Mahindra and Mahindra

The Directors present their Report together with the audited accounts
 of your Company for the year ended 31st March, 2008.
 
 Financial Highlights
 
                                                     (Rs. in crores)
 
                                                  2008       2007
 
 Gross Income                                    13238      11558
 
 Less: Excise DutyjDn Sales                       1566       1337
 
 Net Income                                      11672      10221
 
 Profit before Depreciation, Interest,
 
 Exceptional items and Taxation                   1505       1458
 
 Less: Depreciation / Amortisation                 239        209
 Profit before Interest, Exceptional
 
 items and Taxation                               1266       1249
 
 Less: Interest (Net)                               24        (67)
 
 Profit before Exceptional items and Taxation     1242       1316
 
 Addj_Exceptional items                            165        122
 
 Profit before Taxation                           1407       1438
 Less: Provision for tax - Current tax
 
 (including Fringe Benefit Tax)                    279        366
 
 Less: Provision for tax - Deferred tax (Net)       25        (15)
 Profit for the year before prior period
 adjustments                                      1103       1087
 
 Prior Period Adjustment (Net of Tax)               -          19
 
 Profit for the year                              1103       1068
 
 Balance of profit for earlier years              2125       1476
 
 Add: Transfer (to)/from Debenture
 
 Redemption Reserve                                (17)        16
 
 Profit available for appropriation               3211       2560
 
 Less General Reserve                             1151        110
 
 Interim Dividend paid                             -          184
 
 Income-tax on Interim Dividend paid               -           26
 
 Proposed Dividend                                 283         98
 Income-tax on Proposed Dividend                    38         17
 
 Balance carried forward                          2775       2125
 
 Performance Review
 
 Automotive Sector:
 
 For the sixth consecutive year the Companys vehicle production and
 sales recorded outstanding performance levels despite the industry
 slowdown during the year. A total of 2,00,132 vehicles and 34,556
 three-wheelers were produced as against 1,44,090 vehicles and 34,892
 three- wheelers in the last year. These include 11,079 light commercial
 vehicles (LCVs) and 26,653 cars (previous year 8,811 LCVs and 614 cars)
 manufactured and supplied to two of your subsidiaries, Mahindra
 International Limited (MIL) and Mahindra Renault Private Limited
 (MRPL).
 
 Your Company recorded sales of 1,61,001 vehicles and 34,076
 three-wheelers as compared to 1,35,961 vehicles and 33,718
 three-wheelers in the previous year registering a growth of 18.4% and
 1.1% in vehicles sales and three- wheeler sales respectively.
 
 The total domestic sales volume of 1,48,791 vehicles was higher by
 16.3% than the previous years volume of 1,27,958 vehicles.
 
 Your Company reported a record sale of 1,48,761 multi utility vehicles
 (MUV or MUVs) in the domestic market in the year under review as
 against sale of 1,27,856 MUVs in the previous year. The Companys
 domestic MUV sales volume grew a very healthy 16.4%, against the
 industry MUV sales growth of 5.1%.
 
 Your Company strengthened its dominant position in the domestic MUV
 sub-segment by increasing its market share to 51.5% over the previous
 years market share of 46.6%.
 
 The small pick up model, Maxi Truck, was responsible for the Company
 pick up volumes registering a growth of 17% while the pick up
 sub-segment industry de-grew by 4%. As a result, your Companys market
 share jumped to 76.9% from the previous years market share of 63.2%.
 
 In the Overseas Markets, your Companys initiatives resulted in a
 strong growth of 54% in export volumes - from 8,021 vehicles [including
 254 vehicles sourced from MIL] in the previous year to 12,359 vehicles
 [including 363 vehicles sourced from MIL] in the year under review.
 
 Spare parts sales for the year stood at Rs.388.30 crores (Exports
 Rs.39.89 crores) as compared to Rs.307.33 crores (Exports Rs.23.54
 crores) in the previous year.
 
 Farm Equipment Sector:
 
 Your Company registered a production of 98,917 Tractors for the year
 under review as compared to 1,03,847 Tractors in the previous year.
 This was despite the material supply constraints faced by domestic
 tractor industry in the Financial Year 2008. In addition, 31,922
 Engines were produced for the Mahindra Powerol brand. The strategy of
 increasing production at the Companys Rudrapur Plant, compared to
 earlier dependence on the Kandivali Plant, has significantly
 contributed to lowering the manufacturing cost.
 
