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Mahindra & Mahindra Financial Services Ltd.

BSE: 532720 | NSE: M&MFIN |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE774D01024 | SECTOR: Finance - Leasing & Hire Purchase

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Jan 21, 13:36
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30-Day
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  • Bid Price (Qty.)

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  • Offer Price (Qty.)

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Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

Board’s Report

To,

The Members of

Mahindna & Mahindra Financial Services Limited

Your Directors are pleased to present their Twenty-Ninth Report together with the audited financial statements of your Company for the Financial Year ended 31st March, 2019.

The performance highlights and summarized financial results of the Company are given below:

PERFORMANCE HIGHLIGHTS

- Consolidated income for the year increased by 32% to Rs. 10,430.9 Crores as compared to Rs. 7,912.2 Crores in 2017-18;

- Consolidated income from operations for the year was Rs. 10,371.7 Crores as compared to Rs. 7,883.9 Crores in 2017-18, a growth of 32%;

- Consolidated profit before tax for the year was Rs. 2,840.8 Crores as compared to Rs. 1,904.8 Crores in

2017-18;

- Consolidated profit after tax and non-controlling interest for the year was Rs. 1,827.3 Crores as compared to Rs.1,185.2 Crores in 2017-18.

FINANCIAL RESULTS

Rs. in Crores

CONSOLIDATED

STANDALONE

March 2019

March 2018

March 2019

March 2018

Total Income

10,430.9

7,912.2

8,809.8

6,685.2

Less : Finance Costs

4,432.3

3,436.2

3,944.6

3,081.6

Expenditure

3,129.3

2,546.7

2,422.6

1,957.5

Depreciation, Amortization and Impairment

75.5

55.2

60.2

44.2

Total Expenses

7,637.1

6,038.1

6,427.4

5,083.3

Profit Before Exceptional Items and Taxes

2,793.8

1,874.1

2,382.4

1,601.9

Share of profit of associate

47.0

30.7

-

-

Exceptional items

-

-

-

64.9

Profit Before Tax

2,840.8

1,904.8

2,382.4

1,666.8

Less : Provision For Tax

Current Tax

711.4

665.2

576.8

549.5

Deferred Tax

262.1

23.3

248.5

41.2

Profit After Tax for the Year

1,867.3

1,216.3

1,557.1

1,076.1

Less : Non-controlling interests

40.0

31.1

-

-

Profit for the Year attributable to Owners of the Company

1,827.3

1,185.2

1,557.1

1,076.1

Balance of profit for earlier years

3,282.5

2,909.0

3,193.2

2,608.4

Less : Transfer to Debenture Redemption Reserve

146.7

50.5

146.7

50.5

Profit available for Appropriation

4,963.1

4,043.7

4,603.6

3,634.0

Add : Other Comprehensive Income/(Loss)

(9.5)

(13.6)

(8.6)

(12.3)

Less : Dividend paid on Equity Shares

296.6

163.4

293.8

161.0

General Reserve

155.8

88.4

155.8

89.1

Statutory Reserve

385.2

224.3

311.4

178.4

Gross obligation at fair value to acquire non-controlling interest

158.6

316.8

-

-

Transaction with non-controlling interest

-

5.4

-

-

Securities Premium on fresh issue of equity share capital

0.1

-

-

-

Add : Profit on sale of Equity Shares of subsidiaries

-

50.7

-

-

Balance carried forward

3,957.3

3,282.5

3,834.0

3,193.2

IMPLEMENTATION OF INDIAN ACCOUNTING STANDARDS (“IND AS”)

Your Company has prepared the Financial Statements in accordance with Indian Accounting Standards (IND AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016. The Company has adopted IND AS from 1st April, 2018 with effective transition date of 1st April, 2017 and accordingly, these Financial Statements together with the Financial Statements for the comparative reporting period have been prepared with the recognition and measurement principles stated therein, prescribed under Section 133 of the Companies Act, 2013 (the Act”) read with relevant Rules issued there under and the other accounting principles generally accepted in India.

This transition to IND AS has been carried out from the erstwhile Accounting Standards notified under the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended), guidelines issued by the Reserve Bank of India (RBI”) and other generally accepted accounting principles in India (collectively referred to as ''''the previous GAAP”). Accordingly, the impact of transition has been recorded in the opening reserve as at 1st April, 2017 and the corresponding adjustments pertaining to comparative previous year as presented in these Financial Statements have been restated/reclassified in order to conform to current year presentation.

TRANSFER TO RESERVES

The Company proposes to transfer an amount of Rs. 155.8 Crores to the General Reserve, Rs. 311.4 Crores to the Statutory Reserve and Rs. 146.7 Crores to the Debenture Redemption Reserve. An amount of Rs. 3,834.0 Crores is proposed to be retained in the Statement of Profit and Loss.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 4.0 per Equity Share and also a Special Dividend of Rs. 2.5 per Equity Share aggregating Rs.6.5 per Equity Share of the face value of Rs. 2 each payable to those Members whose names appear in the Register of Members as on the Book Closure date. The Special Dividend is being recommended in the light of the very successful completion of twenty-five years of the business operations of the Company.

The dividend including dividend tax for the Financial Year 2018-19 will absorb a sum of Rs. 477.9 Crores [as against Rs. 293.8 Crores on account of dividend of Rs. 4.0 per Equity Share and tax thereon, paid for the previous year].

The dividend pay-out is in accordance with the Dividend Distribution Policy of the Company which has been approved by the Board of Directors.

DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy, containing the requirements prescribed in Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is appended as “Annexure I” and forms part of this Annual Report.

The Dividend Distribution Policy can also be accessed on the Company''s website at the web-link: https://www.mahindrafinance.com/policies.aspx.

During the year, an amount of Rs. 4,97,120 being the unclaimed/unpaid dividend of the Company for the Financial Year ended 31st March, 2011 was transferred in September, 2018 to the Investor Education and Protection Fund Authority.

OPERATIONS

During the year under review, your Company completed 25 glorious years of its business operations in rural and semi-urban markets. Rural sentiments continued to be positive for the Company from the start of the year till November 2018. During this period both farm and infra cash flows were good enabling higher collection efficiency on a consistent basis despite subdued automobile growth. Elections in few States in November

2018 and the impending Lok Sabha Elections slowed down growth in the last few months of the year. However, even during this slowdown, your Company could maintain the asset growth as well as collections, by continuously engaging with customers.

Your Company further strengthened its position as a significant financier in rural and semi-urban geographies by providing a wide range of products and services. Your Company has retained its leadership position in financing the Mahindra range of vehicles and tractors. Your Company not only retained the status of major financier for Maruti vehicles in semi-urban and rural India but also expanded its coverage to include several leading vehicle dealers. With the Company''s vast semi-urban and rural distribution network, it could attract many OEMs like Hyundai, Renault, Nissan for a tie-up. Your Company consolidated its position as a leading financier in all Aggregator (like Ola and Uber) and Selfdrive vehicles (like Zoom and Revv) segment. In this year, your Company also emerged as a significant player in financing of Heavy, Medium Commercial Vehicles and Construction Equipment for major OEMs. Your Company has also launched pilot projects to understand the upcoming opportunities in Leasing. Your Company maintains a leading presence in the growing market of financing of pre-owned vehicles such as Cars, Utility Vehicles and Tractors.

Network Expansion

Your Company strengthened its pan-India presence with a network of 1,321 offices, which is one of the largest amongst Non-Banking Financial Companies. Your Company further expanded its geographical presence by reaching out to untapped villages and increased its footprint by opening new branches and making it more accessible to its customers. Your Company''s nationwide network of branches and locally recruited employees have facilitated in catering to the diverse financial requirements of its customers by identifying and understanding the needs and aspirations of the people. With its strong presence covering even the most remote areas of the country, your Company is providing flexible financing opportunities to aspiring individuals to realize their dreams and helping them to ''RISE''. Your Company believes that incessantly serving its customers and channel partners and enhancing customer relationship is the starting point of a great successful journey.

Enhanced Product Offerings

Your Company has earned the trust and confidence of its customers with its consistent, transparent and reliable services and as a result, customer satisfaction across its network continues to remain high. Your Company has cumulatively financed the aspirations of over 6 million customers since its inception, most of whom had no prior credit history. Your Company''s philosophy of helping rural customers by providing tailor-made products and services at their doorstep has given a big boost in transforming rural lives. Your Company has also launched Suvidha Loans to meet specific needs of its existing customers through its numerous Branches.

During the year under review, your Company continued to expand its reach in the Micro Small and Medium Enterprises (MSME”) segment. MSME Assets Under Management crossed more than Rs. 3,655.90 Crores during the period under review, covering 3,719 customers.

A reorganized collection structure has enabled your Company to take advantage of improved rural cash flows from better yields and Minimum Support Price which augmented its overall collections.

Digital

Your Company remains firmly focused on addressing the changing but unique needs of its rural and semi-urban customers. Your Company has successfully implemented low bandwidth end-to-end mobile sales application with real time integrations with government databases and credit bureaus to disburse loans to customers anytime, anywhere. Your Company has also launched multilingual mobile application for its customers to view their current loan details and make payments. It also helps in getting pre-approved Suvidha Loans. The digital strategy of your Company focuses on providing tailor-made solutions to meet its customers'' needs. Your Company and its subsidiaries have embraced digital in performing different activities like customers'' acquisition, selling of Fixed Deposits, Mutual Funds and Insurance products in partnership with Common Service Centers Scheme. Your Company will continue to further its digital presence by extending its coverage to more activities including improving employee efficiency.

