m&m annual report

It has been a long rough road over the last financial year.

In 2008 the River Kosi changed its course. Hurricane Ike

hit the US. There were floods in Assam, Bihar and

Bangladesh. China experienced a massive earthquake. And

seemingly in rhythm with these natural cataclysms, the

world saw a cataclysm on Wall Street, the collapse of the

mortgage market, respected banks failing, once mighty

companies collapsing, and even governments teetering on

the brink of bankruptcy. India was not exempt from the

effects of this global upheaval and neither was M&M. In

the face of such sweeping change, such serious uncertainty,

how does a company cope?

We chose to treat the crisis as a ‘Bardo’ moment. In the

words of a philosopher “Bardo is a Tibetan word meaning

transition or a gap between the completion of one situation

and the onset of another… One of the central

characteristics of bardos is that they are periods of deep

uncertainty...But if you look deeply at it you will see that

its very nature creates gaps, spaces in which chances and

opportunities for transformation are continuously flowering

– if, that is, they can be seen and seized”

The description seemed eerily apt. We seemed to be at the

end of a longish period of record profits and almost

effortless growth. We were facing the onset of a new

situation of economic slowdown, consumer cutbacks and

deep uncertainty. A wide chasm yawned between the

success of the past and the bleakness of the future. How

could we “see and seize” the opportunity for transformation

in this deeply unsettling Bardo moment? We decided that

the path to seizing opportunity was threefold. We would

Reboot, Reinvent and Reignite.

When our computers hang, all of us have learned to reboot

them. To start again. To go back to fundamentals. Similarly,

in M&M we spent much of the year rebooting, questioning

everything we did and seeing if we could do it better

cheaper or differently. There was a focus on reengineering

costs and increasing free cash flow, which contributed to

the creditable results we were able to declare at the end

of the year.Next, we decided to leverage our talent for

frugal engineering to reinvent ourselves in many ways large

and small. At the macro end of the scale we concentrated

on producing the Xylo, a product that gave such astounding

features at such a reasonable price that it rendered the

recession irrelevant. At the micro end we focused on grass

roots innovation to do things better. To give just one

example, the team implementing the new factory at

Chakan was challenged to redesign pallets used in the

factory to reduce the cost by half without compromising

functionality. They succeeded in reducing costs not by 50%

but by 65 %! And they improved the functionality as well.

The ripple effects of these savings across factories and

over the years will have an impact for a long long time. So

opportunities for improvement and reinvention flowered

in the time of crisis.

And finally we decided that a crisis was not a time to

forget our dreams – rather it was a time to reignite them.

So we held fast to our dreams and, at the height of the

economic pessimism, launched the Xylo. It turned out to

be a game changing move which revived the entire Indian

automobile market. We held fast to our dreams and to

our belief that a bardo moment always holds the seeds of

opportunities which have to be seen and seized – and

reaped the dividends.

We have learned that a crisis is calamitous only if it is

wasted. Otherwise it is a blessing. As the cover picture

shows, we have learned that we are capable of moving

forward no matter how hard and rocky the road. We have

learned that difficult terrain is not an obstacle to reaching

for the summit. And we have learned that by rebooting,

reinventing and reigniting our dreams we can steer our

way to a brighter future.

MAHINDRA & MAHINDRA LIMITED

1


COMMITTEES OF THE BOARD

Audit Committee

Deepak S. Parekh

Chairman

Nadir B. Godrej

M. M. Murugappan

R. K. Kulkarni

Share Transfer and Shareholders/

Investors Grievance Committee

Keshub Mahindra

Chairman

Anand G. Mahindra

Bharat Doshi

A. K. Nanda

R. K. Kulkarni

Remuneration/Compensation Committee

Narayanan Vaghul

Chairman

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

Anand G. Mahindra

Nadir B. Godrej

M. M. Murugappan

Bharat Doshi

BOARD OF DIRECTORS

Keshub Mahindra

Chairman

Anand G. Mahindra

Vice-Chairman & Managing Director

Deepak S. Parekh

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

Bharat Doshi

Executive Director

A. K. Nanda

Executive Director

GROUP MANAGEMENT BOARD

Anand G. Mahindra

Vice-Chairman & Managing Director

Bharat Doshi

Group Chief Financial Officer

A. K. Nanda

President - Infrastructure Development Sector

Anjanikumar Choudhari

President – Farm Equipment Sector

Rajeev Dubey

President – HR, After – Market & Corporate Services

Pawan Goenka

President – Automotive Sector

Hemant Luthra

President – Systems & Techonologies Sector

Anoop Mathur

President – Two-Wheeler Sector

Uday Y. Phadke

President - Finance, Legal and Financial Services Sector

Ulhas N. Yargop

President – Information Technology Sector

Narayan Shankar

Company Secretary

2

Contents

Directors’ Report ..................................................................................................... 3

Management Discussion and Analysis .................................................................. 29

Corporate Governance .......................................................................................... 47

Sustainability ......................................................................................................... 68

Accounts ............................................................................................................... 73

Statement pursuant to Section 212 ................................................................... 127

Consolidated Accounts ....................................................................................... 131

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., Meher Chambers,

R K Marg, Ballard Estate, Mumbai 400 001.

Registered Office

Gateway Building, Apollo Bunder, Mumbai 400 001.

Branches

7, Dr. Ishaque Road (Old KYD Street), Kolkata 700 016.

Mahindra Towers, 2-A Bhikaji Cama Place, New Delhi 110 066.

Mahindra Towers, First Floor, 17/18, Pattulous Road, Chennai 600 002.

Raheja Chambers, First Floor, 12, Museum Road, Bengaluru 560 001.

3


Directors’ Report

Dear ShareholdersYour Directors present their Report together with the

audited accounts of your Company for the year ended

31st

March, 2009.

Financial Highlights

(Rs. in crores)

2009 2008

Gross Income 14983 13238

Less: Excise Duty on Sales (Net) 1619 1566

Net Income 13364 11672

Profit before Depreciation, Interest,

Exceptional items and Taxation 1363 1497

Less: Depreciation/Amortisation 292 239

Profit before Interest, Exceptional

items and Taxation 1071 1258

Less: Interest (Net) 45 24

Profit before Exceptional items and

Taxation 1026 1234

Add: Exceptional items 10 173

Profit before Taxation 1036 1407

Less: Provision for Tax – Current

Tax (including Fringe Benefit Tax) 58 279

Less: Provision for Tax – Deferred

Tax (Net) 141 25

Profit for the year 837 1103

Add: Profit of Mahindra Holdings

& Finance Limited for the period

1st

February, 2008 to 31st

March, 2008 31 -

Balance of profit for the year 868 1103

Balance of profit for earlier years 2775 2125

Add: Amount transferred on

Amalgamation of Mahindra

Holdings & Finance Limited 160 -

Less: Transfer from Debenture

Redemption Reserve 30 17

Profits available for appropriation 3773 3211

Less: Transfer to General Reserve 100 115

Credit of Income-tax on Proposed

Dividend of Previous Year (4) -

Proposed Dividend 279 283

Income-tax on Proposed Dividend 33 38

Balance carried forward 3365 2775

The year under review was an extremely trying one. The

market place witnessed unprecedented turbulence in the

wake of the Global Financial meltdown. A runaway inflation

touching a high point of 12% early in the year, the tight

monetary policies followed by the authorities for most of

the year to control inflation with the consequent high

interest rates, the precipitous fall in the value of the Rupee

by 26% during the year and weak consumer demand all

led to an extremely challenging environment in which the

Company had to operate. Despite these daunting

conditions, the net income of the Company grew by 14.5%

to 13,364 crores in the year under review from Rs.11,672

crores in the financial year 2008. However, the difficult

global economic climate of the year exerted considerable

pressure on the Company and the profit after tax for the

current year was Rs.837 crores against Rs.1,103 crores for

the previous year.

Dividend

Your Directors are pleased to recommend a dividend of

Rs.10 per Equity Share, payable to those Shareholders

whose names appear in the Register of Members as on

the Book Closure Date. In recognition of the difficult

economic climate in which the Company operated during

the year, a small reduction is being made in the proposed

dividend as compared to the dividend of Rs. 11.50 per

Equity Share paid in the previous year. Also the proposed

dividend will be paid on a slightly enlarged capital base of

Rs.278.82 crores (as against Rs. 245.74 crores in the

previous year). The equity dividend outgo for the financial

year 2008-09, inclusive of tax on distributed profits (after

reducing the tax on distributed profits of Rs.14.15 crores

payable by the subsidiaries on the dividends receivable

4

from them during the current financial year) would absorb

a sum of Rs.312.06 crores (as against Rs.321.09 crores

comprising the dividend of Rs.11.50 per Equity Share paid

for the previous year).

Automotive Sector:

The global economic downturn and softening of growth

in the Indian economy had an adverse impact on the Indian

automotive industry due to strong linkages of the industry

with the economy and the Company took corrective steps

to align the Company’s production to reduced demand

accordingly.

A total of 1,81,842 vehicles and 43,278 three-wheelers

were produced as against 2,00,132 vehicles and 34,556

three-wheelers in the last year. These include 8,723 light

commercial vehicles (LCVs) and 14,404 cars (previous year

11,079 LCVs and 26,653 cars) manufactured and supplied

to two of the Company’s subsidiaries viz. Mahindra Navistar

Automotives Limited (MNAL) and Mahindra Renault Private

Limited (MRPL).

Your Company recorded total sales of 1,61,882 vehicles

and 44,806 three-wheelers as compared to 1,61,001

vehicles and 34,076 three-wheelers in the previous year

registering a growth of 0.5% and 31% in vehicle sales and

three-wheeler sales respectively.

The domestic sales volume of 1,53,654 vehicles [includes

1,53,653 Multi Utility Vehicles (MUVs) and 1 LCV] was

higher by 3.3% than the previous year’s volume of 1,48,791

vehicles (includes 1,48,761 MUVs and 30 LCVs) and the

domestic sales volume of 44,533 three-wheelers was higher

by 31.3% than the previous year’s volume of 33,927 three-

wheelers. The Company’s domestic MUV sales volume grew

by 3.3% as against the industry MUV sales de-growth of

7.4%. In the process, your Company strengthened its

dominant position in the domestic MUV segment by

increasing its market share to 57.2% over the previous

year’s market share of 51.3% - the highest since fiscal 2000.

The Bolero Brand once again demonstrated its popularity

by registering a significant growth over the previous year.

It remains India’s largest selling MUV brand for the fourth

consecutive year.

The Company’s exports were severely impacted by the

global downturn. During the year under review, your

Company exported 8,501 vehicles [including 693 LCVs

sourced from MNAL and 273 three-wheelers] as compared

to the exports of 12,359 vehicles [including 363 LCVs

sourced from MNAL and 149 three-wheelers] in the

financial year 2008 registering a de-growth of 31%.

Spare parts sales for the year stood at Rs.362.7 crores

(Exports Rs.27 crores) as compared to Rs.388.3 crores

(Exports Rs.39.9 crores) in the previous year.

Farm Equipment Sector:

The financial year ending March, 2009 saw the merger of

erstwhile Punjab Tractors Limited (PTL) with your Company,

with effect from 1st

August, 2008, the Appointed Date of

the merger. The merger became effective from

16th

February, 2009 and from the said date it operates as

a part of the Farm Equipment Sector of your Company, as

its Swaraj Division. Therefore, the current year business

figures of your Company include PTL’s financials for the

period from 1st

August, 2008 to 15th

February, 2009. During

the year under review, your Company achieved a production

of 1,19,098 tractors compared to 98,917 tractors in the

previous year. In addition, 52,131 engines were produced

for Mahindra Powerol Brand compared to 32,072 engines

last year. Following the merger, the two tractor

manufacturing plants of the erstwhile PTL at Mohali and

Chappercheri along with its foundry facility at Sialba Majri,

near Mohali, stands added to the existing tractor

manufacturing plants of your Company at Rudrapur,

Nagpur, Kandivali and Jaipur.

For the financial year ending on March, 2009, your

Company recorded sales of 1,20,202 tractors as against

5


99,042 tractors sold in the previous year. This included

domestic tractor sales of 1,13,269 tractors as compared

to domestic sales of 90,509 tractors in the previous year,

recording a growth of 25.1%. This performance should

be considered against the backdrop of an almost flat

industry (+0.6%), faced with the impact of: a) liquidity

crunch following the global economic crisis b) stringent

lending norms for farm loans due to higher NPA’s and c)

high interest rates prevalent throughout the year. The sharp

rise in raw material prices in the first half of the year and

the consequent price increases by all tractor manufacturers’

also impacted demand.

As a result of the merger of the erstwhile PTL, your

Company has firmly established its dominance in the Indian

tractor industry, ending the financial year 2009 with a

market share of 40.8%, compared to a market share of

29.8% in the previous financial year. This is the 26th

consecutive year of leadership in the Indian tractor industry.

The global economic crisis and the subsequent impact on

economies across the globe, including adverse changes in

some international currencies had a negative impact on

exports from India, including tractors. As a result, this year

your Company exported 6,933 tractors, registering a de-

growth of 19%, as compared to 8,533 tractors exported

last year.

In the farm mechanisation space beyond tractors, your

Company sells farm implements and other equipments.

The Swaraj Division Plant at Chappercheri is an established

manufacturer of harvester combines in the organised Sector

in India.

Beyond the Agri space, under the Mahindra Powerol Brand,

your Company sold 52,350 engines and gensets in this

financial year, as against 31,922 engines and gensets last

year - a growth of 64%. With this performance, 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):

With the opening up of the Defence Sector for Private

Sector participation in February, 2001, your Company

constituted a separate Division viz. MDS to pursue a wide

range of Defence Sector activities.

Your Company provides world class armouring solutions

for light combat vehicles and Sports Utility Vehicles (SUVs)

as well as high mobility vehicles for defence, police and

paramilitary use.

During the financial year 2009, your Company has

commenced operations at the newly commissioned

Mahindra Special Military Vehicles (“MSMV”) facility at

Prithla, near Faridabad in Haryana. This is the first such

dedicated defence vehicle facility in the private sector in

India and is designed to provide up-armoured and high

mobility vehicles to the armed forces, police and para-

military forces. Currently, the Plant has an annual capacity

of 500 such vehicles and during the financial year 2010

this capability is likely to be expanded further.

In its endeavor to continuously offer technologically better

and a wider range of products to the defence forces, your

Company has established a Product Development Centre

at MSMV. Based on work carried out in the Product

Development Centre, product improvements have been

effected in the Bullet Proof Scorpio and Rakshak. The

Product Development Centre has carried out development

of the AXE high mobility vehicle, Marksman and Light

Bullet Proof Vehicle based on the specifications of various

Government customers. These products have been procured

by all the State Governments who are facing problems of

insurgency and militancy.

Currently, MDS is engaged in two lines of Defence

Businesses (a) Land Systems and (b) Naval Systems.

Your Company through MDS has obtained licenses from

the Government of India to manufacture a wide range of

6

products which include light armored vehicles, weapon

effect simulators, platforms for surveillance sensors and

sea mines for the Navy. Through these initiatives, your

Company has positioned itself to play a major role in the

Indian Defence Sector for the manufacture and integration

of weapon systems and platforms. Your Company has been

exploring opportunities for partnerships with companies

equipped with globally proven high end defence

technologies and willing to invest in India on a long term

basis.

With this objective, your Company is evaluating various

options and identifying possibilities for forming separate

joint ventures/alliances with strategic partners for carrying

on both the Land Systems and Naval Systems Businesses

respectively. Accordingly, your Company had proposed to

transfer Land Systems and Naval Systems Businesses of

MDS together with congeries of rights of the Company in

such businesses, to two separate subsidiaries of the

Company. In terms of section 293(1)(a) of the Companies

Act, 1956 (“the Act”) and in terms of section 192A of the

Act read with Clause 4(f) of the Companies (Passing of the

Resolution by Postal Ballot) Rules, 2001, approval of the

Shareholders was obtained by means of a Postal Ballot.

Currently, the Company is in the process of transferring

these Businesses into two separate subsidiaries.

Profits:

The Profit for the year before Depreciation, Interest,

Exceptional items and Taxation was Rs.1,362.97 crores as

against Rs.1,496.94 crores in the previous year, a decline

of 8.95%. Profit after tax after considering the profits

earned by the erstwhile Mahindra Holdings & Finance

Limited for the period 1st


March,

2008 was Rs.867.51 crores as against Rs.1,103.37 crores

in the previous year, a decline of 21.38%. Your Company

continues with its rigorous cost restructuring exercises and

efficiency improvements which have resulted in significant

savings through continuous focus on cost controls, process

efficiencies and product innovations that exceed customer

expectations in almost all areas thereby enabling the

Company to take full advantage of the recovery in the

economy, as and when it happens.

Management Discussion and Analysis Report

A detailed analysis of the Company’s 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.

During the year, your Company received the National Award

for Excellence in Corporate Governance from The Institute

of Company Secretaries of India, highlighting the good

Corporate Governance systems and practices adhered to

by the Company. During the year, CRISIL has re-affirmed

the highest level rating, (Level 1) for Governance and Value

Creation for the third 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.

Issue of Shares upon Amalgamations

During the year, two subsidiaries of the Company viz.

erstwhile Mahindra Holdings & Finance Limited (MHFL)

and erstwhile Punjab Tractors Limited (PTL) got

amalgamated with the Company; the details whereof are

given elsewhere in this Report.

Pursuant to the Scheme of Amalgamation of MHFL with

Mahindra and Mahindra Limited and their respective

7


Shareholders (MHFL – M&M Scheme), 5,13,10,208 equity

shares held by the Company in MHFL stood vested in the

Trustees of the M&M Benefit Trust. Upon the MHFL –

M&M Scheme becoming effective, 1,28,27,552 Ordinary

(Equity) Shares of Rs.10 each of the Company were allotted

to the Trustees of M&M Benefit Trust in the Share Exchange

Ratio of 1 Ordinary (Equity) Share of Rs.10 each fully paid-

up in the capital of the Company in respect of every 4

equity shares of Rs.10 each fully paid-up in the equity

share capital of the erstwhile MHFL on the Effective Date.

Pursuant to the Scheme of Amalgamation of PTL with

Mahindra and Mahindra Limited and their respective

Shareholders (PTL – M&M Scheme), all the equity shares

held by the Company in PTL vested in the Trustees of the

M&M Benefit Trust. Subsequently, upon the PTL – M&M

Scheme becoming effective:

a) 2,02,45,395 Ordinary (Equity) Shares of Rs.10 each of

the Company were allotted to the Shareholders of the

erstwhile PTL whose names appeared in the Register

of Members as on 4th

March, 2009, being the Record

Date fixed for this purpose, in the Share Exchange

Ratio of 1 Ordinary (Equity) Share of Rs.10 each fully

paid-up in the capital of the Company in respect of

every 3 equity shares of Rs.10 each fully paid-up in

the equity share capital of the erstwhile PTL, and

b) 6,505 Ordinary (Equity) Shares of Rs.10 each of the

Company were allotted to the Trustees of M&M

Fractional Entitlements Trust set up pursuant to the

Scheme, against 19,515 equity shares of Rs.10 each

fully paid-up in the equity share capital of the erstwhile

PTL being the aggregate of all the fractional

entitlements of various Shareholders of the erstwhile

PTL.

Upon both the MHFL – M&M Scheme and the PTL – M&M

Scheme becoming effective, the issued, subscribed and

paid-up Share Capital of the Company post allotment of

Shares as aforesaid stands at Rs.278.82 crores comprising

of 27,88,21,265 Ordinary (Equity) Shares of Rs.10 each

fully paid-up and the Authorised Share Capital of the

Company stands at Rs.625 crores comprising of

60,00,00,000 Ordinary (Equity) Shares of Rs.10 each and

25,00,000 Unclassified Shares of Rs.100 each.

Finance

The financial year 2009 has been a very challenging year

for corporates in the wake of the unprecedented global

financial crisis. The financial markets world wide faced

massive falls in equity values, collapse of fixed income

markets, liquidity crunch and huge foreign exchange

fluctuations. All Banks resorted to credit freeze which was

a major action that posed a major challenge to operations

of companies. Inspite of it being a very tough year for all

the companies across the globe and in India, your Company

has successfully managed its cash flows efficiently and

preserved its credit lines to maintain a comfortable liquidity

position. The Bankers continue to rate your Company as a

prime customer and extend facilities/services at prime rates.

During the year, your Company has successfully accessed

both domestic and overseas capital markets with diverse

instruments, maturities and interest rates to part finance

its requirements.

In the domestic market, your Company raised Rs.400 crores

by way of private placement of Secured, Non-Convertible

Redeemable Debentures (“NCDs”) with an average maturity

of 6 years. Your Company managed to raise the NCDs at

highly competitive rates inspite of there being a severe

credit freeze and liquidity crunch in the market. ICRA

Limited has assigned a “LAA+” rating to these NCDs

indicating high credit quality.

In the last year’s Directors Report, details were mentioned

about the Company’s successful offering of Rs.700 crores

comprising of 93,95,974 Unsecured Fully and Compulsorily

8

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 at anytime within 18 months from the date of

allotment of the FCD at the option of the Investor and

mandatorily convertible into Equity Shares on the date

falling 18 months from the date of allotment. These FCD

were issued in July, 2008 after the funds were received.

During the year, Reserve Bank of India (“RBI”) announced

a Scheme granting general permission to issuers of Foreign

Currency Convertible Bonds (“FCCBs”) to buyback the

FCCBs, subject to certain parameters. Your Company was

amongst the first few to avail of this opportunity. To date,

the Company has bought back 105 FCCBs of face value of

USD 1,00,000 aggregating USD 10.50 million. The FCCBs

bought back were part of the USD 200 million outstanding

FCCBs issued in the financial year 2006. Your Company

also raised Unsecured External Commercial Borrowings

(ECB), at competitive cost to re-finance the buyback.

Your Company follows a prudent financial policy and aims

to maintain optimum financial gearing at all times.

The Company’s total Debt to Equity Ratio was 0.56 as at

31st

March, 2009.

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 has assigned a rating of “AA/

Negative Outlook” for Long Term banking facilities. This

has been revised from the earlier rating of “AA+/Negative

Outlook”. CRISIL’s rating indicates high safety on timely

payment of financial obligations. The revision is a reflection

of the significant impact of the weakening business

environment on the revenues and profitability of your

Company’s Automotive and Tractor businesses as also

CRISIL’s estimate of your Company’s financial risk profile in

view of the ongoing capital expenditure plans.

ICRA and CARE have maintained a Long Term Rating of

‘LAA+’ and ‘CARE AA+’ respectively. CRISIL, ICRA and

CARE have all assigned the highest rating for your

Company’s Short Term facilities.

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 26,34,363 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

are set out in Annexure I to this Report.

Industrial Relations

Industrial Relations remained cordial and harmonious

throughout the year. The Management Discussion and

Analysis Report gives an overview of the developments in

Human Resources/Industrial Relations during the year.

Subsequent to the year end, the workmen at the Nashik

Plant of the Automotive Sector of the Company resorted

to an illegal tool down strike in response to a disciplinary

action initiated against an office bearer of the Employee’s

Union for alleged acts of indiscipline. The aforesaid illegal

strike temporarily affected the production at the Nashik

Plant. The Nashik Industrial Court, by its Order dated 13th

May, 2009, has declared the tool down strike by workmen

at the Nashik Plant as illegal and unjustified. The Employee’s

Union has withdrawn its strike with effect from 18th

May,

2009 and production has resumed in the Nashik Plant of

the Company and normalcy restored.

9


Safety, Health and Environmental Performance

Your Company has always demonstrated its strong

commitment and responsibility towards Safety,

Occupational Health and Environment which stems from

its Vision and enjoins upon the Company to sustain business

growth with deep commitment towards Safety,

Occupational Health and Environment.

Health and Safety

Your Company has a well established Safety, Occupational

Health & Environmental Policy (SH&E) which is revised under

EMS & OHSMS Standard for all the locations of the

Automotive Sector.

The SH&E Policy inter alia ensures safety of public,

employees, plant, equipment and business associates,

ensuring compliance with all statutory rules and regulations

on a monthly basis, imparting training to its employees

and business associates as per the Training Calendar,

carrying out Statutory safety audits of its facilities as per

legal requirements, conducting regular medical check-ups

of its employees and promoting eco-friendly activities.

Various initiatives on Safety including Safety Promotions,

Safety Patrol Rounds, Safety and Surveillance Audits, Safety

Training with focus on behaviour based safety, Safety

Kaizens, reporting of near-miss incidents are encouraged

to resolve safety issues. Special initiatives such as emergency

mock drills and upgradation of Fire Protection

Systems have been carried out thereby improving

Safety Performance. Your Company’s Plants continue to

strive to achieve “Accident Reduction” in all its units

ensuring a safety culture throughout all levels of the

organisation.

Certifications

ISO 14001:2004 provides a framework for the Company’s

Automotive Sector’s environmental initiatives, objectives

and targets that helps in continually improving its

environmental performance. All Plants of the Automotive

Sector have been certified with the amended standard for

Environmental Management System ISO 14001: 2004.

Further, implementation of OHSMS Standard has reinforced

the Company’s commitment of Safety and Occupational

Health to highest levels. OHSAS 18001:2007 are the existing

best safety practices and are implemented through the

amended management system and all Plants of the

Automotive Sector have been certified during the year

2008-09.

Likewise, Surveillance Audits of OHSAS 18001 and ISO

14001 at select plants of the Tractor Division have also

been completed.

Ensuring compliance

The focus on statutory compliance in your Company is

based on robust internal and external auditing systems

through Integrated Management Systems which dwell upon

legal and other requirements. The evaluation of compliance

is reviewed periodically through monitoring and

measurement schedules.

Your Company continued its commitment to improve the

well being of its employees by conducting curative,

preventive and specialised medical check-ups. Employees

have also been educated with advisories on industrial and

personal hygiene and safety performance at the work place.

Safety Performance

Keeping Safety as a key factor, the Central Safety Committee

of the Mahindra Group was formed by the Mahindra Group

Management Board. With a view to enhance the

performance of each Sector from within the Group, the

overall safety performance is reviewed periodically under

the guidance of a Chairman nominated from the Senior

Management.

10

With the help of Behavioural Based Safety (BBS)

implementation, the Company’s Plants continue to strive

to eliminate accidents in its units.

External Safety Audits

Mahindra Manufacturing Excellence Award for Safety,

Health & Environmental activities for the year 2008-09 has

been assessed by an external agency to confirm the rating

of each Plant and the Company’s best safety practices and

systems are shared and implemented for horizontal

deployment.

Environmental Initiatives

Air Pollution Management:

With a clear focus on the need for a clean environment,

the Company is now in the process of calculating carbon

foot print and taking adequate measures to mitigate the

causes. The Company has taken steps to reduce green

house emissions through workplace air monitoring, effluent

treatment, waste monitoring and volatile organic carbon

monitoring. All Plants of the Tractor Division have

successfully undergone first Sustainability Audit conducted

by Ernst & Young. Your Company is constantly imbibing

the major environment sensitisation drives amongst its

employees through various events and training programs

such as celebration of World Environment Day, Energy

Conservation Month and increased green zones.

Water and Waste Water Management:

The Company has taken various initiatives to achieve waste

reduction and is committed towards resource conservation

through various water management methods, recycling

and re-use of treated waste water in process, revised water

portability monitoring, rainwater harvesting and recharging

within plant premises.

Solid Waste Management:

Your Company is committed towards responsible disposal

of hazardous and non-hazardous waste. While generation

of waste to a great extent has been reduced at source, the

same if adaptable is recycled and reused. The Company is

aggressively working towards minimising the waste disposal

cost and is executing various management programmes at

all its locations i.e. vermiculture, bio-gas Plant to convert

food waste to manure/cooking gas, etc. The Company

also ensures environment friendly disposal of hazardous

e-waste.

Greenbelt Development:

Your Company partners with Non-Government

organisations and academic institutions at various Plant

locations for green belt development and Mahindra Hariyali

is one such initiative.

Corporate Social Responsibility

The Indian economy today is undoubtedly feeling the effects

of global recessionary trends. The resultant downturn in

economic activity is often likely to hit hardest, those people

and communities that are already vulnerable. The need of

the hour is to therefore continue to give high priority to

these disadvantaged communities. Keeping with the

Company’s core value of Good Corporate Citizenship, the

Mahindra Group continues to display its social responsibility

by directing 1% of its profit after tax (“PAT”) to Corporate

Social Responsibility (“CSR”) initiatives which would benefit

the socially and economically disadvantaged sections of

society.

Some of the major initiatives in which the Company has

invested in are described below:

Mahindra Pride School:

The Mahindra Pride School at Chinchwad near Pune,

provides livelihood and skills training to youth from socially

11


disadvantaged communities (comprising mainly of

Scheduled Caste/Scheduled Tribe youth). Since its

establishment on 23rd

March, 2007, 1,202 students have

been imparted with “employable” skills through a training

course of 3 months duration. The School provides training

in four faculties i.e. Hospitality Craft, Customer Relationship

Management, Hardware and Networking and Call Centre

Training. All students also undergo mandatory courses in

English, Life skills and Computer Applications. There has

been 100% placement of the students participating in the

placement process with starting monthly salaries ranging

from Rs.4,500 to Rs.15,000.

The Mahindra Group has also entered into a Memorandum

of Understanding with the Government of Rajasthan in

April, 2008, to construct the second Mahindra Pride School

in Jaipur, Rajasthan. It is now awaiting the handover of

2,500 sq. mtrs. of land offered by the Government of

Rajasthan, to proceed with construction of the School

building.

Mid Day Meal Kitchen:

Honorable Ex-Chief Minister of Rajasthan Smt. Vasundhara

Raje, inaugurated the centralised Mid Day Meal Kitchen

set up by the Company on 20th

September, 2008. The Mid

Day Meal Kitchen at Govindgarh Block, Jaipur District,

Rajasthan, is a result of an unique tripartite agreement

between the Company, Government of Rajasthan and

Naandi Foundation with the prime objective being “to fight

hunger in Schools”. This centralised Mid Day Meal Kitchen

ensures that high quality, hygienically prepared Mid Day

Meals containing a minimum of 450 calories are served to

the children. The Company has spent Rs.1 crore, for setting

up of this central kitchen, which today feeds over 25,000

school children from Class 1 to 5, covering 314 schools in

two blocks of Chomu and Govindgarh, thereby making

schooling and learning a complete experience.

Supporting Nanhi Kali:

Project Nanhi Kali, which supports the education of the

disadvantaged girl child, has been the flagship programme

of the K. C. Mahindra Education Trust. The Mahindra Group

has committed to independently support 6,000 girls in

urban, rural and tribal parts of India by providing academic

support as well as material support in the form of uniforms,

clothes, school bags, shoes, etc. In addition, the Mahindra

Group, through K. C. Mahindra Education Trust, has entered

into a partnership with the Government of Rajasthan to

jointly support the education of 10,000 disadvantaged girls

in the tribal area of Udaipur District through Project Nanhi

Kali, with the Government of Rajasthan supporting 5,000

Nanhi Kalis and the Company supporting the education of

5,000 girls. In total, the Mahindra Group continues to

support the education of 11,000 underprivileged girls

through Project Nanhi Kali. With support from individuals

and other corporate donors like the Mahindra Group,

Project Nanhi Kali now supports the education of over

49,454 underprivileged girls, in poor urban, rural and tribal

communities across 8 States of India.

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 49 profoundly hearing-impaired,

underprivileged children till date. Operations are performed

by Dr. Milind Kirtane, India’s leading ENT surgeon. All

recipients are selected in consultation with Dr. Kirtane and

his team of doctors, audiologists, teachers of the hearing

impaired and social counselors. All beneficiaries are hearing

impaired children below the age of 5, belonging to the

lower socio economic strata of society.

Mahindra All India Talent Scholarships (MAITS):

During the year, 510 students from 11 centres all over

India were awarded the MAITS which enabled them to

12

pursue job oriented diplomas at a recognised Government

Polytechnic in India. The Scholarship is awarded for a 3

year period. A majority of the scholarship awardees are

girls, as the Trust is keen to empower girls through

vocational education. Till date, 4,260 students have been

awarded the MAITS with majority of them belonging to

very poor families where average income of the family

ranges from Rs.1,500 to Rs.2,000 per month.

Employee Social Options:

Employee Social Options (“Esops”) is an unique programme

at the Mahindra Group where each employee can do social

work by volunteering in various CSR initiatives. This year,

10,341 employees volunteered for various social activities

in their local communities. Esops was formally launched in

8 new locations of Mahindra Group.

Some of the Notable Esops initiatives this year were:

• The Lifeline Express in Assam: This was jointly sponsored

and organised by Automotive Sector and Mahindra &

Mahindra Financial Services Limited in Guwahati. The

project was held in the remote area of Rangia in Assam

and 594 surgeries were performed free of cost (Cleft

Lip, Polio, Cataract and Deafness). Esops Volunteers

spent 9,376 man hours in this activity whereas 19,392

man hours were spent by community volunteers –

thus making it an ideal public-private partnership

initiative.

• Target Surpassed “Mahindra Hariyali”: In October,

2008, the Management’s vision of planting one million

trees was surpassed with 12,21,118 trees being planted

by enthusiastic employee volunteers and community

partners (NGO’s, villagers, local schools, local colleges,

etc.). All Sectors of the Mahindra Group and the

Mahindra United World College of India participated

in the Group’s green endeavour.

• Bihar Flood Relief: The devastating Bihar floods saw

immediate help from Esops Volunteers of Mahindra

along with local Dealers at Purnea. Immediately after

the floods, the Mahindra relief team systematically

distributed food, clothes and other crucial items worth

Rs.15 lakhs to over 10,000 affected people through

15 relief camps mainly at Purnea, Madhepura and

Araria. In the second phase, 10,000 blankets were

distributed in Murliganj and Madhepura. Employees

of the entire Mahindra Group gave one day’s salary

towards the relief of the Bihar flood victims and this

amount was matched by the Mahindra Group.

A complete rehabilitation project worth Rs.3.57 crores

is in the pipeline and will begin in the next few months.

Other Esops activities also included initiatives in Education,

Health and Environment having long lasting impact. 60

initiatives were conducted in Education (such as distributing

educational material, IT/vocational training, infrastructure

development) by 745 Esops volunteers impacting 17,656

lives. 94 health initiatives such as medical camps, mobile

dispensaries, etc. reached out to over 71,913 people. Over

33 Blood donation Camps were held across various plants

and offices of the Mahindra Group. 340 HIV/AIDS

awareness campaigns reached out to over 1 lakh people

in Nashik.

‘Sustainability’ Initiative

The threats of Global Warming and Climate Change have

become the defining issues of our era for all humanity.

The scientific facts before us are overwhelming and cannot

be ignored. How and what we do to address these threats,

directly affects the entire spectrum of our life and only

collaborative efforts by Governments, Corporate Bodies and

Society will lead to a solution to this draconian challenge

before us.

Your Company has always been sensitive to the fact that,

since Corporations are vital organs of Society, Corporate

13


interests must serve societal concerns and play an active

role in fulfilling its social responsibilities. Hence, in its 60th

year, the Company committed to pledge 1% of its Profit

after Tax (PAT) to benefit the socially and economically

disadvantaged sections of the Society. The Company now

needs to take this responsibility to encompass a wider

spectrum, and extend it to the conservation of the

ecological integrity of our planet by way of responsible

business practices and greater accountability and

transparency.

Hence in October, 2008, the first Mahindra Group

‘Sustainability Report’, was released, setting out its ‘triple

bottom line’ performance i.e. performance towards the

environmental, societal as well as economic aspects,

towards creating sustainable value for all its stakeholders.

This was in accordance with the latest Guidelines of the

internationally accepted, Global Reporting Initiative (GRI).

This Report was affirmed by Ernst & Young and conforms

to the highest level for reporting ‘Sustainability’

performance, which is A+. The report and the performance

rating of A+ was checked and confirmed by GRI. (GRI is a

Netherland based multi-stakeholder network of thousands

of experts worldwide, which has pioneered the development

of the world’s most widely used sustainability reporting

framework. This reporting framework sets out the principles

and indicators that organisations can use to measure and

report their economic, environmental and social

performance).

In order to generate and enhance awareness about

“Sustainability” among Shareholders, the synopsis of the

above mentioned Sustainability Report and the reason why

there is a need to change the way business was done so

far, has been elaborated on Pages 68 and 69 of this

Annual Report. The detailed Mahindra Group Sustainability

Report is available on the Company’s website

http://www.mahindra.com. This Report is essentially the

first step which will take your Company on a ‘Sustainability

journey’ and enabling it to make conscious plans, to reduce

GHG emissions and waste as well as conserve water, bio-

diversity and natural resources, as a part of its growth

strategy.

It is a matter of pride that this first Report bearing the

theme ‘Alternative Thinking’ was ranked 5th

under the

category of ‘Creativity in Communications’ by the Corporate

Register Reporting Awards. These are the 1st

global,

independent and online awards for ‘triple bottom line’ or

‘Sustainability’ reporting, designed to acknowledge the best

in Corporate non-financial reporting in which majority of

the FT 500 companies have participated.

Directors

Life Insurance Corporation of India (“LIC”) withdrew the

nomination of Mr. Thomas Mathew T., as a Nominee

Director with effect from 30th

July, 2008. Consequently,

Mr. Mathew ceased to be a Director of the Company.

Mr. Arun Kanti Dasgupta was appointed as a Director in

the vacancy caused by the withdrawal of nomination of

Mr. Mathew by LIC at the Meeting of the Board of Directors

held on 30th

July, 2008. Mr. Dasgupta holds office upto

the date of the forthcoming Annual General Meeting as

Mr. Mathew, in whose place he has been appointed, would

have retired by rotation at the forthcoming Annual General

Meeting.

The Company has received a Notice from a Member under

section 257 of the Companies Act, 1956, signifying his

intention to propose Mr. Dasgupta for the office of

Director.

The Board has placed on record its sincere appreciation of

the valuable services rendered by Mr. Mathew during his

tenure as a Director of the Company.

14

Mr. Deepak S. Parekh, Mr. Bharat Doshi and Mr. Narayanan

Vaghul retire by rotation and, being eligible, offer

themselves for re-appointment.

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:

(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, 2009 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.

Subsidiary Companies

The subsidiary companies of your Company continue to

contribute to the overall growth of the Company. Major

subsidiaries such as the Tech Mahindra Group with a 208%

growth in profits, Mahindra & Mahindra Financial Services

Limited with a 21% growth in profits and Mahindra

Holidays and Resorts India Limited with a 3.59% growth

in 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.1,405.41 crores as against Rs. 1,571.12 crores earned

last year.

During the year under review, Mahindra Gears International

Limited, Mahindra Gears Global Limited, Mahindra Gears

Cyprus Limited, Mahindra Metalcastello S.r.l., Mahindra

Bebanco Developers Limited, Mahindra Industrial Township

Limited, Metalcastello S.p.A, Crest Geartech Private Limited,

Engines Engineering S.r.l., Eff Engineering S.r.l., ID-EE S.r.l.,

Mahindra IT Consulting Private Limited, Mahindra Two

Wheelers Limited, Mahindra Automotive Australia Pty.

Limited, Mahindra United Football Club Private Limited,

Mahindra Defence Land Systems Private Limited, Venturbay

Consultants Private Limited and Mahindra Yueda (Yancheng)

Tractor Company Limited became subsidiaries of your

Company.

During the year under review, iPolicy Networks Limited,

Tech Mahindra (R&D Services) Limited, Tech Mahindra (R&D

Services) Inc., Mahindra Holdings & Finance Limited,

Mahindra Retail Private Limited and Punjab Tractors Limited

ceased to be subsidiaries of the Company.

Subsequent to the year-end, Mahindra Industrial Township

Limited has changed its name to Industrial Township

(Maharashtra) Limited, Mahindra Knowledge City Limited

has changed its name to Knowledge Township Limited,

Plexion Technologies GmbH has changed its name to

Mahindra Engineering GmbH and Mahindra SAR

Transmission Private Limited has changed its name to

Mahindra Gears & Transmissions Private Limited.

The Statement pursuant to section 212 of the Companies

Act, 1956 containing details of the Company’s 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.

15


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 will 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. These documents will 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 will 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 re-

appointed to the effect that their re-appointment, if made,

would be in conformity with the limits specified in the said

section.

Public Deposits and Loans/Advances

Out of the total 7,522 deposits of Rs.3,093.79 lakhs

(including 23 unclaimed deposits of Rs.8.99 lakhs of the

erstwhile Punjab Tractors Limited) from the public and

Shareholders as at 31st

March, 2009, 190 deposits

amounting to Rs.37.46 lakhs had matured and had not

been claimed as at the end of the financial year. Since

then, 37 of these deposits of the value of Rs.9.32 lakhs

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.

Current Year

During the period 1st

April, 2009 to 27th

May, 2009, 35,335

vehicles were produced as against 32,512 vehicles and

33,578 vehicles were despatched as against 32,214 vehicles

during the corresponding period in the last year. During

the same period 24,420 tractors (including Swaraj Division)

were produced and 23,816 tractors (including Swaraj

Division) dispatched as against 15,834 tractors produced

and 15,639 tractors despatched during the corresponding

period in the previous year.

The financial crisis that hit the developed world in

September last year has impacted economic growth across

the globe. Manufacturing activities in the country have

been hit particularly sharply by the meltdown in global

financial and trade flows. However, the growth in motor

vehicle sales in March and April, rise in PMI index for India

to level above 50 in April and the installation of a pro-

reform and stable Government ushered in by the recent

elections augur well for a recovery of the economy in the

near term. Given your Company’s continuous focus on

quality, cost controls, process efficiencies and new product

developments and innovations, your Company is poised to

quickly take advantage of the expected positive turn of

events and hopes to cope with these challenges and looks

to the future with confidence.

Acquisitions and other matters

Your Company continued its policy of organic and inorganic

growth encompassing key Sectors of your Company and

concentrated on consolidating its position in various spheres

16

of its business. During the financial year 2009, assignments

across all the transaction categories were successfully

executed. Some of the prominent illustrative transactions

in the financial year 2009 are enumerated as under:

1. Acquisition of Assets in 2 Wheeler Segment:

In line with your Company’s policy of striving to be a

key player in the “Entire Value Chain”, your Company

has made its maiden foray in the 2 Wheeler Segment

by acquiring the assets of Kinetic Motor Company

Limited (KMCL). This acquisition has provided an

additional touch-point for consumers to interact and

bond with the ever-expanding Mahindra Universe of

products and services thereby allowing the Company

to build relationships with customers at a relatively

early stage in the ‘personal transport solutions’ value

chain. This should enable the Company to extend itself

into a large market adjacent to the existing business,

leveraging on its strong corporate brand name,

distribution network in small towns/rural areas,

manufacturing and sourcing capabilities, strong

relationships with dealers and by providing consumer

finance through Mahindra & Mahindra Financial

Services Limited.

This acquisition gives your Company an optimal

strategic fit for a quick and low cost market entry.

It also provides an access to flexible assembly,

manufacturing and R&D facilities, reputed technical

collaborations for launching new products with short

lead times. This acquisition has been completed in

November, 2008 and the facilities have now become

operational.

2. Acquisition of Engines Engineering, Italy (EE):

In line with the “Design to Delivery” policy of Systech

Sector, your Company has acquired a prominent two

wheeler design company in Italy.

EE provides a ‘One Stop Solution’ in the form of

conception, design, styling, on-line assembly,

industrialisation and marketing. Some of the most

prestigious names that are associated with EE are

Benelli, Beta, Ducati, Gilera, Honda, LEM, Malaguti

and Yamaha. EE is the first ever company to introduce

plastic components in Scooters and is a known name

in motorcycle racing competitions in 125 GP Class.

It has a strong cohesive highly skilled people and most

of them having spent their entire professional life with

EE. This acquisition provides an entry into the two

wheeler design capability, generating additional revenue

through an European face and benefits your Company

with aggressive off-shoring of work. Besides improving

the utilisation process, it would also enhance

competencies of Mahindra Engineering Services Limited

through knowledge transfer. EE has an unparalleled

expertise in the two wheeler domain which can be

explored to open up a two Wheeler design centre in

India.

3. Consolidation of Gear Business:

a) Acquisition of Metalcastello, Italy:

One of the key pillars of the Systech Sector strategy

is to have a Global presence in Gear space. In

order to enhance its presence in this space

and expand its global footprints in automotive

components manufacturing, your Company has

during the year acquired Metalcastello S.p.A.

(M C), a Gear manufacturing company in Italy.

Metalcastello fits strategically well in the overall

Gears business vision and complements the

Company’s current portfolio. This acquisition would

allow the Company to exploit potential synergies

between operations of Mahindra Gears &

Transmissions Private Limited, M C and Crest

17


Geartech Private Limited which is a subsidiary of

M C at Faridabad. It will also allow the Company’s

Systech Sector to gain access to international

markets and customers in Automotive / Automotive

Component Industry specifically in the Gears

segment. In order to conserve financial resources

and utilise them over a larger canvas for the Gears

domain, your Company has strategically tied up

with ICICI Venture Fund, a private equity fund

which has co-invested in this space. Your Company

through its subsidiaries has an effective economic

interest of 51% in M C, with ICICI Venture holding

44.61% and the M C Management holding a

minority stake of 4.39%.

b) Increase in stake in Mahindra Gears & Transmissions

Private Limited (MGTPL) (formerly known as

Mahindra SAR Transmission Private Limited):

Your Company bought out the minority

Shareholder’s stake of 39.74% from SAR Auto

Products Limited thus making MGTPL a wholly

owned subsidiary of the Company. This increase

in stake would facilitate the consolidation and

alignment of the Systech Sector’s Indian Gear

businesses with that of the recently acquired

Metalcastello S.p.A. in Italy.

4. Acquisition of Tractor Company in China:

With a view to further consolidate the Company’s

presence in China, being one of the top three tractor

markets, your Company’s Farm Equipment Sector has

formed a Joint Venture viz. Mahindra Yueda (Yancheng)

Tractor Company Limited (JV) in China with Jiangsu

Yueda Yancheng Tractor Manufacturing Co. Ltd.

(Yancheng Tractor), a leading Chinese tractor

manufacturer. Yancheng Tractor’s Huanghai Jinma

brand is the No. 4 tractor brand in China in terms of

tractor volumes in 2008. Your Company holds 51% in

the JV through its wholly owned subsidiary, Mahindra

Overseas Investment Company (Mauritius) Limited

(MOICML) and all the tractor related assets and current

liabilities of Yancheng Tractor have been transferred to

the JV.

With this acquisition, your Company will have a wide

product range from 16HP to 125HP, a large

manufacturing base which will be used to produce

tractors for the domestic market in addition to low

cost tractors for exports, considering that Yancheng

Tractor is also a leading exporter of tractors from China,

with a footprint in more than 60 countries including

the USA, South America, Russia, Europe and Africa.

The combined distribution network of both the

operations (including the 1st

acquisition made by the

Company in China) will give your Company a much

larger presence in the Chinese market.

5. Merger of Punjab Tractors Limited (PTL):

Pursuant to the acquisition of PTL in the financial year

2008 and in order to reap the benefits and consolidate

the tractor business, it was decided to merge PTL into

your Company. The amalgamation of PTL with your

Company has inter alia lead to cost savings, achieving

economies of scale, sourcing benefits, vendor

rationalisation, more focused operational efforts,

simplification of business processes, productivity

improvements and putting cash resources to optimal

use. Above all, this has strengthened your Company’s

leadership in the industry, in terms of its asset base,

revenues, product range, production volumes, brand

consolidation and market share.

The amalgamated entity has benefited from improved

organisational capability and leadership, arising from

18

the combination of people from PTL thereby giving it

an edge in an increasingly competitive industry.

This merger was effected pursuant to a Scheme of

Amalgamation which was approved by the

Shareholders at the Court Convened Meetings of your

Company and PTL respectively and the merger has

been approved by the Honorable High Court of

Judicature at Bombay and Honorable High Court of

Punjab & Haryana. The Appointed Date for the merger

was 1st

August, 2008 and the merger became effective

from 16th

February, 2009.

6. Private Equity in the Automobile After Market Segment:

With a view to providing consumers a wide choice of

good quality used cars through trust and transparency,

your Company has forayed into the After Market

Segment. For funding its growth plans which inter-

alia include the opening of owned Superstores, further

developing its Franchisee network and expanding into

newer cities, your Company has obtained equity

infusion from a PE, namely PHI Management Solutions

Private Limited to the extent of 31.58% in Mahindra

First Choice Wheels Limited. This business vertical will

consolidate your Company’s multi-brand service chain

Mahindra First Choice Services Limited, along with its

pre-owned vehicles business, Mahindra First Choice

Wheels Limited and Mahindra Spares Business.

7. Merger of Mahindra Holdings & Finance Limited

(“MHFL”):

As mentioned in the last year’s Directors Report, in

order to simplify and consolidate the Group holding

structure, your Company decided to merge its wholly

owned subsidiary MHFL into your Company. This

amalgamation has benefited both the companies and

their stakeholders on account of enhanced financial

strength and capability. In addition, the proposed

Scheme has enhanced your Company’s financial

strength and has resulted in higher Shareholder value

creation and distribution. The proposed Scheme was

approved by the Shareholders at a Court Convened

Meeting held on 12th

April, 2008. The Appointed Date

for this Merger was 1st

February, 2008 and became

effective from 11th

August, 2008.

8. Transfer of Logistics Business:

In order to focus on and accelerate the growth of the

Logistics Business of your Company, it was decided to

transfer this Business (formerly known as the Transport

Solutions Group) into a wholly owned subsidiary by

the name of Mahindra Logistics Limited (“MLL”).

This transfer was approved by the Shareholders under

section 293(1)(a) of the Companies Act, 1956 through

a Postal Ballot on 28th

July, 2005. Pursuant to this,

the Company entered into a Business Transfer

Agreement in September, 2008 with MLL in order to

enable such transfer of its Logistics Business

to MLL.

9. Automotive Sector Joint Venture in Australia:

In line with the Automotive Sector’s aspirations to be

a global player in the SUV and Pick-up vehicle

segments, your Company decided to foray into the

Australian market in 2007.

Your Company through its newly formed Australian

subsidiary, Mahindra Automotive Australia Pty. Limited

(“MAAPL”) has taken over Distributorship of vehicles

in Australia from TMI Pacific Pty. Ltd. TMI continues to

be a partner in MAAPL with a 20% stake with the

balance 80% being held by your Company. Your

Company’s foray in this space is a definitive step in its

strategy to grow and position itself as a Global

Automotive OEM in Australia.

19


10. Mahindra South Africa:

Mahindra and Mahindra South Africa (Proprietary)

Limited (“MSA”) was formed as a subsidiary of the

Company with a 51% stake and the remaining 49%

stake held by African Automotive Investment

Corporation (“AAIC”), a South African company. In

order to grow in this line of business, your Company

has decided to buy out the stake of AAIC and also to

infuse suitable funds in the near future.

11. Proposed Merger of Mahindra Hinoday Industries

Limited (“MHIL”) with Mahindra Castings Private Limited

(“MCPL”):

In order to consolidate the activities and optimise from

the benefits of synergy, MHIL and MCPL have filed

respective petitions to the Honorable High Court of

Judicature at Bombay for sanctioning of the Scheme

of Amalgamation of MHIL with MCPL and their

respective Shareholders (“the Scheme”). In terms of

the Scheme, the Appointed Date for the Amalgamation

is 1st

April, 2008. The Scheme is awaiting sanction by

the Honorable High Court of Judicature at Bombay.

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 315 employees who were in receipt of

remuneration of not less than Rs.24,00,000 during the

year ended 31st

March, 2009 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.

For and on behalf of the Board

KESHUB MAHINDRA

Chairman

Mumbai, 28th

May, 2009

20

ANNEXURE I TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST

MARCH, 2009

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 98,61,613

(b) The pricing formula 1st

Tranche 2nd

Tranche 3rd

Tranche 4th

Tranche 5th

Tranche 6th

Tranche 7th

Tranche 8th

Tranche 9th

Tranche

Average Average Discount Discount Average Discount Discount Discount Discount

price price of 5.13% of 4.85% price of 5.02% of 4.89% of 4.97% of 5.03%

preceding preceding on the on the preceding on the on the on the on the

the the average average the average average average average

specified specified price price specified price price price price

date - 27th

date - 30th

preceding preceding date - 14th

preceding preceding preceding preceding

September, May, 2003 the the September, the the the the

2001 specified specified 2005 specified specified specified specified

date - 31st

date - 30th

date - 29th

date - 13th

date - 30th

date - 4th

May, 2004 May, 2005 May, 2006 September, July, 2007 August,

2006 2008

Average price - Average of the daily high and low of the prices for the Company’s Equity

Shares quoted on Bombay Stock Exchange Limited during 15 days preceding

the specified date.

The specified date - Date on which the Remuneration/Compensation Committee decided to

recommend to the Mahindra & Mahindra Employees’ Stock Option Trust

(Trust), the grant of Options.

(c) Options vested 53,34,461 Options stand vested on 31st

March, 2009.

(d) Options exercised 36,46,694

(e) The total number of 36,46,694 Equity Shares of Rs.10 each. These were transferred from the Trust to the Eligible Employees.

shares arising as a

result of exercise of

option

(f) Options lapsed 5,98,998

(g) Variation of terms At the Sixty-first Annual General Meeting of the Company held on 30th

July, 2007, the Mahindra &

of options Mahindra Limited Employees Stock Option Scheme was amended to provide for recovery from Eligible

Employees, the fringe benefit tax in respect of Options which are granted to or vested or exercised by

the Eligible Employees on or after 1st

April, 2007.

