MAHINDRA & MAHINDRA LTD. SUBSIDIARY ANNUAL REPORT 2014 · MAHINDRA VEHICLE MANUFACTURERS LIMITED 2 Audit Committee The Audit Committee at present comprises of Mr. S. Venkatraman (Chairman),

MAHINDRA & MAHINDRA LTD.SUBSIDIARY ANNUAL REPORT 2014

Subsidiary Companies

1 Mahindra Vehicle Manufacturers Limited...................................................................................................................... 1

2 Mahindra Automobile Distributor Private Limited ......................................................................................................... 22

3 Mahindra Trucks and Buses Limited ............................................................................................................................ 41

4 Mahindra Heavy Engines Private Limited ..................................................................................................................... 65

5 NBS International Limited .............................................................................................................................................. 85

6 Mahindra & Mahindra South Africa (Proprietary) Limited ............................................................................................ 102

7 Mahindra Automotive Australia Pty. Limited ................................................................................................................. 118

8 Mahindra Reva Electric Vehicles Private Limited ......................................................................................................... 129

9 Ssangyong Motor Company ......................................................................................................................................... 153

10 Ssangyong European Parts Center B.V. ....................................................................................................................... 190

11 Ssangyong Motor (Shanghai) Company Limited ......................................................................................................... 200

12 Mahindra USA Inc.......................................................................................................................................................... 221

13 Mahindra Tractor Assembly Inc. ................................................................................................................................... 230

14 Mahindra North American Technical Centre Inc. ......................................................................................................... 239

15 Mahindra Gujarat Tractor Limited ................................................................................................................................. 247

16 Mahindra Shubhlabh Services Limited ......................................................................................................................... 266

17 EPC Industrie Limited .................................................................................................................................................... 282

18 Swaraj Automotives Limited .......................................................................................................................................... 314

19 Mahindra Investments (International) Private Limited .................................................................................................. 331

20 Mahindra & Mahindra Financial Services Limited ........................................................................................................ 342

21 Mahindra Insurance Brokers Limited ............................................................................................................................ 403

22 Mahindra Rural Housing Finance Limited .................................................................................................................... 418

23 Mahindra Business & Consulting Services Private Limited ......................................................................................... 441

24 Mahindra Asset Management Company Private Limited ............................................................................................. 453

25 Mahindra Holidays & Resorts India Limited ................................................................................................................. 463

26 Mahindra Holidays and Resorts USA Inc. .................................................................................................................... 513

27 Mahindra Hotels and Residences India Limited .......................................................................................................... 519

28 Heritage Bird (M) Sdn. Bhd. ......................................................................................................................................... 527

29 Bell Tower Resorts Private Limited ............................................................................................................................... 537

30 Divine Heritage Hotels Private Limited ......................................................................................................................... 555

31 Gables Promoters Private Limited ................................................................................................................................ 573

32 Holiday on Hills Resorts Private Limited ...................................................................................................................... 581

33 MH Boutique Hospitality Limited .................................................................................................................................. 599

34 Infinity Hospitality Group Company Limited ................................................................................................................. 605

35 Mahindra Lifespace Developers Limited....................................................................................................................... 614

36 Mahindra Infrastructure Developers Limited ................................................................................................................. 668

37 Mahindra World City Developers Limited ..................................................................................................................... 681

38 Mahindra World City (Jaipur) Limited ........................................................................................................................... 699

39 Mahindra Integrated Township Limited ......................................................................................................................... 717

40 Mahindra Residential Developers Limited .................................................................................................................... 731

41 Mahindra World City (Maharashtra) Limited ................................................................................................................. 745

42 Knowledge Township Limited ....................................................................................................................................... 758

43 Mahindra Bebanco Developers Limited ....................................................................................................................... 768

44 Raigad Industrial & Business Park Limited .................................................................................................................. 780

45 Industrial Township (Maharashtra) Limited ................................................................................................................... 789

46 Anthurium Developers Limited ...................................................................................................................................... 798

47 Mahindra Housing Private Limited ................................................................................................................................ 808

48 Mahindra Consulting Engineers Limited ...................................................................................................................... 817

49 Bristlecone Limited ........................................................................................................................................................ 838

50 Bristlecone Inc. .............................................................................................................................................................. 848

51 Bristlecone India Limited ............................................................................................................................................... 861

52 Bristlecone (Singapore) Pte. Limited ............................................................................................................................ 880

53 Bristlecone GmbH ......................................................................................................................................................... 890

54 Bristlecone UK Limited .................................................................................................................................................. 905

55 Bristlecone (Malaysia) Sdn. Bhd. .................................................................................................................................. 912

56 Bristlecone Consulting Limited ..................................................................................................................................... 925

57 Bristlecone International AG .......................................................................................................................................... 932

58 Mahindra Intertrade Limited .......................................................................................................................................... 937

59 Mahindra MiddleEast Electrical Steel Service Centre (FZC) ....................................................................................... 961

60 Mahindra Steel Service Centre Limited ........................................................................................................................ 977

61 Mahindra Electrical Steel Private Limited ..................................................................................................................... 996

62 Mahindra Auto Steel Private Limited ............................................................................................................................ 1006

63 Mahindra Ugine Steel Company Limited...................................................................................................................... 1016

64 Mahindra Sanyo Special Steel Private Limited ............................................................................................................ 1067

65 Mahindra Engineering Services Limited 1095

66 Mahindra Engineering Services (Europe) Limited ....................................................................................................... 1118

67 Mahindra Engineering GmbH ....................................................................................................................................... 1125

68 Mahindra Technologies Services Inc. ........................................................................................................................... 1135

69 Mahindra Aerospace Private Limited ............................................................................................................................ 1144

70 Mahindra Aerospace Australia Pty. Limited .................................................................................................................. 1164

71 Aerostaff Australia Pty. Limited ...................................................................................................................................... 1173

72 Gipp Aero Investments Pty. Limited.............................................................................................................................. 1184

73 Gippsaero Pty. Limited .................................................................................................................................................. 1193

74 GA8 Airvan Pty. Limited ................................................................................................................................................. 1205

75 GA200 Pty. Limited ........................................................................................................................................................ 1211

76 Airvan Flight Services Pty. Limited ................................................................................................................................ 1217

77 Nomad TC Pty. Limited ................................................................................................................................................. 1221

78 Mahindra Aerostructures Private Limited ...................................................................................................................... 1227

79 Mahindra Gears International Limited ........................................................................................................................... 1245

80 Mahindra Gears Global Limited .................................................................................................................................... 1257

81 Mahindra Gears Cyprus Limited ................................................................................................................................... 1269

82 Metalcastello S.p.A. ....................................................................................................................................................... 1276

83 Crest Geartech Private Limited ..................................................................................................................................... 1307

84 Mahindra Investments (India) Private Limited .............................................................................................................. 1325

85 Mahindra Gears & Transmissions Private Limited ....................................................................................................... 1335