 Your Company recorded sales of 99,042 Tractors, as compared to 1,02,531
 Tractors sold in the previous year.  Sale of domestic Tractors was
 90,509 Tractors compared to 95,006 Tractors sold in the previous year
 (a de-growth of 4.7%). This was in a year that witnessed industry de-
 growth of 5.1%, following four consecutive years of Industry growth.
 The de-growth was mainly due to slow down in bank financing on account
 of higher NPAs, and tightening of lending norms. The situation was
 further aggravated by increased interest rates.
 
 In this challenging scenario, your Company has maintained its market
 leadership in the domestic market for the 25th consecutive year.
 
 Against the backdrop of strengthening of the Rupee against the US
 dollar, exports of the Companys Tractors have actually increased to
 8,533 Tractors, a growth of 13.4%, compared to 7,525 Tractors exported
 last year. Your Companys Tractors are now being sold in 6 continents
 of the world. Apart from the US market and the African Countries, the
 neighbouring countries of Sri Lanka, Bangladesh and Nepal are the other
 large overseas markets. Forays have also been made into new markets,
 namely New Zealand and the Latin American Countries of Brazil and
 Chile.
 
 A number of new products were introduced, in both the domestic and
 international space, with many more in the pipeline.
 
 In the domestic market, the 30-40 HP Segment is the largest, comprising
 nearly 55% of the market. Your Company introduced the 295 Dl Super
 Turbo, which was the first turbo charged Tractor in this Segment. Also,
 the 595 Dl Super Turbo (greater than 40 HP Segment) was upgraded. The
 Arjun Ultra-1 has now been transformed into a versatile product which
 has demonstrated superlative performance both on and off the field.
 Mahindra Shaan - a 25 HP multi-utility Tractor, which was launched by
 your Company in 2007, won the Outstanding Innovation Award from ASABE
 (American Society for Agricultural and Biological Engineers), USA. This
 Award has acknowledged the Companys ability to conceive and deliver
 innovative products.
 
 On the International front, Tier III and Tier IV compliant Tractors
 were introduced in the US market and to meet the demand of the higher
 HP Segment in Africa, the 8000 Tractor series was launched there.
 
 To leverage domain expertise in logistics and to enhance effectiveness
 of the supply chain in operation, the Company outsourced a significant
 part of its Logistics operations to Mahindra Logistics, a Division of
 the Company. Additional savings have been accrued as a result of this
 move.
 
 Under the Mahindra Powerol Brand, your Company sold 31,922 engines
 during the year, as against 24,141 engines last year, a growth of 32%.
 From having a single institutional customer in the Financial Year 2002,
 today the engine business has 22 corporate clients. Mahindra Powerol
 has retained its market leadership in gensets market, catering
 primarily to the telecom segment. Your Company expanded the Mahindra
 Powerol genset product range up to 62.5 KVA with the introduction of
 40, 50 and 62.5 KVA engines.  Mahindra Powerol was recognised with the
 Frost and Sullivan Voice of the Customer Award for being the Most
 Preferred Genset Brand in the Telecom Segment.
 
 Your Company has been awarded the Japan Quality Medal (JQM) in 2007, by
 the Union of Japanese Scientists and Engineers (JUSE), Tokyo, Japan.
 JQM is a rare honour given to a Company for excellence in Total Quality
 Management (TQM). The Company is the only Tractor Company in the world
 to win this Award. The Company had also won the Deming Application
 Prize in 2003. Both of these prizes are recognition of the Companys
 customer focus, commitment to TQM practices and demonstration of
 results by significantly improving product and process quality.
 
 Mahindra Defence Systems Division:
 
 Your Company provides world class armouring solutions for light combat
 vehicles and SUVs as well as high mobility vehicles for defence use.
 Your Company developed the AXE, a high mobility fast attack vehicle.
 This Vehicle was awarded the Indigenous Design of the Year by
 Overdrive.  The Marksman is another modern light armoured vehicle
 developed during the year.
 
 Your Company continues to develop competencies in special vehicles and
 is in the advanced stages of construction of the Mahindra Special
 Military Vehicles facility at Faridabad.  This is the first such
 dedicated defence vehicle facility in the private sector.
 