(h) Money realised by Rs. 40,27,83,473. This amount was received by the Trust.

exercise of options

(i) Total number of 56,15,921

options in force

21


(j) Employee-wise details of

options granted to:

(i) Senior managerial As per Statement attached

personnel

(ii) Any other employee Names Options granted Names Options granted

who receives a grant in during the year during the year

any one year of option ended 31st

March, ended 31st

March,

amounting to 5% or 2004* 2005*

more of option granted

during that year

Mr. Raghunath Murti 15,000 Mr. Pranab Datta 15,240

Mr. Hemant Luthra 15,240 Mr. Rajeev Dubey 15,000

Mr. Ramesh Iyer 25,920 Mr. Allen Sequeira 10,160

- - Mr. Prince M. Augustin 5,080

* The Options granted stand augmented by an equal number of Options and the Exercise

Price stands reduced to half on account of the 1:1 Bonus Issue made in September, 2005.

(iii) Identified employees Nil

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.

Rs.30.02

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.33.91 crores, Profit after tax lower by

Rs.33.91 crores and the basic and diluted earnings per share

would have been lower by Rs.1.24 and Rs.1.15 respectively.

22

(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, 9.17%

(ii) expected life, 2.50 years

(iii) expected volatility, 38.84%

(iv) expected dividends, and 2.80%

(v) the price of the underlying share in market at the Rs.593.35

time of option grant.

STATEMENT ATTACHED TO ANNEXURE I TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST

MARCH, 2009

Name of Senior Managerial Options granted in Options granted in Options granted in Options granted in Options granted in

Persons to whom Stock December, 2001* June, 2005** September, 2006 July, 2007 August, 2008

Options have been granted

Mr. Deepak S. Parekh 20,000 5,000 Nil Nil Nil

Mr. Nadir B. Godrej 20,000 5,000 Nil Nil Nil

Mr. M. M. Murugappan 20,000 5,000 Nil Nil Nil

Mr. Narayanan Vaghul 20,000 5,000 Nil Nil Nil

Dr. A. S. Ganguly 20,000 5,000 Nil Nil Nil

Mr. R. K. Kulkarni 20,000 5,000 Nil Nil Nil

Mr. Anupam Puri 20,000 5,000 Nil Nil Nil

Mr. Bharat Doshi 1,00,000 10,000 11,345 8,362 29,039

Mr. A. K. Nanda 1,00,000 10,000 11,345 8,362 24,890

* All the above Options have been exercised.

** 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.

Options Grant Date Exercise price Fair value

(Rs.) (Rs.)

13th

August, 2008 500.00 219.77

The fair-value of the stock options granted on 13th

August,

2008 have been calculated using Black-Scholes Options pricing

Formula and the significant assumptions made in this regard

are as follows:

23


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, 2009

A) Conservation of Energy

Energy Conservation Measures:

1. Engineering Initiatives

a) Commissioning of Energy Efficient Screw

Chiller for Central Air Conditioning at Kandivali

Plant.

b) Installation of compressed air demand side

controller at Igatpuri Plant.

c) Round the clock monitoring of Electrical/

Compressed Air Consumption by installing

Energy Data Acquisition System.

d) Installation of Heat Pumps for washing

machines at Kandivali and Igatpuri Plant by

eliminating electrical heating.

e) Installation of Fanless cooling tower in place

of forced draft cooling tower.

f) Installation of Variable Frequency Drives for

Paint Shop Blowers at Kandivali and Nashik

Plant.

g) Installation of Natural draft Turbine air

ventilators instead of electrical driven exhaust

fans.

h) Installation of Energy efficient pulse start

technology Metal Halide lamps in place of

conventional Mercury Vapor lamps for shop

floor lighting.

i) Capacitors installation and Automatic power

factor controllers.

j) Replacing higher power consuming

equipments with lower power consuming

equipments such as Electronic ballasts,

Low HP Pumps, CFL, water cooled heat

exchanger, etc.

k) Improving insulation of thermic fluid pipe line

to eliminate heat loss.

l) Maintaining the Unity Power factor round the

year by adding capacitor bank with Automatic

P.F. controller and also installing fix capacitor

bank for the motor above 50kw rating.

m) Controlling the Air conditioning timing by

introducing the Timer Ckt in the Package AC

of New Administrative Block.

n) Alternate switching of Street Lights.

o) Siphon system of Over Head drinking water

tank at Trans, Tractor and Canteen Building

with Water Level sensor and Automatic

controls.

p) Maximum Utilisation of ‘A Zone’ Tariff by

shifting the manufacturing activity in Hybrid

shift.

q) Introduction of T 5 Lighting in place of

conventional Metal Halide lamps on Tractor

Pre and Post Painting line.

r) Changing of Electric Circuit of the Hydraulic

Presses, Water Circuit at the Engine testing

and pulley size for Blowers and

Reprogramming of the Variable Frequency

Drives for Spray Pumps.

2. Through Process Improvement

a) Combining operations at Press Shop so as to

avoid additional running of presses.

ANNEXURE II TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST

MARCH, 2009

24

b) Enhancing production capacity at Pre-

treatment to achieve reduced Specific Energy

Consumption.

c) Reduction of hot water generator temperature

without affecting Quality Parameters.

d) Conversion of RX Generator at Heat Treatment

from LPG to PNG with optimum air-fuel ratio.

e) Staggering shift production for availing Time

of Day power tariff advantage.

f) Occupancy Sensors for lighting.

g) Auto switching Off for office air conditioning

units.

h) Digital Temperature Controllers for Window

Air Conditioners.

i) Auto valves for compressed air and water

application.

j) Timers for blowers, fans and lights.

k) Replacing higher H.P to lower H.P motors.

l) Continuous to intermittent operation of

motors.

m) Elimination of Pinion Heating Oven and

combining Pinion heating operation with

existing induction heater of Crank shaft Pinion

Heating.

n) Elimination of bed wash coolant pumps on

M/c No. 1067.

o) Changed the Paint Methodology and paint

material for Tractor front and wheel balance

weights.

p) Optimum utilisation of Paint booth by

staggering Lunch and Dinner timings.

q) Modification of Tackle design for Painting

Process resulting to reduction in paint booth

operations.

r) Elimination of Drum filter motor for Makino.

s) Optimisation of Degreasing Stage 01 and

Stage 02 Spray pumps to save electrical energy.

t) Stopping of Idle running of Unit B Hydraulic

Pump in Engine PG.

u) Installation of Heat Pumps on GPM and CCS01

Machines.

v) Pressure Boosting and Regulating Pump for

Engine Testing area.

w) Optimization of cooling tower power

consumption.

x) Plant level drive to stop the Air Leakages.

y) Changing of the Outlet Temperature at the

Hot Water Generator from 120 Deg Celsius to

95 Deg Celsius.

z) Timer setting of the Spray Pump in the Cylinder

head washing machine at M/c Shop.

3. Awareness for Energy Conservation

a) Annual Automotive Sector meet was

conducted for ENCON Members of all Plants

at Kandivali to share Energy related ideas and

scope for Horizontal Deployment.

b) Modified Energy Management Policy of

Automotive Sector which is distributed and

displayed at all the Plants.

c) Celebrated Energy Conservation Week from

14th

– 21st

December, 2008 to promote energy

saving and conservation of resources. Energy

Efficient Products were displayed and sold.

d) Organised Energy Conservation slogans,

posters and suggestion competition for

employees and their families. Winners had

been awarded in a Prize Distribution Ceremony.

25


e) Designed and distributed leaflets with Energy

Saving tips to all employees.

f) ENCON Stall on Founders Day celebration,

attended by five thousand families.

g) Spread the importance of Energy Conservation

through arranging awareness programs in

schools.

h) Celebration of World Water Day on 22nd

March

and organising week long events on water

conservation including one interactive

exhibition on water saving ideas near canteen.

i) Energy conservation ideas were shared with

the Company’s vendors and suppliers.

Preliminary energy audit was conducted at

some vendors for scope of improvement.

j) Emails, energy saving posters and competitions

were used to create awareness among the

employees about the need for saving energy.

k) Display of details of energy generation

methods and the consumption process.

l) Idea generation campaign for electrical energy

saving.

m) Display of sustainability posters for educating

employees and their families on the impact of

wastages of electrical energy.

n) Stickers of ‘Go Green’ applied on every PC

monitor and Fans/Lights DB’s.

o) Exploration of the avenues of non-conventional

energy resources available in the country,

through websites and interactions with experts.

p) Cross functional team created for identifying

and implementing means of reducing the

consumption of electricity during non-

production time.

q) Training provided to cell members to think

innovatively to reduce the energy consumption.

r) Red tag system introduced to reduce the air

leakages.

s) Rewards and recognitions for energy saving

projects.

t) Detailed Energy Audit conducted by external

agency to quantify energy consumption and

make people aware of potential areas of

action.

During the financial year, the Automotive Sector

has implemented more than 650 Energy Efficiency

Projects (including Horizontal Deployment) through

Engineering Initiatives, Auditors recommendation,

Ingenious drive process and TPM methodology

resulting in reduction of Specific Electrical and

Thermal Energy consumption. In terms of specific

consumption and costs, the Sector has achieved a

6.5% reduction as compared to financial year 2008

(which includes Power Factor Incentive for

maintaining unity power factor).

Likewise, the initiatives and other efforts

implemented by the Tractor Division have resulted

in reduction of energy consumption reflected

through cost savings for the Company, aggregating

approximately Rs.244.28 lakhs.

In recognition of these efforts, the Automotive

Sector of the Company received the following

prestigious awards at National and State levels,

viz.

The Nashik Plant was awarded the National

Level – Certificate of Merit from the Bureau of

Energy Efficiency.

26

The Zaheerabad Plant was awarded the 1st

Prize at National and State Levels from the

Bureau of Energy Efficiency and the

Government of Andhra Pradesh respectively.

B) Research & Development and Technology

Absorption

During the year under review, the Automotive Division

pursuant to its R&D efforts on development of new

products and technologies, launched new products

like Xylo. The existing product portfolio was

strengthened by launch of variants like a new refresh

of the Scorpio, Scorpio with automatic transmission

and Bolero with CRDe engine.

As a part of the Company’s sustainable mobility

program, your Company launched CNG powered

variants of Bolero Pick-Up and three-wheeler Alfa.

India can achieve significant savings in fuel

consumption and lower emissions by promoting

vehicles that automatically switch off the engine when

idling and automatically restart when the vehicle starts

moving seamlessly and without any driver intervention.

The Company became India’s first and only automotive

manufacturer to launch FuelSmart system with Micro

Hybrid technology in its vehicles. Such vehicles, called

micro hybrids, use a start-stop system to ensure

reduced fuel consumption of 5-10% depending on

driving conditions with attendant reduced emissions.

The driver has only to press the accelerator for the

vehicle to automatically start up and move. This

technology has been made available on Scorpio and

Bolero variants during the year.

Keeping in view the future requirements of customers

and legislation in India and abroad, your Company

has undertaken various technology development

programs like alternate fuels, emission technologies,

transmissions, safety and comfort features.

In addition to technology development programs, the

Company is working at developing product variants

on existing product platforms and new products for

market segments which are currently not addressed

by the Company.

During the year under review, your Company’s

Automotive Division applied for 11 Design

Registrations, out of which 5 Design Registrations were

granted.

During the year under review, the Company’s Tractor

Division launched upgraded models of large selling

475DI and 575DI models. In the international space,

the Compact series was launched in USA and 705DI in

the 70 HP segment of the Company’s new introduction

as a value for money offering in Africa. Your Company’s

Swaraj Division, has launched a new series “XM” with

better fuel efficiency, new look and added features

designed for convenience and comfort. Beyond tractors,

your Company also launched crawler harvesters.

Keeping in view the future requirements of

technological upgradations, your Company has

undertaken various programs like development of

engines to meet future regulatory norms in India and

in countries to which the Company’s products are

exported.

During the year, your Company’s Farm Equipment

Sector has been granted one patent, filed in the USA.

Further, this year the Farm Equipment Sector has filed

11 new patent applications, in addition to the filing of

4 design registration applications, including 1 in the

USA.

The Company spent Rs.515.65 crores (including

Rs.276.87 crores on capital expenditure) on Research

and Development work during the year which was

approximately 3.44 % of the total turnover.

27


C ) Imported Technology for the last 5 years

Sr. No. Technology Imported Year of Import Status

1. NEF TCI 2004 Technology Absorbed

2. NEF Performance improvements 2004 Technology Absorbed

3. MDI Engine Upgradation 2004 Technology Absorbed

4. Anticlock Braking System on utility vehicle 2004 Technology Absorbed

5. Common Rail Diesel on utility vehicle 2004 Technology Absorbed

6. New CRDe Engine Development 2004 Technology Absorbed

7. Development of a new MPV 2004 Technology Absorbed

8. Euro IV Emission developments for exports 2004 Technology Absorbed

9. Multi Link Suspension for utility vehicle 2004 Technology Absorbed

10. Development of Air Bags on utility vehicle 2005 In the process of Absorption

11. Development of cruise control on utility vehicle 2005 Technology Absorbed

12. Fatigue Lab and track design for MRV, Chennai 2005 In the process of Absorption

13. Sandwich material for noise absorption 2005 Technology Absorbed

14. Development of Nano-Technology for IP etc. 2005 Technology Absorbed

15. Climate control (Heated and Cooled) seats 2005 In the process of Absorption

16. Bio-Diesel and Gas based engine 2005 Technology Absorbed

17. Transmission Design of Compact Tractor 2006 Technology Absorbed

18. Development of Integrated Cabin for Tractor 2006 In the process of Absorption

19. Hydrophilic Nano coated Feature 2007 In the process of Absorption

20. Automatic Transmission for SUV 2007 Technology Absorbed

21. Transmission for new SUV 2007 In the process of Absorption

22. New Generation system for Brakes for SUV 2007 In the process of Absorption

23. New Electricals & Electronics Features 2007 In the process of Absorption

24. CNG engines for LCV 2007 Technology Absorbed

25. Common Rail Diesel on Light commercial vehicle 2007 Technology Absorbed

26. Next generation Common rail adaptation 2007 Technology Absorbed

27. Hydrogen ICE 2007 In the process of Absorption

28. Fuel Cell Vehicle Development 2007 In the process of Absorption

29. 2nd

Generation Biofuels (Biomass to Liquid / Gas to Liquid) 2007 In the process of Absorption

30. Hybrid Vehicles 2008 In the process of Absorption

31. Transmission Upgrade 2008 In the process of Absorption

32. Electricals & Electronics Update 2008 Technology Absorbed

33. Design for New Tractor Transmission 2008 In the process of Absorption

34. Start Stop Micro Hybrid 2009 Technology Absorbed

35. New Generation Engine Management System 2009 In the process of Absorption

36. CNG Engines for Pickups / 3 Wheelers 2009 Technology Absorbed

37. Electronic Programs for Safety, Stability & Steering Control 2009 In the process of Absorption

38. CAN Based Networking 2009 In the process of Absorption

39. New Airbag Program 2009 In the process of Absorption

40. Advanced Materials Technologies 2009 Technology Absorbed

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

Report.

The information on foreign exchange earnings and outgo is furnished in the Notes on Accounts.

For and on behalf of the Board

KESHUB MAHINDRA

Mumbai, 28th

May, 2009 Chairman

28

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 Balances as on Maximum outstanding

31st

March, 2009 during the year

Mahindra & Mahindra Financial Services Limited 15.00 155.00

Mahindra Intertrade Limited 0.15 0.15

(including loans where there is no interest) (0.15) (0.15)

Bristlecone India Limited 8.03 8.03

Mahindra Gujarat Tractor Limited 1.00 1.00

Mahindra Shubhlabh Services Limited 2.00 8.25

NBS International Limited 2.00 2.00

Mahindra Forgings Limited 44.00 44.00

Bristlecone Limited 81.86 81.86

Mahindra Overseas Investment Company (Mauritius) Limited 38.69 38.69

Mahindra Engineering & Chemical Products Limited 30.20 30.20

Mahindra Engineering Services Limited 0.00 40.00

Mahindra Two Wheelers Limited 35.00 47.00

Mahindra Vehicle Manufacturers Limited 100.00 100.00

Mahindra Renault Private Limited 0.00 19.00

Mahindra Hinoday Industries Limited 19.00 19.00

Mahindra Holdings Limited 25.00 25.00

Mahindra Automotive Australia Pty. Limited 3.87 3.87

Loans and advances in the nature of loans to firms/companies in which Directors are Interested:

(Rupees in crores)


31st


Infrastructure Development & Finance Company Limited 15.00 15.00

Housing Development Finance Corporation Limited 0.00 35.00

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.

Investments by the Loanee in the shares of Subsidiary Company, when the Company has made loans or advances in the

nature of loan:

Investments in the shares of the Subsidiary Company:

(Rupees in crores)


31st


Mahindra Engineering Services Limited 0.00 38.88

29


Management Discussion & Analysis

For most of the year under review, the global economy

faced unparalleled pressures. While the first few months

witnessed a sharp rise in the price of oil, food and other

commodities, inflationary fears soon gave way to concern

about depression and deflation as the financial crisis in the

advanced economies snowballed into a global economic

crisis of unprecedented magnitude. International trade and

financial flows froze and financial institutions crumbled,

leading to rising bankruptcies and widespread

unemployment across the globe. India is neither insulated

nor isolated from global events and has been significantly

impacted by this global meltdown. Exports from, and

capital flows to the country have contracted sharply, leading

to a slowdown in the country’s economic growth. However,

in spite of the contraction of many world economies, India

is expected to grow close to 6% in the coming fiscal,

making it one of the very few countries in the world which

would show any growth in the next two years.

Against this backdrop, your Company’s performance has

been satisfactory; indeed, your Company has outperformed

industry in many of the segments in which it operates.

Industry Structure

The Automotive Sector

The automotive industry occupies a place of pre-eminence

in the Indian economy, accounting for about 5% of GDP

and over 13 mn direct and indirect jobs, and contributing

about 17% of indirect taxes (Source: Automotive Mission

Plan 2006-2016).

Domestic sales in the segments in which the Company

participates - Multi Utility Vehicles (or MUVs) including

soft tops, hard tops and pick-ups, Light Commercial Vehicles

(LCVs), three wheelers, and C-segment cars - declined by

1.7% during the year under review over the previous year

and stood at 917,260 vehicles. (Source: SIAM, Internal).

Your Company sold 220,213 vehicles in the domestic market

during the same period, a growth of 0.6% over the previous

year.

MUVs are a family of vehicles capable of versatile

applications such as passenger transport, goods transport

or a combination of the two. There are six manufacturers

of MUVs in India. Your Company is the largest manufacturer

of MUVs in India, offering a range of over 20 models. In

F-09 industry-wide domestic sales of MUVs were 268,753,

a decline of 7.4 % over F-08 (Source: Industry and internal).

LCVs (gross vehicle weight from 3.5MT to 7.5 MT) are

used mostly for intra-state movement of goods and short

distance transport of passengers. In F-09, 52,705 LCVs

were sold in the domestic market – a decline of 13.0%

over F-08 (Source: Industry and internal). The Company

competes in this segment through its subsidiary Mahindra

Navistar Automotives Limited (MNAL). There are six

manufacturers in India in this specific LCV segment.

India is the largest organised market in the world for three-

wheelers. In F-09 this segment declined by 4.1% over

F-08, with sales of 349,719 three-wheelers in the domestic

market (Source: SIAM).

In F-09, the C-Segment of passenger cars sold 246,011

vehicles, a growth of 12% over the previous year. The

C-segment is second largest segment of the passenger car

market comprising 19% of the total car sales in India.

There are nine players competing in this segment.

30

The Farm Equipment Sector

Agriculture plays an important role in the Indian economy

and society. It accounts for a little less than 20% of the

country’s Gross Domestic Product (GDP) yet contributes to

nearly 60% of employment in rural India.

The Indian tractor market is one of the largest markets in

the world by volume, despite a low penetration level of

tractors. The domestic tractor industry is fragmented, with

about 13 national players and some regional players. In

the current year, all the tractor manufacturers in India

together sold 303,921 tractors. Additionally, 38,910 tractors

were exported.

The domestic tractor market is traditionally segmented by

horsepower into the low horsepower 20 HP - 30 HP

segment, the mid segment of 30 - 40 HP and the higher

segment of above 40 HP. Most of the major players cater

to all the three segments. However, their relative strengths

and market positions differ from segment to segment.

Many factors affect tractor sales including monsoons,

availability of irrigation, reservoir water levels, government

declared support prices for key crops, commodity prices,

crop production expenses (such as seeds, fuel, fertilizer,

pesticides and other costs) and credit availability. The

availability of finance is one of the most significant factors

influencing tractor demand, as approximately 80% to 90%

of tractors are sold through finance from banks and other

financial institutions.

Your Company’s Farm Equipment Sector (FES), which

designs, develops, manufactures and markets tractors for

Indian and overseas markets is the largest manufacturer of

tractors in India and has sustained its market leadership in

the Indian tractor market for over 26 years.

Industry Developments


Over the past one year, the global economic environment

has undergone significant turmoil. Global economy is

expected to shrink in 2009 for the first time in many

decades, and may remain weak in the medium term.

Financial markets have seen an unprecedented level of

stress and volatility. The automobile industry worldwide is

bearing the brunt of this general economic distress - with

precipitous decline in volumes, financial losses and

significant restructuring. India also witnessed lowered

economic growth during the year which impacted the

automotive industry adversely.

After several years of strong growth, the Indian automotive

industry experienced significant challenges in F-09,

particularly in the second half of the fiscal. A sharp

deterioration in liquidity conditions in the financial markets

significantly reduced availability of credit for automobile

buyers. In addition, economic growth slowed down rapidly

over the course of the fiscal year. As a result, F-09 saw a

drop in domestic sales of motor vehicles of 5.0%. The

commercial vehicle segment was the worst affected with a

21.7% drop in sales, while the three-wheeler segment

declined by 4.1%, and passenger vehicles sales were flat

(Source: SIAM).

Given the importance of the automobile industry to the

economy, the government provided active support through

fiscal stimulus (particularly by reducing the applicable excise

duty) and by making liquidity and credit available. Interest

rates and fuel prices were also reduced. As a result,

domestic sales showed a partial recovery in the last quarter

of the fiscal.

In addition, the automotive industry was also adversely

affected by a sharp rise in commodity prices, especially in

the first half of F-09. An unprecedented increase in the

prices of major input materials, along with the pricing

pressures due to the economic slowdown, put significant

pressures on the margins of the automobile manufacturers.

31



The first monsoon (between June and September) of FY

08-09 was 98% of the Long Period Average, resulting in a

good Kharif crop. However, during the second half of the

year, the country experienced a deficient north-east rainfall

(-31%) in 30 of the 36 meteorological districts. In spite of

overall lower rainfall and lower reservoir levels in F09, the

total food grain production during the year (Rabi + Kharif)

is expected to be almost equal to last year at 230 mn

tonnes, based on the latest estimates.

Substantial increases in Minimum Support Prices for various

crops announced by the Government have positively

impacted rural disposable incomes. In addition, in the 2008-

09 Union budget, credit allocation to agriculture saw an

increase of Rs. 50,000 crores to reach Rs.2,80,000 crores.

There was an increase in other outlays for supporting the

development of the rural economy. India’s agricultural GDP

is expected to have grown by around 2% in F-09.

Yet, the domestic tractor industry was faced with the

simultaneous impact of a liquidity crunch (following the

global economic crisis), stringent lending norms for farm

loans due to higher NPA’s and high interest rates. The

sharp rise in raw material prices in the first half of the year

with resultant price increases by all tractor manufacturers’

also impacted demand. Hence, the year under review saw

a flat domestic tractor industry which ended the year at

303,921 tractors (+0.6% vs. previous year).

Indian tractor exports totalled 38,910 tractors in F-09,

12.1% lower than last year due to the impact of global

economic turbulence, recessionary trends and sharp

changes in exchange rates in some markets.

Company’s Performance


The Automotive Sector (AS) of the Company is engaged in

the Multi Utility Vehicle (MUV) and three-wheeler segments

directly. It competes in the Light Commercial Vehicle (LCV)

segment through its joint venture subsidiary MNAL, and in

the passenger car segment through another joint venture

subsidiary Mahindra Renault Pvt. Ltd (MRPL). The Company

manufactures LCVs for MNAL and passenger cars for MRPL

on a contract basis. The Company also distributes these

LCVs and cars for the two joint venture companies

respectively under a distribution contract for a fee.

Despite the challenging business environment, your

Company maintained its vehicle sales. On the domestic

sales front, the Company along with its subsidiaries MNAL

and MRPL sold a total of 220,213 vehicles (including 44,533

three-wheelers, 8,603 LCVs through MNAL and 13,423

cars through MRPL), recording a growth of 0.6% over the

previous year.

Your Company’s domestic MUV sales volumes increased

by 3.3%, as against a decline of 7.4% for industry MUV

sales. A record number of 153,653 MUVs were sold in the

domestic market in F-09 compared to 148,761 MUVs in

the previous year. Indeed, in the month of March 2009,

against the backdrop of a tough business scenario, your

Company sold an all time record 25,748 vehicles in the

domestic market, by undertaking the target in mission

mode (christened Mission 25001). Hence, your Company

further strengthened its domination of the domestic MUV

sub-segment during the year, increasing its market share

to 57.2% over the previous year’s market share of 51.3%

(Source: Internal).

The continued success of the Company’s Bolero range and

the launch of the new Xylo (in January 2009) contributed

to MUV sales in a significant manner during the year. The

refreshed version of the Bolero that was launched in March

2007 continues to attract customers and the Bolero brand

continues to be India’s largest selling MUV, for the fourth

year in a row. The Company has recently launched a

refreshed version of the Scorpio (positioned as “the Mighty

32

Muscular Scorpio”), with an improved value proposition,

and has received an encouraging response. The Scorpio

became the first brand in the country to offer a BS-IV

compliant version to consumers.

In LCVs, M&M, through its subsidiary MNAL, has a presence

in the 3.5-7.5MT GVW segment of the market. In F-09,

your Company’s sales in this segment declined by 17%

against a decline of 13% for the industry segment. MNAL

is currently developing products to address the full range

of the commercial vehicle market. Mahindra Navistar

Engines Pvt. Ltd (MNEL), another joint venture company is

also in the process of developing a new power train for

the commercial vehicle range.

In the passenger car segment, MRPL sold 13,423 cars

(Logan), a decline of 48% over the previous year, due to

increased competitive activity in its market segment.

Industry sales in the C-segment, where Logan competes,

increased 12% in F-09.

In the three-wheeler segment, your Company’s sales

increased 31.3% to 44,533 units, as against a decline of

4.1% in the industry sales. This decline in the three wheeler

industry was caused by a significant deterioration in credit

availability for buyers. The Company’s growth was on

account of the success of the passenger version of the

Company’s Alfa three wheeler (launched in Feb 2008). The

Company now has a 12.7% market share in the three

wheeler segment.

Your Company believes that the Indian automotive market

is amongst the top growth markets in the world. Hence

your Company is continuing with its expansion plans as

envisioned. Construction work at the new manufacturing

site at Chakan (near Pune) is in full swing. This state-of-

the-art plant will be set up by Mahindra Vehicle

Manufacturers Limited (MVML), a wholly owned subsidiary

of the Company. It will have the capabilities to manufacture

the Company’s range of new generation MUVs as well as

commercial application vehicles. It will also manufacture

CVs for MNAL. Another subsidiary, MNEL (Mahindra

Navistar Engines Ltd.) will manufacture engines at this

facility.

In the global markets, the Company’s sales declined 31%

in F-09 to 8,501 units due to the challenging macro-

economic conditions and trade environment. Your Company

also sold 1,611 Logan cars in overseas markets through its

subsidiary MRPL.

Going forward, growth in overseas markets is a strategic

focus area for your Company and all plans for overseas

expansion are on track. Your Company continues to expand

its footprint in niche overseas markets with a strong

emphasis on building the MAHINDRA brand. In F-09, the

Xylo was launched in South Africa. Your Company formed

a new joint venture Mahindra Automotive Australia Pty.

Limited, to focus on the Australian Market. Your Company

also made its presence felt at several international motor

shows such as ones in Italy (Bologna), Chile, Johannesburg

(South Africa) and Sao Paulo (Brazil).

In Operations, your Company focused on rigorous cost

reduction through productivity improvement and waste

reduction. Energy conservation was an area of particular

focus. The impact of these efforts has been recognised

through a plethora of awards. The Zaheerabad plant was

awarded the National Energy Conservation Award (1st

rank)

for the second consecutive year. The Nashik plant was

awarded the National Certificate of Merit, instituted by

the Bureau of Energy Efficiency and Ministry of Power, in

recognition of its energy conservation initiatives and also

won the CII National Award for Excellence in Water

Management.

Quality improvement and customer satisfaction is a thrust

area for your Company. The Company maintained its

standing at 3rd

rank on Sales Satisfaction and was ranked

4th

on Customer Satisfaction, in syndicated studies

conducted by J.D. Power.

33



The financial year ending March, 2009 saw the merger of

erstwhile Punjab Tractors Limited (PTL) with your Company,

with effect from 1st

August, 2008, the Appointed Date of

the merger. The merger became effective from

16th

February, 2009 and from the said date it operates as

a part of the Farm Equipment Sector of your Company, as

its Swaraj Division. Therefore, the current year business

figures of your Company include PTL’s financials for the

period from 1st

August, 2008 to 15th

February, 2009. PTL

is a good strategic fit for the Company. Its strong ‘Swaraj’

brand equity and nationwide dealer network complement

your Company’s existing network, sound financial

fundamentals and dedicated and experienced workforce.

Following the acquisition, your Company has firmly

established its dominance in the Indian tractor industry

with 40.8% market share marking the 26th consecutive

year of leadership in the Indian tractor industry. In addition,

your Company has reaped the benefits of enhanced

capacities and economies of scale along with an expanded

network and product portfolio.

As a result, in this period, your Company achieved a

production of 119,098 tractors. In addition, 52,131 engines

were produced for the Mahindra Powerol brand. Following

the merger, the two tractor manufacturing plants of the

erstwhile PTL at Mohali and Chappercheri along with its

foundry facility at Sialba Majri, near Mohali, stands added

to the existing tractor manufacturing plants of your

Company at Rudrapur, Nagpur, Kandivali and Jaipur.

Your Company recorded sales of 120,202 tractors against

99,042 tractors sold in the previous year. This included

domestic tractor sales of 113,269 tractors - a growth of

25.1%, compared to 90,509 tractors sold in the previous

year, against the backdrop of a flat industry scenario. In

the farm mechanization space, besides tractors, your

Company sold farm implements and other equipment under

both the ‘Mahindra’ and the ‘Swaraj’ brand. The Swaraj

Division plant at Chappercheri is also an established

producer of Harvester combines in the organized sector in

India.

In 2008, under the Mahindra brand, your Company had

launched the 295 DI Super Turbo tractors in the 30 to 40

HP segment, in a few select states. This model has been

well appreciated by the customers for its fuel efficiency

and power and this year 295DI was offered across the

country. Upgraded models of the large selling 475DI and

575DI models were also introduced.

The Arjun Ultra-1 has now been transformed into a versatile

product which has demonstrated superlative performance

both on and off the field. The Mahindra Shaan - a 25 HP

multi-utility tractor launched by your Company in 2007 -

has proved very successful in the brick kiln segment.

Your Company is the first tractor manufacturer in the

country to offer radial tyres with its tractors. Under the

‘Swaraj’ brand, a new series called “XM” (Xtra Mileage)

has been launched, which has a better fuel efficiency, new

look and added features of convenience and comfort. This

has been well received in the market. To cater to the

market requirement in the less than 30 HP segment, the

Company has re-launched model 722 Super with

improvements in ergonomics, steering effort, operator

comfort and usability.

FES has been awarded the prestigious Golden Peacock

Award ’08 in the Innovative Product/Services category for

its in-house development of a Load Car, the first of its kind

in Indian tractor industry.

Two of its advertising campaigns (for ‘Bhoomiputra 235

DI’ and ‘Arjun Ultra-1’) won Golds at the 2nd

Rural

Marketing Awards, organised by the Rural Marketing

Association of India (RMAI). FES also bagged five awards,

34

the most by a single brand, at the 1st

WoW Awards

organised by EventFaqs - a renowned web portal, to

celebrate excellence in Events and Experiential Marketing.

Your Company has launched a unique initiative called

Samriddhi that aims to bring the latest innovative farming

technologies within the reach of the Indian farmer. This

initiative includes soil and water testing labs, productivity

demo farms, agri-clinics and counselling centres. One of

the projects under this program - ‘Project Bhoomi’ - (Mobile

Soil Testing Laboratory), was awarded the ‘Order of Merit’

by the Promotion Marketing Awards of Asia ‘08 fraternity

in the category of ‘Best Cause’ Campaign.

Your Company’s tractors are now being sold in 6 continents

of the world. The Company has continued to focus on the

African states. Africa is one of your Company’s largest

export markets apart from the US. Your Company has set

up an assembly plant in Ghana, inaugurated by the

President of that country. This is in addition to the assembly

plants set up in Tchad and Mali, Nigeria and Gambia last

year. This year, your Company has made forays into the

new African markets of Botswana, Egypt, Niger, Congo

and Brazzaville. To meet the demand of the higher HP

segment in Africa, your Company launched the Mahindra

705DI as a ‘value for money’ offering in the 70 HP segment.

The 8000 tractor series was launched in Africa in 2008.

The product’s success has now led to its introduction in

Latin America and Australia.

Other new markets were Yemen in the Middle East,

Cambodia in South East Asia and Argentina in Latin

America. Under the Mahindra brand, the compact range

of tractors (35 series) was introduced by your Company in

the US market and in ANZ. The neighbouring countries of

Sri Lanka, Bangladesh and Nepal continue to be large

overseas markets for your Company. As a result of the

global economic slowdown, your Company exported 6,933

tractors i.e. 19% less than last year.

Your Company has strengthened its presence in the growing

Chinese tractor market by entering into a JV in China with

the Chinese Jiangsu Yueda Group. This is your Company’s

2nd

JV in China. The JV’s manufacturing facility is located

in Yancheng city, Jiangsu Province and sells tractors under

the Jinma brand. Jinma’s product portfolio includes tractors

ranging from 16 - 125 HP. The new entity is named

Mahindra Yueda (Yancheng) Tractor Company Limited

(MYYTCL).

Your Company’s first JV in China, Mahindra (China) Tractor

Company Ltd. (MCTCL) was able to grow by 21% over the

previous year despite the stagnant industry situation. This

was enabled through the launch of Mahindra branded red

tractors in the domestic market and the expansion of the

product range up to the 40HP segment on the current

platform. This year, MCTCL made the change over from

selling tractors under the MCTCL Feng Shou brand to the

new Mahindra Feng Shou brand. In line with the Mahindra

strategy of customer service as a differentiating factor,

MCTCL launched customer support initiatives to support

Mahindra brand. MCTCL has embarked on a new product

development program to expand into higher HP segments.

Products up to 55HP are being seeded in select domestic

markets before commercial launch in the next financial

year. On the exports front, MCTCL opened up new markets

in East Europe, Africa and Iran and has also completed

product homologation for European markets. All these

initiatives will enable MCTCL to gain a significant presence

in the China tractor industry.

In the US, the 0-80 HP tractor industry declined by 16%

between April 2007 and March 2008. The economic crisis

and the collapse of the housing market are the prime

reasons. In this challenging environment, the sales of

Mahindra USA Inc. (MUSA) declined by 32 %. On a positive

note, MUSA was rated highest in Overall Satisfaction

amongst dealers in the US market, in a survey conducted

35


by North American Equipment Dealers Association. This is

a significant achievement in a market in which every leading

global tractor manufacturer has a presence.

Under the Mahindra Powerol brand, your Company has

sold 52,350 engines in this financial year, as against 31,922

engines last year - a growth of 64%. Mahindra Powerol

has retained its leadership position in the genset market

that caters to the telecom industry adding prestigious clients

to its list such as Indus Towers, Xcel Telecom, TCS, 3i

Infotech, Nutek, Barista, Tanishq, Levis, Kotak Life and

Maharashtra State Road Transport Corporation (MSRTC).

To ensure a high degree of interaction with corporate

customers, your Company has introduced the web based

MAGIEC interface.

Your Company expanded the Mahindra Powerol genset

product range from the prevalent 62.5 kVA to 140 kVA. In

addition, it has also launched engines for cranes,

locomotives and marine applications. Mahindra Powerol

also has a presence in the retail segment, with 55 branded

show-rooms operated across India. Mahindra Powerol has

initiated exports to Nepal, Bangladesh, UAE and Brazil. It

opened its first international showroom in Kathmandu.

After winning the most coveted International Quality

accolades – the Deming Prize and the Japan Quality Medal

- FES has continued on the 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 horizontally

deployed in the Swaraj Division to accelerate the

implementation of best practices. The FES journey towards

business excellence continues with unabated vigour.

Plants of the Mahindra and Swaraj division are already

certified for various internationally recognized Quality and

Safety Management Systems. From this year, the Powerol

Business is also covered under certification for the ISO

9000: 2000.

Opportunities


Despite the recent slowdown in economic growth, the

Indian economy is poised to show robust growth in the

medium to long term. With the economy on a high growth

path on a secured long-term basis and with the consequent

increase in disposable incomes of the population at large,

the Indian automotive industry is expected to provide

significant growth opportunities. India’s automotive sector

is expected to be one of the fastest growing in the world

over the next several years. The Indian Government’s

Automotive Mission Plan 2016 (AMP 2016) will facilitate

such growth and targets a doubling of the automotive

industry’s contribution to the Indian economy between

2006-2016.

Your Company is investing significant resources towards

expansion of its technological and product development

capabilities to actively participate in the expected growth

of the Indian economy. Your Company also continues to

actively search for overseas partners and markets, to

supplement and strengthen its domestic market, in both

sectors. The sectors also share synergies of resources,

especially for sourcing, giving major opportunities for

savings. Your Company has expanded its participation in

the Indian automotive industry thorough its joint ventures

for CVs and cars, as well with its entry into two-wheelers

and three-wheeler categories. As a result, the Company is

well poised to garner an increasing share of this segment

of the Indian economy which is expected to show relatively

high growth over the long term. While the near term may

be challenging, with sluggish growth due to global and

local economic pressures as listed under the next section,

the long term outlook is positive.

36

In the Automotive Sector, the Company believes that its

core MUV market is likely to increase its share in the light

vehicles category due to the inherent versatility of MUVs.

The proportion of MUVs in India is relatively low compared

to corresponding figures in Asian countries that share a

similar or more developed economic and demographic

profile. In the long term, the Company believes that the

light vehicle market will expand at a fast clip in India and

that MUVs will take an increasing share of this market.

The AMP 2016 also states that fiscal benefits should be

provided to MUVs, which could lead to further MUV

growth.

The increased investments in infrastructure required to

maintain the high growth of the Indian economy – such

as the National Highway Development Programme with a

budget of tens of thousands of crores - and the increased

goods movement in a fast growing economy would result

in a high demand for commercial vehicles. To capture a

share of the growing medium and heavy commercial

vehicles segment, the Company’s subsidiary, MNAL, will

launch a new range of medium and heavy commercial

vehicles over the next few years and thus ensure the

Company’s participation in this large and important

segment of the Indian automotive industry.

The WTO and Free Trade Area negotiations with Thailand,

ASEAN, SAARC countries and the Mercosur countries are

likely to lead to lowered tariffs in many of the Company’s

target export markets. This could provide a significant

opportunity to generate larger volumes from export sales

and further the Automotive Sector’s strategic emphasis on

the development of exports.

Through various strategic initiatives, the Automotive Sector

of the Company has put in place plans to increase the size

of its addressable market of the Indian automotive industry

from 17% in F-05 to 75% by F-10, providing a huge

opportunity for growth.


In a global economy faced with recessionary pressures, the

Indian economy has witnessed a slow down in growth.

Yet, the positives for your Company in such an environment,

is that the impact on the rural economy has been minimal.

With a large rural population base dependent on farming

and allied industries, agriculture will continue to be the

priority area for the Government. This coupled with

significantly lower levels of mechanization compared to

the global average, indicates that there is significant growth

potential for mechanization in the country, which your

Company is well poised to leverage.

Your Company’s Farm Equipment Sector will use every

opportunity to leverage both the Mahindra and Swaraj

brands, to create strong dealers, build better channel

efficiencies, develop cutting edge technologies and

introduce a continuous pipeline of product up-gradations

and new product introductions.

The US and China are amongst the top three tractor

markets in the world apart from India. To tap the potential

in these markets, FES plans to continue its focus on these

markets to become a global leader. The Chinese

Government policies encouraging agriculture have provided

the Company good opportunities as demonstrated by the

2nd

JV in China. Similarly, your Company is also exploring

various global tractor markets in Africa, East Europe, South

America and South East Asia. The improved stability and

economic growth in smaller African countries have provided

the Company good opportunities to expand exports and

collaborate with local Governments by helping them set

up tractor assembly plants for the Company’s SKD exports.

Your Company’s strategy to make use of low cost

manufacturing & sourcing bases in India and abroad will

enhance its cost competitiveness.

37


Threats

There is a strong linkage between the automotive industry,

the economy and consumer sentiment. A prolonged

slowdown in the Indian economy would therefore impact

the near term growth prospects for the automotive sector.

For the Farm Equipment business, a slowdown of the Indian

economy in the short term, given the current global

developments, and natural factors like weather, rainfall,

floods, natural calamities like El-Nino and economic factors

like high fuel prices increasing the running costs, may

directly impact the tractor industry.

The major threats for the automotive business could be:

Competition

Given the increased relative attractiveness of emerging

markets such as India, global players are likely to further

enhance their presence there. This would lead to higher

level of competition for your Company. The entry of new

players will result in ever increasing levels of competition

in all the segments of the automobile industry, resulting in

intense pressure on the profit margins of all participants.

The Company is countering this threat by a stronger focus

on reducing costs and increasing efficiency of operations.

Regulations

For the Automotive Sector, more stringent regulatory norms

are being introduced, especially in the areas of safety and

emission. While these measures are welcome, they may

result in an increase in manufacturing cost, which in turn,

may affect margins or demand in a market which is

intensely competitive and customers who are price sensitive.

Recently, the tax levy differential between small cars and

larger vehicles has increased. With a resulting lower price

tag for small cars, customers on the margin may opt to

postpone large car purchases or buy a small car, which

could impact MUV and the larger car segment growth.

With the Company’s strong focus on globalisation, any

form of tariff or non-tariff barriers imposed by any country

where the Company has a significant presence, or has

plans to grow, will be a threat to its prospects. As for all

exporters, any political, economic uncertainty or natural

calamity in the countries of export would be a potential

threat.

Common threats to the Automotive as well as Farm

Equipment businesses could be:

Financial market conditions

Tightening of credit disbursals for vehicles and increase in

interest rates impacted demand in many segments in F-

09. Any adverse change in these factors would impact

demand in the current year and this may affect sales

volumes, leading to lower profitability. However having a

subsidiary company, Mahindra & Mahindra Financial

Services Limited alleviates this concern to some extent.

The Company’s exports, a strong thrust area, can be

adversely affected by currency fluctuations.

In the US market, the US economic slowdown has directly

impacted the spending propensity of the customer

segments for Mahindra’s range of tractors. The tractor

industry has itself contracted by about 20% last year and

is forecast to contract by close to a similar level this year.

This has significantly impacted MUSA’s business.

The Maoist insurgency and political instability in Nepal has

been affecting the Company’s exports to that country.

Fuel prices and alternate fuels

High fuel prices increase the cost of ownership and could

also adversely impact demand for both Sectors. Any

reduction in the price differential between petrol and diesel

could increase demand for petrol MUVs at the expense of

38

diesel MUVs. Almost all of the Company’s MUV models

are diesel powered and an increase in preference for petrol

vehicles could be a disadvantage to the Company. The

cost of diesel also constitutes around 60% of the running

cost of a tractor. Any sharp upsides in the price of diesel

may adversely impact input costs for farmers. However,

going by the previous experience, the price control on

fuels employed by the Government minimizes these risks

to a substantial degree.

Mandatory use of vehicles powered by alternative energy

sources could affect both the Sectors. For the Automotive

Sector, it could lead to a demand for different types of

vehicles. The Company has developed products powered

by alternate energy like CNG and electricity to provide

lower polluting products for a better environment, which

minimizes this risk. The Company has also developed

prototypes of a hybrid Scorpio and hydrogen powered

three-wheeler as well as a bio diesel powered Scorpio and

Bolero. The Company is thus well placed to move with the

trend towards alternative energy in both the Sectors, should

it become a norm in future. For instance, in F-09, the

Company introduced micro hybrids in mainstream models

with the path-breaking FuelSmart system on its Scorpio

and Bolero SUVs. FuelSmart technology enables the engine

to shut off automatically at traffic junctions, when idling

or when in neutral gear, thus saving fuel. The engine starts

seamlessly when the driver depresses the clutch to move

forward.

For the Farm Equipment Sector it could lead to a demand

for different types of tractors. To minimize this risk, FES is

customizing products powered by alternate energy like bio

diesel. Your Company has successfully developed engines

capable of running on B100 grade diesel. The Company is

therefore well placed to move with the trend towards

green fuels in both the Sectors, should it become a norm

in future.

Commodity Prices

A major threat to both the Sectors lies in the escalation of

raw material prices. Such price hikes, especially for iron,

steel and rubber are likely to put pressure on prices and

could affect margins or demand. Although commodity

prices have recently declined after peaking in the first half

of F-09, the near to medium term remains unclear given

the uncertainties in the global macro-economic

environment. Any rise in the commodity prices will result

in a rise in input costs, in turn causing price escalation.

This may therefore impact demand with a consequent

impact on the bottom-line if not passed on. The Company’s

Automotive Sector continued to be amongst the most

aggressive in passing on these costs to consumers, but

may not be able to always do so in the future.

Apart from this, a steep increase in crude oil prices globally,

has an inflationary impact on the overall economy.

Risks and Concerns

With the growing integration of the Indian economy with

the Global economy, events around the world have a direct

or indirect impact on the Indian automobile industry. In

particular, Indian financial markets are highly integrated to

global financial markets. As a result, liquidity and availability

of credit, an important facilitator for automobile and tractor

sales in the Indian market, will be impacted by conditions

in the Global markets.

Stringent legislation on pollution and emission requirements

will increase the cost of the Company’s products for the

Automotive Sector. Holding the price line could have an

impact on profitability. Price increases on the other hand

could impact volumes.

The Automotive Sector is in the process of setting up a

new greenfield plant at Chakan, near Pune with significant

investments made by the Company. With the addition of

the full capacity of this new plant, the dedicated final

39


capacity will significantly increase as compared to its current

capacity. If owing to lower than expected demand for its

products, the utilisation of this increased capacity is below

optimal level, the increased fixed costs would impact

profitability in the future. The Company plans to bring in

the incremental capacity from this new plant, phase wise

to protect it from this risk.

In the domestic tractor market, growing NPAs of banks

are a concern for FES, as this puts pressure on fresh loans

and new tractors sales to the farmers, 80 % to 90% of

whom buy tractors against loans. Interest rates for tractor

loans tend to be higher than for housing and car loans.

High interest rates have prevailed throughout the year under

review. If interest rates remain at these levels there could

be an impact on the loan repayment ability of farmers,

thus impacting tractor demand.

For the overseas operations, rupee appreciation could be a

risk for both the Sectors. However, the Company as a

practice, is taking appropriate steps to hedge currency

exposure thus limiting the impact of risk. Both Sectors will

continue to focus on cost cutting measures through value

engineering.

With growing competition for acquisition and retention of

talent, which is ever more important to retain the

Company’s competitive position in the market, availability

of technical and managerial resources at reasonable cost

is an important risk factor

Excise matters

In 1991, an excise dispute arose at the Nashik and Kandivli

factories of the Automotive Sector relating to the

Commander range of ten-seater vehicles manufactured at

these factories. The jurisdictional Central Excise authorities,

after due inquiry, approved the classification of these

vehicles as ten-seaters which attracted a lower rate of

excise duty under Tariff Entry 8702. The Company

successfully contested the subsequent challenge by the

excise authorities, in two different fora. The Excise

Department accepted these decisions and the classification

of the vehicle as a ten-seater was consistently approved by

the authorities. In spite of the above, the Excise Department

subsequently disputed the classification on the ground that

classification of the Commander under Tariff Entry 8702

as ten-seater did not meet certain parameters of the Motor

Vehicles Act, 1988 and the Maharashtra Motor Vehicles

Rules, 1989, and demanded differential duty. The

Department’s stand was that the Commander should be

classified under Tariff Entry 8703, attracting a higher rate

of excise duty. The Company challenged these demands by

writ petitions before the Bombay High Court, which

remanded these matters for adjudication by the Excise

authorities. The Commissioner (Adjudication), Navi Mumbai

passed an order dated 30th March 2005 confirming the

demand of Rs.216.03 crores and imposed a penalty of Rs.

88.08 crores. The Company has filed an appeal and a stay

application in the Tribunal challenging this order. The

Tribunal has granted an unconditional stay against the

demand and penalty in terms of its order dated 9th October

2007.

In another concurrent proceeding, the Tribunal passed an

order in July 2005 holding that the vehicles were

appropriately classifiable under Tariff Entry 8702 as ten-

seaters. The Department has challenged this order by filing

a Civil Appeal, before the Supreme Court, which has been

admitted. The matter is yet to be finally heard. The

Company does not expect any liability on this account as it

has been advised that an extraneous legislation like the

Motor Vehicles Act cannot be referred to for the purpose

of excise classification. The Excise Commissioners, the

Tribunal and various expert/statutory bodies holding the

vehicle to be a ten-seater have accepted this stand. Apart

from the above, the Commissioner of Central Excise, Nashik

has also confirmed a demand of Rs. 24.55 crores and

40

imposed a penalty of Rs.20 lakhs in respect of “Armada”

range of vehicles manufactured by its Nashik Unit during

the period 1992 to 1996, on the same basis as adopted

for Commander range of vehicles. The Tribunal was pleased

to grant an unconditional stay against this order as well.

The final hearing in both the above matters is awaited.

Outlook

There is a strong linkage between the strength of the

automotive industry and the strength of the economy of a

country. High growth of the industry, through its forward

and backward linkages, leads to accelerated growth of the

economy, which in turn leads to a higher growth for the

automotive industry in a virtuous cycle. After six years of

rapid growth, Indian economy and the automotive industry

slowed down significantly in F-09. Despite this, the Indian

automotive industry was and is likely to remain one of the

fastest growing automotive industries in the world.

In the medium term, the Indian economy is projected to

return to brisk growth and demand conditions, in the

medium to long term, are expected to remain strong.

However, in the near term, due to continued uncertainties

in the global and domestic macro-economic environment,

the outlook for the automobile industry is one of cautious

optimism. While there are positive developments such as

increased pay of Central Government Employees (as part

of Sixth Pay Commission recommendations), lower inflation,

lower interest rates and softer commodity prices, there are

also significant challenges stemming from slowing

economic growth, lower business and consumer confidence

and tightening of credit standards.

In this environment, your Company is banking upon new

products to maintain its sales momentum. The recently

launched Mahindra Xylo (Project Ingenio) and the refreshed

Scorpio which have received encouraging response in the

market place would be a key contributor to the Company’s

MUV sales in F-10. In addition, the Company will also

launch new products to address previously unaddressed

market segments.

Given the overall thrust on agricultural development by

the Government, the scenario for FES is encouraging. For

F-09, the Government of India has proposed to allocate

Rs. 2.8 lakh crores for agricultural credit, which is expected

to give a boost to the tractor industry. Moreover, there is a

strong focus on irrigation projects and investment for

development of rainless areas with an outlay of Rs. 20,000

crores. The Government’s emphasis on rural economic

development and support to the agriculture sector will

create opportunities for growth in farm mechanization.

In the international market, FES plans to expand aggressively

into newer markets and strengthen its presence in existing

markets.

Both sectors with their updated product portfolios and

their exploration of global horizons, will strive to maintain

their leadership position. Simultaneously, the Company will

continue its focus on achieving cost leadership through

focused cost optimization, 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

The long-term objective of all HR / IR is to create a culture

of sustained business outperformance accompanied by

extreme care for all stakeholders, while sustaining and

strengthening the core values of the Group.

Given the business imperatives in the current economic

slowdown, the focus during the year was on aligning all

HR levers to support the initiatives for cost control and

conservation of cash, while creating the required capabilities

41


in the workforce and ensuring organizational confidence

and employee motivation that would enable the Company

to face current challenges and seize future opportunities.

A major challenge was to find a sense of balance between

the short and the long term, and to honour the Triple

Bottom Line of profit, people and planet.

The focus on cost control from the HR perspective resulted

in changes in the organization structure and work design,

a review of the number of employees along with salary

levels and incentive schemes, and the right level and mix

of skills.

The focus on making Mahindra a Great Place to Work

continued through significant improvements in physical

infrastructure and work place ambience, employee

engagement, and harnessing the power of IT. Specific

employee engagement initiatives were either introduced

or intensified, and continue to be tracked by the Gallup

Engagement Index.

Performance Management continued to be the backbone

of all HR activities, and goal-setting received a lot of focus

in the year under review.

The Talent Management process has grown in strength

during the year. Succession planning for critical positions,

use of development centres and creating a large number

of coaches and mentors, continued to be high on the

priority list, along with cross-business rotation of employees.

Pre-merger HR diligence and post-merger integration were

important activities, both for domestic as well as global

acquisitions.

The training centre at Bodhi Vriksha in Nashik has been

humming with activity with both the Mahindra

Management Development Centre (MMDC) and the

Mahindra Institute of Quality (MIQ) working closely with

businesses to create the competencies required for the

success of strategic business plans. Special mention needs

to be made of the Mahindra Quality Way, a process that is

being embraced by businesses across the Group. In

addition, technical and functional programmes are

conducted by the businesses, where the use of e-learning

portals is increasing exponentially.

Employer Branding as a formal process took a big leap

forward with the “War Room” an event in which 16 of the

top Business Schools of India participated through 784

teams and over 3000 students. The Company believes this

has already impacted the Mahindra Brand in this

community, with the Company getting a slot on day one

in most campuses visited for hiring.

