Director's Report
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Mahindra & Mahindra LtdIndustry : Automobiles - Passenger Cars
BSE Code:500520
ISIN Demat:INE101A01026
Book Value(Rs):243.89
NSE Symbol:M&M
Div & Yield %:0.99
Market Cap (Rs Cr.):94488.85
P/E(TTM):21.07
EPS(TTM):36.07
Face Value(Rs):5
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Dear Shareholders

Your Directors present their Report together with the audited financial statements of your Company for the year ended 31st March, 2018.

A. FINANCIAL AND OPERATIONAL HIGHLIGHTS

(Rs. in crores)

Particulars 2018 2017
Revenue from Operations 49,445 47,384
Other Income 1,036 1,345
Profit before Depreciation, Finance
Costs, Exceptional items and Taxation 7,259 5,861
Less: Depreciation, Amortisation and
Impairment Expenses 1,479 1,526
Profit before Finance Costs,
Exceptional items and Taxation 5,780 4,335
Less: Finance Costs 112 160
Profit before Exceptional items and
Taxation 5,668 4,175
Add: Exceptional items 434 548
Profit before Taxation 6,102 4,723
Less: Tax Expense 1,746 1,080
Profit for the year 4,356 3,643
Balance of profit for earlier years 21,781 17,905
Less: Transfer to Debenture
Redemption Reserve 14 14
Profits available for appropriation 26,123 21,534
Add: Due to Scheme of Arrangement 1,092
Add: Other Comprehensive Income/ (Loss) * 8 (3)
Less: Dividend paid on Equity Shares 807 745
Less: Income-tax on Dividend paid 118 96
Balance carried forward 25,206 21,781

* Remeasurement of (loss)/gain (net) on defined benefit plans, recognised as part of retained earnings.

In the year gone by, global growth and trade rebounded sharply and remained the story of the year. Such broad based and strong growth has not been seen since the world's initial sharp 2010 bounce back, from the financial crisis of 2008–09. In the United States, fiscal policy even turned much more expansive as the Fed continued on its path of interest rate normalisation. Other large Central Banks however, continued with their accommodative monetary stance. Global commodity prices, including crude oil, rallied significantly during the year.

On the domestic side, economic activity which flagged for five consecutive quarters, began to recover as several elements started coming together to nurture this nascent acceleration. This started manifesting in estimates and high frequency as well as survey-based indicators. A normal monsoon, record foodgrains output, strong sales growth by Corporations, depleting finished goods inventories and resilience in several services sectors raised the prospects of sustained economic recovery.

However, even amidst this scenario, your Company recorded an increase of 4.4% in revenue from operations at Rs. 49,445 crores in the year under review as against Rs. 47,384 crores in the previous year.

The Profit for the year before Depreciation, Finance Costs, Exceptional items and Taxation recorded an increase of 23.9% at Rs. 7,259 crores as against Rs. 5,861 crores in the previous year. Profit after tax increased by 19.6% at Rs. 4,356 crores as against Rs. 3,643 crores in the previous year.

Your Company continues with its rigorous cost restructuring exercises and efficiency improvements which have resulted in significant savings through continued focus on cost controls, process efficiencies and product innovations that exceed customer expectations in all areas thereby enabling the Company to maintain profitable growth in the current economic scenario.

No material changes and commitments have occurred after the closure of the Financial Year 2017-18 till the date of this Report, which would affect the financial position of your Company. There has been no change in the nature of business of your Company.

Performance Review

Automotive Sector:

Your Company's Automotive Sector recorded total sales of 5,48,508 vehicles (4,90,870 four-wheelers and 57,638 three-wheelers) as against a total of 5,06,624 vehicles (4,52,893 four-wheelers and 53,731 three-wheelers) in the previous year, registering a growth of 8.3%.

In the domestic market, your Company sold a total of 5,20,286 vehicles as compared to 4,69,384 vehicles in the previous year, resulting in a growth of 10.8%.

In the Passenger Vehicle segment, your Company sold 2,48,859 vehicles [including 2,33,915 Utility Vehicles (UVs), 14,219 Vans and 725 Cars] registering a growth of 5.4%, as compared to the previous year's volume of 2,36,130 vehicles [including 2,22,541 UVs, 10,370 Vans and 3,219 Cars].

In the Commercial Vehicle segment, your Company sold 2,16,802 vehicles [including 41,305 vehicles <2T GVW, 1,58,269 vehicles between 2-3.5T GVW, 7,744 LCVs in the LCV > 3.5T segment and 9,484 Heavy Commercial Vehicles (HCVs)] registering a growth of 19.8% over the previous year's volume of 1,80,948 commercial vehicles [including 30,043 vehicles < 2T GVW, 1,36,564 vehicles between 2-3.5T GVW, 7,626 LCVs in the LCV > 3.5T segment and 6,715 HCVs].

In the Three-Wheeler segment, your Company sold 54,625 three wheelers, registering a growth of 4.4% over the previous year's volume of 52,306 three wheelers.

For the year under review, the Indian automotive industry (except 2W) grew 11.9%, with the Passenger Vehicle (PV) industry growth of 7.9% and Commercial Vehicle (CV) industry growth of 19.9%. Three industry sub-segments where your Company has an active presence, posted very robust growth. These are Utility Vehicles (UV) which grew 21%, LCV Goods < 3.5T at 29.8% and MHCV Goods at 19.4%.

Your Company's UV volume grew 5.1% to 2,33,915 units. The UV market share for your Company stood at 25.4% as against 29.2% in the previous year. Scorpio continues to strengthen its iconic status and recorded the highest ever sales with a volume of 53,934 units in Financial Year 2018. Bolero has been a very successful brand for your Company over the last 10 years, and for the year under review, Bolero along with the all New Bolero Power+, posted combined sales of 85,386 units. Your Company strengthened the UV portfolio with the launch of the ‘KUV100 NXT' in October, 2017, the ‘All Powerful Scorpio' in November, 2017 and the ‘Plush New XUV500' in April, 2018.

Your Company is the pioneer for Electric Vehicles (EVs) in India, and for the year under review, sold [along with its subsidiary Mahindra Electric Mobility Limited] 4,026 EVs (1,094 four wheelers and 2,932 three wheelers) as against 1,021 EVs in the previous year. This growth is supported by the Government's thrust on adopting EVs and your Company's efforts of working with various stakeholders, especially fleet operators.

In the LCV<3.5T segment, your Company retained the No. 1 position with a 47.4% market share. Your Company sold a total of 1,99,544 vehicles in this segment, which is a growth of 19.8% over the previous year. The LCV<3.5T segment has two sub segments viz. LCV<2T and LCV 2-3.5T, which is the Pik-UP segment. Your Company has a market share of 25% and 61.9% in the two sub segments respectively.

In the HCV segment, your Company sold 9,484 trucks as against 6,715 trucks in the previous year. This is a growth of 41.2%. The growth is driven by good product performance, improved service reach and spares availability. The Blazo series of trucks which are backed by guarantees on mileage and service are instrumental in building brand and growing sales. Your Company's market share in the HCV segment stands at 4.5%.

During the year under review, your Company posted an export volume of 28,222 vehicles as against the previous year's record exports of 37,240 vehicles. This is a de-growth of 24.2%. This de-growth is principally due to adverse business and regulatory environment in key markets of Nepal and Sri Lanka. Sales in Africa grew 13%.

The spare parts sales for the year stood at Rs. 2,083.8 crores (including Exports of Rs. 193.4 crores) as compared to Rs. 1,937.2 crores (including Exports of Rs. 115.6 crores) in the previous year, registering a growth of 7.6%.

Farm Equipment Sector

Your Company's Farm Equipment Sector recorded total sales of 3,17,531 tractors as against 2,63,177 tractors sold in the previous year thus recording a growth of 20.7%.

