Mahindra & Mahindra Ltd
Directors Reports
Dear Shareholders
Your Directors present their Report together with the audited financial statements of
your Company for the year ended 31st March, 2020.
A. FINANCIAL AND OPERATIONAL HIGHLIGHTS
| Particulars |
2020 |
2019 |
| Revenue from Operations |
45,488 |
53,614 |
| Other Income |
1,668 |
1,689 |
| Profit before Depreciation, Finance Costs, |
|
|
| Exceptional items and Taxation |
7,466 |
8,328 |
| Less: Depreciation, Amortisation and |
|
|
| Impairment Expenses |
2,223 |
1,860 |
| Profit before Finance Costs, Exceptional |
|
|
| items and Taxation |
5,243 |
6,468 |
| Less: Finance Costs |
113 |
113 |
| Profit before Exceptional items and Taxation... |
5,130 |
6,355 |
| Add: Exceptional items |
(2,014) |
(30) |
| Profit before Taxation |
3,116 |
6,325 |
| Less: Tax Expense |
1,785 |
1,529 |
| Profit for the year |
1,331 |
4,796 |
| Balance of profit for earlier years |
28,967 |
25,206 |
| Less: Transfer to Debenture Redemption |
|
|
| Reserve |
— |
14 |
| Profits available for appropriation |
30,298 |
29,988 |
| Add: Other Comprehensive Income/(Loss)*.. |
(8) |
(9) |
| Less: Dividend paid on Equity Shares |
1,057 |
932 |
| Less: Income-tax on Dividend paid |
131 |
80 |
| Balance carried forward |
29,102 |
28,967 |
* Remeasurement of (loss)/gain (net) on defined benefit plans, recognised as part of
retained earnings.
Economic activity remained largely subdued and tighter financial conditions impinged
upon activity. The second advance estimates released in February, 2020 implied real GDP
growth of 4.7% for the fourth quarter of the Financial Year 2020 within the annual
estimate of 5% for the year as a whole.
However, this is now at risk from the COVID-19 pandemic's impact on the economy. High
frequency indicators suggest that private final consumption expenditure has been hit
hardest, even as gross fixed capital formation has been in contraction since the
second quarter of the
Financial Year 2020. On the supply side, the outlook for agriculture and allied
activities appears to be the only silver lining, with foodgrains output at 292 million
tonnes. Meanwhile, most of the service sector indicators in January-March, 2020 moderated
or declined. Anecdotal evidence suggests that several services such as trade, tourism,
airlines, the hospitality sector and construction have been further adversely impacted by
the COVID-19. Due to overall slowdown in auto industry leading to lower sales during the
Financial Year 2019-20 followed by abrupt closure of business activities from 25th
March, 2020 due to COVID-19 lockdown, your Company recorded a decrease of 15.2% in
revenue from operations at Rs. 45,488 crores in the year under review as against Rs.
53,614 crores in the previous year.
The Profit for the year before Depreciation, Finance Costs, Exceptional items and
Taxation recorded a decrease of 10.4% at Rs. 7,466 crores as against Rs. 8,328 crores in
the previous year. Profit after tax decreased by 72.3% at Rs. 1,331 crores as against Rs.
4,796 crores in the previous year.
Your Company continues with its rigorous cost restructuring exercises and efficiency
improvements which have resulted in significant savings through continued focus on cost
controls, process efficiencies and product innovations that exceed customer expectations
in all areas thereby enabling the Company to maintain profitable growth in the current
economic scenario.
Details of Material Changes from the end of the Financial Year till the date of this
Report
The rampant spread of COVID-19 outbreak, across borders and geographies, has severely
impacted almost the whole world and triggered significant downside risks to the overall
global economic outlook. Due to the lockdown announced by the Government of India from 25th
March, 2020, entire operations of the Company came to a halt. The lockdowns and
restrictions imposed on various activities due to the pandemic have posed challenges to
all the businesses of your Company and its Subsidiaries. Though it is difficult to predict
any demand scenario for the immediate short term, the Company expects the Tractor demand
to show good improvement on the back of several positive factors such as record
Rabi production, higher Government procurement, announcement of higher MSPs leading to
better realisation to the farmers and outlook of a normal monsoon aiding sentiments for a
good Kharif crop. The Company's Auto sales traditionally come from both rural and urban
segment. On account of positive factors stated above, the Company expects quicker recovery
in rural India and rural demand to improve sales momentum for Auto Sector while urban
segment will take little longer time to come back to normalcy. Factors such as lower
household incomes, employment uncertainty, higher cost of finance and difficulty in
getting finance as a result of potential rise in NPA in the Financial Sector may result in
demand constraints for discretionary items like automobiles.
Although there are uncertainties due to the pandemic, the Company is taking several
measures to mitigate the adverse impact by optimising costs and continuously realigning
the cost-structures to the activity level.
Performance Review
Automotive Sector
Your Company's Automotive Sector, posted total sales of 4,71,141 vehicles (4,11,345
four-wheelers and 59,796 three-wheelers) as against a total of 6,07,548 vehicles (5,37,639
four-wheelers and 69,909 three-wheelers) in the previous year, registering a de-growth of
22.5%.
In the domestic market, your Company sold a total of 4,44,218 vehicles as compared to
5,69,092 vehicles in the previous year resulting in a de-growth of 21.9%.
In the Passenger Vehicle (PV) segment, your Company sold 1,86,942 vehicles [including
1,79,405 Utility Vehicles (UVs), 6,679 Vans and 858 Cars] registering a de-growth of
26.5%, as compared to the previous year's volume of 2,54,351 vehicles [including 2,35,362
UVs, 17,451 Vans and 1,538 Cars].