 Your Company has established a manufacturing facility for underwater
 systems at Pune and is now well placed to deliver Sea Mines and Decoy
 Launchers to the Indian Navy.
 
 Your Company has obtained an export order from Ghana for up-armoured
 Scorpios during the year under review.
 
 Mahindra Logistics Division:
 
 The Logistics arm of your Company continues its impressive growth by
 recording revenues of Rs.607 crores as compared to Rs.383 crores in the
 previous year, registering a sustained increase of over 50% on a year
 on year basis for the past few years. The business has acquired its
 leadership position in the Automotive / BPO and ITES Industry Segments
 and is now building its presence in Retail and other Industry Segments.
 
 Profits:
 
 The Profit for the year before Depreciation, Interest, Exceptional
 items and Taxation was Rs. 1,504.47 crores as against Rs.1,457.83
 crores in the previous year registering an increase of 3.20%. Profit
 after tax was Rs.1,103.37 crores as against Rs. 1,068.39 crores in the
 previous year recording an increase of 3.27%. Your Company continues
 with its rigorous cost restructuring exercises by efficiency
 improvements which have resulted in significant savings through value
 engineering, cost re-engineering and economising, optimum utilisation
 of available manufacturing locations, outsourcing of service
 activities, optimisation of plant capacity utilisation, cost
 competitiveness and right sizing in almost all areas.
 
 Management Discussion and Analysis Report
 
 A detailed analysis of the Companys performance is discussed in the
 Management Discussion and Analysis Report, which forms part of this
 Annual Report.
 
 Corporate Governance
 
 Your Company is committed to transparency in all its dealings and
 places high emphasis on business ethics. For several years your Company
 has been following good Corporate Governance procedures long before
 they were mandated. A Report on Corporate Governance along with a
 Certificate from the 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.
 
 Dividend
 
 Keeping in mind the overall performance during the year, your Directors
 are pleased to recommend a dividend of 115% (Rs. 11.50 per Equity
 Share), payable to those Shareholders whose names appear in the
 Register of Members as on the Book Closure Date. The equity dividend
 outgo for the financial year 2007-08, inclusive of tax on distributed
 profits (after reducing the tax on distributed profits of Rs.9.55
 crores payable by the subsidiaries on the dividends receivable from
 them during the current financial year) would .absorb a sum of
 Rs.321.09 crores (as against Rs.324.73 crores comprising an interim
 dividend of 75% and the final dividend of 40% [comprising the final
 dividend of 25% and a special dividend of 15%] paid for the previous
 year).
 
 Finance
 
 During the year, your Company raised resources from the capital markets
 to part finance its various ongoing modernisation and expansion
 programmes. Your Company successfully accessed both overseas and
 domestic markets with diverse instruments, maturities and interest rate
 fixings.  The Company raised Unsecured External Commercial Borrowing
 (ECB) of US$ 50 million. The ECB was raised at an average maturity of
 six years at highly competitive rates.  In the domestic market, your
 Company raised Rs.200 crores by way of Private Placement of Secured,
 Non-Convertible Redeemable Debentures with a bullet maturity of 3
 years.  ICRA has assigned a LAA+ rating to these Debentures
 indicating high credit quality. Your Company also raised Rs.100 crores
 through FCNR (B) Loan from a Consortium Bank at a highly competitive
 rate.
 
 In order to meet short-term mismatches, your Company utilised its fund
 based working capital limits from time to time, apart from making
 regular use of non-fund based limits. Your Company inter alia raised
 Rs.100 crores through issue of Commercial Paper at very competitive
 rates. The Paper was rated P1 + by CRISIL, the highest rating for a
 short term paper. The Consortium of Bankers continue to rate the
 Company as a prime customer and extend facilities/ services at prime
 rates.
 
 Your Company follows a prudent financial policy and aims to maintain
 optimum financial gearing at all times. The Companys total Debt to
 Equity Ratio was 0.60 as at 31st March, 2008.
 
 During the year, CRISIL has reaffirmed the AA+ with a Negative
 outlook rating assigned by it to the Companys outstanding Debentures
 in the previous financial year.  CRISILs rating indicates high safety
 on timely payment of interest and principal.
 