86 Mahindra Engineering and Chemical Products Limited .............................................................................................. 1359

87 Retail Initiative Holdings Limited ................................................................................................................................... 1376

88 Mahindra Retail Private Limited .................................................................................................................................... 1388

89 Mahindra Conveyor Systems Private Limited............................................................................................................... 1406

90 Mahindra First Choice Wheels Limited ......................................................................................................................... 1426

91 Mahindra Logistics Limited ........................................................................................................................................... 1443

92 2 X 2 Logistics Private Limited ...................................................................................................................................... 1464

93 Mahindra First Choice Services Limited ....................................................................................................................... 1475

94 Mahindra Two Wheelers Limited ................................................................................................................................... 1492

95 Mahindra Holdings Limited ........................................................................................................................................... 1514

96 Mahindra United Football Club Private Limited............................................................................................................ 1529

97 Mahindra Punjab Tractors Private Limited .................................................................................................................... 1538

98 Mahindra Integrated Business Solutions Private Limited ............................................................................................ 1547

99 Mahindra Telecommunications Investment Private Limited ......................................................................................... 1562

100 Mahindra Namaste Private Limited ............................................................................................................................... 1575

101 Gateway Housing Finance Corporation Limited .......................................................................................................... 1587

102 Mahindra EPC Services Private Limited ....................................................................................................................... 1599

103 Mahindra Offgrid Services Private Limited ................................................................................................................... 1616

104 Brightsolar Renewable Energy Private Limited ............................................................................................................ 1626

105 Cleansolar Renewable Energy Private Limited ............................................................................................................ 1635

106 Mahindra Overseas Investment Company (Mauritius) Limited .................................................................................... 1644

107 Mahindra-BT Investment Company (Mauritius) Limited ............................................................................................... 1661

108 Mahindra Europe S.r.l. ................................................................................................................................................... 1674

109 Mahindra Graphic Research Design S.r.l. .................................................................................................................... 1695

110 Mahindra Yueda (Yancheng) Tractor Company Limited .............................................................................................. 1718

111 Mahindra Racing S.r.l. ................................................................................................................................................... 1755

112 Mahindra Emirates Vehicle Armouring FZ-LLC ............................................................................................................ 1762

113 Defence Land Systems India Private Limited ............................................................................................................... 1777

114 Mahindra Defence Systems Limited ............................................................................................................................. 1797

115 Mahindra Telephonics Integrated Systems Limited ..................................................................................................... 1816

116 Mahindra Defence Naval Systems Private Limited ...................................................................................................... 1832

117 Mahindra Construction Company Limited .................................................................................................................... 1848

MAHINDRA VEHICLE MANUFACTURERS LIMITED

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DIRECTORS’ REPORT TO THE SHAREHOLDERS

The Directors have pleasure in presenting their Seventh Report together with the Audited Accounts of your Company for the year ended 31st March, 2014:

Financial Results

Particulars (Rs. in lakh)

For the Year Ended 31st March, 2014

For the Year Ended 31st March, 2013

Income ...................................................................................................................... 5,80,115 7,90,364

Profit/(Loss) before Depreciation Amortisation, Interest & Taxation ....................... 52,194 62,016

Depreciation & Amortisation .................................................................................... 11,266 10,699

Profit/(Loss) Before Interest & Taxation ................................................................... 40,928 51,317

Interest ...................................................................................................................... 8,017 8,264

Profit/(Loss) before Taxation..................................................................................... 32,911 43,053

Taxation ..................................................................................................................... 11,244 14,675

Profit/(Loss) for the year after Taxation .................................................................... 21,667 28,378

Balance of Profit/(Loss) from earlier years .............................................................. 24,576 11,627

Profit available for Appropriation .............................................................................. 46,243 40,005

Proposed Dividend on Equity Shares .............................................................. 5,522 7,000

Income-Tax on Proposed Dividend .................................................................. 944 1,190

Transfer to Debenture Redemption Reserve .................................................... 7,083 7,239

Balance carried to Balance Sheet ........................................................................... 32,664 24,576

Dividend

Your Directors recommended a dividend of Re. 0.577 per Equity Share on 96,22,50,000 Fully Paid-Up Equity Shares, aggregating Rs. 64,95,77,592 (including dividend distribution tax of Rs. 9,43,59,342/-).

The above Equity dividend, if approved by the shareholders at the ensuing Annual General Meeting, will be paid to those Equity shareholders whose names appear in the Register of Members of the Company as on the record date fixed for this purpose.

Operations

During the year 1,08,695 vehicles were produced as against 1,56,143 during the year 2012-13 (30.38% lesser than previous year). This was due to slow down in overall economy and auto industry as well.

The vehicles manufactured by your Company were exported to a number of countries. 16,642 number of vehicles were exported (through Mahindra & Mahindra Limited) as compared to 19,252 vehicles in FY13.

Your Company ensured that all expectations of customers were met in terms of volume and quality.

With relentless focus on quality systems, your Company underwent surveillance audits for ISO 9001-2008, EMS and OSHAS recertification. Your Company also maintained a constant focus on cost reduction and successfully maintained costs below planned levels.

Your Company won several awards and recognitions during the year. Some prominent ones amongst them included the CII ITC Sustainability Award 2013 (Commendation Certificate for Significant Achievement on the journey towards Sustainable Development), CII Environmental Best Practices Award 2013, Mahindra Group Innovation Award for HRTS and Rain Water Harvesting project, NCQC Award etc.

People

Your Company has over 4,300 people on its rolls as at the close of the 2013-14. Your Company acknowledges its commitment to regional development and improving the standard of living of the people in this region.

Directors

Dr. Pawan Kumar Goenka and Mr. A. M. Choksey retire by rotation and being eligible offer themselves for re-appointment at the forthcoming Annual General Meeting of the Company.

Mr. Vijay Dhongde was appointed as the Whole-time Director and Chief Executive Officer of the Company with effect from 1st April, 2014 in terms of the provisions of Section 203 of the Companies Act, 2013.

Mr. L. P. Pereira resigned from the directorship of the Company w. e. f. 17th April, 2014 due to personal reasons. The Board places on record its sincere appreciation of the valuable advice rendered by Mr. Pereira during his tenure as a director of the Company.


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Audit Committee

The Audit Committee at present comprises of Mr. S. Venkatraman (Chairman), Dr. Pawan Kumar Goenka and Mr. A. M. Choksey. The terms of reference of the Committee were amended as per the provisions of Section 177 of the Companies Act, 2013 at the Board meeting held on 28th March, 2014.The Audit Committee met four times during the year under review.

Nomination and Remuneration Committee

The Remuneration Committee was re-named as the Nomination and Remuneration Committee and its terms of reference were amended as per the provisions of Section 178 of the Companies Act, 2013 at the Board meeting held on 28th March, 2014. The Committee comprises of Dr. Pawan Kumar Goenka (Chairman), Mr. A. M. Choksey and Mr. S. Venkatraman. The Committee met once during the year.

