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Mahindra and Mahindra

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Directors Report Year End : Mar '16    « Mar 15
Dear Shareholders
 
 The Directors present their Report together with the audited financial
 statements of your Company for the year ended 31st March, 2016.
 
 A. FINANCIAL AND OPERATIONAL HIGHLIGHTS
 
                                                       (Rs. in crores) 
 
                                                    2016         2015
 
 Gross Income                                     44,461       41,481
 
 Less: Excise Duty on Sales                        2,722        2,188
 
 Net Income                                       41,739       39,293
 
 Profit before Depreciation, Finance
 
 Costs, Exceptional items and Taxation             5,425        5,022
 
 Less: Depreciation/Amortisation                   1,109          975
 
 Profit before Finance Costs,
 
 Exceptional items and Taxation                    4,316        4,047
 
 Less: Finance Costs                                 155          214
 
 Profit before Exceptional items
 and Taxation                                      4,161        3,833
 
 Add: Exceptional items                               69          336
 
 Profit before Taxation                            4,230        4,169
 
 Less: Provision for Tax - Current Tax
 (including MAT credit entitlement)                  806          743
 
 Less: Provision for Tax - Deferred
 
 Tax (Net)                                           257          105
 
 Profit for the year                               3,167        3,321
 
 Balance of profit for earlier years              14,750       12,325
 
 Less: Transfer to Debenture
 
 Redemption Reserve                                    3           17
 
 Add: Transfer from Debenture
 
 Redemption Reserve                                  100           __
 
 Profits available for appropriation              18,014       15,629
 
 Add: Reversal of income tax on
 dividend paid for 2013-14                            __            3
 
 Less: Proposed Dividends                            745          745
 
 Income-tax on Proposed Dividend                      96          102
 
 Depreciation as per transitional
 provision as specified in
 Schedule II of the Companies Act,
 2013 For 2014-15 [Net of Tax of
 Rs. 18.24 crores]                                    __           35
 
 Income-tax on Dividend Paid for
 2014-15                                               *           __
 
 Balance carried forward                          17,173       14,750
 
 * denotes amounts less than Rs. 50 lakhs
 
 The fact that India''s economic recovery remained on course throughout
 the Financial Year 2015-16, despite an extremely weak and volatile
 global operational environment, is impressive and bears testimony to
 the policy repair that has been wrought since the near crisis
 experienced in May 2013. Aided by subdued oil and metal prices and
 supported by positive policy actions, the country''s key macroeconomic
 indicators - inflation, fiscal deficits and current account balances -
 have witnessed a remarkable turnaround and consolidated further through
 the year. The string of financial storms that hit global markets in
 2015, engendered by uncertainty surrounding US monetary policy actions,
 rising risks of a hard-landing in China and the unfolding economic and
 geopolitical crises in Europe and the Middle East, resulted in
 portfolio flows to India, and other emerging markets, turning negative
 this fiscal. However, consolidating macros, coupled with a steady
 improvement in policy and regulatory environment, led to a 28% increase
 in foreign direct investment flows to the country, providing it with a
 much needed buffer. Thus, even as portfolio flows reversed, the surge
 in FDI inflows allowed the central bank to grow international reserves
 by close to  billion by year end, strengthening the economy''s
 ability to absorb future external shocks without de-stabilizing.
 
 Growth momentum, however, remained disappointingly modest and patchy
 through most of the year. With external demand remaining sluggish,
 rural incomes battered by four consecutively weak cropping seasons and
 domestic private investments constrained by excess capacities and
 rising balance sheet stress, urban consumption and public capital
 expenditures were virtually the only sources of demand that picked up
 pace this fiscal. Economic activity, as a consequence, remained far
 feebler through 2015-16 than was anticipated at the start of the year.
 
 However, even amidst this scenario, your Company recorded an increase
 of 6.23% in net income at Rs. 41,739 crores in the year under review as
 against Rs. 39,293 crores in the previous year.
 
 The Profit for the year before Depreciation, Finance Costs, Exceptional
 items and Taxation recorded an increase of 8.02% at Rs. 5,425 crores as
 against Rs. 5,022 crores in the previous year. Profit after tax
 declined by 4.64% at Rs. 3,167 crores as against Rs. 3,321 crores in
 the previous year.
 
 Your Company continues with its rigorous cost restructuring exercises
 and efficiency improvements which have resulted in significant savings
 through continued focus on cost controls and process efficiencies
 thereby enabling the Company to maintain profitable growth in the
 current economic scenario.
 
 No material changes and commitments have occurred after the closure of
 the Financial Year 2015-16 till the date of this Report, which would
 affect the financial position of your Company.
 
 Performance Review Automotive Division:
 
 Your Company''s Automotive Sector recorded total sales of 4,94,096
 vehicles (4,37,911 four-wheelers and 56,185 three- wheelers) as against
 a total of 4,64,850 vehicles (4,05,446 four wheelers and 59,404
 three-wheelers) in the previous year, registering a growth of 6.3% in
 vehicle sales.
 
 On the domestic sales front, your Company sold a total of 4,58,065
 vehicles as compared to 4,34,654 vehicles in the previous year
 registering a growth of 5.4%.
 
 In the Passenger Vehicle segment, your Company sold 2,36,307 vehicles
 [including 2,22,324 Utility Vehicles (UVs), 10,588 Vans and 3,395 Cars]
 which is a growth of 5.5% over the previous year''s volume of 2,23,968
 vehicles [including 2,06,837 UVs, 13,947 Vans and 3,184 Cars].
 
 In the commercial vehicle segment, your Company sold 1,66,783 vehicles
 [including 27,834 vehicles < 2T GVW, 1,26,819 vehicles between 2-3.5T
 GVW, 6,425 LCVs in the LCV > 3.5T segment and 5,705 HCVs (Heavy
 Commercial Vehicles)] registering a growth of 8.4% over the previous
 year''s volume of 1,53,922 commercial vehicles [including 15,255
 vehicles < 2T GVW, 1,29,755 vehicles between 2-3.5T GVW, 5,413 LCVs in
 the LCV > 3.5T segment and 3,499 HCVs].
 
 In the three-wheeler segment, your Company sold 54,975 three-wheelers
 registering a decline of 3.2% over the previous year''s volume of 56,764
 three-wheelers.
 
 A key highlight for the year under review was the launch of fourteen
 new products by your Company. These product launches were across
 product categories and have helped strengthen your Company''s presence
 across industry segments.
 
 For the year under review, the Indian automotive industry (except 2W)
 grew 7.1% and all segments of the industry (except LCV < 2T and 3W
 Goods) posted growth. This growth is much more broad-based as compared
 to the patchy growth in the Financial Year 2014-15, where many segments
 continued to be in the negative after the low of Financial Year
 2013-14. In Financial Year 2015-16, the Passenger vehicle segment
 reported a growth of 7.2% which was largely driven by new launches -
 both in Car and UV segments. The commercial vehicle segment grew 11.5%
 after three consecutive years of decline. Within the commercial
 vehicles, the < 3.5T GVW segment continued to face difficult times due
 to slowdown in Agri incomes and finance availability.
 
 Your Company''s UV sales volume grew by 7.5%, and your Company continued
 leadership of the domestic UV market by posting a market share of
 37.9%. During this year, Bolero retained the title of India''s largest
 selling SUV for the 10th consecutive year, and the XUV500 continued to
 be the customer''s choice in the premium UV segment with over 36,000
 sales in the year.
 
 The highlight for the year under review was the launch of two all new
 UVs, the TUV300 and KUV100 in the compact UV segment. Launched in
 September, 2015, the TUV300 is inspired by the design of a battle tank
 that lends it a tough, bold and stylish, ''true-blue SUV character.
 Despite the tough appearance of a true blue SUV on the outside, the
 TUV300 is stylish and extremely comfortable on the inside and comes
 loaded with a host of technology and safety features. The KUV100 which
 was launched in January, 2016, is designed to appeal to the cool and
 trendy, with its Aggressive Design with Imposing SUV Stance. Powered by
 the all new mFALCON family of petrol and diesel engines, the KUV100
 marks Mahindra''s entry into the petrol space. Driven by the new
 launches, the UV volume growth for your Company in the second half of
 the Financial Year 2015-16 was 19.7% as against decline of 5.5% in the
 first half of the Financial Year 2015-16.
 
 In the LCV < 2T segment, your Company launched the all new small
 commercial vehicle Jeeto. Jeeto is the first ever product in its
 category with a modular range of eight mini-trucks to cater to the
 varied needs of the sub 1 tonne load segment customers. On back of
 success of Jeeto, your Company''s market share for this segment stood at
 23.9% as against 11.6% in the previous year.
 
 In the PIK-UP segment of commercial vehicles (LCV 2 to 3.5T), your
 Company maintained its leadership position with a market share of
 69.1%. In January, 2016, your Company launched Imperio, the premium,
 aspirational PIK-UP.
 
 In February, 2016, your Company launched Blazo series heavy commercial
 trucks with Fuelsmart technology. The Blazo series of trucks are backed
 by a guarantee of superior mileage and a 48 hours service guarantee.
 