In the Commercial Vehicle (CV) segment, your Company sold 1,99,131 vehicles [including
36,475 vehicles <2T GVW, 1,51,384 vehicles between 2-3.5T GVW, 5,415 LCVs in the LCV
> 3.5T segment, 760 vehicles in the 7.5-16.2T GVW segment and 5,097 Heavy Commercial
Vehicles (HCVs)] registering a de-growth of 19.9% over the previous year's volume of
2,48,601 commercial vehicles, [including 53,149 vehicles < 2T GVW, 1,76,203 vehicles
between 2-3.5T GVW, 8,235 LCVs in the LCV > 3.5T segment, 176 vehicles in the 7.5-16.2T
GVW segment and 10,838 HCVs].
In the three-wheeler segment, your Company sold 58,145 three wheelers, registering a
de-growth of 12.1% over the previous year's volume of 66,140 three wheelers. For the year
under review, the Indian automotive industry (except 2W) de-grew 18.8%, with the Passenger
Vehicle (PV) industry de-growth of 17.9% and Commercial Vehicle (CV) industry de-growth of
28.8%. The UV segment of the PV industry posted a flat performance with 0.5% growth.
Within the CV industry, the LCV goods <3.5T segment de-grew 20.2% while the HCV goods
segment de-grew 56.0%.
Your Company's UV volume stood at 1,79,405 units, a de-growth of 23.8%. The UV market
share for your Company stood at 19.0%. For the year under review, your Company's PV volume
stood at 1,86,942 units with a market share of 6.7%. The Stylish & Thrilling XUV300
launched in February, 2019 performed well in the compact UV segment with a volume of
37,576 units for Financial Year 2020. Scorpio, XUV500 and Bolero continued to be strong
brands for your Company in the UV segment. In the LCV<3.5T segment, your Company
retained its No.1 position with a 45.7% market share. Your Company sold a total of
1,87,859 vehicles in this segment. Your Company has a market share of 65.3% in the LCV
2-3.5T segment, which is the Pik-UP segment. In the Medium and Heavy Commercial Vehicle
(MHCV) segment, your Company sold 5,857 trucks as against 11,014 in the previous year.
This is a de-growth of 46.8%. Your Company's market share in the HCV segment stands at
5.0%. Your Company is the pioneer for Electric Vehicles (EVs) in India, and for the year
under review, sold [along with its subsidiary Mahindra Electric Mobility Limited (MEML)]
14,602 EVs (966 four wheelers and 13,636 three wheelers) as against 10,276 EVs (1,811 four
wheelers and 8,465 three wheelers) in the previous year. This growth is supported by the
Governments' thrust on adopting EVs, and sustained effort by your Company in working with
various stakeholders, especially fleet operators. During the year under review, your
Company posted an export volume of 26,923 vehicles as against the previous year's exports
of 38,456 vehicles. This is a de-growth of 30.0%. The spare parts sales for the year stood
at Rs. 2,494.5 crores (including exports of Rs. 230.8 crores) as compared to Rs. 2,633.5
crores (including exports of Rs. 284.0 crores) in the previous year, registering a
de-growth of 5.3%.
Farm Equipment Sector
Your Company's Farm Equipment Sector recorded total sales of 3,01,915 tractors
(domestic + export) as against 3,30,436 tractors sold in the previous year, registering a
de-growth of 8.6%. This includes 2,988 tractors sold under the Trakstar brand, which is
the third brand of your Company under the subsidiary Gromax Agri Equipment Limited.
For the year under review, the tractor industry in India recorded sales of 7,09,002
tractors, a de-growth of 9.9%. Tractor Industry recorded de-growth in Financial Year 2020
after three consecutive years of growth.
In the domestic market, your Company sold 2,91,901 tractors (including Gromax Agri
Equipment Limited), as compared to 3,16,742 tractors in the previous year, recording a
de-growth of 7.8%. However, in a very competitive industry, your Company increased its
market share by 0.9% and continued its market leadership for the 37th
consecutive year. Your Company's performance was supported by good performance of all
products in the portfolio.
Your Company continues to focus on growing the farm mechanisation space, by offering
affordable mechanisation solutions. The portfolio comprises of Rotavators, Cultivators,
Harvesters, Rice transplanters, Balers and Sprayers for horticulture segment.
For the year under review, your Company exported 9,956 tractors which is a de-growth of
26.6% over the previous year.
Spare parts net sales for the year stood at Rs. 718.2 crores (including exports
of Rs. 42.4 crores) in Financial Year 2020 as compared to Rs. 682.2 crores (including
exports of Rs. 47.0 crores) in the Financial Year 2019, registering a growth of 5.3%.
Other Businesses
Mahindra Powerol
Under the Mahindra Powerol Brand, your Company has been a leader in providing power
back-up solutions to the telecom industry for the past 13 years. To cater to changing
customer needs, your Company continues to expand its presence in tele infra management and
in the energy management solutions space.
In the retail genset business, your Company is the No. 2 brand by volume, offering a
wide range of solutions from Lower KVA range to mid to higher KVA range.
With a focus on providing greener solutions, your Company started selling Gas Powered
Gensets across the country, in the Financial Year 2019-20.
Construction Equipment Business
For the year under review, your Company (under the Mahindra EarthMaster brand)
sold 880 Back-Hoe Loaders (BHLs) against 1,286 BHLs in Financial Year 2019, which is a
de-growth of 31.6%. With the slowdown in Infrastructure Sector, the BHL market in India
de-grew by 22.5% over the previous year. Your Company continues to be at 4th
position in the BHL industry.
Your Company has presence in the road construction equipment business through motor
graders (under the Mahindra RoadMaster brand). For the year under review, your Company
sold 168 motor graders.