CSR Committee

At the Board meeting held on 28th March, 2014, a Corporate Social Responsibility Committee was constituted. Mr. Pravin Shah (Chairman), Mr. Vijay Dhongde and Mr. Ajay Choksey are the members of the Committee. The Committee is yet to meet.

Directors’ Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors, based on the representation 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, 2014 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.

AuditorsMessrs. Deloitte Haskins & Sells, Chartered Accountants, (Firm Registration No. 117365W) retire at the conclusion of the forthcoming Annual General Meeting (AGM) and have accorded their consent for re-appointment. The Members would appoint Auditors to hold office from the conclusion of the forthcoming AGM till the conclusion of the next AGM and fix their remuneration.

As required by the provisions of section 139 of the Companies Act, 2013, your Company has obtained a written certificate from Messrs. Deloitte Haskins & Sells, Chartered Accountants, to the effect that their re-appointment, if made, would be in conformity with the conditions and limits specified in the said section.

Public Deposits and Loans/Advances

Your Company has not accepted any deposits from the public or its employees during the year under review.

Your Company has not made any loans/advances which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement signed by the parent company viz. Mahindra & Mahindra Limited.

Cost Auditors

Pursuant to the Companies (Cost Accounting Records) Rules, 2011, the Company had prepared a Cost Audit Report for the financial year ended 31st March, 2013 which was submitted by M/s. Dhananjay V. Joshi & Associates, Cost Accountants, Pune which was filed in XBRL format on 27th September, 2013. The due date for filing the Cost Audit Report for the financial year 2012-13 was 30th September, 2013.

The Board of Directors of your Company have upon recommendation of the Audit Committee, appointed M/s. Dhananjay V. Joshi & Associates, Cost Accountants, Pune to carry out Audit of Cost Accounts maintained by the Company for the financial year ending 31st March, 2015, subject to the approval of the Central Government.

The Company has obtained a written confirmation from M/s. Dhananjay V. Joshi & Associates, Cost Accountants, Pune to the effect that they are eligible for appointment as Cost Auditors and that they are an independent firm of Cost Accountants and have arm’s length relationship with your Company.

Conservation of Energy and Technology Absorption

The particulars relating to energy conservation, technology absorption and foreign exchange earnings and outgo, as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure I to this Report.

Safety, Health and Environment

Your Company maintains a good health and safety record in line with the Health and Wellness Policy. Your Company has also set-up a well-equipped pathology lab in-house where all routine tests can be conducted.

Over 43 fire safety mock drills were held during the year under review. There was no reportable fire incidence.

The Company has rolled out a Policy for prevention of sexual harassment in which it has formalised a free and fair enquiry process with clear timelines. The Company has also constituted an “Internal Complaints Committee” to which employees can write their complaints. During the year under review no complaints were received by the said Committee.

Corporate Social Responsibility (CSR)

Your Company acknowledges its Social Responsibility and has initiated many projects that help the needy and under privileged in the region. One of the prominent ones is the “Bandhan” initiative which focuses on ‘Mother & Child Development’. 28 medical camps were held during FY14, benefiting 2305 individuals.


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With a view to create awareness about automotive and auto passion in young age, a project called ‘A World In Motion’ (AWIM) was continued during the year and 1500 school students were benefited due to this initiative.

Sustainability Initiative

With a view to support the environment, your Company had commissioned High Rate Transpiration (HRTS) project during last year, under which 4,800 trees with high transpiration rate were planted. Due to this project, during the year under review, Company could reduce the usage of high energy consuming processes Reverse Osmosis and MEE etc.

As a step towards conserving water and becoming “water positive”, your Company had initiated during last year, the ‘Rain Water Harvesting’ project under which an eight meter high Water Retaining Structure was constructed across a gorge within the Company’s factory premises. Due to this project, during year

under review, about 30,000m3 of stored rainwater was used for gardening purpose.

Particulars of Employees as required under section 217(2A) of the Companies Act, 1956 and Rules framed there under

As required under section 217(2A) of the Companies Act, 1956 and Rules framed thereunder, a statement containing particulars of the Company’s employee who was in receipt of remuneration of not less than Rs. 60,00,000 per annum during the year ended 31st March, 2014 or not les then Rs. 5,00,000 per month during any part of the said year is given in Annexure II to this report.

For and on behalf of the Board

Dr. Pawan Kumar Goenka Chairman

Mumbai, 23rd April, 2014


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ANNEXURES TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2014

ANNEXURE - I

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, 2014.

A. CONSERVATION OF ENERGY

(a) Energy Conservation measures taken:

Your Company has right from inception strived for Green factory concept & has been consciously making efforts towards conserving natural resources. Various energy efficiency Improvement initiatives have been implemented by undertaking number of energy conservation projects like Intelligent Flow Controller for Compressed Air Demand Side Management, Second Extraction Waste Heat Recovery from ovens for ASU preheating, Sealer Oven Waste Heat Recovery, VFD fitment for Circulation Pumps, Torque reduction in Press Dies, etc.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:

Rs 1.87 Crore.

(c) Impact of the measures taken at (a) & (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:

The above measures have resulted in energy reduction.

(d) Total energy consumption and energy consumption per unit of production as per Form-A of the Annexure to the Rules in respect of Industries specified in the Schedule:

Not Applicable

B. TECHNOLOGY ABSORPTION

Research & Development (R & D)

Your Company does not have R&D activity of its own. So there is no money spent by the Company on R&D. During the year under review, no technology was imported by your Company.

1. Areas in which Research & Development is carried out: None 2. Benefits derived as a result of the above efforts: N.A. 3. Future plan of action: None 4. Expenditure on R&D: Nil 5. Technology absorption, adaptation and innovation: None 6. Imported Technology for the last 5 years: N.A.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company continues to strive to reduce its import outgo of foreign exchange. Total Foreign Exchange earnings and outgo during the year under review is as follows:

Foreign Exchange earnings – Rs. Nil (Rs. Nil in the previous year). Foreign Exchange outgo - Rs. 29,374 lakh (Rs. 55,056 lakh in the previous year).

ANNEXURE II TO THE DIRECTORS’ REPORT

ADDITIONAL INFORMATION AS REQUIRED UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2014.

Name of the Employee

Designation Remuneration Received (Subject to Income Tax) (Rs.)