Getting Future Ready

In order to provide superior experience to its customers, your Company has entered into a long term partnership with a leading technology service provider. With this state-of-the-art technology, your Company will be in a position to delight its customers.

Building Analytics Capability

Your Company has consistently serviced over 6 million semi-urban and rural customers across 3.6 lakh villages, for the past 25 years. In the process, the Company has acquired a very rich database of these millions of customers which could be productively mined for not only increasing repeat business but also to cross-sell many other financial and insurance products. Towards this purpose, the Company has set up a Data Analytics and Insight Department with experienced data science professionals.

The overall disbursement registered a growth of 22% at Rs. 46,210.3 Crores as compared to Rs. 37,772.9 Crores in the previous year. Total Income grew by 32% at Rs. 8,809.8 Crores for the year ended 31st March, 2019 as compared to Rs. 6,685.2 Crores for the previous year. Profit Before Tax (PBT) grew by 43% at Rs. 2,382.4 Crores as compared to Rs. 1,666.8 Crores for the previous year. Profit After Tax (PAT) increased by 45% at Rs. 1,557.10 Crores as compared to Rs. 1,076.10 Crores in the previous year.

During the year under review, the Assets Under Management stood at Rs. 67,078 Crores as at 31st March, 2019 as against Rs. 52,793 Crores as at 31st March, 2018, a growth of 27%.

There has been no change in the nature of business of the Company during the year under review.

DISTRIBUTION OF MUTUAL FUND PRODUCTS

During the year under review, the activity of distribution of Mutual Fund Products (MFP) was carried out across 160 branches covering 24 States.

As on 31st March, 2019, the amount of Assets Under Management outstanding through the Company''s Distribution Services on MFP, aggregate of institutional and retail segment, was Rs. 1,373.48 Crores and the number of clients stood at 57,389.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

CORPORATE GOVERNANCE

Your Company practices a culture that is built on core values and ethical governance practices. 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 Messrs. KSR & Co., Company Secretaries LLP regarding compliance with the conditions of Corporate Governance as stipulated in Regulations 17 to 27, clauses (b) to (i) of sub-regulation (2) of Regulation 46 and paragraphs C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of the Annual Report.

SHARE CAPITAL

The issued, subscribed and paid-up Equity Share Capital as on 31st March, 2019 was Rs. 123.55 Crores, comprising of 61,77,64,960 Equity Shares of the face value of Rs. 2 each, fully paid-up.

There was no change in the Share Capital during the year under review.

The Company has neither issued shares with differential rights as to dividend, voting or otherwise, nor has issued sweat equity, other than Employee Stock Options under the Employees'' Stock Option Scheme referred to in this Report, during the year under review.

As on 31st March, 2019, none of the Directors of the Company holds instruments convertible into Equity Shares of the Company.

STOCK OPTIONS

During the year under review, on the recommendation of the Nomination and Remuneration Committee of your Company, the Trustees of the Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Trust have granted 21,94,249 Stock Options to Eligible Employees under the Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Scheme-2010 (2010 Scheme”). No new Options were granted under the Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Scheme-2005 (2005 Scheme”). The Company does not have any scheme to fund its employees to purchase the shares of the Company. No employee has been issued stock options during the year, equal to or exceeding 1% of the issued capital of the Company at the time of grant.

During the year, the Nomination and Remuneration Committee has inter alia, approved the transfer of 7,85,275 Stock Options, being the balance number of Options available in the 2005 Scheme to the 2010 Scheme.

Pursuant to the aforesaid transfer of 7,85,275 Options to the 2010 Scheme on 14th March, 2019, the 2005 Scheme stands closed, effective from the date of the said transfer.

The 2010 Scheme of the Company is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations”) and there were no material changes made to the said Scheme. A Certificate from Messrs. B S R & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, pursuant to Regulation 13 of the SBEB Regulations would be placed at the Annual General Meeting for inspection by Members.

Voting rights on the Shares issued to employees under the aforesaid Scheme are either exercised by them directly or through their appointed proxy.

The details of the Employees'' Stock Options and the Company''s Employees'' Stock Option Trust 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: https://www. mahindrafinance.com/annual-reports.aspx.

ECONOMY

Global

After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies. From an accelerating economic activity almost across the world with projected growth in 2019 being at 3.9 percent, a lot have changed in the last year. China''s growth declined following a combination of needed regulatory tightening to rein in shadow banking and an increase in trade tensions with the United States. The euro area economy lost more momentum than expected as consumer and business confidence weakened and car production in Germany was disrupted by the introduction of new emission standards; investment dropped in Italy as sovereign spreads widened; and external demand, especially from emerging Asia, softened. Elsewhere, natural disasters hurt activity in Japan.

Trade tensions increasingly took a toll on business confidence and, so, financial market sentiment worsened, with financial conditions tightening for vulnerable emerging markets and advanced economies, weighing on global demand. Conditions have eased in 2019 as the US Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a US-China trade deal, but they remain slightly more restrictive than in the fall.

Outlook

As a result of these developments, global growth is now projected to slow from 3.6 percent in 2018 to 3.3 percent in 2019, before returning to 3.6 percent in 2020. The projected pickup in the second half of 2019 is predicated on an ongoing buildup of policy stimulus in China, recent improvements in global financial market sentiment, the waning of some temporary drags on growth in the euro area, and a gradual stabilization of conditions in stressed emerging market economies.

While global growth could surprise favorably if trade differences are resolved quickly so that business confidence rebounds and investor sentiment strengthens further, the balance of risks to the outlook remains on the downside. A further escalation of trade tensions and the associated increases in policy uncertainty could further weaken growth. Across all economies, the imperative is to take actions that boost potential output, improve inclusiveness, and strengthen resilience.

Domestic

After averaging close to 8 per cent through Q3:2017-18 to Q1:2018-19, domestic economic activity lost speed. Domestic economic activity lost pace in Q2 and Q3:FY2019, with coincident indicators suggesting a sharper deceleration in Q4. Aggregate demand weakened in Q2 by a large drag from net exports, which became entrenched in Q3 due to deceleration in public spending and private consumption.

Headline CPI inflation has declined sharply since mid- 2018, driven by the sustained fall in food inflation (even turning into deflation during October 2018-February 2019), the waning away of the direct impact of house rent allowances for central government employees, and more recently, by a sharp fall in fuel inflation.

During the end of second quarter, amid certain defaults in the NBFC sector, a credit freeze was witnessed in the bond market especially for NBFCs. The spread of 5-year AAA corporate bond yield over 5-year G-sec yield went up, further the spread for NBFCs/HFCs were even higher with availability of liquidity being limited. For NBFCs and HFCs combined, the share of participation in the issuance of Commercial Paper reduced from upwards of one-half to closer to one-third of the total issuances reflecting increased credit risk premia in the aftermath of the defaults.

Outlook

Looking ahead, favorable factors such as an increase in financial flows to the commercial sector, stabilization of crude oil and other commodity prices, consumption and investment enhancing proposals in the Union Budget 2019-20, and, the expectation of a normal monsoon are expected to boost economic activity. However, there could be headwinds from greater than expected moderation in global growth and global trade as well as unanticipated volatility in global financial markets.

GDP growth is projected to improve from 7.0 per cent in 2018-19 to 7.2 per cent in 2019-20. There are upside as well as downside risks to the baseline growth scenario. The boost to private investment activity from faster resolution of stressed assets and increased as well as more broad-based credit off take amidst rising capacity utilization can raise the baseline growth projection. Conversely, further escalation of trade tensions and protectionist trends, increased volatility in global financial conditions over the uncertainty of the stance of monetary policy in the US and other advanced economies, uncertainty surrounding Brexit, a sharper slowdown in the Chinese economy and deviations of the south-west monsoon from the baseline assumption of a normal monsoon may pose downside risks to the baseline growth path.

Source: International Monetary Fund (IMF), RBI Finance

The NBFC sector experienced liquidity problems in the second half of the financial year 2018-19. The funding squeeze has contributed to higher funding costs and a slowdown in loan growth for non-banking financial companies. Your Company continued to focus on managing cash efficiently and ensured that it had adequate liquidity and back-up lines of credit.

During the year under review, the Reserve Bank of India (RBI”) held six Bi-monthly Monetary Policy Committee (MPC”) meetings. The Policy Repo rates under the Liquidity Adjustment Facility (LAF”) was at 6.00% at the beginning of the year. The MPC took the decision to increase the Policy Repo Rate under the LAF by 25 basis points each in the second and third meetings to 6.50% and maintained it at that level till the fifth meeting. Finally, in the sixth meeting, MPC took the decision to reduce the Policy Repo Rate under the LAF by 25 basis points from 6.50% to 6.25%. The MPC changed its stance from neutral” to calibrated tightening” in the fourth policy review and reverted back to neutral” in the sixth policy review. The market continued to expect further reduction in the policy rate.

