 (4.45) 3,047.87 (711.38) 2,336.49 (99.37) 176.01 515.13 591.77 (11.73) 1,731.60 (100.30) 1,631.30 370.78 14.25 (261.80) 156.85 6.07 (10.40) 20.83 (0.26) 296.32 3,052.32 30.73 11.01 41.74 291.52 6.30 (266.90) 134.12 11.32 (92.36) 1.19 (1.57) 83.62 1,151.56 2,756.00 1,026.20 2009

86

MAHINDRA & MAHINDRA LIMITED

Cash Flow Statement


C.

(Contd.)

Rupees crores 2010 CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from Issue of Share Capital (including Share Premium) .......... Proceeds from borrowings ..................................................................... Repayments of borrowings (including premium on prepayments) ......... Dividends paid [including income tax on dividend Rs. 33.23 crores (2009 : Rs. 38.48 crores)] ...................................................................... Interest, Commitment and Finance charges paid ................................... Stamp Duty paid on shares issued on merger ....................................... NET CASH (USED IN)/FROM FINANCING ACTIVITIES .............................. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS ............ 72.40 436.32 (743.98) 2,117.39 (1,005.05) 2009

(311.36) (229.48) (7.77) (783.87) 207.18

(320.26) (95.17) 696.91 387.21

CASH AND CASH EQUIVALENTS [Note 1] : Opening Balance .................................................................................... Cash and Bank Balance acquired pursuant to the Schemes of Amalgamation ........................................................................................ Cash and Bank Balance Transferred on transfer of Business .................. Closing Balance ...................................................................................... 1,561.83 923.88

(18.20) 1,750.81

253.76 (3.02) 1,561.83

See Notes attached.

In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants M. M. Murugappan N. Vaghul R. K. Kulkarni A. S. Ganguly A. P. Puri N. B. Godrej A. K. Dasgupta Deepak S. Parekh

B. P. Shroff Partner

Keshub Mahindra Anand G. Mahindra Directors Bharat Doshi

Chairman Vice Chairman & Managing Director Executive Director Company Secretary Mumbai, 29th May, 2010
87

Narayan Shankar

Mumbai, 29th May, 2010

Notes to the Cash Flow Statement

for the year ended 31st March, 2010

Rupees crores 2010 1 Cash and Bank Balances ......................................................................... Unrealised (Gain)/Loss on foreign currency cash and cash equivalents .. Total cash and cash equivalents ............................................................. 2 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) .................................. Current Assets ........................................................................................ Current Liabilities and Provisions ............................................................ This transfer of the Land Defence Systems business of Mahindra Defence Systems division is a non-cash transaction. 5 Previous years figures have been regrouped/restated wherever necessary. 26.42 33.43 32.47 1,743.23 7.58 1,750.81 2009 1,574.43 (12.60) 1,561.83

88

MAHINDRA & MAHINDRA LIMITED

SCHEDULE I
Rupees crores 2010 Share 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) 25,00,000 Unclassified Shares of Rs. 100 each ............................................................ Total ............................................................................................................ 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) ............................... 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 ................................... Adjusted : Issued and Subscribed Share Capital ................................................................... #REF! 2009

600.00 25.00 625.00

600.00 25.00 625.00

289.21 289.21

278.82 278.82

6.26 282.95

6.20 272.62 Rupees crores

SCHEDULE II

2009 Reserves and Surplus 1 2 Capital Reserve Securities Premium Account [Note 3(a)(i)] ...................... Less : Premium on shares issued to ESOP Trust but not allotted to employees [Note 3(b)] ..................... 11.50 11.50 493.79 527.13 15.20 16.34 478.59 510.79 12.09 12.47 826.74 748.92 3.10 3.33 829.84 752.25 47.62 18.00 672.14 39.43 (434.19) (12.92) 1,617.59 1,331.52

Additions 784.79 10.86 71.40 713.39 10.86 210.00 117.79 210.00 117.79 30.95 29.62 23.52 806.61 433.28 1,411.14 964.88

Deductions 6.59 44.20 2.31 1.14 4.28 43.06 0.42 0.38 6.12 39.97 0.47 0.23 6.59 40.20 70.00 173.90 421.27 81.29 678.81

2010 11.50 11.50 1,271.99 493.79 84.29 15.20 1,187.70 478.59 11.67 12.09 1,030.62 826.74 2.63 3.10 1,033.25 829.84 78.57 47.62 625.66 672.14 (0.91) (434.19) 2,947.44 1,617.59 4,588.37 3,365.32 7,535.81 4,982.91

3 4

Revaluation Reserve [Note 3(a)(ii)] .................................. General ReserveI ............................................................. Add : Bonus shares issued to ESOP Trust but not allotted to employees [Note 3(b)] .....................

5 6 7

Debenture Redemption Reserve ...................................... Investment Fluctuation Reserve [Note 23, 25 & 26] ...... Hedging Reserve Account [Note 3(c)] ............................

Balance for 2009-2010 and earlier years as per Profit and Loss Account ................................................. Total .............................

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 Loan Funds [Note 4] : (A) Secured : (1) Debentures/Bonds ........................................................................... (2) Foreign Currency Loans from Banks ................................................ (3) Loans and Advances on cash credit account from Banks ............... (4) Short-term Foreign Currency Loans from Banks .............................. 2009

600.01 2.44 602.45

600.01 124.29 3.00 253.70 981.00

(B) Unsecured : (1) Fixed Deposits ................................................................................. (2) Short-term Loans from Banks ......................................................... (3) Other Loans : (a) From Financial Institutions ....................................................... (b) Foreign Currency Loan from Banks .......................................... (c) Zero Coupon Convertible Bonds .............................................. (d) 9.25% Fully and Compulsorily Convertible Debentures ............ (e) From Others .............................................................................

166.22 730.35 501.35 850.85 28.93 2,111.48 2,277.70

30.85 80.00 634.68 625.65 961.52 700.00 39.06 2,960.91 3,071.76 4,052.76

Total ...............

2,880.15

SCHEDULE IV
Fixed Assets [Note 5] :
Description of Assets Cost/ Professional valuation as at 31st March, 2009 Additions and adjustments during the year Deductions and adjustments during the year Cost/Professional valuation as at 31st March, 2010 Depreciation/Amortisation to 31st March, 2009 Depreciation/ Amortisation for 20092010 Deductions and adjustments of Depreciation/ Amortisation 4.37 134.70 7.78 12.87 159.72 29.39 Depreciation/ Amortisation to 31st March, 2010

Rupees crores
Net Balance as at 31st March, 2010 Net Balance as at 31st March, 2009

Land - Freehold ......................... Land - Leasehold ....................... Buildings .................................... Plant and Machinery ................. Furniture and Fittings ................ Vehicles, Cycles, etc ................... Technical Knowhow ................... Development Expenditure ......... Software Expenditure ................ Total ............

56.18 61.28 638.61 3,596.60 122.31 131.61 240.23 47.07 4,893.89 3,656.13

0.31 1.97 45.52 329.60 7.99 22.42 2.58 169.88 9.07 589.34 1,291.43

7.48 12.94 155.22 10.68 20.62 206.94 53.67

49.01 63.25 671.19 3,770.98 119.62 133.41 2.58 410.11 56.14 5,276.29 4,893.89

2.98 153.86 1,985.69 52.23 54.85 41.14 35.54 2,326.29 1,841.68

0.67 19.59 276.69 7.03 17.99 0.52 36.97 11.74 371.20 514.00

3.65 169.08 2,127.68 51.48 59.97 0.52 78.11 47.28 2,537.77 2,326.29

49.01 59.60 502.11 1,643.30 68.14 73.44 2.06 332.00 8.86 2,738.52 2,567.60

56.18 58.30 484.75 1,610.91 70.08 76.76 199.09 11.53 2,567.60

90

MAHINDRA & MAHINDRA LIMITED

SCHEDULE V
Investments (At Cost, unless otherwise specified) :
2010 Number Face Value Per Unit Rupees Note Long Term Shares (Non-trade and fully paid-up unless otherwise specified) : Unquoted : (a) In Subsidiary Companies : (i) Equity Shares : Mahindra Engineering and Chemical Products Limited ............. Mahindra Intertrade Limited [including 1,50,00,000 shares partly paid-up Rs. 3 per share] .................................................. Mahindra Steel Service Centre Limited ...................................... (c)(1) Mahindra USA Inc. .................................................................... (b)(c)(2) Mahindra Gujarat Tractor Limited ............................................. Mahindra Shubhlabh Services Limited ....................................... (b) Mahindra First Choice Wheels Limited ...................................... Mahindra Logisoft Business Solutions Limited .......................... (c)(3) Bristlecone Limited ..................................................................... Mahindra & Mahindra South Africa (Proprietary) Limited ......... (b)(c)(4) Mahindra Engineering Services Limited. (b) Mahindra Overseas Investment Company (Mauritius) Limited .. (b)(c)(5) Mahindra Gears & Transmissions Private Limited (formerly known as Mahindra SAR Transmission Private Limited) ............ (c)(6) Mahindra Renault Private Limited ............................................. (b) Mahindra Navistar Automotives Limited ................................... (b)(c)(7) Mahindra Vehicle Manufactures Limited ................................... (b)(c)(8) Mahindra Castings Limited (formerly known as Mahindra Castings Private Limited) ............................................................ (c)(9) Mahindra Logistics Limited ........................................................ Mahindra Navistar Engines Private Limited ............................... (c)(10) Mahindra Aerospace Private Limited ......................................... (c)(11) Mahindra First Choice Services Limited ..................................... (c)(12) Mahindra Gears International Limited ....................................... Mahindra Holdings Limited ....................................................... Mahindra Consulting Engineers Limited .................................... Mahindra Holidays & Resorts India Limited (transferred to Quoted Subsidiary) ............................................ (c)(13) NBS International Limited .......................................................... Mahindra Two Wheelers Limited ............................................... Mahindra Automotive Australia Pty. Ltd. .................................. Defence Land Systems India Private Limited (formerly known as Mahindra Defence Land Systems Private Limited) ................ (c)(14)&(15) Mahindra EcoNova Private Limited ............................................ (c)(16) (ii) SeriesA Preference Shares : Bristlecone Limited ....................... (iii) SeriesB Preference Shares : Bristlecone Limited ....................... (iv) 10.50% Non Cumulative Redeemable Preference Shares : Mahindra Lifespace Developers Limited .................................... (v) Preference Shares : Mahindra Gears International Limited ....... (vi) Share Warrants Convertible into Equity Shares : Mahindra Forgings Limited ........................................................ (c)(17)

Rupees crores
2009 Current Long Term Current

53,98,462 2,71,00,006 14,00,00,000 16,83,218 2,46,81,437 3,47,77,255 42,22,250 5,20,00,000 81,26,218 5,87,95,000 40,30,806 10,16,24,232 20,70,32,300 58,50,00,000 2,14,40,052 4,90,49,900 8,41,50,000 1,05,50,000 1,63,50,000 2,07,00,001 2,25,49,999 5,10,000 50,490 11,80,00,000 7,00,000 3,42,62,000 10,000 70,00,000 69,20,000 10,00,000 23,00,000 42,99,270

10 10 10 US$ 0.10 10 10 10 10 US$ 0.001 ZAR 1 10 US$ 1 10 10 10 10 10 10 10 10 10 EURO 1 10 10 10 10 10 AU$ 1 10 10 US$ 0.001 US$ 0.001 100.00 EURO 1 10

5.82 16.60 66.37 3.55 25.72 47.44 19.26 28.54 59.96 270.10 21.75 154.38 209.00 585.00 130.25 49.05 84.15 10.55 16.35 137.83 22.55 0.64 5.07 118.00 2.27 34.26 0.01 31.72 15.12 10.00 15.31 14.72 2,211.34

5.82 16.60 6.38 44.30 3.55 25.72 47.44 5.78 19.26 17.24 59.96 204.28 40.77 154.38 165.31 485.00 105.25 49.05 21.17 0.05 11.05 137.83 22.55 0.64 30.25 5.07 118.00 2.27 31.72 15.12 10.00 15.31 1,877.12

(b) 312 8,55,646 1,00,000 35,000 75,000 7,49,997 50,000 20,000 2,85,000 9,00,000 5,00,000 13,10,000 75,00,000 2,81,24,794 19,750 4,98,000 100 10 10 10 10 10 10 10 10 10 10 10 10 10 5 10

In Other Companies : (i) Equity Shares : Montreal Engineering International Limited .............................. Machinery Manufacturers Corporation Limited ......................... Judricks (India) Private Limited .................................................. Mahindra & Mahindra Contech Limited .................................... NTTF Industries Limited ............................................................. Officemartindia.com Limited ..................................................... Indian NGOs.com Private Limited .............................................. Sixth Sense Studios Private Limited ........................................... Utility Engineers (India) Limited ................................................. Mahindra Construction Company Limited ................................. Business Standard Limited ......................................................... Mahindra Sona Limited ............................................................. New Tirupur Area Development Corporation Limited ............... Owens Corning India Limited .................................................... PSL Erickson Limited .................................................................. Triton Overwater Transport Agency Limited .............................. Others ........................................................................................

(b)

(a)

* 0.94 0.10 0.04 0.15 0.22 0.06 0.02 0.29 0.97 0.09 1.64 7.50 28.12 0.01 0.58 *

* 0.94 0.10 0.04 0.15 0.22 0.06 0.02 0.29 0.97 0.09 1.64 7.50 28.12 0.01 0.58 *

*denotes amounts less than Rs. 50,000

91

SCHEDULE V (Contd.)
Investments (At Cost, unless otherwise specified) :
2010 Number Face Value Per Unit Rupees (ii) 2,296 1,78,000 5,40,000 23,00,423 100 (iii) 100 (iv) 100 (v) 4% Taxfree Cumulative Preference Shares : Machinery Manufactures Corporation Limited .......................... 11% Redeemable Preference Shares : Sixth Sense Studios Private Limited ........................................... 10% NonCumulative Redeemable Participating Preference Shares : Mahindra Construction Company Limited ................................. 8% NonCumulative Redeemable Preferred Stock : Prana Holdings Inc. USA ........................................................... 13.83 61.76 Quoted : (a) 2,08,46,126 5,82,41,532 4,45,26,339 1,64,66,789 6,99,85,642 10 10 10 10 10 10 In Subsidiary Companies : (i) Equity Shares : Mahindra Lifespace Developers Limited .................................... Mahindra & Mahindra Financial Services Limited ...................... Tech Mahindra Limited (transferred to Quoted Non Subsidiary) Mahindra Forgings Limited ........................................................ Mahindra Ugine Steel Company Limited ................................... Mahindra Holidays & Resorts India Limited (transferred from Unquoted Subsidiary) ................................................................ (b) (b)(c)(17) 276.95 150.91 795.25 49.26 28.86 1,301.23 (b) 41,26,417 10,59,543 13,41,203 25 2,85,440 900 5,37,76,252 10 10 10 100 10 10 10 In Other Companies : (i) Equity Shares : Swaraj Engines Limited .............................................................. Swaraj Automotives Limited ...................................................... Mahindra Composites Limited ................................................... Jardine Henderson Limited ........................................................ IDBI Bank Limited ...................................................................... Power Trading Corporation of India Limited ............................. Tech Mahindra Limited (transferred from Quoted Subsidiary) .. 1.63 12.45 2.90 * 2.28 191.81 211.07 Shares : (Trade & fully paid-up unless otherwise specified) : Unquoted Others : (i) 19,45,867 10 (ii) 24,54,133 10 Equity Shares : Wardha Power Company Limited [19,45,867 Class A shares partly paid-up Re.1 per share] ...................................................................... 0.01% Class A Redeemable Preference Shares : Wardha Power Company Limited ....................................................... (c)(18) 2.45 2.64 Debentures/Bonds : (Non-trade & fully paid-up) : Unquoted : (a) 25,00,000 13 100 (b) 100 In Subsidiary Companies : 2.00% Mahindra Holdings Limited ..................................................... In Other Companies : 0.50% The East India Clinic Limited ................................................... * 25.00 * 25.00 25.00 25.00 (c)(18) 0.19 * * 1.63 12.45 2.90 * 2.28 19.26 * * 276.95 150.91 191.81 754.14 49.26 1,423.07 13.83 61.76 5.40 5.40 1.78 1.78 (b) 0.02 0.02 Note Long Term

Rupees crores
2009 Current Long Term Current

* denotes amounts less than Rs. 50,000

92

MAHINDRA & MAHINDRA LIMITED

SCHEDULE V (Contd.)
Investments (At Cost, unless otherwise specified) :
2010 Number Face Value Per Unit Rupees Quoted : (a) 250 18 2,085 50 500 1,000 1,000 10,00,000 10,00,000 (b) 10,00,000 10,00,000 1,00,000 10,00,000 1,00,000 1,00,000 1,00,000 In Subsidiary Companies : 7.50% Mahindra & Mahindra Financial Services Limited ................... 8.50% Mahindra & Mahindra Financial Services Limited ................... In Other Companies : 7.00% Power Finance Corporation Limited (2011) Series XXII ........... 7.99% Infrastructure Development Finance Company Limited ........... 6.85% India Infrastructure Finance Company Limited ........................ 7.75% Rural Electrification Corporation Limited ................................. 6.70% Indian Railway Finance Corporation Limited ........................... 6.00% Indian Railway Finance Corporation Limited ........................... 6.30% Indian Railway Finance Corporation Limited ........................... (d)(1) (d)(2) 25.00 Less : Excess of cost over fair value of current investments of Debentures/ Bonds ................................................................................................. 25.00 Other Investments : Trust Securities : Unquoted : Sunrise Initiatives Trust ................................................................................. M & M Benefit Trust .................................................................................... Mahindra World Motor Driving School Trust ............................................... M & M Fractional Entitlement Trust ............................................................. 88.37 1,459.77 0.01 0.01 1,548.16 Government Securities : Unquoted : 26,000^ 6 Years National Savings Certificates ........................................................... (e)(1) * 1,548.16 Quoted : 1,92,70,000^ Government of India Securities .................................................................... (e)(2) 1,548.16 Less : Excess of cost over fair value of current investments of Government Securities ........................................................................................... 1,548.16 ^ Total Face Value Units : Unquoted : 1,56,55,599 50,17,665 1,00,00,271 46,93,285 10 10 10 10 Birla Sun Life Mutual Fund - Saving Fund Institutional Daily Dividend ....... Birla Sun Life Mutual Fund - FTP Institutional Series AV Dividend .............. Birla Sun Life Mutual Fund - FTP Institutional Series AK Dividend .............. Birla Sun Life Mutual Fund - Dynamic Bond Fund Retail Plan Monthly Dividend ....................................................................................................... 10 Birla Sun Life Mutual Fund - BSL Floating Rate Fund Long Term Institutional Weekly Dividend ....................................................................... 10 Canara Robeco Mutual Fund - Liquid Super Institutional Daily Dividend Reinvestment Fund ....................................................................................... (f)(2) (f)(3) (f)(4) (f)(5) (f)(6) (f)(7) 15.67 5.24 10.02 4.71 34.84 5.00 10.00 1.91 1.91 1.91 * 1.91 1,511.12 1,511.12 1.91 1.91 1.91 1.91 * 1,511.12 51.33 1,459.77 0.01 0.01 1,511.12 25.00 1.80 20.95 5.00 5.00 10.00 10.00 77.75 77.75 77.75 25.00 25.00 20.22 1.80 15.00 37.02 37.02 (0.35) 36.67 Note Long Term

Rupees crores
2009 Current Long Term Current

(d)(3) (d)(4) (d)(5) (d)(6) (d)(7) (d)(8)

* denotes amounts less than Rs. 50,000

93

SCHEDULE V (Contd.)
Investments (At Cost, unless otherwise specified) :
2010 Number Face Value Per Unit Rupees 10 Canara Robeco Mutual Fund - Treasury Advantage Super Institutional Daily Dividend Reinvestment ........................................................................ 10 L & T Mutual Fund - Freedom Income STP Institutional Daily Dividend Reinvestment Plan (formerly known as DBS Chola Mutual Fund) ............... 10 Deutsche Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend ....................................................................................................... 10 Deutsche Mutual Fund - Short Maturity Fund Institutional Weekly Dividend Plan ............................................................................................... 1,000 DSP Black Rock Mutual Fund - Floating Rate Fund Institutional Plan Daily Dividend ....................................................................................................... 10 Fortis Mutual Fund - Money Plus Institutional Plan Daily Dividend ............. 10 Fidelity Mutual Fund - Ultra Short Term Debt Fund Institutional Daily Dividend .................................................................................................. 10 Fidelity Mutual Fund - Ultra Short Term Debt Fund Super Institutional Daily Dividend .............................................................................................. 1,000 Franklin Templeton Mutual Fund - India Treasury Management Account Super Institutional Plan Daily Dividend ........................................................ 10 Franklin Templeton Mutual Fund - India Ultra Short Bond Fund Super Institutional Plan Daily Dividend .................................................................. 10 Franklin Templeton Mutual Fund - Fixed Horizon Fund Series VII Plan A Institutional Growth ..................................................................................... 10 HDFC Mutual Fund - Cash Management Fund Savings Plan Daily Dividend Reinvestment Option .................................................................................... 10 HDFC Mutual Fund - Cash Management Fund Treasury Advantage Plan Wholesale Daily Dividend Reinvestment ....................................................... 10 HDFC Mutual Fund - Floating Rate Income Fund Short Term Plan Wholesale Option Dividend Reinvestment ................................................... 10 HDFC Mutual Fund - High Interest Fund Short Term Plan Dividend Option 10 HSBC Mutual Fund - Floating Rate LT Institutional Option Weekly Dividend 10 HSBC Mutual Fund - Fixed Term Series 54 Institutional Dividend Tenure 370 Days ...................................................................................................... 10 IDFC Mutual Fund - Cash Fund Super Institutional Plan C Dividend ........... 10 IDFC Mutual Fund - Money Manager Fund TP Super Institutional Plan C Daily Dividend .............................................................................................. 10 IDFC Mutual Fund - SSIF Short Term Plan B Fortnightly Dividend ............... 10 IDFC Mutual Fund - Money Manager Fund Investment Plan B Daily Dividend .................................................................................................. 10 JM Financial Mutual Fund - Money Manager Fund Super Plus Plan Daily Dividend ....................................................................................................... 10 JM Financial Mutual Fund - High Liquidity Fund Super Institutional Plan Daily Dividend ...................................................................................... 10 J P Morgan Mutual Fund - India Short Term Income Fund Weekly Dividend Reinvestment ................................................................................. 10 Kotak Mahindra Mutual Fund - Liquid Institutional Premium Daily Dividend 10 Kotak Mahindra Mutual Fund - Floater Long Term Daily Dividend ............. 10 Kotak Mahindra Mutual Fund - FMP 14M Series 3 Institutional Dividend .. 10 Kotak Mahindra Mutual Fund - FMP 15M Series 5 Institutional Dividend .. 10 Kotak Mahindra Mutual Fund - Quarterly Interval Plan Series 2 Dividend .. 10 LIC Mutual Fund - Income Plus Fund Daily Dividend Plan ........................... 10 LIC Mutual Fund - Fixed Maturity Plan - Series 43 (13 Months) ................. 10 LIC Mutual Fund - Savings Plus Fund Daily Dividend Plan .......................... 10 Principal Mutual Fund - Cash Management Fund Liquid Option Institutional Premium Plan Dividend Reinvestment Daily ............................. 10 Principal Mutual Fund - Floating Rate Fund FMP Institutional Option Dividend Reinvestment Daily ........................................................................ 10 Prudential ICICI Mutual Fund - Institutional Liquid Plan Super Institutional Daily Dividend .............................................................................................. 10 Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend Note Long Term

Rupees crores
2009 Current Long Term Current

1,64,32,073 7,03,46,691 49,94,768 2,52,409 1,71,51,007 2,35,04,193 98,27,205 1,71,51,909 48,91,694 4,02,17,825 50,72,403 1,02,10,779 59,51,879 20,00,000 4,10,11,250 50,00,000 7,43,91,791 1,82,48,723 1,12,48,555 25,09,445

(f)(8) (f)(10) (f)(12) (f)(13) (f)(15) (f)(17) (f)(19) (f)(20) (f)(21) (f)(22) (f)(24) (f)(26) (f)(27) (f)(28) (f)(29) (f)(32) (f)(33) (f)(34) (f)(35) (f)(36) (f)(37) (f)(38) (f)(39) (f)(41) (f)(43) (f)(44) (f)(45) (f)(46) (f)(47) (f)(48) (f)(49) (f)(51) (f)(52) (f)(53) (f)(54) (f)(55)

