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DIRECTOR'S REPORT
Your Directors present their Report together with the audited accounts of
your Company for the year ended 31st March, 2010.
2010 2009
Agricultural GDP however, witnessed a decline this year due to the severe
drought experienced during the kharif season. Food prices as a consequence,
rose alarmingly and food inflation in India has leapfrogged to challenging
levels.
Profits
The Profit for the year before Depreciation, Interest, Exceptional items
and Taxation was Rs.3,154.59 crores as against Rs. 1,362.97 crores in the
previous year, an increase of 131.45%. Profit after tax was Rs.2,087.75
crores as against Rs.836.78 crores in the previous year clocking an
increase of 149.50%. Your Company continues with its rigorous cost
restructuring exercises and efficiency improvements which have resulted in
significant savings through value engineering, economising, optimisation of
plant capacity utilisation and cost competitiveness in almost all areas
thereby enabling the Company to take full advantage of the recovery in the
economy.
Dividend
Automotive Division:
Your Company recorded total sales of 2,36,759 vehicles and 45,360 three-
wheelers as compared to 1,61,882 vehicles and 44,806 three-wheelers in the
previous year registering a growth of 46.3% and 1.2% in vehicles sales and
three-wheeler sales respectively.
On the domestic sales front, your Company sold 2,27,114 vehicles [includes
2,14,128 Multi Utility Vehicles (MUVs), 3,722 small 4 wheelers 0.75 Ton
cargo and 9,264 mini 4 wheelers 0.5 Ton cargo] registering a growth of
47.8% over the previous year's volume of 1,53,654 vehicles [includes
1,53,653 MUVs and 1 Light Commercial Vehicle ('LCV')j. The domestic sales
volume of 44,438 three wheelers was lower by 0.2% as compared to the
previous year's volume of 44,533 three-wheelers.
The Company's domestic MUV sales volumes grew by 39.4% as against the
industry MUV sales growth of 26%. The Company strengthened its dominant
position in the domestic MUV segment by increasing its market share to
63.3% over the previous year's market share of 57.2%.
Xylo, which was launched in January, 2009 has been very well accepted in
the market. A total of 27,978 Xylos were sold in the year under review.
Spare parts sales for the year stood at Rs. 514.96 crores (including
Exports of Rs. 22.4 crores) as compared to Rs. 362.75 crores (including
Exports of Rs.27 crores) in the previous year, registering a growth of 42%.
Farm Division:
Beyond Agriculture, in the Powergen space under the Mahindra Powerol Brand,
your Company sold 48,011 engines in this Financial Year, as against 52,350
engines in the previous year. Your Company retained its leadership position
in the genset market catering to the telecom space, while strengthening its
presence in the retail segment.
In the Land Systems business, your Company provides armouring solutions for
light combat vehicles and SUVs as well as high mobility vehicles for
defence, police and paramilitary use. Pursuant to an approval accorded by
the Shareholders by way of Postal Ballot on 4th April, 2009 this business
has been hived-off into a wholly owned subsidiary (Mahindra Defence Land
Systems Private Limited - now rechristened as Defence Land Systems India
Private Lin with effect from 1st July, 2009. Your Company has further
signed a Joint Venture Agreement on 30th November, 2009 with BAE Systems
Pic. to form a 74:26 Joint Venture for defence land systems products. Once
this Joint Venture is operational, it would further expand its product base
to include manufacture of artillery products and combat vehicles in
technical assistance with BAE Systems PIc.
Corporate Governance
re-affirmed the highest level rating, (Level 1) for Governance and Value
Creation for the fourth 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.
Share Capital
Pursuant to the approval received from the Members of the Company by way of
Postal Ballot on 11th March, 2010, your Company has on 31st March, 2010,
upon sub-division, issued 2 (Two) Ordinary (Equity) Shares of Rs.5 each
fully paid-up in the Equity Share Capital of the Company for every 1 (One)
Ordinary (Equity) Share of the face value of Rs.10 fully paid-up held by
the Members in the Equity Share Capital of the Company as on the Record
Date i.e. 30th March, 2010.
Finance
During the year, keeping in mind the volatile times, your Company continued
to focus on managing cash efficiently. I Even while financing its ongoing
modernisation and growth initiatives, it was ensured that your Company had
abundant liquidity. Your Company did not need to tap the capital market and
in fact used its strong liquidity at its disposal to repay foreign currency
loans aggregating USD 94.5 million without the need for refinancing.
As was reported in the previous year's Director's Report, your Company had,
in July, 2008, issued 9.25% p.a. Unsecured Fully and Compulsorily
Convertible Debentures ('FCD'), each FCD having a face value of Rs. 745 and
convertible into one Equity Share of Rs. 10 each in the Company at a price
of Rs. 745 per Share. In January, 20 10, in accordance with the terms of
the issue, the FCDs were converted into Equity Shares of the Company and
your Company allotted 93,95,974 Ordinary (Equity) Shares of Rs. 10 each,
adding Rs. 700 crores to its Net Worth.
Your Company has been rated by CRISIL, ICRA Limited (ICRA) and Credit
Analysis & Research Limited (CARE) for its Banking facilities under Basel
11 norms. During the year, CRISIL reaffirmed its rating of 'AN' and revised
its rating outlook to 'AA/ Stable' from 'AA/ Negative' for your Company's
Long Term Facilities under Basel 11. During the year, ICRA also reaffirmea
its rating of 'LAA+' for your Company and also revised its rating outlook
from 'LAA+/Negative' to 'LAA+/Stable' and CARE has maintained a Long Term
Rating of 'CARE AA+''.
CRISIL, ICRA and CARE have all reaffirmed the highest rating for your
Company's Short Term facilities. Your Company's Bankers Continue to rate
your Company as a prime customer and extend facilities/services at prime
rates.
Your Company decided to make a foray into Aerospace Sector with the
intention of penetrating into global aerospace supply chain as a credible
registered manufacturer of components and assemblies with the leading
players in Aerospace and also to become small capacity aircraft
manufacturer. To meet these goals, your Company has made 2 acquisitions in
Australia as under:
As mentioned earlier in this Report, your Company has entered into a Joint
Venture with BAE Systems PIc. ('BAE'). BAE is a premier global defence,
security and aerospace company delivering a full range of products and
services for air, land and naval forces, as well as advanced electronics,
security, information technology solutions and customer support services.
3. Gear Vertical
In view of the Agri Inputs business being a high gestation business, MSSL
now intends to streamline its operations and wants to focus only on the
Fruits Business and explore strategic options to grow this business
domestically and globally in terms of scale and profitability and going
forward, the Agri Inputs business would be dernerged into your Company
owing to its strategic importance and funding resources required for the
same.
An amount of Rs. 175 crores was raised through a QIP by issue and allotment
of Equity Shares of the face value of Rs. 10 each at a price of Rs. 107.75
per Equity Share to Qualified Institutional Buyers. MFL has also allotted
72,99,270 Warrants on a preferential basis to your Company wherein each
Warrant entitles the Company to apply for and be allotted one Equity Share
of MFL of the face value of Rs.10 each at a price of Rs.137 per share, in
one or more tranches, at any time after the date of allotment of Warrants
but on or before the expiry of 18 months from the date of allotment of
Warrants. The Company has made an upfront payment of 25% of the aggregate
price amounting to approximately Rs.25 crores and has exercised, its option
to convert 30,00,000 Warrants into Equity Shares. The Company still has an
option to convert the balance 42,99,270 Warrants into Equity Shares, by 3rd
September, 2011. As a result of the above, the Company's shareholding in
MFL stands at 50.68%.
The Company had entered into a Joint Venture with Renault s.a.s,
('Renault') for the manufacture and sale of the Logan sedan car principally
for the Indian market in 2005. Mahindra Renault Private Limited ('MIRPL'),
a subsidiary of the Company had commenced commercial production of the car
badged as Mahindra Renault logan from February, 2007.
The Company had been in discussions with Renault to arrive at a long term
solution to MRPUs continuing losses and subsequent to the year end, your
Company signed a Framework Agreement with Renault to buyout Renault's
Shares in MRPL which would result in MRPL becoming a wholly owned
subsidiary of your Company. Renault would continue to support the Company
and the Logan through a License Agreement and supply of key components.
Through this Agreement, your Company would strive to ensure continuity and
build on the positive customer equity that exists for the Logan in India.
Keeping in mind the above opportunity and with a view to consolidate its
presence in the Automotive Space, your Company subsequent to the year end
decided to acquire a majority stake in Reva Electric Car, Company Private
Limited ('Reva'). Established in 1994, Reva launched its first EV in 2001
under the 'Reva' brand and further extended it to London in 2004 under the
'G-Wiz' brand. With the help of its strong engineering team and frugal
mindset, it has developed significant proprietary technology which has
enabled it to create a fleet of EVs worldwide with over 3,000 vehicles on
the road in more than 20 countries including India, the United Kingdom and
other countries in Europe.
This acquisition would help your Company to compliment its other clean
energy initiatives on Hybrid, Hydrogen and Bio-diesel which is an important
element in the sustainable mobility: strategy of the Company.
Stock Options
Your Company proposes to introduce a new Employee Stock Option Scheme known
as 'Mahindra & Mahindra Limited Employees Stock Option Scheme 2010' ('New
Scheme'). The New Scheme will facilitate grant of Options to the employees
in the form of Stock Options and/ or Restricted Stock Units ('RSU's') and
/or other instruments ('Options') exercisable into Equity Shares. It is
proposed that the Options can be exercised by the employees at a price
equal to or not less than the face value of the Equity Shares of the
Company. The necessary Resolutions seeking consent of the Members are being
sought as proposed in the Notice convening the Annual General Meeting.
The New Scheme has been formulated in accordance with the Guidelines and
other applicable laws.
Industrial Relations
The Safety, Occupational Health & Environment of its employees are embedded
as core Organisational values of the Company. The Policy inter alia covers
and ensures safety of public, employees, plant and equipment, imparts
training to all its employees as per training calendar, carries out
statutory safety assurance and audits of its facilities as per legal
requirements, conducts regular medical and occupational check-up of its
employees and promotes eco-friendly activities.
New Certifications
Environmental Initiatives:
I With a clear view on sustaining green business growth, the need for clean
environment was given a renewed focus. By incorporation of new
technological upgraclations, your Company is now in the process of
calculating carbon foot print of Plants location wise and is taking
adequatte measures to mitigate the causes attributing to it. The Company
also has a roadmap to reduce Green House Gas ('GHG') emissions by
curtailing travel of its employees to client locations for Meetings and
discussions and this is achieved by promoting the use of Video
Conferencing. Your Company is constantly imbibing the major environment
sensitisation drives amongst its employees through various evenu such as
celebrations of World Environment Day, World Ozone Day alongwith active
participation of employee's families. Your Company has also implemented
an*ient and work place air monitoring, increased green zones, alongwith
effluent treatment and waste monitoring.
Greenbelt Development
Your Company has community partners at each location for green belt
development. Mahindra Hariyali was one. of the initiatives which was
implemented at the Plants at Mumbai and Kanhe and at dealers & distributors
across India. Your Company's Plants at various locations have partnered
with Non-Govern mental Organisations and various academic institutions all
located in and around Mumbai, Nashik, Igatpuri, Zaheerabad and Haridwar.
Some of the major initiatives your Company has invested in are described
below:
Mahindra Pride Schools:
Nanhi Kali:
Nanhi Kali, which supports the education of the disadvantaged girl child
has been the flagship programme of the K. C. Mahindra Education Trust.
Nanhi Kali brings about a complete transformation, by allowing the girls to
attend school and learn with dignity. Nanhi Kali sponsorship provides not
only academic support classes where concepts of Maths, Science and language
are taught to the girls but also provides uniforms, school bags, shoes,
etc. which free her family from hidden costs of education. The Mahindra
Group independently supports 11,000 girls across India. With support from
thousands of individuals and Corporate donors, Project Nanhi Kali now
supports the education of over 54,000 underprivileged girl children, in
poor urban, remote rural and conflict afflicted tribal communities across 8
States of India. The goal of Nanhi Kali is to provide educational support
to 1,00,000 underprivileged girls by 2011.
The river Kosi wreaked havoc in Bihar in 2008 with floods causing
incalculable loss of life and property besides snatching away the
livelihood of lakhs of people in the State. Following the same, Mahindra
Foundation and Mahindra Consulting Engineers Limited ('MACE'), a subsidiary
of the Company have entered into a Memorandum of Understanding ('MOU') with
the Collector, Madhepura District, Bihar to support the rehabilitation and
reconstruction activities in Pattori Gram Panchayat, Singheswar Block,
Madhepura District of Bihar for those ravaged by the Kosi floods in 2008.
Under the terms of the MOU, MACE would create the complete social inf
rastructu re in Pattori Gram Panchayat. This comprehensive programme
includes the construction of permanent houses with provision of basic
infrastructural facilities such as water supply and sanitation.
* The Lifeline Express in Wardha: This was jointly sponsored and organised
by the Farm Division and Mahindra & Mahindra Financial Services Limited, a
subsidiary of the Company. The Project was held at Wardha and 1,153
surgeries were performed free of cost and 281 Hearing Aids were
distributed. ESOPs Volunteers spent 13,752 man hours in this activity and
30,575 man hours were spent by volunteers from the Community, thus making
it an ideal public-private partnership initiative.
