Accounts Final - Mahindra and Mahindra Ltd

8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.

http://slidepdf.com/reader/full/accounts-final-mahindra-and-mahindra-ltd 1/25

Vignana Jyothi Institute of Management Page 1

INTRODUCTION:

The Mahindra Group is a large industrial conglomerate in India, with operations in the

automotive, farm equipment, financial services, trade and logistics, automotive components,after-market, IT and infrastructure sectors. It is considered to be one of the most reputable Indian

industrial houses, with the market leadership in utility vehicles as well as tractors in India. The

Mahindra Group has a global presence with operations on every continent except Antarctica. Its

headquarters are located at Mahindra Towers in Mumbai.

Mahindra & Mohammed was originally incorporated in 1945 by KC Mahindra and

Ghulam Mohammad in Ludhiana, Punjab as a manufacturer under license of the famous Willys

Jeep. Following the Partition of India in 1947, Ghulam Mohammad left the company and

emigrated to Pakistan, becoming the first finance minister of the new state. In 1948, KC

Mahindra changed the name to Mahindra & Mahindra, and building on his expertise in the steel

industry began trading steel with UK suppliers. By 1956, the company was listed on the Bombay

Stock Exchange, and by 1969 the company had entered the world market as an exporter of utility

vehicles and spare parts. Due to the restrictions of the License Raj, Mahindra & Mahindra like

many Indian companies was forced to expand into other businesses, creating a tractor division in

1982 and a tech division in 1986. It has continued to diversify its operations ever since through both joint ventures and Greenfield investments. By 1994 the structure of the group had become

so bloated and the group so diverse that a fundamental reorganization of the company was

undertaken, dividing the group into six Strategic Business Units: Automotive; Farm Equipment;

Infrastructure; Trade and Financial Services; Information Technology and Automotive

Components.

The new Managing Director Anand Mahindra followed this reorganization with a new

logo in 2000 and the successful launch of the Mahindra Scorpio in 2002. In conjunction with an

overhaul in production and manufacturing methods these changes did much to make the

company more competitive, and since then the reputation and revenues of the group have risen

noticeably. The US-based Reputation Institute recently ranked Mahindra among the top 10

Indian companies in its 'Global 200: The World's Best Corporate Reputations' list. As of 2007 it




was also ranked one of India¶s 40 largest companies. The Mahindra Group recently acquired the

troubled IT services provider Satyam for approximately $422 million. It plans to eventually

merge the company with Tech Mahindra.

The subsidiary companies of the Company continue to contribute to the overall growth

of the Company. Major Subsidiaries such as the Tech Mahindra Group with a 208%growth in

profits, Mahindra & Mahindra Financial Services Limited with a 21% growth in profits and

Mahindra Holidays and Resorts India Limited with a 3.59% growth in profits deserve special

mention. The consolidated Group Profit for the year after exceptional items, prior period

During the year under review, Mahindra Gears International Limited, Mahindra Gears

Global Limited, Mahindra Gears Cyprus Limited, Mahindra Metalcastello S.r.l., MahindraBebanco Developers Limited, Mahindra Industrial Township Limited, Metalcastello S.p.A, Crest

Geartech Private Limited, Engines Engineering S.r.l., Eff Engineering S.r.l., ID-EE S.r.l.,

Mahindra IT Consulting Private Limited, Mahindra Two Wheelers Limited, Mahindra

Automotive Australia Pty. Limited, Mahindra United Football Club Private Limited, Mahindra

Defense Land Systems Private Limited, Venturbay Consultants Private Limited and Mahindra

Yueda (Yancheng) Tractor Company Limited became subsidiaries of the Company. Mahindra

Defense Systems Division (MDS): With the opening up of the Defense Sector for Private Sector

participation in February, 2001, the Company constituted a separate Division viz. MDS to pursue

a wide range of Defense Sector activities.

They don't have a group-wide mission statement. Their Core Purpose is what makes all of

them to get up and come to work in the morning.'




ACCOUNTING POLICY:

1. Basis of preparation of Accounts:

The accounting policy used by the Mahindra and Mahindra is GAAP. The accounts have

been prepared to comply in all the material aspects with

a) Applicable accounting principles in India.

b) The Accounting Standards issued by the Institute of Chartered Accountants of

India, as applicable.

c) Relevant provisions of the Companies Act, 1956.

