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MAHINDRA & MAHINDRA LIMITED

COMMITTEES OF THE BOARD

Audit Committee

Deepak S. Parekh

Chairman

Nadir B. Godrej

M. M. Murugappan

R. K. Kulkarni

Share Transfer and Shareholders/

Investors Grievance Committee

Keshub Mahindra

Chairman

Anand G. Mahindra

Bharat Doshi

A. K. Nanda

R. K. Kulkarni

Remuneration/Compensation Committee

Narayanan Vaghul

Chairman

Keshub Mahindra

Nadir B. Godrej

M. M. Murugappan

Loans & Investment Committee

Keshub Mahindra

Chairman

Anand G. Mahindra

Bharat Doshi

A. K. Nanda

R. K. Kulkarni

Research & Development Committee

A. S. Ganguly

Chairman

Anand G. Mahindra

Nadir B. Godrej

M. M. Murugappan

Bharat Doshi

BOARD OF DIRECTORS

Keshub Mahindra

Chairman

Anand G. Mahindra

Vice-Chairman & Managing Director

Deepak S. Parekh

A. K. Nanda

Nadir B. Godrej

M. M. Murugappan

Narayanan Vaghul

A. S. Ganguly

R. K. Kulkarni

Anupam Puri

Arun Kanti Dasgupta

Nominee of Life Insurance Corporation of India

Bharat Doshi

Executive Director

Narayan Shankar

Company Secretary

Bankers

Bank of America N.A.

Bank of Baroda

Bank of India

Canara Bank

Central Bank of India

HDFC Bank Limited

Standard Chartered Bank

State Bank of India

Union Bank of India

Auditors

Deloitte Haskins & Sells

12, Dr. Annie Besant Road, Opp. Shiv Sagar Estate,

Worli, Mumbai 400 018.

Advocates

Khaitan & Co.,

One Indiabulls Centre,

13th

Floor, 841, Senapati Bapat Marg,

Elphinstone Road, Mumbai 400 013.

Registered Office

Gateway Building, Apollo Bunder, Mumbai 400 001.

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Contents

Directors’ Report .................................................................................................................................................. 3

Management Discussion and Analysis .................................................................................................................. 27

Corporate Governance ......................................................................................................................................... 47

Sustainability ........................................................................................................................................................ 73

Accounts .............................................................................................................................................................. 79

Statement pursuant to Section 212 ..................................................................................................................... 129

Consolidated Accounts ......................................................................................................................................... 133

GROUP EXECUTIVE BOARD

Anand G. Mahindra

Vice-Chairman & Managing Director

Bharat Doshi

Executive Director and Group Chief Financial Officer

Rajeev Dubey

President (HR, After-Market & Corporate Services)

Pawan Goenka

President (Automotive & Farm Equipment Sectors)

Hemant Luthra

President (Systems & Technologies Sector)

Anoop Mathur

President (Two-Wheeler Sector)

Uday Y. Phadke

President (Finance, Legal & Financial Services Sector)

Ulhas N. Yargop

President (Information Technology Sector)

Anita Arjundas

Managing Director - Mahindra Lifespace Developers Limited &

CEO Real Estate Sector

Zhooben Bhiwandiwala

Executive Vice President & Managing Partner, Mahindra Partners

C. P. Gurnani

Chief Executive Officer - Mahindra Satyam

Ruzbeh Irani

Executive Vice President - Corporate Strategy & Chief Brand Officer

Ramesh Iyer

Managing Director - Mahindra & Mahindra Financial Services

Limited

Rajesh Jejurikar

Chief Executive - Automotive Division (Automotive Sector)

Sanjay Kalra

Chief Executive Officer - Tech Mahindra Limited

Harsh Kumar

Managing Director - Mahindra Intertrade Limited

Romesh Kaul

Global Chief Executive Officer - Gears Business, Systech Sector

Bishwambhar Mishra

Chief Executive Officer - Swaraj Division (Farm Equipment Sector)

Gautam Nagwekar

Chief Executive - Mahindra Division (Farm Equipment Sector)

V. S. Parthasarathy

Executive Vice President - Finance, M&A and Group CIO

Ramesh Ramanathan

Managing Director - Mahindra Holidays & Resorts India Limited

& CEO Hospitality Sector

Pravin Shah

Chief Executive - International Operations (Automotive & Farm

Equipment Sectors)

Rajan Wadhera

Chief Executive - Technology, Product Development and

Sourcing (Automotive & Farm Equipment Sectors)

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MAHINDRA & MAHINDRA LIMITED

5

MAHINDRA & MAHINDRA LIMITED

Directors’ Report

Dear ShareholdersYour Directors present their Report together with the

audited accounts of your Company for the year ended

31st

March, 2010.

Financial Highlights

(Rs. in crores)

2010 2009

Gross Income 20595 14983

Less: Excise Duty on Sales 1794 1619

Net Income 18801 13364

Profit before Depreciation, Interest,

Exceptional items and Taxation 3155 1363

Less: Depreciation/Amortisation 371 292

Profit before Interest,

Exceptional items and Taxation 2784 1071

Less: Interest (Net) 28 45

Profit before Exceptional

items and Taxation 2756 1026

Add: Exceptional items 91 10

Profit before Taxation 2847 1036

Less: Provision for Tax - Current Tax

(including Fringe Benefit Tax) 749 58

Less: Provision for Tax - Deferred Tax (Net) 10 141

Profit for the year 2088 837

Add: Profit of Mahindra Holdings &

Finance Limited for the period

1st

February, 2008 to 31st

March, 2008 - 31

Balance of profit for the year 2088 868

Balance of profit for earlier years 3365 2775

Add: Amount transferred on

Amalgamation of Mahindra Holdings &

Finance Limited - 160

Less: Transfer to Debenture Redemption

Reserve 31 30

Profits available for appropriation 5422 3773

Less: General Reserve 210 100

Credit of Income-tax on Proposed

Dividend of previous year - (4)

Proposed Dividends 550 279

Income-tax on Proposed Dividends 74 33

Balance carried forward 4588 3365

Inspite of the global financial crisis, India’s economic growth

is steadily gaining momentum, led by a very encouraging

re-bound in industrial activity during the year. The sharp

increase in consumer durables and capital goods production

this fiscal is particularly heartening as it indicates

strengthening consumer and business confidence in the

country.

Agricultural GDP however, witnessed a decline this year

due to the severe drought experienced during the kharif

season. Food prices as a consequence, rose alarmingly and

food inflation in India has leapfrogged to challenging levels.

In these challenging times, the Automotive and Farm

Divisions of your Company have clocked one of their best

performances reflecting in substantial growth in the net

income of the Company by 40.7% to Rs.18,801 crores in

the year under review from Rs.13,364 crores in the Financial

Year 2009. Consequent to this commendable performance,

the profit after tax of the Company for the current year

was Rs.2,088 crores as against Rs.837 crores for the

previous year.

Profits

The Profit for the year before Depreciation, Interest,

Exceptional items and Taxation was Rs.3,154.59 crores as

against Rs.1,362.97 crores in the previous year, an increase

of 131.45%. Profit after tax was Rs.2,087.75 crores as

against Rs.836.78 crores in the previous year clocking an

increase of 149.50%. Your Company continues with its

rigorous cost restructuring exercises and efficiency

improvements which have resulted in significant savings

through value engineering, economising, optimisation of

plant capacity utilisation and cost competitiveness in almost

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all areas thereby enabling the Company to take full

advantage of the recovery in the economy.

Dividend

Your Directors are pleased to recommend a dividend of

Rs.8.75 per Ordinary (Equity) Share and also a Special

Dividend of Rs.0.75 per Ordinary (Equity) Share aggregating

Rs.9.50 per Ordinary (Equity) Share of the face value of

Rs.5 each, payable to those Shareholders whose names

appear in the Register of Members as on the Book Closure

Date. The Special Dividend is being recommended in the

light of the very successful listing of Mahindra Holidays &

Resorts India Limited Equity Shares on the Stock Exchanges.

In recognition of the impressive performance of the

Company, a substantial increase is being made in the

proposed dividend as compared to the dividend of Rs.10

per Equity Share paid in the previous year. Also the

proposed dividend will be paid on a slightly enlarged capital

base of Rs.289.21 crores (as against Rs.278.82 crores in

the previous year). The equity dividend outgo for the

Financial Year 2009-10, inclusive of tax on distributed profits

(after reducing the tax on distributed profits of Rs.17.04

crores payable by the subsidiaries on the dividends

receivable from them during the current Financial Year)

would absorb a sum of Rs.623.75 crores (as against

Rs.312.06 crores comprising the dividend of Rs.10 per

Equity Share of Rs.10 each paid for the previous year).

Automotive Division:

Your Company recorded total sales of 2,36,759 vehicles

and 45,360 three-wheelers as compared to 1,61,882

vehicles and 44,806 three-wheelers in the previous year

registering a growth of 46.3% and 1.2% in vehicles sales

and three-wheeler sales respectively.

On the domestic sales front, your Company sold 2,27,114

vehicles [includes 2,14,128 Multi Utility Vehicles (MUVs),

3,722 small 4 wheelers 0.75 Ton cargo and 9,264 mini 4

wheelers 0.5 Ton cargo] registering a growth of 47.8%

over the previous year’s volume of 1,53,654 vehicles

[includes 1,53,653 MUVs and 1 Light Commercial Vehicle

(“LCV”)]. The domestic sales volume of 44,438 three-

wheelers was lower by 0.2% as compared to the previous

year’s volume of 44,533 three-wheelers.

The Company’s domestic MUV sales volumes grew by

39.4% as against the industry MUV sales growth of 26%.

The Company strengthened its dominant position in the

domestic MUV segment by increasing its market share to

63.3% over the previous year’s market share of 57.2%.

Xylo, which was launched in January, 2009 has been very

well accepted in the market. A total of 27,978 Xylos were

sold in the year under review.

In a very competitive small 4-wheeler cargo segment (0.75

Ton), your Company has launched the Maxximo, a small 4

wheeler cargo vehicle, with 2-cylinder common rail engine,

in February, 2010. In the 0.5 Ton Truck load segment, your

Company launched a compact Truck – Gio.

In the Overseas market, despite difficult economic

conditions, your Company registered superior growth.

During the year under review, your Company sold 10,567

vehicles [including 1,323 vehicles sourced from Mahindra

Navistar Automotives Limited (“MNAL”) and 922 three-

wheelers] in the Overseas market as compared to 8,501

vehicles [including 693 vehicles sourced from MNAL and

273 three-wheelers] in the previous year registering a

growth of 24.3%.

Spare parts sales for the year stood at Rs. 514.96 crores

(including Exports of Rs. 22.4 crores) as compared to

Rs. 362.75 crores (including Exports of Rs.27 crores) in the

previous year, registering a growth of 42%.

Farm Division:

Your Company’s Farm Division recorded sales of 1,75,196

tractors as against 1,20,202 tractors sold in the previous

year, recording a significant growth of 45.8%. For the

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MAHINDRA & MAHINDRA LIMITED

previous year figures, the Company has taken into

consideration, the merger of Punjab Tractors Limited with

your Company, the appointed date of which was 1st

August,

2008.

After 3 years of plateauing of the domestic tractor industry

and despite one of the worst South-West monsoons, this

year saw a strong resurgence with the domestic industry

clocking sales of 4,00,203 tractors registering a growth of

31.7% over the last year. Your Company outperformed the

industry with domestic sales of 1,66,359 tractors, a growth

of 46.9% as compared to 1,13,269 tractors sold in the

previous year. This has also helped gain market share which

now stands at 41.4% as compared to 40.8% in the previous

Financial Year, thus completing 27 years of leadership in

the Indian tractor industry.

With the slow recovery in international markets, especially

in the US, tractor industry exports from India continued to

be under strain. In contrast, your Company’s exports grew

27.5% to reach 8,837 tractors as compared to 6,933

tractors exported in the previous year.

Beyond Agriculture, in the Powergen space under the

Mahindra Powerol Brand, your Company sold 48,011

engines in this Financial Year, as against 52,350 engines in

the previous year. Your Company retained its leadership

position in the genset market catering to the telecom space,

while strengthening its presence in the retail segment.

Mahindra Defence Systems Division (MDS):

Your Company, through Mahindra Defence Systems (MDS)

Operating Group, is engaged in three defence related

businesses – a) Land Systems b) Naval Systems and

c) Mahindra Special Services Group (“MSSG”).

In the Land Systems business, your Company provides

armouring solutions for light combat vehicles and SUVs as

well as high mobility vehicles for defence, police and

paramilitary use. Pursuant to an approval accorded by the

Shareholders by way of Postal Ballot on 4th

April, 2009 this

business has been hived-off into a wholly owned subsidiary

(Mahindra Defence Land Systems Private Limited – now

rechristened as Defence Land Systems India Private Limited)

with effect from 1st

July, 2009. Your Company has further

signed a Joint Venture Agreement on 30th

November, 2009

with BAE Systems Plc. to form a 74:26 Joint Venture for

defence land systems products. Once this Joint Venture is

operational, it would further expand its product base to

include manufacture of artillery products and combat

vehicles in technical assistance with BAE Systems Plc.

In the Naval Systems business, your Company currently

manufactures Sea Mines, Decoy Launchers and composites

for various naval and other applications.

In the Special Services Group business, your Company

provides corporate risk management consultancy services

and assists organisations in maintaining their competitive

edge by protecting Information, Physical and Personnel

assets through implementing the security strategy

encompassing people, process and technology. MSSG has

been integrated with the MDS Operating Group from

1st

April, 2009 in order to synergise the efficiencies with

other businesses of MDS. During the year, this business

has expanded to Northern and Southern India as well as

some international markets.

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 is committed to transparency in all its

dealings and places high emphasis on business ethics. Your

Company received the Best Governed Company 2009

Award from the Indian Merchants Chamber and the Asian

Centre for Corporate Governance and Sustainability. During

the year, CRISIL has re-affirmed the highest level rating,

(Level 1) for Governance and Value Creation for the fourth

8

year in a row. This rating indicates that the capability of

the Company with respect to wealth creation for all its

stakeholders while adopting strong Corporate Governance

practices is the highest. A Report on Corporate Governance

along with a Certificate from the Statutory Auditors of the

Company regarding the compliance of conditions of

Corporate Governance as stipulated under Clause 49 of

the Listing Agreement forms part of the Annual Report.

Share Capital

Increase in Share Capital

During the year under review, your Company allotted:

1) 10,00,000 Ordinary (Equity) Shares of Rs.10 each to

the Trustees of Mahindra & Mahindra Employees’ Stock

Option Trust; and

2) 93,95,974 Ordinary (Equity) Shares of Rs.10 each to

Golboot Holdings Limited upon compulsory conversion

of 93,95,974 Fully and Compulsorily Convertible

Debentures.

Sub-division (“Stock-split”) of Face Value of

Equity Shares

Pursuant to the approval received from the Members of

the Company by way of Postal Ballot on 11th

March, 2010,

your Company has on 31st

March, 2010, upon sub-division,

issued 2 (Two) Ordinary (Equity) Shares of Rs.5 each fully

paid-up in the Equity Share Capital of the Company for

every 1 (One) Ordinary (Equity) Share of the face value of

Rs.10 fully paid-up held by the Members in the Equity

Share Capital of the Company as on the Record Date i.e.

30th

March, 2010.

Post allotment of Equity Shares and sub-division of Equity

Shares as aforesaid, the issued, subscribed and paid-up

Share Capital of the Company stands at Rs.289.21 crores

comprising of 57,84,34,478 Ordinary (Equity) Shares of

Rs.5 each fully paid-up and the Authorised Share Capital

of the Company stands at Rs.625 crores comprising of

1,20,00,00,000 Ordinary (Equity) Shares of Rs.5 each and

25,00,000 Unclassified Shares of Rs.100 each.

Consequent to the Stock-split, a new International Securities

Identification Number (ISIN) INE101A01026 has been

created by the Depositories for the Company’s Equity Shares

of the face value of Rs.5 each.

Finance

Despite prolonged global challenges, the Indian economy

showed signs of recovery in most of the Sectors in the

Financial Year 2009-10. The risk appetite returned to

financial markets as equities and debt raising gained

momentum on the back of abundant liquidity. Even though

things looked to be on an upswing, Corporates still faced

the task of sustaining growth amidst volatilities as well as

surging inflation.

During the year, keeping in mind the volatile times, your

Company continued to focus on managing cash efficiently.

Even while financing its ongoing modernisation and growth

initiatives, it was ensured that your Company had abundant

liquidity. Your Company did not need to tap the capital

market and in fact used its strong liquidity at its disposal

to repay foreign currency loans aggregating USD 94.5

million without the need for refinancing.

As was reported in the previous year’s Director’s Report,

your Company had, in July, 2008, issued 9.25% p.a.

Unsecured Fully and Compulsorily Convertible Debentures

(“FCD”), each FCD having a face value of Rs. 745 and

convertible into one Equity Share of Rs. 10 each in the

Company at a price of Rs. 745 per Share. In January,

2010, in accordance with the terms of the issue, the FCDs

were converted into Equity Shares of the Company and

your Company allotted 93,95,974 Ordinary (Equity) Shares

of Rs.10 each, adding Rs. 700 crores to its Net Worth.

Your Company follows a prudent financial policy and aims

to maintain optimum financial gearing at all times. The

Company’s total Debt to Equity Ratio was 0.37 as at

31st

March, 2010.

MAHINDRA & MAHINDRA LIMITED

Your Company has been rated by CRISIL, ICRA Limited

(ICRA) and Credit Analysis & Research Limited (CARE) for

its Banking facilities under Basel II norms. During the year,

CRISIL reaffirmed its rating of “AA” and revised its rating

outlook to “AA/ Stable” from “AA/ Negative” for your

Company’s Long Term Facilities under Basel II. During the

year, ICRA also reaffirmed its rating of “LAA+” for your

Company and also revised its rating outlook from “LAA+/

Negative” to “LAA+/Stable” and CARE has maintained a

Long Term Rating of “CARE AA+”.

CRISIL, ICRA and CARE have all reaffirmed the highest

rating for your Company’s Short Term facilities. Your

Company’s Bankers continue to rate your Company as a

prime customer and extend facilities/services at prime rates.

Acquisitions and other matters

1. Acquisition of Aerostaff Australia and Gippsland

Aeronautics

Your Company decided to make a foray into Aerospace

Sector with the intention of penetrating into global

aerospace supply chain as a credible registered

manufacturer of components and assemblies with the

leading players in Aerospace and also to become small

capacity aircraft manufacturer. To meet these goals,

your Company has made 2 acquisitions in Australia as

under:

Aerostaff Australia (“AA”) manufactures high-precision

close-tolerance aircraft components and assemblies

for large aerospace Original Equipment

Manufacturers (“OEMs“).

Gippsland Aeronautics (“GA”) is an established brand

in general aviation and has delivered more than 200

FAR 23 certified planes in 32 countries.

NM5 is a 5-seater Aircraft designing and manufacturing

project which is being developed by your Company

with Hindustan Aeronautics Limited. The NM5 initiative

compliments the product portfolio of GA.

Your Company’s move into the Aerospace segment is

supported by a renewed demand for economical air

transportation around the world. The Company’s

investment in component capability addresses the

growing needs of both the civil and defence markets

and in particular the offset opportunities that have

triggered world wide interest in Indian Aerospace.

2. Joint Venture with BAE Systems Plc.

Through various initiatives, your Company had

positioned itself to play a major role in the Indian

Defence Sector for the manufacture and integration

of weapon systems and platforms. Your Company had

also been exploring opportunities for partnerships with

companies with globally proven high end defence

technologies. With this objective in mind, your

Company had evaluated various options and identified

possibilities for forming separate Joint Ventures/alliances

with strategic partners.

As mentioned earlier in this Report, your Company

has entered into a Joint Venture with BAE Systems Plc.

(“BAE”). BAE is a premier global defence, security and

aerospace company delivering a full range of products

and services for air, land and naval forces, as well as

advanced electronics, security, information technology

solutions and customer support services.

3. Gear Vertical

Mahindra Gears & Transmissions Private Limited

(“MGTPL”) is a subsidiary of your Company. With a

view to derive optimum structuring and operational

benefits and unlock value in MGTPL, your Company

divested 46.66% of the Equity Share Capital in MGTPL

in favour of ICICI Venture Fund during the year.

Subsequent to the divestment, the holding of your

Company in MGTPL stands at 53.34%.

4. Demerger of Non Fruit Business of Mahindra

Shubhlabh Services Limited into the Company

Mahindra Shubhlabh Services Limited (“MSSL”),

a subsidiary of your Company, is in the business of

a) domestic sales and exports of fresh fruit products

and b) production and distribution of Agri Inputs

namely Seeds, Seed Potato and Crop Care Products.

MSSL’s Fruits business is currently focused on exports

of grapes to Europe. MSSL proposes to expand its

foray into other Fruits businesses. MSSL has till now

steadily developed a footprint in Agri Input business,

which is strategically an important business to your

Company, as it directly relates with the farmer and

Farm Tech Prosperity, essential for improving customer

bonding, customer loyalty and market penetration of

your Company.

In view of the Agri Inputs business being a high

gestation business, MSSL now intends to streamline

its operations and wants to focus only on the Fruits

Business and explore strategic options to grow this

business domestically and globally in terms of scale

and profitability and going forward, the Agri Inputs

business would be demerged into your Company owing

to its strategic importance and funding resources

required for the same.

To achieve the above objective, a Scheme of

Arrangement between MSSL and your Company and

their respective Shareholders was announced by your

Company and MSSL on 30th

March, 2010 which inter

alia envisages demerger of the Agri Inputs Business

along with other common assets and liabilities (“Non

Fruit business”) of MSSL into the Company under the

provisions of sections 391 to 394 of the Companies

Act, 1956. The Appointed Date of the Scheme would

be 1st

January, 2010 and pursuant to the Scheme,

Shares held by the Company and its wholly owned

subsidiary, Mahindra Holdings Limited (“MHL”) in MSSL

shall stand cancelled. Upon the Scheme becoming

effective, the Company shall issue and allot to the

Shareholder of MSSL (other than the Company and

MHL) as on the Record Date 34,730 fully paid-up Equity

Shares of Rs.5 each of the Company. Currently, the

Scheme is in process of being filed with the Stock

Exchanges and the Honourable High Court of

Judicature at Bombay for approval.

5. Mahindra Forgings Limited Qualified Institutional

Placement and issue of Warrants to the Company

Mahindra Forgings Limited (“MFL”), a subsidiary of

the Company, raised capital by way of a Qualified

Institutional Placement (“QIP”) to Qualified Institutional

Buyers accompanied by a simultaneous issue of

Warrants to your Company, in terms of Securities and

Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2009.

An amount of Rs.175 crores was raised through a QIP

by issue and allotment of Equity Shares of the face

value of Rs.10 each at a price of Rs.107.75 per Equity

Share to Qualified Institutional Buyers. MFL has also

allotted 72,99,270 Warrants on a preferential basis to

your Company wherein each Warrant entitles the

Company to apply for and be allotted one Equity Share

of MFL of the face value of Rs.10 each at a price of

Rs.137 per share, in one or more tranches, at any

time after the date of allotment of Warrants but on or

before the expiry of 18 months from the date of

allotment of Warrants. The Company has made an

upfront payment of 25% of the aggregate price

amounting to approximately Rs.25 crores and has

exercised its option to convert 30,00,000 Warrants

into Equity Shares. The Company still has an option to

convert the balance 42,99,270 Warrants into Equity

Shares by 3rd

September, 2011. As a result of the

above, the Company’s shareholding in MFL stands at

50.68%.

MAHINDRA & MAHINDRA LIMITED

6. Acquisition of Shareholding of Renault s.a.s. in

Mahindra Renault Private Limited (“MRPL”) and take

over of the business of MRPL as a going concern

The Company had entered into a Joint Venture with

Renault s.a.s. (“Renault”) for the manufacture and sale

of the Logan sedan car principally for the Indian market

in 2005. Mahindra Renault Private Limited (“MRPL”), a

subsidiary of the Company had commenced commercial

production of the car badged as Mahindra Renault

Logan from February, 2007.

The Company had been in discussions with Renault to

arrive at a long term solution to MRPL’s continuing

losses and subsequent to the year end, your Company

signed a Framework Agreement with Renault to buyout

Renault’s Shares in MRPL which would result in MRPL

becoming a wholly owned subsidiary of your

Company. Renault would continue to support the

Company and the Logan through a License Agreement

and supply of key components. Through this

Agreement, your Company would strive to ensure

continuity and build on the positive customer equity

that exists for the Logan in India.

7. Going Green – Acquisition of Reva Electric Car

Company Private Limited

Given the concerns about environment, tighter

regulation on emission, debate on greenhouse gases

and taxation on emission, the demand for electric-

vehicles (“EV”) is projected to increase many fold. Most

global OEMs are working on EV programs and are at

least 1 to 2 years away from commercial production.

Your Company is of the view that it should be focused

on developing EV capabilities that would assist it to

be ready to exploit this opportunity.

Keeping in mind the above opportunity and with a

view to consolidate its presence in the Automotive

Space, your Company subsequent to the year end

decided to acquire a majority stake in Reva Electric Car

Company Private Limited (“Reva”). Established in 1994,

Reva launched its first EV in 2001 under the ‘Reva’

brand and further extended it to London in 2004 under

the ‘G-Wiz’ brand. With the help of its strong

engineering team and frugal mindset, it has developed

significant proprietary technology which has enabled

it to create a fleet of EVs worldwide with over 3,000

vehicles on the road in more than 20 countries

including India, the United Kingdom and other

countries in Europe.

This acquisition would help your Company to

compliment its other clean energy initiatives on Hybrid,

Hydrogen and Bio-diesel which is an important element

in the sustainable mobility strategy of the Company.

Stock Options

On the recommendation of the Remuneration/

Compensation Committee of your Company, the Trustees

of the Mahindra & Mahindra Employees’ Stock Option

Trust have granted 4,01,770 Stock Options to Eligible

Employees during the year under review.

Details required to be provided under the Securities and

Exchange Board of India (Employee Stock Option Scheme

and Employee Stock Purchase Scheme) Guidelines, 1999

(“the Guidelines”) are set out in Annexure I to this Report.

Mahindra & Mahindra Limited Employees Stock Option

Scheme - 2010

Your Company proposes to introduce a new Employee

Stock Option Scheme known as ‘Mahindra & Mahindra

Limited Employees Stock Option Scheme 2010’ (“New

Scheme”). The New Scheme will facilitate grant of Options

to the employees in the form of Stock Options and/ or

Restricted Stock Units (“RSU’s”) and /or other instruments

(“Options”) exercisable into Equity Shares. It is proposed

that the Options can be exercised by the employees at a

price equal to or not less than the face value of the Equity

Shares of the Company. The necessary Resolutions seeking

consent of the Members are being sought as proposed in

the Notice convening the Annual General Meeting.

The New Scheme has been formulated in accordance with

the Guidelines and other applicable laws.

Industrial Relations

Industrial Relations remained cordial and harmonious

throughout the year. As mentioned in the last year’s

Directors’ Report, the workmen at the Nashik plant of the

Automotive Division of the Company resorted to one illegal

strike in May, 2009. The Management Discussion and

Analysis Report gives an overview of the developments in

Human Resources/Industrial Relations during the year.

Safety, Health and Environmental Performance

Health and Safety

Your Company continues to demonstrate a strong

commitment towards Safety, Occupational Health and

Environment. Your Company has a well established Safety,

Occupational & Environmental Policy (SH&E). The objectives

and targets derived from the Policy are supported by

Management Programs.

The Safety, Occupational Health & Environment of its

employees are embedded as core Organisational values of

the Company. The Policy inter alia covers and ensures safety

of public, employees, plant and equipment, imparts training

to all its employees as per training calendar, carries out

statutory safety assurance and audits of its facilities as per

legal requirements, conducts regular medical and

occupational check-up of its employees and promotes

eco-friendly activities.

New Certifications

The Sustainability Reporting System of your Company

provides a framework for environmental initiatives,

objectives & targets and helps in continually improving its

Air, Water and Waste Management performance. All Plants

of Automotive Division have been certified with amended

standard for ISO 14001: 2004 & OHSAS 18001. Your

Company’s commitment to environment stems from the

Group’s abiding concern for the Stakeholders engagement

in and around the society. Its nature of operations has a

low impact on the environment due to implementation of

Environment Management System which provides a healthy

work environment to its employees and ensures conduct

of environment friendly business.

Implementation of Occupational Health & Safety

Management System Standard has re-enforced the

Company’s commitment of Safety and Occupational Health

to high levels. OHSAS 18001:2007 is the best existing

safety practice which is implemented through the amended

management system and all the Plants of the Automotive

Division have been certified during the year 2009-10. The

individual operational Units of the Automotive Division i.e.

Kandivli, Nashik, Igatpuri, Zaheerabad and Haridwar are

also certified. The OHSAS system aims to eliminate or

minimise risk to employees and other interested parties

who may be exposed to Occupational Safety risks associated

with its activities.

Occupational Health Examination

Your Company’s Plants continued its commitment to improve

the well being of the employees. During the year 2009-10,

all employees in Hazardous operations were medically

examined once in six months and other employees from

Non-Hazardous operations were examined once in a year.

Environmental Initiatives :

Air Pollution Management

With a clear view on sustaining green business growth,

3

MAHINDRA & MAHINDRA LIMITED

the need for clean environment was given a renewed focus.

By incorporation of new technological upgradations, your

Company is now in the process of calculating carbon foot

print of Plants location wise and is taking adequate

measures to mitigate the causes attributing to it. The

Company also has a roadmap to reduce Green House Gas

(“GHG”) emissions by curtailing travel of its employees to

client locations for Meetings and discussions and this is

achieved by promoting the use of Video Conferencing.

Your Company is constantly imbibing the major

environment sensitisation drives amongst its employees

through various events such as celebrations of World

Environment Day, World Ozone Day alongwith active

participation of employee’s families. Your Company has

also implemented ambient and work place air monitoring,

increased green zones, alongwith effluent treatment and

waste monitoring.

Water and Waste Water Management

Your Company is committed towards resource conservation

and has taken various initiatives to achieve waste reduction

and resource conservation. Your Company has implemented

various water management methods such as recycling and

re-use of treated waste water in process. The Company

has also introduced rainwater harvesting and recharging

within Plant premises and would extend it to other locations

as well.

Solid Waste Management

Your Company’s Plants at Kandivli, Nashik, Igatpuri and

Zaheerabad believe in responsible disposal of hazardous

and non-hazardous waste. The generation of waste to a

greater extent has been reduced at source and if adaptable,

it is recycled and reused. Your Company is aggressively

working towards minimising waste disposal costs and is

executing various Management programmes at each

location such as vermiculture, bio-gas Plants to convert

food waste to manure/cooking gas towards minimisation

of the same. Your Company is conscious towards

environment and ensures environment friendly disposal of

e-waste.

Greenbelt Development

Your Company has community partners at each location

for green belt development. Mahindra Hariyali was one of

the initiatives which was implemented at the Plants at

Mumbai and Kanhe and at dealers & distributors across

India. Your Company’s Plants at various locations have

partnered with Non-Governmental Organisations and

various academic institutions all located in and around

Mumbai, Nashik, Igatpuri, Zaheerabad and Haridwar.

Corporate Social Responsibility

From educating a girl child in Udaipur, providing healthcare

to inaccessible areas in Uttarkhand, enabling socially

disadvantaged youth become self reliant in Pune, to

planting a million trees in India, your Company’s Corporate

Social Responsibility (“CSR”) initiatives continue to provide

strategic interventions that help the Nation help itself.

At Mahindra we call it “Transform-nation”.

CSR continues to be an integral part of the vision of the

Mahindra Group and this year too, the Company has

pledged 1% of its Profit after Tax for CSR initiatives, largely

to benefit the socially and economically disadvantaged

sections of Society.

Some of the major initiatives your Company has invested

in are described below:

Mahindra Pride Schools:

Mahindra Pride Schools (“MPS”) unique partnership model

speeds its graduates’ integration into the workforce, where

they earn not only a salary but also the respect of their

family and peers. Since inception in March, 2007, 1,720

students from socially disadvantaged communities have

completed the 3 month course at MPS. MPS provides

these youth with livelihood training in sunshine industries

4

i.e. Hospitality, Customer Relationship Management,

Hardware & Networking and Call Centre Training. All

students are required to undergo mandatory courses in

English, Life skills and computer applications. There has

been 100% placement of all students participating in the

placement process.

Nanhi Kali:

Nanhi Kali, which supports the education of the

disadvantaged girl child has been the flagship programme

of the K. C. Mahindra Education Trust. Nanhi Kali brings

about a complete transformation, by allowing the girls to

attend school and learn with dignity. Nanhi Kali sponsorship

provides not only academic support classes where concepts

of Maths, Science and language are taught to the girls but

also provides uniforms, school bags, shoes, etc. which free

her family from hidden costs of education. The Mahindra

Group independently supports 11,000 girls across India.

With support from thousands of individuals and Corporate

donors, Project Nanhi Kali now supports the education of

over 54,000 underprivileged girl children, in poor urban,

remote rural and conflict afflicted tribal communities across

8 States of India. The goal of Nanhi Kali is to provide

educational support to 1,00,000 underprivileged girls by

2011.

Mahindra All India Talent Scholarships (MAITS):

Instituted in 1995, MAITS are awarded to students from

lower socio-economic strata to enable them to pursue a

job oriented diploma course at a recognised Government

Polytechnic Institute in India. Approximately 500

scholarships are given every year for students who undergo

a three year course. As a result in the last Financial Year,

1,525 students all over India received financial support

through MAITS. Till date, 4,772 students have been MAITS

Scholars. A survey of students who have graduated indicate

that they have got good jobs and the living standards and

economic status of their families have improved.

Gifting Cochlear Implants:

By gifting the power of sound through the donation of

Cochlear Implants, the Mahindra Group has changed the

life and future of 60 profoundly hearing-impaired,

underprivileged children till date. Operations are performed

by Dr. Milind Kirtane, India’s leading ENT surgeon and his

Team. All beneficiaries are hearing impaired children below

the age of 5, belonging to the lower socio-economic strata

of Society.

Bihar Rehabilitation Project:

The river Kosi wreaked havoc in Bihar in 2008 with floods

causing incalculable loss of life and property besides

snatching away the livelihood of lakhs of people in the

State. Following the same, Mahindra Foundation and

Mahindra Consulting Engineers Limited (“MACE”), a

subsidiary of the Company have entered into a

Memorandum of Understanding (“MOU”) with the

Collector, Madhepura District, Bihar to support the

rehabilitation and reconstruction activities in Pattori Gram

Panchayat, Singheswar Block, Madhepura District of Bihar

for those ravaged by the Kosi floods in 2008. Under the

terms of the MOU, MACE would create the complete social

infrastructure in Pattori Gram Panchayat. This

comprehensive programme includes the construction of

permanent houses with provision of basic infrastructural

facilities such as water supply and sanitation.

Employee Social Options:

Employee Social Options (“ESOPs”) is the unique

programme at the Mahindra Group where each employee

can do social work by volunteering in various CSR initiatives.

Till date, 31,317 employees have volunteered in various

initiatives in their local communities. ESOPs were formally

launched in 3 new locations of Mahindra Group – Mahindra

Two Wheelers; Pune, Mahindra Two Wheelers; Pithampur

and Mahindra Retail; Bangalore.

Some of the notable ESOPs initiatives this year were:

5

MAHINDRA & MAHINDRA LIMITED

• The Lifeline Express in Wardha: This was jointly

sponsored and organised by the Farm Division and

Mahindra & Mahindra Financial Services Limited, a

subsidiary of the Company. The Project was held at

Wardha and 1,153 surgeries were performed free of

cost and 281 Hearing Aids were distributed. ESOPs

Volunteers spent 13,752 man hours in this activity

and 30,575 man hours were spent by volunteers from

the Community, thus making it an ideal public-private

partnership initiative.

• Mahindra Hariyali : A Survey was conducted on the

survival rate of trees planted in the Financial Year

2008-09. According to the Survey, the survival rate

as on 31st

May, 2009 of the trees planted during

the abovementioned period is 79.49%.

• ESOPs AWARDS 2009: is an internal Company award

and was institutionalised in 2008 to appreciate and

promote healthy competition amongst employees and

locations.

Other ESOPs activities also included other initiatives in

Education, Health, Environment and Social arenas bringing

long-lasting impact. 27 initiatives were conducted in

Education (such as distributing educational material, IT/

vocational training, infrastructure development) impacting

24,664 lives. 54 Health initiatives such as medical camps,

blood donation camps, Pulse Polio Campaigns, mobile

dispensaries, etc. reached out to over 14,573 people. HIV/

AIDS awareness campaigns reached out to over 1,36,560

people in Nashik. For taking care of the Environment,

1,14,862 trees were planted for Gap Filling in Financial

Year 2009-10. 71 Social initiatives were conducted such as

visiting Old Age Homes, interacting with children,

conducting Shraamdan, etc. which reached out to over

78,003 people.

‘Sustainability’ Initiative

In the last year’s Directors’ Report, a beginning was made

to appraise the Shareholders of the initiatives your Company

had taken in reporting its ‘Sustainability’ performance for

reviewing its commitments to the Environment and Society,

while generating profits.

During the year under review, the 2nd

Sustainability Report

for the year 2008-09 was published, in accordance with

the latest Guidelines of the internationally accepted Global

Reporting Initiative or the GRI standards. Again this year,

this Report was externally assured by Ernst & Young and

rated with the highest level of A+ and GRI checked. This

2nd

Report reflects that along with your Company’s business

growth, the Company’s responsibility to its stakeholders

has also grown, expanded and intensified. Your Company’s

progression in this journey and its commitment to taking

a more responsible and holistic approach to business is

reflected by the facts that a) all commitments made in the

first Report were satisfactorily met and b) a structured

Sustainability road map over a 3 and 5 year time horizon

has been drawn, with clear targets for reducing

consumption of energy and water and reduction in GHG

emission and waste. Details of this Group Level Road Map

and further information on various environment related

initiatives taken by your Company which would help in

achieving the targets in the Road Map, have been

elaborated elswhere in the Annual Report.

During the year under review, a Carbon foot-printing

exercise was undertaken to inventorise GHG emissions from

all the Company’s business operations under Scope I, II &

III emissions as per internationally accepted standards. This

would enable your Company to baseline data on its

emissions and undertake initiatives towards improving

performance in this area. This would be reported in your

Company’s 3rd

Sustainability Report, which would be

released shortly.

Realising that the equation of business with Environment

and Society is undergoing a radical change, through its

strategic approach of ‘ALTERNATIVE THINKING’ your

6

Company is committed to integrate sustainable

development for a sustainable business growth. For a

detailed information on the Annual Sustainability Reports

for the years 2007-08 to 2008-09 please log on to

www.mahindra.com/sustainability.

Directors

Mr. A. K. Nanda, Executive Director of the Company, after

37 illustrious years of service in the Mahindra Group of

which 18 years were as an Executive Director decided to

step down from his executive position with effect from the

close of 31st

March, 2010.

Considering his experience and expertise, Mr. A. K. Nanda

was appointed as an Additional Director of the Company

with effect from 1st

April, 2010 at the Meeting of the

Board of Directors of the Company held on 30th

March,

2010.

The Board has placed on record its deep appreciation of

Mr. Nanda’s immense contribution and valuable services

during his long association with the Company and

acknowledged Mr. Nanda’s outstanding experience and

expertise in serving the Mahindra Group since 1973

including his contribution as Executive Director of the

Company from 1992 onwards.

The Company has received a Notice from a Member

signifying his intention to propose Mr. Nanda for the

office of Director at the forthcoming Annual General

Meeting.

Mr. Keshub Mahindra, Mr. Anupam Puri, Dr. A. S. Ganguly

and Mr. R. K. Kulkarni retire by rotation and, being eligible,

offer themselves for re-appointment.

Directors’ Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956,

your Directors, based on the representations received from

the Operating Management, and after due enquiry, confirm

that:

(i) in the preparation of the annual accounts, the

applicable accounting standards have been followed;

(ii) they have, in the selection of the accounting policies,

consulted the Statutory Auditors and these have been

applied consistently and reasonable and prudent

judgments and estimates have been made so as to

give a true and fair view of the state of affairs of the

Company as at 31st

March, 2010 and of the profit of

the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the

maintenance of adequate accounting records in

accordance with the provisions of the Companies Act,

1956 for safeguarding the assets of the Company and

for preventing and detecting fraud and other

irregularities;

(iv) the annual accounts have been prepared on a going

concern basis.

Subsidiary Companies

The subsidiary companies of your Company continue to

contribute to the overall growth of the Company. Major

subsidiaries such as Mahindra & Mahindra Financial Services

Limited with a 61.96% growth in its consolidated profits

and Mahindra Holidays & Resorts India Limited with a

46.86% growth in its consolidated profits deserve special

mention. The consolidated Group Profit for the year after

exceptional items, prior period adjustments and tax and

after deducting minority interests is Rs.2,478.56 crores as

against Rs.1,405.41 crores earned in the previous year.

During the year under review, Mahindra Metal One Steel

Service Centre Limited, Raigad Industrial & Business Park

Limited, Retail Initiative Holdings Limited, Mahindra Retail

Private Limited, Mahindra Technologies Services Inc.,

Mahindra Punjab Tractors Private Limited, Mahindra

EcoNova Private Limited, Mahindra Conveyor Systems

Private Limited, Tech Mahindra (Nigeria) Limited, Tech

Mahindra Bahrain Limited S.P.C. and BAH Hotelanlagen

AG became subsidiaries of your Company.

7

MAHINDRA & MAHINDRA LIMITED

During the year under review, Mahindra Hinoday Industries

Limited, Metalcastello S.p.A., and Mahindra Technologies

Inc., ceased to be subsidiaries of the Company.

Further, pursuant to an Agreement dated 10th

May, 2005,

signed between SBC International Inc. [now AT&T

International Inc.] (“AT&T”), Mahindra and Mahindra

Limited (“the Company”), British Telecommunications Plc.,

Mahindra-BT Investment Company (Mauritius) Limited

(“MBTM”) and Tech Mahindra Limited (“Tech Mahindra”)

which entitled AT&T to exercise certain Options over Equity

Shares of Tech Mahindra on achieving certain Milestones

by Tech Mahindra at a pre-determined price, AT&T exercised

its Options and acquired 98,70,912 Equity Shares of Tech

Mahindra, aggregating 8.07% of the paid-up Equity Share

Capital of Tech Mahindra on 22nd

March, 2010 from MBTM.

Upon the exercise of Options by AT&T, the Shareholding

of the Company alongwith its subsidiary MBTM in Tech

Mahindra stands reduced to 44.01%, resulting in Tech

Mahindra ceasing to be a subsidiary of the Company with

effect from 22nd

March, 2010.

Consequently, the subsidiaries of Tech Mahindra viz.

Mahindra Logisoft Business Solutions Limited, Tech

Mahindra (Americas) Inc., Tech Mahindra GmbH, Tech

Mahindra (Singapore) Pte. Limited, Tech Mahindra

(Thailand) Limited, Tech Mahindra Foundation, PT Tech

Mahindra Indonesia, CanvasM Technologies Limited,

CanvasM (Americas) Inc., Tech Mahindra (Malaysia)

SDN.BHD, Tech Mahindra (Beijing) IT Services Limited, Tech

Mahindra (Nigeria) Limited, Tech Mahindra Bahrain Limited

S.P.C. and Venturbay Consultants Private Limited also ceased

to be subsidiaries of the Company with effect from

22nd

March, 2010.

Subsequent to the year end, Mahindra Metal One Steel

Service Centre Limited has changed its name to Mahindra

Electrical Steel Limited and Mahindra Aerospace Australia

Pty. Limited and Aerostaff Australia Pty. Limited became

wholly owned subsidiaries of Mahindra Aerospace Private

Limited which in turn is a subsidiary of your Company.

Reva Electric Car Company Private Limited also became a

subsidiary of your Company.

The Statement pursuant to section 212 of the Companies

Act, 1956 containing details of the Company’s subsidiaries

is attached.

The Consolidated Financial Statements of the Company

and its subsidiaries, prepared in accordance with

Accounting Standard AS21 form part of the Annual Report.

In terms of the approval granted by the Central Government

under section 212(8) of the Companies Act, 1956, copy of

the Balance Sheet, Profit and Loss Account, Reports of the

Board of Directors and Auditors of the subsidiaries have

not been attached to the Balance Sheet of the Company.

The Company Secretary would make these documents

available upon receipt of request from any Member of the

Company interested in obtaining the same. However, as

directed by the Central Government, the financial data of

the subsidiaries have been separately furnished forming

part of the Annual Report. The accounts of the individual

subsidiary companies shall be uploaded on the Website of

your Company. These documents would also be available

for inspection at the Head Office of the Company and at

the Office of the respective subsidiary companies, during

working hours upto the date of the Annual General Meeting.

Auditors

Messrs. Deloitte Haskins & Sells, Chartered Accountants,

retire as Auditors of the Company and have given their

consent for re-appointment. The Shareholders would be

required to elect Auditors for the current year and fix their

remuneration.

As required under the provisions of section 224(1B) of the

Companies Act, 1956, the Company has obtained a written

Certificate from the above Auditors proposed to be

8

re-appointed to the effect that their re-appointment, if

made, would be in conformity with the limits specified in

the said section.

Public Deposits and Loans/Advances

Out of the total 17,101 deposits of Rs.166.22 crores from

the Public and Shareholders as at 31st

March, 2010, 205

deposits amounting to Rs.0.67 crores had matured and

had not been claimed as at the end of the Financial Year.

Since then, 93 of these deposits of the value of Rs.0.44

crores have been claimed.

The particulars of loans/advances and investment in its

own shares by listed companies, their subsidiaries,

associates, etc., required to be disclosed in the Annual

Accounts of the Company pursuant to Clause 32 of the

Listing Agreement are furnished separately.

Current Year

During the period 1st

April, 2010 to 28th

May, 2010, 45,821

vehicles were despatched as against 34,797 vehicles during

the corresponding period in the previous year. During the

same period, 29,699 tractors were despatched as against

24,536 tractors despatched during the corresponding

period in the previous year.

Economies in many parts of the world have started to

stabilise and recover either from recession or severe slow

down in the past two years. The Indian Economy has

displayed remarkable resilience over the course of the

downturn and is expected to grow strongly. The primary

driver of growth in the year under review was the Industrial

Sector. The index of industrial production grew 10.1% on a

year on year basis between April, 2009 to February, 2010

as compared to the 3.1% growth registered in the same

period in the last fiscal. With investments picking up in the

last few months, as indicated by the sharp rise in capital

goods production and a normal monsoon forecast for the

current year, the prognosis for growth in the current fiscal is

positive.

However, the rising cost of commodities and the supply

constraints on certain critical components are a source of

considerable concern and your Company hopes to counter

this through an intensive and continuous focus on cost

controls, product innovation and customer delight.

Energy Conservation, Technology Absorption

and Foreign Exchange Earnings and Outgo

Particulars required to be disclosed under the Companies

(Disclosure of Particulars in the Report of Board of Directors)

Rules, 1988 are set out in Annexure II to this Report.

Particulars of Employees

The Company had 426 employees who were in receipt of

remuneration of not less than Rs.24,00,000 during the

year ended 31st

March, 2010 or not less than Rs.2,00,000

per month during any part of the said year. However, as

per the provisions of section 219(1)(b)(iv) of the Companies

Act, 1956, the Directors’ Report and Accounts are being

sent to all the Shareholders of the Company excluding the

Statement of particulars of employees. Any Shareholder

interested in obtaining a copy of the Statement may write

to the Company Secretary of the Company.

For and on behalf of the Board

KESHUB MAHINDRA

Mumbai, 29th

May, 2010 Chairman

MAHINDRA & MAHINDRA LIMITED

ANNEXURE I TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST

MARCH, 2010

Information to be disclosed under the Securities and Exchange Board of India (Employee Stock Option Scheme and

Employee Stock Purchase Scheme) Guidelines, 1999:

(a) Options 1,51,80,898

granted

(b) The pricing 1st

Tranche 2nd

Tranche 3rd

Tranche 4th

Tranche 5th

Tranche 6th

Tranche 7th

Tranche 8th

Tranche 9th

Tranche 10th

Tranche

formula

Average Average Discount Discount Average Discount Discount Discount Discount Discount

price price of 5.13% of 4.85% price of 5.02% of 4.89% of 4.97% of 5.03% of 4.97%

preceding preceding on the on the preceding on the on the on the on the on the

the the average average the average average average average average

specified specified price price specified price price price price price

date - 27th

date - 30th

preceding preceding date - 14th

preceding preceding preceding preceding preceding

September, May, the the September, the the the the the

2001 2003 specified specified 2005 specified specified specified specified specified

date - 31st

date - 30th

date - 29th

date - 13th

date - 30th

date - 4th

date - 30th

May, 2004 May, 2005 May, 2006 September, July, 2007 August, July, 2009

2006 2008

Average price - Average of the daily high and low of the prices for the Company’s Equity Shares

quoted on Bombay Stock Exchange Limited during 15 days preceding the

specified date.

The specified date - Date on which the Remuneration/Compensation Committee decided to

recommend to the Mahindra & Mahindra Employees’ Stock Option Trust (Trust),

the grant of Options.

(c) Options vested 82,90,283

(d) Options exercised 45,88,703

(e) The total number of 45,88,703 Equity Shares of Rs.10 each. These were transferred from the Trust to the Eligible

shares arising as a Employees prior to sub-division of the Face Value of Equity Share from Rs.10 to Rs.5.

result of exercise of

option

(f) Options lapsed 7,57,165

(g) Variation of terms At the Sixty-first Annual General Meeting of the Company held on 30th

July, 2007, the

of options Mahindra & Mahindra Limited Employees Stock Option Scheme was amended to provide for

recovery from Eligible Employees, the fringe benefit tax in respect of Options which are

granted to or vested or exercised by the Eligible Employees on or after 1st

April, 2007.

(h) Money realised by Rs.79,24,98,738. This amount was received by the Trust.

exercise of options

(i) Total number 98,35,030

of options in force

The Company has calculated the employee compensation cost using the intrinsic

value of stock options. Had the fair value method been used, in respect of stock

options granted on or after 30th

June, 2003, the employee compensation cost

would have been higher by Rs.26.44 crores, Profit after tax lower by Rs.26.44

crores and the basic and diluted earnings per share would have been lower by

Rs.0.48 and Rs.0.44 respectively.

(j) Employee-wise details of

options granted to:

(i) Senior managerial As per Statement attached

personnel

(ii) Any other employee who Names Options Names Options

receives a grant in any granted granted

one year of option during the during the

amounting to 5% or more year ended year ended

of option granted during 31st

March, 31st

March,

that year 2004* 2005*

Mr. Raghunath Murti 15,000 Mr. Pranab Datta 15,240

Mr. Hemant Luthra 15,240 Mr. Rajeev Dubey 15,000**

Mr. Ramesh lyer 25,920 Mr. Allen Sequeira 10,160

- - Mr. Prince M. Augustin 5,080

* The Options granted stand augmented by an equal number of Options and the

Exercise Price stands reduced to half on account of the 1:1 Bonus Issue made in

September, 2005.

** Out of these, the Options granted and outstanding as of 30th

March 2010,

stands augmented by an equal number of Options and the Exercise Price

stands reduced to half on account of the sub-division of the Face Value of

Equity Share from Rs.10 to Rs.5.

(iii) Identified employees who Nil

were granted option,

during any one year,

equal to or exceeding 1%

of the issued capital

(excluding outstanding

warrants and conversions)

of the company at the

time of grant

(k) Diluted Earnings Per Share Rs.35.61

(EPS) pursuant to issue of

shares on exercise of option

calculated in accordance with

Accounting Standard (AS) 20

‘Earnings per Share’

(l) Where the company has

calculated the employee

compensation cost using the

intrinsic value of the stock

options, the difference between

the employee compensation

cost so computed and the

employee compensation cost

that shall have been recognised

if it had used the fair value of

the options, shall be disclosed.

The impact of this difference on

profits and on EPS of the

company shall also be disclosed.

MAHINDRA & MAHINDRA LIMITED

(m)Weighted-average exercise

prices and weighted-average

fair values of options shall be

disclosed separately for options

whose exercise price either

equals or exceeds or is less than

the market price of the stock.

(n) A description of the method

and significant assumptions

used during the year to

estimate the fair values of

options, including the

following weighted-average

information:

(i) risk-free interest rate, 6.41%

(ii) expected life, 2.50 years

(iii) expected volatility, 53.56%

(iv) expected dividends, and 2.24%

(v) the price of the underlying Rs.929.50

share in market at the time

of option grant.

Options Grant Date Exercise price Fair value

(Rs.) (Rs.)

4th

November, 2009 724.00 414.84

The fair-value of the stock options granted on 4th

November, 2009 have been

calculated using Black-Scholes Options pricing Formula and the significant

assumptions made in this regard are as follows:

STATEMENT ATTACHED TO ANNEXURE I TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST

MARCH, 2010

Name of Senior Managerial Options granted in Options granted in Options granted in Options granted in Options granted in

Persons to whom Stock December, 2001* June, 2005** September, 2006 July, 2007 August, 2008

Options have been granted

Mr. Deepak S. Parekh 20,000 5,000 Nil Nil Nil

Mr. Nadir B. Godrej 20,000 5,000 Nil Nil Nil

Mr. M. M. Murugappan 20,000 5,000 Nil Nil Nil

Mr. Narayanan Vaghul 20,000 5,000 Nil Nil Nil

Dr. A. S. Ganguly 20,000 5,000 Nil Nil Nil

Mr. R. K. Kulkarni 20,000 5,000 Nil Nil Nil

Mr. Anupam Puri 20,000 ***5,000 Nil Nil Nil

Mr. Bharat Doshi 1,00,000 ***10,000 ***11,345 ***8,362 ***29,039

Mr. A. K. Nanda 1,00,000 10,000 ***11,345 ***8,362 ***24,890

* All the above Options have been exercised.

** The Options granted stands augmented by an equal number of Options and the Exercise Price stands reduced to

half on account of the 1:1 Bonus Issue made in September, 2005.

*** Out of these, the Options granted and outstanding as on 30th

March 2010, stands augmented by an equal number

of Options and the Exercise Price stands reduced to half on account of the sub-division of Face Value of Equity

Share from Rs.10 to Rs.5.

ANNEXURE II TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST

MARCH, 2010

PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF

PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS)

RULES, 1988 AND FORMING PART OF THE DIRECTORS’

REPORT FOR THE YEAR ENDED 31ST

MARCH, 2010

A) Conservation of Energy

The Company has always been conscious of the need

for conservation of energy and has been steadily

making progress towards this end. Energy

conservation initiatives have been implemented at all

the plants and offices of the Company by undertaking

numerous energy conservation projects.

(a) During the year, the Company has taken the

following initiatives for conservation of energy:

(i) Engineering Initiatives

• Modification in equipments like oil

pumps and motors coupled with system

optimisations to reduce energy

consumption.

• Replacement of higher HP motor with

lower HP.

• Installation of heat pumps, metal halide

lamps instead of sodium and mercury

vapor lamps.

• Installation of natural draft cooling

towers instead of induced draft cooling

systems.

• Installation of capacitor banks, automatic

timer circuits for lights and fans.

• Installation of heat recovery system at

ED oven.

• Shift to LPG Heating from Electric Heating.

(ii) Process Improvement

• Cycle time reduction of various

manufacturing processes.

• Improving capacity utilisation of cylinder

head washing units.

• Modifying furnace charging sequence.

• Optimising temperature settings of air

conditioners considering seasonal

changes.

• Modification of Air Handling Ducts in

paint shop to optimise use of Air Blower

power consumption.

(iii) Initiatives Generating Awareness on Energy

Consumption

• Display of sustainability posters at

workplace.