'Sustainability' Initiative
In the last year's Directors' Report, a beginning was made to appraise the
Shareholders of the initiatives your Company had taken in reporting its
'Sustainability' performance for reviewing its commitments to the
Environment and Society, while generating profits.
During the year under review, the 2nd Sustainability Report for the year
2008-09 was published, in accordance with the latest Guidelines of the
internationally accepted Global Reporting Initiative or the GRI standards.
Again this year this Report was externally assured by Ernst & Young and
rated with the highest level of A+ and GRI checked. This 2nd Report
reflects that along with your Company's business growth, the Company's
responsibility to its stakeholders has also grown, expanded and
intensified. Your Company's progression in this journey and its commitment
to taking a more responsible and holistic approach to business is reflected
by the facts that a) all commitments made in the first Report were
satisfactorily met and b) a structured Sustainability road map over a 3 and
5 year time horizon has been drawn, with clear targets for reducing
consumption of energy and water and reduction in GHG emission and waste.
Details of this Group Level Road Map and further information on various
environment related initiatives taken by your Company which would help in
achieving the targets in the Road Map, have been elaborated elswhere in the
Annual Report.
Directors
The Board has placed on record its deep appreciation of Mr. Nanda's immense
contribution and valuable service during his 'long association with the
Company and acknowledged Mr. Nanda's outstanding experience and expertise
in serving the Mahindra Group since 1973 including his contribution as
Executive Director of the Company from 1992 onwards.
The Company has received a Notice from a Member signifying his intention to
propose Mr. Nanda for the office of Director at the forthcoming Annual
General Meeting,
Mr. Keshub Mahindra, Mr. Anupam Puri, Dr. A.S. Ganguly and Mr. R.K.
Kulkarni retire by rotation and, being eligible, toffer themselves for re-
appointment.
(i) They have, in the selection of the accounting policies, consulted the
Statutory Auditors and these have been applied consistently and reasonable
and prudent judgments and estimates have been made so as to give a true and
fair view of the state of affairs of the Company as at 31st March, 2010 and
of the profit of the Company for the year ended on that date;
(iii) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) The annual accounts have been prepared on a going concern basis.
Subsidiary
During the year under review, MahirTdra Metal One Steel Service Centre
Limited, Raigad Industrial & Business Park Limited, Retail Initiative
Holdings Limited, Mahindra Retail Private Limited, Mahindra Technologies
Services Inc., Mahindra Punjab Tractors Private Limited, Mahindra EcoNova
Private Limited, Mahindra Conveyor Systems Private Limited, Tech Mahindra
(Nigeria) Limited, Tech Mahindra Bahrain Limited S.P.C. and BAH
Hotelanlagen AG became subsidiaries of your Company. During the year under
review, Mahindra Hinoday Industries Limited, Metalcastello S.p.A., and
Mahindra Technologies Inc., ceased to be subsidiaries of the Company.
Further, pursuant to an Agreement dated 10th May, 2005, signed between SBC
International Inc. [now AT&T International Inc.] ('AW'), Mahindra and
Mahindra Limited ('the Company'), British Telecommunications PIc.,
Mahindra-BT Investment Company (Mauritius) Limited ('MBTM') and Tech
Mahindra Limited ('Tech Mahindra') which entitled AT&T to exercise certain
Options over Equity Shares of Tech Mahindra on achieving certain Milestones
by Tech Mahindra at a pre-determined price, AT&T exercised its Options and
acquired 98,70,912 Equity Shares of Tech Mahindra, aggregating 8.07% of the
paid-up Equity Share Capital of Tech Mahindra on 22nd March, 2010 from
MBTM.
Subsequent to the year end, Mahindra Metal One Steel Service Centre Limited
has changed its name to Mahindra Electrical Steel Limited and Mahindra
Aerospace Australia Pty. Limited and Aerostaff Australia Pty. Limited
became wholly owned subsidiaries of Mahindra Aerospace Private Limited
which in turn is a subsidiary of your Company. Reva Electric Car Company
Private Limited also became a subsidiary of your Company.
The Statement pursuant to section 212 of the Companies Act, 1956 containing
details of the Company's subsidiaries is attached.
Auditors
Out of the total 17,101 deposits of Rs.1 66.22 crores from the Public and
Shareholders as at 31st March, 2010, 205 deposits amounting to Rs.0.67
crores had matured and had not been claimed as at the end of the Financial
Year. Since then, 93 of these deposits of the value of Rs.0.44 crores have
been claimed.
Current Year
During the period 1 April, 2010 to 28th May, 2010, 45,821 vehicles were
despatched as against 34,797 vehicles during the corresponding period in
the previous year. During the same period, 29,699 tractors were despatched
as against 24,536 tractors despatched during the corresponding period in
the previous year.
Economies in many parts of the world have started to stabilise and recover
either from recession or severe slow down in the past two years. The Indian
Economy has displayed remarkable resilience over the course of the downturn
and is expected to grow strongly. The primary driver of growth in the year
under review was the Industrial Sector. The index of industrial production
grew 10.1% on a year on year basis between April, 2009 to February, 2010 as
compared to the 3.1% growth registered in the same period in the last
fiscal. With investments picking up in the last few months, as indicated by
the sharp rise in capital goods production and a normal monsoon forecast
for the current year, the prognosis for growth in the current fiscal is
positive.
Particulars of Employees
The Company had 426 employees who were in receipt of remuneration of not
less than Rs.24,00,000 during the year ended 31st March, 2010 or not less
than Rs.2,00,000 per month during any part of the said year. However, as
per the provisions of section 219(i)(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.
KESHUB MAHINDRA
Place: Mumbai Chairman
Date : 29th May, 2010
ANNEXURE I TO THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2010
1st Tranche:
2nd Tranche:
3rd Tranche:
Discount of 5.13% on the average price preceding the specified date - 31st
May, 2004
4th Tranche:
Discount 4.85% on the average price preceding the specified date - 30th
May, 2005
5th Tranche:
6th Tranche:
Discount of 5.02% on the average price preceding the specified date - 29th
May, 2006
7th Tranche:
Discount of 4.89% on the average price preceding the specified date - 13th
September, 2006
8th Tranche:
Discount of 4.97% on the average price preceding the specified date - 30th
July, 2007
9th Tranche:
Discount of 5.03% on the average price preceding the specified date - 4th
August, 2008
10th Tranche:
Discount of 5.03% on the average price preceding the specified date - 30th
July, 2009
Average price:
Average of the daily high and low of the prices for the Company's Equity
Shares quoted on Bombay Stock Exchange Limited during 15 days preceding the
specified date.
45,88,703 Equity Shares of Rs-10 each. These were transferred from the
Trust to the Eligible Employees prior to sub-division of the Face Value of
Equity Share from Rs.10 to Rs.5.
7,57,165
At the Sixty-firs Annual General Meeting of the Company held on 30th July,
2007, the Mahindra & Mahindra Limited Employees Stock Option Scheme was
amended to provide for recovery from Eligible Employees, the fringe benefit
tax in respect of Options which are granted to or vested or exercised by
the Eligible Employees on or after 1st April, 2007.
98,35,030
(ii) Any other employee who receives a grant in any one year of option
amounting to 5% or more of option granted during that year:
* The Options granted stand augmented by an equal number of Options and the
Exercise Price stands reduced to half on account of the 1:1 Bonus Issue
made in September, 2005.
** Out of these, the Options granted and outstanding as of 30th March 2010,
stands augmented by an equal number of Options and the Exercise Price
stands reduced to half on account of the sub-division of the Face Value ol
Equity Share from Rs. 10 to Rs. 5.
(iii) Identified employees who were granted option, during any one year,
equal to or exceeding 1% of the issued capital (excluding outstanding
warrants and conversions) of the company at the time of grant
Nil
Rs. 35.61
(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:
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 30'~ June, 2003, the employee
compensation cost would have been higher by Rs.26.44 crores, Profit after
tax lower by Rs.26,44 crores and the basic and diluted earnings per share
would have been lower by Rs.0.48 and Rs.0.44 respectively.
(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:
*** Out of these, the Options granted and outstanding as on 3 01h March
2010, stands augmented by an equal number of Options and the Exercise.
Pfjcg stands reduced to half on account of the sub-division of Face Value
of Equity Share from Rs.10 to Rs.5.
ANNEXURE II TO THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2010
A) Conservation of Energy
The Company has always been conscious of the need for conservation of
energy and has been steadil making progress towards this end. Energy
conservation initiatives have been implemented at all the plants and
offices of the Company by undertaking numerous energy conservation
projects.
(a) During the year, the Company has taken the following initiatives for
conservation of energy:
* Modification in equipments like oil pumps and motors coupled with system
optimisations to reduce energy consumption.
(c) impact of the measures at (a) & (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods:
The work done by your Company has received recognition in the form of a
number of National and State level awards.
B) Technology Absorption
During the year under review, the Automotive Division focused technology
development efforts in core areas of engine technology, safety, value
engineering through the use of modern manufacturing processes, alternate
material and developing capabilities in automotive electronics. The Farm
Equipment Sector too, focused on improvement in engine technology and new
product development.
Some significant achievements for the year under review include the C2 CRDe
engine with DOHC which was launched on the Maxximo. The engine delivers
higher power and better fuel efficiency, thus delivering significant
customer benefit and competitive advantage to your Company. Your Company
also developed its first in-house Gasoline Engine which was launched on the
Scorpio targeting the overseas markets.
Your Company has been working on developing the Scorpio Pick-UP for the US
market and in the process, has developed/attained significant capabilities
in the field of emission, safety, security and on board diagnostics. The
Company has confidence of complying to the latest FMVSS legislations for
model year 2010 and further years. In the area of sustainable mobility, the
Company developed a Micro Hybrid application on the Pick-UP. This was
launched on the new Bolero Maxi Truck and was received very well by the
customers.
During the year under review, your Company's Automotive Division applied
for 24 Patents and 8 Design Registrations.
Moving on to the Farm Equipment Sector, in the domestic market, the Farm
Division, during the year under review, developed and launched the 'Yuvraj
215', a 15HP tractor, to meet the needs of the small and marginal farmers.
The entire existing range of tractors, i.e. Bhoomiputra, Sarpanch and the
flagship Arjun range were upgraded, offering better fuel efficiency,
stability and comfort. in the same period, the Swaraj Division developed
and launched the Swaraj 843 XM (Xtra Mileage) tractor, the 1st new product
from the Swaraj stable after its merger with the Company.
During the year in India, the Farm Equipment Sector filed 12 New Patents
4. Expenditure on R&D
The Company has continued its endeavor to absorb advanced technologies for
its product range to meet the requirements of a globally competitive
market. All of the Company's Vehicles, Engines and Tractors are compliant
with the prevalent regulatory norms in India and also in the countries to
which they are exported. The Company has also undertaken programs for
development of vehicles which would run on alternate fuels like CNG, Bio-
cliesel, Hydrogen and Electric traction.
* Compliance with new emission norms introduced in India with effect from
1st April, 2010.
2. Development of cruise
control on utility vehicle 2005 Technology Absorbed
5. Development of Nano -
Technology for IP etc. 2005 Technology Absorbed
6. Climate control
(Heated and Cooled) seats 2005 In the process of Absorption
8. Transmission Design of
Compact Tractor 2006 Technology Absorbed
9. Development of
Integrated Cabin for Tractor 2006 Technology Absorbed
KESHUB MAHINDRA
Chairman
(Rupees in crores)
(Rupees in crores)
Infrastructure Development
& Finance Company Limited 0.00 15.00
Except as indicated above, the Company has not made any loans and advances
in the nature of loans to associates or loans and advances in the nature of
loans where there is no repayment schedule or repayment beyond seven years
or no interest or interest below section 372A of the Companies Act, 1956.
Industry Structure
Indian economic growth recovered strongly and relatively faster from the
effects of the global financial crisis. 'The Government responded quickly
to the crisis with a large stimulus package including reduction in indirect
taxes and other fiscal and monetary measures to boost demand. As a result,
industrial growth made rapid strides, registering a double digit increase
in the second half of Financial Year 2010, as compared to nearly zero
growth in the comparable period of Financial Year 2009.
However, given the poor monsoon and rise in global commodity prices,
inflation has risen sharply since November, 2009. Containing inflation is
likely to remain a key challenge for the Govemment and policyrnakers in the
near term.
The global Automobile Industry was one of the worst affected by the
financial crisis. Global Automobile production declined by 13.5% in the
year 2009, after a 3.7% decline in the year 2008 (Source: OICA).
Recognising the importance of the Automobile Industry to their economies
and employment, many Governments in developed and emerging markets
responded with measures to boost demand for Automobiles, especially through
providing incentives for scrapping old vehicles (also known as 'cash for
clunker' Schemes) and by reducing taxes.
Passenger
vehicles 15,49,882 15,52,703 19,49,776 0.2% 25.6%
Commercial
vehicles 4,88,088 3,84,194 5,31,395 -21.3% 38.3%
growth was 34.4%. Most of the growth in M&HCV sales came in the second half
of the fiscal, partly due to a sharp rebound in industrial growth and
partly due to a very low base in the corresponding period of the previous
year.