2. Use of Estimates:

The preparation of financial statements requires the management to make

estimates and assumptions considered in the reported amount of assets and liabilities

(including contingent liabilities) as on the date of financial statements and the reported

income and expenses during the reporting period. Management believes that the estimates

used in the Preparation of the financial statements are prudent and reasonable. Actual

results could differ from these estimates. Any revision to accounting estimates is

recognized prospectively in current and future periods.

3. Basis of Accounting:

The Company follows the accrual method of accounting for its income and

expenditure except delayed payment charges, fee based income and Interest on Trade

advance, which on account of uncertainty of ultimate collection are accounted on receipt

basis. Also in accordance with the guidelines issued by the companies Act 1956.Theaccrual basis of accounting as started earlier is considered to be most scientific basis of

accounting. So the companies Act 1956 with the effect from 15th June, 1988 requiring all

the companies to maintain their account on accrual basis of accounting so that fairest

possible periodic net income and the financial position may be reported to the public.




FIXED ASSETS:

Fixed asset, also known as property, plant, and equipment, is a term used in

accountancy for assets and property, which cannot easily be converted into cash within 1 year or one accounting cycle whichever is longer.

In most cases, only tangible assets are referred to as fixed. Fixed assets are stated at cost

of acquisition, including any attributable for bringing the asset to its working condition for its

intended use, less accumulated depreciation.

Types of Fixed assets:

1. Intangible Assets: Assets that do not have a definite existence are called intangible assets.They have neither a physical form nor give their owner definite financial rights. The most

important intangible fixed asset is goodwill. Other intangible includes patents, copyrights and

trademarks.

2. Tangible assets: Assets that have a physical existence, or give the holders definite set of

financial rights are classified as tangible assets. Examples of tangible assets include land,

machinery, bank deposits and investments.

Observations:

y The net value of fixed assets has increased from Rs. 1814.15 Crores to Rs. 2567.60 Crore

due to the increase in Gross block.

y The fixed assets have not been physically verified by the management during the year but

the company has a system of verifying the fixed assets once in every three years.

y The inventory of the company has been physically verified by the management as at the

year-end.

y The financial position of the company became strong compared in 2009 compared to

2008.




LI ABILITY:

In financial accounting, a liability is defined as an obligation of an entity arising

from past transactions or events, the settlement of which may result in the transfer or use

of assets, provision of services or other yielding of economic benefits in the future.

Types of Liabilities:

1. Current Liabilities: Current liabilities are short-term financial obligations that are paid

off within one year or one current operating cycle, whichever is longer. Current liabilities

include such accrued expenses as wages, taxes, and interest payments not yet paid;

accounts payable; short-term notes; cash dividends; and revenues collected in advance of

actual delivery of goods or services.

2. Long Term - Liabilities: Liabilities that are not paid off within a year, or within a

business's operating cycle, are known as long-term or noncurrent liabilities. Long-term

liabilities include notes, mortgages, lease obligations, deferred income taxes payable, and

pensions and other post-retirement benefits.

3. Contingent Liabilities: A third kind of liability accrued by companies is known as a

contingent liability. Contingent liabilities often come into play when a lawsuit or other

legal measure has been taken against a company. An as yet unresolved lawsuit

concerning a business's products or service, for example, would qualify as a contingent

liability. Environmental cleanup and/or protection responsibility sometimes falls under

this classification as well, if the monetary impact of new regulations or penalties on a

company is uncertain.

Observations:

y The current liabilities increased by Rs. 1223.65 Crores due to increase in provisions of

Rs. 334.1 Crores.

.




DEPRECI ATION:

In accounting, depreciation is a term used to describe any method of attributing the

historical or purchase cost of an asset across its useful life, roughly corresponding to

normal wear and tear It is of most use when dealing with assets of a short, fixed service life, and

which is an example of applying the matching principle per generally accepted accounting

principles.