Two-Wheeler Business
For the Financial Year 2019-20, your Company sold 1,450 two-wheelers (including 412
export). Additionally, your Company successfully exported first lot of ‘Made in
India' electric two-wheeler E-Ludix, to its subsidiary Peugeot Motocycles in France. In
line with the revised strategy for the two-wheeler business, your Company through its
subsidiary, Classic Legends Private Limited (CLPL) had reintroduced the iconic brand
‘Jawa' to the Indian market in Financial Year 2019, with the launch of new range of
JAWA motorcycles - Jawa and Jawa Forty-Two. A new addition to that range - JAWA
Perak was launched in the Financial Year 2019-20.
Current Year's review
During the period 1st April, 2020 to 11th June, 2020, 7,122
vehicles were produced as against 79,655 vehicles and 8,289 vehicles were dispatched as
against 77,332 vehicles during the corresponding period in the last year. During the same
period 22,025 tractors were produced and 23,049 tractors dispatched as against 64,233
tractors produced and 63,241 tractors dispatched during the corresponding period in the
previous year.
The world is in the middle of perhaps the biggest crisis faced ever in the modern
times. Just three months ago, the IMF was expecting positive per capita income growth in
> 160 member countries in 2020. Today, it projects that over 170 countries will
experience negative per capita income growth this year.
The ensuing lockdowns to contain the spread of the virus have curtailed both supply and
demand. Added to this, a combination of lower incomes and heightened uncertainty has added
to the drag on consumer spending and business investment. This could result in a massive
drag on GDP growth. Thus, Financial Year 2021 is expected to be exceptionally challenging
and unlike any other time before.
The RBI and the Government have been coming up with targeted measures and hopes remain
pinned on them doing ‘whatever it takes' till normalcy is achieved. Currently, most
Financial Year 2021 forecasts pencil in growth in the range of 0-2% with some even
expecting a recession. Expectations of the pandemic fading and allowing a gradual
normalisation along with proactive and effective administrative, monetary and fiscal
measures could enable a semblance of partial recovery in the latter part of Financial Year
2021. However, the outlook is heavily contingent upon the intensity, spread and duration
of the pandemic.
Finance
Financial Year 2019-20 can at best be described as a ‘Rocky Road' for the world
economy and financial markets. Market sentiments remained volatile since the start of the
financial year due to escalating trade tensions between US and China, fears of disruptions
to supply chains, prolonged uncertainty on Brexit and geopolitical tensions in Middle
East. As the year progressed, trade tensions dragged down international trade, corporate
confidence and capital spending, which ultimately led to Global growth rate dropping to a
meagre 2.9% in calendar year 2019, the lowest since global financial crisis. While the
growth remained robust in United States, most other advanced economies strongly exposed to
global trade including Eurozone and Japan stayed weak.
At the start of the year 2020, a phase 1 trade deal agreed between U.S. and China and
green shoots in manufacturing indicators, raised hopes for a global mini-cycle recovery.
However soon thereafter, a virus outbreak in China quickly progressed into the biggest
human and economic crisis impacting the world in a century. The COVID-19 outbreak has not
only brought considerable human suffering, it has also brought an unprecedented collapse
in trade and commerce. The containment efforts have involved quarantines, restrictions on
labour mobility and travel, and sharp cutbacks in many manufacturing and service sector
activities. Global value chain linkages have amplified the overall macroeconomic effects
of the pandemic.
There is still a lot of uncertainty on the duration and depth of the virus-induced
recession. In its forecasts published in April, IMF projects the global growth in 2020 at
–(minus) 3.0%; a mark down by more than 6% relative to the earlier forecasts. Growth
in the advanced economies is projected at –(minus) 6.1% in the coming year, whilst
emerging economies are expected to contract by –(minus) 1.0% in 2020.
Financial markets are sharply hit by the heightened uncertainty and are witnessing a
flight to safe assets such as US Dollar and Gold. Markets are also jittery as it is felt
that monetary policy has reached its limits with almost all major central banks at the
zero lower bound or negative interest rates. Most countries are resorting to aggressive
fiscal measures to fight the slowdown. The risk-off sentiment has also led to a rush to
hoard liquidity by borrowers on one hand, and risk aversion amongst lenders on the other
hand.
Commodity Prices especially Crude and Metals, which were soft throughout the year due
to slowing global demand, were rattled by both demand and supply shock post the COVID-19
outbreak with Crude prices (US benchmark) briefly plunging to negative territory in April,
2020.
On the domestic front, India also faced global headwinds and most growth engines -
private consumption, private investment, and exports - showed a sustained slowdown. In
addition, tightening lending conditions on account of stressed Balance Sheets of Banks and
NBFCs, also impacted demand for goods and services.
The Indian rupee came under sustained pressure during the year and saw a 9%
depreciation closing the year at 75.38. This was despite healthy fund flows from Foreign
Portfolio Investor (FPI) and Foreign Direct Investment (FDI). FPI flows turned negative in
March and saw an outflow of Rs. 1,18,203 crores taking the yearly tally to an outflow of
Rs. 27,528 crores. Going forward whilst the plunge in crude prices will keep India's
Balance of Payments supported, the ongoing risk-off sentiment and pressure of emerging
market currencies will keep Rupee elevated in the short term.
In line with most other central banks, Reserve Bank of India cut policy rate of 185 bps
including the 75 bps emergency cut to support the economy from COVID-19 related shocks.
With limited arsenal remaining in monetary policy, RBI also announced several
liquidity-boosting measures and regulatory forbearance including CRR cut, Targeted Long
Term Repo Operations (TLTROs), liquidity support for NBFCs and Mutual Funds, etc.
Your Company continued to focus on managing cash efficiently and ensured that it had
adequate liquidity and back up lines of credit. It shored up additional lines of
liquidity. During the year, your Company availed short term working capital and export
finance. As on 31st March, 2020, Rs. 900 crores of short term working capital
and trade finance, was outstanding. During the year, your Company repaid Rs. 91.01 crores
of long term borrowings from internal accruals.