For the year under review, the tractor industry in India recorded sales of 7,09,308 tractors, a growth of 21.9%. Second consecutive year of normal monsoon, increase in MSPs and Government's thrust on Agriculture and rural development, helped drive the positive sentiment in the Agriculture Sector and the rural economy at large. In the domestic market, your Company sold 3,02,082 tractors, as compared to 2,48,594 tractors in the previous year, recording a growth of 21.5%. In a very competitive industry, your Company continued its market leadership for the 35th consecutive year, with a market share at 42.6%.

Your Company's growth was driven by good performance of all products under the Mahindra and Swaraj Brands. The new product trio of Mahindra NOVO, YUVO and JIVO have helped build the ‘technology leadership' image for the Company. JIVO which was launched in Financial Year 2018, proved to be an ideal choice for farmers in the fast growing orchard and horticulture space.

For the year under review, Swaraj Division of your Company, launched the Swaraj 963 in the 60+ HP segment. The Swaraj 963 and its variants, will help grow volume in the higher HP segment. Further, your Company had developed and demonstrated technology for driverless tractors. First phase of this technology will be made available in the market in the Financial Year 2019. With this, your Company would take another pioneering step to revolutionise farming in India.

For the year under review, your Company exported 15,449 tractors registering a growth of 5.9% over the previous year. This is the highest ever tractor exports from India by your Company. There was growth in exports to USA and neighbouring countries.

Your Company continued to strengthen its global footprint by further expanding into Turkey, through the acquisition of Erkunt Traktor Sanayii A.S. (Erkunt), the 4th largest tractor brand in Turkey. This is the second acquisition by your Company in Turkey after Hisarlar which is a farm equipment company. Spare parts net sales for the year stood at Rs. 605.3 crores (including exports of Rs. 52.9 crores) as compared to Rs. 534.4 crores (including exports of Rs. 43.8 crores) in the previous year, registering a growth of 13.3%.

Other Businesses

Mahindra Powerol

Under the Mahindra Powerol Brand, your Company has been a leader in providing power back-up solutions to the telecom industry for past 11 years. With a focus on changing customer needs, your Company has further expanded the business in Tele infra management and in the energy management solutions space.

In the retail genset business, your Company is the No. 2 brand by volume, and for the year under review, expanded the product range with the launch of gensets in the higher KVA range.

Construction Equipment Business

For the year under review, your Company (under the Mahindra EarthMaster brand) sold 1,229 Backhoe Loaders (BHLs) against 1,025 in Financial Year 2017, which is a growth of 19.9%. With an uptick in infrastructure spending, the BHL market in India grew 23.5% over the previous year. Your Company ranks 4th in the BHL industry.

Your Company forayed into fast growing road construction equipment business with the launch of Motor Grader - RoadMaster G75, in October, 2017. Your Company sold 164 motor graders in Financial Year 2018.

Two-Wheeler Business

During the year under review, the two-wheeler business of Mahindra Two Wheelers Limited was demerged into your Company. For the Financial Year 2017-18, your Company sold 32,661 two-wheelers (including 17,912 exports).

Transitioning to Goods and Services Tax

Effective 1st July, 2017, India introduced the landmark tax reform with initiation of the Goods and Services Tax (GST) regime. All businesses of your Company, made a timely and seamless transition to the new GST system.

Current Year's review

During the period 1st April, 2018 to 28th May, 2018, 72,813 vehicles were produced as against 62,615 vehicles and 67,244 vehicles were despatched as against 59,361 vehicles during the corresponding period in the last year. During the same period 56,961 tractors were produced and 57,290 tractors despatched as against 48,499 tractors produced and 48,210 tractors despatched during the corresponding period in the previous year.

Economic activity is expected to gather pace in Financial Year 2019 as the transitory effects of implementation of the Goods and Service Tax (GST) recede. The Reserve Bank of India (RBI) projects India's GDP growth to strengthen from 6.6 per cent in 2017-18 to 7.4 per cent in Financial Year 2019. The step-up in growth outlook is likely to be driven by a revival of investment on the demand side and manufacturing on the supply side. Credit off-take has also improved and is becoming increasingly broad-based, which augurs well for the underlying economic activity.

This outlook will also be lifted by tailwinds from normal rainfall with the weather bureau forecasting a ‘normal' monsoon for the third successive year in its first stage long range forecast. While the spatial and temporal distribution remain to be seen, well spread out rainfall is likely to have a salutary impact on the overall demand conditions. Moreover, the thrust on rural and infrastructure sectors imparted through the Union Budget could further help rejuvenate rural demand and also crowd in private investment.

Global growth backdrop too remains benign with a synchronised cyclical rebound. A boost to US investment demand from corporate tax cuts, strong activity in the Euro area supported by accommodative monetary policy and improvement in growth prospects of Emerging Market Economies (EMEs) have been supportive of this rebound thus far. However, escalation in trade frictions and protectionist policies, abrupt changes in the pace and timing of normalization of monetary policy of developed country central banks and higher crude oil prices could pose downside risks to global trade and demand growth.

Finance

Financial Year 2017-18 saw the broadest synchronized global growth since the financial crisis. World economy grew at 3.8% in 2017 up from 3.2% in 2016, on the back of growth in trade, pickup in investment particularly among advanced economies. US economy grew at a robust pace and is expected to continue on the back of tax reforms and associated fiscal stimulus. US Federal Reserve hiked interest rates by a cumulative of 75 bps during the Financial Year. Eurozone also saw a rebound in business sentiment and investments with still accommodative monetary policy, political uncertainties largely sorted and Brexit negotiations making progress. Despite some slowdown recently, Japan recorded eight consecutive quarters of growth up to December, 2017.

Economic activity also continued to expand in major emerging market economies such as Brazil, Russia and South Africa - driven by higher crude and commodity prices. China witnessed slight slowdown as it transitions from an export-driven to a domestic demand driven growth model, and saw a rating downgrade with warnings on its excessive debt levels. The latest World Economic Outlook by IMF predicts global growth to pick up to 3.9% in 2018 supported by strong momentum, favorable market sentiment, accommodative financial conditions, and the domestic and international repercussions of expansionary fiscal policy in the United States. The key risks to the optimistic outlook are rising trade protectionism and geo-political uncertainties especially in the Middle-East.

On the domestic front the year began on a jubilant note with the Union Budget giving a strong thrust to the rural economy and a normal monsoon after two years of deficient rainfall. The much awaited Goods and Services Tax (GST) was rolled out on 1st July, 2017, replacing multiple taxes levied by Governments. Economic activity accelerated as is evident from high frequency indicators such as strong retail sales, depleting finished goods inventories and greenshoots of renewal of capex cycle.

On the other hand, financial markets saw volatility on the back of US Fed tightening and rising crude prices. In addition, Banking Sector was also fraught with non-performing assets and frauds.

Indian Rupee which appreciated till the early part of January, 2018 on buoyant capital inflows, started depreciating subsequently over concerns of the impact of higher crude oil prices on India's trade deficit and closed the year at Rs. 65.18 per USD.

CPI inflation remained benign during the first half of Financial Year 2018 which led to the Reserve Bank of India (RBI) to ease policy rates by 25 bps. However, inflation gradually started inching up in the second half of the year due to unfavourable base effect and rise in food and fuel inflation. Going forward there are various uncertainties on the inflation outlook primarily on account of impact of HRA increases by various State Governments, increase in MSP in Union Budget 2018, rising fuel and commodity prices and normalisation of monetary policy by major advanced economies. Systemic liquidity, which had remained in surplus since demonetization, turned into deficit towards close of the year. Consequently, even though RBI remained in a pause mode since August, 2017, bond markets experienced rise in yields due to drying liquidity, concerns about inflation and the fiscal situation.

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, your Company repaid Rs. 80.69 crores of long term borrowings from internal accruals. During the year, your Company also availed short term export finance. As on 31st March, 2018, Rs. 668 crores of export finance was outstanding, out of which Rs. 365 crores was under the interest equalization scheme of Government of India. The Company's Bankers continue to rate your Company as a prime customer and extend facilities/services at prime rates. Your Company follows a prudent financial policy and aims not to exceed an optimum financial gearing at any time. The Company's total Debt to Equity Ratio was 0.10 as at 31st March, 2018.