 During the year under review, your Company posted the highest ever
 export volume of 36,031 vehicles as against previous year export of
 30,196 vehicles, a growth of 19.3%. Your Company continued to grow its
 presence in the neighbouring markets of Sri Lanka, Nepal, Bangladesh
 and Bhutan, where volumes grew by 29%. With continued efforts of
 building brand in key markets like South Africa and Chile, your Company
 reported a volume growth of 5% and 20% respectively.
 
 Spare parts sales for the year stood at Rs. 1,772.8 crores (including
 Exports of Rs. 111.5 crores) as compared to Rs. 1,569.5 crores
 (including Exports of Rs. 104.0 crores) in the previous year,
 registering a growth of 12.9%.
 
 Farm Division:
 
 Your Company''s Farm Division (including Swaraj Division) recorded sales
 of 2,14,173 tractors as against 2,34,766 tractors sold in the previous
 year, recording a decline of 8.8%.
 
 In the Financial Year 2015-16, the Indian tractor industry declined by
 10.4%. The domestic tractor industry recorded sales of 4,93,497
 tractors as compared to 5,50,963 tractors in the previous year. This
 was the second consecutive year of steep decline, with the Financial
 Year 2014-15 decline being 13.1%. As a result of decline in these two
 consecutive years, the industry volume for Financial Year 2015-16 was
 22.1% below the all- time high of Financial Year 2013-14. The key
 reason behind this decline is, two successive years of deficient
 monsoon, which have impacted the crop production and rural sentiment at
 large.
 
 Your Company''s sales in the domestic market stood at 2,02,628 tractors
 as compared to 2,21,020 tractors in the previous year, recording a
 decline of 8.3%. Your Company continues to be the market leader with a
 40.9% market share with a gain of 0.9%. With a vision to offer class
 leading tractors to the Indian farmer, your Company in the first week
 of April, 2016 launched Mahindra YUVO, a new age, superior technology,
 range of tractors in the 30-45 HP category. The advanced technology of
 the YUVO range helps serve the diverse needs of farmers - from land
 preparation to harvesting as well as post-harvesting requirements,
 helps them do more, faster and better.
 
 During the year under review, your Company exported 11,545 tractors
 which is a decline of 16.0% over the previous year.  While the exports
 grew to the neighbouring countries, the slowdown in the African market
 due to the oil crisis, impacted the overall export volumes.
 
 Beyond tractors, your Company has presence in crop care solutions and
 distribution of seeds. The focus of this business is to provide quality
 inputs and help improve farm productivity.  In Financial Year 2015-16
 this business saw a growth of 13.3% in terms of revenue.
 
 In the power generation space, under the Mahindra Powerol Brand, your
 Company continues to be amongst the leaders in the industry. Your
 Company earned a revenue of Rs. 1,109.9 crores in the current financial
 year as against Rs. 955.5 crores in the previous year, recording a
 growth of 16.4%. Along with the revenue growth, your Company has
 improved its presence in the retail segment and made good progress in
 the ''Energy Management Solutions'' space.
 
 Spare parts sales for the year stood at Rs. 540.3 crores (including
 Exports of Rs. 34.8 crores) as compared to Rs. 526.3 crores (including
 Exports of Rs. 48.8 crores) in the previous year, registering growth of
 2.7%.
 
 Current Year''s review
 
 During the period 1st April, 2016 to 29th May, 2016, 60,027 vehicles
 were produced as against 65,086 vehicles and 57,668 vehicles were
 dispatched as against 59,956 vehicles during the corresponding period
 in the last year. During the same period 44,730 tractors were produced
 and 44,778 tractors dispatched as against 38,382 tractors produced and
 38,175 tractors dispatched during the corresponding period in the
 previous year.
 
 Recent data indicators suggest that the country is likely to experience
 a stronger, more broad-based economic recovery in Financial Year
 2016-17. For one, infrastructural activity, particularly in the power
 and road sectors, registered a smart pick up in the last quarter of
 Financial Year 2015-16 indicating that the Government''s focused policy
 efforts in this space are finally beginning to bear fruit. Rising
 bitumen production, cement dispatches and freight rates attest to the
 same.  Second, growth in domestic sales of motor cycles and tractors
 have now turned positive suggesting that the rural economy may now be
 stabilizing, albeit at a low level. With a robust monsoon season
 predicted for 2016, rural demand will, in all likelihood, pick up pace
 in the coming quarters. Finally, with both infrastructural activity and
 consumption demand gaining strength, Balance Sheet stresses in the
 Corporate Sector are likely to wane, setting the stage for a revival in
 domestic private sector investments by year end.
 
 Thus, even as we remain alert to the downside risks emanating from a
 challenging global environment and domestic banking distress including
 Brexit, the Company''s outlook on the economy is upbeat and it stands
 ready to harness the business opportunities that stronger growth will
 present.
 
 Finance
 
 The world is in a churn and uncertainty and subdued global economic
 activity were the key themes for Financial Year 2015-16. US economy
 showed signs of steady recovery with improvement seen in consumer
 spending and labour market, which led to the US Federal Reserve to
 announce an interest rate hike of 0.25% in December, 2015, the first
 rate hike in nine years. The US Federal Reserve was also caught in the
 churn as the slow growth rate across geographies has led to it stalling
 any further rate hikes. Other major advanced economies such as the
 Eurozone and Japan struggled to revive growth and continued with their
 quantitative easing. As a first, both Eurozone and Japan resorted to
 the unorthodox measure of adopting negative interest rate policy in
 order to kick-start consumption and pull their respective economies out
 of deflation. As advanced economies struggled, even the emerging
 economies were hit by the fall in energy and other commodity prices.
 Slowdown of growth in China (the slowest pace in 25 years) and
 resultant measures taken by the Chinese authorities, fueled volatility
 in financial markets across the world. In addition, both in case of
 Brazil and Russia, their economic outlook has deteriorated more rapidly
 than expected. In case of Africa, the region still has a lot of
 potential for economic expansion in the medium to long run, mainly due
 to its demographic dividend but several political and institutional
 constraints offer significant uncertainty.  Amidst all the churn across
 the globe, India was one of the few bright spots in the world, which
 benefitted from lower energy prices. The latest World Economic Outlook
 by IMF projects the world economy to grow at an increasingly fragile
 pace due to global asset market volatility, loss of growth momentum in
 the advanced economies and continuing headwinds for emerging market
 economies.
 
 Financial Year 2015-16 was full of surprises for the currency markets.
 The sudden currency devaluation by China, talks about Grexit, prospects
 of interest rate hikes by US Fed and falling oil prices kept the
 currency markets volatile. Indian Rupee displayed relative
 outperformance as compared to other emerging market currencies. While
 the global slowdown continued to weigh on exports, which declined 16%
 and were at a 5-year low, the Government''s commitment towards fiscal
 prudence and progressive economic policies, led to surge of Foreign
 Direct investment (FDI). FDI in Financial Year 2015-16 touched a
 record high of USD 56 billion. The Reserve Bank of India (RBI)
 through various measures augmented its forex reserves to counter any
 volatility in outflows amidst slowing growth in China and prospects
 that the Federal Reserve will consider raising US interest rates.
 
 With the CPI inflation firmly in control, RBI reduced repo rate by
 cumulative of 75 bps in the first half of the financial year. RBI
 continued to nudge Banks to ensure that effective transmission of rate
 cut in the system takes place. Both the Government and RBI took several
 measures such as reduction in small savings rates, refinements in the
 liquidity management framework and the introduction of the marginal
 cost of funds based lending rate to improve transmission and magnify
 the effects of the current policy rate cut in the economy.
 
 Your Company continued to focus on managing cash efficiently and
 ensured that it had adequate liquidity and back up lines of credit.
 During the course of the year, your Company availed Export finance
 amounting to Rs. 315 crores under the interest equalisation Scheme of
 Government of India. During the year, your Company repaid Rs. 1,298.41
 crores of borrowings from internal accruals. The Company''s Bankers
 continue to rate your Company as a prime customer and extend
 facilities/services at prime rates. Your Company follows a prudent
 financial policy and aims not to exceed an optimum financial gearing at
 any time. The Company''s total Debt to Equity Ratio was 0.13 as at 31st
 March, 2016.
 
 Your Company has been rated by CRISIL Limited (CRISIL), ICRA Limited
 (ICRA), India Ratings and Research Private Limited (India Ratings)
 and Credit Analysis & Research Limited (CARE) for its Banking
 facilities under Basel II norms. All have re-affirmed the highest
 credit rating for your Company''s Short Term facilities. For Long Term
 facilities and Non-Convertible Debenture (NCD) programme, CRISIL and
 ICRA have re-affirmed their credit ratings of CRISIL AAA/ Stable and
 [ICRAjAAA (stable) respectively. Further, CARE has also re-affirmed the
 ratings of the Company''s long-term Bank facilities at CARE AAA.  India
 Ratings and Research (Ind-Ra, a Fitch Group Company) has also
 re-affirmed Long- Term Issuer Rating of ''IND AAA'' with a Stable outlook
 to your Company.
 
 With the above rating affirmations, your Company continues to enjoy the
 highest level of rating from all major rating agencies at the same
 time.
 