20.39 70.47 5.22 25.26 17.16 25.00 9.86 17.29 5.18 40.22 5.10 10.23 5.96 2.00 41.34 5.00 74.39 18.25 11.26 25.10

24.14 50.30 50.31 5.08 20.08 10.00 30.57 14.07 34.37 16.14 36.86 15.92 50.00 25.06 14.55 30.39 10.74 5.29 50.27 10.00 50.00 20.00 30.46

94

MAHINDRA & MAHINDRA LIMITED

SCHEDULE V (Contd.)
Investments (At Cost, unless otherwise specified) :
2010 Number Face Value Per Unit Rupees 100 Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend .................................................................................................. 10 Prudential ICICI Mutual Fund - Institutional Short Term Plan Dividend Reinvestment Fortnightly .............................................................................. 10 Prudential ICICI Mutual Fund - Ultra Short Term Plan Super Premium Daily Dividend Reinvestment ........................................................................ 10 Religare Mutual Fund - Liquid Fund Super Institutional Daily Dividend ...... 10 Religare Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend 10 SBI Mutual Fund - Magnum Insta Cash Fund Daily Dividend Option ......... 10 SBI Mutual Fund - Ultra Short Term Fund Institutional Plan Daily Dividend 10 Sundaram Mutual Fund - Money Fund Super Institutional Daily Dividend . 10 Tata Mutual Fund - Floater Fund Daily Dividend ......................................... 1,000 Tata Mutual Fund - Liquid Super High Investment Fund Daily Dividend ..... 1,000 UTI Mutual Fund - Treasury Advantage Fund Institutional Plan Daily Dividend Option Reinvestment ..................................................................... 1,000 UTI Mutual Fund - Money Market Fund Daily Dividend Option Reinvestment ................................................................................................ 1,000 UTI Mutual Fund - Floating Rate Fund Short Term Plan Institutional Daily Dividend Plan ...................................................................................... 10 UTI Mutual Fund - Fixed Income Interval Fund Quarterly Interval Plan Series I Institutional Dividend Plan Reinvestment ........................................ 10 UTI Mutual Fund - Fixed Income Interval Fund Monthly Interval Plan II Institutional Dividend Plan ........................................................................... Note Long Term

Rupees crores
2009 Current Long Term Current

17,34,030 42,73,736 2,01,73,102 2,59,57,208 5,97,00,423 2,30,86,148 6,41,95,532 1,13,292 3,18,422 2,74,181 50,00,000 1,00,00,000

(f)(56) (f)(57) (f)(58) (f)(59) (f)(60) (f)(61) (f)(62) (f)(64) (f)(65) (f)(66) (f)(67) (f)(68) (f)(69) (f)(70) (f)(71)

18.33 5.18 20.22 26.00 100.00 23.10 64.43 11.33 31.95 27.44 5.00 10.00 813.30 (0.09) 813.21

5.50 19.62 25.02 25.09 20.23 30.00 50.60 830.50 830.50

Less : Excess of cost over fair value of current investments of Mutual Fund Units

25,00,00,000 25,00,00,000 25,00,00,000 70,00,00,000

Certificate of Deposits : Unquoted : ^ State Bank of Travancore ........................................................................ ^ Central Bank of India .............................................................................. ^ State Bank of Hyderabad ........................................................................ ^ State Bank of Mysore .............................................................................. ^ Total Face Value

(g)(1) (g)(2) (g)(3) (g)(4)

5,361.20

24.82 24.81 24.82 69.50 143.95 1,036.82 6,398.02 4,806.15 1,591.96 6,398.11 (0.09) 6,398.02

4,917.33

869.08 5,786.41 4,305.50 1,481.26 5,786.76 (0.35) 5,786.41 3,218.81

Total ........... Cost (net of amounts written off) of Unquoted Investments .................... Cost of Quoted Investments ...................................................................... Less : Excess of cost over fair value of Current Investments (Net) ............

Market Value of Quoted Investments ........................................................ Notes: Number 21 74 Face Value Per Unit Rupees (a) 100 # 16,667 # (Rials) Shares (unquoted) in other companies : The United Spices Importers Limited (Equity B Shares) ................... Engineering & Metal Works, Tehran ................................................... Total ........... # (b)

12,216.75

Long Term Rupees 1 1 2

Long Term Rupees 1 1 2

Written off to Re. 1 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 Shares Sold Nos. 37,23,874 63,49,500 35,26,094 33,69,191 Acquired/ (Redeemed/ Sold) Nos. 24,54,133 Share Warrants

Acquired Nos. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) Mahindra Steel Service Centre Limited .................................................. Mahindra USA Inc ................................................................................. Mahindra Logisoft Business Solutions Limited ....................................... Mahindra & Mahindra South Africa (Proprietary) Limited ..................... Mahindra Overseas Investment Company (Mauritius) Limited .............. Mahindra Gears & Transmissions Private Limited .................................. Mahindra Navistar Automotives Limited ................................................ Mahindra Vehicle Manufacturers Limited .............................................. Mahindra Castings Limited............... Mahindra Navistar Engines Private Limited ............................................ Mahindra Aerospace Private Limited ..................................................... Mahindra First Choice Services Limited ................................................. Mahindra Holidays & Resorts India Limited ........................................... Defence Land Systems India Private Limited .......................................... Defence Land Systems India Private Limited .......................................... Mahindra EcoNova Private Limited ........................................................ Mahindra Forgings Limited .................................................................... Wardha Power Company Limited .......................................................... @ # $ (d) Subscribed to on rights basis. Consideration other than Cash. Conversion of warrants into Equity. 4,50,00,000@ 1,84,30,000 1,40,25,000 4,36,91,700 10,00,00,000 49,52,450@ 6,29,85,000@ 1,05,00,000 53,00,000 68,82,150 2,73,79,850# 10,000 30,00,000$ 19,45,867

Acquired Nos. 72,99,270

Sold/ Converted Nos. 30,00,000

The following are the movements in Debentures/Bonds during the year : Acquired Nos. (1) (2) (3) (4) (5) (6) (7) (8) Mahindra & Mahindra Financial Services Limited .................................. Mahindra & Mahindra Financial Services Limited .................................. Infrastructure Development Finance Company Limited ......................... India Infrastructure Finance Company Limited ...................................... Rural Electrification Corporation Limited ............................................... Indian Railway Finance Corporation Limited ......................................... Indian Railway Finance Corporation Limited ......................................... Indian Railway Finance Corporation Limited ......................................... 7.50% 8.50% 7.99% 6.85% 7.75% 6.70% 6.00% 6.30% 250 2,085 50 500 1,000 1,000 Rs. Crores 25.00 20.95 5.00 5.00 10.00 10.00 Sold Nos. Matured Nos. 200 150

(e)

Government Securities : (1) (2) Face value of Rs. * crores (2009 : Rs. * crores) were lodged as security deposit. 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 Nos. (1) (2) (3) (4) Birla Birla Birla Birla Sun Sun Sun Sun Life Life Life Life Mutual Mutual Mutual Mutual Fund Fund Fund Fund Cash Plus Institutional Premium Daily Dividend ............................ Saving Fund Institutional Daily Dividend ....................................... FTP Institutional Series AV Dividend .............................................. FTP Institutional Series AK Dividend .............................................. 98,86,38,498 46,72,55,635 3,83,424 9,06,852 Rs. Crores Sold Nos.

990.57 98,86,38,498 467.57 48,64,19,235 0.38 53,83,424 0.91 1,09,06,852

* denotes amount less than Rs. 50,000

96

MAHINDRA & MAHINDRA LIMITED

SCHEDULE V (Contd.)
Investments (At Cost, unless otherwise specified) :
(f) The following are the movements in Units during the year : Acquired Sold

Nos. (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33) (34) (35) (36) (37) (38) (39) (40) (41) (42) (43) (44) (45) (46) (47) (48) (49) (50) Birla Sun Life Mutual Fund - Dynamic Bond Fund Retail Plan Monthly Dividend ....................... Birla Sun Life Mutual Fund - BSL Floating Rate Fund Long Term Institutional Weekly Dividend ... Canara Robeco Mutual Fund - Liquid Super Institutional Daily Dividend Reinvestment Fund .... Canara Robeco Mutual Fund - Treasury Advantage Super Institutional Daily Dividend Reinvestment ................................................................................................................................ L & T Mutual Fund - Liquid Institutional Daily Dividend Reinvestment Plan ............................... L & T Mutual Fund - Freedom Income STP Institutional Daily Dividend Reinvestment Plan ....... Deutsche Mutual Fund - Insta Cash Plus Fund Super Institutional Plan Daily Dividend .............. Deutsche Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend ............................. Deutsche Mutual Fund - Short Maturity Fund Institutional Weekly Dividend Plan ..................... DSP Black Rock Mutual Fund - Cash Plus Institutional Daily Dividend ........................................ DSP Black Rock Mutual Fund - Floating Rate Fund Institutional Plan Daily Dividend ................. DSP Black Rock Mutual Fund - Liquidity Fund Institutional Daily Dividend ................................. Fortis Mutual Fund - Money Plus Institutional Plan Daily Dividend ............................................. Fidelity Mutual Fund - Cash Fund Super Institutional Daily Dividend ......................................... Fidelity Mutual Fund - Ultra Short Term Debt Fund Institutional Daily Dividend ........................ Fidelity Mutual Fund - Ultra Short Term Debt Fund Super Institutional Daily Dividend .............. Franklin Templeton Mutual Fund - India Treasury Management Account Super Institutional Plan Daily Dividend ...................................................................................................................... Franklin Templeton Mutual Fund - India Ultra Short Bond Fund Super Institutional Plan Daily Dividend ....................................................................................................................................... Franklin Templeton Mutual Fund - Ultra Short Bond Fund Institutional Plan Dividend .............. Franklin Templeton Mutual Fund - Fixed Horizon Fund Series VII Plan A Institutional Growth .. Franklin Templeton Mutual Fund - Ultra Short Bond Fund Retail Plan Daily Dividend ............... HDFC Mutual Fund - Cash Management Fund Savings Plan Daily Dividend Reinvestment Option .......................................................................................................................................... HDFC Mutual Fund - Cash Management Fund Treasury Advantage Plan Wholesale Daily Dividend Reinvestment ................................................................................................................. HDFC Mutual Fund - Floating Rate Income Fund Short Term Plan Wholesale Option Dividend Reinvestment ................................................................................................................................ HDFC Mutual Fund - High Interest Fund Short Term Plan Dividend Option ............................... HDFC Mutual Fund - Liquid Fund Premium Plan Dividend Daily Reinvestment .......................... HSBC Mutual Fund - Cash Fund Institutional Plus Daily Dividend ............................................... HSBC Mutual Fund - Floating Rate LT Institutional Option Weekly Dividend .............................. HSBC Mutual Fund - Fixed Term Series 54 Institutional Dividend Tenure 370 Days ................... IDFC Mutual Fund - Cash Fund Super Institutional Plan C Dividend ........................................... IDFC Mutual Fund - Money Manager Fund TP Super Institutional Plan C Daily Dividend .......... IDFC Mutual Fund - SSIF Short Term Plan B Fortnightly Dividend ............................................... IDFC Mutual Fund - Money Manager Fund Investment Plan B Daily Dividend ........................... JM Financial Mutual Fund - Money Manager Fund Super Plus Plan Daily Dividend ................... JM Financial Mutual Fund - High Liquidity Fund Super Institutional Plan Daily Dividend .......... J P Morgan Mutual Fund - India Liquid Fund Super Institutional Daily Dividend Plan ............... J P Morgan Mutual Fund - India Short Term Income Fund Weekly Dividend Reinvestment ....... J P Morgan Mutual Fund - Treasury Fund Super Institutional Daily Dividend Plan ..................... Kotak Mahindra Mutual Fund - Liquid Institutional Premium Daily Dividend ............................. Kotak Mahindra Mutual Fund - Floater Long Term Daily Dividend ............................................. Kotak Mahindra Mutual Fund - FMP 14M Series 3 Institutional Dividend .................................. Kotak Mahindra Mutual Fund - FMP 15M Series 5 Institutional Dividend .................................. Kotak Mahindra Mutual Fund - Quarterly Interval Plan Series 2 Dividend .................................. LIC Mutual Fund - Income Plus Fund Daily Dividend Plan .......................................................... LIC Mutual Fund - Fixed Maturity Plan Series - 43 (13 Months) ................................................. LIC Mutual Fund - Liquid Fund Dividend Plan ............................................................................. 50,17,665 1,00,00,271 32,90,50,995 5,99,76,723 5,13,79,110 2,65,51,053 93,80,71,958 37,56,06,173 49,94,768 99,998 2,52,409 2,65,051 22,10,423 18,19,29,043 48,260 5,26,24,997 78,46,296 30,03,38,162 4,50,48,136 5,01,841 99,47,05,915 16,47,54,932 32,15,39,414 48,91,694 14,79,83,470 7,45,93,214 59,70,113 3,87,722 1,01,19,55,742 27,71,82,280 50,72,403 1,02,10,779 1,66,16,605 3,09,12,096 13,73,58,303 20,00,000 4,96,13,661 16,69,77,801 13,38,82,000 1,55,811 2,01,410 50,00,000 7,16,37,026 9,88,586 21,71,36,309

Rs. Crores

Nos.

5.24 10.02 330.40 32,43,57,710 74.41 4,35,44,650 51.96 5,13,79,110 26.96 5,03,22,742 940.92 93,80,71,958 376.28 35,54,87,714 5.22 10.00 99,998 25.26 26.51 2,65,051 2.21 5,25,01,773 183.20 18,19,29,043 0.05 51,23,218 52.64 5,55,44,365 785.16 79,46,229

300.69 33,08,74,759 45.10 4,50,48,136 0.50 1,40,65,033 5,01,841

1,058.01 1,00,35,16,030 165.27 17,10,17,674 324.14 30,43,87,505 5.18 74.63 6.71 0.39 7,45,93,214 3,87,72,145 1,63,12,060 181.42 14,79,83,470

1,012.21 1,06,19,40,859 277.22 23,69,64,455 5.10 10.23 16.63 30.96 2.00 49.66 4,16,63,221 2,49,60,217 4,96,13,661

137.47 13,73,58,303

204.18 17,88,76,624 134.95 12,30,18,314 0.16 0.20 5.00 0.99 1,08,94,130 54,86,600 1,09,88,586

71.64 12,19,06,783 238.42 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 Nos. (51) LIC Mutual Fund - Savings Plus Fund Daily Dividend Plan .......................................................... (52) Principal Mutual Fund - Cash Management Fund Liquid Option Institutional Premium Plan Dividend Reinvestment Daily ........................................................................................................ (53) Principal Mutual Fund - Floating Rate Fund FMP Institutional Option Dividend Reinvestment Daily ............................................................................................................................................. (54) Prudential ICICI Mutual Fund - Institutional Liquid Plan Super Institutional Daily Dividend ....... (55) Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend ........................... (56) Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend ........................... (57) Prudential ICICI Mutual Fund - Institutional Short Term Plan Dividend Reinvestment Fortnightly (58) Prudential ICICI Mutual Fund - Ultra Short Term Plan Super Premium Daily Dividend Reinvestment ................................................................................................................................ (59) Religare Mutual Fund - Liquid Fund Super Institutional Daily Dividend ...................................... (60) Religare Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend ............................... (61) SBI Mutual Fund - Magnum Insta Cash Fund Daily Dividend Option ......................................... (62) SBI Mutual Fund - Ultra Short Term Fund Institutional Plan Daily Dividend ............................... (63) Sundaram Mutual Fund - Liquid Plus Super Institutional Dividend Reinvestment Daily .............. (64) Sundaram Mutual Fund - Money Fund Super Institutional Daily Dividend ................................. (65) Tata Mutual Fund - Floater Fund Daily Dividend ......................................................................... (66) Tata Mutual Fund - Liquid Super High Investment Fund Daily Dividend ..................................... (67) UTI Mutual Fund - Treasury Advantage Fund Institutional Plan Daily Dividend Option Reinvestment ................................................................................................................................ (68) UTI Mutual Fund - Money Market Fund Daily Dividend Option Reinvestment ........................... (69) UTI Mutual Fund - Floating Rate Fund Short Term Plan Institutional Daily Dividend Plan (70) UTI Mutual Fund - Fixed Income Interval Fund Quarterly Interval Plan Series I Institutional Dividend Plan Reinvestment ......................................................................................................... (71) UTI Mutual Fund - Fixed Income Interval Fund Monthly Interval Plan II Institutional Dividend Plan .............................................................................................................................................. (72) UTI Mutual Fund - Liquid Cash Plan Institutional Daily Income Option ...................................... (73) UTI Mutual Fund - Money Market Fund Daily Dividend Option ................................................. (g) The following are the movements in Certificate of Deposits during the year : Acquired Face Value Rs. Crores (1) (2) (3) (4) (5) State Bank of Travancore ....................................................................... Central Bank of India ............................................................................. State Bank of Hyderabad ....................................................................... State Bank of Mysore ............................................................................ State Bank of Patiala .............................................................................. 25.00 25.00 25.00 70.00 10.00 Total Value Rs. Crores 24.82 24.81 24.82 69.50 9.99 Sold Face Value Rs. Crores Matured Face Value Rs. Crores 10.00 19,42,93,108 2,74,35,98,984 62,37,68,587 25,34,30,386 16,56,33,324 2,77,42,447 42,73,736 2,01,73,102 7,07,46,709 1,33,53,027 70,66,03,282 13,02,72,046 22,26,24,551 1,04,38,43,608 39,45,46,624 50,75,789 23,36,801 57,10,120 11,23,526 50,00,000 1,00,00,000 10,14,986 5,70,22,369 Rs. Crores Sold Nos.

194.29 11,99,01,317 2,743.79 2,77,53,46,761 624.54 61,25,20,032 818.26 27,09,19,941 175.13 19,44,37,457 293.35 5.18 20.22 70.79 13.37 2,60,08,417 7,62,46,961 69,89,028

1,183.58 66,18,40,622 130.35 10,71,85,898 223.45 22,26,24,551 1,053.79 1,06,86,95,339 395.95 35,05,04,484 565.71 233.73 572.76 112.44 5.00 10.00 103.47 87.85 53,44,963 27,29,416 53,91,698 8,49,345 10,14,986 5,70,22,369

98

MAHINDRA & MAHINDRA LIMITED

SCHEDULE VI
2010 Current Assets, Loans and Advances : (A) Inventories (at cost or net realisable value whichever is lower) : (i) Finished Products produced and purchased for sale ........................... (ii) Contracts and Work-in-Progress ........................................................... (iii) Manufactured Components ................................................................. (iv) Raw Materials and Bought-out Components ....................................... (v) Property Development Activity - Work-in-Progress [including completed flats and premises Rs. 6.32 crores (2009 : Rs. 6.32 crores)] ...................................................................... (vi) Stores and Spares ................................................................................. (vii) Tools ..................................................................................................... (B) Sundry Debtors (Unsecured) : Outstanding over six months : Considered good ........................................ : Considered doubtful ................................... Other Debts : Considered good ........................................ : Considered doubtful ...................................

Rupees crores 2009

491.38 75.03 73.89 494.50 6.32 23.47 24.19 1,188.78 101.42 113.25 214.67 1,156.66 1,156.66 1,371.33 113.25 1,258.08 221.17 242.47 1,268.06 * 1,510.53

471.81 88.87 55.93 391.01 6.32 23.56 23.17 1,060.67 125.74 72.12 197.86 917.91 917.91 1,115.77 72.12 1,043.65 354.39 275.65 938.73 0.09 1,214.47

Less : Provision for Doubtful Debts ............................................................. -(C) Cash and Bank Balances : Cash, cheques and stamps on hand ........................................................... Balances with Scheduled Banks : (i) On Current Account ............................................................................. (ii) On Fixed Deposit Account @ ............................................................... (iii) On Margin Account ............................................................................. @ [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 .................................................................................... (D) Other Current Assets : Interest accrued on Investments .................................................................. Others .......................................................................................................... (E) Loans and Advances [Note 7] : (Unsecured, considered good unless otherwise stated) : Advances and Loans to subsidiaries : Considered good ......................................................................................... Considered doubtful .................................................................................... Less : Provision for Doubtful Advances and Loans ...................................... -497Bills of exchange, considered doubtful ....................................................... Less : Provision for Doubtful bills ................................................................ Advances recoverable in cash or in kind or for value to be received : Considered good ......................................................................................... Considered doubtful .................................................................................... Less : Provision for Doubtful Advances ....................................................... Payments towards Income-tax and Surtax [Note 18(d)] .............................. Balances - Customs, Port Trust, Excise, etc. ................................................. Total..... * denotes amounts less than Rs. 50,000

11.53 1,743.23 3.38 47.49 50.87

5.57 1,574.43 1.42 0.14 1.56

561.63 5.99 567.62 5.99 1.02 1.02 946.70 57.86 1,004.56 57.86 946.70 292.04 1.06 1,801.43 6,042.39 561.63

402.93 24.99 427.92 24.99 402.93 1.02 1.02 757.11 48.64 805.75 48.64 757.11 221.67 0.91 1,382.62 5,062.93

99

SCHEDULE VII
2010 Current Liabilities and Provisions : (A) Current Liabilities # : Acceptances Sundry Creditors : (i) Total outstanding dues of micro and small enterprises [Note 8]... 5.99 107.25

Rupees crores 2009

106.26

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].. (iii) Dues to Subsidiaries ........................................................................ 3,080.85 173.25 3,260.09 Dividend payable ............................................................................. Balances on Directors Current Accounts ........................................ Interest accrued but not due on loans ........................................... 6.89 3.10 22.67 3,400.00 # There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund. (B) Provisions : Proposed Dividend .................................................................................. Provision for Tax on Proposed Dividend ................................................. Provision for diminution in value of long term investments .................. Proision for premium payable on redemption of convertible bonds ...... Provision for compensated absences ...................................................... Provision for taxation ............................................................................. Provision Others [Note 9] ....................................................................... 549.52 74.23 266.43 238.49 274.58 173.63 219.66 1,796.54 Total 5,196.54 278.83 33.23 201.02 269.51 245.76 81.76 167.45 1,277.56 4,797.76 3,206.19 124.62 3,336.80 6.19 2.21 68.74 3,520.20

SCHEDULE VIII
2010 Miscellaneous Expenditure (to the extent not written off or adjusted) : (a) Finance Charges ..................................................................................... (b) Separation and Other Costs ................................................................... Total 4.12 4.12

Rupees crores 2009

11.69 0.86 12.55

100

MAHINDRA & MAHINDRA LIMITED

SCHEDULE IX
2010 Income from Operations and Other Income : (A) Income from Operations : Income from services rendered .............................................................. Scrap Sales ............................................................................................. Octroi Refund ......................................................................................... Other Operating Income ........................................................................ Total......... (B) Other Income : Dividends on Investments in subsidiaries - Gross. .................................. Dividends on other Investments - Gross - Non Trade [Note 10(a)] ........ Profit on sale of Investments (Net) [Note 10(b)] .................................... Miscellaneous Income ............................................................................ Total........ 83.29 49.47 10.40 56.19 199.35 343.83 70.14 72.49 77.60 564.06

Rupees crores 2009

272.45 63.73 44.90 63.54 444.62

131.83 46.21 53.22 39.08 270.34 Rupees crores

SCHEDULE X
2010 Raw 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 ...................... (ii) Contracts and Work-in-Progress ...................................................... (iii) Manufactured Components ............................................................ Add : Stock Taken Over on Amalgamation : (i) Finished Products produced and purchased for sale ...................... Less : Closing Stock : (i) Finished Products produced and purchased for sale ...................... (ii) Contracts and Work-in-Progress ...................................................... (iii) Manufactured Components ............................................................ 491.38 75.03 73.89 640.30 (Increase)/Decrease in Stock ................................................................... (B) Consumption of Raw Materials and Bought-out Components : Opening Stock ........................................................................................ Add : Purchases [including outside processing charges Rs. 281.83 crores (2009 : Rs. 224.06 crores)] ................................................ Add : Stock Taken Over on Amalgamation ............................................ Less : Closing Stock ................................................................................ (C) Purchases of Finished Products for sale ................................................. Total........ 391.01 11,799.05 12,190.06 494.50 11,695.56 661.05 12,332.92 (23.69) 471.81 88.87 55.93 616.61

2009

579.43 53.10 48.15 680.68 80.61 11.61 92.22 471.81 88.87 55.93 616.61 156.29 351.95 8,756.79 9,108.74 54.06 391.01 8,771.79 346.15 9,274.23

(ii) Contracts and Work-in-Progress ......................................................