Qualification Age (Yrs)

Experience (Yrs)

Date of commencement of employment

Last employment held

Nidamaluri Nagesh

Head – MES Division

63,04,579.06 M.S. 65 37 09.07.2007 General Motors

For and on behalf of the Board

Dr. Pawan Kumar Goenka (Chairman)

Mumbai, 23rd April, 2014


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Report on the Financial Statements

We have audited the accompanying financial statements of Mahindra Vehicle Manufacturers Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF MAHINDRA VEHICLE MANUFACTURERS LIMITED

statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on 31st March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

For DELOITTE HASKINS & SELLSChartered Accountants

(Firm’s Registration No. 117365W)

H. L. ShahPartner

(Membership No.: 033590)Place: MumbaiDate: 23.04.2014


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(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The Company has a programme for physical verification of fixed assets whereby fixed assets are physically verified once every three years. In accordance with the said programme, no physical verification was planned/conducted in the current year and accordingly, the question of reporting on discrepancies on physical verification does not arise. In our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and the nature of the assets.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) (a) Inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company has maintained proper records of inventory during the current year. The discrepancies noticed on verification between physical stocks and book stocks were not material having regard to the size of operations of the Company and have been properly dealt with in the books of accounts.

(iii) The Company has not granted or taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Sub-clauses (b), (c), (d), (f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us and having regard to the explanation that most of the items purchased are of a special nature and comparable alternative quotations are not available, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, with regard to purchase of inventory and fixed assets and for sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

(v) Based upon the audit procedures performed and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered into the register maintained in pursuance of section 301 of the Companies Act, 1956.

Sub-clause (b) is not applicable.

(vi) The Company has not accepted any deposit from public to which the provisions of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under apply.

(vii) The Company has an internal audit system commensurate with its size and nature of its business.

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees’ State Insurance, Investor Education and Protection Fund, Income tax, Sales tax, Wealth tax, Service tax, Custom Duty, Excise Duty, cess and other statutory dues with the appropriate authorities. Based on our audit procedures and according to the information and explanations given to us, there are no arrears of statutory dues which has remained outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and records of the company, there are no dues of sales tax/income tax/custom duty/wealth tax/ service tax/excise duty/cess, which have not been deposited on account of any dispute.

(x) The Company does not have any accumulated losses as at 31st March, 2014. The Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, the Company has not defaulted in repayment of dues to banks and financial institution.

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)


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(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not in the business of chit fund, nidhi/ mutual benefit fund and therefore the requirements pertaining to such class of companies are not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company has not raised any term loan during the year.

(xvii) The funds raised on short-term basis have not been used for long-term investments.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the Company has during the year created charge/security in respect of the debentures issued during the previous years.

(xx) The Company has not made any public issue and therefore the question of disclosing the end use of money does not arise.

(xxi) Based upon the audit procedures performed and according to the information and explanations given and representations made by the management, we report that no significant fraud on the Company or fraud by the Company had been noticed or reported during the year.

For DELOITTE HASKINS & SELLSChartered Accountants

(Firm’s Registration No. 117365W)

H. L. ShahPartner

(Membership No. 033590)Place: MumbaiDate: 23.04.2014


8

BALANCE SHEET AS AT 31ST MARCH, 2014Rupees in Lakhs

Particulars Note No. As at

31st March, 2014 As at

31st March, 2013

I. EQUITY AND LIABILITIES (1.) Shareholder's Funds (a) Share capital .............................................. 2 96,225 96,225 (b) Reserves and surplus ................................ 3 47,346 32,175

143,571 128,400 (2.) Non-Current Liabilities (a) Long-term borrowings ............................... 4 56,268 85,881 (b) Deferred tax liabilities (Net) ....................... 5 16,150 14,084 (c) Long term provisions ................................. 6 4,681 3,652

77,099 103,617 (3.) Current Liabilities (a) Short-term borrowings ............................... 7 – 6,637 (b) Trade payables .......................................... 8 100,482 137,002 (c) Other current liabilities ............................... 9 44,430 27,243 (d) Short-term provisions ................................ 10 8,042 8,320

152,954 179,202

Total 373,624 411,219

II. ASSETS (1.) Non-current assets (a) Fixed assets ............................................... (i) Tangible assets ................................... 11 191,664 185,939 (ii) Intangible assets ................................. 12 760 1,024 (iii) Capital work-in-progress .................... 12A 2,586 5,581

195,010 192,544 (b) Non-current investments ........................... 13 280 280 (c) Long term loans and advances ................ 14 32,766 47,428

228,056 240,252 (2.) Current assets (a) Current investments ................................... 15 4,400 2,000 (b) Inventories .................................................. 16 37,761 66,105 (c) Trade receivables ....................................... 17 51,378 58,913 (d) Cash and bank balances 18 19,100 4,132 (e) Short-term loans and advances ................ 19 8,506 6,351 (f) Other current assets .................................. 20 24,423 33,466

145,568 170,967 Total 373,624 411,219

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

In terms of our report attached

For Deloitte Haskins & Sells For and on behalf of the BoardChartered Accountants H.L. ShahPartner


Pravin ShahA.M ChokseyVijay DhongdeS. Venkatraman

} DirectorDate: 23rd April, 2014Place: Mumbai

Date: 23rd April, 2014Place: Mumbai


9

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH 2014Rupees in Lakhs

Particulars Note No.

For the year ended

31st March 2014

For the year ended

31st March 2013

I. Revenue from operations – Gross .................... 695,009 966,049

Less: Excise Duty ................................................ (116,706) (177,741)

Revenue from operations – Net ........................... 21 578,303 788,308

II. Other Income ....................................................... 22 1,812 2,056

III. Total Revenue (I +II)........................................... 580,115 790,364

IV. Expenses:

Cost of materials consumed ................................ 23 484,765 697,242

Changes in inventories of finished goods and work-in-progress ................................................... 24 15,918 (814)

Employee benefit expense ................................... 25 14,724 13,120

Finance costs ........................................................ 26 10,245 10,525

Depreciation and amortization expense .............. 10 & 11 11,266 10,699

Other expenses ..................................................... 27 10,286 16,539

Total Expenses..................................................... 547,204 747,311

V. Profit before tax (III - IV) .................................... 32,911 43,053

VI. Tax expense:

(1) Current tax .................................................... 9,178 8,610

Less: MAT credit entitlement ......................... – (1,836)

9,178 6,774

(2) Deferred tax ................................................... 2,066 7,901

11,244 14,675

VII. Profit for the year (V - VI) .................................. 21,667 28,378

VIII. Basic/Diluted earning per equity share: (Face Value per share Rs. 10) ........................... 2.25 2.95

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

In terms of our report attached to the Balance Sheet







10

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2014

For the year ended 31st March 2014


Rupees in Lakhs

Rupees in Lakhs

Rupees in Lakhs

Rupees in Lakhs

A. CASH FLOW FROM OPERATING ACTIVITIES

Profit before tax ............................................................ 32,911 43,053

Adjustment for:

Depreciation/Amortisation ............................................ 11,266 10,699

Finance cost ................................................................. 10,245 10,525

Loss on sale of fixed assets ........................................ 6 2

Profit on sale of investments ....................................... (352) (647)

Interest income ............................................................. (786) (616)