• Idea generation campaign for electrical

energy saving.

• Celebration of Energy Conservation Day

on 14th

December, 2009 followed by

Energy Conservation Week between 14th

December, 2009 to 21st

December, 2009.

• Setting up of Stalls inside the Plant

premises for awareness of Energy

Efficient and Renewable Energy Products.

• Reward and recognition for energy saving

projects.

(b) Additional investments and proposals, if any,

being implemented for reduction of consumption

of energy:

• Waste heat recovery projects in paint shops.

• Improvement in efficiency of central air

conditioning units.

• Explore application of efficient lighting (LED,

Magnetic coupled).

• Use of renewable energy (Solar and Wind).

3

MAHINDRA & MAHINDRA LIMITED

(c) Impact of the measures at (a) & (b) above for

reduction of energy consumption and

consequent impact on the cost of production of

goods:

The measures taken have resulted in lower energy

consumption. In the Automotive Division, the

Specific Power consumption per equivalent vehicle

improved by 15% over the previous year. For the

same period, the Farm Equipment Sector achieved

an improvement of 3.21% per equivalent tractor.

The work done by your Company has received

recognition in the form of a number of National

and State level awards.

B) Technology Absorption

Research & Development:

1. Areas in which Research & Development is carried

out:

During the year under review, the Automotive

Division focused technology development efforts

in core areas of engine technology, safety, value

engineering through the use of modern

manufacturing processes, alternate material and

developing capabilities in automotive electronics.

The Farm Equipment Sector too, focused on

improvement in engine technology and new

product development.

2. Benefits derived as a result of the above efforts:

Some significant achievements for the year under

review include the C2 CRDe engine with DOHC

which was launched on the Maxximo. The engine

delivers higher power and better fuel efficiency,

thus delivering significant customer benefit and

competitive advantage to your Company. Your

Company also developed its first in-house

Gasoline Engine which was launched on the

Scorpio targeting the overseas markets.

In the area of Suspension, a hydro-formed frame

and front independent suspension was developed

for the Maxximo to give the pick-up segment

users a car like driving comfort.

Your Company has been working on developing

the Scorpio Pick-UP for the US market and in the

process, has developed/attained significant

capabilities in the field of emission, safety, security

and on board diagnostics. The Company has

confidence of complying to the latest FMVSS

legislations for model year 2010 and further years.

In the area of sustainable mobility, the Company

developed a Micro Hybrid application on the

Pick-UP. This was launched on the new Bolero

Maxi Truck and was received very well by the

customers.

During the year under review, your Company’s

Automotive Division applied for 24 Patents and

8 Design Registrations.

Moving on to the Farm Equipment Sector, in the

domestic market, the Farm Division, during the

year under review, developed and launched the

“Yuvraj 215”, a 15HP tractor, to meet the needs

of the small and marginal farmers. The entire

existing range of tractors, i.e. Bhoomiputra,

Sarpanch and the flagship Arjun range were

upgraded, offering better fuel efficiency, stability

and comfort. In the same period, the Swaraj

Division developed and launched the Swaraj 843

XM (Xtra Mileage) tractor, the 1st

new product

from the Swaraj stable after its merger with the

Company.

In the international space, in the US market, the

Compact series of tractors were launched across

the country, offering advanced features like

Hydrostatic Transmission, allowing the product to

be easily operated by all in the household. Your

Company developed an Integrated Cabin, which

was also introduced in the US market. In China,

the 125 HP tractor was launched, significantly

expanding your Company’s tractor range.

4

In the case of Mahindra Powerol, the product

range was increased to 320 kVA, at the higher

end. At the lower end, the 5kVA genset has been

developed and introduced. In AppliTrac, the

tracked type self propelled harvester was developed

and introduced in the southern rice belt.

Keeping in view the future technology

requirements, your Company’s tractor engines are

compliant with the upcoming BS (Trem) IIIA

norms in India and has also undertaken a

programme to meet the challenging Tier-IV

emission norms of USA.

During the year in India, the Farm Equipment

Sector filed 12 New Patents and 2 New Design

Registration applications.

3. Future plan of action

Your Company continues its focus on developing

new products and technologies to meet the ever

growing customer needs, regulatory

requirements, competitive pressures and to

prepare for the future. Sustainable mobility

solutions are a key focus area and your Company

will continue to aggressively pursue technology

development in this area. Some of the key thrust

areas in this direction are weight reduction, fuel

efficiency improvement and development of

alternative fuel powertrains. Further, safety related

technologies are another key area of focus for

your Company.

On the Farm Equipment side, your Company

remains committed to improving farm

productivity through a variety of product (Tractors

and Implements) and non-product initiatives. The

focus will be on delivering new technology to

the customer for a multi-fold farm output.

Product upgrades, new products and implements

will be focus areas.

4. Expenditure on R&D

The Company spent Rs.664.86 crores (including

Rs.390.72 crores on capital expenditure) on

Research and Development work during the year

which was approximately 3.23% of the total

turnover.

Technology Absorption, adaptation and innovation:

1. Efforts, in brief, made towards technology

absorption, adaption and innovation

The Company has continued its endeavor to

absorb advanced technologies for its product

range to meet the requirements of a globally

competitive market. All of the Company’s

Vehicles, Engines and Tractors are compliant with

the prevalent regulatory norms in India and also

in the countries to which they are exported. The

Company has also undertaken programs for

development of vehicles which would run on

alternate fuels like CNG, Bio-diesel, Hydrogen and

Electric traction.

2. Benefits derived as a result of the above efforts

• Compliance with new emission norms

introduced in India with effect from 1st

April,

2010.

• Build a knowledge base for the Company.

• Launch of Bolero Maxi Truck, Gio, Maxximo

and Yuvraj.

• Introduction of Micro Hybrid Technology on

a Pick-UP.

• Development of C2 CRDe engine with DOHC.

• Development of Electric Version of Maxximo.

• Development of Integrated Cabin for Tractor.

• Emphasis on value analysis/value engineering

and innovative cost reduction ideas to cut

down costs.

5

MAHINDRA & MAHINDRA LIMITED

3. Imported Technology for the last 5 years

Sr. No. Technology Imported Year of Import Status

1. Development of Air Bags on utility vehicle 2005 In the process of Absorption

2. Development of cruise control on utility vehicle 2005 Technology Absorbed

3. Fatigue Lab and track design for MRV, Chennai 2005 In the process of Absorption

4. Sandwich material for noise absorption 2005 Technology Absorbed

5. Development of Nano-Technology for IP etc. 2005 Technology Absorbed

6. Climate control (Heated and Cooled) seats 2005 In the process of Absorption

7. Bio-Diesel and Gas based engine 2005 Technology Absorbed

8. Transmission Design of Compact Tractor 2006 Technology Absorbed

9. Development of Integrated Cabin for Tractor 2006 Technology Absorbed

10. Hydrophilic Nano coated Feature 2007 In the process of Absorption

11. Automatic Transmission for SUV 2007 Technology Absorbed

12. Transmission for new SUV 2007 In the process of Absorption

13. New Generation system for Brakes for SUV 2007 In the process of Absorption

14. New Electricals & Electronics Features 2007 In the process of Absorption

15. CNG engines for LCV 2007 Technology Absorbed

16. Common Rail Diesel on Light commercial vehicle 2007 Technology Absorbed

17. Next generation Common rail adaptation 2007 Technology Absorbed

18. Hydrogen ICE 2007 Technology Absorbed

19. Fuel Cell Vehicle Development 2007 In the process of Absorption

20. 2nd

Generation Biofuels (Biomass to Liquid/Gas to Liquid) 2007 In the process of Absorption

21. Hybrid Vehicles 2008 In the process of Absorption

22. Transmission Upgrade 2008 In the process of Absorption

23. Electricals & Electronics Update 2008 Technology Absorbed

24. Design for New Tractor Transmission 2008 In the process of Absorption

25. Start Stop Micro Hybrid 2009 Technology Absorbed

26. New Generation Engine Management System 2009 In the process of Absorption

27. CNG Engines for Pickups/3 Wheelers 2009 Technology Absorbed

28. Electronic Programs for Safety, Stability & Steering Control 2009 Technology Absorbed

29. CAN Based Networking 2009 Technology Absorbed

30. New Airbag Program 2009 In the process of Absorption

31. Advanced Materials Technologies 2009 Technology Absorbed

32. Development of components using alternate 2010 In the process of Absorption

materials and advanced manufacturing processes

33. Engine upgrades and Emission improvement technologies 2010 In the process of Absorption

34. New transmissions for compact vehicles and Utility vehicles 2010 In the process of Absorption

35. Technology for NVH management 2010 In the process of Absorption

36. Electrical and electronic technologies in the areas of 2010 In the process of Absorption

safety, infotainment and convenience

37. Alternate fuel technologies 2010 In the process of Absorption

38. New suspension system for improved comfort 2010 In the process of Absorption

39. Development of digital service interface 2010 In the process of Absorption

40. Agri Implements Technology transfer 2010 In the process of Absorption

C) Foreign Exchange Earnings and Outgo

The Company continues to strive to improve its export earnings. Further details in respect of exports are set out elsewhere in the

Annual Report.

The information on foreign exchange earnings and outgo is furnished in the Notes on Accounts.

For and on behalf of the Board

KESHUB MAHINDRA

Mumbai, 29th

May, 2010 Chairman

6

Particulars of loans/advances and investment in its own shares by listed companies, their subsidiaries,

associates, etc., required to be disclosed in the Annual Accounts of the Company pursuant to Clause 32

of the Listing Agreement.

Loans and advances in nature of loans to subsidiaries:

(Rupees in crores)

Name of the Company Balances as on Maximum outstanding

31st

March, 2010 during the year

Mahindra & Mahindra Financial Services Limited 0.00 15.00

Mahindra Intertrade Limited 0.00 0.15

(including loans where there is no interest) (0.15)

Bristlecone India Limited 8.03 8.03

Mahindra Gujarat Tractor Limited 1.00 1.00

Mahindra Shubhlabh Services Limited 0.00 2.00

NBS International Limited 2.00 2.00

Mahindra Forgings Limited 0.00 100.50

Bristlecone Limited 72.45 72.45

Mahindra Overseas Investment Company (Mauritius) Limited 86.86 86.86

Mahindra Engineering & Chemical Products Limited 68.53 68.53

Mahindra Two Wheelers Limited 41.00 46.00

Mahindra Vehicle Manufacturers Limited 230.00 230.00

Mahindra Castings Limited 0.00 38.00

Mahindra Holdings Limited 25.00 25.00

Mahindra Automotive Australia Pty. Ltd. 4.51 4.51

Mahindra Logistics Limited 0.00 22.84

Mahindra USA Inc. 0.00 7.20

Loans and advances in the nature of loans to firms/companies in which Directors are Interested:

(Rupees in crores)

Name of the Company Balances as on Maximum outstanding

31st

March, 2010 during the year

Infrastructure Development & Finance Company Limited 0.00 15.00

Except as indicated above, the Company has not made any loans and advances in the nature of loans to associates or

loans and advances in the nature of loans where there is no repayment schedule or repayment beyond seven years or no

interest or interest below section 372A of the Companies Act, 1956.

7

MAHINDRA & MAHINDRA LIMITED

8

MAHINDRA & MAHINDRA LIMITED

Management Discussion & Analysis

Management Discussion & Analysis

Mahindra & Mahindra Limited ("M&M") or ("Mahindra") is

the flagship Company of the US$ 7.1 billion Mahindra

Group which consists of 105 companies and has businesses

large and small in almost every continent of the world. The

different Sectors of the Mahindra Group cover a wide

spectrum of industries from Tractors to Information

Technology, from Automobiles and Two Wheelers to

Airplanes, from Financial services and Holidays to Defence

and Infrastructure. An investor in M&M has the benefit of

the Group’s involvement in all these Industries.

Positive sentiment and a renewed confidence in the India

growth story replaced the fear and uncertainty prevalent in

the past year. Your Company used the crisis to reboot and

reinvent itself and to reignite its dreams. It took the

challenges head on and surged ahead with aspiration,

inspiration and motivation. The Automotive Sector

contributed to the revival of The Indian Auto Industry with

the Mahindra Xylo, which was launched at the height of

the recession and which went on to become an immensely

successful vehicle. The Farm Equipment Sector crowned 27

years of market leadership, with M&M becoming the single

largest tractor Company in the world by volume.

Industry Structure

The domestic Automotive Industry comprises of Multi Utility

Vehicles ("MUVs"), which includes soft tops, hard tops and

pick-ups, Light Commercial Vehicles ("LCVs"), three wheelers

and C-segment cars.

The domestic Tractor Industry is traditionally segmented by

horsepower into the low horsepower of 20 hp - 30 hp

segment, the middle segment of 30-40 hp and the higher

segment of above 40 hp.

Industry overview and trends

Indian economic growth recovered strongly and relatively

faster from the effects of the global financial crisis. The

Government responded quickly to the crisis with a large

stimulus package including reduction in indirect taxes and

other fiscal and monetary measures to boost demand. As a

result, industrial growth made rapid strides, registering a

double digit increase in the second half of Financial Year

2010, as compared to nearly zero growth in the comparable

period of Financial Year 2009.

However, given the poor monsoon and rise in global

commodity prices, inflation has risen sharply since November,

2009. Containing inflation is likely to remain a key challenge

for the Government and policymakers in the near term.

Indian Automotive Sector

The global Automobile Industry was one of the worst

affected by the financial crisis. Global Automobile production

declined by 13.5% in the year 2009, after a 3.7% decline

in the year 2008 (Source: OICA). Recognising the importance

of the Automobile Industry to their economies and

employment, many Governments in developed and

emerging markets responded with measures to boost

demand for Automobiles, especially through providing

incentives for scrapping old vehicles (also known as "cash

for clunker" Schemes) and by reducing taxes.

Helped by the Indian Government's stimulus package

(primarily comprising a 6% point reduction in excise duty)

and multiple new product launches by manufacturers, the

Indian Automobile Industry registered a healthy growth of

27.9% in Financial Year 2010 as compared to a decline of

4.8% in Financial Year 2009.

3

Domestic industry sales F-08 F-09 F-10 F-09 F-10

Passenger vehicles 15,49,882 15,52,703 19,49,776 0.2% 25.6%

Cars 12,03,733 12,20,475 15,26,787 1.4% 25.1%

*A1: Mini 69,553 49,383 63,378 -29.0% 28.3%

A2: Compact 8,59,197 8,85,639 11,28,272 3.1% 27.4%

A3: Mid-size 2,25,725 2,41,683 2,76,071 7.1% 14.2%

A4: Executive 42,195 33,638 46,346 -20.3% 37.8%

A5: Premium 6,201 9,093 11,455 46.6% 26.0%

A6: Luxury 862 1,093 1,265 26.8% 15.7%

MPVs 1,00,865 1,06,607 1,50,256 5.7% 40.9%

UVs 2,45,284 2,25,621 2,72,733 -8.0% 20.0%

Commercial vehicles 4,88,088 3,84,194 5,31,395 -21.3% 38.3%

LCVs 2,15,912 2,00,699 2,86,337 -7.0% 42.7%

Passenger 27,832 26,952 34,421 -3.2% 27.7%

Goods 1,88,080 1,73,747 2,51,916 -7.6% 45.0%

M&HCVs 2,74,582 1,83,495 2,45,058 -33.2% 33.6%

Passenger 38,647 34,892 43,081 -9.7% 23.5%

Goods 2,35,935 1,48,603 2,01,977 -37.0% 35.9%

3 Wheelers 3,64,781 3,49,727 4,40,368 -4.1% 25.9%

Passenger 2,34,774 2,68,463 3,49,662 14.3% 30.2%

Goods 1,30,007 81,264 90,706 -37.5% 11.6%

2 Wheelers 96,54,435 74,37,619 93,71,231 -23.0% 26.0%

Scooters 10,50,109 11,48,007 14,62,507 9.3% 27.4%

Motorcycles 57,68,342 58,31,953 73,41,139 1.1% 25.9%

Mopeds 4,13,759 4,31,214 5,64,584 4.2% 30.9%

Electric 17,068 26,445 3,001 54.9% -88.7%

Source: Society of Indian Automobile Manufacturers

* Classification of A1, A2 etc as per Society of Indian Automobile Manufacturers

3

MAHINDRA & MAHINDRA LIMITED

growth was 34.4%. Most of the growth in M&HCV sales

came in the second half of the fiscal, partly due to a

sharp rebound in industrial growth and partly due to a

very low base in the corresponding period of the previous

year.

Indian Tractor Industry

The Indian Tractor Industry, the world's largest, grew by 31.7%

this year to touch 4,00,203 Tractors, compared with 3,03,921

Tractors sold in the corresponding period last year.

This growth, despite a weak monsoon and a badly-affected

Kharif crop this year, is because the dynamics of the rural

economy has undergone some fundamental changes in

recent times. The Government has enhanced its support

for the Agriculture Sector with increased levels of credit

and better minimum support prices. Increased rural outlays

including those under initiatives like the National Rural

Employment Guarantee Scheme ("NREGS") have helped

improve rural incomes. New employment avenues have

emerged and on an average, farm incomes now contribute

to less than half of rural incomes. All this has resulted in

higher rural liquidity, ensuring strong demand, despite the

poor monsoon.

Within the overall Automobile Industry, the performance of

different segments varied significantly during the year.

The passenger car segment, which comprises of 78% of

personal vehicles, reported a healthy growth of 25.2%, led

by the A2 segment which grew 27.4%. The A4, A5 and A6

segments grew in average of 36-68% indicating the rising

income levels, wealth and aspirations of the Indian

consumers.

The Utility Vehicle ("UV") segment, in which your Company

participates as a significant player, registered a growth of

21.0% as compared to a decline of 7.6% in Financial Year

2009. This growth was driven by increasing prosperity,

development of infrastructure and growth in road travel.

Interestingly, over 40% of the growth in UV industry volumes

was contributed by Mahindra Xylo.

The commercial vehicle industry registered a growth of

38.8% during the year. The LCV market showed an increase

of 42.7% during the year. This was primarily driven by the

small commercial vehicle segment (of less than 1 tonne

payload), which grew by 47% (Source: M&M analysis).

Medium and Heavy commercial vehicle (M&HCV) segment

100000

150000

200000

250000

300000

350000

400000

450000

20

10

-11

20

09

-10

20

08

-09

20

07

-08

20

06

-07

20

05

-06

20

04

-05

20

03

-04

40

02

03

30

39

21

30

22

41

31

83

28

26

26

21

22

61

14

17

54

65

16

00

56

Industry

3

Your Company's Performance

Automotive Sector - Leading the Industry

Financial Year 2010 was an epochal year for your Company's

Automotive Sector. Spurred to rise above the challenges

imposed by a stagnant market and declining customer

spend, Mahindra broke new ground. New vehicles were

launched, a state-of-the-art factory was inaugurated, even

as your Company's ever popular vehicles, the Scorpio and

Bolero continued to show good growth in sales volumes:

Growth

M&M Domestic sales F-08 F-09 F-10 F-09 F-10

Passenger Vehicles 1,29,849 1,19,799 1,56,058 -7.7% 30.3%

Cars 25,907 13,423 5,332 -48.2% -60.3%

UVs 1,03,942 1,06,376 1,50,726 2.3% 41.7%

Light commercial vehicles 55,222 55,881 86,217 1.2% 54.3%

3 Wheelers 33,927 44,533 44,438 31.3% -0.2%

2 Wheelers N/A 3,014 70,008 N/A 2,222.8%

Notes:Data as per classification of Society of Indian Automobile Manufacturers. Includes sales of subsidiaries. Two

wheeler sales for F-09 are for the period January 2009-March 2009.

• During the Financial Year 2010, your Company, along with

its Joint Venture subsidiaries Mahindra Navistar Automotives

Limited (‘‘MNAL’’) and Mahindra Renault Private Limited

(‘‘MRPL’’), sold a total of 2,86,713 vehicles in the domestic

market, a growth of 30.0% over the previous year.

• The Company's domestic UV sales volumes increased

41.7% to 1,50,058 units, as against a growth of 20.0%

for industry UV sales. As a result, your Company further

strengthened its domination of the domestic UV sub-

segment, increasing its market share to 55.3% over

the previous year's market share of 47.1% (Source:

SIAM Data).

• The Scorpio, Bolero and Xylo continued to lead the Indian

market, increasing Mahindra's already dominant marketshare.

• The Bolero occupied the numero uno slot for the fourth

consecutive year, selling more than 70,000 vehicles

during the year.

• In LCVs, M&M has a presence in < 3.5T GVW segment

(small commercial vehicles and pick-ups), while its

subsidiary MNAL has a presence in the 3.5-7.5MT GVW

segment.

• In Financial Year 2010, your Company's overall LCV

sales were 86,217 units, a growth of 54.3% as

compared with a growth of 42.7% for the industry.

Your Company is the second largest player in the LCV

segment with a market share of nearly 30.0%. (Source:

SIAM Data).

Bolero was the 9th

largest selling passenger vehicle in

the country. All other vehicles but one, on the list of top

10 selling vehicles were small cars. Further, the Bolero

was ranked No. 1 in the SUV/MPV category in TNS.

Scorpio won the Autobild Technology Award for its micro-

hybrid technology. During the year, the Xylo won

three important awards - MUV of the Year from NDTV

Profit Car and Bike Awards 2009; UV of the Year from

CNBC TV 18 Overdrive Awards 2009 and

MPV of the year from ZigWheels Car and Bike

Awards 2009.

33

MAHINDRA & MAHINDRA LIMITED

• In the passenger car segment, the Logan sold 5,332

units, a decline of 60.3% over the previous year as

compared to a growth of 14.2% for the A3-segment.

• The Company recently announced a restructuring of its

Joint Venture with Renault s.a.s. France, which it hopes

will augment sales.

New products - Inspiration on roads

At Mahindra, the customer is king, and their satisfaction is

the source of the Company's motivation. Keeping customer

focus in view, the Automotive Sector launched new products

in Financial Year 2010, which met with encouraging

response in the market, on the basis of which your Company

is ramping up production to meet market demand.

Three new products were launched in the < 3.5T GVW

segment.

• Mahindra was the first

Company to introduce micro-

hybrid technology in the LCV

segment in the Bolero Maxi-

truck (BMT), which now

accounts for more than 30% of BMT volumes.

• The Company also

launched India's first

compact truck, the Gio,

with a 0.5T payload,

with car-like interiors

and an attractive price

point. By offering

attractive finance schemes, the Company expects the

Gio to provide self-employment opportunities to rural

and semi-urban youth.

• Mahindra launched the Maxximo, a technologically-

advanced compact truck with a 0.85T payload. It

features the world's first 2-cylinder 4-valve common

rail engine. The Maxximo offers a price-value proposition

in terms of performance

and features that is much

superior to what was

hitherto available in the

market.

• In March, 2009 a refreshed

version of the Scorpio,

called the "Mighty

Muscular Scorpio" was

launched, which led to

more than 20% growth in

sales of the brand during

the year.

• Mahindra Navistar Automotives

Limited ("MNAL") (a subsidiary of

your Company) is developing

products to address the full range

of the commercial vehicle market,

some of which were displayed

at the Auto Expo in January,

2010 to wide acclaim from media and customers. The

commercial launch is expected in the short term. MNAL

is expected to have a full range of M&HCVs in the next

3-4 years.

New Infrastructure - Aspiring to reach greater heights

Your Company is positive on the future of the Indian

Automotive Industry and is continuing with its expansion

plans. To meet increased customer requirements, the first

phase of a brand new manufacturing facility at Chakan,

near Pune in Maharashtra, was commissioned in December,

2009. This state-of-the-art plant is owned and operated by

Mahindra Vehicle Manufacturers Limited ("MVML"), a wholly

owned subsidiary of your Company.

In another path breaking initiative, Mahindra commenced

partial operations at its brand new research and

development facility - Mahindra Research Valley, MRV at

34

H1F10H1F09 H2F10H2F09

6,128

3,0072,373

7,560

Chennai. The facility will be expanded further over the next

few years and will create a world class R&D infrastructure

for product development, testing and validation.

The Chakan Plant has the capability to manufacture the

Company's range of new generation UVs as well as

commercial application vehicles. It will also manufacture

Commercial Vehicles for MNAL.

Overseas operations - Expanding frontiers

In the Global markets, while the overall economic conditions

have improved from the nadir of Financial Year 2009, they

still remain challenging. The Company's overseas automotive

operations recovered in the second half of last year with

export sales growing nearly 24% to 10,567 units as

compared to 8,501 units in the previous year.

Automotive Sector: Overseas volumes

To build on the

Company's heritage and

build its brand in

overseas markets, your

Company launched a

new product, Mahindra

Thar. The product has

received good response in targeted markets.

In addition to the above, your Company sold 1,000 Logan

cars in overseas markets through MRPL.

Farm Equipment Sector - The route to the numero uno

position

The Financial year ended 31st

March, 2010

was a landmark year for the business. Your

Company became the world's largest tractor

Company, in terms of the number of

tractors sold, fulfilling a long cherished

dream. 'Mahindra Tractors' is an iconic brand and enjoys a

strong following in the India rural heartland.

M&M Domestic sales F-08 F-09 F-10 F-09 F-10

Tractors 99,042 1,20,202 1,75,196 21.4% 45.8%

Domestic 90,509 1,13,269 1,66,359 25.2% 46.9%

Exports 8,533 6,933 8,837 -18.8% 27.5%

• In this period, your Company sold 1,66,359 tractors

under its Mahindra and Swaraj brands as against

1,13,269 tractors sold in the previous year, a 46.9% increase.

• This resulted in the market share going up to 41.4%

from 40.8% last year and marked the completion of

27 years of leadership of the Farm Equipment Sector in

the Indian Tractor Market.

• The above volumes included the sale of more than

1,00,000 Mahindra branded tractors in the domestic

tractor market in a single financial year, the 1st

Tractor

Company in the country to achieve this distinction.

New Products - Inspired by India

• Yuvraj 215 - A revolutionary 15 HP Tractor for the

small and marginal farmer, launched in Gujarat.

• 843 XM - The first

Tractor to be launched

under the Swaraj

brand after the merger

of the erstwhile Punjab

Tractors Limited with

the Company.

35

MAHINDRA & MAHINDRA LIMITED

• Arjun, Sarpanch,

Bhoomiputra range -

Upgraded versions

launched, enhancing value

for the customer.

International launches

United States

• Launch of the first hi-tech Integrated Cabin Tractor

with both air-conditioning and heating in the US, the

first from a tractor that is 'Made in India'.

• The Compact series of Tractors, another first from an

Indian Tractor Company, was launched nation-wide.

These products have been very well received in that

country.

China

In China, the inauguration of the Joint Venture Company

viz. Mahindra Yeuda (Yancheng) Tractor Company Limited

("MYYTCL") in April, 2009 was accompanied by the launch

of the 125HP tractor, thus expanding your Company's

product portfolio range up to 125HP.

Overseas Operations - Global Reach

• Mahindra Tractors exported tractors to more than 35

countries across the world.

• Exports grew 27.5% this year to touch 8,837 tractors

as compared to 6,933 tractors exported last year,

outperforming exports registered by the Indian tractor

industry which de-grew 6.5% at 36,394 tractors.

• China is the second largest tractor market in the world

with a rapidly growing Chinese market, fuelled by

increased Government subsidies focussed on

agricultural mechanisation. MYYTCL has been

successfully operationalised and has delivered 32%

increase in domestic volumes in the first year of

operations. The two Joint Ventures of your Company

in China together account for the sale of around

30,000 tractors.

• In the US, the tractor industry continued to face the

brunt of the economic down turn, which impacted the

sale of tractors by Mahindra USA, Inc.

Beyond Agriculture - New growth engines - Mahindra

Powerol

Mahindra is a Company on the move. Having been the

leading tractor maker for close to three decades now, the

Company has diversified in other

spheres such as power generators.

A leading player in the powergen

space, Mahindra Powerol sold

48,011 engines in this financial

year, as against 52,350 engines in

the last year.

Mahindra Powerol has made a

foray in the new area of Tele Infra

Mahindra Powerol is the largest manufacturer of gensets

in the country and has retained its leadership position

in the Powergen space for telecom, with nearly 42%

market share.

36

Management ("TIM"). This is a business where your Company

will manage telecom towers by providing the entire range

of services required, including diesel filling, preventive

maintenance, security and surveillance while ensuring world

class uptime levels. The business has already contracted

more than 7,000 sites for its services.

Mahindra Powerol has notched impressive growth in the

retail space in Financial Year 2010. It also tested an engine

for rice mill application, which was successfully introduced

in the market.

Mahindra Powerol has expanded its genset product range

to 320 kVA at the higher end and introduced a new 5kVA

DG at the lower end. Perhaps the most significant product

introduction for the retail segment from the Mahindra

Powerol stable has been the digital home UPS. With sales

of over 7,000 numbers this year, this product is poised to

take Mahindra into every home.

The Quality Way - Inspiring success

Strict adherence to quality is the abiding culture at

Mahindra Tractors, across its businesses and activities.

Winning the most coveted International Quality accolades

such as the Deming Prize and the Japan Quality Medal

has inspired it to continue on the exalted path. The Farm

Equipment Sector ("FES") has continued on the Total Quality

Management ("TQM") path with its own Assessment Model

- the Mahindra Excellence Model. To further strengthen

its manufacturing capability, the Sector is pursuing the

path of Total Productive Maintenance ("TPM") under the

guidance of Japan Institute of Plant Maintenance. The

rich TQM experience of FES is now being horizontally

deployed in the Swaraj Division to accelerate the

implementation of best practices. The Sector is relentlessly

pursuing its goal of business excellence and is taking this

culture across to other businesses in your Company as

well.

Opportunities and threats

The Automotive Sector

The current low level of vehicle ownership in India is 14 per

1,000 people as compared with the world average of 120

per 1,000 which implies a huge opportunity for growth of

the Automobile Industry. India's Automotive Sector is

expected to be one of the fastest growing in the world

over the next several years. However, the Company faces

increasing competition from the presence of a large number

of automotive companies in the country.

The Automobile Industry is also a key contributor in

economic growth. The Indian Government's Automotive

Mission Plan 2016 (AMP 2016) envisages a doubling of

Automotive Industry's share of the Indian economy by 2016.

However, stricter emission norms and an increased focus

on public transportation may discourage use of automobiles

as a means of personal transport.

The increased investments in infrastructure and the

consequent growth in industrial activity will lead to increased

goods movement, resulting in a growing demand for

commercial vehicles. The Company's subsidiary, MNAL is

set to launch a range of medium and heavy commercial

vehicles over the next few years. This will ensure the

Company's participation in this large and important segment

of the Indian Automotive Industry.

The Farm Equipment Sector

• The improvement in rural liquidity and increase in

non-agri component of rural incomes is a strong

positive since demand will have lesser sensitivity to a

single deficient monsoon as compared to earlier

periods.

• Food security and rural development remain high on

the Government agenda, with the Union Budget for

2010-2011 showing an increase in agri credit outlay

37

MAHINDRA & MAHINDRA LIMITED

by 15% to Rs.3.75 lakh crores; interest subvention on

crop loans and various initiatives for rural development

also have enhanced outlays. This, coupled with

significantly low levels of mechanisation in Indian farms

compared to the global average, indicates that there is

significant growth potential for agricultural

mechanisation in the country. Your Company is well

poised to leverage this opportunity. The Company may

face increased competition from other tractor

manufacturers.

• Amongst your Company's newly launched products,

the Yuvraj 215 has the potential to grow significant

volumes in the upcoming period by creating an

entirely new category and catering to a large group

of customers who had no affordable option thus

far.

Your Company will use every opportunity to leverage synergy

both within the Sector as well as with other Mahindra

companies to create and improve channel efficiencies,

develop cutting edge technologies and introduce a

continuous pipeline of product upgradations and new

product introductions. Your Company's strategy to make

use of low cost manufacturing and sourcing bases in India

and abroad will enhance its cost competitiveness.

Having achieved Global Leadership, your Company will

continue to focus on expanding international volumes. With

the 2 Joint Ventures in China, your Company is well poised

to participate in the growth in China, one of the fastest

growing tractor markets, fuelled by huge Government

subsidies for mechanisation. Similarly, with the US market

slowly emerging out of a recession, your Company expects

the business to resume its growth path.

Perhaps the biggest opportunity will emerge as the FES

gears up to bring about Farm Tech Prosperity. The

possibilities are endless in this area.

Your Company has the will to achieve and go where no

other has gone before, to travel the road less travelled and

create its own pathways on its continued journey to success

and excellence.

Risks and Concerns

The Automotive Sector

Competition

Given that the Indian Automobile Industry is expected to

be one of the fastest growing markets in the world, many

global players are significantly expanding their presence in

India. There is a concern that this will result in an ever

increasing level of competition and intense pressure on the

profit margins of all participants.

Increased competition will lead to more frequent product

launches in all industry segments and raise customer

expectations in terms of performance, quality and

technology, leading to higher costs. Your Company views

all of this as an opportunity and a challenge.

Regulations

Stringent regulatory norms are being introduced to

safeguard the environment, especially in the area of

emissions. Many of these measures are likely to result in an

increase in costs which cannot always be passed on to

customers through price increases in a highly competitive

market environment.

In India, there is a large differential in taxes levied on small

cars and larger vehicles. With the resulting lower price tag

for small cars, many customers may opt to postpone large

car purchases or buy a small car, which could impact the

growth of UVs and the large car segment.

Fuel prices and alternate fuels

Fuel prices are an important element of the overall cost of

ownership for vehicles and tractors. Almost all of the

38

Company's UV models are diesel powered. Diesel is priced

lower than petrol. Any

reduction in the price

differential between petrol

and diesel may increase

the demand for petrol UVs

at the expense of diesel

UVs and will be

disadvantageous to the

Company.

There is also a growing customer trend, as well as promotion

by the Government, for vehicles powered by CNG, LPG and

electric batteries, as well as hybrid powertrains. To mitigate

this risk, the Company has developed products powered by

alternate energy such as CNG and electricity to provide

lower polluting products. The Company has also developed

prototypes of a hybrid Scorpio and hydrogen powered three-

wheeler as well as a bio-diesel powered Scorpio and Bolero,

bio-diesel tractors and Gensets.

Alternate modes of transportation

While the thrust by the Government on development of

urban infrastructure would lead to overall economic

development and improve living standards, it is also likely

to provide

a l t e r n a t e

modes of

transport for

d a i l y

c o m m u t i n g

such as Bus

Rapid Transit

S y s t e m

( " B R T S " ) ,

M e t r o r a i l ,

monorails, etc.

Also, growing urbanisation and vehicle population is leading

to growing pollution, congestion and shortage of parking

spaces in cities. These trends would likely discourage the

use of automobiles as a means of personal transport,

though, given the aspirations of Indian consumers, it may

not have a significant impact on the demand for personal

vehicles.

Financial market conditions

Availability of credit and affordable interest rates are

important facilitators for automobile and tractor sales.

Any adverse change in these factors would impact

demand. However, several strategic tie-ups with multiple

banks and financing companies alleviates this concern to

some extent.

For overseas operations, which are a key thrust area for the

Company, rupee appreciation could be a risk for both the

Sectors. However, M&M, as a practice, is taking appropriate

steps to hedge currency exposure, thus limiting the impact

of risk.

New projects

To maintain and extend its competitive advantage, the

Company has created significant new capacity at its new

manufacturing plant at Chakan and is simultaneously investing

in an aggressive new product development programme.

Success of the new product launches and attaining optimal

and planned capacity utilisation of the new facility would

have an important bearing on the future profitability.

To mitigate the associated risks, your Company is taking

great care in building new products around the customers'

needs and plans to bring in the incremental capacity from

this new plant in phases.

3

MAHINDRA & MAHINDRA LIMITED

Farm Equipment Sector

Competition

The Indian domestic tractor market, the world's largest, has

seen a round of consolidation in the last few years, which

includes the coming together of TAFE and Eicher and the

acquisition of Punjab Tractors Limited by your Company.

Having recorded a significant growth of over 30% in this

financial year, the market is expected to see more

competition among the existing domestic and international

players.

Increased competition will lead to more frequent product

launches in all industry segments and raise customer

expectations in terms of performance, quality and

technology, leading to higher costs. Your Company views

all of this as an opportunity and a challenge.

Regulations and alternative fuels

Stringent regulatory norms are being introduced to

safeguard the environment, especially in the areas of

emissions. Your Company is ahead of the curve, in terms of

technology readiness, to meet the changes in norms. In

addition, in the area of alternative fuels, your Company's

products both in tractors and gensets are compatible with

bio-fuels, ensuring the customer can use such fuels,

whenever their commercial availability improves.

Raw Materials

After a year of decline in raw material prices, Financial Year

2011 is expected to see a firming of prices in the

international market. While this is an area of concern and

will put pressure on margins, your Company will continue

to focus on cost re-engineering to minimise the impact of

this development.

Strategy

Automotive Sector: Expanding the addressable market

Your Company is investing significant resources in developing

its capacity and capabilities to grow its participation as a

full range player in the Indian automobile industry.

• Entry into new segments - In addition to sports utility

vehicles, pick-up trucks, light commercial vehicles and

three-wheelers, your Company has recently entered into

the Multi Purpose Vehicle segment (through the Xylo),

the mini-truck segment (through the Maxximo) and

the compact-truck segment (through the Gio). The

Company, through its subsidiary MNAL, will enter into

the medium and heavy commercial vehicle segment in

the near term as well. This will not only provide the

Company with a much larger addressable market but

will also provide multiple avenues for growth and de-

risk the business from dependence on a single segment.

• New products - The Company is refreshing and growing

its product portfolio to grow its sales volumes and

defend its market position. As part of the Company's

aggressive product plan, it is planned to launch a

number of new products and multiple variants in the

next three years. This includes a new global Sports

Utility Vehicle platform to be launched in the near

future.

• Technology upgradation and R&D - The Company is

investing in upgrading the technology and quality of

its products. An important initiative in this area is the

new research facility being set up at Mahindra Research

Valley (MRV) in Chennai, which will provide world-

class R&D infrastructure. Further, the impending launch

of the Company's products in the US, the most

advanced automobile market, will help the Company

keep abreast of technological trends. The Company

plans to harness its frugal engineering capabilities to

4

achieve its technology and new product development

objectives at a globally competitive cost.

• Overseas markets and partnerships - The Company

plans to increase its focus on developing overseas

markets through new products and brand building.

During Financial Year 2011, the Company plans to

enter the US market with a pick-up. The Company

also continues to actively search for overseas partners

to supplement and strengthen its domestic market in

both the Sectors.

Farm Equipment Sector: Aspiring for Farm Tech Prosperity

Going beyond just being a tractor company, FES aspires to

make a difference in the lives of farmers by delivering Farm

Tech Prosperity, both in the Indian context, as well as on a

global scale, in the immediate and distant future.

The Company's customers - the source of inspiration

At Mahindra, the Company undertakes research to identify

the needs of both its existing and potential customers in

order to fulfil their aspirations. These findings inspire the

Company to follow the road less travelled. In the past year,

FES took many steps along the road, to improve the lives

of its customers.

Yuvraj 215

There is wealth at the bottom of the pyramid. Research

showed that the lower income farmer is still forced to rely

on manual labour and

bullocks to till his land.

With this insight, your

Company took upon

itself the challenge of

creating a suitable

solution at a suitable

price. FES launched

the Yuvraj 215, a 15

HP tractor at an unbeatable price for small and marginal

farmers - your Company's contribution towards inclusive

growth in the country. This technological marvel meets the

needs of over 80% of India's farming populace, whose

land holding is less than 5 acres, and for whom a Rs.2.5

lakhs tractor is simply unaffordable.

Mahindra Applitrac

Research suggests that increasing rural affluence, multiple

sources of income in rural India and the success of social

programmes like NREGS are combining to make farm labour

scarce and expensive. Also, the productivity levels are very

low on Indian farms, far lower than the global average.

This is the inspiration for the AppliTrac brand, which offers

the Indian farmer, complete mechanisation solutions for a

range of crops, helping him deal with labour shortage and

also enhance productivity.

Mahindra Samriddhi

Farmer prosperity is the inspiration that has motivated FES

to intensify Mahindra Samriddhi, which is focused on

increasing crop productivity. This initiative includes soil and

water testing labs, productivity demo farms, agri-clinics and

counselling centres. It brings the best of agricultural know-

Yuvraj 215 has received the Golden Peacock Award, 2010

in the Innovative Product/Services category, which has

recognised the game changing nature of Yuvraj 215.

4

MAHINDRA & MAHINDRA LIMITED

how within reach of the farmer and helps him increase

farm productivity.

In the Financial Year ended 31st

March, 2010, 75 Samriddhi

centres were operational across the country. Samriddhi is

motivated by your Company's desire to help millions of

farmers across the country get more out of soil, ensuring

that there is and will be enough food to feed India's growing

population.

Outlook

In the long term, the Indian economy is projected to grow

rapidly and demand conditions are expected to remain

strong. However, in the near term, there are challenges in

terms of higher commodity prices, rising inflation and

appreciation of the rupee which will have a bearing on

demand and profitability.

Both the Automotive and Farm Equipment Sectors with

their updated product portfolios and their exploration of

global horizons, will strive to maintain their leadership

position in their respective markets. Simultaneously, your

Company will continue its focus on achieving cost leadership

through focused cost optimisation, value engineering,

improved efficiency measures like supply chain management,

countrywide connectivity of all its suppliers and dealers and

exploiting synergies between its Sectors.

Material Developments in Human Resources/

Industrial Relations for Automotive and Farm

Equipment Sectors

This year, HR in the Mahindra Group continued on its

strategic purpose of focusing on the HR Triple Bottom-line

by creating a culture of sustained business out performance,

extreme care for all stakeholders, starting with customers

and employees, and strengthening the core values of the

Group.

Going forward, the success of the Group will depend on

individuals and teams that are able to create value for the

organisation. The levers of organisation structure and design,

reward and recognition, talent acquisition, communication

and performance management system are important and

are aligned. Leadership development, succession planning

and employee engagement demanded extra focus this year,

given the prevalent economic situation.

To showcase HR practices in various businesses and

encourage best practice sharing, the HR Best Practice Award

was instituted.

The Talent Management process of the Group gave impetus

to leadership development programmes with a focus on

creating synergy between Satyam Computer Services Limited,

Tech Mahindra Limited and the other businesses of the

Group. Continuing with leadership development

programmes, this year a partnership was forged with the

Centre for Creative Leadership, USA in line with the said

purpose.

A cross-functional team of more than 150 HR,

business and IT professionals worked together for

harnessing the power of IT through Parivartan -

Project Harmony, whose basic objective is to create a One

Mahindra experience by synergising and creating best

practices in 24 HR processes across the Group. 17,000

Officers across 29 Group companies spread over 156

locations experienced this power when the system went

live.

Your Company continued with its initiative of employer

branding through “The War Room”, event which sees

participation from the country's leading Business Schools.

The impact of this initiative was significant and there was a

marked increase in the number of participating teams this

year.

4

Industrial Relations remained cordial and harmonious during

the year for both the Sectors, apart from a brief illegal

tool-down strike by workers at the Nashik Automotive Plant.

However, the loss in production was compensated and the

Company did not suffer any major loss. Various training

programmes were organised at all Plants for developing

personal, interpersonal and technical skills of the Company's

workmen. These training programs covered a wide range

of topics e.g. Positive Attitude, Stress Management,

Creativity, Team Effectiveness, Safety and Environment,

Quality Tools, TPM, Dexterity and Technical training. The

workmen wholeheartedly participated in all training

programmes and in many cases on a holiday or after

working hours.

Workmen at all locations are involved in driving

improvement activities.

The permanent employee strength of the Company as on

31st

March, 2010 was 14,355.

Internal Control Systems

The Company maintains adequate internal control systems,

which provide, among other things, reasonable assurance

of recording the transactions of its operations in all material

respects and of providing protection against significant

misuse or loss of Company assets. The Company uses an

Enterprise Resource Planning ("ERP") package, which

enhances the internal control mechanism. The Company

has a strong and independent internal audit function. The

Chief Internal Auditor reports directly to the Chairman of

the Board. Professionally qualified, technical and financial

personnel of the internal audit function conduct periodic

audits to ensure that the Company's internal control systems

are adequate and are complied with.

Discussion on Financial Performance with respect

to Operational Performance

Overview

The financial statements have been prepared in

compliance with the requirements of the Companies Act,

1956 and Generally Accepted Accounting Principles

("GAAP") in India.

The Group's consolidated financial statements have been

prepared in compliance with the standard AS 21 on

Consolidation of Accounts and presented in a separate

section. The Company has provided segment reporting on

a consolidated basis as per standard AS 17 on segment

reporting. This information appears along with the

consolidated accounts.

Financial Information

Fixed Assets:

As at 31st

March, 2010 the Gross Block of Fixed Assets and

Capital Work in Progress was Rs.6,240.49 crores as

compared to Rs.5,540.62 crores as at 31st

March, 2009.

During the year, the Company incurred capital expenditure

of Rs.946.31 crores (previous year Rs.855.12 crores). The

major items of capital expenditure were on New Product

Development like the Maximmo, Capacity Enhancement and

Research & Development including on the Company's

research facility in Chennai. This included the purchase of

Intangible assets aggregating Rs.225.28 crores (previous

year Rs.170.35 crores).

Inventories:

Particulars 31st

March, 31st

March,

2010 2009

Raw materials and bought

out components as a % of

consumption 4.23% 4.46%

Finished goods as a % of

gross sales 2.48% 3.31%

43

MAHINDRA & MAHINDRA LIMITED

The reduction in inventory levels is due to the Company's

continued focus on supply chain management and better

planning and control.

Sundry Debtors:

Sundry debtors amount to Rs.1,258.08 crores as

at 31st

March, 2010, as compared with

Rs.1,043.65 crores as at 31st

March, 2009. While in absolute

terms the debtors have gone up, as a

percentage of gross sales and income from operations

debtors are lower at 6.17% for the year ended

31st

March, 2010 as compared to 7.09% for the previous

year. The Company has been able to achieve this

improvement in its debtor's level due to its proactive

emphasis on collections.

Loan Funds:

The loans funds have decreased from Rs.4,052.76 crores in

the previous year to Rs.2,880.15 crores in the current year.

The decrease is primarily on account of the conversion of

the Fully and Compulsorily Convertible Debentures into

Equity Shares and the repayment of secured Foreign

Currency Loans from Banks.

RESULTS OF OPERATIONS

Income:

(Rs. crores)

Particulars Finanical Year - 2010 Finanical Year - 2009 Inc./(Dec.)

Amount % Amount % %

Gross Sales 19,832.06 106.61 14,268.41 108.97 38.99

Income from Operations 564.06 3.03 444.62 3.40 26.86

Gross Sales & Income from Operations 20,396.12 109.64 14,713.03 112.37 38.63

Less : Excise Duty on Sales 1,794.01 9.64 1,619.35 12.37 10.79

Net Sales & Income from Operations 18,602.11 100.00 13,093.68 100.00 42.07

Other Income 199.35 1.07 270.34 2.06 (26.26)

Net Sales, Income from Operations and Other Income:

The net sales and income from operations of the

Company grew by 42% over the previous year on a

growth of 44% in the automotive business and 40%

in the Company's tractor business. This growth in the

Automotive Sector was driven by the robust

growth in domestic UV volumes by 39%, increased exports

and the launch of the GIO and the Maximmo in the current

year. The tractor business growth was fuelled by a strong

increase in sales in both the domestic and export

markets.

Other income during Financial Year 2010 at Rs.199.35 crores

fell by 26% as compared to the previous year amount of

Rs.270.34 crores due to lower dividend income from

subsidiaries and lower profit from the sale of investments

in the current year.

44

Expenditure: (Rs. crores)

Particulars Financial Year 2010 Financial Year 2009 Inc./(Dec.)

Amount % to Net Sales Amount % to Net Sales %

and Income and Income

from from

Operations Operations

Raw materials, Finished and

Semi-finished Products 12,332.92 66.30 9,274.23 70.83 32.98

Personnel expenses 1,198.47 6.44 1,024.61 7.83 16.97

Interest, commitment and finance charges 27.81 0.15 45.26 0.35 (38.56)

Depreciation/Amortisation 370.78 1.99 291.51 2.23 27.19

Other expenses 2,115.48 11.37 1,702.21 13.00 24.28

Total Expenditure 16,045.46 86.26 12,337.82 94.23 30.05

The total expenditure during the year as a percentage of Net sales/Income from Operations is 86.26% as compared to

94.23% in the previous year.

Material Cost:

For the year ended 31st

March, 2010 material cost has

increased by 33% which is much lower than increase in net

sales and income from operations due to increased volumes

in the current year. Thus, as a percentage of net sales,

material cost shows a decrease over the previous year. This

is mainly due to the full benefit of the decrease in

commodity prices in the second half of Financial Year 2009

accruing to the current year and the cost reduction initiatives

of the Company.

Personnel Cost:

Personnel cost has increased by 17% to Rs.1,198.47 crores

from Rs.1,024.61 crores in the previous year. This is mainly

due to increase in flexible manpower, officers' annual

increments and impact of wage agreements signed during

the year. Also the current year had the impact of full year

charge of the erstwhile Punjab Tractors Limited in the books

of the Company as compared to an eight month charge in

the previous year.

Other Expenses:

Other expenses as a percentage of net sales and operating

income shows a decrease over the previous year due to the

increased income in the current year. However, because of

the increase in volumes, the expenses in absolute terms are

higher due to increases in freight, power and fuel, warranty

and marketing related expenses on incentives, advertisement,

sales promotion, etc.

Depreciation:

The depreciation for the year ended 31st

March, 2010 is at

Rs.370.78 crores as compared to Rs.291.51 crores in the

previous year due to the full impact in the current year of

capitalisation of Xylo related fixed assets and intangibles and

due to fresh capitalisation of projects in the current year.

45

MAHINDRA & MAHINDRA LIMITED

Interest (Net):

The interest expense of Rs.27.81 crores (net of interest

income Rs.129.04 crores) for the year ended 31st

March,

2010 is lower than the interest expense of Rs.45.26 crores

(net of interest income Rs.134.12 crores) in the previous

year. This is due to the higher earnings from surplus funds

and interest on IT refund received during the current year

partially offset by increased expense on account of increased

fixed deposits and a longer period impact of fully and

compulsorily convertible debentures in the current year.

Exceptional Items:

The profit from Exceptional items during the year ended

31st

March, 2010 is Rs.90.75 crores as against Rs.10.27

crores in the last year. The profit in the current year is on

account of profit on sale of shares of Mahindra Holidays &

Resorts India Limited offered as a part of that company's

Initial Public Offering, while in the previous year the

exceptional income was on account of surplus on transfer

of the Company's Logistics business to its wholly owned

subsidiary.

Provision for taxation:

The provision for current tax, fringe benefit tax and deferred

tax for the year ended 31st

March, 2010 as a percentage to

profit before tax is higher than the previous year, on account

of the incremental profits during the year being subjected

to tax at the maximum marginal rate of 33.99%.

Consolidated Financial Position of the M&M

Group

The current year has witnessed a strong sales performance

which has translated to healthy growth in both, revenues

and profits of the Group.

The Gross turnover for the year ended 31st

March, 2010 of

Consolidated Mahindra Group is Rs.33,790.10 crores as

against Rs.28,991.99 crores for the previous year. The

Group's net turnover grew by 17.71% to Rs.31,687.97 crores

in the current year from Rs.26,919.81 crores in Financial

Year 2009. The profit before exceptional items and tax for

the current year is Rs.3,779.73 crores as compared to

Rs.2,330.51 crores, registering an increase of 62.18% over

the previous year. While the Group's performance across all

its segments has registered an improvement, the Systech

segment faced challenges on account of the situation

prevailing in the European countries which are yet to return

to normalcy post the global meltdown of 2009 which

severely impacted the auto-components industry world over.

During the year, there was an exceptional gain of Rs.264.56

crores mainly arising from the sale of shares through an

Initial Public Offering of Mahindra Holidays and Resorts

India Limited, gains on account of deemed divestitures of

the Company's holdings in group companies such as

Mahindra Forgings Limited, Tech Mahindra Limited and

Mahindra Holidays & Resorts India Limited. The consolidated

Group Profit for the year after exceptional items, prior period

adjustments and tax and after deducting minority interests

is Rs.2,478.56 crores as against Rs.1,405.41 crores earned

last year, a growth of 76.36%.

During the year, by virtue of exercise of options granted to AT&T,

the shareholding of the Company alongwith Mahindra-BT

Investment Company (Mauritius) Limited in Tech Mahindra Limited

stands reduced to 44.01%, resulting in Tech Mahindra Limited

alongwith its subsidiary companies ceasing to be subsidiaries of

the Company with effect from 22nd

March, 2010. Accordingly as

on 31st

March, 2010, Tech Mahindra Limited is a Joint Venture of

the Company. As on 31st

March, 2010 the Group comprised of

90 Subsidiaries, 5 Joint Ventures and 10 Associates.

Tech Mahindra Limited, the Group's IT arm, registered a

total income (Consolidated) of Rs.4,700.77 crores as against

Rs.4,426.86 crores in Financial Year 2009 - an increase of

6.19%. Its Net Profit, after share of minority interest, was

lower at Rs.700.42 crores during Financial Year 2010 as

against Rs.1,014.37 crores in the previous year.

46

Segment Results (before exceptional item):

The results achieved by major business segments of the Group are given below:

(Rupees Crores)

Segments Financial Year 2010 Financial Year 2009

1. Automotive 1,260.64 257.72

2. Farm Equipment 1,406.66 667.85

3. Financial Services 524.21 333.91

4. Steel Trading & Processing 82.64 94.80

5. Infrastructure 121.72 80.00

6. Hospitality 158.01 93.66

7. IT Services 1,026.36 1,126.28

8. Systech (108.08) 23.86

9. Others (108.08) (46.71)

The Group's Finance company, Mahindra & Mahindra

Financial Services Limited (Consolidated), witnessed a

revenue growth of 13.93% over the previous year. Having

put in place various initiatives towards improving cashflows,

reducing interest costs through broad basing the borrowing

profile and establishing banking relationships, it reported a

total income of Rs.1,595.60 crores during the current year

as compared to Rs.1,400.45 crores in the last year. With a

network of 459 offices it is one of the leading NBFCs in

financing of utility vehicles, tractors and cars. Its consolidated

profit after tax for Financial Year 2010 grew by 61.96%

from Rs.219.70 crores in the previous year to Rs.355.82

crores in the current year.

Mahindra Holidays & Resorts India Limited, during the year

under review, continued to grow towards dominance in

the Holiday Segment with membership growing by 18.38%

from 92,825 numbers to 1,09,884 numbers. The total

income (Consolidated) grew by 17.90% from Rs. 442.12

crores to Rs. 521.28 crores. The profit after tax for the year

registered an increase of 46.86% increasing from Rs.79.71

crores in Financial Year 2009 to Rs.117.06 crores in Financial

Year 2010.

Disclaimer

Certain statements in the Management Discussion and Analysis describing the Company's objectives, projections,

estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities

laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make

a difference to the Company's operations include raw material availability and prices, cyclical demand and pricing in

the Company's principal markets, changes in Government regulations, tax regimes, economic developments within

India and the countries in which the Company conducts business and other incidental factors.

47

MAHINDRA & MAHINDRA LIMITED

48

4

MAHINDRA & MAHINDRA LIMITED

Corporate Governance

Your Company is committed to transparency in all its

dealings and places high emphasis on business ethics. The

Company believes that sound Corporate Governance is

critical for enhancing and retaining investor trust and

your Company always seeks to ensure that its performance

goals are met with integrity. The Company is of the view

that good governance goes beyond good working results

and financial propriety and is a pre-requisite to attainment

of excellent performance in terms of stakeholder value

creation.