At the start of the fiscal year (April 2018), 10-year G-Sec benchmark yields (7.17% Gov Stock 2028), were trading at 7.40% levels which was at similar level by end of March 2019. However, in the wake of rising trade tensions, concerns about a no deal” Brexit and signs of slowing down of the global economy, financial markets sentiments turned cautious and 10-year G-Sec yield touched a peak of 8.18% (around September 2018). The spread of 5-year AAA corporate bond yield over 5-year G-Sec yield moved up, reflecting increased credit risk premia in the aftermath of certain defaults in the NBFC sector. The defaults also led to a liquidity crisis for several non-banking financial companies. The spread declined consequent to the Reserve Bank''s announcement to inject rupee liquidity through long-term foreign exchange buy/sell swap auction. Divergent movements were observed in various segments of the domestic financial market as they reacted differently to the evolving global and local developments during second half of the Financial Year 2018-19. Lower inflation prints, continuing fall in crude oil prices and buoyed sentiments after the announcement of multiple open market purchases by the RBI, resulted in a decline in yields.

During the last quarter of the year under review, a new 10-year benchmark (7.26% GS 2029 - issued in January 2019) which closed the year at 7.35% was issued. During the year, the INR depreciated by 6.7% from INR 65 to INR 69 per USD with intermittent levels being at INR 74/USD around mid-October. The sudden sharp increase and heightened volatility in the currency resulted in inflows from international market being tightened, resulting in further pressure on the currency, which subsided with the global crude prices subsiding.

With a view to promoting and developing a liquid and dynamic corporate bond market, the Securities and Exchange Board of India (SEBI”) vide its Circular No. SEBI/HO/DDHS/CIR/P/2018/144 dated 26th November, 2018 has provided a framework comprising detailed guidelines for raising of funds by issuance of debt securities and mandated all large corporates” to raise at least 25 per cent of their incremental borrowings during a financial year by issuing debt securities from the financial year 201920 onwards.

Your Company has been identified as a Large Corporate” as per the applicability criteria stipulated in the aforesaid SEBI Circular.

During the year under review, your Company continued with its diverse methods of sourcing funds in addition to regular borrowings like Secured and Unsecured Debentures, Term Loans, Fixed Deposits, Commercial Papers, etc., and maintained prudential Asset/ Liability match throughout the year. Your Company sourced long-term debentures and loans from banks and other institutions at attractive rates. Your Company, for the first time has raised funds through issuance of Market Linked Debentures, External Commercial Borrowings (ECB”) and internationally rated securitisation transactions.

During the year, your Company has successfully completed 7 (seven) securitisation transactions aggregating to Rs. 4,389.20 crores and raised around US- 200 million through ECB.

- Private Placement Issues of Non-Convertible Debentures

During the year under review, your Company issued Secured/Unsecured Redeemable NonConvertible Debentures including Secured Redeemable Principal Protected Non-Convertible Market Linked Debentures (NCDs”) aggregating to Rs. 6,800.90 Crores on a private placement basis, in various tranches.

As specified in the respective offer documents, the funds raised from NCDs were utilised for the purpose of financing, repayment of dues of other financial institutions/Banks or for longterm working capital.

- Public Issuance of Non-Convertible Debentures

Your Company continues to broaden the liability mix by bringing in new instruments as well as diversifying the investor base and profile. During the year under review, your Company successfully raised Rs. 2,146.99 Crores through its third public issue of 2,14,69,947 Secured Redeemable Non-Convertible Debentures and Unsecured Subordinated Redeemable Non-Convertible Debentures of face value of Rs. 1,000 each, consisting of 1,81,01,224 Secured Redeemable NonConvertible Debentures and 33,68,723 Unsecured Subordinated Redeemable NonConvertible Debentures (NCDs”). With this issuance, approximately 8% of your Company''s borrowing is funded through this instrument. The NCDs were allotted on 18th January, 2019 and listed on BSE Limited on 21st January, 2019.

The net proceeds received from the Public Issue were used for the purpose of onward lending, financing, refinancing the existing indebtedness of the Company, long-term working capital requirements, Issue expenses and for general corporate purposes. Details of the Issue and the end use were furnished to the Audit Committee.

The Company has been regular in making payments of principal and interest on the NCDs. There are no NCDs which have not been claimed by investors or not paid by the Company after the date on which the NCDs became due for redemption.

- Rupee Denominated Medium Term Note (MTN)

The Rupee Denominated Medium Term Note (MTN) programme of your Company, is listed on the Singapore Exchange Securities Trading Limited. During the year under review, no securities have been issued by your Company under the programme.

INVESTOR RELATIONS

Your Company has been continuously interacting and endeavours to further improve its engagement with Domestic and International investors/analysts by participating either in-person meetings or through use of technology i.e. conference calls, video-conferencing, Tele-presence meetings. Your Company attended multiple investor meets organised by reputed Global and Domestic Broking Houses during the year, both in India and abroad, to communicate details of its performance, important regulatory and market developments and exchange of information. Quarterly and annual earnings calls are scheduled through structured conference calls to keep various stakeholders informed about the past performance and future outlook of the industry, especially those having a bearing on the Company. These interactions with institutional shareholders, fund managers and analysts are based on generally available information that is accessible to the public on a non-discriminatory basis. Your Company uploads the transcript of the quarterly earnings calls on its website which can be accessed by existing and potential investors and lenders.

Your Company believes in transparent communication and building a relationship of mutual understanding and trust. Your Company further ensures that critical information about the Company is available to all the investors by hosting such information on the Company''s website.

CAPITAL ADEQUACY

As on 31st March, 2019, the Capital to Risk Assets Ratio (CRAR) of your Company was 20.3% which is well above the minimum requirement of 15% CRAR prescribed by the Reserve Bank of India.

CREDIT RATING

The credit rating details of the Company as on 31st March, 2019 were as follows:

Rating Agency

Type of Instrument

Rating*

Remarks

India Ratings & Research Private Limited

Commercial Paper Programme and Bank Facilities (Fund/NonFund Based Working Capital Limit)

''IND A1 ''

The ''A1'' rating indicates the Highest Level of Rating. Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk.

Long-term Debt instruments, Subordinated Debt Programme and Bank Facilities (Fund/NonFund Based Working Capital Limit)

''IND AAA/Stable''

''IND PP-MLD AAA emr/Stable''

The ''AAA'' ratings denote the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

''PP-MLD'' indicates the full principal protection in the equity-linked notes wherein the issuer is obligated to pay the full principal upon maturity.

Suffix “eirr” denotes the exclusion of the embedded market risk from the rating.

CARE Ratings Limited (Formerly known as Credit Analysis & Research Limited)

Long-term Debt instruments and Subordinated Debt Programme

''CARE AAA/Stable''

Brickwork Ratings India Private Limited

Long-term Subordinated Debt Programme

''BWR AAA/Stable''

CRISIL Limited

Fixed Deposit Programme

''CRISIL FAAA/Stable''

Long-term Debt Instruments, Subordinated Debt Programme and Bank Loan Facilities

''CRISIL AA /Stable''

The ''AA '' rating indicates a high degree of safety with regard to timely payment of financial obligations. Such instruments carry very low credit risk.

Commercial Paper Programme and Bank Loan Facilities

''CRISIL A1 ''

The ''A1'' rating indicates the Highest Level of Rating. Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk.

* The ratings mentioned above were reaffirmed by the Rating Agencies during the Financial Year 2018-19. With the above rating affirmations, your Company continues to enjoy the highest level of rating from all major rating agencies at the same time.

Out of the above, Tier I capital adequacy ratio stood at 15.5% and Tier II capital adequacy ratio stood at 4.8%, respectively.

RBI GUIDELINES

The Company continues to comply with all the applicable regulations prescribed by the Reserve Bank of India (RBI”), from time to time.

ACHIEVEMENTS

Your Company won several awards and accolades during the year under review. Select few awards/ recognition are enumerated hereunder:

Corporate Governance

- Listed amongst the Top 10 Companies of the ''S&P BSE 100 Companies'' with a ''High Corporate Governance Score'' for the second time in a row, in a study jointly conducted by International Finance Corporation (IFC), a member of the World Bank Group, BSE Limited (BSE) and Institutional Investor Advisory Services (IiAS), based on G20/OECD Principles of Corporate Governance.

Business & Marketing:

- Adjudged the Gold Award Winner as the Retail NBFC of the Year 2018” by Outlook Money Awards 2018.

- Won two prestigious Awards at the Rural Marketing Forum and Awards 2019” in the following categories:

a. Most Effective use of Direct Marketing to Rural Consumers for 2 Wheeler to 20 Wheeler Maha Loan Mela”.

b. Best Integrated Rural Marketing Campaign for Vehicle Loan Festival”.

- Won the Silver Award for MF SUTRADHAAR program and Bronze Award for Suvidha Loans at Flame Awards Asia 2018.

- Won the PRCI (Public Relations Council of India) Collateral Awards 2019 in the following categories:

i) Crystal Award for Table Calendar-2019

ii) Gold Award for Annual Report design

iii) Advertisement Campaign on Vehicle Loan Festival

CSR & Sustainability

- Conferred with the coveted Golden Peacock Award for Corporate Social Responsibility-2018 by the Institute of Directors.

- Listed in Dow Jones Sustainability Index (DJSI) Emerging Markets category for the 6th consecutive year.

- Honoured with ET NOW CSR Leadership Award 2018 for Best CSR Practices and Skill development.

- Included in the Sustainability Yearbook 2019” released by RobecoSAM.

- Won the Gold Award for Women and Child Health initiative at the CSR Health Impact Awards 2018.

Human Resources

- Listed by Great Place to Work® Institute India in the Top 100 list of Great Places to work in India for 3 years in a row.