The Indian Tractor Industry, the world's largest, grew by 31.7% this year
to touch 4,00,203 Tractors, compared with 3,03,921 Tractors sold in the
corresponding period last year.
This growth, despite a weak monsoon and a badly-affected Kharif crop this
year, is because the dynamics of the rural economy has undergone some
fundamental changes in recent times. The Government has enhanced its
support for the Agriculture Sector with increased levels of credit and
better minimum support prices. Increased rural outlays including those
under initiatives like the National Rural Employment Guarantee Scheme
('NREGS') have helped improve rural incomes. New employment avenues have
emerged and on an average, farm incomes now contribute to less than half of
rural incomes. All this has resulted in higher rural liquidity, ensuring
strong demand, despite the poor monsoon.
Financial Year 2010 was an epochal year for your Company' Automotive
Sector. Spurred to rise above the challenges
Growth
M&M Domestic
sales F-08 F-09 F-10 F-09 F-10
Passenger
Vehicles 1,29,849 1,19,799 1,56,058 -7.7% 30.3%
Cars 25,907 13,423 5,332 -48.2% -60.3%
LIVS 1,03,942 1,06,376 1,50,726 2.3% 41.7%
Light
commercial
vehicles 55,222 55,881 86,217 1.2% 54.3%
* During the Financial Year 2010, your Company, along with its Joint
Venture subsidiaries Mahindra Navistar Automotives Limited ('MNAU') and
Mahindra Renault Private Limited ('MRPU'), sold a total of 2,86,713
vehicles in the domestic market, a growth of 30.0% over the previous year
* The Scorpio, Bolero and Xylo continued to lead the Indian market,
increasing Mahindra's already dominant marketshare. The Bolero occupied the
numero uno slot for the fourth consecutive year, selling more than 70,000
vehicles during the year.
* In LCVs, M&M has a presence in < 3.5T GVW segment (small commercial
vehicles and pick-ups), while its subsidiary MNAL has a presence in the
3.5-7.51VIT GVW segment.
* In Financial Year 2010, your Company's overall LCV sales were 86,217
units, a growth of 54.3% as compared with a growth of 42.7% for the
industry. Your Company is the second largest player in the LCV segment with
a market share of nearly 30.0%. (Source: SIAM Data).
* In the passenger car segment, the Logan sold 5,332 units, a decline of
60.3% over the previous year as compared to a growth of 14.2% for the A3-
segment.
Three new products were launched in the < 3.5T GVW segment.
The Company also launched India's first compact truck, the Gio, with a 0.5T
payload, with car-like interiors and an attractive price point. By offering
attractive finance schemes, the Company expects the Gio to provide self-
employment opportunities to rural and semi-urban youth.
The Chakan Plant has the capability to manufacture the Company's range of
new generation UVs as well as commercial application vehicles. It will also
manufacture Commercial Vehicles for MNAL.
In the Global markets, while the overall economic conditions have improved
from the nadir of Financial Year 2009, they still remain challenging. The
Company's overseas automotive operations recovered in the second half of
last year with export sales growing nearly 24% to 10,567 units as compared
to 8,501 units in the previous year.
To build on the Company's heritage and build its brand in overseas markets,
your Company launched a new product, Mahindra Thar. The product has
received good response in targeted markets.
In addition to the above, your Company sold 1,000 Logan cars in overseas
markets through MRPL.
Farm Equipment Sector - The route to the numero uno position
The Financial year ended 31st March, 2010 was a landmark year for the
business. Your Company became the world's largest tractor Company, in terms
of the number tractors sold, fulfilling a long cherished dream. 'Mahindra
Tractom is an iconic brand and enjoys a strong following in the India rural
heardand.
* In this period, your Company sold 1,66,359 tractors under its Mahindra
and Swaraj brands as against 1,13,269 tractors sold in the previous year, a
46.91/o increase.
* This resulted in the ffiarket share going up to 41.4% from 40.8% last
year and marked the completion of 27 years of leadersNp of the Farm
Equipment Sector in the Indian Tractcx Market.
* The above volumes included the sale of more than 1,00,000 Mahindra
branded tractors in the domestic tractor market in a single financial year,
the 1 sl Tractor Company in the country to achieve this distinction.
* 843 XM - The first ractor to be launched under the Swarai brand after
the merger of the erstwhile Punjab Tractors Limited with the Company.
International launches
United States
* Launch of the first hi-tech Integrated Cabin Tractor with both air-
conditioning and heating in the US, the first from a tractor that is 'Made
in India'.
China
In China, the inauguration of the Joint Venture Company viz. Mahindra Yeuda
(Yancheng) Tractor Company Limited ('MYYTCL') in April, 2009 was
accompanied by the launch of the 125HP tractor, thus expanding your
Company's product portfolio range up to 125HP.
* China is the second largest tractor market in the world with a rapidly
growing Chinese market, fuelled by increased Government subsidies focussed
on agricultural mechanisation. MYYTCL has been successfully operationalised
and has delivered 32% increase in domestic volumes in the first year of
operations. The two Joint Ventures of your Company in China together
account for the sale of around 30,000 tractors.
* In the US, the tractor industry continued to face the brunt of the
economic down turn, which impacted the sale of tractors by Mahindra USA,
Inc.
Mahindra is a Company on the move. Having been the leading tractor maker
for close to three decades now, the Company has diversified in other
spheres such as power generators.
Mahindra Powerol has made a foray in the new area of Tele Infra
Mahindra Powerol has expanded its genset product range to 320 kVA at the
higher end and introduced a new 5kVA DG at the lower end. Perhaps the most
significant product introduction for the retail segment from the Mahindra
Powerol stable has been the digital home UPS. With sales of over 7,000
numbers this year, this product is poised to take Mahindra into every home.
The current low level of vehicle ownership in India is 14 per 1,000 people
as compared with the world average of 120 per 1,000 which implies a huge
opportunity for growth of the Automobile Industry. India's Automotive
Sector is expected to be one of the fastest growing in the world over the
next several years. However, the Company faces increasing competition from
the presence of a large number of automotive companies in the country.
* Food security and rural development remain high on the Government agenda,
with the Union Budget for 2010-2011 showing an increase in agri credit
outlay by 15% to Rs.3.75 lakh crores; interest subvention on crop loans and
various initiatives for rural development also have enhanced outlays. This,
coupled with significantly low levels of mechanisation in Indian farms
compared to the global average, indicates that there is significant growth
potential for agricultural mechanisation in the country. Your Company is
well poised to leverage this opportunity. The Company may face increased
competition from other tractor manufacturers.
Amongst your Company's newly launched products, the Yuvraj 215 has the
potential to grow significant volumes in the upcoming period by creating an
entirely new category and catering to a large group of customers who had no
affordable option thus far.
Your Company will use every opportunity to leverage synergy both within the
Sector as well as with other Mahindra companies to create and improve
channel efficiencies, develop cutting edge technologies and introduce a
continuous pipeline of product upgraclations and new product introductions.
Your Company's strategy to make use of low cost manufacturing and sourcing
bases in India and abroad will enhance its cost competitiveness.
Perhaps the biggest opportunity will emerge as the FES gears up to bring
about Farm Tech Prosperity. The possibilities are endless in this area.
Your Company has the will to achieve and go where no other has gone before,
to travel the road less travelled and create its own pathways on its
continued journey to success and excellence.
Competition
Regulations
Fuel prices are an important element of the overall cost of ownership for
vehicles and tractors. Almost all of the Company's UV models are diesel
powered. Diesel is priced lower than petrol. Any reduction in the price
differential between petrol and diesel may increase the demand for petrol
UVs at the expense of diesel UVs and will be disadvantageous to the
Company.
For overseas operations, which are a key thrust area for the Company, rupee
appreciation could be a risk for both the Sectors. However, M&M, as a
practice, is taking appropriate steps to hedge currency exposure, thus
limiting the impact of risk.
New projects
To maintain and extend its competitive advantage, the Company has created
significant new capacity at its new manufacturing plant at Chakan and is
simultaneously investing in an aggressive new product development
programme. Success of the new product launches and attaining optimal and
planned capacity utilisation of the new facility would have an important
bearing on the future profitability.
Competition
The Indian domestic tractor market, the world's largest, has seen a round
of consolidation in the last few years, which includes the coming together
of TAFE and Eicher and the acquisition of Punjab Tractors Limited by your
Company. Having recorded a significant growth of over 30% in this financial
year, the market is expected to see more competition among the existing
domestic and international players.
Raw Materials
Strategy
market with a pick-up. The Company also continues to actively search for
overseas partners to supplement and strengthen its domestic market in both
the Sectors.
Going beyond just being a tractor company, FES aspires to make a difference
in the lives of farmers by delivering Farm Tech Prosperity, both in the
Indian context, as well as on a global scale, in the immediate and distant
future.
Yuvraj 215
There is wealth at the bottom of the pyramid. Research showed that the
lower income farmer is still forced to rely on manual labour and bullocks
to till his land. With this insight, your Company took upon itself the
challenge of creating a suitable solution at a suitable price. FES launched
the Yuvraj 215, a 15 HP tractor at an unbeatable price for small and
marginal farmers - your Company's contribution towards inclusive growth in
the country. This technological marvel meets the needs of over 80% of
India's farming populace, whose land holding is less than 5 acres, and for
whom a Rs.2.5 lakhs tractor is simply unafforclable.
Mahindra Applitrac
Mahindra Samriddhi
Outlook
In the long term, the Indian economy is projected to grow rapidly and
demand conditions are expected to remain strong. However, in the near term,
there are challenges in terms of higher commodity prices, rising inflation
and appreciation of the rupee which will have a bearing on demand and
profitability.
Both the Automotive and Farm Equipment Sectors with their updated product
portfolios and their exploration of global horizons, will strive to
maintain their leadership position in their respective markets.
Simultaneously, your Company will continue its focus on achieving cost
leadership through focused cost optimisation, value engineering, improved
efficiency measures like supply chain management, countrywide connectivity
of all its suppliers and dealers and exploiting synergies between its
Sectors.
Going forward, the success of the Group will depend on individuals and
teams that are able to create value for the organisation. The levers of
organisation structure and design, reward and recognition, talent
acquisition, communication and performance management system are important
and are aligned. Leadership development, succession planning and employee
engagement demanded extra focus this year, given the prevalent economic
situation.
Industrial Relations remained cordial and harmonious during the year for
both the Sectors, apart from a brief illegal, tool-down strike by workers
at the Na~shik Automotive Plant. However, the loss in production was
compensated and the Company did not suffer any major loss. Various training
programmes were organised at all Plants for developing personal,
interpersonal and technical skills of the Company's i workmen. These
training programs covered a wide range 1 of topics e.g. Positive Attitude,
Stress Management, Creativity, Team Effectiveness, Safety and Environment,
Quality Tools, TPM, Dexterity and Technical training. The workmen
wholeheartedly participated in all training programmes and in many cases on
a holiday or after working hours.
The permanent employee strength of the Company as on 31st March, 2010 was
14,355.
Overview
Fixed Assets:
As at 31st March, 2010 the Gross Block of Fixed Assets and Capital Work in
Progress was Rs.6,240.49 crores as compared to Rs.5,540.62 crores as at
31st March, 2009. During the year, the Company incurred capital expenditure
of Rs.946.31 crores (previous year Rs.855.12 crores). The major items of
capital expenditure were on New Product Development like the Maximmo,
Capacity Enhancement and Research & Development including on the Company's
research facility in Chennai. This included the purchase of Intangible
assets aggregating Rs.225.28 crores (previous year Rs.170.35 crores).
Inventories:
Finished goods as a % of
gross sales 2.48% 3.31%
Sundry Debtors:
Loan Funds:
The loans funds have decreased from Rs.4,052.76 crores in the previous year
to Rs.2,880.15 crores in the current year. The decrease is primarily on
account of the conversion of the Fully and Compulsorily Convertible
Debentures into, Equity Shares and the repayment of secured Foreign
Currency Loans from Banks.
RESULTS OF OPERATIONS
Income:
(Rs. crores)
Less: Excise
Duty on Sales 1,794.01 9.64 1,619.35 12.37 10.79
The net sales and income from operations of the Company grew by 42% over
the previous year on a growth of 44% in the automotive business and 40% in
the Company's tractor business. This growth in the Automotive Sector was
driven by the robust growth in domestic UV volumes by 39%, increased
exports and the launch of the GIO and the Maximmo in the current year. The
tractor business growth was fuelled by a strong increase in sales in both
the domestic and export markets.
Other income during Financial Year 2010 at Rs.1 99.35 crores fell by 26% as
compared to the previous year amount of Rs.270.34 crores due to lower
dividend income from subsidiaries and lower profit from the sale of
investments in the current year.