Types to Calculate Depreciation

1. Straight line method:

Straight-line depreciation is the simplest and most-often-used technique, in which

the company estimates the salvage value of the asset at the end of the period during

which it will be used to generate revenues (useful life) and will expense a portion

of original cost in equal increments over that period. The salvage value is an estimate of

the value of the asset at the time it will be sold or disposed of; it may be zero or even

negative. Salvage value is also known as scrap value or residual value.

y Straight-Line Method:

Annual depriciation Expense = (Cost of Fixed Assets- Scrap Vaue)/ Life Time(years)

2. Accelerated Depreciation Methods :Accelerated depreciation methods such as

declining balance and sum of year¶s digits calculate depreciation by expensing a large

part of the cost at the beginning of the life of the fixed asset. These methods are further

classified into three:

i. Sum of the Years Digits - The first step is to sum the digits or numbers starting with the

life and going back to one. For example, an asset with a life of 5 would have a sum of digits as follows: 5+ 4+ 3 +2 + 1 = 15. To find the percentage for each year divide the

year's digit by the sum.

y Depreciation amount = (Cost ± residual value) * number of years of useful life left /sum

of digits of the years of life.




ii. Written down value method - Under this method depreciation is calculated every year on

the net value of assets. Unlike in the straight line method depreciation amount is not the

same every year. Net value of assets in a year is the total value of assets after deducting

last year¶s depreciation. In case the rate of depreciation is not given then the formula to

calculate the rate is as follows:

y Rate of depreciation = 1 ± n^residual value / cost

(Where n is the estimated useful life of the asset)

3. Production Units methods - This method is used when the asset can be classified as a

certain number production units. For example for a vehicle the depreciation is calculated

based on the kilometers run. In such cases, the per unit depreciation is calculated, and

the total depreciation is known by multiplying with the total production units.

Rate of depreciation per unit = cost ± residual value /cos

4. Depreciation and amortization is calculated based on cost using the straight-line method

over the estimated useful life of the asset, unless the useful life is indefinite. Parts of

property, plant and equipment with a cost that is significant in relation to the total cost of

the item are depreciated separately when the useful life of the parts do not coincide with

the useful life of other parts of the item.




The following useful lives are used for depreciation and amortization:

Particulars Years

Technology-based intangible assets 3±15

Trademarks with definite lives 5±10

Marketing and customer related

intangible assets

5±10

Buildings 25±50

Machinery and equipment 3-10

Vehicles 4±5

Computer hardware and software 3-5

Rental equipment 3±12

The useful lives and residual values are reassessed annually.

Land, goodwill and trademarks with indefinite lives are not depreciated or amortized.

Observations:

The depreciation for the year ended March 31, 2009 is of Rs. 291.51 Cores where as in March31, 2008 is of Rs. 238.66 Crores due to capitalization of the Xylo related assets and the increase

in amortization of intangibles in the current year.




INVENTORIES:

Definition: Inventory is list for goods and materials, or those goods and materials themselves,

held available in stock by a business. In accounting, inventory is considered as an asset.

Inventories are valued at the lower of cost or net realizable value. Net realizable value is

the estimated selling price less the estimated costs of completion and selling expenses. The cost

of inventories is based on the first-in, first-out principle and includes the costs of acquiring

inventories and bringing them to their existing location and condition. Inventories manufactured

by the Group and work in progress include an appropriate share of overheads. Inventories are

reported net of deductions for obsolescence and internal profits arising in connection with

deliveries from the production companies to the customer centers.

Inventories:

March 31, 2009 March 31, 2008

Raw materials and bought out components as a %

of consumption 4.46% 4.66%

Finished goods as a % of gross sales 3.31% 4.68%

Raw materials, Finished and Semi-finished

Products 9,274.23( in crores) 7,725.91(in crores)

The reduction in inventory levels is due to focus on supply chain management and better

management and control.




DIVIDENDS:

Dividends are payments made by a corporation to its shareholder members. It is the

portion of corporate profits paid out to stockholders. When a corporation earns a profit or

surplus, that money can be put to two uses: it can either be re-invested in the business

(called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations

retain a portion of their earnings and pay the remainder as a dividend

Observations:

y In recognition of the difficult economic climate in which the Company operated during

the year, a small reduction is being made in the proposed dividend as compared to the

dividend of Rs. 11.50 per Equity Share paid in the previous year.

y Also the proposed dividend will be paid on a slightly enlarged capital base of Rs.278.82

Crores (as against Rs. 245.74 Crores in the previous year).

y The equity dividend outgo for the financial year 2008-09, inclusive of tax on distributed

profits (after reducing the tax on distributed profits of Rs.14.15 Crores payable by the

subsidiaries on the dividends receivable from them during the current financial year)

would absorb a sum of Rs.312.06 Crores (as against Rs.321.09 Crores comprising the

dividend of Rs.11.50 per Equity Share paid for the previous year).