- Ranked 11th amongst 25 Best Large Workplaces in Asia 2019”, by Great Place to Work® Institute.

- Won three awards from Great Place to Work® Institute India:

a. Ranked 14th in India''s Best Companies to Work for 2018.

b. Special Category Award in Career Management.

c. Ranked among India''s 15 Best Workplaces in BFSI-2018.

- Listed in Top 100 Best Companies for Women - 2018 by Working Mother and Avtar.

- Won two awards at the TISS Leapvault CLO Summit 2018 in the following categories:

a. Gold Award for the Best Coaching/ Mentoring intervention for GURU-Mentoring Program”.

b. Silver Award for Best Mobile Learning Intervention for Manthan - Training Module”.

- Bagged four awards at the Mega Corporate Film Festival Seminar & Awards 2018 in the following categories:

a. First Prize in the Best Corporate Film - Communicating Employee Engagement-2018”.

b. Second Runners-up in the Best Corporate Film Communicating Vision, Values, Mission, Purpose - 2018”.

c. Second Runners-up in the Best Corporate Film for Communicating Organizational Culture - 2018”.

d. Third Runners-up in Communicating Commitment to Woman Empowerment -2018”.

Information & Technology

- The Project, Voice Induced Business Enablement has won the Flame Awards - Asia” (Gold category) for the Best Small Budget Campaign of the Year.

FIXED DEPOSITS AND LOANS/ADVANCES

Your Company provides a wide range of Fixed Deposit schemes that cater to the investment needs of various classes of investors. These Deposits carry attractive interest rates with superior service enabled by robust processes and technology. In order to tap rural and semi-urban savings and reach out to the farthest customers, your Company continues to expand its network and make its presence felt in the most remote regions of the country.

During the year, CRISIL has reaffirmed a rating of ''CRISIL FAAA/Stable'' for your Company''s Fixed Deposits. This rating represents the highest degree of safety regarding timely servicing of financial obligations and carries the lowest credit risk. Your Company''s Deposits continue to be a preferred investment amongst the investors.

As on 31st March, 2019, your Company has mobilized funds from Fixed Deposits to the tune of Rs. 5,698.88 Crores, with an investor base of over 1,86,359 investors.

Your Company continues to serve the investors by introducing several customer centric measures on an ongoing basis to further strengthen its processes in sync with the requirements of the Fixed Deposit holders. The Company communicates various intimations via SMS, e-mails, post, etc., to its investors as well as sends reminder emails to clients whose TDS is likely to be deducted before any payout/ accrual. Your Company also provides online renewal facility, online generation of TDS certificates from customer/broker portal and Seamless Investment process for employees.

During the year under review, your Company has rolled out several initiatives aimed at offering a superior customer experience. Some key ones are:

- Initiation of online acceptance of Deposits through the Company''s website;

- Introduction of Dhan Samruddhi Deposits which are available through Digital Channel Partners;

- Introduction of Bulk Deposits above Rs. 5 Crores.

As at 31st March, 2019, 6,152 Deposits amounting to Rs.7.22 Crores had matured for payment and remained unclaimed. The unclaimed Deposits have since reduced to 5,421 Deposits amounting to Rs.

6.02 Crores. There has been no default in repayment of Deposits or payment of interest during the year.

Your Company being a Non-Banking Financial Company, the disclosures required as per Rule 8 (5) (v) and (vi) of the Companies (Accounts) Rules, 2014 read with Sections 73 and 74 of the Companies Act, 2013, are not applicable to it.

The information pursuant to Clause 35(1) of Master Direction DNBR.PD.002/03.10.119/2016-17 dated 25th August, 2016 issued by the Reserve Bank of India on Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016, regarding unpaid/unclaimed public deposits as on 31st March, 2019, is furnished below:

i. total number of accounts of Public Deposits of the Company which have not been claimed by the depositors or not paid by the Company after the date on which the deposit became due for repayment: 6,152.

ii. the total amounts due under such accounts remaining unclaimed or unpaid beyond the dates referred to in clause (i) as aforesaid: Rs. 7,22,20,437.

Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their Deposits. Your Company continues to send intimation letters via registered post every 3 months to all those Fixed Deposit holders whose Deposits have matured as well as to those whose Deposits remain unclaimed. Where the Deposit remains unclaimed, follow-up action is also initiated through the concerned agent or branch.

Pursuant to Section 125(2) (i) of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the IEPF Rules”) as amended from time to time, matured Deposits remaining unclaimed for a period of seven years from the date they became due for payment are required to be transferred to the Investor Education and Protection Fund (IEPF) Authority established by the Central Government. Further, interest accrued on the matured deposits which remain unclaimed for a period of seven years from the date of payment will also be transferred to the IEPF under Section 125(2] (k). The concerned depositor can claim the Deposit and/or interest from the IEPF Authority by following the procedure laid down in the IEPF Rules.

During the year under review, an amount of Rs. 0.09 Crores has been transferred to the IEPF Authority.

During the year under review, the Company has not given any loans and advances in the nature of loans to its subsidiaries or associate or loans and advances in the nature of loans to firms/companies in which Directors are interested.

Accordingly, the disclosure of particulars of loans/ advances, etc., as required to be furnished in the Annual Accounts of the Company pursuant to Regulations 34(3) and 53(f) read with paragraph A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is not applicable to the Company.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS IN SECURITIES

Pursuant to Section 186(11) of the Companies Act, 2013 (the Act”), the provisions of Section 186(4) of the Act requiring disclosure in the Financial Statements of the full particulars of the loans made and guarantees given or securities provided by a Non Banking Financial Company in the ordinary course of its business and the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient of the loan or guarantee or security are exempted from disclosure in the Annual Report.

Further, pursuant to the provisions of Section 186 (4) of the Act, the details of investments made by the Company are given in the Notes to the Financial Statements.

SUSTAINABILITY INITIATIVES

Sustainability has invariably been a core to the purpose of Mahindra Finance. At the heart of our organizational strategy is an inclusive business model that enables the residents of semi-urban and rural India to access formal channels of credit/finance which helps them in creating long-term value. In our journey spanning more than two decades, we have empowered the lives of millions of Indians by providing access to myriad financial services and products, which have helped them to Rise for Good”. Your Company has been enabling them to meet their aspirations through financial product offerings. Your Company helps the people build their homes through affordable home loan services provided by Mahindra Rural Housing Finance Limited, secure their life and assets by insurance solutions of Mahindra Insurance Brokers Limited and offers investment options by Mahindra Asset Management Company Private Limited. By providing the right set of opportunities in the remote areas and enabling our customers to advance in their lives, we are making positive contribution to multiple stakeholders. Your Company lays strong emphasis on customer centricity with its customer base spread across more than 3.5 lakh villages in India with majority of them belonging to the ''Earn and Pay'' segment.

Your Company commenced its journey towards reporting sustainability performance in 2008-09 through Mahindra Group''s Sustainability Report and in the year 2012-13 your Company released its first standalone Sustainability Report. In the reporting year, the Company released its Sixth Sustainability Report for the Financial Year 2017-18 with the theme I Am Responsible” based on Integrated Reporting framework and adhering to the Global Reporting Initiative''s (GRI Standards). The Report embodies a motto that each individual of the organization firmly believes in ''Making Sustainability Personal'' under the theme I Am Responsible”. It also showcases how your Company responsibly creates value for all its stakeholders.

This Report is hosted on your Company''s website at the web-link: https://www.mahindrafinance.com/ sustainability.aspx.

Your Company continued to focus on sustainability awareness for different stakeholders and took various initiatives to engage them on these fronts. In 2018, your Company became the 1st Financial Company in India to be committed towards call to action for Science Based Targets. The Science Based Targets initiative (SBTi) requires companies to publicly commit to setting carbon emission reduction targets that are in line with climate science.

Your Company has been listed on the Dow Jones Sustainability Index (DJSI) Emerging Market Trends for the sixth consecutive year. Your Company is the only Company from amongst the Diversified Financial Services Companies in India to have made it to this list. To be included in the DJSI, companies are assessed and selected based on their long term Environmental, Social and Governance (ESG) management plans and actions. Your Company got selected in The Sustainability Yearbook 2019” being the only Financial Services Sector Company to qualify amongst 9 companies from India. This signifies your Company being amongst top Sustainability performers in Diversified Financial Services Sector across the World based on Corporate Sustainability Assessment done by Robeco SAM.

Your Company''s approach has been to make its environmental disclosure transparent, and accordingly, it has been reporting disclosures and reports on its performance through the Carbon Disclosure Project (CDP) India since Financial Year 2011-12. During the reporting year, your Company attained CDP Performance Band - C meaning that your Company is at Awareness” band.

During the year, your Company made proactive efforts to reduce CO2 emissions (carbon footprint) through Project Mahindra Hariyali”, by planting more than 71,000 saplings throughout the country. The Company''s Annual Family Fun Day Vrindavan” attained Yale''s Gold Level Green Event Certification as 87% waste generated at Vrindavan was recycled, composted and sent to biogas plants.

Your Company is gearing up to be future ready by making sustainability and climate change an integral part of its risk framework and taking measures to mitigate and manage them. Weather reports are assessed on a regular basis and aligned with business operations to protect the customers and minimize the risk impact. The outlook for the future has been positive and your Company is well equipped to enable its customers and communities to progress through its inclusive and sustainable business model.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report (BRR”) of your Company for the year 2018-19 forms part of this Annual Report as required under Regulation 34(2) (f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and is appended as “Annexure II”.

