MAHINDRA AND MAHINDRA LIMITED
ANNUAL REPORT 2010-2011
DIRECTOR'S REPORT
Dear Shareholders
Your Directors present their Report together with the audited accounts of
your Company for the year ended 31st March, 2011.
Financial Highlights:
(Rs. in crores)
2011 2010
Gross Income 25,896 20,595
Less: Excise Duty on Sales 2,093 1,794
Net Income 23,803 18,801
Profit before Depreciation, Interest,
Exceptional items and Taxation 3,766 3,155
Less: Depreciation/Amortisation 414 371
Profit before Interest, Exceptional items
and Taxation 3,352 2,784
Less: Interest (Net) (50) 28
Profit before Exceptional items and Taxation 3,402 2,756
Add: Exceptional items 118 91
Profit before Taxation 3,520 2,847
Less: Provision for Tax - Current Tax
(including Fringe Benefit Tax) 762 749
Less: Provision for Tax - Deferred Tax (Net) 96 10
Profit for the year 2,662 2,088
Balance of profit for earlier years 4,588 3,365
Add/(Less): Transfer from/(to) Debenture
Redemption Reserve 36 (31)
Profits available for appropriation 7,286 5,422
Less: General Reserve 275 210
Proposed Dividends 706 550
Income-tax on Proposed Dividends 96 74
Balance carried forward 6,209 4,588
India's economic performance in the Financial Year 2011 had both positive
and negative elements to it. The economy grew a very creditable 8.5% backed
by strong growth in all three Sectors - Agriculture, Industry and Services.
However, despite significant monetary tightening by the Reserve Bank of
India, inflationary pressures persisted throughout the year, drawing
attention to the factors and policies that continue to constrain productive
capacities in the economy.
Yields in the Agricultural Sector in India, for instance, are significantly
lower than those in other countries, for a wide range of crops. Recognising
the criticality of ensuring food security, at affordable prices for all,
the Government of India has taken a series of initiatives focused on
enhancing the productive capacities of both farms and farmers. Mahindra
Samriddhi, an initiative of the Farm Division of your Company, is making a
small but significant contribution in this regard.
Financial Performance
In these challenging times, the Automotive and Farm Divisions of your
Company have secured their best performance for the second year in a row
reflecting in substantial growth in the net income of the Company by 26.60%
to Rs. 23,803 crores in the year under review from Rs.18,801 crores in the
previous year.
Consequent to this remarkable performance, the Profit for the year before
Depreciation, Interest, Exceptional items and Taxation recorded an increase
of 19.37% at Rs. 3,766 crores as against Rs. 3,155 crores in the previous
year. Similarly, Profit after tax clocked an increase of 27.51% at Rs.
2,662 crores as against Rs. 2,088 crores in the previous year. Your Company
continues with its rigorous cost restructuring exercises and efficiency
improvements which have resulted in significant savings through continued
focus on cost controls, process efficiencies and product innovations that
exceed customer expectations in all areas thereby enabling the Company to
maintain profitable growth in the current economic scenario.
Dividend
Your Directors are pleased to recommend a dividend of Rs.10.50 per Ordinary
(Equity) Share and also a Special Dividend of Re.1 per Ordinary (Equity)
Share aggregating Rs.11.50 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 view of the Profit made by the Company on the sale of its
entire holdings in Owens Corning (India) Limited. The proposed dividend
will be paid on an enlarged capital base of Rs.306.99 crores (as against
Rs.289.21 crores in the previous year). The equity dividend outgo for the
Financial Year 2010-11, inclusive of tax on distributed profits (after
reducing the tax on distributed profits of Rs.17.98 crores payable by the
subsidiaries on the dividends receivable from them during the current
Financial Year) would absorb a sum of Rs.802.64 crores (as against
Rs.623.75 crores comprising the 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 paid for the previous year).
Performance Review
Automotive Division:
Your Company's Automotive Division recorded total sales of 2,89,333
vehicles and 64,740 three-wheelers as compared to 2,36,759 vehicles and
45,360 three-wheelers in the previous year registering a growth of 22.2%
and 42.7% in vehicle sales and three-wheeler sales respectively.
On the domestic sales front, your Company sold 2,74,793 vehicles [including
2,30,110 Multi Utility Vehicles (MUVs), 35,493 small 4-wheelers 0.75 Ton
cargo/passenger and 9,190 mini 4 wheelers 0.5 Ton cargo/passenger]
registering a growth of 21% over the previous year's volumes of 2,27,114
vehicles [including 2,14,128 MUVs, 3,722 small 4-wheelers 0.75 Ton cargo
and 9,264 mini 4 wheelers 0.5 Ton cargo]. The domestic sales volumes of
62,142 three-wheelers was higher by 39.8% as compared to the previous
year's volume of 44,438 three-wheelers.
Your Company's MUV sales volume grew by 7.5% and your Company continued its
leadership of the domestic MUV market by posting a market share of 60.9%.
All products of your Company's Passenger MUV portfolio performed very well.
Bolero volumes grew by 17.8% over the previous year and Bolero is currently
India's largest selling MUV for five consecutive years. Scorpio and Xylo
volumes also posted an impressive growth of 19.1% and 14.6% respectively.
In February, 2010, your Company had launched Maxximo in a very competitive
small 4-wheeler cargo segment (0.75 Ton). During the first full year of
sales, Maxximo has impressively established itself in the market, with a
sales volume of 35,464 vehicles and a market share of 19.1%.
With an aim to strengthen its product portfolio and to offer better
products, your Company has launched four new products viz. Genio, Maxximo
Mini Van, Compact Cab-Gio Passenger and Thar which have received good
response from the customers.
In the Overseas market, your Company registered a volume growth of 62.2%
over the previous year. This growth was driven by volume growth in SAARC,
Chile and South Africa. During the year under review, your Company sold
14,540 vehicles [including 305 vehicles sourced from Mahindra Navistar
Automotives Limited ('MNAL')] and 2,598 three-wheelers in the Overseas
market as compared to 10,567 vehicles [including 1,323 vehicles sourced
from MNAL] and 922 threewheelers in the previous year.
Spare parts sales for the year stood at Rs.666.97 crores (including Exports
of Rs.28.3 crores) as compared to Rs.514.96 crores (including Exports of
Rs.22.4 crores) in the previous year, registering a growth of 29.5%.
Farm Division:
Your Company's Farm Division (including Swaraj Division) recorded sales of
2,14,325 tractors as against 1,75,196 tractors sold in the previous year,
recording a significant growth of 22.3%.
In the Financial Year 2011, the Indian tractor industry witnessed
consecutive second year of high growth. The domestic market recorded sales
of 4,80,377 tractors as compared to 4,00,203 tractors in the previous year,
recording a growth of 20%.
Your Company outperformed the tractor industry with domestic sales of
2,02,513 tractors as compared to 1,66,359 tractors in the previous year
recording a growth of 21.7%. This has also helped your Company to improve
its market share which now stands at 42% as compared to 41.4% in the
previous financial year, thus completing 28 years of leadership in the
Indian tractor industry. Your Company's tractor exports grew by 33.7% to
reach 11,812 tractors as compared to 8,837 tractors exported in the
previous year.
Beyond agriculture, in the power generation space under the Mahindra
Powerol Brand, your Company sold 27,748 engines in the current financial
year as against 48,011 engines in the previous year. Volumes were severely
affected due to adverse market conditions in the Telecom Sector. Your
Company, while retaining its leadership position in the genset market
catering to the telecom space, has focused its presence in the retail
segment and has also introduced new products like inverters.
Mahindra Defence Systems Division (MDS):
Mahindra Defence Systems (MDS), a Division of your Company is engaged in
two businesses - a) Mahindra Defence Naval Systems (MDNS) and b) Mahindra
Special Services Group (MSSG).
In the Naval Systems business, your Company currently manufactures Sea
Mines, Torpedo Launchers, Decoy Launchers and Composites for various Naval
and other applications from its Plant based inChinchwadgaon, Pune. MDNS has
been servicing diverse customers by providing systems and sophisticated
components. The Naval Systems business has considerable potential and is
poised for a major growth in the field of different types of Sea Mines,
Torpedo Decoy Systems and Radar Systems.
In the Special Services Group business, your Company provides corporate
risk management consultancy services, assisting organisations in
maintaining their competitive edge by protecting Information, Physical and
Personnel Assets through implementing the security strategy encompassing
people, process and technology. During the year, MSSG has been successful
in registering and maintaining the business growth across various industry
verticals through a wide range of service offerings in the Corporate
SecurityRisk landscape in India thereby enabling over 150 major corporate
customers to secure their people, assets, information and reputation.
MSSG has witnessed tremendous growth opportunities in the areas of
Governance and Fraud Risk Management during the year. MSSG's marketing and
brand promotion activities have been strengthened with increased manpower
and as a result, MSSG has been able to make its brand visible in many
cities across India.
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 has a rich legacy of ethical governance practices most of
which were in place even before they were mandated. Your Company is
committed to transparency in all its dealings and places high emphasis on
business ethics. During the year, CRISIL has re-affirmed the highest level
rating, (Level 1) for Governance and Value Creation for the fifth 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 alongwith 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 this Annual Report.
Share Capital
Increase in Share Capital
During the year under review, your Company has allotted:
1) 1,81,52,597 Ordinary (Equity) Shares of Rs.5 each upon conversion of
Foreign Currency Convertible Bonds into Shares/Global Depositary Receipts
(GDRs), each GDR represented by one Ordinary (Equity) Share of Rs.5 each,
and
2) 1,73,53,034 Ordinary (Equity) Shares of Rs.5 each to the Trustees of
Mahindra & Mahindra Employees' Stock Option Trust.
Subsequent to the year end, your Company allotted 34,730 Ordinary (Equity)
Shares of Rs.5 each to International Finance Corporation, the Shareholder
of Mahindra Shubhlabh Services Limited ('MSSL')in the share exchange ratio
of 1 fully paid-up Ordinary (Equity) Share of Rs.5 each for every 190 fully
paid-up shares of Rs.10 each held in MSSL pursuant to the Scheme of
Arrangement between MSSL and the Company and their respective Shareholders
('the Scheme'). The Scheme became effective on 15th April, 2011.
Post allotment of Equity Shares as aforesaid, the issued, subscribed and
paid-up Share Capital of the Company stands at Rs.307 crores comprising of
61,39,74,839 Ordinary (Equity) Shares of Rs.5 each fully paid-up.
Finance
The overall global growth showed traction in the Financial Year 2011 with
Financial Year 2012 promising further improvement, despite the temporary
setback arising out of natural calamities in Japan. However globally,
monetary and fiscal policies are showing a tightening trend. The
developments in Middle East and North Africa coupled with vagaries of
global weather have resulted in oil and food prices casting a shadow over
forecasts on growth, inflation and policy actions. India's growth during
Financial Year 2011 was strong and various indicators of demand like auto
sales, exports, credit offtake and cargo movements in recent months show
continued upward trends. However, inflation continues to be a worry for
monetary and fiscal policy makers. While the Government of India did not
take any major adverse measures in Union Budget for Financial Year 2012,
the Reserve Bank of India has since March, 2010 raised key policy rates by
350 bps. For the Indian Economy, the Financial Year 2012 could be a
challenging year as corporates face commodity price increase and demand
gets threatened by rising interest rates.
Your Company continued to focus on managing cash efficiently and ensured
that it had adequate liquidity and back up lines of credit. During the
year, your Company initiated suitable actions based on financial
conditions, to facilitate conversion of debt into equity and raised fresh
debt to finance its growth plans.