(Rs. crores)
Expenditure:
Raw materials,
Finished and
Semi-finished
Products 12,332.92 66.30 9,274.23 70.83 32.98
Personnel
expenses 1,198.47 6.44 1,024.61 7.83 16.97
Interest,
commitment and
finance charges 21.81 0.15 45.26 0.35 (38.56)
Depreciation/
Amortisation 370.78 1.99 291.51 2.23 27.19
Total
Expenditure 16,045.46 86.26 12,337.82 94.23 30.05
Material Cost:
For the year ended 31st March, 2010 material cost increased by 33% which is
much lower than increase in net sales and income from operations due to
increased volumes in the current year, Thus, as a percentage of net sales,
material cost shows a decrease over the previous year. This is mainly due
to the full benefit of the decrease in commodity prices in the second half
of Financial Year 2009 accruing to the current year and the cost reduction
initiatives of the Company.
Personnel Cost:
Personnel cost has increased by 17% to Rs. 1,198.47 crores from Rs.1,024.61
crores in the previous year, This is mainly due to increase in flexible
manpower, officers' annual increments and impact of wage agreements signed
during the year. Also the current year had the impact of full year charge
of the erstwhile Punjab Tractors Limited in the books of the Company as
compared to an eight month charge in the previous year.
Other Expenses:
Depreciation:
The depreciation for the year ended 31st March, 2010 is at Rs.370.78 crores
as compared to Rs.291.51 crores in the previous year due to the full impact
in the current year of capitalisation of Xylo related fixed assets and
intangibles and due to fresh capitalisation of projects in the current
year.
Interest (Net):
Exceptional Items:
The profit from Exceptional items during the year ended 31st March, 2010 is
Rs.90.75 crores as against Rs.10.27 crores in the last year. The profit in
the current year is on account of profit on sale of shares of Mahindra
Holidays & Resorts India Limited offered as a part of that company's
Initial Public Offering, while in the previous year the exceptional income
was on account of surplus on transfer of the Company's Logistics business
to its wholly owned subsidiary.
The provision for current tax, fringe benefit tax and deferred tax for the
year ended 31st March, 2010 as a percentage to profit before tax is higher
than the previous year, on account of the incremental profits during the
year being subjected to tax at the maximum marginal rate of 33.99%.
The current year has witnessed a strong sales performance which has
translated to healthy growth in both, revenues and profits of the Group.
The Gross turnover for the year ended 31st March, 2010 of Consolidated
Mahindra Group is Rs.33,790.10 crores as against Rs.28,991.99 crores for
the previous year. The Group's net turnover grew by 17,71% to Rs.31,687.97
crores in the current year from Rs.26,919.81 crores in Financial Year 2009.
The profit before exceptional items and tax for the current year is
Rs.3,779.73 crores as compared to Rs.2,330.51 crores, registering an
increase of 62.18% over the previous year. While the Group's performance
across all its segments has registered an improvement, the Systech segment
faced challenges on account of the situation prevailing in the European
countries which are yet to returm to normalcy post the global meltdown of
2009 which severely impacted the auto-components industry world over During
the year, there was an exceptional gain of Rs.264.56 crores mainly arising
from the sale of shares through an Initial Public Offering of Mahindra
Holidays and Resorts India Limited, gains on account of deemed divestitures
of the Company's holdings in group companies such as Mahindra Forgings
Limited, Tech Mahindra Limited and Mahindra Holidays & Resorts India
Limited. The consolidated Group Profit for the year after exceptional
items, prior period adjustments and tax and after deducting minority
interests is Rs.2,478.56 crores as against Rs.1,405.41 crores earnedf ast
year, a growth of 76.36%.
During the year, by virtue of exercise of options granted to AT&T, the
shareholding of the Company alongwith Mahindra BT Investment Company
(Mauritius) Limited in Tech Mahindra Liimited stands reduced to 44.01%,
resulting in Tech Mahindra Limited alongwith its subsidiary companies
ceasing to be subsidiaries of the Company with effect from 22nd March,
2010, Accordingly as on 31st March, 2010, Tech Mahindra Limited is a Joint
Venture of the Company, As on 31st March, 2010 the Group comprised of 90
Subsidiaries, 5 Joint Ventures and 10 Associates.
The Group's Finance company, Mahindra & Mahindra Financial Services Limited
(Consolidated), witnessed a revenue growth of 13.93% over the previous
year. Having put in place various initiatives towards improving cashflows,
reducing interest costs through broad basing the borrowing profile and
establishing banking relationships, it reported a total income of
Rs.1,595.60 crores during the current year as compared to Rs.1,400.45
crores in the last year. With a network of 459 offices it is one of the
leading NBFCs in i financing of utility vehicles, tractors and cars. Its
consolidated profit after tax for Financial Year 2010 grew by 61.96% from
Rs.219.70 crores in the previous year to Rs.355.82 crores in the current
year,
Mahindra Holidays & Resorts India Limited, during the year under review,
continued to grow towards dominance in the Holiday Segment with membership
growing by 18.38% from 92,825 numbers to 1,09,884 numbers. The total income
(Consolidated) grew by 17.90% from Rs. 442.12 crores to Rs. 521.28 crores.
The profit after tax for the year registered an increase of 46.86%
increasing from Rs.79.71 crores in Financial Year 2009 to Rs. 117.06 crores
in Financial Year 2010.
The results achieved by major business segments of the Group are given
below:
(Rupees Crores)
Disclaimer
AUDITORS' REPORT
To
The members of
Mahindra & Mahindra Limited
(a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
(b) In our opinion, proper books of account as required by law have been
kept by the Company so far as it appears from our examination of those
books;
(c) The Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, the Profit and Loss Account and the
Cash Flow Statement dealt with by this report are in compliance with the
Accounting Standards referred to in Section 211 (3C) of the Companies Act,
1956;
(e) In our opinion and to the best of our information and according to the
explanations given to us, the said accounts give the information required
by the Companies Act, 1956 in the manner so required and give a true and
fair view in conformity with the accounting principles generally accepted
in India:
(i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2010;
(ii) In the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
(iii) In the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
B.P. Shroff
Partner
(Membership No.34382)
Place: Mumbai
Date : 29th May, 2010
Annexure to the Auditors' Report of Mahindra & Mahindra Limited for the
year ended 31st March, 2010.
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.
(b) The fixed assets were physically verified during the year by the
Management in accordance with a regular programme of verification which, in
our opinion, provides for physical verification of all the fixed assets at
reasonable intervals. According to the information and explanation given to
us, no material discrepancies were noticed on such verification.
(c) The fixed assets disposed off during the year, in our opinion, do not
constitute a substantial part of the fixed assets of the Company and such
disposal has, in our opinion, not affected the going concern status of the
Company.
(a) As explained to us, the inventories were physically verified during the
year by the Management at reasonable intervals.
(b) In our opinion and according to the information and explanation given
to us, the procedures of physical verification of inventories followed by
the Management were reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) In our opinion and according to the information and explanations given
to us, the Company has maintained proper records of its inventories and no
material discrepancies were noticed on physical verification.
iii. The Company has neither granted nor taken any loans, secured or
unsecured, to/from companies, firms or other parties listed in the Register
maintained under Section 301 of the Companies Act, 1956.
iv. In our opinion and according to the information and explanations given
to us, having regard to the explanations that some of the items purchased
are of special nature and suitable alternative sources are not readily
available for obtaining comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and the
nature of its business with regard to purchases of inventory and fixed
assets and the sale of goods and services. During the course of our audit,
we have not observed any major weakness in such internal control system.
vi. In our opinion and according to the information and explanations given
to us, the Company has complied with the provisions of Sections 58A and
58AA or any other relevant provisions of the Companies Act, 1956 and the
Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits
accepted from the public. According to the information and explanations
given to us, no order has been passed by the Company Law Board or the
National Company Law Tribunal or the Reserve Bank of India or any court or
any other Tribunal.
vii. In our opinion, the Company has an adequate internal audit system
commensurate with the size and the nature of its business.
(a) The Company has generally been regular in depositing undisputed dues,
including Provident Fund, Investor Education and Protection Fund,
Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax,
Value Added Tax, Customs Duty, Excise Duty, Cess and other material
statutory dues applicable to it with the appropriate authorities.
(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax,
Customs Duty, Excise Duty and Cess which have not been deposited as on 31st
March, 2010 on account of disputes are given below:
Appellate Authority -
Tribunal Level 1987-2007 0.39
Appellate Authority -
Commissioner (Appeals) 1989-2010 24.71
Appellate Authority -
Commissioner 2002-2010 6.09
Appellate Authority -
Tribunal Level 1987-2009 221.49
Appellate Authority -
Commissioner 1994-2010 34.83
x. The Company does not have accumulated losses as at 31st March, 2010 and
has not incurred cash losses during the financial year ended on that date
and in the immediately preceding financial year.
xi. In our opinion and according to the information and explanations given
to us, the Company has not defaulted in the repayment of dues to banks,
financial institutions and debenture holders.
xii. In our opinion and according to the information and explanations given
to us, the Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
xiii. The provisions of any special statute as specified under the clause
(xiii) of the said Order are not applicable to the Company.
xv. According to the information and explanations given to us, the Company
has not given any guarantees for loans taken by others from banks or
financial institutions, the terms and conditions, whereof, in our opinion
are prejudicial to the interest of the Company.
xvi. In our opinion and according to the information and explanations given
to us, the term loans have been applied for the purposes for which they
were obtained.
xix. According to the information and explanations given to us, the Company
has created security in respect of the debentures issued in earlier years.
xx. The Company has not raised any money by public issue during the year.
xxi. During the course of our examination of the books and records of the
Company, carried out in accordance with the generally accepted auditing
practices in India, and according to the information and explanations given
to us, we have neither come across any instance of significant fraud on or
by the Company, noticed or reported during the year nor have we been
informed of such case by the management.
B.P. Shroff
Partner
(Membership No.34382)
Place: Mumbai
Date : 29th May, 2010
NOTES ON ACCOUNTS
(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.
(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.
(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.
(D) Investments:
Long term investments are valued at cost. However, provision for diminution
in value is made to recognise a decline other than temporary in the value
of investments. Current investments are valued at the lower of cost and
fair value, determined by category of investment.
(E) Inventories:
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.
The liability is amortised by the year ended March, 2010 from the month in
which the liability is incurred.
The Company uses foreign currency forward contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating to
certain firm commitments and highly probable forecast transactions. The
Company does not hold derivative financial instruments for speculative
purposes. The Company has applied to such contracts the hedge accounting
principles set out in Accounting Standard 30 'Financial Instruments :
Recognition and Measurement' (AS 30) by marking them to market.
Changes in the fair value of the contracts that are designated and
effective as hedges of future cash flows are recognised directly in Hedging
Reserve Account and the ineffective portion is recognised immediately in
the Profit and Loss Account.
Sales of products and services are recognised when the products are shipped
or services rendered including export benefits thereon.
Dividend from investments are recognised in the Profit and Loss Account
when the right to receive payment is established.
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.
All borrowing costs are charged to the Profit and Loss Account except
(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.
(0) Leases:
2. Share Capital:
Rupees crores
2010 2009
(a) Movements during the year
784.79 10.86
6.59 44.20
0.42 0.38
The Share Capital of the Company has also been reduced and the General
Reserve increased by Rs. 2.63 crores (2009 : Rs. 3.10 crores) for the
52,63,296 bonus shares of Rs. 5 each (2009 : 31,02,653 bonus shares of Rs.
10 each) issued by the Company in September, 2005 to the trust but not yet
transferred by the trust to the employees. The above monies which are
treated as advance received from it, is included under current liabilities.
4. Loans:
(b) (i) Debentures of Rs. 600.01 crores are secured by a pari-passu charge
on immovable properties of the Company both present and future, subject to
certain exclusions and are also secured by pari-passu charge on the movable
properties of the Company including movable machinery, machinery spares,
tools and accessories, both present and future.
(ii) Loans and Advances on cash credit accounts from the Company's bankers
are secured by a first charge on a pari-passu basis on the whole of the
current assets of the Company namely inventories, book debts, outstanding
monies, receivables, claims, etc. both present and future.
The Company had issued during the year ended 31st March, 2007, Zero Coupon
Foreign Currency Convertible Bonds (Bonds 2011 aggregating US$ 200 million,
at par The bond holders have an option to convert these bonds into Equity
Shares with full voting rights or Global Depository Receipts (GDRs)
determined at an initial conversion price of Rs. 461.02 per share of Rs. 5
each (2009 : Rs. 922.04 per share of Rs. 10 each) with fixed exchange rate
of conversion of Rs. 44.42 = US$ 1, at any time on or after 7th May, 2006
upto 7th March, 2011.
The Bonds 2011 may be redeemed, in whole but not in part, at the option of
the Company at any time on or after 13th April, 2008 subject to
satisfaction of certain conditions. Unless previously converted, redeemed
or purchased and cancelled, the bonds fall due for redemption on 14th
April, 2011 at 128.03 per cent of their principal amount. Bonds 2011 of the
face value of US$ 10.50 million have been bought back and cancelled in the
previous year. Upto 31st March, 2010, none of the Bonds 2011 have been
converted into equity shares/GDRs.
The net proceeds of Rs. 48.46 crores, unutilised as at 31st March, 2010, is
disclosed under Cash and Bank balances.
(i) Interest capitalised during the year Rs. 26.56 crores (2009 : Rs. 15.63
crores).