 The AAA ratings indicate highest degree of safety regarding timely
 servicing of financial obligations and is also a vote of confidence
 reposed in your Company''s Management by the rating agencies. It is an
 acknowledgement of the strong credit profile of your Company over the
 years, resilience in earnings despite cyclical upturns/downturns,
 robust financial flexibility arising from the significant market value
 of its holdings and prudent management.
 
 During the year, your Company obtained International Credit Rating from
 Moody''s Investor Service (Moody''s) and Standard & Poor (S&P). Both
 the agencies assigned investment grade credit rating to the Company
 viz., Baa3 by Moody''s and BBB- by S&P with a stable outlook. The rating
 reflects your Company''s diversified business profile, leading market
 position in India, long track record of successful operations, strong
 corporate governance practices, financial flexibility and conservative
 financial policies.
 
 With this your Company is now amongst a very few select Indian
 Corporates who enjoy investment grade rating. It may be relevant to
 note that India''s sovereign rating also stands at Baa3 and BBB- by
 Moody''s and S&P respectively.
 
 Investor Relations (IR)
 
 Your Company continuously strives for excellence in its Investor
 Relations (IR) engagement with International and domestic investors
 through structured conference-calls and periodic investor/analyst
 interactions like individual Meetings, Tele- presence Meetings,
 participation in investor conferences, quarterly earnings calls and
 annual analyst meet with the Chairman & Managing Director, Executive
 Director and Business Heads. Your Company interacted with around 635
 Indian and overseas investors and analysts (excluding quarterly
 earnings calls and specific event related calls) during the year.
 
 Your Company always believes in leading from the front with emerging
 best practices in IR and building a relationship of mutual
 understanding with investor/analysts. In order to engage with investors
 beyond financial numbers, your Company also organises annual conference
 call with investors/ analysts on key Environment, Social and Corporate
 Governance (ESG) initiatives of the Company.
 
 Your Company''s IR function was voted as one of the top 2 companies
 under the category ''Best at Investor Relations in India'' for the year
 in the 16th Annual survey conducted by FinanceAsia magazine, Hong Kong.
 FinanceAsia is a magazine founded in 1996 to cover investment banking,
 capital markets and strategic corporate finance in Asia Pacific and is
 owned by Haymarket Media, a publishing house based in UK.
 
 Your Company ensures that critical information about the Company is
 available to all the investors by uploading all such information at the
 Company''s website. Your Company has created a ''Group Investor Relations
 Council'' to share best practices across all the listed group companies
 and learn from each other.
 
 Dividend
 
 Your Directors are pleased to recommend a dividend of Rs. 12 per
 Ordinary (Equity) Share of the face value of Rs. 5 each, payable to
 those Shareholders whose names appear in the Register of Members as on
 the Book Closure Date. The equity dividend outgo for the Financial Year
 2015-16, inclusive of tax on distributed profits (after reducing the
 tax on distributed profits of Rs. 55.36 crores on the dividends
 receivable from the subsidiaries during the current Financial Year)
 would absorb a sum of Rs. 841.68 crores [as against Rs. 846.95 crores
 comprising the dividend of Rs. 12 per Ordinary (Equity) Share of the
 face value of Rs. 5 each and tax thereon paid for the previous year].
 Further, the Board of your Company decided not to transfer any amount
 to the General Reserve for the year under review.
 
 B. CONSOLIDATED FINANCIAL STATEMENTS
 
 The Consolidated Financial Statements of the Company and its
 subsidiaries, prepared in accordance with the Companies Act, 2013 and
 applicable Accounting Standards along with all relevant documents and
 the Auditors'' Report form part of this Annual Report. The Consolidated
 Financial Statements presented by the Company include the financial
 results of its subsidiary companies, associates and joint ventures.
 
 The Financial Statements as stated above are also available on the
 website of the Company and can be accessed at the Web-link:
 http://www.mahindra.com/resources/investor-reports/ FY16/Annual
 Reports/Links-AnnualReport.zip
 
 Subsidiary, Joint Venture and Associate Companies
 
 The Mahindra Group Companies continue to contribute to the overall
 growth in revenues of your Company.
 
 Tech Mahindra Limited (TML), the Company''s Flagship Company in the IT
 Sector, has reported a consolidated revenue of Rs. 26,494 crores in the
 current year as compared to Rs. 22,621 crores in the previous year, an
 increase of 17%. Its consolidated profit after tax is Rs. 3,118 crores
 as compared to Rs. 2,628 crores in the previous year, an increase of
 19%.
 
 The Group''s finance company, Mahindra & Mahindra Financial Services
 Limited (Mahindra Finance), reported a total consolidated income of Rs.
 6,554 crores during the current year as compared to Rs. 6,021 crores in
 the previous year, a growth of 9%. The consolidated profit after tax
 for the year is Rs. 772 crores as compared to Rs. 913 crores in the
 previous year.
 
 Mahindra Lifespace Developers Limited (MLDL), the Group''s subsidiary in
 the business of real estate and infrastructure registered a
 consolidated operating income of Rs. 826 crores as compared to Rs.
 1,086 crores in the previous year. The consolidated profit after tax
 for the year is Rs. 93 crores as compared to Rs. 266 crores in the
 previous year.
 
 Mahindra Holidays & Resorts India Limited, the Group''s subsidiary in
 the business of timeshare registered a consolidated operating income of
 Rs. 1,599 crores as compared to Rs. 812 crores in the previous year, an
 increase of 97%. The consolidated profit after tax for the year is Rs.
 99 crores as compared to Rs. 81 crores in the previous year, an
 increase of 22%.
 
 Ssyangyong Motor Company (SYMC), the Korean subsidiary of the Company
 has reported consolidated revenues of Rs. 19,647 crores in the current
 fiscal year as compared to Rs. 18,466 crores in the previous year, a
 growth of 6%. The consolidated loss after tax for the year is Rs. 177
 crores as compared to Rs. 715 crores in the previous year.
 
 The consolidated group profit after tax after minority interest before
 exceptional items for the year is Rs. 3,206 crores as against Rs. 2,863
 crores in the previous year - a growth of 12%. The consolidated profit
 after tax after minority interests and exceptional items for the year
 is Rs. 3,211 crores as against Rs. 3,137 crores in the previous year.
 
 During the year under review, Divine Solren Private Limited, Neo Solren
 Private Limited, Mahindra Water Utilities Limited,
 
 Holiday Club Resorts Oy, Holiday Club Sweden Ab Are, Ownership Services
 Ab, Holiday Club Canarias Investments S.L., Holiday Club Canarias Sales
 & Marketing S.L., Holiday Club Canarias Resort Management S.L.,
 Saariselka Resort Oy, Kiinteisto Oy Jalomella, Kiinteisto Oy Outapalas,
 Kiinteisto Oy Ulkuvuoma, Holiday Club Rus LLC, Suomen Vapaa-
 aikakiinteistot Oy LKV, Kiinteisto Oy Himos Gardens, Himos Hillside
 Golf Oy, Kiinteisto Oy Himoksen Tahti 2, Sallan Tunturipalvelut Oy,
 Kiinteisto Oy Tunturinrivi, Kiinteisto Oy Pisterinniementie 2, Holiday
 Club Katinkullan Villas Oy, Kiinteisto Oy Vanha Ykkostii, Kiinteisto Oy
 Katinkullan Villas Parkki, Kiinteisto Oy Katinnurkka, Kiinteisto Oy
 Katinpalsta, Kiinteisto Oy Tenetinlahti, Kiinteisto Oy Mallosniemi,
 Holiday Club Golf Saimaa Oy, Kiinteisto Oy Rauhan Ranta 1, Kiinteisto
 Oy Rauhan Ranta 2, Kiinteisto Oy Rauhan Ranta 6, Kiinteisto Oy Rauhan
 Parkki, Saimaan Palvelukiinteistot Oy, Kiinteisto Oy Paviljongin
 Pysakointi, Kiinteisto Oy Tiurunniemi, Kiinteisto Oy Rauhan
 Liikekiinteistot 1, Saimaa Action Park Oy, Supermarket Capri Oy,
 Kiinteisto Oy Kylpylantorni 1, Kiinteisto Oy Lappeenrannan Saimaan
 Kreivi, Kiinteisto Oy Spa Lofts 2, Kiinteisto Oy Spa Lofts 3,
 Kiinteisto Oy Kulennoinen, Kiinteisto Oy Kuusamon Pulkkajarvi 1,
 Kongressi-ja Kylpylahotelli Caribia Oy, Caribia Service Oy, Ou Holiday
 Club Tallinn, Kiinteisto Oy Hakan Perusyhtio 79, HCR Management Oy,
 Finland, Marvel Solren Private Limited, Astra Solren Private Limited,
 Orizonte Business Solutions Limited, AirvanIO Pty Ltd., Holiday Club
 Sport and Spa AB (formerly known as Visionsbolaget 10088 AB), Gateway
 Housing Company Limited, Mahindra International UK Ltd., SY Auto
 Capital Co., Ltd., MachinePulse Tech Private Limited, Are Semesterby A,
 Are Semesterby B, Are Semesterby C, Are Semesterby D, Are Villas 1 Ab,
 Are Villas 2 Ab and Saimaa Gardens Arena Oy became subsidiaries of your
 Company.
 