Your Company is building an inclusive organization by empowering all the stakeholders and facilitating their contribution towards growth that is both holistic and long term. Through the inclusive business model, your Company is endeavoring to cater to the bottom of the pyramid in the rural and semi-urban areas, enabling them to earn their livelihood through varied financial products and services. Your Company has always been conscious of its role as a responsible corporate citizen. Through its wide network of branches with locally-recruited employees, strong and lasting relationships with its stakeholders, large customer base, vast experience and market knowledge, your Company is providing financial resources to underserviced regions of the country.

The BRR can also be accessed on the Company''s website at the web-link: https://www.mahindrafinance.com/ sustainability.aspx.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Transforming lives of the rural population has been the primary focus of all CSR initiatives undertaken by your Company. The endeavour is to empower the rural communities and help them unleash their potential. Your Company has identified Healthcare, Education (including Livelihood) and Environment as key CSR thrust areas for the welfare of one of the major stakeholders - rural communities in India.

Building on the momentum created last year through several education and livelihood projects, your Company continued to provide scholarships to 2,500 undergraduate and 500 graduate students, organised visits to municipal schools and financial support to run a vocational skill building center catering to 500 People with Disability. In an effort to encourage more women to take up livelihood opportunities, your Company also implemented Drivers Training Program for 375 women and an Auto-mechanic Training Program for 180 women. Further, your Company is empowering youth, women and working population with the knowledge of sound financial practices to enable them in managing their money better by conducting a Financial Literacy workshop. Reaffirming its commitment to the cause of education, your Company continued its support to over 10,450 underprivileged girl children from socially and economically marginalised families living in urban, rural and tribal areas of India. To promote inclusive growth of socially and economically disadvantaged youth, your Company continued its support to Mahindra Pride School which skilled 3,453 youth and all of them have been absorbed in various organisations. Further, an additional 39,783 students were trained through 866 batches of Mahindra Pride Classrooms conducted through Polytechnics and Arts & Science Colleges in 14 States.

In the area of healthcare, your Company organized nationwide blood donation drives, health checkup camps, Swachh Bharat activities, donated 14 ambulances that have made access to primary healthcare centers easy, for several tribal and rural patients across the nation. Your Company has revamped the Medical Equipment Donation project to provide financial support for procuring crucial equipment used in liver transplants and dialysis for kidney patients. Additionally, your Company continued its support for Maternal & Child Health Care project which provides nutritional supplementation to anemic pregnant and lactating women, adolescents and malnourished children in rural areas.

For increasing focus on better environment, your Company helped build a greener tomorrow by planting over 72,500 trees with a higher survival rate.

Apart from the key thrust areas, your Company contributed funds for other causes such as preservation and promotion of the fine arts & culture and conducted visits to orphanage homes, differently abled homes, homes for the elderly, etc., to re-affirm its pledge to the society.

During the year under review, your Company has spent Rs. 26.87 Crores on CSR projects/programs. 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. 26.81 Crores. Your Company is in compliance with the statutory requirements in this regard.

CSR COMMITTEE

During the year under review, the CSR Committee comprised of Mr. Piyush Mankad (Chairman), Mr. Ramesh Iyer, Mr. V. Ravi and Dr. Anish Shah. The Committee, inter alia, reviews and monitors the CSR activities.

Consequent upon the resignation of Mr. Piyush Mankad, as an Independent Director with effect from the close of business hours on 31st March, 2019, the Committee was reconstituted effective from 9th April, 2019 as follows:

Name

Category

Mr. Dhananjay Mungale

- Chairman of the Committee (Independent Director)

Ms. Rama Bijapurkar

- Independent Director

Mr. Ramesh Iyer

- Vice-Chairman & Managing Director

Mr. V. Ravi

- Executive Director & Chief Financial Officer

Dr. Anish Shah

- Non-Executive Non Independent Director

CSR POLICY

The CSR Policy of the Company duly amended, is hosted on the Company''s website at the web-link: https://www.mahindrafinance.com/csr.aspx and a

brief outline of the CSR Policy and the CSR initiatives undertaken by the Company during the year as per Annexure prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as “Annexure III” to this Report.

EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3(a) of Section 134 and subsection (3) of Section 92 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 at 31st March, 2019 in Form No. MGT-9, is appended as “Annexure IV” and forms part of this Report.

The Annual Return of the Company as at 31st March, 2019 has been placed on the website of the Company and can be accessed at https://www. mahindrafinance.com/annual-reports.aspx.

BOARD MEETINGS AND ANNUAL GENERAL MEETING

The calendar of the Board/Committee Meetings and the Annual General Meeting is circulated to the Directors in advance to enable them to plan their schedule for effective participation at the respective meetings. Additional Board Meetings are convened by giving appropriate notice to address business exigencies. At times certain decisions are taken by the Board/Committee through circular resolutions.

All the decisions and urgent matters approved by way of circular resolutions are placed and noted at the subsequent Board/Committee Meeting.

The Board of Directors met six times during the year under review, on 25th April, 2018, 27th July, 2018, 24th October. 2018, 25th January. 2019, 7th March, 2019 and 27th March, 2019. The requisite quorum was present for all the Meetings. The maximum time gap between any two Meetings was not more than one hundred and twenty days. These Meetings were well attended. The 28th Annual General Meeting (AGM) of the Company was held on 27th July, 2018.

Detailed information on the Meetings of the Board, its Committees and the AGM is included in the Report on Corporate Governance, which forms part of this Annual Report.

MEETINGS OF INDEPENDENT DIRECTORS

The Independent Directors met twice during the year under review, on 24th October, 2018 and 6th March, 2019. The Meetings were conducted in an informal manner without the presence of the Wholetime Directors, the Non-Executive Non-Independent Directors, or any other Management Personnel.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company has various Committees which have been constituted as a part of good corporate governance practices and the same are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

During the year under review, the Audit Committee comprised of Mr. C. B. Bhave as the Chairman and Mr. Dhananjay Mungale, Mr. M. G. Bhide, Ms. Rama Bijapurkar, Mr. Piyush Mankad, Mr. V. S. Parthasarathy and Dr. Anish Shah as Members.

Consequent upon the resignation of Mr. M. G. Bhide and Mr. Piyush Mankad, Independent Directors from the Board of Directors with effect from the close of business hours on 31st March, 2019, and the appointment of Mr. Milind Sarwate as an Independent Director of the Company with effect from 1st April, 2019, the Committee stands reconstituted effective from 9th April, 2019 as follows:

Name

Category

Mr. C. B. Bhave

- Chairman of the Committee (Independent Director)

Mr. Dhananjay Mungale

- Independent Director

Ms. Rama Bijapurkar

- Independent Director

Mr. V. S. Parthasarathy

- Non-Executive Non Independent Director

Dr. Anish Shah

- Non-Executive Non Independent Director

Mr. Milind Sarwate

- Independent Director

The recommendations of the Audit Committee were duly approved and accepted by the Board during the year under review.

The other Committees of the Board are:

i) Nomination and Remuneration Committee

ii) Stakeholders Relationship Committee

iii) Corporate Social Responsibility Committee

iv) Risk Management Committee

v) Asset Liability Committee

vi) Committee for Strategic Investments

vii) IT Strategy Committee

The details with respect to the composition, powers, roles, terms of reference, Meetings held and attendance of the Directors at such Meetings of the relevant Committees are given in detail in the Report on Corporate Governance of the Company which forms part of this Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Directors

Mr. M. G. Bhide and Mr. Piyush Mankad were appointed as Independent Directors by the Members at the 24th Annual General Meeting held on 24th July, 2014 for a term of 5 (five) consecutive years commencing from 24th July, 2014 to 23rd July, 2019, not liable to retire by rotation.

Pursuant to the applicability of Regulation 17(1A) of the Listing Regulations, as amended by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, mandating approval of Members by a special resolution for the appointment/continuance of Non-Executive Director(s) above the age of 75 years, effective from 1st April, 2019, Mr. M. G. Bhide and Mr. Piyush Mankad, who have attained the age of 75 years, tendered their resignation as Independent Directors from the Board of Directors of the Company with effect from the close of business hours on 31st March, 2019.

The Board places on record its sincere appreciation for the invaluable contribution and guidance provided by Mr. M. G. Bhide and Mr. Piyush Mankad during their tenure as Independent Directors of the Company.

The Board of Directors, based on the recommendation of the Nomination and Remuneration Committee, vide its Circular Resolution dated 25th February, 2019 proposed the appointment of Mr. Milind Sarwate as an Independent Director of the Company to hold office for a term of 5 (five) consecutive years commencing from 1st April, 2019 to 31st March, 2024, not liable to retire by rotation, subject to the approval of the Shareholders.

Subsequent to the above, the Shareholders of the Company have pursuant to the provisions of Sections 149, 150, 152 read with Schedule IV and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014, approved the appointment of Mr. Milind Sarwate as an Independent Director of the Company with effect from 1st April, 2019 for a term of 5 (five) consecutive years, vide an Ordinary Resolution passed by means of a Postal Ballot on 31st March, 2019.

Mr. V. Ravi, Executive Director & Chief Financial Officer, retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for reappointment.