101

SCHEDULE XI
2010 Personnel : Salaries, Wages, Bonus, etc. .......................................................................... Contribution to Provident and other funds ................................................... Gratuity ........................................................................................................ Welfare ........................................................................................................ Total........ 988.10 66.89 31.31 112.17 1,198.47

Rupees crores 2009 822.36 58.54 50.13 93.58 1,024.61

SCHEDULE XII
2010 Interest, Commitment and Finance Charges : On Term Loans and Debentures On Others (Net) Less : Interest Income : (i) Interest on Government Securities, Debentures and Bonds - Gross [Note 10(c)] (ii) Interest - Others - Gross [Note 10(d)] 148.91 7.94 156.85

Rupees crores 2009

124.60 9.52 134.12

4.68 124.36 129.04

4.76 84.10 88.86 45.26

Total........

27.81

SCHEDULE XIII
2010 Other Expenses : Stores consumed Tools consumed Power and Fuel Rent including lease rentals Rates and Taxes Insurance Repairs and Maintenance [Note 11] : Buildings ................................................................................................. Machinery ............................................................................................... Others ..................................................................................................... Advertisement Commission on sales/contracts (Net) Discount allowed Freight outward Sales Promotion Expenses Miscellaneous Expenses [Note 12] Directors fees Donations and contributions [Note 27] Loss on Fixed Assets sold/scrapped/written off (Net) Excess of cost over fair value of Current Investments (Net) Provision for doubtful debts/advances (Net) [Note 25] Total........ 75.27 29.68 120.97 47.01 16.53 11.72 22.56 96.92 33.10 152.58 139.78 70.54 4.80 269.73 317.17 824.88 0.14 9.35 20.83 (0.26) 51.02 2,161.74

Rupees crores 2009 66.89 23.88 98.69 49.41 12.68 11.95 17.88 75.36 28.29 121.53 96.49 47.91 7.45 215.47 208.02 779.85 0.09 5.97 1.19 (1.57) 31.44 1,777.34

102

MAHINDRA & MAHINDRA LIMITED

SCHEDULE XIV
Notes on Accounts for the year ended 31st March, 2010
1. 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) (b) (i) (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. Leasehold land is amortised over the period of the lease. 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) (2) 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. 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 assets 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. Companys 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. Companys 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) (b) 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. 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 Companys 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) (b) (c) 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. 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. 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. 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. 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. 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. 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. 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. Rupees crores 2010 (a) Movements during the year : (i) Securities Premium Account : Additions, arising out of exercise of options ......................................................... Additions, arising out of issue of Ordinary (Equity) Shares to M&M ESOP Trust .................................................................................................... Premium on conversion of Debentures and Bonds ................................................ Reversal of Premium on buyback of Zero Coupon Convertible Bonds [Net of Tax of Rs. Nil (2009 : Rs. 5.07 crores)] ...................................................... Reduction of provision for premium on redemption of Zero Coupon Convertible Bonds [Net of Tax of Rs. 10.30 crores (2009 : Rs. Nil)] .................... 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)] ............................................................... Effect of tax rate change on amounts debited to Securities Premium Account .... Increase of provision for premium on redemption of Zero Coupon Convertible Bonds [Net of Tax of Rs. Nil (2009 : Rs. 20.20 crores )] ........................................ (ii) Revaluation Reserve : Adjusted against depreciation for the year [Note 1(B)(b)(iii)] ................................ Adjusted in respect of revalued Buildings demolished .......................................... 2.07 71.40 690.60 20.72 784.79 1.02 9.84 10.86 2009

(d) (e) (f) (g) (h) 3.

Reserves and Surplus :

5.88 0.71 6.59 0.41 0.01 0.42

4.95 39.25 44.20 0.38 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) (ii) Rs. 200.00 crores on 9th January, 2011. 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. Loans and Advances on cash credit accounts from the Companys 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.

(ii)

(c)

The following amounts are repayable/convertible by 31st March, 2011 : (i) (ii) Debenture holders ...................................................................... Foreign currency loans from Banks : (a) (b) Secured ............................................................................... Unsecured ........................................................................... : : : Rs. Nil (2009 : Rs. 253.70 crores) Rs. 175.86 crores (2009 : Rs. 101.48 crores) Rs. 78.15 crores (2009 : Rs. 4.88 crores) : Rs. 200.00 crores (2009 : Rs. 700.00 crores)

(iii) Fixed Deposit holders .................................................................... (iv) Rupee Loans : (a) (b) (c) from banks ......................................................................... from financial institutions .................................................. from others .........................................................................

: : :

Rs. Nil (2009 : Rs. 80.00 crores) Rs. 2.60 crores (2009 : Rs. Nil) 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 Companys 93,95,974 Unsecured Fully and Compulsorily Convertible Debentures (FCDs) 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 LIMITED

5.

(a) (b)

Buildings include Rs. * crores (2009 : Rs. * crores) being the value of shares in co-operative housing societies. Additions to fixed assets and capital work-in-progress include : (i) (ii) Interest capitalised during the year Rs. 26.56 crores (2009 : Rs. 15.63 crores). Foreign exchange fluctuation capitalised during the year Rs. 117.79 crores credit (Net) [2009 : Rs. 172.97 crores debit (Net)]. The depreciation charge for the year excludes : (a) (b) (ii) 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. An amount of Rs. 0.01 crores (2009 : Rs. Nil), representing depreciation on revalued buildings demolished during the year.

(c)

(i)

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, Tehran Balance as at 31st March, 2010 ................ Balance as at 31st March, 2009 ................ Maximum balance during the year ........... Maximum balance during the previous year * * * * Bank of Australia 6.39 3.34 11.91 9.51 Bank of China * 0.09 0.59 1.47 The Municipal The Ahmednagar Co-op. Bank Ltd. Merchants Co-op. Bank Ltd. 5.14 2.13 5.68 3.23 * * * *

7.

Loans and Advances include : (a) (b) 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. 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 (a) Dues remaining unpaid as at 31st March Principal .............................................................................................................. Interest on the above ......................................................................................... (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 ......................................................... Interest paid in terms of Section 16 of the Act ................................................. (c) (d) (e) Amount of interest due and payable for the period of delay on payments made beyond the appointed day during the year ............................................. 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 ....... Amount of interest accrued and remaining unpaid as at 31st March ............... 7.39 18.12 0.03 0.89 0.07 2.42 0.05 2009

0.11 0.32 0.50

0.15 0.13 0.32

9.

(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 2010 Balance as at 1 April ................................................... Add : On Amalgamation during the year ..................... Add : Provision made during the year .......................... Less : Utilisation during the year ................................... Balance as at 31st March ...............................................
st

Contingency 2010 8.25 3.58 8.25 3.58 2009 8.16 5.41 5.32 8.25

Retired assets 2010 16.89 1.06 15.83 2009 17.01 0.12 16.89

2009 106.42 0.25 85.05 54.27 137.45

137.45 105.59 63.43 179.61

10. (a) (b) (c)

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. 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). 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. Interest received - others includes tax deducted at source Rs. 12.21 crores (2009 : Rs. 15.11 crores).

(d)

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 (i) Audit Fees ......................................................................................................................... 1.24 1.08 (ii) Company Law matters ...................................................................................................... * * (iii) Other Services ................................................................................................................... 0.66 0.63 (iv) Reimbursement of expenses.............................................................. ............................. 0.01 0.05 1.91 1.76 (b) Cost Auditors 0.03 0.02 0.03 0.02

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. 50,000 108

MAHINDRA & MAHINDRA LIMITED

Post retirement medical The Company provides post retirement medical cover to select grade of employees to cover the retiring employee and their spouse upto a specified age through mediclaim policy on which the premiums are paid by the Company. The eligibility of the employee for the benefit as well as the amount of medical cover purchased is determined by the grade of the employee at the time of retirement. Post retirement housing allowance The Company operates a post retirement benefit scheme for a certain cadre of employees in which a monthly allowance determined on the basis of 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 Funded Plan Gratuity 2010 I. Expense recognised in the Statement of Profit and Loss Account for the year ended 31st March 1. 2. 3. 4. 5. 6. 7. Current service cost Interest cost Expected return on plan assets Actuarial (Gain)/Loss Past service cost Total expense included in Personnel (Schedules XI) Actual return on plan assets 19.17 23.91 (16.23) (7.69) 12.15 31.31 20.75 16.59 18.30 (18.16) 33.40 50.13 18.16 0.37 0.40 4.32 5.09 0.22 0.24 1.81 2.27 1.50 0.84 (1.77) 0.57 2009 Unfunded Plans Post retirement medical 2010 2009 Post retirement housing allowance 2010 2009 Rupees Crores

II. Net Asset/(Liability) recognised in the Balance Sheet as at 31st March 1. 2. 3. Present value of defined benefit obligation as at 31st March Fair value of plan assets as at 31st March Net Asset/(Liability) as at 31 March
st

334.20 266.10 (68.10)

300.61 206.14 (94.47)

9.65 (9.65)

4.84 (4.84)

10.99 (10.99)

III. Change in the obligation during the year ended 31st March 1. 2. 3. 4. 5. 6. 7. 8. Present value of defined benefit obligation at the beginning of the year Addition on account of amalgamation Current service cost Interest cost Actuarial (Gain)/Loss Past service cost Benefit payments Present value of defined benefit obligation at the end of the year 300.61 19.17 23.91 (3.17) 12.15 (18.47) 334.20 201.76 40.90 16.59 18.30 33.40 (10.34) 300.61 4.84 0.37 0.40 4.32 (0.28) 9.65 2.79 0.22 0.24 1.81 (0.22) 4.84 10.42 1.50 0.84 (1.77) 10.99

IV. Change in fair value of assets during the year ended 31st March 1. 2. 3. 4. 5. 6. 7. 8. Fair value of plan assets at the beginning of the year Addition on account of amalgamation Expected return on plan assets Actuarial Gain/(Loss) Contributions by employer (including benefit payments recoverable) Benefit payments Fair value of plan assets at the end of the year Actual return on plan assets 206.14 16.23 4.52 57.68 (18.47) 266.10 20.75 163.58 29.16 18.16 5.58 (10.34) 206.14 18.16 0.28 (0.28) 0.22 (0.22)

109

Rupees Crores Funded Plan Gratuity 2010 V. The major categories of plan assets as a percentage of total plan Insurer managed funds VI. Actuarial assumptions 1. 2. 3. 4. Discount rate Expected rate of return on plan assets Attrition rate Medical premium inflation 8.45% 7.50% 5.00% 7.75% 7.50% 5.00% 8.45% 5.00% 5.00% 7.75% 5.00% 5.00% 8.45% 100% 100% 2009 Unfunded Plans Post retirement medical 2010 2009 Post retirement housing allowance 2010 2009

VII. Effect of one percentage point change in the assumed medical inflation rate 1. 2. Effect on the aggregate service and interest cost of post employment medical benefits Effect on the accumulated post employment medical benefits obligations

One percentage point increase in medical inflation rates 2010 0.25 1.36 2009 0.14 0.72

One percentage point decrease in medical inflation rates 2010 (0.20) (1.10) 2009 (0.11) (0.60)

VIII. Experience Adjustments 2010 1. 2. 3. 4. 5. 1. 2. 3. 4. 1. 2. 3. 4. Defined benefit obligation Fair value of plan assets Surplus/(Deficit) Experience adjustment on plan liabilities [(Gain)/Loss] Experience adjustment on plan assets [Gain/(Loss)] Defined benefit obligation Plan assets Surplus/(Deficit) Experience adjustment on plan liabilities [(Gain)/Loss] Defined benefit obligation Plan assets Surplus/(Deficit) Experience adjustment on plan liabilities [(Gain)/Loss] 334.20 266.10 (68.10) 7.93 4.44 9.65 (9.65) 5.21 10.99 (10.99) 0.15 2009

Period ended 2008 Gratuity 300.61 206.14 (94.47) 5.87 4.84 (4.84) 1.24 201.76 163.58 (38.18) 4.55 2.79 (2.79) (0.55) 184.43 127.04 (57.39) 3.22 (3.22) 0.07 2007

Post retirement medical

Post retirement housing allowance

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 Companys 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 Options outstanding on 1st April, 2009 Options granted during the year Options forfeited/lapsed during the year Options exercised during the year Additional options pursuant to sub-division of shares Options outstanding on 31 March, 2010 Options vested but not exercised on 31 March, 2010 Average share price on the date of exercise of the options are as under Date of exercise 11 June, 2009 14 June, 2009 31 July, 2009 13 August, 2009 29 September, 2009 26 October, 2009 Information in respect of options outstanding as at 31st March, 2010. Range of exercise price Rs. 107.50 - Rs. 113.50 Rs. 180.50 Rs. 308.00 Rs. 310.00 Rs. 381.00 Rs. 250.00 Rs. 362.00 The fair value of options granted during the year on 4th November, 2009 is Rs. 414.84 per share. Number of options 5,29,662 35,484 12,47,066 29,91,922 42,69,056 7,61,840 Weighted average remaining life 1.14 yrs 1.57 yrs 3.86 yrs 4.80 yrs 6.11 yrs 7.09 yrs
th th th st th th st st

Weighted average exercise price (Rs.) 556.55 724.00 585.81 413.71 298.33 298.33 300.57

56,15,921 4,01,770 1,58,167 9,42,009 49,17,515 98,35,030 35,38,627

Average share price (Rs.) 790.70 803.80 863.65 793.25 858.85 928.90

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 Expected life Expected volatility Expected dividend yield Exercise price (Rs.) Stock price (Rs.) 6.41% 2.50 Years 53.56% 2.24% 724.00 929.50

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 Companys 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 Companys 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 Companys favour. The CESTAT had accepted the Companys 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 Departments appeal against the Order of the Collector, Central Excise classifying the Commander range of vehicles as 10-seater. The Departments 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 Companys 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 Companys 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 : Amount of guarantees 2010 For employees For other companies 1.05 327.61 2009 1.05 168.46 Rupees crores Outstanding amounts against the guarantees 2010 * 286.91 2009 * 163.67

* denotes amounts less than Rs. 50,000 112

MAHINDRA & MAHINDRA LIMITED

(b)

Claims against the Company not acknowledged as debts comprise of : (i) (ii) 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)]. 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) (d) Uncalled liability on equity shares partly paid Rs. 10.50 crores (2009 : Rs. 10.50 crores). 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 - Surtax matters (e) : : Rs. 70.58 crores (2009 : Rs. 58.63 crores). Rs. 0.13 crores (2009 : Rs. 0.13 crores).

Bills discounted not matured Rs. Nil (2009 : Rs. 59.55 crores).

19. Research and Development expenditure : (a) In recognised Research and Development units : (i) (ii) 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)]. 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) (ii) 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)]. 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) (b) Profit on sale of certain long term investments Rs. 90.75 crores (2009 : Rs. Nil). Surplus on transfer of Logistics business Rs. Nil (2009 : Rs. 10.27 crores). Rupees crores 2010 Deferred Tax Liability : (i) (ii) On fiscal allowances on fixed assets Others 296.12 126.38 422.50 Deferred Tax Assets : (i) On Provision for compensated absences (ii) On Provision for doubtful debts/advances (iii) On Premium on redemption of Zero Coupon Convertible Bonds (iv) On Provision for employee benefits (v) Loss on mark to market of forward contracts (vi) Others 322.06 71.32 393.38 2009

22. The components of Deferred Tax Liability and Assets as at 31st March, 2010 are as under :

86.41 36.54 18.10 13.69 0.45 26.98 182.17

78.62 27.33 40.08 17.61 223.57 24.44 411.65 (18.27)

Net Deferred Tax (Asset)/Liability

240.33

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. 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. Accordingly, the figures for the current year are not strictly comparable with that of the previous year.

(b)

(c)

24. Earnings per Share : 2010 Amount used as the numerator Balance of profit (Rupees crores) ............................................... Effect on earnings of convertible bonds/debentures (Gain)/Loss (Rupees crores) ............................ Amount used as the numerator for diluted earnings per share (Rupees crores) ............................. Weighted average number of equity shares used in computing basic earnings per share ............. Effect of potential Ordinary (Equity) Shares on conversion of bonds/debentures ........................... Weighted average number of equity shares used in computing diluted earnings per share .......... Basic Earnings per share (Rs.) (Face value of Rs. 5 per share) .......................................................... Diluted Earnings per share (Rs.) ........................................................................................................ 2087.75 32.64 2120.39 54,98,38,769 4,56,31,897 59,54,70,666 37.97 35.61 2009 867.51 17.29 884.80 54,50,45,894 4,44,38,826 58,94,84,720 15.92 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 Companys 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 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 Honble High Courts] ............................................................................................. Less : Transfer from Investment Fluctuation Reserve pursuant to the above schemes of arrangement/amalgamation .................................................................................................... Total .............................................................................................................................................. 2009

51.02 51.02

50.96 19.52 31.44

26. Provision for diminution in the value of long term investments for the year comprises : Rupees crores 2010 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 Honble High Courts] ............................ Less : Transfer from Investment Fluctuation Reserve pursuant to the above schemes of arrangement/amalgamation .................................................................................................... Total .................................................................................................................................................. 2009

70.00 70.00

154.38 154.38

114

MAHINDRA & MAHINDRA LIMITED

27. Donations and contributions include contributions to : (a) (b) (c) (d) (e) Indian National Congress Bhartiya Janata Party Shiv Sena Nationalist Congress Party Bihar Pradesh Janata Dal (United) : : : : : Rs. 1.00 crore (2009 : Rs. Nil) Rs. 1.00 crore (2009 : Rs. Nil) Rs. 0.50 crores (2009 : Rs. Nil) Rs. 0.50 crores (2009 : Rs. Nil) 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 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. Mahindra Engineering and Chemical Products Limited Mahindra Logisoft Business Solutions Limited (upto 22nd March, 2010) Mahindra First Choice Wheels Limited Mahindra USA Inc. Mahindra Gujarat Tractor Limited Mahindra (China) Tractor Company Limited Mahindra Shubhlabh Services Limited Mahindra & Mahindra South Africa (Proprietary) Limited Mahindra Europe s.r.l. Mahindra Engineering Services Limited Mahindra Gears & Transmissions Private Limited (formerly known as Mahindra SAR Transmission Private Limited) Mahindra Overseas Investment Company (Mauritius) Limited Mahindra-BT Investment Company (Mauritius) Limited Mahindra Intertrade Limited Mahindra Steel Service Centre Limited Mahindra Middleeast Electrical Steel Service Centre (FZC) Mahindra Consulting Engineers Limited Mahindra Holidays & Resorts India Limited Mahindra Holidays and Resorts USA Inc. NBS International Limited Mahindra Ugine Steel Company Limited Mahindra & Mahindra Financial Services Limited Mahindra Insurance Brokers Limited Tech Mahindra Limited (upto 22nd March, 2010) Tech Mahindra (Americas) Inc. (upto 22nd March, 2010) Tech Mahindra GmbH (upto 22nd March, 2010) Tech Mahindra (Singapore) Pte. Limited (upto 22nd March, 2010) Tech Mahindra (Thailand) Limited (upto 22nd March, 2010) Tech Mahindra Foundation (upto 22nd March, 2010) Sl. No. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. Name of the Company Bristlecone Limited Bristlecone Inc. Bristlecone (UK) Limited Bristlecone India Limited Bristlecone (Singapore) Pte. Limited Bristlecone GmbH Mahindra Renault Private Limited Mahindra Navistar Automotives Limited Stokes Group Limited Jensand Limited Stokes Forgings Limited Stokes Forgings Dudley Limited Mahindra Engineering Services (Europe) Limited Mahindra Engineering GmbH (formerly known as Plexion Technologies GmbH) Mahindra Technologies Inc. (upto 10th March, 2010) Mahindra Lifespace Developers Limited Mahindra World City (Jaipur) Limited Mahindra World City Developers Limited Mahindra Infrastructure Developers Limited Mahindra Integrated Township Limited Mahindra World City (Maharashtra) Limited PT Tech Mahindra Indonesia (upto 22nd March, 2010) Mahindra Forgings International Limited CanvasM Technologies Limited (upto 22nd March, 2010) CanvasM (Americas) Inc. (upto 22nd March, 2010) Mahindra Forgings Europe AG Gesenkschmiede Schneider GmbH JECO-Jellinghaus GmbH Falkenroth Umformtechnik GmbH Mahindra Vehicle Manufacturers Limited Schneweiss & Co. GmbH 115

Sl. No. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86.

Name of the Company MHR Hotel Management GmbH Mahindra Forgings Limited Mahindra Rural Housing Finance Limited Mahindra Hotels and Residences India Limited Mahindra Forgings Global Limited Bristlecone (Malaysia) SDN.BHD Tech Mahindra (Malaysia) SDN.BHD (upto 22nd March, 2010) Mahindra Castings Limited (formerly known as Mahindra Castings Private Limited) Knowledge Township Limited (formerly known as Mahindra Knowledge City Limited) Mahindra Holdings Limited Mahindra Logistics Limited Tech Mahindra (Beijing) IT Services Limited (upto 22nd March, 2010) Mahindra Navistar Engines Private Limited Mahindra Residential Developers Limited Mahindra Graphic Research Design s.r.l. Mahindra Aerospace Private Limited Heritage Bird (M) SDN.BHD Mahindra First Choice Services Limited Mahindra Bebanco Developers Limited Mahindra Gears Global Limited Mahindra Gears Cyprus Limited Mahindra Gears International Limited Metalcastello s.r.l. (formerly known as Mahindra Metalcastello s.r.l.) Industrial Township (Maharashtra) Limited (formerly known as Mahindra Industrial Township Limited) Metalcastello S.p.A (upto 31st December, 2009) Crest Geartech Private Limited

Sl. No. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107.

Name of the Company Engines Engineering s.r.l. EFF Engineering s.r.l. ID-EE s.r.l. Mahindra Business & Consulting Services Private Limited (formerly known as Mahindra IT Consulting Private Limited) Mahindra Automotive Australia Pty. Ltd. Mahindra Two Wheelers Limited Mahindra United Football Club Private Limited Defence Land Systems India Private Limited (formerly known as Mahindra Defence Land Systems Private Limited) Mahindra Yeuda (Yancheng) Tractor Company Limited Venturbay Consultants Private Limited (upto 22nd March, 2010) Mahindra Metal One Steel Service Centre Limited (w.e.f. 11th June, 2009) Raigad Industrial & Business Park Limited (w.e.f. 18th June, 2009) Retail Initiative Holdings Limited (w.e.f. 1st July, 2009) Mahindra Retail Private Limited (w.e.f. 1st July, 2009) Mahindra Technologies Services Inc. (w.e.f. 4th June, 2009) Tech Mahindra (Nigeria) Limited (from 18th August, 2009 to 22nd March, 2010) Mahindra Punjab Tractors Private Limited (w.e.f. 9th October, 2009) Tech Mahindra Bahrain Limited S.P.C. (w.e.f. 3rd November, 2009 & upto 22nd March, 2010) Mahindra EcoNova Private Limited (w.e.f. 2nd January, 2010) Mahindra Conveyor Systems Private Limited (w.e.f. 4th January, 2010) BAH Hotelanlagen AG (w.e.f. 11th January, 2010)

(b)

Other parties with whom transactions have taken place during the year. (i) 1. 2. 3. 4. (ii) 1. 2. Associates : Sl. No. 5. 6. 7. Name of the Company Swaraj Automotives Limited Swaraj Engines Limited Mahindra Water Utilities Limited Mahindra Composites Limited Mahindra Construction Company Limited Owens Cornings (India) Limited Satyam Computer Services Limited (from 5th May, 2009 to 22nd March, 2010) Joint Venture : Mahindra Sona Limited Tech Mahindra Limited (w.e.f 23rd March, 2010) Mr. Anand Mahindra Mr. B.N. Doshi Mr. A.K. Nanda Sl. No. Name of the Company

Sl. No. Name of the Company

(iii) Key Management Personnel : Vice Chairman and Managing Director ................................... Executive Directors ................................................................... (iv) Welfare Funds : Sl. No. Name of the Fund 1. 2. 3. 4. Mahindra World School Education Trust M&M Benefit Trust M&M Employees Welfare Fund M&M Employees Farm Equipment Sector Employees Welfare Fund

116

MAHINDRA & MAHINDRA LIMITED

(c)

The related party transactions are as under : Rupees crores Subsidiaries Associate Companies 3,08.90 (1,58.49) () 0.04 () Joint Ventures 84.60 (66.72) () () Key Management Personnel () () () Welfare Funds () () ()

Sl. No. Nature of Transactions 1. Purchases : Goods ..............................................................