CSR and employee volunteering through the Employee

Social Option activities are an important element of the

Mahindra culture. The number of volunteers has reached

14500, and activities continue to focus on education (with

special emphasis on the girl child), the environment and

public health. Special mention needs to be made of the

Mahindra Hariyali project through which Mahindra Group

planted 1.2 million trees in the past year.

In the Automotive Sector, Industrial Relations remained

cordial and harmonious during the year under review.

Various training programs were organized at all plants for

developing personal, interpersonal and technical skills of

the workmen. These training programs covered a wide

range of topics including Positive Attitude, Stress

Management, Creativity, Team Effectiveness, Safety and

Environment, Quality Tools, TPM, Dexterity and Technical

training. The workmen wholeheartedly participated in all

training programs and in many cases on a holiday or after

working hours.

Workmen at all locations are involved in driving

improvement activities. For the year under review, a total

of over 42,000 suggestions were implemented which is a

record for the Automotive Sector.

42

FES saw cordial industrial relations at all its locations &

area offices during the year. Manpower utilization was at

an effective level of almost 100%, barring the slack months

of December and January, when production cuts were

necessary to respond to the market situation following the

global economic meltdown. Employee communication,

through ‘Reach Out’ – a two way internal communication

process – played an important role in rallying employee

enthusiasm and performance, despite the challenging

circumstances.

The integration of acquired companies was an important

activity requiring intense HR inputs. Of particular note,

was the swift and smooth harmonization and rolling out

of key HR processes and policies in the ‘Swaraj Division’

post the merger with your Company.

At FES, the workmen participation continued to be major

thrust area under the ‘Akraman’ (War on Waste) movement,

while the Yellow Belt programme encouraged officers to

acquire proficiency in Systematic problem solving and

demonstrate its application through successful completion

of complex projects. Both these programmes have

contributed to system improvements and cost savings.

To create a vibrant workplace, both the Sectors embarked

on the ‘Fun at Workplace’ initiative through sector-wide

plant and department centric events, sometimes involving

families of employees.

The permanent Employee strength of the Company as on

31st

March, 2009 was 16094.

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.

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 of the Annual Report. 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

1. Fixed Assets:

As at 31st

March, 2009 the Gross Block of Fixed Assets

and Capital Work in Progress was Rs. 5,540.62 crores as

compared to Rs. 4,202.58 crores as at 31st

March, 2008.

During the year, the Company incurred capital expenditure

of Rs. 895.90 crores (previous year Rs. 754.27 crores). The

major items of capital expenditure were on New Product

Development, Capacity Enhancement, and Research &

Development. This included purchase of Intangible assets

aggregating Rs.169.86 crores (previous year Rs.71.42

crores). The Gross Block for the year has also increased by

Rs.308.71 crores on account of the additions of Fixed

Assets due to the merger of Punjab tractors Limited (PTL)

with the Company.

43


2. Inventories:

March 31, 2009 March 31, 2008

Raw materials and bought out components as a % of consumption 4.46% 4.66%

Finished goods as a % of gross sales 3.31% 4.68%

The reduction in inventory levels is due to focus on supply chain management and better planning and control.

Sundry Debtors:

Sundry debtors amount to Rs. 1,043.65 crores as at March 31, 2009, as compared with Rs. 1,004.88 crores as at March

31, 2008. Debtors as a percentage of gross sales and income from operations are 7.09% for the year ended March 31,

2009, as compared to 7.67% for the previous year. The Company has been able to achieve this improvement in its

debtors level due to its proactive emphasis on collections.

Results of Operations

Income : (Rupees crores)

Particulars F – 2009 F – 2008 Inc./(Dec.)

Amount % Amount % %

Gross Sales 14,268.41 112.80 12,371.03 114.50 15.34

Less : Excise Duty on Sales 1,619.35 12.80 1,566.39 14.50 3.38

Net Sales 12,649.06 100.00 10,804.64 100.00 17.07

Income from Operations 444.62 3.52 736.63 6.82 (39.64)

Other Income 270.34 2.14 130.37 1.21 107.36

Income from Operations & Other Income:

The income from operations in the current year is lower mainly on account of the transfer of the Company’s logistics

business to its wholly owned subsidiary from the beginning of the current year. Other income during F-2009 at

Rs.270.34 crores is more than double of Rs.130.37 crores earned in the previous year. This increase is on account of

higher dividends received from the subsidiaries, profit on sale of Swaraj Mazda shares and higher income from increased

level of surplus funds arising from the PTL merger.

44

Expenditure: (Rupees Crores)

Particulars F – 2009 F – 2008 Inc./(Dec.)

Amount % to Net Amount % to Net %

Sales & Income Sales & Income

from Operations from Operations

Raw materials, Finished and

Semi-finished Products 9,274.23 70.83 7,725.91 66.94 20.04

Personnel expenses 1,024.61 7.83 868.14 7.52 18.02

Interest, commitment and finance charges 45.26 0.35 24.24 0.21 86.72

Depreciation/Amortisation 291.51 2.23 238.66 2.07 22.14

Other expenses 1,702.21 13.00 1,580.65 13.70 7.69

Total Expenditure 12,337.82 94.23 10,437.60 90.44 18.21

The total expenditure during the year as a percentage of

Net sales / Income from Operations is 94.23% as compared

to 90.44 % in the previous year.

Material Cost :

For the year ended March 31, 2009, material cost as a

percentage of net sales shows an increase over the previous

year mainly due to the significant increases in material

costs in the first half of the current year, lower closing

inventory and lower income from operations due to the

transfer of logistics business.

Personnel Cost :

Personnel cost as a percentage of sales has increased from

7.52 % to 7.83 %. This is mainly due to increase in officers’

strength, annual increments and refinements in actuarial

assumptions affecting calculation of gratuity.

Other Expenses :

Other expenses as a percentage of net sales shows a

decrease over the previous year as a percentage to net

sales and operating income mainly due to the freight cost

reduction on transfer of logistics business. However, the

expenses in absolute terms are higher due to losses on

account of forward cover cancellations arising from lower

than planned exports due to global recession and increase

in professional fees on acquisitions, corporate branding,

etc.

Depreciation :

The depreciation for the year ended March 31, 2009 is at

Rs. 291.51 crores as compared to Rs. 238.66 crores in the

previous year due to capitalization of the Xylo related assets

and the increase in amortization of intangibles in the

current year.

Interest (Net) :

The interest expense of Rs.45.26 crores (net of interest

income of Rs.134.12 crores) for the year ended March 31,

2009 is higher than the interest expense of Rs.24.24 crores

45


(net of interest income of Rs.87.59 crores) in the previous

year due to increased borrowings to meet the Company’s

capital expenditure and other growth plans.

Exceptional Items :

The profit from Exceptional items during the year ended

31st

March, 2009 is Rs.10.27 crores as against Rs.172.73

crores last year. The profit in the current year is on

account of surplus on transfer of the Company’s logistics

business to its wholly owned subsidiary. In the previous

year, the profit was due to the gain from the valuation

of certain shares received by the Company under two

court approved merger schemes at the fair value of the

shares parted with in exchange for them.

Provision for taxation :

The provision for current tax, fringe benefit tax and

deferred tax for the year ended 31st

March, 2009 as a

percentage to profit before tax is lower than the previous

year, on account of a higher tax-free dividend income

during the year and increased profits in a new plant

eligible for deduction under Section 80IC of the Income-

tax Act, 1961.

Consolidated Financial Position of the M&M

Group

During the year, the Group acquired Metalcastello S.p.A

and Engines Engineering S.r.l both of which became

subsidiaries of the Company. In addition to these, the

Company also acquired the two wheeler business of

Kinetic Motor Company Ltd., through its newly formed

subsidiary Mahindra Two Wheelers Ltd. During the year,

two of the Company’s subsidiaries Mahindra Holdings

& Finance Limited and Punjab Tractors Limited, merged

with the Company under two separate Schemes of

Amalgamation approved by the High Courts of Bombay

and Punjab and Haryana. As on 31st

March, 2009 the

Group comprised of the flagship holding company,

Mahindra & Mahindra Limited, 97 Subsidiaries, 4 Joint

Ventures and 11 Associates engaged in various businesses.

The Gross turnover for the year ended 31st March 2009 of

Consolidated Mahindra Group is Rs.28,991.99 crores as

against Rs.26,600.11 crores for the previous year. The

Group’s net turnover grew by 10.12 % to Rs.26,919.81

crores in the current year from Rs.24,445.29 crores in the

previous year. The profit before exceptional items and tax

for the current year is Rs.2,330.51 crores as compared to

Rs.2,798.27 crores in the previous year. The Group results

were adversely affected by the downturn in the automotive

and auto-components industry the world over and the

consequent poor showing during the year of the Company’s

subsidiaries operating in these industries. The sharp

depreciation in the value of the Indian rupee also

contributed significantly to the overall decline in the Group

profits. During the year, there was an exceptional charge

of Rs.156.87 crores arising mainly on account of

impairment of assets of a group company and a profit of

Rs.86.29 crores on account of deemed divestiture of

Mahindra First Choice Wheels Ltd and Mahindra Residential

Developers Ltd and the divestment of the holding in

Mahindra Retail Pvt Ltd. The consolidated Group Profit for

the year after exceptional items, prior period adjustments

and tax and after deducting minority interests is Rs.1,405.41

crores as against Rs.1,571.12 crores earned last year.

The Group’s major IT subsidiary, Tech Mahindra Limited

(Consolidated), witnessed a Revenue growth of 14.38 %

with total income increasing from Rs. 3,870.50 crores last

year to Rs.4,426.90 crores in the current year. The profit

after tax before exceptional items for the year was Rs.

1,014.56 crores as compared to Rs.769.50 crores in the

previous year – an increase of 31.85 %.

The Group’s Finance company, Mahindra & Mahindra

Financial Services Limited, despite interest volatility, credit

46

squeeze and stiff competition, achieved a 12.87 % growth

in its total income from Rs. 1,226.80 crores to Rs. 1,384.66

crores. It is one of the leading NBFCs in financing of four

wheelers and its profit after tax grew by 21.18 % from Rs.

177.02 crores in the previous year to Rs. 214.52 crores in

the current year.

Mahindra Holidays and Resorts India Ltd., during the year

under review, continued to grow towards dominance in

the Holiday Segment with membership growing by 26.24%

from 73,533 numbers to 92,825 numbers. The total income

grew by 18.47% from Rs. 375.04 crores to Rs. 444.31

crores. The profit after tax for the year registered a modest

increase from Rs. 80.52 crores in F-2008 to Rs 83.41 crores

in F-2009.

Segment Results

The results achieved by major business segments of the Group are given below:

(Rupees Crores)

Segments F-2009 F-2008

1. Automotive 100.85 741.25

2. Farm Equipment 667.85 603.49

3. Financial Services 333.91 279.14

4. Trading 94.80 88.32

5. Infrastructure 112.08 75.21

6. Hospitality 93.66 108.47

7. IT Services 1,126.28 361.92

8. Systech 21.18 199.74

9. Others (46.71) 118.83

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.

47


Corporate Governance

Your Company is committed to transparency in all its

dealings and places high emphasis on business ethics. It is

committed to all its Stakeholders including fulfilling its

Societal obligations. 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 your Company received

the National Award for Excellence in Corporate Governance

from The Institute of Company Secretaries of India

highlighting the good Corporate Governance systems and

practices adhered to by the Company. CRISIL has also

re-affirmed the highest level rating (Level 1) for Governance

and Value Creation. 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 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.

I. Board of Directors

The composition of the Board is in total conformity with

Clause 49 of the Listing Agreement, as amended from

time to time. The Non–Executive 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 results of management to ensure

that the long term objectives of enhancing stakeholders’

value are met.

The Vice-Chairman & Managing Director and the two

Executive Directors are Whole-time Directors. The Chairman

and the Vice-Chairman & Managing Director, though

professional Directors in their individual capacities, belong

to the Company’s promoter group. The remaining Non-

Executive Directors (including the Nominee Director) are

Independent Directors and have 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 Independent Directors.

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.

Khaitan & Co., Advocates & Solicitors, in which Mr. R. K.

Kulkarni, Non-Executive Director is a partner, received

professional fees of Rs.85.63 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.

48

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, 2009

Committee Committee Directorships $

Memberships+ Chairmanships+

NON-EXECUTIVE

Mr. Keshub Mahindra Promoter 1 1 6

(Chairman)

Mr. Deepak S. Parekh Independent 7 5 13

Mr. N. B. Godrej Independent 3 1 14

Mr. M. M. Murugappan Independent 5 4 8

Mr. Narayanan Vaghul Independent 2 1 11

Dr. A. S. Ganguly Independent 2 1 5

Mr. R. K. Kulkarni Independent 7 2 9

Mr. Anupam Puri Independent 2 1 5

Mr. Arun Kanti Dasgupta** Independent 2 - 4

EXECUTIVE

Mr. Anand G. Mahindra Promoter 1 - 12

(Vice-Chairman &

Managing Director)

Mr. Bharat Doshi Non-independent 4 2 10

(Executive Director)

Mr. A. K. Nanda Non-independent 7 4 14

(Executive Director)

* 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.

** appointed with effect from 30th

July, 2008.

49


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 Company’s

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

Seven Board Meetings were held during the year 1st

April,

2008 to 31st

March, 2009 on the following dates -3rd

May,

2008, 28th

May, 2008, 30th

July, 2008, 29th

October, 2008,

31st

January, 2009, 13th

February, 2009 and 26th

March,

2009. The gap between two Meetings did not exceed four

months. These Meetings were well attended.

The Sixty-second Annual General Meeting (AGM) of the

Company was held on 30th

July, 2008.

The attendance of the Directors at these Meetings is as under:

Directors Number of Board Attendance at the

Meetings Attended AGM

Mr. Keshub Mahindra 7 Yes

Mr. Anand G. Mahindra 5 Yes

Mr. Deepak S. Parekh 6 Yes

Mr. N. B. Godrej 5 Yes

Mr. M. M. Murugappan 4+ Yes

Mr. Bharat Doshi 6# Yes

Mr. A. K. Nanda 7 Yes

Mr. Narayanan Vaghul 5$ Yes

Dr. A. S. Ganguly 7 Yes

Mr. R. K. Kulkarni 6 Yes

Mr. Anupam Puri 5 Yes

Mr. Thomas Mathew T. * 1 No

Mr. Arun Kanti Dasgupta ** 4 Yes

* resigned with effect from 30th

July, 2008.

** appointed with effect from 30th

July, 2008.

+ In addition to attending four Board Meetings, Mr. Murugappan participated in two Board Meetings through

teleconference. No sitting fee was paid for participation through teleconference.

# In addition to six Board Meetings, Mr. Doshi participated in one Board Meeting through teleconference.

$ In addition to five Board Meetings, Mr. Vaghul participated in two Board Meetings through teleconference. No

sitting fee was paid for participation through teleconference.

50

D. Directors seeking appointment/re-appointment

Mr. Deepak S. Parekh, Mr. Bharat Doshi and Mr. Narayanan

Vaghul retire by rotation and, being eligible, have offered

themselves for re-appointment. Mr. Arun Kanti Dasgupta

has been appointed in the casual vacancy caused on

account of withdrawal of nomination of Mr. Thomas

Mathew T. representing Life Insurance Corporation of India

at the Meeting of the Board of Directors held on 30th

July,

2008. Mr. Dasgupta holds office upto the date of

forthcoming Annual General Meeting as Mr. Mathew, in

whose place he has been appointed, would have retired

by rotation at the forthcoming Annual General Meeting. A

Notice has been received from a Member proposing the

candidature of Mr. Dasgupta for the office of Director.

Mr. Deepak S. Parekh

Mr. Deepak Parekh, is the Chairman of Housing Development

Finance Corporation Limited (HDFC), India’s premier Housing

Finance Institution. A Chartered Accountant by profession,

he has been with HDFC for 28 years. Under his leadership,

HDFC has grown from its humble beginning, into a financial

powerhouse with its activities diversifying into Banking, Asset

Management, Life Insurance, General Insurance, BPO, Credit

Bureau and Real Estate Venture Fund. The HDFC Group has

an asset base of over Rs.3,50,000 crores and a customer

base of over 3.5 crores.

Besides HDFC, Mr. Parekh is on the Board of several leading

Corporations across diverse sectors. He is the Non-Executive

Chairman of Infrastructure Development Finance Company

Limited, GlaxoSmithkline Pharmaceuticals Limited, Siemens

Limited and Lafarge India Private Limited. He is also the

Chairman of HDFC Asset Management Company Limited,

HDFC Ergo General Insurance Company Limited & HDFC

Standard Life Insurance Company Limited and Director of

Hindustan Unilever Limited, Hindustan Oil Exploration

Company Limited, Castrol India Limited, The Indian Hotels

Company Limited, WNS Global Services Private Limited and

Singapore Telecommunications Limited, along with being

the Alternate Director of Borax Morarji Limited, Zodiac

Clothing Company Limited, Bharat Bijlee Limited and Exide

Industries Limited. In addition, he is also nominated by the

Ministry of Corporate Affairs to the Board of Satyam

Computer Services Limited as a Special Director and

nominated by the Ministry of Civil Aviation to the Board of

Airports Authority of India.

Mr. Parekh is widely consulted by the Government on a

wide range of issues of national importance and has been

a member of various Government appointed committees

and advisory panels, which include financial services, capital

markets and infrastructure sector reforms.

As a member of the Investment Commission appointed by

the Government of India, the three-member committee is

expected to make recommendations to the Government

both on policies and procedures to facilitate greater FDI

inflows into India. He is Chairman of the Committee

appointed by the Ministry of Finance to make

recommendations on Infrastructure Financing, Chairman

of the High Level Task Force constituted by the Government

of India to look into various aspects of providing affordable

housing for all, Chairman of the Expert Group for

recommending investment norms for New Pension Scheme

(NPS) to be launched by the Pension Fund Regulatory &

Development Authority and member of the Audit Advisory

Board constituted by the Comptroller & Auditor General of

India (C&AG).

A recipient of the ‘Padma Bhushan’ in 2006, he has also

received several awards including the ‘IMC Juran Quality

Medal 2008’ for excellent customer-centric work in various

initiatives relating to the field of Banking & Finance by the

Indian Merchants Chamber (IMC), Outstanding Business

Leader of the Year 2008 by CNBC, NDTV Business Leader

of the Year Award – 2008, ’Life Time Achievement Award

2007’ by Finance Asia, ‘Best Non Executive Director 2006’

by the Asian Centre for Corporate Governance, ‘The

Economic Times Life Time Achievement Award’ in 2003,

the ‘JRD Corporate Leadership Award’ in 1997 and

‘Businessman of the Year’ by Business India in 1996.

51


Mr. Parekh is a Member of following Board Committees:

Sr. No. Name of the Company Name of Committee Position held

1. Mahindra & Mahindra Limited Audit Committee Chairman

2. The Indian Hotels Company Limited Audit Committee Member

3. GlaxoSmithkline Pharmaceuticals Limited Audit Committee Chairman

Investors Grievance Committee Chairman

4. Castrol India Limited Audit Committee Chairman

5. Hindustan Unilever Limited Audit Committee Chairman

6. Infrastructure Development Finance Company Remuneration Committee Member

Limited

7. Siemens Limited Remuneration Committee Member

Audit Committee Member

Mr. Deepak Parekh holds 52,754 Ordinary (Equity) Shares

in the Company.

Mr. Bharat Doshi

Mr. Bharat Doshi joined the Company in 1973 as an

Executive. He is a fellow member of The Institute of

Chartered Accountants of India and The Institute of

Company Secretaries of India and has a Master’s Degree

in Law from the University of Bombay. He has participated

in the Program for Management Development at Harvard

Business School. He was also a Fellow of the Salzburg

Seminar on ‘Asian Economies: Regional and Global

Relationships’ held in December, 2000. Mr. Doshi was

Executive Vice President (Corporate Affairs) from July, 1991

to August, 1992. In August, 1992, he joined the Board of

the Company as Executive Director in charge of Finance &

Accounts, Corporate Affairs and Information Technology.

In addition, he was the President of the Trade & Financial

Services Sector from December, 1994 to October, 2007.

Mr. Doshi is presently designated as Executive Director and

Group Chief Financial Officer (Group CFO). Mr. Doshi is

Chairman of Mahindra & Mahindra Financial Services

Limited and Mahindra Intertrade Limited. He is Director of

several companies in the Mahindra Group, including Tech

Mahindra Limited, Mahindra Holdings Limited, Mahindra

Navistar Automotives Limited, Mahindra Navistar Engines

Private Limited and Mahindra USA Incorporated and also

a Director of Mumbai Mantra Media Limited. He was also

a Director on the Board of Ford affiliate in India from May,

1997 to March, 2005.

He is an Independent Director on the Boards of Godrej

Consumer Products Limited and NSE.IT Limited.

He is a Trustee of the Mahindra Foundation and the K.C.

Mahindra Education Trust. He is also on the Board of

Governors of the Mahindra United World College of India.

He was a Member of the Board of Governors of Indian

Institute of Management, Kozhikode, from September,

1997 to March, 2008. He was a member of the Managing

Committee of Bombay Chamber of Commerce & Industry

52

from May, 2005 to May, 2007. He was one of the Founding

Members of the Governing Council of In Act (Indian

Association of Corporate CFOs & Treasurers).

Mr. Doshi was a member of the High Powered Expert

Committee constituted by the Ministry of Finance,

Government of India, on making Mumbai an International

Financial Centre and is a member of the SEBI (Securities

and Exchange Board of India) Committee on Disclosures

and Accounting Standards (SCODA).

Mr. Doshi is presently the Vice President of Bombay

Chamber of Commerce & Industry (BCCI), a premier

Business Chamber and President-elect for the year

2009-10.

Mr. Doshi has addressed at several international and

domestic fora on economic and management topics over

the years.

Recently, Mr. Doshi was invited to speak at the OECD’s

(Organisation for Economic Cooperation and Development)

EmNet (Emerging Market Networks) international

discussions meet in Paris on “Emerging Multinationals:

Partnering into New Markets” and “Closing the Emerging

World Infrastructure Gap: Is there a Role for the Private

Sector?”

Mr. Bharat Doshi was adjudged ‘India’s Best CFO’ by the

leading business fortnightly Business Today (India Today

Group Publication) in April, 2005. He was also conferred

the ‘CFO of the Year’ Award, honouring financial excellence,

instituted by IMA India, an associate of The Economist

Group, in December, 2005. In November, 2007, Mr. Bharat

Doshi was honoured with the prestigious CNBC CFO of

the Year 2007 award.

Mr. Doshi is a Member of following Board Committees:


1. Mahindra & Mahindra Limited Share Transfer and Shareholders/Investors Member

Grievance Committee

Loans & Investment Committee Member

Research & Development Committee Member

Corporate Social Responsibility Committee Member

2. Mahindra Intertrade Limited Compensation Committee Member

3. Mahindra Navistar Automotives Limited Audit Committee Chairman

4. Godrej Consumer Products Limited Audit Committee Chairman

Human Resource Committee Member

Nominations Committee Member

Compensation Committee Member

5. Mahindra & Mahindra Financial Services Limited Loans & Investment Committee Member

Compensation Committee Member

6. Mahindra Navistar Engines Private Limited Audit Committee Member

Remuneration Committee Member

Mr. Doshi holds 2,51,516 Ordinary (Equity) Shares in the Company.

53


Mr. Narayanan Vaghul

Mr. Narayanan Vaghul was Chairman of the Board of ICICI

Bank Limited till April, 2009. Mr. Vaghul joined ICICI in

1985 as Chairman and CEO and relinquished his position

as CEO in 1996. During his eleven years tenure as CEO,

ICICI was transformed from a small size long term credit

bank to a large diversified financial conglomerate. He was

instrumental in starting an investment bank, commercial

bank, venture capital company and an asset management

company, as part of the ICICI Group. He was also

responsible for the promotion of India’s first credit rating

company (CRISIL), which has since emerged as a market

leader in the region. In recognition of his pioneering efforts

he was selected as the “Business Man of the Year” in

1992, by Business India, a leading business magazine and

has been conferred the “Lifetime Achievement Award” by

Economic Times in 2006.

Mr. Vaghul is also on the Board of several companies. He

is on the Board of Mahindra World City Developers Limited,

Arcelor Mittal, Luxembourg, Wipro Limited, Piramal Health

Care Limited, National Aviation Company of India Limited,

IAL Airport Services Limited, Air India Air Transport Services

Limited, Air India Engineering Services Limited, Apollo

Hospitals Enterprise Limited, Arcelor Mittal Europe and

Hemogenomics Private Limited.

Mr. Vaghul was a visiting professor in the Stern Business

School of New York University teaching a regular 3 credit

course titled “Emerging Economies” to the MBA students

during the fall semester from 1998 to 2001. This course

has been quite popular with the students and has received

a very high rating in the student evaluation.

Mr. Vaghul is also connected intimately with education.

He is the Chairman of IFMR (a business school based in

Chennai). He is also the Chairman of a Public Trust known

as Pratham, a highly successful and well regarded NGO,

which has as its goal, universalization of primary education

throughout the country.

Mr. Vaghul has been closely associated with the policy

formulation at the national level. He was the Chairman of

several committees and task forces constituted by the

Government and the Reserve Bank of India. He also served

for a while as the Chairman of Foreign Investment Advisory

Board constituted by the Government. Mr. Vaghul has

handled several assignments for Asian Development Bank,

IFC and the World Bank.

Mr. Vaghul graduated from the Madras University in 1956,

and joined State Bank of India, the largest commercial

bank in India in 1957 as a career banker. He occupied

various positions in that Bank before joining the Board of

the Central Bank of India, the second largest commercial

bank in 1978. He became Chairman of Bank of India, an

equally large commercial bank in 1981 and had the

distinction of being appointed as the youngest ever

Chairman in a State-owned bank.

Mr. Vaghul is a Member of following Board Committees:


1. Mahindra & Mahindra Limited Remuneration/Compensation Committee Chairman

2. Mahindra World City Developers Limited Remuneration Committee Member

3. Wipro Limited Audit Committee Chairman

Board Governance and Compensation Committee Member

4. Nicholas Piramal India Limited Compensation Committee Chairman

Audit Committee Member

5. Apollo Hospitals Enterprise Limited Remuneration Committee Member

Mr. Narayanan Vaghul holds 46,664 Ordinary (Equity) Shares in the Company.

54

Mr. Arun Kanti Dasgupta

Mr. A.K. Dasgupta, a direct recruit of 10th

Batch hails from

Assam. He is a Science Graduate from Dibrugarh University

and also PGDBM from Punjab University. Mr. Dasgupta

has served Life Insurance Corporation of India (LIC) in many

important assignments such as Senior Divisional Manager

of Guwahati and Karnal Divisions, Deputy General Manager,

LIC (International) Bahrain, Regional Manager (Marketing),

Western Zone, Mumbai, Chief Executive, LIC Housing

Finance, Mumbai, Zonal Manager, Central Zone, Bhopal

and Executive Director (SBU-International Operations/

Corporate Communications). Apart from being associated

with many organizational development programmes in LIC,

he was also instrumental in introducing many new initiatives

during his tenure as CEO with LIC Housing Finance Limited

and Executive Director (SBU-International Operation/

Corporate Communications). He is currently Managing

Director of Life Insurance Corporation of India.

Mr. Dasgupta is also a Director of Asean Brown Boveri

(ABB) Limited, LIC (Nepal) Limited, LIC (Mauritius) Offshore

Limited, Saudi Indian Company for Co-op. Insurance, LIC

Pension Fund Limited and Grasim Industries Limited.

Mr. Dasgupta is a Member of following Board Committees:


1. Asean Brown Boveri (ABB) Limited Audit Committee Member

2. LIC (Nepal) Limited Audit Committee Chairman

3. Saudi Indian Company for Co-op. Executive Committee Chairman

Insurance

4. LIC Pension Fund Limited Audit Committee Member

Mr. Arun Kanti Dasgupta does not hold any Shares in the

Company.

E. 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 Company’s 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.

F. 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, 2009.

II. Remuneration to Directors

A. Remuneration Policy

While deciding on the remuneration for Directors, the

Board, Remuneration/ Compensation Committee

(“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

Company’s remuneration policies.

55


B. Remuneration to Non-Executive Directors for the

year ended 31st

March, 2009

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. 96 lakhs has been provided as payable to the eligible

Non-Executive Directors in the accounts of the year under

review.

During the year under review, the Non-Executive Directors

were paid a commission of Rs.96 lakhs (provided in the

accounts for the year ended 31st

March, 2008), distributed

amongst the Directors as under:

(Rs. in Lakhs)

Directors Commission for the year ended

31st

March, 2008, paid during

the year under review

Mr. Keshub Mahindra 32.00

Mr. Deepak S. Parekh 8.00

Mr. N. B. Godrej 8.00

Mr. M. M. Murugappan 8.00

Mr. Narayanan Vaghul 8.00

Dr. A. S. Ganguly 8.00

Mr. R. K. Kulkarni 8.00

Mr. Anupam Puri 8.00

Mr. Thomas Mathew T.* (Nominee of LIC) 8.00#

# The Commission is paid to the Nominating Financial Institution.

* resigned with effect from 30th

July, 2008.

Non-Executive Directors are also paid a sitting fee of Rs.10,000 for every Meeting of the Board or Committee attended.

The sitting fees paid to Non-Executive Directors for the year ended 31st

March, 2009 along with their shareholdings are as under:

Directors Sitting Fees for the Board No. of Ordinary (Equity)

and Committee Meetings Shares held as on

paid during the year 31st

March, 2009

ended 31st

March, 2009

(Rs. in Lakhs)

Mr. Keshub Mahindra 1.10 2,01,148

Mr. Deepak S. Parekh 1.10 52,754

Mr. N. B. Godrej 1.10 1,81,421

Mr. M. M. Murugappan 1.00 46,664

Mr. Narayanan Vaghul 0.70 46,664

Dr. A. S. Ganguly 0.90 46,664

Mr. R. K. Kulkarni 1.70 45,452

Mr. Anupam Puri 0.50 43,332

Mr. Thomas Mathew T.** (Nominee of LIC) 0.10* Nil

Mr. Arun Kanti Dasgupta *** (Nominee of LIC) 0.40* Nil

* Sitting Fees for Board Meetings were paid to LIC.

** resigned with effect from 30th

July, 2008.

***appointed with effect from 30th

July, 2008.

56

35,000 Stock Options granted in June, 2005 to the Non-

Executive 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. 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, 2009:

Remuneration to Whole-time Directors is fixed by the

Remuneration / Compensation Committee which is

subsequently approved by the Board of Directors and

Shareholders at a General Meeting.

Following is the remuneration paid/payable to the Whole-

time Directors during the year ended 31st

March, 2009:

(Rs. In Lakhs)

Directors Salary Comm- Company’s Perquisites Total Contract No. of No. of No. of No. of

ission Contribu- and Period Options Options Options Options

tion to allowances granted granted in granted granted

Funds* in June, September, in July, in August,

2005$ 2006 $$ 2007$$$ 2008$$$$

Mr. Anand G. 63.00 96.47 17.01 36.26 212.74 4th

April, Nil Nil Nil Nil

Mahindra 2007 to

(Vice-Chairman 3rd

April

& Managing 2012

Director

Mr. Bharat Doshi 57.00 61.79 15.39 16.29 150.47 28th

August, 10,000 11,345 8,362 29,039

(Executive Director) 2007 to

27th

August,

2012

Mr. A. K. Nanda 57.00 61.79 15.39 18.28 152.46 28th

August, 10,000 11,345 8,362 24,890

(Executive Director) 2007 to

27th

August,

2012

* Aggregate of the Company’s contributions to Superannuation Fund, Provident Fund, Gratuity and Privilege Leave Encashment.

Options granted on Vesting period Exercise period Exercise price

$ June, 2005 Already vested in June, 2006 Within five years from Rs.454 per share#

the date of vesting

$$ September, 2006 Four equal instalments On the date of Vesting or Rs.616 per share

in September 2007, 2008, 2009 and 2010 within five years from

respectively the date of Vesting

$$$ July, 2007 Four equal instalments On the date of Vesting or Rs.762 per share

in July, 2008, 2009, 2010 and 2011 within five years from


$$$$ August, 2008 Four equal instalments On the date of Vesting or Rs.500 per share

in August, 2009, 2010, 2011 and 2012 within five years from


# 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.

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 Option and Commission are the only components of remuneration that are performance-linked. All

other components are fixed.

57


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.

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 arm’s length basis. Generally all items listed

in Clause 49 II (D) of the Listing Agreement are covered in

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 62nd

Annual General Meeting of the Company held

on 30th

July, 2008.

The Committee met five times during the year under review

and 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) 4

Mr. R. K. Kulkarni 5

Mr. N. B. Godrej 4

Mr. M. M. Murugappan 4

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

individual’s 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.

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.

58

The Committee met once during the year under review

and all Members of the Committee attended the same.

C. Share Transfer and Shareholders/Investors

Grievance Committee

The Company’s 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

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 expediting the process

of share transfers, Mr. A. K. Nanda, Executive Director as

well as Mr. Narayan Shankar, Company Secretary of the

Company are severally authorised to approve 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. Both the

Meetings were well attended by its Members. During the

year, 20 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.

The Committee held two Meetings during the year under

review, which were well attended.

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

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.

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. However, 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.

VI. Disclosures

A. Disclosure of transactions with Related Parties

During the financial year 2008-09, there were no materially

significant transactions entered into between the Company

59


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 “30” 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.

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.

VII.Shareholder Information

1. 63rd

Annual General Meeting

Date : 30th

July, 2009

Time : 3:30 p.m.

Venue : Y B Chavan Centre

General Jagannathrao Bhosale Marg,

Next to Sachivalaya Gymkhana,

Mumbai - 400 021.

2. Dates of Book Closure/Record Date

Dates of Book Closure for Dividend will be from 11th

July, 2009 to 30th

July, 2009, both days inclusive.

3. Date of Dividend Payment

Date of payment of Dividend would be on or after

31st

July, 2009.

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, 2009 - End July, 2009

Half-year ending

30th

September, 2009 - End October, 2009

Quarter ending

31st

December, 2009 - End January, 2010

Year ending

31st

March, 2010 - End May, 2010

Note: The above dates are indicative.

5. Registered Office

Mahindra & Mahindra Limited

Gateway Building,

Apollo Bunder,

Mumbai - 400 001.

6. Listing of Ordinary (Equity) Shares and Debentures

on Stock Exchanges

The Company’s 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.

60

0

100

200

300

400

500

600

700

800M&M on BSE

Mar-09Feb-09Jan-09Dec-08Nov-08Oct-08Sep-08Aug-08Jul-08Jun-08May-08Apr-080

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000BSE Sensex

M&

M o

n B

SE

BSE

SEN

SEX

Closing Price on Last Trading day of the Month

7. 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

4. Corporate Identity Number: L65990MH1945PLC004558

5. FCCBs, Singapore Exchange Securities Trading Limited (ISIN): XSO250972543

6. GDRs, Luxembourg Stock Exchange (ISIN): USY541641194

8. Stock Performance

The performance of the Company’s Shares relative to the BSE Sensitive Index is given in the chart below:

The performance of the Company’s Shares relative to the NSE Sensitive Index (S&P CNX Nifty Index) is given in the chart below:

0

100

200

300

400

500

600

700

800

Mar-09Feb-09Jan-09Dec-08Nov-08Oct-08Sep-08Aug-08Jul-08Jun-08May-08Apr-080

1000

2000

3000

4000

5000

6000NSE Nifty

M&

M o

n N

SE

NSE

NIF

TY

Closing Price on Last Trading day of the Month

M&M on NSE

61


9. Stock Price Data:

Equity Shares GDRs

Bombay Stock National Stock Luxembourg Stock

Exchange Limited Exchange of India Limited Exchange*

High Low High Low High Low

Rs. Rs. Rs. Rs. US $ US $

April, 2008 715.00 594.00 716.75 592.10 16.47 14.99

May, 2008 705.00 585.00 705.00 583.05 17.04 14.41

June, 2008 669.00 477.00 607.00 478.00 14.09 11.40

July, 2008 573.00 430.00 574.40 427.10 13.24 10.30

August, 2008 609.00 511.00 603.00 506.00 13.88 12.15

September, 2008 604.00 450.00 618.70 490.00 13.36 11.00

October, 2008 536.00 236.00 539.00 237.10 11.03 4.81

November, 2008 410.00 258.00 412.00 256.00 8.19 5.31

December, 2008 346.90 235.50 347.00 235.00 7.16 4.87

January, 2009 330.00 258.80 330.00 258.60 6.66 5.30

February, 2009 333.00 264.80 333.55 264.00 6.51 5.46

March, 2009 394.50 297.30 397.70 290.05 7.61 6.00

* Based on closing prices.

10. Registrar and Transfer Agent:

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 No.: +91-22-67720400

Fax: +91-22-28591568

Email: [email protected]

The Registrar and Transfer Agents also have an office at:


912, Raheja Centre,

Free Press Journal Road,

Nariman Point,

Mumbai - 400 021.

Telephone No.: +91-22-22881568/69

Fax: +91-22-22825484

62

11. 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 expediting

the process of share transfers, Mr. A. K. Nanda, Executive

Director as well as Mr. Narayan Shankar, Company Secretary

of the Company are 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.

12. Distribution of Shareholding as on 31st

March, 2009:

Number of Shares held Number of Number of Percentage of

Shareholders Shares held Shareholding

1 to 500 1,45,042 91,81,713 3.29

501 to 1000 4,950 36,19,031 1.30

1001 to 5000 4,120 83,44,815 2.99

5001 to 10000 425 29,22,549 1.05

10001 and above 569 25,47,53,157 91.37

Total 1,55,106 27,88,21,265 100.00

Shareholding Pattern as on 31st

March, 2009:

Sr. No. Category of Shareholders Total Holdings Holdings in

Percentage

1. Promoters and Promoter Group 8,14,14,412 29.20

2. Mutual Funds/UTI 66,80,617 2.40

3. Banks, Financial Institutions, Insurance Companies 6,44,22,073 23.10

& State Government

4. FIIs/Foreign Bodies* 6,72,84,732 24.13

5. Private Corporate Bodies 1,19,72,505 4.29

6. Indian Public 2,66,16,303 9.55

7. NRIs/OCBs/ Foreign National 19,00,907 0.68

8. Bank of New York (for GDR holders) 1,85,29,716 6.65

Grand Total 27,88,21,265 100.00

* FIIs/Foreign Bodies does not include Shareholding aggregating 117.50 lakhs Shares representing 4.21% 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.

63


13. Dematerialisation of Shares

98.26% of the paid-up Equity Share Capital is held in

dematerialised form with National Securities Depository

Limited and Central Depository Services (India) Limited as

on 31st

March, 2009. 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 70.8% and the stock is highly liquid.

14. Outstanding GDRs / ADRs / Warrants or any Convertible

Instruments, Conversion date and likely impact on equity

1,85,29,716 GDRs were outstanding as at 31st

March,

2009. 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.

During the year, the Company has 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 have taken place. As of date,

FCCBs amounting US$ 18,95,00,000 convertible into

around 91,29,311 Equity Shares/GDRs are outstanding.

In July, 2008, the Company has allotted 93,95,974

Unsecured Fully & Compulsorily Convertible Debentures

(FCDs) on preferential allotment basis. The FCDs would be

compulsorily convertible into equivalent number of fully

paid-up Equity Shares of the face value of Rs.10 each. The

holder of the FCDs will have an option to convert each

FCD into one fully paid-up Equity Share of the Company at

any time after the date of allotment but on or before the

expiry of 18 months from the date of allotment of FCDs.

In the event this option is not exercised by the holder

within 18 months, the FCDs shall be compulsorily

convertible on the date falling 18 months from the date

of allotment of the FCDs. The Equity Shares to be so allotted

on conversion of the FCDs would be at a conversion price

of Rs.745 per Share (including a premium of Rs.735 per

Share).

15. Plant Locations

The Company’s manufacturing facilities are located at

Kandivali, Nashik, Igatpuri, Nagpur, Zaheerabad, Jaipur,

Rudrapur, Haridwar, Pune and Mohali.

16. Address for correspondence

Shareholders may correspond with the Registrar and

Transfer Agents at:


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 No.: +91-22-67720400

Fax: +91-22-28591568

Email: [email protected]

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 [email protected]

as an exclusive email ID for Shareholders for the purpose

of registering complaints and the same has been displayed

on the Company’s website.

64

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: [email protected]

The Company can also be visited at its website:

http://www.mahindra.com

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 Date Time Special Resolutions passed

2006 26th

July, 2006 3.30 p.m. No Special Resolution was passed at the AGM.

2007 30th

July, 2007 3.30 p.m. 1. Re-appointment of Mr. Anand G. Mahindra, Vice-Chairman & Managing

Director for a period of 5 years w.e.f. 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 w.e.f. 28th

August, 2007.

3. Alteration of Article 3 of the Articles of Association of the Company.

4. Authority to the Board to recover from Eligible Employees, the fringe

benefit tax in respect of Options which are granted to or vested or

exercised by the Eligible Employees on or after 1st

April, 2007.

2008 30th

July, 2008 3.30 p.m. No Special Resolution was passed at the AGM.

Extraordinary General Meetings held during the past 3 years:

Year Date Time Special Resolutions passed

2007 20th

April, 2007 11.00 a.m. Making investments, etc. in excess of the limits prescribed under section

372A of the Companies Act, 1956 upto an amount of Rs.1,500 crores.

All the Meetings were held at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg (New Marine Lines),

Mumbai - 400 020.

65


Details of the Court Convened Meetings held during the year 2008-09:

Date Time Resolutions passed

12th

April, 2008 3.30 p.m. Approving the arrangement embodied in the Scheme of Amalgamation of

Mahindra Holdings & Finance Limited with Mahindra & Mahindra Limited and

their respective Shareholders.

29th

October, 2008 3.00 p.m. Approving the arrangement embodied in the Scheme of Amalgamation of

Punjab Tractors Limited with Mahindra & Mahindra Limited and their respective

Shareholders.

Both the Meetings were held at Y B Chavan Centre, General Jagannathrao Bhosale Marg, Next to Sachivalaya Gymkhana,

Mumbai - 400 021.

Details of Resolutions passed through Postal Ballots during the year 2008-09:

Date of Board Description % of Valid Votes in Scrutinizer for

Meeting favour of the conducting the

Resolution Postal Ballot

3rd

May, 2008 Special Resolution authorising the Board to 99.98% Dr. S. D. Israni,

create, offer, issue and allot 93,95,974, 9.25% Practising Company

Unsecured Fully & Compulsorily Convertible Secretary, Mumbai

Debentures to Golboot Holdings Limited on

terms as specified in the Postal Ballot Notice

dated 3rd

May, 2008.

13th

February, 2009 1. Ordinary Resolution authorising the Board 99.91%*

to transfer, sell or otherwise dispose of the

Land Systems Business forming part of

Company’s Mahindra Defence Systems

Division to a Subsidiary Company at such

consideration being not lower than the Net Dr. S. D. Israni,

Asset Value of the aforesaid Land Systems Practising Company

Business. Secretary, Mumbai

2. Ordinary Resolution authorising the Board 99.91%*

to transfer, sell or otherwise dispose of the

Naval Systems Business forming part of

Company’s Mahindra Defence Systems

Division to a Subsidiary Company at such

consideration being not lower than the Net

Asset Value of the aforesaid Naval Systems

Business.

* Results declared in April, 2009.

66

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 Company’s results and official

news releases are displayed on the Company’s 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.

The Company was regularly posting information

relating to its financial results and shareholding pattern

on the SEBI EDIFAR website at www.sebiedifar.nic.in.

Thereafter, it is being filed 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 (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 Company’s financial statements.

The Company continues to adopt best practices to

ensure regime of unqualified financial statements.

The Company has not adopted the other non-mandatory

requirements as specified in Annexure I D of Clause 49.

Mumbai, 28th

May, 2009.

67


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, 2009.

Anand G. Mahindra

Mumbai, 28th

May, 2009 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, 2009, 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

B.P. Shroff

(Partner)

Mumbai, 28th

May, 2009 Membership Number: 34382

70

Financial Position at a Glance

(Rupees in crores)

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

Gross Fixed Assets 5541 4203 3510 3065 2810 2559 2489 2417 2231 1859

Net Fixed Assets 3214 2361 1871 1555 1475 1391 1466 1537 1483 1232

Investments 5786 4215 2238 1669 1190 1111 862 800 710 823

Deferred Tax Assets (Net) 18 - - - - - - - - -

Foreign Currency Monetary Item

Translation Difference Account 18 - - - - - - - - -

Inventories 1061 1084 878 879 760 500 457 469 553 515

Debtors 1044 1005 701 638 512 400 517 648 632 462

Other Current Assets 2959 1555 2169 1232 1028 625 640 616 529 684

Misc. Expenditure not written off 13 14 18 18 24 10 40 - 224 155

Borrowings

Long-term 3685 2187 1558 837 941 652 1072 1192 791 845

Short-term 368 400 78 46 111 78 68 185 344 109

Current Liabilities and Provisions 4798 3240 2666 2052 1760 1329 1095 1051 927 900

Deferred Tax Liability (Net) - 57 20 147 190 203 177 138 - -

Equity Capital 273 239 238 233 112 116 116 116 111 110

Reserves 4989 4111 3315 2676 1875 1659 1454 1388 1958 1907

Net Worth 5262 4350 3553 2909 1987 1775 1570 1504 2069 2017

Book Value Per Share (Rupees) 192.12 180.87 147.98 *123.29 174.46 150.89 130.56 128.26 165.50 166.90

* 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.

71


Summary of Operations

(Rupees in crores)

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

Income @ 14983 13238 11558 9451 7804 6001 4597 3997 4353 4409

Materials

Direct 9274 7726 6828 5714 4603 3353 2500 2117 2359 2210

Indirect 91 89 79 68 60 43 39 32 49 46

Excise Duty (Net) 1587 1584 1335 1136 1055 955 785 677 755 773

Personnel 1025 868 666 553 465 421 385 375 401 397

Interest (Net) @ 45 24 (67) (18) (6) 52 87 83 62 75

Depreciation (Net) 292 239 209 200 184 165 165 139 140 123

Other Expenses 1643 1474 1192 909 743 603 496 476 443 426

Exceptional items (10) (173) (122) (210) (14) (29) (57) 17 15 13

Extra-ordinary items - - - - - - - - - (4)

Profit before tax for the year 1036 1407 1438 1099 714 438 197 81 129 350

Tax for the year - Current 58 279 366 285 215 63 12 3 8 87

Deferred Tax Liability/(Asset) 141 25 (15) (43) (14) 26 39 (25) - -

Adj. pertaining to Prev. Years/

Special Adjustment ë31 - 19 - - - - 6 - -

Balance profit 868 1103 1068 857 513 349 146 97 121 263

Dividends #+312 +321 +325 +278 +172 +118 + 72 56 +67 +67

Equity Dividend (%) #100.00 115.00 115.00 100.00 130.00 90.00 55.00 50.00 55.00 55.00

Earnings per Share (Rupees) 31.83 46.24 45.15 38.07 23.04 15.02 6.28 4.31 5.46 11.93

Vehicles produced ** (Units) 201993 196956 169557 148213 148025 117670 87088 66256 63146 76983

Vehicles sold ** (Units) 206688 195077 169679 147591 145024 117399 86890 65338 62927 76437

Tractors produced (Units) 119098 98917 103,847 87075 67115 50102 45183 54524 80261 73222

Tractors sold (Units) 120202 99042 102,531 85029 65390 49576 47028 58006 79237 70571

@ Interest income netted off in

interest expense 89 63 87 45 36 25 29 33 51 67

# Proposed Dividend.

+ Including Income-Tax on Proposed Dividend/Dividends.

** Including CKD packs.

ë Profit of Mahindra Holdings and Finance Limited for the period 1st February, 2008 to 31st March, 2008.

72

Financial Highlights

PAT and Net Income (Rupees Crores) Earnings Per Shares (Rs.)

Net Segmental Revenue F-2009 Debt Equity Ratio

Net

Inco

me

PAT

0

2000

4000

6000

8000

10000

12000

14000

0

250

500

750

1000

1250

1500

FY 2009FY 2008FY 2007FY 2006FY 2005

6769

8327

10221

13364

11672

513

857

1068

1103

868

Net Income Profit After Tax

0

10

20

30

40

50

FY 2009FY 2008FY 2007FY 2006FY 2005

23.04

38.07

45.1546.24

31.83

EPS

(Rs.

)

Automotive56.4%

FarmEquipment

43.2%

Others0.4%

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

FY 2009FY 2008FY 2007FY 2006FY 2005

0.53

0.31

0.46

0.60

0.56

Tim

es

73

MAHINDRA & MAHINDRA LIMITEDMAHINDRA & MAHINDRA LIMITED

ACCOUNTSACCOUNTSACCOUNTSACCOUNTSACCOUNTS

74

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, 2009, the profit and

loss account and also the cash flow statement for the year

ended on that date annexed thereto. These financial

statements are the responsibility of the Company’s

management. Our responsibility is to express an opinion on

these financial statements based on our audit.

2. 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 misstatement. An audit includes

examining on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and

significant estimates made by management, as well as

evaluating the overall financial statement presentation. We

believe that our audit provides a reasonable basis for our

opinion.

3. As required by the Companies (Auditor’s Report) Order,

2003 (hereinafter referred to as ‘the Order’) issued by the

Central Government of India in terms of sub-section (4A) of

Section 227 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.

4. Further to our comments in the Annexure referred to in

paragraph 3 above, we report that:

i. 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;

ii. in our opinion, proper books of account as required by

law have been kept by the company so far as appears

from our examination of those books;

iii. the balance sheet and the profit and loss account dealt

with by this report are in agreement with the books of

account;

iv. in our opinion, the balance sheet and the profit and

loss account dealt with by this report comply with the

accounting standards referred to in sub-section (3C) of

Section 211 of the Companies Act, 1956;

v. 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:

(a) in the case of the balance sheet, of the state of

affairs of the company as at 31st

March, 2009;

(b) in the case of the profit and loss account, of the

profit for the year ended on that date; and

(c) in the case of the cash flow statement, of the cash

flows for the year ended on that date.

5. On the basis of the written representations received from

the directors, as on 31st

March, 2009, and taken on record

by the Board of Directors, we report that none of the

directors is disqualified as on 31st

March, 2009 from being

appointed as a director in terms of clause (g) of sub-section

(1) of section 274 of the Companies Act, 1956.



B.P. Shroff

(Partner)

Membership Number: 34382

Mumbai, 28th

May, 2009

75


Annexure to the Auditors’ Report

(Referred to in paragraph (3) of the Auditors’ Report of even date to the members of Mahindra & Mahindra Limited.)

(i) (a) The company is maintaining proper records showing

full particulars, including quantitative details and

situation of fixed assets.

(b) The fixed assets have not been physically verified by

the management during the year but the company has

a system of verifying the fixed assets once in every

three years. In our opinion the frequency of verification

is at reasonable intervals.

(c) During the year, in our opinion, a substantial part

of fixed assets has not been disposed off by the

company.

(ii) (a) The inventory of the company has been physically

verified by the management as at the year end. In

respect of stocks lying with third parties, a substantial

portion has been confirmed by third parties. In our

opinion the frequency of verification is reasonable.

(b) In our opinion and according to the information and

explanations given to us, the procedures of physical

verification of inventory followed by the management

were found reasonable and adequate in relation to the

size of company and the nature of its business.

(c) On the basis of our examination of records of inventory,

in our opinion, the company has maintained proper

records of inventory and the discrepancies noticed on

physical verification between the physical stocks and

the book records were not material in relation to the

operations of the company.

(iii) According to the information and explanations given to us,

the company has neither granted nor taken any loans,

secured or unsecured, to/from companies, firms, or other

parties covered in the register maintained under section

301 of the Companies Act, 1956 and accordingly paragraphs

4(iii) (b), (c), (d), (f) and (g) of the Companies (Auditors’

Report) Order, 2003, are not applicable.

(iv) In our opinion and according to the information and

explanations given to us, having regard to the explanation

that many of the items are of a special nature and their

prices cannot be compared with alternative quotations, there

are adequate internal control systems commensurate with

the size of the company and the nature of its business for

purchase of inventory, fixed assets and for the sale of goods

and services. Further, on the basis of our examination and

according to the information and explanations given to us

we have neither come across nor have we been informed

of any instance of major weakness in the aforesaid internal

control system.

(v) (a) In our opinion and according to the information and

explanations given to us the particulars of contracts or

arrangements referred to in section 301 of the

Companies Act, 1956 have been entered in the register

required to be maintained under that section.

(b) In our opinion and according to the information and

explanations given to us, having regard to comment in

(iv) above, the transactions made in pursuance of such

contracts or arrangements and exceeding the value of

rupees five lakhs in respect of any party during the

year have been made at prices, which are reasonable

having regard to the prevailing market prices at the

relevant time.

(vi) In our opinion and according to the information and

explanations given to us, the company has complied with

the provisions of Section 58A, 58AA and any other relevant

provisions of the Companies Act, 1956 and the Companies

(Acceptance of Deposits) Rules, 1975, as applicable, with

regard to the deposits accepted from the public. According

to the information and explanations given to us, no order

under the aforesaid sections has been passed by the

Company Law Board or National Company Law Tribunal or

Reserve Bank of India or any Court or any other Tribunal, on

the company.

(vii) In our opinion, the company has an internal audit system

commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of account maintained

by the company relating to the manufacture of motor

vehicles and tractors 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 and

we are of the opinion that prima facie the prescribed

accounts and records have been maintained and are being

made up. We have not, however, 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 given to us,

the Central Government has not prescribed the maintenance

of cost records under section 209 (1) (d) of the Companies

Act, 1956, for any other products of the Company.