20,379 19,963

Operating profit before Working Capital changes ...... 53,290 63,016

Adjustments for changes in Working capital

Long term Loans and advances .................................. 7,203 (20,139)

Inventories ................................................................... 28,344 (9,930)

Trade Receivables ........................................................ 7,535 (13,959)

Short term Loans and advances ................................. 3,370 676

Other current assets ..................................................... 9,298 (8,516)

Long term Provisions ................................................... 323 312

Trade Payables ............................................................. (36,520) 3,975

Other current liabilities ................................................. (7,750) 2,559

Short term Provisions ................................................... 70 16

11,873 (45,006)

Cash generated from operations ................................. 65,163 18,010

Income taxes paid ........................................................ (5,721) (11,561)

Net Cash from Operating activities ............................. 59,442 6,449

B. CASH FLOW FROM INVESTING ACTIVITIES

Tangible and Intangible Assets:

Purchase ....................................................................... (12,337) (22,044)

Sale ............................................................................... 10 23

Investments:

Purchase ....................................................................... (141,150) (204,672)

Sale ............................................................................... 139,102 216,933

Inter Corporate deposit given ...................................... (2,500) (1,000)

Inter Corporate deposit recovered .............................. – 4,000

Interest received ........................................................... 531 579

Net Cash from/used in investing activities .................. (16,344) (6,181)


11



C. CASH FLOW FROM FINANCING ACTIVITIES

Repayment of Long term borrowings ........................ (5,063) (5,226)

Proceeds from Short term borrowings ........................ – 6,469

Repayment of Short term borrowings ......................... (6,637) –

Dividend paid (including Dividend Distribution Tax) .... (8,190) –

Finance cost paid ......................................................... (8,240) (8,485)

Net Cash from/used in financing activities .................. (28,130) (7,242)

D. NET INCREASE/(DECREASE) IN CASH

AND CASH EQUIVALENTS ........................................ 14,968 (6,974)

Cash and Cash Equivalents (Opening balance) ........ 3,275 10,249

Cash and Cash Equivalents (Closing balance) .......... 18,243 3,275

Notes:

1 Figures in brackets represent outflows of cash and cash equivalents.

2 Cash and cash equivalents comprise:

As at 31st Mar, 2014

Rs. In lakhs


Rs. In lakhs


Rs. In lakhs

Cash on hand ............................................................... – 1 –

Balances with Banks .................................................... 18,243 3,274 10,249

18,243 3,275 10,249

Add: Earmarked balances with banks 857 857 857

Cash and bank balances as per schedule 18 19,100 4,132 11,106

In terms of our report attached to the Balance Sheet







12

1. SIGNIFICANT ACCOUNTING POLICIES:

(A) BASIS OF ACCOUNTING :

The financial statements are prepared in accordance with the generally accepted accounting principles in India and comply with the Accounting Standards notified under sub-section (3C) of Section 211 of the Companies Act, 1956 (“ the 1956 Act’) ( which continue to be applicable in respect of Section 133 of the Companies Act ,2013 (“the 2013 Act’) in terms of General Circular 15/2013 dated 13 September,2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act , as applicable.

(B) Tangible Assets :

(a) Tangible assets are carried at cost less depreciation. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying tangible assets upto the date the assets are ready for use.

When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account and resultant profit (including capital profit) or loss, if any, is reflected in the Statement of Profit and Loss.

(b) (i) Leasehold land is amortised over the period of the lease.

(ii) Depreciation on assets is calculated on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, except for :

(1) Certain items of Plant and Machinery individually costing more than Rs. 5,000 - over their useful lives (2 years or 5 years, as the case may be) as determined by the Company.

(2) Cars and Vehicles - at 15% of cost.

(C) Intangible Assets :

Intangible assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits are consumed.

(a) License Fee :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding five years commencing with the year of purchase of License.

(b) Technical Know-how fees :

The expenditure incurred on technical services and other project/product related expenses are amortised over the estimated period of benefit, not exceeding five years.

(c) Software Expenditure :

The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure is incurred.

(D) Investments :

Long term investments are valued at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of investments. Current investments are valued at the lower of cost and fair value, determined by category of investment.

(E) Inventories :

Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition.

Raw materials and bought out components are valued at the lower of cost or net realisable value. Cost is determined on the basis of the weighted average method.

Finished goods produced, manufactured components and work-in-progress are carried at cost or net realisable value whichever is lower. Excise duty is included in the value of finished goods inventory.

Stores, spares and tools other than obsolete and slow moving items are carried at cost. Obsolete and slow moving items are valued at cost or estimated net realisable value, whichever is lower.

(F) Foreign Exchange Transactions :

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are translated at the

NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2014

year-end rates. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of monetary items at the end of the year (other than those relating to long term foreign currency monetary items) is recognised as income or expense, as the case may be.

Any premium or discount arising at the inception of a forward exchange contract is recognised as income or expense over the life of the contract.

(G) Revenue Recognition :

Sales of products and services are recognised when the products are shipped or services rendered.

Interest is recognized on time proportion basis and dividend income from investments in shares is recognized when the owner’s right to receive the payment is established.

(H) Government Grants :

The Company, directly or indirectly through a consortium of Mahindra Group Companies, is entitled to various incentives from government authorities in respect of manufacturing units located in developing regions. The Company accounts for its entitlement as income on an accrual basis.

(I) Employee Benefits :

Defined Contribution Plan/Defined Benefit Plan/Long term Compensated Absences :

Company’s contributions paid/payable during the year to Provident fund, Superannuation Fund, ESIC and Labour Welfare Fund are recognised in the Statement of Profit and Loss as and when the employee renders service.

Company’s liability towards gratuity, long term compensated absences are determined by independent actuaries, using the projected unit credit method. Past services are recognised on a straight line basis over the average period until the benefits become vested. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to the market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(J) Borrowing Costs :

All borrowing costs are charged to the Statement of Profit and Loss except :

(i) Borrowing costs that are attributable to the acquisition or construction of assets that necessarily take a substantial period of time to get ready for their intended use, which are capitalised as part of the cost of such assets.

(ii) Expenses incurred on raising long term borrowings are amortised over the period of borrowings. On early buyback, conversion or repayment of borrowings, any unamortised expenditure is fully written off in that year.

(K) Taxes on Income :

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbed depreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future tax income will be available against which such deferred tax assets can be realised.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax against which the MAT paid will be adjusted.