The Company's Bankers continue to rate your Company as a prime customer and extend
facilities / services at prime rates. Your Company follows a prudent financial policy and
aims not to exceed an optimum financial gearing at any time. The Company's total Debt to
Equity Ratio was 0.09 as at 31st March, 2020.
Your Company has been rated by CRISIL Limited ("CRISIL"), ICRA Limited
("ICRA"), India Ratings and Research Private Limited ("India Ratings")
and CARE Ratings Limited ("CARE") for its Banking facilities. All have
re-affirmed the highest credit rating for your Company's Short Term facilities. For Long
Term facilities and Non-Convertible Debenture ("NCD") programme, CRISIL, ICRA
and India Ratings have re-affirmed their credit ratings of CRISIL AAA/Stable, [ICRA]AAA
(stable) and IND AAA/Stable for the respective facilities rated by them. With the above
rating affirmations, your Company continues to enjoy the highest level of rating from all
major rating agencies at the same time.
The AAA ratings indicate highest degree of safety regarding timely servicing of
financial obligations and is also a vote of confidence reposed in your Company's
Management by the rating agencies. It is an acknowledgement of the strong credit profile
of your Company over the years, resilience in earnings despite cyclical upturns/downturns,
robust financial flexibility arising from the significant market value of its holdings and
prudent management.
Your Company is a "Large Corporate" as per the criteria under SEBI Circular
No. SEBI/HO/DDHS/CIR/P/2018/144 dated 26th November, 2018.
Investor Relations (IR)
Your Company continuously strives for excellence in its IR engagement with
International and Domestic investors. Structured conference calls and periodic investor /
analyst interactions including one-on-one meetings, participation in investor conferences,
quarterly earnings calls, video conferencing across various key geographies and annual
analyst meet with the Executive Chairman, Managing Director and Business Heads were
organised during the year. During the year, your Company had organised an event
called ‘BS6 knowledge sharing session', which was to showcase the Company's
preparedness for BS6 transition. Your Company interacted with around 631 Indian and
overseas investors and analysts (excluding quarterly earnings calls and specific event
related calls) during the year. Your Company always believes in leading from the front
with emerging best practices in IR and building a relationship of mutual understanding
with investor/analysts. Your Company also engages with investors on Environment, Social
and Corporate Governance (ESG), which has received excellent feedback from investors and
ESG analysts. Your Company ensures that critical information about the Company is
available to all the investors by uploading all such information on the Company's website.
Your Company was awarded as ‘Best Financial Reporting (Large Cap)' by IR Magazine
Awards – 2019, Mumbai and your Company's Annual Integrated Report won the Gold at the
2019 MARCOM Awards, USA.
Dividend
Your Directors are pleased to recommend a dividend of Rs. 2.35 per Ordinary (Equity)
Share of the face value of Rs. 5 each on the Share Capital, payable to those Shareholders
whose names appear in the Register of Members as on the Book Closure Date. Dividend is
subject to approval of members at the ensuing Annual General Meeting and shall be subject
to deduction of tax at source. The equity dividend outgo for the Financial Year 2019-20
would absorb a sum of Rs. 292.15 crores [as against Rs. 1,187.35 crores comprising the
dividend of Rs. 8.50 per Ordinary (Equity) Share of the face value of Rs. 5 each on the
enhanced share capital and tax thereon paid for the previous year]. Further, the Board of
your Company decided not to transfer any amount to the General Reserve for the year under
review.
The dividend pay-out is in accordance with the Company's Dividend Distribution Policy.
Dividend Distribution Policy
The Dividend Distribution Policy containing the requirements mentioned in Regulation
43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 is attached as Annexure I and forms part of this Annual
Report.
B. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company, its subsidiaries, associates and
joint ventures prepared in accordance with the Companies Act, 2013 and applicable
Indian Accounting Standards along with all relevant documents and the Auditors' Report
form part of this Annual Report. The Consolidated Financial Statements presented by the
Company include the financial results of its subsidiary companies, associates and joint
ventures. The Financial Statements as stated above are also available on the website of
the Company and can be accessed at the Web-link: https://www.mahindra.com/
resources/FY20/AnnualReport.zip
Subsidiary, Joint Venture and Associate Companies
The Mahindra Group Companies continue to contribute to the overall growth in revenues
and overall performance of your Company.
Tech Mahindra Limited, Flagship Company in the IT Sector, has reported a consolidated
operating revenue of Rs. 36,868 crores in the current year as compared to Rs. 34,742
crores in the previous year, an increase of 6%. Its consolidated profit after tax after
non-controlling interests is Rs. 4,033 crores as compared to Rs. 4,298 crores in
the previous year, a decrease of 6%.
The Group's finance company, Mahindra & Mahindra Financial Services Limited
(Mahindra Finance), reported a consolidated operating income of Rs. 11,883 crores during
the current year as compared to Rs. 10,372 crores in the previous year, a growth of 15%.
The consolidated profit after tax after non-controlling interests for the year is Rs.
1,075 crores as compared to Rs. 1,827 crores in the previous year.
Mahindra Lifespace Developers Limited, the subsidiary in the business of real estate
and infrastructure registered a consolidated operating income of Rs. 611 crores as
compared to Rs. 593 crores in the previous year. The consolidated loss after
non-controlling interest for the year is Rs. 193 crores as compared to profit of
Rs. 120 crores in the previous year.
Mahindra Holidays & Resorts India Limited, the subsidiary in the business of
timeshare registered a consolidated operating income of Rs. 2,372 crores as compared to
Rs. 2,239 crores in the previous year. The consolidated loss after non-controlling
interests for the year is Rs. 132 crores as compared to profit of Rs. 60 crores in
the previous year.