9,65.63 (6,58.26)

Fixed Assets .....................................................

14.34 (7.41)

Services ............................................................

6,25.67 (3,34.45)

2.

Sales : Goods .............................................................. 5,41.53 (4,09.72) Fixed Assets ..................................................... 2.10 (8.19) Services ............................................................ 1,03.93 (1,25.00) 1.31 (1.22) (0.16) 0.55 (4.96) () () 0.05 (0.05) () () () () () ()

3.

Investments : Purchase/Subscribed ........................................ 4,34.66 (10,04.39) Sales/Redemption ............................................ 39.99 (28.75) () () () () () () (0.01) ()

4.

Deputation of Personnel : From Related Parties ........................................ 0.23 (1.59) To Related Parties ............................................ 10.98 (17.35) () 4.15 (0.52) () () () () () () () () () () () () () () () () () 6.56 (5.15) 0.05 (0.07) () () () () 10.00 () () ()

5.

Write off of Receivables ..................................

2.20 ()

6.

Write Back of Provision for doubtful debts/advances ................................................

19.52 ()

7.

Provision for doubtful debts/advances ............

(19.52)

8.

Managerial Remuneration ...............................

()

9.

Stock Options ..................................................

()

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 Companies () 0.46 (1.85) () 2.60 (0.28) () () () () () 0.29 (0.28) () 1.04 (0.02) 0.02 (0.02) () () 1.36 (3.26) 2.72 (12.31) () 4.59 (4.59) () () () 6.69 (6.69) Joint Ventures () () () 1.31 (0.98) () () () () () () () 0.03 (0.03) () () () 7.61 (11.20) 0.01 (0.01) () () () () () () Key Management Personnel () () () () () () () 0.45 (0.52) () () () () () () () 3.10 (2.21) () () () () () () () Welfare Funds () () () () () () (14,59.76) 26.86 (1.05) () 25.91 () () () () 7.00 (15.00) () () 22.00 (15.00) () () () () () 10.00 ()

Inter Corporate Deposits refunded to parties . Interest received .............................................. Interest Paid ..................................................... Dividend received ............................................ Security Deposits Paid ..................................... Security Deposits Refunded ............................. 11. 12. 13. 14. Issue of Ordinary (Equity) Shares .................... Dividends Distributed ...................................... Guarantees & Collaterals given ....................... Other Transactions : Other Income .................................................. Other Expenses ................................................ Reimbursements received from parties ........... Reimbursements made to parties .................... Advance Given ................................................. Advance Received ............................................ 15. Outstandings : Payable ............................................................ Receivable ........................................................ Debenture issued by parties ............................ Inter Corporate Deposits given ........................ Guarantees & Collaterals given ....................... Security Deposit Paid ....................................... Security Deposit Received ................................

(5.00) 54.31 (24.19) 0.44 (1.47) 83.29 (1,31.83) 0.81 () 0.66 () () () 1,67.99 (1,19.58) 9.64 (10.88) 20.60 (17.71) 1,10.16 (2,01.55) 87.44 (1,29.43) 8.49 (5.74) 1.00 () 1,73.25 (1,24.62) 3,49.13 (1,38.46) 50.00 (45.00) 5,14.72 (4,00.78) 2,86.91 (1,63.67) 5.79 (5.03) 1.85 (2.51)

16.

Provision for doubtful debts/advances ............

5.99 (25.51)

Previous years figures are given in brackets.

118

MAHINDRA & MAHINDRA LIMITED

The significant related party transactions are as under : Rupees crores Sl. No. 1. Nature of Transactions Purchase Goods Subsidiaries Mahindra Intertrade Limited Mahindra Ugine Steel Company Limited Mahindra Forgings Limited Mahindra Vehicle Manufacturers Limited 2. Purchase Services Mahindra Logistics Limited Mahindra Engineering Services Limited 3. Sale Goods Mahindra USA Inc. Mahindra Navistar Automotives Limited Mahindra & Mahindra South Africa (Proprietary) Limited NBS International Limited 4. Sale Services Mahindra Navistar Automotives Limited Mahindra Renault Private Limited Amount 1,60.19 (1,24.93) 3,84.61 (3,08.92) 1,11.14 (77.32) 1,08.60 () 5,13.81 (2,37.42) (44.05) 1,35.45 (1,05.37) 1,48.28 (92.61) 65.76 (58.22) 79.12 (64.89) 43.90 (34.37) 44.38 (76.27) Owens Corning (India) Limited Satyam Computer Services Limited Swaraj Engines Limited 5. Investments Purchase Mahindra Navistar Automotives Limited Mahindra Vehicle Manufacturers Limited Mahindra Overseas Investment Company (Mauritius) Limited Mahindra Forgings Limited Mahindra Navistar Engines Private Limited Mahindra Gears International Limited Mahindra Two Wheelers Limited 43.69 (1,12.97) 1,00.00 (3,60.20) 65.82 (1,09.43) 0.47 (3.21) 0.07 () (1.43) Mahindra Sona Limited 0.05 (0.05) Swaraj Engines Limited 1.31 (1.22) Satyam Computer Services Limited 0.04 () Associate Companies Swaraj Engines Limited Amount 2,94.63 (1,50.60) Joint Ventures Mahindra Sona Limited Amount 84.60 (66.72)

55.83 () 62.98 () (1,53.14) (1,17.99)

119

Rupees crores Sl. No. 6. Nature of Transactions Investments Sale Subsidiaries Tech Mahindra Limited Mahindra Intertrade Limited 7. Investments Redemption Mahindra & Mahindra Financial Services Limited Mahindra Intertrade Limited 8. Advances Given Mahindra Integrated Township Limited Defence Land Systems India Private Limited Mahindra Ugine Steel Company Limited Mahindra Automotive Australia Pty. Ltd. 9. Inter Corporate Deposits given Mahindra Overseas Investment Company (Mauritius) Limited Mahindra Forgings Limited Mahindra Vehicle Manufacturers Limited Mahindra Two Wheelers Limited Mahindra & Mahindra Financial Services Limited 10. Inter Corporate Deposits refunded by parties Mahindra Forgings Limited Mahindra Vehicle Manufacturers Limited Mahindra Castings Limited Mahindra & Mahindra Financial Services Limited Mahindra Engineering Services Limited Mahindra Two Wheelers Limited 11. Guarantees given Mahindra USA Inc. Mahindra Forgings Limited Mahindra Renault Private Limited Previous years figures are given in brackets. Amount 5.71 () 14.27 () 20.00 (10.00) (18.75) 5.39 () 2.73 () (2.13) (3.57) 62.38 () 56.50 () 2,05.00 (1,00.00) (1,02.00) (1,85.00) 1,00.50 () 75.00 () 38.00 () (1,70.00) (40.00) (67.00) 94.42 () 73.57 () (1,19.58) Associate Companies Amount Joint Ventures Amount

120

MAHINDRA & MAHINDRA LIMITED

30. Joint Venture Disclosure (i) a) b) c) Jointly Controlled Entities by the Company : Name of the Entity Tech Mahindra Limited (w.e.f. 23rd March, 2010) Mahindra Sona Limited PSL Erickson Limited Country of Incorporation India India India % Holding 43.99 % 29.77 % 18.06 %

(ii) Interests in the Assets, Liabilities, Income and Expenses with respect to Jointly Controlled Entities. Rupees crores
2010 I ASSETS 1 2 3 Fixed Assets ...................................................................................................... Investments................ ....... . Current Assets, Loans and Advances (a) (b) (c) (d) 4 II Inventories ............................................................................................... Sundry Debtors ........................................................................................ Cash and Bank Balances .......................................................................... Loans and Advances ................................................................................ 7.26 469.43 100.83 297.02 12.14 4.59 10.22 3.40 1.23 0.25 415.17 1,326.13 8.03 0.05 2009

Deferred Tax Net ...........................................................................................

LIABILITIES 1 Loan Funds (a) (b) 2 Secured Loans .......................................................................................... Unsecured Loans ..................................................................................... 330.24 271.51 0.82

Current Liabilities and Provisions (a) (b) Liabilities .................................................................................................. Provisions ................................................................................................. 267.61 124.78 337.71 6.14 1.62

3 III

Deferred Revenue .............................................................................................

INCOME 1 2 Sales ................................................................................................................. Other Income ................................................................................................... 109.61 4.60 44.57 2.21

IV

EXPENSES 1 2 3 4 5 Raw Materials, Finished and Semi Finished Products ...................................... Excise Duties .................................................................................................... Manufacturing, Selling Expenses, etc. ............................................................. Depreciation/Amortisation ............................................................................... Provision for Taxation ...................................................................................... 34.65 3.83 54.11 2.69 4.85 26.73 4.09 9.34 0.76 2.20

OTHER MATTERS 1 2 Contingent Liabilities ....................................................................................... Capital Commitments ...................................................................................... 59.50 118.01 3.90 0.29

31. 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 years figures are indicated below the current years figures. 32. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 - See Schedule XVII. 33. Previous years figures have been regrouped/restated wherever necessary.

121

SCHEDULE XV
Computation of Net Profit in accordance with Section 309(5) of the Companies Act, 1956 for the year ended 31st March, 2010 Rupees crores
2010 Profit before Taxation as per Profit and Loss Account ..................................................... Add : Profit of Mahindra Holdings and Finance Limited for the period 1st February, 2008 to 31st March, 2008 ........................................ : Depreciation/Amortisation charged in the Accounts ............................................ : Directors Remuneration including Directors fees ................................................ : Provision for doubtful debts and advances (Net) ................................................. : Loss on sale, etc. of Fixed Assets (Net) ................................................................. : Net reduction in the fair value of current investments ......................................... 2,846.75 370.78 8.19 51.02 20.83 (0.26) 450.56 3,297.31 Less : Depreciation under Section 350 of the Companies Act, 1956 ............................ : Amortisation of Intangibles ................................................................................... : Profit on sale of Investments (Net) ....................................................................... : Loss on sale of Assets as per Section 349 of the Companies Act, 1956 (Net) .... : Surplus on transfer of Logistics Division ............................................................... 290.09 49.23 101.15 2.80 443.27 Total...... Commission payable to the wholetime Directors restricted to ............................. Commission payable to the non-wholetime Directors restricted to ..................... 2,854.04 3.09 1.44 2009 1,036.47 41.74 291.51 6.29 31.44 1.19 (1.57) 370.60 1,407.07 233.97 31.14 53.22 2.22 10.27 330.82 1,076.25 2.20 0.96

122

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 :
Unit of Measurement Quantity Value Rupees crores Quantity Value Rupees crores Quantity Value Rupees crores Licenced Capacity per annum [Note (i)] Installed Capacity per annum [Note (i)] Actual Production [Notes (ii) & (iii)(a)] Opening Stock Closing Stock Sales

Sl. No.

Class of Goods

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. Nos. Nos. 2,29,000 2,14,000 66,000 1,11,000 60,000 72,000 45,717 43,278 1,205 2,753 13.89 29.28 1,525 1,205 15.14 13.89 3,60,000 2,76,000 3,04,000 2,50,000 2,33,533 1,58,715 2,937 5,826 108.11 256.52 4,365 2,937 155.98 108.11 2,31,703 1,61,189 45,360 44,806

10,721.10 7,646.72 530.15 517.68

b.

Three Wheelers

2.

a.

Agricultural Tractors [Note (iv) below]

b.

Tractor Skids

2,33,000 2,33,000 These are manufactured against spare capacity under 2(a) 4,91,260 4,27,952 91.53 94.97 90.01 91.53

1,71,550 1,17,847 1,726 1,251

8,671 9,438 23 168

232.77 254.16 1.66 6.61

6,963 8,671 98 23

191.11 232.77 4.27 1.66

1,73,217 1,18,565 1,647 1,386

6,408.61 4,333.56 92.06 65.35

3. Nos.

Manufactured and Purchased Parts and Accessories for sale [Notes (iii)(a) and (b) below]

888.16 621.08

4. Nos. Nos. These are manufactured against spare capacity under 2(a) 26,144 25,904 385 439

Internal Combustion Piston Engines

Nos.

5.

Diesel Genset

1,75,000 1,75,000 24,000 24,000 2.17 2.79

These are manufactured against spare capacity under 1 and 2 above 1,75,000 1,50,000 Assembly at 3rd Party Locations 1,68,683 1,18,036 21,751 26,227 1,361 1,162 159 115 10.08 8.15 2.96 2.04

1,225 1,361 114 159 903 385

9.49 10.08 1.83 2.96 3.43 2.17

11,179 9,034 21,796 26,183 25,626 25,958

106.66 89.25 451.78 592.15 246.15 248.41

6.

Engines

7. Nos.

Forklifts

Nos.

8.

Harvester Combines

300 300 300 300

300 300 300 300

110 46 324 136

6 7 1 2

2 6 23 1

113 46 302 137

9.

Others

0.41 0.51 0.11 0.25 0.03 0.01

0.13 0.41 2.73 0.11 0.17 0.03

10.

Export benefits Total ........

8.24 3.52 42.41 16.47 10.04 4.42 18.97 26.99 19,524.33 14,165.60

Notes : (i) (a) (b)

(ii) (iii)

MAHINDRA & MAHINDRA LIMITED

(iv)

The installed capacity has been certified by President/Chief Executives, which the auditors have relied on without verification as this is a technical matter. 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. Actual Production includes production for captive consumption. (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. 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.

123

SCHEDULE XVI
(B)

(Contd.)

PARTICULARS IN RESPECT OF GOODS TRADED : Purchases Opening Stock Closing Stock Sales

Sl. No. Class of Goods

Unit of Measurement

Quantity

Value Quantity Rupees crores

Value Quantity Rupees crores

Value Quantity Rupees crores

Value Rupees crores

1. 2. 3. 4.

Tractors .............................................. Agricultural Implements .................... Four Wheelers ................................... Bought-out Spares for Resale [Note (iii)(b) to item A] ................... Diesel Genset & Genset Engines ....... Others ...............................................

Nos. Nos. Nos.

317 269 10,168 6,178 5,272 693

9.00 7.29 57.35 41.47 151.40 27.41 375.64 263.96

50 36 436 2,230

1.75 1.13 5.98 3.62

35 50 865 436 211

1.24 1.75 9.41 5.98 5.01

332 251 9,739 7,972 5,056 693

12.47 8.90 69.34 50.32 149.16 31.20

5. 6.

Nos.

1,523 277

18.61 3.09 49.05 2.93

68

0.34 0.02 8.09 4.75

166 68

1.33 0.34 0.10 0.02 17.09 8.09

589 209

17.93 3.16 58.83 9.23 307.73 102.81

Total ...............

661.05 346.15

Note (iv) to item (A).

(C)

PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED : Unit of Measurement Nos. Metric Tonnes Value Rupees crores 274.13 191.00 0.47 0.14

Sl. No. Description 1. Steel Items (Sheets, Tubes, etc.)

Quantity 1,13,459 89,522 48,042 32,290 38,801 10,339 120 119 8,75,017 7,49,035 2,58,903 1,83,583 26,35,185 19,36,747 47,30,889 35,76,788 8,891 7,898

2. 3. 4.

Aluminium Sections and Other Aluminium Items Other Metals (Steel Shots, Lead, Tin, etc.) Paints

Kgs. Metric Tonnes Nos. Metres Kgs. Litres

5.

Steel Scrap

Metric Tonnes

0.45 0.56

96.11 72.85

17.24 19.83

124

MAHINDRA & MAHINDRA LIMITED

SCHEDULE XVI
(C) Sl. No. Description

(Contd.)

MATERIALS PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED (Contd.) : Unit of Measurement Value Rupees crores

Quantity

6. 7.

Pig Iron ....................................................................................................................... Miscellaneous Foundry Materials ................................................................................

Metric Tonnes Nos. Metric Tonnes Litres

11,157 8,880 19,28,687 15,45,939 14,396 12,585 4,42,660 3,36,844

8.

Other Materials (Direct Stores, Patterns, Oils, etc.) .....................................................

Not practicable to give quantitative details Nos. *35,45,832 *27,31,682

23.64 25.42

16.59 16.32

*102.76 *78.19 *664.70 *473.90 *10,091.32 *7,593.08 408.15 300.50 11,695.56 8,771.79

9.

Tyres and Tubes ...........................................................................................................

10. Components other than Tyres and Tubes (including processing charges) .................. 11. Material handling and transportation charges, etc. incurred on the above items not separately allocable .....................................................................................

Total..... * 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 1. 2. 3. 4. Raw Materials ..................................................................................................... Components, Spare Parts, etc. ............................................................................ Capital Goods ..................................................................................................... Items imported for Resale ................................................................................... Total ...... 1.17 225.86 98.61 27.01 352.65 2009 0.65 153.81 81.48 13.77 249.71

Notes : (i) Credits, if any, recoverable in respect of short landings, etc. are not considered. (ii) The value of imports shown above includes : (a) (b) Imports on C&F basis as per suppliers invoices Rs. 12.55 crores (2009 : Rs.4.82 crores) Imports on cost basis Rs. 203.09 crores (2009 : Rs. 163.52 crores)

125

SCHEDULE XVI
(E)

(Contd.)

EXPENDITURE IN FOREIGN CURRENCIES (SUBJECT TO DEDUCTION OF TAX WHERE APPLICABLE) : Rupees crores 2010 2009 43.35 0.84 55.31 70.32 169.82

1. 2. 3. 4.

Professional and Consultancy Fees [including Rs. 0.89 crores (2009 : Rs. 6.35 crores) capitalised] Commission on Exports .................................................................................................................... Interest & Commitment charges ....................................................................................................... Others ............................................................................................................................................... Total.....

34.82 1.21 42.85 69.68 148.56

Notes : (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 Shareholders 2010 : 1 2009 : 1 Equity shares 120 120 * * Year ended 31st March, 2009 Year ended 31st March, 2008 Amount remitted Dividend relating to

(G) EARNINGS IN FOREIGN EXCHANGE : Rupees crores 2010 1. 2. 3. Export of goods on F.O.B. basis .................................................................................. Interest ........................................................................................................................ Others (freight, etc.) ................................................................................................... Total..... 719.37 9.60 32.47 761.44 2009 632.36 14.74 44.15 691.25

Notes : 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/export sales under rupee credit which qualify for export benefits. (H) VALUE OF IMPORTED AND INDIGENOUS CONSUMPTION : ^Raw Materials and Components 1. 2. Imported .......................................................................................................... Indigenously obtained ..................................................................................... Total..... ^ Includes items used for other than production, amount not ascertained. Notes : (1) (2) (3) Items purchased through canalising agencies have been considered as imported. See Note (i) to item (C). 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. 50,000 Rupees crores 177.61 121.97 11,517.95 8,649.82 11,695.56 8,771.79 % 1.52 1.39 98.48 98.61 100.00 100.00

126

MAHINDRA & MAHINDRA LIMITED

SCHEDULE XVII
ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956. Balance Sheet Abstract & Companys General Business Profile : I. Registration Details : Registration No. Balance Sheet Date 4 5 5 8 3 1 Date 0 3 Month 2 0 1 0 Year State Code 1 1

II.

Capital raised during the Year (Amount in Rs. Thousands) : Public Issue Rights Issue

N I L
Bonus Issue Private Placement

N I L

N I L
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) : Total Liabilities including Shareholders Funds

1 0 0 0 0
Total Assets

1 6 3 2 9 4 2 2 4
Sources of Funds : Paid-up Capital

1 6 3 2 9 4 2 2 4

Reserves & Surplus

2 8 2 9 5 3 9
Secured Loans

7 5 4 3 8 2 8 3
Unsecured Loans

6 0 2 4 4 9 7
Deferred Tax Liability (Net)

2 2 7 7 7 0 1 1
Foreign Currency Monetary Item Translation Difference Account

2 4 0 3 2 6 6
Application of Funds : Net Fixed Assets

3 4 5 5 8

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 8 4 5 8 6 4 1

4 1 1 8 1
IV. Performance of Company (Amount in Rs. Thousands) : Turnover (Sales & Other Income)

Total Expenditure

2 0 8 1 5 2 5 3 5
+ - Profit/Loss Before Tax

1 7 9 6 8 5 0 5 6
+ Profit/Loss After Tax

2 8 4 6 7 4 7 9
Earnings per Share in Rupees Basic Diluted

2 0 8 7 7 4 7 9

Dividend Rate %

37.97
(Refer Note 24)

35.61

1 9 0

127

SCHEDULE XVII
V.

(Contd.)

Generic Names of Three Principal Products/Services of Company (as per monetary terms) : Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product Description 8 7 0 1 Tractors 8 7 0 2 Motor Vehicles for the transport of more than six persons, excluding the driver 8 7 0 3 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 N. Vaghul R. K. Kulkarni A. S. Ganguly A. P. Puri N. B. Godrej A. K. Dasgupta Deepak S. Parekh

Keshub Mahindra Anand G. Mahindra Directors Bharat Doshi

Chairman Vice Chairman & Managing Director Executive Director Company Secretary Mumbai, 29th May, 2010

Narayan Shankar

128

MAHINDRA & MAHINDRA LIMITED

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 For Current Financial Year For Previous Financial Years by Mahindra & Mahindra 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 the year ended 31 the year Equity Extent ended 31 March, 2010 ended 31st of March, 2010 ended 31st holding March, 2010 March, 2010 Nos. Mahindra Engineering and Chemical Products Limited Retail Initiative Holdings Limited ......................... 7 Mahindra Retail Private Limited .......................... 53,98,462 2,71,00,006 5,10,000 6,99,85,642 50,490 1,64,66,789 2,25,49,999 2,08,46,126 % 100.00% 100.00% 78.91% 100.00% 100.00% 90.00% 61.00% 100.00% 51.00% #83.09% #62.32% #83.09% #83.09% #83.09% #82.20% 100.00% 50.69% 100.00% 100.00% 100.00% 51.08% 40.87% 42.21% 37.80% 48.74% 24.85% 51.08% 51.08% 35.76% 51.08 Rupees crores * Rupees crores 6.53 (0.02) (25.43) 51.07 3.14 2.20 (0.12) 0.49 97.91 0.07 0.71 * (0.12) 0.69 (0.18) 2.36 6.02 * * 40.55 0.11 4.62 2.98 (2.16) (0.95) * (0.01) * (0.03) Rupees crores 1.89 12.45 0.52 0.18 22.01 6.26 115.95 15.54 9.51 1.15 140.63 (0.02) (0.28) (0.01) (0.09) 0.63 84.41 (1.12) * 55.80 0.21 14.58 0.81 (0.09) (0.16) (0.04) (0.19) (0.11) Rupees crores 72.43 -

Name of the Subsidiary Companies

Mahindra Conveyor Systems Private Limited ......