Your Company practices a culture that is built on core

values and ethics. During the year ‘CRISIL’ has re-affirmed

the highest level rating “GVC Level 1” for Governance and

Value Creation for the fourth year in a row. This has been

possible through sustained efforts and commitment to the

highest standards of corporate conduct. Your Company

has also received the “Best Governed Company 2009”

Award from the ‘Indian Merchants Chamber and the Asian

Centre for Corporate Governance and Sustainability’.

A Report on compliance with the Code of Corporate

Governance as prescribed by the Securities and Exchange

Board of India and incorporated in the Listing Agreement

is given below.

I. Board of Directors

The composition of the Board is in conformity with Clause

49 of the Listing Agreement, as amended from time to

time. The Non–Executive Chairman of the Company is a

Promoter and the number of Non-Executive Independent

Directors is more than one-half of the total number of

Directors. The Board reviews and approves strategy and

oversees the actions and results of management to ensure

that the long term objectives of enhancing stakeholders’

value are met.

The Vice-Chairman & Managing Director alongwith

Executive Directors are Whole-time Directors of your

Company. Mr. A. K. Nanda, Executive Director of the

Company, has resigned with effect from the close of

working hours on 31st

March, 2010 and has been

appointed as a Non-Executive Director on the Board of

Directors of the Company, with effect from 1st

April, 2010.

The Chairman and the Vice-Chairman & Managing Director,

though Professional Directors in their individual capacities,

belong to the Company’s promoter group. The remaining

Non-Executive Directors comprising of eight Independent

Directors (including the Nominee Director) and one Non-

Independent Non-Executive Director possess the requisite

qualifications and experience in general corporate

management, finance, banking, insurance and other allied

fields which enable them to contribute effectively to the

Company in their capacity as Directors of the Company.

Apart from reimbursement of expenses incurred in the

discharge of their duties, the remuneration that these

Directors would be entitled under the Companies Act, 1956

as Non-Executive Directors and the remuneration that a

Director may receive for professional services rendered to

the Company through a firm in which he is a partner,

none of these Directors has any other material pecuniary

relationships or transactions with the Company, its

Promoters, its Directors, its Senior Management or its

Subsidiaries and Associates which in their judgment would

affect their independence. None of the Directors of the

Company are inter-se related to each other.

Professional fees for the year to Khaitan & Co., Advocates

& Solicitors, in which Mr. R. K. Kulkarni, Non-Executive

Director is a partner amounts to Rs.112.77 lakhs.

The Senior Management have made disclosures to the

Board confirming that there are no material, financial and/

or commercial transactions between them and the

Company which could have potential conflict of interest

with the Company at large.

5

A. Composition of the Board

Currently, the Board comprises of twelve Directors. The names

and categories of Directors, the number of Directorships and

Committee positions held by them in the companies are

given below. None of the Directors on the Board is a Member

on more than 10 Committees and Chairman of more than 5

Committees (as specified in Clause 49 of the Listing

Agreement), across all the companies in which he is a Director:

Directors Category Total Number of Committee Memberships,

Chairmanships and Directorships of public

companies* as on 31st

March, 2010

Committee Committee Directorships $

Memberships+ Chairmanships+

NON-EXECUTIVE

Mr. Keshub Mahindra Promoter 1 1 6

(Chairman)

Mr. Deepak S. Parekh Independent 7 5 12

Mr. A. K. Nanda# Non-Independent 8 4 15

Mr. N. B. Godrej Independent 3 1 14

Mr. M. M. Murugappan Independent 5 4 8

Mr. Narayanan Vaghul Independent 2 1 5

Dr. A. S. Ganguly Independent 2 1 5

Mr. R. K. Kulkarni Independent 7 3 8

Mr. Anupam Puri Independent 2 - 5

Mr. Arun Kanti Dasgupta Independent 2 - 5

EXECUTIVE

Mr. Anand G. Mahindra Promoter 1 - 13

(Vice-Chairman &

Managing Director)

Mr. Bharat Doshi Non-Independent 4 3 10

(Executive Director)

# Resigned as the Executive Director and also as a Director of the Company with effect from the close of working hours

on 31st

March, 2010. He has been appointed as an Additional Director on the Board of Directors of the Company,

with effect from 1st

April, 2010.

* Excludes private limited companies, foreign companies, companies registered under section 25 of the Companies

Act, 1956 and government bodies.

+ Committees considered are Audit Committee and Shareholders/Investors Grievance Committee, including that of

Mahindra & Mahindra Limited.

$ Excludes Alternate Directorships but includes Additional Directorships and Directorship in Mahindra & Mahindra

Limited.

5

MAHINDRA & MAHINDRA LIMITED

B. Board Procedure

A detailed Agenda folder is sent to each Director in advance

of Board and Committee Meetings. To enable the Board to

discharge its responsibilities effectively, the Vice-Chairman

& Managing Director apprises the Board at every Meeting

of the overall performance of the Company, followed by

presentations by the Sector Presidents. A detailed functional

Report is also placed at Board Meetings. The Board also

inter alia reviews strategy and business plans, annual

operating and capital expenditure budgets, investment and

exposure limits, compliance reports of all laws applicable

to the Company, as well as steps taken by the Company to

rectify instances of non-compliances, review of major legal

issues, minutes of the Board Meetings of your Company’s

unlisted subsidiary companies, significant transactions and

arrangements entered into by the unlisted subsidiary

companies, adoption of quarterly/half-yearly/annual results,

significant labour issues, transactions pertaining to

purchase/disposal of property(ies), major accounting

provisions and write-offs, corporate restructuring, Minutes

of Meetings of the Audit and other Committees of the

Board and information on recruitment of Officers just below

the Board level, including the Company Secretary and

Compliance Officer.

C. Number of Board Meetings, Attendance of the

Directors at Meetings of the Board and at the

Annual General Meeting

During the year 1st

April, 2009 to 31st

March, 2010, Six

Board Meetings were held on the following dates – 9th

April, 2009, 28th

May, 2009, 30th

July, 2009, 29th

October,

2009, 25th

January, 2010 and 30th

March, 2010. The gap

between two Meetings did not exceed four months. These

Meetings were well attended. The Sixty-third Annual

General Meeting (AGM) of the Company was held on 30th

July, 2009.

The attendance of the Directors at these Meetings is as

under:

Directors Number of Board Attendance at the

Meetings Attended AGM

Mr. Keshub Mahindra 5 + Yes

Mr. Anand G. Mahindra 6 Yes

Mr. Deepak S. Parekh 4 Yes

Mr. N. B. Godrej 6 Yes

Mr. M. M. Murugappan 5 + Yes

Mr. Bharat Doshi 6 Yes

Mr. A. K. Nanda 6 Yes

Mr. Narayanan Vaghul 6 Yes

Dr. A. S. Ganguly 6 Yes

Mr. R. K. Kulkarni 6 Yes

Mr. Anupam Puri 5 Yes

Mr. Arun Kanti Dasgupta 4 Yes

+ In addition to five Board Meetings, Mr. Keshub Mahindra and Mr. M. M. Murugappan participated in one Board

Meeting through teleconference. No sitting fees were paid for participation through teleconference.

5

D. Meetings of Independent Directors

The Independent Directors of the Company meet before

the Board Meeting to examine various Corporate

Governance issues, functioning of the Company and of

the Group and other issues without the presence of Vice-

Chairman & Managing Director or Executive Directors or

Management Personnel. These Meetings are conducted in

an informal and flexible manner to enable the Independent

Directors to discuss matters pertaining to the affairs of the

Company and put forth their views and recommend their

suggestions to the Board.

E. Directors seeking appointment/re-appointment

Mr. Keshub Mahindra, Mr. Anupam Puri, Dr. A. S. Ganguly

and Mr. R. K. Kulkarni retire by rotation and, being eligible,

have offered themselves for re-appointment. Mr. A. K.

Nanda resigned as the Executive Director of the Company

and also as a Director of the Company with effect from

the close of working hours on 31st

March, 2010. He was

appointed as an Additional Director of the Company with

effect from 1st

April, 2010 and will hold office upto the

next Annual General Meeting of the Company.

Mr. Keshub Mahindra

Mr. Keshub Mahindra, Chairman of Mahindra & Mahindra

Limited, is a Graduate from Wharton, University of

Pennsylvania, USA. After joining the Company as a Director

in 1948, he became the Chairman in 1963.

He is a well-known philanthropist who redefined Corporate

Governance by effectively channelising funds into the social

sector.

Mr. Keshub Mahindra is Chairman of Mahindra Ugine Steel

Company Limited, Chairman of the Board of Governors of

Mahindra United World College of India, Vice-Chairman

of Housing Development Finance Corporation Limited,

Chairman of Kema Services (International) Private Limited,

Chairman of Tech Mahindra Foundation, Chairman of

Mahindra Holdings Limited and Director of Bombay Burmah

Trading Corporation Limited, The Bombay Dyeing &

Manufacturing Company Limited, Indian Institute for

Human Settlements and Prudential Management & Services

Private Limited.

He was also appointed by the Government of India to

serve on a number of Committees including the Sachar

Commission on Company Law & MRTP; Central Advisory

Council of Industries, etc.

Mr. Mahindra is associated with several Committees. He is

a Member of Prime Minister's Council on Trade & Industry,

New Delhi, Apex Advisory Council - ASSOCHAM, Deputy

Chairman & Trustee - Employers' Federation of India,

President of the Governing Council - University of

Pennsylvania Institute for the Advanced Study of India,

New Delhi and Member of United World Colleges

(International), U.K., amongst other companies.

Mr. Mahindra was the President of Bombay Chamber of

Commerce & Industry, President of ASSOCHAM, President

of Indo-American Society and Chairman of Indian Institute

of Management, Ahmedabad.

Mr. Mahindra has been recipient of prestigious awards

including 1989 Business India - Businessman of the Year;

1994 The Sir Jehangir Ghandy Medal for Industrial Peace -

XLRI, Jamshedpur; 1998 IMC Diamond Jubilee Endowment

Trust Award; 2000 Dadabhai Naoroji International Award

for Excellence & Lifetime Achievement; 2003 All India

Management Association Lifetime Achievement Award for

Management; 2006 Lakshya Business Visionary Award -

NITIE; 2007 Indian Business School (IBS) Kolkata Lifetime

Achievement Award presented by the Institute of Chartered

Financial Analysts of India (ICFAI); 2007 Ernst & Young

Entrepreneur of the Year Lifetime Achievement Award; 2008

Society of Indian Automobile Manufacturers (SIAM) Award

for 'Lifetime Contribution to the Automotive Industry'; 2009

CNBC TV 18 India Business Leaders Lifetime Achievement

Award 2008; 2009 ACMA Lifetime Achievement Award

and very recently 2009 Economic Times Lifetime

Achievement Award.

53

MAHINDRA & MAHINDRA LIMITED

institutions on public policy. Mr. Anupam Puri spearheaded

the development of McKinsey’s India practice, oversaw the

Asian and Latin American offices and was an elected

Member of the Board.

He is currently a Member of the Board at Dr. Reddy’s

Laboratories Limited, Mahindra & Mahindra Limited,

Mumbai Mantra Media Limited and Tech Mahindra Limited

as well as Chairman of the Advisory Board of Corsair Capital.

Mr. Anupam Puri is a Member of the following Board

Committees:

Sr. No. Name of the Company Name of Committee Position held

1. Mahindra & Mahindra Limited Share Transfer and Shareholders/ Chairman

Investors Grievance Committee

Loans & Investment Committee Chairman

Remuneration/Compensation Committee Member

2. Housing Development Finance Compensation Committee Chairman

Corporation Limited

3. Bombay Dyeing & Manufacturing Remuneration Committee Chairman

Company Limited

4. Bombay Burmah Trading Remuneration Committee Member

Corporation Limited

Sr. No. Name of the Company Name of Committee Position held

1. Dr. Reddy’s Laboratories Limited Governance and Compensation Chairman

Committee

2. Tech Mahindra Limited Audit Committee Member

Compensation Committee Member

3. Mumbai Mantra Media Limited Audit Committee Member

Mr. Anupam Puri does not hold any Share in the Company.

Mr. Keshub Mahindra holds 4,02,296 Ordinary (Equity)

Shares in the Company.

Mr. Anupam Puri

Mr. Anupam Puri holds a M. Phil in Economics from Nuffield

College, Oxford University, 1969; an M.A. in Economics

from Balliol College, Oxford University, 1967; and a B.A. in

Economics from Delhi University, India, 1965. Mr. Puri was

a Management Consultant with McKinsey & Company from

1970 to 2000. He worked globally with corporate clients

in several industries on strategy and organisational issues

and also served several Governments and multilateral

Mr. Keshub Mahindra is a Member of the following Board Committees:

54

Dr. A. S. Ganguly

Dr. Ganguly is currently the Chairman of Firstsource

Solutions Limited (formerly ICICI OneSource Limited) and

ABP Private Limited (Ananda Bazar Patrika Group) and has

been a Director on the Central Board of the Reserve Bank

of India, since November, 2000. (Dr. Ganguly has resigned

from the RBI Board effective 18.11.2009). Dr. Ganguly

also currently serves as a Non-Executive Director of

Mahindra & Mahindra Limited, Wipro Limited, Tata AIG

Life Insurance Company Limited, Hemogenomics Private

Limited and a Director on the Advisory Board of Microsoft

Corporation (India) Private Limited and the Blackstone

Group. Dr. Ganguly has been recently appointed a Director

on the Board of Dr. Reddy’s Laboratories Limited. He is a

Member of the Prime Minister’s Council on Trade and

Industry as well as the Investment Commission and the

India-USA CEO Council, set up by the Prime Minister of

India and the President of the USA. He is also a Member

of the Rajiv Gandhi Foundation and National Knowledge

Commission to the Prime Minister. More recently,

Dr. Ganguly was nominated to the Rajya Sabha and ‘sworn

in’ as a Member of Parliament on 30th

November, 2009.

Dr Ganguly is a former Member of the Board of British

Airways Plc. (1996-2005).

Dr. Ganguly graduated with Distinction from the Bombay

University and has obtained the M.S. and Ph.D. degrees

from the University of Illinois, USA. Dr. Ganguly’s principal

professional career spanned 35 years with Unilever Plc./

N.V. He was the Chairman of Hindustan Lever Limited

from 1980 to 1990 and a Member of the Unilever Board

from 1990 to 1997, with responsibility for world-wide

research and technology.

During his career, he has served several public bodies, the

principal among them, as Member, Science Advisory Council

to the Prime Minister of India (1985-89) and the UK Advisory

Board of Research Councils (1991-94). Dr. Ganguly is a

recipient of the Padma Bhushan, one of India’s highest

honours (1987); he was made an Hon. Professor by the

Chinese Academy of Science, Shanghai (1996). The University

of Illinois, College of Food and Nutrition selected Dr. Ganguly

as their ‘Outstanding Alumnus’ in 1997 and he is the

recipient of the International Alumni Award for Exceptional

Achievement for the academic year 2003-2004, from the

University of Illinois. In 2006, Dr. Ganguly was awarded the

CBE (Hon) by the United Kingdom. In 2008, Dr. Ganguly

received the Economic Times Lifetime Achievement Award

and more recently, he has been the recipient of the Padma

Vibhushan, India’s second highest civilian award. Dr. Ganguly

has authored three books – “Industry &

Liberalisation”(1994),”Strategic Manufacturing for

Competitive Advantage” (1998) and “Business Driven R&D-

Managing Knowledge to Create Wealth” (1999), besides

several publications in Science, Technology and Management.

Dr. Ganguly is a Member of the following Board Committees:

Sr. No. Name of the Company Name of Committee Position held

1. Mahindra & Mahindra Limited Research & Development Committee Chairman

2. Tata AIG Life Insurance Company Limited Remuneration Committee Chairman

Audit Committee Member

3. Firstsource Solutions Limited Compensation cum Chairman

Board Governance Committee

Investors /Shareholders’ Chairman

Grievance Committee

Investment Committee Member

Committee for Issue of Securities Chairman

(FCCB Committee)

Strategy Committee Chairman

4. Wipro Limited Corporate Governance Committee Chairman

5. Microsoft Corporation India Private Limited Advisory Board Chairman

Dr. Ganguly holds 1,00,000 Ordinary (Equity) Shares in the Company.

55

MAHINDRA & MAHINDRA LIMITED

Mr. R. K. Kulkarni

Mr. R. K. Kulkarni, B.Sc., LL.M, is a practicing Advocate

and Solicitor and is a Senior Partner in Khaitan & Co.,

Advocates & Solicitors.

He has immense experience in all aspects of Corporate

law; Mergers & Acquisitions – such as due diligence,

structuring documentation involving listed companies,

cross-border transactions in Capital Markets - such as advice

and documentation relating to domestic IPOs and GDR/

FCCB offerings of securities by Indian companies; in

Securities Law – such as insider trading, takeover-code,

public offers, buyback of securities, etc., in Restructuring –

such as advice and documentation involving creditors

restructuring, sick companies, demergers, spin offs, sale of

assets, etc. in privatisation – such as advice and

documentation in relation of privatisation of Government

business and companies in India on behalf of several

bidders, etc., in Foreign Investment, Joint Venture and

Foreign Collaboration – such as advice and documentation,

obtaining regulatory approvals, Joint Venture and licensing,

shareholder agreements and arrangements, technology

transfers, import of plant and equipment, etc., in

Infrastructure and Project Financing – such as advice and

documentation relating to corporate financing, debt issues,

including concession agreements, construction contracts,

operation & maintenance contracts, etc. He also has

considerable experience in litigation having handled writs

and civic litigation. He advises a range of large Indian and

multinational clients in various business Sectors, including

infrastructure, power, telecom, automobile, engineering

steel, cement, agriculture and agri-products, software and

information technology, retail services, etc.

He is on the Board of various companies viz. Mahindra &

Mahindra Limited, Alternate Brand Solutions (India) Limited,

Elantas Beck India Limited, Caprihans India Limited,

Entertainment Network (India) Limited, INEOS ABS (India)

Limited, Tech Mahindra Limited, Shamrao Vithal Co-op Bank

Limited, R&P Management Communications Private Limited

and Venturbay Consultants Private Limited.

Mr. R. K. Kulkarni is a Member of the following Board Committees:

Sr. No. Name of the Company Name of Committee Position held

1. Mahindra & Mahindra Limited Audit Committee Member

Share Transfer and Shareholders/ Member

Investors Grievance Committee

2. Elantas Beck India Limited Audit Committee Chairman

Shareholders’/Investor Chairman

Grievance Committee

3. Caprihans India Limited Audit Committee Chairman

4. Entertainment Network (India) Limited Audit Committee Member

Remuneration Committee Member

5. INEOS ABS (India) Limited Audit Committee Member

Remuneration Committee Member

6. Tech Mahindra Limited Remuneration Committee Chairman

Mr. Kulkarni holds 87,576 Ordinary (Equity) Shares in the Company.

56

Mr. A. K. Nanda

Mr. A. K. Nanda holds a Degree in Law from the University

of Calcutta, is a fellow member of The Institute of

Chartered Accountants of India (FCA) and a fellow

member of The Institute of Company Secretaries of India

(FCS). Mr. Nanda has also participated in a Senior Executive

Programme at the London Business School. He joined the

Mahindra Group in 1973. He has held several important

positions within the Group over the 37 years he was with

the Company.

He was inducted to the Board of Mahindra & Mahindra

Limited (M&M) in August, 1992 and resigned as Executive

Director in March, 2010 to focus on the social sector and

create a favourable ecosystem for senior citizens. He was

immediately appointed as a Non-Executive Director of

M&M.

He is currently the Chairman of Mahindra Holidays & Resorts

India Limited, Mahindra Lifespace Developers Limited,

Owens Corning (India) Limited, Mahindra Consulting

Engineers Limited, Mahindra Construction Company

Limited, Mahindra Infrastructure Developers Limited,

Mahindra World City (Maharashtra) Limited, Knowledge

Township Limited, Vice-Chairman of Mahindra World City

Developers Limited and Director of Mahindra Water Utilities

Limited, Mahindra Holidays and Resorts (USA) Inc., MHR

Hotel Management GmbH, Mahindra Holdings Limited,

Mahindra World City (Jaipur) Limited, Mumbai Mantra

Media Limited and Union Bank of India. He is also on the

Advisory Boards of Barco Company Limited and Schneider

Electric India Private Limited and elected as a Member of

the Supervisory Board of BAH Hotelanlagen AG.

Mr. Nanda is also the Chairman of CII Western Region,

Chairman Emeritus of the Indo-French Chamber of

Commerce, Member of the Governing Boards of the Council

of EU Chambers of Commerce in India and Bombay First.

He was the Chairman of CII National Committee on Water

from April, 2007 to March, 2009.

Mr. Nanda has been honoured with an Award of “Chevalier

de la Legion d’Honneur” (Knight of the National Order of

the Legion of Honour) by the President of the French

Republic, Mr. Nicolas Sarkozy.

Mr. Nanda has also been awarded with the “Real Estate

Person of the Year” Award from GIREM Leadership

Awards in India.

Mr. Nanda has also been awarded with the “CA Business

Achiever Award - Corporate” at The Institute of Chartered

Accountants of India Award 2009 and “Lifetime

Achievement Award” for his outstanding contribution to

the Hospitality Industry and the Service Sector by the Golden

Star Awards 2010.

Mr. A. K. Nanda is a Member of the following Board

Committees:

57

MAHINDRA & MAHINDRA LIMITED

Sr. No. Name of the Company Name of Committee Position held

1. Mahindra & Mahindra Limited Share Transfer and Shareholders/ Member

Investors Grievance Committee

Loans & Investment Committee Member

2. Mahindra Holidays & Resorts India Limited Loans & Investment Committee Member

Remuneration Committee Member

Inventory Approval Committee Member

IPO Committee Member

Share Allotment/Transfer cum Chairman

Investor Grievances Committee

3. Owens Corning (India) Limited Audit Committee Chairman

Remuneration Committee Member

4. Mahindra Construction Company Limited Remuneration Committee Member

5. Mahindra Lifespace Developers Limited Investors’ Grievance and Shareholders’ Chairman

Committee

Loans & Investment Committee Chairman

Remuneration Committee Member

Share Allotment Committee Member

6. Mahindra Infrastructure Developers Limited Audit Committee Member

7. Mahindra World City (Jaipur) Limited Audit Committee Member

Capital Issue Committee Member

Land Lease Committee Member

Loans & Investment Committee Member

Remuneration Committee Chairman

8. Mahindra World City (Maharashtra) Limited Capital Issue Committee Member

9. Mahindra Holdings Limited Audit Committee Chairman

10. Mahindra World City Developers Limited Remuneration Committee Member

11. Union Bank of India Shareholders /Investors Grievance Member

Committee

Remuneration Committee Member

Mr. A. K. Nanda holds 2,75,864 Ordinary (Equity) Shares in the Company.

58

During the year under review, the Non-Executive Directors were paid a commission of Rs.96 lakhs (provided in the

accounts for the year ended 31st

March, 2009), distributed amongst the Directors as under:

(Rs. in Lakhs)

Directors Commission for the year ended

31st

March, 2009, paid during

the year under review

Mr. Keshub Mahindra 32.00

Mr. Deepak S. Parekh 8.00

Mr. N. B. Godrej 8.00

Mr. M. M. Murugappan 8.00

Mr. Narayanan Vaghul 8.00

Dr. A. S. Ganguly 8.00

Mr. R. K. Kulkarni 8.00

Mr. Anupam Puri 8.00

Mr. Arun Kanti Dasgupta (Nominee of LIC) 8.00 #

# The Commission is paid to the Nominating Financial Institution.

F. Codes of Conduct

The Board has laid down two separate Codes of Conduct

(“Codes”), one for Board Members and other for Senior

Management and Employees of the Company. These Codes

have been posted on the Company’s website http://

www.mahindra.com. All Board Members and Senior

Management Personnel have affirmed compliance with these

Codes. A declaration signed by the Vice-Chairman & Managing

Director to this effect is enclosed at the end of this Report.

G. CEO/CFO Certification

As required under Clause 49 V of the Listing Agreement

with the Stock Exchanges, the Vice-Chairman & Managing

Director and the Group Chief Financial Officer of the

Company have certified to the Board regarding the Financial

Statements for the year ended 31st

March, 2010.

II. Remuneration to Directors

A. Remuneration Policy

While deciding on the remuneration for Directors, the

Board, Remuneration/ Compensation Committee

(“Committee”) considers the performance of the

Company, the current trends in the industry, the

qualification of the appointee(s), their experience, past

performance and other relevant factors. The Board/

Committee regularly keeps track of the market trends

in terms of compensation levels and practices in

relevant industries through participation in structured

surveys. This information is used to review the

Company’s remuneration policies.

B. Remuneration to Non-Executive Directors for the

year ended 31st

March, 2010

The e l ig ib le Non-Execut ive Di rectors are pa id

commission upto a maximum of 1% of the net profits

of the Company as specifically computed for this

purpose. A commission of Rs.144 lakhs has been

provided as payable to the eligible Non-Executive

Directors in the accounts of the year under review.

5

MAHINDRA & MAHINDRA LIMITED

35,000 Stock Options granted in June, 2005 to the Non-

Executive Directors which have vested in June, 2006 can

be exercised in three tranches over a period of five years

from the date of vesting at an Original Exercise Price of

Rs.454 per share. The Options granted stand augmented

by an equal number of Options and the Exercise Price

stands reduced to half on account of the 1:1 Bonus Issue

made in September, 2005. Further, the number of Stock

Options granted and outstanding as on 30th

March, 2010

Non-Executive Directors are also paid a sitting fees of Rs.20,000* for every Meeting of the Board or Committee attended.

The sitting fees paid to Non-Executive Directors for the year ended 31st

March, 2010 alongwith their shareholdings are as

under:

Directors Sitting Fees for the Board No. of Ordinary (Equity)

and Committee Meetings Shares held as on

paid during the year 31st

March, 2010

ended 31st

March, 2010

(Rs. in Lakhs)

Mr. Keshub Mahindra 1.60 4,02,296

Mr. Deepak S. Parekh 1.70 1,12,180

Mr. N. B. Godrej 2.20 3,58,884

Mr. M. M. Murugappan 2.40 1,00,000

Mr. Narayanan Vaghul 1.80 1,00,000

Dr. A. S. Ganguly 1.00 1,00,000

Mr. R. K. Kulkarni 2.10 87,576

Mr. Anupam Puri 0.60 Nil

Mr. Arun Kanti Dasgupta (Nominee of LIC) 0.50 ** Nil

* The sitting fees payable to the Non-Executive Directors of the Company has been increased with effect from

1st

November, 2009, from the existing limit of Rs.10,000 to Rs.20,000 for every Board Meeting or Board constituted

Committee Meeting attended by them, excluding the Share Transfer and Shareholders / Investors Grievance Committee.

** Sitting fees for Board Meetings were paid to LIC.

stands augmented by an equal number of Options and

Exercise Price stands reduced to half on account of Sub-

division of each Ordinary (Equity) Share of the Company

having a Face Value of Rs.10 each fully paid-up into 2

(Two) Ordinary (Equity) Shares of the Face Value of Rs.5

each fully paid-up. Details of the Options granted to each

of the Directors are given in the Statement attached to

Annexure I to the Directors’ Report.

6

subsequently approved by the Board of Directors and

Shareholders at a General Meeting.

Following is the remuneration paid/payable to the Whole-

time Directors during the year ended 31st

March, 2010:

(Rs. In Lakhs)

Directors Salary Comm- Company’s Perquisites Total Contract No. of No. of No. of No. of

ission Contribu- and Period Options Options Options Options

tion to allowances granted granted in granted granted

Funds* in June, September, in July, in August,

2005$ 2006 $$ 2007$$$ 2008$$$$

Mr. Anand G. 65.42 130.85 17.66 50.73 264.66 4th

April, 2007 Nil Nil Nil Nil

Mahindra to 3rd

April,

(Vice-Chairman & 2012

Managing Director)

Mr. Bharat Doshi 59.33 89.00 16.02 19.46 183.81 28th

August, 2007 10,000 11,345 8,362 29,039

(Executive Director) to 27th

August,

2012

Mr. A. K. Nanda** 59.33 89.00 16.02 48.29 212.64 28th

August, 2007 10,000 11,345 8,362 24,890

(Executive Director) to 27th

August,

2012

* Aggregate of the Company’s contributions to Superannuation Fund, Provident Fund, Gratuity and Privilege Leave Encashment.

** Resigned as the Executive Director and also as a Director of the Company with effect from the close of working hours on 31st

March, 2010. He has been appointed

as an Additional Director on the Board of Directors of the Company, with effect from 1st

April, 2010.

Options granted on€ Vesting period Exercise period Exercise price€

$ June, 2005 Already vested in June, 2006 Within five years from the Rs.454 per share#

date of vesting

$$ September, 2006 Four equal instalments in On the date of Vesting or Rs.616 per share

September 2007, 2008, within five years

2009 and 2010 respectively from the date of Vesting

$$$ July, 2007 Four equal instalments in On the date of Vesting or Rs.762 per share

July, 2008, 2009, 2010 and within five years from the

2011 respectively date of Vesting

$$$$ August, 2008 Four equal instalments in On the date of Vesting Rs.500 per share

August 2009, 2010, 2011 or within five years from

and 2012 respectively the date of Vesting

# The Options granted stands augmented by an equal number of Options and the Exercise Price stands reduced to half on account of the 1:1 Bonus Issue made in

September, 2005.

€ Further, the number of Stock Options granted and outstanding as on 30th

March, 2010 stands augmented by an equal number of Options and

Exercise Price stands reduced to half on account of Sub-division of each Ordinary (Equity) Share of the Company having a Face Value of Rs.10

each fully paid-up into 2 (Two) Ordinary (Equity) Shares of the Face Value of Rs.5 each fully paid-up.

Details of the Options granted including discount are given in the Statement attached to Annexure I to the Directors’

Report.

Notes:

a) Notice period applicable to each of the Whole-time Directors – six months.

b) Employee Stock Options and Commission are the only components of remuneration that are performance-linked. All

other components are fixed.

C. Remuneration paid/payable to Managing/Executive

Director(s) (Whole-time Directors) for the year ended

31st

March, 2010:

Remuneration to Whole-time Directors is fixed by the

Remuneration/ Compensation Committee which is

6

MAHINDRA & MAHINDRA LIMITED

III. Risk Management

Your Company has a well-defined risk management

framework in place. The risk management framework

adopted by the Company is discussed in detail in the

Management Discussion and Analysis Chapter of this

Annual Report. Your Company has established procedures

to periodically place before the Board, the risk assessment

and minimisation procedures being followed by the

Company and steps taken by it to mitigate these risks.

IV. Committees of the Board

A. Audit Committee

This Committee comprises solely of Independent Directors

viz. Mr. Deepak S. Parekh (Chairman of the Committee),

Mr. R. K. Kulkarni, Mr. N. B. Godrej and Mr. M. M.

Murugappan. All the Members of the Committee possess

strong accounting and financial management knowledge.

The Company Secretary is the Secretary to the Committee.

The terms of reference of this Committee are very wide.

Besides having access to all the required information from

within the Company, the Committee can obtain external

professional advice whenever required. The Committee acts

as a link between the Statutory and the Internal Auditors

and the Board of Directors of the Company. It is authorised

to select and establish accounting policies, review reports

of the Statutory and the Internal Auditors and meet with

them to discuss their findings, suggestions and other

related matters. The Committee is empowered to inter alia

review the remuneration payable to the Statutory Auditors

and to recommend a change in Auditors, if felt necessary.

It is also empowered to review Financial Statements and

investments of unlisted subsidiary companies, Management

Discussion & Analysis, material individual transactions with

related parties not in normal course of business or which

are not on an arm’s length basis. Generally all items listed

in Clause 49 II (D) of the Listing Agreement are covered in

the terms of reference. The Audit Committee has been

granted powers as prescribed under Clause 49 II (C). The

Meetings of the Audit Committee are also attended by the

Vice-Chairman & Managing Director, the Executive Directors

of the Company, the President-Finance, Legal and Financial

Services Sector, the Statutory Auditors, Chief Internal Auditor

and the Company Secretary. The Chairman of the Audit

Committee, Mr. Deepak S. Parekh was present at the 63rd

Annual General Meeting of the Company held on 30th

July,

2009.

The Committee met seven times during the year under

review. The Committee Meetings were held on the following

dates – 21st

May, 2009, 28th

May, 2009, 30th

July, 2009,

29th

October, 2009, 2nd

December, 2009, 25th

January, 2010

and 30th

March, 2010. The gap between two Meetings did

not exceed four months. The attendance at the Meetings

is as under:

Members Number of

Meetings attended

Mr. Deepak S. Parekh (Chairman) 6

Mr. R. K. Kulkarni 7

Mr. N. B. Godrej 6

Mr. M. M. Murugappan 5 +

+ In addition to attending five Audit Committee Meetings,

Mr. M. M. Murugappan participated in one Meeting

through teleconference. No sitting fee was paid for

participation through teleconference.

B. Remuneration/Compensation Committee

The role of the Remuneration/Compensation Committee is

to review market practices and to decide on remuneration

packages applicable to the Vice-Chairman & Managing

Director, the Executive Directors and Senior Executives of

the Company. During the course of its review, the

Committee also decides on the commission of the Directors

and/or other incentives payable, taking into account the

6

individual’s performance as well as that of the Company.

The Committee has formulated and administers the

Mahindra & Mahindra Limited Employees’ Stock Option

Scheme and also attends to such other matters as may be

prescribed from time to time.

The scope of the Remuneration/Compensation Committee

is enhanced to include the function of a Nomination

Committee, which would, inter alia include

recommendations for new appointment and removal of

Board Members, scrutinising nominations for Board

Members with reference to their competencies,

qualifications, experience, track record, integrity, etc.,

assessment of the necessary and desirable competencies

of Board Members, appointing, retaining and managing

the necessary talent pool commensurate with the size and

operations of the Company including Board Members, etc.

The Committee comprises of a majority of Independent

Directors and includes the Chairman of the Company.

Mr. Narayanan Vaghul is the Chairman of the Committee.

Mr. Keshub Mahindra, Mr. N. B. Godrej and Mr. M. M.

Murugappan are the other Members of the Committee.

The Committee met four times during the year under

review. The attendance at the Meetings is as under:

Members Number of

Meetings attended

Mr. Narayanan Vaghul (Chairman) 4

Mr. Keshub Mahindra 3

Mr. N. B. Godrej 3

Mr. M. M. Murugappan 4

C. Share Transfer and Shareholders/Investors

Grievance Committee

The Company’s Share Transfer and Shareholders/Investors

Grievance Committee functions under the Chairmanship

of Mr. Keshub Mahindra, Chairman of the Board and a

Non-Executive Director. Mr. Anand G. Mahindra, Mr. R. K.

Kulkarni, Mr. Bharat Doshi and Mr. A. K. Nanda are also

on the Committee. Mr. Narayan Shankar, Company

Secretary is the Compliance Officer of the Company.

The Committee meets as and when required, to inter alia

deal with matters relating to transfer of shares and monitor

redressal of complaints from Shareholders relating to

transfers, non-receipt of Balance Sheet, non-receipt of

dividends declared, etc. With a view to expedite the process

of share transfers, necessary authority has been delegated

to approve the transfers of not more than 5,000 Ordinary

(Equity) Shares per transfer, provided the transferee does

not hold one lakh or more Ordinary (Equity) Shares in the

Company.

The Committee met two times during the year and all

Members of the Committee attended the same. During

the year, 19 complaints were received from the

Shareholders, all of which have been attended to/resolved

to date. As of date, there are no pending share transfers

pertaining to the year under review.

D. Research & Development Committee (a voluntary

initiative of the Company)

The Research & Development (R&D) Committee, which was

constituted by the Board in 1998, provides direction on

the R&D mission and strategy and key R&D and technology

issues. The Committee also reviews and makes

recommendations on skills and competencies required and

the structure and the process needed to ensure that the

R&D initiatives result in products that are in keeping with

the business needs. Dr. A. S. Ganguly is the Chairman of

the Committee. Mr. Anand G. Mahindra, Mr. N. B. Godrej,

Mr. Bharat Doshi and Mr. M. M. Murugappan are the

other Members of the Committee.

E. Loans & Investment Committee (a voluntary

initiative of the Company)

The Committee approves of the making of loans and

investment, disinvestment, borrowing moneys and related

aspects of fund management in accordance with the

63

MAHINDRA & MAHINDRA LIMITED

Guidelines prescribed by the Board. Mr. Keshub Mahindra

is the Chairman of the Committee. Mr. Anand G. Mahindra,

Mr. R. K. Kulkarni, Mr. Bharat Doshi and Mr. A. K. Nanda

are the other Members of the Committee.

V. Subsidiary Companies

Clause 49 defines a “material non-listed Indian subsidiary”

as an unlisted subsidiary, incorporated in India, whose

turnover or net worth (i.e. paid-up capital and free reserves)

exceeds 20% of the consolidated turnover or net worth

respectively, of the listed holding company and its

subsidiaries in the immediately preceding accounting year.

Under this definition, the Company did not have any

“material non-listed Indian subsidiary” during the year under

review. The Subsidiaries of the Company function

independently, with an adequately empowered Board of

Directors and sufficient resources. For more effective

governance, the Minutes of Board Meetings of Subsidiaries

of the Company are placed before the Board of Directors

of the Company for their review.

VI. Disclosures

A. Disclosure of transactions with Related Parties

During the financial year 2009-10, there were no materially

significant transactions entered into between the Company

and its promoters, Directors or the management, subsidiaries

or relatives, etc. that may have potential conflict with the

interests of the Company at large. Further details of related

party transactions are presented in Note Number “29” in

Schedule XIV to Annual Accounts of the Annual Report.

B. Disclosure of Accounting Treatment in preparation

of Financial Statements

The Company has followed the Accounting Standards laid

down by The Companies (Accounting Standards) Rules,

2006 in preparation of its financial statements.

C. Code for Prevention of Insider Trading Practices

The Company has instituted a comprehensive Code of

Conduct for Prevention of Insider Trading for its designated

employees, in compliance with Securities and Exchange

Board of India (Prohibition of Insider Trading) Regulations,

1992, as amended from time to time. The Code lays down

Guidelines, which advises them on procedures to be

followed and disclosures to be made, while dealing with

shares of the Company, and cautioning them of the

consequences of violations.

VII. Shareholder Information

1. 64rd

Annual General Meeting

Date : 28th

July, 2010

Time : 3:00 p.m.

Venue : Birla Matushri Sabhagar,

19, Sir Vithaldas Thackersey Marg

(New Marine Lines),

Mumbai - 400 020.

2. Dates of Book Closure

Dates of Book Closure for Dividend will be from

10th

July, 2010 to 28th

July, 2010, both days inclusive.

3. Date of Dividend Payment

Date of payment of Dividend would be on or after

29th

July, 2010.

4. Financial Year of the Company

The financial year covers the period from 1st

April

to 31st

March.

Financial Reporting for:

Quarter ending

30th

June, 2010 - End July, 2010

Half-year ending

30th

September, 2010 - End October, 2010

Quarter ending

31st

December, 2010 - End January, 2011

64

Year ending

31st

March, 2011 - End May, 2011

Note: The above dates are indicative.

5. Registered Office

Mahindra & Mahindra Limited

Gateway Building,

Apollo Bunder,

Mumbai - 400 001.

6. Listing on Stock Exchanges

The Company’s Shares are listed on Bombay Stock Exchange

Limited (BSE) and National Stock Exchange of India Limited

(NSE). The Global Depositary Receipts (GDRs) of the

Company are listed on the Luxembourg Stock Exchange

and are also admitted for trading on International Order

Book (IOB) of the London Stock Exchange. The US $200

million Zero Coupon Foreign Currency Convertible Bonds

(FCCBs) due for redemption in 2011 are listed at Singapore

Exchange Securities Trading Limited. The requisite listing

fees have been paid in full to all these Stock Exchanges.

7. Sub-division of Face Value of Equity Shares (Stock-

split)

Pursuant to the approval received from the Members of

the Company by way of Postal Ballot on 11th

March, 2010,

the Company has on 31st

March, 2010, upon sub-division,

issued 2 (Two) Ordinary (Equity) Shares of Rs.5 each fully

paid-up in the Equity Share Capital of the Company for

every 1 (One) Ordinary (Equity) Share of the face value of

Rs.10 fully paid-up held by the Members in the Equity

Share Capital of the Company as on the Record Date i.e.

30th

March, 2010.

Post allotment of Equity Shares and sub-division of Equity

Shares as aforesaid, the issued, subscribed and paid-up

Share Capital of the Company stands at Rs.289.22 crores

comprising of 57,84,34,478 Ordinary (Equity) Shares of

Rs.5 each fully paid-up (prior to Stock-split: 28,92,17,239

Equity Shares of Rs.10 each) and the Authorised Share

Capital of the Company stands at Rs.625 crores comprising

of 1,20,00,00,000 Ordinary (Equity) Shares of Rs.5 each

and 25,00,000 Unclassified Shares of Rs.100 each.

8. Stock Code

1. Bombay Stock Exchange Limited (BSE) : 500520

2. National Stock Exchange of India Limited (NSE):

M&M

3. Demat International Security Identification Number

(ISIN) in NSDL and CDSL for Equity Shares:

INE101A01018 (Old – for Equity Shares of

Rs.10 each)

INE101A01026 (New – for Equity Shares of

Rs.5 each)

4. Corporate Identity Number:

L65990MH1945PLC004558

5. FCCBs, Singapore Exchange Securities Trading

Limited (ISIN): XS0250972543

6. GDRs, Luxembourg Stock Exchange (ISIN):

USY541641194

65

MAHINDRA & MAHINDRA LIMITED

M&

M on

BSE

BSE

SEN

SEX

0

200

400

600

800

1000

1200

Mar-10*Feb-10Jan-10Dec-09Nov-09Oct-09Sep-09Aug-09Jul-09Jun-09May-09Apr-090

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Closing Price on Last Trading day of the Month

M&M on BSE BSE Sensex

9. Stock Performance

The performance of the Company’s shares relative to the BSE Sensitive Index is given in the chart below:

M&

M on

NSE

NSE

NIF

TY

0

200

400

600

800

1000

1200

Mar-10*Feb-10Jan-10Dec-09Nov-09Oct-09Sep-09Aug-09Jul-09Jun-09May-09Apr-090

1000

2000

3000

4000

5000

6000

Closing Price on Last Trading day of the Month

M&M on NSE NSE Nifty

The performance of the Company’s shares relative to the NSE Sensitive Index (S&P CNX Nifty Index) is given in the chart

below:

* The Share price became ex-date for sub-division with effect from 29th

March, 2010. However, for a meaningful

comparison, the closing price on the last trading day of March, 2010 has been doubled.

* The Share price became ex-date for sub-division with effect from 29th

March, 2010. However, for a meaningful

comparison, the closing price on the last trading day of March, 2010 has been doubled.

66

10. Stock Price Data:

Equity Shares GDRs

Bombay Stock National Stock Luxembourg Stock

Exchange Limited Exchange of India Limited Exchange

High Low High Low High Low

Rs. Rs. Rs. Rs. US $ US $

April, 2009 503.00 377.50 504.55 377.50 9.74 7.73

May, 2009 700.00 486.75 698.00 484.60 14.50 10.00

June, 2009 824.00 669.05 829.00 660.15 17.07 14.03

July, 2009 892.00 643.30 889.80 644.10 17.93 13.80

August, 2009 942.70 735.20 943.95 734.00 19.51 15.20

September, 2009 909.80 809.00 910.00 808.00 18.53 16.63

October, 2009 981.00 865.00 981.40 866.00 21.05 18.65

November, 2009 1092.00 878.00 1091.00 879.00 23.04 18.87

December, 2009 1098.70 1005.00 1094.00 1005.00 23.26 21.54

January, 2010 1196.70 985.00 1199.00 987.75 26.10 21.75

February, 2010 1065.80 950.25 1065.50 950.00 22.86 20.52

March, 2010* 1154.00 535.45 1154.95 515.00 25.02 12.14

* The Share price became ex-date for sub-division with effect from 29th

March, 2010.

11. Registrar and Transfer Agents

Sharepro Services (India) Private Limited

Unit: Mahindra & Mahindra Limited

13AB, Samhita Warehousing Complex,

2nd

Floor, Sakinaka Telephone Exchange Lane,

Off Andheri Kurla Road,

Sakinaka, Andheri (East),

Mumbai - 400 072.

Telephone Nos.: +91-22-67720400/67720300

Fax: +91-22-28591568

email: sharepro@shareproservices.com

The Registrar and Transfer Agents also have an office at:

Sharepro Services (India) Private Limited

912, Raheja Centre,

Free Press Journal Road,

Nariman Point,

Mumbai - 400 021.

Telephone Nos.: +91-22-22881568/69

Fax: +91-22-22825484

67

MAHINDRA & MAHINDRA LIMITED

12. Share Transfer System

Trading in Ordinary (Equity) Shares of the Company through

recognized Stock Exchanges is permitted only in

dematerialised form.

Shares sent for transfer in physical form are registered and

returned within a period of thirty days from the date of

receipt of the documents, provided the documents are

valid and complete in all respects. With a view to expedite

the process of share transfers, Mr. A. K. Nanda, Executive

Director as well as Mr. Narayan Shankar, Company Secretary

of the Company were severally authorised to approve the

transfers of not more than 5,000 Ordinary (Equity) Shares

per transfer, provided the transferee does not hold one

lakh or more Ordinary (Equity) Shares in the Company.

Since, Mr. A. K. Nanda ceased to be an Executive Director

of the Company, Mr. Bharat Doshi, Executive Director and

Group Chief Financial Officer or Mr. Uday Y. Phadke,

President – Finance, Legal and Financial Services Sector or

Mr. Narayan Shankar, Company Secretary of the Company

have now been severally authorised to approve the transfers

of not more than 5,000 Ordinary (Equity) Shares per

transfer, provided the transferee does not hold one lakh or

more Ordinary (Equity) Shares in the Company. The Share

Transfer and Shareholders/Investors Grievance Committee

meets as and when required to consider the other transfer

proposals and attend to Shareholder grievances.

13. Distribution of Shareholding as on 31st

March, 2010

Number of Shares held Number of Number of Percentage of

Shareholders Shares held Shareholding

1 to 500 1,34,427 1,15,27,754 1.99

501 to 1000 8,391 61,57,823 1.06

1001 to 5000 7,794 1,62,32,135 2.81

5001 to 10000 944 66,46,410 1.15

10001 and above 1,132 53,78,70,356 92.99

Total 1,52,688 57,84,34,478 100.00

Shareholding Pattern as on 31st

March, 2010:

Sr. No. Category of Shareholders Total Holdings Holdings in

Percentage

1. Promoters and Promoter Group 15,23,69,592 26.34

2. Mutual Funds/UTI 2,40,86,073 4.16

3. Banks, Financial Institutions, Insurance Companies, 12,01,02,772 20.76

Central and State Government

4. FIIs* 13,53,37,813 23.40

5. Foreign Bodies 1,87,91,948 3.25

6. Private Corporate Bodies 4,42,23,273 7.65

7. Indian Public 5,02,73,902 8.69

8. NRIs/ OCBs/ Foreign National ** 33,30,113 0.58

9. The Bank of New York Mellon (for GDR holders) 2,99,18,992 5.17

Grand Total 57,84,34,478 100.00

* FIIs category does not include Shareholding aggregating 135.23 lakhs Shares representing 2.34% of the paid-up

share capital of the Company held by a FII, as the same is included under the category of Promoters and

Promoter Group.

** NRIs category does not include Shareholding aggregating 7.32 lakhs Shares representing 0.12% of the paid-up

share capital of the Company held by a NRI, as the same is included under the category of Promoters and

Promoter Group.

68

16. Plant Locations

The Company’s manufacturing facilities are located at

Kandivali, Nashik, Igatpuri, Nagpur, Zaheerabad, Jaipur,

Rudrapur, Haridwar, Chakan and Mohali.

17. Address for correspondence

Shareholders may correspond with the Registrar and

Transfer Agents at:

Sharepro Services (India) Private Limited

Unit: Mahindra & Mahindra Limited

13AB, Samhita Warehousing Complex,

2nd

Floor, Sakinaka Telephone Exchange Lane,

Off Andheri Kurla Road,

Sakinaka, Andheri (East),

Mumbai - 400 072.

Telephone Nos.: +91-22-67720400/67720300

Fax: +91-22-28591568

Email: sharepro@shareproservices.com

on all matters relating to transfer/dematerialisation of

shares, payment of dividend and any other query relating

to Equity Shares or Debentures of the Company.

The Company has also designated investors@mahindra.com

as an exclusive email ID for Investors for the purpose of

registering complaints and the same has been displayed

on the Company’s website.

Shareholders would have to correspond with the respective

Depositary Participants for Shares held in demateralised

form.

For all investor related matters, the Company Secretary &

Compliance Officer can be contacted at:

Mahindra Towers,

5th

Floor, Dr. G. M. Bhosale Marg,

Worli, Mumbai - 400 018.

Telephone Nos.: +91-22-24905624 & +91-22-24975074

Fax: +91-22-24900833

email: investors@mahindra.com

The Company can also be visited at its website:

http://www.mahindra.com

14. Dematerialisation of Shares

98.47% of the paid-up Equity Share Capital is held in a

dematerialised form with National Securities Depository

Limited and Central Depository Services (India) Limited as

on 31st

March, 2010. The market lot of the share is one

share, as the trading in the Equity Shares of the Company

is permitted only in dematerialised form. Non-Promoters’

holding is 73.66% and the stock is highly liquid.

15. Outstanding GDRs / ADRs / Warrants or any Convertible

Instruments, Conversion date and likely impact on equity

2,99,18,992 GDRs were outstanding as at 31st

March,

2010. Since the underlying Ordinary (Equity) Shares

represented by GDRs have been allotted in full, the

outstanding GDRs have no impact on the Equity of the

Company.

2000 Zero Coupon Convertible Bonds (due 2011) of US$

1,00,000 each (FCCBs) aggregating US$ 200 million issued

in April, 2006, may at the option of the Bondholder, be

converted into around 96,35,156 Equity Shares/GDRs each

GDR representing One Equity Share of the Company at an

initial conversion price of Rs.922.04 at any time between

7th

May, 2006 and 7th

March, 2011.

In the year 2008-2009, the Company had repurchased

105 FCCBs aggregating US$ 1,05,00,000 at a discount

and the same have been cancelled upon repurchase. Till

date, no conversion of any FCCBs has taken place.

Consequent to sub-division of each Ordinary (Equity) Share

of the face value of Rs.10 fully paid-up in the Equity Share

Capital of the Company into 2 Ordinary (Equity) Shares of

the face value of Rs.5 each fully paid-up, the initial

conversion price of Rs.922.04 was adjusted to Rs.461.02

per share with effect from 31st

March, 2010.

As of date, FCCBs amounting to US$ 18,95,00,000

convertible into around 1,82,58,622 Equity Shares/GDRs

are outstanding.

6

MAHINDRA & MAHINDRA LIMITED

VIII. Other Disclosures

1. Details of General Meetings and Special Resolutions passed

Annual General Meetings (AGM) held during the past 3 years and the Special Resolutions passed therein:

Year Date Time Special Resolutions passed

2007 30th

July, 2007 3.30 p.m. 1. Re-appointment of Mr. Anand G. Mahindra, Vice-Chairman & Managing

Director for a period of 5 years with effect from 4th

April, 2007.

2. Re-appointment of two Executive Directors of the Company viz.

Mr. Bharat Doshi and Mr. A. K. Nanda for a period of 5 years with

effect from 28th

August, 2007.

3. Alteration of Article 3 of the Articles of Association of the Company.

4. Authority to the Board to recover from Eligible Employees, the fringe

benefit tax in respect of Options which are granted to or vested or

exercised by the Eligible Employees on or after 1st

April, 2007.

2008 30th

July, 2008 3.30 p.m. No Special Resolution was passed at the AGM.

2009 30th

July, 2009 3.30 p.m. Change in place of keeping Registers and Index of Members and

Debenture/ Bond Holders and copies of Annual Returns, etc.

Extraordinary General Meetings held during the past 3 years:

Year Date Time Special Resolution passed

2007 20th

April, 2007 11.00 a.m. Making investments etc. in excess of the limits prescribed under section

372A of the Companies Act, 1956 upto an amount of Rs.1,500 crores.

All the above Meetings were held at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg (New Marine Lines),

Mumbai - 400 020, except the Annual General Meeting held on 30th

July, 2009 which was convened at Y B Chavan

Centre, General Jagannathrao Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai - 400 021.

7

2. Details of non-compliance etc.

The Company has complied with all the requirements

of regulatory authorities. During the last three years,

there were no instances of non-compliance by the

Company and no penalty or strictures were imposed

on the Company by the Stock Exchanges or SEBI or

any statutory authority, on any matter related to the

capital markets.

3. Means of Communication

The quarterly, half-yearly and yearly results are published

in Business Standard and Sakal which are national and

local dailies respectively. These are not sent individually

to the Shareholders. The Company’s results and official

news releases are displayed on the Company’s website

http://www.mahindra.com

Presentations are also made to international and

national institutional investors and analysts which are

also put up on the website of the Company.

The Company has been regularly posting information

relating to its financial results and shareholding pattern

on Corporate Filing and Dissemination System (CDFS)

viz. www.corpfiling.co.in, the common platform

launched by BSE and NSE for electronic filing by listed

companies.

4. Management Discussion and Analysis Report

Management Discussion and Analysis Report (MDA)

has been attached to the Directors’ Report and forms

part of this Annual Report.

5. Compliance with Mandatory requirements

The Company has complied with all the mandatory

requirements of Clause 49 of the Listing Agreement

relating to Corporate Governance.

6. Compliance with Non-mandatory requirements

a. Office of the Chairman

The Company has provided the Chairman

Details of Resolutions passed through Postal Ballots durings the year 2009-10:

Date of Board Description % of Valid Votes in Scrutinizer for

Meeting favour of the conducting the

Resolution Postal Ballot

25th

January, 2010 1. Ordinary Resolution to sub-divide 99.99

each of the Ordinary (Equity) Share of

the Face Value of Rs.10 into 2 Ordinary

(Equity) Shares of the Face Value of

Rs.5 each.

2. Ordinary Resolution to amend Clause 99.90

5 of the Memorandum of Association

of the Company.

3. Special Resolution to amend Clause 3 99.90

of the Articles of Association of the

Company.

The procedure for Postal Ballot is as per section 192A of the Companies Act, 1956 and Rules made thereunder namely

Companies (Passing of the Resolution by Postal Ballot) Rules, 2001.

Mr. Taizoon M. Khumri,

Practising Company

Secretary,

Mumbai

7

MAHINDRA & MAHINDRA LIMITED

(Non-Executive) with a full-fledged office, the

expenses of which are borne by the Company.

The Chairman is reimbursed all expenses incurred

in the performance of his duties.

b. Remuneration Committee

The Company has set up the Remuneration/

Compensation Committee long before application

of Clause 49 of Listing Agreement.

c. Audit Qualifications

During the year under review, there is no audit

qualification in the Company’s financial statements.

The Company continues to adopt best practices to

ensure regime of unqualified financial statements.

The Company has not adopted the other non-

mandatory requirements as specified in Annexure I D

of Clause 49.

7. Compliance with the Corporate Governance –

Voluntary Guidelines, 2009

In December, 2009 the Government of India, Ministry

of Corporate Affairs (“MCA”) had issued Corporate

Governance Voluntary Guidelines 2009 (“the

Guidelines”). MCA has clarified that the Guidelines were

prepared and disseminated for consideration and

adoption by Corporates and may be voluntarily adopted

by public companies with the objective to enhance

not only the economic value of the enterprise but also

the value for every stakeholder who has contributed in

the success of the enterprise and set a global

benchmark for good Corporate Governance. MCA after

taking into account the experience of adoption of these

Guidelines by Corporates and after consideration of

the feedback received from them would review the

Guidelines for further improvements after a period of

one year.