RESERVES AND SURPLUS:

Reserve is the Net worth of a firm over the amount realized from issuance of stock (shares)

and arising from retained profits, revaluation of assets, and other surplus sums. It is the Part

of retained earnings set aside for a specified purpose and, hence, unavailable for

disbursement as dividends or Funds or material set aside or saved for future use.

Surplus is the extent to which generation of goods, services, and resources (such

as capital) exceeds their consumption. Surplus of resources is the bedrock on which capitalism is

built.

Consolidated equity includes certain reserves which are described as follows:

y The Board¶s policy is to maintain an adequate capital structure so as to maintain investor,

creditor and market confidence and to support future development of the business.

y The company makes various types of reserve like capital reserve, capital reserve on

consolidation, security premium reserve, revaluation reserve, investment fluctuation

reserve, capital redemption reserve, special reserve, hedging reserve, foreign exchange

fluctuation reserve.

Observations:

y From the balance sheet it is observed that reserve and surplus of the company had

increased from Rs. 5921.70 Crores to Rs. 6763.29 Crores. It means the company is more

concern on future uncertainty.

y From the schedule it is observed that the company is focused on some particular reserve

like General Reserve and Debenture redemption Reserve.

y The company made a reserve in general reserve in 2008 was Rs 971.84 Crores and whichis increased by Rs 1047.71 Crores. It means the company is more focused on future

uncertainty.

y The company increased his Debenture Redemption Reserve from Rs. 975.17 Crore to Rs.

1050.81 Crore.It means the company thinks about his debenture holder because 2009-10

the company issued more debenture / bond.




SECURED AND UNSECURED LO ANS:

A secured loan is a loan in which the borrower pledges some asset as collateral for the

loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is

thus secured against the collateral in the event that the borrower defaults; the creditor takes

possession of the asset used as collateral and may sell it to satisfy the debt by regaining the

amount originally lent to the borrower.

An unsecured loan is a loan that is not backed by collateral. It is based solely upon the

borrower's credit rating. As a result, they are often much more difficult to get than a secured

loan, which also factors in the borrower's income. An unsecured loan is considered much

cheaper and carries less risk to the borrower. However, when an unsecured loan is granted, it

does not necessarily have to be based on a credit score.

The company has some secured and unsecured loans. The secured loans are Debenture /

Bond, Foreign Currency Loan from Bank, Loans and Advance on cash Credit Account from

Bank and Short-term Foreign Currency Loan from Bank. The Unsecured Loans are Fixed

deposits, Short-term loan from Bank, and Other loan like Loan from Financial institutions,

Foreign currency loan from Bank, Zero coupon convertible Bonds, 9.25 % fully and

compulsorily convertible debenture and from others.

Observation:

y Both the Secured and Unsecured are increased comparing the previous year.

y The Secured loan in is increased by Rs. 363.74 Crores because the company issue more

debenture/ bond in 2009-10.

y The Unsecured loan also increased by rs1465.7crores.

y The company get more Unsecured loan because Brand name of the company.

y The company issuers Rs.700 Crores 9.25% fully and compulsorily convertible debenture

which is Zero in previous year.

y Due to the increase in Secured and Unsecured loan the liability of the company is

increased.




INCOME ST ATEMENT:

Income statement is the financial statement that summarizes the revenues, costs and

expenses incurred during a specific period of time - usually a fiscal quarter or year. These

records provide information that shows the ability of a company to generate profit by increasing

revenue and reducing costs. This statement is also known as a "statement of profit and loss", or

"income statement" or an "income and expense statement". This statement includes both

operating and non-operating items.

The important thing to remember about an income statement is that it represents a period

of time. This contrasts with the balance sheet, which represents a single moment in time.

Charitable organizations that are required to publish financial statements do not produce

an income statement. Instead, they produce a similar statement that reflects funding sources

compared against program expenses, administrative costs, and other operating commitments.

Observations:

1) The company is following single step income statement.