13

NOTE 2 – SHARE CAPITAL

As at 31st March, 2014

Rs. in Lakhs


Rs. in Lakhs

Authorised:1,30,00,00,000 (Previous year – 1,30,00,00,000) equity shares of Rs. 10 each. 130,000 130,000

Issued, Subscribed and Paid up:96,22,50,000 (Previous year – 96,22,50,000) equity shares of Rs. 10 each fully paid up. 96,225 96,225

Total 96,225 96,225

Reconciliation of the no. of shares outstanding at the beginning and at the end of the year:

As at 31st March, 2014 As at 31st March, 2013

No of shares

Amount Rs. in Lakhs

No of shares

Amount Rs. in Lakhs

No. of Equity shares outstanding at the beginning of the year 962,250,000 96,225 962,250,000 96,225

Add: Additional Equity shares issued during the year – – – –

Less: Equity Shares forfeited/Bought back during the year – – – –

No. of Equity shares outstanding at the end of the year 962,250,000 96,225 962,250,000 96,225

Notes:

(i) Number of shares held by each shareholder holding more than 5% shares in the company are as follows:

Particulars2014 2013

Number of shares

% shareholding

Number of shares

% shareholding

Equity Shares:Mahindra & Mahindra Ltd (holding company) and its nominees 962,250,000 100 962,250,000 100

(ii) Rights, preferences, restrictions of equity shares

The Company has only one class of Equity Shares having par value of Rs. 10 per share. Each holder of Equity Share is entitled to one vote per share.

NOTE 3 – RESERVES AND SURPLUS

Rs. in Lakhs

As at 31st March, 2014 Rs. in Lakhs

As at 31st March, 2013 Rs. in Lakhs

Debenture Redemption Reserve:As per last Balance Sheet 7,599 360 Transfer from Surplus i.e. Balance in Profit and Loss Statement during the year 7,083 7,239

14,682 7,599 Surplus i.e. Balance in Profit and Loss StatementAs per last Balance Sheet 24,576 11,627 Add: Profit for the year 21,667 28,378 Less: AppropriationsProposed Dividend (Rs. 0.577 per equity share) (Previous year Rs. 0.727 per equity share) (5,552) (7,000)Tax on Proposed Dividend (944) (1,190)Transfer to Debenture Redemption Reserve (7,083) (7,239)

32,664 24,576

Total 47,346 32,175

NOTE 4 – LONG TERM BORROWINGS


Rs. in Lakhs


Rs. in Lakhs

Loans and Advances from other than related parties:

Debentures (Secured)

2,600 (Previous period 2,600) 8% Non Convertible Debentures of Rs. 10,00,000/- each, fully paid (Series III) 26,000 26,000

2,700 (Previous period 2,700) 8% Non Convertible Debentures of Rs. 10,00,000/- each, fully paid (Series II) 27,000 27,000

– (Previous period 2,700) 8% Non Convertible Debentures of Rs. 10,00,000/- each, fully paid (Series I) – 27,000

Term Loans (Secured)

– from Banks 3,268 5,881

Total 56,268 85,881

Notes:

1. Debentures are to be secured by First Pari Passu charge on fixed assets of the Company.

2. Term Loans are secured by English mortgage of immovable properties and on all the movable properties (both present and future) including movable plant and machinery, furniture, fixtures, vehicles, etc. (other than current assets)

NOTE 4a: Terms of repayment/redemption of Term Loans and Debentures:

Terms of repayment/redemption

Period/Date Rs. In Lakhs

Term loan from Banks April 2015 to March 2016 3,268

Debentures 14-Mar-16 27,000

14-Mar-17 26,000

NOTE 5 – DEFERRED TAX LIABILITIES (NET)

(i) Break up of deferred tax liability as at year end:

Nature of timing difference


Rs. in Lakhs


Rs. in Lakhs

Provision for Depreciation 16,839 14,638

Total 16,839 14,638

(ii) Break up of deferred tax asset as at year end:

Nature of timing difference


Rs. in Lakhs


Rs. in Lakhs

Unclaimed amount under section 43B of Income Tax Act 1961 689 554

Total 689 554

(iii) Deferred tax asset/(liability) net: (16,150) (14,084)


14

NOTE 6 – LONG-TERM PROVISIONS


Rs. in Lakhs


Rs. in Lakhs

Provision for Employee Benefits 1,823 1,500

Provision – Others:

Provision for premium on redemption of debentures 2,858 2,152

Total 4,681 3,652

NOTE 7 – SHORT TERM BORROWINGS


Rs. in Lakhs


Rs. in Lakhs

Loans and Advances from other than related parties:

Loans repayable on demand

– from Banks (Secured) – 6,637

(Secured by hypothecation by way of first charge on all stock in trade both present and future, consisting of raw material, finished goods, goods in process of manufacturing and other movable property, all book debts, outstanding money receivable, claims and bills which are now due and owing or which may at any time hereafter during the continuance of this security becomes due and owing.)

Total – 6,637

NOTE 11 – TANGIBLE ASSETS

Cost Depreciation/Amortization Net Block

As at 31st March,

2013

Additions during the

year

Disposals during the

year

As at 31st March,

2014

Upto 31st March,

2013

For the year

On disposals

Upto 31st March,

2014

As at 31st March,

2014

As at 31st March,

2013

Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs

Leasehold Land (Refer Note 32) 31,206 406 – 31,612 1,432 336 – 1,768 29,844 29,774 Buildings (Refer Note 32) 82,931 6,162 – 89,093 6,584 2,940 – 9,524 79,569 76,347 Plant & Equipment 92,738 8,619 101,357 17,182 6,735 – 23,917 77,440 75,556 Furniture & Fixtures 1,698 400 – 2,098 328 136 – 464 1,634 1,370 Vehicles 846 336 43 1,139 220 146 27 339 800 626 Office Equipment 3,487 637 – 4,124 1,221 526 – 1,747 2,377 2,266 Total 212,906 16,560 43 229,423 26,967 10,819 27 37,759 191,664 185,939

Previous year 189,055 23,885 34 212,906 16,676 10,300 9 26,967 185,939

Note: ‘’- Plant & Equipment includes cost Rs. 649 lakhs (Previous year - Rs. 649 lakhs), Net Block Rs. 567 lakhs (Previous year 598 lakhs )and depreciation for the year Rs.31 lakhs (Previous year - Rs.35 lakhs) in respect of expenditure incurred on capital assets, ownership of which does not vest in the Company.

NOTE 12 – INTANGIBLE ASSETS

Cost Amortization Net BlockAs at

31st March, 2013

Additions during the

year

Disposals during the

year

As at 31st March,

2014

Upto 31st March,

2013

For the year

On disposals

Upto 31st March,

2014

As at 31st March,

2014

As at 31st March,

2013

Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs

(Other than internally generated)Computer Software 939 183 – 1,122 573 288 – 861 261 366

License 489 – – 489 105 98 – 203 286 384

Technical know how 310 – – 310 36 61 – 97 213 274

Total 1,738 183 – 1,921 714 447 – 1,161 760 1,024

Previous year 1,263 475 – 1,738 315 399 – 714 1,024

NOTE 8 – TRADE PAYABLES


Rs. in Lakhs


Rs. in Lakhs Acceptances 747 1,323 Other than Acceptances (See note 39) 99,735 135,679

100,482 137,002

Note 9 – OTHER CURRENT LIABILITIES


Rs. in Lakhs


Rs. in Lakhs

Current maturities of long-term debt 29,613 5,063

Interest accrued but not due on borrowings 380 427

Other payables 14,437 21,753

Total 44,430 27,243

Other payable includes government grants payable to group companies, capital creditors, advance from customers, employee related statutory obligations, withholding tax payable, wealth tax payable etc.