The Company has been a strong believer in good

Corporate Governance and has been adopting the best

practices that have evolved over the last two decades.

The Company is in substantial compliance with the

Guidelines and it will always be the Company’s

endeavour to attain the best practices in Corporate

Governance.

Mumbai, 29th

May, 2010.

7

DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49

OF THE LISTING AGREEMENT

To

The Members of Mahindra & Mahindra Limited

I, Anand G. Mahindra, Vice-Chairman & Managing Director of Mahindra & Mahindra Limited declare that all the

Members of the Board of Directors and Senior Management Personnel have affirmed compliance with the Code of

Conduct for the year ended 31st

March, 2010.

Anand G. Mahindra

Mumbai, 29th

May, 2010 Vice-Chairman & Managing Director

CERTIFICATE

To

The Members of Mahindra & Mahindra Limited

We have examined the compliance of conditions of Corporate Governance by Mahindra & Mahindra Limited, for the year

ended on 31st

March, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock

exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was

limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the

conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of

the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the

Company has complied with the conditions of the Corporate Governance as stipulated in the above mentioned Listing

Agreement.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or

effectiveness with which the management has conducted the affairs of the Company.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No. 117364W)

B.P. Shroff

(Partner)

Mumbai, 29th

May, 2010 Membership Number: 34382

73

MAHINDRA & MAHINDRA LIMITED

7474

75

MAHINDRA & MAHINDRA LIMITED

75

76

Financial Position at a Glance

(Rupees in crores)

2010 2009 2008 2007 2006 2005 2004 2003 2002 2001

Gross Fixed Assets 6240 5541 4203 3510 3065 2810 2559 2489 2417 2231

Net Fixed Assets 3703 3214 2361 1871 1555 1475 1391 1466 1537 1483

Investments 6398 5786 4215 2238 1669 1190 1111 862 800 710

Foreign Currency Monetary Item

Translation Difference Account

Asset/(Liability) (3) 18 - - - - - - - -

Inventories 1189 1061 1084 878 879 760 500 457 469 553

Debtors 1258 1044 1005 701 638 512 400 517 648 632

Other Current Assets 3595 2959 1555 2169 1232 1028 625 640 616 529

Misc. Expenditure not written off 4 13 14 18 18 24 10 40 - 224

Borrowings

Long-term 2801 3685 2187 1558 837 941 652 1072 1192 791

Short-term 79 368 400 78 46 111 78 68 185 344

Current Liabilities and Provisions 5197 4798 3240 2666 2052 1760 1329 1095 1051 927

Deferred Tax Liability/(Asset) (Net) 240 (18) 57 20 147 190 203 177 138 -

Equity Capital 283 273 239 238 233 112 116 116 116 111

Reserves 7544 4989 4111 3315 2676 1875 1659 1454 1388 1958

Net Worth 7827 5262 4350 3553 2909 1987 1775 1570 1504 2069

Book Value Per Share (Rupees) @138.03 192.12 180.87 147.98 *123.29 174.46 150.89 130.56 128.26 165.50

@ Book value per share is shown after giving effect to the sub-division of each Ordinary (Equity) Share of the face value Rs. 10 each

fully paid up into two Ordinary (Equity) Shares of Rs. 5 each fully paid up in March, 2010.

* Book value per share is shown after giving effect to a 1:1 bonus issue in September, 2005.

Book value per share is calculated after reducing Miscellaneous Expenditure not written off and Revaluation Reserve from Net

worth.

77

MAHINDRA & MAHINDRA LIMITED

Summary of Operations

(Rupees in crores)

2010 2009 2008 2007 2006 2005 2004 2003 2002 2001

Income @ 20595 14983 13238 11558 9451 7804 6001 4597 3997 4353

Materials

Direct 12333 9274 7726 6828 5714 4603 3353 2500 2117 2359

Indirect 105 91 89 79 68 60 43 39 32 49

Excise Duty (Net) 1807 1587 1584 1335 1136 1055 955 785 677 755

Personnel 1198 1025 868 666 553 465 421 385 375 401

Interest (Net) @ 28 45 24 (67) (18) (6) 52 87 83 62

Depreciation (Net) 371 292 239 209 200 184 165 165 139 140

Other Expenses 1997 1643 1474 1192 909 743 603 496 476 443

Exceptional items

(Income)/Expense (91) (10) (173) (122) (210) (14) (29) (57) 17 15

Profit before tax for the year 2847 1036 1407 1439 1099 714 438 197 81 129

Tax for the year - Current 749 58 279 366 285 215 63 12 3 8

Deferred Tax Liability/(Asset) 10 141 25 (15) (43) (14) 26 39 (25) -

Adj. pertaining to Prev. Years - ▲31 - 19 - - - - 6 -

Balance profit 2088 868 1103 1069 857 513 349 146 97 121

Dividends #+624 +312 +321 +325 +278 +172 +118 + 72 56 +67

Equity Dividend (%) #190.00 100.00 115.00 115.00 100.00 130.00 90.00 55.00 50.00 55.00

Earnings per Share (Rupees) * 37.97 15.92 23.12 22.58 19.04 11.52 7.51 3.14 2.16 2.73

Vehicles produced ** (Units) 284516 201993 196956 169557 148213 148025 117670 87088 66256 63146

Vehicles sold ** (Units) 282119 206688 195077 169679 147591 145024 117399 86890 65338 62927

Tractors produced (Units) 173276 119098 98917 103847 87075 67115 50102 45183 54524 80261

Tractors sold (Units) 175196 120202 99042 102531 85029 65390 49576 47028 58006 79237

@ Interest income netted off in

interest expense 129 89 63 87 45 36 25 29 33 51

# Proposed Dividend.

+ Including Income-tax on Proposed Dividend/Dividends.

* Basic Earning per share is calculated on effective capital during the year and after giving effect to the sub-division of the

Ordinary (Equity) Shares in March 2010, for all the periods above.

** Including CKD packs.

▲ Profit of Mahindra Holdings and Finance Limited for the period 1st February, 2008 to 31st March, 2008.

78

Financial Highlights

PAT and Net Income (Rupees Crores) Earnings Per Share (Rs.)

Net Segmental Revenue F-2010 Debt Equity Ratio

Net

Inco

me

PAT

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

0

300

600

900

1200

1500

1800

2100

2400

FY 2010FY 2009FY 2008FY 2007FY 2006

8327

10221

11672

18801

13364

857

10681103

868

2088

Net Income Profit After Tax

0

8

16

24

32

40

48

FY 2010FY 2009FY 2008FY 2007FY 2006

19.04

22.58 23.12

15.92

37.97

EPS

(Rs.

)

Automotive57.0%

FarmEquipment

42.6%

Others0.4%

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

FY 2010FY 2009FY 2008FY 2007FY 2006

0.37

0.31

0.46

0.60

0.56

Tim

es

79

MAHINDRA & MAHINDRA LIMITED

80

81

MAHINDRA & MAHINDRA LIMITED

Auditors’ Report to the members of Mahindra & Mahindra Limited

1. We have audited the attached Balance Sheet of Mahindra &

Mahindra Limited as at 31st March, 2010, the Profit and

Loss Account and the Cash Flow Statement of the Company

for the year ended on that date, both annexed thereto.

These financial statements are the responsibility of the

Company’s Management. Our responsibility is to express an

opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing

standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements

are free of material misstatements. An audit includes

examining, on a test basis, evidence supporting the amounts

and the disclosures in the financial statements. An audit

also includes assessing the accounting principles used and

the significant estimates made by the Management, as well

as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for

our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003

(CARO) issued by the Central Government in terms of Section

227(4A) of the Companies Act, 1956, we enclose in the

Annexure a statement on the matters specified in paragraphs

4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in

paragraph 3 above, we report as follows:

(a) we have obtained all the information and explanations which

to the best of our knowledge and belief were necessary for

the purposes of our audit;

(b) in our opinion, proper books of account as required by law

have been kept by the Company so far as it appears from

our examination of those books;

(c) the Balance Sheet, the Profit and Loss Account and the

Cash Flow Statement dealt with by this report are in

agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Profit and Loss

Account and the Cash Flow Statement dealt with by this

report are in compliance with the Accounting Standards

referred to in Section 211(3C) of the Companies Act, 1956;

(e) in our opinion and to the best of our information and

according to the explanations given to us, the said accounts

give the information required by the Companies Act, 1956

in the manner so required and give a true and fair view in

conformity with the accounting principles generally accepted

in India:

(i) in the case of the Balance Sheet, of the state of affairs

of the Company as at 31st

March, 2010;

(ii) in the case of the Profit and Loss Account, of the profit

of the Company for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash

flows of the Company for the year ended on that date.

5. On the basis of the written representations received from

the Directors as on 31st

March, 2010, and taken on record

by the Board of Directors, we report that none of the

Directors is disqualified as on 31st

March, 2010 from being

appointed as a director in terms of Section 274(1) (g) of the

Companies Act, 1956.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No.117364W)

B. P. Shroff

Partner

(Membership No.34382)

MUMBAI, 29th May, 2010

82

Annexure to the Auditors’ Report of Mahindra & Mahindra Limited for the year ended 31st

March, 2010.

(Referred to in paragraph (3) thereof)

i. In respect of its fixed assets:

(a) The Company has maintained proper records showing

full particulars, including quantitative details and

situation of the fixed assets.

(b) The fixed assets were physically verified during the year

by the Management in accordance with a regular

programme of verification which, in our opinion,

provides for physical verification of all the fixed assets

at reasonable intervals. According to the information

and explanation given to us, no material discrepancies

were noticed on such verification.

(c) The fixed assets disposed off during the year, in our

opinion, do not constitute a substantial part of the

fixed assets of the Company and such disposal has, in

our opinion, not affected the going concern status of

the Company.

ii. In respect of its inventory:

(a) As explained to us, the inventories were physically

verified during the year by the Management at

reasonable intervals.

(b) In our opinion and according to the information and

explanation given to us, the procedures of physical

verification of inventories followed by the Management

were reasonable and adequate in relation to the size of

the Company and the nature of its business.

(c) In our opinion and according to the information and

explanations given to us, the Company has maintained

proper records of its inventories and no material

discrepancies were noticed on physical verification.

iii. The Company has neither granted nor taken any loans,

secured or unsecured, to/from companies, firms or other

parties listed in the Register maintained under Section 301

of the Companies Act, 1956.

iv. In our opinion and according to the information and

explanations given to us, having regard to the explanations

that some of the items purchased are of special nature and

suitable alternative sources are not readily available for

obtaining comparable quotations, there is an adequate

internal control system commensurate with the size of the

Company and the nature of its business with regard to

purchases of inventory and fixed assets and the sale of

goods and services. During the course of our audit, we

have not observed any major weakness in such internal

control system.

v. In respect of contracts or arrangements entered in the

Register maintained in pursuance of Section 301 of the

Companies Act, 1956, to the best of our knowledge and

belief and according to the information and explanations

given to us:

(a) The particulars of contracts or arrangements referred

to Section 301 that needed to be entered in the Register

maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5

lakhs in respect of any party, having regard to the

explanations that some of the items purchased are of

special nature and suitable alternative sources are not

readily available for obtaining comparable quotations,

the transactions have been made at prices which are

prima facie reasonable having regard to the prevailing

market prices at the relevant time.

vi. In our opinion and according to the information and

explanations given to us, the Company has complied with

the provisions of Sections 58A and 58AA or any other

relevant provisions of the Companies Act, 1956 and the

Companies (Acceptance of Deposits) Rules, 1975 with regard

to the deposits accepted from the public. According to the

information and explanations given to us, no order has

been passed by the Company Law Board or the National

Company Law Tribunal or the Reserve Bank of India or any

Court or any other Tribunal.

vii. In our opinion, the Company has an adequate internal audit

system commensurate with the size and the nature of its

business.

viii. We have broadly reviewed the books of account maintained

by the Company pursuant to the rules made by the Central

Government for the maintenance of cost records under

Section 209(1) (d) of the Companies Act, 1956 in respect of

manufacture of motor vehicles and tractors and are of the

opinion that prima facie the prescribed accounts and records

have been made and maintained. We have, however, not

made a detailed examination of the records with a view to

determining whether they are accurate or complete. To the

best of our knowledge and according to the information

and explanations given to us, the Central Government has

not prescribed the maintenance of cost records for any

other product of the Company.

ix. According to the information and explanations given to us

in respect of statutory dues:

(a) The Company has generally been regular in depositing

undisputed dues, including Provident Fund, Investor

Education and Protection Fund, Employees’ State

Insurance, Income-tax, Sales Tax, Wealth Tax, Service

Tax, Value Added Tax, Customs Duty, Excise Duty, Cess

and other material statutory dues applicable to it with

the appropriate authorities.

(b) There were no undisputed amounts payable in respect

of Income-tax, Wealth Tax, Customs Duty, Excise Duty,

Cess and other material statutory dues in arrears as at

31st

March, 2010 for a period of more than six months

from the date they became payable.

83

MAHINDRA & MAHINDRA LIMITED

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service

Tax, Customs Duty, Excise Duty and Cess which have not

x. The Company does not have accumulated losses as at 31st

March, 2010 and has not incurred cash losses during the

financial year ended on that date and in the immediately

preceding financial year.

xi. In our opinion and according to the information and

explanations given to us, the Company has not defaulted in

the repayment of dues to banks, financial institutions and

debenture holders.

xii. In our opinion and according to the information and

explanations given to us, the Company has not granted any

loans and advances on the basis of security by way of pledge

of shares, debentures and other securities.

xiii. The provisions of any special statute as specified under the

clause (xiii) of the said Order are not applicable to the

Company.

xiv. In our opinion the Company is not dealing in or trading in

shares, securities, debentures and other investments.

Accordingly, the provisions of paragraph 4(xiv) of the Order

are not applicable to the Company.

xv. According to the information and explanations given to us,

the Company has not given any guarantees for loans taken

by others from banks or financial institutions, the terms

and conditions, whereof, in our opinion are prejudicial to

the interest of the Company.

xvi. In our opinion and according to the information and

explanations given to us, the term loans have been applied

for the purposes for which they were obtained.

xvii. In our opinion and according to the information and

explanations given to us and on an overall examination of

been deposited as on 31st

March, 2010 on account of

disputes are given below:

Statute Nature of Forum where Period to Amount

Dues Dispute is pending which the amount involved

relates (Rs. in crores)

Income-Tax Laws Income-Tax Appellate Authority – 2004-2007 8.12

Tribunal Level

Appellate Authority – 1999-2008 5.99

Commissioner (Appeals)

Sales Tax Laws Sales Tax High Court 1987-2008 181.87

Appellate Authority –

Tribunal Level 1987-2007 0.39

Appellate Authority –

Commissioner (Appeals) 1989-2010 24.71

Service Tax Laws Service Tax Appellate Authority – Tribunal Level 2007-2008 1.16

Appellate Authority – Commissioner 2002-2010 6.09

Excise Duty Laws Excise Duty Supreme Court 1991-1996 418.22

Appellate Authority – Tribunal Level 1987-2009 221.49

Appellate Authority – Commissioner 1994-2010 34.83

Customs Duty Laws Customs Duty Appellate Authority – Tribunal Level 1992-2001 6.31

the Balance Sheet, we report that funds raised on short

term basis have not been used during the year for long

term investments.

xviii. The Company has not made any preferential allotment of

shares to parties and companies covered in the register

maintained under Section 301 of the Companies Act, 1956,

during the year.

xix. According to the information and explanations given to us,

the Company has created security in respect of the

debentures issued in earlier years.

xx. The Company has not raised any money by public issue

during the year.

xxi. During the course of our examination of the books and

records of the Company, carried out in accordance with the

generally accepted auditing practices in India, and according

to the information and explanations given to us, we have

neither come across any instance of significant fraud on or

by the Company, noticed or reported during the year nor

have we been informed of such case by the management.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No.117364W)

B. P. Shroff

Partner

(Membership No.34382)

MUMBAI, 29th May, 2010

84

In terms of our report attached

For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra Chairman

Chartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director

A. S. Ganguly

B. P. Shroff A. P. PuriDirectors

Bharat Doshi

Partner N. B. GodrejExecutive Director

A. K. Dasgupta

Deepak S. Parekh Narayan Shankar Company Secretary

Mumbai, 29th

May, 2010 Mumbai, 29th

May, 2010

}

Balance SheetBalance SheetBalance SheetBalance SheetBalance Sheet as at 31as at 31as at 31as at 31as at 31ststststst

March, 2010 March, 2010 March, 2010 March, 2010 March, 2010

Rupees crores

Schedule 2010 2009

I. SOURCES OF FUNDS :

SHAREHOLDERS’ FUNDS :

Capital……………………… ................................................ I 282.95 272.62

Employee Stock Options Outstanding ................................. 8.01 6.55

Reserves and Surplus ........................................................... II 7,535.81 4,982.91

7,826.77 5,262.08

LOAN FUNDS :

(a) Secured Loans .............................................................. III A 602.45 981.00

(b) Unsecured Loans .......................................................... III B 2,277.70 3,071.76

2,880.15 4,052.76

DEFERRED TAX LIABILITY (Net) [Note 22] ............................ 240.33 —

FOREIGN CURRENCY MONETARY ITEM TRANSLATION

DIFFERENCE ACCOUNT ........................................................ 3.46 —

Total .......... 10,950.71 9,314.84

II. APPLICATION OF FUNDS :

FIXED ASSETS :

Gross Block .......................................................................... 5,276.29 4,893.89

Less : Depreciation .............................................................. 2,537.77 2,326.29

Net Block ............................................................................. IV 2,738.52 2,567.60

CAPITAL WORK-IN-PROGRESS (INCLUDING CAPITAL

ADVANCES) ......................................................................... 964.20 646.73

3,702.72 3,214.33

INVESTMENTS ...................................................................... V 6,398.02 5,786.41

DEFERRED TAX ASSET (Net) [Note 22] ................................ — 18.27

FOREIGN CURRENCY MONETARY ITEM TRANSLATION

DIFFERENCE ACCOUNT ........................................................ — 18.11

CURRENT ASSETS, LOANS AND ADVANCES :

(a) Inventories .................................................................... VI A 1,188.78 1,060.67

(b) Sundry Debtors ............................................................ VI B 1,258.08 1,043.65

(c) Cash and Bank Balances ............................................... VI C 1,743.23 1,574.43

(d) Other Current Assets .................................................... VI D 50.87 1.56

(e) Loans and Advances ..................................................... VI E 1,801.43 1,382.62

6,042.39 5,062.93

CURRENT LIABILITIES AND PROVISIONS :

(a) Current Liabilities .......................................................... VII A 3,400.00 3,520.20

(b) Provisions ..................................................................... VII B 1,796.54 1,277.56

5,196.54 4,797.76

NET CURRENT ASSETS ......................................................... 845.85 265.17

MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT

WRITTEN OFF OR ADJUSTED) .............................................. VIII 4.12 12.55

Total .......... 10,950.71 9,314.84

NOTES ON ACCOUNTS ........................................................ XIV

85

MAHINDRA & MAHINDRA LIMITED

In terms of our report attached

For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra Chairman

Chartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director

A. S. Ganguly

B. P. Shroff A. P. PuriDirectors

Bharat Doshi

Partner N. B. GodrejExecutive Director

A. K. Dasgupta

Deepak S. Parekh Narayan Shankar Company Secretary

Mumbai, 29th

May, 2010 Mumbai, 29th

May, 2010

Profit and Loss AccountProfit and Loss AccountProfit and Loss AccountProfit and Loss AccountProfit and Loss Account for the year ended 31for the year ended 31for the year ended 31for the year ended 31for the year ended 31ststststst

March, 2010 March, 2010 March, 2010 March, 2010 March, 2010

Rupees crores

Schedule 2010 2009

SALES - Traded and Manufactured Goods .............................................................. 19,832.06 14,268.41

Less : Excise Duty on Sales (Net) ............................................................................. 1,794.01 1,619.35

Net Sales ................................................................................................................. 18,038.05 12,649.06

Income from Operations ......................................................................................... IX A 564.06 444.62

Other Income .......................................................................................................... IX B 199.35 270.34

Net Income .............................................................................................................. 18,801.46 13,364.02

EXPENDITURE :

Raw Materials, Finished and Semi-finished Products ............................................... X 12,332.92 9,274.23

Excise Duty ............................................................................................................... 13.29 (32.30)

Personnel ................................................................................................................. XI 1,198.47 1,024.61

Interest, Commitment and Finance Charges (Net) ................................................... XII 27.81 45.26

Depreciation/Amortisation [Note 5(c)(i)] .................................................................. 370.78 291.51

Other Expenses ........................................................................................................ XIII 2,161.74 1,777.34

16,105.01 12,380.65

Less : Cost of Manufactured Products Capitalised .................................................. 59.55 42.83

16,045.46 12,337.82

Profit before exceptional items and taxation ........................................................... 2,756.00 1,026.20

Add : Exceptional Items [Note 21] .......................................................................... 90.75 10.27

Profit before taxation .............................................................................................. 2,846.75 1,036.47

Less : Provision for Tax - Current Tax (including Fringe Benefit Tax) .................... 749.33 58.51

- Deferred Tax (Net) ......................................................... 9.67 141.18

Profit for the year .................................................................................................... 2,087.75 836.78

Add :

Profit of Mahindra Holdings and Finance Limited for the period

1st February, 2008 to 31st March, 2008 ................................................................ — 30.73

Balance of Profit for the year .................................................................................. 2,087.75 867.51

Balance of Profit for earlier years ............................................................................ 3,365.32 2,775.48

Amount Transferred on Amalgamation of Mahindra Holdings and Finance

Limited [Note 23(a)] ................................................................................................ — 159.94

Less : Transfer to Debenture Redemption Reserve (Net) .......................................... (30.95) (29.62)

3,334.37 2,905.80

Total of Profit and Loss Account balances shown above ........................................ 5,422.12 3,773.31

Less :

General Reserve ....................................................................................................... 210.00 100.00

Credit of Income-tax on Proposed Dividend of Previous Year ................................. — (4.07)

Proposed Dividend ................................................................................................... 549.52 278.83

Income-tax on Proposed Dividend ........................................................................... 74.23 33.23

Balance for 2009-2010 and earlier years carried to Balance Sheet ......................... 4,588.37 3,365.32

EARNINGS PER SHARE [Note 24] :

(Face value Rs. 5/- per share) (Rupees)

Basic ........................................................................................................................ 37.97 15.92

Diluted ..................................................................................................................... 35.61 15.01

NOTES ON ACCOUNTS ............................................................................................ XIV

}

86

Cash Flow StatementCash Flow StatementCash Flow StatementCash Flow StatementCash Flow Statement for the year ended 31for the year ended 31for the year ended 31for the year ended 31for the year ended 31ststststst

March, 2010 March, 2010 March, 2010 March, 2010 March, 2010

Rupees crores

2010 2009

A. CASH FLOW FROM OPERATING ACTIVITIES :

Profit before exceptional items and taxation.......................................... 2,756.00 1,026.20

Adjustments for :

Net Profit earned by Mahindra Holdings and

Finance Limited from 1st February, 2008 to 31st March, 2008 ..... — 30.73

Taxes and other adjustments on above ........................................... — 11.01

— 41.74

Adjustments for : Depreciation/Amortisation .................................. 370.78 291.52

(Profit)/Loss on Exchange (Net) ....................................................... 14.25 6.30

Investment and Interest Income ...................................................... (261.80) (266.90)

Interest, Commitment and Finance charges .................................... 156.85 134.12

Amortisation of Expenses ................................................................ 6.07 11.32

Profit on sale of investments (Net) .................................................. (10.40) (92.36)

Loss on fixed assets sold/scrapped/written off (Net) ....................... 20.83 1.19

Excess of cost over fair value of current investments (Net) ............. (0.26) (1.57)

296.32 83.62

Operating Profit before Working Capital changes .................................. 3,052.32 1,151.56

Changes in :

Trade and other receivables ............................................................. (458.69) (99.37)

Inventories ....................................................................................... (133.84) 176.01

Trade and other payables ................................................................ 588.08 515.13

(4.45) 591.77

Miscellaneous Expenditure (to the extent not written off or adjusted)

incurred during the year ........................................................................ — (11.73)

Cash generated from operations ............................................................ 3,047.87 1,731.60

Income Taxes paid (Net of refunds) ........................................................ (711.38) (100.30)

NET CASH FROM OPERATING ACTIVITIES ............................................... 2,336.49 1,631.30

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets ......................................................................... (967.06) (929.74)

Sale of fixed assets ................................................................................. 6.36 14.58

Purchase of investments ......................................................................... (19,022.10) (17,118.59)

Sale of investments ................................................................................ 18,490.89 16,195.73

Interest received ..................................................................................... 100.74 79.87

Dividends received .................................................................................. 87.26 137.13

Inter corporate deposits (Net) ................................................................ (133.67) (319.98)

Exceptional Items :

Sales Proceeds (Net) on sale of Long Term Investments ......................... 92.14 —

NET CASH USED IN INVESTING ACTIVITIES ............................................ (1,345.44) (1,941.00)

87

MAHINDRA & MAHINDRA LIMITED

In terms of our report attached

For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra Chairman

Chartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director

A. S. Ganguly

B. P. Shroff A. P. PuriDirectors

Bharat Doshi

Partner N. B. GodrejExecutive Director

A. K. Dasgupta

Deepak S. Parekh Narayan Shankar Company Secretary

Mumbai, 29th

May, 2010 Mumbai, 29th

May, 2010

}

Cash Flow StatementCash Flow StatementCash Flow StatementCash Flow StatementCash Flow Statement (Contd.)(Contd.)(Contd.)(Contd.)(Contd.)

Rupees crores

2010 2009

C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from Issue of Share Capital (including Share Premium) .......... 72.40 —

Proceeds from borrowings ..................................................................... 436.32 2,117.39

Repayments of borrowings (including premium on prepayments) ......... (743.98) (1,005.05)

Dividends paid [including income tax on dividend Rs. 33.23 crores

(2009 : Rs. 38.48 crores)] ...................................................................... (311.36) (320.26)

Interest, Commitment and Finance charges paid ................................... (229.48) (95.17)

Stamp Duty paid on shares issued on merger ....................................... (7.77) —

NET CASH (USED IN)/FROM FINANCING ACTIVITIES .............................. (783.87) 696.91

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS ............ 207.18 387.21

CASH AND CASH EQUIVALENTS [Note 1] :

Opening Balance .................................................................................... 1,561.83 923.88

Cash and Bank Balance acquired pursuant to the Schemes of

Amalgamation ........................................................................................ — 253.76

Cash and Bank Balance Transferred on transfer of Business .................. (18.20) (3.02)

Closing Balance ...................................................................................... 1,750.81 1,561.83

See Notes attached.

88

Notes to the Cash Flow StatementNotes to the Cash Flow StatementNotes to the Cash Flow StatementNotes to the Cash Flow StatementNotes to the Cash Flow Statement for the year ended 31for the year ended 31for the year ended 31for the year ended 31for the year ended 31ststststst

March, 2010 March, 2010 March, 2010 March, 2010 March, 2010

Rupees crores

2010 2009

1 Cash and Bank Balances ......................................................................... 1,743.23 1,574.43

Unrealised (Gain)/Loss on foreign currency cash and cash equivalents .. 7.58 (12.60)

Total cash and cash equivalents ............................................................. 1,750.81 1,561.83

2 During the year the Company formed Mahindra EcoNova Private Limited

as a wholly owned subsidiary with an initial subscription of Rs. 0.01

crores.

3 During the year the Company received on disposal of its subsidiaries

Mahindra Logisoft Business Solutions Limited and Mahindra Steel Service

Centre Limited Rs. 5.71 crores and Rs. 14.27 crores respectively.

4 The Company transferred the Land Defence Systems business of

Mahindra Defence Systems, a division of Mahindra & Mahindra Limited,

to a wholly owned subsidiary in the current year with effect from

1st July, 2009. The value of the assets and liabilities of the business

transferred are at the values indicated below :

Fixed Assets (including Capital Work-in-Progress) .................................. 26.42 —

Current Assets ........................................................................................ 33.43 —

Current Liabilities and Provisions ............................................................ 32.47 —

This transfer of the Land Defence Systems business of Mahindra Defence

Systems division is a non-cash transaction.

5 Previous year’s figures have been regrouped/restated wherever necessary.

89

MAHINDRA & MAHINDRA LIMITED

SCHEDULE I

Rupees crores

2010 2009

Share Capital [Note 2] :

Authorised :

1,20,00,00,000 Ordinary (Equity) Shares of Rs. 5 each

(2009 : 60,00,00,000 Ordinary (Equity) Shares of Rs. 10 each)…………… 600.00 600.00

25,00,000 Unclassified Shares of Rs. 100 each ............................................................ 25.00 25.00

Total ............................................................................................................ 625.00 625.00

Issued and Subscribed :

57,84,34,478 Ordinary (Equity) Shares of Rs. 5 each fully paid up (2009 : 27,88,21,265

Ordinary (Equity) Shares of Rs. 10 each fully paid up) ............................... 289.21 278.82

289.21 278.82

Less :

1,25,26,592 Ordinary (Equity) Shares of Rs. 5 each fully paid up

(2009 : 62,05,306 Ordinary (Equity) Shares of Rs. 10 each fully paid up)

issued to ESOP Trust but not allotted to employees ................................... 6.26 6.20

Adjusted : Issued and Subscribed Share Capital ................................................................... 282.95 272.62

#REF!

SCHEDULE II

Rupees crores

2009 Additions Deductions 2010

Reserves and Surplus

1 Capital Reserve 11.50 — — 11.50

11.50 — — 11.50

2 Securities Premium Account [Note 3(a)(i)] ...................... 493.79 784.79 6.59 1,271.99

527.13 10.86 44.20 493.79

Less : Premium on shares issued to ESOP Trust

but not allotted to employees [Note 3(b)] ..................... 15.20 71.40 2.31 84.29

16.34 — 1.14 15.20

478.59 713.39 4.28 1,187.70

510.79 10.86 43.06 478.59

3 Revaluation Reserve [Note 3(a)(ii)] .................................. 12.09 — 0.42 11.67

12.47 — 0.38 12.09

4 General ReserveI ............................................................. 826.74 210.00� 6.12� 1,030.62

748.92 117.79�� 39.97• 826.74

Add : Bonus shares issued to ESOP Trust

but not allotted to employees [Note 3(b)] ..................... 3.10 — 0.47 2.63

3.33 — 0.23 3.10

829.84 210.00 6.59 1,033.25

752.25 117.79 40.20 829.84

5 Debenture Redemption Reserve ...................................... 47.62 30.95� — 78.57

18.00 29.62� — 47.62

6 Investment Fluctuation Reserve [Note 23, 25 & 26] ...... 672.14 23.52� 70.00 625.66

39.43 806.61 173.90 672.14

7 Hedging Reserve Account [Note 3(c)] ............................ (434.19) 433.28 — (0.91)

(12.92) — 421.27 (434.19)

1,617.59 1,411.14 81.29 2,947.44

1,331.52 964.88 678.81 1,617.59

8 Balance for 2009-2010 and earlier years as per

Profit and Loss Account ................................................. 4,588.37

3,365.32

Total ............................. 7,535.81

4,982.91

� Transfer from Profit and Loss Account Rs. 210.00 crores (2009 : Rs. 100.00 crores).

� Amount utilised for expenses incurred on amalgamation of previous year Rs. 5.18 crores (Net of Tax of Rs. 2.59 crores) and

impact of tax rate change on net debits to General Reserve Rs. 0.94 crores.

� Transfer from Profit and Loss Account Rs. 30.95 crores (2009 : Rs. 29.62 crores).

� Provisions no longer required written back.

� Amount transferred during the year on amalgamation Rs. 17.79 crores.

• Adjustment on adoption of Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 (Net of Tax

of Rs. 20.58 crores).

90

SCHEDULE III

Rupees crores

2010 2009

Loan Funds [Note 4] :

(A) Secured :

(1) Debentures/Bonds ........................................................................... 600.01 600.01

(2) Foreign Currency Loans from Banks ................................................ — 124.29

(3) Loans and Advances on cash credit account from Banks ............... 2.44 3.00

(4) Short-term Foreign Currency Loans from Banks .............................. — 253.70

602.45 981.00

(B) Unsecured :

(1) Fixed Deposits ................................................................................. 166.22 30.85

(2) Short-term Loans from Banks ......................................................... — 80.00

(3) Other Loans :

(a) From Financial Institutions ....................................................... 730.35 634.68

(b) Foreign Currency Loan from Banks .......................................... 501.35 625.65

(c) Zero Coupon Convertible Bonds .............................................. 850.85 961.52

(d) 9.25% Fully and Compulsorily Convertible Debentures ............ — 700.00

(e) From Others ............................................................................. 28.93 39.06

2,111.48 2,960.91

2,277.70 3,071.76

Total ............... 2,880.15 4,052.76

SCHEDULE IV

Fixed Assets [Note 5] : Rupees crores

Description of Assets Cost/ Additions Deduc- Cost/Pro- Deprecia- Deprecia- Deductions Deprecia- Net Net

Professional and tions fessional tion/Amor- tion/ and tion/ Balance Balance

valuation adjust- and valuation tisation Amor- adjust- Amortisa- as at as at

as at 31st

ments adjust- as at 31st

to 31st

tisation ments tion 31st

31st

March, during ments March, March, for 2009- of Depre- to 31st

March, March,

2009 the year during 2010 2009 2010 ciation/ March, 2010 2009

the year Amorti- 2010

sation

Land - Freehold ......................... 56.18 0.31 7.48 49.01 — — — — 49.01 56.18

Land - Leasehold ....................... 61.28 1.97 — 63.25 2.98 0.67 — 3.65 59.60 58.30

Buildings .................................... 638.61 45.52 12.94 671.19 153.86 19.59 4.37 169.08 502.11 484.75

Plant and Machinery ................. 3,596.60 329.60 155.22 3,770.98 1,985.69 276.69 134.70 2,127.68 1,643.30 1,610.91

Furniture and Fittings ................ 122.31 7.99 10.68 119.62 52.23 7.03 7.78 51.48 68.14 70.08

Vehicles, Cycles, etc ................... 131.61 22.42 20.62 133.41 54.85 17.99 12.87 59.97 73.44 76.76

Technical Knowhow ................... — 2.58 — 2.58 — 0.52 — 0.52 2.06 —

Development Expenditure ......... 240.23 169.88 — 410.11 41.14 36.97 — 78.11 332.00 199.09

Software Expenditure ................ 47.07 9.07 — 56.14 35.54 11.74 — 47.28 8.86 11.53

Total ............ 4,893.89 589.34 206.94 5,276.29 2,326.29 371.20 159.72 2,537.77 2,738.52 2,567.60

3,656.13 1,291.43 53.67 4,893.89 1,841.68 514.00 29.39 2,326.29 2,567.60

91

MAHINDRA & MAHINDRA LIMITED

SCHEDULE V

Investments (At Cost, unless otherwise specified) : Rupees crores

2010 2009

Face Value

Number Per Unit Note Long Term Current Long Term Current

Rupees

Shares (Non-trade and fully paid-up unless otherwise specified) :

Unquoted :

(a) In Subsidiary Companies :

(i) Equity Shares :

53,98,462 10 Mahindra Engineering and Chemical Products Limited ............. 5.82 — 5.82 —

2,71,00,006 10 Mahindra Intertrade Limited [including 1,50,00,000 shares

partly paid-up Rs. 3 per share] .................................................. 16.60 — 16.60 —

— 10 Mahindra Steel Service Centre Limited ...................................... (c)(1) — — 6.38 —

14,00,00,000 US$ 0.10 Mahindra USA Inc. .................................................................... (b)(c)(2) 66.37 — 44.30 —

16,83,218 10 Mahindra Gujarat Tractor Limited ............................................. 3.55 — 3.55 —

2,46,81,437 10 Mahindra Shubhlabh Services Limited ....................................... (b) 25.72 — 25.72 —

3,47,77,255 10 Mahindra First Choice Wheels Limited ...................................... 47.44 — 47.44 —

— 10 Mahindra Logisoft Business Solutions Limited .......................... (c)(3) — — 5.78 —

42,22,250 US$ 0.001 Bristlecone Limited ..................................................................... 19.26 — 19.26 —

5,20,00,000 ZAR 1 Mahindra & Mahindra South Africa (Proprietary) Limited ......... (b)(c)(4) 28.54 — 17.24 —

81,26,218 10 Mahindra Engineering Services Limited…………………………. (b) 59.96 — 59.96 —

5,87,95,000 US$ 1 Mahindra Overseas Investment Company (Mauritius) Limited .. (b)(c)(5) 270.10 — 204.28 —

40,30,806 10 Mahindra Gears & Transmissions Private Limited (formerly

known as Mahindra SAR Transmission Private Limited) ............ (c)(6) 21.75 — 40.77 —

10,16,24,232 10 Mahindra Renault Private Limited ............................................. (b) 154.38 — 154.38 —

20,70,32,300 10 Mahindra Navistar Automotives Limited ................................... (b)(c)(7) 209.00 — 165.31 —

58,50,00,000 10 Mahindra Vehicle Manufactures Limited ................................... (b)(c)(8) 585.00 — 485.00 —

2,14,40,052 10 Mahindra Castings Limited (formerly known as Mahindra

Castings Private Limited) ............................................................ (c)(9) 130.25 — 105.25 —

4,90,49,900 10 Mahindra Logistics Limited ........................................................ 49.05 — 49.05 —

8,41,50,000 10 Mahindra Navistar Engines Private Limited ............................... (c)(10) 84.15 — 21.17 —

1,05,50,000 10 Mahindra Aerospace Private Limited ......................................... (c)(11) 10.55 — 0.05 —

1,63,50,000 10 Mahindra First Choice Services Limited ..................................... (c)(12) 16.35 — 11.05 —

2,07,00,001 EURO 1 Mahindra Gears International Limited ....................................... 137.83 — 137.83 —

2,25,49,999 10 Mahindra Holdings Limited ....................................................... 22.55 — 22.55 —

5,10,000 10 Mahindra Consulting Engineers Limited .................................... 0.64 — 0.64 —

— 10 Mahindra Holidays & Resorts India Limited

(transferred to Quoted Subsidiary) ............................................ (c)(13) — — 30.25 —

50,490 10 NBS International Limited .......................................................... 5.07 — 5.07 —

11,80,00,000 10 Mahindra Two Wheelers Limited ............................................... 118.00 — 118.00 —

7,00,000 AU$ 1 Mahindra Automotive Australia Pty. Ltd. .................................. 2.27 — 2.27 —

3,42,62,000 10 Defence Land Systems India Private Limited (formerly known

as Mahindra Defence Land Systems Private Limited) ................ (c)(14)&(15) 34.26 — — —

10,000 10 Mahindra EcoNova Private Limited ............................................ (c)(16) 0.01 — — —

70,00,000 US$ 0.001 (ii) Series’A’ Preference Shares : Bristlecone Limited ....................... 31.72 — 31.72 —

69,20,000 US$ 0.001 (iii) Series’B’ Preference Shares : Bristlecone Limited ....................... 15.12 — 15.12 —

(iv) 10.50% Non Cumulative Redeemable Preference Shares :

10,00,000 100.00 Mahindra Lifespace Developers Limited .................................... 10.00 — 10.00 —

23,00,000 EURO 1 (v) Preference Shares : Mahindra Gears International Limited ....... 15.31 — 15.31 —

(vi) Share Warrants Convertible into Equity Shares :

42,99,270 10 Mahindra Forgings Limited ........................................................ (c)(17) 14.72 — — —

2,211.34 — 1,877.12 —

(b) In Other Companies :

(i) Equity Shares :

312 100 Montreal Engineering International Limited .............................. * — * —

8,55,646 10 Machinery Manufacturers Corporation Limited ......................... (b) 0.94 — 0.94 —

1,00,000 10 Judricks (India) Private Limited .................................................. 0.10 — 0.10 —

35,000 10 Mahindra & Mahindra Contech Limited .................................... 0.04 — 0.04 —

75,000 10 NTTF Industries Limited ............................................................. 0.15 — 0.15 —

7,49,997 10 Officemartindia.com Limited ..................................................... 0.22 — 0.22 —

50,000 10 Indian NGOs.com Private Limited .............................................. 0.06 — 0.06 —

20,000 10 Sixth Sense Studios Private Limited ........................................... 0.02 — 0.02 —

2,85,000 10 Utility Engineers (India) Limited ................................................. 0.29 — 0.29 —

9,00,000 10 Mahindra Construction Company Limited ................................. 0.97 — 0.97 —

5,00,000 10 Business Standard Limited ......................................................... 0.09 — 0.09 —

13,10,000 10 Mahindra Sona Limited ............................................................. 1.64 — 1.64 —

75,00,000 10 New Tirupur Area Development Corporation Limited ............... 7.50 — 7.50 —

2,81,24,794 10 Owens Corning India Limited .................................................... 28.12 — 28.12 —

19,750 5 PSL Erickson Limited .................................................................. 0.01 — 0.01 —

4,98,000 10 Triton Overwater Transport Agency Limited .............................. 0.58 — 0.58 —

Others ........................................................................................ (a) * — * —

*denotes amounts less than Rs. 50,000

92

SCHEDULE V (Contd.)

Investments (At Cost, unless otherwise specified) : Rupees crores

2010 2009

Face Value

Number Per Unit Note Long Term Current Long Term Current

Rupees

(ii) 4% Tax–free Cumulative Preference Shares :

2,296 100 Machinery Manufactures Corporation Limited .......................... (b) 0.02 — 0.02 —

(iii) 11% Redeemable Preference Shares :

1,78,000 100 Sixth Sense Studios Private Limited ........................................... 1.78 — 1.78 —

(iv) 10% Non–Cumulative Redeemable Participating Preference Shares :

5,40,000 100 Mahindra Construction Company Limited ................................. 5.40 — 5.40 —

(v) 8% Non–Cumulative Redeemable Preferred Stock :

23,00,423 Prana Holdings Inc. USA ........................................................... 13.83 — 13.83 —

61.76 — 61.76 —

Quoted :

(a) In Subsidiary Companies :

(i) Equity Shares :

2,08,46,126 10 Mahindra Lifespace Developers Limited .................................... 276.95 — 276.95 —

5,82,41,532 10 Mahindra & Mahindra Financial Services Limited ...................... 150.91 — 150.91 —

— 10 Tech Mahindra Limited (transferred to Quoted Non Subsidiary) — — 191.81 —

4,45,26,339 10 Mahindra Forgings Limited ........................................................ (b)(c)(17) 795.25 — 754.14 —

1,64,66,789 10 Mahindra Ugine Steel Company Limited ................................... 49.26 — 49.26 —

6,99,85,642 10 Mahindra Holidays & Resorts India Limited (transferred from

Unquoted Subsidiary) ................................................................ (b) 28.86 — — —

1,301.23 — 1,423.07 —

(b) In Other Companies :

(i) Equity Shares :

41,26,417 10 Swaraj Engines Limited .............................................................. 1.63 — 1.63 —

10,59,543 10 Swaraj Automotives Limited ...................................................... 12.45 — 12.45 —

13,41,203 10 Mahindra Composites Limited ................................................... 2.90 — 2.90 —

25 100 Jardine Henderson Limited ........................................................ * — * —

2,85,440 10 IDBI Bank Limited ...................................................................... 2.28 — 2.28 —

900 10 Power Trading Corporation of India Limited ............................. — * — *

5,37,76,252 10 Tech Mahindra Limited (transferred from Quoted Subsidiary) .. 191.81 — — —

211.07 * 19.26 *

Shares : (Trade & fully paid-up unless otherwise specified) :

Unquoted Others :

(i) Equity Shares :

19,45,867 10 Wardha Power Company Limited [19,45,867 Class ‘A’ shares partly

paid-up Re.1 per share] ...................................................................... (c)(18) 0.19 — — —

(ii) 0.01% Class ‘A‘ Redeemable Preference Shares :

24,54,133 10 Wardha Power Company Limited ....................................................... (c)(18) 2.45 — — —

2.64 — — —

Debentures/Bonds : (Non-trade & fully paid-up) :

Unquoted :

(a) In Subsidiary Companies :

25,00,000 100 2.00% Mahindra Holdings Limited ..................................................... 25.00 — 25.00 —

(b) In Other Companies :

13 100 0.50% The East India Clinic Limited ................................................... * — * —

25.00 — 25.00 —

* denotes amounts less than Rs. 50,000

93

MAHINDRA & MAHINDRA LIMITED

Quoted :

(a) In Subsidiary Companies :

— 10,00,000 7.50% Mahindra & Mahindra Financial Services Limited ................... (d)(1) — — — 20.22

250 10,00,000 8.50% Mahindra & Mahindra Financial Services Limited ................... (d)(2) — 25.00 — —

(b) In Other Companies :

18 10,00,000 7.00% Power Finance Corporation Limited (2011) Series XXII ........... — 1.80 — 1.80

— 10,00,000 7.99% Infrastructure Development Finance Company Limited ........... (d)(3) — — — 15.00

2,085 1,00,000 6.85% India Infrastructure Finance Company Limited ........................ (d)(4) — 20.95 — —

50 10,00,000 7.75% Rural Electrification Corporation Limited ................................. (d)(5) — 5.00 — —

500 1,00,000 6.70% Indian Railway Finance Corporation Limited ........................... (d)(6) — 5.00 — —

1,000 1,00,000 6.00% Indian Railway Finance Corporation Limited ........................... (d)(7) — 10.00 — —

1,000 1,00,000 6.30% Indian Railway Finance Corporation Limited ........................... (d)(8) — 10.00 — —

— 77.75 — 37.02

25.00 77.75 25.00 37.02

Less : Excess of cost over fair value of current investments of Debentures/

Bonds ................................................................................................. — — — (0.35)

25.00 77.75 25.00 36.67

Other Investments :

Trust Securities :

Unquoted :

— Sunrise Initiatives Trust ................................................................................. 88.37 — 51.33 —

— M & M Benefit Trust .................................................................................... 1,459.77 — 1,459.77 —

— Mahindra World Motor Driving School Trust ............................................... 0.01 — 0.01 —

— M & M Fractional Entitlement Trust ............................................................. 0.01 — 0.01 —

1,548.16 — 1,511.12 —

Government Securities :

Unquoted :

— 26,000^ 6 Years National Savings Certificates ........................................................... (e)(1) * — * —

1,548.16 — 1,511.12 —

Quoted :

— 1,92,70,000^ Government of India Securities .................................................................... (e)(2) — 1.91 — 1.91

— 1.91 — 1.91

1,548.16 1.91 1,511.12 1.91

Less : Excess of cost over fair value of current investments of Government

Securities ........................................................................................... — * — —

1,548.16 1.91 1,511.12 1.91

^ Total Face Value

Units :

Unquoted :

1,56,55,599 10 Birla Sun Life Mutual Fund - Saving Fund Institutional Daily Dividend ....... (f)(2) — 15.67 — 34.84

— 10 Birla Sun Life Mutual Fund - FTP Institutional Series AV Dividend .............. (f)(3) — — — 5.00

— 10 Birla Sun Life Mutual Fund - FTP Institutional Series AK Dividend .............. (f)(4) — — — 10.00

50,17,665 10 Birla Sun Life Mutual Fund - Dynamic Bond Fund Retail Plan Monthly

Dividend ....................................................................................................... (f)(5) — 5.24 — —

1,00,00,271 10 Birla Sun Life Mutual Fund - BSL Floating Rate Fund Long Term

Institutional Weekly Dividend ....................................................................... (f)(6) — 10.02 — —

46,93,285 10 Canara Robeco Mutual Fund - Liquid Super Institutional Daily Dividend

Reinvestment Fund ....................................................................................... (f)(7) — 4.71 — —

SCHEDULE V (Contd.)

Investments (At Cost, unless otherwise specified) : Rupees crores

2010 2009

Face Value

Number Per Unit Note Long Term Current Long Term Current

Rupees

* denotes amounts less than Rs. 50,000

94

1,64,32,073 10 Canara Robeco Mutual Fund - Treasury Advantage Super Institutional

Daily Dividend Reinvestment ........................................................................ (f)(8) — 20.39 — —

— 10 L & T Mutual Fund - Freedom Income STP Institutional Daily Dividend

Reinvestment Plan (formerly known as DBS Chola Mutual Fund) ............... (f)(10) — — — 24.14

7,03,46,691 10 Deutsche Mutual Fund - Ultra Short Term Fund Institutional Daily

Dividend ....................................................................................................... (f)(12) — 70.47 — 50.30

49,94,768 10 Deutsche Mutual Fund - Short Maturity Fund Institutional Weekly

Dividend Plan ............................................................................................... (f)(13) — 5.22 — —

2,52,409 1,000 DSP Black Rock Mutual Fund - Floating Rate Fund Institutional Plan Daily

Dividend ....................................................................................................... (f)(15) — 25.26 — —

— 10 Fortis Mutual Fund - Money Plus Institutional Plan Daily Dividend ............. (f)(17) — — — 50.31

— 10 Fidelity Mutual Fund - Ultra Short Term Debt Fund Institutional Daily

Dividend .................................................................................................. (f)(19) — — — 5.08

1,71,51,007 10 Fidelity Mutual Fund - Ultra Short Term Debt Fund Super Institutional

Daily Dividend .............................................................................................. (f)(20) — 17.16 — 20.08

— 1,000 Franklin Templeton Mutual Fund - India Treasury Management Account

Super Institutional Plan Daily Dividend ........................................................ (f)(21) — — — 10.00

— 10 Franklin Templeton Mutual Fund - India Ultra Short Bond Fund Super

Institutional Plan Daily Dividend .................................................................. (f)(22) — — — 30.57

— 10 Franklin Templeton Mutual Fund - Fixed Horizon Fund Series VII Plan A

Institutional Growth ..................................................................................... (f)(24) — — — 14.07

2,35,04,193 10 HDFC Mutual Fund - Cash Management Fund Savings Plan Daily Dividend

Reinvestment Option .................................................................................... (f)(26) — 25.00 — 34.37

98,27,205 10 HDFC Mutual Fund - Cash Management Fund Treasury Advantage Plan

Wholesale Daily Dividend Reinvestment ....................................................... (f)(27) — 9.86 — 16.14

1,71,51,909 10 HDFC Mutual Fund - Floating Rate Income Fund Short Term Plan

Wholesale Option Dividend Reinvestment ................................................... (f)(28) — 17.29 — —

48,91,694 10 HDFC Mutual Fund - High Interest Fund Short Term Plan Dividend Option (f)(29) — 5.18 — —

— 10 HSBC Mutual Fund - Floating Rate LT Institutional Option Weekly Dividend (f)(32) — — — 36.86

— 10 HSBC Mutual Fund - Fixed Term Series 54 Institutional Dividend Tenure

370 Days ...................................................................................................... (f)(33) — — — 15.92

— 10 IDFC Mutual Fund - Cash Fund Super Institutional Plan C Dividend ........... (f)(34) — — — 50.00

4,02,17,825 10 IDFC Mutual Fund - Money Manager Fund TP Super Institutional Plan C

Daily Dividend .............................................................................................. (f)(35) — 40.22 — —

50,72,403 10 IDFC Mutual Fund - SSIF Short Term Plan B Fortnightly Dividend ............... (f)(36) — 5.10 — —

1,02,10,779 10 IDFC Mutual Fund - Money Manager Fund Investment Plan B Daily

Dividend .................................................................................................. (f)(37) — 10.23 — —

— 10 JM Financial Mutual Fund - Money Manager Fund Super Plus Plan Daily

Dividend ....................................................................................................... (f)(38) — — — 25.06

59,51,879 10 JM Financial Mutual Fund - High Liquidity Fund Super Institutional

Plan Daily Dividend ...................................................................................... (f)(39) — 5.96 — —

20,00,000 10 J P Morgan Mutual Fund - India Short Term Income Fund Weekly

Dividend Reinvestment ................................................................................. (f)(41) — 2.00 — —

— 10 Kotak Mahindra Mutual Fund - Liquid Institutional Premium Daily Dividend (f)(43) — — — 14.55

4,10,11,250 10 Kotak Mahindra Mutual Fund - Floater Long Term Daily Dividend ............. (f)(44) — 41.34 — 30.39

— 10 Kotak Mahindra Mutual Fund - FMP 14M Series 3 Institutional Dividend .. (f)(45) — — — 10.74

— 10 Kotak Mahindra Mutual Fund - FMP 15M Series 5 Institutional Dividend .. (f)(46) — — — 5.29

50,00,000 10 Kotak Mahindra Mutual Fund - Quarterly Interval Plan Series 2 Dividend .. (f)(47) — 5.00 — —

— 10 LIC Mutual Fund - Income Plus Fund Daily Dividend Plan ........................... (f)(48) — — — 50.27

— 10 LIC Mutual Fund - Fixed Maturity Plan - Series 43 (13 Months) ................. (f)(49) — — — 10.00

7,43,91,791 10 LIC Mutual Fund - Savings Plus Fund Daily Dividend Plan .......................... (f)(51) — 74.39 — —

1,82,48,723 10 Principal Mutual Fund - Cash Management Fund Liquid Option

Institutional Premium Plan Dividend Reinvestment Daily ............................. (f)(52) — 18.25 — 50.00

1,12,48,555 10 Principal Mutual Fund - Floating Rate Fund FMP Institutional Option

Dividend Reinvestment Daily ........................................................................ (f)(53) — 11.26 — —

25,09,445 10 Prudential ICICI Mutual Fund - Institutional Liquid Plan Super Institutional

Daily Dividend .............................................................................................. (f)(54) — 25.10 — 20.00

— 10 Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend (f)(55) — — — 30.46

SCHEDULE V (Contd.)

Investments (At Cost, unless otherwise specified) : Rupees crores

2010 2009

Face Value

Number Per Unit Note Long Term Current Long Term Current

Rupees

95

MAHINDRA & MAHINDRA LIMITED

SCHEDULE V (Contd.)