Your Company had outstanding Foreign Currency Convertible Bonds ('FCCBs')
aggregating USD 189.50 million at the beginning of the year. It issued a
notice on 8th October, 2010 for early redemption of its outstanding FCCBs
aggregating USD 141.20 million. Prior to the notice for early redemption,
the bondholders had opted for conversion of FCCBs aggregating USD 48.30
million into Shares/GDRs. Your Company's call met with a resounding success
with FCCBs aggregating USD 140.10 million representing 99.2% of the
outstanding FCCBs of USD 141.20 million being converted into Shares/ GDRs.
Consequently during the year, your Company has on conversion of FCCBs
aggregating USD 188.40 million allotted 18.15 million Shares (including
Shares underlying GDRs) to the bondholders, who exercised the option to
convert these FCCBs into such Shares/ GDRs. Accordingly, your Company's
FCCB debt of Rs.850.85 crores outstanding on its books as at the beginning
of the financial year stands extinguished thereby strengthening the credit
profile of your Company.
Your Company has also repaid foreign currency loan aggregating Rs.176
crores and Non-Convertible Redeemable Debentures ('NCDs') of Rs.200 crores
during the year. It has successfully raised External Commercial Borrowings
aggregating USD 150 million from banks at attractive terms and at benchmark
pricing.
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 0.23 as at 31st March, 2011.
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 upgraded the rating for Long Term Banking
facilities to 'AA+/Stable' from the earlier 'AA/ Stable'. During the year,
ICRA and CARE have maintained a Long Term Rating of 'LAA+/Stable' and 'CARE
AA+' respectively.
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 Ssangyong Motor Company Limited ('SYMC')
Your Company acquired SYMC, a premier manufacturer of sports utility
vehicles ('SUV') and recreational vehicles ('RV') in Korea. The total cost
of acquisition of SYMC was KRW 5,22,50,00,00,000(approximately US$ 463
million) with KRW 4,27,09,52,35,000 (approximately US$ 378 million) payable
for new stocks and KRW 95,40,47,65,000 (approximately US$ 85 million) in
corporate bonds for an equity stake of around 70% in SYMC.
SYMC was founded in 1954 and has been manufacturing automobiles for more
than five decades. SYMC has a strong domestic network of over 130 dealers
and exports to over 90 countries through over 1,200 dealers.
SYMC has been undergoing a corporate rehabilitation process since February,
2009 and the court receivership has now concluded upon court approval and
the corporate rehabilitation process has been terminated in March, 2011.
This acquisition will help your Company to emerge as a competitive global
utility vehicle player by leveraging on your Company's competence in
sourcing and marketing strategy and SYMC's strong global presence. Your
Company is committed to nurturing the Ssangyong brand in global markets
while preserving its Korean heritage. It is intended that SYMC will
continue to function as an independent entity with primarily a Korean
Management. The acquisition will offer financial stability to SYMC and will
work to further strengthen SYMC's product portfolio across the globe.
The strong complementarities between SYMC and your Company's portfolio of
products and technology provide an opportunity to create distinct
positioning. The wide sales and distribution networks and complementary
product lines will provide access to many overseas markets for both the
companies.
2) EPC Industrie' Limited - The Farm Division of your Company has been
working in the wider agriculture domain through Mahindra Shubhlabh Services
Limited and through various Mahindra Samriddhi centres across the country.
Farm Division's vision is to 'Deliver FarmTech Prosperity' and in line with
this vision, your Company has decided to foray into the Micro-irrigation
industry. Micro-irrigation brings various benefits to the farmer, such as
reduced requirement of water, fertilizers, electricity, labour, etc. with
increase in productivity. Entry into the micro-irrigation business is an
important step towards realisation of the Division'svision. It also
signifies your Company's commitment to conserve the most precious natural
resource viz. Water. More than 80% of available water in India is consumed
in agriculture. Micro irrigation is a water efficient irrigation technology
which has been identified as one of the major focus area by the
Agricultural Department.
Thus, keeping the opportunities in Agricultural Sector in mind, your
Company has acquired 38% of the paid-up Equity Share Capital through a
Preferential Allotment in EPC Industrie' Limited (EPC), a company listed on
the Bombay Stock Exchange Limited. Pursuant to the above acquisition, the
Company is in the process of making an Open Offer under the Securities and
Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 ('Takeover Code') to the Shareholders of EPC for 20% of
the enhanced Share Capital of EPC as per the terms of the Takeover Code.
EPC established in 1981 is based in Nasik, Maharashtra and is known for its
quality products. EPC has grown as one of the top five companies in India
in the micro-irrigation space.
Your Company already has a very strong presence in the Tractor and Farm
machinery business and with the current entry in the micro - irrigation
business, your Company would be in a position to serve the farmer in a much
better way and create a strong differentiation for the brand 'Mahindra'.
3) Demerger of the Non Fruit Business of Mahindra Shubhlabh Services
Limited into your Company - The Honourable High Court of Judicature at
Bombay has approved the Scheme of Arrangement between Mahindra Shubhlabh
Services Limited ('MSSL') and your Company and their respective
Shareholders 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.
4) Strategic Sale of part of the Company's Shareholding in Mahindra
Consulting Engineers Limited ('MACE') to SAFEGE - a France based Multi
Disciplinary Consultancy Company - MACE, a subsidiary of the Company is
engaged in engineering, project advisory and infrastructure consulting
activities covering urban infrastructure, water, wastewater, waste
management, environment, urban planning, industrial infrastructure,
transportation, rural infrastructure, etc.
MACE entered into a strategic partnership with SAFEGE, France and post
induction of the strategic partner, your Company holds 54.16% of the Equity
Share Capital of MACE, whilst 30.83% is held by SAFEGE and balance 15.01%
is held by Mahindra Consulting Engineers Employees Stock Option Trust and
/or its beneficiaries.
SAFEGE activities are synergetic with thrust and growth areas identified
for Indian Engineering and Infrastructure consultancy. 'MACE-SAFEGE'
partnership will be a strategic vehicle to develop business in India,
neighbouring countries and the Middle East and Asia besides other
international markets in identified areas of activities. Through this
strategic partnership, MACE will also offer support to SAFEGE's
International Assignments and MACE would be well poised to handle large
domestic projects in India requiring international expertise.
5) Joint Venture with Arabia Holdings Limited and Ras-Al-Khaimah Transport
Investments Co. LLC - Through its Mahindra Defence Systems Division (MDS),
your Company has over the past eight years acquired a leadership position
in India in the field of research, design, development and manufacture of
armoured and light military vehicles. In order to address the large and
growing market for uparmoured vehicles globally especially in West Asia,
Central Asia and Africa, in June, 2010, your Company had entered into a
Joint Venture with Arabia Holdings Limited and Ras-Al- Khaimah Transport
Investments Co. LLC through its wholly owned subsidiary Mahindra Overseas
Investment Company (Mauritius) Limited to form a Joint Venture company viz.
'Mahindra Emirates Vehicle Armouring FZ LLC' or 'MEVA' in the Emirate of
Ras-Al-Khaimah in the UAE for armouring of vehicles.
Your Company holds a 51% stake in MEVA which would design and develop
ballistic kits for vehicle protection. The other Joint Venture partners
would provide necessary infrastructural support to MEVA for establishing
the operations in the Emirate of Ras-Al-Khaimah.
MEVA intends to launch a number of MDS armoured vehicles such as the
Marksman, the uparmoured Scorpio, Cash in Transit Van, etc. which have been
very successful in India. MEVA will also be doing armouring of non-MDS
vehicles such as Toyota, Nissan, etc.
Stock Options
Pursuant to the approval of the Members at the previous Annual General
Meeting held on 28th July, 2010, your Company has adopted and introduced
Mahindra & Mahindra Limited Employees Stock Option Scheme - 2010 ('New
Scheme'). On the recommendation of the Remuneration/Compensation Committee
of your Company, the Trustees of the Mahindra & Mahindra Employees' Stock
Option Trust have granted 32,16,758 Stock Options to Eligible Employees
under the New Scheme. During the year under review, no new Options have
been granted under the Mahindra & Mahindra Limited Employees Stock Option
Scheme - 2000.
Details required to be provided under the Securities and Exchange Board of
India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are set out in Annexure I to this Report.
Industrial Relations
Industrial Relations generally remained cordial and harmonious throughout
the year, apart from a one day illegal tool down strike by the Nashik Plant
Workmen to press for their demands for increase in wages and for
upgradation for a section of workmen. The loss of production for that day
was compensated within the same week and the Company did not suffer any
loss. On the contrary, the highest ever production was recorded in the
month of March, 2011.
The Management Discussion and Analysis Report gives an overview of the
developments in Human Resources/Industrial Relations during the year. In a
restructuring exercise to rightsize the work force, your Company has,
during the year under review accepted Voluntary Retirement from 146
employees at Kandivali Plant of the Farm Division. Your Company has set an
example of harmonious industrial relationship by celebrating the 40th
Anniversary of uninterrupted existence of Union at Kandivali Plant of the
Farm Division.
Safety, Health and Environmental Performance
Health and Safety
Your Company continues to demonstrate a strong commitment towards Safety,
Health and Environment and as a part of the same, following measures and
actions were taken during the year under review. Your Company has a well-
established Safety, Occupational Health & Environmental Policy. Objectives
and Targets derived from the Policy are supported by Management Programs.
The Safety & Occupational Health 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, ensures
compliance on a monthly basis, imparts training to all its employees asper
training calendar, carries out statutory safety assurance and auditsof its
facilities as per legal requirements, conducts regular medical and
occupational check-up of its employees and promotes health-friendly
sustainable activities.
Fire Service Day and Safety Week are being celebrated, Safety Audits/
Inspection alongwith Safety awareness training with benchmarks on safety
performance are conducted. Your Company's Plants continued their commitment
to improve the well being of its employees and contract workmen by
organising Occupational Health Examination Camps, medical check-ups, etc.
Through stakeholder's engagement and employee's involvement, your Company
demonstrates its road map on the fundamentals of Planet, People and Profit.
Various path breaking projects have been implemented by your Company in the
areas of Air Pollution Management, Water and Waste Water Management, Solid
Waste Management and Greenbelt Development.
New Certifications
The Sustainability Reporting System provides framework for your Company's
environmental initiatives, sets objectives and targets and helps in
continually improving its air quality by controlling emissions, water
pollution and minimising waste from its processes. All Plants of the
Automotive Division have been certified with amended standard for ISO
14001: 2004 & OHSAS 18001:2007. Your Company's commitment to environment
stems from the Mahindra Group's abiding concern for Stakeholder engagement
in and around the Society. Its nature of operations has a low impact on the
environment by implementing Environment Management System wherein a healthy
work environment is provided to its employees and environment friendly
businesses are conducted. Besides, to bring cross cultural sensitivity of
the Company's business associates, promotional activity towards Green
Supply Chain Management has also been initiated.
Implementation of Occupational Health & Safety Management System standard
has re-enforced the Company's commitment of Safety and Occupational Health
to the highest levels. OHSAS 18001:2007 is the existing best safety
practices standard which is implemented through the amended Management
System and all Plants of the Automotive Division have been certified during
the year 2010-11. 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. Sustainable development is
promoted across the Division through sharing of best practices in the
fields of Safety, Occupational Health & Environment.
Corporate Social Responsibility
Through its various Corporate Social Responsibility ('CSR') initiatives,
the Mahindra Group is enabling entire communities to RISE'. With a vision
of transforming the lives of youth from socially weaker and economically
disadvantaged sections of society, the Mahindra Group has established
various scholarships and other educational initiatives which help empower
these communities. In addition, other CSR initiatives such as Project
Hariyali in the area of environment and supporting Lifeline Express' in
the area of health continue to drive positive change in the lives of
communities.