(ii) Foreign exchange fluctuation capitalised during the year Rs. 117.79
crores credit (Net) [2009 : Rs. 172.97 crores debit (Net)].
(a) An amount of Rs. 0.41 crores (2009 : Rs. 0.38 crores), representing
depreciation on the increase due to revaluation of Land and Buildings
transferred from the Revaluation Reserve.
(ii) The net credit to the Profit and Loss Account consequent to the above
adjustments to the Revaluation Reserve is Rs. 0.42 crores (2009 : Rs. 0.38
crores).
6. Cash and Bank Balances include balances lying with non-scheduled banks
In Current Account
Rupees crores
Balance as at
31st March, 2010 * 6.39 * 5.14 *
Balance as at
31st March, 2009 * 3.34 0.09 2.13 *
Maximum balance
during the year *11.91 0.59 5.68 *
(b) Amounts paid towards joint development of property Rs. Nil (2009 :
Rs.1.54 crores).
8. Micro, Small and Medium enterprises have been identified by the Company
on the basis of the information available. Total outstanding dues of Micro
and Small enterprises, which are outstanding for more than the stipulated
period are given below:
Rupees crores
2010 2009
9. (a) Provision - Others Rs. 219.66 crores (2009 : Rs. 167.45 crores)
includes provision for contingencies Rs. 3.58 crores (2009 Rs. 8.25
crores), provision for warranty Rs. 179.61 crores (2009 : Rs. 137.45
crores), provision for post retirement medical benefits Rs. 9.65 crores
(2009 : Rs. 4.84 crores), provision for post retirement housing allowance
Rs. 10.99 crores (2009 : Rs. Nil) and provision for diminution in value of
certain assets substantially retired from active use Rs. 15.83 crores (2009
: Rs. 16.89 crores). Provision for contingencies is in respect of labour
demands under negotiations at certain locations of the Company. Provision
for warranties relates to warranty provision made in respect of sale of
certain products, the estimated cost of which is accrued at the time of
sale. The products are generally covered under a free warranty period
ranging from 6 months to 3 years. denotes amounts less than Rs. 50,000.
(b) The movement in provisions for warranty, contingency and retired assets
is as follows:
Rupees crores
Add On Amalgamation
during the year - 0.25 - - - -
Less Utilisation
during the year 63.43 54.27 8.25 5.32 1.06 0.12
Balance as at
31st March 179.61 137.45 3.58 8.25 15.83 16.89
(d) Interest received - others includes tax deducted at source Rs. 12.21
crores (2009 Rs. 15.11 crores).
11. Repairs and Maintenance includes machinery spares consumed Rs. 33.85
crores (2009 Rs. 26.25 crores) but does not include items included under
Consumption of Raw Materials and Bought-out Components and amounts charged
to salaries and wages (amounts not ascertained).
Rupees crores
Statutory Cost
Auditors Auditors
1.08 0.02
(ii) Company Law matters
0.63 -
0.05 -
1.91 0.03
1.76 0.02
(b) An amount of Rs. 1.44 crores (2009 : Rs. 0.96 crores) payable as
commission to non-wholetime Directors - Note 13 and Schedule XV.
13. Managerial remuneration for Directors included in the Profit and Loss
Account is Rs. 8.19 crores (2009 Rs. 6.29 crores) including Directors' fees
of Rs. 0.14 crores (2009 : Rs. 0.09 crores), perquisites Rs. 1.68 crores
(2009 : Rs. 1.27 crores) and commission Rs. 4.53 crores (2009 : Rs. 3.16
crores) (See Schedule XV) and excluding charge for gratuity, provision for
leave encashment and post retirement medical benefit as separate actuarial
valuation figures are not available. The above perquisites include
amortisation of Employees Stock Options amounting to Rs. 0.06 crores (2009
: Rs. 0.09 crores).
Gratuity
Rupees Crores
1. Expense recognised
in the Statement of
Profit and Loss
Account for the year
ended 31st March
1. Current service
cost 19.17 16.59 0.37 0.22 1.50 -
3. Expected return
on plan assets (16.23) (18.16) - - --
4. Actuarial
(Gain)/Loss (7.69) 33.40 4.32 1.81 (1.77)-
6. Total expense
included in
Personnel
(Schedules XI) 31.31 50.13 5.09 2.27 0.57-
7. Actual return
on plan assets 20.75 18.16 - - --
1. Present value
of defined benefit
obligation as at
31st March 334.20 300.61 9.65 4.84 10.99-
2. Fair value of
plan assets as
at 31st March 266.10 206.14 - - --
3. Net Asset/
Wability) as at
31st March (68.10) (94.47) (9.65) (4.84) (10.99)-
1. Present value
of defined benefit
obligation at
the beginning of
the year 300.61 201.76 4.84 2.79 10.42-
2. Addition on
account of
amalgamation - 40.90 - - - -
3. Current
service cost 19.17 16.59 0.37 0.22 1.50 -
5. Actuarial
(Gain)/Loss (3.17) 33.40 4.32 1.81 (1.77) -
6. Past
service cost 12.15 - - - --
8. Present value
of defined benefit
obligation at the
end of the year 334.20 300.61 9.65 4.84 10.99-
1. Fair value of
plan assets at
the beginning
of the year 206.14 163.58 - - --
2. Addition on
account of
amalgamation - 29.16 - - --
3. Expected return
on plan assets 16.23 18.16 - - --
4. Actuarial
Gain/(Loss) 4.52 - - - --
5. Contributions
by employer
(including benefit
payments
recoverable) 57.68 5.58 0.28 0.22 --
7. Fair value of
plan assets at the
end of the year 266.10 206.14 - - --
8. Actual return
on plan assets 20.75 18.16 - - --
V. The major
categories of
plan assets as
a percentage
of total plan
Insurer managed
funds 100% 100% - - - -
VI. Actuarial
assumptions
2. Expected rate
of return on plan
assets 7.50% 7.50% - - --
4. Medical premium
inflation - 5.00% 5.00% - --
Gratuity
4. Experience adjustment on
plan liabilities [(Gain)/Loss] 7.93 5.87 4.55 -
5. Experience adjustment on
plan assets [Gain/(Loss)] 4.44 - - -
2. Plan assets - - - -
4. Experience adjustment on
plan liabilities [(Gain)/Loss] 5.21 1.24 (0.55) 0.07
Post retirement housing
allowance
2. Plan assets - - - -
3. Surplus/(Deficit) (10.99) - - -
4. Experience adjustment
on plan liabilities
[(Gain)/Loss] 0.15 - - -
The Payment of Gratuity (Amendment) Bill 2010 amending the maximum gratuity
payable under The Payment of Gratuity Act 1972 from Rs. 3.50 lakhs to
Rs.10.00 lakhs has been passed by both houses of Parliament in May, 2010
and will come into effect from a date to be notified by the Central
Government. Since the said Bill has been substantively enacted, the Company
has given effect to the same in valuing its actuarial liability for
gratuity as at 31st March, 2010. Due to this change in the maximum limit
under the Act, the profit after tax for the current year is lower by Rs.
8.02 crores.
The post retirement housing allowance scheme of the Company for select
cadre of employees has been introduced in the current year and the opening
liability as at 1st April, 2009 of Rs. 10.42 crores has been recognized as
an expense in the current year
The expected rate of return on plan assets is based on the average long
term rate of return expected on investments of the fund during the
estimated term of obligation.
15. The Company has allotted 55,24,219 and 10,00,000 Ordinary (Equity)
Shares of Rs. 10 each in the years ended 31st March, 2002 and 31st March,
2010 respectively to the Mahindra & Mahindra Employees' Stock Option Trust
set up by the Company. The trust holds these shares for the benefit of the
employees and issues them to the eligible employees as per the
recommendation of the Compensation Committee.
The fair value of options granted during the year on 4th November, 2009 is
Rs. 414.84 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:
Had the Company adopted fair value method in respect of options granted on
or after 1st April, 2005, the employee compensation cost would have been
higher by Rs. 26.44 crores, Profit after tax lower by Rs. 26.44 crores and
the basic and diluted earning per share would have been lower by Rs. 0.48 &
Rs. 0.44 respectively.
The Company has filed an appeal against the aforesaid order dated 7th
December, 2009 inter alia, on the grounds that the MVA and MMVR cannot be
referred to for the purpose of determining the excise classification, as
has been repeatedly held by various judicial fora, including the Supreme
Court and particularly by CESTAT vide its order dated 19th July, 2005 in
the Company's own case referred to above.
Without prejudice to the grounds raised in the appeal, the Company has paid
an amount of Rs. 40.00 crores in January, 2010. Pending admission of the
Company's appeal, the Supreme Court has passed an interim order staying the
recovery of the balance amount till further orders.
The Company strongly believes, based on legal advise it has received, that
the CESTAT order dated 7th December, 2009 which is under appeal in the
Supreme Court is not sustainable in law and hence the Company has a very
good chance of succeeding in the matter As such, the Company does not
expect any liability on this account. However, in view of the CESTAT order,
the Company has reflected the above amount aggregating Rs. 328.86 crores
and the interest of Rs. 168.05 crores accrued on the same upto 31st March,
2010, as a Contingent Liability in the Accounts and the same is included in
the amounts disclosed under Note 18 (b)(i).
Rupees crores
(b) Claims against the Company not acknowledged as debts comprise of:
(i) Excise Duty, Sales Tax and Service Tax claims disputed by the Company
relating to issues of applicability and classification aggregating
Rs.968.22 crores (Net of Tax : Rs. 698.04 crores) [2009 : Rs. 386.32 crores
(Net of Tax : Rs. 274.20 crores)].
(iii) Claims on capital account : Rs. 1.18 crores (2009 : Rs. 1.18 crores).
(c) Uncalled liability on equity shares partly paid Rs. 10.50 crores (2009
: Rs. 10.50 crores).
(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:
(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:
(e) Bills discounted not matured Rs. Nil (2009 : Rs. 59.55 crores).
(i) debited to the Profit and Loss Account, including certain expenditure
based on allocations made by the Company, aggregate Rs.248.25 crores (2009
: Rs. 220.09 crores) [excluding depreciation and amortisation of Rs. 81.03
crores (2009 : Rs. 56.19 crores)].
(ii) Development Expenditure incurred during the year Rs. 131.28 crores
(2009 : Rs. 128.94 crores).
(iii) Capitalisation of assets Rs. 41.64 crores (2009 : Rs. 15.64 crores).
(i) debited to the Profit and Loss Account, including certain expenditure
based on allocations made by the Company, aggregate Rs.25.89 crores (2009 :
Rs. 18.69 crores) [excluding depreciation and amortisation of Rs. 2.25
crores (2009 : Rs. 1.50 crores)].
(ii) Development Expenditure incurred during the year Rs. 38.59 crores
(2009 : Rs. 7.50 crores).
(iii) Capitalisation of assets Rs. 4.34 crores (2009 : Rs. 3.56 crores).
20. The net difference in foreign exchange loss debited to the Profit and
Loss Account is Rs. 113.48 crores (2009 Rs. 237.20 crores).
21. Exceptional items of Rs. 90.75 crores (2009 : Rs. 10.27 crores)
comprise of:
(a) Profit on sale of certain long term investments Rs. 90.75 crores (2009:
Rs. Nil).
(b) Surplus on transfer of Logistics business Rs. Nil (2009 : Rs. 10.27
crores).
22. The components of Deferred Tax Liability and Assets as at 31st March,
2010 are as under:
Rupees crores
2010 2009
422.50 393.38
182.17 411.65
(c) Accordingly, the figures for the current year are not strictly
comparable with that of the previous year.
2010 2009
Amount used as the numerator - Balance
of profit (Rupees crores) 2087.75 867.51
In the computation of earnings per share for the periods above, the Company
has given effect to the sub-division in March, 2010 of the Company's
Ordinary (Equity) Share of Rs. 10 each into 2 Ordinary (Equity) Shares of
Rs. 5 each.
25. Provision for doubtful debts and advances for the year comprises
Rupees crores
2010 2009
26. Provision for diminution in the value of long term investments for the
year comprises
Rupees crores
2010 2009
Total - -
(a) Indian National Congress : Rs. 1.00 crore (2009 Rs. Nil)
(b) Bhartiya Janata Party : Rs. 1.00 crore (2009 Rs. Nil)
(c) Shiv Sena : Rs. 0.50 crores (2009 Rs. Nil)
(d) Nationalist Congress Party : Rs. 0.50 crores (2009 Rs. Nil)
(e) Bihar Pradesh Janata Dal (United) : Rs. 0.25 crores (2009 Rs. Nil)
The Company has taken foreign exchange contracts amounting to US$ 54.80
crores comprising Forward Contracts US$ 32.10 crores (2009 US$ 60.30
crores), Range Forwards US$ 7.20 crores (2009 : US$ 10.20 crores) and US$
15.50 crores (2009 : US$ 33.20 crores) of derivative structures in the form
of 'strips'.