 Subsequent to 31st March, 2008, the Board of Directors of your Company
 have considered and approved, subject to receipt of requisite approvals
 and consent of the Shareholders by means of a Postal Ballot, issuance
 of 93,95,974, 9.25% p.a. Unsecured Fully and Compulsorily Convertible
 Debentures (FCD or FCDs) of the Face Value of Rs.745 each
 aggregating Rs.700,00,00,630 to Golboot Holdings Limited, an entity
 controlled by Goldman Sachs, each FCD being convertible into one Equity
 Share of Rs.10 each in the Company at a price of Rs.745 per Share
 (including premium of Rs.735 per Share) in accordance with Chapter XIII
 of the Securities and Exchange Board of India (Disclosure & Investor
 Protection) Guidelines, 2000.
 
 The FCDs shall be convertible into Equity Shares at anytime within 18
 months from the date of allotment of FCDs at the option of the
 Investor, and mandatorily convertible into Equity Shares on the date
 falling 18 months from the date of allotment. Your Company will utilise
 the amount raised through this preferential offer towards its
 Automobile and Farm Equipment businesses.
 
 Stock Options
 
 On the recommendation of the Remuneration/ Compensation Committee of
 your Company, the Trustees of the Mahindra & Mahindra Employees Stock
 Option Trust have granted 16,48,081 Stock Options to Eligible Employees
 during the year under review.
 
 Details required to be provided under the Securities and Exchange Board
 of India (Employee Stock Option Scheme and Employee Stock Purchase
 Scheme) Guidelines, 1999 are set out in Annexure I to this Report.
 
 Industrial Relations
 
 Industrial Relations generally remained cordial and harmonious
 throughout the year. The Management Discussion and Analysis Report
 gives an overview of the developments in Human Resources/Industrial
 Relations during the year. In a restructuring exercise to rightsize the
 work force, the Company has, during the year under review accepted
 Voluntary Retirement from 28 employees of the Automotive Sector under
 the Scheme in existence since 1995 which has since been discontinued.
 These measures will enable the Company to obtain optimum utilisation of
 the existing work force and increase the level of productivity.
 
 Safety, Health and Environmental Performance
 
 Your Company has always demonstrated its strong commitment and
 responsibility towards Safety, Occupational Health and Environment
 which stems from its Vision and enjoins upon the Company to sustain
 business growth with deep commitment towards Safety, Occupational
 Health and Environment.
 
 Your Company has a well-established Safety, Occupational Health and
 Environmental (SH&E) Policy drilled down from the Corporate Policy
 revised and released during the year.  The Safety, Occupational Health
 and Environment of its employees are embedded in the core
 organisational values of the Company. The SH&E Policy inter alia
 ensures safety of public, employees, plant, equipment and business
 associates, ensuring compliance with all statutory rules and
 regulations on monthly basis, imparting training to its employees and
 business associates as per Training Calendar, carrying out Statutory
 safety audits of its facilities as per legal requirement, conducting
 regular medical check up of its employees and promoting eco-friendly
 activities. Various initiatives on Safety including Safety Promotions,
 Safety Patrol Rounds, Safety and Surveillance Audits, Safety Training,
 Safety Kaizens, reporting of near-miss incidents are encouraged to
 resolve the safety issues and various special initiatives such as
 emergency mock drills and upgradation of Fire Protection Systems were
 carried out thereby resulting in improved Safety Performance. Your
 Companys Plants continue to strive to achieve Accident Reduction in
 all its units ensuring a safety culture throughout all levels of the
 organisation.
 
 The Occupational Health and Safety (OHSAS) system aims to eliminate or
 minimise risk to employees and other interested parties who may be
 exposed to Occupational Health and Safety risks associated with its
 activities. During the year 2007- 08, various product units of Haridwar
 and Nashik Plants have also been certified for OHSAS Management System
 (OHSAS 18001:2007) amended standard.
 
 All Plants of the Automotive Sector have been certified with the
 amended standard for Environmental Management System ISO 14001: 2004.
 