 Subsequent to the year end, Trringo.com Limited and Mahindra West
 Africa Limited became subsidiaries of your Company.
 
 During the year under review, Mahindra Business & Consulting Services
 Private Limited, Kiinteisto Oy Lappeenrannan Saimaan Kreivi, Saariselka
 Resort Oy, Himos Hillside Golf Oy, Kiinteisto Oy Pisterinniementie 2,
 Holiday Club Katinkullan Villas Oy, Kiinteisto Oy Katinpalsta, Saimaan
 Palvelukiinteistot Oy, Kiinteisto Oy Paviljongin Pysakointi, Kiinteisto
 Oy Hakan Perusyhtio 79, Kiinteisto Oy Rauhan Ranta 6, Kiinteisto Oy
 Rauhan Parkki, Ou Holiday Club Tallinn, Swaraj Automotives Limited,
 Divine Heritage Hotels Private Limited, Competent Hotels Private
 Limited, Holiday on Hills Resorts Private Limited, Kiinteisto Oy
 Jalomella, Kiinteisto Oy Outapalas, Kiinteisto Oy Ulkuvuoma, Kiinteisto
 Oy Kulennoinen, Kongressi-ja Kylpylahotelli Caribia Oy, Saimaa Action
 Park Oy, Holiday Club Golf Saimaa Oy, Sallan Tunturipalvelut Oy and
 Kiinteisto Oy Katinkullan Villas Parkki ceased to be subsidiaries of
 your Company.
 
 During the year under review, Mriyalguda Farm Solution Limited has
 changed its name to Mahindra eMarket Limited, Mahindra EPC Services
 Private Limited has changed its name to Mahindra Susten Private
 Limited, Mahindra Offgrid Services Private Limited has changed its name
 to Mahindra Renewables Private Limited, Mega One Stop Farm Services
 Limited has changed its name to Orizonte Business Solutions Limited,
 Mahindra Shubhlabh Services Limited has changed its name to Mahindra
 Agri Solutions Limited, Mahindra Punjab Tractors Private Limited has
 changed its name to Auto Digitech Private Limited and Mahindra Racing
 s.r.l. has changed its name to Mahindra Racing S.P.A.
 
 During the year under review, Mahindra Heavy Engines Private Limited,
 Mahindra Reva Electric Vehicles Private Limited and Mahindra Namaste
 Private Limited were converted into Public Limited companies and
 accordingly, their names were changed to Mahindra Heavy Engines
 Limited, Mahindra Reva Electric Vehicles Limited and Mahindra Namaste
 Limited respectively.
 
 During the year under review, Mitsubishi Mahindra Agricultural
 Machinery Co. Ltd., became a Joint Venture of your Company.
 
 A Report on the performance and financial position of each of the
 subsidiaries, associates and joint venture companies included in the
 Consolidated Financial Statement is provided in Form AOC-1 and forms
 part of this Annual Report.
 
 The Policy for determining material subsidiaries as approved by the
 Board is uploaded on the Company''s website and can be accessed at the
 Web-link: http://www.mahindra.com/resources/
 investor-reports/FY16/Annual Reports/Links-AnnualReport.zip
 
 C. JOINT VENTURES, ACQUISITIONS AND OTHER MATTERS
 
 Consolidation of Agri Business under Mahindra Agri Solutions Limited
 (MASL)
 
 The Agri Business of your Company had reached a critical mass. In order
 to enable the organization to focus on the Agri business, your Company
 entered into a Business Transfer Agreement to transfer its Agri
 business to Mahindra Agri Solutions Limited (MASL, earlier known as
 Mahindra Shubhlabh Services Limited) for an aggregate cash
 consideration of Rs. 260.06 crores. MASL became a wholly owned
 subsidiary of the Company during the year under review. MASL would
 provide an opportunity to fully leverage the potential that this
 business offers and thus function as an end to end provider in the Agri
 value chain. Post this consolidation, MASL would house the businesses
 viz. Crop Care, Seeds, Pulses, Dairy, Edible Oil, Seed Potato (held
 through a joint venture company named Mahindra HZPC Private Limited),
 Fruits (in MASL and through a joint venture company named Mahindra
 Univeg Private Limited). The micro irrigation business, EPC Industrie
 Limited, shall continue to remain a direct subsidiary of the Company.
 
 Acquisition of 35% stake in Sampo Rosenlew Oy, Finland
 
 In line with the vision of the Farm Equipment Sector to become a global
 full line player in the agriculture machinery space and to deliver
 Farm Tech Prosperity, your Company signed a definitive agreement on
 31st March, 2016, for acquiring a 35% stake in Sampo Rosenlew Oy
 (Sampo) for a consideration not exceeding Euro 18 million, subject to
 customary adjustments, on closing. The transaction is expected to close
 on or before 30th September, 2016. Sampo''s main products are combine
 harvesters and forest harvesters with combine harvesters accounting for
 nearly 70% of its net sales. For the year ended September, 2015, Sampo
 had a stand-alone revenue of Euro 93 million. It is also a joint
 venture partner in a combine harvester company in Algeria which had
 revenues of Euro 45 million for the year ended December, 2015. Sampo
 has built significant business in its core markets of Europe, Eurasian
 countries and North Africa. Together with its existing strategy in the
 core markets, Sampo will also develop a new range of combine harvesters
 for developing markets and for specialty crops.  Your Company and Sampo
 will jointly focus on the combine harvester business in Asia, Africa
 and Eurasian Economic Union countries.
 
 Sale of your Company''s 71.19% stake in Swaraj Automotives Limited (SAL)
 
 With an endeavour to divest its non-core investments, during the
 financial year under review, your Company sold of its entire holding of
 17,06,925 shares in Swaraj Automotives Limited to b4S Solutions Private
 Limited at a per share price of Rs. 145.5 per share i.e. for an overall
 consideration of Rs. 24.8 crores.
 
 Acquisition of controlling stake in Pininfarina S.p.A
 
 On 14th December, 2015, your Company and Tech Mahindra Limited, an
 associate of your Company has signed an agreement to acquire a
 controlling stake in Pininfarina S.p.A (Pininfarina), a leading
 Italian automotive design and engineering services company which
 provides services to global automotive manufacturers such as Fiat, BMW,
 PSA and others apart from your Company.
 
 As per the agreement, your Company and Tech Mahindra would purchase
 76.06% of Pininfarina shares from Pincar S.r.L.  for a consideration of
 Euro 25.3 million at a price of Euro 1.1 per share. This investment
 would be made by PF Holdings B.V., a Joint Venture Company (JVCo),
 held 60% by Tech Mahindra and 40% by your Company.
 
 Subsequent to the aforesaid acquisition, the JVCo would launch an open
 offer to acquire the balance 23.94% of Pininfarina''s stake held by
 public shareholders at Euro 1.1 per share.
 
 D. INTERNAL FINANCIAL CONTROLS
 
 The Corporate Governance Policies guide the conduct of affairs of your
 Company and clearly delineates the roles, responsibilities and
 authorities at each level of its governance structure and key
 functionaries involved in governance. The Code of Conduct for Senior
 Management and Employees of your Company (the Code of Conduct)
 commits Management to financial and accounting policies, systems and
 processes. The Corporate Governance Policies and the Code of Conduct
 stand widely communicated across your Company at all times.
 
 Your Company''s Financial Statements are prepared on the basis of the
 Significant Accounting Policies that are carefully selected by
 Management and approved by the Audit Committee and the Board. These
 Accounting policies are reviewed and updated from time to time.
 
 Your Company uses SAP ERP Systems as a business enabler and also to
 maintain its Books of Account. The transactional controls built into
 the SAP ERP systems ensure appropriate segregation of duties,
 appropriate level of approval mechanisms and maintenance of supporting
 records. The Information Management Policy reinforces the control
 environment. The systems, Standard Operating Procedures and controls
 are reviewed by Management. These systems and controls are audited by
 Internal Audit and their findings and recommendations are reviewed by
 the Audit Committee which ensures the implementation.
 
 Your Company has in place adequate internal financial controls with
 reference to the Financial Statements commensurate with the size, scale
 and complexity of its operations. Such controls have been assessed
 during the year under review taking into consideration the essential
 components of internal controls stated in the Guidance Note on Audit of
 Internal Financial Controls over Financial Reporting issued by The
 Institute of Chartered Accountants of India. Based on the results of
 such assessments carried out by Management, no reportable material
 weakness or significant deficiencies in the design or operation of
 internal financial controls was observed. Nonetheless your Company
 recognizes that any internal control framework, no matter how well
 designed, has inherent limitations and accordingly, regular audits and
 review processes ensure that such systems are reinforced on an ongoing
 basis.
 
 Indian Accounting Standards (IND AS) - IFRS Converged Standard
 
 Your Company would adopt Indian Accounting Standards (Ind AS) for the
 accounting periods beginning on 1st April, 2016 pursuant to Ministry of
 Corporate Affairs Notification dated 16th February, 2015 notifying the
 Companies (Indian Accounting Standard) Rules, 2015.
 
 E.  MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 A detailed analysis of your Company''s performance is discussed in the
 Management Discussion and Analysis Report, which forms part of this
 Annual Report.
 