Mahindra Logistics Limited, a listed subsidiary in the logistics business has
registered a consolidated operating income of Rs. 3,471 crores as compared to Rs. 3,851
crores in the previous year. The consolidated profit after tax after
non-controlling interests for the year is Rs. 55 crores as compared to Rs. 86
crores in the previous year.
Ssyangyong Motor Company, the Korean subsidiary of the Company has reported
revenues of Rs. 19,972 crores in the current fiscal year as compared to Rs. 24,184
crores in the previous year. The loss for the year is Rs. 3,029 crores as compared
to loss of Rs. 345 crores in the previous year.
The consolidated group profit before exceptional item and tax for the year is Rs. 2,586
crores as against Rs. 7,280 crores in the previous year. The consolidated profit after tax
after non-controlling interest and exceptional items for the year is Rs. 127 crores as
against Rs. 5,315 crores in the previous year.
During the year under review, Mahindra Finance CSR Foundation, Merakisan Private
Limited, Mahindra Bangladesh Private Limited, MSPL International DMCC, Meru Travel
Solutions Private Limited, Meru Mobility Tech Private Limited, V-Link Automotive Services
Private Limited, V-Link Fleet Solutions Private Limited and Fifth Gear Ventures Limited
became subsidiaries of your Company. During the year under review, Orizonte Business
Solutions Limited, Mahindra International UK Ltd, Mahindra Defence Naval Systems Limited,
re Villas 1 AB, re Villas 2 AB and Cleansolar Renewable Energy Private Limited ceased
to be subsidiaries of your Company. Subsequent to the year end, Graphic Research Design
s.r.l. and Divine Solren Private Limited ceased to be subsidiaries of your Company.
During the year under review, Machinepulse Tech Private Limited changed its name to
Mahindra Teqo Private Limited, Passeport Sante SL changed its name to Holiday Club
Canarias Vacation Club SLU and Mahindra Graphic Research Design s.r.l changed its name to
Graphic Research Design s.r.l.
Subsequent to the year end, Mahindra Asset Management Company Private Limited changed
its name to Mahindra Manulife Investment Management Private Limited and Mahindra Trustee
Company Private Limited changed its name to Mahindra Manulife Trustee Private Limited. A
Report on the performance and financial position of each of the subsidiaries, associates
and joint venture companies included in the Consolidated Financial Statement and their
contribution to the overall performance of the Company, is provided in Form AOC-1 and
forms part of this Annual Report.
The Policy for determining material subsidiaries as approved by the Board is uploaded
on the Company's website and can be accessed at the Web-link: https://
www.mahindra.com/resources/FY20/AnnualReport.zip
C. JOINT VENTURES, ACQUISITIONS AND
OTHER MATTERS
Mahindra First Choice Wheels Limited acquires 100% equity stake in Fifth Gear Ventures
Limited
During the year under review, Mahindra First Choice Wheels Limited ("MFCWL"),
a board controlled subsidiary of Mahindra Holdings Limited ("MHL"), which is, in
turn a wholly owned subsidiary of your Company, acquired 100% of the equity share capital
of Fifth Gear Ventures Limited ("FGVL"), for a consideration of around Rs. 30.45
crores discharged by MFCWL by way of cash and shares of MFCWL aggregating around
0.75% of MFCWL's fully diluted share capital. FGVL, is engaged in the business of
maintaining and operating the website www.carandbike.com, an e-commerce market platform
that facilitates sale and purchase of new and used vehicles and keeps its users updated
with the latest information and reviews from automotive industry. This acquisition will
help MFCWL expand its presence in the digital automotive space and seamlessly integrate
the online and offline user experience.
Merger of Mahindra Vehicle Manufacturers Limited with Mahindra & Mahindra Limited
As mentioned in the previous Annual Report, the Board of Directors of the Company at
its meeting held on 29th May, 2019, subject to requisite approvals /consents,
approved the Scheme of Merger by Absorption of Mahindra Vehicle Manufacturers Limited, a
wholly owned subsidiary of the Company ("MVML") with the Company and their
respective shareholders ("Scheme") under the provisions of Section 230 to 232 of
the Companies Act, 2013. The Appointed Date of the Scheme is 1st April, 2019
and the entire assets and liabilities of MVML would be transferred to and recorded by the
Company at book values. The entire share capital of MVML is held by the Company. Upon the
Scheme being effective, all shares (‘Preference and equity') held by the Company in
MVML shall stand cancelled, without any further act or deed and no consideration shall be
issued on merger. The Scheme is subject to receipt of approvals from Directorate of
Industries, Maharashtra Industrial Development Corporation, National Company Law Tribunal
(‘NCLT'), Mumbai Bench and such other statutory / government authorities as
may be directed by the NCLT. The Scheme has been filed with the Stock Exchanges and
NCLT.
Sale of shares of your Company by M&M Benefit Trust
During the year under review, M&M Benefit Trust (‘the Trust') which forms part
of the Promoter Group of your Company, sold 1,92,00,000 equity shares (treasury stock)
representing 1.54% of the total paid up equity share capital of the Company. The sale has
been executed on the Stock Exchange(s), at a gross price of Rs. 648 per share. Following
the sale, the shareholding of the Promoter and Promoter Group in your Company came down
from 20.44% to 18.90% of the total paid up equity share capital of the Company.
Scheme of Amalgamation between Mahindra Defence Naval Systems Limited and Mahindra
Defence Systems Limited (Scheme)
The National Company Law Tribunal has approved the Scheme vide its order dated 22nd
August, 2019. The Appointed Date of the Scheme is 1st April, 2018 and the
Scheme is Effective from 18th September, 2019. Pursuant to the Scheme becoming
effective, Mahindra Defence Naval Systems Limited ceased to be the subsidiary of Mahindra
Defence Systems Limited and of the Company.