 Your Company has given the utmost importance for Environment Monitoring
 at all its Plants by implementing various environmental initiatives
 such as effluent treatment, increased green zones, water and waste
 water management, solid waste management, air pollution management
 thereby complying with all relevant Environment Legislations. The
 Environmental performance is well within the limits stipulated in
 statutory guidelines for all operations and fulfills the required
 statutory requirements of respective State Pollution Control Boards.
 Major environmental parameters required are being regularly monitored
 and reported to the concerned regulatory bodies.
 
 Your Companys Plants continued its commitment to improve the well
 being of the employees. Medical Check- ups, both curative and
 preventive Check-ups have been organised at all its Plants including
 educating the employees on Industrial Hygiene at the work place.
 
 Corporate Social Responsibility
 
 Corporate Social Responsibility (CSR) has always been an integral part
 of the vision of the Mahindra Group and has been the cornerstone of its
 core value of Good Corporate Citizenship. CSR for the Company is all
 encompassing, including making socially responsible products, engaging
 in responsible employee relations, and not only making a responsible
 commitment to the community but also encouraging employee engagement in
 community initiatives.
 
 The Mahindra Group has pledged amounts not exceeding 1% of its profit
 after tax (PAT) on a yearly basis for the Companys CSR initiatives,
 largely to benefit the socially and economically disadvantaged sections
 of society.
 
 While the Companys focus area for CSR has been in the field of
 education, as responsible citizens, the Company has also been actively
 supporting issues such as health and environment.
 
 Some of the major initiatives your Company has invested in are
 described below:
 
 Mahindra Pride School:
 
 As part of the 60th year celebrations, through the K. C.  Mahindra
 Education Trust, the Company has committed to setting up two Mahindra
 Pride Schools. The Schools aim to empower the youth from socially
 disadvantaged sections of society by extending livelihood training
 which will enable them to gain employment based on the skills learned
 at these Schools.  Mid Day Meal Kitchen:
 
 The Company had entered into a tripartite public private partnership
 with the Government of Rajasthan and Naandi Foundation for setting up
 of a centralised Mid Day Meal Kitchen at Govindgarh Taluka, Jaipur
 District, in the state of Rajasthan. This kitchen will provide
 hygienic, nutritious and wholesome mid day meals to approximately
 25,000 - 35,000 primary school children studying in 314 Government
 Schools in Govindgarh Taluka, Jaipur District.  Supporting 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. The Mahindra Group has committed to independently support 6,000
 girls in urban, rural and tribal parts of India by providing academic
 support as well as material support in the form of uniforms, clothes,
 school bags, shoes, etc. In addition, the Company has entered into a
 partnership with the Government of Rajasthan to jointly support the
 education of 10,000 disadvantaged girl children in the tribal area of
 Udaipur District.  Gifting Cochlear Implants:
 
 By gifting the power of sound through the donation of cochlear
 implants, the Mahindra Group has changed the life and future of 41
 profoundly hearing-impaired, underprivileged children till date.
 Operations are performed by Dr. Milind Kirtane, Indias leading ENT
 surgeon. All recipients are selected in consultation with Dr. Kirtane
 and his team of doctors, audiologists, teachers of the hearing impaired
 and social counselors.  Supporting Government Schools:
 
 Continuing its commitment to make quality education accessible to all
 children, the Mahindra Group has continued support to 6 Government
 Schools in Mumbai (5 Schools at Kandivli and 1 in Worli). Naandi
 Foundation, the implementation partner for the School Adoption
 Programme, has through its Ensuring Children Learn strategy, been
 running Gyan Jyothi Centres - or academic support classes to ensure
 that children coming to BMC Schools acquire grade specific learning
 competencies.
 
 Mahindra All India Talent Scholarships (MAITS):
 
 498 students from 11 Centres all over India were awarded the MAITS in
 the last financial year to enable them to pursue a job oriented diploma
 course at a recognised Government Polytechnic in India. These students
 have been provided with this scholarship for a 3 year period. A
 majority of the scholarship awardees are girls, as the Trust is keen to
 empower girls through vocational education.
 
 Employee Social Options (ESOPS):
 
 Employee Social Options (ESOPS) the unique programme at the Mahindra
 Group where each employee can exercise his own social responsibility by
 volunteering in CSR initiatives received great support, with 14,535
 employees volunteering for various initiatives with ESOPS expanding to
 6 new States namely Uttar Pradesh, Assam, Madhya Pradesh, Rajasthan,
 Bihar and Tamil Nadu.
 