NOTE 10 – SHORT-TERM PROVISIONSAs at

31st March, 2014 Rs. in Lakhs


Rs. in Lakhs Provision for Employee Benefits 200 130Proposed Dividend 5,552 7,000Provision for Tax on Proposed Dividend 944 1,190Provision - Others :– Provision for premium on

redemption of debentures 1,346 –

Total 8,042 8,320


15

Note 12A – CAPITAL WORK-IN-PROGRESS


Rs. in Lakhs


Rs. in Lakhs

Capital Work-in-progress 2,390 5,581

Incidental Expenditure during construction period pending allocation to fixed assets

196 –

2,586 5,581

Schedule 12B – INCIDENTAL EXPENDITURE DURING CONSTRUCTION PERIOD PENDING ALLOCATION TO FIXED ASSETS (INCLUDED IN CAPITAL WORK-IN-PROGRESS)

Particulars Balance as at 31st March,

2013

Expenditure incurred during

the year

Expenditure incurred upto

31st March, 2014

Expenditure allocated to

Fixed Assets

Balance as at 31st March,

2014

Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs

Salaries, wages and bonus – 139 139 – 139

Repairs & Maintenance – Machinery – 40 40 – 40

Miscellaneous Expenses – 17 17 17

Total expenditure – 196 196 – 196

Previous year 79 35 114 114 –

Note 13 – NON CURRENT INVESTMENTSAs at



Rs. in Lakhs

Non Current Investments (Unquoted, Trade)

Investments in Equity Instruments:(Investment in Class ‘A’ Equity Shares of Wardha Power Company Limited (12,38,279 shares (Previous year - 12,38,279 shares) having face value of Rs. 10 each fully paid up))

124 124

Investments in preference shares:(Investment in 0.01% Class ‘A’ Redeemable Preference Shares of Wardha Power Company Limited (15,61,721 shares (Previous year - 15,61,721 shares) having face value of Rs. 10 each fully paid up))

156 156

Total 280 280

NOTE 14 – LONG TERM LOANS AND ADVANCESAs at



Rs. in Lakhs Loans and Advances to other than related parties

(Secured, considered good)

Other Loans and Advances (Advance to Suppliers) 369 554

Loans and Advances to other than related parties:

(Unsecured, considered good)

Capital Advances 278 1,255

Security deposits 558 578

Other Loans and Advances 31,561 45,041

Total 32,766 47,428

Other Loans & Advances includes income tax payment less provisions, VAT Refund, and prepaid expenses, MAT Credit entitilement*, etc

*Rs. 109 lakhs (Previous year Rs. 5,768 lakhs)

NOTE 15 – CURRENT INVESTMENTS

Face Value

Rs.

As at 31st March 2014 As at 31st March 2013

Units Rs. in Lakhs

Units Rs. in Lakhs

CURRENT INVESTMENTS (Unquoted)

(at cost or fair value whichever is lower)

Investments in Mutual funds:

a) Kotak Floater Short Term – Growth 1,000 – – 52,084 1,000

b) Birla Sun Life Cash Plus Institutional Premium – Growth 100 – – 532,767 1,000

c) Religare Invesco Liquid Fund - Growth Plan 1,000 107,901 1,900 – –

d) Birla Sun Life Cash Plus -Regular Plan - Growth 100 1,217,192 2,500 – –

Total 4,400 2,000

NOTE 16 – INVENTORIES


Rs. in Lakhs


Rs. in Lakhs

(at cost or net realisable value whichever is lower) Raw materials (Including Goods in transit Rs. 4,186 Lakhs) (Previous year Rs. 11,012 Lakhs)) 22,575 35,303

Work-in-Progress 3,913 3,395

Finished Goods 10,349 26,785

Stores and spares 508 325

Loose tools 416 297

Total 37,761 66,105

NOTE 17 – TRADE RECEIVABLES


Rs. in Lakhs


Rs. in Lakhs


Trade receivables due for a period exceeding six months from the date they are due for payment – 771

Other Trade Receivables 51,378 58,142

Total 51,378 58,913

NOTE 18 – CASH AND BANK BALANCES


Rs. in Lakhs


Rs. in Lakhs

A. Cash and cash equivalents

Cash on hand – 1

Balances with banks

– In current accounts 43 279

– In deposit accounts 18,200 2,995

B. Other bank balances

Earmarked balances with banks 857 857

Total 19,100 4,132


16

NOTE 19 – SHORT TERM LOANS AND ADVANCES


Rs. in Lakhs


Rs. in Lakhs

Loans and Advances to related parties:


Inter corporate deposit given 2,500 –

Loans and Advances to other than related parties:

(secured, considered good)

Advances to Suppliers 185 46


Others 5,821 6,305

Total 8,506 6,351

Others Includes advances to suppliers, employee advances, prepaid expenses, balances with central excise, Lease rent receivable, MAT Credit entitlement*, etc.

*Rs. 3,025 lakhs (Previous year Rs. Nil lakhs) etc.

NOTE 20 – OTHER CURRENT ASSETS


Rs. in Lakhs


Rs. in Lakhs

Interest Accrued (On Fixed Deposits, advance to suppliers etc.) 684 429

Other Receivables (Government grants receivable, Lease rent receivables etc.) 23,739 33,037

Total 24,423 33,466

NOTE 21 – REVENUE FROM OPERATIONS- NET

For the year ended 31st

March, 2014Rs. in Lakhs



Sale of products 676,349 943,198

Sale of services (Painting work) 257 439

Other operating revenues

– Government Grants* 15,083 17,978

– Scrap Sales 3,320 4,434

695,009 966,049

Less: Excise Duty (116,706) (177,741)

Total 578,303 788,308

* Includes Government Grant recognized in respect of earlier years Rs. 2,998 lakhs (Previous year - Rs. Nil )

NOTE 22 – OTHER INCOME

For the year ended

31st March, 2014Rs. in Lakhs

For the year ended

31st March, 2013Rs. in Lakhs

Profit on sale of current investments 352 647

Income from Lease Rent 574 638

Cash discount received 47 124

Interest earned 786 616

Other non-operating income (net of expenses directly attributable to such income) 53 31

Total 1,812 2,056

NOTE 23 – COST OF MATERIAL CONSUMED





Raw Material Consumed 484,706 697,121

Packing Material Consumed 59 121

Total 484,765 697,242

NOTE 24 – CHANGES IN INVENTORIES OF FINISHED GOODS AND WORK-IN-PROGRESS

Rs. in Lakhs





Opening stock

Work-in-progress 3,395 3,114

Finished goods 26,785 26,252

30,180 29,366

Closing stock

Work-in-progress 3,913 3,395

Finished goods 10,349 26,785

14,262 30,180

Total 15,918 (814)