Investments (At Cost, unless otherwise specified) : Rupees crores

2010 2009

Face Value

Number Per Unit Note Long Term Current Long Term Current

Rupees

17,34,030 100 Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily

Dividend .................................................................................................. (f)(56) — 18.33 — —

42,73,736 10 Prudential ICICI Mutual Fund - Institutional Short Term Plan Dividend

Reinvestment Fortnightly .............................................................................. (f)(57) — 5.18 — —

2,01,73,102 10 Prudential ICICI Mutual Fund - Ultra Short Term Plan Super Premium

Daily Dividend Reinvestment ........................................................................ (f)(58) — 20.22 — —

— 10 Religare Mutual Fund - Liquid Fund Super Institutional Daily Dividend ...... (f)(59) — — — 5.50

2,59,57,208 10 Religare Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend (f)(60) — 26.00 — 19.62

5,97,00,423 10 SBI Mutual Fund - Magnum Insta Cash Fund Daily Dividend Option ......... (f)(61) — 100.00 — 25.02

2,30,86,148 10 SBI Mutual Fund - Ultra Short Term Fund Institutional Plan Daily Dividend (f)(62) — 23.10 — —

— 10 Sundaram Mutual Fund - Money Fund Super Institutional Daily Dividend . (f)(64) — — — 25.09

6,41,95,532 10 Tata Mutual Fund - Floater Fund Daily Dividend ......................................... (f)(65) — 64.43 — 20.23

— 1,000 Tata Mutual Fund - Liquid Super High Investment Fund Daily Dividend ..... (f)(66) — — — 30.00

1,13,292 1,000 UTI Mutual Fund - Treasury Advantage Fund Institutional Plan Daily

Dividend Option Reinvestment ..................................................................... (f)(67) — 11.33 — 50.60

3,18,422 1,000 UTI Mutual Fund - Money Market Fund Daily Dividend Option

Reinvestment ................................................................................................ (f)(68) — 31.95 — —

2,74,181 1,000 UTI Mutual Fund - Floating Rate Fund Short Term Plan Institutional

Daily Dividend Plan ...................................................................................... (f)(69) — 27.44 — —

50,00,000 10 UTI Mutual Fund - Fixed Income Interval Fund Quarterly Interval Plan

Series I Institutional Dividend Plan Reinvestment ........................................ (f)(70) — 5.00 — —

1,00,00,000 10 UTI Mutual Fund - Fixed Income Interval Fund Monthly Interval Plan II

Institutional Dividend Plan ........................................................................... (f)(71) — 10.00 — —

— 813.30 — 830.50

Less : Excess of cost over fair value of current investments of Mutual

Fund Units — (0.09) — —

— 813.21 — 830.50

Certificate of Deposits :

Unquoted :

25,00,00,000 ^ State Bank of Travancore ........................................................................ (g)(1) — 24.82 — —

25,00,00,000 ^ Central Bank of India .............................................................................. (g)(2) — 24.81 — —

25,00,00,000 ^ State Bank of Hyderabad ........................................................................ (g)(3) — 24.82 — —

70,00,00,000 ^ State Bank of Mysore .............................................................................. (g)(4) — 69.50 — —

— 143.95 — —

^ Total Face Value

5,361.20 1,036.82 4,917.33 869.08

Total ........... 6,398.02 5,786.41

Cost (net of amounts written off) of Unquoted Investments .................... 4,806.15 4,305.50

Cost of Quoted Investments ...................................................................... 1,591.96 1,481.26

6,398.11 5,786.76

Less : Excess of cost over fair value of Current Investments (Net) ............ (0.09) (0.35)

6,398.02 5,786.41

Market Value of Quoted Investments ........................................................ 12,216.75 3,218.81

Notes:

Face Value

Per Unit Long Term Long Term

Number Rupees Rupees Rupees

(a) Shares (unquoted) in other companies :

21 100 # The United Spices Importers Limited (Equity “B” Shares) ................... 1 1

74 16,667 # Engineering & Metal Works, Tehran ................................................... 1 1

(Rials)

Total ........... 2 2

# Written off to Re. 1

(b) Equity investments in these companies carry certain restrictions on transfer of shares in terms of funds raised by these companies

from financial institutions/banks/or in terms of SEBI IPO for listing agreements.

96

SCHEDULE V (Contd.)

Investments (At Cost, unless otherwise specified) :

(c) The following are the movements in Shares during the year :

Equity Shares Preference Share Warrants

Shares

Acquired Sold Acquired/ Acquired Sold/

(Redeemed/ Converted

Sold)

Nos. Nos. Nos. Nos. Nos.

(1) Mahindra Steel Service Centre Limited .................................................. — 37,23,874 — — —

(2) Mahindra USA Inc ................................................................................. 4,50,00,000@ — — — —

(3) Mahindra Logisoft Business Solutions Limited ....................................... — 63,49,500 — — —

(4) Mahindra & Mahindra South Africa (Proprietary) Limited ..................... 1,84,30,000 — — — —

(5) Mahindra Overseas Investment Company (Mauritius) Limited .............. 1,40,25,000 — — — —

(6) Mahindra Gears & Transmissions Private Limited .................................. — 35,26,094 — — —

(7) Mahindra Navistar Automotives Limited ................................................ 4,36,91,700 — — — —

(8) Mahindra Vehicle Manufacturers Limited .............................................. 10,00,00,000 — — — —

(9) Mahindra Castings Limited………………………………………............... 49,52,450@ — — — —

(10) Mahindra Navistar Engines Private Limited ............................................ 6,29,85,000@ — — — —

(11) Mahindra Aerospace Private Limited ..................................................... 1,05,00,000 — — — —

(12) Mahindra First Choice Services Limited ................................................. 53,00,000 — — — —

(13) Mahindra Holidays & Resorts India Limited ........................................... — 33,69,191 — — —

(14) Defence Land Systems India Private Limited .......................................... 68,82,150 — — — —

(15) Defence Land Systems India Private Limited .......................................... 2,73,79,850# — — — —

(16) Mahindra EcoNova Private Limited ........................................................ 10,000 — — — —

(17) Mahindra Forgings Limited .................................................................... 30,00,000$ — — 72,99,270 30,00,000

(18) Wardha Power Company Limited .......................................................... 19,45,867 — 24,54,133 — —

@ Subscribed to on rights basis.

# Consideration other than Cash.

$ Conversion of warrants into Equity.

(d) The following are the movements in Debentures/Bonds during the year :

Acquired Sold Matured

Nos. Rs. Crores Nos. Nos.

(1) Mahindra & Mahindra Financial Services Limited .................................. 7.50% — — — 200

(2) Mahindra & Mahindra Financial Services Limited .................................. 8.50% 250 25.00 — —

(3) Infrastructure Development Finance Company Limited ......................... 7.99% — — — 150

(4) India Infrastructure Finance Company Limited ...................................... 6.85% 2,085 20.95 — —

(5) Rural Electrification Corporation Limited ............................................... 7.75% 50 5.00 — —

(6) Indian Railway Finance Corporation Limited ......................................... 6.70% 500 5.00 — —

(7) Indian Railway Finance Corporation Limited ......................................... 6.00% 1,000 10.00 — —

(8) Indian Railway Finance Corporation Limited ......................................... 6.30% 1,000 10.00 — —

(e) Government Securities :

(1) Face value of Rs. * crores (2009 : Rs. * crores) were lodged as security deposit.

(2) Treasury Bills of the face value of Rs. 25.00 Crores (2009 : Nil) were purchased and of the face value of Rs. 25.00 Crores (2009 : Nil) sold during the year.

(f) The following are the movements in Units during the year :

Acquired Sold

Nos. Rs. Crores Nos.

(1) Birla Sun Life Mutual Fund - Cash Plus Institutional Premium Daily Dividend ............................ 98,86,38,498 990.57 98,86,38,498

(2) Birla Sun Life Mutual Fund - Saving Fund Institutional Daily Dividend ....................................... 46,72,55,635 467.57 48,64,19,235

(3) Birla Sun Life Mutual Fund - FTP Institutional Series AV Dividend .............................................. 3,83,424 0.38 53,83,424

(4) Birla Sun Life Mutual Fund - FTP Institutional Series AK Dividend .............................................. 9,06,852 0.91 1,09,06,852

* denotes amount less than Rs. 50,000

97

MAHINDRA & MAHINDRA LIMITED

SCHEDULE V (Contd.)

Investments (At Cost, unless otherwise specified) :

(f) The following are the movements in Units during the year :

Acquired Sold

Nos. Rs. Crores Nos.

(5) Birla Sun Life Mutual Fund - Dynamic Bond Fund Retail Plan Monthly Dividend ....................... 50,17,665 5.24 —

(6) Birla Sun Life Mutual Fund - BSL Floating Rate Fund Long Term Institutional Weekly Dividend ... 1,00,00,271 10.02 —

(7) Canara Robeco Mutual Fund - Liquid Super Institutional Daily Dividend Reinvestment Fund .... 32,90,50,995 330.40 32,43,57,710

(8) Canara Robeco Mutual Fund - Treasury Advantage Super Institutional Daily Dividend

Reinvestment ................................................................................................................................ 5,99,76,723 74.41 4,35,44,650

(9) L & T Mutual Fund - Liquid Institutional Daily Dividend Reinvestment Plan ............................... 5,13,79,110 51.96 5,13,79,110

(10) L & T Mutual Fund - Freedom Income STP Institutional Daily Dividend Reinvestment Plan ....... 2,65,51,053 26.96 5,03,22,742

(11) Deutsche Mutual Fund - Insta Cash Plus Fund Super Institutional Plan Daily Dividend .............. 93,80,71,958 940.92 93,80,71,958

(12) Deutsche Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend ............................. 37,56,06,173 376.28 35,54,87,714

(13) Deutsche Mutual Fund - Short Maturity Fund Institutional Weekly Dividend Plan ..................... 49,94,768 5.22 —

(14) DSP Black Rock Mutual Fund - Cash Plus Institutional Daily Dividend ........................................ 99,998 10.00 99,998

(15) DSP Black Rock Mutual Fund - Floating Rate Fund Institutional Plan Daily Dividend ................. 2,52,409 25.26 —

(16) DSP Black Rock Mutual Fund - Liquidity Fund Institutional Daily Dividend ................................. 2,65,051 26.51 2,65,051

(17) Fortis Mutual Fund - Money Plus Institutional Plan Daily Dividend ............................................. 22,10,423 2.21 5,25,01,773

(18) Fidelity Mutual Fund - Cash Fund Super Institutional Daily Dividend ......................................... 18,19,29,043 183.20 18,19,29,043

(19) Fidelity Mutual Fund - Ultra Short Term Debt Fund Institutional Daily Dividend ........................ 48,260 0.05 51,23,218

(20) Fidelity Mutual Fund - Ultra Short Term Debt Fund Super Institutional Daily Dividend .............. 5,26,24,997 52.64 5,55,44,365

(21) Franklin Templeton Mutual Fund - India Treasury Management Account Super Institutional

Plan Daily Dividend ...................................................................................................................... 78,46,296 785.16 79,46,229

(22) Franklin Templeton Mutual Fund - India Ultra Short Bond Fund Super Institutional Plan Daily

Dividend ....................................................................................................................................... 30,03,38,162 300.69 33,08,74,759

(23) Franklin Templeton Mutual Fund - Ultra Short Bond Fund Institutional Plan Dividend .............. 4,50,48,136 45.10 4,50,48,136

(24) Franklin Templeton Mutual Fund - Fixed Horizon Fund Series VII Plan A Institutional Growth .. — — 1,40,65,033

(25) Franklin Templeton Mutual Fund - Ultra Short Bond Fund Retail Plan Daily Dividend ............... 5,01,841 0.50 5,01,841

(26) HDFC Mutual Fund - Cash Management Fund Savings Plan Daily Dividend Reinvestment

Option .......................................................................................................................................... 99,47,05,915 1,058.01 1,00,35,16,030

(27) HDFC Mutual Fund - Cash Management Fund Treasury Advantage Plan Wholesale Daily

Dividend Reinvestment ................................................................................................................. 16,47,54,932 165.27 17,10,17,674

(28) HDFC Mutual Fund - Floating Rate Income Fund Short Term Plan Wholesale Option Dividend

Reinvestment ................................................................................................................................ 32,15,39,414 324.14 30,43,87,505

(29) HDFC Mutual Fund - High Interest Fund Short Term Plan Dividend Option ............................... 48,91,694 5.18 —

(30) HDFC Mutual Fund - Liquid Fund Premium Plan Dividend Daily Reinvestment .......................... 14,79,83,470 181.42 14,79,83,470

(31) HSBC Mutual Fund - Cash Fund Institutional Plus Daily Dividend ............................................... 7,45,93,214 74.63 7,45,93,214

(32) HSBC Mutual Fund - Floating Rate LT Institutional Option Weekly Dividend .............................. 59,70,113 6.71 3,87,72,145

(33) HSBC Mutual Fund - Fixed Term Series 54 Institutional Dividend Tenure 370 Days ................... 3,87,722 0.39 1,63,12,060

(34) IDFC Mutual Fund - Cash Fund Super Institutional Plan C Dividend ........................................... 1,01,19,55,742 1,012.21 1,06,19,40,859

(35) IDFC Mutual Fund - Money Manager Fund TP Super Institutional Plan C Daily Dividend .......... 27,71,82,280 277.22 23,69,64,455

(36) IDFC Mutual Fund - SSIF Short Term Plan B Fortnightly Dividend ............................................... 50,72,403 5.10 —

(37) IDFC Mutual Fund - Money Manager Fund Investment Plan B Daily Dividend ........................... 1,02,10,779 10.23 —

(38) JM Financial Mutual Fund - Money Manager Fund Super Plus Plan Daily Dividend ................... 1,66,16,605 16.63 4,16,63,221

(39) JM Financial Mutual Fund - High Liquidity Fund Super Institutional Plan Daily Dividend .......... 3,09,12,096 30.96 2,49,60,217

(40) J P Morgan Mutual Fund - India Liquid Fund Super Institutional Daily Dividend Plan ............... 13,73,58,303 137.47 13,73,58,303

(41) J P Morgan Mutual Fund - India Short Term Income Fund Weekly Dividend Reinvestment ....... 20,00,000 2.00 —

(42) J P Morgan Mutual Fund - Treasury Fund Super Institutional Daily Dividend Plan ..................... 4,96,13,661 49.66 4,96,13,661

(43) Kotak Mahindra Mutual Fund - Liquid Institutional Premium Daily Dividend ............................. 16,69,77,801 204.18 17,88,76,624

(44) Kotak Mahindra Mutual Fund - Floater Long Term Daily Dividend ............................................. 13,38,82,000 134.95 12,30,18,314

(45) Kotak Mahindra Mutual Fund - FMP 14M Series 3 Institutional Dividend .................................. 1,55,811 0.16 1,08,94,130

(46) Kotak Mahindra Mutual Fund - FMP 15M Series 5 Institutional Dividend .................................. 2,01,410 0.20 54,86,600

(47) Kotak Mahindra Mutual Fund - Quarterly Interval Plan Series 2 Dividend .................................. 50,00,000 5.00 —

(48) LIC Mutual Fund - Income Plus Fund Daily Dividend Plan .......................................................... 7,16,37,026 71.64 12,19,06,783

(49) LIC Mutual Fund - Fixed Maturity Plan Series - 43 (13 Months) ................................................. 9,88,586 0.99 1,09,88,586

(50) LIC Mutual Fund - Liquid Fund Dividend Plan ............................................................................. 21,71,36,309 238.42 21,71,36,309

98

(51) LIC Mutual Fund - Savings Plus Fund Daily Dividend Plan .......................................................... 19,42,93,108 194.29 11,99,01,317

(52) Principal Mutual Fund - Cash Management Fund Liquid Option Institutional Premium Plan

Dividend Reinvestment Daily ........................................................................................................ 2,74,35,98,984 2,743.79 2,77,53,46,761

(53) Principal Mutual Fund - Floating Rate Fund FMP Institutional Option Dividend Reinvestment

Daily ............................................................................................................................................. 62,37,68,587 624.54 61,25,20,032

(54) Prudential ICICI Mutual Fund - Institutional Liquid Plan Super Institutional Daily Dividend ....... 25,34,30,386 818.26 27,09,19,941

(55) Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend ........................... 16,56,33,324 175.13 19,44,37,457

(56) Prudential ICICI Mutual Fund - Flexible Income Plan Premium Daily Dividend ........................... 2,77,42,447 293.35 2,60,08,417

(57) Prudential ICICI Mutual Fund - Institutional Short Term Plan Dividend Reinvestment Fortnightly 42,73,736 5.18 —

(58) Prudential ICICI Mutual Fund - Ultra Short Term Plan Super Premium Daily Dividend

Reinvestment ................................................................................................................................ 2,01,73,102 20.22 —

(59) Religare Mutual Fund - Liquid Fund Super Institutional Daily Dividend ...................................... 7,07,46,709 70.79 7,62,46,961

(60) Religare Mutual Fund - Ultra Short Term Fund Institutional Daily Dividend ............................... 1,33,53,027 13.37 69,89,028

(61) SBI Mutual Fund - Magnum Insta Cash Fund Daily Dividend Option ......................................... 70,66,03,282 1,183.58 66,18,40,622

(62) SBI Mutual Fund - Ultra Short Term Fund Institutional Plan Daily Dividend ............................... 13,02,72,046 130.35 10,71,85,898

(63) Sundaram Mutual Fund - Liquid Plus Super Institutional Dividend Reinvestment Daily .............. 22,26,24,551 223.45 22,26,24,551

(64) Sundaram Mutual Fund - Money Fund Super Institutional Daily Dividend ................................. 1,04,38,43,608 1,053.79 1,06,86,95,339

(65) Tata Mutual Fund - Floater Fund Daily Dividend ......................................................................... 39,45,46,624 395.95 35,05,04,484

(66) Tata Mutual Fund - Liquid Super High Investment Fund Daily Dividend ..................................... 50,75,789 565.71 53,44,963

(67) UTI Mutual Fund - Treasury Advantage Fund Institutional Plan Daily Dividend Option

Reinvestment ................................................................................................................................ 23,36,801 233.73 27,29,416

(68) UTI Mutual Fund - Money Market Fund Daily Dividend Option Reinvestment ........................... 57,10,120 572.76 53,91,698

(69) UTI Mutual Fund - Floating Rate Fund Short Term Plan Institutional Daily Dividend Plan………… 11,23,526 112.44 8,49,345

(70) UTI Mutual Fund - Fixed Income Interval Fund Quarterly Interval Plan Series I Institutional

Dividend Plan Reinvestment ......................................................................................................... 50,00,000 5.00 —

(71) UTI Mutual Fund - Fixed Income Interval Fund Monthly Interval Plan II Institutional Dividend

Plan .............................................................................................................................................. 1,00,00,000 10.00 —

(72) UTI Mutual Fund - Liquid Cash Plan Institutional Daily Income Option ...................................... 10,14,986 103.47 10,14,986

(73) UTI Mutual Fund - Money Market Fund Daily Dividend Option ................................................. 5,70,22,369 87.85 5,70,22,369

(g) The following are the movements in Certificate of Deposits during the year :

Acquired Sold Matured

Face Value Total Value Face Value Face Value

Rs. Crores Rs. Crores Rs. Crores Rs. Crores

(1) State Bank of Travancore ....................................................................... 25.00 24.82 — —

(2) Central Bank of India ............................................................................. 25.00 24.81 — —

(3) State Bank of Hyderabad ....................................................................... 25.00 24.82 — —

(4) State Bank of Mysore ............................................................................ 70.00 69.50 — —

(5) State Bank of Patiala .............................................................................. 10.00 9.99 — 10.00

SCHEDULE V (Contd.)

Investments (At Cost, unless otherwise specified) :

(f) The following are the movements in Units during the year :

Acquired Sold

Nos. Rs. Crores Nos.

99

MAHINDRA & MAHINDRA LIMITED

SCHEDULE VI Rupees crores

2010 2009

Current Assets, Loans and Advances :

(A) Inventories (at cost or net realisable value whichever is lower) :

(i) Finished Products produced and purchased for sale ........................... 491.38 471.81

(ii) Contracts and Work-in-Progress ........................................................... 75.03 88.87

(iii) Manufactured Components ................................................................. 73.89 55.93

(iv) Raw Materials and Bought-out Components ....................................... 494.50 391.01

(v) Property Development Activity - Work-in-Progress

[including completed flats and premises Rs. 6.32 crores

(2009 : Rs. 6.32 crores)] ...................................................................... 6.32 6.32

(vi) Stores and Spares ................................................................................. 23.47 23.56

(vii) Tools ..................................................................................................... 24.19 23.17

1,188.78 1,060.67

(B) Sundry Debtors (Unsecured) :

Outstanding over six months : Considered good ........................................ 101.42 125.74

: Considered doubtful ................................... 113.25 72.12

214.67 197.86

Other Debts : Considered good ........................................ 1,156.66 917.91

: Considered doubtful ................................... — —

1,156.66 917.91

1,371.33 1,115.77

Less : Provision for Doubtful Debts ............................................................. 113.25 72.12

1,258.08 1,043.65

-(C) Cash and Bank Balances :

Cash, cheques and stamps on hand ........................................................... 221.17 354.39

Balances with Scheduled Banks :

(i) On Current Account ............................................................................. 242.47 275.65

(ii) On Fixed Deposit Account @ ............................................................... 1,268.06 938.73

(iii) On Margin Account ............................................................................. * 0.09

1,510.53 1,214.47

@ [includes balance of unutilised monies raised by issue : Rs. 48.46

crores (2009 : Rs. 53.95 crores)]

Balances with Non-Scheduled Banks [Note 6] :

On Current Account .................................................................................... 11.53 5.57

1,743.23 1,574.43

(D) Other Current Assets :

Interest accrued on Investments .................................................................. 3.38 1.42

Others .......................................................................................................... 47.49 0.14

50.87 1.56

(E) Loans and Advances [Note 7] :

(Unsecured, considered good unless otherwise stated) :

Advances and Loans to subsidiaries :

Considered good ......................................................................................... 561.63 402.93

Considered doubtful .................................................................................... 5.99 24.99

567.62 427.92

Less : Provision for Doubtful Advances and Loans ...................................... 5.99 24.99

- 561.63 402.93

-497Bills of exchange, considered doubtful ....................................................... 1.02 1.02

Less : Provision for Doubtful bills ................................................................ 1.02 1.02

— —

Advances recoverable in cash or in kind or for value to be received :

Considered good ......................................................................................... 946.70 757.11

Considered doubtful .................................................................................... 57.86 48.64

1,004.56 805.75

Less : Provision for Doubtful Advances ....................................................... 57.86 48.64

- 946.70 757.11

Payments towards Income-tax and Surtax [Note 18(d)] .............................. 292.04 221.67

Balances - Customs, Port Trust, Excise, etc. ................................................. 1.06 0.91

1,801.43 1,382.62

Total..... 6,042.39 5,062.93

* denotes amounts less than Rs. 50,000

100

C M Y K

SCHEDULE VII Rupees crores

2010 2009

Current Liabilities and Provisions :

(A) Current Liabilities # :

Acceptances 107.25 106.26

Sundry Creditors :

(i) Total outstanding dues of micro and small enterprises [Note 8]... 5.99 5.99

(ii) Total outstanding dues of creditors other than micro and small

enterprises [including Rs. 209.21 crores (2009 : Rs. 162.51 crores)

being advance payments for which value has still to be given]….. 3,080.85 3,206.19

(iii) Dues to Subsidiaries ........................................................................ 173.25 124.62

3,260.09 3,336.80

Dividend payable ............................................................................. 6.89 6.19

Balances on Directors’ Current Accounts ........................................ 3.10 2.21

Interest accrued but not due on loans ........................................... 22.67 68.74

3,400.00 3,520.20

# There are no amounts due and outstanding to be credited tothe Investor Education and Protection Fund.

(B) Provisions :

Proposed Dividend.................................................................................. 549.52 278.83

Provision for Tax on Proposed Dividend ................................................. 74.23 33.23

Provision for diminution in value of long term investments .................. 266.43 201.02

Proision for premium payable on redemption of convertible bonds ...... 238.49 269.51

Provision for compensated absences ...................................................... 274.58 245.76

Provision for taxation ............................................................................. 173.63 81.76

Provision Others [Note 9] ....................................................................... 219.66 167.45

1,796.54 1,277.56

Total………… 5,196.54 4,797.76

SCHEDULE VIII Rupees crores

2010 2009

Miscellaneous Expenditure(to the extent not written off or adjusted) :

(a) Finance Charges ..................................................................................... 4.12 11.69

(b) Separation and Other Costs ................................................................... — 0.86

Total………… 4.12 12.55

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MAHINDRA & MAHINDRA LIMITED

SCHEDULE IX Rupees crores

2010 2009

Income from Operations and Other Income :

(A) Income from Operations :

Income from services rendered .............................................................. 343.83 272.45

Scrap Sales ............................................................................................. 70.14 63.73

Octroi Refund ......................................................................................... 72.49 44.90

Other Operating Income ........................................................................ 77.60 63.54

Total......... 564.06 444.62

(B) Other Income :

Dividends on Investments in subsidiaries - Gross. .................................. 83.29 131.83

Dividends on other Investments - Gross - Non Trade [Note 10(a)] ........ 49.47 46.21

Profit on sale of Investments (Net) [Note 10(b)] .................................... 10.40 53.22

Miscellaneous Income ............................................................................ 56.19 39.08

Total........ 199.35 270.34

SCHEDULE X Rupees crores

2010 2009

Raw Materials, Finished and Semi-Finished Products :

(A) (Increase)/Decrease in Stock of Finished Goods,

Work-in-Progress and Manufactured Components :

Opening Stock :

(i) Finished Products produced and purchased for sale ...................... 471.81 579.43

(ii) Contracts and Work-in-Progress ...................................................... 88.87 53.10

(iii) Manufactured Components ............................................................ 55.93 48.15

616.61 680.68

Add : Stock Taken Over on Amalgamation :

(i) Finished Products produced and purchased for sale ...................... — 80.61

(ii) Contracts and Work-in-Progress ...................................................... — 11.61

— 92.22

Less : Closing Stock :

(i) Finished Products produced and purchased for sale ...................... 491.38 471.81

(ii) Contracts and Work-in-Progress ...................................................... 75.03 88.87

(iii) Manufactured Components ............................................................ 73.89 55.93

640.30 616.61

(Increase)/Decrease in Stock ................................................................... (23.69) 156.29

(B) Consumption of Raw Materials and Bought-out Components :

Opening Stock ........................................................................................ 391.01 351.95

Add : Purchases [including outside processing charges Rs. 281.83

crores (2009 : Rs. 224.06 crores)] ................................................ 11,799.05 8,756.79

12,190.06 9,108.74

Add : Stock Taken Over on Amalgamation ............................................ — 54.06

Less : Closing Stock ................................................................................ 494.50 391.01

11,695.56 8,771.79

(C) Purchases of Finished Products for sale ................................................. 661.05 346.15

Total........ 12,332.92 9,274.23

102

SCHEDULE XI Rupees crores

2010 2009

Personnel :

Salaries, Wages, Bonus, etc. .......................................................................... 988.10 822.36

Contribution to Provident and other funds ................................................... 66.89 58.54

Gratuity ........................................................................................................ 31.31 50.13

Welfare ........................................................................................................ 112.17 93.58

Total........ 1,198.47 1,024.61

SCHEDULE XII Rupees crores

2010 2009

Interest, Commitment and Finance Charges :

On Term Loans and Debentures 148.91 124.60

On Others (Net) 7.94 9.52

156.85 134.12

Less : Interest Income :

(i) Interest on Government Securities, Debentures and Bonds - Gross

[Note 10(c)] 4.68 4.76

(ii) Interest - Others - Gross [Note 10(d)] 124.36 84.10

129.04 88.86

Total........ 27.81 45.26

SCHEDULE XIII Rupees crores

2010 2009

Other Expenses :

Stores consumed 75.27 66.89

Tools consumed 29.68 23.88

Power and Fuel 120.97 98.69

Rent including lease rentals 47.01 49.41

Rates and Taxes 16.53 12.68

Insurance 11.72 11.95

Repairs and Maintenance [Note 11] :

Buildings ................................................................................................. 22.56 17.88

Machinery ............................................................................................... 96.92 75.36

Others ..................................................................................................... 33.10 28.29

152.58 121.53

Advertisement 139.78 96.49

Commission on sales/contracts (Net) 70.54 47.91

Discount allowed 4.80 7.45

Freight outward 269.73 215.47

Sales Promotion Expenses 317.17 208.02

Miscellaneous Expenses [Note 12] 824.88 779.85

Directors’ fees 0.14 0.09

Donations and contributions [Note 27] 9.35 5.97

Loss on Fixed Assets sold/scrapped/written off (Net) 20.83 1.19

Excess of cost over fair value of Current Investments (Net) (0.26) (1.57)

Provision for doubtful debts/advances (Net) [Note 25] 51.02 31.44

Total........ 2,161.74 1,777.34

103

MAHINDRA & MAHINDRA LIMITED

SCHEDULE XIV

Notes on Accounts for the year ended 31st

March, 2010

1. Significant Accounting Policies :

(A) Basis of Accounting :

The financial statements are prepared in accordance with the generally accepted accounting principles in India and comply with the

Accounting Standards notified under sub-section (3C) of Section 211 of the Companies Act, 1956 and the relevant provisions thereof.

(B) Fixed Assets :

(a) (i) Fixed Assets are carried at cost less depreciation except as stated in (ii) below. Cost includes financing cost relating to borrowed

funds attributable to the construction or acquisition of qualifying fixed assets upto the date the assets are ready for use. Where

the acquisition of fixed assets are financed through long term foreign currency loans (having a term of 12 months or more at the

time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets.

When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account

and resultant profit (including capital profit) or loss, if any, is reflected in the Profit and Loss Account.

(ii) Land and Buildings, had been revalued as at 31st

October, 1984 at depreciated replacement values on the basis of a valuation

made by a firm of Chartered Surveyors and Valuers. The indices, if any, used are not stated in the valuation.

(b) (i) Leasehold land is amortised over the period of the lease.

(ii) Depreciation on assets is calculated on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the

Companies Act, 1956, except for :

(1) certain items of Plant and Machinery individually costing more than Rs. 5,000 - over their useful lives (2 years, 3 years, 5

years or 7 years, as the case may be) as determined by the Company.

(2) Cars and Vehicles - at 15% of cost.

(iii) Depreciation charge for each year is after deducting the amount representing the depreciation on the increase due to revaluation

of Land and Buildings, transferred from the Revaluation Reserve.

(C) Intangible Assets :

Intangible Assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits are

consumed.

(a) Technical Knowhow :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year of

purchase of the technology.

(b) Development Expenditure :

The expenditure incurred on technical services and other project/product related expenses are amortised over the estimated period of

benefit, not exceeding five years.

(c) Software Expenditure :

The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure is

incurred.

(D) Investments :

Long term investments are valued at cost. However, provision for diminution in value is made to recognise a decline other than temporary

in the value of investments. Current investments are valued at the lower of cost and fair value, determined by category of investment.

(E) Inventories :

Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and

condition.

Raw materials and bought out components are valued at the lower of cost or net realisable value. Cost is determined on the basis of the

weighted average method.

Finished goods produced and purchased for sale, manufactured components and work-in-progress are carried at cost or net realisable

value whichever is lower. Excise duty is included in the value of finished goods inventory.

Stores, spares and tools other than obsolete and slow moving items are carried at cost. Obsolete and slow moving items are valued at cost

or estimated realisable value, whichever is lower.

Long term contracts in progress are valued at cost.

(F) Miscellaneous Expenditure (to the extent not written off or adjusted) :

Expenditure carried forward under this head is being amortised as follows :

(a) Finance Charges :

The expenditure incurred in raising long term borrowings is amortised over the period of the borrowings. On early buyback,

conversion or repayment of borrowings, any unamortised expenditure is fully written off in that year.

104

(b) Separation and Other Costs :

Special Payments/Pensions under Voluntary Retirement Schemes.

The liability is amortised by the year ended March, 2010 from the month in which the liability is incurred.

(G) Foreign Exchange Transactions :

Transactions in foreign currencies (other than firm commitments and highly probable forecast transactions) are recorded at the exchange

rates prevailing on the date of transaction. Monetary items are translated at the year-end rates. The exchange difference between the rate

prevailing on the date of transaction and on the date of settlement as also on translation of monetary items at the end of the year (other

than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be.

Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of

fixed assets are added to or subtracted from the cost of such fixed assets and the balance accumulated in ‘Foreign Currency Monetary Item

Translation Difference Account’ and amortised over the balance term of the long term monetary item or 31st

March, 2011 whichever is

earlier.

Any premium or discount arising at the inception of a forward exchange contract is recognised as income or expense over the life of the

contract, except in the case where the contract is designated as a cash flow hedge.

(H) Derivative Instruments and Hedge Accounting :

The Company uses foreign currency forward contracts and currency options to hedge its risks associated with foreign currency fluctuations

relating to certain firm commitments and highly probable forecast transactions. The Company does not hold derivative financial instruments

for speculative purposes. The Company has applied to such contracts the hedge accounting principles set out in Accounting Standard 30

‘Financial Instruments : Recognition and Measurement’ (AS 30) by marking them to market.

Changes in the fair value of the contracts that are designated and effective as hedges of future cash flows are recognised directly in

Hedging Reserve Account and the ineffective portion is recognised immediately in the Profit and Loss Account.

(I) Revenue Recognition :

Sales of products and services are recognised when the products are shipped or services rendered including export benefits thereon.

Dividend from investments are recognised in the Profit and Loss Account when the right to receive payment is established.

(J) Government Grants :

The Company is entitled to various incentives from a State Government, such as grants by way of refund of octroi duty paid by the

Company for its manufacturing unit located in a developing region. In view of the uncertainty in respect of the collection of these grants,

such grants are accounted for as and when the disbursements are received.

(K) Employee Benefits :

Defined Contribution Plan/Defined Benefit Plan/Long term Compensated Absences.

Company’s contributions paid/payable during the year to Superannuation Fund, ESIC and Labour Welfare Fund are recognised in the Profit

and Loss Account.

Contributions to Provident Fund are made to a Trust administered by the Company and are charged to Profit and Loss Account as incurred.

The Company is liable for the contribution and any shortfall in interest between the amount of interest realised by the investment and the

interest payable to members at the rate declared by the Government of India.

Company’s liability towards gratuity, long term compensated absences, post retirement medical benefit and post retirement housing

allowance schemes are determined by independent actuaries, using the projected unit credit method. Past services are recognised on a

straight line basis over the average period until the benefits become vested. Actuarial gains and losses are recognised immediately in the

statement of Profit and Loss Account as income or expense. Obligation is measured at the present value of estimated future cash flows

using a discounted rate that is determined by reference to the market yields at the Balance Sheet date on Government Bonds where the

currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(L) Borrowing Costs :

All borrowing costs are charged to the Profit and Loss Account except :

(a) Borrowing costs that are attributable to the acquisition or construction of assets that necessarily take a substantial period of time to

get ready for their intended use, which are capitalised as part of the cost of such assets.

(b) Expenses incurred on raising long term borrowings are amortised over the period of borrowings. On early buyback, conversion or

repayment of borrowings, any unamortised expenditure is fully written off in that year.

(M) Redemption Premium :

Premium payable on redemption of Bonds/Debentures is fully provided and charged to Securities Premium Account (Net of Tax) in the year

of issue.

(N) Product Warranty :

In respect of warranties given by the Company on sale of certain products, the estimated costs of these warranties are accrued at the time

of sale. The estimates for accounting of warranties are reviewed and revisions are made as required.

105

MAHINDRA & MAHINDRA LIMITED

(O) Leases :

The Company’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns,

computer hardware, etc.). The leasing arrangements, which are not non-cancellable, range between eleven months and five years generally,

and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals payable are charged as rent.

(P) Taxes on Income :

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject to

consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in

one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed

depreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidence

that sufficient future tax income will be available against which such deferred tax assets can be realised.

(Q) Excise duty recovered on sales is included in “Sales – Traded and Manufactured Goods”. Excise duty in respect of Finished Goods

manufactured is shown separately as an item of expense and included in valuation of finished goods produced.

2. Share Capital :

Issued and Subscribed Capital include :

(a) 3,33,618 Ordinary (Equity) Shares of Rs. 5 each (2009 : 1,66,809 Ordinary (Equity) Shares of Rs. 10 each) allotted as fully paid-up pursuant

to a contract without payment having been received in cash.

(b) 34,12,15,008 Ordinary (Equity) Shares of Rs. 5 each (2009 : 17,06,07,504 Ordinary (Equity) Shares of Rs. 10 each) allotted as fully paid-up

by way of Bonus Shares by capitalisation of Securities Premium Account and Reserves.

(c) 25,13,124 Ordinary (Equity) Shares of Rs. 5 each (2009 : 12,56,562 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the

Scheme of Amalgamation with the Union Bank of India Limited. Of these, 27,474 Ordinary (Equity) Shares of Rs. 5 each (2009 : 13,737

Ordinary (Equity) Shares of Rs. 10 each) were issued on conversion of 41,211 8% Bonds.

(d) 25,96,404 Ordinary (Equity) Shares of Rs. 5 each (2009 : 12,98,202 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the

Scheme of Amalgamation with International Tractor Company of India Limited without payment having been received in cash.

(e) 3,76,332 Ordinary (Equity) Shares of Rs. 5 each (2009 : 1,88,166 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme

of Amalgamation with Mahindra Spicer Limited without payment having been received in cash.

(f) 19,46,400 Ordinary (Equity) Shares of Rs. 5 each (2009 : 9,73,200 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the

Scheme of Amalgamation with Mahindra Nissan Allwyn Limited without payment having been received in cash.

(g) 2,56,55,104 Ordinary (Equity) Shares of Rs. 5 each (2009 : 1,28,27,552 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the

Scheme of Amalgamation with Mahindra Holdings and Finance Limited without payment having been received in cash.

(h) 4,05,03,800 Ordinary (Equity) Shares of Rs. 5 each (2009 : 2,02,51,900 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the

Scheme of Amalgamation with Punjab Tractors Limited without payment having been received in cash.

3. Reserves and Surplus :

Rupees crores

2010 2009

(a) Movements during the year :

(i) Securities Premium Account :

Additions, arising out of exercise of options ......................................................... 2.07 1.02

Additions, arising out of issue of Ordinary (Equity) Shares to

M&M ESOP Trust .................................................................................................... 71.40 —

Premium on conversion of Debentures and Bonds ................................................ 690.60 —

Reversal of Premium on buyback of Zero Coupon Convertible Bonds

[Net of Tax of Rs. Nil (2009 : Rs. 5.07 crores)] ...................................................... — 9.84

Reduction of provision for premium on redemption of Zero Coupon

Convertible Bonds [Net of Tax of Rs. 10.30 crores (2009 : Rs. Nil)] .................... 20.72 —

784.79 10.86

Applied, in accordance with Section 78 of the Companies Act, 1956, towards :

Writing-off of share and bonds/debenture issue expenses [Net of Tax of

Rs. 0.47 crores (2009 : Rs. 0.54 crores)] ............................................................... 5.88 4.95

Effect of tax rate change on amounts debited to Securities Premium Account .... 0.71 —

Increase of provision for premium on redemption of Zero Coupon Convertible

Bonds [Net of Tax of Rs. Nil (2009 : Rs. 20.20 crores )] ........................................ — 39.25

6.59 44.20

(ii) Revaluation Reserve :

Adjusted against depreciation for the year [Note 1(B)(b)(iii)] ................................ 0.41 0.38

Adjusted in respect of revalued Buildings demolished .......................................... 0.01 —

0.42 0.38

106

(b) The Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India requires

that shares allotted to a trust but not transferred to employees be reduced from Share Capital and Reserves. Accordingly, the Company has

reduced the Share Capital by Rs. 3.63 crores (2009 : Rs. 3.10 crores), Securities Premium Account by Rs. 84.29 crores (2009 : Rs. 15.20

crores) for the 72,63,296 shares of Rs. 5 each (2009 : 31,02,653 shares of Rs. 10 each) held by the trust pending transfer to the eligible

employees.

The Share Capital of the Company has also been reduced and the General Reserve increased by Rs. 2.63 crores (2009 : Rs. 3.10 crores) for

the 52,63,296 bonus shares of Rs. 5 each (2009 : 31,02,653 bonus shares of Rs. 10 each) issued by the Company in September, 2005 to

the trust but not yet transferred by the trust to the employees. The above monies which are treated as advance received from it, is included

under current liabilities.

(c) Consequent to the announcement issued by The Institute of Chartered Accountants of India dated 29th

March, 2008 in respect of forward

exchange contracts and currency and interest rate swaps, the Company has applied the Hedge Accounting principles set out in the

Accounting Standard (AS) 30 ‘Financial Instruments : Recognition and Measurement’. Accordingly, such contracts are marked to market

and the loss aggregating Rs. 0.91 crores (Net of Tax of Rs. 0.45 crores) [2009 : Rs. 434.19 crores (Net of Tax of Rs. 223.57 crores)] arising

consequently on contracts that were designated and effective as hedges of future cash flows has been recognized directly in the Hedging

Reserve Account.

4. Loans :

(a) Debentures are redeemable as follows :

(i) Rs. 200.00 crores on 9th

January, 2011.

(ii) Rs. 400.00 crores in three equal instalments from 12th

December, 2013.

(iii) Rs. 0.01 crores of 12.50% Debentures and Zero Interest Bonds on receipt of balance amount due on allotment.

(b) (i) Debentures of Rs. 600.01 crores are secured by a pari-passu charge on immovable properties of the Company both present and

future, subject to certain exclusions and are also secured by pari-passu charge on the movable properties of the Company including

movable machinery, machinery spares, tools and accessories, both present and future.

(ii) Loans and Advances on cash credit accounts from the Company’s bankers are secured by a first charge on a pari-passu basis on the

whole of the current assets of the Company namely inventories, book debts, outstanding monies, receivables, claims, etc. both

present and future.

(c) The following amounts are repayable/convertible by 31st

March, 2011 :

(i) Debenture holders ...................................................................... : Rs. 200.00 crores (2009 : Rs. 700.00 crores)

(ii) Foreign currency loans from Banks :

(a) Secured ............................................................................... : Rs. Nil (2009 : Rs. 253.70 crores)

(b) Unsecured ........................................................................... : Rs. 175.86 crores (2009 : Rs. 101.48 crores)

(iii) Fixed Deposit holders .................................................................... : Rs. 78.15 crores (2009 : Rs. 4.88 crores)

(iv) Rupee Loans :

(a) from banks ......................................................................... : Rs. Nil (2009 : Rs. 80.00 crores)

(b) from financial institutions .................................................. : Rs. 2.60 crores (2009 : Rs. Nil)

(c) from others ......................................................................... : Rs. 8.08 crores (2009 : Rs. 10.13 crores)

The Company had issued during the year ended 31st

March, 2007, Zero Coupon Foreign Currency Convertible Bonds (Bonds 2011) aggregating

US$ 200 million, at par. The bond holders have an option to convert these bonds into Equity Shares with full voting rights or Global Depository

Receipts (GDRs) determined at an initial conversion price of Rs. 461.02 per share of Rs. 5 each (2009 : Rs. 922.04 per share of Rs. 10 each) with

fixed exchange rate of conversion of Rs. 44.42 = US$ 1, at any time on or after 7th

May, 2006 upto 7th

March, 2011.

The Bonds 2011 may be redeemed, in whole but not in part, at the option of the Company at any time on or after 13th

April, 2008 subject to

satisfaction of certain conditions. Unless previously converted, redeemed or purchased and cancelled, the bonds fall due for redemption on 14th

April, 2011 at 128.03 per cent of their principal amount. Bonds 2011 of the face value of US$ 10.50 million have been bought back and

cancelled in the previous year. Upto 31st

March, 2010, none of the Bonds 2011 have been converted into equity shares/GDRs.

The net proceeds of Rs. 48.46 crores, unutilised as at 31st

March, 2010, is disclosed under Cash and Bank balances.

The Company’s 93,95,974 Unsecured Fully and Compulsorily Convertible Debentures (FCD’s) having face value of Rs. 745 per FCD issued during

the year ended 31st

March, 2009, were compulsorily converted on 27th

January, 2010 into 93,95,974 Ordinary (Equity) Shares of Rs. 10 each

[before sub-division of the Ordinary (Equity) Shares] of the Company at a premium of Rs. 735 per share. Consequent to the conversion the Share

Capital and Securities Premium Account of the Company have increased by Rs. 9.40 crores and Rs. 690.60 crores respectively.

107

MAHINDRA & MAHINDRA LIMITED

5. (a) Buildings include Rs. * crores (2009 : Rs. * crores) being the value of shares in co-operative housing societies.

(b) Additions to fixed assets and capital work-in-progress include :

(i) Interest capitalised during the year Rs. 26.56 crores (2009 : Rs. 15.63 crores).

(ii) Foreign exchange fluctuation capitalised during the year Rs. 117.79 crores credit (Net) [2009 : Rs. 172.97 crores debit (Net)].

(c) (i) The depreciation charge for the year excludes :

(a) An amount of Rs. 0.41 crores (2009 : Rs. 0.38 crores), representing depreciation on the increase due to revaluation of Land and

Buildings transferred from the Revaluation Reserve.

(b) An amount of Rs. 0.01 crores (2009 : Rs. Nil), representing depreciation on revalued buildings demolished during the year.

(ii) The net credit to the Profit and Loss Account consequent to the above adjustments to the Revaluation Reserve is Rs. 0.42 crores

(2009 : Rs. 0.38 crores).

6. Cash and Bank Balances include balances lying with non-scheduled banks :

In Current Account

Rupees crores

Bank Tejarat, Bank of Australia Bank of China The Municipal The Ahmednagar

Tehran Co-op. Bank Ltd. Merchant’s Co-op. Bank Ltd.

Balance as at 31st

March, 2010 ................ * 6.39 * 5.14 *

Balance as at 31st

March, 2009 ................ * 3.34 0.09 2.13 *

Maximum balance during the year ........... * 11.91 0.59 5.68 *

Maximum balance during the previous year * 9.51 1.47 3.23 *

7. Loans and Advances include :

(a) Fixed/Call deposits with/loans to limited companies Rs. 525.72 crores (2009 : Rs. 411.14 crores) including Rs. 519.23 crores (2009 :

Rs. 404.65 crores) with/to subsidiaries.

(b) Amounts paid towards joint development of property Rs. Nil (2009 : Rs.1.54 crores).

8. Micro, Small and Medium enterprises have been identified by the Company on the basis of the information available. Total outstanding dues of

Micro and Small enterprises, which are outstanding for more than the stipulated period are given below :

Rupees crores

2010 2009

(a) Dues remaining unpaid as at 31st

March

Principal .............................................................................................................. 0.89 2.42

Interest on the above ......................................................................................... 0.07 0.05

(b) Interest paid in terms of Section 16 of the Act, along with the amount of

payment made to the supplier beyond the appointed day during the year

Principal paid beyond the appointed date ......................................................... 7.39 18.12

Interest paid in terms of Section 16 of the Act ................................................. — 0.03

(c) Amount of interest due and payable for the period of delay on payments

made beyond the appointed day during the year ............................................. 0.11 0.15

(d) Further interest due and payable even in the succeeding years, until such date

when the interest due as above are actually paid to the small enterprises ....... 0.32 0.13

(e) Amount of interest accrued and remaining unpaid as at 31st

March ............... 0.50 0.32

9. (a) Provision - Others Rs. 219.66 crores (2009 : Rs. 167.45 crores) includes provision for contingencies Rs. 3.58 crores (2009 : Rs. 8.25 crores),

provision for warranty Rs. 179.61 crores (2009 : Rs. 137.45 crores), provision for post retirement medical benefits Rs. 9.65 crores (2009 :

Rs. 4.84 crores), provision for post retirement housing allowance Rs. 10.99 crores (2009 : Rs. Nil) and provision for diminution in value of

certain assets substantially retired from active use Rs. 15.83 crores (2009 : Rs. 16.89 crores). Provision for contingencies is in respect of

labour demands under negotiations at certain locations of the Company. Provision for warranties relates to warranty provision made in

respect of sale of certain products, the estimated cost of which is accrued at the time of sale. The products are generally covered under a

free warranty period ranging from 6 months to 3 years.

* denotes amounts less than Rs. 50,000

108

(b) The movement in provisions for warranty, contingency and retired assets is as follows :

Rupees crores

Warranty Contingency Retired assets

2010 2009 2010 2009 2010 2009

Balance as at 1st

April ................................................... 137.45 106.42 8.25 8.16 16.89 17.01

Add : On Amalgamation during the year ..................... — 0.25 — — — —

Add : Provision made during the year .......................... 105.59 85.05 3.58 5.41 — —

Less : Utilisation during the year ................................... 63.43 54.27 8.25 5.32 1.06 0.12

Balance as at 31st

March ............................................... 179.61 137.45 3.58 8.25 15.83 16.89

10. (a) Dividends on other investments include Rs. 45.56 crores (2009 : Rs. 44.89 crores) in respect of current investments and Rs. 3.91 crores

(2009 : Rs. 1.32 crores) in respect of long term investments.

(b) Profit on sale of investments (Net) includes profit on disposal of current investments (Net) Rs. 1.53 crores (2009 : Rs. 14.73 crores), and

profit on disposal of long term investments (Net) Rs. 8.87 crores (2009 : Rs. 38.49 crores).

(c) Interest on Government Securities, Debentures and Bonds includes tax deducted at source Rs. 0.05 crores (2009 : Rs. 0.11 crores) and

comprise Rs. 0.50 crores (2009 : Rs. 0.50 crores) and Rs. 4.18 crores (2009 : Rs. 4.26 crores) in respect of long term and current

investments respectively.

(d) Interest received - others includes tax deducted at source Rs. 12.21 crores (2009 : Rs. 15.11 crores).

11. Repairs and Maintenance includes machinery spares consumed Rs. 33.85 crores (2009 : Rs. 26.25 crores) but does not include items included

under Consumption of Raw Materials and Bought-out Components and amounts charged to salaries and wages (amounts not ascertained).

12. Miscellaneous Expenses include :

(a) Amounts paid/payable to Auditors (Net of service tax where applicable) :

Rupees crores

Statutory Auditors Cost Auditors

(i) Audit Fees ......................................................................................................................... 1.24 0.03

1.08 0.02

(ii) Company Law matters ...................................................................................................... * —

* —

(iii) Other Services ................................................................................................................... 0.66 —

0.63 —

(iv) Reimbursement of expenses.............................................................. ............................. 0.01 —

0.05 —

1.91 0.03

1.76 0.02

(b) An amount of Rs. 1.44 crores (2009 : Rs. 0.96 crores) payable as commission to non-wholetime Directors – Note 13 and Schedule XV.

13. Managerial remuneration for Directors included in the Profit and Loss Account is Rs. 8.19 crores (2009 : Rs. 6.29 crores) including Directors’ fees

of Rs. 0.14 crores (2009 : Rs. 0.09 crores), perquisites Rs. 1.68 crores (2009 : Rs. 1.27 crores) and commission Rs. 4.53 crores (2009 : Rs. 3.16

crores) (See Schedule XV) and excluding charge for gratuity, provision for leave encashment and post retirement medical benefit as separate

actuarial valuation figures are not available. The above perquisites include amortisation of Employees Stock Options amounting to Rs. 0.06

crores (2009 : Rs. 0.09 crores).

14. Employee Benefits :

General description of defined benefit plans :

Gratuity

The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the

Payment of Gratuity Act or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous

service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity

is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance

Corporation of India through its Gratuity Trust Fund.

* denotes amounts less than Rs. 50,000

109

MAHINDRA & MAHINDRA LIMITED

Post retirement medical

The Company provides post retirement medical cover to select grade of employees to cover the retiring employee and their spouse upto a

specified age through mediclaim policy on which the premiums are paid by the Company. The eligibility of the employee for the benefit as well

as the amount of medical cover purchased is determined by the grade of the employee at the time of retirement.

Post retirement housing allowance

The Company operates a post retirement benefit scheme for a certain cadre of employees in which a monthly allowance determined on the basis

of the last drawn basic salary at the time of retirement, is paid to the retiring employee in lieu of housing.

Defined benefit plans – as per actuarial valuation on 31st

March, 2010 Rupees Crores

Funded Plan Unfunded Plans

Gratuity Post retirement Post retirement

medical housing allowance

2010 2009 2010 2009 2010 2009

I. Expense recognised in the Statement of

Profit and Loss Account for the year ended 31st

March

1. Current service cost 19.17 16.59 0.37 0.22 1.50 —

2. Interest cost 23.91 18.30 0.40 0.24 0.84 —

3. Expected return on plan assets (16.23) (18.16) — — — —

4. Actuarial (Gain)/Loss (7.69) 33.40 4.32 1.81 (1.77) —

5. Past service cost 12.15 — — — — —

6. Total expense included in Personnel (Schedules XI) 31.31 50.13 5.09 2.27 0.57 —

7. Actual return on plan assets 20.75 18.16 — — — —

II. Net Asset/(Liability) recognised in the Balance Sheet

as at 31st

March

1. Present value of defined benefit obligation as at

31st

March 334.20 300.61 9.65 4.84 10.99 —

2. Fair value of plan assets as at 31st

March 266.10 206.14 — — — —

3. Net Asset/(Liability) as at 31st

March (68.10) (94.47) (9.65) (4.84) (10.99) —

III. Change in the obligation during the year ended

31st March

1. Present value of defined benefit obligation at

the beginning of the year 300.61 201.76 4.84 2.79 10.42 —

2. Addition on account of amalgamation — 40.90 — — — —

3. Current service cost 19.17 16.59 0.37 0.22 1.50 —

4. Interest cost 23.91 18.30 0.40 0.24 0.84 —

5. Actuarial (Gain)/Loss (3.17) 33.40 4.32 1.81 (1.77) —

6. Past service cost 12.15 — — — — —

7. Benefit payments (18.47) (10.34) (0.28) (0.22) — —

8. Present value of defined benefit obligation at

the end of the year 334.20 300.61 9.65 4.84 10.99 —

IV. Change in fair value of assets during the year

ended 31st

March

1. Fair value of plan assets at the beginning of the year 206.14 163.58 — — — —

2. Addition on account of amalgamation — 29.16 — — — —

3. Expected return on plan assets 16.23 18.16 — — — —

4. Actuarial Gain/(Loss) 4.52 — — — — —

5. Contributions by employer (including benefit

payments recoverable) 57.68 5.58 0.28 0.22 — —

6. Benefit payments (18.47) (10.34) (0.28) (0.22) — —

7. Fair value of plan assets at the end of the year 266.10 206.14 — — — —

8. Actual return on plan assets 20.75 18.16 — — — —

110

V. The major categories of plan assets as a percentage

of total plan

Insurer managed funds 100% 100% — — — —

VI. Actuarial assumptions

1. Discount rate 8.45% 7.75% 8.45% 7.75% 8.45% —

2. Expected rate of return on plan assets 7.50% 7.50% — — — —

3. Attrition rate 5.00% 5.00% 5.00% 5.00% — —

4. Medical premium inflation — — 5.00% 5.00% — —

VII. Effect of one percentage point change in the One percentage point increase in One percentage point decrease

assumed medical inflation rate medical inflation rates in medical inflation rates

2010 2009 2010 2009

1. Effect on the aggregate service and interest cost of

post employment medical benefits 0.25 0.14 (0.20) (0.11)

2. Effect on the accumulated post employment medical

benefits obligations 1.36 0.72 (1.10) (0.60)

VIII. Experience Adjustments Period ended

2010 2009 2008 2007

Gratuity

1. Defined benefit obligation 334.20 300.61 201.76 184.43

2. Fair value of plan assets 266.10 206.14 163.58 127.04

3. Surplus/(Deficit) (68.10) (94.47) (38.18) (57.39)

4. Experience adjustment on plan liabilities [(Gain)/Loss] 7.93 5.87 4.55 —

5. Experience adjustment on plan assets [Gain/(Loss)] 4.44 — — —

Post retirement medical

1. Defined benefit obligation 9.65 4.84 2.79 3.22

2. Plan assets — — — —

3. Surplus/(Deficit) (9.65) (4.84) (2.79) (3.22)

4. Experience adjustment on plan liabilities [(Gain)/Loss] 5.21 1.24 (0.55) 0.07

Post retirement housing allowance

1. Defined benefit obligation 10.99 — — —

2. Plan assets — — — —

3. Surplus/(Deficit) (10.99) — — —

4. Experience adjustment on plan liabilities [(Gain)/Loss] 0.15 — — —

The Payment of Gratuity (Amendment) Bill 2010 amending the maximum gratuity payable under The Payment of Gratuity Act 1972 from

Rs. 3.50 lakhs to Rs. 10.00 lakhs has been passed by both houses of Parliament in May, 2010 and will come into effect from a date to be

notified by the Central Government. Since the said Bill has been substantively enacted, the Company has given effect to the same in valuing its

actuarial liability for gratuity as at 31st

March, 2010. Due to this change in the maximum limit under the Act, the profit after tax for the current

year is lower by Rs. 8.02 crores.

On account of defined contribution plans the Company’s contribution to Provident Fund and Superannuation Fund aggregating Rs. 66.15

crores (2009 : Rs. 57.78 crores) has been recognized in the statement of Profit and Loss Account under the head personnel.

The post retirement housing allowance scheme of the Company for select cadre of employees has been introduced in the current year and the

opening liability as at 1st

April, 2009 of Rs. 10.42 crores has been recognized as an expense in the current year.