 Some of the Notable ESOPS initiatives this year were:
 
 The Lifeline Express; undertaken by the Tractor Plant in Rudrapur,
 where 647 surgeries were performed free of cost.
 
 Mahindra Hariyali; The Managements vision of planting One million
 trees has already reached the 2.8 lakhs mark across the country.
 
 AIDS Awareness Campaign; inaugurated in July, 2007, and conducted in
 partnership with an NGO AAS Centre for Human Hope aims to create Aids
 awareness among the Companys employees, school/college students,
 vendor/ suppliers and other citizens of Nashik City.
 
 The Company has been recognised for its CSR work and feels privileged
 to have received the Businessworld FICCI SEDF CSR Award and the BSR
 Business for Social Responsibility Award.
 
 Directors
 
 Mr. Anand G. Mahindra, Mr. A. K. Nanda, Mr. Nadir B.  Godrej and Mr. M.
 M. Murugappan retire by rotation and, being eligible, offer themselves
 for re-appointment.
 
 Directors Responsibility Statement
 
 Pursuant to section 21 7(2AA) of the Companies Act, 1956, your
 Directors, based on the representations received from the Operating
 Management, and after due enquiry, confirm that:
 
 (i) in the preparation of the annual accounts, the applicable
 accounting standards have been followed;
 
 (ii) they have, in the selection of the accounting policies, consulted
 the Statutory Auditors and these have been applied consistently and
 reasonable and prudent judgments and estimates have been made so as to
 give a true and fair view of the state of affairs of the Company as at
 31st March, 2008 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, 1 956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities;
 
 (iv) the annual accounts have been prepared on a going concern basis.
 
 Subsidiary Companies
 
 The subsidiary companies of your Company have reflected a significantly
 improved performance over the previous year and are moving from
 strength to strength, thereby contributing to the overall growth of the
 Company and appreciation in Shareholders value. The major subsidiaries
 such as Tech Mahindra Limited with a 399.5% growth in profits, Mahindra
 Holidays & Resorts India Limited with a 92.82% growth in profits and
 Mahindra & Mahindra Financial Services Limited with a 33.22% growth in
 profits, deserve special mention. The consolidated Group Profit for the
 year after exceptional items, prior period adjustments and tax and
 after deducting minority interests is Rs. 1,571.12 crores as against
 Rs.  1,497.15 crores earned last year - a growth of 4.94%.
 
 During the year under review, Mahindra Retail Private Limited, Mahindra
 Hotels and Residences India Limited, Mahindra Holdings Limited,
 Mahindra Rural Housing Finance Limited, Tech Mahindra (Malaysia)
 SDN.BHD, Tech Mahindra (Beijing) IT Services Limited, Bristlecone
 (Malaysia) SDN.BHD, Mahindra Residential Developers Limited, Mahindra
 Technology Park Limited, Mahindra Automotive Limited, Punjab Tractors
 Limited, Mahindra Logistics Limited, Mahindra Forgings Limited,
 Mahindra Castings Private Limited, Mahindra Navistar Engines Private
 Limited, Heritage Bird (M) Sdn Bhd, Mahindra First Choice Services
 Limited, Mahindra Graphic Research Design s.r.L, Mahindra Aerospace
 Private Limited and Ashtamudi Resorts Private Limited became
 subsidiaries of your Company.
 
 During the year under review, Mahindra Forgings Overseas Limited,
 Mahindra Forgings Mauritius Limited, Falkenroth Grundstucksgesellschaft
 GmbH, Tech Mahindra (R&D Services) Pte. Limited, Fried. Hunninghaus
 GmbH, Fried.  Hunninghaus GmbH & Co. KG, Mahindra Stokes Holding
 Company Limited, Plexion Technologies (India) Private Limited, Mahindra
 Ashtech Limited and Ashtamudi Resorts Private Limited ceased to be
 subsidiaries of the Company.
 
 Subsequent to the year-end, iPolicy Networks Limited and Tech Mahindra
 (R&D Services) Limited ceased to be subsidiaries of the Company.
 
 The Statement pursuant to section 212 of the Companies Act, 1956
 containing details of the Companys subsidiaries is attached.
 