Your Company has been rated by CRISIL Limited (CRISIL), ICRA Limited (ICRA), India Ratings and Research Private Limited (India Ratings) and CARE Ratings Limited (CARE) for its Banking facilities. All have re-affirmed the highest credit rating for your Company's Short Term facilities. For Long Term facilities and Non-Convertible Debenture (NCD) programme, CRISIL, ICRA and India Ratings have re-affirmed their credit ratings of CRISIL AAA/Stable, [ICRA]AAA (stable) and IND AAA/Stable for the respective facilities rated by them. With the above rating affirmations, your Company continues to enjoy the highest level of rating from all major rating agencies at the same time.

The AAA ratings indicate highest degree of safety regarding timely servicing of financial obligations and is also a vote of confidence reposed in your Company's Management by the rating agencies. It is an acknowledgement of the strong credit profile of your Company over the years, resilience in earnings despite cyclical upturns/downturns, robust financial flexibility arising from the significant market value of its holdings and prudent management.

Investor Relations (IR)

Your Company continuously strives for excellence in its IR engagement with International and Domestic investors and has set up feedback mechanism to measure IR effectiveness. Structured conference calls and periodic investor/analyst interactions including one-on-one meeting, participation in investor conferences, quarterly earnings calls and annual analyst meet with the Chairman, Managing Director and Business Heads were organised during the year.

Your Company interacted with around 670 Indian and overseas investors and analysts (excluding quarterly earnings calls and specific event related calls) during the year. Your Company always believes in leading from the front with emerging best practices in IR and building a relationship of mutual understanding with investor/analysts. As a key milestone in this continuing endeavour, your Company created a digital interactive annual review of the Company's performance on the Corporate website to provide an interactive experience beyond what is available in the Annual Report. The Company had created its first Integrated Report (for Financial Year 2017). Your Company also continues to organise con-call on Environment, Social and Corporate Governance (ESG) for analysts and investors, which has received excellent feedback from investors and ESG analysts for this pioneering initiative.

Your Company ensures that critical information about the Company is available to all the investors by uploading all such information at the Company's website. Your Company has created a ‘Group Investor Relations Council' to share best practices across all the listed group companies and learn from each other.

Issue of Shares

(a) Scheme of Arrangement between Mahindra Two Wheelers Limited and Mahindra and Mahindra Limited and their respective Shareholders and Creditors (Scheme) Your Company on 8th November, 2017 allotted 5,03,888 Ordinary (Equity) Shares of Rs. 5 each to the Shareholders of Mahindra Two Wheelers Limited (other than the Company) pursuant to the Scheme.

(b) Bonus Shares

Pursuant to the recommendation of the Board of Directors at its Meeting held on 10th November, 2017 and approval of the Members of the Company through a Postal Ballot, the Results of which were declared on 16th December, 2017, your Company has on 26th December, 2017 allotted 62,15,96,272 Ordinary (Equity) Shares of Rs. 5 each as fully paid-up Bonus Shares in the ratio of one Bonus Share for every one existing Equity Share of the Company held by the Shareholders as on the Record Date i.e. 23rd December, 2017.

Consequently, the paid-up Equity Share Capital of the Company increased to Rs. 621,59,62,720 divided into 124,31,92,544 Ordinary (Equity) Shares of Rs. 5 each, fully paid-up.

Dividend

Your Directors are pleased to recommend a dividend of Rs. 7.50 per Ordinary (Equity) Share of the face value of Rs. 5 each on the enhanced Share Capital, payable to those Shareholders whose names appear in the Register of Members as on the Book Closure Date. The equity dividend outgo for the Financial Year 2017-18, inclusive of tax on distributed profits (after reducing the tax on distributed profits of Rs. 69.52 crores on the dividends declared by subsidiaries as of the date of this report and receivable during the current Financial Year 2018-19) would absorb a sum of Rs. 1,054.53 crores [as against Rs. 927.62 crores comprising the dividend of Rs. 13 per Ordinary (Equity) Share of the face value of Rs. 5 each and tax thereon paid for the previous year]. Further, the Board of your Company decided not to transfer any amount to the General Reserve for the year under review. The dividend pay-out is in accordance with the Company's Dividend Distribution Policy.

Dividend Distribution Policy

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

B. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company, its subsidiaries, associates and joint ventures prepared in accordance with 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, associates and joint ventures.

The Financial Statements as stated above are also available on the website of the Company and can be accessed at the Web-link: http://www.mahindra.com/resources/investor-reports/ FY18/Annual Reports/Links-AnnualReport.zip

Subsidiary, Joint Venture and Associate Companies

The Mahindra Group Companies continue to contribute to the overall growth in revenues and overall performance of your Company.

Tech Mahindra Limited, Flagship Company in the IT Sector, has reported a consolidated revenue of Rs. 30,773 crores in the current year as compared to Rs. 29,141 crores in the previous year, an increase of 6%. Its consolidated profit after tax is Rs. 3,800 crores as compared to Rs. 2,813 crores in the previous year, an increase of 35%.

The Group's finance company, Mahindra & Mahindra Financial Services Limited (Mahindra Finance), reported a consolidated operating income of Rs. 8,533 crores during the current year as compared to Rs. 7,146 crores in the previous year, a growth of 19%. The consolidated profit after tax for the year is Rs. 1,024 crores as compared to Rs. 512 crores in the previous year. Mahindra Finance financials is as per Indian Generally Accepted Accounting Principles (IGAAP).

Mahindra Lifespace Developers Limited, the subsidiary in the business of real estate and infrastructure registered a consolidated operating income of Rs. 566 crores as compared to Rs. 762 crores in the previous year. The consolidated profit after tax for the year is Rs. 101 crores as compared to Rs. 102 crores in the previous year.

Mahindra Holidays & Resorts India Limited, the subsidiary in the business of timeshare registered a consolidated operating income of Rs. 2,317 crores as compared to Rs. 2,267 crores in the previous year, an increase of 2%. The consolidated profit after tax for the year is Rs. 132 crores as compared to Rs. 149 crores in the previous year.

Mahindra Logistics Limited, a listed subsidiary in the logistics business has registered a consolidated operating income of Rs. 3,416 crores as compared to Rs. 2,667 crores in the previous year, an increase of 28%. The consolidated profit after tax for the year is Rs. 64 crores as compared to Rs. 46 crores in the previous year, an increase of 39%.

Ssyangyong Motor Company, the Korean subsidiary of the Company has reported consolidated revenues of Rs. 20,435 crores in the current fiscal year as compared to Rs. 21,153 crores in the previous year. The consolidated loss for the year is Rs. 502 crores as compared to consolidated profit after tax of Rs. 245 crores in the previous year.

The consolidated group profit before exceptional item and tax for the year is Rs. 6,590 crores as against Rs. 5,004 crores in the previous year – a growth of 32%. The consolidated profit after tax after non-controlling interest and exceptional items for the year is Rs. 7,510 crores as against Rs. 3,698 crores in the previous year.

During the year under review, Mahindra Automotive North America Inc., Merakisan Private Limited, Mahindra Vehicle Sales and Services Inc., Mahindra Waste Energy Solutions Limited, Mahindra Telecom Energy Management Services Limited, Mahindra Happinest Developers Private Limited, Mahindra Fresh Fruits Distribution Holding Company (Europe) B.V., Erkunt Traktor Sanayii A.S., Erkunt Sanayi A.S., Deep Mangal Developers Private Limited, Moonshine Construction Private Limited, Mahindra Construction Company Limited, Visionsbolaget 12191 AB and Visionsbolaget 12192 AB became subsidiaries of your Company.

During the year under review, Mahindra Yueda (Yancheng) Tractor Company Limited, Defence Land Systems India Limited, Raigad Industrial & Business Park Limited, Mahindra Telecommunications Investment Private Limited, Gateway Housing Company Limited and Visionsbolaget 12192 AB ceased to be subsidiaries of your Company.