 F.  CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
 
 All Related Party Transactions entered during the year were in the
 Ordinary Course of Business and on Arms Length basis.  During the year
 under review, your Company had entered into Material Related Party
 Transactions, i.e. transactions exceeding ten percent of the annual
 consolidated turnover as per the last audited financial statements,
 with Mahindra Vehicle Manufacturers Limited, a wholly owned subsidiary
 of your Company. These transactions too were in the Ordinary Course of
 Business of your Company and were at Arms Length Basis, details of
 which, as required to be provided under section 134(3)(h) of the
 Companies Act, 2013 are disclosed in Form AOC-2 as Annexure I and forms
 part of this Annual Report.
 
 The policy on Related Party Transactions as approved by the Board is
 uploaded on the Company''s website and can be accessed at the Web-link:
 http://www.mahindra.com/resources/ investor-reports/FY16/Annual
 Reports/Links-AnnualReport.zip
 
 G. AUDITORS
 
 Statutory Auditors and Auditors'' Report
 
 Messrs Deloitte Haskins & Sells, Chartered Accountants (ICAI
 Registration No. 117364W) were re-appointed as the Statutory Auditors
 of the Company to hold office from the conclusion of the 68th Annual
 General Meeting (AGM) held on 8th August, 2014 until the conclusion of
 the third consecutive AGM of the Company to be held in the year 2017
 (subject to ratification of their appointment by the Members at every
 AGM held after the AGM held on 8th August, 2014).
 
 As required under the provisions of section 139(1) of the Companies
 Act, 2013, the Company has received a written consent from Messrs
 Deloitte Haskins & Sells, Chartered Accountants to their appointment
 and a Certificate, to the effect that their appointment, if made, would
 be in accordance with the Companies Act, 2013 and the Rules framed
 thereunder and that they satisfy the criteria provided in section 141
 of the Companies Act, 2013.
 
 The Members are requested to ratify the appointment of the Statutory
 Auditors as aforesaid and fix their remuneration.
 
 The Auditors'' Report is unmodified i.e. it does not contain any
 qualification, reservation or adverse remark.
 
 Secretarial Auditor
 
 Pursuant to the provisions of section 204 of the Companies Act, 2013
 and the Companies (Appointment and Remuneration of Managerial
 Personnel) Rules, 2014, the Company has appointed Mr. Sachin Bhagwat,
 Practicing Company Secretary (Certificate of Practice Number: 6029) to
 undertake the Secretarial Audit of the Company.
 
 The Company has annexed to this Board Report as Annexure II, a
 Secretarial Audit Report given by the Secretarial Auditor.
 
 The Secretarial Audit Report does not contain any qualification,
 reservation or adverse remark.
 
 Cost Auditors
 
 The Board had appointed Messrs N. I. Mehta & Co., Cost Accountants
 (Firm Registration Number 000023), as Cost Auditor for conducting the
 audit of cost records of the Company for the Financial Year 2015-16.
 
 The Board of Directors on the recommendation of the Audit Committee,
 appointed Messrs D. C. Dave & Co., Cost Accountants (Firm Registration
 Number 000611), as the Cost Auditors of the Company for the Financial
 Year 2016-17 under section 148 of the Companies Act, 2013. Messrs D. C.
 Dave & Co. have confirmed that their appointment is within the limits
 of section 141 (3)(g) of the Companies Act, 2013 and have also
 certified that they are free from any disqualifications specified under
 section 141(3) and proviso to section 148(3) read with section 141(4)
 of the Companies Act, 2013.
 
 The Audit Committee has also received a Certificate from the Cost
 Auditors certifying their independence and arms length relationship
 with the Company.
 
 As per the provisions of the Companies Act, 2013, the remuneration
 payable to the Cost Auditor is required to be placed before the Members
 in a General Meeting for their ratification. Accordingly, a Resolution
 seeking Members'' ratification for the remuneration payable to Messrs D.
 C. Dave & Co., Cost Auditors is included in the Notice convening the
 Annual General Meeting.
 
 Reporting of Frauds by Auditors
 
 During the year under review, the Statutory Auditors, Cost Auditors and
 Secretarial Auditor have not reported any instances of frauds committed
 in the Company by its Officers or Employees to the Audit Committee
 under section 143(12) of the Companies Act, 2013, details of which
 needs to be mentioned in this Report.
 
 H. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES
 
 Particulars of the loans given, investment made or guarantee given or
 security provided and the purpose for which the loan or guarantee or
 security is proposed to be utilised by the recipient of the loan or
 guarantee or security are provided in Note Nos. 42, 13A and 13B to the
 Financial Statements.
 
 I.  PUBLIC DEPOSITS AND LOANS/ADVANCES
 
 Your Company had discontinued its Fixed Deposit Scheme for 36 months
 with effect from the close of office hours on 31st January, 2014 and
 has also discontinued acceptance of Fixed Deposits with effect from 1st
 April, 2014.
 
 Out of the previously accepted total of 2,417 deposits of Rs. 2,233.37
 lakhs from the public and shareholders as at 31st March, 2016, 185
 deposits amounting to Rs. 96.55 lakhs, had matured and had not been
 claimed as at the end of the Financial Year. Since then, 67 of these
 deposits of the value of Rs. 47.81 lakhs have been claimed.
 
 There was no default in repayment of deposits or payment of interest
 thereon during the year under review. There are no deposits which are
 not in compliance with the requirements of Chapter V of the Companies
 Act, 2013.
 
 The particulars of loans/advances, etc., required to be disclosed in
 the Annual Accounts of the Company pursuant to Para A of Schedule V of
 the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
 2015 are furnished separately.
 
 J.  EMPLOYEES
 
 Key Managerial Personnel (KMP)
 
 The following have been designated as the Key Managerial Personnel of
 the Company pursuant to sections 2(51) and 203 of the Companies Act,
 2013 read with the Companies (Appointment and Remuneration of
 Managerial Personnel) Rules, 2014:
 
 (a) Mr. Anand G. Mahindra - Chairman & Managing Director
 
 (b) Dr. Pawan Goenka - Executive Director & Group President (Auto and
 Farm Sector)
 
 (c) Mr. V S Parthasarathy - Group CFO, Group CIO & President (Group
 Finance and M&A)
 
 (d) Mr. Narayan Shankar - Company Secretary
 
 There has been no change in the KMPs during the year under review.
 
 Employees'' Stock Option Scheme
 
 During the year under review, on the recommendation of the Governance,
 Nomination and Remuneration Committee of your Company, the Trustees of
 Mahindra & Mahindra Employees'' Stock Option Trust have granted Stock
 Options to employees under the Mahindra & Mahindra Limited Employees
 Stock Option Scheme 2010. No Stock Options have been granted to
 employees under the Mahindra & Mahindra Limited Employees Stock Option
 Scheme 2000.
 
 The Company has in force the following Schemes which get covered under
 the provisions of SEBI (Share Based Employee Benefits) Regulations,
 2014 (SBEB Regulations):
 
 1.  Mahindra & Mahindra Limited Employees Stock Option Scheme - 2000
 (2000 Scheme)
 
 2.  Mahindra & Mahindra Limited Employees Stock Option Scheme - 2010
 (2010 Scheme)
 
 3.  M&M Employees Welfare Fund No. 1
 
 4.  M&M Employees Welfare Fund No. 2
 
 5.  M&M Employees Welfare Fund No. 3
 
 There are no material changes made to the above Schemes and these
 Schemes are in compliance with the SBEB Regulations.  Your Company''s
 Auditors, Messrs Deloitte Haskins & Sells, have certified that the
 Company''s above-mentioned Schemes have been implemented in accordance
 with the SBEB Regulations, and the Resolutions passed by the Members
 for the 2000 Scheme and the 2010 Scheme.
 
 Information as required under the SBEB Regulations read with SEBI
 Circular CIR/CFD/POLICY CELL/2/2015 dated 16th June, 2015 have been
 uploaded on the Company''s website and can be accessed at the Web-link:
 http://www.mahindra.  com/resources/investor reports/FY16/Annual Re
 ports/Links- AnnualReport.zip
 
 Particulars of Employees and related disclosures
 
 The Company had 484 employees who were in receipt of remuneration of
 not less than Rs. 60,00,000 during the year ended 31st March, 2016 or
 not less than Rs. 5,00,000 per month during any part of the year.
 
 Disclosures with respect to the remuneration of Directors, KMPs and
 employees as required under section 197(12) of the Companies Act, 2013
 read with Rule 5(1) of the Companies (Appointment and Remuneration of
 Managerial Personnel) Rules, 2014 are given in Annexure III to this
 Report.
 
 Details of employee remuneration as required under provisions of
 section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3)
 of Companies (Appointment and Remuneration of Managerial Personnel)
 Rules, 2014 are available at the Registered Office of the Company
 during working hours, 21 days before the Annual General Meeting and
 shall be made available to any Shareholder on request. Such details are
 also available on your Company''s website and can be accessed at the
 Web-link: http://www.mahindra.com/resources/investor-
 reports/FY16/Annual Reports/Links-AnnualReport.zip
 
 Industrial Relations
 
 The year under review has witnessed a very positive Industrial
 Relations Scenario across all manufacturing locations for the
 Automotive and Farm Equipment Sectors.
 