Mahindra Intertrade Limited ................................... @ Mahindra MiddleEast Electrical Steel Service Centre (FZC) ........................................................ @ Mahindra Steel Service Centre Limited ........... @ Mahindra Metal One Steel Service Centre Limited Mahindra Consulting Engineers Limited ................. Mahindra Holidays and Resorts India Limited ........ + MHR Hotel Management GmbH ......................... + Mahindra Holidays & Resorts USA Inc ................ + Mahindra Hotels and Residences India Limited .. + Heritage Bird (M) SDN.BHD ................................ + BAH Hotelanlagen AG ......................................... NBS International Limited ....................................... Mahindra Ugine Steel Company Limited ................ Mahindra Holdings Limited .................................... E Mahindra United Football Club Private Limited .. E Mahindra Punjab Tractors Private Limited ........... Mahindra Lifespace Developers Limited .................. p Mahindra Infrastructure Developers Limited ....... p Mahindra World City Developers Limited ........... p Mahindra World City (Jaipur) Limited ................. p Mahindra Integrated Township Limited .............. a Mahindra Residential Developers Limited ........... p Mahindra World City (Maharashtra) Limited ...... p Knowledge Township Limited (formerly known as Mahindra Knowledge City Limited) ..................... p Mahindra Bebanco Developers Limited ............... p Raigad Industrial & Business Park Limited .......... * denotes amounts less than Rs. 50,000

129

Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies
Number of Shares in the Subsidiary Company held by Mahindra & Mahindra Limited at the financial year ending date The net aggregate of profits/(losses) of the Subsidiary Companies so far as they concern the members of Mahindra & Mahindra Limited For Current Financial Year Dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores Not dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores (0.02) 205.97 6.65 1.15 For Previous Financial Years Dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores 32.03 Not dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores (0.03) 363.29 5.89 (0.73)

Name of the Subsidiary Companies

Equity

Extent of holding % 51.08% #60.10% #60.10% #52.59%

Nos. p Industrial Township (Maharashtra) Limited (formerly known as Mahindra Industrial Township Limited) . Mahindra & Mahindra Financial Services Limited ... y Mahindra Insurance Brokers Limited ................... y Mahindra Rural Housing Finance Limited ........... y Mahindra Business & Consulting Services Private Limited (formerly known as Mahindra IT Consulting Private Limited) ................................. Bristlecone Limited .................................................. D Bristlecone Inc ..................................................... D Bristlecone India Limited ..................................... % Bristlecone (Singapore) Pte. Limited ................... % Bristlecone GmbH ............................................... D Bristlecone UK Limited ........................................ D Bristlecone (Malaysia) SDN.BHD .......................... Mahindra First Choice Wheels Limited ................... Mahindra USA Inc. ................................................. Mahindra Gujarat Tractor Limited ........................... Mahindra Shubhlabh Services Limited .................... Mahindra & Mahindra South Africa (Proprietary) Limited .................................................................... Mahindra Overseas Investment Company (Mauritius) Limited .................................................................... v Mahindra (China) Tractor Company Limited ....... v Mahindra-BT Investment Company (Mauritius) Limited ................................................................ v Mahindra Europe s.r.l. ......................................... v Mahindra Graphic Research Design s.r.l ............. v Mahindra Yeuda (Yancheng) Tractor Company Limited ................................................................ Mahindra Gears & Transmissions Private Limited (formerly known as Mahindra SAR Transmission Private Limited) ....................................................... * denotes amounts less than Rs. 50,000 130 5,82,41,532 -

42,22,250 3,47,77,255 14,00,00,000 16,83,218 2,46,81,437 5,20,00,000 5,87,95,000 -

#60.10% 81.97% 81.97% 81.97% 81.97% 81.97% 81.97% 81.97% #53.31% 100.00% 60.00% 83.05% 100.00% 100.00% 85.90% 57.00% 80.00% 100.00% 51.00%

0.08 (5.92) (10.59) 0.51 (1.51) 0.03 (2.84) (0.17) (4.65) (38.16) 1.81 0.45 1.62 (3.26) (12.11) 42.61 0.58 (5.05) (5.65)

* (10.57) (28.75) 12.31 (2.18) (0.04) (11.09) 0.67 (34.60) (8.90) (16.87) (21.98) (15.50) (4.78) (55.58) 7.47 2.20 (2.48) (1.44)

40,30,806

53.34%

0.71

0.76

1.24

MAHINDRA & MAHINDRA LIMITED

Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies
Number of Shares in the Subsidiary Company held by Mahindra & Mahindra Limited at the financial year ending date The net aggregate of profits/(losses) of the Subsidiary Companies so far as they concern the members of Mahindra & Mahindra Limited For Current Financial Year Dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores Not dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores 28.26 0.18 (0.79) 0.35 (2.48) * (0.04) (48.02) (15.93) (0.06) (19.72) (9.05) 11.63 (29.53) (6.88) (8.18) (41.58) (13.09) (3.62) (19.43) (2.84) (7.18) (0.89) (6.18) (0.11) (0.08) (0.10) (28.81) 0.16 For Previous Financial Years Dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores 5.85 1.34 Not dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores 55.18 6.54 (0.28) (1.05) 0.02 (0.09) (28.17) (27.77) 0.62 (0.27) (4.14) (1.88) 10.91 (11.88) 8.92 3.39 2.92 2.57 (296.11) (16.90) (34.03) (8.89) 2.89 (3.70) (0.38) (5.86) (0.11) (0.08) (0.38) 6.81 0.13

Name of the Subsidiary Companies

Equity

Extent of holding % 100.00% 100.00% 100.00% 100.00% 70.00% 35.70% 49.00% 50.68% 50.64% 50.64% 50.64% 50.64% 50.68% 50.68% 50.68% 50.68% 50.68% 50.68% 50.68% 51.00% 51.00% 64.94% 100.00% 100.00% 51.00% 100.00% 100.00% 100.00% 53.34% 53.34% 51.00% 51.00%

Nos. Mahindra Engineering Services Limited .................. x Mahindra Engineering Services (Europe) Limited x Mahindra Engineering GmbH (formerly known as Plexion Technologies GmbH) .......................... x Mahindra Technologies Services Inc .................... x Engines Engineering s.r.l ...................................... EFF Engineering s.r.l ............................................ ID-EE s.r.l ............................................................. Mahindra Forgings Limited ..................................... Stokes Group Limited ............................................ 5 Stokes Forgings Dudley Limited ........................... 5 Jensand Limited ................................................... 5 Stokes Forgings Limited ....................................... Mahindra Forgings Global Limited ........................ ## Schneweiss & Co. GmbH ................................. Mahindra Forgings International Limited .............. u Mahindra Forgings Europe AG ............................ c Gesenkschmiede Schneider GmbH ....................... c JECO-Jellinghaus GmbH ....................................... c Falkenroth Umformtechnik GmbH ....................... Mahindra Renault Private Limited ........................... Mahindra Navistar Automotives Limited ................. Mahindra Castings Limited (formerly known as Mahindra Castings Private Limited) ........................ Mahindra Vehicle Manufacturers Limited ............... Mahindra Logistics Limited ..................................... Mahindra Navistar Engines Private Limited ............. Mahindra Aerospace Private Limited ...................... Mahindra First Choice Services Limited ................... Mahindra Gears International Limited .................... w Mahindra Gears Global Limited ........................... 3 Mahindra Gears Cyprus Limited ........................... Metal Castello S.p.A ............................................. Crest Geartech Private Limited ............................. * denotes amounts less than Rs. 50,000 81,26,218 4,45,26,339 10,16,24,232 20,70,32,300 2,14,40,052 58,50,00,000 4,90,49,900 8,41,50,000 1,05,50,000 1,63,50,000 2,07,00,001 -

131

Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies
Number of Shares in the Subsidiary Company held by Mahindra & Mahindra Limited at the financial year ending date The net aggregate of profits/(losses) of the Subsidiary Companies so far as they concern the members of Mahindra & Mahindra Limited For Current Financial Year Dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores Not dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores (3.24) (77.53) For Previous Financial Years Dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores Not dealt with in the accounts of Mahindra & Mahindra Limited for the year ended 31st March, 2010 Rupees crores (1.87) (18.00)

Name of the Subsidiary Companies

Equity

Extent of holding % 80.00% 80.00%

Nos. Mahindra Automotive Australia Pty. Ltd. ................ Mahindra Two Wheelers Limited ............................ Defence Land Systems India Private Limited (formerly known as Mahindra Defence Land Systems Private Limited) .......................................... Mahindra EcoNova Private Limited ......................... 7,00,000 11,80,00,000

3,42,62,000 10,000

100.00% 100.00%

(0.07) *

* denotes amounts less than Rs. 50,000 # after considering shares issued to its ESOP Trust but not allotted to its employees. 7 @ + E p a y D % v x 5 ## u c w 3 a a a a a a a a a a a a a a a a a a a a a a subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary subsidiary of of of of of of of of of of of of of of of of of of of of of of Mahindra Engineering and Chemical Products Limited Retail Initiative Holdings Limited Mahindra Intertrade Limited Mahindra Holidays & Resorts India Limited Mahindra Holdings Limited Mahindra Lifespace Developers Limited Mahindra Integrated Township Limited Mahindra & Mahindra Financial Services Limited Bristlecone Limited Bristlecone India Limited Mahindra Overseas Investment Company (Mauritius) Limited Mahindra Engineering Services Limited Engines Engineering s.r.l. Mahindra Forgings Limited Stokes Group Limited Mahindra Forgings Global Limited Mahindra Forgings International Limited Mahindra Forgings Europe AG Mahindra Gears International Limited Mahindra Gears Global Limited Mahindra Gears Cyprus Limited Metal Castello S.p.A

Note : The financial year of all subsidiaries ended on 31st March, 2010, except for Mahindra Yueda (Yancheng) Tractor Company Limited whose financial year is 1st January, 2009 to 31st December, 2009 and Mahindra EcoNova Private Limited and Mahindra Conveyor Systems Private Limited whose first financial years would be from 2nd January, 2010 to 31st March, 2011 and 4th January, 2010 to 31st March, 2011, respectively.

M. M. Murugappan N. Vaghul R. K. Kulkarni A. S. Ganguly A. P. Puri N. B. Godrej A. K. Dasgupta Deepak S. Parekh

Keshub Mahindra Anand G. Mahindra Directors Bharat Doshi Narayan Shankar

Chairman Vice Chairman & Managing Director Executive Director Company Secretary Mumbai, 29th May, 2010

132

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

33

34

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Auditors Report to the Board of Directors of Mahindra & Mahindra Limited


1. We have audited the attached Consolidated Balance Sheet of Mahindra & Mahindra Limited, its subsidiaries and jointly controlled entities (the Group) as at 31st March, 2010, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for the year ended on that date, both annexed thereto. The Consolidated Financial Statements include investments in associates accounted on the equity method in accordance with Accounting Standard 23 (Accounting for Investments in Associates in Consolidated Financial Statements) and the jointly controlled entities accounted in accordance with Accounting Standard 27 (Financial Reporting of Interests in Joint Ventures) as notified under the Companies (Accounting Standards) Rules, 2006. These financial statements are the responsibility of the Companys Management and have been prepared on the basis of the separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of certain subsidiaries and joint ventures, whose financial statements reflect total assets of Rs.13,902.30 crores as at 31st March, 2010, total revenues of Rs. 5,628.43 crores and net cash inflows amounting to Rs. 4.67 crores for the year ended on that date as considered in the Consolidated Financial Statements. These financial statements have been audited by other auditors whose reports have been furnished to us and our opinion in so far as it relates to the amounts included in respect of these subsidiaries and joint ventures is based solely on the reports of the other auditors. 4. Without qualifying our opinion, we draw attention to note 4 of Schedule XV to the financial statements. As indicated therein the Consolidated Financial Statements do not include Satyam Computer Services Limited and its subsidiaries, in accordance with the approval of the Securities and Exchange Board of India, and the impact of post acquisition profit or loss of Satyam Computer Services Limited and its subsidiaries are not considered in these financial statements. We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of Accounting Standard 21 (Consolidated Financial Statements), Accounting Standard 23 (Accounting for Investment in Associates in Consolidated Financial Statements) and Accounting Standard 27 (Financial Reporting of Interests in Joint Ventures) as notified under the Companies (Accounting Standards) Rules, 2006. Based on our audit and on consideration of the separate audit reports on individual financial statements of the Company, its aforesaid subsidiaries, joint ventures and associates and to the best of our information and according to the explanations given to us, in our opinion, the Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India : (i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2010;

5.

6.

2.

(ii) in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date; and (iii) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date. For Deloitte Haskins & Sells Chartered Accountants B.P. Shroff (Partner) Membership Number: 34382 Mumbai, 29th May, 2010

3.

35

Consolidated Balance Sheet as at 31st March, 2010


Rupees crores Schedule I. SOURCES OF FUNDS : SHAREHOLDERS FUNDS : Capital ................................................................................................................... Employee Stock Options Outstanding ................................................................... Reserves and Surplus ............................................................................................. MINORITY INTEREST .............................................................................................. LOAN FUNDS : (a) Secured Loans ................................................................................................ (b) Unsecured Loans ............................................................................................ DEFERRED TAX LIABILITY (Net) [Note 17] .............................................................. FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT ..... DEFERRED INCOME : Advance towards Club Mahindra members facilities ........................................... Total ........... II. APPLICATION OF FUNDS : FIXED ASSETS : ...................................................................................................... Gross Block ............................................................................................................ Less : Depreciation ................................................................................................ Net Block ............................................................................................................... CAPITAL WORK-IN-PROGRESS (INCLUDING CAPITAL ADVANCES) .......................... Less : Provision for impairment ............................................................................. INVESTMENTS ........................................................................................................ DEFERRED TAX ASSETS (Net) [Note 17] ................................................................ FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT ..... CURRENT ASSETS, LOANS AND ADVANCES : (a) Inventories ...................................................................................................... (b) Sundry Debtors .............................................................................................. (c) Cash and Bank Balances ................................................................................. (d) Other Current Assets ...................................................................................... (e) Loans and Advances ....................................................................................... LESS : CURRENT LIABILITIES AND PROVISIONS : (a) Current Liabilities ............................................................................................ (b) Provisions ....................................................................................................... NET CURRENT ASSETS ........................................................................................... MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED) ........................................................................................................... Total ........... NOTES ON ACCOUNTS .......................................................................................... Per our report attached For Deloitte Haskins & Sells Chartered Accountants B. P. Shroff Partner M. M. Murugappan N. Vaghul R. K. Kulkarni A. S. Ganguly A. P. Puri N. B. Godrej A. K. Dasgupta Deepak S. Parekh V IV 14,204.00 5,333.76 8,870.24 1,967.69 10,837.93 317.60 10,520.33 4,805.25 3,548.99 3,207.17 2,737.12 51.94 10,771.00 20,316.22 VII A VII B 6,717.61 1,938.08 8,655.69 11,660.53 VIII XV 4.58 26,990.69 13,042.35 5,341.02 7,701.33 1,751.73 9,453.06 311.25 9,141.81 3,381.26 188.40 18.44 3,271.46 3,470.79 2,967.51 3.19 8,861.91 18,574.86 6,779.96 1,615.75 8,395.71 10,179.15 16.86 22,925.92 2010 2009

I II

282.95 8.01 9,897.31 10,188.27 2,462.35

272.62 6.55 6,790.76 7,069.93 3,029.79 7,724.71 4,465.60 12,190.31 635.89 22,925.92

III A III B

8,972.45 4,513.40 13,485.85 48.21 1.94 804.07 26,990.69

VI VI VI VI VI

A B C D E

Keshub Mahindra Anand G. Mahindra Directors Bharat Doshi Narayan Shankar

Chairman Vice Chairman & Managing Director Executive Director Company Secretary Mumbai, 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 SALES ............................................................................................................................ Less : Excise Duty on Sales ........................................................................................... Net Sales ....................................................................................................................... Income from Operations .............................................................................................. Other Income ............................................................................................................... EXPENDITURE : Raw Materials, Finished and Semi-finished Products .................................................... Personnel ...................................................................................................................... Interest, Commitment and Finance Charges (Net) ........................................................ Depreciation/Amortisation [Note 8] .............................................................................. Other Expenses ............................................................................................................. Less : Cost of Manufactured/Purchased Products capitalised ....................................... Profit before exceptional item and taxation ................................................................. Add : Exceptional Items [Note 18] ............................................................................... Profit before taxation ................................................................................................... (Add) / Less : Provision for Tax - Current Tax including Fringe Benefit Tax .................. - Deferred Tax (Net) .................................................... Profit for the year before prior year adjustments ......................................................... Less : Adjustments pertaining to previous year [Note 19] ........................................... Balance of profit for 2009-2010 before share of profit/loss of Associates and Minority Interests .......................................................................................................... Add : Share of Profit of Associates for the year .......................................................... Profit before Minority Interests ..................................................................................... Minority Share in Profits for 2009-2010 ...................................................................... Net Profit ...................................................................................................................... Balance of profit for earlier years ................................................................................. Less : Adjustment on account of Mergers .................................................................... Less : Transfer to Debenture Redemption Reserve (Net) ............................................... Total of Profit and Loss Account balances shown above ............................................. Deduct : Statutory Reserve ............................................................................................ General Reserve (Net) ..................................................................................... Capital Redemption Reserve ........................................................................... Income Tax on Dividends ............................................................................... Proposed Dividend on Equity Shares .............................................................. Income Tax on Proposed Dividend ................................................................. Balance for 2009-2010 and earlier years carried to Balance Sheet .............................. EARNINGS PER SHARE : [Note 23] (Face value Rs.5/- per share) (Rupees) Basic ............................................................................................................................. Diluted .......................................................................................................................... NOTES ON ACCOUNTS ................................................................................................. Per our report attached For Deloitte Haskins & Sells Chartered Accountants B. P. Shroff Partner M. M. Murugappan N. Vaghul R. K. Kulkarni A. S. Ganguly A. P. Puri N. B. Godrej A. K. Dasgupta Deepak S. Parekh IX X 2010 25,300.78 2,102.13 23,198.65 8,369.89 119.43 31,687.97 XI XII XIII XIV 15,267.91 4,582.55 979.83 873.52 6,337.02 28,040.83 132.59 27,908.24 3,779.73 250.23 4,029.96 1,240.12 (85.92) 2,875.76 4.27 2,871.49 19.63 2,891.12 412.56 2,478.56 4,642.70 (116.10) 4,526.60 7,005.16 43.09 286.88 15.38 549.52 74.23 6,036.06 45.08 42.17 XV 2009 21,058.63 2,072.18 18,986.45 7,769.90 163.46 26,919.81 13,063.79 4,274.86 750.16 749.33 5,858.96 24,697.10 107.80 24,589.30 2,330.51 (76.39) 2,254.12 506.92 35.25 1,711.95 6.36 1,705.59 11.27 1,716.86 311.45 1,405.41 3,873.20 43.91 (29.62) 3,799.67 5,205.08 26.62 180.05 18.75 24.90 278.83 33.23 4,642.70 25.79 24.14

Mumbai, 29th May, 2010

Keshub Mahindra Anand G. Mahindra Directors Bharat Doshi Narayan Shankar

Chairman Vice Chairman & Managing Director Executive Director Company Secretary Mumbai, 29th May, 2010
37

Consolidated Cash Flow Statement for the year ended 31st March, 2010
Rupees crores 2010 A. CASH FLOW FROM OPERATING ACTIVITIES : Profit before exceptional item, taxation and adjustments pertaining to previous years .............................................................................................. Adjustments for : Depreciation/Amortisation ........................................................................... Profit on Exchange (Net) ............................................................................. Investment and Interest Income [Excluding Rs. 25.91 crores (2009 : Rs. 13.42 crores) in respect of financial enterprises consolidated] ...... Interest, Commitment and Finance charges [Excluding Rs. 500.34 crores (2009 : Rs. 495.05 crores) in respect of financial enterprises consolidated] Amortisation of Expenses ............................................................................ Profit on sale of Investments (Net) .............................................................. Loss on fixed assets sold/scrapped/written off (Net) (Excluding Rs. 0.05 crores in respect of Prior Period Item) ......................... Provision for diminution in value of long term investments (Net) .............. Increase of cost over fair value of current investments (Net) ...................... 873.52 0.08 (183.70) 620.23 9.93 (13.98) 17.83 8.75 (0.25) 1,332.41 Operating Profit before Working Capital changes ....................................... Changes in : Deferred income advances towards membership fees ........ Trade and other receivables ................................................... Loans against Assets * ........................................................... Inventories ............................................................................. Trade and other payables ...................................................... Exceptional Items ......................................................................................... Miscellaneous Expenditure (to the extent not written off or adjusted) incurred during the year ............................................................................. Cash generated/(used) from operations ...................................................... Income Taxes paid (Net of refunds including for prior years) ..................... NET CASH FROM OPERATING ACTIVITIES .................................................... * In respect of financial enterprises consolidated. B. CASH FLOW FROM INVESTING ACTIVITIES : Purchase of fixed assets .............................................................................. Sale of fixed assets ...................................................................................... Purchase of investments .............................................................................. Sale of investments ..................................................................................... Interest received .......................................................................................... Dividends received ....................................................................................... Inter corporate deposits (Net) ..................................................................... Purchase consideration paid on acquisition of interest in subsidiaries ....... Sales Proceeds/subscription (Net) received on divesture of interest in subsidiaries NET CASH USED IN INVESTING ACTIVITIES ................................................. (2,699.86) 145.51 (23,823.11) 20,869.23 160.17 8.30 (35.54) (32.16) 681.65 (4,725.81) (2,941.33) 81.73 (20,149.02) 19,692.81 79.52 35.88 14.88 (562.95) 305.14 (3,443.34) 168.18 (1,452.88) (1,351.38) (278.34) 1,766.90 (1,147.52) (2.19) 3,962.43 (1,163.67) 2,798.76 5,112.14 749.33 (5.58) (195.25) 362.84 15.81 (47.78) 6.04 0.24 (1.93) 883.72 3,214.23 157.94 85.05 (185.28) 177.94 690.40 926.05 (21.44) 4,118.84 (717.34) 3,401.50 2009

3,779.73

2,330.51

38

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Consolidated Cash Flow Statement


C. CASH FLOW FROM FINANCING ACTIVITIES :

(contd.) Rupees crores 2010 2009 57,271.36 (55,364.19) (371.78) (328.81) 1,206.58 1,164.74 1,785.67 4.37 (1.71) 2,953.07

Proceeds from issue of Share Capital .......................................................... Proceeds from borrowings .......................................................................... Repayments of borrowings (including premium on repayment) ................. Dividends paid ............................................................................................. Interest, Commitment and Finance charges paid ........................................ Stamp duty paid on shares issued to PTL Shareholders .............................. NET CASH FROM FINANCING ACTIVITIES .................................................... NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) CASH AND CASH EQUIVALENTS [Note (a)] Opening Balance ......................................................................................... Cash & Bank Balance Acquired on Acquisition of Subsidiaries ................... Cash & Bank Balance on Disposal of Subsidiary .......................................... Closing Balance ........................................................................................... Per our report attached For Deloitte Haskins & Sells Chartered Accountants B. P. Shroff Partner M. M. Murugappan N. Vaghul R. K. Kulkarni A. S. Ganguly A. P. Puri N. B. Godrej A. K. Dasgupta Deepak S. Parekh

72.40 61,183.93 (58,322.46) (367.13) (716.14) (7.77) 1,842.83 (84.22) 2,953.07 1.43 (122.92) 2,747.36

Mumbai, 29th May, 2010

Keshub Mahindra Anand G. Mahindra Directors Bharat Doshi Narayan Shankar

Chairman Vice Chairman & Managing Director Executive Director Company Secretary Mumbai, 29th May, 2010

Notes to the Consolidated Cash Flow Statement for the year ended 31st March, 2010
Rupees crores 2010 (a) Cash and Bank Balances .............................................................................. Unrealised (Net) translation (gain)/loss on foreign currency cash and cash equivalents .................................................................................................. Total cash and cash equivalents .................................................................. (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. 10.24 2,747.36 (14.44) 2,953.07 2,737.12 2009 2,967.51

(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 years figures have been regrouped/restated wherever necessary.

SCHEDULE I
2010 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] 25,00,000 Unclassified Shares of Rs.100 each ........................................ Total .......... 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] ......................................................................... Less : 1,25,26,592 Ordinary (Equity) Shares of Rs. 5 each fully paid up [2009 : 62,05,305 Ordinary (Equity) Shares of Rs.10 each fully paid up] issued to ESOP Trust but not allotted to employees ............................................................ Adjusted : Issued and Subscribed Share Capital ................................................