Subsequent to the year end, Mahindra Susten Bangladesh Private Limited and Blitz 18-371 GmbH became subsidiaries of your Company and Gipp Aero Investments Pty Limited and Aerostaff Australia Pty Limited ceased to be subsidiaries of your Company.

Pursuant to the Ministry of Corporate Affairs Notification dated 7th May, 2018, the amendment to the definition of "subsidiary company" was made effective and thereby

Mahindra Knowledge Park Mohali Limited became a subsidiary of your Company and Merakisan Private Limited ceased to be a subsidiary of your Company.

During the year under review, Mahindra Waste Energy Solutions Limited changed its name to Mahindra Waste To Energy Solutions Limited, Mahindra Gujarat Tractor Limited changed its name to Gromax Agri Equipment Limited, Mahindra Suryaurja Private Limited changed its name to Mega Suryaurja Private Limited and Visionsbolaget 12191 AB changed its name to re Villa 3 AB.

During the year under review, Mahindra Happinest Developers Private Limited and Mahindra Defence Naval Systems Private Limited were converted into Public Limited Companies and accordingly, their names were changed to Mahindra Happinest Developers Limited and Mahindra Defence Naval Systems Limited.

Subsequent to the year end, Mahindra Retail Private Limited was converted into a Public Limited Company and accordingly changed its name to Mahindra Retail Limited. Further, Blitz 18-371 GmbH changed its name to Automobili Pininfarina GmbH and Industrial Cluster Private Limited changed its name to Mahindra Industrial Park Private Limited.

During the year under review, M.I.T.R.A Agro Equipments Private Limited, ZoomCar Inc, Carnot Technologies Private Limited and Resfeber Labs Private Limited became Associates of your Company and subsequent to the year end, Merakisan Private Limited became Associate of your Company.

A Report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the Consolidated Financial Statement and their contribution to the overall performance of the Company, is provided in Form AOC-1 and forms part of this Annual Report.

The Policy for determining material subsidiaries as approved by the Board is uploaded on the Company's website and can be accessed at the Web-link: http://www.mahindra.com/resources/ investor-reports/FY18/Annual Reports/Links-AnnualReport.zip

C. JOINT VENTURES, ACQUISITIONS AND OTHER MATTERS

Demerger of Two-Wheeler Business of Mahindra Two Wheelers Limited (MTWL) into your Company

MTWL, a step down subsidiary of your Company, has been engaged in the businesses of design, manufacture, sales and service of two wheelers (Two-Wheeler Business) and also trading in spares and accessories for two wheelers. A Scheme of Arrangement between MTWL and your Company and their respective Shareholders and Creditors (Scheme) was announced by your Company to demerge the Two Wheeler Business into your Company. The appointed date of the Scheme was 1st October, 2016. The National Company Law Tribunal approved the Scheme and the Scheme has been made effective from 25th October, 2017.

In accordance with the Scheme, your Company has allotted 4,63,287 Ordinary (Equity) Shares of Rs. 5 each to Aay Kay Global and 40,601 Ordinary (Equity) Shares of Rs. 5 each to Emerging India Fund, the Shareholders of MTWL, in the share exchange ratio of 1 fully paid-up Ordinary (Equity) Share of Rs. 5 each of the Company for every 461 fully paid-up shares held in MTWL.

Divestment of 87,211 Equity Shares of Swaraj Engines Limited in the Buy-back offer

During this year, Swaraj Engines Limited (SEL), an associate company of your Company, had come up with a Buy-Back Offer (Offer). Your Company successfully offered 87,211 Equity Shares of SEL in the Offer. Your Company booked a profit of approximately Rs. 21 crores in the process. Following this Offer, the shareholding of your Company has marginally increased from 33.22% to 33.31% of SEL's share capital.

Sale of 64,50,000 shares representing 5% of the total share capital of CIE Automotive S.A

During the year, Mahindra Overseas Investment Company (Mauritius) Limited (MOICML), a wholly owned subsidiary of the Company, executed a sale of 64,50,000 shares representing 5% of the share capital of CIE Automotive S.A at a price of Euro 23.5 per share, aggregating to Euro 151.58 million on the Spanish Stock Exchange. The post-tax capital gains booked by MOICML is Euro 91.4 million.

Post the sale, MOICML's shareholding in CIE Automotive S.A has come down to 7.435% of its share capital. This transaction has facilitated diversification of the investor base of CIE Automotive S.A.

Scheme of Amalgamation between Defence Land Systems India Limited (Transferor Company) and Mahindra Defence Systems Limited (Transferee Company) and their respective Shareholders and Creditors (Scheme)

The National Company Law Tribunal has approved the Scheme vide its order dated 5th October, 2017. The appointed date of the Scheme is 1st January, 2017 and the Scheme is effective from 18th October, 2017.

Initial Public Offer of Mahindra Logistics Limited

During this year, Mahindra Logistics Limited (MLL), a subsidiary of your Company, successfully completed an Initial Public Offer (IPO) with an issue size of Rs. 829 crores. As a part of this IPO, your Company sold 96,66,173 Equity Shares of MLL, amounting to 13.6% stake. The offer was oversubscribed nearly by 8 times and the allotment took place at the upper end of the price band of Rs. 425-429 per share. The Equity Shares of MLL got listed on BSE Limited and National Stock Exchange of India Limited (NSE) on 10th November, 2017.

This was the largest IPO from your Company till date and as a result of this secondary sale during the IPO, your Company has realized gross proceeds of Rs. 414 crores and booked profit of Rs. 386 crores, thereby unlocking substantial value creation for the shareholders. Your Company's shareholding in MLL stood at 58.8% on completion of the IPO. The Equity Shares of MLL traded at closing price of Rs. 484.80 per share on NSE on the last trading day of the fiscal year ended on 31st March, 2018.

Consolidation of Smartshift and Porter

Orizonte Business Solutions Limited (Smartshift) is a step down subsidiary of your Company which owns and operates a technology enabled load exchange marketplace platform for matching the needs of cargo owners with transporters. Mahindra Trucks & Buses Limited (MTBL), a wholly owned subsidiary of your Company held a 10.37% stake on a fully diluted basis in Resfeber Labs Private Limited (Porter) which is a similar business to that of Smartshift. To leverage synergies and obtain greater economies of scale for both businesses, your Company agreed to a Scheme to merge Smartshift and Porter. As a part of this strategy, on 23rd February, 2018, your Company executed a Share Subscription Agreement and Shareholders Agreement which entailed a commitment to merge Smartshift with Porter through a Scheme of Merger and make an investment of approximately Rs. 65 crores in Porter and Smartshift. As on date, your Company has made the aforesaid investment in Smartshift and Porter. Additionally, the aforementioned Scheme of Merger was also approved by the Board of Directors of Smartshift and Porter and was filed before the National Company Law Tribunal (NCLT), Mumbai Bench on 5th April, 2018. Pursuant to the merger, which is subject to the NCLT approval, Smartshift will cease to be a subsidiary of the Company.

Post merger, the shareholding of your Company and its subsidiaries in Porter (the combined entity) taken on a fully diluted basis would be 30.9% for the Company, 2.5% for Mahindra & Mahindra Financial Services Limited and 7% for MTBL.

Investment in Zoomcar

Your Company has been keen to invest in the shared mobility space as part of its strategy to promote and participate in sustainable mobility solutions, including multi modal urban mobility, with the objective of enabling improved livelihoods and lifestyles of people enabling them to RISE. As a part of your Company's strategy of promoting Electric Vehicles and shared mobility, your Company invested in Zoomcar India Private Limited (Zoomcar India) which is a leading self-drive car rental company based out of Bangalore, India and had been 100% owned by Zoomcar Inc., a holding company incorporated in the USA. Your Company subscribed to Compulsory Convertible Preference Shares (CCPS) of Zoomcar India, which on an as-converted to Equity Share basis, would result in the Company holding about 11.6% of the Equity Share Capital of Zoomcar India on a fully diluted basis. Subject to receipt of regulatory approvals, the Company shall exchange its CCPS holding of Zoomcar India for Preferred Stock of Zoomcar Inc. at a future date. Mahindra Overseas Investment Company (Mauritius) Limited (MOICML), a wholly owned subsidiary of the Company, has also invested in Zoomcar Inc.