 The Company''s focus continues towards propagating proactive and
 employee centric practices. The Transformational Work Culture
 initiative which aims to create an engaged workforce and an innovative,
 productive and competitive shop-floor ecosystem, continues to grow in
 strength. The Transformational Work Culture Committee (TWCC)
 continually engages with long-term strategic initiatives which range
 from anticipated Labour Law reforms to ''Swachh Bharat Abhiyaan''. Some
 examples of the programs put in place are Rise for Associates,
 Industrial Relations Skills for Frontline Officers, Cultural
 Diagnostics Projects, e-Compliance and Code of Conduct for Associates.
 
 In order to develop skills and foster togetherness at the workplace,
 multiple training and engagement programs were rolled out. These
 training programs covered a wide range of topics, including Positive
 Attitude, Stress Management, Creativity, Team Effectiveness, Safety and
 Environment, Quality Tools, Total Productive Maintenance, Dexterity,
 skill building programs and Technical Training. The Mahindra Skill
 Excellence Initiative is a holistic approach to enhance the skill and
 capabilities of shop-floor employees and the participation from
 associates across manufacturing facilities has increased from 1,800 of
 last year to 2,300 this year. The initiative brought laurels to the
 Company and the Nation by registering 7th rank at World Skill
 Competition held at Brazil last year.
 
 During the year under review your Company''s shop floor associates
 generated about 17.5 ideas per person towards resolving quality
 concerns, reducing cost, ensuring safety and improving productivity,
 resulting into whopping cost saving of Rs. 26 crores cumulative for 2
 years.
 
 Significant emphasis has also been put on creating awareness about
 health and wellness of employees through annual medical check-ups,
 medical software, health awareness activities and introduction of diet
 food.
 
 Proactive and employee-centric shop floor practices, a focus on
 transparent communication of business goals, an effective concern
 resolution mechanism, and the firm belief that employees are the most
 valuable assets of the Company, are the cornerstone of the Company''s
 employee relations approach.  An ''open door policy'' and constant
 dialogue to create win- win situations, have helped the Company to
 build trust and harmony. The Industrial Relations scenario continued to
 be largely positive across all the Mahindra Automotive and Tractor
 Manufacturing locations. Bonus settlements were reached amicably at all
 locations. All this resulted in zero production loss in the Financial
 Year 2015-16 and helped create a peaceful, healthy and collaborative
 work environment.
 
 Safety, Occupational Health and Environment
 
 The Safety & Occupational Health of its employees is embedded as part
 of the organisational core values of the Company.  The Safety,
 Occupational Health & Environmental Policy (SH&E Policy), inter alia,
 covers and ensures safety of public, employees, plant and equipment,
 ensures compliance on a monthly basis by developing e-compliance
 systems and imparts training through e-learning modules on Safety,
 Sustainability & Prevention of Sexual Harassment to all its employees.
 
 Your Company has a well-established SH&E Policy in line with the
 National Safety, Occupational Health & Environmental Policy. The
 Company Policy has been further drilled down, through the Policy for
 Automotive and Farm Sectors, followed by the respective Plant Policy.
 Each Plant has displayed and communicated the SH&E Policy to all its
 stakeholders.  Objectives and targets derived from the new amended SH&E
 Policy are supported by focussed management programs, safety i4, safety
 Kaizens and mistake proofing projects. Your Company demonstrates a
 strong leadership commitment towards Safety, Occupational Health and
 Environment and as a part of the same, multiple measures and actions
 are implemented with the thorough competency training programs i.e.
 Working on height, Gas cutting and welding, Forklift driving in line to
 reduce operational risk by implementing adequate precautionary
 measures. Safety Observation Tours, Plant Officers observations, safety
 ideas through i4, focused safety Kaizens and mistake proofing projects
 i.e. Poka Yoke''s were undertaken during the year under review.
 
 At each Plant location, annual events are organised and commemorated
 like Road Safety Week, National Safety Day/ Week and Fire Service Day,
 Safety Audits/Inspections, etc.
 
 Safety Culture building is demonstrated in your Company through Safety
 Crusade, Levers of Excellence and Waste to Wealth programs in the
 Manufacturing domain. Safety, Occupational Health awareness training
 with benchmarks on overall Safety and Occupational Health performance
 are conducted. All stakeholders are covered as per the training
 calendar through e-learning modules. Statutory safety Risk audits of
 its facilities are periodically carried out by absorbing all new
 amended legal requirements. Internally developed e-module for Health
 recording on regular internal and external medical and occupational
 check-up of your Company''s employees, associates and health-friendly
 sustainable activities are promoted as part of this Policy.
 
 Your Company''s Plants continued their commitment to improve the
 wellbeing of its employees and contract workmen by establishing Health
 and Wellness Goals by organising physical fitness activities like Yoga,
 Zumba, Occupational Health Examination Camps, Blood Donation Camps,
 medical check- ups, consultation and counselling. Further, World Health
 Day, World Heart Day, World Kidney Day and World Diabetes Day are
 celebrated including Health Audits/Inspection along with Way 2 Wellness
 sessions covering topics i.e. Healthy Heart, Diabetes, etc.
 
 Various path breaking projects have been implemented by your Company
 like renewable energy management programs in the areas of Air Pollution
 Management, Water and Waste Water Management, Solid Waste Management
 and new techniques to grow Go Green Developments have been undertaken.
 
 World Environment Day, World Earth Day, World Water Day and Energy
 Conservation Week and Water Conservation Week are also observed on an
 annual basis. Through stakeholders'' engagement and employees''
 involvement, your Company demonstrates its road map with benchmarks and
 revised targets on the fundamentals of triple bottom line i.e. Planet,
 People and Profit.
 
 Certifications/Recertification''s
 
 All Plants of the Automotive Division have been recertified with
 standard for ISO 14001: 2004 & OHSAS 18001: 2007.  Your Company''s
 commitment to environment stems from the Mahindra Group''s abiding
 concern for engagement with various stakeholders and Society at large.
 Sustainability Reporting System of adopting GRI, G3 to G4 Guidelines
 framework for your Company''s Safety, Health & Environmental
 initiatives, monthly reviewed objectives and targets in operations
 review, helps in continually improving emissions, ambient air quality,
 reducing water pollution, recycling water consumption and minimising
 waste from its processes. Its nature of operations have a low
 environmental impact due to the implementation of the Environment
 Management System wherein a healthy work environment is provided to its
 employees and environment friendly businesses are conducted. Besides,
 to bring cross cultural sensitivity of the Company''s business
 associates, promotional activity towards increasing the awareness on
 Green Supply Chain Management in the vendor community and support by
 conducting suppliers risk assessment have also progressed.
 
 Implementation of Safety, Occupational Health & Environment Management
 System Standard (SHEMS) has been re-enforced by way of a
 re-certification process towards the Company''s commitment of Safety,
 Occupational Health and Environment to the highest levels. OHSAS 18001:
 2007 & EMS ISO 14001: 2004 is the existing best practice. The SHEMS
 aims to eliminate or minimise risk and environmental impact as well as
 impact on employees and other stakeholders who may be exposed to
 Occupational health and Safety risks and environmental impact
 associated with its activities. Though Sustainable development is
 percolated across the Division as well as in Sectors through horizontal
 deployment by sharing of industries internal as well as external best
 practices, Senior Management is also involved in sharing and
 investigation of internal as well as external injuries by a forum
 called Safety® Plant. Senior Management also monitors Plant Safety
 performance through weekly theme based safety reviews, monthly reviews
 of Sector Safety performance and quarterly reviews of President''s
 balance score card in the field of Safety, Occupational Health &
 Environment by achieving targets and improving year on year
 performance.
 
 K. BOARD & COMMITTEES
 
 Directors
 
 As mentioned in the previous Annual Report, Mr. Bharat Doshi desired to
 relinquish his position as a Director, and accordingly ceased to be a
 Director of your Company with effect from the conclusion of the 69th
 Annual General Meeting held on 7th August, 2015.
 
 Mr. S. B. Mainak retires by rotation and, being eligible, offers
 himself for re-appointment at the 70th Annual General Meeting of the
 Company scheduled to be held on 10th August, 2016.
 
 The Company has received declarations from all the Independent
 Directors of the Company confirming that they meet the criteria of
 independence as prescribed both under the Companies Act, 2013 and SEBI
 (Listing Obligations and Disclosure Requirements) Regulations, 2015.
 
 Pursuant to the provisions of the Companies Act, 2013 and the SEBI
 (Listing Obligations and Disclosure Requirements) Regulations, 2015,
 the Board has carried out an annual evaluation of its own performance
 and that of its Committees as well as performance of the Directors
 individually. Feedback was sought by way of a structured questionnaire
 covering various aspects of the Board''s functioning such as adequacy of
 the composition of the Board and its Committees, Board culture,
 execution and performance of specific duties, obligations and
 governance and the evaluation was carried out based on responses
 received from the Directors.
 