 The Consolidated Financial Statements of the Company and its
 subsidiaries, prepared in accordance with Accounting Standard AS 21
 form part of the Annual Report.
 
 The Company has made an application to the Ministry of Corporate
 Affairs seeking exemption from attaching the copy of the Balance Sheet,
 Profit and Loss Account, Reports of the Board of Directors and Auditors
 of the subsidiaries with the Balance Sheet of the Company. If in terms
 of the approval granted by the Ministry of Corporate Affairs under
 section 212(8) of the Companies Act, 1956, the copy of the Balance
 Sheet, etc. of the subsidiaries are not required to be attached to the
 Balance Sheet of the Company, the Company Secretary will make these
 documents available upon receipt of request from any Member of the
 Company interested in -obtaining the same. These documents will also be
 available for inspection at the Head Office of the Company and the
 office of the respective subsidiary companies, during working hours
 upto the date of the Annual General Meeting.
 
 Auditors
 
 Messrs. Deloitte Haskins & Sells, Chartered Accountants, retire as
 Auditors of the Company and have given their consent for
 re-appointment. The Shareholders will be required to elect Auditors for
 the current year and fix their remuneration.
 
 As required under the provisions of section 224(1 B) of the Companies
 Act, 1956, the Company has obtained a written certificate from the
 above Auditors proposed to be re- appointed to the effect that their
 re-appointment, if made, would be in conformity with the limits
 specified in the said section.
 
 Public Deposits and Loans/Advances
 
 Out of the total 2,070 deposits of Rs.372.19 lakhs from the public and
 Shareholders as at 31st March, 2008, 141 deposits amounting to Rs.22.14
 lakhs, which had matured, had not been claimed as at the end of the
 financial year.  Since then, 17 of these deposits of the value of
 Rs.2.90 lakhs have been claimed.
 
 The particulars of loans/advances and investment in its own shares by
 listed companies, their subsidiaries, associates, etc., required to be
 disclosed in the annual accounts of the Company pursuant to Clause 32
 of the Listing Agreement are furnished separately.
 
 Current Year
 
 During the period 1st April, 2008 to 27th May, 2008, 32,468 vehicles
 were produced as against 28,680 vehicles and 32,214 vehicles were
 despatched as against 27,247 vehicles during the corresponding period
 in the last year. During the same period 15,834 Tractors were produced
 and 15,639 Tractors despatched as against 16,010 Tractors produced and
 16,099 Tractors despatched during the corresponding period in the
 previous year.
 
 The Indian economic performance has been impressive with a healthy GDP
 Growth Rate coupled with strong growth in the Industry as well as in
 the Services Sector. The expected normal monsoon and increase in the
 support prices announced by the Government should brighten the outlook
 for agriculture. While these macro economic factors remain strong,
 higher oil, commodity and food prices resulting in inflation, a sharply
 appreciating rupee, slowing world growth and fluid domestic and
 international financial conditions are likely to persist which will
 create pressure on pricing and margins. Consumer demand will remain
 below potential until interest rates soften. The Company expects to
 meet these challenges through innovative cost control, process
 efficiencies and designing products that exceed consumer expectations.
 
 Acquisitions and other matters
 
 Punjab Tractors Limited:
 
 As mentioned in the last Annual Report, your Company with a view to
 further consolidating its presence in the Tractor Industry, along with
 Mahindra Holdings & Finance Limited (MHFL), entered into a Share
 Purchase Agreement with Actis Group and the Burman Family to acquire
 43.3% of the issued and fully paid-up equity capital of Punjab Tractors
 Limited (PTL). In addition to this, your Company along with MHFL had
 made an open offer to acquire an additional stake of upto 20% in PTL
 and also for acquiring upto 20% stake in Swaraj Engines Limted and
 Swaraj Automotives Limited, in accordance with Regulations 10 and 12 of
 the Securities and Exchange Board of India (Substantial Acquisition of
 Shares and Takeovers) Regulations, 1997, as amended. Pursuant to these
 open offers, your Company acquired 20% additional stake in PTL, 20% in
 Swaraj Automotives Limited and 0.1% in Swaraj Engines Limited in the
 fiscal year 2007-08.
 