(ix) (a) According to the information and explanations given

to us and according to the books and records as

produced and examined by us, in our opinion, the

undisputed statutory dues including provident fund,

investor education and protection fund, income-tax,

sales-tax, service tax, value added tax, customs duty,

excise duty, cess and other material statutory dues as

applicable have been generally regularly deposited by

the company during the year with the appropriate

authorities. According to the information and

explanations given to us, there are no arrears of

outstanding statutory dues as mentioned above as at

31st

March, 2009 for a period of more than six months

from the date they became payable.

76

(b) As at 31st

March, 2009 according to the records of the

company and the information and explanations given

to us, the following are the particulars of dues on

account of income-tax, sales-tax, wealth tax, service

tax, customs duty, excise duty and cess matters that

have not been deposited on account of any dispute:

Nature of the Nature of Amount Period to which Forum where pending

statute the dues Rs. in crores the amount relates

various years

covering the period

Income-Tax Laws Income-Tax 0.81 1999 Appellate Authority – Tribunal Level

46.81 2004-2008 Appellate Authority – Commissioner

(Appeals)

Sales-Tax Laws Sales-Tax 15.57 1988-2009 Appellate Authority – Commissioner

(Appeals)

184.65 1987-2008 High Court

1.56 1986-2006 Appellate Authority – Tribunal Level

Service Tax Laws Service Tax 0.17 2002 Appellate Authority – Commissioner

Excise Duty Laws Excise Duty 377.88 1987-2009 Appellate Authority – Tribunal Level

110.51 2007-2009 Appellate Authority – Commissioner

Custom Duty Laws Custom Duty 4.55 1996-2001 Appellate Authority – Tribunal Level

(x) The company does not have accumulated losses as at 31st

March, 2009 and has not incurred cash losses during the

financial year ended on that date and in the immediately

preceding financial year.

(xi) In our opinion and according to the information and

explanations given to us, the company has not defaulted

in repayment of dues to a financial institution, bank or to

debenture holders during the year.

(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

paragraph 4(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 were applied for

the purpose for which the loans were obtained.

(xvii) Based on the information and explanations given to us

and on an overall examination of the balance sheet of the

company, in our opinion, funds raised on short term basis

have not been used for long term investments.

77


(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

debentures issued during the year.

(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.



B.P. Shroff

(Partner)


Mumbai, 28th

May, 2009

78

Balance SheetBalance SheetBalance SheetBalance SheetBalance Sheet as at 31as at 31as at 31as at 31as at 31ststststst

March, 2009 March, 2009 March, 2009 March, 2009 March, 2009

Rupees crores

Schedule 2009 2008

I. SOURCES OF FUNDS :

SHAREHOLDERS’ FUNDS :

Capital ................................................................................. I 272.62 239.07

Employee Stock Options Outstanding ................................. 6.55 4.00

Reserves and Surplus ........................................................... II 4,982.91 4,107.00

5,262.08 4,350.07

LOAN FUNDS :

(a) Secured Loans .............................................................. III A 981.00 617.26

(b) Unsecured Loans .......................................................... III B 3,071.76 1,969.80

4,052.76 2,587.06

DEFERRED TAX LIABILITY (Net) ............................................ — 56.72

Total .......... 9,314.84 6,993.85

II. APPLICATION OF FUNDS :

FIXED ASSETS :

Gross Block .......................................................................... 4,893.89 3,656.13

Less : Depreciation .............................................................. 2,326.29 1,841.68

Net Block ............................................................................. IV 2,567.60 1,814.45

CAPITAL WORK-IN-PROGRESS (INCLUDING CAPITAL

ADVANCES) ......................................................................... 646.73 546.45

3,214.33 2,360.90

INVESTMENTS ...................................................................... V 5,786.41 4,215.06

DEFERRED TAX ASSET (Net) ................................................ 18.27 —

FOREIGN CURRENCY MONETARY ITEM TRANSLATION

DIFFERENCE ACCOUNT [NOTE 3(d)] .................................... 18.11 —

CURRENT ASSETS, LOANS AND ADVANCES :

(a) Inventories .................................................................... VI A 1,060.67 1,084.11

(b) Sundry Debtors ............................................................ VI B 1,043.65 1,004.88

(c) Cash and Bank Balances ............................................... VI C 1,574.43 861.23

(d) Other Current Assets .................................................... VI D 1.56 2.27

(e) Loans and Advances ..................................................... VI E 1,382.62 691.88

5,062.93 3,644.37

CURRENT LIABILITIES AND PROVISIONS :

(a) Current Liabilities .......................................................... VII A 3,520.20 2,296.55

(b) Provisions ..................................................................... VII B 1,277.56 943.46

4,797.76 3,240.01

NET CURRENT ASSETS ......................................................... 265.17 404.36

MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT

WRITTEN OFF OR ADJUSTED) .............................................. VIII 12.55 13.53

Total .......... 9,314.84 6,993.85

NOTES ON ACCOUNTS ............................................................... XIV

Per our report attached

For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra Chairman

Chartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director

A. S. Ganguly Directors

B. P. Shroff A. P. Puri Bharat Doshi

Partner N. B. Godrej A. K. NandaExecutive Directors

A. K. Dasgupta

Narayan Shankar Company Secretary

Mumbai, 28th

May, 2009 Mumbai, 28th

May, 2009

} }}}}}

79


Profit and Loss AccountProfit and Loss AccountProfit and Loss AccountProfit and Loss AccountProfit and Loss Account for the year ended 31for the year ended 31for the year ended 31for the year ended 31for the year ended 31ststststst


Rupees crores

Schedule 2009 2008

SALES - Traded and Manufactured Goods [Note 11(a)] .......................................... 14,268.41 12,371.03

Less : Excise Duty on Sales (Net) ............................................................................. 1,619.35 1,566.39

Net Sales ................................................................................................................. 12,649.06 10,804.64

Income from Operations ......................................................................................... IX A 444.62 736.63

Other Income .......................................................................................................... IX B 270.34 130.37

Net Income .............................................................................................................. 13,364.02 11,671.64

EXPENDITURE :

Raw Materials, Finished and Semi-finished Products ............................................... X 9,274.23 7,725.91

Excise Duty ............................................................................................................... (32.30) 18.18

Personnel ................................................................................................................. XI 1,024.61 868.14

Interest, Commitment and Finance Charges (Net) ................................................... XII 45.26 24.24

Depreciation/Amortisation [Note 5(c)(i) & (d)] ......................................................... 291.51 238.66

Other Expenses ........................................................................................................ XIII 1,777.34 1,608.96

12,380.65 10,484.09

Less : Cost of Manufactured Products Capitalised .................................................. 42.83 46.49

12,337.82 10,437.60

Profit before exceptional items and taxation ........................................................... 1,026.20 1,234.04

Add : Exceptional Items [Note 23] .......................................................................... 10.27 172.73

Profit before taxation .............................................................................................. 1,036.47 1,406.77

Less : Provision for Tax - Current Tax (including Fringe Benefit Tax) ....................... 58.51 278.75

- Deferred Tax (Net) [Note 24] .......................................... 141.18 24.65

Profit for the year .................................................................................................... 836.78 1,103.37

Add :

Profit of Mahindra Holdings and Finance Limited for the period

1st


March, 2008 [Note 25(a)] .............................................. 30.73 —

Balance of Profit for the year .................................................................................. 867.51 1,103.37

Balance of Profit for earlier years ............................................................................ 2,775.48 2,125.08

Amount Transferred on Amalgamation of Mahindra Holdings and Finance

Limited [Note 25(a)] ................................................................................................ 159.94 —

Less : Transfer to Debenture Redemption Reserve (Net) .......................................... (29.62) (16.88)

2,905.80 2,108.20

Total of Profit and Loss Account balances shown above ........................................ 3,773.31 3,211.57

Less :

General Reserve ....................................................................................................... 100.00 115.00

Credit of Income-Tax on Proposed Dividend of Previous Year ................................. (4.07) —

Proposed Dividend ................................................................................................... 278.83 282.61

Income-Tax on Proposed Dividend ........................................................................... 33.23 38.48

Balance for 2008-2009 and earlier years carried to Balance Sheet ......................... 3,365.32 2,775.48

EARNINGS PER SHARE [Note 26] :

(Face value Rs.10/- per share) (Rupees)

Basic ........................................................................................................................ 31.83 46.24

Diluted ..................................................................................................................... 30.02 41.52

NOTES ON ACCOUNTS ............................................................................................ XIV








A. K. Dasgupta


Mumbai, 28th


May, 2009

} }}}}}

80

Cash Flow StatementCash Flow StatementCash Flow StatementCash Flow StatementCash Flow Statement for the year ended 31for the year ended 31for the year ended 31for the year ended 31for the year ended 31ststststst


Rupees crores

2009 2008

A. CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit before exceptional items and taxation ................................... 1,026.20 1,234.04

Adjustments for :

Net Profit earned by Mahindra Holdings and

Finance Limited from 1st


March, 2008 ....... 30.73 —

Taxes and other adjustments on above ........................................... 11.01 —

41.74 —

Adjustments for :

Depreciation/Amortisation ............................................................... 291.52 238.66

(Profit)/Loss on Exchange (Net) ....................................................... 6.30 (39.90)

Investment and Interest Income ...................................................... (266.90) (143.60)

Interest, Commitment and Finance charges .................................... 134.12 87.59

Amortisation of Expenses ................................................................ 11.32 10.28

(Profit)/Loss on sale of investments (Net) ........................................ (92.36) (28.94)

(Profit)/Loss on fixed assets sold/scrapped/written off (Net) ............ 1.19 2.82

Excess of cost over fair value of current investments (Net) ............. (1.57) (1.74)

Provision for diminution in the value of long term investments ..... — (5.40)

83.62 119.77

Operating Profit before Working Capital changes .................................. 1,151.56 1,353.81

Changes in :

Trade and other receivables ............................................................. (99.37) (450.40)

Inventories ....................................................................................... 176.01 (205.63)

Trade and other payables ................................................................ 515.13 408.87

591.77 (247.16)

Miscellaneous Expenditure (to the extent not written off or adjusted)

incurred during the year ........................................................................ (11.73) (3.12)

Cash generated from operations ............................................................ 1,731.60 1,103.53

Income Taxes paid (Net of refunds) ........................................................ (100.30) (277.70)

NET CASH FROM OPERATING ACTIVITIES ............................................... 1,631.30 825.83

81


Cash Flow StatementCash Flow StatementCash Flow StatementCash Flow StatementCash Flow Statement (Contd.)(Contd.)(Contd.)(Contd.)(Contd.)

Rupees crores

2009 2008

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets ......................................................................... (929.74) (729.09)

Sale of fixed assets ................................................................................. 14.58 12.00

Purchase of investments ......................................................................... (17,118.59) (16,091.67)

Sale of investments ................................................................................ 16,195.73 14,487.81

Interest received ..................................................................................... 79.87 68.95

Dividends received .................................................................................. 137.13 65.61

Inter corporate deposits (Net) ................................................................ (319.98) 111.31

NET CASH USED IN INVESTING ACTIVITIES ............................................ (1,941.00) (2,075.08)

C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from borrowings ..................................................................... 2,117.39 2,303.55

Repayments of borrowings (including premium on prepayments) ......... (1,005.05) (1,294.08)

Dividend paid [including income tax on dividend Rs. 38.48 crores

(2008 : Rs. 16.69 crores)] ...................................................................... (320.26) (118.01)

Interest, Commitment and Finance charges paid ................................... (95.17) (80.12)

NET CASH FROM FINANCING ACTIVITIES ............................................... 696.91 811.34

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS ............ 387.21 (437.91)

CASH AND CASH EQUIVALENTS [Note 1] :

Opening Balance .................................................................................... 923.88 1,361.79

Cash and Bank Balance acquired pursuant to the Schemes of

Amalgamation ........................................................................................ 253.76 —

Cash and Bank Balance transferred on transfer of Division ................... (3.02) —

Closing Balance ...................................................................................... 1,561.83 923.88

See Notes attached.








A. K. Dasgupta


Mumbai, 28th


May, 2009

} }}}}}

82

Notes to the Cash Flow StatementNotes to the Cash Flow StatementNotes to the Cash Flow StatementNotes to the Cash Flow StatementNotes to the Cash Flow Statement for the year ended 31for the year ended 31for the year ended 31for the year ended 31for the year ended 31ststststst


Rupees crores

2009 2008

1 Cash and Bank Balances ......................................................................... 1,574.43 861.23

Unrealised (Gain)/Loss on foreign currency cash and cash equivalents .. (12.60) 62.65

Total cash and cash equivalents ............................................................. 1,561.83 923.88

2 During the year the Company has acquired/formed the following

subsidiaries :

(a) Mahindra Gears International Limited Rs. 137.83 crores

(b) Mahindra Automotive Australia Pty. Limited Rs. 2.27 crores

(c) Mahindra Two Wheelers Limited Rs. 0.01 crores

3 Pursuant to the Scheme of Amalgamation of Punjab Tractors Limited

(PTL) a subsidiary of the Company, with the Company sanctioned by the

Honourable High Court of Bombay and the Honourable High Court of

Punjab & Haryana vide their orders dated 9th

January, 2009 and 16th

January, 2009 respectively, the entire business and all the assets and

liabilities, duties and obligations of PTL were transferred to and vested

in the Company, from 1st

August, 2008 (the appointed date) at the

values indicated below :

Loan Fund .............................................................................................. 2.27 —

Fixed Assets (Including Capital Work-in-Progress) .................................. 93.20 —

Investments ............................................................................................ 225.52 —

Current Assets ........................................................................................ 395.94 —

Current Liabilities and Provisions ............................................................ 211.85 —

Deferred Tax Liabilities ............................................................................ 13.10 —

This amalgamation into the Company is a non-cash transaction.

4 Pursuant to the Scheme of Amalgamation of Mahindra Holdings and

Finance Limited (MHFL) a wholly owned subsidiary of the Company,

with the Company as sanctioned by the Honourable High Court of

Bombay vide its order dated 18th

July, 2008 the entire business and all

the assets and liabilities, duties and obligations of MHFL were transferred

to and vested in the Company, from 1st

February, 2008 (the appointed

date) at the values indicated below :

Fixed Assets ............................................................................................ 4.26 —

Investments ............................................................................................ 342.09 —

Current Assets ........................................................................................ 64.81 —

Deferred Tax Assets ................................................................................. 0.34 —


This amalgamation into the Company is a non-cash transaction.

5 The Company transferred its Logistics division to a wholly owned

subsidiary in the current year with effect from 1st

April, 2008. The value

of the assets and liabilities of the division transferred are at the values

indicated below :

Loan Fund .............................................................................................. 26.14 —

Fixed Assets (Including Capital Work-in-Progress) .................................. 11.86 —

Investments ............................................................................................ * —

Current Assets ........................................................................................ 95.62 —


This transfer of Logistics division is a non-cash transaction.

6 Previous year’s figures have been regrouped/restated wherever necessary.

* denotes amount less than Rs. 50,000

83


SCHEDULE I

Rupees crores

2009 2008

Share Capital [Note 2] :

Authorised :

60,00,00,000 (2008 : 37,50,00,000) Ordinary (Equity) Shares of Rs. 10 each ................. 600.00 375.00

25,00,000 Unclassified Shares of Rs. 100 each ............................................................ 25.00 25.00

Total ............................................................................................................ 625.00 400.00

Issued and Subscribed :

27,88,21,265 (2008 : 24,57,41,813) Ordinary (Equity) Shares of

Rs. 10 each fully paid up ............................................................................ 278.82 245.74

278.82 245.74

Less :

62,05,305 (2008 : 66,68,431) Ordinary (Equity) Shares of Rs.10 each fully

paid up issued to ESOP Trust but not allotted to employees ..................... 6.20 6.67

Adjusted : Issued and Subscribed Share Capital ................................................................... 272.62 239.07

SCHEDULE II

Rupees crores

2008 Additions Deductions 2009

Reserves and Surplus

1 Capital Reserve ............................................................... 11.50 — — 11.50

11.50 — — 11.50

2 Securities Premium Account [Note 3(a)(i)] ...................... 527.13 10.86 44.20 493.79

502.10 27.04 2.01 527.13

Less : Premium on shares issued to ESOP Trust

but not allotted to employees [Note 3(b)] ..................... 16.34 — 1.14 15.20

17.98 — 1.64 16.34

510.79 10.86 43.06 478.59

484.12 27.04 0.37 510.79

3 Revaluation Reserve [Note 3(a)(ii)] .................................. 12.47 — 0.38 12.09

12.86 — 0.39 12.47

4 General Reserve .............................................................. 748.92 117.79 �� 39.97 • 826.74

633.92 115.00 � — 748.92

Add : Bonus shares issued to ESOP Trust

but not allotted to employees [Note 3(b)] ..................... 3.33 — 0.23 3.10

3.67 — 0.34 3.33

752.25 117.79 40.20 829.84

637.59 115.00 0.34 752.25

5 Debenture Redemption Reserve ...................................... 18.00 29.62 � — 47.62

1.12 16.88 � — 18.00

6 Investment Fluctuation Reserve [Note 25, 27 & 28] ...... 39.43 806.61 173.90 672.14

39.43 — — 39.43

7 Hedging Reserve Account [Note 3(c)] ............................ (12.92) — 421.27 (434.19)

— — 12.92 (12.92)

1,331.52 964.88 678.81 1,617.59

1,186.62 158.92 14.02 1,331.52

8 Balance for 2008-2009 and earlier years as per

Profit and Loss Account ................................................. 3,365.32

2,775.48

Total ........................................................................ 4,982.91

4,107.00

� Transfer from Profit and Loss Account Rs. 100.00 crores (2008 : Rs. 115.00 crores).

� Amount transferred during the year on amalgamation Rs. 17.79 crores. Refer Note 25(a).

• Adjustment on adoption of Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 (Net of Tax

of Rs. 20.58 crores). Refer Note 3(d).

� Transfer from Profit and Loss Account Rs. 29.62 crores (2008 : Rs. 16.88 crores).

84

SCHEDULE III

Rupees crores

2009 2008

Loan Funds [Note 4] :

(A) Secured :

(1) Debentures/Bonds ........................................................................... 600.01 205.51

(2) Foreign Currency Loans from Banks ................................................ 124.29 121.80

(3) Loans and Advances on cash credit account from Banks ............... 3.00 9.04

(4) Short-term Foreign Currency Loans from Banks .............................. 253.70 280.91

981.00 617.26

(B) Unsecured :

(1) Fixed Deposits ................................................................................. 30.85 3.72

(2) Short-term Loans from Banks ......................................................... 80.00 106.14

(3) Other Loans :

(a) From Financial Institutions ....................................................... 634.68 521.13

(b) Foreign Currency Loan from Banks. ......................................... 625.65 491.02

(c) Zero Coupon Convertible Bonds .............................................. 961.52 802.60

(d) 9.25% Fully and Compulsorily Convertible Debentures ............ 700.00 —

(e) From Others ............................................................................. 39.06 45.19

2,960.91 1,859.94

3,071.76 1,969.80

Total ............... 4,052.76 2,587.06

SCHEDULE IV

Fixed Assets [Note 5] : Rupees crores

Description of Assets Cost/ Additions Deduc- Cost/Pro- Deprecia- Deprecia- Deductions Deprecia- Net Net

Professional and tions fessional tion/Amor- tion/ and tion/ Balance Balance

valuation adjust- and valuation tisation Amor- adjust- Amortisa- as at as at

as at 31st

ments adjust- as at 31st

to 31st

tisation ments tion 31st

31st

March, during ments March, March, for 2008- of Depre- to 31st

March, March,

2008 the year during 2009 2008 2009 ciation/ March, 2009 2008

the year Amorti- 2009

sation

Land - Freehold ......................... 53.73 4.20 1.75 56.18 — — — — 56.18 53.73

Land - Leasehold ....................... 66.40 0.62 5.74 61.28 2.44 0.69 0.15 2.98 58.30 63.96

Buildings .................................... 518.21 121.55 1.15 638.61 119.79 34.52 0.45 153.86 484.75 398.42

Plant and Machinery ................. 2,669.96 950.64 24.00 3,596.60 1,590.21 413.80 18.32 1,985.69 1,610.91 1,079.75

Furniture and Fittings ................ 96.92 27.40 2.01 122.31 41.38 11.25 0.40 52.23 70.08 55.54

Vehicles, Cycles, etc. .................. 111.06 39.27 18.72 131.61 42.89 21.82 9.86 54.85 76.76 68.17

Development Expenditure .......... 103.49 136.74 — 240.23 24.30 16.84 — 41.14 199.09 79.19

Software Expenditure ................ 36.36 11.01 0.30 47.07 20.67 15.08 0.21 35.54 11.53 15.69

Total ............ 3,656.13 1,291.43 53.67 4,893.89 1,841.68 514.00 29.39 2,326.29 2,567.60 1,814.45

3,229.69 470.79 44.35 3,656.13 1,639.12 239.22 36.66 1,841.68 1,814.45

85


SCHEDULE V

Investments (At Cost, unless otherwise specified) : Rupees crores

Note 2009 2008

Face Value

Per Unit Long Term Current Long Term Current

Number Rupees

Shares (Non-trade and fully paid-up unless otherwise specified) :

Unquoted :

(a) In Subsidiary Companies :

(i) Equity Shares :

53,98,462 10 Mahindra Engineering and Chemical Products Limited ............. (c)(1) 5.82 — 5.64 —

2,71,00,006 10 Mahindra Intertrade Limited [including 1,50,00,000 shares

partly paid-up Rs. 3 per share] .................................................. 16.60 — 16.60 —

37,23,874 10 Mahindra Steel Service Centre Limited ...................................... 6.38 — 6.38 —

— 10 Mahindra Holdings & Finance Limited ...................................... (c)(2) — — 146.60 —

9,50,00,000 US $ 0.10 Mahindra USA Inc. .................................................................... (c)(3) 44.30 — 19.38 —

16,83,218 10 Mahindra Gujarat Tractor Limited ............................................. 3.55 — 3.55 —

2,46,81,437 10 Mahindra Shubhlabh Services Limited ....................................... (b)(c)(4) 25.72 — 15.87 —

3,47,77,255 10 Mahindra First Choice Wheels Limited (formerly known as

FirstChoice Wheels Limited) ....................................................... (b)(c)(5) 47.44 — 29.21 —

63,49,500 10 Mahindra Logisoft Business Solutions Limited .......................... 5.78 — 5.78 —

42,22,250 US$0.001 Bristlecone Limited ..................................................................... 19.26 — 19.26 —

3,35,70,000 ZAR 1 Mahindra & Mahindra South Africa (Proprietary) Limited ......... (b)(c)(6) 17.24 — 2.49 —

81,26,218 10 Mahindra Engineering Services Limited (formerly known as

Mahindra Engineering Design & Development Company Limited) (b) 59.96 — 59.96 —

4,47,70,000 US $ 1 Mahindra Overseas Investment Company (Mauritius) Limited .. (b)(c)(7) 204.28 — 94.85 —

75,56,900 10 Mahindra SAR Transmission Private Limited .............................. (c)(8) 40.77 — 21.77 —

10,16,24,232 10 Mahindra Renault Private Limited ............................................. (b) 154.38 — 154.38 —

16,33,40,600 10 Mahindra Navistar Automotives Limited (formerly known as

Mahindra International Limited) ................................................ (b)(c)(9) 165.31 — 52.34 —

48,50,00,000 10 Mahindra Vehicle Manufactures Limited (formerly known as

Mahindra Automotive Limited) .................................................. (b)(c)(10)&(11) 485.00 — 124.81 —

1,64,87,602 10 Mahindra Castings Private Limited ............................................ 105.25 — 105.25 —

4,90,49,900 10 Mahindra Logistics Limited ........................................................ (c)(12) 49.05 — 0.05 —

2,11,65,000 10 Mahindra Navistar Engines Private Limited ............................... (c)(13)&(14) 21.17 — 0.51 —

50,000 10 Mahindra Aerospace Private Limited ......................................... 0.05 — 0.05 —

1,10,50,000 10 Mahindra First Choice Services Limited ..................................... (c)(15) 11.05 — 0.05 —

2,07,00,001 EURO 1 Mahindra Gears International Limited ....................................... (c)(16) 137.83 — — —

2,25,49,999 10 Mahindra Holdings Limited ....................................................... (c)(17) 22.55 — — —

5,10,000 10 Mahindra Consulting Engineers Limited .................................... (c)(18) 0.64 — — —

7,33,54,833 10 Mahindra Holidays & Resorts India Limited ............................... (c)(19) 30.25 — — —

50,490 10 NBS International Limited .......................................................... (c)(20) 5.07 — — —

11,80,00,000 10 Mahindra Two Wheelers Limited ............................................... (c)(21) 118.00 — — —

7,00,000 AU $ 1 Mahindra Automotive Australia Pty. Limited ............................. (c)(22) 2.27 — — —

(ii) 7.25% Cumulative Redeemable Preference Shares :

— 100 Mahindra Intertrade Limited ...................................................... (c)(23) — — 18.75 —

70,00,000 US$0.001 (iii) Series’A’ Preference Shares : Bristlecone Limited ....................... 31.72 — 31.72 —

69,20,000 US$0.001 (iv) Series’B’ Preference Shares : Bristlecone Limited ....................... 15.12 — 15.12 —

(v) 10.50% Non Cumulative Redeemable Preference Shares :

10,00,000 100.00 Mahindra Lifespace Developers Limited .................................... (c)(24) 10.00 — — —

23,00,000 EURO 1 Mahindra Gears International Limited ....................................... (c)(16) 15.31 — — —

1,877.12 — 950.37 —

(b) In Other Companies :

(i) Equity Shares :

312 100 Montreal Engineering International Limited .............................. * — * —

8,55,646 10 Machinery Manufacturers Corporation Limited ......................... (b) 0.94 — 0.94 —

1,00,000 10 Judricks (India) Private Limited .................................................. 0.10 — 0.10 —

35,000 10 Mahindra & Mahindra Contech Limited .................................... 0.04 — 0.04 —

75,000 10 NTTF Industries Limited ............................................................. 0.15 — 0.15 —

7,49,997 10 Officemartindia.com Limited ..................................................... 0.22 — 0.22 —

50,000 10 Indian NGOs.com Private Limited .............................................. 0.06 — 0.06 —

20,000 10 Sixth Sense Studios Private Limited ........................................... 0.02 — 0.02 —

2,85,000 10 Utility Engineers (India) Limited ................................................. 0.29 — 0.29 —

9,00,000 10 Mahindra Construction Company Limited ................................. (c)(25) 0.97 — — —

5,00,000 10 Business Standard Limited ......................................................... (c)(26) 0.09 — — —

13,10,000 10 Mahindra Sona Limited ............................................................. (c)(27) 1.64 — — —

75,00,000 10 New Tirupur Area Development Corporation Limited ............... (c)(28) 7.50 — — —

2,81,24,794 10 Owens Corning (India) Limited .................................................. (c)(29) 28.12 — — —

19,750 5 PSL Erickson Limited .................................................................. (c)(30) 0.01 — — —

4,98,000 10 Triton Overwater Transport Agency Limited .............................. (c)(31) 0.58 — — —

Others ........................................................................................ (a) * — * —

(ii) 4% Tax–free Cumulative Preference Shares :

2,296 100 Machinery Manufactures Corporation Limited .......................... (b) 0.02 — 0.02 —

(iii) 11% Redeemable Preference Shares :

1,78,000 100 Sixth Sense Studios Private Limited ........................................... 1.78 — 1.78 —

(iv) 10% Non–Cumulative Redeemable participating Preference Shares :

5,40,000 100 Mahindra Construction Company Limited ................................. (c)(25) 5.40 — — —

(v) 8% Non–Cumulative Redeemable Preferred Stock :

23,00,423 Prana Holdings Inc, USA ........................................................... (c)(32) 13.83 — — —

61.76 — 3.62 —

*denotes amounts less than Rs. 50,000

86

SCHEDULE V (Contd.)


Note 2009 2008

Face Value


Number Rupees

Quoted :


(i) Equity Shares :

2,08,46,126 10 Mahindra Lifespace Developers Limited .................................... (b)(c)(24) 276.95 — 216.34 —

5,82,41,532 10 Mahindra & Mahindra Financial Services Limited ...................... 150.91 — 150.91 —

5,37,76,252 10 Tech Mahindra Limited .............................................................. (b) 191.81 — 191.81 —

— 10 Punjab Tractors Limited ............................................................. (c)(33)&(34) — — 1,388.75 —

4,15,26,339 10 Mahindra Forgings Limited ........................................................ (b)(c)(35) 754.14 — 754.14 —

1,64,66,789 10 Mahindra Ugine Steel Company Limited ................................... (c)(36) 49.26 — — —

1,423.07 — 2,701.95 —

(b) In Non-Subsidiary Companies :

(i) Equity Shares :

41,26,417 10 Swaraj Engines Limited .............................................................. (c)(37) 1.63 — 0.95 —

10,59,543 10 Swaraj Automotives Limited ...................................................... (c)(38) 12.45 — 12.39 —

13,41,203 10 Mahindra Composites Limited ................................................... (c)(39) 2.90 — — —

25 100 Jardine Henderson Limited ........................................................ (c)(40) * — — —

2,85,440 10 IDBI Bank Limited ...................................................................... (c)(41) 2.28 — — —

900 10 Power Trading Corporation of India Limited ............................. (c)(42) — * — —

19.26 * 13.34 —

Debentures/Bonds : (Non-trade & fully paid-up) :

Unquoted :


25,00,000 100 2.00 % Mahindra Holdings Limited .................................................... (d)(1) 25.00 — — —


13 100 0.50% The East India Clinic Limited ................................................... * — * —

25.00 — * —

Quoted :


200 10,00,000 7.50% Mahindra & Mahindra Financial Services Limited ................... — 20.22 — 20.22

— 10,00,000 8.60% Mahindra & Mahindra Financial Services Limited ................... (d)(2) — — — 10.02


— 100 6.75% Tax Free US 64 Bonds ............................................................. (d)(3) — — — 8.09

18 10,00,000 7.00% Power Finance Corporation Limited (2011) Series XXII ........... — 1.80 — 1.80

150 10,00,000 7.99% Infrastructure Development Finance Company Limited ........... — 15.00 — 15.00

— 37.02 — 55.13

25.00 37.02 * 55.13

Less : Excess of cost over fair value of current investments of Debentures/Bonds — (0.35) — (1.44)

25.00 36.67 * 53.69

Other Investments :

Trust Securities

Unquoted :

— Sunrise Initiatives Trust ................................................................................. 51.33 — — —

— M & M Benefit Trust .................................................................................... 1,459.77 — — —

— Mahindra World Motor Driving School Trust ............................................... 0.01 — — —

— M & M Fractional Entitlement Trust ............................................................. 0.01 — — —

Government Securities :

Unquoted :

— 26,000 ^ 6 Years National Savings Certificates .................................................. (f)(1) * — * —

1,511.12 — * —

Quoted :

— 1,92,70,000 ^ Government of India Securities .......................................................... (f)(2) — 1.91 — 17.40

— 1.91 — 17.40

1,511.12 1.91 * 17.40

Less : Excess of cost over fair value of current investments of Government Securities — — — (0.48)

1,511.12 1.91 * 16.92

^ Total Face Value

* denotes amounts less than Rs. 50,000

87


SCHEDULE V (Contd.)


Note 2009 2008

Face Value


Number Rupees

Units :

Unquoted :

— 10 Birla Sun Life Mutual Fund - Cash Plus Institutional Premium Daily

Dividend (formerly known as Birla Mutual Fund) ............................... (g)(3) — — — 11.66

3,48,19,199 10 Birla Sun Life Mutual Fund - Saving Fund Institutional Daily Dividend

(formerly known as Birla Mutual Fund Liquid Plus Institutional Daily

Dividend) ............................................................................................. (g)(4) — 34.84 — 50.00

50,00,000 10 Birla Sun Life Mutual Fund - FTP Institutional Series AV Dividend ..... (g)(6) — 5.00 — —

1,00,00,000 10 Birla Sun Life Mutual Fund - FTP Institutional Series AK Dividend ..... (g)(7) — 10.00 — —

2,37,71,689 10 DBS Chola Mutual Fund - Freedom Income STP Institutional Daily

Dividend Reinvestment Plan ................................................................ (g)(11) — 24.14 — —

— 10 Deutsche Mutual Fund - Insta Cash Plus Fund Super Institutional

Plan Daily Dividend. ............................................................................ (g)(13) — — — 10.70

— 10 Deutsche Mutual Fund - Money Plus Advantage Fund Institutional

Plan Dividend ...................................................................................... (g)(17) — — — 10.12

5,02,28,232 10 Deutsche Mutual Fund - Ultra Short Term Fund Institutional Daily

Dividend .............................................................................................. (g)(18) — 50.30 — —

— 1000 DSP Merrill Lynch Mutual Fund - Cash Plus Institutional Daily

Dividend .............................................................................................. (g)(20) — — — 10.00

— 10 Fortis Mutual Fund - Dual Advantage Fund Plan A Series 1

Institutional Growth (formerly known as ABN AMRO Mutual Fund) . (g)(25) — — — 5.00

5,02,91,350 10 Fortis Mutual Fund - Money Plus Institutional Plan Daily Dividend .... (g)(27) — 50.31 — —

50,74,958 10 Fidelity Mutual Fund - Ultra Short Term Debt Fund Institutional

Daily Dividend ..................................................................................... (g)(31) — 5.08 — —

2,00,70,375 10 Fidelity Mutual Fund - Ultra Short Term Debt Fund Super Institutional

Daily Dividend ..................................................................................... (g)(32) — 20.08 — —

— 10 Franklin Templeton Mutual Fund - Floating Rate Income Fund Long

Term Plan Super Institutional Option Daily Dividend .......................... (g)(33) — — — 26.00

99,933 1000 Franklin Templeton Mutual Fund - India Treasury Management

Account Super Institutional Plan Daily Dividend ................................ (g)(34) — 10.00 — —

3,05,36,597 10 Franklin Templeton Mutual Fund - India Ultra Short Bond Fund Super

Institutional Plan Daily Dividend ......................................................... (g)(35) — 30.57 — —

1,40,65,033 10 Franklin Templeton Mutual Fund - Fixed Horizon Fund Series VII

Plan A Institutional Growth ................................................................ (g)(36) — 14.07 — —

3,23,14,308 10 HDFC Mutual Fund - Cash Management Fund - Savings Plan Daily

Dividend Reinvestment Option ........................................................... (g)(44) — 34.37 — 15.00

1,60,89,947 10 HDFC Mutual Fund - Cash Management Fund - Treasury Advantage

Plan Wholesale Daily Dividend Reinvestment ..................................... (g)(48) — 16.14 — —

3,28,02,032 10 HSBC Mutual Fund - Floating Rate - LT - Institutional Option Weekly

Dividend .............................................................................................. (g)(52) — 36.86 — —

1,59,24,338 10 HSBC Mutual Fund - Fixed Term Series 54 Institutional Dividend

Tenure 370 Days ................................................................................. (g)(55) — 15.92 — —

— 10 IDFC Mutual Fund - Fixed Maturity Plan - Quarterly Series 26

Dividend (formerly known as Standard Chartered Mutual Fund) ....... (g)(59) — — — 10.00

4,99,85,117 10 IDFC Mutual Fund - Cash Fund Super Institutional Plan C Dividend .. (g)(60) — 50.00 — —

2,50,46,616 10 JM Financial Mutual Fund - Money Manager Fund Super Plus Plan

Daily Dividend ..................................................................................... (g)(62) — 25.06 — —

1,18,98,823 10 Kotak Mahindra Mutual Fund - Liquid Institutional Premium Daily

Dividend .............................................................................................. (g)(68) — 14.55 — 15.00

3,01,47,564 10 Kotak Mahindra Mutual Fund - Floater Long Term - Daily Dividend . (g)(69) — 30.39 — —

1,07,38,319 10 Kotak Mahindra Mutual Fund - FMP 14M Series 3 - Institutional

Dividend .............................................................................................. (g)(73) — 10.74 — —

52,85,190 10 Kotak Mahindra Mutual Fund - FMP 15M Series 5 - Institutional

Dividend .............................................................................................. (g)(74) — 5.29 — —

— 10 LIC Mutual Fund - Liquid Fund Dividend Plan .................................... (g)(78) — — — 10.00

5,02,69,757 10 LIC Mutual Fund - Income Plus Fund Daily Dividend Plan ................. (g)(79) — 50.27 — —

1,00,00,000 10 LIC Mutual Fund - Fixed Maturity Plan - Series 43 (13 Months) ........ (g)(80) — 10.00 — —

— 10 Principal Mutual Fund - Floating Rate Fund FMP Institutional Option

Dividend Reinvestment Daily ............................................................... (g)(81) — — — 21.95

— 10 Principal Mutual Fund - Fixed Maturity Plan (FMP - 43) 91 Days Series

XIII Regular Dividend Payout Feb 08 .................................................. (g)(82) — — — 5.00

4,99,96,500 10 Principal Mutual Fund - Cash Management Fund Liquid Option

Institutional Premium Plan Dividend Reinvestment Daily .................... (g)(83) — 50.00 — —

1,99,99,000 10 Prudential ICICI Mutual Fund - Institutional Liquid Plan Super

Institutional Daily Dividend ................................................................. (g)(88) — 20.00 — 15.00

2,88,04,133 10 Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily

Dividend .............................................................................................. (g)(89) — 30.46 — —

55,00,252 10 Religare Mutual Fund - Liquid Fund - Super Institutional Daily

Dividend (formerly known as Lotus India Mutual Fund) .................... (g)(95) — 5.50 — 10.00

1,95,93,209 10 Religare Mutual Fund - Ultra Short Term Fund - Institutional Daily

Dividend .............................................................................................. (g)(96) — 19.62 — —

88

SCHEDULE V (Contd.)


Note 2009 2008

Face Value


Number Rupees

1,49,37,763 10 SBI Mutual Fund - Magnum Insta Cash Fund Daily Dividend Option (g)(102) — 25.02 — —

— 10 Sundaram Mutual Fund - BNP Paribas FTP 90 Days Series 3

Institutional Dividend .......................................................................... (g)(112) — — — 10.00

2,48,51,731 10 Sundaram Mutual Fund - Money Fund Super Institutional Daily

Dividend .............................................................................................. (g)(113) — 25.09 — —

— 10 Tata Mutual Fund - Dynamic Bond Fund Option A Dividend ............. (g)(118) — — — 10.03

2,01,53,392 10 Tata Mutual Fund - Floater Fund Daily Dividend ................................ (g)(119) — 20.23 — —

2,69,174 1000 Tata Mutual Fund - Liquid Super High Investment Fund Daily

Dividend .............................................................................................. (g)(120) — 30.00 — —

— 1000 UTI Mutual Fund - Liquid Cash Plan Institutional Daily Income

Option ................................................................................................. (g)(126) — — — 15.00

— 10 UTI Mutual Fund - Fixed Income Interval Fund Monthly Interval

Plan II Institutional Dividend Plan ....................................................... (g)(127) — — — 10.00

— 10 UTI Mutual Fund - Fixed Maturity Plan HFMP 03/08 I Institutional

Dividend Plan Payout .......................................................................... (g)(129) — — — 25.00

5,05,907 1000 UTI Mutual Fund - Treasury Advantage Fund Institutional Plan Daily

Dividend Option Reinvestment ........................................................... (g)(133) — 50.60 — —

— 830.50 — 295.46

Others :

Certificate of Deposit

Unquoted :

— State Bank of Travancore .................................................................... (h)(1) — — — 23.15

— ABN AMRO Bank ................................................................................ (h)(2) — — — 23.12

— State Bank of Bikaner & Jaipur ........................................................... (h)(3) — — — 42.71

— State Bank of Hyderabad .................................................................... (h)(4) — — — 23.80

— State Bank of Patiala ........................................................................... (h)(5) — — — 24.55

— Union Bank of India ........................................................................... (h)(6) — — — 19.16

— Punjab National Bank ......................................................................... (h)(7) — — — 23.22

— — — 179.71

4,917.33 869.08 3,669.28 545.78

Total ............................. 5,786.41 4,215.06

Cost (net of amounts written off) of Unquoted Investments ................ 4,305.50 1,429.16

Cost of Quoted Investments .................................................................... 1,481.26 2,787.82

5,786.76 4,216.98

Less : Excess of cost over fair value of Current Investments (Net) ........ (0.35) (1.92)

5,786.41 4,215.06

Market Value of Quoted Investments ........................................................ 3,218.81 7,669.90

Notes :

Face Value

Per Unit Long Term Long Term

Number Rupees Rupees Rupees

(a) Shares (unquoted) in other companies :

21 100 # The United Spices Importers Limited (Equity “B” Shares) .............. 1 1

74 16,667 # Engineering & Metal Works, Tehran ............................................... 1 1

(Rials)

Total ............................. 2 2

# Written off to Re 1

(b) Equity investments in these companies carry certain restrictions on transfer of shares in terms of funds raised by these companies

from financial institutions/banks/or in terms of SEBI IPO for listing agreements.

89


SCHEDULE V (Contd.)

Investments (At Cost, unless otherwise specified) :

(c) The following are the movements in Shares during the year :

Equity Shares Preference Equity Shares Preference

Shares Shares

Acquired Sold Acquired/ Acquired/(Transferred)

(Redeemed/ pursuant to Schemes of

Sold) Amalgamation**

Nos. Nos. Nos. Nos.

(1) Mahindra Engineering & Chemical Products Limited ............................ — — — 20,227 —

(2) Mahindra Holdings & Finance Limited .................................................. — — — (5,13,10,208)£ —

(3) Mahindra USA Inc. ................................................................................ 5,00,00,000+ — — — —

(4) Mahindra Shubhlabh Services Limited ................................................... 98,47,644+ — — — —

(5) Mahindra First Choice Wheels Limited .................................................. 1,21,51,907 — — — —

(6) Mahindra & Mahindra South Africa (Proprietary) Limited ..................... 3,00,00,000+ — — — —

(7) Mahindra Overseas Investment Company (Mauritius) Limited .............. 2,24,30,000 — — — —

(8) Mahindra SAR Transmission Private Limited .......................................... 30,03,161 — — — —

(9) Mahindra Navistar Automotives Limited ................................................ 11,29,65,000 — — — —

(10) Mahindra Vehicle Manufacturers Limited .............................................. 55,00,000@ — — — —

(11) Mahindra Vehicle Manufacturers Limited .............................................. 35,47,00,000 — — — —

(12) Mahindra Logistics Limited .................................................................... 4,90,00,000 100 — — —

(13) Mahindra Navistar Engines Private Limited ............................................ 38,25,000@ — — — —

(14) Mahindra Navistar Engines Private Limited ............................................ 1,68,30,000 — — — —

(15) Mahindra First Choice Services Limited ................................................. 1,10,00,000 — — — —

(16) Mahindra Gears International Limited ................................................... 2,07,00,001 — 23,00,000 — —

(17) Mahindra Holdings Limited ................................................................... — — — 2,25,49,999 —

(18) Mahindra Consulting Engineers Limited ................................................ — — — 5,10,000 —

(19) Mahindra Holidays & Resorts India Limited ........................................... — 8,24,565 — 7,41,79,398 —

(20) NBS International Limited ...................................................................... — — — 50,490 —

(21) Mahindra Two Wheelers Limited ........................................................... 11,80,00,000 — — — —

(22) Mahindra Automotive Australia Pty. Limited ......................................... 7,00,000 — — — —

(23) Mahindra Intertrade Limited .................................................................. — — (18,75,000) — —

(24) Mahindra Lifespace Developers Limited ................................................. — — — 54,45,000 10,00,000

(25) Mahindra Construction Company Limited ............................................. — — — 9,00,000 5,40,000

(26) Business Standard Limited ..................................................................... — — — 5,00,000 —

(27) Mahindra Sona Limited ......................................................................... — — — 13,10,000 —

(28) New Tirupur Area Development Corporation Limited ........................... — — — 75,00,000 —

(29) Owens Corning (India) Limited .............................................................. — — — 2,81,24,794 —

(30) PSL Erickson Limited .............................................................................. — — — 19,750 —

(31) Triton Overwater Transport Agency Limited ........................................... — — — 4,98,000 —

(32) Prana Holdings Inc, USA ........................................................................ — — — — 23,00,423

(33) Punjab Tractors Limited .......................................................................... — — — 7,93,655 —

(34) Punjab Tractors Limited .......................................................................... — — — (3,92,70,165) —

(35) Mahindra Forgings Limited .................................................................... — — — 10 —

(36) Mahindra Ugine Steel Company Limited ............................................... — — — 1,64,66,789 —

(37) Swaraj Engines Limited .......................................................................... — — — 41,19,000 —

(38) Swaraj Automotives Limited .................................................................. — — — 5,80,000 —

(39) Mahindra Composites Limited ............................................................... — — — 13,41,203 —

(40) Jardine Henderson Limited .................................................................... — — — 25 —

(41) IDBI Bank Limited ................................................................................... — — — 2,85,440 —

(42) Power Trading Corporation of India Limited ......................................... — — — 900 —

(43) Swaraj Mazda Limited ........................................................................... — 14,72,000 — 14,72,000 —

** Acquired/(Transferred) pursuant to Schemes of Amalgamation is for consideration other than cash.

£ Transfer is net of cancellation of 9,52,90,385 equity shares.

+ Subscribed to on rights basis.

@ Transferred from application monies of previous year.

90

SCHEDULE V (Contd.)


(d) The following are the movements in Debentures/Bonds during the year :

Acquired pursuant to Schemes of

Amalgamation** Sold Matured

Nos. Rs. crores Nos. Nos.

(1) Mahindra Holdings Limited ................................................................... 2.00% 25,00,000 25.00 — —

(2) Mahindra & Mahindra Financial Services Limited .................................. 8.60% — — — 100

(3) Tax Free US 64 Bonds ............................................................................ 6.75% — — — 7,75,000

** Acquired pursuant to Schemes of Amalgamation is for consideration other than cash.

(e) The following are the movements in Trust Securities during the year :

Acquired

pursuant to

Schemes of

Amalgamation** Sold

Nos. Nos.

India Auto Ancillary Trust 0.91 0.91

** Acquired pursuant to Schemes of Amalgamation is for consideration other than cash.

(f) Government Securities :

(1) Face value of Rs. * crores (2008 : Rs. * crores) were lodged as security deposit.

(2) Government of India Securities of the face value Rs. Nil (2008 : Rs. 20.00 crores ) were purchased and of the face value of Rs. 15.00 crores (2008 : Rs. 5.00

crores) sold during the year.


(g) The following are the movements in Units during the year :

Acquired pursuant to Acquired Sold

Schemes of Amalgamation**

Nos. Rs. crores Nos. Rs. crores Nos.

(1) AIG Mutual Fund - India Liquid Fund Super Institutional

Daily Dividend ........................................................................................ — — 5,50,393 55.08 5,50,393

(2) Birla Sun Life Mutual Fund - Interval Income Institutional

Monthly Series 2 Dividend ..................................................................... — — 1,01,39,231 10.14 1,01,39,231

(3) Birla Sun Life Mutual Fund - Cash Plus Institutional Premium

Daily Dividend ........................................................................................ — — 75,69,88,521 758.46 76,86,23,052

(4) Birla Sun Life Mutual Fund - Saving Fund Institutional Daily Dividend . — — 32,31,27,822 323.35 33,82,74,646

(5) Birla Sun Life Mutual Fund - Interval Income Retail Monthly -

Series 2 Dividend Payout ....................................................................... — — 1,00,00,000 10.00 1,00,00,000

(6) Birla Sun Life Mutual Fund - FTP Institutional Series AV

Dividend. ................................................................................................ 50,00,000 5.00 — — —

(7) Birla Sun Life Mutual Fund - FTP Institutional Series

AK Dividend ........................................................................................... 1,00,00,000 10.00 — — —

(8) Birla Sun Life Mutual Fund - Interval Income Institutional

Monthly - Series 1 Dividend .................................................................. — — 50,30,175 5.03 50,30,175

(9) Birla Sun Life Mutual Fund - Quarterly Interval - Series 3 - Dividend

Reinvestment .......................................................................................... 1,03,99,723 10.40 4,31,056 0.43 1,08,30,779

(10) DBS Chola Mutual Fund - Liquid Institutional Daily Dividend

Reinvestment Plan .................................................................................. — — 20,97,70,398 210.71 20,97,70,398

(11) DBS Chola Mutual Fund - Freedom Income STP Institutional Daily

Dividend Reinvestment Plan ................................................................... 1,50,18,612 15.02 4,89,59,909 49.34 4,02,06,832

(12) DBS Chola Mutual Fund - Short Term Floating Rate Fund Daily

Dividend Reinvestment Plan ................................................................... — — 9,97,58,109 100.09 9,97,58,109

(13) Deutsche Mutual Fund - Insta Cash Plus Fund Super Institutional

Plan Daily Dividend ................................................................................ — — 66,25,40,424 663.87 67,32,19,067

(14) Deutsche Mutual Fund - Insta Cash Plus Fund Institutional Plan

Daily Dividend ........................................................................................ — — 99,84,869 10.00 99,84,869

(15) Deutsche Mutual Fund - Liquid Plus Fund - Regular Daily

Dividend Plan ......................................................................................... — — 3,94,29,740 39.49 3,94,29,740

(16) Deutsche Mutual Fund - Money Plus Fund Institutional Daily

Dividend Plan ......................................................................................... — — 3,97,83,542 39.82 3,97,83,542

(17) Deutsche Mutual Fund - Money Plus Advantage Fund Institutional

Plan Dividend ......................................................................................... — — 2,83,717 0.29 1,02,96,326

91


(18) Deutsche Mutual Fund - Ultra Short Term Fund Institutional

Daily Dividend ........................................................................................ — — 22,89,81,874 229.33 17,87,53,642

(19) Deutsche Mutual Fund - Quarterly Interval Fund -Series 1-

Dividend Plan ......................................................................................... 1,50,00,000 15.00 6,35,303 0.64 1,56,35,303

(20) DSP Merrill Lynch Mutual Fund - Cash Plus Institutional Daily

Dividend ................................................................................................. 66,234 6.62 8,41,816 84.19 10,08,040

(21) DSP Merrill Lynch Mutual Fund - Liquidity Fund-Daily

Regular Dividend .................................................................................... — — 12,22,502 1.22 12,22,502

(22) DSP Merrill Lynch Mutual Fund - Liquidity Fund Institutional

Daily Dividend ........................................................................................ — — 51,14,766 511.59 51,14,766

(23) DSP Merrill Lynch Mutual Fund - Liquid Plus Institutional Plan

Daily Dividend ........................................................................................ — — 29,53,352 295.57 29,53,352

(24) DSP Merrill Lynch Mutual Fund - FMP - 6M - Series 6-Institutional

Dividend ................................................................................................. 1,00,35,425 10.04 — — 1,00,35,425

(25) Fortis Mutual Fund - Dual Advantage Fund Plan A Series 1

Institutional Growth ............................................................................... — — — — 50,00,000

(26) Fortis Mutual Fund - Interval Fund Monthly Plan A Dividend ............... — — 1,50,00,000 15.00 1,50,00,000

(27) Fortis Mutual Fund - Money Plus Institutional Plan Daily Dividend ....... — — 6,54,17,194 65.43 1,51,25,844

(28) Fortis Mutual Fund - Cash Fund Institutional Plus Daily Dividend ......... — — 1,00,01,514 10.00 1,00,01,514

(29) Fortis Mutual Fund - Overnight Institutional Plus Daily Dividend .......... — — 17,50,51,750 175.08 17,50,51,750

(30) Fidelity Mutual Fund - Cash Fund Super Institutional Daily Dividend ... — — 8,12,52,033 81.28 8,12,52,033

(31) Fidelity Mutual Fund - Ultra Short Term Debt Fund Institutional

Daily Dividend ........................................................................................ — — 50,74,958 5.08 —

(32) Fidelity Mutual Fund - Ultra Short Term Debt Fund Super

Institutional Daily Dividend .................................................................... — — 2,00,70,375 20.08 —

(33) Franklin Templeton Mutual Fund - Floating Rate Income Fund Long

Term Plan Super Institutional Option Daily Dividend ............................. — — 10,39,42,375 104.03 12,99,14,325

(34) Franklin Templeton Mutual Fund - India Treasury Management

Account Super Institutional Plan Daily Dividend ................................... — — 59,10,229 591.41 58,10,296

(35) Franklin Templeton Mutual Fund - India Ultra Short Bond Fund

Super Institutional Plan Daily Dividend .................................................. — — 24,08,25,609 241.24 21,02,89,012

(36) Franklin Templeton Mutual Fund - Fixed Horizon Fund Series VII

Plan A Institutional Growth ................................................................... 1,40,65,033 14.07 — — —

(37) Franklin Templeton Mutual Fund - Floating Rate Income Fund Long

Term Plan Retail Option Dividend Reinvestment .................................... 4,17,051 0.45 — — 4,17,051

(38) Franklin Templeton Mutual Fund - Fixed Horizon - Series X - Plan D -

Dividend Payout ..................................................................................... — — 60,20,369 6.02 60,20,369

(39) Franklin Templeton Mutual Fund - Floating Rate Income Fund - Long

Term Plan Institutional Option - Growth ............................................... — — 40,30,275 5.00 40,30,275

(40) Franklin Templeton Mutual Fund - Fixed Horizon - Series X - Plan B -

Dividend Payout ..................................................................................... — — 50,06,247 5.01 50,06,247

(41) Franklin Templeton Mutual Fund - India Treasury Management

Institutional Plan Daily Dividend Reinvestment ...................................... — — 60,261 6.03 60,261

(42) Franklin Templeton Mutual Fund - India Ultra Short Bond Fund

Institutional Plan - Daily Dividend Reinvestment ................................... — — 60,13,694 6.02 60,13,694

(43) Franklin Templeton Mutual Fund - Quarterly Interval Plan - Plan B -

Institutional - Dividend Reinvestment .................................................... 61,20,988 6.13 1,20,763 0.12 62,41,751

(44) HDFC Mutual Fund - Cash Management Fund - Savings Plan

Daily Dividend Reinvestment Option ..................................................... — — 65,16,28,357 693.10 63,34,16,565

(45) HDFC Mutual Fund - FMP 90D August 2008 (IX) (4)

Wholesale Plan Dividend Option Payout ................................................ — — 1,51,19,342 15.12 1,51,19,342

(46) HDFC Mutual Fund - FMP 90D June 2008 (VIII) (2) Wholesale Plan

Dividend Option Payout ......................................................................... — — 50,00,000 5.00 50,00,000

(47) HDFC Mutual Fund - Floating Rate Income Fund - Short Term Plan

Wholesale Option Dividend Reinvestment ............................................. 1,49,05,327 15.03 27,31,27,759 275.34 28,80,33,086

(48) HDFC Mutual Fund - Cash Management Fund - Treasury

Advantage Plan Wholesale Daily Dividend Reinvestment ...................... — — 9,08,09,028 91.10 7,47,19,081

SCHEDULE V (Contd.)