 A separate exercise was carried out by the Governance, Nomination and
 Remuneration Committee of the Board to evaluate the performance of
 individual Directors. The performance evaluation of the Non-independent
 Directors and the Board as a whole was carried out by the Independent
 Directors. The performance evaluation of the Chairman of the Company
 was also carried out by the Independent Directors, taking into account
 the views of the Executive Director and Non-Executive Directors. The
 Directors expressed their satisfaction with the evaluation process.
 
 The details of programs for familiarisation of the Independent
 Directors with the Company, their roles, rights, responsibilities in
 the Company, nature of the industry in which the Company operates,
 business model of the Company, number of programs and number of hours
 spent by each Independent Director in terms of the requirements of SEBI
 (Listing Obligations and Disclosure Requirements) Regulations, 2015 are
 available on the Company''s website and can be accessed at the Web-
 link: http://www.mahindra.com/resources/investor-reports/FY16/ Annual
 Reports/Links-AnnualReport.zip
 
 In line with the principles of transparency and consistency, your
 Company has adopted the following Policies which, inter alia, include
 criteria for determining qualifications, positive attributes and
 independence of a Director:
 
 (a) Policy on Appointment of Directors and Senior Management and
 succession planning for orderly succession to the Board and the Senior
 Management;
 
 (b) Policy for remuneration of the Directors, Key Managerial Personnel
 and other employees.
 
 The Policies mentioned at (a) and (b) above are attached as Annexure
 IV-A and IV-B respectively and form part of this Report.
 
 Directors'' Responsibility Statement
 
 Pursuant to section 134(5) of the Companies Act, 2013, your Directors,
 based on the representations received from the Operating Management,
 and after due enquiry, confirm that:
 
 (a) in the preparation of the annual accounts for the Financial Year
 ended 31st March, 2016, the applicable accounting standards have been
 followed;
 
 (b) they had in consultation with Statutory Auditors, selected
 accounting policies and applied them consistently, and made judgments
 and estimates that are reasonable and prudent so as to give a true and
 fair view of the state of affairs of the Company as at 31st March, 2016
 and of the profit of the Company for the year ended on that date;
 
 (c) they have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 2013 for safeguarding the assets of the Company and for
 preventing and detecting fraud and irregularities;
 
 (d) they have prepared the annual accounts on a going concern basis;
 
 (e) they have laid down adequate Internal Financial Controls to be
 followed by the Company and such Internal Financial Controls were
 operating effectively during the Financial Year ended 31st March, 2016;
 
 (f) they had devised proper systems to ensure compliance with the
 provisions of all applicable laws and that such systems were adequate
 and operating effectively throughout the Financial Year ended 31st
 March, 2016.
 
 Board Meetings and Annual General Meeting
 
 A calendar of Meetings is prepared and circulated in advance to the
 Directors.
 
 During the year 1st April, 2015 to 31st March, 2016, six Board Meetings
 were held on: 29th May, 2015, 7th August, 2015, 6th November, 2015,
 21st December, 2015, 12th February, 2016 and 29th March, 2016. The 69th
 Annual General Meeting (AGM) of the Company was held on 7th August,
 2015.
 
 Meetings of Independent Directors
 
 The Independent Directors of your Company meet before the Board
 Meetings without the presence of the Chairman & Managing Director or
 Executive Director or other Non- independent Directors or Chief
 Financial Officer or any other Management Personnel.
 
 These Meetings are conducted in an informal and flexible manner to
 enable the Independent Directors to discuss matters pertaining to,
 inter alia, review of performance of Non-independent Directors and the
 Board as a whole, review the performance of the Chairman of the Company
 (taking into account the views of the Executive and Non-Executive
 Directors), review the performance of the Company, assess the quality,
 quantity and timeliness of flow of information between the Company
 Management and the Board that is necessary for the Board to effectively
 and reasonably perform their duties.
 
 Five Meetings of Independent Directors were held during the year and
 these meetings were well attended.
 
 Audit Committee
 
 The Committee comprises of four Directors viz. Mr. Deepak S. Parekh
 (Chairman of the Committee), Mr. Nadir B. Godrej, Mr. M. M. Murugappan
 and Mr. R. K. Kulkarni. All the Members of the Committee are
 Independent Directors and possess strong accounting and financial
 management knowledge.  The Company Secretary of the Company is the
 Secretary of the Committee.
 
 All the recommendations of the Audit Committee were accepted by the
 Board.
 
 L.  GOVERNANCE
 
 Corporate Governance
 
 Your Company has a rich legacy of ethical governance practices many of
 which were implemented by the Company, even before they were mandated
 by law. Your Company is committed to transparency in all its dealings
 and places high emphasis on business ethics. A Report on Corporate
 Governance along with a Certificate from the Statutory Auditors of the
 Company regarding compliance with the conditions of Corporate
 Governance as stipulated under Schedule V of the SEBI (Listing
 Obligations and Disclosure
 
 Requirements) Regulations, 2015 forms part of the Annual Report.
 
 During the year under review, your Company has been conferred the
 coveted Golden Peacock Award for Excellence in Corporate Governance by
 the Institute of Directors (IOD) and the National Award for Excellence
 in Corporate Governance by the Institute of Company Secretaries of
 India.  Both these Awards validate your Company''s ''Best-in-class''
 corporate governance practices and reflect on its transparent and
 ethical dealings with stakeholders across the entire value chain.
 
 Vigil Mechanism
 
 The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules
 prescribed thereunder and the SEBI (Listing Obligations and Disclosure
 Requirements) Regulations, 2015 is implemented through the Company''s
 Whistle Blower Policy to enable the Directors, employees and all
 stakeholders of the Company to report genuine concerns, to provide for
 adequate safeguards against victimisation of persons who use such
 mechanism and make provision for direct access to the Chairman of the
 Audit Committee.
 
 Whistle Blower Policy of your Company (revised in December, 2015) is
 available on the Company''s website and can be accessed at the Web-link:
 http://www.mahindra.com/resources/ investor-reports/FY16/Annual
 Reports/Links-AnnualReport.zip
 
 Further details are available in the Report on Corporate Governance
 that forms part of this Annual Report.
 
 The Sexual Harassment of Women at Workplace (Prevention, Prohibition
 and Redressal) Act, 2013
 
 The Company has in place an Anti-Sexual Harassment Policy in line with
 the requirements of the Sexual Harassment of Women at Workplace
 (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints
 Committee (ICC) has been set up to redress complaints received
 regarding sexual harassment. All employees (permanent, contractual,
 temporary, trainees) are covered under this Policy. The Policy is
 gender neutral.
 
 During the year under review, 4 complaints with allegations of sexual
 harassment were filed, all of which were disposed-off as per the
 provisions of The Sexual Harassment of Women at Workplace (Prevention,
 Prohibition and Redressal) Act, 2013.
 
 Business Responsibility Report
 
 The ''Business Responsibility Report'' (BRR) of your Company for the year
 2015-16 forms part of this Annual Report as required under Regulation
 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements)
 Regulations, 2015.
 
 Your Company strongly believes that sustainable and inclusive growth is
 possible by using the levers of environmental and social responsibility
 while setting aspirational targets and improving economic performance
 to ensure business continuity and rapid growth. Your Company is
 committed to leverage ''Alternative Thinking'' to build competitive
 advantage in achieving high shareholder returns through customer
 centricity, innovation, good governance and inclusive human development
 while being sensitive to the environment.
 
 Risk Management
 
 Your Company has a well-defined risk management framework in place. The
 risk management framework works at various levels across the
 enterprise. These levels form the strategic defence cover of the
 Company''s risk management. The Company has a robust Organisational
 structure for managing and reporting on risks.
 
 Your Company has constituted a Risk Management Committee of the Board
 which is authorised to monitor and review risk management plan and risk
 certificate. The Committee is also empowered, inter alia, to review and
 recommend to the Board the modifications to the Risk Management Policy.
 Further, the Board has constituted a Corporate Risk Council comprising
 the Senior Executives of the Company. The terms of reference of the
 Council comprises review of risks and Risk Management Policy on
 periodic intervals.
 
 Your Company has developed and implemented a Risk Management Policy
 which is approved by the Board. The Risk Management Policy, inter alia,
 includes identification therein of elements of risk, including those
 which in the opinion of the Board may threaten the existence of the
 Company. Risk management process has been established across the
 Company and is designed to identify, assess and frame a response to
 threats that affect the achievement of its objectives. Further, it is
 embedded across all the major functions and revolves around the goals
 and objectives of the organisation.
 
 M. CORPORATE SOCIAL RESPONSIBILITY AND RELATED MATTERS
 
 Corporate Social Responsibility (CSR)
 
 Your Company''s Corporate Social Responsibility (CSR) efforts in the
 last financial year have been concentrated on initiatives which
 contribute to nation building, and have in fact been identified as
 priorities in the national agenda. As per the Company''s CSR Policy, it
 continues to focus its CSR efforts within the constituencies of girls,
 youth and farmers by innovatively supporting them through programs
 designed in the domains of education, health and environment, while
 harnessing the power of technology.
 