 PTL is a strategic fit to your Company. Its Swaraj Brand has a good
 reputation in the market for reliability and efficient working. PTL has
 also significant unutilised capacity which the Company would be
 utilising to ramp up not only sales of Swaraj Tractors but also exploit
 synergies with the Farm Equipment Sector of your Company. The Company
 will be in a unique position to leverage upon these opportunities
 coupled with other advantages such as economies of scale, sourcing
 benefits and some amount of vendor rationalisation. To add to these,
 PTL has certain products in the above 50 HP range which will add to the
 portfolio of the Company.
 
 Mahindra Graphic Research Design s. r. I.:
 
 With a view to further consolidating its presence in the Automotive
 Sector, your Company, through Mahindra Overseas Investment Company
 (Mauritius) Ltd. (MOICML), a wholly owned subsidiary of the Company,
 entered into an Asset Purchase Agreement with G.R. Graphica Ricerca
 Design S.r.l. to purchase its assets and business. GR Design, started
 in 1996, has a rich experience in automotive body and trim design and a
 systematic and process oriented methodology. Since 1998, their quality
 system is ISO 9001 certified. Since July, 2005 they have adopted a
 quality- environmental integrated system and in 2006, they have
 obtained ISO 14001:2004 Certificates. Their capabilities cover the
 development of chassis, body, external and internal trim on
 automobiles, light and heavy trucks. The purpose of acquisition is to
 create an in-house design centre to meet the requirements of the
 Companys Automotive Sector.
 
 Merger of the Forgings Business:
 
 In order to build a robust, global scale business in forging and to
 reap the benefits of operational synergy and enhance stakeholder value,
 the forging entities of the group namely, Stokes Group Limited, Jeco
 Holding AG and Schoneweiss & Co. GmbH were integrated by way of a
 Scheme of Arrangement between Mahindra Stokes Holding Company Limited,
 Mahindra Forgings Mauritius Limited and Mahindra Forgings Overseas
 Limited with Mahindra ForgingsLimited.  The Scheme which was approved
 by the Honourable Bombay High.Court on 23rd November, 2007, was made
 effective on 27th December, 2007 and the Appointed Date for the same
 was 1st April, 2007.
 
 Mahindra Holdings & Finance Limited:
 
 In order to simplify and consolidate the group holding structure, your
 Company decided to merge its wholly owned subsidiary Mahindra Holdings
 & Finance Limited (MHFL) into your Company. This would help rationalise
 operations for both the companies. Besides, the restructuring would
 benefit the companies and its stakeholders on account of enhanced
 financial strength and capability. The amalgamation would integrate
 operations of both companies and would provide efficient management
 control and systems. In addition, the proposed Scheme would enhance
 your Companys financial strength, and result in higher Shareholder
 value creation and distribution. The proposed Scheme was approved by
 the Shareholders at a
 
 Court Convened Meeting held on 12th April, 2008. This merger would be
 effective post the approval by the Honourable Bombay High Court and the
 Appointed Date for the same is 1st February, 2008.
 
 Divestment in Mahindra Ashtech Limited:
 
 Given the priority of your Company to invest only in its core
 businesses, your Company divested its holding in Mahindra Ashtech
 Limited, a wholly owned subsidiary of your Company, engaged in the
 business of Ash handling systems and Traveling Water Screen in favour
 of Fusion Fittings (India) Limited.
 
 Energy Conservation, Technology Absorption and Foreign Exchange
 Earnings and Outgo
 
 Particulars required to be disclosed under the Companies (Disclosure of
 Particulars in the Report of Board of Directors) Rules, 1988 are set
 out in Annexure II to this Report.
 
 Particulars of Employees
 
 The Company had 237 employees who were in receipt of remuneration of
 not less than Rs.24,00,000 during the year ended 31st March, 2008 or
 not less than Rs.2,00,000 per month during any part of the said year.
 However, as per the provisions of section 21 9(1 )(b)(iv) of the
 Companies Act, 1956, the Directors Report and Accounts are being sent
 to all the Shareholders of the Company excluding the Statement of
 particulars of employees. Any Shareholder interested in obtaining a
 copy of the Statement may write to the Company Secretary of the
 Company.
 
 
                               For and on behalf of the Board
 
                               KESHUB MAHINDRA
 
                               Chairman
                               Mumbai, 28th May, 2008