2) The Net sales for the year 2009 ± 2010 has increased by 17% i.e. Rs. 1844.22 crore.

3) The Net Income for the year 2009 - 2010 has increased by 15% i.e. Rs. 1692.38 crore.

4) The profit for the year 2009 ± 2010 has decreased by 24% i.e. Rs. 266.59 crore.

5) The profit has come down due to the decrease in the Income from operations, since there

is an increase in some expenses like Raw materials, Finished and Semi-finished products

and personnel expenditure.

6)

The Personnel expenditure has increased by Rs. 138.47 crore because of the increase ingratuity by Rs. 35.16 crore.

7) The Raw Material has increased by 1548.32 crore where there is a huge change compare

to last year because the stock taken over on Amalgamation increased i.e. Rs. 92.22 crore.




BAL ANCE SHEET:

In financial accounting, a balance sheet or statement of financial position is a summary of a

person's or organization's balances. Balance sheet is a financial statement that summarizes a

company's assets, liabilities and shareholders' equity are listed as of a specific date, such as the

end of its financial year. These three balance sheet segments give investors an idea as to what the

company owns and owes, as well as the amount invested by the shareholders. A balance sheet is

often described as a snapshot of a company's financial condition. Of the four basic financial

statements, the balance sheet is the only statement which applies to a single point in time.

The balance sheet must follow the following formula:

Assets = Liabilities + Shareholders' Equity

Observations: MAHINDRA AND MAHINDRA LTD. prepares its balance sheet in the vertical format. It

comprises of sources and application of funds. Sources of funds include share holders funds,

reserves and surplus, loan funds and deferred tax liabilities. Application of funds includes fixed

assets (both tangible and intangible), investments, deferred tax assets and net current assets

(current assets less current liabilities). The balance sheet tallies at Rs 9134.84 Crore.




1. SOURCES OF FUNDS:

i. SHARE HOLDER¶S FUNDS:

y In this company, sources of funds include share holder funds (capital,

employee, stock options and reserves and surpluses) and loan funds

(secured loans and unsecured loans).

a. Capital:

y The authorized share capital is of Rs. 600 Crore and the unclassified

authorized shares are of 25 lakhs of Rs 100 each i.e. Rs. 25 Crore.

y The issued and subscribed capital is of Rs. 289.21 Crore as on 2010

and Rs. 278.82 Crore as on 2009 and paid up capital is of Rs 282.95

Crore as

y on 2010 and Rs. 272.62 Crore as on 2009. This shows that there is an

increase in the capital as compared to the year 2009.

b. Reserves and Surplus:

y Reserves and surplus has increased from Rs 4107 Crore to Rs 4982.91

Crore in 2010.

ii. LOAN FUNDS:a. Secured Loans:

y The secured loans have increased from Rs. 617.26 Crore to Rs. 981

Crore.

b. Unsecured Loans:

y The unsecured loans have increased from Rs. 1969.80 Crore to Rs.

3071.76 Crore.

iii. DFERRED TAX LIABILITY:

y The net deferred tax decreased from Rs.56.72 Crore to 0 (NIL).

2. APPLICATION OF FUNDS:

i. FIXED ASSETS:

y The net block increased from Rs. 1814.15 Crore to Rs. 2567.70 Crore.




y The capital work-in-progress (including capital advances) has

increased from Rs. 546.45 Crore to Rs. 646.73 Crore.

ii. INVESTMENTS:

y Investments are of Rs 4215.06 Crore in 2009 and Rs 5786.41 Crore in

2010. Investments have increased by a margin of Rs. 1571.35 Crore.

iii. DEFERRED TAX ASSET:

y Deferred tax assets have increased from 0 to Rs 18.27 Crore.

iv. NET CURRENT ASSETS:

y Net currents assets are the differences between current assets andcurrent liabilities.

y Sundry Debtors have increased from Rs 1004.88 Crore to Rs 1043.65

Crore implying an increase in loans and advances.

y Cash balances have increased by a huge margin from Rs. 861.23

Crore to Rs. 1574.43 Crore.

There is an overall increase in both current assets as well as current liabilities. Currentassets are of Rs. 1418.56 Crore and current liabilities are of Rs. 1557.75 Crore. Therefore, it

clearly states that there is a huge increase in current liabilities compared to current assets which

is resulting a decrease in net current assets of Rs 404.36 Crore in 2009 to Rs. 265.17 Crore in

2010.