Joint Venture with Ford Motor Company
In October, 2019, your Company entered into definitive agreements with Ford Motor
Company Inc., USA ("FMC") to enable the formation of a joint venture wherein
your Company and/or its subsidiary(ies) would hold a 51% equity share capital and FMC
would hold the balance 49% stake. The joint venture company would be Mahindra Ford
Automotive Private Limited ("MFAPL"), formerly known as ‘Ardour Automotive
Private Limited'. As part of the transaction, MFAPL will acquire the existing automotive
business of Ford India Private Limited ("FIPL"), a wholly owned subsidiary of
FMC at an enterprise valuation of Rs. 1,925 crores. The Purchase Price to be paid by MFAPL
to FIPL would be arrived at by deducting from the enterprise value, after making customary
closing adjustments, the net debt that would be transferred to MFAPL. Based on the
available estimates, the likely Purchase Price to be paid by MFAPL would be Rs. 1,289
crores, of which 51% i.e. Rs. 657 crores would be funded by your Company. In the
aggregate, your Company is committed to fund, for acquiring a 51% stake in MFAPL and for
the future operations of MFAPL, an amount not exceeding Rs. 1,400 crores.
For reference, FIPL has been engaged in the automotive business in India since 1995.
Currently, it is the sixth largest player in the four wheeled passenger vehicle market in
India. As one of the largest exporters of vehicles from India, FIPL manufactures and
exports vehicles and engines from its facilities in Chengalpattu, Tamil Nadu and Sanand,
Gujarat. For the year ended 31st March, 2019, the total revenue of FIPL's
Automotive business was Rs. 26,324 crores. The formation of this joint venture is the next
step in the strategic alliance forged between Ford and your Company in September, 2017.
This joint venture will further strengthen your Company's presence in the Automotive
business. It will help your Company's growth in key emerging markets. The joint venture
will be responsible for growing the Ford brand in India and exporting its products to Ford
entities globally. Using the strengths of both shareholders, MFAPL would be focused to
deliver operational excellence and value to stakeholders. The partnership will allow your
Company and FMC to offer new product to customers faster than before and will deliver
profitable growth to both entities. The joint venture will drive enhanced competitiveness
through greater economies of scale across the automotive value chain, including optimised
sourcing, product development and use of relevant technologies. In addition, the joint
venture will be a catalyst for growth for the Ford and Mahindra brands in emerging
markets, which are growing at double the rate of the global industry.
Your Company has since received approval from the Competition Commission of India as
well as the required anti-trust approvals from the European Commission, Korean Fair Trade
Commission and Competition Commission at South Africa and expects to complete the
transaction within the current financial year.
Acquisition of controlling stake in Meru
In December, 2019, your Company acquired 36.63% of the equity share capital of Meru
Travel Solutions Private Limited ("Meru"), holding company of the Meru Group and
has the right to appoint majority of the directors on the Board of Meru. Therefore, Meru
along with its three wholly owned operating subsidiaries became subsidiaries of your
Company. Your Company is committed to enhancing its equity stake in Meru up to 55%.
Further, your Company has call option to acquire shares from certain existing investors of
Meru and these existing investors of Meru have a put option to sell shares to your
Company. In the aggregate your Company is committed to invest an amount not exceeding Rs.
201.5 crores in Meru.
Currently, Meru through its subsidiaries operates in the ride hail segment and also has
a presence in the corporate transportation space. Meru was one of the first radio taxi
operators in the ride hail segment and currently Meru has presence in Mumbai, Delhi,
Bengaluru and Hyderabad. On the corporate transportation side, Meru has been providing
transportation solutions to companies in various sectors such as BPOs, Banking, IT and
ITES. Given your Company's intent to grow its presence in various segments of Mobility
Services, the investment in Meru would enable your Company to increase its presence in the
corporate shared mobility segment which is an area of strategic interest to your Company.
Investment in Eurl LD Azouaou, Algeria
In March, 2020, your Company entered into an agreement to subscribe to around 5% of the
share capital of Eurl LD Azouaou, Algeria ("LDA") for an amount equivalent to
US$ 1,50,000 (approximately Rs. 1.1 crores). LDA is engaged in the business of tractor
assembly and distribution in Algeria. In the past, Algeria has been an important export
market for the farm equipment business of your Company. To that extent this investment
would enable your Company to re-enter the Algerian Agricultural Machinery Market.
Investment in Porter
Earlier, your Company had merged a step down subsidiary named Orizonte Business
Solutions Limited which operated a technology enabled load exchange marketplace platform
for matching the needs of cargo owners with transporters with Smartshift Logistics
Solutions Private Limited ("Porter") (formerly known as Resfeber Labs Private
Limited). Consequently, the shareholding of your Company and its subsidiaries in Porter
taken on a fully diluted basis stood at 30.8% for the Company, 2.5% for Mahindra &
Mahindra Financial Services Limited and 6.9% for Mahindra Trucks and Buses Limited. Your
Company has been keen to grow its presence in the shared mobility logistics solutions
space which is an identified area of strategic interest for your Company. During the year,
your Company along with the key financial investors of Porter invested Rs. 69 crores in
Porter, of which your Company invested Rs. 37.5 crores. Further to this in April, 2020,
Lightstone Fund SA, a private equity investor invested Rs. 140 crores in Porter. As a
result of the aforesaid equity investments in Porter, the shareholding of your Company and
its subsidiaries in Porter taken on a fully diluted basis is 26.6% for the Company, 2.1%
for Mahindra & Mahindra Financial Services Limited and 4.8% for Mahindra Trucks and
Buses Limited.