CSR continues to be an integral part of the vision of the Mahindra Group
and this year too, your 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:
A. Nanhi Kali
Nanhi Kali is a sponsorship program that supports the education of
disadvantaged girl children in India. Through the Nanhi Kali sponsorship,
underprivileged girls are provided not only academic support but also
uniforms, school bags, shoes, etc. which allow the girls to attend school
with dignity. Through the support of 8,000 donors, the Nanhi Kali project
is supporting the education of 70,000 underprivileged girls in 9 states in
India. The largest donor is the Mahindra Group which supports the education
of 23,000 Nanhi Kalis.
B. Mahindra Pride Schools
2,400 students from socially weaker sections of Society have been provided
with livelihood training at Mahindra Pride School in Pune. The training is
provided for those who wish to gain employment in the Hospitality Sector,
Information Technology Sector for BPOs and KPOs and the Retail Sector. The
composition of students consists of scheduled caste and scheduled tribe
youth, most of whom have not even completed their education. After
completing their training, 100% of the students have been placed in
lucrative jobs. The second Mahindra Pride School was opened in Chennai
early this year. This school would train approximately 600 students in a
year.
C. Scholarships & Grants
Mahindra All India Talent Scholarships was awarded to students from lower
socio economic strata of society who wish to pursue job oriented Diploma
Courses in Government Polytechnics. The K. C. Mahindra Scholarships for
Post-Graduate studies abroad provide interest free loan scholarships to
various deserving students. Your Company is also supporting 15 Mumbai
Public Schools which provide quality English medium public education to
students from lower socio economic strata of Society.
Employee Social Options
Your Company is tapping the potential hidden within each one of its
employees to make a sustainable society; one which is healthier, cleaner,
greener and more literate. The Mahindra Workforce is a powerhouse of
inexhaustible energy where people work with passion in abundance and also
for the betterment of the Society. Through your Company's Employee Social
Options (ESOPs) program many Mahindra employees are contributing towards
making difference to Society.
Your Company's ESOPs program encourages employees in supporting
volunteering projects based on the needs of underprivileged communities in
and around their places of work. Employees generate ideas for projects,
prepare annual activity plans, implement each activity and monitor results.
To fund these Employee initiatives, each Sector donates 0.5 percent of its
profit after tax to the ESOPs Central CSR fund.
During the year under review, 15,147 employees volunteered in various
initiatives contributing 73,509 man-hours in various social initiatives in
and around their local communities.
Some of the notable ESOPs initiatives this year were the Lifeline Express
in Farrukhabad for performing surgeries free of cost, Mahindra Hariyali for
planting one million trees, ESOPs Awards - 2010, etc.
Your Company's ESOPs activities also included initiatives in Education,
Health, Environment and others having short term as well as long term
impact on the beneficiaries.
Sustainability' Initiative
Your Company embarked on the sustainability journey in November, 2007 and
over these last four years has laid a foundation for developing a
sustainable enterprise. Conscious efforts have been made to consider the
impact of the Company's business on the environment and its responsibility
towards the communities in which it operates, besides focussing on economic
progress. During the year, your Company's triple bottom line performance
for 2009-10 was published in accordance with the latest guidelines of the
internationally accepted Global Reporting Initiative or the GRI standards
and like in case of the previous two Reports, this Report was externally
assured by Ernst & Young with an A+ rating and GRI checked. The Report for
the year 2010-11 is under preparation and will be released shortly.
During the year 2009-10, a Carbon foot-printing exercise was undertaken to
inventorise GHG emissions from all your Company's business operations under
Scope I, II and III emissions as per internationally accepted standards.
This has enabled the Company to establish a baseline on emissions. This
will be an ongoing exercise and continuous reduction in the GHG intensity
of all products and processes, will be the Company's constant endeavour.
The focus all along has been on transparent and comprehensive reporting,
due to which your Company has been ranked in the list of top 10 companies
in India by the Carbon Disclosure Leadership Index 2010 and the Standard &
Poor ESG India Index 2010. Your Company also secured a second place in the
Green Business Leadership Awards 2010-11, instituted by Financial Express
and Emergent Ventures.
Being conscious of the fact that the Company's products touch many lives
and livelihoods in many ways and that the progress of many communities is
linked to the Company's success, with a continued use of the strategic
approach of ALTERNATIVE THINKING', your Company is committed to creating a
sustainable enterprise.
Directors
Mr. Anand G. Mahindra, Mr. Bharat Doshi, Mr. Nadir B. Godrej and Mr. M. M.
Murugappan retire by rotation and, being eligible, offer themselves for re-
appointment.
Directors' Responsibility Statement
Pursuant to Section 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, 2011 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 38.49% growth in its
consolidated profits and Mahindra Lifespace Developers Limited with a
37.81% 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.3,079.73 crores as against Rs. 2,478.56 crores earned in the previous
year.
During the year under review, Mahindra Aerospace Australia Pty. Limited,
Aerostaff Australia Pty. Limited, Mahindra Reva Electric Vehicles Private
Limited (earlier known as Reva Electric Car Company Private Limited),
Bristlecone Consulting Limited, Anthurium Developers Limited, Watsonia
Developers Limited, Gipp Aero Investments Pty. Limited, Gippsaero Pty.
Limited, GA8 Airvan Pty. Limited, GA200 Pty. Limited, Airvan Flight
Services Pty. Limited, Gipp Aero International Pty. Limited, Nomad TC Pty.
Limited, Mahindra Emirates Vehicle Armouring FZ-LLC, Mahindra Solar One
Private Limited, Mahindra BPO Services Private Limited, Mahindra
Aerostructures Private Limited, Ssangyong Motor Company Limited, Ssangyong
European Parts Center B.V., Ssangyong Motor (Shanghai) Co. Limited,
Ssangyong (Yizheng) Auto Parts Manufacturing Co. Limited and Mahindra EPC
Services Private Limited became subsidiaries of your Company.
During the year under review, ID-EE S.r.l. and Mahindra Solar One Private
Limited ceased to be subsidiaries of the Company.
The Statement pursuant to Section 212 of the Companies Act, 1956 containing
details of the Company's subsidiaries is attached.
In accordance with the General Circular issued by the Ministry of Corporate
Affairs, Government of India, the Balance Sheet, Profit and Loss Account
and other documents of the subsidiary companies are not being attached with
the Balance Sheet of the Company. The Company will make available the
Annual Accounts of the subsidiary companies and the related detailed
information to any Member ofthe Company who may be interested in obtaining
the same. Further, the Annual Accounts of the subsidiaries would also be
available for inspection by any Member 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.
Consolidated Financial Statements
The Consolidated Financial Statements of the Company and its subsidiaries,
prepared in accordance with Accounting Standard AS21 form part of this
Annual Report.
The Consolidated Financial Statements presented by the Company include the
financial results of its subsidiary companies, associates,joint ventures,
etc.
Auditors
Messrs. Deloitte Haskins & Sells, Chartered Accountants, retire as Auditors
of the Company and have given their consent for reappointment. The Members
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 re-appointed to the effect that their re-
appointment, if made, would be in conformity with the limits specified in
the said section.
Cost Auditors
As per the Order of the Central Government and in pursuance of Section 233B
of the Companies Act, 1956, your Company carries out an audit of its cost
records. The due date for filing of the Cost Audit Report with the Ministry
of Corporate Affairs for the financial year ended 31st March, 2010 was 30th
September, 2010. This Report was filed on 24th September, 2010. The Board
of Directors of your Company has upon recommendation of the Audit Committee
appointed M/s. N. I. Mehta & Co., Cost Accountants to audit the cost
accounts of the Company for the financial year ending 31st March, 2012,
subject to the approval of the Central Government. As required under the
provisions of Section 224(1B) of the Companies Act, 1956, the Company has
obtained a written confirmation from M/s. N. I. Mehta & Co. to the effect
that they are eligible for appointment as Cost Auditors under Section 233B
of the Companies Act, 1956.
Public Deposits and Loans/Advances
Out of the total 14,047 deposits of Rs. 93.09 crores from the Public and
Shareholders as at 31st March, 2011, 190 deposits amounting to Rs. 0.82
crores had matured and had not been claimed as at the end of the Financial
Year. Since then, 63 of these deposits of the value of Rs. 0.45 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, 2011 to 29th May, 2011, 50,216 vehicles were
despatched as against 47,022 vehicles during the corresponding period in
the previous year. During the same period, 40,971 tractors were despatched
as against 30,302 tractors despatched during the corresponding period in
the previous year.
With both input costs and interest rates rising, the economic environment
is significantly more challenging today than it was a year ago. However,
the Company expects to meet these challenges, through its intense and
continuous focus on cost controls, innovation, product quality and market
diversification.
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 113 employees who were in receipt of remuneration of not
less than Rs. 60,00,000 during the year ended 31st March, 2011 or not less
than Rs. 5,00,000 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 Members of the
Company excluding the Statement of particulars of employees. Any Member
interested in obtaining a copy of the Statement may write to the Company
Secretary of the Company.
For and on behalf of the Board
KESHUB MAHINDRA
Chairman
Mumbai, 30th May, 2011
ANNEXURE-I TO THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2011
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 granted : Mahindra & Mahindra Limited Employees Stock Option
Scheme - 2000 ('2000 Scheme') - 1,51,80,898
Mahindra & Mahindra Limited Employees Stock Option
Scheme - 2010 ('2010 Scheme') - 32,16,758
b. The pricing formula:
2000 Scheme:
* 1st Tranche Average price preceding the specified date - 27th September,
2001
* 2nd Tranche Average price preceding the specified date - 30th May, 2003
* 3rd TrancheDiscount of 5.13% on the average price preceding the specified
date - 31st May, 2004
* 4th Tranche Discount of 4.85% on the average price preceding the
specified date - 30th May, 2005
* 5th Tranche Average price preceding the specified date - 14th September,
2005
* 6th Tranche Discountof 5.02% on the average price preceding thespecified
date - 29th May, 2006
* 7th Tranche Discount of 4.89% on the average price preceding the
specified date 13th September, 2006
* 8th Tranche Discount of 4.97% on the average price preceding the
specified date - 30th July,2007
* 9th Tranche Discount of 5.03% on the average price preceding the
specified date - 4th August, 2008
* 10th Tranche Discount of 4.97% on the average price preceding the
specified date - 30th July, 2009
2010 Scheme:
* 1th Tranche Options issued at Par specified date -29th October, 2010
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 on which the Remuneration/Compensation Committee
date decided to recommend to the Mahindra & Mahindra
Employees' Stock Option Trust ('Trust'), the grant of
Options.
c. Options vested : 2000 Scheme - 1,07,24,944
2010 Scheme - Nil
d. Options : 2000 Scheme - 77,75,337
exercised 2010 Scheme - Nil
e. The total number: 45,88,703 Equity Shares of Rs.10 each. These were
of shares arising transferred from the Trust to the Eligible
as a result of Employees prior to sub-division of the Face Value
exercise of option of Equity Share from Rs.10 to Rs.5.
31,86,634 Equity shares of Rs.5 each were transferred
from the Trust to the Eligible Employees during the
period 1st April, 2010 to 31st March, 2011.
f. Options lapsed 2000 Scheme - 10,88,767
2010 Scheme - 3,888
g. Variation of At the Sixty-first Annual General Meeting of the
terms of options Company held on 30th July, 2007, 2000 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 2000 Scheme - Rs.1,75,39,72,669
by exercise of 2010 Scheme - Nil
options This amount was received by the Trust.
i. Total number of 2000 Scheme - 63,16,794
options in force 2010 Scheme - 32,12,870
j. Employee-wise
details of options
granted to:
(i) Senior As per Statement attached
managerial
personnel
(ii) Any other employee who receives a grant in any one year of option
amounting to 5% or more of option granted during that year:
2000 Scheme:
Names Options granted
during the year
ended 31st March, 2004*
Mr. Raghunath Murti 15,000
Mr. Hemant Luthra 15,240
Mr. Ramesh lyer 25,920
- -
Names Options granted
during the year
ended 31st March, 2005*
Mr. Pranab Datta 15,240
Mr. Rajeev Dubey 15,000**
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.