92

(49) HDFC Mutual Fund - FMP 90D May 2008 (VIII) (4)

Wholesale Plan Dividend Payout ............................................................ — — 1,51,19,342 15.12 1,51,19,342

(50) HDFC Mutual Fund - FMP 90D Feb 2008 (VII) (2) Wholesale Plan

Dividend Payout ..................................................................................... — — 1,51,19,342 15.12 1,51,19,342

(51) HSBC Mutual Fund - Cash Fund - Institutional Plus Daily Dividend ...... — — 58,23,62,241 582.69 58,23,62,241

(52) HSBC Mutual Fund - Floating Rate - LT - Institutional Option

Weekly Dividend .................................................................................... — — 3,28,02,032 36.86 —

(53) HSBC Mutual Fund - Floating Rate - LT - Institutional Daily Dividend .. — — 50,22,673 5.03 50,22,673

(54) HSBC Mutual Fund - Liquid Plus Institutional Plan Daily Dividend ........ — — 21,88,58,315 219.13 21,88,58,315

(55) HSBC Mutual Fund - Fixed Term Series 54 Institutional Dividend

Tenure 370 Days .................................................................................... 1,50,69,611 15.07 8,54,727 0.85 —

(56) HSBC Mutual Fund - Fixed Term Series 55 Institutional Dividend

Tenure 6 Months ................................................................................... 1,00,00,000 10.00 4,18,769 0.42 1,04,18,769

(57) IDFC Mutual Fund - Liquidity Manager Plus Daily Dividend .................. — — 15,53,89,925 424.94 15,53,89,925

(58) IDFC Mutual Fund - Floating Rate Fund LT Institutional Plan B

Daily Dividend ........................................................................................ — — 17,32,73,664 173.37 17,32,73,664

(59) IDFC Mutual Fund - Fixed Maturity Plan - Quarterly Series 26

Dividend ................................................................................................. — — — — 1,00,00,000

(60) IDFC Mutual Fund - Cash Fund Super Institutional Plan C Dividend ..... — — 97,06,61,073 970.90 92,06,75,956

(61) JM Financial Mutual Fund - Interval Fund Quarterly Plan 3

Institutional Dividend Plan ..................................................................... — — 51,08,170 5.11 51,08,170

(62) JM Financial Mutual Fund - Money Manager Fund Super Plus

Plan Daily Dividend ................................................................................ — — 4,69,76,039 47.00 2,19,29,423

(63) JM Financial Mutual Fund - High Liquidy Fund Super

Institutional Plan Daily Dividend ............................................................ — — 25,97,02,009 260.13 25,97,02,009

(64) Kotak Mahindra Mutual Fund - Flexi Debt Scheme

Daily Dividend ........................................................................................ 80,12,113 8.04 5,26,45,401 52.81 6,06,57,514

(65) Kotak Mahindra Mutual Fund - Flexi Debt Scheme Institutional -

Daily Dividend ........................................................................................ — — 13,66,08,899 137.26 13,66,08,899

(66) Kotak Mahindra Mutual Fund - FMP 1M Series 2 Dividend .................. — — 1,50,00,000 15.00 1,50,00,000

(67) Kotak Mahindra Mutual Fund - FMP 1M Series 3 Dividend .................. — — 1,51,07,683 15.11 1,51,07,683

(68) Kotak Mahindra Mutual Fund - Liquid Institutional Premium

Daily Dividend ........................................................................................ — — 73,33,28,532 896.72 73,36,96,537

(69) Kotak Mahindra Mutual Fund - Floater Long Term - Daily Dividend .... — — 7,97,51,723 80.39 4,96,04,159

(70) Kotak Mahindra Mutual Fund - Quarterly Interval Plan - Series 2 -

Dividend ................................................................................................. 51,88,355 5.19 2,30,525 0.23 54,18,880


Dividend ................................................................................................. 49,98,850 5.00 97,438 0.10 50,96,288


Dividend ................................................................................................. 50,91,045 5.09 2,01,894 0.20 52,92,939

(73) Kotak Mahindra Mutual Fund - FMP 14M Series 3 - Institutional

Dividend ................................................................................................. 1,00,62,680 10.06 6,75,639 0.68 —

(74) Kotak Mahindra Mutual Fund - FMP 15M Series 5 - Institutional

Dividend ................................................................................................. 50,00,000 5.00 2,85,190 0.29 —

(75) LIC Mutual Fund - Interval Fund Series 1 Quarterly Dividend Plan ....... — — 1,02,32,672 10.27 1,02,32,672

(76) LIC Mutual Fund - Interval Fund Quarterly Plan Series 2

Quarterly Dividend Plan ......................................................................... — — 51,13,036 5.11 51,13,036

(77) LIC Mutual Fund - Interval Fund Series 1 Monthly Dividend Plan ......... — — 1,01,52,615 10.16 1,01,52,615

(78) LIC Mutual Fund - Liquid Fund Dividend Plan ....................................... — — 35,31,45,690 387.76 36,22,53,075

(79) LIC Mutual Fund - Income Plus Fund Daily Dividend Plan .................... — — 28,90,33,276 289.03 23,87,63,519

(80) LIC Mutual Fund - Fixed Maturity Plan - Series 43 (13 Months) ........... 1,00,00,000 10.00 — — —

(81) Principal Mutual Fund - Floating Rate Fund FMP Institutional Option

Dividend Reinvestment Daily .................................................................. 55,35,476 5.54 22,90,92,346 229.35 25,65,46,774

(82) Principal Mutual Fund - Fixed Maturity Plan (FMP - 43) 91 Days

Series XIII Feb 08 Regular Dividend Payout ........................................... — — — — 50,00,000

(83) Principal Mutual Fund - Cash Management Fund Liquid Option

Institutional Premium Plan Dividend Reinvestment Daily ....................... — — 85,34,42,677 853.50 80,34,46,177

SCHEDULE V (Contd.)






93


(84) Principal Mutual Fund - Floating Rate Fund SMP Institutional

Option Dividend Reinvestment Daily ..................................................... — — 19,57,85,489 195.80 19,57,85,489


Series XIV May 08 Regular Dividend Payout ......................................... 50,00,000 5.00 — — 50,00,000


Series XVI Jun 08 Regular Dividend Payout ........................................... 1,50,16,964 15.02 — — 1,50,16,964

(87) Principal Mutual Fund - Cash Management Fund Liquid Option

Dividend Reinvestment Daily .................................................................. — — 63,02,122 6.30 63,02,122

(88) Prudential ICICI Mutual Fund - Institutional Liquid Plan Super

Institutional Daily Dividend .................................................................... 65,00,928 6.50 64,94,30,487 649.46 65,09,31,665

(89) Prudential ICICI Mutual Fund - Flexible Income Plan

Premium Daily Dividend ......................................................................... — — 25,26,09,539 267.10 22,38,05,406

(90) Prudential ICICI Mutual Fund - Flexible Income Plan Daily Dividend ..... — — 1,37,89,314 14.58 1,37,89,314

(91) Prudential ICICI Mutual Fund - Fixed Maturity Plan Series 44 Three

Month Plan B Retail Dividend Pay Dividend .......................................... 50,00,000 5.00 — — 50,00,000


Month Plan C Retail Dividend Pay Dividend .......................................... 1,00,00,000 10.00 — — 1,00,00,000


Month Plan B Retail Dividend Pay Dividend .......................................... — — 50,00,000 5.00 50,00,000


Month Plan C Retail Dividend Pay Dividend .......................................... — — 1,00,00,000 10.00 1,00,00,000

(95) Religare Mutual Fund - Liquid Fund - Super Institutional Daily

Dividend ................................................................................................. — — 38,71,16,023 387.24 39,16,14,071

(96) Religare Mutual Fund - Ultra Short Term Fund - Institutional

Daily Dividend ........................................................................................ — — 5,22,15,819 52.30 3,26,22,610

(97) Religare Mutual Fund - Monthly Interval Fund - Plan A Dividend ........ — — 51,37,586 5.14 51,37,586

(98) Religare Mutual Fund - Quarterly Interval Fund - Plan D Dividend ....... — — 49,98,550 5.00 49,98,550

(99) Religare Mutual Fund - FMP - 3 Months - Series XXXII - Dividend ...... 50,00,920 5.00 1,04,904 0.10 51,05,824

(100) Religare Mutual Fund - Quarterly Interval Fund Plan I Institutional

Dividend ................................................................................................. — — 52,40,581 5.24 52,40,581

(101) SBI Mutual Fund - Debt Fund Series - 30 Days - 3 - Dividend ............. — — 1,00,00,000 10.00 1,00,00,000

(102) SBI Mutual Fund - Magnum Insta Cash Fund Daily Dividend Option ... — — 7,29,41,362 122.18 5,80,03,599

(103) SBI Mutual Fund - Premier Liquid Fund Super Institutional

Daily Dividend ........................................................................................ — — 10,36,42,166 103.98 10,36,42,166

(104) SBI Mutual Fund - Liquid Plus - Institutional Plan Daily Dividend ......... — — 4,92,72,935 49.30 4,92,72,935

(105) SBI Mutual Fund - Debt Fund Series 90 Days 24 - Dividend ................ 50,03,362 5.00 85,628 0.09 50,88,990

(106) SBI Mutual Fund - Debt Fund Series 90 Days 25 - Dividend ................ 50,00,000 5.00 89,555 0.09 50,89,555

(107) SBI Mutual Fund - Debt Fund Series 90 Days 28 - Dividend ................ — — 52,02,739 5.20 52,02,739

(108) SBI Mutual Fund - Debt Fund Series 90 Days 29 - Dividend ................ — — 52,04,345 5.20 52,04,345

(109) SBI Mutual Fund - Short Horizon Fund Liquid Plus Institutional Plan -

Daily Dividend ........................................................................................ — — 4,53,24,957 45.35 4,53,24,957

(110) Sundaram Mutual Fund - BNP Paribas Interval Fund Quarterly Plan B

Institutional Dividend ............................................................................. — — 51,17,560 5.12 51,17,560

(111) Sundaram Mutual Fund - Liquid Plus Super Institutional Dividend

Reinvestment Daily ................................................................................. — — 2,02,19,758 20.27 2,02,19,758

(112) Sundaram Mutual Fund - BNP Paribas FTP 90 Days Series 3

Institutional Dividend ............................................................................. — — — — 1,00,00,000

(113) Sundaram Mutual Fund - Money Fund Super Institutional

Daily Dividend ........................................................................................ — — 28,34,04,834 286.11 25,85,53,103

(114) Sundaram Mutual Fund - BNP Paribas FTP 90 Days Series 6

Institutional Dividend ............................................................................. — — 1,00,00,000 10.00 1,00,00,000

(115) Sundaram Mutual Fund - BNP Paribas Interval Fund Quarterly Plan E

Institutional Dividend ............................................................................. — — 1,02,23,300 10.22 1,02,23,300

SCHEDULE V (Contd.)






94

(116) Tata Mutual Fund - Fixed Horizon Fund Series 19 Scheme D

Institutional Plan Periodic Dividend ....................................................... — — 51,17,879 5.12 51,17,879

(117) Tata Mutual Fund - Floater Fund Weekly Dividend ............................... — — 3,95,84,832 39.93 3,95,84,832

(118) Tata Mutual Fund - Dynamic Bond Fund Option A Dividend ................ — — 31,434 0.03 95,82,419

(119) Tata Mutual Fund - Floater Fund Daily Dividend ................................... — — 35,15,00,959 352.75 33,13,47,567

(120) Tata Mutual Fund - Liquid Super High Investment Fund Daily Dividend — — 64,37,262 717.45 61,68,088

(121) Tata Mutual Fund - Floating Rate Short Term Institutional Plan

Daily Dividend ........................................................................................ — — 8,18,29,188 81.89 8,18,29,188

(122) Tata Mutual Fund - Income Plus Fund (Option B) Bonus/Income ......... — — 48,61,591 5.11 48,61,591

(123) Tata Mutual Fund - Fixed Income Portfolio Fund A2 Dividend Payout .. — — 1,50,71,986 15.09 1,50,71,986

(124) UTI Mutual Fund - Fixed Income Interval Fund - Monthly Interval Plan

Series 1 Institutional Dividend Plan Payout ............................................ — — 50,00,896 5.00 50,00,896

(125) UTI Mutual Fund - Fixed Income Interval Fund - Series II Quarterly

Interval Plan V Institutional Dividend Plan Payout ................................. — — 1,00,00,000 10.00 1,00,00,000

(126) UTI Mutual Fund - Liquid Cash Plan Institutional Daily Income Option — — 19,64,081 200.23 21,11,220

(127) UTI Mutual Fund - Fixed Income Interval Fund Monthly Interval Plan II

Institutional Dividend Plan ..................................................................... — — 76,553 0.08 1,00,76,553

(128) UTI Mutual Fund - Money Market Fund Daily Dividend Reinvestment

Option .................................................................................................... — — 29,40,91,902 533.67 29,40,91,902

(129) UTI Mutual Fund - Fixed Maturity Plan - HFMP - 03/08 - I - Institutional

Dividend Plan Payout ............................................................................. — — — — 2,50,00,000

(130) UTI Mutual Fund - Fixed Maturity Plan - QFMP - 05/08 - II - Dividend

Plan - Reinvestment ............................................................................... 50,00,000 5.00 88,048 0.09 50,88,048

(131) UTI Mutual Fund - Fixed Maturity Plan - QFMP - 06/08 - II -

Institutional Dividend Plan Payout ......................................................... — — 50,00,000 5.00 50,00,000

(132) UTI Mutual Fund - Fixed Maturity Plan - QFMP - 07/08 - I -

Institutional Dividend Plan - Reinvestment ............................................ 1,00,00,000 10.00 2,16,371 0.22 1,02,16,371

(133) UTI Mutual Fund - Treasury Advantage Fund Institutional Plan

Daily Dividend Option Reinvestment ..................................................... — — 19,67,510 196.79 14,61,603

(134) UTI Mutual Fund - Fixed Income Interval Fund Quarterly Plan

Series 1 - Dividend Plan Reinvestment .................................................. 50,00,000 5.00 99,788 0.10 50,99,788

(135) UTI Mutual Fund - Fixed Income Interval Fund Quarterly Plan -

Series III Institutional Dividend Plan Reinvestment ................................ 1,49,61,783 14.96 6,25,392 0.63 1,55,87,175

(136) UTI Mutual Fund - Fixed Income Interval Fund Series II - Quarterly

Interval Plan VI Institutional Dividend Plan Reinvestment ..................... — — 52,14,878 5.21 52,14,878

(137) UTI Mutual Fund - Fixed Income Interval Fund Series II - Quarterly

Interval Plan VII Institutional Dividend Plan Reinvestment .................... — — 1,04,78,198 10.48 1,04,78,198

**Acquired pursuant to Schemes of Amalgamation is for consideration other than cash.

(h) The following are the movements in Certificate of Deposits during the year :

Acquired Sold Matured

Face Value Total Value Face Value Face Value

Rs. crores Rs. crores Rs. crores Rs. crores

(1) State Bank of Travancore ................................................................................................. — — — 25.00

(2) ABN AMRO Bank ............................................................................................................. — — — 25.00

(3) State Bank of Bikaner & Jaipur ........................................................................................ 50.00 48.93 45.00 50.00

(4) State Bank of Hyderabad ................................................................................................. 50.00 49.03 25.00 50.00

(5) State Bank of Patiala ........................................................................................................ 45.00 43.18 45.00 25.00

(6) Union Bank of India ........................................................................................................ — — — 20.00

(7) Punjab National Bank ...................................................................................................... 25.00 24.88 — 50.00

(8) Axis Bank Limited ............................................................................................................. 40.00 39.32 — 40.00

(9) State Bank of Mysore ...................................................................................................... 10.00 9.77 10.00 —

SCHEDULE V (Contd.)





Nos Rs. crores Nos Rs. crores Nos.

95


SCHEDULE VI Rupees crores

2009 2008

Current Assets, Loans and Advances :

(A) Inventories (at cost or net realisable value whichever is lower) :

(i) Finished Products produced and purchased for sale ...................... 471.81 579.43

(ii) Contracts and Work-in-Progress ...................................................... 89.09 53.10

(iii) Manufactured Components ............................................................ 55.71 48.15

(iv) Raw Materials and Bought-out Components .................................. 391.01 351.95

(v) Property Development Activity - Work-in-Progress

[including completed flats and premises Rs. 6.32 crores

(2008 : Rs. 6.32 crores)] [Note 11(b)] ............................................. 6.32 6.32

(vi) Stores and Spares ............................................................................ 23.56 24.76

(vii) Tools ................................................................................................ 23.17 20.40

1,060.67 1,084.11

(B) Sundry Debtors (Unsecured) [Note 6] :

Outstanding over six months : Considered good ................................... 125.74 111.29

: Considered doubtful ............................. 72.12 31.61

197.86 142.90

Other Debts : Considered good ................................... 917.91 893.59

: Considered doubtful ............................. — 1.20

917.91 894.79

1,115.77 1,037.69

Less : Provision for Doubtful Debts ........................................................ 72.12 32.81

1,043.65 1,004.88

(C) Cash and Bank Balances :

Cash, cheques and stamps on hand ...................................................... 354.39 194.27

Balances with Scheduled Banks :

(i) On Current Account ........................................................................ 275.65 109.72

(ii) On Fixed Deposit Account* ............................................................. 938.73 550.59

(iii) On Margin Account ........................................................................ 0.09 0.06

1,214.47 660.37

*[includes balance of unutilised monies raised by issue : Rs. 53.95 cores

(2008 : Rs. 274.03 Crores)]

Balances with Non-Scheduled Banks [Note 7] :

On Current Account ............................................................................... 5.57 6.59

1,574.43 861.23

(D) Other Current Assets :

Interest accrued on Investments ............................................................. 1.42 2.13

Others ..................................................................................................... 0.14 0.14

1.56 2.27

(E) Loans and Advances [Note 8] :

(Unsecured, considered good unless otherwise stated) :

Advances and Loans to subsidiaries :-

Considered good .................................................................................... 402.93 100.73

Considered doubtful ............................................................................... 24.99 5.99

427.92 106.72

Less : Provision for Doubtful Advances and Loans ................................. 24.99 5.99

402.93 100.73

Bills of exchange, considered doubtful .................................................. 1.02 1.02

Less : Provision for Doubtful bills ........................................................... 1.02 1.02

— —

Advances recoverable in cash or in kind or for value to be received :

Considered good .................................................................................... 757.11 470.53

Considered doubtful ............................................................................... 48.64 47.80

805.75 518.33

Less : Provision for Doubtful Advances .................................................. 48.64 47.80

757.11 470.53

Payments towards Income-Tax and Surtax [Note 20(d)] ......................... 221.67 119.92

Balances - Customs, Port Trust, Excise, etc. ............................................ 0.91 0.70

1,382.62 691.88

Total..... 5,062.93 3,644.37

96

SCHEDULE VII Rupees crores

2009 2008

Current Liabilities and Provisions :

(A) Current Liabilities* :

Acceptances ............................................................................................ 106.26 125.79

Sundry Creditors :

(i) Total outstanding dues of micro and small enterprises [Note 9] .... 5.99 4.16

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

enterprises [including Rs. 162.51 crores (2008 : Rs. 112.05 crores)

being advance payments for which value has still to be given] ..... 3,206.19 2,075.43

(iii) Dues to Subsidiaries ........................................................................ 124.62 70.70

3,336.80 2,150.29

Dividend payable .................................................................................... 6.19 4.21

Balances on Directors’ Current Accounts ............................................... 2.21 2.46

Interest accrued but not due on loans ................................................... 68.74 13.80

3,520.20 2,296.55

* There are no amounts due and outstanding to be credited

to the Investor Education and Protection Fund.

(B) Provisions :

Proposed Dividend.................................................................................. 278.83 282.61

Provision for Tax on Proposed Dividend ................................................. 33.23 38.48

Provision for diminution in value of long term investments .................. 201.02 25.17

Provision for premium payable on redemption of convertible bonds .... 269.51 224.97

Provision for compensated absences ...................................................... 245.76 200.76

Provision for taxation ............................................................................. 81.76 37.09

Provision Others [Note 10] ..................................................................... 167.45 134.38

1,277.56 943.46

Total........ 4,797.76 3,240.01

SCHEDULE VIII Rupees crores

2009 2008

Miscellaneous Expenditure

(to the extent not written off or adjusted) :

(a) Finance Charges ..................................................................................... 11.69 5.73

(b) Separation and Other Costs ................................................................... 0.86 7.80

Total........ 12.55 13.53

97


SCHEDULE IX Rupees crores

2009 2008

Income from Operations and Other Income :

(A) Income from Operations :

Income from services rendered.. ............................................................ 272.45 523.91

Scrap Sales..……….. .............................................................................. 63.73 59.91

Octroi Refund..……….. .......................................................................... 44.90 92.89

Other Operating Income ..……….. ........................................................ 63.54 59.92

Total........ 444.62 736.63

(B) Other Income :

Dividends on Investments in subsidiaries - Gross ................................... 131.83 65.24

Dividends on other Investments - Gross [Note 12(a)] ............................ 46.21 15.01

Profit on sale of Investments (Net) [Note 12(d)] .................................... 53.22 28.94

Miscellaneous Income ............................................................................ 39.08 21.18

Total........ 270.34 130.37

SCHEDULE X Rupees crores

2009 2008

Raw Materials, Finished and Semi-Finished Products :

(A) Decrease/(Increase) in Stock of Finished Goods,

Work-in-Progress and Manufactured Components :

Opening Stock :




680.68 531.57

Add : Stock Taken Over on Amalgamation :

(i) Finished Products produced and purchased for sale ...................... 80.61 —

(ii) Contracts and Work-in-Progress ...................................................... 11.61 —

92.22 —

Less : Closing Stock :




616.61 680.68

Decrease/(Increase) in Stock ................................................................... 156.29 (149.11)

(B) Consumption of Raw Materials and Bought-out Components :

Opening Stock ........................................................................................ 351.95 305.52

Add : Purchases [including outside processing charges Rs. 224.06 crores

(2008 : Rs. 251.68 crores)] ........................................................... 8,756.79 7,602.26

9,108.74 7,907.78

Add : Stock Taken Over on Amalgamation ............................................. 54.06 —

Less : Closing Stock ................................................................................ 391.01 351.95

8,771.79 7,555.83

(C) Purchases of Finished Products for sale ................................................. 346.15 319.19

Total........ 9,274.23 7,725.91

98

SCHEDULE XI Rupees crores

2009 2008

Personnel :

Salaries, Wages, Bonus, etc. .......................................................................... 822.36 725.40

Contribution to Provident and other funds ................................................... 58.54 47.48

Gratuity .......................................................................................................... 50.13 14.97

Welfare .......................................................................................................... 93.58 80.29

Total........ 1,024.61 868.14

SCHEDULE XII Rupees crores

2009 2008

Interest, Commitment and Finance Charges :

On Term Loans and Debentures .................................................................... 124.60 80.80

On Others (Net) ............................................................................................. 9.52 6.79

134.12 87.59

Less : Interest Income :

(i) Interest on Government Securities, Debentures and Bonds - Gross

[Note 12(b)] ............................................................................................ 4.76 4.87

(ii) Interest - Others - Gross [Note 12(c)] ..................................................... 84.10 58.48

88.86 63.35

Total........ 45.26 24.24

SCHEDULE XIII Rupees crores

2009 2008

Other Expenses :

Stores consumed ........................................................................................... 66.89 73.01

Tools consumed ............................................................................................. 23.88 15.79

Power and Fuel .............................................................................................. 98.69 91.33

Rent including lease rentals ........................................................................... 49.41 36.40

Rates and Taxes ............................................................................................. 12.68 22.69

Insurance ....................................................................................................... 11.95 13.10

Repairs and Maintenance [Note 13] :

Buildings ................................................................................................. 17.88 17.65

Machinery ............................................................................................... 75.36 73.35

Others ..................................................................................................... 28.29 28.81

121.53 119.81

Advertisement ................................................................................................ 96.49 77.22

Commission on sales/contracts (Net) ............................................................. 47.91 70.74

Discount allowed ........................................................................................... 7.45 5.20

Freight outward ............................................................................................. 215.47 508.95

Sales Promotion Expenses .............................................................................. 208.02 142.40

Miscellaneous Expenses [Note 14] ................................................................. 779.85 452.76

Directors’ fees ................................................................................................ 0.09 0.10

Donations and contributions ......................................................................... 5.97 7.37

Loss on Fixed Assets sold/scrapped/written off (Net) ..................................... 1.19 2.82

Excess of cost over fair value of Current Investments (Net) .......................... (1.57) (1.74)

Provision for doubtful debts/advances (Net) [Note 27] ................................. 31.44 (23.59)

Provision for diminution in value of Long term investments (Net) [Note 28] — (5.40)

Total........ 1,777.34 1,608.96

99


SCHEDULE XlV

Notes on Accounts for the year ended 31st

March, 2009

1. Significant Accounting Policies :

(A) Fixed Assets :

(a) (i) Fixed Assets are carried at cost less depreciation except as stated in (ii) below. Cost includes financing cost relating to borrowed

funds attributable to the construction or acquisition of qualifying fixed assets upto the date the assets are ready for use. Where

the acquisition of fixed assets are financed through long term foreign currency loans (having a term of 12 months or more at the

time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets.

When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account

and resultant profit (including capital profit) or loss, if any, is reflected in the Profit and Loss Account.

(ii) Land and Buildings, had been revalued as at 31st

October, 1984 at depreciated replacement values on the basis of a valuation

made by a firm of Chartered Surveyors and Valuers. The indices, if any, used are not stated in the valuation.

(b) (i) Leasehold land is amortised over the period of the lease.

(ii) Depreciation on assets is calculated on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the

Companies Act, 1956, except for :

(1) certain items of Plant and Machinery individually costing more than Rs. 5,000 - over their useful lives (2 years, 3 years,

5 years or 7 years, as the case may be) as determined by the Company.

(2) Cars and Vehicles - at 15% of cost.

(iii) Depreciation charge for each year is after deducting the amount representing the depreciation on the increase due to revaluation

of Land and Buildings, transferred from the Revaluation Reserve.

(B) Intangible Assets :

Intangible Assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits are

consumed.

(a) Technical Knowhow :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year of

purchase of the technology.

(b) Development Expenditure :

The expenditure incurred on technical services and other project/product related expenses are amortised over the estimated period of

benefit, not exceeding five years.

(c) Software Expenditure :

The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure is

incurred.

(C) 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.

(D) 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.

(E) 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.

100

(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.

(F) 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.

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.

(G) 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.

(H) Revenue Recognition :

Sales of products and services are recognised when the products are shipped or services rendered. In respect of sale of property (concerning

property development activity), the Company accounts for the income on the percentage of completion basis. [Refer paragraph (I) below].

Dividend from investments are recognised in the Profit and Loss Account when the right to receive payment is established.

(I) Property Development Activity :

The Company accounts for income on the percentage of completion basis which necessarily involves technical estimates of the percentage

of completion, and costs to completion of the activity, on the basis of which profits/losses are accounted. Such estimates, made by the

Company and certified to the auditors, have been relied upon by them, as these are of a technical nature.

(J) Government Grants :

The Company is entitled to various incentives from a State Government, such as grants by way of refund of octroi duty paid by the

Company for its manufacturing unit located in a developing region. In view of the uncertainty in respect of the collection of these grants,

such grants are accounted for as and when the disbursements are received.

(K) Employee Benefits :

Defined Contribution Plan/Defined Benefit Plan/Long term Compensated Absences.

Company’s contributions paid/payable during the year to Superannuation Fund, ESIC and Labour Welfare Fund are recognised in the Profit

and Loss Account.

Contributions to Provident Fund are made to a Trust administered by the Company and are charged to Profit and Loss Account as incurred.

The Company is liable for the contribution and any shortfall in interest between the amount of interest realised by the investment and the

interest payable to members at the rate declared by the Government of India.

Company’s liability towards gratuity, long term compensated absences 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.

(L) Borrowing Costs :

All borrowing costs are charged to the Profit and Loss Account except :

(a) Borrowing costs that are attributable to the acquisition or construction of assets that necessarily take a substantial period of time to

get ready for their intended use, which are capitalised as part of the cost of such assets.

(b) Expenses incurred on raising long term borrowings are amortised over the period of borrowings. On early buyback, conversion or

repayment of borrowings, any unamortised expenditure is fully written off in that year.

(M) Redemption Premium :

Premium payable on redemption of Bonds/Debentures is fully provided and charged to Securities Premium Account (Net of Tax) in the year

of issue.

101


(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.

(O) Leases :

The Company’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns,

computer hardware etc.). The leasing arrangements, which are not non-cancellable, range between eleven months and five years generally,

and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals payable are charged as rent.

(P) Taxes on Income :

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject to

consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in

one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed

depreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidence

that sufficient future tax income will be available against which such deferred tax assets can be realised.

(Q) Excise duty recovered on sales is included in ’Sales – Traded and Manufactured Goods’. Excise duty in respect of Finished Goods

manufactured is shown separately as an item of expense and included in valuation of finished goods produced.

2. Share Capital :

Issued and Subscribed Capital include :

(a) 1,66,809 Ordinary Shares allotted as fully paid-up pursuant to a contract without payment having been received in cash.

(b) 17,06,07,504 Ordinary Shares allotted as fully paid-up by way of Bonus Shares by capitalisation of Securities Premium Account and

Reserves.

(c) 12,56,562 Ordinary Shares issued consequent to the Scheme of Amalgamation with the Union Bank of India Limited. Of these, 13,737

Ordinary Shares were issued on conversion of 41,211 8% Bonds.

(d) 12,98,202 Ordinary Shares issued consequent to the Scheme of Amalgamation with International Tractor Company of India Limited

without payment having been received in cash.

(e) 1,88,166 Ordinary Shares issued consequent to the Scheme of Amalgamation with Mahindra Spicer Limited without payment having been

received in cash.

(f) 9,73,200 Ordinary Shares issued consequent to the Scheme of Amalgamation with Mahindra Nissan Allwyn Limited without payment

having been received in cash.

(g) 1,28,27,552 Ordinary Shares issued consequent to the Scheme of Amalgamation with Mahindra Holdings and Finance Limited without

payment having been received in cash.

(h) 2,02,51,900 Ordinary Shares issued consequent to the Scheme of Amalgamation with Punjab Tractors Limited without payment having

been received in cash.

3. Reserves and Surplus :

Rupees crores

2009 2008

(a) Movements during the year :

(i) Securities Premium Account :

Additions, arising out of exercise of options ..................................................... 1.02 1.34

Reversal of Premium on buyback of Zero Coupon Convertible Bonds

(Net of Tax of Rs. 5.07 crores (2008 : Rs. Nil)) .................................................. 9.84 —

Premium on conversion of Debentures and Bonds ............................................ — 11.62

Reduction of provision for premium on redemption of Zero Coupon

Convertible Bonds (Net of Tax of Rs. Nil ( 2008 : Rs. 5.54 crores)) ................... — 14.08

10.86 27.04

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. 0.54 crores ( 2008 : Rs. 0.49 crores)) ................................... 4.95 2.01

Increase of provision for premium on redemption of Zero Coupon Convertible

Bonds (Net of Tax of Rs. 20.20 crores (2008 : Rs. Nil)) ..................................... 39.25 —

44.20 2.01

(ii) Revaluation Reserve :

Adjusted against depreciation for the year [Note 1 (A)(b) (iii)] ......................... 0.38 0.39

0.38 0.39

102

(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. 3.10 crores (2008 : Rs. 3.34 crores), Securities Premium Account by Rs. 15.20 crores (2008 : Rs. 16.34

crores) for the 31,02,653 shares (2008 : 33,34,216 shares) 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. 3.10 crores (2008 : Rs. 3.33 crores) for

the bonus shares 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. 434.19 crores (Net of Tax of Rs. 223.57 crores) (2008 : Rs. 12.92 crores (Net of Tax of Rs. 6.66 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.

(d) In line with the notification dated 31st

March, 2009 issued by The Ministry of Corporate Affairs, amending Accounting Standard (AS) 11 –

‘Effects of Changes in Foreign Exchange Rates’, the Company has chosen to exercise the option under paragraph 46 inserted in the

standard by the notification.

Accordingly with retrospective effect from 1st

April, 2007 exchange differences on all long term monetary items are :

(i) to the extent such items are used for financing fixed assets, added to/subtracted from the cost of those fixed assets and depreciated

over the balance useful life of the asset.

(ii) in other cases accumulated in the ‘Foreign Currency Monetary Item Translation Difference Account’ and amortised over the balance

period of such long term monetary item but not beyond 31st

March, 2011.

Arising from the above the Company has :

(i) charged to the opening General Reserve Rs. 39.97 crores (Net of Tax of Rs. 20.58 crores) which was recognised in the Profit and Loss

Account in previous financial year ended 31st

March, 2008.

(ii) added to fixed assets Rs. 131.73 crores and to Capital Work-in-Progress Rs. 41.24 crores being the exchange differences on long term

monetary items relatable to the acquisition of fixed assets.

(iii) charged to the Profit and Loss Account Rs. 24.61 crores.

(iv) carried forward Rs. 18.11 crores in the ‘Foreign Currency Monetary Item Translation Difference Account’ being the amount remaining

to be amortised as at 31st

March, 2009.

As a result of the above change in Accounting Policy the net profit before tax for the year is higher by Rs. 251.63 crores (Net of Tax

Rs. 166.10 crores).

4. Loans :

(a) Debentures are redeemable/convertible as follows :

(i) Rs. 700 crores Fully and Compulsorily Convertible Debentures on 28th

January, 2010.

(ii) Rs. 200 crores on 9th

January, 2011.

(iii) Rs. 400 crores in three equal instalments from 12th

December, 2013.

(iv) 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 and Foreign Currency Loans from Banks of Rs. 124.29 crores are secured by a pari-passu charge on

immovable properties of the Company both present and future, subject to certain exclusions and are also secured by pari-passu charge on

the movable properties of the Company including movable machinery, machinery spares, tools and accessories, both present and future.

(ii) Short Term Foreign Currency Loan of Rs. 253.70 crores from banks and Loans and Advances on cash credit accounts from the Company’s

bankers are secured by a first charge on a pari-passu basis on the whole of the current assets of the Company namely inventories, book

debts, outstanding monies, receivables, claims etc. both present and future.

(c) The following amounts are repayable/convertible by 31st

March, 2010 :

(i) Debenture holders .......................................................................... : Rs. 700.00 crores (2008 : Rs. 5.50 crores)

(ii) Foreign currency loans from Banks (secured) ................................. : Rs. 355.18 crores (2008 : Rs. 304.41 crores)

(iii) Fixed Deposit holders ..................................................................... : Rs. 4.88 crores (2008 : Rs. 2.15 crores)

(iv) Rupee Loans :

(a) from banks ............................................................................. : Rs. 80.00 crores (2008 : Rs. 106.14 crores)

(b) from others ............................................................................. : Rs. 10.13 crores (2008 : Rs. 6.14 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. 922.04 per share 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.

103


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. Upto 31st

March, 2009, none of the Bonds 2011 have been converted into equity

shares/GDRs.

During the year Bonds 2011 of the face value of US$ 10.50 million were bought back and cancelled.

Premium payable on redemption of Bonds 2011 had been fully provided in the previous year by debiting the same to Securities Premium

Account (SPA). Consequent to the buyback, premium aggregating Rs. 9.84 crores (Net of Tax of Rs. 5.07 crores) no longer payable has been

credited back to SPA during the year.

The net proceeds of Rs. 53.95 crores, unutilised as at 31st

March, 2009, is disclosed under Cash and Bank balances.


March, 2009, 93,95,974 Unsecured Fully and Compulsorily Convertible Debentures (FCD’s)

having a face value of Rs. 745 per FCD for an aggregate consideration of Rs. 700 crores. The FCD’s have a tenure of 18 months and carry a

coupon rate of 9.25% until conversion or date of maturity whichever is earlier. The FCD holder has the option to convert each FCD into one

equity share of face value Rs. 10 at a premium of Rs. 735, at anytime within 18 months from 28th

July, 2008. Unless previously converted, each

FCD will be compulsorily converted into one equity share of Rs. 10 each at a premium of Rs. 735 on 28th

January, 2010. Upto 31st

March, 2009,

none of the FCD’s have been converted into equity shares.

5. (a) Buildings include Rs. * crores (2008 : Rs. * crores) being the value of shares in co-operative housing societies.

(b) Additions to Plant and Machinery include Rs. 9.65 crores (2008 : Rs. Nil) on account of capitalisation of interest and Rs. 131.73 crores

debit (Net) (2008 : Rs. Nil) on account of foreign exchange fluctuation.

(c) (i) The depreciation charge for the year excludes :

(a) An amount of Rs. 0.38 crores (2008 : Rs. 0.39 crores), representing depreciation on the increase due to revaluation of Land and

Buildings transferred from the Revaluation Reserve.

(b) An amount of Rs. Nil (2008 : Rs. 0.17 crores), representing depreciation on assets used for development work. This expenditure

is transferred to Development Expenditure and is appropriately amortised.

(ii) The net credit to the Profit and Loss Account consequent to the above adjustments to the Revaluation Reserve is Rs. 0.38 crores (2008

: Rs. 0.39 crores).

(d) Addition to Fixed Assets and Depreciation/Amortisation for the year includes the following assets transferred on Amalgamation :

Rupees crores

Description of Assets Cost Depreciation/

Amortisation

Land – Freehold ................................................................. 3.95 —

Building .............................................................................. 38.59 17.57

Plant and Machinery .......................................................... 253.35 193.90

Furniture and Fittings ........................................................ 5.84 4.16

Vehicles, Cycles, etc ........................................................... 9.71 5.70

Software Expenditure ......................................................... 1.87 0.78

Total .................................................................................. 313.31 222.11

6. Sundry Debtors others include Rs. 0.59 crores (2008 : Rs. 0.22 crores), which, in accordance with the terms of the contracts, were not due for

payment as at 31st

March, 2009.

7. Cash and Bank Balances include balances lying with non-scheduled banks :

In Current Account

Rupees crores

Bank Tejarat, Bank of Australia Bank of China The Municipal The Ahmednagar

Tehran Co-op. Bank Ltd. Merchant’s Co-op. Bank Ltd.

Balance as at 31st

March, 2009 ...................... * 3.34 0.09 2.13 *

Balance as at 31st

March, 2008 ...................... * 4.38 0.06 2.15 —

Maximum balance during the year ................. * 9.51 1.47 3.23 *

Maximum balance during the previous year ... * 5.62 1.41 3.61 —

8. Loans and Advances include :

(a) Fixed/Call deposits with/loans to limited companies Rs. 411.14 crores (2008 : Rs. 71.44 crores) including Rs. 404.65 crores (2008 : Rs.

64.95 crores) with/to subsidiaries.

(b) Amounts paid towards joint development of property Rs. 1.54 crores (2008 : Rs. 1.54 crores).

(c) Share Application money pending allotment Rs. Nil (2008 : Rs. 9.33 crores) to subsidiaries.


104

9. 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

2009 2008

(a) Dues remaining unpaid as at 31st

March

Principal 2.42 3.09

Interest 0.05 0.04

(b) Interest paid in terms of Section 16 of the Act 0.03 —

(c) Amount of interest due and payable for the period of delay on

payments made beyond the appointed day during the year 0.15 0.10

(d) Amount of interest accrued and remaining unpaid as at 31st

March 0.32 0.15

(e) Further interest due and payable even in the succeeding years, until such date

when the interest due as above are actually paid to the small enterprises 0.13 0.01

10. (a) Provision - Others Rs. 167.45 crores (2008 : Rs. 134.38 crores) includes provision for contingencies Rs. 8.25 crores (2008 : Rs. 8.16 crores),

provision for warranty Rs. 137.45 crores (2008 : Rs. 106.42 crores) and provision for diminution in value of certain assets substantially

retired from active use Rs. 16.91 crores (2008 : Rs. 17.01 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.

(b) The movement in above provisions is as follows :

Rupees crores

Warranty Contingency

2009 2008 2009 2008

Provisions

Balance as at 1st

April 106.42 85.32 8.16 —

Add : On Amalgamation during the year 0.25 — — —

Add : Provision made during the year 85.05 90.78 5.41 8.16

Less : Utilisation during the year 54.27 69.68 5.32 —

Balance as at 31st

March 137.45 106.42 8.25 8.16

11. (a) Sales include :

(i) Export benefits Rs. 26.99 crores (2008 : Rs. 28.64 crores).

(ii) Cost of items given for sales promotion/as donations Rs. 0.77 crores (2008 : Rs. 0.32 crores).

(b) Stock-in-Trade, Property Development Activity, includes completed premises Rs. 3.13 crores (2008 : Rs. 3.13 crores), which, pending sale,

have been given out on leave and licence basis for which fresh agreement is under negotiation.

12. (a) Dividends on other investments includes Rs. 44.89 crores (2008 : Rs. 15.01 crores) in respect of current investments and Rs. 1.32 crores

(2008 : Rs. Nil) in respect of long term investments.

(b) Interest on Government Securities, Debentures and Bonds includes tax deducted at source Rs. 0.11 crores (2008 : Rs. 0.90 crores) and

comprise Rs. 0.50 crores (2008 : Rs. 0.28 crores) and Rs. 4.26 crores (2008 : Rs. 4.59 crores) in respect of long term and current

investments respectively.

(c) Interest received - others includes tax deducted at source Rs. 15.11 crores (2008 : Rs. 3.91 crores).

(d) Profit on sale of investments (Net) includes profit on disposal of current investments (Net) Rs. 14.73 crores (2008 : Rs. 14.72 crores), and

profit on disposal of long term investments (Net) Rs. 38.49 crores (2008 : Rs. 14.22 crores).

105


13. Repairs and Maintenance includes machinery spares consumed Rs. 26.25 crores (2008 : Rs. 22.19 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).

14. Miscellaneous Expenses include :

(a) Amounts paid/payable to Auditors (net of service tax where applicable) :

Rupees crores

Statutory Auditors Cost Auditors

(i) Audit Fees ......................................................................................................................... 1.08 0.02

0.91 0.02

(ii) Company Law matters ...................................................................................................... * —

* —

(iii) Other Services ................................................................................................................... 0.63 —

0.74 —

(iv) Reimbursement of expenses ............................................................................................. 0.05 —

0.06 *

1.76 0.02

1.71 0.02

(b) An amount of Rs. 0.96 crores (2008 : Rs. 0.96 crores) payable as commission to non-wholetime Directors – Note 15 and Schedule XV.

15. Managerial remuneration for Directors included in the Profit and Loss Account is Rs. 6.29 crores (2008 : Rs. 6.54 crores) including Directors’

fees of Rs. 0.09 crores (2008 : Rs. 0.10 crores), perquisites Rs. 1.27 crores (2008 : Rs. 1.25 crores) and commission Rs. 3.16 crores (2008 :

Rs. 3.41 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.

0.09 crores (2008 : Rs. 0.09 crores).

16. Employee Benefits

Defined benefit plans – as per Actuarial valuation on 31st

March, 2009.

Gratuity (Funded) Rupees crores

2009 2008

I. Expense recognised in the Statement of

Profit and Loss Account for the year ended 31st

March

1. Current Service Cost 16.59 13.20

2. Interest 18.30 14.84

3. Expected Return on Plan Assets (18.16) (12.45)

4. Actuarial (Gain)/Loss 33.40 (0.62)

5. Total expense 50.13 14.97

II. Net Asset/(Liability) recognised in the Balance Sheet as at 31st

March

1. Present value of Defined Benefit Obligation as at 31st

March 300.61 201.76

2. Fair value of plan assets as at 31st

March 206.14 163.58

3. Funded status [Surplus/(Deficit)] (94.47) (38.18)

4. Net asset/(liability) as at 31st

March (94.47) (38.18)

III. Change in the obligation during the year ended 31st

March

1. Present value of Defined Benefit Obligation at the beginning of the year 201.76 184.43

2. Addition on account of amalgamation 40.90 —


4. Interest Cost 18.30 14.84


6. Benefit payments ** (10.34) (10.09)

7. Present Value of Defined Benefit Obligation at the end of the year 300.61 201.76

**Includes benefit payment recoverable Rs. 0.53 crores (2008 : Rs. 2.73 crores).


106

IV. Change in Fair Value of Assets during the year ended 31st

March

1. Fair Value of Plan assets at the beginning of the year 163.58 127.04

2. Addition on account of amalgamation 29.16 —

3. Expected return on plan assets 18.16 12.45

4. Contributions by employer 5.05 31.45

5. Actual benefits paid (9.81) (7.36)

6. Fair value of Plan assets at the end of the year 206.14 163.58

7. Actual return on plan assets 18.16 12.45

V. The major categories of plan assets as a percentage of total plan

Funded with LIC 100% 100%

VI. Actuarial assumptions

1. Discount Rate 7.75% 8.05%

2. Expected rate of return on plan assets 9.25%-9.50% 9.45%

3. In-service Mortality Indian Assured Lives Mortality

(1994-96) Modified ultimate

4. Turnover Rate 5% Age 21 to 30 - 10%

Age 31 to 40 - 5%

Age 41 to 50 - 3%

Age 51 & above - 2%

VII. Experience Adjustments Period Ended

2009 2008 2007

1. Defined Benefit Obligation 300.61 201.76 184.43

2. Fair Value of Plan Assets 206.14 163.58 127.04

3. Surplus/(Deficit) (94.47) (38.18) (57.39)

4. Experience Adjustment on Plan Liabilities [(Gain)/Loss] 32.04 (3.36)

Post Retirement Medical Benefits (Unfunded) Rupees crores

2009 2008

I. Expense recognised in the Statement of Profit and Loss

Account for the year ended 31st

March


2. Interest 0.24 0.28


4. Total expense 2.27 (0.28)

II. Net Asset/(Liability) recognised in the Balance Sheet as at 31st

March

1. Present value of Defined Benefit Obligation as at 31st

March 4.84 2.79

2. Funded status [Surplus/(Deficit)] (4.84) (2.79)

3. Net Asset/(Liability) as at 31st

March (4.84) (2.79)

Rupees crores

2009 2008

107


III. Change in the obligation during the year ended 31st

March

1. Present value of Defined Benefit Obligation at the beginning of the year 2.79 3.22


3. Interest Cost 0.24 0.28


5. Benefit payments (0.22) (0.15)

6. Present Value of Defined Benefit Obligation at the end of the year 4.84 2.79

IV. Change in Fair Value of Assets during the year ended 31st

March

1. Contributions by employer 0.22 0.15

2. Actual benefits paid (0.22) (0.15)

V. Actuarial assumptions

1. Discount Rate 7.75% 8.05%

2. In-service Mortality Indian Assured Lives Mortality

(1994-96) Modified ultimate

3. Turnover Rate 5% Age 21 to 30 -10%

Age 31 to 40 - 5%

Age 41 to 50 - 3%

Age 51 & above- 2%

4. Medical premium inflation 5% 3%

VI. Effect of one percentage point change in the assumed medical inflation rate One percentage point One percentage point

increase in medical decrease in medical

inflation rates inflation rates

2009 2008 2009 2008

1. Effect on the aggregate service and interest cost of Post

Employment Medical Benefits 0.14 0.05 (0.11) (0.08)

2. Effect on the accumulated Post Employment Medical Benefits obligations 0.72 0.38 (0.60) (0.32)

VII. Experience Adjustments Period Ended

2009 2008 2007

1. Defined Benefit Obligation 4.84 2.79 3.22

2. Surplus/(Deficit) (4.84) (2.79) (3.22)

3. Experience Adjustment on Plan Liabilities 1.24 (0.55) 0.07

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, takes account of inflation, seniority, promotion and other relevant

factors, such as supply and demand in the employment market.

17. The Company had allotted 55,24,219 ordinary (equity) shares in the year ended 31st

March, 2002, 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.

Rupees crores

2009 2008

108

Summary of Stock Options

No. of stock options Weighted average

exercise price (Rs.)

Options outstanding on 1st

April, 2008 35,86,368 557.33

Options granted during the year 26,34,363 500.00

Options forfeited/lapsed during the year 1,41,684 622.15

Options exercised during the year 4,63,126 220.82

Options outstanding on 31st

March, 2009 56,15,921 556.55

Options vested but not exercised on 31st

March, 2009 13,47,050 464.03

Average share price on the date of exercise of the options are as under :

Date of exercise Average share price (Rs.)

31st

May, 2008 603.43

11th

June, 2008 575.55

14th

June, 2008 571.93

Information in respect of options outstanding as at 31st

March, 2009.

Range of exercise price Number of options Weighted average

remaining life

Rs. 29.50 - Rs. 61.50 12,526 0.17 yrs

Rs. 215.00 - Rs. 227.00 6,39,268 2.17 yrs

Rs. 361.00 27,742 2.57 yrs

Rs. 616.00 - Rs. 620.00 8,18,300 4.79 yrs

Rs. 762.00 15,49,971 5.82 yrs

Rs. 500.00 25,68,114 6.87 yrs

The fair value of options granted during the year on 13th

August, 2008 is Rs. 219.77 per share.

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

13th

Aug, 2008

Risk free interest rate 9.17%

Expected life 2.50 Years

Expected volatility 38.84%

Expected dividend yield 2.80%

Exercise price (Rs.) 500.00

Stock price (Rs.) 593.35

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. 3.57 crores (2008 :

Rs. 2.16 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. 33.90 crores, Profit after tax lower by Rs. 33.90 crores and the basic and diluted earnings per share would have been

lower by Rs. 1.24 and Rs. 1.15 respectively.

18. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st

March, 2009 is Rs. 756.32

crores (2008 : Rs. 522.77 crores).

19. The Commissioner of Central Excise (Adjudication), Navi Mumbai, passed an order on 30th

March, 2005, confirming the demand made on the

Company for payment of differential excise duty (including penalty) of Rs. 304.11 crores in connection with the classification of Company’s

Commander range of vehicles, during the years 1991-1996. Whilst the Company had classified the Commander range of vehicles as 10-seater

attracting a lower rate of excise duty, the Commissioner of Central Excise (Adjudication), Navi Mumbai, has held that these vehicles could not be

classified as 10-seaters and as such attracted a higher rate of excise duty. In earlier proceedings, the Collector of Central Excise, Mumbai as also

the Collector Central Excise (Appeals), Mumbai had upheld the classification of these vehicles as 10-seaters. Similarly, certain statutory/expert

bodies have also confirmed the concerned vehicles to be 10-seater vehicles.

109


The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has also by its order dated 19th

July, 2005 upheld this classification. The

department’s Statutory Appeal against this order has been admitted by the Supreme Court.

The Commissioner of Central Excise, Nasik passed another order dated 20th

March, 2006 confirming a demand of Rs. 24.75 crores in respect of

Company’s Armada range of vehicles manufactured during the years 1992-1996, on the same grounds as adopted for Commander range of

vehicles.

The Company has been legally advised that the aforesaid orders dated 30th

March, 2005 and 20th

March, 2006 passed by the Commissioners are

unsustainable in law. The Tribunal has also given an unconditional stay against both the aforesaid orders.

The final hearing in the above matters is awaited.

The Company is confident that it would succeed in the case and the Company’s stand that the Commander and Armada Vehicles are 10-seater

vehicles would be upheld. As such, the Company does not expect any liability on this account.

20. Contingent Liability :

(a) Guarantees given by the Company :

Rupees crores

Amount of guarantees Outstanding amounts

against the guarantees

2009 2008 2009 2008

For employees 1.05 1.05 * *

For other companies 168.46 38.10 163.67 34.37

(b) Claims against the Company not acknowledged as debts comprise of :

(i) Excise Duty, Sales Tax and Service Tax claims disputed by the Company relating to issues of applicability and classification aggregating

Rs. 381.39 crores (Net of Tax : Rs. 270.95 crores) [2008 : Rs. 184.03 crores (Net of Tax : Rs. 127.24 crores)].

(ii) Other matters (excluding claims where amounts are not ascertainable) : Rs. 21.95 crores (Net of Tax : Rs. 15.16 crores ) [2008 :

Rs. 10.73 crores (Net of Tax : Rs. 7.61 crores)].

(iii) Claims on capital account : Rs. 1.18 crores (2008 : Rs. 1.18 crores).

(c) Uncalled liability on equity shares partly paid Rs. 10.50 crores (2008 : Rs. 10.50 crores).

(d) Taxation matters :

(i) Demands against the Company not acknowledged as debts and not provided for, relating to issues of deductibility and taxability in

respect of which the Company is in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be

completed :

- Income-Tax : Rs. 168.25 crores (2008 : Rs. 134.14 crores).