Rupees Crores

Funded Plan Unfunded Plans

Gratuity Post retirement Post retirement

medical housing allowance

2010 2009 2010 2009 2010 2009

111

MAHINDRA & MAHINDRA LIMITED

The expected rate of return on plan assets is based on the average long term rate of return expected on investments of the fund during the

estimated term of obligation.

The estimate of future salary increases, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant

factors, such as supply and demand in the employment market.

15. The Company has allotted 55,24,219 and 10,00,000 Ordinary (Equity) Shares of Rs. 10 each in the years ended 31st

March, 2002 and

31st

March, 2010 respectively to the Mahindra & Mahindra Employees’ Stock Option Trust set up by the Company. The trust holds these shares

for the benefit of the employees and issues them to the eligible employees as per the recommendation of the Compensation Committee.

In respect of options granted prior to 29th

September, 2006, the equity settled options vest one year from the date of the grant and are

exercisable on specified dates in 3 tranches within a period of 5 years from the date of vesting. The number of options exercisable in each

tranche is between the minimum of 100 and a maximum of 1/3rd

of the options vested, except in case of the last date of exercise, where the

employee can exercise all the options vested but not exercised till that date.

Options granted on or after 29th

September, 2006 vest in 4 equal instalments on the expiry of 12 Months, 24 Months, 36 Months and 48

Months from the date of grant. The options may be exercised on the date of vesting and on specified dates within 5 years from the date of

vesting. Number of vested options exercisable on each specified date is subject to a minimum of 50 or number of options vested whichever is

lower, except in case of the last date of exercise, where the employee can exercise all the options vested but not exercised till that date.

The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value method.

Summary of Stock Options

No. of stock options Weighted average

exercise price (Rs.)

Options outstanding on 1st

April, 2009 56,15,921 556.55

Options granted during the year 4,01,770 724.00

Options forfeited/lapsed during the year 1,58,167 585.81

Options exercised during the year 9,42,009 413.71

Additional options pursuant to sub-division of shares 49,17,515 298.33

Options outstanding on 31st

March, 2010 98,35,030 298.33

Options vested but not exercised on 31st

March, 2010 35,38,627 300.57

Average share price on the date of exercise of the options are as under

Date of exercise Average share price (Rs.)

11th

June, 2009 790.70

14th

June, 2009 803.80

31st

July, 2009 863.65

13th

August, 2009 793.25

29th

September, 2009 858.85

26th

October, 2009 928.90

Information in respect of options outstanding as at 31st

March, 2010.

Range of exercise price Number of options Weighted average

remaining life

Rs. 107.50 - Rs. 113.50 5,29,662 1.14 yrs

Rs. 180.50 35,484 1.57 yrs

Rs. 308.00 – Rs. 310.00 12,47,066 3.86 yrs

Rs. 381.00 29,91,922 4.80 yrs

Rs. 250.00 42,69,056 6.11 yrs

Rs. 362.00 7,61,840 7.09 yrs

The fair value of options granted during the year on 4th

November, 2009 is Rs. 414.84 per share.

112

The fair value has been calculated using the Black Scholes Options Pricing Model and the significant assumptions made in this regard are as

follows :

Grant dated 4-Nov-09

Risk free interest rate 6.41%

Expected life 2.50 Years

Expected volatility 53.56%

Expected dividend yield 2.24%

Exercise price (Rs.) 724.00

Stock price (Rs.) 929.50

In respect of Options granted under the Employee Stock Option plan, in accordance with guidelines issued by SEBI, the accounting value of the

options is accounted as deferred employee compensation, which is amortised on a straight line basis over the period between the date of grant

of options and eligible dates for conversion into equity shares. Consequently, salaries, wages, bonus, etc. includes Rs. 3.54 crores (2009 :

Rs. 3.57 crores) being the amortisation of deferred employee compensation, after adjusting for reversals on account of options lapsed.

Had the Company adopted fair value method in respect of options granted on or after 1st

April, 2005, the employee compensation cost would

have been higher by Rs. 26.44 crores, Profit after tax lower by Rs. 26.44 crores and the basic and diluted earning per share would have been

lower by Rs. 0.48 & Rs. 0.44 respectively.

16. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st

March, 2010 is Rs. 781.83

crores (2009 : Rs. 756.32 crores).

17. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) by its order dated 7th

December, 2009 has rejected the Company’s appeal

against the order dated 30th

March, 2005 passed by the Commissioner of Central Excise (Adjudication), Navi Mumbai confirming the demand

made on the Company for payment of differential excise duty (including penalty) of Rs. 304.11 crores in connection with the classification of

Company’s Commander range of vehicles, during the years 1991-1996. Whilst the Company had classified the Commander range of vehicles as

10-seater attracting a lower rate of excise duty, the Commissioner of Central Excise (Adjudication), Navi Mumbai, has held that these vehicles

could not be classified as 10-seater as they did not fulfil the requirement of 10-seater vehicles, as provided under the Motor Vehicles Act, 1988

(MVA) and Maharashtra Motor Vehicles Rules, 1989 (MMVR) and as such attracted a higher rate of excise duty.

In earlier collateral proceedings on this issue, the CESTAT had by an Order dated 19th

July, 2005 settled the controversy in the Company’s favour.

The CESTAT had accepted the Company’s submission that MVA and MMVR could not be referred to for determining the classification for the

purpose of levy of excise duty and rejected the Department’s appeal against the Order of the Collector, Central Excise classifying the Commander

range of vehicles as 10-seater. The Department’s appeal against the CESTAT Order dated 19th

July, 2005 is pending before the Supreme Court of

India but the operation of the Order has not been stayed.

The Company has filed an appeal against the aforesaid order dated 7th

December, 2009 inter alia, on the grounds that the MVA and MMVR

cannot be referred to for the purpose of determining the excise classification, as has been repeatedly held by various judicial fora, including the

Supreme Court and particularly by CESTAT vide its order dated 19th

July, 2005 in the Company’s own case referred to above.

Without prejudice to the grounds raised in the appeal, the Company has paid an amount of Rs. 40.00 crores in January, 2010. Pending

admission of the Company’s appeal, the Supreme Court has passed an interim order staying the recovery of the balance amount till further

orders.

In another case relating to Armada range of vehicles manufactured during the years 1992 to 1996, by the Company at its Nashik facility, the

Commissioner of Central Excise, Nashik passed an order dated 20th

March, 2006 confirming a demand of Rs. 24.75 crores, on the same grounds

as adopted for Commander range of vehicles. The CESTAT has given an unconditional stay against this order, which is yet to be finally heard by

the Tribunal.

The Company strongly believes, based on legal advise it has received, that the CESTAT order dated 7th

December, 2009 which is under appeal in

the Supreme Court is not sustainable in law and hence the Company has a very good chance of succeeding in the matter. As such, the Company

does not expect any liability on this account. However, in view of the CESTAT order, the Company has reflected the above amount aggregating

Rs. 328.86 crores and the interest of Rs. 168.05 crores accrued on the same upto 31st

March, 2010, as a Contingent Liability in the Accounts

and the same is included in the amounts disclosed under Note 18 (b)(i).

18. Contingent Liability :

(a) Guarantees given by the Company : Rupees crores

Amount of guarantees Outstanding amounts

against the guarantees

2010 2009 2010 2009

For employees 1.05 1.05 * *

For other companies 327.61 168.46 286.91 163.67

* denotes amounts less than Rs. 50,000

113

MAHINDRA & MAHINDRA LIMITED

(b) Claims against the Company not acknowledged as debts comprise of :

(i) Excise Duty, Sales Tax and Service Tax claims disputed by the Company relating to issues of applicability and classification aggregating

Rs. 968.22 crores (Net of Tax : Rs. 698.04 crores) [2009 : Rs. 386.32 crores (Net of Tax : Rs. 274.20 crores)].

(ii) Other matters (excluding claims where amounts are not ascertainable) : Rs. 17.78 crores (Net of Tax : Rs. 12.41 crores) [2009 :

Rs. 17.37 crores (Net of Tax : Rs. 12.14 crores)].

(iii) Claims on capital account : Rs. 1.18 crores (2009 : Rs. 1.18 crores).

(c) Uncalled liability on equity shares partly paid Rs. 10.50 crores (2009 : Rs. 10.50 crores).

(d) Taxation matters :

(i) Demands against the Company not acknowledged as debts and not provided for, relating to issues of deductibility and taxability in

respect of which the Company is in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be

completed :

- Income-tax : Rs. 181.07 crores (2009 : Rs. 168.25 crores).

(ii) Items in respect of which the Company has succeeded in appeal, but the Income-tax Department is pursuing/likely to pursue in

appeal/reference and exclusive of the effect of similar matters in respect of assessments remaining to be completed :

- Income-tax matters : Rs. 70.58 crores (2009 : Rs. 58.63 crores).

- Surtax matters : Rs. 0.13 crores (2009 : Rs. 0.13 crores).

(e) Bills discounted not matured Rs. Nil (2009 : Rs. 59.55 crores).

19. Research and Development expenditure :

(a) In recognised Research and Development units :

(i) debited to the Profit and Loss Account, including certain expenditure based on allocations made by the Company, aggregate Rs.

248.25 crores (2009 : Rs. 220.09 crores) [excluding depreciation and amortisation of Rs. 81.03 crores (2009 : Rs. 56.19 crores)].

(ii) Development Expenditure incurred during the year Rs. 131.28 crores (2009 : Rs. 128.94 crores).

(iii) Capitalisation of assets Rs. 41.64 crores (2009 : Rs. 15.64 crores).

(b) In other units :

(i) debited to the Profit and Loss Account, including certain expenditure based on allocations made by the Company, aggregate Rs.

25.89 crores (2009 : Rs. 18.69 crores) [excluding depreciation and amortisation of Rs. 2.25 crores (2009 : Rs. 1.50 crores)].

(ii) Development Expenditure incurred during the year Rs. 38.59 crores (2009 : Rs. 7.50 crores).

(iii) Capitalisation of assets Rs. 4.34 crores (2009 : Rs. 3.56 crores).

20. The net difference in foreign exchange loss debited to the Profit and Loss Account is Rs. 113.48 crores (2009 : Rs. 237.20 crores).

21. Exceptional items of Rs. 90.75 crores (2009 : Rs. 10.27 crores) comprise of :

(a) Profit on sale of certain long term investments Rs. 90.75 crores (2009 : Rs. Nil).

(b) Surplus on transfer of Logistics business Rs. Nil (2009 : Rs. 10.27 crores).

22. The components of Deferred Tax Liability and Assets as at 31st

March, 2010 are as under :

Rupees crores

2010 2009

Deferred Tax Liability :

(i) On fiscal allowances on fixed assets 296.12 322.06

(ii) Others 126.38 71.32

422.50 393.38

Deferred Tax Assets :

(i) On Provision for compensated absences 86.41 78.62

(ii) On Provision for doubtful debts/advances 36.54 27.33

(iii) On Premium on redemption of Zero Coupon Convertible Bonds 18.10 40.08

(iv) On Provision for employee benefits 13.69 17.61

(v) Loss on mark to market of forward contracts 0.45 223.57

(vi) Others 26.98 24.44

182.17 411.65

Net Deferred Tax (Asset)/Liability 240.33 (18.27)

114

23. Scheme of Amalgamations :

(a) In the previous year, pursuant to the Scheme of Amalgamation (the scheme) as approved by the shareholders of the Company and

subsequently sanctioned by the Honourable High Court of Bombay on 18th

July, 2008, the entire business and all the assets and liabilities,

duties and obligations of Mahindra Holdings and Finance Limited (MHFL) (an erstwhile wholly owned subsidiary of the Company) were

transferred to and vested in the Company, with effect from 1st

February, 2008. The excess of the value of the net assets of MHFL over the

face value of the shares allotted, the face value of the shares cancelled and the amount of General Reserve and Profit and Loss Account of

MHFL transferred to the Company was credited to the existing Investment Fluctuation Reserve Account.

(b) In the previous year, pursuant to the Scheme of Amalgamation (the scheme) as approved by the shareholders of the Company and

subsequently sanctioned by the Honourable High Court of Bombay and the Honourable High Court of Punjab & Haryana on 9th

January,

2009 and 16th

January, 2009 respectively, the entire business and all the assets and liabilities, duties and obligations of Punjab Tractors

Limited (PTL) (an erstwhile subsidiary of the Company) were transferred to and vested in the Company, with effect from 1st

August, 2008.

The excess of the value of the net assets of PTL over the face value of the shares allotted was credited to the existing Investment Fluctuation

Reserve Account.

(c) Accordingly, the figures for the current year are not strictly comparable with that of the previous year.

24. Earnings per Share :

2010 2009

Amount used as the numerator – Balance of profit (Rupees crores) ............................................... 2087.75 867.51

Effect on earnings of convertible bonds/debentures (Gain)/Loss (Rupees crores) ............................ 32.64 17.29

Amount used as the numerator for diluted earnings per share (Rupees crores) ............................. 2120.39 884.80

Weighted average number of equity shares used in computing basic earnings per share ............. 54,98,38,769 54,50,45,894

Effect of potential Ordinary (Equity) Shares on conversion of bonds/debentures ........................... 4,56,31,897 4,44,38,826

Weighted average number of equity shares used in computing diluted earnings per share .......... 59,54,70,666 58,94,84,720

Basic Earnings per share (Rs.) (Face value of Rs. 5 per share) .......................................................... 37.97 15.92

Diluted Earnings per share (Rs.) ........................................................................................................ 35.61 15.01

In the computation of earnings per share for the periods above, the Company has given effect to the sub-division in March, 2010 of the

Company’s Ordinary (Equity) Share of Rs. 10 each into 2 Ordinary (Equity) Shares of Rs. 5 each.

25. Provision for doubtful debts and advances for the year comprises :

Rupees crores

2010 2009

Provision for doubtful debts and advances made during the year (Net) [including

Rs. Nil (2009 : Rs. 19.52 crores) pursuant to the schemes of arrangement/amalgamation

approved by the Hon’ble High Courts] ............................................................................................. 51.02 50.96

Less : Transfer from Investment Fluctuation Reserve pursuant to the above schemes of

arrangement/amalgamation .................................................................................................... — 19.52

Total .............................................................................................................................................. 51.02 31.44

26. Provision for diminution in the value of long term investments for the year comprises :

Rupees crores

2010 2009

Provision for diminution in value of investments, made during the year (Net)

[including provision of Rs. 70.00 crores (2009 : Rs. 154.38 crores) pursuant to the

schemes of arrangement/amalgamation approved by the Hon’ble High Courts] ............................ 70.00 154.38

Less : Transfer from Investment Fluctuation Reserve pursuant to the above schemes of

arrangement/amalgamation .................................................................................................... 70.00 154.38

Total .................................................................................................................................................. — —

115

MAHINDRA & MAHINDRA LIMITED

27. Donations and contributions include contributions to :

(a) Indian National Congress : Rs. 1.00 crore (2009 : Rs. Nil)

(b) Bhartiya Janata Party : Rs. 1.00 crore (2009 : Rs. Nil)

(c) Shiv Sena : Rs. 0.50 crores (2009 : Rs. Nil)

(d) Nationalist Congress Party : Rs. 0.50 crores (2009 : Rs. Nil)

(e) Bihar Pradesh Janata Dal (United) : Rs. 0.25 crores (2009 : Rs. Nil)

28. The outstanding derivative instruments as on 31st

March, 2010 :

The Company has taken foreign exchange contracts amounting to US$ 54.80 crores comprising Forward Contracts US$ 32.10 crores (2009 :

US$ 60.30 crores), Range Forwards US$ 7.20 crores (2009 : US$ 10.20 crores) and US$ 15.50 crores (2009 : US$ 33.20 crores) of derivative

structures in the form of ‘strips’.

The foreign currency exposures not hedged by derivative instrument or otherwise as on 31st

March, 2010 are – Receivables of ZAR 4.67 crores,

EUR 0.58 crores, AUD 0.39 crores, GBP 0.27 crores, NZD 0.02 crores, CHF * crores and Payables of JPY 2.20 crores, US$ 1.33 crores, SEK 0.03

crores, SAR 0.01 crores, SGD * crores (2009 : Receivables of AUD 0.38 crores, RMB 0.01 crores, SEK * crores and Payables of US$ 2.71 crores,

EUR 0.03 crores, GBP * crores, CHF * crores, JPY 2.38 crores, ZAR * crores, SAR 0.04 crores, SGD * crores, DKK * crores, NZD * crores ).

The Company has outstanding borrowings of JPY 1,126.44 crores (2009 : JPY 1,126.44 crores and US$ 9.45 crores) as Foreign Currency

Borrowings. The borrowing of JPY 450.24 crores (2009 : JPY 450.24 crores) has been completely hedged using cross currency swap structure

fixing the liability into a full fledged rupee liability. The borrowing of JPY 676.20 crores (2009 : JPY 676.20 crores) has been fixed to a US$

liability using a cross currency swap structure. The borrowing of US$ Nil (2009 : US$ 2.00 crores) has been hedged using a forward cover.

The Company had made an issue of US$ 20.00 crores in the form of Foreign Currency Convertible Bonds in April, 2006. Out of this issue, Bonds

of value US$ 18.95 crores (2009 : US$ 18.95 crores) are outstanding and have not been hedged.

* denotes amounts less than 50,000 of respective currency.

29. Related Party Disclosure :

(a) Related parties where control exist :

(i) Subsidiaries :

Sl. No. Name of the Company Sl. No. Name of the Company

1. Mahindra Engineering and Chemical Products Limited

2. Mahindra Logisoft Business Solutions Limited

(upto 22nd

March, 2010)

3. Mahindra First Choice Wheels Limited

4. Mahindra USA Inc.

5. Mahindra Gujarat Tractor Limited

6. Mahindra (China) Tractor Company Limited

7. Mahindra Shubhlabh Services Limited

8. Mahindra & Mahindra South Africa (Proprietary) Limited

9. Mahindra Europe s.r.l.

10. Mahindra Engineering Services Limited

11. Mahindra Gears & Transmissions Private Limited (formerly

known as Mahindra SAR Transmission Private Limited)

12. Mahindra Overseas Investment Company (Mauritius) Limited

13. Mahindra-BT Investment Company (Mauritius) Limited

14. Mahindra Intertrade Limited

15. Mahindra Steel Service Centre Limited

16. Mahindra Middleeast Electrical Steel Service Centre (FZC)

17. Mahindra Consulting Engineers Limited

18. Mahindra Holidays & Resorts India Limited

19. Mahindra Holidays and Resorts USA Inc.

20. NBS International Limited

21. Mahindra Ugine Steel Company Limited

22. Mahindra & Mahindra Financial Services Limited

23. Mahindra Insurance Brokers Limited

24. Tech Mahindra Limited (upto 22nd

March, 2010)

25. Tech Mahindra (Americas) Inc. (upto 22nd

March, 2010)

26. Tech Mahindra GmbH (upto 22nd

March, 2010)

27. Tech Mahindra (Singapore) Pte. Limited

(upto 22nd

March, 2010)

28. Tech Mahindra (Thailand) Limited (upto 22nd

March, 2010)

29. Tech Mahindra Foundation (upto 22nd

March, 2010)

30. Bristlecone Limited

31. Bristlecone Inc.

32. Bristlecone (UK) Limited

33. Bristlecone India Limited

34. Bristlecone (Singapore) Pte. Limited

35. Bristlecone GmbH

36. Mahindra Renault Private Limited

37. Mahindra Navistar Automotives Limited

38. Stokes Group Limited

39. Jensand Limited

40. Stokes Forgings Limited

41. Stokes Forgings Dudley Limited

42. Mahindra Engineering Services (Europe) Limited

43. Mahindra Engineering GmbH (formerly known as Plexion

Technologies GmbH)

44. Mahindra Technologies Inc. (upto 10th

March, 2010)

45. Mahindra Lifespace Developers Limited

46. Mahindra World City (Jaipur) Limited

47. Mahindra World City Developers Limited

48. Mahindra Infrastructure Developers Limited

49. Mahindra Integrated Township Limited

50. Mahindra World City (Maharashtra) Limited

51. PT Tech Mahindra Indonesia (upto 22nd

March, 2010)

52. Mahindra Forgings International Limited

53. CanvasM Technologies Limited (upto 22nd

March, 2010)

54. CanvasM (Americas) Inc. (upto 22nd

March, 2010)

55. Mahindra Forgings Europe AG

56. Gesenkschmiede Schneider GmbH

57. JECO-Jellinghaus GmbH

58. Falkenroth Umformtechnik GmbH

59. Mahindra Vehicle Manufacturers Limited

60. Schöneweiss & Co. GmbH

116

61. MHR Hotel Management GmbH

62. Mahindra Forgings Limited

63. Mahindra Rural Housing Finance Limited

64. Mahindra Hotels and Residences India Limited

65. Mahindra Forgings Global Limited

66. Bristlecone (Malaysia) SDN.BHD

67. Tech Mahindra (Malaysia) SDN.BHD (upto 22nd

March, 2010)

68. Mahindra Castings Limited (formerly known as Mahindra

Castings Private Limited)

69. Knowledge Township Limited (formerly known as Mahindra

Knowledge City Limited)

70. Mahindra Holdings Limited

71. Mahindra Logistics Limited

72. Tech Mahindra (Beijing) IT Services Limited

(upto 22nd

March, 2010)

73. Mahindra Navistar Engines Private Limited

74. Mahindra Residential Developers Limited

75. Mahindra Graphic Research Design s.r.l.

76. Mahindra Aerospace Private Limited

77. Heritage Bird (M) SDN.BHD

78. Mahindra First Choice Services Limited

79. Mahindra Bebanco Developers Limited

80. Mahindra Gears Global Limited

81. Mahindra Gears Cyprus Limited

82. Mahindra Gears International Limited

83. Metalcastello s.r.l. (formerly known as

Mahindra Metalcastello s.r.l.)

84. Industrial Township (Maharashtra) Limited (formerly known

as Mahindra Industrial Township Limited)

85. Metalcastello S.p.A (upto 31st

December, 2009)

86. Crest Geartech Private Limited

87. Engines Engineering s.r.l.

88. EFF Engineering s.r.l.

89. ID-EE s.r.l.

90. Mahindra Business & Consulting Services Private Limited

(formerly known as Mahindra IT Consulting Private Limited)

91. Mahindra Automotive Australia Pty. Ltd.

92. Mahindra Two Wheelers Limited

93. Mahindra United Football Club Private Limited

94. Defence Land Systems India Private Limited (formerly known

as Mahindra Defence Land Systems Private Limited)

95. Mahindra Yeuda (Yancheng) Tractor Company Limited

96. Venturbay Consultants Private Limited (upto 22nd

March,

2010)

97. Mahindra Metal One Steel Service Centre Limited

(w.e.f. 11th

June, 2009)

98. Raigad Industrial & Business Park Limited

(w.e.f. 18th

June, 2009)

99. Retail Initiative Holdings Limited (w.e.f. 1st

July, 2009)

100. Mahindra Retail Private Limited (w.e.f. 1st

July, 2009)

101. Mahindra Technologies Services Inc. (w.e.f. 4th

June, 2009)

102. Tech Mahindra (Nigeria) Limited

(from 18th

August, 2009 to 22nd

March, 2010)

103. Mahindra Punjab Tractors Private Limited

(w.e.f. 9th

October, 2009)

104. Tech Mahindra Bahrain Limited S.P.C.

(w.e.f. 3rd

November, 2009 & upto 22nd

March, 2010)

105. Mahindra EcoNova Private Limited (w.e.f. 2nd

January, 2010)

106. Mahindra Conveyor Systems Private Limited

(w.e.f. 4th

January, 2010)

107. BAH Hotelanlagen AG (w.e.f. 11th

January, 2010)

(b) Other parties with whom transactions have taken place during the year.

(i) Associates :

Sl. No. Name of the Company Sl. No. Name of the Company

1. Mahindra Composites Limited 5. Swaraj Automotives Limited

2. Mahindra Construction Company Limited 6. Swaraj Engines Limited

3. Owens Cornings (India) Limited 7. Mahindra Water Utilities Limited

4. Satyam Computer Services Limited (from 5th

May, 2009 to

22nd

March, 2010)

(ii) Joint Venture :

Sl. No. Name of the Company

1. Mahindra Sona Limited

2. Tech Mahindra Limited (w.e.f 23rd

March, 2010)

(iii) Key Management Personnel :

Vice Chairman and Managing Director ................................... Mr. Anand Mahindra

Executive Directors ................................................................... Mr. B.N. Doshi

Mr. A.K. Nanda

(iv) Welfare Funds :

Sl. No. Name of the Fund

1. Mahindra World School Education Trust

2. M&M Benefit Trust

3. M&M Employee’s Welfare Fund

4. M&M Employee’s Farm Equipment Sector Employee’s Welfare Fund

Sl. No. Name of the Company Sl. No. Name of the Company

117

MAHINDRA & MAHINDRA LIMITED

(c) The related party transactions are as under :

Rupees crores

Sl. No. Nature of Transactions Subsidiaries Associate Joint Key Management Welfare

Companies Ventures Personnel Funds

1. Purchases :

Goods .............................................................. 9,65.63 3,08.90 84.60 — —

(6,58.26) (1,58.49) (66.72) (—) (—)

Fixed Assets ..................................................... 14.34 — — — —

(7.41) (—) (—) (—) (—)

Services ............................................................ 6,25.67 0.04 — — —

(3,34.45) (—) (—) (—) (—)

2. Sales :

Goods .............................................................. 5,41.53 1.31 — — —

(4,09.72) (1.22) (—) (—) (—)

Fixed Assets ..................................................... 2.10 — — — —

(8.19) (0.16) (—) (—) (—)

Services ............................................................ 1,03.93 0.55 0.05 — —

(1,25.00) (4.96) (0.05) (—) (—)

3. Investments :

Purchase/Subscribed ........................................ 4,34.66 — — — —

(10,04.39) (—) (—) (—) (0.01)

Sales/Redemption ............................................ 39.99 — — — —

(28.75) (—) (—) (—) (—)

4. Deputation of Personnel :

From Related Parties ........................................ 0.23 — — — —

(1.59) (—) (—) (—) (—)

To Related Parties ............................................ 10.98 4.15 — — —

(17.35) (0.52) (—) (—) (—)

5. Write off of Receivables .................................. 2.20 — — — —

(—) (—) (—) (—) (—)

6. Write Back of Provision for doubtful

debts/advances ................................................ 19.52 — — — —

(—) (—) (—) (—) (—)

7. Provision for doubtful debts/advances ............ — — — — 10.00

(19.52) (—) (—) (—) (—)

8. Managerial Remuneration ............................... — — — 6.56 —

(—) (—) (—) (5.15) (—)

9. Stock Options .................................................. — — — 0.05 —

(—) (—) (—) (0.07) (—)

10. Finance :

Inter Corporate Deposits given ........................ 4,22.24 — — — —

(6,19.59) (—) (—) (—) (—)

Inter Corporate Deposits refunded by parties . 2,88.41 — — — —

(2,99.61) (—) (—) (—) (—)

Inter Corporate Deposits taken ....................... — — — — —

(5.00) (—) (—) (—) (—)

118

Inter Corporate Deposits refunded to parties . — — — — —

(5.00) (—) (—) (—) (—)

Interest received .............................................. 54.31 0.46 — — —

(24.19) (1.85) (—) (—) (—)

Interest Paid ..................................................... 0.44 — — — —

(1.47) (—) (—) (—) (—)

Dividend received ............................................ 83.29 2.60 1.31 — —

(1,31.83) (0.28) (0.98) (—) (—)

Security Deposits Paid ..................................... 0.81 — — — —

(—) (—) (—) (—) (—)

Security Deposits Refunded ............................. 0.66 — — — —

(—) (—) (—) (—) (—)

11. Issue of Ordinary (Equity) Shares .................... — — — — —

(—) (—) (—) (—) (14,59.76)

12. Dividends Distributed ...................................... — — — 0.45 26.86

(—) (—) (—) (0.52) (1.05)

13. Guarantees & Collaterals given ....................... 1,67.99 — — — —

(1,19.58) (—) (—) (—) (—)

14. Other Transactions :

Other Income .................................................. 9.64 0.29 — — 25.91

(10.88) (0.28) (—) (—) (—)

Other Expenses ................................................ 20.60 — — — —

(17.71) (—) (—) (—) (—)

Reimbursements received from parties ........... 1,10.16 1.04 0.03 — —

(2,01.55) (0.02) (0.03) (—) (—)

Reimbursements made to parties .................... 87.44 0.02 — — —

(1,29.43) (0.02) (—) (—) (—)

Advance Given ................................................. 8.49 — — — 7.00

(5.74) (—) (—) (—) (15.00)

Advance Received ............................................ 1.00 — — — —

(—) (—) (—) (—) (—)

15. Outstandings :

Payable ............................................................ 1,73.25 1.36 7.61 3.10 —

(1,24.62) (3.26) (11.20) (2.21) (—)

Receivable ........................................................ 3,49.13 2.72 0.01 — 22.00

(1,38.46) (12.31) (0.01) (—) (15.00)

Debenture issued by parties ............................ 50.00 — — — —

(45.00) (—) (—) (—) (—)

Inter Corporate Deposits given ........................ 5,14.72 4.59 — — —

(4,00.78) (4.59) (—) (—) (—)

Guarantees & Collaterals given ....................... 2,86.91 — — — —

(1,63.67) (—) (—) (—) (—)

Security Deposit Paid ....................................... 5.79 — — — —

(5.03) (—) (—) (—) (—)

Security Deposit Received ................................ 1.85 — — — —

(2.51) (—) (—) (—) (—)

16. Provision for doubtful debts/advances ............ 5.99 6.69 — — 10.00

(25.51) (6.69) (—) (—) (—)

Previous year’s figures are given in brackets.

Rupees crores

Sl. No. Nature of Transactions Subsidiaries Associate Joint Key Management Welfare

Companies Ventures Personnel Funds

119

MAHINDRA & MAHINDRA LIMITED

The significant related party transactions are as under :

Rupees crores

Sl. Associate

No. Nature of Transactions Subsidiaries Amount Companies Amount Joint Ventures Amount

1. Purchase – Goods Mahindra Intertrade 1,60.19 Swaraj Engines 2,94.63 Mahindra Sona 84.60

Limited (1,24.93) Limited (1,50.60) Limited (66.72)

Mahindra Ugine Steel 3,84.61

Company Limited (3,08.92)

Mahindra Forgings 1,11.14

Limited (77.32)

Mahindra Vehicle 1,08.60

Manufacturers Limited (—)

2. Purchase – Services Mahindra Logistics 5,13.81 Satyam Computer 0.04

Limited (2,37.42) Services Limited (—)

Mahindra Engineering —

Services Limited (44.05)

3. Sale – Goods Mahindra USA Inc. 1,35.45 Swaraj Engines 1.31

(1,05.37) Limited (1.22)

Mahindra Navistar 1,48.28

Automotives Limited (92.61)

Mahindra & Mahindra 65.76

South Africa (58.22)

(Proprietary) Limited

NBS International Limited 79.12

(64.89)

4. Sale – Services Mahindra Navistar 43.90 Owens Corning 0.47 Mahindra 0.05

Automotives Limited (34.37) (India) Limited (3.21) Sona Limited (0.05)

Mahindra Renault 44.38 Satyam Computer 0.07

Private Limited (76.27) Services Limited (—)

Swaraj Engines —

Limited (1.43)

5. Investments –

Purchase Mahindra Navistar 43.69

Automotives Limited (1,12.97)

Mahindra Vehicle 1,00.00

Manufacturers Limited (3,60.20)

Mahindra Overseas 65.82

Investment Company (1,09.43)

(Mauritius) Limited

Mahindra Forgings 55.83

Limited (—)

Mahindra Navistar 62.98

Engines Private Limited (—)

Mahindra Gears —

International Limited (1,53.14)

Mahindra Two —

Wheelers Limited (1,17.99)

120

Rupees crores

Sl. Associate

No. Nature of Transactions Subsidiaries Amount Companies Amount Joint Ventures Amount

6. Investments – Sale Tech Mahindra Limited 5.71

(—)

Mahindra Intertrade Limited 14.27

(—)

7. Investments – Mahindra & Mahindra 20.00

Redemption Financial Services Limited (10.00)

Mahindra Intertrade Limited —

(18.75)

8. Advances Given Mahindra Integrated 5.39

Township Limited (—)

Defence Land Systems 2.73

India Private Limited (—)

Mahindra Ugine —

Steel Company Limited (2.13)

Mahindra Automotive —

Australia Pty. Ltd. (3.57)

9. Inter Corporate Deposits Mahindra Overseas 62.38

given Investment Company (—)

(Mauritius) Limited

Mahindra Forgings 56.50

Limited (—)

Mahindra Vehicle 2,05.00

Manufacturers Limited (1,00.00)

Mahindra Two Wheelers —

Limited (1,02.00)

Mahindra & Mahindra —

Financial Services Limited (1,85.00)

10. Inter Corporate Deposits Mahindra Forgings 1,00.50

refunded by parties Limited (—)

Mahindra Vehicle 75.00

Manufacturers Limited (—)

Mahindra Castings Limited 38.00

(—)

Mahindra & Mahindra —

Financial Services Limited (1,70.00)

Mahindra Engineering —

Services Limited (40.00)

Mahindra Two —

Wheelers Limited (67.00)

11. Guarantees given Mahindra USA Inc. 94.42

(—)

Mahindra Forgings 73.57

Limited (—)

Mahindra Renault —

Private Limited (1,19.58)

Previous year’s figures are given in brackets.

121

MAHINDRA & MAHINDRA LIMITED

30. Joint Venture Disclosure

(i) Jointly Controlled Entities by the Company :

Name of the Entity Country of Incorporation % Holding

a) Tech Mahindra Limited (w.e.f. 23rd

March, 2010) India 43.99 %

b) Mahindra Sona Limited India 29.77 %

c) PSL Erickson Limited India 18.06 %

(ii) Interests in the Assets, Liabilities, Income and Expenses with respect to Jointly Controlled Entities.

Rupees crores

2010 2009

I ASSETS

1 Fixed Assets ...................................................................................................... 415.17 8.03

2 Investments………………………………………………………................ ....... . 1,326.13 0.05

3 Current Assets, Loans and Advances

(a) Inventories ............................................................................................... 7.26 4.59

(b) Sundry Debtors ........................................................................................ 469.43 10.22

(c) Cash and Bank Balances .......................................................................... 100.83 3.40

(d) Loans and Advances ................................................................................ 297.02 1.23

4 Deferred Tax – Net ........................................................................................... 12.14 0.25

II LIABILITIES

1 Loan Funds

(a) Secured Loans .......................................................................................... 330.24 0.82

(b) Unsecured Loans ..................................................................................... 271.51 —

2 Current Liabilities and Provisions

(a) Liabilities .................................................................................................. 267.61 6.14

(b) Provisions ................................................................................................. 124.78 1.62

3 Deferred Revenue ............................................................................................. 337.71 —

III INCOME

1 Sales ................................................................................................................. 109.61 44.57

2 Other Income ................................................................................................... 4.60 2.21

IV EXPENSES

1 Raw Materials, Finished and Semi Finished Products ...................................... 34.65 26.73

2 Excise Duties .................................................................................................... 3.83 4.09

3 Manufacturing, Selling Expenses, etc. ............................................................. 54.11 9.34

4 Depreciation/Amortisation ............................................................................... 2.69 0.76

5 Provision for Taxation ...................................................................................... 4.85 2.20

V OTHER MATTERS

1 Contingent Liabilities ....................................................................................... 59.50 3.90

2 Capital Commitments ...................................................................................... 118.01 0.29

31. Additional information pursuant to the provisions of paragraphs 3(i)(a) and (ii), 4C and 4D of Part II of Schedule VI to the Companies Act, 1956

- See Schedule XVI. Previous year’s figures are indicated below the current year’s figures.

32. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 - See Schedule XVII.

33. Previous year’s figures have been regrouped/restated wherever necessary.

122

SCHEDULE XV

Computation of Net Profit in accordance with Section 309(5) of the Companies Act, 1956 for the year ended 31st

March, 2010

Rupees crores

2010 2009

Profit before Taxation as per Profit and Loss Account ..................................................... 2,846.75 1,036.47

Add : Profit of Mahindra Holdings and Finance Limited

for the period 1st

February, 2008 to 31st

March, 2008 ........................................ — 41.74

: Depreciation/Amortisation charged in the Accounts ............................................ 370.78 291.51

: Directors’ Remuneration including Directors’ fees ................................................ 8.19 6.29

: Provision for doubtful debts and advances (Net) ................................................. 51.02 31.44

: Loss on sale, etc. of Fixed Assets (Net) ................................................................. 20.83 1.19

: Net reduction in the fair value of current investments ......................................... (0.26) (1.57)

450.56 370.60

3,297.31 1,407.07

Less : Depreciation under Section 350 of the Companies Act, 1956 ............................ 290.09 233.97

: Amortisation of Intangibles ................................................................................... 49.23 31.14

: Profit on sale of Investments (Net) ....................................................................... 101.15 53.22

: Loss on sale of Assets as per Section 349 of the Companies Act, 1956 (Net) .... 2.80 2.22

: Surplus on transfer of Logistics Division ............................................................... — 10.27

443.27 330.82

Total...... 2,854.04 1,076.25

Commission payable to the wholetime Directors restricted to ............................. 3.09 2.20

Commission payable to the non-wholetime Directors restricted to ..................... 1.44 0.96

123

MAHINDRA & MAHINDRA LIMITEDSC

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1,71,550

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124

SCHEDULE XVI (Contd.)(Contd.)(Contd.)(Contd.)(Contd.)

(B)(B)(B)(B)(B) PPPPPARTICULARS IN RESPECT OF GOODS TRADED :ARTICULARS IN RESPECT OF GOODS TRADED :ARTICULARS IN RESPECT OF GOODS TRADED :ARTICULARS IN RESPECT OF GOODS TRADED :ARTICULARS IN RESPECT OF GOODS TRADED :

PurchasesPurchasesPurchasesPurchasesPurchases Opening StockOpening StockOpening StockOpening StockOpening Stock Closing StockClosing StockClosing StockClosing StockClosing Stock SalesSalesSalesSalesSales

Sl. Unit of

No. Class of Goods Measurement Quantity Value Quantity Value Quantity Value Quantity Value

Rupees Rupees Rupees Rupees

crores crores crores crores

1. Tractors .............................................. Nos. 317 9.00 50 1.75 35 1.24 332 12.47

269 7.29 36 1.13 50 1.75 251 8.90

2. Agricultural Implements .................... Nos. 10,168 57.35 436 5.98 865 9.41 9,739 69.34

6,178 41.47 2,230 3.62 436 5.98 7,972 50.32

3. Four Wheelers ................................... Nos. 5,272 151.40 — — 211 5.01 5,056 149.16

693 27.41 — — — — 693 31.20

4. Bought-out Spares for Resale

[Note (iii)(b) to item “A”] ................... 375.64 — — —

263.96 — — —

5. Diesel Genset & Genset Engines ....... Nos. 1,523 18.61 68 0.34 166 1.33 589 17.93

277 3.09 — — 68 0.34 209 3.16

6. Others ............................................... 49.05 0.02 0.10 58.83

2.93 — 0.02 9.23

Total ............... 661.05 8.09 17.09 307.73

346.15 4.75 8.09 102.81

Note (iv) to item (A).

(C) PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED :

Sl. Unit of Value

No. Description Measurement Quantity Rupees crores

1. Steel Items (Sheets, Tubes, etc.) Nos. 1,13,459

89,522 274.13

Metric Tonnes 48,042 191.00

32,290

2. Aluminium Sections and Other Aluminium Items Kgs. 38,801 0.47

10,339 0.14

3. Other Metals (Steel Shots, Lead, Tin, etc.) Metric Tonnes 120 0.45

119 0.56

4. Paints Nos. 8,75,017

7,49,035

Metres 2,58,903

1,83,583 96.11

Kgs. 26,35,185 72.85

19,36,747

Litres 47,30,889

35,76,788

5. Steel Scrap Metric Tonnes 8,891 17.24

7,898 19.83

}

}

125

MAHINDRA & MAHINDRA LIMITED

SCHEDULE XVI (Contd.)(Contd.)(Contd.)(Contd.)(Contd.)

(C)(C)(C)(C)(C) PPPPPARTICULARS OF RAW MAARTICULARS OF RAW MAARTICULARS OF RAW MAARTICULARS OF RAW MAARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED (Contd.) :TERIALS AND COMPONENTS CONSUMED (Contd.) :TERIALS AND COMPONENTS CONSUMED (Contd.) :TERIALS AND COMPONENTS CONSUMED (Contd.) :TERIALS AND COMPONENTS CONSUMED (Contd.) :

Sl. Unit of Value

No. Description Measurement Quantity Rupees crores

}6. Pig Iron ....................................................................................................................... Metric Tonnes 11,157 23.64

8,880 25.42

7. Miscellaneous Foundry Materials ................................................................................ Nos. 19,28,687

15,45,939

Metric Tonnes 14,396 16.59

12,585 16.32

Litres 4,42,660

3,36,844

8. Other Materials (Direct Stores, Patterns, Oils, etc.) ..................................................... Not practicable to *102.76

give quantitative details *78.19

9. Tyres and Tubes ........................................................................................................... Nos. *35,45,832 *664.70

*27,31,682 *473.90

10. Components other than Tyres and Tubes (including processing charges) .................. *10,091.32

*7,593.08

11. Material handling and transportation charges, etc. incurred on the above

items not separately allocable ..................................................................................... 408.15

300.50

Total..... 11,695.56

8,771.79

* Includes items used for other than production, amounts not ascertained.

Notes :

(i) The consumption in value has been ascertained on the basis of opening stock plus purchases less closing stock and includes the adjustment of

excesses and shortages as ascertained on physical count and write-off of obsolete and unserviceable raw materials and components.

(ii) The consumption in value shown against item 10 is a balancing figure based on the total consumption shown in the Profit and Loss Account.

(D) VALUE OF IMPORTS ON C.I.F. BASIS ACCOUNTED FOR DURING THE YEAR :

Rupees crores

2010 2009

1. Raw Materials ..................................................................................................... 1.17 0.65

2. Components, Spare Parts, etc. ............................................................................ 225.86 153.81

3. Capital Goods ..................................................................................................... 98.61 81.48

4. Items imported for Resale ................................................................................... 27.01 13.77

Total ...... 352.65 249.71

Notes :

(i) Credits, if any, recoverable in respect of short landings, etc. are not considered.

(ii) The value of imports shown above includes :

(a) Imports on C&F basis as per suppliers’ invoices Rs. 12.55 crores (2009 : Rs.4.82 crores)

(b) Imports on ‘cost’ basis Rs. 203.09 crores (2009 : Rs. 163.52 crores)

126

SCHEDULE XVI (Contd.)

(E) EXPENDITURE IN FOREIGN CURRENCIES (SUBJECT TO DEDUCTION OF TAX WHERE APPLICABLE) :

Rupees crores

2010 2009

1. Professional and Consultancy Fees [including Rs. 0.89 crores (2009 : Rs. 6.35 crores) capitalised] 34.82 43.35

2. Commission on Exports .................................................................................................................... 1.21 0.84

3. Interest & Commitment charges ....................................................................................................... 42.85 55.31

4. Others ............................................................................................................................................... 69.68 70.32

Total..... 148.56 169.82

Notes :

(1) Fee for use of technology, development expenditure and software expenditure [refer to in Note 1 (C)] :

(a) written off during the year Rs. 9.17 crores (2009 : Rs. 8.91 crores); and

(b) amount remitted during the year Rs. 76.18 crores (2009 : Rs. 59.81 crores) net of tax deducted at source of Rs. 5.92 crores

(2009 : Rs. 6.11 crores) are not included in the above figures.

(F) REMITTANCE IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDENDS TO NON-RESIDENT SHAREHOLDERS :

Number of Amount remitted Dividend relating to

Shareholders Equity shares

2010 : 1 120 * Year ended 31st

March, 2009

2009 : 1 120 * Year ended 31st

March, 2008

(G) EARNINGS IN FOREIGN EXCHANGE :

Rupees crores

2010 2009

1. Export of goods on F.O.B. basis .................................................................................. 719.37 632.36

2. Interest ........................................................................................................................ 9.60 14.74

3. Others (freight, etc.) ................................................................................................... 32.47 44.15

Total..... 761.44 691.25

Notes :

F.O.B. value of exports includes local sales which qualify for export benefits and for which payment is receivable in foreign currency and local/export

sales under rupee credit which qualify for export benefits.

(H) VALUE OF IMPORTED AND INDIGENOUS CONSUMPTION :

^Raw Materials and Components

Rupees crores %

1. Imported .......................................................................................................... 177.61 1.52

121.97 1.39

2. Indigenously obtained ..................................................................................... 11,517.95 98.48

8,649.82 98.61

Total..... 11,695.56 100.00

8,771.79 100.00

^ Includes items used for other than production, amount not ascertained.

Notes :

(1) Items purchased through canalising agencies have been considered as imported.

(2) See Note (i) to item (C).

(3) In giving the above information the Company has taken the view that spares and components as referred to in paragraph 4 (D)(c) of Part II of

Schedule VI covers only such items as go directly into production.

* denotes amounts less than Rs. 50,000

127

MAHINDRA & MAHINDRA LIMITED

I. Registration Details :

Registration No. State Code

Balance Sheet Date

Date Month Year

II. Capital raised during the Year (Amount in Rs. Thousands) :

Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) :

Total Liabilities including Shareholders’ Funds Total Assets

Sources of Funds :

Paid-up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Deferred Tax Liability (Net) Foreign Currency Monetary Item Translation Difference Account

Application of Funds :

Net Fixed Assets Foreign Currency Monetary Item Translation Difference Account

Investments Deferred Tax Asset (Net)

Miscellaneous Expenditure Net Current Assets

IV. Performance of Company (Amount in Rs. Thousands) :

Turnover (Sales & Other Income)★ Total Expenditure

+ - Profit/Loss Before Tax + - Profit/Loss After Tax

Earnings per Share in Rupees ▲

Basic Diluted Dividend Rate %

(Refer Note 24)

4 5 5 8

N I L

N I L1 0 0 0 0

1 6 3 2 9 4 2 2 4 1 6 3 2 9 4 2 2 4

2 8 2 9 5 3 9 7 5 4 3 8 2 8 3

6 0 2 4 4 9 7 2 2 7 7 7 0 1 1

6 3 9 8 0 1 5 1 —

2 0 8 1 5 2 5 3 5 1 7 9 6 8 5 0 5 6

2 8 4 6 7 4 7 9 2 0 8 7 7 4 7 9

37.97

N I L

1 1

3 1 0 3 2 0 1 0

�

4 1 1 8 1 8 4 5 8 6 4 1

�

35.61

SCHEDULE XVII

ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956.

Balance Sheet Abstract & Company’s General Business Profile :

1 9 0

3 7 0 2 7 1 8 1 —

2 4 0 3 2 6 6 3 4 5 5 8

128

V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) :

Item Code No. (ITC Code)

Product Description Tractors

Item Code No. (ITC Code)

Product Description Motor Vehicles for the transport of more than six persons, excluding the driver

Item Code No. (ITC Code)

Product Description Other motor vehicles principally designed for the transport of persons

★ after considering interest income and exceptional items.

▲ computed on the basis of, the weighted average number of shares outstanding during the year.

Signatures to Schedules I to XVII

SCHEDULE XVII (Contd.)

8 7 0 1

8 7 0 2

8 7 0 3

M. M. Murugappan Keshub Mahindra Chairman

N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director

A. S. Ganguly

A. P. PuriDirectors

Bharat Doshi

N. B. GodrejExecutive Director

A. K. Dasgupta

Deepak S. Parekh Narayan Shankar Company Secretary

Mumbai, 29th

May, 2010

}

129

MAHINDRA & MAHINDRA LIMITED

Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies

For Current Financial Year For Previous Financial Years

Name of the Subsidiary Companies Dealt with in Not dealt Dealt with in Not dealt

the accounts with in the the accounts with in the

of Mahindra & accounts of of Mahindra & accounts of

Mahindra Mahindra & Mahindra Mahindra &

Limited for Mahindra Limited for Mahindra

the year Limited for the year Limited for

Equity Extent ended 31st

the year ended 31st

the year

of March, 2010 ended 31st

March, 2010 ended 31st

holding March, 2010 March, 2010

Nos. % Rupees crores Rupees crores Rupees crores Rupees crores

Mahindra Engineering and Chemical Products Limited 53,98,462 100.00% - 6.53 1.89 72.43

• Retail Initiative Holdings Limited ......................... - 100.00% - (0.02) - -

� Mahindra Retail Private Limited .......................... - 78.91% - (25.43) - -

• Mahindra Conveyor Systems Private Limited ...... - 100.00% * - -

Mahindra Intertrade Limited ................................... 2,71,00,006 100.00% - 51.07 12.45 115.95

@ Mahindra MiddleEast Electrical Steel Service

Centre (FZC) ........................................................ - 90.00% - 3.14 - 15.54

@ Mahindra Steel Service Centre Limited ........... … - 61.00% - 2.20 0.52 9.51

@ Mahindra Metal One Steel Service Centre Limited - 100.00% - (0.12) - -

Mahindra Consulting Engineers Limited ................. 5,10,000 51.00% - 0.49 0.18 1.15

Mahindra Holidays and Resorts India Limited ........ 6,99,85,642 #83.09% - 97.91 22.01 140.63

+ MHR Hotel Management GmbH ......................... - #62.32% - 0.07 - (0.02)

+ Mahindra Holidays & Resorts USA Inc ................ - #83.09% - 0.71 - (0.28)

+ Mahindra Hotels and Residences India Limited .. - #83.09% - * - (0.01)

+ Heritage Bird (M) SDN.BHD ................................ - #83.09% - (0.12) - (0.09)

+ BAH Hotelanlagen AG ......................................... - #82.20% - 0.69 - -

NBS International Limited ....................................... 50,490 100.00% - (0.18) - 0.63

Mahindra Ugine Steel Company Limited ................ 1,64,66,789 50.69% - 2.36 - 84.41

Mahindra Holdings Limited .................................... 2,25,49,999 100.00% - 6.02 - (1.12)

� Mahindra United Football Club Private Limited .. - 100.00% - * - *

� Mahindra Punjab Tractors Private Limited ........... - 100.00% - * - -

Mahindra Lifespace Developers Limited .................. 2,08,46,126 51.08% - 40.55 6.26 55.80

� Mahindra Infrastructure Developers Limited ....... - 40.87% - 0.11 - 0.21

� Mahindra World City Developers Limited ........... - 42.21% - 4.62 - 14.58

� Mahindra World City (Jaipur) Limited ................. - 37.80% - 2.98 - 0.81

� Mahindra Integrated Township Limited .............. - 48.74% - (2.16) - (0.09)

� Mahindra Residential Developers Limited ........... - 24.85% - (0.95) - (0.16)

� Mahindra World City (Maharashtra) Limited ...... - 51.08% - * - (0.04)

� Knowledge Township Limited (formerly known as

Mahindra Knowledge City Limited) ..................... - 51.08% - (0.01) - (0.19)

� Mahindra Bebanco Developers Limited ............... - 35.76% - * - (0.11)

� Raigad Industrial & Business Park Limited .......... - 51.08 - (0.03) - -

Number of

Shares in the

Subsidiary

Company held

by Mahindra & Mahindra

Limited at the

financial year

ending date

The net aggregate of profits/(losses) of the

Subsidiary Companies so far as they concern the members of

Mahindra & Mahindra Limited

* denotes amounts less than Rs. 50,000

130

� Industrial Township (Maharashtra) Limited (formerly

known as Mahindra Industrial Township Limited) . - 51.08% - (0.02) - (0.03)

Mahindra & Mahindra Financial Services Limited ... 5,82,41,532 #60.10% - 205.97 32.03 363.29

� Mahindra Insurance Brokers Limited ................... - #60.10% - 6.65 - 5.89

� Mahindra Rural Housing Finance Limited ........... - #52.59% - 1.15 - (0.73)

� Mahindra Business & Consulting Services Private

Limited (formerly known as Mahindra IT

Consulting Private Limited) ................................. - #60.10% - 0.08 - *

Bristlecone Limited .................................................. 42,22,250 81.97% - (5.92) - (10.57)

� Bristlecone Inc ..................................................... - 81.97% - (10.59) - (28.75)

� Bristlecone India Limited ..................................... - 81.97% - 0.51 - 12.31

� Bristlecone (Singapore) Pte. Limited ................... - 81.97% - (1.51) - (2.18)

� Bristlecone GmbH ............................................... - 81.97% - 0.03 - (0.04)

� Bristlecone UK Limited ........................................ - 81.97% - (2.84) - (11.09)

� Bristlecone (Malaysia) SDN.BHD .......................... - 81.97% - (0.17) - 0.67

Mahindra First Choice Wheels Limited ................... 3,47,77,255 #53.31% - (4.65) - (34.60)

Mahindra USA Inc. ................................................. 14,00,00,000 100.00% - (38.16) - (8.90)

Mahindra Gujarat Tractor Limited ........................... 16,83,218 60.00% - 1.81 - (16.87)

Mahindra Shubhlabh Services Limited .................... 2,46,81,437 83.05% - 0.45 - (21.98)

Mahindra & Mahindra South Africa (Proprietary)

Limited .................................................................... 5,20,00,000 100.00% - 1.62 - (15.50)

Mahindra Overseas Investment Company (Mauritius)

Limited .................................................................... 5,87,95,000 100.00% - (3.26) - (4.78)

� Mahindra (China) Tractor Company Limited ....... - 85.90% - (12.11) - (55.58)

� Mahindra-BT Investment Company (Mauritius)

Limited ................................................................ - 57.00% - 42.61 - 7.47

� Mahindra Europe s.r.l. ......................................... - 80.00% - 0.58 - 2.20

� Mahindra Graphic Research Design s.r.l ............. - 100.00% - (5.05) - (2.48)

� Mahindra Yeuda (Yancheng) Tractor Company

Limited ................................................................ - 51.00% - (5.65) - (1.44)

Mahindra Gears & Transmissions Private Limited

(formerly known as Mahindra SAR Transmission

Private Limited) ....................................................... 40,30,806 53.34% - 0.71 0.76 1.24

Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies

For Current Financial Year For Previous Financial Years

Name of the Subsidiary Companies Dealt with in Not dealt Dealt with in Not dealt

the accounts with in the the accounts with in the

of Mahindra & accounts of of Mahindra & accounts of

Mahindra Mahindra & Mahindra Mahindra &

Limited for Mahindra Limited for Mahindra

the year Limited for the year Limited for

Equity Extent ended 31st

the year ended 31st

the year

of March, 2010 ended 31st

March, 2010 ended 31st

holding March, 2010 March, 2010

Nos. % Rupees crores Rupees crores Rupees crores Rupees crores

Number of

Shares in the

Subsidiary

Company held

by Mahindra & Mahindra

Limited at the

financial year

ending date

The net aggregate of profits/(losses) of the

Subsidiary Companies so far as they concern the members of

Mahindra & Mahindra Limited

* denotes amounts less than Rs. 50,000

131

MAHINDRA & MAHINDRA LIMITED

Mahindra Engineering Services Limited .................. 81,26,218 100.00% - 28.26 5.85 55.18

Mahindra Engineering Services (Europe) Limited - 100.00% - 0.18 - 6.54

Mahindra Engineering GmbH (formerly known

as Plexion Technologies GmbH) .......................... - 100.00% - (0.79) - (0.28)

Mahindra Technologies Services Inc .................... - 100.00% - 0.35 - -

Engines Engineering s.r.l ...................................... - 70.00% - (2.48) - (1.05)

¥ EFF Engineering s.r.l ............................................ - 35.70% - * - 0.02

¥ ID-EE s.r.l ............................................................. - 49.00% - (0.04) - (0.09)

Mahindra Forgings Limited ..................................... 4,45,26,339 50.68% - (48.02) - (28.17)

£ Stokes Group Limited ............................................ - 50.64% - (15.93) - (27.77)

Stokes Forgings Dudley Limited ........................... - 50.64% - - - 0.62

Jensand Limited ................................................... - 50.64% - - - (0.27)

Stokes Forgings Limited ....................................... - 50.64% - - - (4.14)

£ Mahindra Forgings Global Limited ........................ - 50.68% - (0.06) - (1.88)

## Schöneweiss & Co. GmbH ................................. - 50.68% - (19.72) - 10.91

£ Mahindra Forgings International Limited .............. - 50.68% - (9.05) - (11.88)

� Mahindra Forgings Europe AG ............................ - 50.68% - 11.63 - 8.92

� Gesenkschmiede Schneider GmbH ....................... - 50.68% - (29.53) - 3.39

� JECO-Jellinghaus GmbH ....................................... - 50.68% - (6.88) - 2.92

� Falkenroth Umformtechnik GmbH ....................... - 50.68% - (8.18) - 2.57

Mahindra Renault Private Limited ........................... 10,16,24,232 51.00% - (41.58) - (296.11)

Mahindra Navistar Automotives Limited ................. 20,70,32,300 51.00% - (13.09) - (16.90)

Mahindra Castings Limited (formerly known as

Mahindra Castings Private Limited) ........................ 2,14,40,052 64.94% - (3.62) - (34.03)

Mahindra Vehicle Manufacturers Limited ............... 58,50,00,000 100.00% - (19.43) - (8.89)

Mahindra Logistics Limited ..................................... 4,90,49,900 100.00% - (2.84) 1.34 2.89

Mahindra Navistar Engines Private Limited ............. 8,41,50,000 51.00% - (7.18) - (3.70)

Mahindra Aerospace Private Limited ...................... 1,05,50,000 100.00% - (0.89) - (0.38)

Mahindra First Choice Services Limited ................... 1,63,50,000 100.00% - (6.18) - (5.86)

Mahindra Gears International Limited .................... 2,07,00,001 100.00% - (0.11) - (0.11)

Mahindra Gears Global Limited ........................... - 53.34% - (0.08) - (0.08)

� Mahindra Gears Cyprus Limited ........................... - 53.34% - (0.10) - (0.38)

� Metal Castello S.p.A ............................................. - 51.00% - (28.81) - 6.81

� Crest Geartech Private Limited ............................. - 51.00% - 0.16 - 0.13

Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies

For Current Financial Year For Previous Financial Years

Name of the Subsidiary Companies Dealt with in Not dealt Dealt with in Not dealt

the accounts with in the the accounts with in the

of Mahindra & accounts of of Mahindra & accounts of

Mahindra Mahindra & Mahindra Mahindra &

Limited for Mahindra Limited for Mahindra

the year Limited for the year Limited for

Equity Extent ended 31st

the year ended 31st

the year

of March, 2010 ended 31st

March, 2010 ended 31st

holding March, 2010 March, 2010

Nos. % Rupees crores Rupees crores Rupees crores Rupees crores

Number of

Shares in the

Subsidiary

Company held

by Mahindra & Mahindra

Limited at the

financial year

ending date

The net aggregate of profits/(losses) of the

Subsidiary Companies so far as they concern the members of

Mahindra & Mahindra Limited

* denotes amounts less than Rs. 50,000

132

Mahindra Automotive Australia Pty. Ltd. ................ 7,00,000 80.00% - (3.24) - (1.87)

Mahindra Two Wheelers Limited ............................ 11,80,00,000 80.00% - (77.53) - (18.00)

Defence Land Systems India Private Limited

(formerly known as Mahindra Defence Land

Systems Private Limited) .......................................... 3,42,62,000 100.00% - (0.07) - -

Mahindra EcoNova Private Limited ......................... 10,000 100.00% - * - -

* denotes amounts less than Rs. 50,000

# after considering shares issued to its ESOP Trust but not allotted to its employees.

• a subsidiary of Mahindra Engineering and Chemical Products Limited

� a subsidiary of Retail Initiative Holdings Limited

@ a subsidiary of Mahindra Intertrade Limited

+ a subsidiary of Mahindra Holidays & Resorts India Limited

� a subsidiary of Mahindra Holdings Limited

� a subsidiary of Mahindra Lifespace Developers Limited

� a subsidiary of Mahindra Integrated Township Limited

� a subsidiary of Mahindra & Mahindra Financial Services Limited

� a subsidiary of Bristlecone Limited

� a subsidiary of Bristlecone India Limited

� a subsidiary of Mahindra Overseas Investment Company (Mauritius) Limited

a subsidiary of Mahindra Engineering Services Limited

¥ a subsidiary of Engines Engineering s.r.l.