** The Options granted and outstanding as of 30th March, 2010, stand
augmented by an equal number of Options and the Exercise Price stands
reduced to half on account of the subdivision of the Face Value of Equity
Share from Rs.10 to Rs.5.
2010 Scheme: Nil
(iii) Identified employees who 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:
Nil.
k. Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise
of option calculated in accordance with Accounting Standard (AS) 20
'Earnings per Share':
Rs.44.33.
l. Where the company has The Company has calculated the employee
calculated the employee compensation cost using the intrinsic
compensation cost using value of stock options. Had the fair
the intrinsic value of value method been used, in respect of
the stock options, the stock options granted on or after 30th
difference between the June, 2003, under 2000 Scheme and 2010
employee compensation cost Scheme, the employee compensation cost
so computed and the would have been higher by Rs.11.40
employee compensation cost crores, Profit after tax lower by
that shall have been Rs.11.40 crores and the basic and
recognised if it had used diluted earnings per share would have
the fair value of the been lower by Rs.0.20 and Rs.0.19
options, shall be respectively.
disclosed. The impact of
this difference on profits
and on EPS of the company
shall also be disclosed.
m. Weighted-average 2010 Scheme
exercise prices and Options Grant Date Exercise Fair value
weighted-average fair price
values of options shall
be disclosed separately (Rs.) (Rs.)
for options whose exercise
price either equals or 28th January, 5.00 649.70
exceeds or is less than 2011
the market price of the
stock.
n. A description of the The fair-value of the stock options granted
method and significant under 2010 Scheme have been calculated using
assumptions used during Black-Scholes Options pricing Formula and
the year to estimate the the significant assumptions made in this
fair values of options, regard are as follows:
including the following
weighted-average
information:
(i) risk-free interest rate, 7.92%
(ii) expected life, 1.25 years
(iii) expected volatility, 45.73%
(iv) expected dividends, and 2.03%
(v) the price of the underlying
share in market at the time of
option grant. Rs.697.90
STATEMENT ATTACHED TO ANNEXURE I TO THE DIRECTORS' REPORT FOR THE YEAR
ENDED 31ST MARCH, 2011
Name of Senior 2000 Scheme 2010
Managerial Scheme
Persons to whom
Stock Options Options Options Options Options Options Options
have been granted granted granted granted granted granted
granted in Dec., in June, in Sep., in July, in Aug., in
2001* 2005 2006 ($$) 2007 2008 Jan.,
**($) ($$$) ($$$$) 2011
($$$$$)
Mr. Deepak S.
Parekh 20000 5000 Nil Nil Nil Nil
Mr. Nadir B.
Godrej 20000 *5000 Nil Nil Nil Nil
Mr. M.M.
Murugappan 20000 *5000 Nil Nil Nil Nil
Mr. Narayanan
Vaghul 20000 *5000 Nil Nil Nil Nil
Dr. A.S.Ganguly 20000 *5000 Nil Nil Nil Nil
Mr. R.K.Kulkarni 20000 *5000 Nil Nil Nil Nil
Mr. Anupam Puri 20000 5000*** Nil Nil Nil Nil
Mr. Bharat Doshi 100000 *10000*** *11,345*** 8,362*** 29,039*** 71,080
Mr. A.K. Nanda 100000 *10,000 11,345*** 8,362*** 24,890*** Nil
Options granted Vesting period Exercise period Exercise
on price
($) June, 2005 Already vested in Within five years Rs.454 per
June, 2006 from the date of share**
vesting
($$) Sep., 2006 Four equal instalments On the date of Rs.616 per
in Sep., 2007, 2008, Vesting or within share
2009 & 2010 five years from the
respectively date of Vesting
($$$) July, Four equal On the date of Rs.762 per
2007 instalments in Vesting or within share
July, 2008, 2009, five years from the
2010 and 2011 date of Vesting
respectively
($$$$) August, Four equal On the date of Rs.500 per
2008 instalments in Vesting or share
August, 2009, within five
2010, 2011 years from the
and 2012 date of Vesting
respectively
($$$$$) Jan., Five equal On the date of Rs.5 per
2011 instalments in Vesting or share
January 2012, within six
2013, 2014, 2015 months from the
and 2016 date of Vesting
respectively
* 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.
*** 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.
ANNEXURE-II TO THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2011
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, 2011
A) Conservation of Energy
Your 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.
Your Company ensures strict compliance with all statutory requirements at
all its plants/ units and takes several voluntary steps like Zero
Discharge, reduced consumptionof water, deploying reduce, recycle and reuse
approach and takes various other steps as explained under sustainability
initiatives of the Company.
Your Company has also implemented following activities to ensure better
environment:
* Reduce Green Gas Emission.
* Increased green zones.
* Effective effluent treatment.
* Waste monitoring and reduction.
* Recycling and reuse of waste/used water such that there is virtually no
water discharge.
* Reducing solid waste and Eco friendly waste disposal.
* Saving of natural resources like water, fuel, etc.
* Ambient and work place air monitoring.
(a) During the year, the Company has taken the following initiatives for
conservation of energy:
(i) Engineering Initiatives
* Installation of heat recovery equipment for furnaces and ovens.
* Use of Piped Natural Gas in place of electrical heating for heat
treatment and industrial washing.
* Installation of LPG flux saver in ovens.
* Multiple initiatives to maintain power factor and hence gain
incentive/rebate from power supply company.
* Installation of energy efficient screw chiller for Paint Shop and central
air conditioning.
* Introduction of energy efficient pumps.
* Installation of VFDs (Variable frequency drives) at select locations.
* Auto switching on-off timer for surrounding lights and boundary lights.
* Theme called 'C3= CUT COST OF COMPRESSED AIR' taken up and implemented in
many projects e.g. Installation of smaller capacity air compressors for
feeding compressed air to limited areas on non-production days, timer
operated valves for air lines, dedicated low pressure lines for cleaning.
* Installation of solar panels and LED lights.
* Installation of metal halide lamps instead of sodium/mercury vapour
lamps.
* Rainwater harvesting.
* Installation of natural draft cooling towers instead of induced draft
cooling systems.
(ii) Process Improvement
* Cycle time reduction of various manufacturing processes through
introduction of new technology and process improvement.
* Optimising temperature settings on HVAC units, considering seasonal
changes.
* Improve capacity utilisation in Paint Shop through modification of skids
and trolley.
* Installation of spring loaded water taps at main canteen.
(iii) Initiatives Generating Awareness on Energy Consumption.
* Extensive involvement of shop floor operating teams in improvement
activities and projects. Some examples are -
- Periodic checking of Pressure Regulators, Air Leakage audits.
- Shift from continuous to intermittent operation of motors (where
possible).
- Optimisation of overhead lights.
* Display of sustainability posters on workplace.
* Display and sale of Energy efficient products for employees.
* Booklet on 'Resource Conservation' is published for internal circulation.
* Guest lecture and quiz competition on 'Sustainable Growth through Energy
Conservation'.
* Extend energy conservation campaigns to suppliers and to nearby schools
and colleges.
* Celebration of World earth day.
* Reward and recognition for energy saving projects.
(b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy
* Baltimore efficient Cooling Tower.
* ASU heating with heat recovery from Top coat and Surfacer Oven objects in
Paint Shops.
* Improvement in efficiency of air conditioning units.
* Application of efficient Magnetic coupled lighting.
* VFD for Pumps.
* Heat Pump for Washing Machine heating.
* PNG hot water Generator for Washing Machine heating.
(c) Impact of the measures at (a) & (b) above for reduction in 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 improved by 4.3% over
the previous year and the Farm Division achieved an improvement of 6.1%.
During the current year, the Company has won several awards at National/
State/ Regional level for energy management and Environment protection.
B) Technology Absorption
Research & Development:
1. Areas in which Research & Development is carried out:
During the year under review, the Automotive Division focused on technology
upgradation 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 Division
focused on retaining fuel efficiency advantage while meeting the upcoming
engine emission norms on total range of the engines with improvement in
engine technology and carrying out new product development. Also beyond
tractor, efforts were focused on development of a range of mechanisation
solutions.
2. Benefits derived as a result of the above efforts:
Some significant achievements in the Automotive Division include the launch
of Genio, Gio Cab and Maxximo Van.
Genio is the next generation 1.2 tonne pick-up powered by a modern CRDe
engine. The Genio comeswith many safety features which are a first in the
pickup category in India. To name a few - LSPV brakes which adjust the
braking pressure depending on the load of the vehicle, ELR (Emergency
Locking Retract) seat belts for the driver and co-driver, Radial tubeless
tyres which do not burst in case of a puncture and adjustable steering and
immobiliser.
The Company also launched India's most affordable four wheeler Compact Cab
Gio, equipped with modern styling, car like comfort and safety features.
With a driver + 6 seating configuration, the Gio Cab is set to redefine
last mile public transportation across India.
The Maxximo Van with the advanced C2 CRDe engine was launched in April,
2011. The stylish van with spacious 8-seats promises best-in-class comfort
is set to re-define the entry-level Contract Carriage and Stage Carriage
segments.
Moving on to the Farm Division, in the domestic market, the Company has
successfully launched the Arjun Multi Application Tractor, strengthening
your Company's position in the segment of greater than 50HP. In addition,
refresh models across the domestic range were launched during the course of
the year.
Engines of all tractor models have been upgraded to meet the upcoming
Bharat Term IIIA emission norms. New models/variants with reduction in fuel
consumption as well as comfort factors like power steering were introduced.
In the international space, the integrated cabin tractor was extended to 70
HP segment - Model 7060. Compact tractor is also very well accepted in the
US market and the range has been expanded by offering 3 new different
transmission options - Gear, Hydrostatic transmission and Power shuttle.
In the mechanisation space, the next generation loader with bucket having
superior reach, advanced rotavator optimised for Indian conditions and
localised rice transplanter are some of the key developments that will
benefit the consumer in the time to come.
The in-house engine development effort resulted in higher kVA engines
adding to the Mahindra Powerol portfolio. Going beyond regular
applications, the in-house developed engines are finding unique
applications, including powering the Brahmos missile launcher, thus
contributing to national security.
During the year, Auto and Farm Divisions filed 35 new patents, while 4
patents were granted.
3. Future plan of action
Your Company continues its efforts 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 these areas. Some
of the key thrust areas in this direction are weight reduction by using
alternate materials, designing modularity to take care of variants, VAVE
(Value Analysis Value Engineering) approach for meeting cost pressures.
Development and adaptation of safety technologies also remain a key focus
area. On the Farm Division side, the Company remains committed to offering
Farm Tech Prosperity to all stakeholders.
4. Expenditure on R&D
The Company spent Rs.739.25 crores (including Rs.349.68 crores on Capital
Expenditure) for Research and Development work during the year, which was
approximately 2.85% of the total turnover.
Besides the above, the Research and Development Expenditure incurred by the
Company since 2004-05 in recognised R & D units is as follows:
(Rs. in crores)
Particulars A B C D E F G
Revenue Expenditure 30.02 64.02 90.31 191.52 220.09 248.25 376.85
Development Expenditure 2.26 5.39 17.85 53.97 128.94 131.28 127.41
Capitalisation
of Assets 6.52 8.15 26.40 44.67 15.64 41.64 323.33
A = Year ended 31.03.2005
B = Year ended 31.03.2006
C = Year ended 31.03.2007
D = Year ended 31.03.2008
E = Year ended 31.03.2009
F = Year ended 31.03.2010
G = Year ended 31.03.2011
Technology Absorption, adaptation and innovation:
1. Efforts, in brief, made towards technology absorption, adaption and
innovation
Your Company has continued its endeavour 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. Your Company is making good progress in its
programs for development of vehicles which would run on alternate fuels
like CNG, Biodiesel, Hydrogen and Electric traction. The Acquisition of a
majority stake in Mahindra Reva Electric Vehicles Private Limited has
substantially helped your Company to leapfrog in EV technology capability.