The Nomination and Remuneration Committee, on the basis of performance evaluation of Independent Directors and taking into account the business knowledge, experience and the substantial contribution made by Mr. Dhananjay Mungale and Ms. Rama Bijapurkar during their tenure, has recommended to the Board that the continued association of Mr. Dhananjay Mungale and Ms. Rama Bijapurkar as Independent Directors of the Company would be beneficial to the Company. Based on the above and the performance evaluation of Independent Directors, the Board recommends the re-appointment of Mr. Dhananjay Mungale and Ms. Rama Bijapurkar, as Independent Directors of the Company, not liable to retire by rotation, to hold office for a second term of 5 (five) consecutive years on the Board of the Company, commencing from 24th July, 2019 to 23rd July, 2024 The Company has received the requisite Notices from Members in writing proposing their appointment as Independent Directors.

Mr. Dhananjay Mungale and Ms. Rama Bijapurkar have given their consent for re-appointment and have confirmed that they continue to retain their status as Independent Directors and that they do not suffer from any disqualifications for appointment.

Mr. Dhananjay Mungale, Ms. Rama Bijapurkar and Mr. V. Ravi are not debarred or disqualified from holding the office of Director by virtue of any SEBI Order or any other such authority, pursuant to circulars dated 20th June, 2018 issued by BSE Limited and the National Stock Exchange of India Limited pertaining to enforcement of SEBI Orders regarding appointment of Directors by the listed companies.

All the Directors of the Company have confirmed that they satisfy the fit and proper” criteria as prescribed in Chapter XI of RBI Master Direction No. DNBR. PD. 008/ 03.10.119/2016-17 dated 1st September, 201 6 and that they are not disqualified from being appointed/continuing as Directors in terms of Section 164(2) of the Companies Act, 2013.

The details of the Directors being re-appointed are set out in the Notice convening the ensuing AGM.

Key Managerial Personnel

Mr. Ramesh Iyer, Vice-Chairman & Managing Director, Mr. V. Ravi, Executive Director & Chief Financial Officer and Ms. Arnavaz M. Pardiwalla, Company Secretary of the Company have been designated as the Key Managerial Personnel of the Company (KMP) pursuant to the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

There has been no change in the KMP during the year under review.

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they fulfill the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Directors'' Responsibility Statement

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, (the Act”) 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 for financial year ended 31st March, 2019, the applicable accounting standards have been followed and there are no material departures in adoption of these standards.

ii. they have in consultation with the Statutory Auditors selected such 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, 2019 and of the profit of the Company for the year ended on that date.

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. they have prepared the annual accounts for financial year ended 31st March, 2019 on a going concern basis.

v. they have laid down adequate internal financial controls to be followed by the Company and that such internal financial controls were operating effectively during the financial year ended 31st March, 2019.

vi. they have devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31st March, 2019.

Performance Evaluation of the Board

The Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations”) stipulate the evaluation of the performance of the Board, its Committees, Individual Directors and the Chairperson.

The Company has formulated a Policy for performance evaluation of the Independent Directors, the Board, its Committees and other individual Directors which includes criteria for performance evaluation of the Non-Executive Directors and Executive Directors.

The evaluation framework for assessing the performance of Directors comprises of various key areas such as attendance at Board and Committee Meetings, quality of contribution to Board discussions and decisions, strategic insights or inputs regarding future growth of the Company and its performance, ability to challenge views in a constructive manner, knowledge acquired with regard to the Company''s business/ activities, understanding of industry and global trends, etc.

The evaluation involves self-evaluation by the Board Member and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/her evaluation.

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the Listing Regulations, 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 (including Independent Directors).

Feedback was sought by way of well-defined and structured questionnaires covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, areas of responsibility, execution and performance of specific duties, obligations and governance, compliance, oversight of Company''s subsidiaries, etc., and the evaluation was carried out based on responses received from the Directors.

A separate exercise was carried out by the Nomination and Remuneration Committee of the Board to evaluate the performance of individual Directors who were evaluated on several parameters such as level of engagement and contribution, independence of judgment safeguarding the interest of the Company and its minority shareholders and knowledge acquired with regard to the Company''s business/activities.

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 Directors and NonExecutive Directors.

The performance evaluation of the Independent Directors was carried out by the entire Board excluding the Director being evaluated. Qualitative comments and suggestions of Directors were taken into consideration by the Chairman of the Board and the Chairman of the Nomination and Remuneration Committee. The Directors have expressed their satisfaction with the evaluation process.

Familiarisation Programme for Independent Directors

The details of programmes for familiarisation of 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 and related matters along with details of number of programmes and number of hours spent by each of the Independent Directors during the Financial Year 2018-19, in terms of the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are available on the website of the Company and can be accessed at the web-link: https:// www.mahindrafinance.com/pdf/Familiarisation Programme for the FY 2018 19.pdf.

Policies on Appointment of Directors and Senior Management and Remuneration of Directors,

Key Managerial Personnel and Employees

i) Policy on Appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management

In accordance with the provisions of Section 134(3)(e) of the Companies Act, 2013 (the Act”) read with Section 178(2) of the Act and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has adopted a Policy on Appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management, which inter alia, includes the criteria for determining qualifications, positive attributes and independence of Directors, identification of persons who are qualified to become Directors and who may be appointed in the Senior Management team, succession planning for Directors and Senior Management, and the Talent Management framework of the Company.

During the year under review, the Board based on the recommendations of the Nomination and Remuneration Committee amended the aforesaid Policy to align it in accordance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018.

ii) Policy on Remuneration of Directors and the Remuneration Policy for Key Managerial Personnel and Employees of the Company

Your Company has also adopted the Policy on Remuneration of Directors and the Remuneration Policy for Key Managerial Personnel and Employees of the Company in accordance with the provisions of sub-section (4) of Section 178 of the Act.

During the year under review, your Company made changes in these Policies to align them with the amendments made pursuant to the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, respectively.

The Policy on Remuneration of Directors and the Remuneration Policy for Key Managerial Personnel and Employees of the Company, as amended, are appended as “Annexure V-A” and “Annexure V-B”, respectively, and form part of this Report.

The criteria for determining qualifications, positive attributes and independence of a Director and the Remuneration Policies for Directors, Key Managerial Personnel and other employees have been discussed in detail in the Report on Corporate Governance.

AUDITORS

Statutory Auditors

Messrs. B S R & Co. LLP, Chartered Accountants, (ICAI Firm Registration No. 101 248W/W-100022), were appointed as Statutory Auditors of the Company at the Twenty-seventh Annual General Meeting (AGM”) to hold office for a period of five years, commencing from the conclusion of the 27th AGM held on 24th July, 2017 till the conclusion of the 32nd AGM of the Company to be held in the year 2022, subject to ratification of their appointment by the Members at the AGM, as may be applicable.

Pursuant to the Notification issued by the Ministry of Corporate Affairs on 7th May, 2018 amending Section 139 of the Companies Act, 2013 and the applicable Rules, the mandatory requirement for ratification of appointment of Auditors by the Members at every AGM has been omitted and hence the Company has not proposed ratification of appointment of Messrs. B S R & Co. LLP, Chartered Accountants, at the ensuing AGM.

The Statutory Auditors have given a confirmation to the effect that they are eligible to continue with their appointment and that they have not been disqualified in any manner from continuing as Statutory Auditors. The remuneration payable to the Statutory Auditors shall be determined by the Board of Directors based on the recommendation of the Audit Committee.

The Report given by the Auditors on the Financial Statements of the Company for the Financial Year 2018-19 is a part of the Annual Report. The Report is unmodified and does not contain any qualification, reservation, adverse remark or disclaimer.

The Statutory Auditors were present at the last AGM.

Secretarial Auditor

The Board of Directors of the Company has appointed Messrs. KSR & Co., Company Secretaries LLP to conduct the Secretarial Audit of the Company pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. In accordance with the provisions of sub-section (1) of Section 204, the Secretarial Audit Report for the Financial Year 2018-19 is appended to this Report as “Annexure VI”.

The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Cost Records and Cost Audit

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable in respect of the business activities carried out by the Company.

Reporting of Frauds by Auditors

During the year under review, the Statutory Auditors and the 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 need to be mentioned in this Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts/arrangements/transactions entered into by the Company during the Financial Year with related parties were in the ordinary course of business and on an arm''s length basis. During the year under review, your Company had not entered into any contract/ arrangement/transaction with Related Parties which could be considered material in accordance with the Policy on Related Party Transactions. Pursuant to Section 134 (3) (h) read with Rule 8 (2) of the Companies (Accounts) Rules, 2014, there are no transactions to be reported under Section 188 (1) of the Companies Act, 2013. Accordingly, the disclosure of Related Party Transactions, as required under Section 134 (3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable to the Company.

During the year under review, the Board of Directors based on the recommendations of the Audit Committee amended the Policy on Related Party Transactions in line with the revised Listing Regulations and the same is uploaded on the Company''s website at the web-link: https://www.mahindrafinance.com/policies.aspx.

Further details on the transactions with related parties are provided in the accompanying financial statements.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

No material changes and commitments have occurred after the closure of the Financial Year 2018-19 till the date of this Report, which would affect the financial position of your Company.

RISK MANAGEMENT POLICY

Your Company has a comprehensive Risk Management Policy in place and has laid down a well-defined risk management framework to identify, assess and monitor risks and strengthen controls to mitigate risks. Your Company has established procedures to periodically place before the Risk Management Committee and the Board of Directors, the risk assessment and minimisation procedures being followed by the Company and steps taken by it to mitigate these risks.