£ a subsidiary of Mahindra Forgings Limited

a subsidiary of Stokes Group Limited

## a subsidiary of Mahindra Forgings Global Limited

� a subsidiary of Mahindra Forgings International Limited

� a subsidiary of Mahindra Forgings Europe AG

a subsidiary of Mahindra Gears International Limited

� a subsidiary of Mahindra Gears Global Limited

� a subsidiary of Mahindra Gears Cyprus Limited

� a subsidiary of Metal Castello S.p.A

Note :

The financial year of all subsidiaries ended on 31st

March, 2010, except for Mahindra Yueda (Yancheng) Tractor Company Limited whose financial year

is 1st

January, 2009 to 31st

December, 2009 and Mahindra EcoNova Private Limited and Mahindra Conveyor Systems Private Limited whose first

financial years would be from 2nd January, 2010 to 31st

March, 2011 and 4th

January, 2010 to 31st

March, 2011, respectively.

Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies

For Current Financial Year For Previous Financial Years

Name of the Subsidiary Companies Dealt with in Not dealt Dealt with in Not dealt

the accounts with in the the accounts with in the

of Mahindra & accounts of of Mahindra & accounts of

Mahindra Mahindra & Mahindra Mahindra &

Limited for Mahindra Limited for Mahindra

the year Limited for the year Limited for

Equity Extent ended 31st

the year ended 31st

the year

of March, 2010 ended 31st

March, 2010 ended 31st

holding March, 2010 March, 2010

Nos. % Rupees crores Rupees crores Rupees crores Rupees crores

Number of

Shares in the

Subsidiary

Company held

by Mahindra & Mahindra

Limited at the

financial year

ending date

The net aggregate of profits/(losses) of the

Subsidiary Companies so far as they concern the members of

Mahindra & Mahindra Limited

M. M. Murugappan Keshub Mahindra Chairman

N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director

A. S. Ganguly

A. P. PuriDirectors

Bharat Doshi Executive Director

N. B. Godrej

A. K. Dasgupta

Deepak S. Parekh Narayan Shankar Company Secretary

Mumbai, 29th

May, 2010

}

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

33

34

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

35

Auditors’ Report to the Board of Directors of Mahindra & Mahindra Limited

1. We have audited the attached Consolidated Balance Sheet

of Mahindra & Mahindra Limited, its subsidiaries and jointly

controlled entities (the Group) as at 31st March, 2010, the

Consolidated Profit and Loss Account and the Consolidated

Cash Flow Statement of the Group for the year ended on

that date, both annexed thereto. The Consolidated Financial

Statements include investments in associates accounted on

the equity method in accordance with Accounting Standard

23 (Accounting for Investments in Associates in Consolidated

Financial Statements) and the jointly controlled entities

accounted in accordance with Accounting Standard 27

(Financial Reporting of Interests in Joint Ventures) as notified

under the Companies (Accounting Standards) Rules, 2006.

These financial statements are the responsibility of the

Company’s Management and have been prepared on the

basis of the separate financial statements and other financial

information regarding components. Our responsibility is to

express an opinion on these Consolidated Financial

Statements based on our audit.

2. We conducted our audit in accordance with the auditing

standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements

are free of material misstatements. An audit includes

examining, on a test basis, evidence supporting the amounts

and the disclosures in the financial statements. An audit

also includes assessing the accounting principles used and

the significant estimates made by the Management, as well

as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for

our opinion.

3. We did not audit the financial statements of certain

subsidiaries and joint ventures, whose financial statements

reflect total assets of Rs.13,902.30 crores as at 31st March,

2010, total revenues of Rs. 5,628.43 crores and net cash

inflows amounting to Rs. 4.67 crores for the year ended on

that date as considered in the Consolidated Financial

Statements. These financial statements have been audited

by other auditors whose reports have been furnished to us

and our opinion in so far as it relates to the amounts

included in respect of these subsidiaries and joint ventures

is based solely on the reports of the other auditors.

4. Without qualifying our opinion, we draw attention to note

4 of Schedule XV to the financial statements. As indicated

therein the Consolidated Financial Statements do not include

Satyam Computer Services Limited and its subsidiaries, in

accordance with the approval of the Securities and Exchange

Board of India, and the impact of post acquisition profit or

loss of Satyam Computer Services Limited and its subsidiaries

are not considered in these financial statements.

5. We report that the Consolidated Financial Statements have

been prepared by the Company in accordance with the

requirements of Accounting Standard 21 (Consolidated

Financial Statements), Accounting Standard 23 (Accounting

for Investment in Associates in Consolidated Financial

Statements) and Accounting Standard 27 (Financial

Reporting of Interests in Joint Ventures) as notified under

the Companies (Accounting Standards) Rules, 2006.

6. Based on our audit and on consideration of the separate

audit reports on individual financial statements of the

Company, its aforesaid subsidiaries, joint ventures and

associates and to the best of our information and according

to the explanations given to us, in our opinion, the

Consolidated Financial Statements give a true and fair view

in conformity with the accounting principles generally

accepted in India :

(i) in the case of the Consolidated Balance Sheet, of the

state of affairs of the Group as at 31st March, 2010;

(ii) in the case of the Consolidated Profit and Loss Account,

of the profit of the Group for the year ended on that

date; and

(iii) in the case of the Consolidated Cash Flow Statement,

of the cash flows of the Group for the year ended on

that date.

For Deloitte Haskins & Sells

Chartered Accountants

B.P. Shroff

(Partner)

Membership Number: 34382

Mumbai, 29th

May, 2010

36

Consolidated Balance Sheet as at 31st March, 2010

Rupees crores

Schedule 2010 2009

I. SOURCES OF FUNDS :

SHAREHOLDERS’ FUNDS :

Capital ................................................................................................................... I 282.95 272.62

Employee Stock Options Outstanding ................................................................... 8.01 6.55

Reserves and Surplus ............................................................................................. II 9,897.31 6,790.76

10,188.27 7,069.93

MINORITY INTEREST .............................................................................................. 2,462.35 3,029.79

LOAN FUNDS :

(a) Secured Loans ................................................................................................ III A 8,972.45 7,724.71

(b) Unsecured Loans ............................................................................................ III B 4,513.40 4,465.60

13,485.85 12,190.31

DEFERRED TAX LIABILITY (Net) [Note 17] .............................................................. 48.21 —

FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT..... 1.94 —

DEFERRED INCOME :

Advance towards Club Mahindra members’ facilities ........................................... 804.07 635.89

Total ........... 26,990.69 22,925.92

II. APPLICATION OF FUNDS :

FIXED ASSETS : ...................................................................................................... IV

Gross Block ............................................................................................................ 14,204.00 13,042.35

Less : Depreciation ................................................................................................ 5,333.76 5,341.02

Net Block ............................................................................................................... 8,870.24 7,701.33

CAPITAL WORK-IN-PROGRESS (INCLUDING CAPITAL ADVANCES) .......................... 1,967.69 1,751.73

10,837.93 9,453.06

Less : Provision for impairment ............................................................................. 317.60 311.25

10,520.33 9,141.81

INVESTMENTS ........................................................................................................ V 4,805.25 3,381.26

DEFERRED TAX ASSETS (Net) [Note 17] ................................................................ — 188.40

FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT..... — 18.44

CURRENT ASSETS, LOANS AND ADVANCES :

(a) Inventories ...................................................................................................... VI A 3,548.99 3,271.46

(b) Sundry Debtors .............................................................................................. VI B 3,207.17 3,470.79

(c) Cash and Bank Balances ................................................................................. VI C 2,737.12 2,967.51

(d) Other Current Assets ...................................................................................... VI D 51.94 3.19

(e) Loans and Advances ....................................................................................... VI E 10,771.00 8,861.91

20,316.22 18,574.86

LESS : CURRENT LIABILITIES AND PROVISIONS :

(a) Current Liabilities ............................................................................................ VII A 6,717.61 6,779.96

(b) Provisions ....................................................................................................... VII B 1,938.08 1,615.75

8,655.69 8,395.71

NET CURRENT ASSETS ........................................................................................... 11,660.53 10,179.15

MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR

ADJUSTED) ........................................................................................................... VIII 4.58 16.86

Total ........... 26,990.69 22,925.92

NOTES ON ACCOUNTS .......................................................................................... XV

}

Per our report attached

For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra Chairman

Chartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director

A. S. GangulyDirectors

B. P. Shroff A. P. Puri Bharat Doshi Executive Director

Partner N. B. Godrej

A. K. Dasgupta

Deepak S. Parekh Narayan Shankar Company Secretary

Mumbai, 29th

May, 2010 Mumbai, 29th

May, 2010

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

37

Consolidated Profit and Loss Account for the year ended 31st March, 2010

Rupees crores

Schedule 2010 2009

SALES ............................................................................................................................ 25,300.78 21,058.63

Less : Excise Duty on Sales ........................................................................................... 2,102.13 2,072.18

Net Sales ....................................................................................................................... 23,198.65 18,986.45

Income from Operations .............................................................................................. IX 8,369.89 7,769.90

Other Income ............................................................................................................... X 119.43 163.46

31,687.97 26,919.81

EXPENDITURE :

Raw Materials, Finished and Semi-finished Products .................................................... XI 15,267.91 13,063.79

Personnel ...................................................................................................................... XII 4,582.55 4,274.86

Interest, Commitment and Finance Charges (Net) ........................................................ XIII 979.83 750.16

Depreciation/Amortisation [Note 8] .............................................................................. 873.52 749.33

Other Expenses ............................................................................................................. XIV 6,337.02 5,858.96

28,040.83 24,697.10

Less : Cost of Manufactured/Purchased Products capitalised ....................................... 132.59 107.80

27,908.24 24,589.30

Profit before exceptional item and taxation ................................................................. 3,779.73 2,330.51

Add : Exceptional Items [Note 18] ............................................................................... 250.23 (76.39)

Profit before taxation ................................................................................................... 4,029.96 2,254.12

(Add) / Less : Provision for Tax - Current Tax including Fringe Benefit Tax .................. 1,240.12 506.92

- Deferred Tax (Net) .................................................... (85.92) 35.25

Profit for the year before prior year adjustments ......................................................... 2,875.76 1,711.95

Less : Adjustments pertaining to previous year [Note 19] ........................................... 4.27 6.36

Balance of profit for 2009-2010 before share of profit/loss of Associates and

Minority Interests .......................................................................................................... 2,871.49 1,705.59

Add : Share of Profit of Associates for the year .......................................................... 19.63 11.27

Profit before Minority Interests ..................................................................................... 2,891.12 1,716.86

Minority Share in Profits for 2009-2010 ...................................................................... 412.56 311.45

Net Profit ...................................................................................................................... 2,478.56 1,405.41

Balance of profit for earlier years ................................................................................. 4,642.70 3,873.20

Less : Adjustment on account of Mergers .................................................................... — 43.91

Less : Transfer to Debenture Redemption Reserve (Net) ............................................... (116.10) (29.62)

4,526.60 3,799.67

Total of Profit and Loss Account balances shown above ............................................. 7,005.16 5,205.08

Deduct : Statutory Reserve ............................................................................................ 43.09 26.62

General Reserve (Net) ..................................................................................... 286.88 180.05

Capital Redemption Reserve ........................................................................... — 18.75

Income Tax on Dividends ............................................................................... 15.38 24.90

Proposed Dividend on Equity Shares .............................................................. 549.52 278.83

Income Tax on Proposed Dividend ................................................................. 74.23 33.23

Balance for 2009-2010 and earlier years carried to Balance Sheet .............................. 6,036.06 4,642.70

EARNINGS PER SHARE : [Note 23]

(Face value Rs.5/- per share) (Rupees)

Basic ............................................................................................................................. 45.08 25.79

Diluted .......................................................................................................................... 42.17 24.14

NOTES ON ACCOUNTS ................................................................................................. XV

}

Per our report attached

For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra Chairman

Chartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director

A. S. GangulyDirectors

B. P. Shroff A. P. Puri Bharat Doshi Executive Director

Partner N. B. Godrej

A. K. Dasgupta

Deepak S. Parekh Narayan Shankar Company Secretary

Mumbai, 29th

May, 2010 Mumbai, 29th

May, 2010

38

Consolidated Cash Flow Statement for the year ended 31st March, 2010

Rupees crores

2010 2009

A. CASH FLOW FROM OPERATING ACTIVITIES :

Profit before exceptional item, taxation and adjustments pertaining to

previous years .............................................................................................. 3,779.73 2,330.51

Adjustments for :

Depreciation/Amortisation ........................................................................... 873.52 749.33

Profit on Exchange (Net) ............................................................................. 0.08 (5.58)

Investment and Interest Income [Excluding Rs. 25.91 crores

(2009 : Rs. 13.42 crores) in respect of financial enterprises consolidated] ...... (183.70) (195.25)

Interest, Commitment and Finance charges [Excluding Rs. 500.34 crores

(2009 : Rs. 495.05 crores) in respect of financial enterprises consolidated] 620.23 362.84

Amortisation of Expenses ............................................................................ 9.93 15.81

Profit on sale of Investments (Net) .............................................................. (13.98) (47.78)

Loss on fixed assets sold/scrapped/written off (Net)

(Excluding Rs. 0.05 crores in respect of Prior Period Item) ......................... 17.83 6.04

Provision for diminution in value of long term investments (Net) .............. 8.75 0.24

Increase of cost over fair value of current investments (Net) ...................... (0.25) (1.93)

1,332.41 883.72

Operating Profit before Working Capital changes ....................................... 5,112.14 3,214.23

Changes in : Deferred income – advances towards membership fees ........ 168.18 157.94

Trade and other receivables ................................................... (1,452.88) 85.05

Loans against Assets * ........................................................... (1,351.38) (185.28)

Inventories ............................................................................. (278.34) 177.94

Trade and other payables ...................................................... 1,766.90 690.40

(1,147.52) 926.05

Exceptional Items......................................................................................... (2.19) —

Miscellaneous Expenditure (to the extent not written off or adjusted)

incurred during the year ............................................................................. — (21.44)

Cash generated/(used) from operations ...................................................... 3,962.43 4,118.84

Income Taxes paid (Net of refunds including for prior years) ..................... (1,163.67) (717.34)

NET CASH FROM OPERATING ACTIVITIES .................................................... 2,798.76 3,401.50

* In respect of financial enterprises consolidated.

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets .............................................................................. (2,699.86) (2,941.33)

Sale of fixed assets ...................................................................................... 145.51 81.73

Purchase of investments .............................................................................. (23,823.11) (20,149.02)

Sale of investments ..................................................................................... 20,869.23 19,692.81

Interest received .......................................................................................... 160.17 79.52

Dividends received ....................................................................................... 8.30 35.88

Inter corporate deposits (Net) ..................................................................... (35.54) 14.88

Purchase consideration paid on acquisition of interest in subsidiaries ....... (32.16) (562.95)

Sales Proceeds/subscription (Net) received on divesture of interest in subsidiaries 681.65 305.14

NET CASH USED IN INVESTING ACTIVITIES ................................................. (4,725.81) (3,443.34)

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

3

C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from issue of Share Capital .......................................................... 72.40 —

Proceeds from borrowings .......................................................................... 61,183.93 57,271.36

Repayments of borrowings (including premium on repayment) ................. (58,322.46) (55,364.19)

Dividends paid ............................................................................................. (367.13) (371.78)

Interest, Commitment and Finance charges paid ........................................ (716.14) (328.81)

Stamp duty paid on shares issued to PTL Shareholders .............................. (7.77) —

NET CASH FROM FINANCING ACTIVITIES .................................................... 1,842.83 1,206.58

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) (84.22) 1,164.74

CASH AND CASH EQUIVALENTS [Note (a)]

Opening Balance ......................................................................................... 2,953.07 1,785.67

Cash & Bank Balance Acquired on Acquisition of Subsidiaries ................... 1.43 4.37

Cash & Bank Balance on Disposal of Subsidiary .......................................... (122.92) (1.71)

Closing Balance ........................................................................................... 2,747.36 2,953.07

Consolidated Cash Flow Statement (contd.)

Rupees crores

2010 2009

Notes to the Consolidated Cash Flow Statement for the year ended 31st March, 2010

Rupees crores

2010 2009

(a) Cash and Bank Balances .............................................................................. 2,737.12 2,967.51

Unrealised (Net) translation (gain)/loss on foreign currency cash and cash

equivalents .................................................................................................. 10.24 (14.44)

Total cash and cash equivalents .................................................................. 2,747.36 2,953.07

(b) The following non-cash transactions do not form part of Cash Flow :

(i) Arising out of the agreement between Mahindra-BT Investment Company (Mauritius) Ltd. (MBTICM), a subsidiary of the

Company and AT&T for sale of shares of Tech Mahindra Ltd. (TML) by MBTICM to AT&T, resulting in TML alongwith its

subsidiary companies ceasing to be subsidiaries of the Company.

(ii) Arising out of the scheme of arrangement for the merger of Mahindra Hinoday Industries Limited with Mahindra Castings

Private Limited.

(iii) Arising out of the scheme of arrangement for the merger of Metalcastello S.p.A. with Mahindra Metalcastello S.r.l.

(c) Previous year’s figures have been regrouped/restated wherever necessary.

}

Per our report attached

For Deloitte Haskins & Sells M. M. Murugappan Keshub Mahindra Chairman

Chartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing Director

A. S. GangulyDirectors

B. P. Shroff A. P. Puri Bharat Doshi Executive Director

Partner N. B. Godrej

A. K. Dasgupta

Deepak S. Parekh Narayan Shankar Company Secretary

Mumbai, 29th

May, 2010 Mumbai, 29th

May, 2010

140

CMYK

SCHEDULE I Rupees crores

2010 2009

Share Capital :Authorised :1,20,00,00,000 Ordinary (Equity) Shares of Rs. 5 each

[2009 : 60,00,00,000 Ordinary (Equity) Shares of Rs. 10 each] 600.00 600.0025,00,000 Unclassified Shares of Rs.100 each ........................................ 25.00 25.00

Total .......... 625.00 625.00

Issued and Subscribed :57,84,34,478 Ordinary (Equity) Shares of Rs. 5 each fully paid up [2009

: 27,88,21,265 Ordinary (Equity) Shares of Rs. 10 eachfully paid up] ......................................................................... 289.21 278.82

289.21 278.82Less :

1,25,26,592 Ordinary (Equity) Shares of Rs. 5 each fully paid up[2009 : 62,05,306 Ordinary (Equity) Shares of Rs.10 eachfully paid up] issued to ESOP Trust but notallotted to employees ............................................................ 6.26 6.20

Adjusted : Issued and Subscribed Share Capital ................................................ 282.95 272.62

SCHEDULE II Rupees crores

2009 Additions / Deductions 2010Adjustments

Reserves and Surplus :

1 Capital Reserve .................................................................... 23.54 — — 23.5423.48 0.08 0.02 23.54

2 Capital Reserve on consolidation ......................................... 139.01 0.31 — 139.32138.55 0.46 — 139.01

3 Securities Premium Account ................................................ 545.66 784.79 6.59 1,323.86579.03 10.95 44.32 545.66

Less : Premium on shares issued to ESOP Trust but notallotted to employees [Note 5] ............................................ 15.20 71.40 2.31 84.29

16.34 — 1.14 15.20

530.46 713.39 4.28 1,239.57562.69 10.95 43.18 530.46

4 Revaluation Reserve ............................................................. 12.09 — 0.42 11.6712.47 — 0.38 12.09

5 General Reserve ................................................................... 1,047.71 336.38# 6.12o 1,377.97971.84 180.05# 104.18** 1,047.71

Add : Bonus shares issued to ESOP Trust but not allottedto employees [Note 5] ......................................................... 3.10 — 0.47 2.63

3.33 — 0.23 3.10

1,050.81 336.38 6.59 1,380.60975.17 180.05 104.41 1,050.81

6 Debenture Redemption Reserve ........................................... 47.86 116.10$ 0.11 163.8518.24 29.62$ — 47.86

7 Investment Fluctuation Reserve ........................................... 682.84 4.52 70.00 617.3630.61 806.61 154.38 682.84

8 Capital Redemption Reserve ................................................ 68.75 — *** — 68.7550.00 18.75 — 68.75

9 Special Reserve (As per Section 45 IC of the RBI Act) ......... 129.91 43.09 0.09 172.91194.51 26.62 91.22 129.91

10 Hedging Reserve Account [Note 6] ..................................... (479.90) 559.92 — 80.0228.78 — 508.68 (479.90)

11 Foreign Exchange Fluctuation Reserve ................................. (57.31) 20.97 — (36.34)14.00 — 71.31 (57.31)

2,148.06 1,794.68 81.49 3,861.25†

2,048.50 1,073.14 973.58 2,148.06†

† [including Group Share in Joint Ventures Rs. 401.02 crores (2009 : Rs. 3.21 crores)]

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

141

CMYK

SCHEDULE II (contd.) Rupees crores

2010

12 Balance for 2009-2010 and earlier years as per Profit andLoss Account ....................................................................... 5,060.66

4,614.63Group Share in Joint Ventures ............................................ 975.40

28.07

Total .............................................. 9,897.31

6,790.76

# Transfer from Profit and Loss Account Rs. 286.88 crores (2009 : Rs. 180.05 crores)# Addition include adjustments pertaining to earlier periods in respect of Minority Interest amounting to Rs. 49.39 crores*** Transfer of Rs. NIL crores (2009 : Rs. 18.75 crores) from Profit and Loss Account$ Transfer from Profit and Loss Account Rs. 116.10 crores (2009 : Rs. 29.62 crores)

Provisions no longer required written backo Amount utilised for expenses incurred on amalgamation of previous year Rs. 5.18 crores (Net of Tax of Rs. 2.59 crores) and

impact of tax rate change on net debits to General Reserve Rs. 0.94 crores** Adjustment on adoption of Companies (Accounting Standards) Amendment Rules, 2009 on Accounting Standard 11 - Net of Tax

of Rs. 21.03 crores

SCHEDULE III Rupees crores

2010 2009

Loan Funds :(A) Secured : [Note 7]

(1) Debentures/Bonds ................................................................................ 2,330.20 2,880.86(2) Foreign Currency Loans from Banks ..................................................... 1,047.27 1,133.97(3) Rupee Loans :

(a) From Financial Institutions ............................................................ 44.25 41.92(b) From Banks ................................................................................... 4,561.72 2,648.08(c) From Others .................................................................................. 148.00 56.00

4,753.97 2,746.00(4) Loans and Advances on cash credit account from Banks .................... 510.76 709.36(5) Short-term Foreign Currency Loans from Banks ................................... — 253.70

8,642.20 7,723.89Group Share in Joint Ventures .................................................................... 330.25 0.82

Total ................................................. 8,972.45 7,724.71

(B) Unsecured :(1) Fixed Deposits ...................................................................................... 671.68 103.26(2) Short-term Loans :

(a) From Banks ................................................................................... 456.91 658.12(b) From Others .................................................................................. 261.20 213.84

718.11 871.96(3) Other Loans :

(a) From Financial Institutions ............................................................ 841.43 688.67(b) Foreign Currency Loans from Banks .............................................. 501.35 625.65(c) Zero Coupon Convertible Bonds ................................................... 850.86 961.52(d) Debentures/Bonds ......................................................................... 290.00 321.00(e) 9.25% Fully and Compulsorily Convertible Debentures ................. — 700.00(f) From Government of Gujarat ........................................................ 10.31 9.85(g) From Banks ................................................................................... 318.38 137.81(h) From Others .................................................................................. 39.76 45.88

2,852.09 3,490.38

4,241.88 4,465.60Group Share in Joint Ventures .................................................................... 271.52 —

Total ................................................. 4,513.40 4,465.60

Total ................................................. 13,485.85 12,190.31

4

SC

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

43

SCHEDULE V Rupees crores

2010 2010 2009 2009

Long Term Current Long Term Current

Investments (At Cost unless otherwise specified) :

Shares (Non-trade and fully paid-up) :

Unquoted :

(a) Equity Shares ....................................................................... 61.57 0.01 43.82 —

(b) Equity Shares - Associates [Note 1(c) & Note 24] ............... 54.85 — 50.09 —

(c) Preference Shares ................................................................ 43.20 — 34.52 —

159.62 0.01 128.43 —

Quoted :

(a) Equity Shares ....................................................................... 7.49 — 8.85 —

(b) Equity Shares - Associates [Note 1(c) & Note 24] ............... 42.29 — 31.88 —

49.78 — 40.73 —

209.40 0.01 169.16 —

Shares (Trade and fully paid-up, unless otherwise specified) :

Unquoted :

(a) Equity Shares ....................................................................... 8.82 — 6.17 —

(b) Equity Shares partly paid-up ............................................... 0.19 — — —

(c) Preference Shares ................................................................ 15.20 — 9.83 —

24.21 — 16.00 —

Debentures/Bonds (Non-trade & fully paid-up) :

(a) Unquoted ............................................................................ — — 33.25 —

(b) Quoted ................................................................................ — 52.76 — 16.80

— 52.76 33.25 16.80

Other Investments :

Government Securities (including Treasury Bills) :

(a) Unquoted ............................................................................ 0.01 — 0.01 —

(b) Quoted ................................................................................ — 205.29 — 99.08

0.01 205.29 0.01 99.08

Units :

Unquoted ................................................................................... 1.15 1,291.57 — 1,535.37

1.15 1,291.57 — 1,535.37

Trust Securities :

Unquoted ................................................................................... 1,548.17 — 1,511.14 —

1,548.17 — 1,511.14 —

Others :

Unquoted ................................................................................... — 143.95 0.05 —

— 143.95 0.05 —

1,782.94 1,693.58 1,729.61 1,651.25

Total ............... 3,476.52 3,380.86

Group Share in Investments of Joint Ventures ........................... 1,329.88 0.44

Total ............... 4,806.40 3,381.30

Cost (Net of amounts written off) of Unquoted Investments .... 4,498.57 3,224.69

Cost/Carrying Value of Quoted Investments ............................... 307.83 156.61

4,806.40 3,381.30

Less : Excess of cost over fair value of Current Investments (Net) 1.15 0.04

4,805.25 3,381.26

Market value of Quoted Investments ......................................... 422.50 188.09

44

SCHEDULE VI Rupees crores

2010 2009

Current Assets, Loans and Advances :

(A) Inventories (at cost or net realisable value whichever is lower) :

(i) Finished Products produced and purchased for sale ........................... 860.13 845.55

(ii) Contracts and Work-in-Progress ........................................................... 804.78 862.42

(iii) Manufactured Components ................................................................. 78.83 55.79

(iv) Raw Materials and Bought-out Components ....................................... 1,112.06 902.73

(v) Work-in-Progress – Property Development Activity and Long Term Contracts 576.33 498.36

(vi) Food, Beverages, Smokes and Operating Supplies ............................... 3.25 5.24

(vii) Stores and Spares ................................................................................. 65.75 58.20

(viii) Tools ..................................................................................................... 40.59 38.58

3,541.72 3,266.87

Group Share in Inventories of Joint Ventures .............................................. 7.27 4.59

Total .......... 3,548.99 3,271.46

(B) Sundry Debtors :

Unsecured unless otherwise stated :

Outstanding over six months : Considered good ..................................... 292.77 427.23

: Considered doubtful ................................ 163.90 123.23

456.67 550.46

Other Debts : Considered good ................................................................. 2,662.42 3,122.19

: Considered doubtful ............................................................ 1.61 3.29

2,664.03 3,125.48

3,120.70 3,675.94

Less : Unmatured Finance Charges ............................................................. 128.27 94.02

Less : Provision for Doubtful Debts ............................................................. 162.88 131.11

2,829.55 3,450.81

Group Share in Debtors of Joint Ventures .................................................. 377.62 19.98

Total .......... 3,207.17 3,470.79

(C) Cash and Bank Balances :

Cash, cheques and stamps on hand ........................................................... 246.87 392.81

Balances with Banks :

(i) On Current Account ............................................................................. 763.13 1,168.50

(ii) On Fixed Deposit Account .................................................................... 1,581.14 1,348.95

(iii) On Margin Account ............................................................................. 42.82 51.43

2,387.09 2,568.88

2,633.96 2,961.69

Group Share in Cash and Bank Balances of Joint Ventures ........................ 103.16 5.82

Total .......... 2,737.12 2,967.51

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

45

SCHEDULE VI (contd.) Rupees crores

2010 2009

(D) Other Current Assets :

Interest accrued on Investments .................................................................. 4.38 2.94

Others .......................................................................................................... 47.49 0.14

51.87 3.08

Group Share in Other Current Assets of Joint Ventures .............................. 0.07 0.11

Total .......... 51.94 3.19

(E) Loans and Advances :

(Unsecured, considered good unless otherwise stated) :

Bills of exchange, considered good ............................................................. 47.81 14.26

Bills of exchange, considered doubtful ....................................................... 1.02 1.02

48.83 15.28

Less : Provision for Doubtful Debts ............................................................. 1.02 1.02

47.81 14.26

Advances recoverable in cash or in kind or for value to be received :

Considered good ......................................................................................... 2,108.39 1,774.59

Considered doubtful .................................................................................... 88.80 79.74

2,197.19 1,854.33

Less : Provision for Doubtful Advances ....................................................... 85.50 74.91

2,111.69 1,779.42

Loans against assets/Retained Interest in Securitised Assets (Secured) :

Considered good ......................................................................................... 7,969.76 6,319.22

Considered doubtful .................................................................................... 411.66 678.79

8,381.42 6,998.01

Less : Provision for Doubtful Advances ....................................................... 411.66 379.63

7,969.76 6,618.38

Payments towards Income Tax and Surtax (Net of provisions) .................... 273.27 336.57

Balances - Customs, Port Trust, Excise, etc. ................................................. 71.63 112.53

10,474.16 8,861.16

Group Share in Loans and Advances of Joint Ventures .............................. 296.84 0.75

Total .......... 10,771.00 8,861.91

Total .......... 20,316.22 18,574.86

46

SCHEDULE VII Rupees crores

2010 2009

Current Liabilities and Provisions :

(A) Current Liabilities :

Acceptances ................................................................................................. 349.89 354.71

Sundry Creditors :

(i) Total outstanding dues of micro and small enterprises ....................... 24.21 6.76

(ii) Total outstanding dues of creditors other than micro and small enterprises 4,544.01 5,097.73

4,568.22 5,104.49

Dividend payable ......................................................................................... 0.34 6.19

Balances on Directors’ Current Accounts .................................................... 3.10 2.21

Interest accrued but not due on loans ........................................................ 151.48 210.10

Deposits/Advances received against hire purchase/lease agreements .......... 112.80 53.87

Other current liabilities ................................................................................ 1,023.21 1,039.09

6,209.04 6,770.66

Group Share in Current Liabilities of Joint Ventures ................................... 508.57 9.30

Total .......... 6,717.61 6,779.96

(B) Provisions :

Proposed Dividends ..................................................................................... 549.52 278.83

Provision for Tax on Proposed Dividends ..................................................... 74.23 33.23

Provision for diminution in value of long term investments ....................... 93.34 28.35

Provision for premium payable on redemption of convertible bonds ......... 238.49 269.51

Provision for compensated absences ........................................................... 334.72 466.92

Provision for Estimated Loss/Expenses on Securitisation ............................. 202.67 137.62

Provision : Others [Note 14] ........................................................................ 341.99 400.45

1,834.96 1,614.91

Group Share in Provisions of Joint Ventures ............................................... 103.12 0.84

Total .......... 1,938.08 1,615.75

Total .......... 8,655.69 8,395.71

SCHEDULE VIII Rupees crores

2010 2009

Miscellaneous Expenditure

(to the extent not written off or adjusted) :

(a) Finance Charges ................................................................................... 4.12 15.38

(b) Separation and other costs .................................................................. — 0.86

(c) Others .................................................................................................. 0.46 0.62

Total .......... 4.58 16.86

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

47

SCHEDULE IX Rupees crores

2010 2009

Income from Operations :

Income from services rendered ................................................................... 6,028.05 5,718.51

Income from Loan, Retained Interest in securitised assets and securitisation 1,534.90 1,373.41

Income from long term contracts ............................................................... 321.16 159.57

Hire Purchase income, Lease income and other rentals .............................. 83.49 167.50

Miscellaneous Income ................................................................................. 394.97 342.45

8,362.57 7,761.44

Group Share in Joint Ventures .................................................................... 7.32 8.46

Total .......... 8,369.89 7,769.90

SCHEDULE X Rupees crores

2010 2009

Other Income :

Profit on sale of Investments (Net) [Note 20 (b)] ........................................ 13.98 47.78

Dividends on other Investments [Note 20 (a)] ............................................ 68.87 100.94

Miscellaneous Income ................................................................................. 36.53 14.69

119.38 163.41

Group Share in Joint Ventures .................................................................... 0.05 0.05

Total .......... 119.43 163.46

SCHEDULE XI Rupees crores

2010 2009

Raw Materials, Finished and Semi-Finished Products :

(A) (Increase)/Decrease in Stock of Finished Goods, Work-in-Progress

and Manufactured Components :

Opening Stock :

(i) Finished Products produced and purchased for sale ........................... 845.55 1,013.20

(ii) Contracts and Work-in-Progress ........................................................... 862.42 730.01

(iii) Manufactured Components ................................................................. 55.79 48.10

1,763.76 1,791.31

Add : Stock taken over on acquisition

(i) Finished Products produced and purchased for sale ........................... 6.67 1.79

(ii) Contracts and Work-in-Progress ........................................................... — 149.73

6.67 151.52

Less : Closing Stock :

(i) Finished Products produced and purchased for sale ........................... 860.13 845.55

(ii) Contracts and Work-in-Progress ........................................................... 804.78 862.42

(iii) Manufactured Components ................................................................. 78.83 55.79

1,743.74 1,763.76

(Increase)/Decrease in Stock ........................................................................ 26.69 179.07

(B) Consumption of Raw Materials and Bought-out Components :

Opening Stock ............................................................................................. 902.73 1,029.39

Add : Purchases ........................................................................................... 14,338.40 11,801.58

15,241.13 12,830.97

Add : Stock taken over on acquisition ........................................................ — 7.52

Less : Closing Stock ..................................................................................... 1,112.06 902.73

14,129.07 11,935.76

(C) Purchases of Finished Products for sale ...................................................... 1,079.88 922.23

15,235.64 13,037.06

Group Share in Joint Ventures .................................................................... 32.27 26.73

Total .......... 15,267.91 13,063.79

48

SCHEDULE XII Rupees crores

2010 2009

Personnel :

Salaries, Wages, Bonus, etc. ........................................................................ 4,024.00 3,736.92

Contribution to Provident and other funds ................................................. 255.65 262.58

Welfare ........................................................................................................ 294.56 269.09

4,574.21 4,268.59

Group Share in Joint Ventures .................................................................... 8.34 6.27

Total .......... 4,582.55 4,274.86

SCHEDULE XIII Rupees crores

2010 2009

Interest, Commitment and Finance Charges :

On Term Loans and Debentures .................................................................. 905.36 730.91

On Others (Net) ........................................................................................... 188.93 105.68

Finance charges ........................................................................................... 26.21 21.17

1,120.50 857.76

Group Share in Joint Ventures .................................................................... 0.07 0.13

Total .......... 1,120.57 857.89

Less : Interest Income :

Interest on Government Securities, Debentures and Bonds - Gross .. 3.43 2.83

Interest - Others - Gross .................................................................... 136.94 104.60

140.37 107.43

Group Share in Joint Ventures .................................................................... 0.37 0.30

Total .......... 140.74 107.73

979.83 750.16

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

4

SCHEDULE XIV Rupees crores

2010 2009

Other Expenses :

Stores consumed ......................................................................................... 194.09 181.57

Tools consumed ........................................................................................... 58.90 68.87

Power and Fuel ............................................................................................ 510.77 471.40

Rent including lease rentals ......................................................................... 241.08 240.23

Rates and Taxes ........................................................................................... 70.40 5.37

Insurance ..................................................................................................... 58.19 57.49

Repairs and Maintenance :

Buildings ............................................................................................... 30.72 29.55

Machinery ............................................................................................. 172.83 191.82

Others .................................................................................................. 80.05 66.94

283.60 288.31

Postage, Telephone and Communication .................................................... 130.92 131.07

Software Charges ........................................................................................ 100.21 68.15

Legal and Professional Charges ................................................................... 192.76 200.30

Advertisement .............................................................................................. 254.57 203.98

Commission on sales/contracts (Net) ........................................................... 169.50 132.53

Discount allowed ......................................................................................... 102.90 72.87

Freight outward ........................................................................................... 873.87 718.36

Sales Promotion Expenses ........................................................................... 439.08 351.51

Travelling Expenses ...................................................................................... 458.58 487.15

Cost of Projects, Property etc. ..................................................................... 247.72 145.88

Subcontracting Charges .............................................................................. 873.93 770.21

Miscellaneous Expenses ............................................................................... 930.30 1,070.01

Amortisation of Expenses ............................................................................ 1.68 1.19

Directors’ Fees ............................................................................................. 0.14 0.09

Donations and Contributions ...................................................................... 18.75 16.89

Loss on Fixed Assets sold/scrapped/written off (Net) .................................. 17.88 6.04

Provision for diminution in value of Long Term Investments (Net) ............. 8.75 0.24

Net Increase of cost over fair value of Current Investments ....................... (0.25) (1.93)

Provision for doubtful debts/advances (Net) ............................................... 91.26 165.68

6,329.58 5,853.46

Group Share in Joint Ventures .................................................................... 7.44 5.50

Total .......... 6,337.02 5,858.96

5

SCHEDULE XV

Notes on the Consolidated Accounts for the year ended 31st March, 2010

1. The Consolidated Financial Statements relate to Mahindra & Mahindra Limited (M&M, the Company) and its subsidiaries, joint ventures and

associates. The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21) “Consolidated

Financial Statements”, Accounting Standard 23 (AS 23) “Accounting for Investment in Associates in Consolidated Financial Statements” and

Accounting Standard 27 (AS 27) “Financial Reporting of Interests in Joint Ventures” notified by the Companies (Accounting Standard) Rules,

2006. The Consolidated Financial Statements have been prepared on the following basis :

(a) Investments in Subsidiaries :

i) The Financial Statements of the Company and its subsidiary companies have been combined on a line by line basis by adding together

the book values of like items of assets, liabilities, income and expenses. Intra group balances, intra group transactions and unrealised

profits or losses have been fully eliminated.

ii) The difference between the costs of investment in the subsidiaries over the Company’s portion of equity of the subsidiary is recognised

in the financial statements as Goodwill or Capital Reserve.

iii) The difference between the proceeds from disposal of investment in a subsidiary and the carrying amount of its assets less liabilities as

of date of disposal is recognised in the Profit and Loss Account as profit or loss on disposal of investment in subsidiary.

iv) Minority Interest in the net assets of consolidated subsidiaries consists of :

a) the amount of equity attributable to minorities at the date on which investment in a subsidiary is made; and

b) the minorities’ share of movements in equity since the date the parent subsidiary relationship comes into existence.

v) The Financial Statements of the subsidiaries are drawn up to 31st

March, 2010.

The subsidiaries (which along with Mahindra & Mahindra Limited, the parent, constitute the group) considered in the presentation of these

Consolidated Financial Statements are :

Proportion of Proportion of voting

Country of ownership interest power where different

Name of the Subsidiary Company Incorporation as at as at as at as at

31-03-2010 31-03-2009 31-03-2010 31-03-2009

Indian Subsidiaries

Mahindra First Choice Wheels Limited * India 54.83% 54.83% — —

Mahindra Life Space Developers Limited India 51.08% 51.08% — —

Mahindra Consulting Engineers Limited India 51.00% 51.00% — —

Tech Mahindra Limited

[upto 22nd

March, 2010 – refer note 3 (iii)] India — 48.83% — 52.33%

Bristlecone India Limited India 81.97% 82.05% 100.00% 100.00%

Mahindra Engineering and Chemical Products Limited India 100.00% 100.00% — —

Mahindra Gujarat Tractor Limited India 60.00% 60.00% — —

Mahindra Holidays and Resorts India Limited * India 84.03% 95.29% — —

Mahindra Infrastructure Developers Limited India 40.87% 40.87% 80.00% 80.00%

Mahindra Intertrade Limited India 100.00% 100.00% — —

Mahindra Logisoft Business Solutions Limited

[upto 22nd

March, 2010 – refer note 3 (iii)] India — 100.00% — —

Mahindra & Mahindra Financial Services Limited * India 60.68% 60.85% — —

Mahindra Steel Service Centre Limited India 61.00% 61.00% — —

Mahindra Shubhlabh Services Limited India 83.05% 83.05% — —

NBS International Limited India 100.00% 100.00% — —

Mahindra Insurance Brokers Limited India 60.68% 60.85% 100.00% 100.00%

Mahindra Engineering Services Limited India 100.00% 100.00% — —

Mahindra World City Developers Limited India 42.21% 42.21% 82.62% 82.62%

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

5

Mahindra Gears & Transmissions Private Limited

(formerly known as Mahindra SAR Transmission

Private Limited) India 53.34% 100.00% — —

Mahindra Navistar Automotives Limited India 51.00% 51.00% — —

Mahindra World City (Maharashtra) Limited India 51.08% 51.08% 100.00% 100.00%

Mahindra Renault Private Limited India 51.00% 51.00% — —

Mahindra Ugine Steel Company Limited India 50.69% 50.69% — —

Mahindra World City (Jaipur) Limited India 37.80% 37.80% 74.00% 74.00%

CanvasM Technologies Limited

[upto 22nd

March, 2010 – refer note 3 (iii)] India — 39.11% — 80.10%

Mahindra Hinoday Industries Limited *

[upto 31st

March, 2009 – refer note 3 (iv)] India — 64.88% — 99.81%

Mahindra Integrated Township Limited India 48.74% 48.77% 99.92% 100.00%

Mahindra Vehicle Manufacturers Limited India 100.00% 100.00% — —

Mahindra Castings Limited

(formerly known as Mahindra Castings Private Limited) India 64.94% 65.00% — —

Mahindra Forgings Limited India 50.68% 60.56% — —

Mahindra Hotels and Residences India Limited India 84.02% 95.28% 99.99% 99.99%

Knowledge Township Limited

(formerly known as Mahindra Knowledge City Limited) India 51.08% 51.08% 100.00% 100.00%

Mahindra Holdings Limited India 100.00% 100.00% — —

Mahindra Logistics Limited India 100.00% 100.00% — —

Mahindra Rural Housing Finance Limited India 53.09% 53.25% 87.50% 87.50%

Mahindra Residential Developers Limited India 24.85% 24.87% 51.00% 51.00%

Mahindra Aerospace Private Limited India 100.00% 100.00% — —

Mahindra First Choice Services Limited India 100.00% 100.00% — —

Mahindra Navistar Engines Private Limited India 51.00% 51.00% — —

Mahindra Bebanco Developers Limited India 35.76% 35.76% 70.00% 70.00%

Industrial Township (Maharashtra) Limited

(formerly known as Mahindra Industrial Township Limited) India 51.08% 51.08% 100.00% 100.00%

Crest Geartech Limited India 51.00% 51.00% 100.00% 100.00%

Mahindra Business & Consulting Services Private Limited

(formerly known as Mahindra IT Consulting Private Limited) India 60.68% 82.05% 100.00% 100.00%

Mahindra Two Wheelers Limited India 80.00% 80.00% — —

Mahindra United Football Club Private Limited India 100.00% 100.00% — —

Defence Land Systems India Private Limited

(formerly known as Mahindra Defence Land Systems

Private Limited) India 100.00% 100.00% — —

Venturbay Consultants Private Limited

[upto 22nd

March, 2010 – refer note 3 (iii)] India — 48.83% — 100.00%

Mahindra Metal One Steel Service Centre Limited

(w.e.f. 11th

June, 2009) India 100.00% — — —

Raigad Industrial & Business Park Limited

(w.e.f. 18th

June, 2009) India 51.08% — 100.00% —

Proportion of Proportion of voting

Country of ownership interest power where different

Name of the Subsidiary Company Incorporation as at as at as at as at

31-03-2010 31-03-2009 31-03-2010 31-03-2009

5

Proportion of Proportion of voting

Country of ownership interest power where different

Name of the Subsidiary Company Incorporation as at as at as at as at

31-03-2010 31-03-2009 31-03-2010 31-03-2009

Retail Initiative Holdings Limited (w.e.f. 1st

July, 2009) India 100.00% — — —

Mahindra Retail Private Limited (w.e.f. 1st

July, 2009) India 78.91% — — —

Mahindra Punjab Tractors Private Limited

(w.e.f. 9th

October, 2009) India 100.00% — — —

Mahindra EcoNova Private Limited (w.e.f. 2nd

January, 2010) India 100.00% — — —

Mahindra Conveyor Systems Private Limited

(w.e.f. 4th

January, 2010) India 100.00% — — —

Foreign Subsidiaries

Mahindra Automotive Australia Pty. Limited Australia 80.00% 80.00% — —

Bristlecone Limited Cayman Islands 81.97% 82.05% — —

Mahindra (China) Tractor Company Limited China 85.90% 84.87% — —

Tech Mahindra (Beijing) IT Services Limited

[upto 22nd

March, 2010 – refer note 3 (iii)] China — 48.83% — 100.00%

Mahindra Yueda (Yancheng) Tractor Company Limited China 51.00% 51.00% — —

Mahindra Gears Cyprus Limited Cyprus 53.34% 53.34% 100.00% 100.00%

Tech Mahindra GmbH

[upto 22nd

March, 2010 – refer note 3 (iii)] Germany — 48.83% — 100.00%

Bristlecone GmbH Germany 81.97% 82.05% 100.00% 100.00%

Mahindra Engineering GmbH

(formerly known as Plexion Technologies GmbH) Germany 100.00% 100.00% — —

Mahindra Forgings Europe AG Germany 50.68% 60.56% 100.00% 100.00%

Gesenkschmiede Schneider GmbH Germany 50.68% 60.56% 100.00% 100.00%

JECO-Jellinghaus GmbH Germany 50.68% 60.56% 100.00% 100.00%

Falkenroth Umformtechnik GmbH Germany 50.68% 60.56% 100.00% 100.00%

Schöneweiss & Co. GmbH ** Germany 50.68% 60.56% 97.28% 97.28%

MHR Hotel Management GmbH Germany 63.02% 71.47% 75.00% 75.00%

PT Tech Mahindra Indonesia

[upto 22nd

March, 2010 – refer note 3 (iii)] Indonesia — 48.83% — 100.00%

Mahindra Europe S.r.l. Italy 80.00% 80.00% — —

Mahindra Graphic Research Design S.r.l. Italy 100.00% 100.00% — —

Metalcastello S.p.A.

(formerly known as Mahindra Metalcastello S.r.l.- name

changed pursuant to merger of Metalcastello S.p.A

w.e.f. 31st

December, 2009) Italy 51.00% 51.00% 95.61% 95.61%

Metalcastello S.p.A. (upto 31st

December, 2009) Italy — 51.00% — 100.00%

Engines Engineering S.r.l. Italy 70.00% 70.00% — —

EFF Engineering S.r.l. Italy 35.70% 35.70% 51.00% 51.00%

ID-EE S.r.l. Italy 49.00% 49.00% 70.00% 70.00%

Bristlecone (Malaysia) SDN. BHD. Malaysia 81.97% 82.05% 100.00% 100.00%

Tech Mahindra (Malaysia) SDN. BHD.

[upto 22nd

March, 2010 – refer note 3 (iii)] Malaysia — 48.83% — 100.00%

Heritage Bird (M) SDN. BHD. Malaysia 84.03% 95.29% 100.00% 100.00%

Mahindra Overseas Investment Company (Mauritius) Limited Mauritius 100.00% 100.00% — —

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

53

Proportion of Proportion of voting

Country of ownership interest power where different

Name of the Subsidiary Company Incorporation as at as at as at as at

31-03-2010 31-03-2009 31-03-2010 31-03-2009

Mahindra-BT Investment Company (Mauritius) Limited Mauritius 57.00% 57.00% — —

Mahindra Forgings International Limited Mauritius 50.68% 60.56% 100.00% 100.00%

Mahindra Forgings Global Limited Mauritius 50.68% 60.56% 100.00% 100.00%

Mahindra Gears International Limited Mauritius 100.00% 100.00% — —

Mahindra Gears Global Limited Mauritius 53.34% 53.34% — —

Mahindra Middleeast Electrical Steel Service Centre (FZC) Sharjah 90.00% 90.00% — —

Tech Mahindra (Singapore) Pte. Limited

[upto 22nd

March, 2010 – refer note 3 (iii)] Singapore — 48.83% — 100.00%

Bristlecone (Singapore) Pte. Limited Singapore 81.97% 82.05% 100.00% 100.00%

Mahindra & Mahindra South Africa (Proprietary) Limited South Africa 100.00% 90.73% — —

Tech Mahindra (Thailand) Limited

[upto 22nd

March, 2010 – refer note 3 (iii)] Thailand — 48.83% — 100.00%

Bristlecone UK Limited U.K. 81.97% 82.05% 100.00% 100.00%

Stokes Group Limited U.K. 50.64% 60.43% 99.92% 99.78%

Stokes Forgings Dudley Limited U.K. 50.64% 60.43% 100.00% 100.00%

Jensand Limited U.K. 50.64% 60.43% 100.00% 100.00%

Stokes Forgings Limited U.K. 50.64% 60.43% 100.00% 100.00%

Mahindra Engineering Services (Europe) Limited U.K. 100.00% 100.00% — —

Tech Mahindra (Americas) Inc.

[upto 22nd

March, 2010 – refer note 3(iii)] U.S.A. — 48.83% — 100.00%

Mahindra USA Inc. U.S.A. 100.00% 100.00% — —

Bristlecone Inc. U.S.A. 81.97% 82.05% 100.00% 100.00%

Mahindra Holidays and Resorts USA Inc. U.S.A. 84.03% 95.29% 100.00% 100.00%

Mahindra Technologies Inc.(upto 10th

March, 2010) U.S.A. — 100.00% — —

CanvasM (Americas) Inc.

[upto 22nd

March, 2010 – refer note 3 (iii)] U.S.A. — 39.11% — 100.00%

Mahindra Technologies Services Inc. (w.e.f. 4th

June, 2009) U.S.A. 100.00% — — —

Tech Mahindra (Nigeria) Limited

[w.e.f. 18th

August, 2009 & upto 22nd

March, 2010 –

refer note 3 (iii)] Nigeria — — — —

Tech Mahindra Bahrain Limited S.P.C.

[w.e.f. 3rd

November, 2009 & upto 22nd

March, 2010 –

refer note 3 (iii)] Bahrain — — — —

BAH Hotelanlagen AG (w.e.f. 11th

January, 2010) Austria 83.13% — 98.93% —

* excluding shares issued to ESOP Trust but not allotted to employees as per the Guidance Note on Accounting for Employee Share-based

Payments issued by The Institute of Chartered Accountants of India.

** includes fundamental economic rights and administrative rights (including but not limited to voting rights, information rights and right to

participate in shareholders meetings) in respect of 2.72% shares.

Note : Tech Mahindra Foundation is not consolidated as a subsidiary as it can apply its income for charitable objects only and cannot pay

dividend or transfer funds to its parent. Further, with effect from 23rd

March, 2010 Tech Mahindra Limited & all its subsidiaries cease to

be a subsidiary of the Company.