2. Benefits derived as a result of the above efforts
* Compliance with new emission norms introduced in India with effect from
1st April, 2010.
* Launch of Genio Pick up, Gio Cab, Maxximo Van, THAR, Arjun Multi
Application Tractor, next generation loader, localised rice transplanter
and other implements suitable for Indian conditions.
* Build a knowledge base for the Company.
* Emphasis on value analysis/value engineering and innovative cost
reduction ideas to cut down costs.
3. Imported Technology for the last 5 years
Sr. Technology Imported Year Status
No.
1 Transmission Design of Compact Tractor 2006 Technology Absorbed
2 Development of Integrated Cabin for Tractor 2006 Technology Absorbed
3 Hydrophilic Nano coated Feature 2007 Technology Absorbed
4 Automatic Transmission for SUV 2007 Technology Absorbed
5 Transmission for new SUV 2007 Technology Absorbed
6 New Generation system for Brakes for SUV 2007 Technology Absorbed
7 New Electricals & Electronics Features 2007 Technology Absorbed
8 CNG engines for LCV 2007 Technology Absorbed
9 Common Rail Diesel on Light commercial
vehicle 2007 Technology Absorbed
10 Next generation Common rail adaptation 2007 Technology Absorbed
11 Hydrogen ICE 2007 Technology Absorbed
12 Fuel Cell Vehicle Development 2007 Technology Absorbed
13 2nd Generation Biofuels (Biomass to
Liquid /Gas to Liquid) 2007 Technology Absorbed
14 Hybrid Vehicles 2008 Technology Absorbed
15 Transmission Upgrade 2008 Technology Absorbed
16 Electricals & Electronics Update 2008 Technology Absorbed
17 Design for New Tractor Transmission 2008 Technology Absorbed
18 Start Stop Micro Hybrid 2009 Technology Absorbed
19 New Generation Engine Management System 2009 Technology Absorbed
20 CNG Engines for Pickups/3 Wheelers 2009 Technology Absorbed
21 Electronic Programs for Safety, Stability
& Steering Control 2009 Technology Absorbed
22 CAN Based Networking 2009 Technology Absorbed
23 New Airbag Program 2009 Technology Absorbed
24 Advanced Materials Technologies 2009 Technology Absorbed
25 Development of components using alternate
materials & advanced manufacturing 2010 In the process of
processes Absorption
26 Engine upgrades and Emission improvement 2010 In the process of
technologies Absorption
27 New transmissions for compact vehicles and 2010 In the process of
Utility vehicles Absorption
28 Technology for NVH management 2010 Technology Absorbed
29 Electrical and electronic technologies for 2010 In the process of
safety, infotainment and convenience Absorption
feature addition
30 Alternate fuel technologies 2010 In the process of
Absorption
31 New suspension system for improved comfort 2010 In the process of
Absorption
32 Development of digital service interface 2010 In the process of
Absorption
33 Agri Implements Technology transfer 2010 In the process of
Absorption
34 Electric Vehicle Technology 2011 In the process of
Absorption
35 Advanced Engine Technologies 2011 In the process of
Absorption
36 Advanced Propulsion Technologies 2011 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
Chairman
Mumbai, 30th May, 2011
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:
(Rs. in crores)
Name of the Company Balances as on 31st Maximum
March, 2011 outstanding
during the year
Mahindra & Mahindra Financial Services Limited 0.00 100.00
Bristlecone India Limited 8.03 8.03
Mahindra Gujarat Tractor Limited 1.00 1.00
Mahindra Shubhlabh Services Limited 8.00 8.00
NBS International Limited 2.00 2.00
Bristlecone Limited 80.90 81.91
Mahindra Overseas Investment Company
(Mauritius) Limited 74.63 86.86
Mahindra Engineering & Chemical Products Limited 126.63 126.63
Mahindra Two Wheelers Limited 148.00 148.00
Mahindra Vehicle Manufacturers Limited 0.00 230.00
Mahindra Holdings Limited 0.00 25.00
Mahindra Automotive Australia Pty Ltd. 0.00 6.17
Ssangyong Motor Company Limited 387.01 387.01
Loans and advances in the nature of loans to Associates:
Vayugrid Marketplace Services Private Limited 8.00 8.00
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.
MANAGEMENT DISCUSSION AND ANALYSIS
Mahindra & Mahindra Limited ('M&M') or ('Mahindra') is the flagship brand
of the Mahindra Group, which consists of 130 companies with diverse
businesses across the globe and aggregate revenues of US $ 12.5 billion.
2010-11 was an epochal year in the life of your 65 year old Company. It
unveiled its new brand position, Rise - a simple yet powerful verb which
succinctly sums up the aspirations of not only the Company's employees but
all the Company's Stakeholders. Customers across the world share a common
desire to Rise, to succeed and create a better future for themselves, their
families and their communities. The Company's Core Purpose is to facilitate
this by accepting no limits, thinking innovatively and driving positive
change in the lives of all its Stakeholders.
The Automotive and Farm Equipment Sectors of your Company continued to work
together with distinct and strong customer focus at the front end and
structured for synergy at the back end. This combined force has achieved
sales of 3,77,065 vehicles and 2,14,325 tractors in the domestic and export
markets.
Mahindra Group Core Purpose - We will challenge conventional thinking and
innovatively use all our resources to drive positive change in the lives of
our stakeholders and communities across the world, to enable them to Rise.
Industry Structure
The Indian automobile industry comprises of a number of Indian-origin and
multinational players, with varying degree of presence in different
segments.
The domestic tractor market too comprises of a large number of players and
is segmented by horsepower into the sub 30 HP segment, the 30-40 HP and 40-
50 HP segments and the higher segment of above 50 HP.
Economic overview
For the Indian economy, Financial Year 2011 was a year of robust growth,
with consumption led demand fuelling manufacturing growth, supported by a
record 5.4% growth in the agricultural sector. However, with this high
growth came a sharp rise in inflation, both on the food and commodities
front.
The Indian economy continued on a robust growth path despite several
challenges on the global macroeconomic front, especially the sovereign debt
crisis in Europe and a significant increase in oil prices. Almost all
Sectors of the Indian economy showed accelerated growth until the third
quarter of Financial Year 2010-11. A normal monsoon supported a very strong
rebound in agricultural growth during the year, thus providing further
impetus to economic growth by raising rural income levels. However, there
were signs of slowing down in some Sectors, especially in manufacturing in
the fourth quarter.
The Reserve Bank of India continued with its monetary policy action of rate
increases to contain inflation, which translated into significant hikes in
wholesale and consumer financing costs, particularly for automobiles.
Industry Overview and Trends
Indian Automotive Sector
The global automobile industry production grew by nearly 26% in 2010
(Source: OICA Organisation Internationale des Constructeurs d'Automobiles),
recovering smartly from two consecutive years of decline, driven primarily
by growth in emerging markets such as China and India. A highlight of the
year was the emergence of China as the largest vehicle market in the world,
surpassing the United States of America.
Against the backdrop of the challenging macroeconomic environment both
domestically and globally, the Indian automobile industry registered a
robust growth during Financial Year 2010-11. The passenger vehicle segment
grew by 29% with domestic sales crossing 2.5 million vehicles. In 2010,
according to OICA, India was the 7th largest vehicle producing country in
the world. This growth was supported by a slew of new product introductions
by vehicle manufacturers, and growing consumer confidence.
During the year, the Government of India introduced Bharat Stage (BS) IV
emission norms for 13 major cities and BSIII norms for the rest of the
country for passenger vehicles. The transition was smooth despite a phased
introduction, due to the cooperative approach of both the Government and
the Industry.
Within the passenger vehicle segment, while the passenger car segment grew
by 30%, in line with the overall industry, the multipurpose vehicle (MPV)
segment grew by 42%. The Utility Vehicle (UV) segment registered a growth
of 19%.
The Commercial Vehicle (CV) segment grew by 27%, driven by a 32% growth in
the Medium and Heavy Commercial Vehicle (M&HCV) segment and a 23% growth in
the Light Commercial Vehicle (LCV) segment. The three-wheeler segment
registered a 19% growth during the year, driven largely by a 23% growth in
the passenger segment owing to the renewal of existing fleet permits and
opening of new permits in several states.
During Financial Year 2011, the two-wheeler segment grew by 25.8%. Within
two-wheelers, Motorcycles grew by 22.9% and scooters recorded an impressive
growth of 41.8%. Mopeds grew at 23.5%.
Source: Society of Indian Automobile Manufacturers (SIAM)
* Classification of A1, A2 etc as per SIAM
Particulars A B C D E F
Passenger
Vehicles 1552713 1951334 2520393 25.7% 29.2%
Cars 1220463 1528337 1982990 25.2% 29.7%
*A1: Mini 49,383 63,378 96,917 28.3% 52.9%
A2: Compact 885639 1128977 1449361 27.5% 28.4%
A3: Mid-size 241683 276294 366474 14.3% 32.6%
A4: Executive 33,636 46,437 52,143 38.1% 12.3%
A5: Premium 9,034 11,898 16,172 31.7% 35.9%
A6: Luxury 1,088 1,353 1,923 24.4% 42.1%
MPVs 106607 150256 213507 40.9% 42.1%
UVs 225643 272741 323896 20.9% 18.8%
Commercial
Vehicles 384952 532721 676370 38.4% 27.0%
LCVs 200699 287777 353621 43.4% 22.9%
A: Passenger 26,952 34,413 37,481 27.7% 8.9%
B: Goods 173747 253364 316140 45.8% 24.8%
M&HCVs 184253 244944 322749 32.9% 31.8%
A: Passenger 34,892 43,083 47,512 23.5% 10.3%
B: Goods 149361 201861 275237 35.1% 36.3%
3 Wheelers 349727 440392 526022 25.9% 19.4%
A: Passenger 268463 349732 428979 30.3% 22.7%
B: Goods 81,264 90,660 97,043 11.6% 7.0%
2 Wheelers 7437670 9371231 11790305 26.0% 25.8%
Scooters 1145798 1462507 2073797 27.6% 41.8%
Motorcycles 5835145 7341139 9019090 25.8% 22.9%
Mopeds 431214 564584 697418 30.9% 23.5%
Electric Two
Wheelers 25,513 3,001 - -88.2% -
Grand Total 9725062 12295678 15513090 26.4% 26.2%
A = Vehicle Classification
B = Financial Year 2009 volumes
C = Financial Year 2010 volumes
D = Financial Year 2011 volumes
E = Financial Year 2010-% growth
F = Financial Year 2011-% growth
Indian Tractor Industry:
The Indian tractor market, comprising of a number of players, continued on
its high growth path to touch 4,80,377 tractors, a growth of 20% over the
previous year. This was on the back of a 31.7% growth in the corresponding
period last year. This growth has been fuelled by increasing rural
liquidity, better crop realisations through higher minimum support prices
and increasing cost and scarcity of farm labour, all of which were further
strengthened by a normal monsoon and continuedgovernment support for
agriculture and for rural India.
Your Company's performance
Automotive Sector - Accept No Limits
During the year under review, your Company's Automotive Sector exemplified
the Rise tenet of Accepting no limits'. It achieved many milestones and
landmarks on its journey to becoming a globally recognised automotive
brand. New products were launched along with refreshes. The Sector won many
awards and much recognition.