C ASH FLOW ST ATEMENT:

The official name for cash flow statement is statement of cash flows. In financial

accounting, a cash flow statement also known as funds flow statement is a financial

statement that shows how changes in balance sheet and income accounts affect cash and cash

equivalents, and breaks the analysis down to operating, investing, and financing activities.

The cash flow statement organizes and reports the cash generated and uses in the following

categories:

1. Operating

activities

± It Converts the items reported on the income statement from

the accrual basis of accounting to cash.

2. Investing

activities

± It reports the purchase and sale of long-term investments and

property, plant and equipment.

3. Financing

activities

± It reports the issuance and repurchase of the company's own

bonds and stock and the payment of dividends.

This statement does not include non-cash incomes and expenses and outstanding expenses and

accrued incomes. As the name suggests it includes only those transactions which result in cash

inflows and cash outflows. As an analytical tool, the statement of cash flows is useful in

determining the short-term viability of a company, particularly its ability to pay bills.

International Accounting Standard 7 (IAS 7) is the International Accounting Standard that deals

with cash flow statements.




OBSERVATIONS:

1. The Net cash generated from operating activities is Rs. 1631.30 Crore. It is increased by

Rs. 805.47 Crore.

2. The Net cash used in investing activities is Rs. (1941) Crore. The net cash flow used in

investing activities has been reduced from Rs. (2075.08) Crore to Rs. (1941.00) Crore i.e.

By Rs. 134.28 Crore because of sale of investments and dividends received.

3. The Net cash generated from financing activities is Rs. 696.91 Crore. It is decreased by

Rs. 114.43 Crore because of huge amount of dividends paid which includes income tax

on dividends of Rs.38.48 Crore; where as last year¶s income tax on dividend was

Rs.16.69 Crore.

4. The cash and cash equivalent at the end of the year have increased from Rs. (437.41)

Crore to Rs. 387.21 Crore.




NOTES TO ACCOUNTS:

1. Significant Accounting Policies:

i. Accounting Convention:

Principles, rules and procedures selected, and consistently followed, by the

management of an in preparing and reporting the financial statements are called as

accounting policies. Accounting policies deal specifically with matters such as

consolidation of accounts, depreciation methods, goodwill, inventory pricing, and

research and development costs. These policies must be disclosed in the annual financial

statements.

ii. Employee Benefits:

a) Defined Contribution Plan: Company¶s contributions paid/payable during the year

to Superannuation Fund, ESIC and Labor Welfare Fund are recognized in the

Profit and Loss Account.

b) Defined Benefit Plan: Contributions to Provident Fund are made to a Trust

administered by the Company and are charged to Profit and Loss Account asincurred..

c) Defined Long term Compensated Absences: Company¶s liability towards gratuity,

long term compensated absences and post retirement medical benefit schemes are

determined by independent actuaries, using the projected unit credit method.

iii. Sales: sales include export benefits and cost of items given for sales promotion donations.

Stock-in-Trade, Property Development Activity, includes completed premises

iv. Research and Development expenditure: In recognized Research and Development units

are debited to the Profit and Loss Account, including certain expenditure based on




allocations made by the Company. Development expenditure and capitalization of assets

are incurred.

v. Taxation: Demands against the Company not acknowledged as debts and not provided

for, relating to issues of deductibility and taxability in respect of which the Company is in

appeal and exclusive of the effect of similar matters in respect of assessments remaining

to be completed.

The Income-tax Department is likely to pursue in reference and exclusive of the effect of

similar matters in respect of assessments remaining to be completed:

y Income-Tax matters: Rs. 58.63 Crores (2008: Rs. 37.96 Crores)

y Surtax matter: Rs. 0.13 Crores (2008: Rs. 0.13 Crores)




DIRECTORS REPORT:

Directors' report is an annual report by the directors of a company to its shareholders,

which forms part of the company's accounts required to be filed with the Registrar of Companies

under the Companies Act 1985. It should contain:

(1) Names of directors who served during the reporting year.

(2) Summary of the firm is trading activities and its future prospects.

(3) Principal activities of the firm and its subsidiaries, and any changes therein

(4) Recommended dividend for the reporting year.