(ii) Items in respect of which the Company has succeeded in appeal, but the Income-tax Department is pursuing/likely to pursue in

appeal/reference and exclusive of the effect of similar matters in respect of assessments remaining to be completed :

- Income-Tax matters : Rs. 58.63 crores (2008 : Rs. 37.96 crores)

- Surtax matters : Rs. 0.13 crores (2008 : Rs. 0.13 crores)

(e) Bills discounted not matured Rs. 59.55 crores (2008 : Rs. 61.22 crores).

(f) Counter Guarantees to banks Rs. 0.64 crores (2008 : Nil).

21. Research and Development expenditure :

(a) In recognised Research and Development units :

(i) debited to the Profit and Loss Account, including certain expenditure based on allocations made by the Company, aggregate

Rs. 220.09 crores (2008 : Rs. 177.89 crores) [excluding depreciation and amortisation of Rs. 56.19 crores (2008 : Rs. 39.21 crores)].

(ii) Development Expenditure incurred during the year Rs. 128.94 crores (2008 : Rs. 53.77 crores).

(iii) Capitalisation of assets Rs. 15.64 crores (2008 : Rs. 33.13 crores).


110

(b) In other units :

(i) debited to the Profit and Loss Account, including certain expenditure based on allocations made by the Company, aggregate

Rs. 18.69 crores (2008 : Rs. 13.63 crores) [excluding depreciation and amortisation of Rs. 1.50 crores (2008 : Rs. 1.09 crores)].

(ii) Development Expenditure incurred during the year Rs. 7.50 crores (2008 : Rs. Nil).

(iii) Capitalisation of assets Rs. 3.56 crores (2008 : Rs. 1.55 crores).

22. The net difference in foreign exchange loss debited to the Profit and Loss Account is Rs. 237.20 crores (2008 : Gain of Rs. 13.45 crores).

23. Exceptional items of Rs. 10.27 crores (2008 : Rs. 172.73 crores) comprise of :

(a) Surplus on transfer of Logistics business Rs. 10.27 crores (2008 : Rs. Nil).

(b) In the previous year, gain of Rs. 172.73 crores arising from the schemes of arrangement (merger) between the Company’s subsidiaries Mahindra

Stokes Holding Company Limited (MSHCL), Mahindra Forgings Overseas Limited (MFOL) and Mahindra Forgings Mauritius Limited (MFML) with

Mahindra Forgings Limited (MFL); and between Plexion (India) Private Limited with Mahindra Engineering Design and Development Company

Limited (MEDDCL) approved by the High Court of Bombay. The schemes are operative from the appointed date of 1st

April, 2007. Consequently

MFL became a subsidiary of the Company and MSHCL, MFOL, MFML and Plexion (India) Private Limited, ceased to be subsidiaries of the

Company. In compliance with Accounting Standard (AS) 13 - ’Accounting for investments’, the Company is required to value the additional

shares received of MFL and MEDDCL, by referencing them to the fair value of the shares of MSHCL, MFOL, MFML and Plexion (India) Private

Limited respectively, resulting in the gain mentioned above.

24. The components of Deferred Tax Liability and Assets as at 31st

March, 2009 are as under :

Rupees crores

2009 2008

Deferred Tax Liability :

(i) On fiscal allowances on fixed assets 322.06 196.65

(ii) Others 71.32 21.11

393.38 217.76

Deferred Tax Assets :

(i) On Provision for Compensated absences 78.62 67.36

(ii) On Provision for Doubtful Debts/Advances 27.33 13.68

(iii) On Premium on redemption of Zero Coupon Convertible Bonds 40.08 48.67

(iv) On Provision for Employee Benefits 17.61 11.01

(v) Loss on mark to market of Forward Contracts 223.57 6.66

(vi) Others 24.44 13.66

411.65 161.04

Net Deferred Tax (Asset)/Liability (18.27) 56.72

25. Scheme of Amalgamations :

(a) Pursuant to the Scheme of Amalgamation (the scheme) of Mahindra Holdings and Finance Limited (MHFL) a wholly owned subsidiary of

the Company, with the Company as sanctioned by the Honourable High Court of Bombay vide its order dated 18th

July, 2008, the entire

business and all the assets and liabilities, duties and obligations of MHFL were transferred to and vested in the Company, from 1st

February,

2008 (the appointed date). The scheme became effective on 11th

August, 2008.

The accounting for the amalgamation was done as per the pooling of interest method as modified under the scheme and approved by the

Honourable High Court and the same has been given effect to in the financial statements as under :

(i) The assets, liabilities and reserves of MHFL were recorded in the books of the Company, at their book values.

(ii) The Company transferred, out of its total holding in MHFL as on 1st

February, 2008, 5,13,10,208 shares to a trust, to hold the shares

and any additions or accretions thereto exclusively for the benefit of the Company and the Company has under the scheme issued to

the trust one share in itself for every four shares held by it in MHFL. The balance shares held by the Company in MHFL were cancelled.

(iii) The Company credited to the existing Investment Fluctuation Reserve Account Rs. 129.61 crores, being 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.

MHFL was engaged in the business of investing and financing.

The MHFL profit after tax of Rs. 30.73 crores for the period 1st


March, 2008, has been recognised in the current

year and disclosed separately in the Profit and Loss Account.

Had the scheme not prescribed the above treatment, the General Reserve of the Company would have been higher by Rs. 129.61

crores and the Investment Fluctuation Reserve Account lower by the same amount.

111


(b) Pursuant to the Scheme of Amalgamation (the scheme) of Punjab Tractors Limited (PTL) a subsidiary of the Company, with the Company

sanctioned by the Honourable High Court of Bombay and the Honourable High Court of Punjab & Haryana vide their orders dated 9th

January, 2009 and 16th

January, 2009 respectively, the entire business and all the assets and liabilities, duties and obligations of PTL were

transferred to and vested in the Company, from 1st

August, 2008 (the appointed date). The scheme became effective from 16th

February, 2009.

The accounting for the amalgamation was done as per the pooling of interest method as modified under the scheme and approved by the

Honourable High Courts and the same has been given effect to in the financial statements as under :

(i) The assets, liabilities and reserves of PTL were recorded in the books of the Company, at their book values.

(ii) The Company transferred its entire holding of 3,92,70,165 shares as on 1st

August, 2008 in PTL to a trust, to hold the shares and any

additions or accretions thereto exclusively for the benefit of the Company. The Company has under the scheme issued one equity

share of Rs. 10 each for every three equity shares of Rs. 10 each held in PTL to the shareholders of PTL.

(iii) The Company credited to the existing Investment Fluctuation Reserve Account Rs. 677.00 crores, being the excess of the value of the

net assets of PTL over the face value of the shares allotted.

PTL was engaged in the business of manufacture and sale of tractors and combine harvesters.

Had the scheme not prescribed the above treatment, the General Reserve and the Profit and Loss Account of the Company would

have been higher by Rs. 646.70 crores and Rs. 30.00 crores respectively, there would have been a Preference Share Redemption

Reserve of Rs. 0.30 crores and the Investment Fluctuation Reserve Account would have been lower by Rs. 677.00 crores.

(c) On account of the above mergers, the figures for current year are not strictly comparable with that of the previous year.

26. Earnings per Share :

2009 2008

Amount used as the numerator – Balance of profit (Rupees crores) ............................................... 867.51 1,103.37

(Gain)/Loss on difference in exchange on bonds (Rupees crores) .................................................... 17.29 (42.97)

Amount used as the numerator for diluted earnings per share (Rupees crores) ............................. 884.80 1,060.40

Weighted average number of equity shares used in computing basic earnings per share ............. 27,25,22,947 23,86,22,366

Effect of potential ordinary (equity) shares on conversion of bonds/debentures ............................ 2,22,19,413 1,67,57,276

Weighted average number of equity shares used in computing diluted earnings per share .......... 29,47,42,360 25,53,79,642

Basic Earnings per share (Rs.) (Face value of Rs. 10 per share) ........................................................ 31.83 46.24

Diluted Earnings per share (Rs.) ........................................................................................................ 30.02 41.52

27. Provision for doubtful debts and advances for the year comprises :

Rupees crores

2009 2008

Provision for doubtful debts and advances made during the year (Net)

(including Rs. 19.52 crores (2008 : Rs. Nil) pursuant to the schemes of arrangement/amalgamation

approved by the Hon’ble High Courts) ............................................................................................. 50.96 (23.59)

Less : Transfer from Investment Fluctuation Reserve pursuant to the above schemes of

arrangement/amalgamation .............................................................................................................. 19.52 —

Total .................................................................................................................................................. 31.44 (23.59)

28. Provision for diminution in the value of long term investments for the year comprises :

Rupees crores

2009 2008

Provision for diminution in value of investments, made during the year (Net) (including

provision of Rs. 154.38 crores (2008 : Rs. Nil) pursuant to the schemes of

arrangement/amalgamation approved by the Hon’ble High Courts) ............................................... 154.38 (5.40)

Less : Transfer from Investment Fluctuation Reserve pursuant to the above schemes of

arrangement/amalgamation .............................................................................................................. 154.38 —

Total .................................................................................................................................................. — (5.40)

112

29. The outstanding derivative instruments as on 31st

March, 2009 :

The Company takes forward contracts to hedge exposures arising out of trade payables in foreign currency. Such outstanding forward contracts

are booked for fixing exchange rates between cross currencies like JPY/US$. The amount of hedges is Rs. Nil (2008 : JPY 50.00 crores).

The Company has taken forward contracts to hedge exposures arising out of trade receivables part by forward contracts US$ 60.30 crores

(2008 : AUD 0.35 crores, EUR 1.00 crore and US$ 19.40 crores), part by Range Forwards US$ 10.20 crores (2008 : Nil) and partly US$ 33.20

crores (2008 : US$ 33.75 crores and EUR 1.20 crores) by a derivative structure in the form of ‘strips’.

The foreign currency exposures not hedged by derivative instrument or otherwise as on 31st

March, 2009 are – 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 (2008 : Receivables of JPY 4.25 crores, RMB * crores and Payables of AUD 0.04

crores, CHF * crores, EUR 0.61 crores, GBP 0.05 crores, SEK 0.06 crores, SGD 0.02 crores, US$ 7.84 crores, ZAR 0.12 crores).

The Company has outstanding borrowings of JPY 1,126.44 crores and US$ 9.45 crores (2008 : JPY 1,091.74 crores and US$ 11.45 crores) as

Foreign Currency Borrowings. The borrowing of JPY 450.24 crores (2008 : JPY 509.44 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 (2008 : JPY 582.30 crores) has been fixed

to a US$ liability using a cross currency swap structure. The borrowing of US$ 2.00 crores (2008 : 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 (2008 : US$ 20.00 crores) are outstanding and have not been hedged.

* denotes amounts less than 50,000 of respective currency.

30. Related Party Transactions :

(a) Related parties where control exist :

(i) Subsidiaries :

Sl. No. Name of the Company Sl. No. Name of the Company

1. Mahindra Engineering and Chemical Products Limited

2. Mahindra Logisoft Business Solutions Limited

3. Mahindra First Choice Wheels Limited (formerly known as

FirstChoice Wheels Limited)

4. Mahindra USA Inc.

5. Mahindra Gujarat Tractor Limited

6. Mahindra (China) Tractor Company Limited

7. Mahindra Shubhlabh Services Limited

8. Mahindra & Mahindra South Africa (Proprietary) Limited

9. Mahindra Europe s.r.l.

10. Mahindra Engineering Services Limited (formerly known as

Mahindra Engineering Design & Development Company

Limited)

11. Mahindra SAR Transmission Private Limited

12. Mahindra Overseas Investment Company (Mauritius) Limited

13. Mahindra-BT Investment Company (Mauritius) Limited

14. Mahindra Intertrade Limited

15. Mahindra Steel Service Centre Limited

16. Mahindra Middleeast Electrical Steel Service Centre (FZC)

17. Mahindra Consulting Engineers Limited

18. Mahindra Holidays & Resorts India Limited

19. Mahindra Holidays and Resorts USA Inc.

20. NBS International Limited

21. Mahindra Ugine Steel Company Limited

22. Mahindra & Mahindra Financial Services Limited

23. Mahindra Insurance Brokers Limited

24. Tech Mahindra Limited

25. Tech Mahindra (Americas) Inc.

26. Tech Mahindra GmbH

27. Tech Mahindra (Singapore) Pte. Limited

28. Tech Mahindra (Thailand) Limited

29. Tech Mahindra Foundation

30. Tech Mahindra (R&D Services) Inc. (upto 30th

June, 2008)

31. Bristlecone Limited

32. Bristlecone Inc.

33. Bristlecone UK Limited

34. Bristlecone India Limited

35. Bristlecone (Singapore) Pte. Limited

36. Bristlecone GmbH

37. Mahindra Renault Private Limited

38. Mahindra Navistar Automotives Limited (formerly known

as Mahindra International Limited)

39. Stokes Group Limited

40. Jensand Limited

41. Stokes Forgings Limited

42. Stokes Forgings Dudley Limited

43. Mahindra Engineering Services (Europe) Limited (formerly

known as Plexion Technologies (UK) Limited)

44. Plexion Technologies GmbH

45. Mahindra Technologies Inc. (formerly known as Plexion

Technologies Inc.)

46. Mahindra Lifespace Developers Limited

47. Mahindra World City (Jaipur) Limited

48. Mahindra World City Developers Limited

49. Mahindra Infrastructure Developers Limited

50. Mahindra Integrated Township Limited

51. Mahindra World City (Maharashtra) Limited

52. PT Tech Mahindra Indonesia

53. Mahindra Forgings International Limited

54. CanvasM Technologies Limited

55. CanvasM (Americas) Inc.

56. Mahindra Forgings Europe AG

57. Gesenkschmiede Schneider GmbH

58. JECO-Jellinghaus GmbH

113



59. Falkenroth Umformtechnik GmbH

60. Mahindra Vehicle Manufacturers Limited (formerly known

as Mahindra Automotive Limited)

61. Schöneweiss & Co. GmbH

62. Mahindra Hinoday Industries Limited

63. MHR Hotel Management GmbH

64. Mahindra Forgings Limited

65. Mahindra Rural Housing Finance Limited

66. Mahindra Hotels and Residences India Limited

67. Mahindra Forgings Global Limited

68. Bristlecone (Malaysia) SDN.BHD

69. Tech Mahindra (Malaysia) SDN.BHD

70. Punjab Tractors Limited (upto 31st

July, 2008)

71. Mahindra Castings Private Limited

72. Mahindra Retail Private Limited (upto 14th

January, 2009)

73. Mahindra Knowledge City Limited

(formerly known as Mahindra Technology Park Limited)

74. Mahindra Holdings Limited

75. Mahindra Logistics Limited

76. Tech Mahindra (Beijing) IT Services Limited

77. Mahindra Navistar Engines Private Limited

78. Mahindra Residential Developers Limited

79. Mahindra Graphic Research Design s.r.l.

80. Mahindra Aerospace Private Limited

81. Heritage Bird (M) SDN.BHD

82. Mahindra First Choice Services Limited

83. Mahindra Bebanco Developers Limited (w.e.f. 3rd

June, 2008)

84. Mahindra Gears Global Limited (formerly known as Iven

International Gear Mauritius Limited) (w.e.f. 6th

June, 2008)

85. Mahindra Gears Cyprus Limited (formerly known as

Kalbarri Trading Limited) (w.e.f. 6th

June, 2008)

86. Mahindra Gears International Limited (w.e.f. 10th

June, 2008)

87. Mahindra Metal Castello S.r.l. (w.e.f. 17th

June, 2008)

88. Mahindra Industrial Township Limited (w.e.f. 2nd

July, 2008)

89. Metalcastello S.p.A (w.e.f. 3rd

July, 2008)

90. Crest Geartech Private Limited (w.e.f. 3rd

July, 2008)

91. Engines Engineering S.r.l (w.e.f. 5th

Aug, 2008)

92. Eff Engineering S.r.l (w.e.f. 5th

Aug, 2008)

93. ID-EE S.r.l (w.e.f. 5th

Aug, 2008)

94. Mahindra IT Consulting Private Limited (w.e.f. 16th

Sept, 2008)

95. Mahindra Automotive Australia Pty. Limited (w.e.f. 23rd

Sept, 2008)

96. Mahindra Two Wheelers Limited (w.e.f. 29th

Sept, 2008)

97. Mahindra United Football Club Private Limited

(w.e.f. 3rd

Nov, 2008)

98. Mahindra Defence Land Systems Private Limited

(w.e.f. 4th

March, 2009)

99. Mahindra Yeuda (Yancheng) Tractor Company Limited

(w.e.f. 28th

November, 2008)

100. Venturbay Consultants Private Limited (w.e.f. 19th

March, 2009)

(b) Other parties with whom transactions have taken place during the year.

(i) Associates :


1. Mahindra Composites Limited 4. Mahindra Water Utilities Limited

2. Mahindra Construction Company Limited 5. Swaraj Automotives Limited

3. Owens Cornings (India) Limited 6. Swaraj Engines Limited

(ii) Joint Venture :

Sl. No. Name of the Company

1. Mahindra Sona Limited

(iii) Key Management Personnel :

Vice Chairman and Managing Director ................................... Mr. Anand Mahindra

Executive Directors ................................................................... Mr. B.N. Doshi

Mr. A.K. Nanda

(iv) Welfare Funds :

Sl. No. Name of the Fund

1. Mahindra World School Education Trust

2. M&M Benefit Trust

3. M&M Employee’s Welfare Fund

4. M&M Employee’s Farm Equipment Sector Employee’s Welfare Fund

114

(c) The related party transactions are as under :

Rupees crores

Sl. No. Nature of Transactions Subsidiaries Associate Joint Key Management Welfare

Companies Ventures Personnel Funds

1. Purchases :

Goods .............................................................. 6,58.26 1,58.49 66.72 — —

(4,41.75) (1.59) (50.51) (—) (—)

Fixed Assets ..................................................... 7.41 — — — —

(9.73) (0.33) (—) (—) (—)

Services ............................................................ 3,34.45 — — — —

(85.67) (—) (—) (—) (—)

2. Sales :

Goods .............................................................. 4,09.72 1.22 — — —

(5,67.07) (—) (—) (—) (—)

Fixed Assets ..................................................... 8.19 0.16 — — —

(0.77) (—) (—) (—) (—)

Services ............................................................ 1,25.00 4.96 0.05 — —

(1,86.25) (0.02) (0.04) (—) (—)

3. Investments :

Purchase/Subscribed ........................................ 10,04.39 — — — 0.01

(10,67.46) (3.00) (—) (—) (—)

Sales/Redemption ............................................ 28.75 — — — —

(6,15.02) (—) (—) (—) (—)

4. Deputation of Personnel :

From Related Parties ........................................ 1.59 — — — —

(1.19) (—) (—) (—) (—)

To Related Parties ............................................ 17.35 0.52 — — —

(11.21) (0.39) (—) (—) (—)

5. Managerial Remuneration ............................... — — — 5.15 —

(—) (—) (—) (5.39) (—)

6. Stock Options .................................................. — — — 0.07 —

(—) (—) (—) (0.05) (—)

7. Finance :

Inter Corporate Deposits given ........................ 6,19.59 — — — —

(56.17) (—) (—) (—) (—)

Inter Corporate Deposits refunded by parties . 2,99.61 — — — —

(8.16) (—) (—) (—) (—)

Inter Corporate Deposits taken ....................... 5.00 — — — —

(25.00) (—) (—) (—) (—)

Inter Corporate Deposits refunded to parties . 5.00 — — — —

(25.00) (—) (—) (—) (—)

Interest received .............................................. 24.19 1.85 — — —

(9.59) (—) (—) (—) (—)

Interest paid .................................................... 1.47 — — — —

(1.32) (—) (—) (—) (—)

Dividend received ............................................ 1,31.83 0.28 0.98 — —

(65.24) (—) (—) (—) (—)

Security Deposits accepted .............................. — — — — —

(0.57) (—) (—) (—) (—)

115


Security Deposits paid ..................................... 0.05 — — — —

(3.00) (—) (—) (—) (—)

8. Share Application Money (Net) ....................... — — — — —

(9.33) (—) (—) (—) (—)

9. Issue of Ordinary (Equity) Shares .................... — — — — 14,59.76

(—) (—) (—) (—) (—)

10. Dividends Distributed ...................................... — — — 0.52 1.05

(—) (—) (—) (0.17) (0.37)

11. Guarantees & Collaterals given ....................... 1,19.58 — — — —

(—) (—) (—) (—) (—)

12. Other Transactions :

Other Income .................................................. 10.88 0.28 — — —

(6.80) (—) (0.02) (—) (—)

Other Expenses ................................................ 17.71 — — — —

(8.21) (—) (—) (—) (—)

Reimbursements received from parties ........... 2,01.55 0.02 0.03 — —

(3,15.68) (0.02) (0.06) (—) (—)

Reimbursements made to parties .................... 1,29.43 0.02 — — —

(1,74.37) (—) (—) (—) (—)

Advance given ................................................. 5.74 — — — 15.00

(4.84) (—) (—) (—) (—)

Advance refunded ........................................... — — — — —

(2,36.55) (—) (—) (—) (—)

13. Outstandings :

Payable ............................................................ 1,24.62 3.26 11.20 2.21 —

(70.70) (0.65) (8.97) (2.46) (—)

Receivable ........................................................ 1,41.23 12.31 0.01 — 15.00

(1,80.37) (3.09) (0.02) (—) (—)

Debenture issued by parties ............................ 45.00 — — — —

(30.00) (—) (—) (—) (—)

Inter Corporate Deposits given ........................ 4,00.78 4.59 — — —

(64.95) (4.59) (—) (—) (—)

Guarantees & Collaterals given ....................... 1,63.67 — — — —

(34.37) (—) (—) (—) (—)

Security Deposit paid ....................................... 0.05 — — — —

(3.00) (—) (—) (—) (—)

14. Provision for doubtful debts/advances ............ 25.51 6.69 — — —

(5.99) (6.69) (—) (—) (—)

15. Share Application Money. ............................... — — — — —

(9.33) (—) (—) (—) (—)

Previous year’s figures are given in brackets.

The previous year’s figures are suitably regrouped/restated.

Rupees crores

Sl. No. Nature of Transactions Subsidiaries Associate Joint Key Management Welfare

Companies Ventures Personnel Funds

116

The significant related party transactions are as under :

Rupees crores

Sl. Associate

No. Nature of Transactions Subsidiaries Amount Companies Amount Joint Ventures Amount

1. Purchase – Goods Mahindra Intertrade 1,24.93 Swaraj Engines 1,50.60 Mahindra Sona 66.72

Limited (2,32.20) Limited (—) Limited (50.51)

Mahindra Ugine 3,08.92 Mahindra Composites —

Steel Company Limited (—) Limited (1.58)

Mahindra Hinoday —

Industries Limited (46.98)

Mahindra Forgings 77.32

Limited (60.36)

2. Purchase – Services Mahindra Engineering 44.05

Services Limited (20.72)

Mahindra Logistics 2,37.42

Limited (—)

3. Sale – Goods Mahindra USA 1,05.37 Swaraj Engines 1.22

Inc. (1,78.05) Limited (—)

Mahindra Navistar 92.61

Automotives Limited (98.30)

Mahindra & Mahindra 58.22

South Africa (1,00.99)

(Proprietary) Limited

Mahindra Europe s.r.l. —

(1,15.65)

NBS International 64.89

Limited (—)

4. Sale – Services Mahindra Navistar 34.37 Swaraj Automotives — Mahindra Sona 0.05

Automotives Limited (47.76) Limited (*) Limited (0.04)

Mahindra Renault 76.27 Swaraj Engines 1.43

Private Limited (1,14.37) Limited (0.01)

Owens Corning 3.21

(India) Limited (—)

5. Investments – Purchase Mahindra Navistar 1,12.97 Mahindra Renault —

Automotives Limited (—) Nissan Automotive (3.00)

Private Limited

Mahindra Vehicle 3,60.20

Manufacturers Limited (1,24.75)

Mahindra Overseas 1,09.43

Investment Company (—)

(Mauritius) Limited

Mahindra Gears 1,53.14

International Limited (—)

Mahindra Two 1,17.99

Wheelers Limited (—)

Mahindra Forgings —

Limited (6,88.61)

6. Investments – Sale Mahindra Forgings —

Limited (4,68.54)

Mahindra Castings —

Private Limited (1,05.20)


117


7. Investments – Mahindra & Mahindra 10.00

Redemption Financial Services Limited (4.00)

Mahindra Intertrade 18.75

Limited (—)

8. Share Application Mahindra Vehicle —

Money (Net) Manufacturers Limited (5.50)

Mahindra Navistar —

Engines Private Limited (3.83)

9. Advances given Mahindra Ugine Steel 2.13

Company Limited (4.09)

Mahindra Automotive 3.57

Australia Pty. Limited (—)

Mahindra Renault —

Private Limited (0.75)

10. Inter Corporate Mahindra & Mahindra 1,85.00

Deposits given Financial Services Limited (—)

Mahindra Vehicle 1,00.00

Manufacturers Limited (—)

Mahindra Two 1,02.00

Wheelers Limited (—)

Bristlecone Limited —

(40.82)

Mahindar Shubhlabh —

Services Limited (8.25)

11. Inter Corporate Deposits Mahindra Engineering 40.00

refunded by parties Services Limited (—)

Mahindra & Mahindra 1,70.00

Financial Services Limited (—)

Mahindra Two Wheelers 67.00

Limited (—)

Mahindra Intertrade —

Limited (1.56)

Mahindra Ashtech —

Limited (6.50)

12. Guarantees given Mahindra Renault 1,19.58

Private Limited (—)

31. Joint Venture Disclosure

(i) Jointly Controlled Entities by the Company :

Name of the Entity Country of

Incorporation % Holding

(a) Mahindra Sona Limited India 29.77 %

(b) PSL Erickson Limited India 18.06 %

Rupees crores

Sl. Associate

No. Nature of Transactions Subsidiaries Amount Companies Amount Joint Ventures Amount

118

(ii) Interests in the Assets, Liabilities, Income and Expenses with respect to Jointly Controlled Entities.

Rupees crores

2009 2008

I ASSETS

1. Fixed Assets ............................................................................................. 8.03 6.54

2. Investments .............................................................................................. 0.05 0.05

3. Current Assets, Loans and Advances

a. Inventories ....................................................................................... 4.59 5.97

b. Sundry Debtors ................................................................................ 10.22 11.21

c. Cash and Bank Balances .................................................................. 3.40 2.06

d. Loans and Advances ........................................................................ 1.23 1.30

4. Deferred Tax – Net ................................................................................... 0.25 0.32

II LIABILITIES

1. Loan Funds

a. Secured Loans ................................................................................. 0.82 1.88

2. Current Liabilities and Provisions

a. Liabilities .......................................................................................... 6.14 8.07

b. Provisions ......................................................................................... 1.62 1.96

III INCOME

1. Sales ........................................................................................................ 44.57 46.95

2. Other Income .......................................................................................... 2.21 1.60

IV EXPENSES

1. Raw Materials, Finished and Semi Finished Products .............................. 26.73 27.30

2. Excise Duties ............................................................................................ 4.09 5.00

3. Manufacturing, Selling Expenses, etc ...................................................... 9.34 10.51

4. Depreciation/Amortisation ....................................................................... 0.76 0.60

5. Provision for Taxation .............................................................................. 2.20 1.88

V OTHER MATTERS

1. Contingent Liabilities ............................................................................... 3.90 3.53

2. Capital Commitments .............................................................................. 0.29 0.60

32. Additional information pursuant to the provisions of paragraphs 3(i)(a) and (ii), 4C and 4D of Part II of Schedule VI to the Companies Act,

1956 - See Schedule XVI. Previous year’s figures are indicated below the current year’s figures.

33. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 - See Schedule XVII.

34. Previous year’s figures have been regrouped/restated wherever necessary.

119


SCHEDULE XV

Computation of Net Profit in accordance with Section 309(5) of the Companies Act, 1956 for the year ended 31st

March, 2009

Rupees crores

2009 2008

Profit before Taxation as per Profit and Loss Account ..................................................... 1,036.47 1,406.77

Add : Profit of the Mahindra Holdings and Finance Limited for the period

1st


March, 2008 ............................................................. 41.74 —

: Depreciation/Amortisation charged in the Accounts ......................................... 291.51 238.66

: Directors’ Remuneration including Directors’ fees ............................................. 6.29 6.54

: Provision for doubtful debts and advances (Net) .............................................. 31.44 (23.59)

: Loss on sale, etc. of Fixed Assets (Net) .............................................................. 1.19 2.82

: Net reduction in the fair value of current investments ...................................... (1.57) (1.74)

: Provision for diminution in value of long term investments (Net) ..................... — (5.40)

370.60 217.29

1,407.07 1,624.06

Less : Depreciation under Section 350 of the Companies Act, 1956 .......................... 233.97 192.01

: Amortisation of Intangibles ................................................................................ 31.14 19.37

: Profit on sale of Investments (Net) ..................................................................... 53.22 28.94

: Profit arising on merger between company’s subsidiaries (Refer Note 23(b)) ... — 172.73

: Loss on sale of Assets as per Section 349 of the Companies Act, 1956 (Net) . 2.22 1.71

: Surplus on transfer of Logistics Division ............................................................ 10.27 —

330.82 414.76

Total .................................................................................................................... 1,076.25 1,209.30

Commission payable to the wholetime Directors restricted to ............................. 2.20 2.45

Commission payable to the non-wholetime Directors restricted to ..................... 0.96 0.96

120

SCHEDULE XVI

Additional Information pursuant to the Provisions of Paragraphs 3 (i)(a) and (ii), 4C and 4D, of Part II of Schedule VI to the Companies Act, 1956.

(A) PARTICULARS IN RESPECT OF GOODS MANUFACTURED :

Sl. Class of Goods Unit of Licenced Installed Actual

No. Measurement Capacity Capacity Production

per annum per annum [Notes (ii)

[Note (i)] [Note (i)] & (iii)(a)]

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. 2,76,000 2,50,000 1,58,715

2,76,000 2,29,000 1,62,400

b. Three Wheelers Nos. 1,11,000 72,000 43,278

1,11,000 54,000 34,556

2. a. Agricultural Tractors [Note (v) below] Nos. 2,14,000 2,33,000 1,17,847

1,89,000 1,73,000 95,301

b. Tractor Skids These are

manufactured

against spare

capacity under 2(a) 1,251

3,616

3. Manufactured and Purchased Parts Nos. These are

and Accessories for sale [Notes (iii)(a) manufactured

and (b) below] against spare

capacity under

1 and 2 above 4,27,952

2,42,709

4. Internal Combustion Piston Engines Nos. 1,75,000 1,50,000 1,18,036

1,75,000 1,36,000 1,29,236

5. Agricultural Implements Nos. 17

—

6. Parts and accessories of motor vehicles Nos. 5,00,000 1,25,000 94,637

5,00,000 1,25,000 80,967

7. Internal Combustion Engine Nos. 60,000 54,000 50,913

60,000 54,000 47,597

8. Diesel Genset Nos. 24,000 Assembly at 26,227

24,000 3rd

Party Locations 16,943

9. Engines Nos. These are 25,904

manufactured 15,129

against spare

capacity under 2(a)

10. Forklifts Nos. 300 300 46

— — —

11. Harvester Combines Nos. 300 300 136

— — —

12. Castings MT. 2,000 10,000 6,857

— — —

13. Circuit Breakers Nos. 5,321

1,847

14. Export benefits

# Includes Stock taken over on amalgamation with PTL (Quantity : 2,385 Nos., Value : Rs. 66.90 crores).

@ Includes Stock taken over on amalgamation with PTL (Value : Rs.12.93 crores).

^ Stock taken over on amalgamation with PTL


Notes :

(i) (a) The installed capacity has been certified by Presidents, which the auditors have relied on without verification as this is a technical matter.

(b) The licensed capacities include/represent, as the case may be, registrations granted and Industrial Entrepreneur Memorandum filed with,

and duly acknowledged by, the Government pursuant to the schemes of de-licensing. [Also see note (v) 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. 110 (2008 : 38) 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 (2008 : 48,000) for production of vehicles for third

parties.

121


Opening Stock Closing Stock Sales

Quantity Value Quantity Value Quantity Value

Rupees crores Rupees crores Rupees crores

5,826 256.52 2,923 107.59 1,61,189 7,646.72

4,473 179.74 5,826 256.52 1,60,636 7,407.00

2,753 29.28 1,219 14.41 44,806 517.68

2,312 26.63 2,753 29.28 34,076 398.98

9,438#

254.16#

8,671 232.77 1,18,565 4,333.56

7,163 164.73 7,053 187.26 95,370 3,133.96

168 6.61 23 1.66 1,386 65.35

119 4.22 168 6.61 3,546 133.55

— 94.94@

— 91.50 — 620.26

— 62.97 — 82.01 — 576.86

1,162 8.15 1,361 10.08 9,034 89.25

917 2.92 1,162 8.15 13,836 125.85

2^ 0.01^ 5 0.02 14 0.06

— — — — — —

12 0.02 7 0.01 517 0.76

70 0.03 12 0.02 1,519 2.02

107 — 97 — — —

90 — 107 — — —

115 2.04 159 2.96 26,183 592.15

97 1.23 115 2.04 16,925 367.08

439 2.79 385 2.17 25,958 248.41

226 1.24 439 2.79 14,916 140.14

7^ 0.51^ 6 0.41 46 3.52

— — — — — —

2^ 0.25^ 1 0.11 137 16.47

— — — — — —

1^ 0.01^ 1 0.01 117 0.63

— — — — — —

4 * 164 0.02 5,161 3.79

— — 4 * 1,843 2.92

26.99

28.64

Total....... 14,165.60

12,317.00

SCHEDULE XVI (Contd.)

(ii) Actual Production includes production for captive consumption.

(iii) (a) The actual production disclosed against manufactured components/sub-assemblies/steel blanks is the number of such components transferred

during the year to the Marketing Unit/Spare Parts Stores for sale or sold otherwise.

(b) The Opening and Closing Stocks and Sales of goods shown under item 3 above consist of manufactured and purchased parts. The

bifurcation of stocks/sales into manufactured and bought-out parts is not practicable.

(iv) With regard to clause 3(ii) of Part II of Schedule VI to the Companies Act, 1956, the Company is of the view that, in respect of the property

development activity, the Company is not a ‘manufacturing’, a ‘trading’ or a ‘service’ company falling under sub-clause (a), (b) and (c) thereof,

but it is an ‘other’ company falling under sub-clause (e) thereof.

(v) 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.

122

SCHEDULE XVI (Contd.)(Contd.)(Contd.)(Contd.)(Contd.)

(B)(B)(B)(B)(B) PPPPPARTICULARS IN RESPECT OF GOODS TRADED :ARTICULARS IN RESPECT OF GOODS TRADED :ARTICULARS IN RESPECT OF GOODS TRADED :ARTICULARS IN RESPECT OF GOODS TRADED :ARTICULARS IN RESPECT OF GOODS TRADED :

PurchasesPurchasesPurchasesPurchasesPurchases Opening StockOpening StockOpening StockOpening StockOpening Stock Closing StockClosing StockClosing StockClosing StockClosing Stock SalesSalesSalesSalesSales

Sl. Unit of

No. Class of Goods Measurement Quantity Value Quantity Value Quantity Value Quantity Value

Rupees Rupees Rupees Rupees

crores crores crores crores

1. Tractors .............................................. Nos. 269 7.29 36 1.13 50 1.75 251 8.90

113 2.99 33 1.13 36 1.13 110 4.64

2. Agricultural Implements .................... Nos. 6,178 41.47 2,230 3.62 436 5.98 7,972 50.32

9,585 24.79 1,645 3.50 2,230 3.62 9,000 30.53

3. Light Commercial Vehicles ................ Nos. 693 27.41 — — — — 693 31.20

365 13.63 — — — — 365 16.07

4. Bought-out Spares for Resale

[Note (iii)(b) to item “A”] ................... 263.96 — — —

275.71 — — —

5. Diesel Genset ..................................... Nos. 3 0.16 — — 1 0.05 2 0.12

— — — — — — — —

6. Genset Engines ................................. Nos. 274 2.93 — — 67 0.29 207 3.04

81 0.17 — — — — 81 0.21

7. Others ............................................... 2.93 — 0.02 9.23

1.90 — — 2.58

Total ............... 346.15 4.75 8.09 102.81

319.19 4.63 4.75 54.03

Note (v) to item (A).

(C) PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED :

Sl. Unit of Value

No. Description Measurement Quantity Rupees crores

1. Steel Items (Sheets, Tubes, etc.) .................................................................................. Nos. 1,00,109

73,444

Sq.Feet — 192.71

62 206.56

Metric Tonnes 32,290

53,355

2. Aluminium Sections and Other Aluminium Items ...................................................... Metric Tonnes —

0.03 0.14

Kgs. 10,339 1.27

93,757

3. Other Metals (Steel Shots, Lead, Tin, etc.) ................................................................. Metric Tonnes 118.60 0.56

95.38 0.31

4. Paints ........................................................................................................................... Nos. 7,49,035

5,26,015

Metres 1,83,583

— 72.85

Kgs. 19,36,747 62.27

20,71,338

Litres 35,76,788

26,87,054

5. Steel Scrap .................................................................................................................. Metric Tonnes 11,508 26.94

6,026 11.87

}

}

}

123


SCHEDULE XVI (Contd.)(Contd.)(Contd.)(Contd.)(Contd.)

(C)(C)(C)(C)(C) PPPPPARTICULARS OF RAW MAARTICULARS OF RAW MAARTICULARS OF RAW MAARTICULARS OF RAW MAARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED (Contd.) :TERIALS AND COMPONENTS CONSUMED (Contd.) :TERIALS AND COMPONENTS CONSUMED (Contd.) :TERIALS AND COMPONENTS CONSUMED (Contd.) :TERIALS AND COMPONENTS CONSUMED (Contd.) :

Sl. Unit of Value

No. Description Measurement Quantity Rupees crores

6. Pig Iron ....................................................................................................................... Metric Tonnes 8,880 25.42

2,787 5.18

7. Miscellaneous Foundry Materials ................................................................................ Nos. 15,45,939

15,45,042

Metric Tonnes 12,585 16.32

9,400 7.89

Litres 3,36,844

3,07,209

8. Other Materials (Direct Stores, Patterns, Oils, etc.) ..................................................... Not practicable to give *78.19

quantitative details *61.67

9. Tyres and Tubes Nos. *27,31,682 *473.90

*24,69,329 *393.28

10. Components other than Tyres and Tubes (including processing charges) .................. *7,584.26

*6,488.63

11. Material handling and transportation charges, etc. incurred

on the above items not separately allocable .............................................................. 300.50

316.90

Total..... 8,771.79

7,555.83

* 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

2009 2008

1. Raw Materials ..................................................................................................... 0.65 4.63

2. Components, Spare Parts, etc. ............................................................................ 153.81 121.11

3. Capital Goods ..................................................................................................... 80.96 144.70

4. Items imported for Resale ................................................................................... 13.77 8.57

Total….. 249.19 279.01

Notes :

(i) Credits, if any, recoverable in respect of short landings, etc. are not considered.

(ii) The value of imports shown above includes :

(a) Imports on C&F basis as per suppliers’ invoices Rs. 4.43 crores (2008 : Rs. 2.91 crores)

(b) Imports on ‘cost’ basis Rs. 163.38 crores (2008 : Rs. 184.17 crores)

}

124

SCHEDULE XVI (Contd.)

(E) EXPENDITURE IN FOREIGN CURRENCIES (SUBJECT TO DEDUCTION OF TAX WHERE APPLICABLE) :

Rupees crores

2009 2008

1. Professional and Consultancy Fees [including Rs. 6.17 crores

(2008 : Rs. 2.30 crores) capitalised] ................................................................... 43.86 26.24

2. Commission on Exports ...................................................................................... 0.84 22.76

3. Royalty ................................................................................................................ — 0.06

4. Interest ................................................................................................................ 44.29 46.65

5. Others ................................................................................................................. 69.81 57.71

Total..... 158.80 153.42

Notes :

(1) Fee for use of technology, development expenditure and software expenditure [refer to in Note 1(B)] :

(a) written off during the year Rs. 8.91 crores (2008 : Rs. 9.05 crores); and

(b) amount remitted during the year Rs. 59.81 crores (2008 : Rs. 29.91 crores) net of tax deducted at source

Rs. 6.11 crores (2008 : Rs. 1.33 crores) are not included in the above figures.

(F) REMITTANCE IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDENDS TO NON-RESIDENT SHAREHOLDERS :

Number of Amount remitted Dividend relating to

Shareholders Equity shares

Rupees crores

2009 : 1 120 * Year ended 31st

March, 2008

2008 : 4 1,318 * Year ended 31st

March, 2007

(G) EARNINGS IN FOREIGN EXCHANGE :

Rupees crores

2009 2008

1. Export of goods on F.O.B. basis ......................................................................... 632.36 795.38

2. Interest…………………………………………………………………………………….. 14.74 38.90

3. Others (freight, etc.) ........................................................................................... 44.15 49.28

Total..... 691.25 883.56

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

Rupees crores %

1. Imported ............................................................................................................. 121.97 1.39

120.88 1.60

2. Indigenously obtained ........................................................................................ 8,649.82 98.61

7,434.95 98.40

Total..... 8,771.79 100.00

7,555.83 100.00

^ Includes items used for other than production, amount not ascertained.

Notes :

(1) Items purchased through canalising agencies have been considered as imported.

(2) See Note (i) to item (C).

(3) In giving the above information the Company has taken the view that spares and components as referred to in paragraph 4 (D)(c) of Part II of

Schedule VI covers only such items as go directly into production.


125


I. Registration Details :

Registration No. State Code

Balance Sheet Date

Date Month Year

II. Capital raised during the Year (Amount in Rs. Thousands) :

Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) :

Total Liabilities including Shareholders’ Funds Total Assets

Sources of Funds :

Paid-up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Deferred Tax Liability (Net)

Application of Funds :

Net Fixed Assets Foreign Currency Monetary Item Translation Difference Account

Investments Deferred Tax Asset (Net)

Miscellaneous Expenditure Net Current Assets

IV. Performance of Company (Amount in Rs. Thousands) :

Turnover (Sales & Other Income)e Total Expenditure

+ - Profit/Loss Before Tax ì + - Profit/Loss After Tax ì

Earnings per Share in Rupees ë

Basic Diluted Dividend Rate %

(Refer Note 26)

4 5 5 8

N I L

N I LN I L

1 4 5 0 5 9 8 6 0 1 4 5 0 5 9 8 6 0

2 7 2 6 1 6 0 4 9 8 9 4 6 7 1

9 8 0 9 9 8 2 3 0 7 1 7 6 3 5

5 7 8 6 4 1 3 5 1 8 2 6 7 9

1 5 1 2 4 2 3 8 1 1 4 0 4 6 0 3 2 4

1 0 7 8 2 0 5 7 8 6 7 5 1 0 7

31.83

N I L

1 1

3 1 0 3 2 0 0 9

�

1 2 5 4 9 9 2 6 5 1 7 5 5

�

30.02

SCHEDULE XVII

ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956.

Balance Sheet Abstract & Company’s General Business Profile :

-

1 0 0

3 2 1 4 3 3 0 5 1 8 1 0 7 5

126

V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) :

Item Code No. (ITC Code)

Product Description Tractors


Product Description Motor Vehicles for the transport of more than six persons, excluding the driver


Product Description Other motor vehicles principally designed for the transport of persons

e after considering interest income, exceptional items and profit before tax earned by Mahindra Holdings and Finance Limited

on behalf of the company for the period 1st


March, 2008.

ì after considering profit earned by Mahindra Holdings and Finance Limited on behalf of the company for the period

1st


March, 2008.

ë computed on the basis of, the weighted average number of shares outstanding during the year.

Signatures to Schedules I to XVII

SCHEDULE XVII (Contd.)

8 7 0 1

8 7 0 2

8 7 0 3

M. M. Murugappan Keshub Mahindra Chairman

N. Vaghul



A. P. Puri Bharat Doshi

N. B. Godrej A. K. NandaExecutive Directors

A. K. Dasgupta


Mumbai, 28th

May, 2009

} }}}}}

127


Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies

For Current Financial Year For Previous Financial Years

Name of the Subsidiary Companies Dealt with in Not dealt Dealt with in Not dealt

the accounts with in the the accounts with in the

of Mahindra & accounts of of Mahindra & accounts of

Mahindra Mahindra & Mahindra Mahindra &

Limited for Mahindra Limited for Mahindra

the year Limited for the year Limited for

Equity Extent ended 31st

the year ended 31st

the year

of March, 2009 ended 31st

March, 2009 ended 31st

holding March, 2009 March, 2009

Nos. % Rupees crores Rupees crores Rupees crores Rupees crores

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 Engineering and Chemical Products Limited 53,98,462 100.00% - 6.89 - 67.76

Mahindra Intertrade Limited .................................... 2,71,00,006 100.00% - 44.71 8.30 85.80

@ Mahindra Middleeast Electrical Steel Service

Centre (FZC) .............................................................. - 90.00% - 10.21 - 5.34

Mahindra Steel Service Centre Limited ................... 37,23,874 61.00% - 1.98 0.67 8.14

Mahindra Consulting Engineers Limited ................. 5,10,000 51.00% - 0.53 - 0.82

Mahindra Holidays and Resorts India Limited ........ 7,33,54,833 #93.64% - 78.10 12.79 106.12

+ MHR Hotel Management GmbH .......................... - #70.23% - * - (0.02)

+ Mahindra Holidays & Resorts USA Inc. ................ - #93.64% - (3.95) - 3.63

+ Mahindra Hotels and Residences India Limited ... - #93.64% - (0.01) - (0.01)

+ Heritage Bird (M) SDN.BHD ................................. - #93.64% - (0.10) - -

NBS International Limited ....................................... 50,490 100.00% - (0.23) - 0.87

Mahindra Ugine Steel Company Limited ................ 1,64,66,789 50.69% - (9.54) 4.94 93.95

Mahindra Holdings Limited .................................... 2,25,49,999 100.00% - (1.13) - 0.01

ß Mahindra United Football Club Private Limited .... - 100.00% - * - -

Mahindra Lifespace Developers Limited .................. 2,08,46,126 51.08% - 23.68 5.21 39.44

� Mahindra Infrastructure Developers Limited ....... - 40.87% - 0.10 - 0.12

� Mahindra World City Developers Limited ........... - 42.21% - 12.08 - 2.50

� Mahindra World City (Jaipur) Limited ................. - 37.80% - 1.94 - (1.13)

� Mahindra Integrated Township Limited .............. - 48.77% - 0.21 - (0.30)

� Mahindra Residential Developers Limited ........... - 24.87% - (0.16) - *

� Mahindra World City (Maharashtra) Limited ...... - 51.08% - (0.01) - (0.03)

� Mahindra Knowledge City Limited (formerly known

as Mahindra Technology Park Limited) ............... - 51.08% - (0.09) - (0.10)

� Mahindra Bebanco Developers Limited ............... - 35.76% - (0.11) - -

� Mahindra Industrial Township Limited ................ - 51.08% - (0.03) - -

Mahindra & Mahindra Financial Services Limited ... 5,82,41,532 #60.10% - 128.93 26.21 271.84

� Mahindra Insurance Brokers Limited ................... - #60.10% - 3.53 - 2.36

� Mahindra Rural Housing Finance Limited ............ - #52.59% - (0.42) - (0.31)

Tech Mahindra Limited ........................................... 5,37,76,252 48.83% 21.51 456.61 29.58 438.47

� Tech Mahindra (Americas) Inc. ............................ - 48.83% - 6.61 - 3.38

� Tech Mahindra GmbH ......................................... - 48.83% - 1.76 - (14.01)

� Tech Mahindra Singapore Pte. Limited ............... - 48.83% - 0.71 - 2.35

� Tech Mahindra (Thailand) Limited ....................... - 48.83% - 0.04 - 0.30

� PT Tech Mahindra Indonesia ............................... - 48.83% - 4.01 - 0.53


128

� CanvasM Technologies Limited ............................ - 39.11% - 0.13 - (0.78)

∆ CanvasM (Americas) Inc. ..................................... - 39.11% - (0.04) - 0.06

� Tech Mahindra Foundation ................................. - 48.83% - 0.01 - -

� Tech Mahindra (Malaysia) SDN.BHD .................... - 48.83% - 0.05 - 0.02

� Tech Mahindra (Beijing) IT Services Limited ........ - 48.83% - (0.72) - (0.12)

� Venturbay Consultants Private Limited ............... - 48.83% - * - -

Bristlecone Limited .................................................. 42,22,250 82.05% - (4.71) - (5.87)

� Bristlecone Inc. .................................................... - 82.05% - (0.23) - (28.55)

� Bristlecone India Limited ..................................... - 82.05% - 7.81 - 4.51

� Bristlecone (Singapore) Pte. Limited ................... - 82.05% - (1.01) - (1.18)

� Bristlecone GmbH ............................................... - 82.05% - 0.25 - (0.30)

� Mahindra IT Consulting Private Limited .............. - 82.05% - * - -

� Bristlecone UK Limited ........................................ - 82.05% - (5.25) - (5.85)

� Bristlecone (Malaysia) SDN.BHD .......................... - 82.05% - 0.19 - 0.48

Mahindra Logisoft Business Solutions Limited ........ 63,49,500 100.00% - 1.22 - (3.60)

Mahindra First Choice Wheels Limited (formerly

known as FirstChoice Wheels Limited) .................... 3,47,77,255 #53.31% - (11.63) - (22.97)

Mahindra USA Inc. ................................................. 9,50,00,000 100.00% - (32.83) - 23.93

Mahindra Gujarat Tractor Limited ........................... 16,83,218 60.00% - (0.84) - (16.04)

Mahindra Shubhlabh Services Limited .................... 2,46,81,437 83.05% - (0.56) - (21.42)

Mahindra & Mahindra South Africa

(Proprietary) Limited ............................................... 3,35,70,000 90.73% - (21.36) - 7.29

Mahindra Overseas Investment Company

(Mauritius) Limited .................................................. 4,47,70,000 100.00% - (2.18) - (2.60)

� Mahindra (China) Tractor Company Limited ....... - 84.87% - (17.10) - (37.81)

� Mahindra-BT Investment Company

(Mauritius) Limited .............................................. - 57.00% - 5.51 - 1.97

� Mahindra Europe s.r.l. ......................................... - 80.00% - 0.37 - 1.84

� Mahindra Graphic Research Design s.r.l. ............ - 100.00% - (2.03) - (0.44)

� Mahindra Yeuda (Yancheng) Tractor Company

Limited ................................................................ - 51.00% - (1.44) - -

Mahindra SAR Transmission Private Limited ........... 75,56,900 100.00% - 2.62 - 0.59

Mahindra Engineering Services Limited

(formerly known as Mahindra Engineering Design

& Development Company Limited) ......................... 81,26,218 100.00% - 17.77 - 44.26










the year ended 31st

the year





Number of

Shares in the

Subsidiary

Company held


Limited at the

financial year

ending date





129











the year ended 31st

the year





Number of

Shares in the

Subsidiary

Company held


Limited at the

financial year

ending date




� Mahindra Engineering Services (Europe) Limited

(formerly known as Plexion Technologies

(UK) Limited) ....................................................... - 100.00% - 4.32 - 2.22

� Plexion Technologies GmbH ................................ - 100.00% - (0.21) - (0.07)

� Mahindra Technologies Inc. (formerly known as

Plexion Technologies Inc.) ................................... - 100.00% - (0.23) - (1.07)

� Engines Engineering S.r.l. .................................... - 70.00% - (1.05) - -

� EFF Engineering S.r.l. ........................................... - 35.70% - 0.02 - -

� ID-EE S.r.l. ........................................................... - 49.00% - (0.09) - -

Mahindra Forgings Limited ..................................... 4,15,26,339 60.56% - (25.07) - (8.58)

£ Stokes Group Limited .......................................... - 60.43% - (33.14) - 0.01

� Stokes Forgings Dudley Limited .......................... - 60.43% - - - 0.74

� Jensand Limited ................................................... - 60.43% - - - (0.32)

� Stokes Forgings Limited. ..................................... - 60.43% - 4.41 - (9.36)

£ Mahindra Forgings Global Limited ..................... - 60.56% - (0.08) - (2.17)

� Schöneweiss & Co. GmbH .................................. - 60.56% - (1.64) - 14.67

£ Mahindra Forgings International Limited ............ - 60.56% - (1.48) - (12.71)

ë Mahindra Forgings Europe AG ........................... - 60.56% - 1.49 - 9.16

• Gesenkschmiede Schneider GmbH ..................... - 60.56% - (5.05) - 9.11

• JECO-Jellinghaus GmbH ...................................... - 60.56% - (4.05) - 7.55

• Falkenroth Umformtechnik GmbH ...................... - 60.56% - (5.12) - 8.19

Mahindra Renault Private Limited ........................... 10,16,24,232 51.00% - (250.01) - (46.11)

Mahindra Navistar Automotives Limited (formerly

known as Mahindra International Limited) ............. 16,33,40,600 51.00% - (12.82) - (4.08)

Mahindra Castings Private Limited .......................... 1,64,87,602 65.00% - 1.70 - 0.77

� Mahindra Hinoday Industries Limited .................. - #64.71% - (30.87) - (5.36)

Mahindra Vehicle Manufacturers Limited (formerly

known as Mahindra Automotive Limited) .............. 48,50,00,000 100.00% - (6.57) - (2.32)

Mahindra Logistics Limited ..................................... 4,90,49,900 100.00% - 4.46 - (0.01)

Mahindra Navistar Engines Private Limited ............. 2,11,65,000 51.00% - (3.62) - (0.08)

Mahindra Aerospace Private Limited ...................... 50,000 100.00% - (0.26) - (0.12)

Mahindra First Choice Services Limited ................... 1,10,50,000 100.00% - (5.86) - -

Mahindra Gears International Limited .................... 2,07,00,001 100.00% - (0.11) - -

e Mahindra Gears Global Limited (formerly known

as Iven International Gear Mauritius Limited) ..... - 53.34% - (0.08) - -

| Mahindra Gears Cyprus Limited (formerly known

as Kalbarri Trading Limited) ................................ - 53.34% - (0.38) - -

130

M. M. Murugappan Keshub Mahindra Chairman

N. Vaghul



A. P. Puri Bharat Doshi

N. B. Godrej A. K. NandaExecutive Directors

A. K. Dasgupta


Mumbai, 28th

May, 2009

} }}}}}










the year ended 31st

the year





Number of

Shares in the

Subsidiary

Company held


Limited at the

financial year

ending date




♠ Mahindra Metal Castello S.r.l. ............................. - 51.00% - (5.15) - -

å Metalcastello S.p.A. ............................................ - 51.00% - 11.96 - -

« Crest Geartech Private Limited ............................ - 51.00% - 0.13 - -

Mahindra Automotive Australia Pty. Limited .......... 7,00,000 80.00% - (1.87) - -

Mahindra Two Wheelers Limited ............................ 11,80,00,000 80.00% - (18.00) - -

Mahindra Defence Land Systems Private Limited… - 100.00% - - - -

# after considering shares issued to its ESOP Trust but not allotted to its employees.

@ a subsidiary of Mahindra Intertrade Limited

+ a subsidiary of Mahindra Holidays & Resorts India Limited

ß a subsidiary of Mahindra Holdings Limited

� a subsidiary of Mahindra Lifespace Developers Limited

� a subsidiary of Mahindra Integrated Township Limited

� a subsidiary of Mahindra & Mahindra Financial Services Limited

� a subsidiary of Tech Mahindra Limited

∆ a subsidiary of CanvasM Technologies Limited

� a subsidiary of Bristlecone Limited

� a subsidiary of Bristlecone India Limited

� a subsidiary of Mahindra Overseas Investment Company (Mauritius) Limited

� a subsidiary of Mahindra Engineering Services Limited (formerly known as Mahindra Engineering Design & Development Company Limited)

� a subsidiary of Engines Engineering S.r.l

£ a subsidiary of Mahindra Forgings Limited

� a subsidiary of Stokes Group Limited

� a subsidiary of Mahindra Forgings Global Limited

ë a subsidiary of Mahindra Forgings International Limited

• a subsidiary of Mahindra Forgings Europe AG

� a subsidiary of Mahindra Castings Private Limited

e a subsidiary of Mahindra Gears International Limited

| a subsidiary of Mahindra Gears Global Limited (formerly known as Iven International Gear Mauritius Limited)

♠ a subsidiary of Mahindra Gears Cyprus Limited (formerly known as Kalbarri Trading Limited)

å a subsidiary of Mahindra Metal Castello S.r.l

« a subsidiary of Metalcastello S.p.A

Note :

The financial year of all subsidiaries ended on 31st

March 2009, except for Tech Mahindra (Beijing) IT Services Limited whose financial year is 1st

January, 2008 to 31st

December, 2008, Mahindra Yeuda (Yancheng) Tractor Company Limited and Mahindra Defence Land Systems Private Limited

whose first financial years would be from 28th

November, 2008 to 31st

December, 2008 and 4th

March, 2009 to 31st

March, 2010 respectively.