54

(b) Interests in Joint Ventures

The Group’s interests in jointly controlled entities of the Group are :

Name of the Entity Country of Percentage of Percentage of

Incorporation ownership ownership

interest interest

as at 31-03-2010 as at 31-03-2009

a) Mahindra Sona Limited India 29.77% 29.77%

b) PSL Erickson Limited India 18.06% 18.06%

c) Mahindra Water Utilities Limited $ India 50.00% 50.00%

d) Mahindra Inframan Water Utilities Private Limited $ India 50.00% 50.00%

e) Tech Mahindra Limited [w.e.f. 23rd

March, 2010 - refer note 3 (iii)] India 43.99% —

Interest in Joint Ventures is accounted for using Proportionate Consolidation Method.

$ Shareholding is through a subsidiary, Mahindra Infrastructure Developers Limited.

The financial statements of all the Joint Ventures are drawn upto 31st

March, 2010.

(c) Investment in Associates

The Group’s Associates are :

Name of the Entity Country of Percentage of Percentage of

Incorporation ownership ownership

interest interest

as at 31-03-2010 as at 31-03-2009

Owens Corning (India) Limited India 21.50% 21.50%

Mahindra Construction Company Limited India 43.83% 43.83%

Officemartindia.com Limited India 50.00% 50.00%

Rathna Bhoomi Enterprises Private Limited India 20.43% 20.43%

Kota Farm Services Limited India 37.37% 37.37%

Mriyalguda Farm Solution Limited India 37.37% 37.37%

Mega One Stop Farm Services Limited India 37.37% 37.37%

Mahindra Composites Limited India 30.56% 30.56%

Swaraj Automotives Limited India 44.19% 44.19%

Swaraj Engines Limited India 33.22% 33.22%

Eco Engines (upto 15th

January, 2010) Russia — 29.75%

Satyam Computer Services Limited

(w.e.f. 5th

May, 2009 and upto 22nd

March, 2010 – refer note 4) India — —

The financial statements of all the Associates are drawn up to 31st

March, 2010.

2. Accounting Policies :

(A) Basis of Accounting :

The financial statements are prepared in accordance with the generally accepted accounting principles in India and comply with the

Accounting Standards notified under sub-section (3C) of Section 211 of the Companies Act, 1956 and the relevant provisions thereof.

(B) Fixed Assets :

(a) (i) Fixed Assets are carried at cost less depreciation except as stated in (iii) below. Cost includes financing cost relating to borrowed

funds attributable to the construction or acquisition of qualifying fixed assets upto the date the asset is ready for use.

(ii) When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account

and resultant profit (including capital profit) or loss, if any, is reflected in the Profit and Loss Account.

(iii) Land and Buildings, of the parent company had been revalued as at 31st

October, 1984 at depreciated replacement values on the

basis of a valuation made by a firm of Chartered Surveyors and Valuers. The indices, if any, used are not stated in the valuation.

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

55

(b) (i) Leasehold land is amortised over the period of the lease.

(ii) Depreciation on fixed assets is provided on straight line method over its useful life estimated by management or on the basis of

depreciation rates prescribed under respective local laws.

(iii) Depreciation charge for each year is after deducting the amount representing the depreciation on the increase due to revaluation

of Land and Buildings, transferred from the Revaluation Reserve.

(C) Intangible Assets :

All Intangible Assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits are

consumed.

(a) Technical Knowhow :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year of

purchase of the technology.

(b) Development Expenditure :

The expenditure incurred on technical services and other project related expenses are amortised on the completion of the development

work over the estimated period of benefit not exceeding five years.

(c) Software Expenditure :

The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure is

incurred.

(d) Websites :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding five years.

(e) Timeshare Weeks :

Intangible assets representing ‘timeshare weeks’ are amortised over a period of ten years.

(f) Trademarks :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding ten years.

(g) Non-Compete Fees :

Non-compete payments are amortised equally over the estimated period of benefit, not exceeding ten years.

(D) Investments :

All long term investments, other than in Associates, are carried at cost. However, provision for diminution in value is made to recognise a

decline other than temporary, in the value of investments. Current investments are valued at the lower of cost and fair value, determined by

category of investment. Investments in Associates are accounted using the equity method.

(E) Inventories :

Inventories are stated at cost or net realisable value, whichever is lower. Cost is arrived at on a weighted average method and includes,

where appropriate, manufacturing overheads and excise duty. Cost of the inventory, includes interest, where appropriate, for long term

projects.

(F) Miscellaneous Expenditure (to the extent not written off or adjusted) :

Expenditure carried forward under this head is amortised as follows :

(a) Finance Charges :

The expenditure incurred in raising long term borrowings is amortised over the period of the borrowings. On early buyback,

conversion or repayment of borrowings, any unamortised expenditure is fully written off in that year.

(b) Separation and Other Costs :

Special Payments/Pensions under Voluntary Retirement Schemes.

The liability is amortised by the year ending March, 2010 from the month in which the liability is incurred.

(G) Foreign Exchange Transactions :

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are translated at

the year-end rates. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement as also on

translation of monetary items at the end of the year (other than those relating to long term foreign currency monetary items) is recognised

as income or expense, as the case may be.

56

Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing the acquisition of

fixed assets are added to or subtracted from the cost of such fixed assets and the balance accumulated in ‘Foreign Currency Monetary Item

Translation Difference Account’ and amortised over the balance term of the long term monetary item or 31st

March, 2011 whichever is

earlier.

Any premium or discount arising at the inception of a forward exchange contract is recognised as income or expense over the life of the

contract, except in the case where the contract is designated as a cash flow hedge.

(H) Derivative Instruments and Hedge Accounting :

The Company uses foreign currency forward contracts and currency options to hedge its risks associated with foreign currency fluctuations

relating to certain firm commitments and highly probable forecast transactions. The Company does not hold derivative financial instruments

for speculative purposes. The Company has applied to such contracts the hedge accounting principles set out in Accounting Standard (AS)

30 “Financial Instruments : Recognition and Measurement” by marking them to market.

Changes in the fair value of the contracts that are designated and effective as hedges of future cash flows are recognised directly in

Hedging Reserve Account and the ineffective portion is recognised immediately in the Profit and Loss Account.

(I) Revenue Recognition :

(a) Sales of products and services are recognised when the products are shipped or services rendered. Income from long term contracts

and sale of property (concerning property development activity) is, accounted for on percentage of completion basis. [Refer paragraph

(J) below]

(b) Dividends from investments are recognised in the Profit and Loss Account when the right to receive payment is established.

(J) Long Term Contracts and Property Development Activity :

Income on long term contracts and property development activity is accounted on the percentage of completion basis which necessarily

involves technical estimates of the percentage of completion of each contract/activity, and costs to completion of the contract/activity, on

the basis of which profits/losses are accounted. Such estimates, made by the management and certified to the auditors, have been relied

upon by them, as these are of a technical nature.

Project management fees receivable on fixed period contracts are accounted over the tenure of the contract/agreement. Where the

management fee is linked to the input costs, revenue is recognised as a proportion of the work completed based on progress claim

submitted. Where the management fees are linked to the revenue generation from the project, revenue is recognised on the percentage of

completion basis.

(K) Income from Lease/Hire Purchase :

Finance earnings on lease transactions are calculated by applying the interest rate implicit in the lease, to the investment in the leased

assets, as reduced by the net present value of the lease instalments falling due.

Income from hire purchase contracts entered prior to 1st

April, 2001 is accounted for on equated basis in accordance with the terms of the

contract (except in some cases in which it is accounted for by applying the interest rate implicit in such contracts). For hire purchase

transactions entered on or after 1st

April, 2001 the income is accounted for by applying the interest rate implicit in such contracts.

(L) Government Grants :

The Company is entitled to various incentives from a State Government, such as grants by way of refund of octroi duty paid by the

Company for its manufacturing unit located in a developing region. In view of the uncertainty in respect of the collection of these grants,

such grants are accounted for as and when the disbursements are received.

(M) Timeshare Business :

The activity of selling Timeshare and providing holiday facilities to members for a specified period each year, over a number of years, for

which membership fee is collected either in full up front, or on a deferred payment basis. Upto 30th

September, 2005 out of the total

membership fee, relevant portion reasonably attributable towards cost required to market Timeshare, which is assessed and revised

periodically, is recognised as Timeshare income in the year in which the purchaser of Timeshare becomes a member and the balance

representing ‘Advance towards members’ facilities’ is being recognised as Timeshare income equally over a period for which holiday

facilities are provided commencing from the year in which the member is entitled to benefits of membership under the scheme.

With effect from 1st

October, 2005 in accordance with the new membership rules, admission fee, which is non-refundable, is recognised as

income on admission of a member. Entitlement fee, which entitles the Timeshare member for the Timeshare facilities over the membership

usage period, is recognised as income equally over the usage period.

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

57

(N) Employee Benefits :

Defined Contribution Plan/Defined Benefit Plan/Long term compensated absences.

Group’s contributions paid/payable during the year to Superannuation Fund, ESIC and Labour Welfare Fund are recognised in the Profit and

Loss Account.

Contributions to Provident Fund are made to a Trust administered by the Group and are charged to Profit and Loss Account as incurred.

The Company is liable for the contribution and any shortfall in interest between the amount of interest realised by the investment and the

interest payable to members at the rate declared by the Government of India.

Group’s liability towards gratuity, long term compensated absences and post retirement medical benefit schemes are determined by

independent actuaries, using the projected unit credit method. Past services are recognised on a straight line basis over the average period

until the benefits become vested. Actuarial gains and losses are recognised immediately in the statement of Profit and Loss Account as

income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined

by reference to the market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds

are consistent with the currency and estimated terms of the defined benefit obligation.

(O) Borrowing Costs :

All borrowing costs are charged to the Profit and Loss Account other than :

(a) Borrowing costs that are attributable to the acquisition or construction of assets that necessarily take a substantial period of time to

get ready for their intended use. These are capitalised as part of the cost of such assets.

(b) Expenses incurred on raising long term borrowings which are amortised over the period of borrowings. On early buyback, conversion

or repayment of borrowings, any unamortised expenditure is fully written off in that year.

(P) Redemption Premium :

Premium payable on redemption of Bonds/Debentures is fully provided and charged to Securities Premium Account (Net of Tax) in the year

of issue.

(Q) Product Warranty :

In respect of warranties on sale of certain products, the estimated costs of these warranties are accrued at the time of sale. The estimates

for accounting of warranties are reviewed and revisions are made as required.

(R) Leases :

The Group’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns, etc.). The

leasing arrangements which are not non-cancellable range between eleven months and three years generally, and are usually renewable by

mutual consent on agreed terms. The aggregate lease rentals payable are charged as Rent including lease rentals.

(S) Segment Reporting :

The accounting policies adopted for segment reporting are in line with the accounting policies of the Group. Segments are identified

having regard to the dominant source and nature of risks and returns and internal organisation and management structure.

Revenues and expenses have been identified to the segments based on their relationship to the business activity of the segment.

Income/Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as

unallocated corporate income/expenses. Inter-segment transfers are at prices which are generally market led.

(T) Taxes on Income :

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject to

consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in

one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed

depreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidence

that sufficient future tax income will be available against which such deferred tax assets can be realised.

(U) Income from Securitisation and Assignment :

Securitised assets are derecognised as the contractual rights therein are transferred to the special purpose vehicle or buyers as the case may

be. On derecognition, the difference between book value of the securitised asset and consideration received as reduced by the estimated

provision for loss/expense and incidental expenses related to the transaction is recognised as gain or loss arising on securitisation.

In case of assignment of receivables the assets are derecognised as all the rights, titles, future receivables and interest thereof are assigned

to the purchaser. On derecognising, the difference between book value of the receivables assigned and consideration received as reduced

by the estimated provision for loss/expense and incidental expenses related to the transaction is recognised as gain or loss arising on

assignment.

58

3. Changes in Group Structure : During the year ended 31st

March, 2010, the following changes in Group structure have taken place and the same

have been appropriately dealt with in the Consolidated Financial Statements.

i. Mahindra Holidays & Resorts India Limited (MHRIL) : During the current year Mahindra Holidays & Resorts India Limited (MHRIL), a

subsidiary of the Company, had come out with an IPO which was accompanied by a simultaneous offer for sale of its’ shares held by M&M.

This has resulted in a dilution of M&M’s holding in MHRIL from 95.29% to 84.03%. While in the standalone accounts, M&M had reported

a profit on this transaction of Rs.90.75 crores, in the consolidated accounts of the Company, a deemed divestiture gain of Rs.112.55 crores

has been accounted for as an exceptional item.

ii. Mahindra Forgings Limited (MFL) : During the current year Mahindra Forgings Limited (MFL), a subsidiary of the Company, had issued and

allotted fresh equity shares to Qualified Institutional Buyers (QIBs). Further M&M also opted to convert the preferential warrants issued by

MFL to the Company. As a consequence of this the Group’s holding in MFL has reduced from 60.56% to 50.68%. These changes have

collectively resulted in a deemed divestiture gain of Rs.12.89 crores which has been reflected as an exceptional item in the consolidated

accounts.

iii. Tech Mahindra Limited (TML) : M&M and Mahindra-BT Investment Company (Mauritius) Limited (MBTICM), a subsidiary of the Company,

were effectively holding 48.62% in the equity of Tech Mahindra Limited (TML). MBTICM had entered into an option agreement whereby it

had granted AT&T an option to acquire its investment in TML at a fixed price of US$ 3.5022 per share. Pursuant to the same, AT&T has

exercised its Options and acquired 98,70,912 equity shares of TML on 22nd

March, 2010 from MBTICM.

At the year end the effective shareholding of the Company alongwith MBTICM in TML stands reduced to 43.99%, resulting in TML

alongwith its subsidiary companies ceasing to be Subsidiaries of the Company with effect from 22nd

March, 2010.

For the purposes of the Balance Sheet as at 31st

March, 2010, TML has, on a consolidated basis, been treated as a Joint Venture, in

accordance with the provisions of Accounting Standard 27 dealing with Financial Reporting of Interests in Joint Venture.

While the sale of shares has resulted in a gain of Rs.94.96 crores for MBTICM, the de-subsidiarisation of Tech Mahindra group has resulted

in a deemed divestiture loss amounting to Rs. 45.21 crores and these have been reflected in the consolidated accounts as exceptional

items.

iv. Mahindra Hinoday Industries Limited (MHIL) : In accordance with a scheme of amalgamation sanctioned by the Hon’ble High Court of

Judicature, Bombay vide its order dated 10th

July, 2009 Mahindra Hinoday Industries Limited (MHIL), a subsidiary of Mahindra Castings

Private Limited (MCPL), has merged with MCPL with effect from 1st

April, 2008, the appointed date. In accordance with the Court Order,

the assets and liabilities of MHIL have been transferred at their respective fair values. Since the merger was effective 1st

April, 2008, the

impact of accounting treatment in accordance with the Court Order, amounting to Rs.2.26 crores, has been accounted as a prior period

item.

v. Metalcastello S.p.A. (MMCS) : In accordance with a scheme of amalgamation sanctioned by The Ordinary Court Room, Italy vide its order

dated 17th

December, 2009, Metalcastello S.p.A., a subsidiary of Mahindra Metalcastello S.r.l. (MMCS), has merged with MMCS with effect

from 1st

April, 2009, the appointed date.

vi. Mahindra Shubhlabh Services Limited (MSSL) : In terms of the proposed scheme of arrangement between Mahindra Shubhlabh Services

Limited (MSSL), and the Company the scheme would be operative, pending statutory approvals, with effect from 1st

January, 2010. The

scheme proposes restructuring of the non-fruit business of MSSL as a result of which the non-fruit business would be transferred to the

Company. Pending the approvals, the financial statements of MSSL, an existing subsidiary of the Company, have been considered in the

Consolidated Financial Statements without considering the impact of the proposed scheme.

4. The Consolidated Financial Statements of the Company do not include Satyam Computer Services Limited (SCSL) and its subsidiaries, as SCSL is

in the process of restating its financials. The Company Law Board vide its order dated 15th

April, 2009 has given extension of time till 30th

June,

2010 to SCSL for filing of the documents with various statutory authorities. The Securities Exchange Board of India vide its letter dated 19th

April,

2010 has approved the publishing of the Consolidated Financial Statements of the Company for the year ended 31st

March, 2010 without

including SCSL and its subsidiaries. Hence the impact of post acquisition profit/loss of SCSL on ‘Share of Profit of Associates for the year’, ‘Group

Share in Investments of Joint Ventures’ and ‘Reserves and Surplus’ is not considered in the Consolidated Financial Statements of the Group for

the current year.

5. The Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India requires that

shares allotted to a trust but not transferred to employees be reduced from Share Capital and Reserves. Accordingly, the Company has reduced

the Share Capital by Rs. 3.63 crores (2009 : Rs. 3.10 crores), Securities Premium by Rs. 84.29 crores (2009 : Rs. 15.20 crores) for the 72,63,296

shares of Rs. 5 each (2009 : 31,02,653 shares of Rs. 10 each) held by the trust pending transfer to the eligible employees.

The Share Capital of the Company has also been reduced and the General Reserve increased by Rs. 2.63 crores (2009 : Rs. 3.10 crores) for the

52,63,296 bonus shares of Rs. 5 each (2009 : 31,02, 653 shares of Rs. 10 each) issued by the Company in September, 2005 to the trust but not

yet transferred by the trust to the employees. The above monies which are treated as advance received from it, is included under Current

Liabilities.

6. Consequent to the announcement issued by The Institute of Chartered Accountants of India dated 29th

March, 2008 in respect of forward

exchange contracts and currency and interest rate swaps, the Company has applied the Hedge Accounting principles set out in the Accounting

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

5

Standard (AS) 30 “Financial Instruments : Recognition and Measurement”. Accordingly, such contracts are marked to market and the gain

aggregating Rs. 80.02 crores (Net of Tax of Rs. 27.20 crores) [2009 : Loss of Rs. 479.90 crores (Net of Tax of Rs. 223.57 crores)] arising

consequently on contracts that were designated and effective as hedges of future cash flows has been recognised directly in the Hedging

Reserve Account.

7. Loans :

(a) Secured borrowings are secured by a pari-passu charge on immovable properties of the entities both present and future, subject to certain

exclusions and are also secured by pari-passu charge on the movable properties of the Entities including movable machinery, machinery

spares, tools and accessories, both present and future, subject to certain exclusions.

(b) Loans and Advances from Banks are secured by a first charge on whole of the Current Assets namely inventories, certain book debts,

outstanding monies, receivables, claims, etc. both present and future.

8. (a) The depreciation charge for the year excludes :

i) An amount of Rs. 0.42 crores (2009 : Rs. 0.38 crores), representing depreciation on the increase due to revaluation of Land and

Buildings transferred from the Revaluation Reserve.

ii) An amount of Rs. 6.71 crores (2009 : Rs. 4.08 crores), representing depreciation on assets used for development work. This

expenditure is transferred to Development Expenditure and is appropriately amortised.

(b) Additions to assets include assets taken over due to acquisition of subsidiaries :

Rupees crores

Description of Assets Cost Depreciation/

Amortisation

Land - Leasehold ......................................................................................................................... 26.21 —

Plant and Machinery ................................................................................................................... 6.12 0.59

Furniture and Fittings .................................................................................................................. 6.62 0.50

Vehicles, Cycles, etc. .................................................................................................................... 1.10 0.22

Software Expenditure .................................................................................................................. 3.11 0.80

Property – Leasehold ................................................................................................................... 6.98 0.53

Total ............................................................................................................................................ 50.14 2.64

9. During the year, Mahindra & Mahindra Financial Services Limited has without recourse assigned loan receivables of 31,628 (2009 : 32,083)

contracts amounting to Rs. 1,044.61 crores (2009 : Rs. 1,036.23 crores) (including future interest receivable) for a consideration of Rs. 971.28

crores (2009 : Rs. 915.11 crores) and de-recognised the assets from the books. The income booked in respect of assignment of receivables

includes certain amount towards cost of future servicing of the assigned pool and an appropriate amount has been provided towards

expenditure for future services. On assignment of receivables income is booked at Rs. 190.58 crores (2009 : Rs. 151.95 crores) and provision for

estimated loss/expenses of Rs. 80.51 crores (2009 : Rs. 54.27 crores). During the year provision in respect of securitisation of Rs. 15.46 crores

(2009 : Rs. 7.67 crores) considered no longer necessary has been written back.

10. The Company had issued during the year ended 31st

March, 2007, Zero Coupon Foreign Currency Convertible Bonds (Bonds 2011) aggregating

US$ 200 million, at par. The bond holders have an option to convert these bonds into Equity Shares with full voting rights or Global Depository

Receipts (GDRs) determined at an initial conversion price of Rs. 461.02 per share of Rs. 5 each (2009 : Rs. 922.04 per share of Rs. 10 each) with

fixed exchange rate of conversion of Rs. 44.42 = US$ 1, at any time on or after 7th

May, 2006 upto 7th

March, 2011.

The Bonds 2011 may be redeemed, in whole but not in part, at the option of the Company at any time on or after 13th

April, 2008 subject to

satisfaction of certain conditions. Unless previously converted, redeemed or purchased and cancelled, the bonds fall due for redemption on 14th

April, 2011 at 128.03 per cent of their principal amount. Bonds 2011 of the face value of US$ 10.50 million have been bought back and

cancelled in the previous year. Upto 31st

March, 2010, none of the Bonds 2011 have been converted into equity shares/GDRs.

The net proceeds of Rs. 48.46 crores, unutilised as at 31st

March, 2010, is disclosed under Cash and Bank balances.

The Company’s 93,95,974 Unsecured Fully and Compulsorily Convertible Debentures (FCD’s) having face value of Rs. 745 per FCD issued during

the year ended 31st

March, 2009, were compulsorily converted on 27th

January, 2010 into 93,95,974 Ordinary (Equity) shares of Rs. 10 each

[before sub division of the Ordinary (Equity) Shares] of the Company at a premium of Rs. 735 per share. Consequent to the conversion the Share

Capital and Securities Premium Account of the Company have increased by Rs. 9.40 crores and Rs. 690.60 crores respectively.

6

11. Employee Defined Benefits :

Defined benefit plans – as per Actuarial Valuation on 31st

March, 2010

Rupees crores

Funded Plan Unfunded Plans

Gratuity Gratuity Post Retirement Post Retirement

Medical Benefits Housing Allowance

2010 2009 2010 2009 2010 2009 2010 2009

A Expense recognised in the statement

of Profit & Loss Account for the

year ended 31st March

1 Current Service Cost 25.96 22.19 12.27 21.60 0.44 0.23 1.50 —

2 Interest Cost 26.96 20.57 9.00 10.59 0.41 0.25 0.84 —

3 Expected return on Plan Assets (18.66) (19.82) (0.10) (0.04) — — — —

4 Actuarial (Gains)/Losses (10.90) 35.86 (4.84) 8.21 4.32 1.80 (1.77) —

5 Past Service Cost 12.14 0.03 (0.02) 0.05 — — — —

6 Settlement Cost — — — — — — — —

7 Payments on account of

employee transferred (0.22) (0.04) (0.07) — — — — —

8 Effect of the limit in Para 59(b)

of the revised AS 15 0.08 (0.01) — — — — — —

9 Total expense recognised in

Personnel (Sch XII) 35.36 58.78 16.24 40.41 5.17 2.28 0.57 —

B. Net Asset/(Liability) recognised in the

Balance Sheet as at 31st

March

1 Present Value of Defined Benefit

Obligation as at 31st

March 378.12 337.58 162.51 116.27 9.88 4.99 10.99 —

2 Fair value of Plan Assets as at

31st

March 305.04 230.08 0.05 0.21 — — — —

3 Amount not recognised

as an asset (0.21) (3.92) — 39.65 — — — —

4 Funded status [Surplus/(Deficit)] (72.87) (103.58) (162.46) (155.71) (9.88) (4.99) (10.99) —

5 Net Asset/(Liability) as at

31st

March (72.87) (103.58) (162.46) (155.71) (9.88) (4.99) (10.99) —

C. Change in the obligations during

the year ended 31st

March

1 Present Value of Defined Benefit

Obligation at the beginning of

the year 341.72 278.71 95.95 32.04 5.00 2.95 10.42 —

2 Adjustment to the opening

balance/Exchange rate variation (0.17) — 57.06 — — — — —

3 Obligations arising on account

of acquisitions during the year — (3.08) 2.42 0.68 — — — —

4 Current Service Cost 25.96 22.19 12.27 61.24 0.44 0.23 1.50 —

5 Interest Cost 26.96 20.58 9.01 10.59 0.41 0.25 0.84 —

6 Actuarial (Gains)/Losses (6.15) 35.86 (4.78) 8.16 4.32 1.80 (1.77) —

7 Liabilities settled on sale of

business 0.28 — — (3.12) — — — —

8 Benefits paid (22.62) (12.54) (9.40) (13.70) (0.29) (0.23) — —

9 Past Service Cost 12.14 — (0.02) 0.06 — — — —

10 Present Value of Defined

Benefit Obligation at the

end of the year 378.12 341.72 162.51 95.95 9.88 5.00 10.99 —

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

6

D. Change in the fair value of plan

assets during the year ended

31st March

1 Fair value of Plan Assets at the

beginning of the year 239.13 217.95 — — — — — —

2 Adjustment to the opening

balance/Exchange rate variation (4.21) — — — — — — —

3 Fair value of Plan Assets arising

on account of acquisitions

during the year 1.01 (0.16) — — — — — —

4 Expected return on Plan Assets 18.17 20.03 — — — — — —

5 Actuarial Gains/(Losses) 7.26 0.27 — — — — — —

6 Contributions by employer 66.30 10.59 0.05 2.41 0.28 0.22 — —

7 Asset distributed on sale of

business — 1.76 — — — — — —

8 Actual Benefits paid (22.62) (11.31) — (2.41) (0.28) (0.22) — —

9 Fair value of Plan Assets

at the end of the year 305.04 239.13 0.05 — — — — —

10 Actual return on Plan Assets 22.24 17.38 — — — — — —

E. Major category of Plan Assets

as a percentage of total plan

Insurer Managed Funds 97.96% 100.00%

Others 2.04% 0.00%

F. Actuarial Assumptions

1 Discount Rate (Basis - prevailing 7.50 % - 7.50 % - 6.85 % - 7.50 % - 7.60 % - 7.50 % -

market yields of govt. securities) 8.45 % 8.50 % 8.50 % 8.50 % 8.45 % 8.50 % 8.45%

2 Expected Rate of return on 7.50 % -

Plan Assets 7.07% 9.50 %

3 In-service Mortality Indian Assured Lives Mortality (1994-96) Modified ultimate

4 Turnover rate Age 21 to 5.00% Age 21 to Age 21 to 5.00% Age 21 to

30 - 10% 44 -25% 30 - 10% 30 - 10%

Age 31 to Age 44 to Age 31 to Age 31 to

40 - 3% 59 - 10% 40 - 5% 40 - 5%

Age 41 to Age 41 to Age 41 to

59 - 2% 50 - 3% 50 - 3%

Age 51 Age 51

and and

above - above -

2% 2%

5 Medical Premium inflation 3.00%- 3.00%-

6.00% 6.00%

Rupees crores

Funded Plan Unfunded Plans

Gratuity Gratuity Post Retirement Post Retirement

Medical Benefits Housing Allowance

2010 2009 2010 2009 2010 2009 2010 2009

6

One percentage point increase in One percentage point decrease in

medical inflation rate medical inflation rate

G. Effect of one percentage point

change in the assumed medical

inflation rate

Current Year

Effect on the aggregate service and

interest cost of Post Employment

Medical benefits 0.25 (0.20)

Effect on the accumulated

Post Employment Medical benefit

obligations 1.38 (1.11)

Previous Year

Effect on the aggregate service and

interest cost of Post Employment

Medical benefits 0.14 (0.16)

Effect on the accumulated

Post Employment Medical benefit

obligations 0.46 (1.38)

Rupees crores

Period ended

H. Experience Adjustments 2010 2009 2008 2007

Gratuity (Funded)

Defined Benefit Obligation 378.12 341.72 278.71 204.46

Plan Assets 305.04 239.13 217.95 144.67

(Deficit)/Surplus (73.08) (102.59) (60.76) (59.79)

Experience adjustments on Plan Liabilities 13.40 34.34 (3.36) —

Experience adjustments on Plan Assets 4.92 0.02 — —

Gratuity (Unfunded)

Defined Benefit Obligation 162.51 95.95 52.75 32.05

Plan Assets 0.05 — — —

(Deficit)/Surplus (162.46) (95.95) (52.75) (32.05)

Experience adjustments on Plan Liabilities (0.26) 0.02 — —

Post Retirement Medical Benefits (Unfunded)

Defined Benefit Obligation 9.88 5.00 2.95 3.30

Plan Assets — — — —

(Deficit)/Surplus (9.88) (5.00) (2.95) (3.30)

Experience adjustments on Plan Liabilities 5.21 1.24 (0.49) 0.07

Post Retirement Housing Allowance (Unfunded)

Defined Benefit Obligation 10.99 — — —

Plan Assets — — — —

(Deficit)/Surplus (10.99) — — —

Experience adjustments on Plan Liabilities 0.15 — — —

Basis used to determine expected rate of return on assets :

Based on expectation of the average long term rate of return expected on investment of the fund, during the estimated term of obligation.

The estimate of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant

factors, such as supply and demand in the employment market.

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

63

12. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) by its order dated 7th

December, 2009 has rejected the Company’s appeal

against the order dated 30th

March, 2005 passed by the Commissioner of Central Excise (Adjudication), Navi Mumbai confirming the demand

made on the Company for payment of differential excise duty (including penalty) of Rs. 304.11 crores in connection with the classification of

Company’s Commander range of vehicles, during the years 1991-1996. Whilst the Company had classified the Commander range of vehicles as

10-seater attracting a lower rate of excise duty, the Commissioner of Central Excise (Adjudication), Navi Mumbai, has held that these vehicles

could not be classified as 10-seaters as they did not fulfil the requirement of 10-seater vehicles, as provided under the Motor Vehicles Act, 1988

(MVA) and Maharashtra Motor Vehicles Rules, 1989 (MMVR) and as such attracted a higher rate of excise duty.

In earlier collateral proceedings on this issue, the CESTAT had by an Order dated 19th

July, 2005 settled the controversy in the Company’s favour.

The CESTAT had accepted the Company’s submission that MVA and MMVR could not be referred to for determining the classification for the

purpose of levy of excise duty and rejected the Department’s Appeal against the Order of the Collector, Central Excise classifying the Commander

range of vehicles as 10-seaters. The Department’s appeal against the CESTAT Order dated 19th

July, 2005 is pending before the Supreme Court

of India but the operation of the Order has not been stayed.

The Company has filed an appeal against the aforesaid order dated 7th

December, 2009 inter alia, on the grounds that the MVA and MMVR

cannot be referred to for the purpose of determining the excise classification, as has been repeatedly held by various judicial fora, including the

Supreme Court and particularly by CESTAT vide its order dated 19th

July, 2005 in the Company’s own case referred to above.

Without prejudice to the grounds raised in the appeal, the Company has paid an amount of Rs. 40 crores in January, 2010. Pending admission

of the Company’s appeal the Supreme Court has passed an interim order staying the recovery of the balance amount till further orders.

In another case relating to Armada range of vehicles manufactured during the years 1992 to 1996, by the Company at its Nashik facility, the

Commissioner of Central Excise, Nashik passed an order dated 20th

March, 2006 confirming a demand of Rs. 24.75 crores, on the same grounds

as adopted for Commander range of vehicles. The CESTAT has given an unconditional stay against this order, which is yet to be finally heard by

the Tribunal.

The Company strongly believes, based on legal advice it has received, that the CESTAT order dated 7th

December, 2009 which is under appeal in

the Supreme Court is not sustainable in law and hence the Company has a very good chance of succeeding in the matter. As such, the Company

does not expect any liability on this account. However, in view of the CESTAT order, the Company has reflected the above amount aggregating

Rs. 328.86 crores and the interest of Rs. 168.05 crores accrued on the same upto 31st

March, 2010, as a Contingent Liability in the Accounts

and the same is included in the amounts disclosed under Note 13 (b)(i).

13. Contingent Liability :

(a) Guarantees given :

Rupees crores

Outstanding amounts against the guarantees

2010 2009

For employees ................................................................................................................ 1.05 1.05

For other companies ...................................................................................................... 330.72 181.39

Others ............................................................................................................................ 2.42 105.85

Group share in Joint Ventures Rs. 25.29 crores (2009 : Rs. Nil)

(b) Claims against the Companies not acknowledged as debts comprise of :

(i) Excise Duty, Sales tax and Service tax claims disputed by the Companies relating to issues of applicability and classification aggregating

Rs. 1,004.38 crores (Net of Tax : Rs. 726.63 crores) [2009 : Rs. 427.70 crores (Net of Tax : Rs. 280.02 crores)].

(ii) Other Matters (excluding claims where amounts are not ascertainable) : Rs. 94.04 crores (Net of Tax : Rs. 68.41 crores) [2009 : Rs.

104.68 crores (Net of Tax : Rs. 50.79 crores)].

(iii) On Capital account : Rs. 1.18 crores (2009 : Rs. 1.18 crores).

(iv) Group Share in Joint Ventures Rs. 7.89 crores (Net of Tax : Rs. 7.75 crores) [2009 : Rs. 0.38 crores (Net of Tax : Rs. 0.38 crores)].

(c) Taxation matters :

(i) Demands not acknowledged as debts and not provided for, relating to issues of deductibility and taxability in respect of which the

matters are in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be completed :

- Income Tax : Rs. 409.78 crores (2009 : Rs. 368.52 crores)

- Group Share in Joint Ventures : Rs. 22.57 crores (2009 : Rs. 0.29 crores)

(ii) Items which have succeeded in appeal, but the Income Tax Department is pursuing/likely to pursue in appeal/reference and exclusive

of the effect of similar matters in respect of assessments remaining to be completed :

- Income Tax matters : Rs. 70.58 crores (2009 : Rs. 58.63 crores)

- Surtax matters : Rs. 0.13 crores (2009 : Rs. 0.13 crores)

(d) Bills discounted not matured Rs. 31.40 crores (2009 : Rs. 91.31 crores).

(e) Corporate undertaking on Securitisation/Assignment by Mahindra & Mahindra Financial Services Limited Rs. 626.25 crores

(2009 : Rs. 458.20 crores).

64

14. (a) Provision - Others Rs. 336.29 crores (2009 : Rs. 389.37 crores) includes provision for warranty Rs. 213.06 crores (2009 : Rs. 170.55

crores). This relates to warranty provision made in respect of sale of certain products, the estimated costs of which are accrued at the time

of sale. The products are generally covered under a free warranty period ranging from six months to three years.

(b) Provision for Contingencies Rs. 5.70 crores (2009 : Rs. 11.08 crores) is in respect of labour demands under negotiation at certain locations

of the Company. The ultimate settlement is contingent on the conclusion of negotiations.

(c) Provision for retired assets Rs. 15.83 crores (2009 : Rs. 16.89 crores) is in respect of diminution in value of certain assets substantially

retired from active use.

The movement in above provisions is as follows :

Rupees crores

Warranty Contingency Retired assets

Provisions 2010 2009 2010 2009 2010 2009

Balance as at 1st

April .............................................................. 170.55 139.11 11.08 9.55 16.89 17.01

Add : On Amalgamation during the year ............................... 0.43 0.25 — — — —

Add : Provision made during the year .................................... 128.40 120.33 4.77 6.85 — —

Less : Utilisation/Reversal during the year ................................ 86.32 89.14 10.15 5.32 1.06 0.12

Balance as at 31st

March ......................................................... 213.06 170.55 5.70 11.08 15.83 16.89

Group Share in Joint Venture : Rs. 0.12 crores (2009 : Rs. 0.10 crores)

15. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st

March, 2010 is Rs. 1,400.29

crores (2009 : Rs. 1,259.97 crores).

Group Share in Joint Ventures : Rs. 118.01 crores (2009 : Rs. 0.29 crores).

16. Research and Development expenditure debited to the Profit and Loss account, including certain expenditure based on allocations made

aggregate Rs. 275.72 crores (2009 : Rs. 240.47 crores).

Group Share in Joint Ventures : Rs. NIL (2009 : Rs. 0.03 crores).

17. The components of Deferred Tax Liability and Assets as at 31st

March, 2010 are as under :

Rupees crores

2010 2009

Deferred Tax Liability :

(i) On fiscal allowances on Fixed Assets ........................................................................................ 517.47 445.30

(ii) Others ....................................................................................................................................... 207.20 140.45

Group Share in Joint Ventures .................................................................................................. 0.22 0.50

724.89 586.25

Deferred Tax Assets :

(i) Provision for Compensated absences ....................................................................................... 97.04 101.40

(ii) Provision for Doubtful Debts/Advances .................................................................................... 247.19 209.99

(iii) Unabsorbed depreciation carried forward #............................................................................ 113.47 115.66

(iv) Premium on Redemption of Zero Coupon Convertible Bonds ................................................. 18.10 40.08

(v) Provision for Gratuity ................................................................................................................ 14.09 1.49

(vi) Provision for Post Retirement Medical Expenses ....................................................................... 0.02 17.61

(vii) Others ....................................................................................................................................... 174.50 287.54

Group Share in Joint Ventures .................................................................................................. 12.27 0.88

676.68 774.65

Net Deferred Tax Liability/(Assets) ..................................................................................................... 48.21 (188.40)

# (considered, as there are compensatory timing differences the reversal of which, will result in sufficient future taxable income against which

this can be realised).

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

65

18. Exceptional items of Rs. 250.23 crores (Credit) [2009 : Rs. 76.39 crores (Debit)], comprise of the following :

Rupees crores

2010 2009

1. Profit on divesture of Long Term Investments (Net) ............................................................................ 264.56 83.18

2. Impairment of Assets ........................................................................................................................... (6.35) (311.25)

3. Transferred from Investment Fluctuation Account .............................................................................. — 154.38

4. Restructuring Cost ............................................................................................................................... (3.82) —

5. Amortisation of liability ....................................................................................................................... — (5.30)

6. Others .................................................................................................................................................. (4.16) 2.60

Total ................................................................... 250.23 (76.39)

Figures in brackets signify charge to Profit and Loss account.

19. Adjustments pertaining to previous years, net of current and deferred tax, comprise of the following :

Rupees crores

2010 2009

1. (Excess)/Short provision of Income Tax in respect of previous years ................................................... 0.15 0.07

2. Other Adjustments ............................................................................................................................... 4.12 6.29

Total ................................................................... 4.27 6.36

20. (a) Dividends on other investments Rs. 68.87 crores (2009 : Rs. 100.94 crores) includes Rs. 66.87 crores (2009 : Rs. 100.94 crores) in respect

of current investments and Rs. 2.00 crores (2009 : Rs. Nil) in respect of long term investment.

(b) Profit on sale of investments (Net) includes profit on disposal of current investments (Net) Rs. 3.68 crores (2009 : Rs. 12.53 crores), and

profit on disposal of long term investments (Net) Rs. 10.30 crores (2009 : Rs. 35.25 crores).

21. Work-in-progress – Property Development Activity and Long Term Contracts and Advances recoverable in cash or kind or for value to be received

includes Rs. 68.73 crores (2009 : Rs. 68.73 crores) on account of certain projects, the commencement of which has been delayed pending

resolution of certain matters including receipt of approvals and outcome of court cases.

22. Related Party Disclosures :

(a) Names of related parties where transactions have taken place during the year :

Where Control exists :

Sl. No. Name of the Company

1. Tech Mahindra Foundation [upto 22nd

March, 2010 - refer note 3 (iii)]

Associates :

Sl. No. Name of the Company Sl. No. Name of the Company

1. Owens Corning (India) Limited 7. Mriyalguda Farm Solution Limited

2. Mahindra Construction Company Limited 8. Mega One Stop Farm Services Limited

3. Officemartindia.com Limited 9. Eco Engines (upto 15th

January, 2010 on which date it got

liquidated)

4. Rathna Bhoomi Enterprises Private Limited 10. Swaraj Automotives Limited

5. Mahindra Composites Limited 11. Swaraj Engines Limited

6. Kota Farm Services Limited 12. Satyam Computer Services Limited (w.e.f. 5th

May, 2009 and

upto 22nd

March, 2010) – (refer note 4)

Joint Ventures :

Sl. No. Name of the Company Sl. No. Name of the Company

1. Mahindra Sona Limited 4. PSL Erickson Limited

2. Mahindra Water Utilities Limited 5. Tech Mahindra Limited [w.e.f. 23rd

March, 2010 – refer note 3(iii)]

3. Mahindra Inframan Water Utilities Private Limited

66

Key Management Personnel :

Vice Chairman and Managing Director ........................................... Mr. Anand Mahindra

Executive Directors ........................................................................... Mr. B.N. Doshi

Mr. A.K. Nanda

Welfare Funds :

Sl. No. Name of the Fund

1. Mahindra World School Education Trust

2. M&M Benefit Trust

3. M&M Employee’s Welfare Fund

4. M&M Employee’s Farm Equipment Sector Employee’s Welfare Fund

5. M&M Fractional Entitlements Trust

(b) The related party transactions are as under :

Rupees crores

Sl. Nature of Transactions Subsidiary Associate Joint Key Welfare

No. Companies Companies Ventures Management Funds

# Personnel

1. Purchases :

Goods ............................................................... — 308.91 89.55 — —

(—) (236.22) (71.01) (—) (—)

Fixed Assets ...................................................... — 0.22 — — —

(—) (—) (—) (—) (—)

Services ............................................................. — 16.81 — — —

(—) (0.07) (—) (—) (—)

2. Sales :

Goods ............................................................... — 8.22 3.21 — —

(—) (1.73) (2.26) (—) (—)

Fixed Assets ...................................................... — — — — —

(—) (0.16) (—) (—) (—)

Services ............................................................. — 2.17 0.99 — —

(—) (6.38) (0.99) (—) (—)

3. Deputation of Personnel :

To Related Parties ............................................. — 4.15 — — —

(—) (0.52) (—) (—) (—)

4. Provisions for :

Doubtful Debts/Advances during the year ....... — @ — — 10.00

(0.07)* (—) (—) (—) (—)

Diminution in value of other assets written back — @ — — —

(—) (0.04) (—) (—) (—)

5. Finance :

Interest Received .............................................. — 0.46 — — —

(—) (1.85) (—) (—) (—)

Dividend Distributed ........................................ — — — — 26.86

(—) (—) (—) (—) (1.05)

Dividend Received ............................................ — 2.60 1.31 — —

(—) (2.52) (0.98) (—) (—)

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

67

Rupees crores

Sl. Nature of Transactions Subsidiary Associate Joint Key Welfare

No. Companies Companies Ventures Management Funds

# Personnel

6. Other Transactions :

Other Income ................................................... — 0.29 — — 25.92

(—) (7.18) (—) (—) (—)

Other Expenses ................................................ 2.84* 0.67 — 0.01 —

(8.45)* (0.01) (—) (—) (—)

Reimbursements received from parties. ........... — 1.04 0.03 — —

(—) (0.01) (0.03) (—) (—)

Reimbursements made to parties .................... — 0.29 — — —

(—) (0.03) (—) (—) (—)

Advances given by group companies .............. — @ — — 7.00

(—) (@) (—) (—) (15.00)

7. Outstandings :

Payables ............................................................ — 16.00 14.85 3.10 —

(—) (30.94) (12.66) (2.20) (—)

Receivables ....................................................... — 5.53 2.92 — 22.00

(—) (19.64) (1.18) (—) (15.00)

Inter Corporate Deposits given ........................ — 4.59 — — —

(—) (5.73) (—) (—) (—)

8. Provision for Diminution in value of other

related assets ................................................... — 7.95 — — —

(—) (7.65) (—) (—) (—)

9. Provision for Doubtful debts/advances ............ — 5.33 — — 10.00

(—) (5.33) (—) (—) (—)

10. Managerial Remuneration ................................ — — — 6.56 —

(—) (—) (—) (5.16) (—)

11. Dividends .......................................................... — — — 0.45 —

(—) (—) (—) (0.52) (—)

12. Stock Options ................................................... — — — 0.05 —

(—) (—) (—) (0.07) (—)

13. Issue of Ordinary (Equity) Shares ..................... — — — — —

(—) (—) (—) (—) (1,459.76)

14. Guarantees and Collaterals given. ................... — — 9.00 — —

(—) (—) (9.00) (—) (—)

Previous year’s figures are in brackets.

@ denotes amounts less than Rs. 50,000.

* Amount pertains to Tech Mahindra Foundation.

# Transactions with Joint Ventures have been disclosed at full value.

68

Significant related party transactions are as under :

Rupees crores

Nature of Transactions Associate Companies Amount Joint Ventures# Amount

1 Purchases – Goods ................................. Swaraj Engines Ltd 294.63 Mahindra Sona Ltd 89.55

(225.72) (71.01)

2. Purchases – Fixed Assets ........................ Satyam Computer Services Ltd 0.22

(—)

3. Purchases – Services ............................... Swaraj Engines Ltd —

(0.07)

Satyam Computer Services Ltd 16.81

(—)

4. Sales – Goods ......................................... Swaraj Engines Ltd 8.22 Mahindra Sona Ltd 3.21

(1.71) (2.26)

5. Sales – Fixed Assets ................................ Swaraj Automotives Ltd —

(0.16)

6. Sales – Services ....................................... Swaraj Engines Ltd — Mahindra Water Utilities Ltd 0.95

(2.38) (0.95)

Swaraj Automotives Ltd 0.32

(0.78)

Owens Corning (India) Ltd 0.47

(3.21)

Satyam Computer Services Ltd 1.37

(—)

7. Deputation of Personnel .......................... Mahindra Composites Ltd 0.42

(0.52)

Swaraj Automotives Ltd 0.49

(—)

Swaraj Engines Ltd 3.25

(—)

8. Doubtful Debts/Advances ....................... Kota Farm Services Ltd @

(—)

Mriyalguda Farm Solution Ltd @

(—)

Mega One Stop Farm Services Ltd @

(—)

9. Interest Received ..................................... Owens Corning (India) Ltd 0.46

(1.85)

10.Write back of provision of doubtful

debts/advances ........................................ Kota Farm Services Ltd —

(0.04)

Mriyalguda Farm Solutions Ltd @

(—)

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

6

Rupees crores

Nature of Transactions Associate Companies Amount Joint Ventures# Amount

11. Dividend Received ................................. Swaraj Automotives Ltd 0.26 Mahindra Sona Ltd 1.31

(0.32) (0.98)

Swaraj Engines Ltd 2.06

(2.06)

Mahindra Composites Ltd 0.27

(—)

12. Other Income ...................................... Owens Corning (India) Ltd —

(6.89)

Mahindra Composites Ltd 0.29

(—)

13. Other Expenses ..................................... Mahindra Construction —

Company Ltd (0.01)

Satyam Computer Services Ltd 0.67

(—)

14. Reimbursement Received from parties .. Owens Corning (India) Ltd 0.98 Mahindra Sona Ltd 0.03

(—) (0.03)

Mahindra Water Utilities Ltd @

(—)

15. Reimbursement made to parties ........... Mahindra Composites Ltd —

(0.02)

Swaraj Engines Ltd —

(0.01)

Satyam Computer Services Ltd 0.27

(—)

16. Payables ................................................. Swaraj Engines Ltd 0.29 Mahindra Sona Ltd 8.70

(30.04) (12.66)

Mahindra Composites Ltd 0.53 Tech Mahindra Ltd 6.15

(—) (—)

Swaraj Automotives Ltd 0.53

(—)

17. Receivables ............................................. Mahindra Construction 2.63 Mahindra Sona Ltd 0.55

Company Ltd (6.08) (—)

Mriyalguda Farm Solution Ltd 0.54 Mahindra Water Utilities Ltd 1.84

(—) (1.17)

Swaraj Engines Ltd 1.45

(—)

Owens Corning (India) Ltd —

(12.37)

18. Guarantees given .................................. Mahindra Water Utilities Ltd 9.00

(9.00)

19. Inter Corporate Deposits given Mahindra Construction 4.59

(outstanding) ........................................ Company Ltd (5.73)

20. Provision for diminution in value Mahindra Construction 6.99

of other related assets .......................... Company Ltd (6.69)

7

Rupees crores

Nature of Transactions Associate Companies Amount Joint Ventures # Amount

21. Provision for doubtful debts/advances .. Mriyalguda Farm Solutions Ltd 0.54

(—)

Mahindra Construction Company Ltd 4.49

(4.49)

Mega One Stop Farm Services Ltd —

(0.54)

22. Advances given ...................................... Mriyalguda Farm Solution Ltd @

(—)

Kota Farm Services Ltd @

(—)

Mega One Stop Farm Services Ltd @

(—)

Previous year’s figures are in brackets.

@ denotes amounts less than Rs. 50,000.

# Transactions with Joint Ventures have been disclosed at full value.

23. Earnings per Share :

2010 2009

Amount used as the numerator – Net Profit (Rupees crores) .......................................................... 2,478.56 1,405.41

Effect on earnings of convertible bonds/debentures (Gain)/Loss (Rupees crores) ............................ 32.64 17.29

Amount used as the numerator for diluted earnings per share (Rupees crores) ............................. 2,511.20 1,422.70

Weighted average number of equity shares used in computing basic earnings per share ............. 54,98,38,769 54,50,45,894

Effect of potential ordinary (equity) shares on conversion of bonds/debentures ............................ 4,56,31,897 4,44,38,826

Weighted average number of equity shares used in computing diluted earnings per share .......... 59,54,70,666 58,94,84,720

Basic Earnings per share (Rs.) (Face value of Rs. 5 per share) .......................................................... 45.08 25.79

Diluted Earnings per share (Rs.) (Face value of Rs. 5 per share) ...................................................... 42.17 24.14

In the computation of earnings per share for the periods above, the Company has given effect to the sub division of its Ordinary (Equity) Share

of Rs.10 each into 2 Ordinary (Equity) Shares of Rs. 5 each in March, 2010.

24. Investment in Associates :

No. of Equity % of Cost of Goodwill/ Share in Carrying

shares held Holding Investments (Capital accumulated Cost

(Equity reserve) Profit/(Loss)/

Shares) Reserves

(Nos.) (Rupees crores)

Unquoted :

Owens Corning (India) Limited ......................... 2,81,24,794 21.50% 28.12 (7.64) 26.73 54.85

2,81,24,794 21.50% 28.12 (7.64) 21.82 49.94

Mahindra Construction Company Limited ........ 9,00,000 43.83% 0.97 — (0.97) —

9,00,000 43.83% 0.97 — (0.97) —

Officemartindia.com Limited ............................. 7,49,997 50.00% 0.22 — (0.22) —

7,49,997 50.00% 0.22 — (0.22) —

Rathna Bhoomi Enterprises Private Limited ....... 500 20.43% @ — @ —

500 20.43% @ — @ —

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

7

No. of Equity % of Cost of Goodwill/ Share in Carrying

shares held Holding Investments (Capital accumulated Cost

(Equity reserve) Profit/(Loss)/

Shares) Reserves

(Nos.) (Rupees crores)

Kota Farm Services Limited ................................ 2,73,420 37.37% 0.27 — (0.27) —

......................................................................... 2,73,420 37.37% 0.27 — (0.27) —

Mriyalguda Farm Solution Limited .................... 3,37,500 37.37% 0.34 — (0.34) —

......................................................................... 3,37,500 37.37% 0.34 — (0.34) —

Mega One Stop Farm Services Limited ............. 3,51,000 37.37% 0.35 0.03 (0.35) —

......................................................................... 3,51,000 37.37% 0.35 0.03 (0.35) —

Eco Engines (upto 15th

January, 2010) ............. — — — — — —

— — 0.15 — — 0.15

Total………... 54.85

50.09

Quoted :

Mahindra Composites Limited .......................... 13,41,203 30.56% 2.90 0.55 2.72 5.62

13,41,203 30.56% 2.90 0.55 2.33 5.23

Swaraj Engines Limited ..................................... 41,26,417 33.22% 1.63 (1.36) 18.17 19.80

41,19,000 33.22% 1.63 (1.36) 9.17 10.80

Swaraj Automotives Limited .............................. 10,59,543 44.19% 12.45 (1.99) 4.42 16.87

10,59,543 44.19% 12.45 (1.99) 3.40 15.85

Total………... 42.29

31.88

Total………... 97.14

81.97

@ denotes amounts less than Rs. 50,000.

7

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terests

2,8

91

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1,7

16

.8

6

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

73

Seg

men

t In

fo

rm

atio

n (C

on

td

) :

Ru

pees cro

res

Au

to

mo

tive

Farm

IT Services

Fin

an

cial

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in

gIn

frastru

ctu

re

Ho

sp

itality

Systech

Oth

ers

Elim

in

atio

ns

Co

nso

lid

ated

Eq

uip

men

tServices

an

d Pro

cessin

gTo

tal

OTH

ER IN

FO

RM

ATIO

N

Seg

men

t A

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06

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30

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54

32

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11

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91

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11

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47

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72

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53

.8

66

85

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1–

27

,0

38

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7

5,2

91

.7

73

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28

.8

72

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80

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70

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ilities

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70

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Cap

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dit

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1,6

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00

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12

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No

n cash

exp

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dit

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th

er

th

an

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recia

tio

n–

––

––

––

––

––

––

––

––

–

74

Secondary Segment Disclosure - Geographical Segment

Rupees crores

Domestic Overseas Total

Revenue from External Customers ............................... 30,082.43 3,610.16 33,692.59

24,739.14 4,100.01 28,839.15

Segment Assets ............................................................ 24,868.40 2,170.57 27,038.97

21,903.66 2,461.00 24,364.66

Capital Expenditure ...................................................... 2,850.88 203.64 3,054.52

2,934.54 81.01 3,015.55

Notes :

1. Business Segments

The Group has considered business segments as the primary segment for disclosure.

The segments have been identified taking into account the organisational structure as well as the differing risks and returns of these segments.

Automotive Segment comprises of sales of automobiles, spare parts and related services.

Farm Equipment Segment comprises of sales of Tractors, spare parts and related services.

IT Services comprise of services rendered for IT and Telecom.

Financial Services comprise of services relating to financing, leasing and hire purchase of automobiles and tractors.

Steel Trading & Processing comprises of trading and processing of Steel.

Infrastructure comprises of operating of commercial complexes, project management and development.

Hospitality comprises of sale of Timeshare.

Systech comprises of Automotive components and other related products and services.

Others comprise of Logistics, After-market, Two wheelers, Investment, etc.

2. Secondary Segments

The geographical segments are considered for disclosure as secondary segment.

Domestic segment includes sales to customers located in India and service income accrued in India.

Overseas segment includes sales and services rendered to customers located outside India.

Segment Revenue comprises of :

Rupees crores

2010 2009

Sales ................................................................................................................................................. 25,300.49 21,058.63

Income from Services rendered ........................................................................................................... 6,028.05 5,717.55

Income from long term contracts ....................................................................................................... 327.26 160.07

Hire purchase and lease income ......................................................................................................... 82.12 165.27

Income from Loan, Retained Interest in securitised Asset & Securitisation ........................................ 1,534.90 1,373.41

Other allocable income * .................................................................................................................... 419.77 364.22

Total ............................ 33,692.59 28,839.15

Rupees crores

2010 2009

*Other allocable income includes :

Interest Income ................................................................................................................................... 10.83 8.90

Scrap Sales .......................................................................................................................................... 124.05 138.21

Commission ......................................................................................................................................... 12.54 16.98

Dividend .............................................................................................................................................. 0.76 1.10

Others .................................................................................................................................................. 271.59 199.03

Total ............................ 419.77 364.22

26. Previous year’s figures have been regrouped/restated wherever necessary.

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

75

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