Rupees crores 2009

600.00 25.00 625.00

600.00 25.00 625.00

289.21 289.21

278.82 278.82

6.26 282.95

6.20 272.62 Rupees crores

SCHEDULE II
2009 Reserves and Surplus : 1 2 3 Capital Reserve .................................................................... Capital Reserve on consolidation ......................................... Securities Premium Account ................................................ Less : Premium on shares issued to ESOP Trust but not allotted to employees [Note 5] ............................................ 23.54 23.48 139.01 138.55 545.66 579.03 15.20 16.34 530.46 562.69 12.09 12.47 1,047.71 971.84 3.10 3.33 1,050.81 975.17 47.86 18.24 682.84 30.61 68.75 50.00 129.91 194.51 (479.90) 28.78 (57.31) 14.00 2,148.06 2,048.50 0.08 0.31 0.46 784.79 10.95 71.40 713.39 10.95 336.38# 180.05# 336.38 180.05 116.10$ 29.62$ 4.52 806.61 *** 18.75 43.09 26.62 559.92 20.97 1,794.68 1,073.14 0.02 6.59 44.32 2.31 1.14 4.28 43.18 0.42 0.38 6.12o 104.18** 0.47 0.23 6.59 104.41 0.11 70.00 154.38 0.09 91.22 508.68 71.31 81.49 973.58 Additions / Adjustments Deductions

2010

23.54 23.54 139.32 139.01 1,323.86 545.66 84.29 15.20 1,239.57 530.46 11.67 12.09 1,377.97 1,047.71 2.63 3.10 1,380.60 1,050.81 163.85 47.86 617.36 682.84 68.75 68.75 172.91 129.91 80.02 (479.90) (36.34) (57.31) 3,861.25 2,148.06

4 5

Revaluation Reserve ............................................................. General Reserve ................................................................... Add : Bonus shares issued to ESOP Trust but not allotted to employees [Note 5] .........................................................

6 7 8 9

Debenture Redemption Reserve ........................................... Investment Fluctuation Reserve ........................................... Capital Redemption Reserve ................................................ Special Reserve (As per Section 45 IC of the RBI Act) .........

10 Hedging Reserve Account [Note 6] ..................................... 11 Foreign Exchange Fluctuation Reserve .................................

[including Group Share in Joint Ventures Rs. 401.02 crores (2009 : Rs. 3.21 crores)]
4

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE II (contd.)

Rupees crores 2010

12 Balance for 2009-2010 and earlier years as per Profit and Loss Account ....................................................................... Group Share in Joint Ventures ............................................ Total ..............................................

5,060.66 4,614.63 975.40 28.07 9,897.31 6,790.76

Transfer from Profit and Loss Account Rs. 336.38 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
2010 Loan Funds : (A) Secured : [Note 7] (1) Debentures/Bonds ................................................................................ (2) Foreign Currency Loans from Banks ..................................................... (3) Rupee Loans : (a) From Financial Institutions ............................................................ (b) From Banks ................................................................................... (c) From Others .................................................................................. (4) Loans and Advances on cash credit account from Banks .................... (5) Short-term Foreign Currency Loans from Banks ................................... Group Share in Joint Ventures .................................................................... Total ................................................. (B) Unsecured : (1) Fixed Deposits ...................................................................................... (2) Short-term Loans : (a) From Banks ................................................................................... (b) From Others .................................................................................. (3) Other Loans : (a) From Financial Institutions ............................................................ (b) Foreign Currency Loans from Banks .............................................. (c) Zero Coupon Convertible Bonds ................................................... (d) Debentures/Bonds ......................................................................... (e) 9.25% Fully and Compulsorily Convertible Debentures ................. (f) From Government of Gujarat ........................................................ (g) From Banks ................................................................................... (h) From Others ..................................................................................

Rupees crores 2009

2,330.20 1,047.27 44.25 4,561.72 148.00 4,753.97 510.76 8,642.20 330.25 8,972.45 671.68 456.91 261.20 718.11 841.43 501.35 850.86 290.00 10.31 318.38 39.76 2,852.09 4,241.88 271.52 4,513.40 13,485.85

2,880.86 1,133.97 41.92 2,648.08 56.00 2,746.00 709.36 253.70 7,723.89 0.82 7,724.71 103.26 658.12 213.84 871.96 688.67 625.65 961.52 321.00 700.00 9.85 137.81 45.88 3,490.38 4,465.60 4,465.60 12,190.31

Group Share in Joint Ventures .................................................................... Total ................................................. Total .................................................

SCHEDULE IV
Rupees crores
Additions and adjustments during the year # Depreciation/ Amortisation to 31st March, 2009 Deductions and adjustments during the year Cost/Professional valuation as at 31st March, 2010 Depreciation/ Amortisation for 20092010 # Deductions and adjustments of Depreciation/ Amortisation Depreciation/ Amortisation to 31st March, 2010 Net Balance before Impairment as at 31st March, 2010 Impairment for 20092010 $ Net Balance after Impairment as at 31st March, 2010 Net Balance after Impairment as at 31st March, 2009

Fixed Assets :

Description of Assets

Cost/ Professional valuation as at 31st March, 2009

A: 0.26 35.88 0.83 36.71 0.25 8.20 474.72 22.93 4,144.75 344.02 98.31 44.98 44.97 92.85 3.47 0.24 0.43 9.12 7.84 5,297.08 7.23 5,341.02 2.81 877.06 233.49 * 1,116.76 0.71 0.06 0.40 0.01 32.00 10.19 1.39 0.15 1,123.50 0.03 1,124.02 39.22 0.15 7.74 2.35 28.89 28.17 69.93 146.01 267.94 99.03 50.37 84.04 114.66 3.48 0.64 0.49 8.44 10.50 5,050.64 240.69 5,333.76 602.57 757.16 3,990.16 18.50 32.63 8.80 67.98 142.98 399.72 5.86 2.32 11.74 446.04 1,517.56 20.31 3,772.43 226.22 116.22 117.79 518.67 102.54 0.26 3.09 0.13 8.02 18.38 1,476.88 8,565.42 271.17 8,870.24 0.38 0.63 220.88 6.21 0.49 42.43 33.65 0.07 0.49 0.41 1.30 258.83 1.72 55.57 0.75 0.73 317.60 317.60 0.26 49.26 107.99 541.49 39.02 1,368.75 93.98 39.10 58.73 223.81 51.99 0.24 6.14 53.56 2,634.06 499.30 3,133.62 1,971.97 14,204.00 0.06 511.86 1,971.17 13,616.06 96.26 1,476.88 1.38 28.88 8.51 16.46 0.62 3.73 3.74 8.31 217.20 0.59 602.71 0.60 168.16 34.91 215.25 221.81 494.16 1,008.10 7,762.59 64.64 29.11 456.07 1,917.28 49.60 457.78 20.39 221.51 0.74 76.08 0.74 1.71 74.37 6.14 42.02 32.35 2.45

Assets on Lease 32.35 1.30 33.65 220.88 446.04 1,517.56 20.31 3,513.60 224.50 116.22 62.22 517.92 101.81 0.26 3.09 0.13 8.02 18.38 1,476.88 8,247.82 271.17 8,552.64 38.23 1.62 39.85 192.39 391.19 1,357.14 31.80 3,017.59 276.27 112.75 9.48 333.77 80.42 0.03 3.49 0.19 15.85 16.28 1,519.58 7,358.22 5.39 7,403.46

Plant and Machinery ................

74.11

Vehicles ....................................

Sub Total A ..............................

76.56

B:

Owned Assets

Land - Freehold ........................

192.64

Land - Leasehold ......................

399.39

Buildings - Freehold .................

1,831.86

Buildings - Leasehold ...............

54.73

Plant and Machinery ................

7,401.94

Furniture and Fittings ...............

621.99

Vehicles, Cycles, etc. ................

211.06

Technical Knowhow .................

110.03

Development Expenditure ........ 3.50 3.73 0.62

379.49

Software Expenditure ...............

173.52

Websites ...................................

Non-Compete Fees ...................

Timeshare weeks ......................

Trademarks ...............................

24.97

Other Intangible .......................

24.12

Goodwill + ..............................

1,519.58

Sub Total B ...............................

12,953.17

C:

Group Share in Joint Ventures ...............

12.62

TOTAL (A+B+C) .......................

13,042.35

D:

Capital Work-in-Progress and Advances [including Rs. 141.41 crores towards Group share in Joint Ventures (2009 : Rs. 1.35 crores)] ............. 3,133.62 3,483.87 1,131.88 1,971.97 14,204.00 13,042.35 5,341.02 4,219.02 1,116.76 1,163.49 1,124.02 41.49 5,333.76 5,341.02

1,967.69 10,837.93 9,453.06

317.60 311.25

1,967.69 10,520.33 9,141.81

1,738.35 9,141.81

Grand Total (A+B+C+D) .........

13,042.35

10,690.36

+ # * $

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
2010 Long Term Investments (At Cost unless otherwise specified) : Shares (Non-trade and fully paid-up) : Unquoted : (a) Equity Shares ....................................................................... (b) Equity Shares - Associates [Note 1(c) & Note 24] ............... (c) Preference Shares ................................................................ Quoted : (a) Equity Shares ....................................................................... (b) Equity Shares - Associates [Note 1(c) & Note 24] ............... 2010 Current 2009 Long Term

Rupees crores 2009 Current

61.57 54.85 43.20 159.62 7.49 42.29 49.78 209.40

0.01 0.01 0.01

43.82 50.09 34.52 128.43 8.85 31.88 40.73 169.16

Shares (Trade and fully paid-up, unless otherwise specified) : Unquoted : (a) Equity Shares ....................................................................... (b) Equity Shares partly paid-up ............................................... (c) Preference Shares ................................................................ Debentures/Bonds (Non-trade & fully paid-up) : (a) Unquoted ............................................................................ (b) Quoted ................................................................................ Other Investments : Government Securities (including Treasury Bills) : (a) Unquoted ............................................................................ (b) Quoted ................................................................................ Units : Unquoted ................................................................................... Trust Securities : Unquoted ................................................................................... Others : Unquoted ...................................................................................

8.82 0.19 15.20 24.21

52.76 52.76

6.17 9.83 16.00 33.25 33.25

16.80 16.80

0.01 0.01 1.15 1.15 1,548.17 1,548.17 1,782.94

205.29 205.29 1,291.57 1,291.57 143.95 143.95 1,693.58 3,476.52 1,329.88 4,806.40 4,498.57 307.83 4,806.40 1.15 4,805.25

0.01 0.01 1,511.14 1,511.14 0.05 0.05 1,729.61

99.08 99.08 1,535.37 1,535.37 1,651.25 3,380.86 0.44 3,381.30 3,224.69 156.61 3,381.30 0.04 3,381.26 188.09
43

Total ............... Group Share in Investments of Joint Ventures ........................... Total ............... Cost (Net of amounts written off) of Unquoted Investments .... Cost/Carrying Value of Quoted Investments ............................... Less : Excess of cost over fair value of Current Investments (Net)

Market value of Quoted Investments .........................................

422.50

SCHEDULE VI
2010 Current Assets, Loans and Advances : (A) Inventories (at cost or net realisable value whichever is lower) : (i) Finished Products produced and purchased for sale ........................... 860.13 804.78 78.83 1,112.06 576.33 3.25 65.75 40.59 3,541.72 Group Share in Inventories of Joint Ventures .............................................. Total .......... (B) Sundry Debtors : Unsecured unless otherwise stated : Outstanding over six months : Considered good ..................................... : Considered doubtful ................................ 292.77 163.90 456.67 Other Debts : Considered good ................................................................. : Considered doubtful ............................................................ 2,662.42 1.61 2,664.03 3,120.70 Less : Unmatured Finance Charges ............................................................. Less : Provision for Doubtful Debts ............................................................. Group Share in Debtors of Joint Ventures .................................................. Total .......... (C) Cash and Bank Balances : Cash, cheques and stamps on hand ........................................................... Balances with Banks : (i) On Current Account ............................................................................. 763.13 1,581.14 42.82 2,387.09 2,633.96 Group Share in Cash and Bank Balances of Joint Ventures ........................ Total .......... 103.16 2,737.12 246.87 128.27 162.88 2,829.55 377.62 3,207.17 7.27 3,548.99

Rupees crores 2009

845.55 862.42 55.79 902.73 498.36 5.24 58.20 38.58 3,266.87 4.59 3,271.46

(ii) Contracts and Work-in-Progress ........................................................... (iii) Manufactured Components ................................................................. (iv) Raw Materials and Bought-out Components ....................................... (v) Work-in-Progress Property Development Activity and Long Term Contracts (vi) Food, Beverages, Smokes and Operating Supplies ............................... (vii) Stores and Spares ................................................................................. (viii) Tools .....................................................................................................

427.23 123.23 550.46 3,122.19 3.29 3,125.48 3,675.94 94.02 131.11 3,450.81 19.98 3,470.79 392.81 1,168.50 1,348.95 51.43 2,568.88 2,961.69 5.82 2,967.51

(ii) On Fixed Deposit Account .................................................................... (iii) On Margin Account .............................................................................

44

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE VI (contd.)
2010 (D) Other Current Assets : Interest accrued on Investments .................................................................. Others .......................................................................................................... 4.38 47.49 51.87 Group Share in Other Current Assets of Joint Ventures .............................. Total .......... (E) Loans and Advances : (Unsecured, considered good unless otherwise stated) : Bills of exchange, considered good ............................................................. Bills of exchange, considered doubtful ....................................................... 47.81 1.02 48.83 Less : Provision for Doubtful Debts ............................................................. Advances recoverable in cash or in kind or for value to be received : Considered good ......................................................................................... Considered doubtful .................................................................................... 2,108.39 88.80 2,197.19 Less : Provision for Doubtful Advances ....................................................... 85.50 2,111.69 Loans against assets/Retained Interest in Securitised Assets (Secured) : Considered good ......................................................................................... Considered doubtful .................................................................................... 7,969.76 411.66 8,381.42 Less : Provision for Doubtful Advances ....................................................... 411.66 7,969.76 Payments towards Income Tax and Surtax (Net of provisions) .................... Balances - Customs, Port Trust, Excise, etc. ................................................. 273.27 71.63 10,474.16 Group Share in Loans and Advances of Joint Ventures .............................. Total .......... Total .......... 296.84 10,771.00 20,316.22 1.02 47.81 0.07 51.94

Rupees crores 2009

2.94 0.14 3.08 0.11 3.19

14.26 1.02 15.28 1.02 14.26 1,774.59 79.74 1,854.33 74.91 1,779.42

6,319.22 678.79 6,998.01 379.63 6,618.38 336.57 112.53 8,861.16 0.75 8,861.91 18,574.86

45

SCHEDULE VII
2010 Current Liabilities and Provisions : (A) Current Liabilities : Acceptances ................................................................................................. Sundry Creditors : (i) Total outstanding dues of micro and small enterprises ....................... 24.21 4,544.01 4,568.22 Dividend payable ......................................................................................... Balances on Directors Current Accounts .................................................... Interest accrued but not due on loans ........................................................ Deposits/Advances received against hire purchase/lease agreements .......... Other current liabilities ................................................................................ 0.34 3.10 151.48 112.80 1,023.21 6,209.04 Group Share in Current Liabilities of Joint Ventures ................................... Total .......... (B) Provisions : Proposed Dividends ..................................................................................... Provision for Tax on Proposed Dividends ..................................................... Provision for diminution in value of long term investments ....................... Provision for premium payable on redemption of convertible bonds ......... Provision for compensated absences ........................................................... Provision for Estimated Loss/Expenses on Securitisation ............................. Provision : Others [Note 14] ........................................................................ 549.52 74.23 93.34 238.49 334.72 202.67 341.99 1,834.96 Group Share in Provisions of Joint Ventures ............................................... Total .......... Total .......... 103.12 1,938.08 8,655.69 508.57 6,717.61 349.89

Rupees crores 2009

354.71

6.76 5,097.73 5,104.49 6.19 2.21 210.10 53.87 1,039.09 6,770.66 9.30 6,779.96

(ii) Total outstanding dues of creditors other than micro and small enterprises

278.83 33.23 28.35 269.51 466.92 137.62 400.45 1,614.91 0.84 1,615.75 8,395.71

SCHEDULE VIII
2010 Miscellaneous Expenditure (to the extent not written off or adjusted) : (a) Finance Charges ................................................................................... (b) Separation and other costs .................................................................. (c) Others .................................................................................................. Total .......... 4.12 0.46 4.58

Rupees crores 2009

15.38 0.86 0.62 16.86

46

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE IX
2010 Income from Operations : Income from services rendered ................................................................... Income from Loan, Retained Interest in securitised assets and securitisation Income from long term contracts ............................................................... Hire Purchase income, Lease income and other rentals .............................. Miscellaneous Income ................................................................................. Group Share in Joint Ventures .................................................................... Total .......... 6,028.05 1,534.90 321.16 83.49 394.97 8,362.57 7.32 8,369.89

Rupees crores 2009 5,718.51 1,373.41 159.57 167.50 342.45 7,761.44 8.46 7,769.90 Rupees crores 2010 2009 47.78 100.94 14.69 163.41 0.05 163.46 Rupees crores 2010 2009

SCHEDULE X
Other Income : Profit on sale of Investments (Net) [Note 20 (b)] ........................................ Dividends on other Investments [Note 20 (a)] ............................................ Miscellaneous Income ................................................................................. Group Share in Joint Ventures .................................................................... Total ..........

13.98 68.87 36.53 119.38 0.05 119.43

SCHEDULE XI
Raw 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 ........................... (ii) Contracts and Work-in-Progress ........................................................... (iii) Manufactured Components ................................................................. Add : Stock taken over on acquisition (i) Finished Products produced and purchased for sale ........................... (ii) Contracts and Work-in-Progress ........................................................... Less : Closing Stock : (i) Finished Products produced and purchased for sale ........................... (ii) Contracts and Work-in-Progress ........................................................... (iii) Manufactured Components ................................................................. (Increase)/Decrease in Stock ........................................................................ (B) Consumption of Raw Materials and Bought-out Components : Opening Stock ............................................................................................. Add : Purchases ........................................................................................... Add : Stock taken over on acquisition ........................................................ Less : Closing Stock ..................................................................................... (C) Purchases of Finished Products for sale ...................................................... Group Share in Joint Ventures .................................................................... Total ..........

845.55 862.42 55.79 1,763.76 6.67 6.67 860.13 804.78 78.83 1,743.74 26.69 902.73 14,338.40 15,241.13 1,112.06 14,129.07 1,079.88 15,235.64 32.27 15,267.91

1,013.20 730.01 48.10 1,791.31 1.79 149.73 151.52 845.55 862.42 55.79 1,763.76 179.07 1,029.39 11,801.58 12,830.97 7.52 902.73 11,935.76 922.23 13,037.06 26.73 13,063.79

47

SCHEDULE XII
2010 Personnel : Salaries, Wages, Bonus, etc. ........................................................................ Contribution to Provident and other funds ................................................. Welfare ........................................................................................................ 4,024.00 255.65 294.56 4,574.21 Group Share in Joint Ventures .................................................................... Total .......... 8.34 4,582.55

Rupees crores 2009

3,736.92 262.58 269.09 4,268.59 6.27 4,274.86

SCHEDULE XIII
2010 Interest, Commitment and Finance Charges : On Term Loans and Debentures .................................................................. On Others (Net) ........................................................................................... Finance charges ........................................................................................... 905.36 188.93 26.21 1,120.50 Group Share in Joint Ventures .................................................................... Total .......... Less : Interest Income : Interest on Government Securities, Debentures and Bonds - Gross .. Interest - Others - Gross .................................................................... 3.43 136.94 140.37 Group Share in Joint Ventures .................................................................... Total .......... 0.37 140.74 979.83 0.07 1,120.57

Rupees crores 2009

730.91 105.68 21.17 857.76 0.13 857.89

2.83 104.60 107.43 0.30 107.73 750.16

48

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE XIV
2010 Other Expenses : Stores consumed ......................................................................................... Tools consumed ........................................................................................... Power and Fuel ............................................................................................ Rent including lease rentals ......................................................................... Rates and Taxes ........................................................................................... Insurance ..................................................................................................... Repairs and Maintenance : Buildings ............................................................................................... Machinery ............................................................................................. Others .................................................................................................. 30.72 172.83 80.05 283.60 Postage, Telephone and Communication .................................................... Software Charges ........................................................................................ Legal and Professional Charges ................................................................... Advertisement .............................................................................................. Commission on sales/contracts (Net) ........................................................... Discount allowed ......................................................................................... Freight outward ........................................................................................... Sales Promotion Expenses ........................................................................... Travelling Expenses ...................................................................................... Cost of Projects, Property etc. ..................................................................... Subcontracting Charges .............................................................................. Miscellaneous Expenses ............................................................................... Amortisation of Expenses ............................................................................ Directors Fees ............................................................................................. Donations and Contributions ...................................................................... Loss on Fixed Assets sold/scrapped/written off (Net) .................................. Provision for diminution in value of Long Term Investments (Net) ............. Net Increase of cost over fair value of Current Investments ....................... Provision for doubtful debts/advances (Net) ............................................... 130.92 100.21 192.76 254.57 169.50 102.90 873.87 439.08 458.58 247.72 873.93 930.30 1.68 0.14 18.75 17.88 8.75 (0.25) 91.26 6,329.58 Group Share in Joint Ventures .................................................................... Total .......... 7.44 6,337.02 194.09 58.90 510.77 241.08 70.40 58.19

Rupees crores 2009

181.57 68.87 471.40 240.23 5.37 57.49

29.55 191.82 66.94 288.31 131.07 68.15 200.30 203.98 132.53 72.87 718.36 351.51 487.15 145.88 770.21 1,070.01 1.19 0.09 16.89 6.04 0.24 (1.93) 165.68 5,853.46 5.50 5,858.96

SCHEDULE XV
Notes on the Consolidated Accounts for the year ended 31st March, 2010
1. 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. The difference between the costs of investment in the subsidiaries over the Companys portion of equity of the subsidiary is recognised in the financial statements as Goodwill or Capital Reserve. 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. Minority Interest in the net assets of consolidated subsidiaries consists of : a) b) v) the amount of equity attributable to minorities at the date on which investment in a subsidiary is made; and the minorities share of movements in equity since the date the parent subsidiary relationship comes into existence.

ii) iii) iv)

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 : Country of Incorporation Proportion of ownership interest as at as at 31-03-2010 31-03-2009 Proportion of voting power where different as at as at 31-03-2010 31-03-2009

Name of the Subsidiary Company Indian Subsidiaries Mahindra First Choice Wheels Limited * Mahindra Life Space Developers Limited Mahindra Consulting Engineers Limited Tech Mahindra Limited [upto 22nd March, 2010 refer note 3 (iii)] Bristlecone India Limited Mahindra Engineering and Chemical Products Limited Mahindra Gujarat Tractor Limited Mahindra Holidays and Resorts India Limited * Mahindra Infrastructure Developers Limited Mahindra Intertrade Limited Mahindra Logisoft Business Solutions Limited [upto 22nd March, 2010 refer note 3 (iii)] Mahindra & Mahindra Financial Services Limited * Mahindra Steel Service Centre Limited Mahindra Shubhlabh Services Limited NBS International Limited Mahindra Insurance Brokers Limited Mahindra Engineering Services Limited Mahindra World City Developers Limited

India India India India India India India India India India India India India India India India India India

54.83% 51.08% 51.00% 81.97% 100.00% 60.00% 84.03% 40.87% 100.00% 60.68% 61.00% 83.05% 100.00% 60.68% 100.00% 42.21%

54.83% 51.08% 51.00% 48.83% 82.05% 100.00% 60.00% 95.29% 40.87% 100.00% 100.00% 60.85% 61.00% 83.05% 100.00% 60.85% 100.00% 42.21%

100.00% 80.00% 100.00% 82.62%

52.33% 100.00% 80.00% 100.00% 82.62%

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Name of the Subsidiary Company Mahindra Gears & Transmissions Private Limited (formerly known as Mahindra SAR Transmission Private Limited) Mahindra Navistar Automotives Limited Mahindra World City (Maharashtra) Limited Mahindra Renault Private Limited Mahindra Ugine Steel Company Limited Mahindra World City (Jaipur) Limited CanvasM Technologies Limited [upto 22nd March, 2010 refer note 3 (iii)] Mahindra Hinoday Industries Limited * [upto 31st March, 2009 refer note 3 (iv)] Mahindra Integrated Township Limited Mahindra Vehicle Manufacturers Limited Mahindra Castings Limited (formerly known as Mahindra Castings Private Limited) Mahindra Forgings Limited Mahindra Hotels and Residences India Limited Knowledge Township Limited (formerly known as Mahindra Knowledge City Limited) Mahindra Holdings Limited Mahindra Logistics Limited Mahindra Rural Housing Finance Limited Mahindra Residential Developers Limited Mahindra Aerospace Private Limited Mahindra First Choice Services Limited Mahindra Navistar Engines Private Limited Mahindra Bebanco Developers Limited Industrial Township (Maharashtra) Limited (formerly known as Mahindra Industrial Township Limited) Crest Geartech Limited Mahindra Business & Consulting Services Private Limited (formerly known as Mahindra IT Consulting Private Limited) Mahindra Two Wheelers Limited Mahindra United Football Club Private Limited Defence Land Systems India Private Limited (formerly known as Mahindra Defence Land Systems Private Limited) Venturbay Consultants Private Limited [upto 22nd March, 2010 refer note 3 (iii)] Mahindra Metal One Steel Service Centre Limited (w.e.f. 11th June, 2009) Raigad Industrial & Business Park Limited (w.e.f. 18th June, 2009)