The Company has outstanding borrowings of JPY 1,126.44 crores (2009 : JPY
1,126.44 crores and US$ 9.45 crores) as Foreign Currency Borrowings. The
borrowing of JPY 450.24 crores (2009 : JPY 450.24 crores) has been
completely hedged using cross currency swap structure fixing the liability
into a full fledged rupee liability. The borrowing of JPY 676.20 crores
(2009 : JPY 676.20 crores) has been fixed to a US$ liability using a cross
currency swap structure. The borrowing of US$ Nil (2009 : US$ 2.00 crores)
has been hedged using a forward cover The Company had made an issue of US$
20.00 crores in the form of Foreign Currency Convertible Bonds in April,
2006. Out of this issue, Bonds of value US$ 18.95 crores (2009 : US$ 18.95
crores) are outstanding and have not been hedged.
(i) Subsidiaries:
94. Defence Land Systems India Private Limited (formerly known as Mahindra
Defence Land Systems Private Limited)
97. Mahindra Metal One Steel Service Centre Limited (w.e.f. 11th June,
2009)
98. Raigad Industrial & Business Park Limited (w.e.f. 18th June, 2009)
102. Tech Mahindra (Nigeria) Limited (from 18th August, 2009 to 22nd March,
2010)
103. Mahindra Punjab Tractors Private Limited (w.e.f. 9th October, 2009)
104. Tech Mahindra Bahrain Limited S.P.C. (w.e.f. 3rd November, 2009 & upto
22nd March, 2010)
106. Mahindra Conveyor Systems Private Limited (w.e.f. 4th January, 2010)
(b) Other parties with whom transactions have taken place during the year.
(i) Associates:
4. Satyam Computer Services Limited (from 5th May, 2009 to 22nd March,
2010)
Rupees crores
2. Sales
3. Investments
Purchase/Subscribed 4,34.66 - - - -
(10,04.39) (-) (-) (-) (0.01)
Sales/Redemption 39.99 - - - -
(28.75) (-) (-) (-) (-)
4. Deputation of
Personnel:
From Related Parties 0.23 - - - -
(1.59) (-) (-) (-) (-)
8. Managerial- - - 6.56 -
Remuneration (-) (-) (-) (5.15) (-)
10. Finance:
Inter Corporate - - - - -
Deposits taken(5.00) (-) (-) (-) (-)
Inter Corporate - - - - -
Deposits refunded (5.00) (-) (-) (-) (-)
to parties
14. Other
Transactions:
Guarantees & - - - - -
Collaterals given 2,86.91 - - - -
(1,63.67) (-) (-) (-) (-)
Security Deposit5.79 - - - -
Paid (5.03) (-) (-) (-) (-)
Security Deposit1.85 - - - -
Received (2.51) (-) (-) (-) (-)
Rupees crores
AssociateJoint
Nature of Amount Companies Amount Ventures Amount
Transactions
& Subsidiaries
1. Purchase-Goods &
Mahindra Intertrade 1,60.19 Swaraj 2,94.63 Mahindra84.60
Limited (1,24.93) Engines (1,50.60) Sona (66.72)
Limited Limited
2. Purchase-Services
& Mahindra Logistics 5,13.81 Satyam 0.04
Limited (2,37.42) Computer (-)
Services
Limited
Mahindra Engineering -
Services Limited (44.05)
3. Sale-Goods &
Mahindra USA Inc. 1,35.45 Swaraj 1.31
(1,05.37) Engines (1.22)
Limited
Mahindra Navistar 1,48.28
Automotives Limited (92.61)
4. Sale-Services &
Swaraj
Engines-
Limited (1.43)
5. Investments -
Purchase &
Mahindra Navistar 43.69
Automotives Limited (1,12.97)
Mahindra Gears -
International Ltd(1,53.14)
Mahindra Two -
Wheelers Limited (1,17.99)
6. Investments-Sale
& Tech Mahindra 5.71
Limited (-)
7. Investments -
Redemption &
Mahindra & Mahindra 20.00
Financial Services (10.00)
Limited
Mahindra Intertrade-
Ltd (18.75)
8. Advances Given & 5.39
Mahindra Integrated (-)
Township Limited
Mahindra Ugine -
Steel Company Limited (2.13)
Mahindra Automotive-
Australia Pty. Ltd. (3.57)
9. Inter Corporate
Deposits given &
Mahindra Overseas 62.38
Investment Company (-)
(Mauritius) Limited
Mahindra Two -
Wheelers Limited (1,02.00)
Mahindra Engineering -
Services Limited (40.00)
Mahindra Two -
Wheelers Limited (67.00)
Mahindra Renault -
Private Limited (1,19.58)
(ii) Interests in the Assets, Liabilities, Income and Expenses with respect
to Jointly Controlled Entities.
Rupees crores
2010 2009
1. ASSETS
II. LIABILITIES
1. Loan Funds
III. INCOME
IV. EXPENSES
Class of Goods A B C D EF
1. a. On Road
Automobiles
having four or
more wheels
such as light,
medium and heavy
commercial
vehicles, jeep
type vehicles
and passenger
cars covered
under sub heading
(5) of Heading (7)
of First Schedule Nos. 3,60,000 3,04,000 2,33,533 2,937 108.11
2,76,000 2,50,000 1,58,715 5,826 256.52
2. a. Agricultural
Tractors [Note
(iv) below] Nos. 2,29,000 2,33,000 1,71,550 8,671 232.77
2,14,000 2,33,000 1,17,847 9,438 254.16
b. Tractor Skids These are 1,726 23 1.66
manufactured 1,251 168 6.61
again st
spare
capacity
under 2(a)
3. Manufactured
and Purchased
Parts and
Accessories for
sale [Notes
(iii)(a) and
(b) below] Nos. These are 4,91,260 - 91.53
manufactured 4,27,952 - 94.97
against
spare
capacity
under 1
and 2 above
4. Internal
Combustion
Piston Engines Nos. 1,75,000 1,75,000 1,68,683 1,361 10.08
1,75,000 1,50,000 1,18,036 1,162 8.15
8. Harvester
Combines Nos. 300 300 324 1 0.11
300 300 136 2 0.25
9. Others 0.03
0.01
Class of Goods G H IJ
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. 4,365 155.98 2,31,703 10,721.10
2,937 108.11 1,61,189 7,646.72
2. a. Agricultural
Tractors [Note
(iv) below] Nos. 6,963 191.11 1,73,217 6,408.61
8,671 232.77 1,18,565 4,333.56
b. Tractor Skids 98 4.27 1,647 92.06
23 1.66 1,386 65.35
3. Manufactured
and Purchased
Parts and
Accessories for
sale [Notes
(iii)(a) and
(b) below] Nos. - 90.01 - 888.16
- 91.53 - 621.08
4. Internal
Combustion
Piston Engines Nos. 1,225 9.49 11,179 106.66
1,361 10.08 9,034 89.25
8. Harvester
Combines Nos. 23 2.73 302 42.41
1 0.11 137 16.47
Total 19,524.33
14,165.60
*****
A = Unit of Measurement
I = Sales - Quantity
Notes:
(c) Within the overall licensed capacity in itern 1 above, the Company is
permitted to manufacture for outside sale 10,000 petrol/cliesel engines and
4,000 tonnes grey iron castings.
(d) Bullet proof work and fabrication on base vehicles has been carried out
at third party facilities. Nil (2009 : 110) Vehicles were produced and sold
using such third party facilities and are included in itern (A) 1(a).
(e) The installed capacity mentioned against itern no. (A) 1 (a) above
includes 48,000 (2009 : 48,000) for production of vehicles for third
parties.
Unit of
Class of Goods Measurement Quantity Value Quantity Value
Rupees Rupees Rupees Rupees
crores crores crores crores
2. Agricultural
Implements Nos. 10,168 57.35 436 5.98
6,178 41.47 2,230 3.62
4. Bought-out
Spares for
Resale [Note
(iii)(b) to375.64
item 'A'] 263.96
5. Diesel
Genset &
Genset
Engines Nos. 1,523 18.61 68 0.34
277 3.09 - -
Unit of
Class of Goods Measurement Quantity Value Quantity Value
Rupees Rupees Rupees Rupees
crores crores crores crores
2. Agricultural
Implements Nos. 865 9.41 9,739 69.34
436 5.98 7,972 50.32
4. Bought-out
Spares for
Resale [Note
(iii)(b) to - - - -
item 'A'] - - - -
5. Diesel
Genset &
Genset
Engines Nos. 166 1.33 589 17.93
68 0.34 209 3.16
Unit of Value
Description Measurement Quantity Rupees crores
1. Steel Items
(Sheets, Tubes, etc.) Nos. 1,13,459 }
89,522 } 274.13
Metric Tonnes 48,042 } 191.00
32,290 }
2. Aluminium Sections
and Other Aluminium
Items Kgs. 38,801 0.47
10,339 0.14
3. Other Metals
(Steel Shots, Lead,
Tin, etc.) Metric Tonnes 120 0.45
119 0.56
7. Miscellaneous
Foundry Materials Nos. 19,28,687 }
15,45,939 }
Metric Tonnes 14,396 } 16.59
12,585 } 16.32
Litres 4,42,660 }
3,36,844 }
8. Other Materials
(Direct Stores,
Patterns, Oils, etc.) Not practicable to *102.76
give quantitative
details *78.19
Total 11,695.56
8,771.79
Includes items used for other than production, amounts not ascertained.
Notes :
(i) The consumption in value has been ascertained on the basis of opening
stock plus purchases less closing stock and includes the adjustment of
excesses and shortages as ascertained on physical count and write-off of
obsolete and unserviceable raw materials and components.
(D) VALUE OF IMPORTS ON C.I.F BASIS ACCOUNTED FOR DURING THE YEAR
Rupees crores
2010 2009
Notes:
(i) Credits, if any, recoverable in respect of short landings, etc. are not
considered.
(a) Imports on C&F basis as per suppliers' invoices Rs. 12.55 crores (2009
: Rs.4.82 crores)
(b) Imports on 'cost' basis Rs. 203.09 crores (2009 : Rs. 163.52 crores)
Rupees crores
2010 2009
(a) written off during the year Rs. 9.17 crores (2009 : Rs. 8.91 crores);
and
(b) amount remitted during the year Rs. 76.18 crores (2009 : Rs. 59.81
crores) net of tax deducted at source of Rs. 5.92 crores (2009 : Rs. 6.11
crores) are not included in the above figures.
Rupees crores
2010 2009
1. Export of goods
on F.O.B. basis 719.37 632.36
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.
8,649.82 98.61
8,771.79 100.00
Includes items used for other than production, amount not ascertained.
Notes:
(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 11 of
Schedule VI covers only such items as go directly into production.
M.M. Murugappan
N. Vaghul
R.K. Kulkarni
A.S. Ganguly
A.P. Puri
N.B. Godrej
A.K. Dasgupta
Deepak S. Parekh
Directors
Keshub Mahindra
Chairman
Anand G. Mahindra
Vice Chairman & Managing Director
Bharat Doshi
Executive Director
Narayan Shankar
Company Secretary
Place: Mumbai
Date : 29th May, 2010
NOTES ON ACCOUNTS
(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.
(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.
(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.
(D) Investments:
Long term investments are valued at cost. However, provision for diminution
in value is made to recognise a decline other than temporary in the value
of investments. Current investments are valued at the lower of cost and
fair value, determined by category of investment.
(E) Inventories:
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.
(F) Miscellaneous Expenditure (to the extent not written off or adjusted):
The liability is amortised by the year ended March, 2010 from the month in
which the liability is incurred.
The Company uses foreign currency forward contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating to
certain firm commitments and highly probable forecast transactions. The
Company does not hold derivative financial instruments for speculative
purposes. The Company has applied to such contracts the hedge accounting
principles set out in Accounting Standard 30 'Financial Instruments :
Recognition and Measurement' (AS 30) by marking them to market.
Changes in the fair value of the contracts that are designated and
effective as hedges of future cash flows are recognised directly in Hedging
Reserve Account and the ineffective portion is recognised immediately in
the Profit and Loss Account.
Sales of products and services are recognised when the products are shipped
or services rendered including export benefits thereon.
Dividend from investments are recognised in the Profit and Loss Account
when the right to receive payment is established.
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.
All borrowing costs are charged to the Profit and Loss Account except
(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.
(0) Leases:
2. Share Capital:
Rupees crores
2010 2009
(a) Movements during the year
784.79 10.86
6.59 44.20
0.42 0.38
The Share Capital of the Company has also been reduced and the General
Reserve increased by Rs. 2.63 crores (2009 : Rs. 3.10 crores) for the
52,63,296 bonus shares of Rs. 5 each (2009 : 31,02,653 bonus shares of Rs.
10 each) issued by the Company in September, 2005 to the trust but not yet
transferred by the trust to the employees. The above monies which are
treated as advance received from it, is included under current liabilities.
4. Loans:
(a) Debentures are redeemable as follows
(iii) Rs. 0.01 crores of 12.50% Debentures and Zero Interest Bonds on
receipt of balance amount due on allotment.
(b) (i) Debentures of Rs. 600.01 crores are secured by a pari-passu charge
on immovable properties of the Company both present and future, subject to
certain exclusions and are also secured by pari-passu charge on the movable
properties of the Company including movable machinery, machinery spares,
tools and accessories, both present and future.
(ii) Loans and Advances on cash credit accounts from the Company's bankers
are secured by a first charge on a pari-passu basis on the whole of the
current assets of the Company namely inventories, book debts, outstanding
monies, receivables, claims, etc. both present and future.