The effect of this investment, by your Company and MOICML, on an aggregate as-converted to common stock of Zoomcar Inc. basis would result in your Company and MOICML together holding approximately 16% of the Common Stock of Zoomcar Inc. on a fully diluted basis.

Exploration of Strategic Co-operation with Ford

During the year, your Company announced its intent of exploring a strategic alliance with Ford Motor Company (Ford) which is designed to leverage the benefits of Ford's global reach and expertise and your Company's scale in India and its successful operational model to allow each company to leverage the others' strengths during a period of unprecedented transformation in the global automotive industry. To that end the Company signed several MOUs with Ford during the year which included an overall co-operation plan agreement and the others being in specific areas of connected vehicle projects, battery electric vehicle, powertrains and product development of mid-size and compact SUV.

Acquisition of Erkunt Traktor Sanayii A.S. and Erkunt Sanayi A.S.

During the year, your Company strengthened its presence in Turkey by acquiring Erkunt Traktor Sanayii A.S. (Erkunt Tractor) and Erkunt Sanayi A.S. (Erkunt Sanayi). Erkunt Tractor is the 4th largest tractor company in Turkey, and Erkunt Sanayi is a leading casting and machining company catering to tractor and other industrial machinery. Mahindra Overseas Investment Company (Mauritius) Limited, a wholly owned subsidiary of your Company, acquired 100% of Erkunt Tractor and 98.7% of Erkunt Sanayi, for approximately Rs. 450 crores. These acquisitions, along with investment in Hisarlar Makina in Financial Year 2017, provide a strong base for your Company to participate in the Turkish agri-machinery market which is among the largest globally.

Investment in M.I.T.R.A. Agro Equipment Private Limited

Your Company invested Rs. 8 crores in Equity Shares of M.I.T.R.A Agro Equipment Private Limited (MITRA) during the year. MITRA is an Indian agri-machinery company, specialising in equipment such as sprayers for horticulture. Your Company now has a 26% equity stake, on fully diluted basis, in MITRA. The partnership with MITRA will enable your Company to expand and strengthen its presence in the horticulture segment which is fast growing.

Investment in Carnot Technologies Private Limited

During the year, your Company invested approximately Rs. 6.1 crores in Carnot Technologies Private Limited (Carnot), a startup founded in 2015 by purchasing existing Equity Shares and subscribing to Series A Convertible Preference Shares. Your Company now owns approximately 23% of the fully diluted equity capital of Carnot. Carnot provides Internet of Things (IoT) products and solutions for automobiles currently and your Company intends to partner with Carnot to develop innovative technology solutions and accessories to supplement and enhance the value of its product and service offerings across segments.

Launch of ROXOR by Group company MANA in the US

Mahindra Automotive North America (MANA), a second level subsidiary of your Company launched ROXOR, a new Off-Road vehicle in the powersports segment in March, 2018. ROXOR was conceived, designed, engineered and is being produced in Metro Detroit by MANA which recently opened a new North American Automotive Headquarter and manufacturing center in the US.

Waste to Energy Solutions

During the year, your Company incorporated Mahindra Waste To Energy Solutions Limited (MWESL) as a new subsidiary to carry out activities in relation to conversion of organic wastes to energy. Currently there are multiple locations across India where projects at different operational stages are being executed. In February, 2018, MWESL executed an MOU with Indraprastha Gas Limited (IGL) for providing sustainable solutions to waste management and stubble burning through design and development of bio-gas plants which will use agro and other organic waste in the region where IGL operates.

Merger of Mahindra Telecommunications Investment Private Limited and Gateway Housing Company Limited (Transferor Companies) with Mahindra Holdings Limited (Transferee Company) and their respective Shareholders (Scheme)

The National Company Law Tribunal has approved the Scheme vide its order dated 4th January, 2018. The appointed date of the Scheme is 1st April, 2016 and the Scheme is effective from 27th February, 2018.

Capital Raising by Mahindra & Mahindra Financial Services Limited, a listed subsidiary of your Company

During the year under review, Mahindra & Mahindra Financial Services Limited (MMFSL), a listed subsidiary of your Company had received the approval of its shareholders to issue upto 2.5 crores shares by way of Preferential Allotment to your Company and upto 2.4 crores shares by way of Qualified Institutions Placement (QIP). MMFSL had successfully raised a total of Rs. 2,111 crores through the above issuances made to both the Company (Rs. 1,055 crores) and a mix of domestic and international qualified institutional bidders (Rs. 1,056 crores).

With your Company maintaining majority shareholding of 51.19%, MMFSL continues to benefit by leveraging the financial and operational synergies with the Company and with the simultaneous QIP issuance, it has been able to diversify its investor base. MMFSL's Capital Adequacy has strengthened with this capital raise. It further enables MMFSL to augment its long term resources to enable it to meet its business growth and funding requirements as well as meet the investment required to be made in its subsidiaries and joint ventures.

D. INTERNAL FINANCIAL CONTROLS

The Corporate Governance Policies guide the conduct of affairs of your Company and clearly delineates the roles, responsibilities and authorities at each level of its governance structure and key functionaries involved in governance. The Code of Conduct for Senior Management and Employees of your Company (the Code of Conduct) commits Management to financial and accounting policies, systems and processes. The Corporate Governance Policies and the Code of Conduct stand widely communicated across your Company at all times.

Your Company's Financial Statements are prepared on the basis of the Significant Accounting Policies that are carefully selected by Management and approved by the Audit Committee and the Board. These Accounting policies are reviewed and updated from time to time.

Your Company uses SAP ERP Systems as a business enabler and to maintain its Books of Account. The transactional controls built into the SAP ERP systems ensure appropriate segregation of duties, appropriate level of approval mechanisms and maintenance of supporting records. The Information Management Policy reinforces the control environment. The systems, Standard Operating Procedures and controls are reviewed by Management. These systems and controls are audited by Internal Audit and their findings and recommendations are reviewed by the Audit Committee which ensures the implementation.

Your Company has in place adequate internal financial controls with reference to the Financial Statements commensurate with the size, scale and complexity of its operations. This year your Company's Internal Financial Controls were deployed through Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), that addresses material risks in your Company's operations and financial reporting objectives. Such controls have been assessed during the year under review taking into consideration the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by The Institute of Chartered Accountants of India. Based on the results of such assessments carried out by Management, no reportable material weakness or significant deficiencies in the design or operation of internal financial controls was observed. Your Company recognises Internal Financial Controls cannot provide absolute assurance of achieving financial, operational and compliance reporting objectives because of its inherent limitations. Also, projections of any evaluation of the Internal Financial Controls to future periods are subject to the risk that the Internal Financial Control may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, regular audits and review processes ensure that such systems are reinforced on an ongoing basis.

E. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

F. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All Related Party Transactions entered during the year were in the ordinary course of business and on arms length basis. During the year under review, your Company had entered into Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, with Mahindra Vehicle Manufacturers Limited, a wholly owned subsidiary of your Company. These transactions too were in the ordinary course of business of your Company and were on arms length basis, details of which, as required to be provided under section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure II and forms part of this Annual Report.

The Policy on Materiality of and Dealing with Related Party Transactions as approved by the Board is uploaded on the Company's website and can be accessed at the Web-link: http://www.mahindra.com/resources/investor-reports/FY18/ Annual Reports/Links-AnnualReport.zip

G. AUDITORS

Statutory Auditors and Auditors' Report

Messrs B S R & Co. LLP, Chartered Accountants (ICAI Firm Registration Number 101248W/W-100022) were appointed as the Statutory Auditors of the Company to hold office for a term of 5 years from the conclusion of the 71st Annual General Meeting (AGM) held on 4th August, 2017 until the conclusion of the 76th AGM of the Company to be held in the year 2022.