Country of Incorporation

Proportion of ownership interest as at as at 31-03-2010 31-03-2009

Proportion of voting power where different as at as at 31-03-2010 31-03-2009

India India India India India India India India India India India India India India India India India India India India India India India India India India India

53.34% 51.00% 51.08% 51.00% 50.69% 37.80% 48.74% 100.00% 64.94% 50.68% 84.02% 51.08% 100.00% 100.00% 53.09% 24.85% 100.00% 100.00% 51.00% 35.76% 51.08% 51.00% 60.68% 80.00% 100.00%

100.00% 51.00% 51.08% 51.00% 50.69% 37.80% 39.11% 64.88% 48.77% 100.00% 65.00% 60.56% 95.28% 51.08% 100.00% 100.00% 53.25% 24.87% 100.00% 100.00% 51.00% 35.76% 51.08% 51.00% 82.05% 80.00% 100.00%

100.00% 74.00% 99.92% 99.99% 100.00% 87.50% 51.00% 70.00% 100.00% 100.00% 100.00%

100.00% 74.00% 80.10% 99.81% 100.00% 99.99% 100.00% 87.50% 51.00% 70.00% 100.00% 100.00% 100.00%

India India India India

100.00% 100.00% 51.08%

100.00% 48.83%

100.00%

100.00%

Name of the Subsidiary Company Retail Initiative Holdings Limited (w.e.f. 1st July, 2009) Mahindra Retail Private Limited (w.e.f. 1st July, 2009) Mahindra Punjab Tractors Private Limited (w.e.f. 9th October, 2009) Mahindra EcoNova Private Limited (w.e.f. 2nd January, 2010) Mahindra Conveyor Systems Private Limited (w.e.f. 4th January, 2010) Foreign Subsidiaries Mahindra Automotive Australia Pty. Limited Bristlecone Limited Mahindra (China) Tractor Company Limited Tech Mahindra (Beijing) IT Services Limited [upto 22nd March, 2010 refer note 3 (iii)] Mahindra Yueda (Yancheng) Tractor Company Limited Mahindra Gears Cyprus Limited Tech Mahindra GmbH [upto 22nd March, 2010 refer note 3 (iii)] Bristlecone GmbH Mahindra Engineering GmbH (formerly known as Plexion Technologies GmbH) Mahindra Forgings Europe AG Gesenkschmiede Schneider GmbH JECO-Jellinghaus GmbH Falkenroth Umformtechnik GmbH Schneweiss & Co. GmbH ** MHR Hotel Management GmbH PT Tech Mahindra Indonesia [upto 22nd March, 2010 refer note 3 (iii)] Mahindra Europe S.r.l. Mahindra Graphic Research Design S.r.l. 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) Metalcastello S.p.A. (upto 31 December, 2009) Engines Engineering S.r.l. EFF Engineering S.r.l. ID-EE S.r.l. Bristlecone (Malaysia) SDN. BHD. Tech Mahindra (Malaysia) SDN. BHD. [upto 22nd March, 2010 refer note 3 (iii)] Heritage Bird (M) SDN. BHD. Mahindra Overseas Investment Company (Mauritius) Limited
st

Country of Incorporation India India India India India

Proportion of ownership interest as at as at 31-03-2010 31-03-2009 100.00% 78.91% 100.00% 100.00% 100.00%

Proportion of voting power where different as at as at 31-03-2010 31-03-2009

Australia Cayman Islands China China China Cyprus Germany Germany Germany Germany Germany Germany Germany Germany Germany Indonesia Italy Italy

80.00% 81.97% 85.90% 51.00% 53.34% 81.97% 100.00% 50.68% 50.68% 50.68% 50.68% 50.68% 63.02% 80.00% 100.00%

80.00% 82.05% 84.87% 48.83% 51.00% 53.34% 48.83% 82.05% 100.00% 60.56% 60.56% 60.56% 60.56% 60.56% 71.47% 48.83% 80.00% 100.00%

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 97.28% 75.00%

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 97.28% 75.00% 100.00%

Italy Italy Italy Italy Italy Malaysia Malaysia Malaysia Mauritius

51.00% 70.00% 35.70% 49.00% 81.97% 84.03% 100.00%

51.00% 51.00% 70.00% 35.70% 49.00% 82.05% 48.83% 95.29% 100.00%

95.61% 51.00% 70.00% 100.00% 100.00%

95.61% 100.00% 51.00% 70.00% 100.00% 100.00% 100.00%

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Name of the Subsidiary Company Mahindra-BT Investment Company (Mauritius) Limited Mahindra Forgings International Limited Mahindra Forgings Global Limited Mahindra Gears International Limited Mahindra Gears Global Limited Mahindra Middleeast Electrical Steel Service Centre (FZC) Tech Mahindra (Singapore) Pte. Limited [upto 22nd March, 2010 refer note 3 (iii)] Bristlecone (Singapore) Pte. Limited Mahindra & Mahindra South Africa (Proprietary) Limited Tech Mahindra (Thailand) Limited [upto 22nd March, 2010 refer note 3 (iii)] Bristlecone UK Limited Stokes Group Limited Stokes Forgings Dudley Limited Jensand Limited Stokes Forgings Limited Mahindra Engineering Services (Europe) Limited Tech Mahindra (Americas) Inc. [upto 22nd March, 2010 refer note 3(iii)] Mahindra USA Inc. Bristlecone Inc. Mahindra Holidays and Resorts USA Inc. Mahindra Technologies Inc.(upto 10th March, 2010) CanvasM (Americas) Inc. [upto 22nd March, 2010 refer note 3 (iii)] Mahindra Technologies Services Inc. (w.e.f. 4 June, 2009) Tech Mahindra (Nigeria) Limited [w.e.f. 18th August, 2009 & upto 22nd March, 2010 refer note 3 (iii)] Tech Mahindra Bahrain Limited S.P.C. [w.e.f. 3rd November, 2009 & upto 22nd March, 2010 refer note 3 (iii)] BAH Hotelanlagen AG (w.e.f. 11th January, 2010) * **
th

Country of Incorporation Mauritius Mauritius Mauritius Mauritius Mauritius Sharjah Singapore Singapore South Africa Thailand U.K. U.K. U.K. U.K. U.K. U.K. U.S.A. U.S.A. U.S.A. U.S.A. U.S.A. U.S.A. U.S.A.

Proportion of ownership interest as at as at 31-03-2010 31-03-2009 57.00% 50.68% 50.68% 100.00% 53.34% 90.00% 81.97% 100.00% 81.97% 50.64% 50.64% 50.64% 50.64% 100.00% 100.00% 81.97% 84.03% 100.00% 57.00% 60.56% 60.56% 100.00% 53.34% 90.00% 48.83% 82.05% 90.73% 48.83% 82.05% 60.43% 60.43% 60.43% 60.43% 100.00% 48.83% 100.00% 82.05% 95.29% 100.00% 39.11%

Proportion of voting power where different as at as at 31-03-2010 31-03-2009 100.00% 100.00% 100.00% 100.00% 99.92% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 99.78% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Nigeria

Bahrain 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 Groups interests in jointly controlled entities of the Group are : Name of the Entity Country of Incorporation Percentage of ownership interest as at 31-03-2010 29.77% 18.06% 50.00% 50.00% 43.99% Percentage of ownership interest as at 31-03-2009 29.77% 18.06% 50.00% 50.00%

a) b) c) d) e)

Mahindra Sona Limited PSL Erickson Limited Mahindra Water Utilities Limited $ Mahindra Inframan Water Utilities Private Limited $ Tech Mahindra Limited [w.e.f. 23rd March, 2010 - refer note 3 (iii)]

India India India India India

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 Groups Associates are : Name of the Entity Country of Incorporation Percentage of ownership interest as at 31-03-2010 21.50% 43.83% 50.00% 20.43% 37.37% 37.37% 37.37% 30.56% 44.19% 33.22% Percentage of ownership interest as at 31-03-2009 21.50% 43.83% 50.00% 20.43% 37.37% 37.37% 37.37% 30.56% 44.19% 33.22% 29.75%

Owens Corning (India) Limited Mahindra Construction Company Limited Officemartindia.com Limited Rathna Bhoomi Enterprises Private Limited Kota Farm Services Limited Mriyalguda Farm Solution Limited Mega One Stop Farm Services Limited Mahindra Composites Limited Swaraj Automotives Limited Swaraj Engines Limited Eco Engines (upto 15th January, 2010) Satyam Computer Services Limited (w.e.f. 5th May, 2009 and upto 22nd March, 2010 refer note 4) The financial statements of all the Associates are drawn up to 31 March, 2010. 2. Accounting Policies : (A) Basis of Accounting :
st

India India India India India India India India India India Russia India

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) (ii) 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. 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) (ii)

Leasehold land is amortised over the period of the lease. 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 assets 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) (e) Websites : The expenditure incurred is amortised over the estimated period of benefit, not exceeding five years. 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] Dividends from investments are recognised in the Profit and Loss Account when the right to receive payment is established.

(b) (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. Groups 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. Groups 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) (b) (P) 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. 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.

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 Groups 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&Ms 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. 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 Groups 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. 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 Honble 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. 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. 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.

ii.

iii.

v.

vi.

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. 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.

5.

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. 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. 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. 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)

8.

(a)

ii)

(b)

Additions to assets include assets taken over due to acquisition of subsidiaries : Rupees crores Description of Assets Cost Depreciation/ Amortisation 0.59 0.50 0.22 0.80 0.53 2.64

Land - Leasehold ......................................................................................................................... Plant and Machinery ................................................................................................................... Furniture and Fittings .................................................................................................................. Vehicles, Cycles, etc. .................................................................................................................... Software Expenditure .................................................................................................................. Property Leasehold ................................................................................................................... Total ............................................................................................................................................ 9.

26.21 6.12 6.62 1.10 3.11 6.98 50.14

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 Companys 93,95,974 Unsecured Fully and Compulsorily Convertible Debentures (FCDs) 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 Gratuity 2010 A Expense recognised in the statement of Profit & Loss Account for the year ended 31st March 1 2 3 4 5 6 7 8 9 B. Current Service Cost Interest Cost Expected return on Plan Assets Actuarial (Gains)/Losses Past Service Cost Settlement Cost Payments on account of employee transferred Effect of the limit in Para 59(b) of the revised AS 15 Total expense recognised in Personnel (Sch XII) 25.96 26.96 (18.66) (10.90) 12.14 (0.22) 0.08 35.36 22.19 20.57 (19.82) 35.86 0.03 (0.04) (0.01) 58.78 12.27 9.00 (0.10) (4.84) (0.02) (0.07) 16.24 21.60 10.59 (0.04) 8.21 0.05 40.41 0.44 0.41 4.32 5.17 0.23 0.25 1.80 2.28 1.50 0.84 (1.77) 0.57 2009 Gratuity 2010 2009 Unfunded Plans Post Retirement Medical Benefits 2010 2009 Post Retirement Housing Allowance 2010 2009

Net Asset/(Liability) recognised in the Balance Sheet as at 31st March 1 2 3 4 5 Present Value of Defined Benefit Obligation as at 31st March Fair value of Plan Assets as at 31st March Amount not recognised as an asset Funded status [Surplus/(Deficit)] Net Asset/(Liability) as at 31st March 378.12 305.04 (0.21) (72.87) (72.87) 337.58 230.08 (3.92) (103.58) (103.58) 162.51 0.05 (162.46) (162.46) 116.27 0.21 39.65 (155.71) (155.71) 9.88 (9.88) (9.88) 4.99 (4.99) (4.99) 10.99 (10.99) (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 Adjustment to the opening balance/Exchange rate variation Obligations arising on account of acquisitions during the year Current Service Cost Interest Cost Actuarial (Gains)/Losses Liabilities settled on sale of business Benefits paid Past Service Cost Present Value of Defined Benefit Obligation at the end of the year

341.72 (0.17) 25.96 26.96 (6.15) 0.28 (22.62) 12.14

278.71 (3.08) 22.19 20.58 35.86 (12.54)

95.95 57.06 2.42 12.27 9.01 (4.78) (9.40) (0.02)

32.04 0.68 61.24 10.59 8.16 (3.12) (13.70) 0.06

5.00 0.44 0.41 4.32 (0.29)

2.95 0.23 0.25 1.80 (0.23)

10.42 1.50 0.84 (1.77)

2 3 4 5 6 7 8 9 10

378.12

341.72

162.51

95.95

9.88

5.00

10.99

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Rupees crores Funded Plan Gratuity 2010 D. Change in the fair value of plan assets during the year ended 31st March 1 2 3 Fair value of Plan Assets at the beginning of the year Adjustment to the opening balance/Exchange rate variation Fair value of Plan Assets arising on account of acquisitions during the year Expected return on Plan Assets Actuarial Gains/(Losses) Contributions by employer Asset distributed on sale of business Actual Benefits paid Fair value of Plan Assets at the end of the year Actual return on Plan Assets 239.13 (4.21) 217.95 2009 Gratuity 2010 2009 Unfunded Plans Post Retirement Medical Benefits 2010 2009 Post Retirement Housing Allowance 2010 2009

1.01 18.17 7.26 66.30 (22.62) 305.04 22.24

(0.16) 20.03 0.27 10.59 1.76 (11.31) 239.13 17.38

0.05 0.05

2.41 (2.41)

0.28 (0.28)

0.22 (0.22)

4 5 6 7 8 9 10 E.

Major category of Plan Assets as a percentage of total plan Insurer Managed Funds Others 97.96% 2.04% 100.00% 0.00%

F. 1 2

Actuarial Assumptions Discount Rate (Basis - prevailing market yields of govt. securities) Expected Rate of return on Plan Assets In-service Mortality Turnover rate Age 21 to 30 - 10% Age 31 to 40 - 3% Age 41 to 59 - 2% 7.50 % 8.45 % 7.07% 7.50 % 8.50 % 7.50 % 9.50 % Indian Assured Lives Mortality (1994-96) Modified ultimate 5.00% Age 21 to 44 -25% Age 44 to 59 - 10% Age 21 to 30 - 10% Age 31 to 40 - 5% Age 41 to 50 - 3% Age 51 and above 2% 5.00% Age 21 to 30 - 10% Age 31 to 40 - 5% Age 41 to 50 - 3% Age 51 and above 2% 3.00%6.00% 3.00%6.00% 6.85 % 8.50 % 7.50 % 8.50 % 7.60 % 8.45 % 7.50 % 8.50 % 8.45%

3 4

Medical Premium inflation

One percentage point increase in 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 Effect on the accumulated Post Employment Medical benefit obligations Previous Year Effect on the aggregate service and interest cost of Post Employment Medical benefits Effect on the accumulated Post Employment Medical benefit obligations

One percentage point decrease in medical inflation rate

0.25

(0.20)

1.38

(1.11)

0.14

(0.16)

0.46

(1.38) Rupees crores Period ended

H.

Experience Adjustments Gratuity (Funded) Defined Benefit Obligation Plan Assets (Deficit)/Surplus Experience adjustments on Plan Liabilities Experience adjustments on Plan Assets Gratuity (Unfunded) Defined Benefit Obligation Plan Assets (Deficit)/Surplus Experience adjustments on Plan Liabilities Post Retirement Medical Benefits (Unfunded) Defined Benefit Obligation Plan Assets (Deficit)/Surplus Experience adjustments on Plan Liabilities Post Retirement Housing Allowance (Unfunded) Defined Benefit Obligation Plan Assets (Deficit)/Surplus Experience adjustments on Plan Liabilities

2010

2009

2008

2007

378.12 305.04 (73.08) 13.40 4.92

341.72 239.13 (102.59) 34.34 0.02

278.71 217.95 (60.76) (3.36)

204.46 144.67 (59.79)

162.51 0.05 (162.46) (0.26)

95.95 (95.95) 0.02

52.75 (52.75)

32.05 (32.05)

9.88 (9.88) 5.21

5.00 (5.00) 1.24

2.95 (2.95) (0.49)

3.30 (3.30) 0.07

10.99 (10.99) 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 Companys 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 Companys 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 Companys favour. The CESTAT had accepted the Companys 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 Departments Appeal against the Order of the Collector, Central Excise classifying the Commander range of vehicles as 10-seaters. The Departments 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 Companys 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 Companys 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 For employees ................................................................................................................ For other companies ...................................................................................................... Others ............................................................................................................................ 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)]. 1.05 330.72 2.42 2009 1.05 181.39 105.85

(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 : (ii) Income Tax Group Share in Joint Ventures : : Rs. 409.78 crores (2009 : Rs. 368.52 crores) Rs. 22.57 crores (2009 : Rs. 0.29 crores)

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 Surtax matters : : Rs. 70.58 crores (2009 : Rs. 58.63 crores) Rs. 0.13 crores (2009 : Rs. 0.13 crores)

(d) (e)

Bills discounted not matured Rs. 31.40 crores (2009 : Rs. 91.31 crores). 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. 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. 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 Provisions Balance as at 1 April .............................................................. Add : On Amalgamation during the year ............................... Add : Provision made during the year .................................... Less : Utilisation/Reversal during the year ................................ Balance as at 31 March ......................................................... Group Share in Joint Venture : Rs. 0.12 crores (2009 : Rs. 0.10 crores)
st st

(b) (c)

Contingency 2009 2010 11.08 4.77 10.15 5.70 2009 9.55 6.85 5.32 11.08

Retired assets 2010 16.89 1.06 15.83 2009 17.01 0.12 16.89

2010 170.55 0.43 128.40 86.32 213.06

139.11 0.25 120.33 89.14 170.55

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 Deferred Tax Liability : (i) (ii) On fiscal allowances on Fixed Assets ........................................................................................ Others ....................................................................................................................................... Group Share in Joint Ventures .................................................................................................. Deferred Tax Assets : (i) (ii) Provision for Compensated absences ....................................................................................... Provision for Doubtful Debts/Advances .................................................................................... 97.04 247.19 113.47 18.10 14.09 0.02 174.50 12.27 676.68 Net Deferred Tax Liability/(Assets) ..................................................................................................... 48.21 101.40 209.99 115.66 40.08 1.49 17.61 287.54 0.88 774.65 (188.40) 517.47 207.20 0.22 724.89 445.30 140.45 0.50 586.25 2009

(iii) Unabsorbed depreciation carried forward # ............................................................................ (iv) Premium on Redemption of Zero Coupon Convertible Bonds ................................................. (v) Provision for Gratuity ................................................................................................................

(vi) Provision for Post Retirement Medical Expenses ....................................................................... (vii) Others ....................................................................................................................................... Group Share in Joint Ventures ..................................................................................................

# (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 1. 2. 3. 4. 5. 6. Profit on divesture of Long Term Investments (Net) ............................................................................ Impairment of Assets ........................................................................................................................... Transferred from Investment Fluctuation Account .............................................................................. Restructuring Cost ............................................................................................................................... Amortisation of liability ....................................................................................................................... Others .................................................................................................................................................. Total ................................................................... 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 1. 2. (Excess)/Short provision of Income Tax in respect of previous years ................................................... Other Adjustments ............................................................................................................................... Total ................................................................... 0.15 4.12 4.27 2009 0.07 6.29 6.36 264.56 (6.35) (3.82) (4.16) 250.23 2009 83.18 (311.25) 154.38 (5.30) 2.60 (76.39)

20. (a) (b)

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. 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. 1. Associates : Sl. No. 1. 2. 3. 4. 5. 6. Name of the Company Owens Corning (India) Limited Mahindra Construction Company Limited Officemartindia.com Limited Rathna Bhoomi Enterprises Private Limited Mahindra Composites Limited Kota Farm Services Limited Sl. No. 7. 8. 9. 10. 11. 12. Name of the Company Mriyalguda Farm Solution Limited Mega One Stop Farm Services Limited Eco Engines (upto 15th January, 2010 on which date it got liquidated) Swaraj Automotives Limited Swaraj Engines Limited Satyam Computer Services Limited (w.e.f. 5th May, 2009 and upto 22nd March, 2010) (refer note 4) Name of the Company Tech Mahindra Foundation [upto 22nd March, 2010 - refer note 3 (iii)]

Joint Ventures : Sl. No. 1. 2. 3. Name of the Company Mahindra Sona Limited Mahindra Water Utilities Limited Mahindra Inframan Water Utilities Private Limited Sl. No. 4. 5. Name of the Company PSL Erickson Limited Tech Mahindra Limited [w.e.f. 23rd March, 2010 refer note 3(iii)]

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. 1. 2. 3. 4. 5. (b) Name of the Fund Mahindra World School Education Trust M&M Benefit Trust M&M Employees Welfare Fund M&M Employees Farm Equipment Sector Employees Welfare Fund M&M Fractional Entitlements Trust

The related party transactions are as under : Rupees crores Nature of Transactions Subsidiary Companies Associate Companies Joint Ventures # Key Management Personnel Welfare Funds

Sl. No.

1.

Purchases : Goods ............................................................... Fixed Assets ...................................................... Services ............................................................. () () () 308.91 (236.22) 0.22 () 16.81 (0.07) 8.22 (1.73) (0.16) 2.17 (6.38) 4.15 (0.52) @ () @ (0.04) 0.46 (1.85) () 2.60 (2.52) 89.55 (71.01) () () 3.21 (2.26) () 0.99 (0.99) () () () () () 1.31 (0.98) () () () () () () () () () () () () () () () () () () () 10.00 () () () 26.86 (1.05) ()

2.

Sales : Goods ............................................................... Fixed Assets ...................................................... Services ............................................................. () () ()

3.

Deputation of Personnel : To Related Parties ............................................. ()

4.

Provisions for : Doubtful Debts/Advances during the year ....... Diminution in value of other assets written back (0.07)* ()

5.

Finance : Interest Received .............................................. Dividend Distributed ........................................ Dividend Received ............................................ () () ()

66

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Rupees crores Sl. No. 6. Nature of Transactions Subsidiary Companies Associate Companies Joint Ventures # Key Management Personnel Welfare Funds

Other Transactions : Other Income ................................................... () Other Expenses ................................................ 2.84* (8.45)* Reimbursements received from parties. ........... () Reimbursements made to parties .................... () Advances given by group companies .............. () 0.29 (7.18) 0.67 (0.01) 1.04 (0.01) 0.29 (0.03) @ (@) () () 0.03 (0.03) () () () 0.01 () () () () 25.92 () () () () 7.00 (15.00)

7.

Outstandings : Payables ............................................................ () Receivables ....................................................... () Inter Corporate Deposits given ........................ () 16.00 (30.94) 5.53 (19.64) 4.59 (5.73) 14.85 (12.66) 2.92 (1.18) () 3.10 (2.20) () () () 22.00 (15.00) ()

8.

Provision for Diminution in value of other related assets ................................................... () 7.95 (7.65) 5.33 (5.33) () () () () () () () () () () () 9.00 (9.00) () () 6.56 (5.16) 0.45 (0.52) 0.05 (0.07) () () () 10.00 () () () () (1,459.76) ()

9.

Provision for Doubtful debts/advances ............

()

10.

Managerial Remuneration ................................

()

11.

Dividends ..........................................................

()

12.

Stock Options ...................................................

()

13.

Issue of Ordinary (Equity) Shares .....................

()

14.

Guarantees and Collaterals given. ...................