During the year under review, the Board based on the recommendations of the Risk Management Committee amended the Risk Management Policy which now specifically covers Cyber Security and related risks, in accordance with the amendments under the Listing Regulations.

The Risk Management Policy, inter alia, includes identification therein of elements of risk, including Cyber Security and related risks as well as those risks which in the opinion of the Board may threaten the existence of the Company. The 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 Company.

The development and implementation of Risk Management Policy adopted by the Company is discussed in detail in the Management Discussion and Analysis chapter, which forms part of this Annual Report.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Company promotes ethical behaviour in all its business activities and has established a vigil mechanism for its Directors, Employees and Stakeholders associated with the Company to report their genuine concerns. The Vigil Mechanism as envisaged in the Companies Act, 2013 and the Rules prescribed thereunder and the Listing Regulations is implemented through the Whistle Blower Policy, to provide for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairperson of the Audit Committee.

As per the Whistle Blower Policy implemented by the Company, the Employees, Directors, customers, dealers, vendors, suppliers, or any Stakeholders associated with the Company are free to report illegal or unethical behaviour, actual or suspected fraud or violation of the Company''s Codes of Conduct or Corporate Governance Policies or any improper activity to the Chairman of the Audit Committee of the Company or Chairman of the Company or Convenor of the Corporate Governance Cell.

During the year under review, the Board of Directors based on the recommendation of the Audit Committee has amended the Whistle Blower Policy to inter alia, enable employees to report incidents of leak or suspected leak of unpublished price sensitive information in line with the changes made in the SEBI (Prohibition of Insider Trading) Regulations, 2015.

The Whistle Blower Policy provides for protected disclosure and protection to the Whistle Blower. Under the Whistle Blower Policy, the confidentiality of those reporting violation(s) is protected and they are not subject to any discriminatory practices. Protected disclosures can also be made by sending an email at the designated email id : mmfsl_whistleblower@ mahindra.com.

The Whistle Blower Policy has been appropriately communicated within the Company and is available on the website of your Company at the web-link: https://www.mahindrafinance.com/pdf/MMFSL VigilMechanism.pdf.

No personnel have been denied access to the Audit Committee.

SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

The Company''s subsidiaries and joint venture continue to contribute to the overall growth in revenues and overall performance of your Company.

A Report on the performance and financial position of each of the subsidiaries and the associate company included in the Consolidated Financial Statements and their contribution to the overall performance of the Company, is provided in Form AOC-1 as Annexure A to the Consolidated Financial Statements and forms part of this Annual Report.

Your Company has formulated a Policy for determining ''Material'' Subsidiaries as defined in Regulation 16 of the Listing Regulations. During the year under review, the Policy was amended in line with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018. This Policy has been hosted on the website of the Company and can be accessed through the web-link: https://www.mahindrafinance.com/policies.aspx.

SUBSIDIARIES

Mahindra Insurance Brokers Limited

During the year under review, Mahindra Insurance Brokers Limited (MIBL), the subsidiary in the business of Direct and Re-insurance Broking, serviced approximately 2.27 million insurance cases, with a total of 22,65,146 cases for both Life and Non-Life Retail business. The customized Life insurance cover Mahindra Loan Suraksha” (MLS) increased from 6,85,264 lives covered with a Sum Assured of Rs. 21,579.3 Crores in the Financial Year 2017-18 to 8,13,742 lives covered with a Sum Assured of Rs. 27,765.0 Crores in the Financial Year 2018-19. A substantial portion of MLS continues to be covered in the rural markets.

MIBL achieved a growth of 11% in Gross Premium facilitated for the Corporate and Retail business lines, increasing from Rs. 2,049.1 Crores in the Financial Year 2017-18 to Rs. 2,267.8 Crores in the Financial Year 2018-19. The Total Income increased by 32% from Rs. 245.1 Crores in the Financial Year 2017-18 to Rs. 323.4 Crores in the Financial Year 2018-19. The Profit before Tax increased by 24% from Rs. 83.2 Crores to Rs. 102.9 Crores crossing a milestone of Rs. 100 Crores, and the Profit after Tax increased by 33% from Rs. 53.6 Crores to Rs. 71.5 Crores during the same period.

MIBL has been able to reach the benefit of insurance to cover 3,00,000 villages across India.

Mahindra Rural Housing Finance Limited

Mahindra Rural Housing Finance Limited (MRHFL), the Company''s subsidiary in the business of providing loans for purchase, renovation, construction of houses to individuals in the rural and semi-urban areas of the country, registered a total income of Rs. 1,383.9 Crores as compared to Rs. 1,034.8 Crores for the previous year, registering a growth of 34%. Profit before tax was 52% higher at Rs. 366.2 Crores as compared to Rs. 241.2 Crores for the previous year. Profit after tax was 44% higher at Rs. 250.5 Crores as compared to Rs. 173.9 Crores for the previous year.

During the year under review, MRHFL disbursed loans aggregating to Rs. 2,581.1 Crores as against Rs. 2,789.2 Crores in the previous year.

MRHFL continued its focus on serving customers in rural India. Majority of the loans disbursed were to customers in villages with an average annual household income of less than Rs. 2 lakhs. During the year under consideration, MRHFL disbursed home loans to around 1,71,000 households (in addition to around 7,79,000 existing households as on 31st March, 2018). MRHFL has been expanding its geographical presence to provide affordable services for rural households.

During the year under review, operations of MRHFL were strengthened in the States of Maharashtra, Gujarat, Rajasthan, Tamil Nadu, Andhra Pradesh, Telangana, Chhattisgarh, Kerala, Karnataka, Madhya Pradesh, Uttar Pradesh, Uttarakhand and Bihar.

Acquisition of Shareholding of National Housing Bank in MRHFL

In March 2019, your Company approved the acquisition of 1,18,91,511 Equity Shares of Rs. 10 each held by National Housing Bank representing 9.68% of the share capital in MRHFL, at a premium of Rs. 231.16 per share, aggregating to Rs. 286.78 Crores.

Post the acquisition subsequent to the year end, the shareholding of your Company in MRHFL stands increased from 88.75% to 98.43% of MRHFL''s share capital.

Mahindra Asset Management Company Private Limited

Mahindra Asset Management Company Private Limited (MAMCPL), a wholly-owned subsidiary of the Company acts as an Investment Manager for the schemes of Mahindra Mutual Fund. As on 31st March, 2019, MAMCPL was acting as the Investment Manager for nine schemes.

The Assets under Management in these nine schemes were Rs. 4,871 Crores in March 2019 as compared to Rs. 3,352 Crores in March 2018. Of these assets, Rs. 1,449 Crores were in equity schemes in March 2019 as compared to Rs. 1,173 Crores in March 2018. MAMCPL has empanelled more than 11,500 distributors and opened 1,59,399 investor accounts in these schemes recording a rise of more than 25%.

During the year under review, the total income of MAMCPL was Rs.28.1 Crores as compared to Rs. 23.5 Crores for the previous year, registering a growth of 19%. The operations for the year have resulted in a loss of Rs.39.5 Crores as against a loss of Rs.37.5 Crores during the previous year.

Mahindra Trustee Company Private Limited

Mahindra Trustee Company Private Limited (MTCPL), your Company''s wholly-owned subsidiary, acts as the Trustee to Mahindra Mutual Fund.

During the year, MTCPL earned trusteeship fees of Rs. 23.50 lakhs and other income of Rs. 1.10 lakhs as compared to Rs.23.87 lakhs and Rs. 0.83 lakhs respectively, for the previous year. The total expenses for the year were Rs. 25.34 lakhs as against Rs. 24.25 lakhs in the previous year. MTCPL recorded a loss of Rs. 0.83 lakhs for the year under review as against a profit of Rs. 0.44 lakhs in the previous year.

JOINT VENTURE Mahindra Finance USA LLC.

The joint venture company''s disbursement registered a decline of 8.8% to USD 755.11 Million for the year ended 31st March, 2019 as compared to USD 828.38 Million for the previous year.

Total Income grew by 20.58% to USD 67.68 Million for the year ended 31st March, 2019 as compared to USD 56.13 Million for the previous year. Profit before tax was 9.98% higher at USD 18.08 Million as compared to USD 16.44 Million for the previous year. Profit after tax grew at a healthy rate of 41.86% to USD 13.76 Million as compared to USD 9.70 Million in the previous year.

Names of companies which have become or ceased to be subsidiaries, joint ventures or associate companies during the year

During the year under review, no company has become or ceased to be a subsidiary, joint venture or associate of your Company.

Subsequent to the year end, Mahindra Finance CSR Foundation, has been incorporated on 2nd April, 2019 as a wholly-owned subsidiary of the Company registered under Section 8 of the Companies Act, 2013, to promote and support CSR projects and activities.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company, its subsidiaries and its associate(s) for the Financial Year 2018-19, prepared in accordance with the relevant provisions of the Companies Act, 2013 and applicable Indian 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 and associate(s).

Pursuant to the provisions of Section 136 of the Companies Act, 2013, the Financial Statements of the Company, Consolidated Financial Statements along with relevant documents and separate annual accounts in respect of the subsidiaries are available on the website of the Company and can be accessed at the web-link: https://www.mahindrafinance.com/annual-reports. aspx.