Investment in Zoomcar
Your Company has been keen to invest in the shared mobility space as part of its
strategy to promote and participate in sustainable mobility solutions, including multi
modal urban mobility, with the objective of enabling improved livelihoods and lifestyles
of people enabling them to RISE. As a part of this, in Financial Year 2017-18, your
Company invested in Zoomcar India Private Limited (Zoomcar India) which is a leading
self-drive car rental company based out of Bengaluru, India and had been 100% owned by
Zoomcar Inc. a holding company incorporated in the USA. Your Company subscribed to
Compulsory Convertible Preference Shares (CCPS) of Zoomcar India which are ultimately
convertible into Preferred Stock of Zoomcar Inc. Besides this, Mahindra Overseas
Investment Company (Mauritius) Limited (MOICML), a wholly owned subsidiary of your Company
invested in Zoomcar Inc. The effect of this investment, by your Company and MOICML, on an
aggregate as-converted to common stock of Zoomcar Inc. basis resulted in your Company and
MOICML together holding 16.8% of the Common Stock of Zoomcar Inc. on a fully diluted
basis. Further to the above, during the year under review, your Company invested Rs. 18.8
crores and subscribed to Optionally Convertible Debentures of Zoomcar India, which are
ultimately convertible into Preferred Stock of Zoomcar Inc. In the interim and during this
period, other existing and external investors have been participating in Zoomcar India and
Zoomcar Inc. Post this investment, on an aggregate as-converted to common stock of Zoomcar
Inc., your Company and MOICML together hold 16.1% of the Common Stock of Zoomcar Inc. on a
fully diluted basis for an aggregate investment of around Rs. 196.8 crores.
Investment in Gamaya SA, Switzerland
Your Company acquired 11.25% stake (on a fully diluted basis) in Gamaya SA by
subscribing to equity and preferred shares in June, 2019 for an investment of CHF 4.3
million (Rs. 30.2 crores). Gamaya SA is a start-up based in Switzerland focused on
precision agriculture solutions. This investment in Gamaya SA is expected to support the
Company's businesses by developing precision agriculture technology and solutions for its
customers.
Investment in MITRA Agro Equipments Private Limited
During the year, your Company increased its shareholding in MITRA Agro Equipments
Private Limited ("MITRA"), from 27% to 40%, for an aggregate consideration of
Rs. 7.1 crores. MITRA is engaged in the business of designing, developing, manufacturing,
assembling, and selling orchard sprayers. The purchase of additional equity shares in
MITRA would support the Company's Farm Equipment Sector's growth in the horticulture
sector.
Acquisition of balance 49% stake in Peugeot Motocycles
During the year, your Company increased its shareholding in Peugeot Motocycles (PMTC),
from 51% to 100%, by acquiring 49% equity stake in PMTC from Groupe PSA in November, 2019.
PMTC is the oldest brand in the two-wheeler space in the world and is head-quartered in
Mandeure, France.
Transfer of assets of MyAgriGuru and Samriddhi from Mahindra Agri Solutions Limited
(MASL) to Mahindra and Mahindra Limited (M&M)
During the year, the Company acquired certain tangible and intangible assets pertaining
to MyAgriGuru and Samriddhi from Mahindra Agri Solutions Limited (MASL), its subsidiary
company for an aggregate consideration of Rs. 17.7 crores. This transfer helped to
integrate the precision agriculture and farming-as-a-service (FaaS) businesses under a
single umbrella.
D. INTERNAL FINANCIAL CONTROLS
The Corporate Governance Policies guide the conduct of affairs of your Company and
clearly delineates the roles, responsibilities and authorities at each level of its
governance structure and key functionaries involved in governance. The Code of Conduct for
Senior Management and Employees of your Company (the Code of Conduct) commits Management
to financial and accounting policies, systems and processes. The Corporate Governance
Policies and the Code of Conduct stand widely communicated across your Company at all
times.
Your Company's Financial Statements are prepared on the basis of the Significant
Accounting Policies that are carefully selected by Management and approved by the Audit
Committee and the Board. These Accounting policies are reviewed and updated from time to
time.
Your Company uses SAP ERP Systems as a business enabler and to maintain its Books of
Account. The transactional controls built into the SAP ERP systems ensure appropriate
segregation of duties, appropriate level of approval mechanisms and maintenance of
supporting records. The Information Management Policy reinforces the control environment.
The systems, Standard Operating Procedures and controls are reviewed by Management. These
systems and controls are audited by Internal Audit and their findings and recommendations
are reviewed by the Audit Committee which ensures the implementation.
Your Company has in place adequate Internal Financial Controls with reference to the
Financial Statements commensurate with the size, scale and complexity of its operations.
Your Company's Internal Financial Controls were deployed through Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), that addresses material risks in your Company's operations and
financial reporting objectives.
Such controls have been assessed during the year under review taking into consideration
the essential components of internal controls stated in the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting issued by The Institute of Chartered
Accountants of India. Based on the results of such assessments carried out by Management,
no reportable material weakness or significant deficiencies in the design or operation of
Internal Financial Controls was observed.
Your Company recognises Internal Financial Controls cannot provide absolute assurance
of achieving financial, operational and compliance reporting objectives because of its
inherent limitations. Also, projections of any evaluation of the Internal Financial
Controls to future periods are subject to the risk that the Internal Financial Controls
may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate. Accordingly, regular audits and review
processes ensure that such systems are reinforced on an ongoing basis.
E. MANAGEMENT DISCUSSION AND
ANALYSIS REPORT
A detailed analysis of your Company's performance is discussed in the Management
Discussion and Analysis Report, which forms part of this Annual Report.