 Your Company has an ongoing vibrant CSR program, of which some of the
 notable ongoing investments in education are Project Nanhi Kali, which
 supports the education of underprivileged girls, Mahindra Pride
 Schools, which provide livelihood training to youth from socially and
 economically disadvantaged communities, and a variety of scholarship
 programs, which range from providing opportunities to youth from low
 income group families to undergo diploma courses at vocational
 education institutes, to allowing meritorious students to pursue their
 post graduate studies at reputed universities overseas. Your Company
 has also helped set up a premier Engineering institution ''Mahindra
 Ecole Centrale'' (MEC) in Hyderabad, in partnership with Ecole Centrale,
 Paris and the Jawaharlal Nehru Technological University, Hyderabad. In
 the area of public health, your Company sponsored Lifeline Express
 trains, through which medical care and treatment was provided to
 communities who do not have access to any medical facilities. Your
 Company also contributes to the environment by adding green cover
 through planting of over a million trees every year through Project
 Hariyali. Further, your Company has helped support small and marginal
 farmers by training them in effective farming practices including soil
 health, crop planning, creating model farms with bio-dynamic farming
 practices, thereby increasing crop productivity, through the Wardha
 Family Farming Project, Krishi Mitra and Integrated Watershed
 Development Project.  Your Company supported the Prime Minister''s
 Swachh Bharat Swachh Vidyalaya program by constructing 4,340 toilets
 primarily for girls in Government Schools in Financial Year 2014-15,
 which the Company is maintaining for a period of 12 months, and in
 addition, built another 1,170 toilets in Financial Year 2015-16. Your
 Company is also building 8 blocks of public toilets in Delhi through a
 Confederation of Indian Industries initiative. In addition, your
 Company has a strong community of employees who volunteer through the
 ESOPs (Employee Social Options) platform.
 
 CSR Policy
 
 The Corporate Social Responsibility Committee had formulated and
 recommended to the Board, a Corporate Social Responsibility Policy
 (CSR Policy) which was subsequently adopted by it and is being
 implemented by the Company. The CSR Policy including a brief overview
 of the projects or programs proposed to be undertaken can be accessed
 at the Company''s website through the Web-link:
 http://www.mahindra.com/resources/investor-reports/FY16/ Annual
 Reports/Links-AnnualReport.zip
 
 CSR Committee
 
 The CSR Committee comprises of Dr. Vishakha N. Desai (Chairperson), Mr.
 Anand G. Mahindra, Mr. R. K. Kulkarni, Dr. Pawan Goenka and Mr. Vikram
 Singh Mehta. The Committee, inter alia, monitors the CSR activities.
 
 During the year under review, your Company spent Rs. 85.90 crores on
 CSR activities. The amount equal to 2% of the average net profit for
 the past three financial years required to be spent on CSR activities
 was Rs. 84.95 crores.  The detailed Annual Report on the CSR activities
 undertaken by your Company in Financial Year 2016, is annexed herewith
 marked as Annexure V.
 
 Sustainability Initiatives
 
 During the year under review, the 8th Sustainability Report for the
 year 2014-15 was released and like earlier seven years this Report was
 also externally assured by KPMG with GRI checked application level A .
 
 Your Company retained the focus on the Environmental, Social and
 Governance (ESG) parameters, on its journey towards Sustainability in
 the year under review by consolidating the initiatives of the previous
 years and initiating fresh ones. The Enterprise Risks framework was
 reviewed to include climate change risks to the business. The
 bio-diversity assessments have been initiated to further the actions on
 the India Business and Bio-diversity Initiative (IBBI).
 
 Mr. Anand Mahindra, Chairman and Managing Director of your Company was
 invited on the Global Leadership Panel on Carbon Pricing convened by
 World Bank Group President Jim Yong Kim and IMF Managing Director
 Christine Lagarde.
 
 This panel comprising of five heads of state and five CEOs, (global
 ambassadors for Carbon pricing and climate action) will assemble
 virtually to catalyze action towards putting an effective price on
 Carbon at the national and local level, and in businesses.
 
 Your Company is the first Indian Company to sign the new initiative
 called EP 100 to increase energy productivity which is developed and
 administered by The Climate Group. EP 100 is a global campaign to
 encourage the world''s most influential businesses to commit to doubling
 their energy productivity - which means getting more economic output
 from each unit of energy input.
 
 During the year under review, your Company signed Memorandum of
 Understanding with Institute of Sustainable Communities to create a
 Training Centre on Environment, Health and Safety for suppliers to the
 Company and also to other Original Equipment Manufacturers (OEMs).
 
 The Sustainability performance for your Company for the Financial Year
 2015-16 will be elaborated in detail in the GRI Report which is under
 preparation and will be ready for release shortly.
 
 Your Company was recognized for its consistent performance on the ESG
 dimensions during the year under review, by way of:
 
 - Receiving Sustainable Plus Platinum Label for Financial Year 2015
 from CII-CESD;
 
 - Receiving ''Excellence in Sustainable Supply Chain Award 2015'' in the
 CII-ITC Sustainability Awards;
 
 - Ranking first in CSR in ''The Best Companies for CSR'' study conducted
 by The Economic Times (Futurescape and MM Udaipur);
 
 - Receiving ''Golden Peacock Award for Risk Management'' from the
 Institute of Directors;
 
 - Retaining the status of getting listed on the Dow Jones
 Sustainability Index - 2015 under the ''Emerging Market Index'' for the
 consecutive third year with improvement in percentile scores;
 
 - Retaining its position in the top 10 in the India 200 Carbon
 Disclosure Leadership Index 2015;
 
 - The Mahindra Group Sustainability Report was shortlisted amongst the
 finalists of Asia Sustainability Reporting Awards by CSR Works.
 
 Conservation of Energy, Technology Absorption and Foreign Exchange
 Earnings and Outgo
 
 The information pertaining to conservation of energy, technology
 absorption, foreign exchange earnings and outgo as required under
 section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the
 Companies (Accounts) Rules, 2014 is furnished in Annexure VI and is
 attached to this Report.
 
 N. SECRETARIAL
 
 Share Capital
 
 The issued, subscribed and paid-up Share Capital of the Company stood
 at Rs. 310.55 crores as at 31st March, 2016 comprising of 62,10,92,384
 Ordinary (Equity) Shares of Rs. 5 each fully paid-up. There was no
 change in Share Capital during the year under review.
 
 Extract of Annual Return
 
 Pursuant to section 134(3)(a) and section 92(3) of the Companies Act,
 2013 read with Rule 12(1) of the Companies (Management and
 Administration) Rules, 2014, an extract of the Annual Return as on 31st
 March, 2016 in Form No. MGT-9 is attached herewith as Annexure VII and
 forms part of this Report.
 
 Amendment to the Articles of Association of the Company
 
 At the Sixty-Ninth Annual General Meeting held on 7th August, 2015,
 based on the approval of the Members, the Company adopted new Articles
 of Association which had been streamlined and aligned with the
 Companies Act, 2013 and Rules made thereunder.
 
 Appointment of M/s. Karvy Computershare Private Limited (Karvy) as
 the Registrar & Share Transfer Agent of your Company
 
 The Securities and Exchange Board of India (SEBI) had vide its
 Ex-Parte Ad Interim Order No. WTM/RKA/MIRSD2/41/2016 dated 22nd March,
 2016, inter alia, advised clients of Sharepro Services (India) Private
 Limited (Sharepro) to carry out/ switchover their activities related
 to registrar to an issue and share transfer agent, either in-house or
 through another registrar to an issue and share transfer agent
 registered with SEBI.
 
 In view of the above, the Board of Directors of your Company at its
 Meeting held on 30th May, 2016, decided to appoint Messrs Karvy
 Computershare Private Limited, as the Registrar & Share Transfer Agents
 with effect from 13th June, 2016.  Accordingly, a Resolution seeking
 your consent for keeping the Register and Index of Members and Returns
 at the office of Messrs Karvy Computershare Private Limited is included
 in the Notice convening the Annual General Meeting.
 
 Your Company is committed to protecting the interests of its
 Shareholders and has taken necessary steps as per the provisions of law
 for the same.
 
 GENERAL
 
 The Chairman & Managing Director of the Company did not receive any
 remuneration or commission from any of the subsidiary of your Company.
 The Whole Time Director of the Company did not receive any commission
 from any of its subsidiaries and has not exercised ESOPs of
 subsidiaries of the Company during the year, which were granted in the
 earlier year(s).
 
 Your Directors state that no disclosure or reporting is required in
 respect of the following items as there were no transactions/ events on
 these items during the year under review:
 
 1.  Issue of equity shares with differential rights as to dividend,
 voting or otherwise.
 
 2.  Issue of Shares (Including Sweat Equity Shares) to employees of the
 Company under any Scheme save and except ESOS referred to in this
 Report.
 
 3.  Significant or material orders passed by the Regulators or Courts
 or Tribunals which impact the going concern status and the Company''s
 operation in future.
 
 4.  Voting rights which are not directly exercised by the employees in
 respect of shares for the subscription/ purchase of which loan was
 given by the Company (as there is no scheme pursuant to which such
 persons can beneficially hold shares as envisaged under section 67(3)
 (c) of the Companies Act, 2013).
 
 
 
                                   For and on behalf of the Board
 
                                                ANAND G. MAHINDRA
 
                                     Chairman & Managing Director
 
 Mumbai, 30th May, 2016
Source : Dion Global Solutions Limited
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