Pursuant to the Notification issued by the Ministry of Corporate Affairs on 7th May, 2018, amending section 139 of the Companies Act, 2013, the mandatory requirement for ratification of appointment of Auditors by the Members at every AGM has been omitted and hence your Company has not proposed ratification of appointment of Messrs B S R & Co. LLP, Chartered Accountants, at the forthcoming AGM. The Auditors' Report is unmodified i.e. it does not contain any qualification, reservation or adverse remark or disclaimer.

Secretarial Auditor

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice Number: 6029) to undertake the Secretarial Audit of the Company.

The Company has annexed to this Board Report as Annexure III, a Secretarial Audit Report given by the Secretarial Auditor. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer.

Cost Auditors

The Board had appointed Messrs D. C. Dave & Co., Cost Accountants (Firm Registration Number 000611), as Cost Auditor for conducting the audit of cost records of the Company for the Financial Year 2017-18.

The Board of Directors on the recommendation of the Audit Committee, appointed Messrs D. C. Dave & Co., Cost Accountants (Firm Registration Number 000611), as the Cost Auditors of the Company for the Financial Year 2018-19 under section 148 of the Companies Act, 2013. Messrs D. C. Dave & Co. have confirmed that their appointment is within the limits of section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) and proviso to section 148(3) read with section 141(4) of the Companies Act, 2013.

The Audit Committee has also received a Certificate from the Cost Auditors certifying their independence and arms length relationship with the Company.

As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a Resolution seeking Members' ratification for the remuneration payable to Messrs D. C. Dave & Co., Cost Auditors is included in the Notice convening the Annual General Meeting.

Reporting of Frauds by Auditors

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.

H. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES

Particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security are provided in Note Nos. 6 and 36 to the Financial Statements.

I. PUBLIC DEPOSITS AND LOANS/ADVANCES

Your Company had discontinued its Fixed Deposit Scheme for 36 months with effect from the close of office hours on 31st January, 2014 and has also discontinued acceptance of Fixed Deposits with effect from 1st April, 2014.

All the deposits from public and Shareholders had already matured as at 31st March, 2017. Out of the total outstanding 64 deposits of Rs. 50.11 lakhs from the public and shareholders as at 31st March, 2018, all deposits amounting to Rs. 50.11 lakhs, had matured and had not been claimed as at the end of the Financial Year. Since then 3 of these deposits of the value of Rs. 1.55 lakhs have been claimed.

There was no default in repayment of deposits or payment of interest thereon during the year under review. There are no deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013.

The particulars of loans/advances, etc., required to be disclosed in the Annual Accounts of the Company pursuant to Para A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are furnished separately.

J. EMPLOYEES

Key Managerial Personnel (KMP)

The following have been designated as the Key Managerial Personnel of the Company pursuant to sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: (a) Mr. Anand G. Mahindra – Executive Chairman (b) Dr. Pawan Goenka – Managing Director (c) Mr. V S Parthasarathy – Group CFO & Group CIO (d) Mr. Narayan Shankar – Company Secretary

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

Employees' Stock Option Scheme

During the year under review, on the recommendation of the Governance, Nomination and Remuneration Committee of your Company, the Trustees of Mahindra & Mahindra Employees' Stock Option Trust have granted Stock Options to employees under the Mahindra & Mahindra Limited Employees Stock Option Scheme 2010. No Stock Options have been granted to employees under the Mahindra & Mahindra Limited Employees Stock Option Scheme 2000.

The Company has in force the following Schemes which get covered under the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations):

1. Mahindra & Mahindra Limited Employees Stock Option Scheme – 2000 (2000 Scheme)

2. Mahindra & Mahindra Limited Employees Stock Option Scheme – 2010 (2010 Scheme)

3. M&M Employees Welfare Fund No. 1

4. M&M Employees Welfare Fund No. 2

5. M&M Employees Welfare Fund No. 3

There are no material changes made to the above Schemes and these Schemes are in compliance with the SBEB Regulations. Your Company's Auditors, Messrs B S R & Co. LLP, have certified that the Company's above-mentioned Schemes have been implemented in accordance with the SBEB Regulations, and the Resolutions passed by the Members for the 2000 Scheme and the 2010 Scheme.

Information as required under the SBEB Regulations read with SEBI Circular CIR/CFD/POLICY CELL/2/2015 dated 16th June, 2015 have been uploaded on the Company's website and can be accessed at the Web-link: http://www.mahindra.com/resources/ investor-reports/FY18/Annual Reports/Links-AnnualReport.zip

Particulars of Employees and related disclosures

The Company had 296 employees who were in receipt of remuneration of not less than Rs. 1,02,00,000 during the year ended 31st March, 2018 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) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available at the Registered Office of the Company during working hours, 21 days before the Annual General Meeting and shall be made available to any Shareholder on request. Such details are also available on your Company's website and can be accessed at the Web-link: http://www.mahindra.com/resources/investor-reports/FY18/Annual Reports/Links-AnnualReport.zip

Disclosures with respect to the remuneration of Directors, KMPs and employees as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure IV to this Report.

Industrial Relations

The year under review witnessed a very positive Industrial Relations Scenario across all manufacturing locations for the Automotive and Farm Equipment Sectors.

Your Company's focus continues towards propagating proactive and employee centric practices. The Transformational Work Culture initiative, which aims to create an engaged workforce with an innovative, productive and competitive shop-floor ecosystem, continues to grow in strength. The Transformational Work Culture Committee (TWCC) continually engages with long-term strategic initiatives which range from anticipated Labour Law reforms to ‘Swachh Bharat Abhiyaan'. Some examples of the programs put in place include ‘Rise for Associates', Industrial Relations Skills for Frontline Officers, Cultural Diagnostics Projects, Transformational work culture Projects, e-Compliance, e-Quizz for associates, e-portal for reward and recognition of associates, e-safety module and Code of Conduct for Associates. Some of the programs are run in collaboration with Mahindra Leadership University (MLU).

In order to develop skills and foster togetherness at the workplace, your Company rolled out multiple training and engagement programs covering a wide range of topics, viz. positive attitude, stress management, creativity, team effectiveness, safety and environment, quality tools, TPM, skill building programs, customer focus, awareness on Promise 2019, Code of Conduct and a Union Leadership Development Program.

The Mahindra Skill Excellence initiative is a holistic approach to enhance the skill and capabilities of shop floor associates, and has received good participation across manufacturing facilities. As a result of this effort, an associate from your Company represented India at the Worlds Skill Competition in Abu Dhabi in August, 2017 and the ‘Beijing Arc Cup Competition' for third year in a row.

In an endeavor to generate ideas towards improving quality, reducing cost, ensuring safety and improving productivity, your Company's shop floor associates generated on an average 20 ideas per person.

Significant emphasis was also laid towards raising awareness on health and wellness of employees through annual medical check-ups, health awareness activities, and diet food has become a way of life over past three years. Your Company maintains an ‘Employee Health Index' at an individual level and this has been a useful tool in identifying employees who require focused counselling and monitoring. Proactive and employee-centric shop floor practices, a focus on transparent communication of business goals, an effective concern resolution mechanism, and a firm belief that employees are the most valuable assets of the Company, are the cornerstone of your Company's employee relations approach. An ‘open door policy' with constant dialogue to create win-win situations, have helped your Company build trust and harmony. The Industrial Relations scenario continued to be largely positive across all Manufacturing locations. Bonus settlements were amicably agreed upon at all locations. The sustained efforts towards building a transformational work culture resulted in zero production loss in the Financial Year 2017-18 and helped create a collaborative, healthy and productive work environment.