The annual accounts of the subsidiaries and related detailed information will also be available for inspection at the Registered Office of the Company during working hours upto the date of the Annual General Meeting.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY''S OPERATIONS IN FUTURE There are no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

Your Company has in place adequate internal financial controls with reference to financial statements, commensurate with the size, scale, and complexity of its operations. Your Company uses various industry-standard systems to enable, empower and engender businesses and also to maintain its Books of Account. The transactional controls built into these systems ensure appropriate segregation of duties, the appropriate level of approval mechanisms and maintenance of supporting records. 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 and the IT Strategy Committee which ensures the implementation. Review of the internal financial controls environment of the Company was undertaken during the year which covered verification of entity-level control, process level control and IT controls, identification, assessment and definition of key business processes and analysis of risk control matrices, etc. The risk control matrices are reviewed on a yearly basis and control measures are tested and documented on a quarterly basis.

Reasonable Financial Controls are operative for all the business activities of the Company and no reportable material weakness or significant deficiencies in the design or operation of internal financial controls was observed.

Nonetheless your Company recognises 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.

COMPLIANCE WITH THE PROVISIONS OF SECRETARIAL STANDARD - 1 AND SECRETARIAL STANDARD - 2

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

The applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ''Meetings of the Board of Directors'' and ''General Meetings'', respectively, have been duly complied by your Company.

PARTICULARS OF REMUNERATION AND RELATED DISCLOSURES

Disclosures with respect to the remuneration of Directors, Key Managerial Personnel and Employees as required under Section 197(12) of the Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are as under:

Sr.

Disclosure Requirement

Disclosure Details

No.

Name of Director/ KMP

Designation

Ratio of the remuneration of each Director to median remuneration of employees

1.

Ratio of the remuneration of each Director to the median remuneration

Mr. Dhananjay Mungale

Chairman

(Independent Director)

11.23X

of the employees of the Company for the Financial Year 2018-19.

Mr M. G. Bhide**

Independent Director

9.42X

Mr. Piyush Mankad **

Independent Director

9.05X

Mr. C. B. Bhave

Independent Director

8.89X

Ms. Rama Bijapurkar

Independent Director

8.06X

Mr. V. S. Parthasarathy

Non-Executive Director

NIL*

Dr. Anish Shah

Non-Executive Director

NIL*

Mr. Ramesh Iyer

Vice-Chairman & Managing Director

220.22X

Mr. V. Ravi

Executive Director & Chief Financial Officer

86.70X

Ms. Arnavaz M. Pardiwalla

Company Secretary & Compliance Officer

24.53X

*Mr. V. S. Parthasarathy and Dr. Anish Shah do not receive any remuneration from the Company.

** resigned as Independent Directors of the Company w.e.f. the close of business hours on 31st March, 2019.

Disclosure Details

Sr. No. Disclosure Requirement

Name of Director/KMP

Designation

% increase in Remuneration

2. Percentage increase in Remuneration of each Director, Chief Financial Officer

Mr. Dhananjay Mungale

Chairman

(Independent Director)

8.96

and Company Secretary during the Financial Year 2018 -19.

Mr. M. G. Bhide**

Independent Director

10.47

Mr. Piyush Mankad**

Independent Director

10.53

Mr. C. B. Bhave

Independent Director

12.89

Ms. Rama Bijapurkar

Independent Director

10.08

Mr. V. S. Parthasarathy

Non-Executive Director

NIL*

Dr. Anish Shah

Non-Executive Director

NIL*

Mr. Ramesh Iyer

Vice-Chairman & Managing Director

19.93

Mr. V. Ravi

Executive Director & Chief Financial Officer

9.42

Ms. Arnavaz M. Pardiwalla

Company Secretary & Compliance Officer

33.15

* Mr. V. S. Parthasarathy and Dr. Anish Shah do not receive any remuneration from the Company.

** resigned as Independent Directors of the Company w.e.f. the close of business hours on 31st March, 2019.

3.

Percentage increase in the median Remuneration of employees in the Financial Year 2018-19

50.70% considering employees who were in employment for the whole of the Financial Year 2017-18 and Financial Year 2018-19.

4.

Number of Permanent employees on the rolls of the Company as on 31st March, 2019

21,789

5.

Average percentile increase already made in the salaries of employees other than the Managerial Personnel in the last Financial Year i.e. 201 8-1 9 and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration.

For employees other than Managerial Personnel who were in employment for the whole of the Financial Year 201718 and Financial Year 2018-19, the average increase is 51.75%.

Justification: The remuneration of the Vice-Chairman & Managing Director and Executive Director & Chief Financial Officer is decided based on the individual performance, inflation, prevailing industry trends and benchmarks.

The remuneration of eligible Non-Executive Directors consists of commission and sitting fees. While deciding the remuneration, various factors such as Director''s participation in Board and Committee Meetings during the year, other responsibilities undertaken, such as Membership or Chairmanship/ Chairpersonship of Committees, etc., were taken into consideration.

The increment given to each individual employee is based on the employees'' potential, experience as also their performance and contribution to the Company''s progress over a period of time and also benchmarked against a comparator basket of relevant companies in India.

6.

Affirmation that the remuneration is as per the Remuneration Policy of the Company.

The remuneration paid/payable is as per the Policy on Remuneration of Directors and Remuneration Policy for Key Managerial Personnel and Employees of the Company.

Notes:

1) The remuneration calculated is as per Section 2(78) of the Companies Act, 2013 and includes the perquisite value of Stock Options of the Company exercised during the year.

2) The calculations are based on Employees who were on the rolls of the Company for the whole of the Financial Year 2017-18 and Financial Year 2018-19.

Mr. Ramesh Iyer, Vice-Chairman & Managing Director and Mr. V. Ravi, Executive Director & Chief Financial Officer of the Company do not receive any remuneration or commission from its Holding Company. However, Mr. Iyer has been granted stock options under the Employees'' Stock Option Scheme of the Holding Company, Mahindra & Mahindra Limited. Mr. Iyer has not exercised ESOPs of the Holding Company, during the year, which were granted in the earlier year(s).

During the year under review, Mr. Ramesh Iyer and Mr. V. Ravi have not received any remuneration or commission from any of the subsidiaries of the Company.

During the year, 28,568 Stock Options have been exercised by Mr. Ramesh Iyer and 7,142 Stock Options have been exercised by Mr. V. Ravi, under the Employees'' Stock Option Scheme of Mahindra Rural Housing Finance Limited, the Company''s subsidiary company.

The Company had 16 employees who were in receipt of remuneration of not less than Rs. 1,02,00,000 during the year ended 31st March, 2019 or not less than Rs.8,50,000 per month during any part of the year.

Details of employee remuneration as required under provisions of Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) and 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: https://www. mahindrafinance.com/annual-reports.aspx. None of these employees is a relative of any Director of the Company.

None of the employees holds either by himself/herself or along with his/her spouse or dependent children, more than two per cent of the Equity Shares of the Company.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company is an equal opportunity employer and is committed to ensuring that the work environment at all its locations is conducive to fair, safe and harmonious relations between employees. It strongly believes in upholding the dignity of all its employees, irrespective of their gender or seniority. Discrimination and harassment of any type are strictly prohibited.

The Company has in place an appropriate Policy in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, to prevent sexual harassment of its employees.

All employees (permanent, contractual, temporary and trainees) are covered under this Policy. The Policy has been widely communicated internally and is placed on the Company''s intranet portal. The Company ensures that no employee is disadvantaged by way of gender discrimination.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to redress complaints received regarding sexual harassment.

The following is a summary of Sexual Harassment complaint(s) received and disposed off during the year 2018-19, pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder:

a) Number of complaint(s) of Sexual Harassment received during the year - Nil

b) Number of complaint(s) disposed off during the year - Nil

c) Number of cases pending for more than 90 days -Nil

d) Number of workshops/awareness programmes against sexual harassment carried out - 3 workshops were conducted at the Company''s Corporate Office. Awareness on sexual harassment was carried out to sensitize employees of the Company at branches pan-India.

e) Nature of action taken by the employer or District Officer - Not Applicable.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under sub-section (3) (m) of Section 134 of the Companies Act, 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 are given as under :

(A) Conservation of Energy

(i) The steps taken or impact on conservation of energy:

The operations of your Company are not energy intensive. However, adequate measures have been initiated to reduce energy consumption.

Select few steps are listed:

a) Replacement of conventional lighting with Light Emitting Diode (LED) lighting:

The Company has installed LED lighting in Regional Offices of the Company during the year under review and the same has been monitored in terms of electrical consumption and expenses.

b) Replacement of old air-conditioning with updated version of machines with R-410A gas, which helps in reducing Ozone depletion.

c) Reduction in water and energy consumption and recycling of waste generation at various locations.

(ii) The steps taken by the Company for utilising alternate sources of energy: Nil.

(iii) The capital investment on energy conservation equipments: Nil.

(B) Technology Absorption

(i) The efforts made towards technology absorption: Not Applicable.

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution: Not

Applicable.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the Financial Year): Not Applicable.

(a) Details of Technology Imported;

(b) Year of Import;

(c) Whether the Technology has been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof.

(iv) Your Company has not incurred any expenditure on Research and Development during the year under review.

(C) Foreign Exchange Earnings and Outgo

The information on foreign exchange outgo is furnished in the Notes to the Accounts. There were no foreign exchange earnings during the year.

For and on behalf of the Board

Dhananjay Mungale

Chairman

Place : Mumbai

Date : 24th April, 2019

Director’s Report