NOTE 25 – EMPLOYEE BENEFIT EXPENSE





Salaries and wages 12,416 10,846

Contribution to provident and other funds 618 619

Expense on Employee Stock option (ESOP) Scheme* 193 187

Staff welfare expenses 1,497 1,468

Total 14,724 13,120

*represents reimbursement of cost to holding company, towards ESOP’s granted by the Holding Company to the employees of the Company

NOTE 26 – FINANCE COSTS





Interest expense 8,017 8,264

Other borrowing costs 2,228 2,261

Total 10,245 10,525

Other borrowing costs includes provision for premium on redemption of debentures Rs. 2,052 Lakhs (Previous period - Rs. 2,051 lakhs)


17

NOTE 27 – OTHER EXPENSES

Rs. in Lakhs





Consumption of stores and spare parts 4,491 4,935

Power and fuel 3,354 3,974

Rent 77 100

Repairs and maintenance -

Buildings 140 160

Machinery 670 694

Others 847 816

1,657 1,670

Insurance 268 226

Rates & Taxes (excluding taxes on income) 416 338

Excise Duty relating to change in inventories of finished goods (4,653) 1,309

Net loss on foreign currency transaction and translation 604 94

Hire & service Charge 2,544 2,438

Payment to Auditors*

– As Auditors 22 18

– For Limited Review fees 8 8

– For other services 1 1

31 27

Loss on sale of fixed asset 6 2

Miscellaneous expenses 1,491 1,426

Total 10,286 16,539

*Payment to Auditors excludes Rs. 9 lakhs, (Previous year - Rs. Nil) towards taxation services paid to a firm, some of the partners where of are also partners in the audit firm.

NOTE 28 – THE NET EXCHANGE DIFFERENCES ARISING DURING THE YEAR:

(i) recognised appropriately in the profit and loss account - net loss Rs. 604 lakhs (31st March, 2013 - net loss - Rs. 94 lakhs)

NOTE 29 – DETAILS OF EMPLOYEE BENEFITS AS REQUIRED BY THE ACCOUNTING STANDARD 15 (REVISED) EMPLOYEE BENEFITS ARE AS UNDER:

(A) Defined Contribution Plan

Amount recognized as an expense in the Statement of Profit and Loss/ Incidental expenditure during construction period pending allocation to tangible assets in respect of Defined Contribution Plans is Rs. 577 lakhs (31st March, 2013 - Rs. 534 lakhs)

(B) Defined Benefit Plan

i) Actuarial gains and losses in respect of defined benefit plans are recognised in the Statement of Profit & Loss.

ii) The Defined Benefit Plans comprise of Gratuity.

Gratuity is a benefit to an employee based on a proportion of last drawn salary for each completed year of service.

Amount Rs. In Lakhs

Gratuity (Unfunded)

Particulars For the year ended on 31st

March, 2014

For the year ended on 31st

March, 2013

(C) Changes in the present value of defined obligation representing reconciliation of opening and closing balances thereof are as follows:

1. Present Value of Defined Benefit Obligation as on 1st April 942 723

2. Adjustment on tranfer of employees – 6

3. Current Service cost 199 174

4. Interest cost 78 60

5. Losses (gains) on Curtailment – –

6. Liabilities extinguished on settlements – –

7. Plan ammendments – –

8. Actuarial (gains)/losses (59) 12

9. Benefits paid (11) (33)

10. Present value of Defined Benefit Obligation as on Balance Sheet date. 1,149 942

(D) Analysis of Defined Benefit Obligation:

1. Defined Benefit Obligation as at 31st March 1,149 942

2. Fair Value of Plan assets at the end of the year – –

3. Net (Asset)/Liability recognized in the Balance Sheet as at 31st March 1,149 942

(E) Reconciliation of Present Value of Defined Benefit Obligation and fair value of plan assets showing amount recognized in the Balance Sheet:

1. Present value of Defined Benefit Obligation 1,149 942

2. Fair value of plan assets – –

3. Funded status [Surplus/(Deficit)] (1,149) (942)

4. Unrecognized Past Service Costs – –

5. Net asset/(Liability) recognized in Balance Sheet (1,149) (942)

(F) Components of employer expenses recognized in the statement of profit and loss for the year ended 31st March 2014

1. Current Service cost 199 174

2. Interest cost 78 60

3. Expected return on plan assets – –

4. Curtailment cost/(credit) – –

5. Settlement cost/(credit) – –

6. Past Service cost – –

7. Actuarial Losses/(Gains) (59) 12

8. Total expense recognised in the Statement of Profit & Loss/ Incidental Expense Capitalised 218 246


18

(G) Principal Acturial Assumptions:


As at 31st

March, 2013

1. Discount Rate (%) 9.20% 8.30%

2. Expected Return on plan assets (%) NA NA

3. Salary Escalation (%) 8%/10% 8%/10%

4. Medical cost inflation NA NA

5. Withdrawal Rate (%) (Others) 2%/7% 2%/7%

a) The Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated terms of the obligations.

b) Salary Escalation Rate: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

(H) Experience Adjustments

For the year ended on

31st March, 2014


31st March, 2013


31st March, 2012


31st March, 2011

1. Defined Benefit Obligation at the end of the period 1,149 942 723 622

2. Plan Assets at the end of the period – – – –

3. Funded Status (1,149) (942) (723) (622)

4. Experience adjustments on plan liabilities (59) 7 6 (100)

5. Experience adjustments on plan assets – – – –

Note 30 – Related Party Disclosures:

A) Name of the related party and nature of relationship where control exists:

Name of Related Party Nature of Relationship

Mahindra & Mahindra Limited Holding Company

B) Related Party Transactions:

Name of Related Party Description of Relationship

Nature of Transactions Amount of Transactions

(Rs. in Lakhs)

Amount Outstanding at the end of year

Credit (Rs. In Lakhs)

Debit (Rs. in Lakhs)

Mahindra & Mahindra Ltd. Holding Company Purchase of Services 82

23,262} (20,684)

(76) Purchase of Assets 160 (379) Purchase of Material 92,722 (146,349) Sale of goods 700,396

}

(919,698) Sale of Asset – (8) 48,782 (41,449) Sale of Services 289 (522) Interest Paid 55 (–) Mahindra Automobile Distributor Pvt. Ltd. Fellow Subsidiary Inter Corporate Deposit received – back (3,000) – Interest on Inter Corporate Deposit – (–) (22) Mahindra Reva Elec

Documents

MAHINDRA & MAHINDRA LTD. SUBSIDIARY ANNUAL REPORT 2014 · MAHINDRA VEHICLE MANUFACTURERS LIMITED 2 Audit Committee The Audit Committee at present comprises of Mr. S. Venkatraman (Chairman),