Safety, Occupational Health and Environment

During the year under review, your Company revised its Safety, Occupational Health & Environmental (SOH&E) Policy. The leadership's commitment towards SOH&E, is demonstrated through inclusion of compliance as well as voluntary commitments in the revised policy. SOH&E targets have been set as per the revised policy. Implementation of various initiatives under the policy and achievement of set targets were assessed through audits (both internal and external) and management reviews. At each Plant location, annual events were organised and commemorated like National Safety Day/Month, World Environment Day, Road Safety Week and Fire Service Week. Training programs were conducted for all stakeholders as per the scheduled training calendar through various physical and e-learning modules. In the year under review, your Company completed second batch of Accelerated Learning Program (ALP) on safety, to encourage innovations and best practices related to SOH&E. To strengthen the safety culture, Behaviour Based Safety (BBS) - Level 2 has been introduced at all plants. Your Company carried out statutory safety audits including electrical safety audits of all facilities, as per the amended legal requirements. For the year under review, your Company achieved substantial reduction in the fire load at all the manufacturing plants. Your Company continued its commitment to improve the wellbeing of employees and contract associates through various activities under project Parivartan like organising physical fitness activities including Walkathon, Yoga, Zumba, medical checkups, health consultation and counselling. Further, all locations observed World Health Day, World Heart Day, World Kidney Day and World Diabetes Day. Way2Wellness sessions were conducted covering topics like Healthy Heart and Diabetic feet.

In line with the ‘Go Green' philosophy, your Company is continuously adopting new techniques to eliminate and minimise the environmental impact. Various projects have been implemented by your Company in air, water and waste water management and solid waste management. These initiatives are also extended to the supplier community of your Company. Your Company has adopted Global Reporting Initiative (GRI) - G4 Guidelines, and has undertaken projects aimed at climate change mitigation, sustainable source use and protection of bio-diversity. Some examples of successful initiatives are LED lighting project, Energy efficiency Motors, Solar power installation and certified green building projects with platinum and gold rated facilities. In addition to above, World Ozone Day, World Environment Day, No Print Day, World Earth Day, World Water Day and Energy Conservation Week and Water Conservation Week are also observed on an annual basis.

Certifications/Recertifications

All Plants of your Company have been recertified under standard ISO 14001: 2015 and OHSAS 18001: 2007. Further, all plants are in the process of implementing, integrated management system along with adopting the revised environmental standard ISO 14001: 2015.

In March, 2018, all seven plants of Automotive Sector were awarded TPM excellence award, by Japanese Institute of Plant Maintenance (JIPM). In April, 2018, five Plants of your Company also received certification for "Zero Waste to Landfill" from Intertek USA.

The Company has revised its targets under SOH&E policy and these targets are reviewed periodically by senior management. The focused initiatives and reviews have helped to improve SOH&E performance of your Company in the period 2017-18.

K. BOARD & COMMITTEES

Directors

As mentioned in the previous Annual Report, Mr. Deepak S. Parekh ceased to hold office as an Independent Director of the Company from 8th August, 2017, upon completion of his tenure as approved by the Shareholders at the 68th Annual General Meeting. Further, Mr. T. N. Manoharan was appointed at the 71st Annual General Meeting held on 4th August, 2017 as an Independent and Non-Executive Director of the Company for a period of 5 consecutive years commencing from 11th November, 2016 to 10th November, 2021.

Mr. Anand Mahindra retires by rotation and, being eligible, offers himself for re-appointment at the 72nd Annual General Meeting (AGM) of the Company scheduled to be held on 7th August, 2018.

The Company has received an intimation from Life Insurance Corporation of India informing that Mr. S. B. Mainak has resigned from the Board of the Company. Accordingly, Mr. S. B. Mainak ceased to be a Director of the Company with effect from 11th May, 2018.

The Board places on record its sincere appreciation of the valuable services rendered by Mr. S. B. Mainak during his tenure as a Director of the Company.

The Governance, Nomination and Remuneration Committee, on the basis of performance evaluation of Independent Directors and taking into account the external business environment, the business knowledge, acumen, experience and the substantial contribution made by Mr. M. M. Murugappan and Mr. Nadir B. Godrej during their tenure, has recommended to the Board that continued association of Mr. M. M. Murugappan and Mr. Nadir B. Godrej 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 re-appointment of Mr. M. M. Murugappan and

Mr. Nadir B. Godrej, as Independent Directors of the Company, not liable to retire by rotation, to hold office for a second term of 2 (two) consecutive years on the Board of the Company. The Company has received the requisite Notices from a Member in writing proposing their appointment as Independent Directors.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Pursuant to the provisions of the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance and that of its Committees as well as performance of the Directors individually. Feedback was sought by way of a structured questionnaire covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance and the evaluation was carried out based on responses received from the Directors.

A separate exercise was carried out by the Governance, Nomination and Remuneration Committee of the Board to evaluate the performance of individual Directors. The performance evaluation of the Non-Independent Directors and the Board as a whole was carried out by the Independent Directors. The performance evaluation of the Executive Chairman of the Company was also carried out by the Independent Directors, taking into account the views of the Managing Director and Non-Executive Directors. The Directors expressed their satisfaction with the evaluation process. The Independent Directors and Executive Chairman also carried out performance evaluation of the Managing Director of the Company.

The details of programs for familiarization of the Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, number of programs and number of hours spent by each Independent Director in terms of the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are available on the Company's website and can be accessed at the following Weblink: http://www.mahindra.com /resources /investor-reports/FY18/Annual Reports/Links-AnnualReport.zip

Your Company has adopted the following Policies which, inter alia, include criteria for determining qualifications, positive attributes and independence of a Director: (a) Policy on Appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management; (b) Policy for remuneration of the Directors, Key Managerial Personnel and other employees.

The Policies mentioned at (a) and (b) above are attached as Annexure V-A and V-B respectively and form part of this Report.

Directors' Responsibility Statement

Pursuant to section 134(5) of the Companies Act, 2013, your Directors, based on the representations received from the Operating Management, and after due enquiry, confirm that: (a) in the preparation of the annual accounts for the Financial Year ended 31st March, 2018, the applicable accounting standards have been followed; (b) they had in consultation with Statutory Auditors, selected accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2018 and of the profit of the Company for the year ended on that date; (c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities; (d) they have prepared the annual accounts on a going concern basis; (e) they have laid down adequate Internal Financial Controls to be followed by the Company and such Internal Financial Controls were operating effectively during the Financial Year ended 31st March, 2018; (f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively throughout the Financial Year ended 31st March, 2018.

Board Meetings and Annual General Meeting

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year 1st April, 2017 to 31st March, 2018, eight Board Meetings were held on: 30th May, 2017, 13th June, 2017, 4th August, 2017, 9th October, 2017, 10th November, 2017, 13th December, 2017, 9th February, 2018 and 28th March, 2018. The 71st Annual General Meeting (AGM) of the Company was held on 4th August, 2017.

Meetings of Independent Directors

The Independent Directors of your Company meet before the Board Meetings without the presence of the Executive Chairman or the Managing Director or other Non-Independent Director or Chief Financial Officer or any other Management Personnel. These Meetings are conducted in an informal and flexible manner to enable the Independent Directors to discuss matters pertaining to, inter alia, review of performance of Non-Independent Directors and the Board as a whole, review the performance of the Executive Chairman of the Company (taking into account the views of the Executive and Non-Executive Directors), review the performance of the Company, assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Five Meetings of Independent Directors were held during the year and these meetings were well attended.

Audit Committee

The Board at its Meeting held on 4th August, 2017 re-constituted the Audit Committee and appointed Mr. T. N. Manoharan as the Chairman with effect from 8th August, 2017. The Committee comprises of four Directors viz. Mr. T. N. Manoharan (Chairman of the Committee), Mr. Nadir B. Godrej, Mr. M. M. Murugappan and Mr. R. K. Kulkarni. All the Members of the Committee are Independent Directors and possess strong accounting and financial management knowledge. The Company Secretary of the Company is the Secretary of the Committee.

All the recommendations of the Audit Committee were accepted by the Board.

L. GOVERNANCE

Corporate Governance

Your Company has a rich legacy of ethical governance practices many of which were implemented by the Company, even before they were mandated by law. Your Company is committed to transparency in all its dealings and places high emphasis on business ethics. A Report on Corporate Governance along with a Certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.