The Sector achieved overall volumes, including those of major subsidiaries,
of 3,58,021 vehicles in the domestic market, a significant growth of 25%
during the Financial Year 2011. This growth was contributed largely by its
entry into newer segments and the growth of its existing product range. The
Maxximo, launched in the last quarter of Financial Year 2010, gained a
significant market share in its segment, taking on incumbent competition
successfully. As a result, in the less than 3.5T LCV segment, your Company
gained a 2 percentage points market share to reach 38%.
Particulars A B C D E F
Passenger
Vehicles 119802 156058 1,80,180 30.3% 15.5%
Cars* 13,423 5,332 10,009 -60.3% 87.7%
MPVs 0 0 966 ***NM ***NM
UVs 106379 150726 1,69,205 41.7% 12.3%
Commercial
Vehicles 55,881 86,217 1,15,699 54.3% 34.2%
LCVs** 55,881 86,217 1,14,856 54.3% 33.2%
A: Passenger 5,118 5,025 4,785 -1.8% -4.8%
B: Goods 50,763 81,192 1,10,071 59.9% 35.6%
M&HCVs 0 0 843 ***NM ***NM
**
B: Goods 0 0 843 ***NM ***NM
3. Wheelers 44,533 44,438 62,142 -0.2% 39.8%
All 44,533 44,438 62,142 -0.2% 39.8%
A: Passenger 27,170 30,588 45,091 12.6% 47.4%
B: Goods 17,363 13,850 17,051 -20.2% 23.1%
AS total 220216 286713 358021 30.2% 24.9%
2 Wheelers 0 70,008 163914 ***NM 134.1%
Motorcycles/
StepThrough 0 0 5,181 ***NM ***NM
Scooter/
Scooterettee 0 70,008 1,58,733 ***NM 126.7%
A = Vehicle Classification
B = Financial Year 2009 volumes
C = Financial Year 2010 volumes
D = Financial Year 2011 volumes
E = Financial Year 2010-% growth
F = Financial Year 2011-% growth
* Through JV with Mahindra Automobile Distributor Private Limited.
** Through JV with Mahindra Navistar Automotives Limited.
*** NM: Not meaningful.
Leading the industry:
* Your Company's domestic Utility vehicles sales volumes increased by
12.3% to 1,69,205 units, as against a growth of 18.8% for industry Utility
Vehicles sales. Due to significant supplier capacity constraints faced by
your Company, its market share in the segment dropped 3 percentage points
to 52.2% (Source: SIAM and internal analysis).
* The scorpio, Bolero and Xylo continued to lead the Indian market with
robust growth during the year.
* The Bolero continued to occupy its numer one position for the fifth
consecutive year in the domestic utility vehicle market with record sales
of more than 83,000 vehicles during the year.
* In the financial Year 2011, your Compay'a light commercial Vehicles
sales, including those of its subsidiaries, were 1,10,071 units,
registering a growth of 35.6% as compared to a growth of 22.9% for the
industry. Your Company is the second largest player in the Light Commercial
Vehicles segment with a market share of nearly 32.5%. (Source: SIAM Data
and Internal analysis)
* During the yera, your Company bought out the shareholding of its Joint
Venture partner in Mahindra Automobile Distributor Private Limited. Post
this development, sales of the Logan recovered sharply, with a growth of
nearly 88% to 10,009, compared with the segment growth of 32.6%. The Logan
has been relaunched under the Mahindra badge as the Verito.
New products - Creating customer delight
At Mahindra, the customers are at the core of everything the Company does.
In 2011, the Company launched a slew of products to cater to the diverse
needs of its varied customers. The excellent response received by all these
products proves that your Company is on the right track.
* The Maxximo, launched in the last quarter of the previous financial year,
was rolled out nationwide to an excellent reception in the market.
* The Mahindrs Thar, a niche 4x4 SUV, which sports a retro-look, was
launched in the Indian market to a resounding cheer by offroading and
adventure enthusiasts.
* In January, 2011, your Company launched the Mahindra Genio, a new
generation pick-up truck to cater to the transportation needs of small and
medium businesses.
* During the year, Mahindra Navistar Automotives Limited (a 51% Joint
Venture subsidiary of your Company) commenced the sale of its MN25 and MN31
range of Medium & Heavy Commercial Vehicles, which received an enthusiastic
response in the market. With the gradual rollout of the network and the
launch of a complete range of M&HCVs, this segment is set to be a promising
growth driver for your Company.
Overseas operations - Unbridled growth
* With the recovery in global automotive markets, the Company's overseas
automotive operations registered an impressive growth of 65%.
* The Automotive Sector exported a total of 19,044 vehicles during the
Financial Year 2011. This included exports of 1,904 Logan cars through its
100% subsidiary Mahindra Automobile Distributor Private Limited (MADPL).
Inorganic Growth - Seizing Opportunities:
During the year, the Automotive Sector of your Company took two significant
steps on its journey towards becoming a globally recognised automotive
manufacturer.
* In May, 2010, in acquired a majority shareholding in Reva Electric Car
Company Private Limited (since rechristened as Mahindra Reva Electric
Vehicle Private Limited). This acquisition puts your Company at the
forefront of the changes sweeping the global automotive industry in terms
of the growth of alternate energy vehicles.
* In March 2011, your Company completed the acquisition of a majority
shareholding and management control in SsangYong Motor Company Limited
(SYMC) in South Korea. This acquisition provides both the companies with
opportunities for significant synergy benefits in the areas of global
distribution, joint product development, sourcing and best practices. This
acquisition is a significant step towards realising your Company's global
ambitions.
Farm Equipment Sector - Global tractor leadership
For the Farm Equipment Sector, this was a year of transformation where
numerous milestones were achieved.
Tractor and Farm Mechanisation Business - Creating milestones
* In this period, the Company sold 2,14,325 tractors under the Mahindra and
Swaraj brands, against 1,75,196 tractors sold in the previous year, an
increase of 22%.
* The above volume included the sale of 2,02,513 tractors in the domestic
tractor market in a single financial year, a significant milestone for a
tractor manufacturer anywhere in the world.
* Its market share increased to 42% from 41.4% last year and marked the
completion of 28 years of leadership of the Farm Equipment Sector in the
Indian tractor market.
Tractors - In the Indian heartland
The Farm Equipment Sector's tractor product range extends from 15 HP to 125
HP.
This year saw the launch of Arjun MAT, the first truly multi-application
tractor from the Mahindra stable, equally at ease in agricultural, combine
harvester and other applications.
* Product refreshes: Updated versions of the Mahindra Arjun, Sarpanch,
Bhoomiputra range and the XM series from Swaraj resulted in superior
performance and an improved value proposition for the existing product
range.
Global Footprint
Sustaining the Company's global leadership necessitates a growing global
footprint, which was achieved through focus on the key global markets of US
and China among other regions.
Exports from India grew 34% this year to touch 11,812 tractors, as compared
to 8,837 tractors exported last year.
China
China is the second largest tractor market in the world, fuelled by
increased government subsidies focused on agricultural mechanisation. This
year, however, subsidy disbursements were delayed, missing the major
season, which affected tractor retails, resulting in just 4% domestic
tractor market growth. In this scenario, the Company's domestic volumes
from the two Joint Ventures Mahindra (China) Tractor Company Limited and
Mahindra Yueda (Yancheng) Tractor Company Limited remained steady, with the
Company retaining its 5th position in the domestic market.
Exports from China, which had slumped last year, posted a smart recovery,
propelling Mahindra China export volumes to grow by 31%, thus achieving the
3rd position in Chinese tractor exports.
In recognition of its outstanding performance in sales, customer
satisfaction and brand building for the Huanghai Jinma brand, Mahindra
Yueda (Yancheng) Tractor Company Limited (MYYTCL) was awarded the
'Agriculture Machinery National Customer Satisfaction Brand' by the 'China
Agriculture Machinery Association' in the Category of '25-50 HP Tractors.'
USA
Mahindra USA Inc. posted a strong 54% growth, significantly higher than the
participating industry, gaining market share.Among other contributors to
this success, have been the Compact and Cabin tractor models launched last
year in this market.
ROW
In the SAARC region, Nepal and Bangladesh have been key markets for the
Company's operations. Lately, a fast growing Sri Lankan economy has also
resulted in good tractor sales, and over 20% market share for the Company
in this market.
Mechanisation (Mahindra AppliTrac) - Growing the market
AppliTrac continued to grow the market for agri mechanisation in the
country, playing its part in boosting agri productivity. In view of the
increasing scarcity and cost of farm labour, there is an increasing demand
in the country and beyond for mechanisation solutions for labour intensive
farm operations.
* Rotavator - For AppliTrac, Financial Year 2011 was the year of the
Rotavator'. Sales of this equipment increased three fold. Trailed behind a
tractor and using the tractor's rotary drive, the rotavator ensures a more
efficient form of land preparation, compared to traditional drawn
implements. In order to offer to the Indian customer the best of rotavation
technology, AppliTrac completed an exclusive tie-up with Maschio, Italy,
the world leader in rotavation equipment. These products will be offered
under the Mahindra' brand.
* New products - Applitrac has ensured a steady stream of new products
including Agri construction equipment (CE) attachments, baler, G2 13ft
loader, sugarcane lifter, straw reaper for wheat and more.
* Mechanisation solutions - Another key area of focus has been developing
mechanisation solutions for the labour intensive rice crop. This includes
the rice transplanter and the tracked paddy harvester. Both these products
will go a long way towards transforming the way rice is grown and harvested
in the country.
Agriculture - sowing the seeds for the future
This part of the Agri business will be key to delivering prosperity to the
Indian farmer. While containing elements of the erstwhile business of
Mahindra Shubhlabh Services Limited (MSSL), several new areas in the agri
value chain are being developed.
Agri Inputs
During the year, MSSL's Agri inputs business was demerged into the Company,
with MSSL continuing to exclusively focus on its fruits business. After
demerger with the Company, the Agri inputs arm is being shaped to increase
its offerings to the Indian farmer.
Entry into the Micro-irrigation business
One of the biggest developments this year has been the acquisition of a 38%
stake in EPC Industrie Limited, one of the leading micro-irrigation
companies in India. Micro-irrigation offers tremendous benefits to farmers
- over 25% water savings, reduced expenditure on labour & fertiliser, and
higher productivity. By virtue of this development, the Company will be
able to contribute to the farmer's ability to better utilise scarce water
resources and to overall water conservation in the country.
Mahindra Samriddhi
By the end of this year, over 133 Mahindra Samriddhi Centres have been made
operational. Each Samriddhi Centre offers innovative farming technologies
that transform the lives of farmers by helping them improve productivity.
Mahindra Samriddhi was the recipient of the Golden Peacock Award for
Innovation - 2010, recognising it as a great example of innovation and
thought leadership.
Mahindra Powerol - leadership in challenging times
For Mahindra Powerol, Financial Year 2011 was a very challenging year. The
market for engines and DGs (Diesel Gensets) for the Telecom Sector suffered
a sharp downturn of over 60%. This being Mahindra Powerol's core business,
it significantly impacted plans for the year.
However, Mahindra Powerol weathered this adversity by maintaining focus on
the customer while simultaneously looking at other growth avenues. Some of
the actions for growth included expanding the offering to 500kVA, opening
up new international markets in SAARC and Africa and growing the Home UPS
(HUPS) volume to 47,217 units.
This was rewarded by significant improvement in the Customer Satisfaction
Index (CSI) and Customer as Promoter Score (CaPS), recognition by key
customers and industry-wide recognition in the form of two Voice of
Customer' Awards by Frost & Sullivan.
Despite such a sharp telecom industry demand de-growth, Powerol
strengthened its leadership in the market for power solutions for telecom.