The Company had issued during the year ended 31st March, 2007, Zero Coupon
Foreign Currency Convertible Bonds (Bonds 2011 aggregating US$ 200 million,
at par The bond holders have an option to convert these bonds into Equity
Shares with full voting rights or Global Depository Receipts (GDRs)
determined at an initial conversion price of Rs. 461.02 per share of Rs. 5
each (2009 : Rs. 922.04 per share of Rs. 10 each) with fixed exchange rate
of conversion of Rs. 44.42 = US$ 1, at any time on or after 7th May, 2006
upto 7th March, 2011.
The Bonds 2011 may be redeemed, in whole but not in part, at the option of
the Company at any time on or after 13th April, 2008 subject to
satisfaction of certain conditions. Unless previously converted, redeemed
or purchased and cancelled, the bonds fall due for redemption on 14th
April, 2011 at 128.03 per cent of their principal amount. Bonds 2011 of the
face value of US$ 10.50 million have been bought back and cancelled in the
previous year. Upto 31st March, 2010, none of the Bonds 2011 have been
converted into equity shares/GDRs.
The net proceeds of Rs. 48.46 crores, unutilised as at 31st March, 2010, is
disclosed under Cash and Bank balances.
5. (a) Buildings include Rs. * crores (2009 : Rs. * crores) being the value
of shares in co-operative housing societies.
(i) Interest capitalised during the year Rs. 26.56 crores (2009 : Rs. 15.63
crores).
(ii) Foreign exchange fluctuation capitalised during the year Rs. 117.79
crores credit (Net) [2009 : Rs. 172.97 crores debit (Net)].
(a) An amount of Rs. 0.41 crores (2009 : Rs. 0.38 crores), representing
depreciation on the increase due to revaluation of Land and Buildings
transferred from the Revaluation Reserve.
(ii) The net credit to the Profit and Loss Account consequent to the above
adjustments to the Revaluation Reserve is Rs. 0.42 crores (2009 : Rs. 0.38
crores).
6. Cash and Bank Balances include balances lying with non-scheduled banks
In Current Account
Rupees crores
Balance as at
31st March, 2010 * 6.39 * 5.14 *
Balance as at
31st March, 2009 * 3.34 0.09 2.13 *
Maximum balance
during the year *11.91 0.59 5.68 *
(b) Amounts paid towards joint development of property Rs. Nil (2009 :
Rs.1.54 crores).
8. Micro, Small and Medium enterprises have been identified by the Company
on the basis of the information available. Total outstanding dues of Micro
and Small enterprises, which are outstanding for more than the stipulated
period are given below:
Rupees crores
2010 2009
9. (a) Provision - Others Rs. 219.66 crores (2009 : Rs. 167.45 crores)
includes provision for contingencies Rs. 3.58 crores (2009 Rs. 8.25
crores), provision for warranty Rs. 179.61 crores (2009 : Rs. 137.45
crores), provision for post retirement medical benefits Rs. 9.65 crores
(2009 : Rs. 4.84 crores), provision for post retirement housing allowance
Rs. 10.99 crores (2009 : Rs. Nil) and provision for diminution in value of
certain assets substantially retired from active use Rs. 15.83 crores (2009
: Rs. 16.89 crores). Provision for contingencies is in respect of labour
demands under negotiations at certain locations of the Company. Provision
for warranties relates to warranty provision made in respect of sale of
certain products, the estimated cost of which is accrued at the time of
sale. The products are generally covered under a free warranty period
ranging from 6 months to 3 years. denotes amounts less than Rs. 50,000.
(b) The movement in provisions for warranty, contingency and retired assets
is as follows:
Rupees crores
Add On Amalgamation
during the year - 0.25 - - - -
Less Utilisation
during the year 63.43 54.27 8.25 5.32 1.06 0.12
Balance as at
31st March 179.61 137.45 3.58 8.25 15.83 16.89
(d) Interest received - others includes tax deducted at source Rs. 12.21
crores (2009 Rs. 15.11 crores).
11. Repairs and Maintenance includes machinery spares consumed Rs. 33.85
crores (2009 Rs. 26.25 crores) but does not include items included under
Consumption of Raw Materials and Bought-out Components and amounts charged
to salaries and wages (amounts not ascertained).
Rupees crores
Statutory Cost
Auditors Auditors
1.08 0.02
(ii) Company Law matters
0.63 -
0.05 -
1.91 0.03
1.76 0.02
(b) An amount of Rs. 1.44 crores (2009 : Rs. 0.96 crores) payable as
commission to non-wholetime Directors - Note 13 and Schedule XV.
13. Managerial remuneration for Directors included in the Profit and Loss
Account is Rs. 8.19 crores (2009 Rs. 6.29 crores) including Directors' fees
of Rs. 0.14 crores (2009 : Rs. 0.09 crores), perquisites Rs. 1.68 crores
(2009 : Rs. 1.27 crores) and commission Rs. 4.53 crores (2009 : Rs. 3.16
crores) (See Schedule XV) and excluding charge for gratuity, provision for
leave encashment and post retirement medical benefit as separate actuarial
valuation figures are not available. The above perquisites include
amortisation of Employees Stock Options amounting to Rs. 0.06 crores (2009
: Rs. 0.09 crores).
Gratuity
Rupees Crores
1. Expense recognised
in the Statement of
Profit and Loss
Account for the year
ended 31st March
1. Current service
cost 19.17 16.59 0.37 0.22 1.50 -
3. Expected return
on plan assets (16.23) (18.16) - - --
4. Actuarial
(Gain)/Loss (7.69) 33.40 4.32 1.81 (1.77)-
6. Total expense
included in
Personnel
(Schedules XI) 31.31 50.13 5.09 2.27 0.57-
7. Actual return
on plan assets 20.75 18.16 - - --
1. Present value
of defined benefit
obligation as at
31st March 334.20 300.61 9.65 4.84 10.99-
2. Fair value of
plan assets as
at 31st March 266.10 206.14 - - --
3. Net Asset/
Wability) as at
31st March (68.10) (94.47) (9.65) (4.84) (10.99)-
1. Present value
of defined benefit
obligation at
the beginning of
the year 300.61 201.76 4.84 2.79 10.42-
2. Addition on
account of
amalgamation - 40.90 - - - -
3. Current
service cost 19.17 16.59 0.37 0.22 1.50 -
5. Actuarial
(Gain)/Loss (3.17) 33.40 4.32 1.81 (1.77) -
6. Past
service cost 12.15 - - - --
8. Present value
of defined benefit
obligation at the
end of the year 334.20 300.61 9.65 4.84 10.99-
1. Fair value of
plan assets at
the beginning
of the year 206.14 163.58 - - --
2. Addition on
account of
amalgamation - 29.16 - - --
3. Expected return
on plan assets 16.23 18.16 - - --
4. Actuarial
Gain/(Loss) 4.52 - - - --
5. Contributions
by employer
(including benefit
payments
recoverable) 57.68 5.58 0.28 0.22 --
7. Fair value of
plan assets at the
end of the year 266.10 206.14 - - --
8. Actual return
on plan assets 20.75 18.16 - - --
V. The major
categories of
plan assets as
a percentage
of total plan
Insurer managed
funds 100% 100% - - - -
VI. Actuarial
assumptions
2. Expected rate
of return on plan
assets 7.50% 7.50% - - --
4. Medical premium
inflation - 5.00% 5.00% - --
Gratuity
4. Experience adjustment on
plan liabilities [(Gain)/Loss] 7.93 5.87 4.55 -
5. Experience adjustment on
plan assets [Gain/(Loss)] 4.44 - - -
2. Plan assets - - - -
4. Experience adjustment on
plan liabilities [(Gain)/Loss] 5.21 1.24 (0.55) 0.07
Post retirement housing
allowance
1. Defined benefit obligation 10.99 - - -
2. Plan assets - - - -
3. Surplus/(Deficit) (10.99) - - -
4. Experience adjustment
on plan liabilities
[(Gain)/Loss] 0.15 - - -
The Payment of Gratuity (Amendment) Bill 2010 amending the maximum gratuity
payable under The Payment of Gratuity Act 1972 from Rs. 3.50 lakhs to
Rs.10.00 lakhs has been passed by both houses of Parliament in May, 2010
and will come into effect from a date to be notified by the Central
Government. Since the said Bill has been substantively enacted, the Company
has given effect to the same in valuing its actuarial liability for
gratuity as at 31st March, 2010. Due to this change in the maximum limit
under the Act, the profit after tax for the current year is lower by Rs.
8.02 crores.
The post retirement housing allowance scheme of the Company for select
cadre of employees has been introduced in the current year and the opening
liability as at 1st April, 2009 of Rs. 10.42 crores has been recognized as
an expense in the current year
The expected rate of return on plan assets is based on the average long
term rate of return expected on investments of the fund during the
estimated term of obligation.
15. The Company has allotted 55,24,219 and 10,00,000 Ordinary (Equity)
Shares of Rs. 10 each in the years ended 31st March, 2002 and 31st March,
2010 respectively to the Mahindra & Mahindra Employees' Stock Option Trust
set up by the Company. The trust holds these shares for the benefit of the
employees and issues them to the eligible employees as per the
recommendation of the Compensation Committee.
The fair value of options granted during the year on 4th November, 2009 is
Rs. 414.84 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:
Had the Company adopted fair value method in respect of options granted on
or after 1st April, 2005, the employee compensation cost would have been
higher by Rs. 26.44 crores, Profit after tax lower by Rs. 26.44 crores and
the basic and diluted earning per share would have been lower by Rs. 0.48 &
Rs. 0.44 respectively.
17. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) by its
order dated 7th December, 2009 has rejected the Company's appeal against
the order dated 3 oth March, 2005 passed by the Commissioner of Central
Excise (Adjudication), Navi Mumbai confirming the demand made on the
Company for payment of differential excise duty (including penalty) of Rs.
304.11 crores in connection with the classification of Company's Commander
range of vehicles, during the years 1991-1996. Whilst the Company had
classified the Commander range of vehicles as 10-seater attracting a lower
rate of excise duty, the Commissioner of Central Excise (Adjudication),
Navi Mumbai, has held that these vehicles could not be classified as 10-
seater as they did not fulfil the requirement of 10-seater vehicles, as
provided under the Motor Vehicles Act, 1988 (MVA) and Maharashtra Motor
Vehicles Rules, 1989 (MMVR) and as such attracted a higher rate of excise
duty.
The Company has filed an appeal against the aforesaid order dated 7th
December, 2009 inter alia, on the grounds that the MVA and MMVR cannot be
referred to for the purpose of determining the excise classification, as
has been repeatedly held by various judicial fora, including the Supreme
Court and particularly by CESTAT vide its order dated 19th July, 2005 in
the Company's own case referred to above.
Without prejudice to the grounds raised in the appeal, the Company has paid
an amount of Rs. 40.00 crores in January, 2010. Pending admission of the
Company's appeal, the Supreme Court has passed an interim order staying the
recovery of the balance amount till further orders.
The Company strongly believes, based on legal advise it has received, that
the CESTAT order dated 7th December, 2009 which is under appeal in the
Supreme Court is not sustainable in law and hence the Company has a very
good chance of succeeding in the matter As such, the Company does not
expect any liability on this account. However, in view of the CESTAT order,
the Company has reflected the above amount aggregating Rs. 328.86 crores
and the interest of Rs. 168.05 crores accrued on the same upto 31st March,
2010, as a Contingent Liability in the Accounts and the same is included in
the amounts disclosed under Note 18 (b)(i).
Rupees crores
(b) Claims against the Company not acknowledged as debts comprise of:
(i) Excise Duty, Sales Tax and Service Tax claims disputed by the Company
relating to issues of applicability and classification aggregating
Rs.968.22 crores (Net of Tax : Rs. 698.04 crores) [2009 : Rs. 386.32 crores
(Net of Tax : Rs. 274.20 crores)].
(iii) Claims on capital account : Rs. 1.18 crores (2009 : Rs. 1.18 crores).
(c) Uncalled liability on equity shares partly paid Rs. 10.50 crores (2009
: Rs. 10.50 crores).
(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:
(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:
(e) Bills discounted not matured Rs. Nil (2009 : Rs. 59.55 crores).
(i) debited to the Profit and Loss Account, including certain expenditure
based on allocations made by the Company, aggregate Rs.248.25 crores (2009
: Rs. 220.09 crores) [excluding depreciation and amortisation of Rs. 81.03
crores (2009 : Rs. 56.19 crores)].
(ii) Development Expenditure incurred during the year Rs. 131.28 crores
(2009 : Rs. 128.94 crores).
(iii) Capitalisation of assets Rs. 41.64 crores (2009 : Rs. 15.64 crores).
(i) debited to the Profit and Loss Account, including certain expenditure
based on allocations made by the Company, aggregate Rs.25.89 crores (2009 :
Rs. 18.69 crores) [excluding depreciation and amortisation of Rs. 2.25
crores (2009 : Rs. 1.50 crores)].
(ii) Development Expenditure incurred during the year Rs. 38.59 crores
(2009 : Rs. 7.50 crores).