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

131

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

1. We have audited the attached consolidated balance sheet

of Mahindra & Mahindra Limited and its subsidiaries (the

Group) as at 31st

March, 2009, and also the consolidated

profit and loss account and the consolidated cash flow

statement for the year ended on that date, annexed thereto.

These consolidated financial statements are the responsibility

of Mahindra & Mahindra Limited’s management and have

been prepared by the management on the basis of 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.

2. 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 misstatement. An audit includes

examining on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and

significant estimates made by management, as well as

evaluating the overall financial statement presentation. We

believe that our audit provides a reasonable basis for our

opinion.

3. We did not audit the financial statements of certain

subsidiaries and joint ventures, whose financial statements

reflect Group’s share of total assets of Rs. 13,173.97 crores

as at 31st

March, 2009 and Group’s share of total revenues

of Rs. 6,428.53 crores for the year ended on that date and

Group’s share of total net cash inflow of Rs. 173.33 crores

for the year ended on that date and associates whose

financial statements reflect the Group’s share of profit (net)

up to 31st

March, 2009 of Rs. 34.59 crores and of the

Group’s share of profit (net) Rs. 11.27 crores for the year

ended on that date as considered in the consolidated

financial statements. These financial statements and other

financial information 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, joint ventures and associates, is based

solely on the report of the other auditors.

4. We report that the consolidated financial statements have

been prepared by Mahindra & Mahindra Limited’s

management in accordance with the requirements of

Accounting Standard 21, Consolidated Financial Statements,

Accounting Standard 23, Accounting for Investments in

Associates in Consolidated Financial Statements and

Accounting Standard 27, Financial Reporting of Interests in

Joint Ventures, notified by the Companies (Accounting

Standards) Rules, 2006.

5. Based on our audit and on consideration of the reports of

other auditors on separate financial statements and on the

other financial information of the components, in our

opinion and to the best of our information and according

to the explanations given to us, the attached consolidated

financial statements give a true and fair view in conformity

with the accounting principles generally accepted in India:

(a) in the case of the consolidated balance sheet, of the

state of affairs of Mahindra & Mahindra Limited Group

as at 31st

March, 2009;

(b) in the case of the consolidated profit and loss account,

of the profit for the year ended on that date; and

(c) in the case of the consolidated cash flow statement, of

the cash flows for the year ended on that date.

For Deloitte Haskins & Sells


B.P. Shroff

(Partner)


Mumbai, 28th May, 2009

132

Consolidated Balance SheetConsolidated Balance SheetConsolidated Balance SheetConsolidated Balance SheetConsolidated Balance Sheet as at 31st March, 2009 as at 31st March, 2009 as at 31st March, 2009 as at 31st March, 2009 as at 31st March, 2009

Rupees crores

Schedule 2009 2008

I. SOURCES OF FUNDS :

SHAREHOLDERS’ FUNDS :

Capital ........................................................................................ I 272.62 239.07

Employee Stock Options Outstanding ........................................ 6.55 4.00

Reserves and Surplus .................................................................. II 6,763.29 5,921.70

7,042.46 6,164.77

MINORITY INTEREST ................................................................... 3,057.26 2,734.52

LOAN FUNDS :

(a) Secured Loans ....................................................................... III A 7,724.71 6,981.88

(b) Unsecured Loans ................................................................... III B 4,465.60 2,899.13

12,190.31 9,881.01

DEFERRED INCOME :

Advance towards Club Mahindra members’ facilities ................ 635.89 477.95

Total ............ 22,925.92 19,258.25

II. APPLICATION OF FUNDS :

FIXED ASSETS : IV

Gross Block ................................................................................. 13,042.35 10,690.36

Less : Depreciation ..................................................................... 5,341.02 4,219.02

Net Block .................................................................................... 7,701.33 6,471.34

CAPITAL WORK-IN-PROGRESS (INCLUDING CAPITAL ADVANCES) 1,751.73 1,154.17

9,453.06 7,625.51

Less : Provision for impairment .................................................. 311.25 —

9,141.81 7,625.51

INVESTMENTS ............................................................................. V 3,381.26 1,354.72

DEFERRED TAX ASSETS (Net) ...................................................... 188.40 17.57

FOREIGN CURRENCY MONETARY ITEM TRANSLATION

DIFFERENCE ACCOUNT [NOTE 7(iv)] ........................................... 18.44 —

CURRENT ASSETS, LOANS AND ADVANCES :

(a) Inventories ............................................................................. VI A 3,271.46 3,275.42

(b) Sundry Debtors ..................................................................... VI B 3,470.79 3,767.83

(c) Cash and Bank Balances ....................................................... VI C 2,967.51 1,727.99

(d) Other Current Assets ............................................................. VI D 3.19 15.65

(e) Loans and Advances ............................................................. VI E 8,861.91 8,141.64

18,574.86 16,928.53

LESS: CURRENT LIABILITIES AND PROVISIONS :

(a) Current Liabilities .................................................................. VII A 6,779.96 5,291.24

(b) Provisions .............................................................................. VII B 1,615.75 1,391.02

8,395.71 6,682.26

NET CURRENT ASSETS ................................................................ 10,179.15 10,246.27

MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN

OFF OR ADJUSTED) .................................................................... VIII 16.86 14.18

Total ............ 22,925.92 19,258.25

NOTES ON ACCOUNTS ............................................................ XV








A. K. Dasgupta


Mumbai, 28th May, 2009 Mumbai, 28th May, 2009

} }}}}}


133

Consolidated Profit and Loss AccountConsolidated Profit and Loss AccountConsolidated Profit and Loss AccountConsolidated Profit and Loss AccountConsolidated Profit and Loss Account for the year ended 31st March, 2009for the year ended 31st March, 2009for the year ended 31st March, 2009for the year ended 31st March, 2009for the year ended 31st March, 2009

Rupees crores

Schedule 2009 2008

SALES .......................................................................................................................... 21,058.63 19,774.30

Less : Excise Duty on Sales ......................................................................................... 2,072.18 2,154.82

Net Sales ..................................................................................................................... 18,986.45 17,619.48

Income from Operations ............................................................................................ IX 7,769.90 6,592.52

Other Income ............................................................................................................. X 163.46 233.29

26,919.81 24,445.29

EXPENDITURE :

Raw Materials, Finished and Semi-finished Products… .............................................. XI 13,063.79 11,629.15

Personnel .................................................................................................................... XII 4,274.86 3,630.12

Interest, Commitment and Finance Charges (Net) ..................................................... XIII 750.16 589.52

Depreciation/Amortisation [Note 9] ............................................................................ 749.33 582.24

Other Expenses… ....................................................................................................... XIV 5,858.96 5,373.63

24,697.10 21,804.66

Less : Cost of Manufactured/Purchased Products capitalised ..................................... 107.80 157.64

24,589.30 21,647.02

Profit before exceptional item and taxation ............................................................... 2,330.51 2,798.27

Add : Exceptional Items [Note 19] ............................................................................. (76.39) (294.28)

Profit before taxation ................................................................................................. 2,254.12 2,503.99

Less : Provision for Tax - Current Tax including Fringe Benefit Tax ............................ 506.92 691.84

- Deferred Tax (Net) [Note 18] ............................................. 35.25 (34.64)

Profit for the year before prior year adjustments ....................................................... 1,711.95 1,846.79

Less : Adjustments pertaining to previous years [Note 20] ........................................ 6.36 2.22

Balance of profit for 2008-2009 before share of profit/loss of Associates and

Minority Interests ........................................................................................................ 1,705.59 1,844.57

Add : Share of Profit of Associates for the year ........................................................ 11.27 10.00

Profit before Minority Interests ................................................................................... 1,716.86 1,854.57

Minority Share in Profits for 2008-2009 .................................................................... 311.45 283.45

Net Profit .................................................................................................................... 1,405.41 1,571.12

Balance of profit for earlier years ............................................................................... 3,873.20 2,945.13

Less : Adjustment on account of Mergers .................................................................. 43.91 —

Less : Transfer to Debenture Redemption Reserve (Net) ............................................. (29.62) (16.88)

3,799.67 2,928.25

Total of Profit and Loss Account balances shown above ........................................... 5,205.08 4,499.37

Deduct : Statutory Reserve ........................................................................................ 26.62 49.04

General Reserve (Net) .................................................................................. 180.05 242.33

Capital Redemption Reserve ........................................................................ 18.75 —

Interim Dividends Paid ................................................................................ 23.51 —

Income Tax on Dividends…......................................................................... 28.86 13.71

Proposed Dividend on Equity Shares .......................................................... 278.83 282.61

Income Tax on Proposed Dividend .............................................................. 33.23 38.48

Balance for 2008-2009 and earlier years carried to Balance Sheet ............................ 4,615.23 3,873.20

EARNINGS PER SHARE : [Note 24]

(Face value Rs.10/- per share) (Rupees)

Basic ........................................................................................................................... 51.57 65.84

Diluted ........................................................................................................................ 48.27 59.84

NOTES ON ACCOUNTS ........................................................................................... XV








A. K. Dasgupta



} }}}}}

134

Consolidated Cash Flow StatementConsolidated Cash Flow StatementConsolidated Cash Flow StatementConsolidated Cash Flow StatementConsolidated Cash Flow Statement for the year ended 31st March, 2009for the year ended 31st March, 2009for the year ended 31st March, 2009for the year ended 31st March, 2009for the year ended 31st March, 2009

Rupees crores

2009 2008

A. CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit before exceptional item, taxation and adjustments pertaining to

previous years .............................................................................................. 2,330.51 2,798.27

Adjustments for :

Depreciation/Amortisation ........................................................................... 749.33 582.24

Profit on Exchange (Net) ............................................................................. (5.58) (30.61)

Investment and Interest Income [Excluding Rs. 13.42 crores

(2008 : Rs. 5.93 crores) in respect of financial enterprises consolidated] ... (195.25) (170.85)

Interest, Commitment and Finance charges [Excluding Rs. 495.05 crores

(2008 : Rs. 453.06 crores) in respect of financial enterprises consolidated] 362.84 262.51

Amortisation of Expenses ............................................................................ 15.81 12.62

Profit on sale of Investments (Net) .............................................................. (47.78) (180.00)

(Profit)/Loss on fixed assets sold/scrapped/written off (Net) ........................ 6.04 (19.83)

Provision for diminution in value of long term investments (Net) .............. 0.24 4.33

(Increase)/Decrease of cost over fair value of current investments (Net) ..... (1.93) (1.74)

883.72 458.67

Operating Profit before Working Capital changes ....................................... 3,214.23 3,256.94

Changes in : Deferred income – advances towards membership fees ........ 157.94 158.44

Trade and other receivables ................................................... 85.05 (1,091.40)

Loans against Assets * ........................................................... (185.28) (808.55)

Inventories ............................................................................. 177.94 (703.34)

Trade and other payables ...................................................... 690.40 1,094.40

926.05 (1,350.45)

Exceptional Items :

Upfront payment to a customer ................................................................. — (440.12)

Miscellaneous Expenditure (to the extent not written off or adjusted)

incurred during the year ............................................................................. (21.44) (5.18)

Cash generated/(used) from operations ...................................................... 4,118.84 1,461.19

Income Taxes paid (Net of refunds including for prior years) ..................... (717.34) (762.32)

NET CASH FROM OPERATING ACTIVITIES .................................................... 3,401.50 698.87

* In respect of financial enterprises consolidated.

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets .............................................................................. (2,941.33) (1,972.30)

Sale of fixed assets ...................................................................................... 81.73 45.40

Purchase of investments .............................................................................. (20,148.97) (16,307.27)

Sale of investments ..................................................................................... 19,692.81 15,937.00

Interest received .......................................................................................... 79.52 124.81

Dividends received ....................................................................................... 35.88 30.16

Inter corporate deposits (Net) ..................................................................... 14.88 8.41

Purchase consideration paid on acquisition of interest in subsidiaries ....... (562.95) (1,311.48)

Sales Proceeds (Net) received on divesture of interest in subsidiaries ......... 305.14 675.68

NET CASH USED IN INVESTING ACTIVITIES ................................................. (3,443.29) (2,769.59)


135

Consolidated Cash Flow StatementConsolidated Cash Flow StatementConsolidated Cash Flow StatementConsolidated Cash Flow StatementConsolidated Cash Flow Statement (Contd.)(Contd.)(Contd.)(Contd.)(Contd.)

Rupees crores

2009 2008

C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from borrowings .......................................................................... 7,718.58 32,458.76

Repayments of borrowings (including premium on repayment) ................. (5,811.46) (30,376.23)

Dividends paid ............................................................................................. (371.78) (131.72)

Interest, Commitment and Finance charges paid ........................................ (328.81) (260.65)

NET CASH FROM FINANCING ACTIVITIES .................................................... 1,206.53 1,690.16

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) 1,164.74 (380.56)

CASH AND CASH EQUIVALENTS [Note (a)]

Opening Balance ......................................................................................... 1,785.67 2,085.16

Cash & Bank Balance Acquired on Acquisition of Subsidiaries ................... 4.37 81.07

Cash & Bank Balance on Disposal of Subsidiary .......................................... (1.71) —

Closing Balance ........................................................................................... 2,953.07 1,785.67

Notes to the Consolidated Cash Flow Statement for the year ended 31st March, 2009

Rupees crores

2009 2008

(a) Cash and Bank Balances .............................................................................. 2,967.51 1,727.99

Unrealised (Net) translation (gain)/loss on foreign currency cash and cash

equivalents .................................................................................................. (14.44) 57.68

Total cash and cash equivalent ................................................................... 2,953.07 1,785.67

(b) The following non-cash transactions do not form part of Cash Flow :

i) Arising out of the scheme of arrangement for the merger between company’s subsidiaries Tech Mahindra (R & D Services)

Limited and iPolicy Networks Limited (IPNL) with Tech Mahindra Limited.

(ii) Arising out of the scheme of arrangement for the merger of Tech Mahindra (R & D Services) Inc. with Tech Mahindra

Americas Inc.

(iii) In accordance with a scheme of amalgamation, the company’s wholly owned subsidiary Mahindra Holdings and Finance

Limited has merged with the Company.

(iv) In accordance with a scheme of amalgamation, the company’s subsidiary Punjab Tractors Limited has merged with the

Company

(c) Previous year’s figures have been regrouped/restated wherever necessary.








A. K. Dasgupta



} }}}}}

136

SCHEDULE I Rupees crores

2009 2008

Share Capital :

Authorised :

60,00,00,000 (2008 - 37,50,00,000) Ordinary (Equity) Shares of Rs. 10 each 600.00 375.00

25,00,000 Unclassified shares of Rs.100 each ............................................. 25.00 25.00

Total .............. 625.00 400.00

Issued and Subscribed :

27,88,21,265 (2008 - 24,57,41,813) Ordinary (Equity) Shares of Rs.10 each

fully paid up ............................................................................... 278.82 245.74

278.82 245.74

Less :

62,05,305 (2008 - 66,68,431) Ordinary (Equity) Shares of Rs.10 each fully

paid up issued to ESOP Trust but not allotted to employees ..... 6.20 6.67

Adjusted : Issued and Subscribed Share Capital ...................................................... 272.62 239.07

SCHEDULE II Rupees crores

2008 Additions Deductions 2009

Reserves and Surplus :

1 Capital Reserve .................................................................... 23.48 0.08 0.02 23.54

23.43 0.05 — 23.48

2 Capital Reserve on consolidation ......................................... 138.55 0.46 — 139.01

138.55 — — 138.55

3 Securities Premium Account ................................................ 579.03 10.95 44.32 545.66

554.03 27.15 2.15 579.03

Less : Premium on shares issued to ESOP Trust but not 16.34 — 1.14 15.20

allotted to employees [Note 5] ............................................ 17.98 — 1.64 16.34

562.69 10.95 43.18 530.46

536.05 27.15 0.51 562.69

4 Revaluation Reserve ............................................................. 12.47 — 0.38 12.09

12.86 — 0.39 12.47

5 General Reserve ................................................................... 971.84 180.05 104.18** 1,047.71

742.98 242.33 13.47 971.84

Add : Bonus shares issued to ESOP Trust but not allotted

to employees [Note 5] ......................................................... 3.33 — 0.23 3.10

3.67 — 0.34 3.33

975.17 178.60 102.96 1,050.81

746.65 242.33 13.81 975.17

6 Debenture Redemption Reserve ........................................... 18.24 29.62$ — 47.86

1.36 16.88$ — 18.24

7 Investment Fluctuation Reserve ........................................... 30.61 806.61 154.38 682.84

30.61 — — 30.61

8 Capital Redemption Reserve ................................................ 50.00 18.75*** — 68.75

50.00 — — 50.00

9 Special Reserve (As per Section 45 IC of the RBI Act) ......... 194.51 26.62 91.22 129.91

145.47 49.04 — 194.51

10 Hedging Reserve Account [Note 6] ..................................... 28.78 — 508.68 (479.90)

— 41.70 12.92 28.78

11 Foreign Exchange Fluctuation Reserve ................................. 14.00 — 71.31 (57.31)

(16.57) 30.57 — 14.00

2,048.50 1,071.69 972.13 2,148.06*

1,668.41 407.72 27.63 2,048.50*

* {including Group Share in Joint Ventures Rs. 3.21 crores (2008 : Rs. 3.30 crores)}

12 Balance for 2008-2009 and earlier years as per

Profit and Loss Account ...................................................... 4,587.16

3,851.12

Group Share in Joint Ventures ............................................ 28.07

22.08

Total ................. 6,763.29

5,921.70

** Adjustment on adoption of Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 - Net of

Tax of Rs. 21.03 crores [Note 7]

*** Transfer of Rs. 18.75 crores (2008 : Rs. Nil) from Profit and Loss Account

$ Transfer from Profit and Loss Account Rs. 29.62 crores (2008 : Rs. 16.88 crores)


137

SCHEDULE III Rupees crores

2009 2008

Loan Funds :

(A) Secured : [Note 8]

(1) Debentures/Bonds ........................................................ 2,880.86 3,585.51

(2) Foreign Currency Loans from Banks ............................. 1,133.97 748.10

(3) Rupee Loans :

(a) From Financial Institutions .................................... 41.92 6.05

(b) From Banks ........................................................... 2,648.08 1,638.59

(c) From Others .......................................................... 56.00 62.40

2,746.00 1,707.04

(4) Loans and Advances on cash credit account from Banks 709.36 655.29

(5) Short-term Foreign Currency Loans from Banks ........... 253.70 284.06

7,723.89 6,980.00

Group Share in Joint Ventures ............................................ 0.82 1.88

Total .................................. 7,724.71 6,981.88

(B) Unsecured :

(1) Fixed Deposits .............................................................. 103.26 8.44

(2) Short-term Loans :

(a) From Banks ........................................................... 658.12 476.02

(b) From Others .......................................................... 213.84 —

871.96 476.02

(3) Other Loans :

(a) From Financial Institutions .................................... 688.67 573.98

(b) Foreign Currency Loans from Banks ...................... 625.65 491.02

(c) Zero Coupon Convertible Bonds ........................... 961.52 802.60

(d) Debentures/Bonds ................................................. 321.00 331.20

(e) 9.25% Fully and Compulsorily Convertible

Debentures ............................................................ 700.00 —

(f) From Government of Gujarat ................................ 9.85 9.40

(g) From Banks ........................................................... 137.81 161.28

(h) From Others .......................................................... 45.88 45.19

3,490.38 2,414.67

Total .................................. 4,465.60 2,899.13

Total .................................. 12,190.31 9,881.01

138

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139

SCHEDULE V Rupees crores

2009 2009 2008 2008

Long Term Current Long Term Current

Investments (At Cost unless otherwise specified) :

Shares (Non-trade and fully paid-up unless otherwise specified) :

Unquoted :

(a) Equity Shares ......................................................................... 49.99 — 30.93 —

(b) Equity Shares - Associates [Note 1(c) & Note 25] ................. 50.09 — 47.89 —

(c) Preference Shares .................................................................. 44.35 — 31.86 —

144.43 — 110.68 —

Quoted :

(a) Equity Shares ......................................................................... 8.85 — 18.99 —

(b) Equity Shares - Associates [Note 1(c) & Note 25] ................. 31.88 — 22.66 —

40.73 — 41.65 —

185.16 — 152.33 —

Debentures/Bonds (Non Trade & fully paid-up) :

(a) Unquoted .............................................................................. 33.25 — — —

(b) Quoted .................................................................................. — 16.80 0.33 24.89

33.25 16.80 0.33 24.89

Other Investments :

Government Securities (including Treasury Bills) :

(a) Unquoted .............................................................................. 0.01 — 0.01 —

(b) Quoted .................................................................................. — 99.08 — 17.93

0.01 99.08 0.01 17.93

Units :

Unquoted ..................................................................................... — 1,535.37 34.22 946.23

— 1,535.37 34.22 946.23

Trust Securities :

Unquoted ..................................................................................... 1,511.14 — — —

1,511.14 — — —

Others :

Unquoted ............................................................................. 0.05 — 0.05 179.76

0.05 — 0.05 179.76

1,729.61 1,651.25 186.94 1,168.81

Total ................. 3,380.86 1,355.75

Group Share in Investments of Joint Ventures ............................. 0.44 0.94

Total ................. 3,381.30 1,356.69

Cost (Net of amounts written off) of Unquoted Investments 3,224.69 1,271.89

Cost/Carrying Value of Quoted Investments ................................. 156.61 84.80

3,381.30 1,356.69

Less : Excess of cost over fair value of Current Investments (Net) 0.04 1.97

3,381.26 1,354.72

Market value of Quoted Investments ........................................... 188.09 206.64

140

SCHEDULE VI Rupees crores

2009 2008

Current Assets, Loans and Advances :

(A) Inventories (at cost or net realisable value whichever is lower) :

(i) Finished Products produced and purchased for sale ................. 845.55 1,013.20

(ii) Contracts and Work-in-Progress ................................................. 862.64 730.01

(iii) Manufactured Components ....................................................... 55.57 48.10

(iv) Raw Materials and Bought-out Components ............................. 902.73 1,029.39

(v) Work-in-Progress – Property Development Activity and Long

Term Contracts ........................................................................... 498.36 335.42

(vi) Food, Beverages, Smokes and Operating Supplies ..................... 5.24 3.45

(vii) Stores and Spares ....................................................................... 58.20 70.20

(viii) Tools ........................................................................................... 38.58 39.68

3,266.87 3,269.45

Group Share in Inventories of Joint Ventures .................................... 4.59 5.97

Total .......... 3,271.46 3,275.42

(B) Sundry Debtors :

Unsecured unless otherwise stated :

Outstanding over six months : Considered good .............................. 427.23 393.37

: Considered doubtful ......................... 123.23 78.03

550.46 471.40

Other Debts : Considered good ........................................................ 3,122.19 3,424.74

: Considered doubtful ................................................... 3.29 1.93

3,125.48 3,426.67

3,675.94 3,898.07

Less : Unmatured Finance Charges ................................................... 94.02 66.66

Less : Provision for Doubtful Debts ................................................... 131.11 78.52

3,450.81 3,752.89

Group Share in Debtors of Joint Ventures ........................................ 19.98 14.94

Total .......... 3,470.79 3,767.83

(C) Cash and Bank Balances :

Cash, cheques and stamps on hand ................................................. 392.81 241.51

Balances with Banks :

(i) On Current Account ............................................................ 1,168.50 531.22

(ii) On Fixed Deposit Account .................................................. 1,348.95 946.65

(iii) On Margin Account ............................................................ 51.43 2.44

2,568.88 1,480.31

2,961.69 1,721.82

Group Share in Cash and Bank Balances of Joint Ventures .............. 5.82 6.17

Total .......... 2,967.51 1,727.99


141

(D) Other Current Assets :

Interest accrued on Investments ........................................................... 2.94 4.29

Others ................................................................................................... 0.14 11.14

3.08 15.43

Group Share in Other Current Assets of Joint Ventures ....................... 0.11 0.22

Total ............. 3.19 15.65

(E) Loans and Advances :

(Unsecured, considered good unless otherwise stated) :

Bills of exchange, considered good ...................................................... 14.26 13.60

Bills of exchange, considered doubtful ................................................ 1.02 1.02

15.28 14.62

Less : Provision for Doubtful Debts ...................................................... 1.02 1.02

14.26 13.60

Advances recoverable in cash or in kind or for value to be received :

Considered good .................................................................................. 1,774.59 1,548.86

Considered doubtful ............................................................................. 79.74 78.15

1,854.33 1,627.01

Less : Provision for Doubtful Advances ................................................ 74.91 71.77

1,779.42 1,555.24

Loans against assets/Retained Interest in Securitised Assets (Secured) :

Considered good .................................................................................. 6,319.22 6,157.63

Considered doubtful ............................................................................. 678.79 545.15

6,998.01 6,702.78

Less : Provision for Doubtful Advances ................................................ 379.63 269.68

6,618.38 6,433.10

Payments towards Income Tax and Surtax (Net of provisions) ............. 336.57 98.64

Balances - Customs, Port Trust, Excise, etc. .......................................... 112.53 39.73

8,861.16 8,140.31

Group Share in Loans and Advances of Joint Ventures ....................... 0.75 1.33

Total ............. 8,861.91 8,141.64

Total ............. 18,574.86 16,928.53

SCHEDULE VI (Contd.) Rupees crores

2009 2008

142

SCHEDULE VII Rupees crores

2009 2008

Current Liabilities and Provisions :

(A) Current Liabilities :

Acceptances ....................................................................................... 354.71 354.29

Sundry Creditors :

(i) Total outstanding dues of micro and small enterprises ............. 6.76 4.97

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

small enterprises ......................................................................... 5,097.73 3,700.27

5,104.49 3,705.24

Dividend payable ............................................................................... 6.19 4.21

Balances on Directors’ Current Accounts .......................................... 2.21 2.46

Interest accrued but not due on loans .............................................. 210.10 185.93

Deposits/Advances received against hire purchase/lease agreements 53.87 56.11

Other current liabilities ...................................................................... 1,039.09 972.99

6,770.66 5,281.23

Group Share in Current Liabilities of Joint Ventures ......................... 9.30 10.01

Total .......... 6,779.96 5,291.24

(B) Provisions :

Proposed Dividends ........................................................................... 278.83 282.61

Provision for Tax on Proposed Dividend ............................................ 33.23 38.48

Provision for diminution in value of long term investments ............. 28.35 28.11

Provision for premium payable on redemption of convertible bonds 269.51 224.97

Provision for compensated absences ................................................. 466.92 388.93

Provision for Estimated Loss/Expenses on Securitisation ................... 137.62 93.19

Provision : Others [Note 15] .............................................................. 400.45 334.10

1,614.91 1,390.39

Group Share in Provisions of Joint Ventures ..................................... 0.84 0.63

Total .......... 1,615.75 1,391.02

Total .......... 8,395.71 6,682.26

SCHEDULE VIII Rupees crores

2009 2008

Miscellaneous Expenditure

(to the extent not written off or adjusted) :

(a) Finance Charges ......................................................................... 15.38 5.73

(b) Separation and other costs ........................................................ 0.86 7.99

(c) Others .................................................................................... 0.62 0.46

Total .......... 16.86 14.18


143

SCHEDULE IX Rupees crores

2009 2008

Income from Operations :

Income from services rendered ......................................................... 5,718.51 4,759.09

Income from long term contracts ..................................................... 159.57 158.58

Income from Project Management, etc. ........................................... 1.56 0.38

Hire Purchase income, Lease income and other rentals .................... 161.24 38.39

Income from Loan, Retained Interest in securitised assets and

securitisation ..................................................................................... 1,373.41 1,198.81

Commission ....................................................................................... 16.98 14.91

Rent received ..................................................................................... 6.26 3.69

Miscellaneous Income ....................................................................... 323.91 387.72

Profit on sale of Fixed assets (Net) .................................................... — 21.10

7,761.44 6,582.67

Group Share in Joint Ventures .......................................................... 8.46 9.85

Total .......... 7,769.90 6,592.52

SCHEDULE X Rupees crores

2009 2008

Other Income :

Profit on sale of Investments (Net) [Note 21 (b)] .............................. 47.78 180.00

Dividends on other Investments [Note 21 (a)] .................................. 100.94 50.73

Miscellaneous Income ....................................................................... 14.69 2.55

163.41 233.28


Total .......... 163.46 233.29

SCHEDULE XI Rupees crores

2009 2008

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 ................. 1,013.20 786.54



1,791.31 1,111.48

Add : Stock taken over on acquisition

(i) Finished Products produced and purchased for sale ................. 1.79 38.70


151.52 56.72

Less : Closing Stock :

(i) Finished Products produced and purchased for sale ................. 845.55 1,013.20



1,763.76 1,791.31

(Increase)/Decrease in Stock .............................................................. 179.07 (623.11)

(B) Consumption of Raw Materials and Bought-out Components :

Opening Stock ................................................................................... 1,029.39 794.57

Add : Purchases ................................................................................. 11,801.58 11,242.45

12,830.97 12,037.02

Add : Stock taken over on acquisition .............................................. 7.52 72.11

Less : Closing Stock ........................................................................... 902.73 1,029.39

11,935.76 11,079.74

(C) Purchases of Finished Products for sale ........................................... 922.23 1,145.22

13,037.06 11,601.85


Total ................... 13,063.79 11,629.15

144

SCHEDULE XII Rupees crores

2009 2008

Personnel :

Salaries, Wages, Bonus, etc. .............................................................. 3,736.92 3,180.42

Contribution to Provident and other funds ....................................... 262.58 210.93

Welfare .............................................................................................. 269.09 232.26

4,268.59 3,623.61


Total .......... 4,274.86 3,630.12

SCHEDULE XIII Rupees crores

2009 2008

Interest, Commitment and Finance Charges :

On Term Loans and Debentures ........................................................ 730.91 571.33

On Others (Net) ................................................................................. 105.68 125.26

Finance charges ................................................................................. 21.17 18.84

857.76 715.43


Total .......... 857.89 715.57

Less : Interest Income :

Interest on Government Securities, Debentures and Bonds - Gross 2.83 2.38

Interest - Others - Gross .......................................................... 104.60 123.16

107.43 125.54


Total .......... 107.73 126.05

750.16 589.52


145

SCHEDULE XIV Rupees crores

2009 2008

Other Expenses :

Stores consumed ............................................................................... 181.57 172.78

Tools consumed ................................................................................. 68.87 38.46

Power and Fuel .................................................................................. 471.40 437.95

Rent including lease rentals ............................................................... 240.23 184.46

Rates and Taxes ................................................................................. 5.37 74.15

Insurance ........................................................................................... 57.49 46.13

Repairs and Maintenance :

Buildings ..................................................................................... 29.55 29.36

Machinery ................................................................................... 191.82 190.91

Others ........................................................................................ 66.94 61.52

288.31 281.79

Postage, Telephone and Communication .......................................... 131.07 133.73

Software Charges .............................................................................. 68.15 97.80

Legal and Professional Charges ......................................................... 200.30 160.85

Advertisement .................................................................................... 203.98 207.44

Commission on sales/contracts (Net) ................................................. 132.53 165.92

Discount allowed ............................................................................... 72.87 24.76

Freight outward ................................................................................. 718.36 568.57

Sales Promotion Expenses ................................................................. 351.51 268.21

Travelling Expenses ............................................................................ 487.15 662.67

Cost of Projects, Property etc. ........................................................... 145.88 466.06

Subcontracting Charges .................................................................... 770.21 547.50

Miscellaneous Expenses ..................................................................... 1,070.01 699.23

Amortisation of expenses .................................................................. 1.19 0.78

Directors’ fees .................................................................................... 0.09 0.10

Donations and contributions ............................................................. 16.89 16.46

Loss on Fixed Assets sold/scrapped/written off (Net) ........................ 6.04 —

Provision for diminution in value of Long Term investments (Net) ... 0.24 4.33

Net (Increase)/Decrease of cost over fair value of current investments (1.93) (1.74)

Provision for doubtful debts/advances (Net) ..................................... 165.68 106.87

5,853.46 5,365.26


Total .......... 5,858.96 5,373.63

146

Proportion of Proportion of Voting

Name of the Subsidiary Company

Country of ownership interest Power where different

Incorporation as at as at as at as at

31-03-2009 31-03-2008 31-03-2009 31-03-2008

Indian Subsidiaries

Mahindra First Choice Wheels Limited

(formerly known as FirstChoice Wheels Limited) * India 54.83% 75.89% — —

Mahindra Life Space Developers Limited India 51.08% 51.08% — —

Mahindra Consulting Engineers Limited India 51.00% 51.00% — —

Tech Mahindra Limited India 48.83% 48.97% 52.33% 52.49%

Bristlecone India Limited India 82.05% 82.08% 100.00% 100.00%

Mahindra Engineering and Chemical Products Limited India 100.00% 100.00% — —

Mahindra Gujarat Tractor Limited India 60.00% 60.00% — —

Mahindra Holdings and Finance Limited

(upto 31st

January, 2008) [Note 3(iv)] India — 100.00% — —

Mahindra Holidays and Resorts India Limited * India 95.29% 95.99% — —

Mahindra Infrastructure Developers Limited India 40.87% 40.87% 80.00% 80.00%

Mahindra Intertrade Limited India 100.00% 100.00% — —

Mahindra Logisoft Business Solutions Limited India 100.00% 100.00% — —

Mahindra & Mahindra Financial Services Limited * India 60.85% 61.12% — —

Mahindra Steel Service Centre Limited India 61.00% 61.00% — —

Mahindra Shubhlabh Services Limited India 83.05% 77.31% — —

NBS International Limited India 100.00% 100.00% — —

SCHEDULE XV

Notes on the Consolidated Accounts for the year ended 31st March, 2009

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.

ii) The difference between the costs of investment in the subsidiaries over the Company’s portion of equity of the subsidiary is recognised

in the financial statements as Goodwill or Capital Reserve.

iii) The difference between the proceeds from disposal of investment in a subsidiary and the carrying amount of its assets less liabilities as

of date of disposal is recognised in the Profit and Loss Account as profit or loss on disposal of investment in subsidiary.

iv) Minority Interest in the net assets of consolidated subsidiaries consists of :

a) the amount of equity attributable to minorities at the date on which investment in a subsidiary is made; and

b) the minorities’ share of movements in equity since the date the parent subsidiary relationship comes into existence.

v) The Financial Statements of the subsidiaries are drawn up to 31st

March, 2009.

The subsidiaries (which along with Mahindra & Mahindra Limited, the parent, constitute the group) considered in the presentation of these

consolidated financial statements are :


147

Mahindra Insurance Brokers Limited India 60.85% 61.12% 100.00% 100.00%

Mahindra Engineering Services Limited

(formerly known as Mahindra Engineering Design and

Development Company Limited) India 100.00% 100.00% — —

Mahindra World City Developers Limited India 42.21% 42.21% 82.62% 82.62%

Mahindra SAR Transmission Private Limited India 100.00% 60.26% — —

Mahindra Navistar Automotives Limited

(formerly known as Mahindra International Limited) India 51.00% 51.00% — —

Mahindra World City (Maharashtra) Limited India 51.08% 51.08% 100.00% 100.00%

Mahindra Renault Private Limited India 51.00% 51.00% — —

Mahindra Ugine Steel Company Limited India 50.69% 50.69% — —

Mahindra World City (Jaipur) Limited India 37.80% 37.80% 74.00% 74.00%

Tech Mahindra (R & D Services) Limited (upto 31st

March, 2008) India — 48.97% — 100.00%

CanvasM Technologies Limited India 39.11% 39.23% 80.10% 80.10%

iPolicy Networks Limited (upto 31st

March, 2008) India — 48.97% — 100.00%

Mahindra Hinoday Industries Limited * India 64.88% 43.08% 99.81% 66.28%

Mahindra Integrated Township Limited India 48.77% 48.78% 100.00% 100.00%

Mahindra Vehicle Manufacturers Limited

(formerly known as Mahindra Automotive Limited) India 100.00% 100.00% — —

Mahindra Castings Private Limited India 65.00% 65.00% — —

Mahindra Forgings Limited India 60.56% 60.56% — —

Mahindra Hotels and Residences India Limited India 95.28% 95.98% 99.99% 99.99%

Mahindra Retail Private Limited

(upto 15th

January, 2009) [Note 19] India — 100.00% — —

Mahindra Knowledge City Limited

(Formarly known as Mahindra Technology Park Limited) India 51.08% 51.08% 100.00% 100.00%

Mahindra Holdings Limited India 100.00% 100.00% — —

Mahindra Logistics Limited India 100.00% 100.00% — —

Mahindra Rural Housing Finance Limited India 53.25% 61.12% 87.50% 100.00%

Punjab Tractors Limited (upto 31st

July, 2008) [Note 3(v)] India — 64.64% — —

Mahindra Residential Developers Limited India 24.87% 48.77% 51.00% 100.00%

Mahindra Aerospace Private Limited India 100.00% 100.00% — —

Mahindra First Choice Services Limited India 100.00% 100.00% — —

Mahindra Navistar Engines Private Limited India 51.00% 51.00% — —

Mahindra Bebanco Developers Limited (w.e.f. 3rd

June, 2008) India 35.76% — 70.00% —

Mahindra Industrial Township Limited (w.e.f. 2nd

July, 2008) India 51.08% — 100.00% —

Crest Geartech Limited (w.e.f. 3rd

July, 2008) India 51.00% — 100.00% —





31-03-2009 31-03-2008 31-03-2009 31-03-2008

148





31-03-2009 31-03-2009 31-03-2009 31-03-2008

Mahindra IT Consulting Private Limited

(w.e.f 16th

September, 2008) India 82.05% — 100.00% —

Mahindra Two Wheelers Limited (w.e.f. 29th

September, 2008) India 80.00% — — —

Mahindra United Football Club Private Limited

(w.e.f. 3rd

November, 2008) India 100.00% — — —

Mahindra Defence Land Systems Private Limited

(w.e.f. 4th

March, 2009) India 100.00% — — —

Venturbay Consultants Private Limited (w.e.f. 19th

March, 2009) India 48.83% — 100.00% —

Foreign Subsidiaries

Bristlecone Limited Cayman Islands 82.05% 82.08% — —

Mahindra (China) Tractor Company Limited China 84.87% 83.74% — —

Tech Mahindra (Beijing) IT Services Limited China 48.83% 48.97% 100.00% 100.00%

Tech Mahindra GmbH Germany 48.83% 48.97% 100.00% 100.00%

Bristlecone GmbH Germany 82.05% 82.08% 100.00% 100.00%

Plexion Technologies GmbH Germany 100.00% 100.00% — —

Mahindra Forgings Europe AG Germany 60.56% 60.56% 100.00% 100.00%

Gesenkschmiede Schneider GmbH Germany 60.56% 60.56% 100.00% 100.00%

JECO-Jellinghaus GmbH Germany 60.56% 60.56% 100.00% 100.00%

Falkenroth Umformtechnik GmbH Germany 60.56% 60.56% 100.00% 100.00%

Schöneweiss & Co. GmbH ** Germany 60.56% 60.56% 97.28% 97.28%

MHR Hotel Management GmbH Germany 71.47% 71.99% 75.00% 75.00%

PT Tech Mahindra Indonesia Indonesia 48.83% 48.97% 100.00% 100.00%

Mahindra Europe s.r.l. Italy 80.00% 80.00% — —

Mahindra Graphic Research Design s.r.l. Italy 100.00% 100.00% — —

Bristlecone (Malaysia) SDN. BHD Malaysia 82.05% 82.08% 100.00% 100.00%

Tech Mahindra (Malaysia) SDN. BHD. Malaysia 48.83% 48.97% 100.00% 100.00%

Heritage Bird (M) SDN. BHD. Malaysia 95.29% 95.99% 100.00% 100.00%

Mahindra Overseas Investment Company (Mauritius) Limited Mauritius 100.00% 100.00% — —

Mahindra-BT Investment Company (Mauritius) Limited Mauritius 57.00% 57.00% — —

Mahindra Forgings International Limited Mauritius 60.56% 60.56% 100.00% 100.00%

Mahindra Forgings Global Limited Mauritius 60.56% 60.56% 100.00% 100.00%

Mahindra Middleeast Electrical Steel Service Centre (FZC) Sharjah 90.00% 90.00% — —

Tech Mahindra (Singapore) Pte. Limited Singapore 48.83% 48.97% 100.00% 100.00%

Bristlecone (Singapore) Pte. Limited Singapore 82.05% 82.08% 100.00% 100.00%

Mahindra & Mahindra South Africa (Proprietary) Limited South Africa 90.73% 51.00% — —

Tech Mahindra (Thailand) Limited Thailand 48.83% 48.97% 100.00% 100.00%

Bristlecone UK Limited U.K. 82.05% 82.08% 100.00% 100.00%


149





31-03-2009 31-03-2008 31-03-2009 31-03-2008

Stokes Group Limited U.K. 60.43% 60.43% 99.78% 99.78%

Stokes Forgings Dudley Limited U.K. 60.43% 60.43% 100.00% 100.00%

Jensand Limited U.K. 60.43% 60.43% 100.00% 100.00%

Stokes Forgings Limited U.K. 60.43% 60.43% 100.00% 100.00%

Mahindra Engineering Services (Europe) Limited

(formerly known as Plexion Technologies (UK) Limited) U.K. 100.00% 100.00% — —

Tech Mahindra (Americas) Inc. U.S.A. 48.83% 48.97% 100.00% 100.00%

Mahindra USA Inc. U.S.A. 100.00% 100.00% — —

Bristlecone Inc. U.S.A. 82.05% 82.08% 100.00% 100.00%

Mahindra Holidays and Resorts USA Inc. U.S.A. 95.29% 95.99% 100.00% 100.00%

Tech Mahindra (R & D Services) Inc. (upto 30th

June, 2008) U.S.A. — 48.97% — 100.00%

Mahindra Technologies Inc

(formerly known as Plexion Technologies Inc) U.S.A. 100.00% 100.00% — —

CanvasM (Americas) Inc. U.S.A. 39.11% 39.23% 100.00% 100.00%

Mahindra Automotive Australia Pty. Limited

(w.e.f. 23rd

September, 2008) Australia 80.00% — — —

Mahindra Yueda (Yancheng) Tractor Company Limited

(w.e.f. 28th

November, 2008) China 51.00% — — —

Mahindra Gears Cyprus Limited (w.e.f. 6th

June, 2008)

(formerly known as Kalbarri Trading Limited) Cyprus 53.34% — 100.00% —

Mahindra Metal Castello S.r.l. (w.e.f. 17th

June, 2008) Italy 51.00% — 95.61% —

Metalcastello S.p.A (w.e.f. 3rd

July, 2008) Italy 51.00% — 100.00% —

Engines Engineering S.r.l. (w.e.f. 5th

August, 2008) Italy 70.00% — — —

EFF Engineering S.r.l. (w.e.f. 5th

August, 2008) Italy 35.70% — 51.00% —

ID-EE S.r.l. (w.e.f. 5th

August, 2008) Italy 49.00% — 70.00% —

Mahindra Gears International Limited (w.e.f. 10th

June, 2008) Mauritius 100.00% — — —

Mahindra Gears Global Limited (w.e.f. 6th

June, 2008)

(formerly known as Iven International Gear Mauritius Limited) Mauritius 53.34% — — —

* 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.

150

(b) Interests in Joint Ventures

The Group’s interests in jointly controlled entities of the Group are :

Name of the Entity Country of Percentage of Percentage of

Incorporation ownership ownership

interest interest

as at 31-03-2009 as at 31-03-2008

a) Mahindra Sona Limited India 29.77% 29.77%

b) PSL Erickson Limited India 18.06% 18.06%

c) Mahindra Water Utilities Limited $ India 50.00% 50.00%

d) Mahindra Inframan Water Utilities Private Limited $ India 50.00% 50.00%

Interest in Joint Ventures are 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, 2009.

(c) Investment in Associates

The Group’s Associates are :

Name of the Entity Country of Percentage of Percentage of

Incorporation ownership ownership

interest interest

as at 31-03-2009 as at 31-03-2008

Owens Corning (India) Limited India 21.50% 21.50%

Mahindra Construction Company Limited India 43.83% 43.83%

Officemartindia.com Limited India 50.00% 50.00%

Rathna Bhoomi Enterprises Private Limited India 20.43% 20.43%

Kota Farm Services Limited India 37.37% 34.79%

Mriyalguda Farm Solution Limited India 37.37% 34.79%

Mega One Stop Farm Services Limited India 37.37% 34.79%

Mahindra Composites Limited India 30.56% 30.56%

Swaraj Automotives Limited India 44.19% 35.64%

Swaraj Engines Limited India 33.22% 21.49%

Eco Engines (w.e.f. 5th

August, 2008) Russia 29.75% -

The financial statements of all the Associates are drawn up to 31st

March, 2009.

2. Accounting Policies :

(A) Fixed Assets :

(a) (i) Fixed Assets are carried at cost less depreciation except as stated in (iii) below. Cost includes financing cost relating to borrowed

funds attributable to the construction or acquisition of qualifying fixed assets upto the date the asset is ready for use.

(ii) When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account

and resultant profit (including capital profit) or loss, if any, is reflected in the Profit and Loss Account.

(iii) Land and Buildings, of the parent company had been revalued as at 31st

October, 1984 at depreciated replacement values on the

basis of a valuation made by a firm of Chartered Surveyors and Valuers. The indices, if any, used are not stated in the valuation.

(b) (i) Leasehold land is amortised over the period of the lease.

(ii) Depreciation on fixed assets is provided on Straight Line Method over 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.


151

(B) Intangible Assets :

All Intangible Assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits are

consumed :

(a) Technical Knowhow :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year of

purchase of the technology.

(b) Development Expenditure :

The expenditure incurred on technical services and other project related expenses are amortised on the completion of the development

work over the estimated period of benefit not exceeding five years.

(c) Software Expenditure :

The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure is

incurred.

(d) Websites :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding five years.

(e) Timeshare Weeks :

Intangible assets representing ‘timeshare weeks’ are amortised over a period of ten years.

(f) Trademarks :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding ten years.

(g) Non-Compete Fees :

Non-compete payments are amortised equally over the estimated period of benefit, not exceeding ten years.

(C) 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.

(D) 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.

(E) 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.

(F) 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 loan used for financing the

acquisition of fixed assets) is recognised as income or expense, as the case may be.

Exchange differences relating to long term 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.

(G) 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

152

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.

(H) 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

(I) below]

(b) Dividends from investments are recognised in the Profit and Loss Account when the right to receive payment is established.

(I) 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.

(J) 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.

(K) 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 to the collection of these grants,

such grants are accounted for as and when the disbursements are received.

(L) 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.

(M) Employee Benefits :

Defined Contribution Plan/Defined Benefit Plan/Long term compensated absences.

Group’s contributions paid/payable during the year to Superannuation Fund, ESIC and Labour Welfare Fund are recognised in the Profit and

Loss Account.

Contributions to Provident Fund are made to a Trust administered by the Group and are charged to Profit and Loss account as incurred.

The Company is liable for the contribution and any shortfall in interest between the amount of interest realised by the investment and the

interest payable to members at the rate declared by the Government of India.

Group’s liability towards gratuity, long term compensated absences and post retirement medical benefit schemes are determined by

independent actuaries, using the projected unit credit method. Past services are recognised on a straight line basis over the average period

until the benefits become vested. Actuarial gains and losses are recognised immediately in the statement of Profit and Loss Account as

income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined

by reference to the market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds

are consistent with the currency and estimated terms of the defined benefit obligation.


153

(N) Borrowing Costs :

All borrowing costs are charged to the Profit and Loss Account other than :

(a) Borrowing costs that are attributable to the acquisition or construction of assets that necessarily take a substantial period of time to

get ready for their intended use. These are capitalised as part of the cost of such assets.

(b) Expenses incurred on raising long term borrowings which are amortised over the period of borrowings. On early buyback, conversion

or repayment of borrowings, any unamortised expenditure is fully written off in that year.

(O) 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.

(P) 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.

(Q) Leases :

The Group’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns, etc.). The

leasing arrangements which are not non-cancellable range between 11 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.

(R) 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.

(S) 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.

(T) 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/expenses and incidental expenses related to the transaction is recognised as gain or loss arising on

assignment.

3. Changes in Group Structure : During the year ended 31st

March, 2009, the following changes in Group structure have taken place and the same

have been appropriately dealt with in the Consolidated Financial Statements.

i. Tech Mahindra (R&D Services) Ltd (TMRD) and iPolicy Networks Ltd (IPNL) : In accordance with a scheme of amalgamation sanctioned by

the Hon’ble High Courts of Judicature, Bombay, Karnataka and Delhi vide their orders dated 28th

March, 2008, 3rd

April, 2008 and

4th

April, 2008 respectively, TMRD and IPNL both wholly owned subsidiaries of Tech Mahindra Ltd (TML), have merged with effect from

1st

April, 2008, the appointed date, with TML, an existing subsidiary of the Company.

ii. Tech Mahindra (R&D Services) Inc. (TMRDUS) : In accordance with an approved plan and agreement from amalgamation TMRDUS has

merged with Tech Mahindra (Americas) Inc, also a subsidiary of the Company. The amalgamation has been duly authorised in compliance

with the jurisdictional laws. Accordingly, TMRDUS ceased to exist on 1st

July, 2008.

iii. Stokes Group Ltd (SGL) : In accordance with an Asset Purchase Agreement entered into by Stokes Forgings Limited (SFL), Stokes Forgings

Dudley Limited (SFDL) and Jensand Limited (Jensand) with SGL, the trade and assets of SFL, SFDL and Jensand were transferred at their

respective book values to SGL with effect from 1st

April, 2008.

iv. Mahindra Holdings and Finance Ltd (MHFL) : In accordance with a scheme of amalgamation sanctioned by the Hon’ble High Court of

Judicature, Bombay vide its order dated 18th

July, 2008, the Company’s wholly owned subsidiary MHFL has merged with the Company with

effect from 1st

February, 2008, the appointed date.

154

v. Punjab Tractors Limited (PTL): In accordance with a scheme of amalgamation sanctioned by the Hon’ble High Court of Judicature, Bombay

and the Hon’ble High Court of Punjab & Haryana, Chandigarh vide their orders dated 9th

Juanuary, 2009 and 16th

January, 2009

respectively, the Company’s subsidiary PTL has merged with the Company with effect from 1st

August, 2008, the appointed date.

vi. Mahindra Hinoday Industries Ltd (MHIL) : In terms of the proposed Scheme of Amalgamation of the Company’s subsidiaries Mahindra

Castings Private Ltd (MCPL) and MHIL, a subsidiary of MCPL, the merger would be operative, pending statutory approvals, with effect from

1st

April, 2008. Pending the approvals, MHIL, an existing subsidiary has been considered to be a subsidiary as on the Balance Sheet date

and the results of MHIL for the period ended 31st

March, 2009 have been considered in the Consolidated Financial Statements.