The Quality Way - Inspiring success
Strict adherence to quality is the abiding culture across the Mahindra
Group. After winning the Deming Prize and the Japan Quality Medal, the Farm
Equipment Sector, one of the Group's leading practitioners of the TQM way
is pursuing the path of Total Productive Maintenance (TPM) under the
guidance of the Japan Institute of Plant Maintenance. This year, three FES
plants - Nagpur, Rudrapur and Kandivali - were the proud recipients of the
TPM Excellence Awards 2010. Similarly in the Automotive Sector, the
Mahindra Quality System (MQS) is the way of managing business process
integration of globally competitive practices for sustained growth and
customer satisfaction. The Mahindra Institute of Quality (MIQ) has helped
take this focus on Quality across the Mahindra Group through Mahindra
Quality Way, a rigorous process of internal companywide audits and
improvements.
Opportunities and Threats
Automotive Sector
With the robust growth in the Indian economy and the resulting increase in
the income levels and lifestyle aspirations of the population, the
potential size of the Indian passenger vehicle market in the next five
years is likely to be as large as 4-5 million vehicles with a conservative
growth rate of 10-12% per year. The currently low vehicle penetration of 15
vehicles per 1,000 population, compared to an average of 120 vehicles per
1,000 population for the world also suggests that there are significant
growth opportunities for the industry. According to experts, the automobile
market growth gets on a high trajectory when a country's per capita income
on a Purchasing Power Parity (PPP) basis crosses about $ 4,500. At present,
the PPP per capita income for India is already at approximately $ 3,500 and
is estimated to reach this threshold in the next 4-5 years. As a result,
the Indian automobile industry is expected to remain one of the fastest
growing markets in the world over several years.
Given the importance of the automobile industry to the economy and its
potential for employment and due to its backward and forward linkages with
many Sectors, the Government is keen to support the development of the
industry. On the other hand, there is continuous pressure globally to
reduce environmental emissions from automobiles, leading to the need for
on-going investments in technology upgradation and alternate energy across
the automotive value chain. Growing environmental consciousness among
consumers, government regulations to manage traffic congestion, as well as
improvement in public transport infrastructure are trends that will have
significant impact on the future of the automobile industry. Automobile
manufacturers such as your Company have to monitor such trends carefully
and adapt to them quickly.
Similarly, for Commercial Vehicles, the growth in agriculture and
industrial production, the spread of organised retailing and the growing
prevalence of the hub-and-spoke model for transportation of goods will lead
to a significant expansion of the overall market size. Further, the
expected introduction in the medium to long term of more stringent norms
related to overloading of goods vehicles and roadworthiness and vehicle age
will also lead to significant expansion in the market for commercial
vehicles.
Farm Equipment Sector
The continued Government support to agri and rural development, broad
basing of the rural economy and the greater adoption of improved
agricultural practices (mechanisation, micro-irrigation, hybrid seeds,
nutrient based fertiliser application, etc.) are positive developments that
will drive sustainable agri and rural growth.
Despite having the second largest arable land area in the world and
favourable environmental conditions, lower than world average yields have
limited India's agri output. Having taken on the BHAG of Delivering Farm
Tech Prosperity' and with the creation of the Agri Business vertical, your
Company is geared to contribute in this area.
Within India, there are many areas of low tractor penetration, especially
among the large base of small and marginal farmers. With the increasing
cost and scarcity of farm labour, greater adoption of various forms of
mechanisation is the way forward. These are opportunities which your
Company is well positioned to tap.
The Indian domestic tractor market, having recorded a significant growth in
the last two financial years, is expected to see more competition among
existing players. The international players have been investing in capacity
augmentation and gradually increasing their market share. 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 this as both an
opportunity and a challenge.
Power shortage remains a reality across the country with power capacity
increases not keeping up with demand growth. This is an opportunity for
your Company to continue to offer power solutions to retail and
institutional customers in urban and rural centres, increasing their realm
of possibilities.
Risks and Concerns - Automotive and Farm Equipment Sectors
The Company's business is inherently exposed to many internal and external
risks. Your Company has put in place robust systems and processes, along
with appropriate review mechanisms to actively monitor, manage and mitigate
these risks. Many measures undertaken by your Company are likely to result
in an increase in costs, which cannot always be passed on to customers
through price increases in a highly competitivemarket environment.
Raw Material
Financial Year 2011 saw a strong increase in commodity prices going above
the previous record highs of 2008. Even Financial Year 2012 is expected to
see a firming of prices in the international market. While this will put
pressure on margins, your Company will continue to focus on cost re-
engineering to minimise the impact of this development. In addition, with
the rapid demand growth, some of the Company's key suppliers occasionally
face capacity constraints and are unable to meet demand. This could lead to
potential loss of volumes and market share. The Company is co-operating
closely with the Company's key suppliers to minimise such supply
constraints through advance capacity planning, longer term contracts and
capacity enhancement.
Environment and Tax Regulations
Stringent regulatory norms are being introduced to safeguard the
environment, especially in the area of emissions. 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 Utility Vehicles and the large car segment.
Fuel prices and alternate fuels
With the price of crude oil rising significantly over the past few months,
the price of automotive fuel is likely to face upward pressure. Almost all
of your Company's Utility Vehicle 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 Utility Vehicles at
the expense of diesel Utility Vehicles and will be disadvantageous to the
Company.
There is also a growing customer trend, as well as promotion by Government,
for vehicles powered by CNG, LPG and electric batteries, as well as hybrid
powertrains. Your Company has developed products powered by alternate
energy such as CNG and electricity to provide lower polluting products.
Your Company has also developed prototypes of a hybrid Scorpio and hydrogen
powered three-wheeler as well as a bio-diesel powered Scorpio and Bolero.
The recent acquisition of Mahindra Reva Electric Vehicle Private Limited
will help your Company to partially mitigate this risk by expediting the
development of an electric vehicle portfolio in accordance with customer
demand.
Your Company has also developed tractors and gensets capable of running on
bio-diesel. The entire tractor and Mahindra Powerol range of engines are
not only a benchmark for fuel efficiency, but are also capable of running
on bio-diesel.
Financial market conditions
With the unabated threat of inflation, the Reserve Bank of India has raised
its policy interest rates significantly during the Financial Year 2011 and
is expected to further raise them in the coming months. Availability of
credit and affordable interest rates are important facilitators for
automobile and tractor sales. The recent rise in financing rates is likely
to impact demand. However, to address this risk, your Company has entered
into several strategic tie-ups with multiple banks and financing companies
for providing preferential terms of financing to the Company's customers.
Given the uncertainty prevailing in many parts of the world, especially
with respect to the sovereign debt crisis in Europe and the growth outlook
for key developed markets in the wake of the earthquake and nuclear power
accident in Japan, the outlook for exchange rates is difficult to predict.
This has implications for the profitability of your Company's overseas
operations, which are a key thrust area for the Company. A rupee
appreciation could be a risk for both Automotive and Farm Equipment
Sectors. However, the Company, as a practice, hedges currency exposure
appropriately, thus limiting the impact of risk.
New Projects
In order to meet customer needs and competition, your Company is investing
in an aggressive new product development programme. Success of new product
launches will have an important bearing on its future growth and
profitability.
Monsoons
A normal monsoon is vital as there is a significant interdependence between
the monsoon and the health of the agricultural economy. The tractor
business in particular and automotive business to some degree run the risk
of drop in demand in case of significant variation in monsoon, both
positive and negative. In addition, untimely monsoon also has the potential
of impacting the business.
Outlook - Automotive And Farm Equipment Sectors
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.
The long term outlook for the automobile industry is bright and robust,
though in the near term there are some challenges relating to the external
environment that the industry must overcome. In the past two financial
years, the passenger vehicle growth has been 26% and 29% respectively,
while that for Commercial Vehicles has been 38% and 27% - among the highest
in the world. This high growth has been partly driven by the low base
effect of the previous year due to the global financial crisis, partly by
the stimulus measures taken by theGovernment and partly by appropriate
action on the part of vehicle manufacturers. This support for industry
growth may phase out gradually, returning the industry to a more normal
growth trajectory. In addition, rising inflation, interest rates, fuel
prices and commodity prices are likely to dampen consumer confidence and
sentiment, which has always been a key determinant of automobile sales.
In the long term, the Indian economy is projected to grow rapidly and
demand conditions are expected to remain strong. According to SIAM long
term forecasts, the Indian automobile industry is expected to grow at an
annual average rate of 10-15%. However, in the near term, there are
challenges in terms of higher commodity prices, rising inflation and rupee
appreciation, which will have a bearing on demand and profitability.
Similarly in the case of tractors, the long term outlook continues to be
positive with the tractor industry expected to continue to grow with a CAGR
ranging between 7% and 10%.
Strategy
Automotive Sector
Your Company is pursuing several strategic initiatives, in all key areas of
business, to maintain a healthy and sustainable growth for its Automotive
Sector. Some of the key elements of strategy are to expand the addressable
market by entering into new customer and market segments (such as mini and
small trucks, and medium & heavy trucks), continually refresh and update
its product portfolio (for example with the launch of the new pick up Genio
and impending launch of a new SUV codenamed W201) and by investing
significantly in upgrading R&D and technology.
In addition, your Company is pursuing expansion in overseas markets through
organic and inorganic routes. The recent acquisition of SsangYong Motor
Company Limited is an important step in realising this objective by
expanding the global reach and network of your Company.
Further, your Company is also seized of the global shift towards
sustainable mobility driven by climate change concerns. Towards this
objective, the Company is investing in new alternate fuel technologies. The
recent acquisition of Mahindra Reva Electric Vehicle Private Limited is an
important step towards remaining at the forefront of these developments.
Farm Equipment Sector: Delivering Farm Tech Prosperity
The Farm Equipment Sector strategy has been aligned to Farm Tech prosperity
for the Indian farmer. The core business of tractors will deliver this
through its range of existing and future products that reduce drudgery and
enhance farm productivity. In addition, your Company will offer a wider
range of mechanisation solutions to make life easier and more prosperous
for farmers, especially with rising labour cost and scarcity. The Farm
Equipment Sector's agribusiness will enable the organisation to offer
farmers a range of inputs and knowhow. All these together will lead to
greater farm productivity and deliver prosperity.
Material Developments in Human Resources/ Industrial Relations for
Automotive and Farm Equipment Sectors
The strategic purpose of HR in the Mahindra Group continued to be the
creation of a culture of sustained business outperformance while
simultaneously showing extreme care for all stakeholders, starting with
customers & employees and strengthening the Core Values of the Group. In
the long run, the metric for success would be improvements in the total
factor productivity, while addressing the business imperatives of cash,
cost, competence and confidence. The emphasis was on aligning all the HR
levers towards these goals.
A new and major challenge for HR during the year was to create a detailed
plan of action for bringing the RISE pillars - accepting no limits,
alternative thinking and driving positive change - into the nuts and bolts
of the HR levers. This is a gigantic task which brought together business
and HR professionals from across the Group, to formulate a detailed roll-
out plan over the next few years. It also created a platform for sharing
best practices which would take the Company to the next orbit.
In this overall architecture, some key strategic initiatives that need
mention are employer branding, the employee valueproposition, the template
for creating tomorrow's leaders and harnessing the power of diversity
(across its many dimensions which include gender, age, nationality and
culture). There was huge focus on the Talent Management and Leadership
Development process.
To understand and prepare for the future workplace, the Company is one of
the five Indian companies in the Future of Work project being undertaken in
collaboration with the London Business School. This project is a multi-year
project, involving sixty global Companies and the Company expects to gain
critical insight into leading edge thinking on various areas.
The Company continues to harness the power of IT through Project Harmony,
which now covers 24 HR processes across the Group. Needless to say, all the
initiatives mentioned above need to apply not only to Officers but also to
the blue collar workforce. To that extent the ongoing 'Transformational
Work Culture' initiatives have grown both in depth and width of coverage.