(iii) Capitalisation of assets Rs. 4.34 crores (2009 : Rs. 3.56 crores).
20. The net difference in foreign exchange loss debited to the Profit and
Loss Account is Rs. 113.48 crores (2009 Rs. 237.20 crores).
21. Exceptional items of Rs. 90.75 crores (2009 : Rs. 10.27 crores)
comprise of:
(a) Profit on sale of certain long term investments Rs. 90.75 crores (2009:
Rs. Nil).
(b) Surplus on transfer of Logistics business Rs. Nil (2009 : Rs. 10.27
crores).
22. The components of Deferred Tax Liability and Assets as at 31st March,
2010 are as under:
Rupees crores
2010 2009
422.50 393.38
182.17 411.65
2010 2009
In the computation of earnings per share for the periods above, the Company
has given effect to the sub-division in March, 2010 of the Company's
Ordinary (Equity) Share of Rs. 10 each into 2 Ordinary (Equity) Shares of
Rs. 5 each.
25. Provision for doubtful debts and advances for the year comprises
Rupees crores
2010 2009
26. Provision for diminution in the value of long term investments for the
year comprises
Rupees crores
2010 2009
Total - -
(a) Indian National Congress : Rs. 1.00 crore (2009 Rs. Nil)
(b) Bhartiya Janata Party : Rs. 1.00 crore (2009 Rs. Nil)
(c) Shiv Sena : Rs. 0.50 crores (2009 Rs. Nil)
(d) Nationalist Congress Party : Rs. 0.50 crores (2009 Rs. Nil)
(e) Bihar Pradesh Janata Dal (United) : Rs. 0.25 crores (2009 Rs. Nil)
The Company has taken foreign exchange contracts amounting to US$ 54.80
crores comprising Forward Contracts US$ 32.10 crores (2009 US$ 60.30
crores), Range Forwards US$ 7.20 crores (2009 : US$ 10.20 crores) and US$
15.50 crores (2009 : US$ 33.20 crores) of derivative structures in the form
of 'strips'.
The Company has outstanding borrowings of JPY 1,126.44 crores (2009 : JPY
1,126.44 crores and US$ 9.45 crores) as Foreign Currency Borrowings. The
borrowing of JPY 450.24 crores (2009 : JPY 450.24 crores) has been
completely hedged using cross currency swap structure fixing the liability
into a full fledged rupee liability. The borrowing of JPY 676.20 crores
(2009 : JPY 676.20 crores) has been fixed to a US$ liability using a cross
currency swap structure. The borrowing of US$ Nil (2009 : US$ 2.00 crores)
has been hedged using a forward cover The Company had made an issue of US$
20.00 crores in the form of Foreign Currency Convertible Bonds in April,
2006. Out of this issue, Bonds of value US$ 18.95 crores (2009 : US$ 18.95
crores) are outstanding and have not been hedged.
(i) Subsidiaries:
94. Defence Land Systems India Private Limited (formerly known as Mahindra
Defence Land Systems Private Limited)
97. Mahindra Metal One Steel Service Centre Limited (w.e.f. 11th June,
2009)
98. Raigad Industrial & Business Park Limited (w.e.f. 18th June, 2009)
102. Tech Mahindra (Nigeria) Limited (from 18th August, 2009 to 22nd March,
2010)
103. Mahindra Punjab Tractors Private Limited (w.e.f. 9th October, 2009)
104. Tech Mahindra Bahrain Limited S.P.C. (w.e.f. 3rd November, 2009 & upto
22nd March, 2010)
106. Mahindra Conveyor Systems Private Limited (w.e.f. 4th January, 2010)
(b) Other parties with whom transactions have taken place during the year.
(i) Associates:
4. Satyam Computer Services Limited (from 5th May, 2009 to 22nd March,
2010)
Rupees crores
2. Sales
3. Investments
Purchase/Subscribed 4,34.66 - - - -
(10,04.39) (-) (-) (-) (0.01)
Sales/Redemption 39.99 - - - -
(28.75) (-) (-) (-) (-)
4. Deputation of
Personnel:
8. Managerial- - - 6.56 -
Remuneration (-) (-) (-) (5.15) (-)
10. Finance:
Inter Corporate - - - - -
Deposits taken(5.00) (-) (-) (-) (-)
Inter Corporate - - - - -
Deposits refunded (5.00) (-) (-) (-) (-)
to parties
14. Other
Transactions:
Guarantees & - - - - -
Collaterals given 2,86.91 - - - -
(1,63.67) (-) (-) (-) (-)
Security Deposit5.79 - - - -
Paid (5.03) (-) (-) (-) (-)
Security Deposit1.85 - - - -
Received (2.51) (-) (-) (-) (-)
Rupees crores
AssociateJoint
Nature of Amount Companies Amount Ventures Amount
Transactions
& Subsidiaries
1. Purchase-Goods &
Mahindra Intertrade 1,60.19 Swaraj 2,94.63 Mahindra84.60
Limited (1,24.93) Engines (1,50.60) Sona (66.72)
Limited Limited
Mahindra Engineering -
Services Limited (44.05)
3. Sale-Goods &
Mahindra USA Inc. 1,35.45 Swaraj 1.31
(1,05.37) Engines (1.22)
Limited
Mahindra Navistar 1,48.28
Automotives Limited (92.61)
4. Sale-Services &
Swaraj
Engines-
Limited (1.43)
5. Investments -
Purchase &
Mahindra Navistar 43.69
Automotives Limited (1,12.97)
Mahindra Gears -
International Ltd(1,53.14)
Mahindra Two -
Wheelers Limited (1,17.99)
6. Investments-Sale
& Tech Mahindra 5.71
Limited (-)
7. Investments -
Redemption &
Mahindra & Mahindra 20.00
Financial Services (10.00)
Limited
Mahindra Intertrade-
Ltd (18.75)
Mahindra Ugine -
Steel Company Limited (2.13)
Mahindra Automotive-
Australia Pty. Ltd. (3.57)
9. Inter Corporate
Deposits given &
Mahindra Overseas 62.38
Investment Company (-)
(Mauritius) Limited
Mahindra Two -
Wheelers Limited (1,02.00)
Mahindra Engineering -
Services Limited (40.00)
Mahindra Two -
Wheelers Limited (67.00)
Mahindra Renault -
Private Limited (1,19.58)
(ii) Interests in the Assets, Liabilities, Income and Expenses with respect
to Jointly Controlled Entities.
Rupees crores
2010 2009
1. ASSETS
II. LIABILITIES
1. Loan Funds
III. INCOME
IV. EXPENSES
V. OTHER MATTERS
Class of Goods A B C D EF
1. a. On Road
Automobiles
having four or
more wheels
such as light,
medium and heavy
commercial
vehicles, jeep
type vehicles
and passenger
cars covered
under sub heading
(5) of Heading (7)
of First Schedule Nos. 3,60,000 3,04,000 2,33,533 2,937 108.11
2,76,000 2,50,000 1,58,715 5,826 256.52
2. a. Agricultural
Tractors [Note
(iv) below] Nos. 2,29,000 2,33,000 1,71,550 8,671 232.77
2,14,000 2,33,000 1,17,847 9,438 254.16
b. Tractor Skids These are 1,726 23 1.66
manufactured 1,251 168 6.61
again st
spare
capacity
under 2(a)
3. Manufactured
and Purchased
Parts and
Accessories for
sale [Notes
(iii)(a) and
(b) below] Nos. These are 4,91,260 - 91.53
manufactured 4,27,952 - 94.97
against
spare
capacity
under 1
and 2 above
4. Internal
Combustion
Piston Engines Nos. 1,75,000 1,75,000 1,68,683 1,361 10.08
1,75,000 1,50,000 1,18,036 1,162 8.15
8. Harvester
Combines Nos. 300 300 324 1 0.11
300 300 136 2 0.25
9. Others 0.03
0.01
Class of Goods G H IJ
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. 4,365 155.98 2,31,703 10,721.10
2,937 108.11 1,61,189 7,646.72
2. a. Agricultural
Tractors [Note
(iv) below] Nos. 6,963 191.11 1,73,217 6,408.61
8,671 232.77 1,18,565 4,333.56
b. Tractor Skids 98 4.27 1,647 92.06
23 1.66 1,386 65.35
3. Manufactured
and Purchased
Parts and
Accessories for
sale [Notes
(iii)(a) and
(b) below] Nos. - 90.01 - 888.16
- 91.53 - 621.08
4. Internal
Combustion
Piston Engines Nos. 1,225 9.49 11,179 106.66
1,361 10.08 9,034 89.25
8. Harvester
Combines Nos. 23 2.73 302 42.41
1 0.11 137 16.47
Total 19,524.33
14,165.60
*****
A = Unit of Measurement
I = Sales - Quantity
Notes:
(c) Within the overall licensed capacity in itern 1 above, the Company is
permitted to manufacture for outside sale 10,000 petrol/cliesel engines and
4,000 tonnes grey iron castings.
(d) Bullet proof work and fabrication on base vehicles has been carried out
at third party facilities. Nil (2009 : 110) Vehicles were produced and sold
using such third party facilities and are included in itern (A) 1(a).
(e) The installed capacity mentioned against itern no. (A) 1 (a) above
includes 48,000 (2009 : 48,000) for production of vehicles for third
parties.
(ii) Actual Production includes production for captive consumption.
(b) The Opening and Closing Stocks and Sales of goods shown under itern 3
above consist of manufactured and purchased parts. The bifurcation of
stocks/sales into manufactured and bought-out parts is not practicable.
Unit of
Class of Goods Measurement Quantity Value Quantity Value
Rupees Rupees Rupees Rupees
crores crores crores crores
2. Agricultural
Implements Nos. 10,168 57.35 436 5.98
6,178 41.47 2,230 3.62
4. Bought-out
Spares for
Resale [Note
(iii)(b) to375.64
item 'A'] 263.96
5. Diesel
Genset &
Genset
Engines Nos. 1,523 18.61 68 0.34
277 3.09 - -
Unit of
Class of Goods Measurement Quantity Value Quantity Value
Rupees Rupees Rupees Rupees
crores crores crores crores
2. Agricultural
Implements Nos. 865 9.41 9,739 69.34
436 5.98 7,972 50.32
4. Bought-out
Spares for
Resale [Note
(iii)(b) to - - - -
item 'A'] - - - -
5. Diesel
Genset &
Genset
Engines Nos. 166 1.33 589 17.93
68 0.34 209 3.16
Unit of Value
Description Measurement Quantity Rupees crores
1. Steel Items
(Sheets, Tubes, etc.) Nos. 1,13,459 }
89,522 } 274.13
Metric Tonnes 48,042 } 191.00
32,290 }
2. Aluminium Sections
and Other Aluminium
Items Kgs. 38,801 0.47
10,339 0.14
3. Other Metals
(Steel Shots, Lead,
Tin, etc.) Metric Tonnes 120 0.45
119 0.56
7. Miscellaneous
Foundry Materials Nos. 19,28,687 }
15,45,939 }
Metric Tonnes 14,396 } 16.59
12,585 } 16.32
Litres 4,42,660 }
3,36,844 }
8. Other Materials
(Direct Stores,
Patterns, Oils, etc.) Not practicable to *102.76
give quantitative
details *78.19
9. Tyres and Tubes Nos. *35,45,832 *664.70
*27,31,682 *473.90
Total 11,695.56
8,771.79
Includes items used for other than production, amounts not ascertained.
Notes :
(i) The consumption in value has been ascertained on the basis of opening
stock plus purchases less closing stock and includes the adjustment of
excesses and shortages as ascertained on physical count and write-off of
obsolete and unserviceable raw materials and components.
(D) VALUE OF IMPORTS ON C.I.F BASIS ACCOUNTED FOR DURING THE YEAR
Rupees crores
2010 2009
Notes:
(i) Credits, if any, recoverable in respect of short landings, etc. are not
considered.
(a) Imports on C&F basis as per suppliers' invoices Rs. 12.55 crores (2009
: Rs.4.82 crores)
(b) Imports on 'cost' basis Rs. 203.09 crores (2009 : Rs. 163.52 crores)
Rupees crores
2010 2009
Notes:
(a) written off during the year Rs. 9.17 crores (2009 : Rs. 8.91 crores);
and
(b) amount remitted during the year Rs. 76.18 crores (2009 : Rs. 59.81
crores) net of tax deducted at source of Rs. 5.92 crores (2009 : Rs. 6.11
crores) are not included in the above figures.
Rupees crores
2010 2009
1. Export of goods
on F.O.B. basis 719.37 632.36
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.
8,649.82 98.61
8,771.79 100.00
Includes items used for other than production, amount not ascertained.
Notes:
(1) Items purchased through canalising agencies have been considered as
imported.
(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 11 of
Schedule VI covers only such items as go directly into production.
M.M. Murugappan
N. Vaghul
R.K. Kulkarni
A.S. Ganguly
A.P. Puri
N.B. Godrej
A.K. Dasgupta
Deepak S. Parekh
Directors
Keshub Mahindra
Chairman
Anand G. Mahindra
Vice Chairman & Managing Director
Bharat Doshi
Executive Director
Narayan Shankar
Company Secretary
Place: Mumbai
Date : 29th May, 2010