Vigil Mechanism

The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is implemented through the Company's Whistle Blower Policy to enable the Directors, employees and all stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee.

Whistle Blower Policy of your Company is available on the Company's website and can be accessed at the Web-link: http://www.mahindra.com/resources/investor-reports/FY18/ Annual Reports/Links-AnnualReport.zip Further details are available in the Report on Corporate Governance that forms part of this Annual Report.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral. During the year under review, 1 complaint with allegations of sexual harassment was filed, which was disposed-off as per the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and as of 31st March, 2018, no complaint was pending. One complaint pending as on 31st March, 2017, was also disposed-off during the year under review.

Business Responsibility Report

The ‘Business Responsibility Report' (BRR) of your Company for the year 2017-18 forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Your Company strongly believes that sustainable and inclusive growth is possible by using the levers of environmental and social responsibility while setting aspirational targets and improving economic performance to ensure business continuity and rapid growth. Your Company is committed to leverage ‘Alternative Thinking' to build competitive advantage in achieving high shareholder returns through customer centricity, innovation, good governance and inclusive human development while being sensitive to the environment.

Risk Management

Your Company has a well-defined risk management framework in place. The risk management framework works at various levels across the enterprise. These levels form the strategic defence cover of the Company's risk management. The Company has a robust organisational structure for managing and reporting on risks.

Your Company has constituted a Risk Management Committee of the Board which is authorised to monitor and review risk management plan and risk certificate. The Committee is also empowered, inter alia, to review and recommend to the Board the modifications to the Risk Management Policy. Further, the Board has constituted a Corporate Risk Council comprising the Senior Executives of the Company. The terms of reference of the Council comprises review of risks and Risk Management Policy on periodic intervals.

Your Company has developed and implemented a Risk Management Policy which is approved by the Board. The Risk Management Policy, inter alia, includes identification therein of elements of risk, including those which in the opinion of the Board may threaten the existence of the Company. Risk management process has been established across the Company and is designed to identify, assess and frame a response to threats that affect the achievement of its objectives. Further, it is embedded across all the major functions and revolves around the goals and objectives of the organisation.

M. CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY

Corporate Social Responsibility (CSR)

Your Company's Corporate Social Responsibility efforts continue to be directed towards supporting the constituencies of girls, youth and farmers by innovatively supporting them through programs in the domains of education, health and environment, while harnessing the power of technology. It is only through these sustained and continued efforts that your Company can build and consolidate its CSR initiatives which contribute to nation building. During the last financial year, your Company has been making an impact through its ongoing CSR programs, some of the notable ones include – Project Nanhi Kali, which supports the education of underprivileged girls, Mahindra Pride Schools and Mahindra Pride Classrooms, which provide livelihood training to youth from socially and economically disadvantaged communities, and a variety of other scholarship programs, which range from providing opportunities to youth from low income group families to undergo diploma courses at vocational education institutes, to allowing meritorious students to pursue their post graduate studies at reputed universities overseas, to allowing meritorious and deserving students to study at the Mahindra United World College in Pune. In the area of public health, your Company sponsored Lifeline Express, through which medical care and treatment was provided to communities who do not have access to any medical facilities. Further, your Company supported critical patients suffering from cancer and other life threatening illnesses and also lent support for setting up of the Head and Neck Cancer Institute.

Your Company also contributed to the environment by adding green cover through planting of over 1.5 million trees this year through Project Hariyali. Your Company continues to support small and marginal farmers by training them in effective farming practices including soil health, crop planning, creating model farms with bio-dynamic farming practices, and increasing the water table with a view to increasing crop productivity. These initiatives are implemented through the Wardha Farmer Family Project, Krishi Mitra Project and Integrated Watershed Development Project. Your Company also partnered with the Maharashtra State Government to support the Village Social Transformation Mission of the Government. Your Company is working to create a ‘Zero Fatality Corridor' to ensure ‘zero' deaths due to accidents on Mumbai Pune Expressway. In addition to the above CSR initiatives, your Company has a vibrant ESOPs (Employee Social Options) platform through which the employees are provided opportunities to give back to the community.

During the last financial year, your Company was awarded the prestigious ‘Corporate Citizen of the Year 2017' by Economic Times as well as the ‘Socially Aware Corporate of the Year' at Business Standard Awards 2018, both being a validation of the Company's sustained efforts to ‘Rise for Good'.

CSR Policy

The Corporate Social Responsibility Committee had formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) which was subsequently adopted by it and is being implemented by the Company. The CSR Policy including a brief overview of the projects or programs undertaken can be accessed at the Company's website through the Web-link: http://www.mahindra.com/resources/investor-reports/FY18/ Annual Reports/Links-AnnualReport.zip

CSR Committee

The CSR Committee comprises of Dr. Vishakha N. Desai (Chairperson), Mr. Anand G. Mahindra, Mr. R. K. Kulkarni, Dr. Pawan Goenka and Mr. Vikram Singh Mehta. The Committee, inter alia, reviews and monitors the CSR as well as Sustainability activities.

During the year under review, your Company spent Rs. 81.97 crores on CSR activities. The amount equal to 2% of the average net profit for the past three financial years required to be spent on CSR activities was Rs. 81.27 crores. The detailed Annual Report on the CSR activities undertaken by your Company in Financial Year 2018, is annexed herewith marked as Annexure VI.

Sustainability

During the year under review, the 10th Non-Financial Report was released for the year 2016-17. This year's Report was the first ‘Integrated Report' conforming to reporting frameworks viz. International Integrated Reporting Council (IIRC) and Global Reporting Guideline - ‘GRI G4 Core option'. The report was externally assured by DNV-GL.

Your Company continued the focus on the Environmental, Social and Governance (ESG) parameters, in the year under review by developing Mahindra Sustainability Framework to ensure common language for sustainability across the Group. This framework defines sustainability as building enduring businesses by rejuvenating the environment and enabling stakeholders to rise. Under the three pillars People, Planet and Profit of Sustainability; various actions have been identified for implementation across the Group. Many of these actions are already underway as demonstrated by the Igatpuri Plant by getting certified as ‘Water Positive' and being the 1st Plant in India to be certified by Intertek as ‘Zero Waste to Landfill'.

The Company uses 63% less energy to produce a vehicle than what was done eight years ago. Mahindra Towers at Worli and Kandivali are Indian Green Building Council (IGBC) Platinum Certified existing buildings. The Mahindra IT Centre at Kandivali is USGBC LEED gold certified green building. Mr. Anand G. Mahindra, Executive Chairman of your Company represented the Corporate World Economic Forum at Davos and issued a ‘Call to Action' to all industries and businesses to adopt Science Based Targets to restrict average global temperature rise to 2 degree Celsius in alignment of Paris Climate Change Agreement. Mr. Anand Mahindra has been invited by Mr. Edmund G. Brown, Governor of California to be the Co-Chair at the Global Climate Action Summit to be held in September, 2018 in San Francisco, California.

The Sustainability performance for your Company for the Financial Year 2017-18 will be ready for release shortly.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as Annexure VII and forms part of this Report.

N. SECRETARIAL

Compliance with the provisions of Secretarial Standard 1 and Secretarial Standard 2

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.

Extract of Annual Return

Pursuant to section 134(3)(a) and section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as on 31st March, 2018 in Form No. MGT-9 is attached as Annexure VIII and forms part of this Report.

GENERAL

The Executive Chairman of the Company did not receive any remuneration or commission from any of the subsidiary of your Company. The Managing Director of the Company did not receive any remuneration or commission from any of the subsidiary of your Company. However, the Managing Director has exercised ESOPs of a subsidiary company during the year, which were granted in the earlier year(s).

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events on these items during the year under review except as !WARDR stated hereunder:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of Shares (Including Sweat Equity Shares) to employees of the Company under any Scheme save and except ESOS referred to in this Report.

3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company's operation in future.

4. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3) (c) of the Companies Act, 2013).

For and on behalf of the Board
ANAND G. MAHINDRA
Executive Chairman
Mumbai, 29th May, 2018

   

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