()

Previous years 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 1 Purchases Goods ................................. 2. Purchases Fixed Assets ........................ Associate Companies Swaraj Engines Ltd Satyam Computer Services Ltd Amount 294.63 (225.72) 0.22 () 3. Purchases Services ............................... Swaraj Engines Ltd (0.07) Satyam Computer Services Ltd 16.81 () 4. Sales Goods ......................................... Swaraj Engines Ltd 8.22 (1.71) 5. Sales Fixed Assets ................................ Swaraj Automotives Ltd (0.16) 6. Sales Services ....................................... Swaraj Engines Ltd (2.38) 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) Mahindra Water Utilities Ltd 0.95 (0.95) Mahindra Sona Ltd 3.21 (2.26) Joint Ventures# Mahindra Sona Ltd Amount 89.55 (71.01)

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 crores Nature of Transactions 11. Dividend Received ................................. Associate Companies Swaraj Automotives Ltd Amount 0.26 (0.32) Swaraj Engines Ltd 2.06 (2.06) Mahindra Composites Ltd 0.27 () 12. Other Income ...................................... Owens Corning (India) Ltd Mahindra Composites Ltd 13. Other Expenses ..................................... Mahindra Construction Company Ltd Satyam Computer Services Ltd 14. Reimbursement Received from parties .. Owens Corning (India) Ltd (6.89) 0.29 () (0.01) 0.67 () 0.98 () Mahindra Water Utilities Ltd 15. Reimbursement made to parties ........... Mahindra Composites Ltd Swaraj Engines Ltd Satyam Computer Services Ltd 16. Payables ................................................. Swaraj Engines Ltd Mahindra Composites Ltd Swaraj Automotives Ltd 17. Receivables ............................................. Mahindra Construction Company Ltd Mriyalguda Farm Solution Ltd Swaraj Engines Ltd Owens Corning (India) Ltd 18. Guarantees given .................................. 19. Inter Corporate Deposits given (outstanding) ........................................ 20. Provision for diminution in value of other related assets .......................... Mahindra Construction Company Ltd Mahindra Construction Company Ltd 4.59 (5.73) 6.99 (6.69) (0.02) (0.01) 0.27 () 0.29 (30.04) 0.53 () 0.53 () 2.63 (6.08) 0.54 () 1.45 () (12.37) Mahindra Water Utilities Ltd 9.00 (9.00) Mahindra Water Utilities Ltd Mahindra Sona Ltd 0.55 () 1.84 (1.17) Tech Mahindra Ltd Mahindra Sona Ltd 8.70 (12.66) 6.15 () Mahindra Sona Ltd 0.03 (0.03) @ () Joint Ventures# Mahindra Sona Ltd Amount 1.31 (0.98)

Rupees crores Nature of Transactions 21. Provision for doubtful debts/advances .. Associate Companies Mriyalguda Farm Solutions Ltd Amount 0.54 () Mahindra Construction Company Ltd 4.49 (4.49) Mega One Stop Farm Services Ltd 22. Advances given ...................................... Mriyalguda Farm Solution Ltd Kota Farm Services Ltd Mega One Stop Farm Services Ltd Previous years 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 Amount used as the numerator Net Profit (Rupees crores) .......................................................... Effect on earnings of convertible bonds/debentures (Gain)/Loss (Rupees crores) ............................ Amount used as the numerator for diluted earnings per share (Rupees crores) ............................. Weighted average number of equity shares used in computing basic earnings per share ............. Effect of potential ordinary (equity) shares on conversion of bonds/debentures ............................ Weighted average number of equity shares used in computing diluted earnings per share .......... Basic Earnings per share (Rs.) (Face value of Rs. 5 per share) .......................................................... Diluted Earnings per share (Rs.) (Face value of Rs. 5 per share) ...................................................... 2,478.56 32.64 2,511.20 54,98,38,769 4,56,31,897 59,54,70,666 45.08 42.17 2009 1,405.41 17.29 1,422.70 54,50,45,894 4,44,38,826 58,94,84,720 25.79 24.14 (0.54) @ () @ () @ () Joint Ventures # Amount

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 shares held % of Holding Cost of Investments (Equity Shares) Goodwill/ (Capital reserve) Share in accumulated Profit/(Loss)/ Reserves Carrying Cost

(Nos.) Unquoted : Owens Corning (India) Limited ......................... Mahindra Construction Company Limited ........ Officemartindia.com Limited ............................. Rathna Bhoomi Enterprises Private Limited ....... 2,81,24,794 2,81,24,794 9,00,000 9,00,000 7,49,997 7,49,997 500 500 21.50% 21.50% 43.83% 43.83% 50.00% 50.00% 20.43% 20.43% 28.12 28.12 0.97 0.97 0.22 0.22 @ @ (7.64) (7.64) 26.73 21.82 (0.97) (0.97) (0.22) (0.22) @ @

(Rupees crores)

54.85 49.94

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

No. of Equity shares held

% of Holding

Cost of Investments (Equity Shares)

Goodwill/ (Capital reserve)

Share in accumulated Profit/(Loss)/ Reserves

Carrying Cost

(Nos.) Kota Farm Services Limited ................................ ......................................................................... Mriyalguda Farm Solution Limited .................... ......................................................................... Mega One Stop Farm Services Limited ............. ......................................................................... Eco Engines (upto 15th January, 2010) ............. 2,73,420 2,73,420 3,37,500 3,37,500 3,51,000 3,51,000 37.37% 37.37% 37.37% 37.37% 37.37% 37.37% 0.27 0.27 0.34 0.34 0.35 0.35 0.15 0.03 0.03 (0.27) (0.27) (0.34) (0.34) (0.35) (0.35) Total...

(Rupees crores) 0.15 54.85 50.09

Quoted : Mahindra Composites Limited .......................... Swaraj Engines Limited ..................................... Swaraj Automotives Limited .............................. 13,41,203 13,41,203 41,26,417 41,19,000 10,59,543 10,59,543 30.56% 30.56% 33.22% 33.22% 44.19% 44.19% 2.90 2.90 1.63 1.63 12.45 12.45 0.55 0.55 (1.36) (1.36) (1.99) (1.99) 2.72 2.33 18.17 9.17 4.42 3.40 Total... 5.62 5.23 19.80 10.80 16.87 15.85 42.29 31.88 Total... 97.14 81.97

@ denotes amounts less than Rs. 50,000.

25.

Segment Information :

7
Rupees crores IT Services Financial Services Steel Trading and Processing Infrastructure Hospitality Systech Others Eliminations Consolidated Total Farm Equipment 9,083.10 6,850.11 89.80 136.36 8,993.30 6,713.75 23.01 19.56 9,016.31 6,733.31 4,860.09 4,689.42 1,579.71 1,399.92 965.61 959.43 428.71 350.46 500.46 406.41 3,132.97 4,131.11 1,453.27 856.62 35.58 35.16 9.39 10.36 375.53 290.31 13.57 11.09 1.03 0.32 586.50 506.17 578.10 210.14 4,824.51 4,654.26 1,570.32 1,389.56 590.08 669.12 415.14 339.37 499.43 406.09 2,546.47 3,624.94 875.17 646.48 42.42 58.94 134.74 196.20 35.10 17.84 (1,628.18) (1,101.83) (1,628.18) (1,101.83) 4,824.51 4,654.26 1,570.32 1,389.56 632.50 728.06 415.14 339.37 499.43 406.09 2,681.21 3,821.14 910.27 664.32 33,692.59 28,839.15 2,102.13 2,072.18 31,590.46 26,766.97 31,590.46 26,766.97 1,406.66 667.85 1,406.66 667.85 1,121.32 1,126.28 524.21 333.91 82.64 94.80 117.30 80.00 158.01 93.66 94.96 (4.42) (1.77) (2.68) (109.85) 21.18 1,026.36 1,126.28 524.21 333.91 82.64 94.80 121.72 80.00 158.01 93.66 (108.08) 23.86 (108.08) (46.71) (108.08) (46.71) 4,364.08 2,631.37 82.54 (159.55) 4,446.62 2,471.82 143.04 93.18 4,303.58 2,378.64 565.82 305.25 124.51 97.57 167.69 83.16 4,029.96 2,254.12 1,240.12 506.92 (85.92) 35.25 2,875.76 1,711.95 4.27 6.36 2,871.49 1,705.59 19.63 11.27 2,891.12 1,716.86

Segment Report for the year ended 31st March, 2010.

Primary Segment Disclosure - Business Segment

Automotive

REVENUE

Gross External Revenue

13,076.11 9,986.24

Less : Excise Duty on Sales

1,800.07 1,662.84

Net External Revenue

11,276.04 8,323.40

Inter Segment Revenue

5.47 18.72

Total Revenue

11,281.51 8,342.12

RESULT

Segment result before exceptional items

1,260.64 257.72

Exceptional Items allocated to Segments

(6.23) (156.87)

Segment result after exceptional items Unallocable Corporate expenses (Net of income) Operating Profit

1,254.41 100.85

Less : Interest Expense not allocable to segments

Add : Interest Income not allocable to segments

Add : Exceptional Items Unallocable to segments

Profit before Tax

Less : Income Taxes Current Tax including Fringe benefit tax

Deferred Tax

Profit for the year before prior year adjustments

Less : Adjustments pertaining to previous years

Balance of Profit for the year before Share of Profit of Associates

Share of Profit of Associates

Profit for the year before Minority Interests

Segment Information (Contd) : Rupees crores Farm Equipment IT Services Financial Services Steel Trading and Processing Infrastructure Hospitality Systech Others Eliminations Consolidated Total

Automotive

OTHER INFORMATION 3,344.77 3,328.87 1,306.02 2,380.63 8,730.25 7,170.74 432.41 320.49 1,591.51 1,374.38 1,247.07 1,004.02 2,753.86 2,965.05 685.11 528.71 27,038.97 24,364.66 8,636.79 7,507.92 35,675.76 31,872.58 1,724.94 1,618.66 602.61 920.61 7,313.18 5,873.02 197.29 156.68 172.42 106.51 951.65 721.56 818.48 932.53 245.64 189.83 14,688.33 12,731.84 7,861.75 8,764.26 22,370.08 21,496.10 92.77 366.61 120.64 100.27 136.88 112.28 10.08 8.83 8.57 9.62 6.68 2.51 19.57 16.84 248.57 233.44 730.15 272.80 21.07 14.52 32.31 9.93 13.60 72.88 122.78 163.33 297.00 479.19 108.24 180.89 27.68 9.69

Segment Assets

6,947.97 5,291.77

Unallocable Corporate Assets

Total Assets

Segment Liabilities

2,662.12 2,212.44

Unallocable Corporate Liabilities

Total Liabilities

Capital Expenditure

1,636.60 1,455.40

Depreciation/Amortisation

280.74 249.85

Non cash expenditure other than depreciation

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

73

Secondary Segment Disclosure - Geographical Segment Rupees crores Domestic Revenue from External Customers ............................... Segment Assets ............................................................ Capital Expenditure ...................................................... 30,082.43 24,739.14 24,868.40 21,903.66 2,850.88 2,934.54 Overseas 3,610.16 4,100.01 2,170.57 2,461.00 203.64 81.01 Total 33,692.59 28,839.15 27,038.97 24,364.66 3,054.52 3,015.55

Notes : 1. Business Segments The Group has considered business segments as the primary segment for disclosure. The segments have been identified taking into account the organisational structure as well as the differing risks and returns of these segments. Automotive Segment comprises of sales of automobiles, spare parts and related services. Farm Equipment Segment comprises of sales of Tractors, spare parts and related services. IT Services comprise of services rendered for IT and Telecom. Financial Services comprise of services relating to financing, leasing and hire purchase of automobiles and tractors. Steel Trading & Processing comprises of trading and processing of Steel. Infrastructure comprises of operating of commercial complexes, project management and development. Hospitality comprises of sale of Timeshare. Systech comprises of Automotive components and other related products and services. Others comprise of Logistics, After-market, Two wheelers, Investment, etc. 2. Secondary Segments The geographical segments are considered for disclosure as secondary segment. Domestic segment includes sales to customers located in India and service income accrued in India. Overseas segment includes sales and services rendered to customers located outside India. Segment Revenue comprises of : Rupees crores 2010 Sales ................................................................................................................................................. Income from Services rendered ........................................................................................................... Income from long term contracts ....................................................................................................... Hire purchase and lease income ......................................................................................................... Income from Loan, Retained Interest in securitised Asset & Securitisation ........................................ Other allocable income * .................................................................................................................... Total ............................ 25,300.49 6,028.05 327.26 82.12 1,534.90 419.77 33,692.59 2009 21,058.63 5,717.55 160.07 165.27 1,373.41 364.22 28,839.15 Rupees crores 2010 *Other allocable income includes : Interest Income ................................................................................................................................... Scrap Sales .......................................................................................................................................... Commission ......................................................................................................................................... Dividend .............................................................................................................................................. Others .................................................................................................................................................. Total ............................ 26. Previous years figures have been regrouped/restated wherever necessary. 2009

10.83 124.05 12.54 0.76 271.59 419.77

8.90 138.21 16.98 1.10 199.03 364.22

74

Details of Subsidiary Companies


Rupees crores

Name of the Subsidiary 0.42 0.14 0.30 99.97 19.05 74.01 5.38 15.99 0.60 34.26 0.30 0.60 6.20 74.20 0.42 0.30 5.00 31.02 0.41 95.98 32.29 103.18 10.55 3.08 0.05 0.01 33.02 1.00 0.01 0.01 5.40 0.36 0.44 8.13 6.05 16.35 63.43 84.66 204.69 489.77 87.86 7.56 0.05 260.02 139.08 8.22 24.57 0.71 1.33 (93.50) 15.00 (20.20) (4.65) (14.84) 1.93 (0.07) 0.35 13.98 8.00 38.18 (0.25) (0.07) (0.11) 7.50 1,631.38 (13.38) (88.82) (1.27) (6.29) (0.33) 0.13 84.59 3.06 (@) (@) 39.68 (1.04) 6.03 73.77 3.21 (12.04) (21.15) (74.83) (3.97) (40.42) 697.38 20.73 258.54 (0.29) (0.20) (4.19) 33.43 1.22 5.14 36.89 76.66 140.51 1.81 7.04 6.91 45.79 4.02 48.58 76.10 282.72 7.38 1.41 4.90 77.37 0.41 8,888.09 66.19 89.34 10.48 13.12 29.19 3.82 198.70 5.45 7.67 0.01 127.56 3.46 7.29 160.85 63.33 8.06 57.17 229.04 200.78 687.82 1,139.12 71.54 258.68 259.83 138.95 23.60 33.43 1.22 5.14 36.89 76.66 140.51 1.81 7.04 6.91 45.79 4.02 48.58 76.10 282.72 7.38 1.41 4.90 77.37 0.41 8,888.09 66.19 89.34 10.48 13.12 29.19 3.82 292.45 5.45 7.67 0.01 127.56 3.46 7.29 160.85 63.33 8.06 57.17 229.04 200.78 687.82 1,139.12 71.54 258.68 259.83 138.95 23.60 0.01 0.50 0.02 0.22 0.36 0.04 203.37 4.00 1.21 21.32 0.20 10.39 27.68 4.12 0.30 13.92 82.44 98.73 0.03 3.86 19.70 11.01 25.76 3.77 40.33 105.17 349.61 1.09 1.95 0.01 123.09 1,553.82 120.55 85.63 0.02 20.67 18.41 315.85 8.65 51.70 0.49 3.96 144.13 61.55 9.99 126.73 7.88 0.23 326.84 78.75 15.60 0.76 (0.18) 0.03 (12.23) 0.96 (6.84) (1.57) (3.10) 0.35 (0.08) 0.08 (3.16) (14.55) (51.35) (0.12) (0.06) (0.04) (13.00) 520.57 2.28 (13.36) (0.89) (4.43) (0.01) 0.20 (7.02) 1.76 (@) (@) 9.37 (0.82) 0.24 28.83 1.41 (6.18) (8.72) (93.10) 0.02 (16.26) (94.01) 1.53 (0.18) (0.14) (0.09) (4.56) 0.01 0.02 @ @ 0.21 0.20 0.04 (0.01) 0.08 0.03 0.11 2.08 0.01 0.01 0.15 176.18 0.65 0.07 (1.44) 0.60 4.65 0.07 0.57 0.76 (2.23) 0.02 0.21 0.75 (0.20) 0.03 (12.24) 0.62 (6.84) (1.77) (3.10) 0.31 (0.07) @ (3.19) (14.66) (53.43) (0.13) (0.07) (0.04) (13.15) 342.71 1.63 (13.36) (0.89) (4.43) (0.01) 0.13 (5.58) 0.96 (@) (@) 6.53 (0.82) 0.17 28.26 0.65 (6.18) (8.72) (90.87) 0.02 (16.26) (94.73) 1.33 (0.18) (0.14) (0.09) (4.56)

Capital (including Preference Capital) Reserves & Surplus Total Assets Total Liabilities Gross Turnover Profit before Tax Provision for Tax Profit after Tax Proposed Dividend & Tax thereon 85.03 0.41 9.51 0.44 -

Details of Investments (excluding Investments in subsidiaries)

BAH Hotelanlagen AG # Bristlecone (Malaysia) SDN. BHD # Bristlecone GmbH # Bristlecone Inc. # Bristlecone India Limited Bristlecone Limited # Bristlecone Singapore Pte. Limited # Bristlecone UK Limited # Crest Geartech Limited Defence Land Systems India Private Limited EFF Engineering S.r.l. # Engines Engineering S.r.l. # Falkenroth Umformtechnik GmbH # Gesenkschmiede Schneider GmbH # Heritage Bird (M) SDN. BHD # ID-EE S.r.l. # Industrial Township (Maharashtra) Limited Jeco-Jellinghaus GmbH # Jensand Limited # Mahindra & Mahindra Financial Services Limited Mahindra & Mahindra South Africa (Proprietary) Limited # Mahindra (China) Tractor Company Limited # Mahindra Aerospace Private Limited Mahindra Automotive Australia Pty. Limited # Mahindra Bebanco Developers Limited Mahindra Business & Consulting Services Private Limited Mahindra Castings Limited Mahindra Consulting Engineers Limited Mahindra Conveyor Systems Private Limited Mahindra EcoNova Private Limited Mahindra Engineering & Chemical Products Limited Mahindra Engineering GmbH # Mahindra Engineering Services (Europe) Limited # Mahindra Engineering Services Limited Mahindra Europe S.r.l. # Mahindra First Choice Services Limited Mahindra First Choice Wheels Limited Mahindra Forgings Europe AG # Mahindra Forgings Global Limited # Mahindra Forgings International Limited # Mahindra Forgings Limited Mahindra Gears & Transmissions Private Limited Mahindra Gears Cyprus Limited # Mahindra Gears Global Limited # Mahindra Gears International Limited # Mahindra Graphic Research Design S.r.l. #

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

@ denotes amounts less than Rs. 50,000. # The financial statements of the Foreign Subsidiaries have been converted into Indian Rupees at the 31st March, 2010 exchange rate.

75

Details of Subsidiary Companies


Rupees crores

76
Capital (including Preference Capital) Reserves & Surplus (39.65) 4.90 0.95 356.04 (0.02) 0.81 24.90 (4.67) 153.27 (0.39) 907.58 0.06 (0.12) 16.66 (8.89) (21.34) (8.02) (@) (559.66) 49.89 (91.97) 0.63 (24.32) 33.34 0.33 (119.41) 137.42 (43.66) (28.32) 9.78 (0.09) 21.74 (13.30) 88.66 89.87 0.01 0.44 (0.06) (0.96) 88.95 (0.41) (23.36) 23.39 52.55 1.62 1,471.85 0.13 20.45 29.22 84.41 408.36 27.98 1,126.36 203.88 30.82 839.03 199.52 391.33 0.01 519.59 51.01 40.20 131.00 56.49 78.31 3.19 233.30 759.30 0.31 241.68 1,611.86 510.72 1.04 277.76 580.64 142.32 741.70 0.23 18.30 0.04 75.59 289.84 @ 86.52 23.39 52.55 1.62 1,471.85 0.13 20.45 29.22 84.41 408.36 27.98 1,126.36 203.88 30.82 839.03 199.52 391.33 0.01 519.59 51.01 40.20 131.00 56.49 78.31 3.19 233.30 759.30 0.31 241.68 1,611.86 510.72 1.04 277.76 580.64 142.32 714.70 0.23 18.30 0.04 75.59 289.84 @ 86.52 0.05 24.96 195.40 15.24 16.03 0.03 117.65 26.23 15.00 18.87 1.08 11.37 14.43 8.57 15.12 0.01 0.41 0.08 76.40 5.92 0.88 495.96 1.13 30.10 0.98 946.23 0.01 341.24 902.96 68.38 603.88 0.54 4.74 741.17 10.63 15.59 16.30 82.82 14.93 6.01 258.96 1,181.11 4.18 362.34 103.54 52.60 29.17 565.54 90.03 226.50 0.59 98.40 269.84 131.31 2.95 6.96 (0.09) 176.72 (0.01) 0.61 16.85 (4.44) 75.34 (0.01) 107.50 (4.45) (0.12) 3.28 (25.66) (13.99) (3.08) (@) (489.90) (3.82) (32.22) 2.52 0.54 5.42 0.42 (96.91) 8.63 (37.23) (19.43) 11.81 (0.01) 16.09 (10.50) 89.84 (59.64) 0.11 (0.20) (0.06) (0.02) (48.73) (25.43) (0.08) 0.94 (0.03) 58.88 0.34 5.78 (@) 24.27 28.12 (1.62) 0.10 0.31 0.34 1.72 0.09 3.97 7.69 3.93 5.15 19.03 (9.41) 0.01 (0.02) 2.27 0.06 3.02 6.02 (0.06) 117.84 (0.01) 0.28 11.07 (4.44) 51.07 (0.01) 79.38 (2.84) (0.12) 3.28 (25.66) (14.09) (3.08) (@) (490.21) (3.82) (32.22) 2.18 0.54 3.60 0.33 (96.91) 4.66 (44.92) (19.43) 7.87 (0.01) 10.94 (10.50) 70.81 (50.23) 0.10 (0.18) (0.06) (0.02) (51.00) (25.49) Total Assets Total Liabilities Gross Turnover Profit before Tax Provision for Tax Profit after Tax Proposed Dividend & Tax thereon 39.29 0.59 14.52 17.94 0.16 3.80 5.95 20.30 22.55 @ 83.29 0.05 18.00 0.50 50.04 16.60 21.00 50.81 49.05 0.05 2.48 405.95 165.00 265.34 0.01 199.26 0.26 95.65 13.71 38.93 9.77 0.23 147.50 32.48 0.01 63.18 585.00 170.00 1.12 85.00 283.23 53.61 120.94 0.21 0.05 0.05 0.05 30.24 @ 0.41 10.53 Details of Investments (excluding Investments in subsidiaries)

Name of the Subsidiary

Mahindra Gujarat Tractor Limited Mahindra Holdings Limited Mahindra Holidays and Resorts (USA) Inc. # Mahindra Holidays and Resorts India Limited Mahindra Hotels and Residences India Limited Mahindra Infrastructure Developers Limited Mahindra Insurance Brokers Limited Mahindra Integrated Township Limited Mahindra Intertrade Limited Mahindra Knowledge City Limited Mahindra Life Space Developers Limited Mahindra Logistics Limited Mahindra Metal One Steel Service Centre Limited Mahindra Middleeast Electrical Steel Service Centre (FZC) # Mahindra Navistar Automotives Limited Mahindra Navistar Engines Private Limited Mahindra Overseas Investment Company (Mauritius) Limited # Mahindra Punjab Tractors Private Limited Mahindra Renault Private Limited Mahindra Residential Developers Limited Mahindra Retail Private Limited Mahindra Rural Housing Finance Limited Mahindra Shubhlabh Services Limited Mahindra Steel Service Centre Limited Mahindra Technologies Services Inc. # Mahindra Two Wheelers Limited Mahindra Ugine Steel Company Limited Mahindra United Football Club Private Limited Mahindra USA Inc. # Mahindra Vehicle Manufacturers Limited Mahindra World City (Jaipur) Limited Mahindra World City (Maharashtra) Limited Mahindra World City Developers Limited Mahindra Yueda (Yancheng) Tractor Company Limited # Mahindra-BT Investment Company (Mauritius) Limited # Metalcastello S.p.A. # MHR Hotel Management GmbH # NBS International Limited Raigad Industrial and Business Park Limited Retail Initiative Holdings Limited Schneweiss & Co. GmbH # Stokes Forgings Dudley Limited # Stokes Forgings Limited # Stokes Group Limited #

@ denotes amounts less than Rs. 50,000. # The financial statements of the Foreign Subsidiaries have been converted into Indian Rupees at the 31st March, 2010 exchange rate.

INFOMEDIA 18 LIMITED