It must, however, be noted that while Industrial Relations largely remained
cordial and harmonious during the year, the overall industrial relations
climate in the country is volatile, especially the issue of contract
labour. In this context, training and engagement programmes were organised
across locations for developing personal, interpersonal and technical
skills of the Company's workmen. These training programmes covered a wide
range of topics which included Positive Attitude, Stress Management, TPM,
Dexterity and Technical training. The workmen participated wholeheartedly
in the training programmes, in many cases on holidays or after working
hours. The permanent employee strength of the Company as on 31st March,
2011 was 17,577.
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 Mahindra 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, 2011, the Gross Block of Fixed Assets and Capital Work in
Progress was Rs. 7,213.58 crores as compared to Rs. 6,240.49 crores as at
31st March, 2010. During the year, the Company incurred capital expenditure
of Rs. 1,152.51 crores (previous year Rs. 946.31 crores). The major items
of capital expenditure were on New Product Development, Capacity
Enhancement and Research & Development including on the Company's research
facility in Chennai. This included purchase of Intangible assets
aggregating Rs. 191.03 crores (previous year Rs. 225.28 crores).
Inventories:
Particulars March 31,
2011 2010
Raw materials and bought
out components as a % of
consumption 5.33% 4.23%
Finished goods as a % of
gross sales 2.65% 2.48%
The increase in inventory levels is due to higher level of activity, higher
project inventory due to new products and strategic buildups due to supply
constraints.
Sundry Debtors:
Sundry debtors amount to Rs. 1,354.72 crores as at 31st March, 2011, as
compared with Rs. 1,258.08 crores as at 31st March, 2010. While in absolute
terms, the debtors have gone up as a result of increased sales, as a
percentage of gross sales and income from operations, the debtors are lower
at 5.29% for the year ended 31st March, 2011, as compared to 6.17% for the
previous year. The Company has been able to achieve this improvement in its
debtors' level due to judicious credit management, control and its emphasis
on collections.
Loan Funds:
The loan funds have decreased from Rs. 2,880.15 crores in the previous year
to Rs. 2,405.29 crores in the current year. The decrease is primarily on
account of the conversion into equity shares of the zero coupon convertible
bonds in the current year partly offset by increased foreign currency
borrowings in the last quarter of the current year.
RESULTS OF OPERATIONS
Income :
(Rs. in crores)
Particulars Financial Financial Inc./
Year-2011 Year-2010 (Dec.)
Amount % Amount % %
Gross Sales 24,850.22 105.78 19,832.06 106.61 25.30
Income from Operations 736.21 3.13 564.06 3.03 30.52
Gross Sales & Income
from Operations 25,586.43 108.91 20,396.12 109.64 25.45
Less: Excise Duty
on Sales 2,092.71 8.91 1,794.01 9.64 16.65
Net Sales & Income
from Operations 23,493.72 100.00 18,602.11 100.00 26.30
Other Income 309.52 1.32 199.35 1.07 55.26
Net Sales, Income from Operations and Other Income:
The net sales and income from operations of the Company grew by 26.30 %
over the previous year on a growth of 28.44% in the automotive business and
23.55% in the Company's tractor business. This growth in the businesses was
due to the increased volumes in both the domestic and export markets.
Other income during Financial Year 2011 at Rs. 309.52 is higher than Rs.
199.35 crores earned in the previous year due to higher dividend income
from subsidiaries, higher income from surplus funds and other miscellaneous
income.
Expenditure:
(Rs. in crores)
Particulars A B C D E
Raw materials, Finished and
Semi-finished Products 16,263.94 69.23 12,332.92 66.30 31.87
Personnel expenses 1,445.56 6.15 1,198.47 6.44 20.62
Interest, commitment
and finance charges (50.29) (0.21) 27.81 0.15 280.83
Depreciation/Amortisation 413.86 1.76 370.78 1.99 11.62
Other expenses 2,328.04 9.91 2,115.48 11.37 10.05
Total Expenditure 20,401.11 86.84 16,045.46 86.26 27.15
A = Financial Year-2011 - Amount
B = Financial Year-2011 - % to Net Sales & Income from Operations
C = Financial Year-2010 - Amount
D = Financial Year-2010 - % to Net Sales & Income from Operations
E = Inc./(Dec.) %
The total expenditure during the year as a percentage of Net sales / Income
from Operations is 86.84 % as compared to 86.26 % in the previous year.
Material Cost :
For the year ended 31st March, 2011, material cost has increased by 31.87%
which is higher than the increase in net sales and
income from operations. Material cost as a percentage to net sales and
income from operations increased to 69.23% in Financial Year 2011 as
compared with 66.30% in Financial Year 2010. The increase in material cost
has been largely driven by the increase in input cost due to increase in
commodity prices, changes in product mix and compliance with regulatory
norms.The impact of these was partially offset through selling price
increase and continued cost reduction initiatives undertaken by the
Company.
Personnel Cost :
Personnel cost has increased by 20.62% to Rs. 1,445.56 crores from Rs.
1,198.47 crores in the previous year. This is mainly due to increase in
strength, annual increments, impact of wage agreements signed during the
year and VRS settlements atcertain locations in the Company.
Other Expenses :
Other expenses as a percentage of net sales and operating income shows a
decrease over the previous year. The expenses in absolute terms are higher
due to increase in marketing related expenses on warranty, incentives,
service coupon, advertisement and sales promotion due to increased volumes,
professional fees and brand building offset by a lower charge on account of
variations in difference in exchange and forward cover cancellations as
compared to the previous year.
Depreciation :
The depreciation for the year ended 31st March, 2011 at Rs. 413.86 crores
as compared to Rs. 370.78 crores in the previous year is due to the impact
in the current year on account of increased amortisation of intangibles and
capitalisation of assets at the Company's research facility in Chennai.
Interest (Net):
The interest income for the year ended 31st March, 2011 is Rs. 50.29 crores
(net of interest expense Rs. 70.86 crores) as compared to an interest
expense of Rs. 27.81 crores (net of interest income Rs. 129.04 crores) in
the previous year. This is mainly due to conversion of fully and
compulsorily convertible debentures into equity shares towards the end of
the previous year, resulting in a lower interest charge in the current
year.
Exceptional Items :
The profit from Exceptional items during the year ended 31st March 2011 is
Rs. 117.48 crores as against Rs. 90.75 crores in the previous year. The
profit in the current year is on account of profit earned on exercise of a
put option the Company held on a certain long term investment, while in the
previous year the exceptional income was 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.
Provision for taxation :
The provision for current tax and deferred tax for the year ended 31st
March, 2011 as a percentage to profit before tax is lower than the previous
year, on account of higher tax free dividend income during the year and on
account of increased weighted deduction available for research and
development expenditure in Financial Year 2011.
Consolidated Financial Position of the Mahindra Group
During the year, the Group acquired a 70% stake in Ssangyong Motor Company
Limited of Korea making it a subsidiary of the Company. The Group also
acquired stakes in Reva Electric Car Company Private Limited, Gipps Aero
Investment Pty. Ltd and Aerostaff Australia Pty. Ltd making them
subsidiaries of the Company. Renault s.a.s. exited from the Joint Venture
Mahindra Renault Private Limited during the year, making Mahindra Renault
Private Limited a wholly owned subsidiary of the Company. Mahindra Renualt
Private limited was subsequently renamed as Mahindra Automobile Distributor
Private Limited.
In March 2010, pursuant to the exercise of options by AT&T, Tech Mahindra
Limited along with its subsidiaries ceased to be subsidiaries of the
Company. Hence, for the current year in the books of the Company, Tech
Mahindra Limited and its subsidiaries have been treated as Joint Ventures
and consolidated line by line on the proportionate holding basis as
compared to full line by line basis consolidation as a subsidiary in the
previous year. As on 31st March, 2011, the Group comprised of the flagship
holding company, Mahindra & Mahindra Limited, 110 Subsidiaries, 6 Joint
Ventures and 13 Associates.
The Gross turnover for the year ended 31st March, 2011 of Consolidated
Mahindra Group is Rs. 39,708.66 crores as against Rs. 33,790.10 crores for
the previous year. The Mahindra Group's net turnover grew by 16.85% to Rs.
37,026.37 crores in the current year from Rs. 31,687.97 crores in Financial
Year 2010. The profit before exceptional items and tax for the current year
is Rs. 4,310.84 crores as compared to Rs. 3,782.59 crores registering an
increase of 13.97% over the previous year. The Mahindra Group's performance
across most of its segments has registered an improvement. The Systech
segment, which had faced challenges on account of the situation prevailing
post the global meltdown of 2009, has shown encouraging improvement on the
back of an improved performance in Europe. During the year, there was an
exceptional gain of Rs. 218.83 crores mainly arising from gains on account
of deemed divestitures of the Company's holdings in Mahindra & Mahindra
Financial Services Limited and disposal of an Associate company on
exercising a put option available with the Company. The consolidated Group
Profit for the year after exceptional items, prior period adjustments and
tax and after deducting minority interest is Rs. 3,079.73 crores as against
Rs. 2,478.56 crores earned last year, a growth of 24.25%.
Tech Mahindra Limited (TML), the Group's IT arm, registered a total income
(consolidated) of Rs. 5,257.68 crores as against Rs. 4,700.84 crores in
Financial Year 2010 - an increase of 11.85%. Its Net Profit, after share of
minority interest, was lower at Rs. 644.19 crores during Financial Year
2010 as against Rs. 700.53 crores in the previous year. Excluding TML's
share of associate company loss, the Net Profit, after share of minority
interest was Rs. 743.79 crores.
The Mahindra Group's Finance company, Mahindra & Mahindra Financial
Services Limited (Consolidated), while maintaining its leadership position
as the largest retail financier for semiurban and rural markets, witnessed
a revenue growth of 30% over the previous year. With its continuous focus
on NPA reduction, buoyant rural cashflows and containment of interest costs
through broad basing the borrowing profile, it reported a total income of
Rs. 2,074.39 crores during the current year as compared to Rs. 1,595.60
crores last year. With a network of 547 offices, its improved performance
as a car financier and its increased presence in Heavy Commercial Vehicles
and Construction Equipment, the consolidated profit after tax for Financial
Year 2011 grew by 38.49 % from Rs. 355.82 crores in the previous year to
Rs. 492.77 crores in the current year.
Mahindra Lifespace Developers Limited, the Group's subsidiary in the
business of real estate and infrastructure development, showed impressive
growth during the year under review. Sales of residential units by the
Company and its subsidiaries engaged in residential development registered
a growth of 19% over the previous year. The Company is also engaged in the
development of integrated business cities, under the name Mahindra World
City, through its subsidiary companies at Chennai and Jaipur. The Company's
consolidated operating income increased from Rs. 417.86 crores to Rs.
611.93 crores, an increase of 46.44%. The consolidated profit after tax
after minority interest for the year increased by 37.81% from Rs. 78.49
crores to Rs. 108.17 crores.
Segment Results (before exceptional item):
The results achieved by major business segments of the Group are given
below:
(Rs. in crores)
Sr. Segments Financial Year 2011 Financial Year 2010
No.
1. Automotive 1,632.28 1,261.41
2. Farm Equipment 1,701.48 1,406.66
3. Financial Services 744.01 524.21
4. Steel Trading & Processing 85.30 82.64
5. Infrastructure 170.72 121.72
6. Hospitality 104.28 158.01
7. IT Services 440.67 1,026.36
8. Systech 101.87 (105.98)
9. Others (178.03) (108.08)
Total 4,802.58 4,366.95
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, changesin Government
regulations, monetary policy, tax regimes, economic developments within
India and the countries in which the Company conducts business and other
incidental factors.
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