4. Scheme of Amalgamations :

(a) Pursuant to the Scheme of Amalgamation (the scheme) of Mahindra Holdings and Finance Limited (MHFL), a wholly owned subsidiary of

the Company, with the Company as sanctioned by the Hon’ble High Court of Bombay vide its order dated 18th

July, 2008 :

(i) the entire business and all the assets and liabilities, duties and obligations of MHFL were transferred to and vested in the Company,

from 1st

February, 2008 (the appointed date), at their book values; and

(ii) the excess of the value of net assets of MHFL over the face value of companies shares allotted, the face value of the MHFL shares

cancelled and the amount of General Reserve and Profit and Loss Account of MHFL, amounting to Rs.129.61 crores, has been credited

to the Investment Fluctuation Reserve Account.

Had the scheme not prescribed the above treatment the General Reserve would have been higher by Rs.129.61 crores and the Investment

Fluctuation Reserve Account would have been lower by the same amount.

(b) Pursuant to the Scheme of Amalgamation (the scheme) of Punjab Tractors Limited (PTL) a subsidiary of the Company, with the Company

sanctioned by the Hon’ble High Court of Bombay and the Hon’ble High Court of Punjab & Haryana vide their orders dated 9th

January,

2009 and 16th

January, 2009 respectively :

(i) the entire business and all the assets and liabilities, duties and obligations of PTL were transferred to and vested in the Company, at

their book values from 1st

August, 2008 (the appointed date); and

(ii) the excess of the value of net assets of PTL over the face value of shares allotted, amounting to Rs. 677.00 crores, has been credited

to the Investment Fluctuation Reserve Account.

Had the scheme not prescribed the above treatment the General Reserve and the Profit and Loss Account of the Company would have been

higher by Rs. 646.70 crores and Rs. 30.00 crores respectively, there would have been a Preference Share Redemption Reserve of Rs. 0.30

crores and the Investment Fluctuation Reserve Account would have been lower by Rs. 677.00 crores.

(c) In accordance with the above schemes of arrangement as well as the Scheme of Arrangement approved by the the Hon’ble High Court of

Bombay on 12th

December, 2003, the Investment Fluctuation Reserve has been utilized to the extent of Rs. 154.38 crores (2008 : Rs. Nil),

towards diminution in the value of fixed assets.

5. The Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India requires that

shares allotted to a trust but not transferred to employees be reduced from Share Capital and Reserves. Accordingly, the Company has reduced

the Share Capital by Rs. 3.10 crores (2008 : Rs. 3.34 crores), Securities Premium by Rs. 15.20 crores (2008 : Rs. 16.34 crores) for the 31,02,653

shares (2008 : 33,34,216 shares) 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. 3.10 crores (2008 : Rs. 3.33 crores) for the

bonus shares issued by the Company in September, 2005 to the trust but not yet transferred by the trust to the employees. The above monies

which is treated as advance received, is included under current liabilities.

6. 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, all such contracts are marked to market and the loss

aggregating Rs. 479.90 crores (Net of Tax of Rs. 223.57 crores) [2008 : Gain of Rs. 28.78 crores (Net of Tax of Rs. 14.82 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. In line with the notification dated 31st

March, 2009 issued by the Ministry of Corporate Affairs, amending Accounting Standard AS11 –‘Effects

of Changes in Foreign Exchange Rates’, the Company has chosen to exercise the option under Para 46 inserted in the standard by the

notification.

Accordingly with retrospective effect from 1st

April, 2007 exchange differences on all long term monetary items are :

(i) to the extent such items are used for financing fixed assets, added to/subtracted from the cost of those fixed assets and depreciated over

the balance useful life of the asset.

(ii) in other cases accumulated in the ‘Foreign Currency Monetary Item Translation Difference Account’ and amortised over the balance period

of such long term monetary item but not beyond 31st

March, 2011.

Arising from the above the Company has :

(i) charged to the opening General Reserve Rs. 61.87 crores (Net of Tax of Rs. 21.03 crores) which was recognised in the Profit and Loss

account in previous financial year ended 31st

March, 2008.

(ii) added to fixed asset/capital work-in-progress Rs. 137.73 crores and to capital work-in-progress Rs. 41.24 crores being the exchange

differences on long term monetary items relatable to the acquisition of fixed assets.

(iii) charged to the Profit and Loss account Rs. 24.61 crores.


155

(iv) carried forward Rs. 18.44 crores in the ‘Foreign Currency Monetary Item Translation Difference Account’ being the amount remaining to be

amortised as at 31st

March, 2009.

As a result of the above change in Accounting Policy the net profit before tax for the year is higher by Rs. 259.28 crores (Net of Tax Rs. 171.15

crores).

8. Loans :

(a) Secured borrowings are secured by a pari-passu charge on immovable properties of the entities both present and future, subject to certain

exclusions and are also secured by pari-passu charge on the movable properties of the entities including movable machinery, machinery

spares, tools and accessories, both present and future, subject to certain exclusions.

(b) Loans and Advances from Banks are secured by a first charge on whole of the current assets namely inventories, certain book debts,

outstanding monies, receivables, claims, etc. both present and future.

9. (a) The depreciation charge for the year excludes :

i) An amount of Rs. 0.38 crores (2008 : Rs. 0.42 crores), representing depreciation on the increase due to revaluation of Land and

Buildings transferred from the Revaluation Reserve.

ii) An amount of Rs. 4.08 crores (2008 : Rs. 1.70 crores), representing depreciation on assets used for development work. This

expenditure is transferred to Development Expenditure and is appropriately amortised.

iii) An amount of Rs. 0.51 crores represents depreciation on assets of subsidiary disposed off during the year.

(b) Additions to assets include assets taken over due to acquisition of subsidiaries :

Rupees crores

Description of Assets Cost Depreciation/

Amortisation

Land ......................................................................................................................................... 9.51 -

Building .................................................................................................................................... 49.65 19.76

Plant and Machinery ................................................................................................................ 493.05 369.92

Furniture and Fittings ............................................................................................................... 10.19 9.44

Vehicles, Cycles, etc. ................................................................................................................. 2.80 1.82

Software Expenditure ............................................................................................................... 0.53 0.42

Other Intangibles ..................................................................................................................... 17.78 7.83

Total ......................................................................................................................................... 583.51 409.19

10. During the year, Mahindra & Mahindra Financial Services Limited has without recourse assigned loan receivables of 32,083 (2008 : 24,425)

contracts amounting to Rs. 1,036.23 crores (2008 : Rs. 809.86 crores) (including future interest receivable) for a consideration of

Rs. 915.11 crores (2008 : Rs. 730.31 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. 151.95 crores (2008 : Rs. 133.45 crores) and

provision for estimated loss/expenses of Rs. 54.27 crores (2008 : Rs. 32.60 crores). During the year provision in respect of securitisation of

Rs. 7.67 crores (2008 : Rs. 6.84 crores) considered no longer necessary has been written back.

11. 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. 922.04 per share 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. Upto 31st

March, 2009, none of the bonds have been converted into equity shares/

GDRs.

During the year bonds 2011 of the face value of US$ 10.50 million were bought back and cancelled.

Premium payable on redemption of Bonds 2011 had been fully provided in the previous year by debiting the same to Securities Premium

Account (SPA). Consequent to the buyback, premium aggregating Rs. 9.84 crores (Net of Tax of Rs. 5.07 crores) no longer payable has been

credited back to SPA during the year.

The net proceeds of Rs. 53.95 croees, unutilised as at 31st March, 2009, is disclosed under Cash and Bank balances.


March, 2009, 93,95,974 Unsecured Fully and Compulsorily Convertible Debentures (FCD’s)

having a face value of Rs. 745 per FCD for an aggregate consideration of Rs. 700 crores. The FCD’s have a tenure of 18 months and carry a

coupon rate of 9.25% until conversion or date of maturity whichever is earlier. The FCD holder has the option to convert each FCD into one

equity share of face value Rs.10 at a premium of Rs. 735, at anytime within 18 months from 28th

July, 2008. Unless previously converted, each

FCD will be compulsorily converted into one equity share of Rs. 10 each at a premium of Rs. 735 on 28th

January, 2010. Upto 31st

March, 2009

none of the FCD’s have been converted into equity shares.

156

12. Employee Defined Benefits :

Defined benefit plans – as per Actuarial valuation on 31st

March, 2009 Rupees crores

Gratuity Gratuity Post Retirement

(Funded) (Unfunded) Medical Benefits

(Unfunded)

2009 2008 2009 2008 2009 2008

A. Expense recognised in the Statement of

Profit & Loss Account for the year ended 31st March

1. Current service cost 22.19 20.65 21.60 16.39 0.23 0.21

2. Interest cost 20.57 19.99 10.59 3.22 0.25 0.29

3. Expected return on plan assets (19.82) (16.54) (0.04) — — —

4. Actuarial (Gains)/Losses 35.86 2.39 8.21 2.74 1.80 (0.70)

5. Past Service cost 0.03 0.42 0.05 0.02 — —

6. Settlement cost — — — — — —

7. Payments on account of employee transferred (0.04) (1.73) — — — —

8. Effect of the limit in Para 59(b) of the revised AS 15 (0.01) 0.01 — — — —

9. Total expense 58.78 25.19 40.41 22.37 2.28 (0.20)

B. Net Asset/(Liability) recognised in the Balance Sheet

as at 31st March

1. Present Value of Defined Benefit obligation

as at 31st

March 337.58 278.71 116.27 52.75 4.99 2.95

2. Fair value of plan assets as at 31st

March 230.08 217.95 0.21 — — —

3. Amount not recognised as an asset (3.92) 0.01 39.65 — — —

4. Funded status [Surplus/(Deficit)] (103.58) (60.77) (155.71) (52.75) (4.99) (2.95)

5. Net Asset/(Liability) as at 31st

March (103.58) (60.77) (155.71) (52.75) (4.99) (2.95)

C. Change in the obligations during the year

ended 31st March

1. Present Value of Defined Benefit obligation at the

beginning of the year 278.71 204.46 32.04 32.04 2.95 3.30

2. Obligations arising on account of acquisitions

during the year (3.08) 45.67 0.68 0.68 — —

3. Current service cost 22.19 20.65 61.24 16.39 0.23 0.21

4. Interest cost 20.58 19.99 10.59 3.22 0.25 0.29

5. Actuarial (Gains)/Losses 35.86 2.92 8.16 2.74 1.80 (0.70)

6. Liabilities settled on sale of business — — (3.12) — — —

7. Benefits paid (12.54) (15.40) (13.70) (2.35) (0.23) (0.15)

8. Past Service Cost — 0.42 0.06 0.03 — —

9. Present Value of Defined Benefit obligation

at the end of the year 341.72 278.71 95.95 52.75 5.00 2.95

D. Change in the fair value of plan assets during the

year ended 31st March

1. Fair value of plan assets at the beginning of the year 217.95 144.67 — — — —

2. Fair value of plan assets arising on account of

acquisitions during the year (0.16) 29.37 — — — —

3. Expected return on plan assets 20.03 16.54 — — — —

4. Actuarial Gains/(Losses) 0.27 0.63 — — — —

5. Contributions by employer 10.59 39.41 2.41 2.35 0.22 0.15

6. Asset distributed on sale of business 1.76 — — — — —

7. Actual Benefits paid (11.31) (12.67) (2.41) (2.35) (0.22) (0.15)

8. Fair value of plan assets at the end of the year 239.13 217.95 — — — —

9. Actual return on plan assets 17.38 12.50 — — — —

E. Major category of plan assets as a percentage of total plan

Government of India securities 0.00% 0.36%

Corporate Bonds 0.00% 0.61%

Special Deposit Scheme 0.00%

Funded with LIC 100.00% 98.37%

Others 0.00% 0.66%


157

Rupees crores

Gratuity Gratuity Post Retirement

(Funded) (Unfunded) Medical Benefits

(Unfunded)

2009 2008 2009 2008 2009 2008

F. Actuarial Assumptions

1. Discount Rate (Basis - prevailing market yields of 7.50 % - 7.50 % - 7.50 % - 7.50 % - 7.50 % - 8.20 % -

govt securities) 8.50 % 8.50 % 8.50 % 8.50 % 8.50 % 8.25 %

2. Expected Rate of return on plan assets 7.50 % - 7.50 % -

9.50 % 9.45 %

3. In-service Mortality Indian Assured Lives Mortality (1994-96) Modified ultimate

4. Turnover rate 5.00% Age 21 to Age 21 to Age 21 to Age 21 to Age 21 to

30 - 10% 30 - 10% 30 - 10% 30 - 10% 30 - 10%

Age 31 to Age 31 to Age 31 to Age 31 to Age 31 to

40 - 5% 40 - 5% 40 - 5% 40 - 5% 40 - 5%

Age 41 to Age 41 to Age 41 to Age 41 to Age 41 to

50 - 3% 50 – 3% 50 - 3% 50 – 3% 50 - 3%

Age 51 & Age 51 & Age 51 & Age 51 & Age 51 &

above - 2% above - 2% above - 2% above - 2% above - 2%

5. Medical Premium inflation 3.00 % - 3.00% -

6.00 % - 6.00% -

One percentage point increase in One percentage point decrease

medical inflation rate 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 0.14 (0.16)

Effect on the accumulated Post Employment Medical

benefit obligations 0.46 (1.38)

Previous Year

Effect on the aggregate service and interest cost of

Post Employment Medical benefits 0.05 (0.08)

Effect on the accumulated Post Employment Medical

benefit obligations 0.40 (0.34)

Rupees crores

Period ended

H. Experience Adjustments 2009 2008 2007

Gratuity (Funded)

Defined Benefit obligation 341.72 278.71 204.46

Plan Assets 239.13 217.95 144.67

(Deficit)/Surplus (102.59) (60.76) (59.79)

Experience adjustments on plan liabilities 34.34 (3.36) —

Experience adjustments on plan assets 0.02 — —

Gratuity (Unfunded)

Defined Benefit obligation 95.95 52.75 32.05

Plan Assets — — —

(Deficit)/Surplus (95.95) (52.75) (32.05)

Experience adjustments on plan liabilities 0.02 — —

Experience adjustments on plan assets — — —

Post Retirement Medical Benefits

(Unfunded)Defined Benefit obligation 5.00 2.95 3.30

Plan Assets — — —

(Deficit)/Surplus (5.00) (2.95) (3.30)

Experience adjustments on plan liabilities 1.24 (0.49) 0.07

Experience adjustments on plan assets — — —

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.

158

13. The Commissioner of Central Excise (Adjudication), Navi Mumbai, passed an order on 30th

March, 2005, confirming the demand made on the

Company for payment of differential excise duty (including penalty) of Rs. 304.11 crores in connection with the classification of Company’s

Commander range of vehicles, during the years 1991-1996. Whilst the Company had classified the Commander range of vehicles as 10-seater

attracting a lower rate of excise duty, the Commissioner of Central Excise (Adjudication), Navi Mumbai, has held that these vehicles could not be

classified as 10-seaters and as such attracted a higher rate of excise duty. In earlier proceedings, the Collector of Central Excise, Mumbai as also

the Collector Central Excise (Appeals), Mumbai had upheld the classification of these vehicles as 10-seaters. Similarly, certain statutory/expert

bodies have also confirmed the concerned vehicles to be 10-seater vehicles.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has also by its order dated 19th

July, 2005 upheld this classification. The

department’s Statutory Appeal against this order has been admitted by the Supreme Court.

The Commissioner of Central Excise, Nasik passed another order dated 20th

March, 2006 confirming a demand of Rs. 24.75 crores in respect of

Company’s Armada range of vehicles manufactured during the years 1992 – 1996, on the same grounds as adopted for Commander range of

vehicles.

The Company has been legally advised that the aforesaid orders dated 30th

March, 2005 and 20th

March, 2006 passed by the Commissioners are

unsustainable in law. The Tribunal has also given an unconditional stay against both the aforesaid orders.

The final hearing in the above matters is awaited.

The Company is confident that it would succeed in the case and the Company’s stand that the Commander and Armada Vehicles are 10-seater

vehicles would be upheld. As such, the Company does not expect any liability on this account.

14. Contingent Liability :

(a) Guarantees given :

Rupees crores

Outstanding amounts against the guarantees

2009 2008

For employees ................................................................................................................ 1.05 0.03

For other companies ...................................................................................................... 181.39 5.41

Others ............................................................................................................................ 105.85 337.52

Group share in Joint Ventures Rs. Nil (2008 : Rs. 0.35 crores)

(b) Claims against the Companies not acknowledged as debts comprise of :

(i) Excise Duty, Sales tax and Service tax claims disputed by the Company relating to issues of applicability and classification aggregating

Rs. 427.70 crores (Net of Tax : Rs. 280.02 crores) {2008 : Rs. 206.41 crores (Net of Tax : Rs. 138.20 crores)}.

(ii) Other Matters (excluding claims where amounts are not ascertainable) : Rs. 104.68 crores (Net of Tax : Rs. 50.79 crores)

{2008 : Rs. 146.23 crores (Net of Tax : Rs. 37.15 crores)}.

(iii) On Capital account : Rs. 1.18 crores (2008 : Rs. 1.18 crores).

(iv) Group Share in Joint Ventures Rs. 0.38 crores (Net of Tax : 0.38 crores) {2008 : Rs. 0.51 crores (Net of Tax : Rs. 0.38 crores)}.

(c) Taxation matters :

(i) Demands not acknowledged as debts and not provided for, relating to issues of deductibility and taxability in respect of which the

matters are in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be completed :

- Income Tax : Rs. 368.52 crores (2008 : Rs. 229.23 crores)

- Group Share in Joint Ventures : Rs. 0.29 crores (2008 : Rs. 3.15 crores)

(ii) Items which have succeeded in appeal, but the Income Tax Department is pursuing/likely to pursue in appeal/reference and exclusive

of the effect of similar matters in respect of assessments remaining to be completed :

- Income Tax matters : Rs. 58.63 crores (2008 : Rs. 60.49 crores)

- Surtax matters : Rs. 0.13 crores (2008 : Rs. 0.13 crores)

(d) Bills discounted not matured Rs. 91.31 crores (2008 : Rs. 44.21 crores).

(e) Corporate undertaking on Securitisation/Assignment by Mahindra & Mahindra Financial Services Limited Rs. 458.20 crores (2008 :

Rs. 308.22 crores).

15. (a) Provision - Others Rs. 389.37 crores (2008 : Rs. 324.55 crores) includes provision for warranty Rs. 170.55 crores (2008 : Rs. 139.11

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 6 months to 3 years.

(b) Provision for Contingencies Rs. 11.08 crores (2008 : Rs. 9.55 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.


159

The movement in above provisions is as follows :

Rupees crores

Warranty Contingency

Provisions 2009 2008 2009 2008

Balance as at 1st

April ...................................................................................... 139.11 103.43 9.55 3.46

Add : Amalgmation during the year ............................................................... 0.25 — — 1.39

Add : Provision made during the year ............................................................. 120.33 123.69 6.85 8.16

Less : Utilisation/Reversal during the year ........................................................ 89.14 88.01 5.32 3.46

Balance as at 31st

March ................................................................................. 170.55 139.11 11.08 9.55

Group Share in Joint Venture : Rs. 0.10 crores (2008 : Rs. 0.16 crores)

16. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st

March, 2009 is Rs. 1,259.97

crores (2008 : Rs. 1,259.60 crores).

Group Share in Joint Ventures : Rs. 0.29 crores (2008 : Rs. 0.60 crores).

17. Research and Development expenditure debited to the Profit and Loss Account, including certain expenditure based on allocations made

aggregate Rs. 240.47 crores (2008 : Rs. 205.13 crores).

Group Share in Joint Ventures : Rs. 0.03 crores (2008 : Rs. 0.02 crores).

18. The components of Deferred Tax Liability and Assets as at 31st

March, 2009 are as under :

Rupees crores

2009 2008

Deferred Tax Liability :

(i) On fiscal allowances on Fixed Assets ........................................................................................ 445.30 340.95

(ii) Others ....................................................................................................................................... 140.45 41.43

Group Share in Joint Ventures .................................................................................................. 0.50 0.46

586.25 382.84

Deferred Tax Assets :

(i) Provision for Compensated absences ....................................................................................... 101.40 79.31

(ii) Provision for Doubtful Debts/Advances .................................................................................... 209.99 141.64

(iii) Unabsorbed depreciation carried forward # ............................................................................ 115.66 64.75

(iv) Premium on Redemption of Zero Coupon Convertible Bonds ................................................. 40.08 48.67

(v) Provision for Gratuity ................................................................................................................ 1.49 16.23

(vi) Provision for Post Retirement Medical Expenses ....................................................................... 17.61 1.37

(vii) Others ....................................................................................................................................... 287.54 47.47

Group Share in Joint Ventures .................................................................................................. 0.88 0.97

774.65 400.41

Net Deferred Tax Liability/(Assets) ..................................................................................................... (188.40) (17.57)

# (considered, as there are compensatory timing differences the reversal of which, will result in sufficient future taxable income against which

this can be realised).

160

19. Exceptional items of Rs. 76.39 crores (Debit) {2008 : Rs. 302.51 crores (Debit)}, comprise of the following :

Rupees crores

2009 2008

1. Profit on divesture of Long Term Investments (Net) ................................................................. 83.18 178.37

2. Loss on dilution of Group’s interest in Forging Business ......................................................... — (31.00)

3. Impairment of Assets ................................................................................................................ (311.25) —

4. Transferred from Investment Fluctuation Account ................................................................... 154.38 —

5. Exclusivity Payment to a customer ............................................................................................ — (440.12)

6. Amortisation of liability ............................................................................................................ (5.30) —

7. Others ....................................................................................................................................... 2.60 (1.53)

Total ........................ (76.39) (294.28)

Figures in brackets signify charge to Profit and Loss Account.

During January 2009, the Company has disposed of its entire holding in Mahindra Retail Private Limited (MRPL), an erstwhile subsidiary. The

financial position of MRPL for the period April 08 to December 08 is summarised hereunder :

2009 2008

Income .............................................................................................................................................. 0.62 —

Expenses ............................................................................................................................................ 24.12 10.57

Profit before Tax ................................................................................................................................ (23.50) (10.57)

Profit after Tax ................................................................................................................................... (23.57) (10.58)

20. Adjustments pertaining to previous years, net of current and deferred tax, comprise of the following :

Rupees crores

2009 2008

1. (Excess)/Short provision of Income Tax in respect of previous years ........................................ 0.07 0.37

2. Short provision of warranties ................................................................................................... — 1.13

3. Other adjustments .................................................................................................................... 6.29 0.72

Total ........................ 6.36 2.22

21. (a) Dividends on other investments Rs. 100.94 crores (2008 : Rs. 50.73 crores) is in respect of current investments.

(b) Profit on sale of investments (Net) includes profit on disposal of current investments (Net) Rs. 12.53 crores (2008 : Rs. 26.60 crores), and

profit on disposal of long term investments (Net) Rs. 35.25 crores (2008 : Rs. 153.40 crores).

22. 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 (2008 : 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.

23. Related Party Transactions :

(a) Names of related parties where transactions have taken place during the year :

Where Control exists :

Sl. No. Name of the Company

1. Tech Mahindra Foundation

Associates :


1. Owens Corning (India) Limited 7. Mriyalguda Farm Solution Limited

2. Mahindra Construction Company Limited 8. Mega One Stop Farm Services Limited

3. Officemartindia.com Limited 9. Eco Engines

4. Rathna Bhoomi Enterprises Private Limited 10. Swaraj Automotives Limited

5. Mahindra Composites Limited 11. Swaraj Engines Limited

6. Kota Farm Services Limited


161

Joint Ventures :


1. Mahindra Sona Limited 3. Mahindra Inframan Water Utilities Private Limited

2. Mahindra Water Utilities Limited 4. PSL Erickson Limited

Key Management Personnel :

Vice Chairman and Managing Director ........................................... Mr. Anand Mahindra

Executive Directors ........................................................................... Mr. B.N. Doshi

Mr. A.K. Nanda

Welfare Funds :

Sl. No. Name of the Fund

1. Mahindra World School Education Trust

2. M&M Benefit Trust

3. M&M Employee’s Welfare Fund

4. M&M Employee’s Farm Equipment Sector Employee’s Welfare Fund

(b) The related party transactions are as under :

Rupees crores

Sl. Nature of Transactions Subsidiary Associate Joint Key Welfare

No. Companies Companies Ventures Management Funds

Personnel

1. Purchases :

Goods — 236.22 71.01 — —

(—) (127.33) (54.64) (—) (—)

Fixed Assets ...................................................... — — — — —

(—) (0.38) (—) (—) (—)

Services ............................................................. — 0.07 — — —

(—) (0.32) (—) (—) (—)

2. Sales :

Goods ............................................................... — 1.73 2.26 — —

(—) (5.27) (1.24) (—) (—)

Fixed Assets ...................................................... — 0.16 — — —

(—) (0.08) (—) (—) (—)

Services ............................................................. — 6.38 0.99 — —

(—) (1.95) (0.04) (—) (—)

3. Investments :

Purchase/Subscribed ......................................... — — — — 0.01

(—) (3.00) (—) (—) (—)

4. Deputation of Personnel :

To Related Parties ............................................. — 0.52 — — —

(—) (0.39) (—) (—) (—)

162

5. Provisions for :

Doubtful Advances during the year ................. 0.07 — — — —

(—) (—) (—) (—) (—)

Diminution in value of other assets written back — 0.04 — — —

(—) (—) (—) (—) (—)

6. Finance :

Interest received ............................................... — 1.85 — — —

(—) (3.18) (—) (—) (—)

Dividend Distributed ........................................ — — — — 1.05

(—) (—) (1.31) (—) (0.37)

Dividend Received ............................................ — 2.52 0.98 — —

(—) (—) (—) (—) (—)

7. Other Transactions :

Other Income ................................................... — 7.18 — — —

(—) (9.51) (0.02) (—) (—)

Donation given ................................................ — — — — —

(7.57)* (—) (—) (—) (—)

Other Expenses ................................................ 8.45* 0.01 — — —

(—) (—) (0.05) (—) (—)

Reimbursements received from parties ............ — 0.01 0.03 — —

(—) (0.02) (0.06) (—) (—)

Reimbursements made to parties .................... — 0.03 — — —

(—) (—) (—) (—) (—)

Advance given by group company…………… — @ — — 15.00

(—) (—) (—) (—) (—)

8. Outstandings :

Payable ............................................................. — 30.94 12.66 2.20 —

(—) (15.16) (10.19) (2.46) (—)

Receivable ......................................................... — 19.64 1.18 — 15.00

(—) (28.68) (1.50) (—) (—)

Inter Corporate Deposits given ........................ — 5.73 — — —

(—) (5.73) (—) (—) (—)

9. Provision for Diminution in value of

other related assets .......................................... — 7.65 — — —

(—) (7.65) (—) (—) (—)

10. Provision for Doubtful debts/advances ............ — 5.33 — — —

(—) (5.33) (—) (—) (—)

Rupees crores



Personnel


163

11. Managerial Remuneration ................................ — — — 5.16 —

(—) (—) (—) (5.39) (—)

12. Dividends .......................................................... — — — 0.52 —

(—) (—) (—) (0.17) (—)

13. Stock Options ................................................... — — — 0.07 —

(—) (—) (—) (0.05) (—)

14. Issue of Ordinary (Equity) Shares ..................... — — — — 14,59.76

(—) (—) (—) (—) (—)

15. Guarantees and Collaterals given .................... — — 9.00 — —

(—) (—) (—) (—) (—)

Previous year’s figures are in brackets.

* Amount pertains to Tech Mahindra Foundation

@ denotes amounts less than Rs. 50,000

Significant related party transactions are as under :

Rupees crores

Nature of Transactions Associate Companies Amount Joint Ventures Amount

1. Purchase - Goods ......................... Mahindra Composites Limited — Mahindra Sona Limited 71.01

(1.58) (54.64)

Swaraj Engines Limited 225.72

(125.75)

2. Purchase – Fixed Assets………… . Mahindra Composites Limited —

(0.33)

Swaraj Engines Limited —

(0.01)

3. Purchase – Services ....................... Swaraj Engines Limited 0.07

(0.32)

4. Sale – Goods ................................ Swaraj Engines Limited 1.71 Mahindra Sona Limited 2.26

(5.27) (1.24)

5. Sale – Fixed Assets ....................... Swaraj Automotives Limited 0.16

(—)


(0.08)

6. Sale – Services .............................. Owens Corning (India) Limited 3.21 Mahindra Water 0.95

(—) Utilities Limited (—)

Swaraj Engines Limited 2.38 Mahindra Sona Limited —

(1.95) (0.04)

Swaraj Automotives Limited 0.78

(—)

7. Deputation of Personnel .............. Mahindra Composites Limited 0.52

(0.39)

Rupees crores



Personnel

164

Significant related party transactions are as under :

Rupees crores


8. Interest Received ........................ Owens Corning (India) Limited 1.85

(3.18)

9. Write back of provision of ........ Kota Farm Services Limited 0.04

doubtful debts/advances (—)

10. Dividend Received ...................... Swaraj Automotives Limited 0.32 Mahindra Sona Limited 0.98

(—) (1.31)


(—)

11. Other Income ............................ Owens Corning (India) Limited 6.89 Mahindra Sona Limited —

(9.25) (0.02)

Mahindra Composites Limited —

(0.25)

12. Reimbursement Received ........... Mahindra Construction Company 0.01 Mahindra Sona Limited 0.03

from parties Limited (—) (0.04)

Mahindra Composites Limited — Mahindra Water —

(0.01) Utilities Limited (0.01)

13. Other Expenses .......................... Mahindra Construction Company 0.01

Limited (—)

14. Reimbursement made to parties Mahindra Composites Limited 0.02

(—)


(—)

15. Payable ....................................... Mahindra Construction Company — Mahindra Sona Limited 12.66

Limited (0.11) (10.19)


(0.55)


(14.50)

16. Receivables ................................. Owens Corning (India) Limited 12.37 Mahindra Sona Limited —

(20.85) (1.50)

Mahindra Construction Company 6.08 Mahindra Water 1.17

Limited (6.07) Utilities Limited (—)

Kota Farm Services Limited —

(0.25)

Miryalguda Farm Solution —

Limited (0.05)

Mega One Stop Farm Services —

Limited (0.54)


(0.37)


(0.54)


165

17. Guarantees given ....................... Mahindra Water 9.00

Utilities Limited (—)

18. Inter Corporate Deposits given Mahindra Construction Company 5.73

Limited (—)

19. Provision for diminution in ........ Mahindra Construction Company 6.69

value of other related assets Limited (—)

20. Provision for doubtful debts / ... Mega One Stop Farm Services 0.54

advances Limited (—)

Mahindra Construction Company 4.49

Limited (—)

Previous year’s figures are in brackets.

24. Earnings per Share :

2009 2008

Amount used as the numerator – Net Profit (Rupees crores) ............................................................................... 1,405.41 1,571.12

(Gain)/Loss on difference in exchange on bonds (Rupees crores) ......................................................................... 17.29 (42.97)

Amount used as the numerator for diluted earnings per share (Rupees crores) .................................................. 1,422.70 1,528.15

Weighted average number of equity shares used in computing basic earnings per share ................................... 27,25,22,947 23,86,22,366

Effect of potential ordinary (equity) shares on conversion of bonds/debentures ................................................. 2,22,19,413 1,67,57,276

Weighted average number of equity shares used in computing diluted earnings per share ............................... 29,47,42,360 25,53,79,642

Basic Earnings per share (Rs.) (Face value of Rs. 10 per share) ............................................................................. 51.57 65.84

Diluted Earnings per share (Rs.) ............................................................................................................................. 48.27 59.84

25. Investment in Associates :

No. of Equity % of Cost of Goodwill/ Share in Carrying

shares held Holding Investments (Capital accumulated Cost

(Equity reserve) Profit/(Loss)/

Shares) Reserves

(Nos.) (Rupees crores)

Unquoted :

Owens Corning (India) Limited ......................... 2,81,24,794 21.50% 28.12 (7.64) 21.82 49.94

2,81,24,794 21.50% 28.12 (7.64) 19.77 47.89

Mahindra Construction Company Limited ........ 9,00,000 43.83% 0.97 — (0.97) —

9,00,000 43.83% 0.97 — (0.97) —

Officemartindia.com Limited ............................. 7,49,997 50.00% 0.22 — (0.22) —

7,49,997 50.00% 0.22 — (0.22) —

Rathna Bhoomi Enterprises Private Limited ....... 500 20.43% @ — @ —

500 20.43% @ — @ —

Rupees crores


166

Kota Farm Services Limited ................................ 2,73,420 37.37% 0.27 — (0.27) —

2,73,420 34.79% 0.27 — (0.27) —

Mriyalguda Farm Solution Limited .................... 3,37,500 37.37% 0.34 — (0.34) —

3,37,500 34.79% 0.34 — (0.34) —

Mega One Stop Farm Services Limited ............. 3,51,000 37.37% 0.35 0.03 (0.35) —

3,51,000 34.79% 0.35 0.03 (0.35) —

Eco Engines ....................................................... — — 0.15 — — 0.15

Total............. 50.09

47.89

Quoted :

Mahindra Composites Limited .......................... 13,41,203 30.56% 2.90 0.55 2.33 5.23

13,41,203 30.56% 2.90 0.55 1.45 4.35

Swaraj Engines Limited ..................................... 41,19,000 33.22% 1.63 (1.36) 9.17 10.80

41,19,000 21.49% 1.63 — 2.70 4.33

Swaraj Automotives Limited .............................. 10,59,543 44.19% 12.45 (1.99) 3.40 15.85

10,59,543 35.64% 12.45 8.34 1.53 13.98

Total............. 31.88

22.66

Total............. 81.97

70.55

@ denotes amounts less than Rs. 50,000

No. of Equity % of Cost of Goodwill/ Share in Carrying

shares held Holding Investments (Capital accumulated Cost

(Equity reserve) Profit/(Loss)/

Shares) Reserves

(Nos.) (Rupees crores)

MA

HIN

DRA

&

M

AH

IN

DRA

LIM

ITED

(C

ON

SO

LID

ATED

)

167

CM

YK

26. Segment Information :

Segment Report for the year ended 31st

March, 2009.

Primary Segment Disclosure - Business Segment Rupees crores

Automotive Farm IT Services Financial Trading Infrastructure Hospitality Systech Others Eliminations Consolidated

Equipment Services Total

REVENUE

Gross External Revenue 9,986.24 6,850.11 4,654.26 1,389.56 728.06 339.37 406.09 3,821.14 664.32 — 28,839.15

10,315.15 5,472.40 3,917.91 1,229.83 655.39 212.92 354.17 3,530.76 755.26 — 26,443.79

Less : Excise Duty on Sales 1,662.84 136.36 — — 58.94 — — 196.20 17.84 — 2,072.18

1,783.11 118.75 — — 32.80 — — 205.49 14.67 — 2,154.82

Net External Revenue 8,323.40 6,713.75 4,654.26 1,389.56 669.12 339.37 406.09 3,624.94 646.48 — 26,766.97

8,532.04 5,353.65 3,917.91 1,229.83 622.59 212.92 354.17 3,325.27 740.59 — 24,288.97

Inter Segment Revenue 18.72 19.56 35.16 10.36 290.31 11.09 0.32 506.17 210.14 (1,101.83) —

4.46 24.37 30.85 7.03 336.81 7.93 0.09 326.45 290.57 (1,028.56) —

Total Revenue 8,342.12 6,733.31 4,689.42 1,399.92 959.43 350.46 406.41 4,131.11 856.62 (1,101.83) 26,766.97

8,536.50 5,378.02 3,948.76 1,236.86 959.40 220.85 354.26 3,651.72 1,031.16 (1,028.56) 24,288.97

RESULT

Segment result before 257.72 667.85 1,126.28 333.91 94.80 112.08 93.66 23.86 (46.71) — 2,663.45

exceptional items 741.25 603.49 802.04 279.14 88.32 75.21 108.47 201.26 118.83 — 3,018.01

Exceptional item allocated (156.87) — — — — — — (2.68) — — (159.55)

to Segments — — (440.12) — — — — (1.52) — — (441.64)

Segment result after 100.85 667.85 1,126.28 333.91 94.80 112.08 93.66 21.18 (46.71) — 2,503.90

exceptional items 741.25 603.49 361.92 279.14 88.32 75.21 108.47 199.74 118.83 — 2,576.37

Unallocable Corporate 93.18

expenses (Net of Income) 82.85

Operating Profit 2,410.72

2,493.52

Less : Interest expense not allocable to segments 337.33

249.85

Add : Interest Income not allocable to segments 97.57

112.16

Add : Exceptional Item Unallocable to segment 83.16

148.16

Profit before Tax 2,254.12

2,503.99

Less : Income Taxes – Current Tax including Fringe Benefit Tax 506.92

691.84

– Deferred Tax 35.25

(34.64)

Profit for the year before prior year adjustments 1,711.95

1,846.79

Less : Adjustments pertaining to previous years 6.36

2.22

Balance of Profit for the year before Share of Profit of Associates 1,705.59

1,844.57

Share of Profit of Associates 11.27

10.00

Profit for the year before Minority Interests 1,716.86

1,854.57

168 Segment Information (Contd.) :

Rupees crores

Automotive Farm IT Services Financial Trading Infrastructure Hospitality Systech Others Eliminations Consolidated

Equipment Services Total

OTHER INFORMATION

Segment Assets 5,291.77 3,328.87 2,380.63 7,170.74 320.49 1374.38 1,004.02 2,963.55 528.71 — 24,363.16

4,605.71 2,800.48 2,075.50 6,870.11 396.22 975.38 745.25 2,703.23 551.64 — 21,723.52

Unallocable Corporate 7,509.42

Assets 4,585.65

Total Assets 31,872.58

26,309.17

Segment Liabilities 2,212.44 1,618.66 920.61 5,873.02 156.68 106.51 721.56 932.53 189.83 12,731.84

2,100.66 1,204.25 803.34 5,624.38 222.60 91.47 539.56 799.55 151.86 11,537.67

Unallocable Corporate 8,764.26

Liabilities 5,886.40

Total Liabilities 21,496.10

17,424.07

Capital Expenditure 1455.40 366.61 272.80 14.52 9.93 72.88 163.33 477.69 180.89

907.31 168.85 237.96 13.74 26.74 58.37 78.08 615.74 50.82

Depreciation/Amortisation 249.85 100.27 112.28 8.83 9.62 2.51 16.84 233.44 9.69

215.38 80.41 81.59 8.81 5.73 3.46 11.31 160.41 4.13

Non cash expenditure other — — — — — — — — —

than depreciation — — — — — — — — —


169

CMYK

Secondary Segment Disclosure - Geographical Segment

Rupees crores

Domestic Overseas Total

Revenue From External Customers ............................... 24,739.14 4,100.01 28,839.15

18,789.38 7,654.41 26,443.79

Segment Assets ............................................................ 21,902.18 2,461.00 24,363.18

19,639.81 2,083.72 21,723.53

Capital Expenditure ...................................................... 2,933.04 81.01 3,014.05

1,921.02 236.57 2,157.59

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 comprises of services rendered for IT and Telecom.

Financial Services comprise of services relating to financing, leasing and hire purchase of automobiles and tractors.

Infrastructure comprise 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

2009 2008

Sales .................................................................................................................................................... 21,058.63 19,774.28

Income from Services rendered ........................................................................................................... 5,717.55 4,758.48

Income from long term contracts ....................................................................................................... 160.07 166.69

Income from project management ..................................................................................................... 1.56 0.38

Hire purchase and lease income ......................................................................................................... 161.24 38.39

Income from Loan, Retained Interest in securitised Asset & Securitisation ........................................ 1,373.41 1,198.81

Other allocable income * .................................................................................................................... 366.69 506.76

Total ............................ 28,839.15 26,443.79

Rupees crores

2009 2008

*Other allocable income includes :

Interest Income ................................................................................................................................... 8.90 13.25

Scrap Sales .......................................................................................................................................... 138.21 110.76

Commission ......................................................................................................................................... 16.98 14.91

Dividend .............................................................................................................................................. 1.10 6.22

Others .................................................................................................................................................. 201.50 361.62

Total ............................ 366.69 506.76

27. Previous year’s figures have been regrouped/restated wherever necessary.

170

CM

YK

Details of Subsidiary Companies Rupees crores

Details of

Capital Investments

(including (excluding Proposed

Name of the Subsidiary Preference Reserves & Total Total Investments in Gross Profit Provision Profit Dividend &

Capital) Surplus Assets Liabilities subsidiaries) Turnover before Tax for Tax after Tax Tax thereon

Bristlecone (Malaysia) SDN. BHD # 0.14 0.92 2.44 2.44 - 2.18 0.30 0.06 0.24 -

Bristlecone GmbH # 0.34 1.45 9.84 9.84 - 26.40 0.32 - 0.32 -

Bristlecone Inc # 112.85 (91.76) 47.08 47.08 - 122.81 (0.14) 0.18 (0.32) -

Bristlecone India Limited 19.05 14.38 66.58 66.58 0.01 114.69 11.36 1.83 9.52 -

Bristlecone Limited # 83.48 (15.08) 159.15 159.15 - 0.07 (6.37) - (6.37) -

Bristlecone Singapore Pte. Limited # 4.26 (3.00) 5.73 5.73 - 8.42 (1.29) - (1.29) -

Bristlecone UK Limited # 13.13 (12.58) 2.17 2.17 - 2.60 (5.94) - (5.94) -

CanvasM (Americas) Inc # @ 0.08 11.24 11.24 - 42.60 (0.08) 0.02 (0.10) -

CanvasM Technologies Limited 57.67 (1.66) 89.80 89.80 36.24 45.39 0.41 0.07 0.34 -

Crest Geartech Limited 0.09 0.34 6.91 6.91 - 11.23 0.29 0.04 0.25 -

EFF Engineering S.r.l. # 0.34 0.39 7.08 7.08 - 6.96 0.20 0.02 0.18 -

Engines Engineering S.r.l. # 0.68 19.19 66.76 66.76 0.51 40.99 (1.28) 0.17 (1.45) -

Falkenroth Umformtechnik GmbH # 6.93 8.95 81.90 81.90 - 256.40 (8.55) 0.10 (8.65) -

Gesenkschmiede Schneider GmbH # 82.92 42.66 337.46 337.46 0.24 819.11 (4.95) 0.67 (5.62) -

Heritage Bird (M) SDN BHD # 0.42 (0.11) 7.69 7.69 - 0.83 (0.11) - (0.11) -

ID-EE Srl # 0.34 @ 1.10 1.10 - 1.89 0.04 0.04 @ -

Jeco-Jellinghaus GmbH # 34.66 8.39 82.47 82.47 0.04 297.93 (6.78) 0.32 (7.10) -

Jensand Limited # 0.44 - 0.44 0.44 - - - - - -

Mahindra Gears Cyprus Limited # 0.06 289.09 289.39 289.39 - - (0.73) - (0.73) -

Mahindra & Mahindra Financial Services Limited 95.71 1,372.16 7,265.12 7,265.12 97.16 1,375.27 325.62 111.10 214.52 62.35

Mahindra & Mahindra South Africa (Proprietary) Limited # 19.68 (12.86) 61.00 61.00 - 105.70 (28.40) (7.80) (20.60) -

Mahindra (China) Tractor Company Limited # 108.43 (85.06) 87.61 87.61 - 91.81 (22.58) - (22.58) -

Mahindra Aerospace Private Limited 0.05 (0.38) 5.49 5.49 - - (0.26) - (0.26) -

Mahindra Automotive Australia Pty. Limited # 3.08 (2.27) 5.53 5.53 - 1.44 (2.44) (0.10) (2.34) -

Mahindra Bebanco Developers Limited 0.05 (0.32) 26.14 26.14 - @ (0.32) @ (0.32) -

Mahindra Castings Private Limited 25.37 - 171.42 171.42 - 3.70 3.23 0.62 2.61 -

Mahindra Consulting Engineers Limited 1.00 2.50 5.77 5.77 - 7.83 1.66 0.61 1.05 0.41

Mahindra Defence Land Systems Private Limited - - - - - - - - - -

Mahindra Engineering and Chemical Products Limited 5.40 32.74 81.03 81.03 38.95 67.18 10.32 3.43 6.89 2.21

Mahindra Engineering Services (Europe) Limited # 0.47 6.29 11.00 11.00 - 26.57 5.58 1.57 4.01 -

Mahindra Engineering Services Limited 8.13 55.01 150.12 150.12 9.53 159.05 25.10 6.08 17.77 6.85

Mahindra Europe s.r.l. # 6.76 3.03 61.83 61.83 - 98.23 1.47 0.81 0.66 -

Mahindra First Choice Services Limited 11.05 (5.86) 7.17 7.17 2.00 2.09 (5.84) 0.02 (5.86) -

Mahindra First Choice Wheels Limited 63.43 (12.43) 63.80 63.80 2.30 142.86 (21.67) 0.14 (21.82) -

Mahindra Forgings Europe AG # 33.79 17.92 251.64 251.64 - 18.10 (19.59) (0.74) (18.85) -

Mahindra Forgings Global Limited # 228.72 (4.46) 224.31 224.31 - 0.26 (0.01) - (0.01) -

Mahindra Forgings International Limited # 486.50 (27.00) 680.24 680.24 - 16.27 (0.77) 1.62 (2.39) -

Mahindra Forgings Limited 68.57 599.24 972.93 972.93 2.00 271.77 (33.45) 6.63 (41.40) -

Mahindra Gears Global Limited # 290.55 (0.16) 290.46 290.46 - @ (0.16) - (0.16) -

Mahindra Gears International Limited # 155.41 (0.11) 155.34 155.34 - @ (0.12) - (0.12) -

Mahindra Graphic Research Design s.r.l. # 9.19 (2.63) 30.92 30.92 - 28.52 (1.82) 0.28 (2.10) -

Mahindra Gujarat Tractor Limited 20.30 (42.67) 25.37 25.37 0.05 74.38 (1.29) 0.10 (1.39) -

Mahindra Hinoday Industries Limited 30.60 (18.30) 240.62 240.62 @ 283.86 (70.89) (23.51) (47.71) -

Mahindra Holdings Limited 22.55 (1.12) 46.01 46.01 8.27 1.10 (1.23) (0.10) (1.13) -

Mahindra Holidays and Resorts USA Inc # 0.01 0.15 24.83 24.83 - 1.15 (4.68) - (4.68) -

Mahindra Holidays and Resorts India Limited 76.98 120.97 1,002.17 1,002.17 0.03 407.16 131.90 48.49 83.41 27.49

Mahindra Hotels and Residences India Limited 0.05 (0.01) 0.13 0.13 - - (0.01) - (0.01) -

Mahindra Industrial Township Limited 2.05 (0.07) 2.04 2.04 - - (0.07) - (0.07) -

@ denotes amounts less than Rs. 50,000.

# The financial statements of the Foreign Subsidiaries have been converted into Indian Rupees at the 31st March, 2009 exchange rate

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Details of Subsidiary Companies (Contd.) Rupees crores

Details of

Capital Investments

(including (excluding Proposed

Name of the Subsidiary Preference Reserves & Total Total Investments in Gross Profit Provision Profit Dividend &

Capital) Surplus Assets Liabilities subsidiaries) Turnover before Tax for Tax after Tax Tax thereon

Mahindra Infrastructure Developers Limited 18.00 0.54 19.96 19.96 15.24 1.12 (0.06) (0.30) 0.24 -

Mahindra Insurance Brokers Limited 0.50 14.41 18.05 18.05 - 22.46 10.06 3.60 6.47 -

Mahindra Integrated Township Limited 50.00 (0.23) 78.66 78.66 - 31.85 0.49 0.06 0.43 -

Mahindra Intertrade Limited 16.60 116.73 332.74 332.74 41.25 896.65 71.40 25.96 44.71 14.57

Mahindra IT Consulting Private Limited 0.01 @ 0.01 0.01 - - @ - @ -

Mahindra Knowledge City Limited 12.60 (0.38) 12.24 12.24 - 0.01 (0.18) @ (0.18) -

Mahindra Life Space Developers Limited 50.81 846.14 997.50 997.50 81.03 186.66 57.77 11.41 46.36 13.16

Mahindra Logisoft Business Solutions Limited 12.45 (4.54) 8.25 8.25 @ 4.86 1.79 0.01 1.78 -

Mahindra Logistics Limited 49.05 2.89 193.51 193.51 @ 620.45 6.90 2.44 4.46 1.57

Mahindra Metal Castello S.r.l. # 135.14 156.50 530.27 530.27 - 0.61 (11.17) 0.73 (10.44) -

Mahindra Middleeast Electrical Steel Service Centre (FZC) # 2.81 18.09 47.44 47.44 - 136.85 12.65 - 12.65 -

Mahindra Navistar Automotives Limited 320.28 - 500.80 500.80 36.86 503.70 (24.85) 0.29 (25.14) -

Mahindra Navistar Engines Private Limited 41.50 (7.25) 47.79 47.79 - 0.40 (6.91) 0.18 (7.09) -

Mahindra Overseas Investment Company (Mauritius) Limited # 228.15 (5.58) 305.99 305.99 19.55 1.66 (2.42) - (2.42) -

Mahindra Renault Private Limited 199.26 - 555.93 555.93 - 741.17 (489.90) 0.31 (490.21) -

Mahindra Residential Developers Limited 0.26 53.71 54.34 54.34 - - (0.63) - (0.63) -

Mahindra Rural Housing Finance Limited 13.71 (1.39) 46.15 46.15 - 4.74 (0.74) 0.05 (0.80) -

Mahindra SAR Transmission Private Limited 7.56 19.84 75.34 75.34 - 81.27 4.28 1.66 2.62 0.88

Mahindra Shubhlabh Services Limited 38.93 - 48.40 48.40 1.08 50.43 (0.59) 0.08 (0.68) -

Mahindra Steel Service Centre Limited 6.10 20.22 37.09 37.09 1.10 12.70 4.55 1.29 3.25 1.00

Mahindra Technologies Inc # 3.01 (3.25) 0.50 0.50 - 0.50 (0.31) (0.05) (0.26) -

Mahindra Two Wheelers Limited 147.50 (22.50) 191.75 191.75 - 17.61 (22.46) 0.04 (22.50) -

Mahindra Ugine Steel Company Limited 32.48 136.55 690.97 690.97 14.43 1,212.09 (28.51) (9.68) (18.83) -

Mahindra United Football Club Private Limited 0.01 @ 0.01 0.01 - - @ - @ -

Mahindra USA Inc # 48.41 (8.48) 272.15 272.15 - 508.47 (39.15) (2.74) (36.41) -

Mahindra Vehicle Manufacturers Limited 485.00 (8.89) 913.87 913.87 90.41 - (6.46) 0.12 (6.57) -

Mahindra World City (Jaipur) Limited 170.00 1.91 485.24 485.24 11.95 82.78 6.78 1.66 5.13 -

Mahindra World City (Maharashtra) Limited 1.12 (0.08) 1.05 1.05 - - (0.01) - (0.01) -

Mahindra World City Developers Limited 85.00 16.74 186.58 186.58 0.26 99.35 43.63 15.01 28.62 7.37

Mahindra Yueda (Yancheng) Tractor Company Limited # 199.55 (3.16) 535.10 535.10 - 123.92 (3.16) - (3.16) -

Mahindra-BT Investment Company (Mauritius) Limited # 60.54 116.96 177.54 177.54 - 10.84 10.71 - 10.71 -

Metalcastello S.p.A # 123.29 151.29 638.91 638.91 0.01 614.11 52.43 17.62 34.81 -

MHR Hotel Management GmbH # 0.24 (0.10) 0.18 0.18 - 0.60 0.02 0.01 0.01 -

NBS International Limited 0.05 0.62 20.88 20.88 - 92.46 (0.28) (0.04) (0.23) -

Plexion Technologies GmbH # 0.40 - 0.61 0.61 - 0.33 (0.21) - (0.21) -

PT Tech Mahindra Indonesia # 2.55 14.78 49.06 49.06 - 72.32 13.14 4.03 9.11 -

Schöneweiss & Co. GmbH # 33.79 156.38 389.67 389.67 - 611.90 (5.08) (1.80) (3.28) -

Stokes Forgings Dudley Limited # @ - @ @ - - - - - -

Stokes Forgings Limited # 0.44 (0.44) - - - 6.87 6.87 - 6.87 -

Stokes Group Limited # 3.99 (23.81) 104.07 104.07 - 198.53 (39.41) 4.67 (44.08) -

Tech Mahindra (Americas) Inc # 1.91 28.28 61.49 61.49 - 462.92 25.20 9.80 15.40 -

Tech Mahindra (Beijing) IT Services Limited # 1.06 (1.97) 0.07 0.07 - @ (1.65) - (1.65) -

Tech Mahindra (Malaysia) SDN. BHD # 0.44 0.16 2.73 2.73 - 5.07 0.10 - 0.10 -

Tech Mahindra (Singapore) Pte. Limited # 0.17 7.34 14.07 14.07 - 34.36 1.94 0.41 1.53 -

Tech Mahindra (Thailand) Limited # 0.73 0.48 1.57 1.57 - 2.27 0.10 - 0.10 -

Tech Mahindra GmbH # 3.89 12.91 25.68 25.68 - 79.46 3.74 0.01 3.73 -

Tech Mahindra Limited 121.73 1,759.21 2,771.64 2,771.64 398.45 4,309.43 1,090.51 103.87 986.64 -

Venturbay Consultants Private Limited 0.01 (0.01) @ @ - - @ - @ -

Tech Mahindra Foundation 0.05 36.08 36.16 36.16 - 5.79 0.03 - 0.03 -

@ denotes amounts less than Rs. 50,000.

# The financial statements of the Foreign Subsidiaries have been converted into Indian Rupees at the 31st March, 2009 exchange rate

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