(5) Post-balance sheet date events that may materially affect the firm's finances

(6) Significant changes in the value of fixed assets. The report is typically prepared on a

quarterly and annual basis. The report is usually unaudited.

Mahindra and Mahindra Limited followed strong monetary policies to control inflation with the

Consequent high interest rates:

The net income of the company grew by 14.5% to 13,364 Crores in the year under the

review from Rs. 11,672 Crores in the financial year 2008. The company recorded total sales of 1,

61,882 vehicles, 44,806 three wheelers, 1, 20,202 tractors and domestic sales volume of

1, 53,654 vehicles and spare parts sale of Rs.362 Crores.

Mahindra Defence system division (MDS) is engaged in two lines of Defence Businesses

in land systems and naval systems. The growth rate for most of its most product and services

were fluctuated due to financial crisis and accelerated during the fall demand fell supply towardsthe end of the year.

Demand for three wheelers increased and company entered into various business and

various countries including china, Australia. The subsidiary companies of our company continue

to contribute to the overall growth of the company.




The consolidated group profit for the year after exceptional items, prior period

adjustments and tax and after deducting minority interests is Rs. 1,405.41 Crores as against Rs.

1,571.12 Crores earned last year. Due to financial crisis manufacturing activities in the country

have been hit sharply by the melt down in global financial and trade flows. Our company¶s

continuous focus on quality cost, controls, process efficiencies, and new product development

and innovations, our company is poised to take quickly advantage of the expected positive turn

of events and hopes to cope up with these challenges and look to the future with confidence.

Some of the prominent illustrative transactions in the financial year 2009 are enumerated as

under are:

1. Acquisition of assets in 2-wheeler segment.

2. Acquisition of engines engineering, Italy (EE).

3. Acquisition of Metalcastello, Italy.

4. Acquisition of Tractor Company in china.

5. Merger of Punjab tractors limited.

6. Private equity in the Automobile After market segment.

7. Merger of Mahindra Holdings and finance limited.

8. Transfer of logistic business.

9. Automotive sectors joint venture in Australia.

10. Mahindra South Africa.

11. Proposed merger of Mahindra Hindoy industries limited with Mahindra Castings

Private Limited.




CORPOR ATE GOVERN ANCE REPORT:

The Mahindra and Mahindra Limited has defined financial targets that will Create and

continuously increase shareholder value. The overall objective is to grow while achieving a

return on capital employed that always exceeds the Group¶s average total cost of capital. The

financial targets are to have an annual revenue growth of 14.5%, to challenge and continuously

improve the efficiency of operating capital in terms of fixed assets, inventories, receivables, and

rental-fleet utilization.

To reach these objectives, all operative units within the Group follow a proven

development process: stability first, then profitability, and finally growth.

General: All employees shall receive appropriate training in the Business Code of Practice,

including human rights aspects.

Social:

1. Each employee shall be provided with an average of 40 hours competence development

per year.

2. Each employee shall receive an annual personal performance appraisal.

3. Internal mobility is encouraged with the aim to recruit 85% of managers internally.

4. No work related accidents.

Environmental:

y All employees shall work in an Environmental Management System (EMS) certified

environment.

y All divisions shall have measurable targets for main product Categories to increase

energy efficiency.

y All product companies/production sites aim to reduce their CO2 emissions, including

transports to and from production sites.




AUDITORS REPORT

Auditor¶s report is a document prepared by the auditors appointed to examine and certify

the accounting records and financial position of a firm. It must be filed every year by an

incorporated or registered firm along with audited financial statements.

OBSERVATIONS:

y The auditors of the company have audited the annual accounts, the consolidated

accounts, the accounting records and the administration of the Board of Directors and

the President Of Mahindra and Mahindra Limited for the year 2009.

y The auditor¶s report states that the audit is in accordance with the auditing standards

generally accepted in India. The audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements.

y The auditors of the company recommend to the Annual Meeting of shareholders that

the income statements and balance sheets of the Parent Company and the Group be

adopted, that the profit of the Parent Company be dealt with in accordance with the

proposal in the administration report and that the members of the Board of Directorsand the President be discharged from liability for the financial year.



Vi J hi I i f M P 25

CONCLUSION:

Documents

Accounts Final - Mahindra and Mahindra Ltd