F. CONTRACTS OR ARRANGEMENTS WITH
RELATED PARTIES
All Related Party Transactions entered during the year were in the ordinary course of
business and on arm's length basis. During the year under review, your Company had entered
into Material Related Party Transactions, i.e. transactions exceeding ten percent of the
annual consolidated turnover as per the last audited financial statements, with Mahindra
Vehicle Manufacturers Limited, a wholly owned subsidiary of your Company. These
transactions too were in the ordinary course of business of your Company and were on arm's
length basis, details of which, as required to be provided under Section 134(3)(h) of the
Companies Act, 2013 are disclosed in Form AOC-2 as Annexure II and forms part of
this Annual Report.
The Policy on Materiality of and Dealing with Related Party Transactions as approved by
the Board is uploaded on the Company's website and can be accessed at the Web-link:
https://www.mahindra.com/resources/ FY20/AnnualReport.zip
G. AUDITORS
Statutory Auditors and Auditors' Report
Messrs B S R & Co. LLP, Chartered Accountants (ICAI Firm Registration Number
101248W/W-100022) were appointed as the Statutory Auditors of the Company to hold office
for a term of 5 years from the conclusion of the 71st Annual General Meeting
(AGM) held on 4th August, 2017 until the conclusion of the 76th AGM
of the Company to be held in the year 2022.
The Auditors' Report is unmodified i.e. it does not contain any qualification,
reservation or adverse remark or disclaimer.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has
appointed Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice
Number: 6029) to undertake the Secretarial Audit of the Company. The Company has annexed
to this Board's Report as Annexure III, a Secretarial Audit Report given by the
Secretarial Auditor.
The Secretarial Audit Report does not contain any qualification, reservation or adverse
remark or disclaimer.
Secretarial Audit of Material Unlisted Indian Subsidiary
Mahindra Vehicle Manufacturers Limited ("MVML"), a material subsidiary of the
Company undertakes Secretarial Audit every year under Section 204 of the Companies Act,
2013. The Secretarial Audit of MVML for the Financial Year 2019-20 was carried out
pursuant to Section 204 of the Companies Act, 2013 and Regulation 24A of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015. The Secretarial Audit Report
of MVML submitted by Mr. Sachin Bhagwat, Practicing Company Secretary, does not contain
any qualification, reservation or adverse remark or disclaimer.
Annual Secretarial Compliance Report
The Company has undertaken an audit for the Financial Year 2019-20 for all applicable
compliances as per Securities and Exchange Board of India Regulations and
Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly
signed by Mr. Sachin Bhagwat has been submitted to the Stock Exchanges and is annexed at
Annexure IV to this Board's Report.
Cost Auditors
The Board had appointed Messrs D. C. Dave & Co., Cost Accountants (Firm
Registration Number 000611), as Cost Auditor for conducting the audit of cost records of
the Company for the Financial Year 2019-20.
The Board of Directors on the recommendation of the Audit Committee, appointed Messrs
D. C. Dave & Co., Cost Accountants (Firm Registration Number 000611), as the Cost
Auditors of the Company for the Financial Year 2020-21 under Section 148 of the Companies
Act, 2013. Messrs D. C. Dave & Co. have confirmed that their appointment is
within the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified
that they are free from any disqualifications specified under Section 141(3) and proviso
to Section 148(3) read with Section 141(4) of the Companies Act, 2013.
The Audit Committee has also received a Certificate from the Cost Auditors certifying
their independence and arm's length relationship with the Company. As per the provisions
of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be
placed before the Members in a General Meeting for their ratification. Accordingly, a
Resolution seeking Members' ratification for the remuneration payable to Messrs D. C. Dave
& Co., Cost Auditors is included in the Notice convening the Annual General Meeting.
Cost Records
As per Section 148 of the Companies Act, 2013, read with the Companies (Cost Records
and Audit) Rules, 2014, your Company is required to maintain cost records and accordingly,
such accounts and records are maintained.
Reporting of Frauds by Auditors
During the year under review, the Statutory Auditors, Cost Auditors and Secretarial
Auditor have not reported any instances of frauds committed in the Company by its Officers
or Employees to the Audit Committee under Section 143(12) of the Companies Act, 2013.
H. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES
Particulars of the loans given, investment made or guarantee given or security provided
and the purpose for which the loan or guarantee or security is proposed to be utilised by
the recipient of the loan or guarantee or security are provided in Note Nos. 6 and 36 to
the Financial Statements.
I. PUBLIC DEPOSITS AND LOANS/ ADVANCES
Your Company has discontinued acceptance of Fixed Deposits with effect from 1st
April, 2014.
All the deposits from public and Shareholders had already matured as at 31st
March, 2017. The total outstanding 23 deposits of Rs. 9.79 lakhs from the public and
shareholders as at 31st March, 2020, had matured and had not been claimed as at
the end of the Financial Year. Since then no deposits have been claimed.
There was no default in repayment of deposits or payment of interest thereon during the
year under review. There are no deposits which are not in compliance with the requirements
of Chapter V of the Companies Act, 2013. The particulars of loans/advances/investments,
etc., required to be disclosed pursuant to Para A of Schedule V of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 are furnished separately. The
transaction(s) of the Company with a company belonging to the promoter/promoter group
which hold(s) more than 10% shareholding in the Company as required pursuant to para A of
Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
is disclosed separately in the Financial Statements of the Company.
J. EMPLOYEES
Key Managerial Personnel (KMP)
The following have been designated as the Key Managerial Personnel of the Company
pursuant to Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014:
(a) Mr. Anand G. Mahindra – Executive Chairman
(b) Dr. Pawan Goenka – Managing Director and Chief Executive Officer. Dr. Pawan
Goenka was appointed as the Chief Executive Officer with effect from 1st April,
2020.
(c) Dr. Anish Shah – Deputy Managing Director and Group Chief Financial Officer
(appointed with effect from 1st April, 2020).
(d) Mr. Rajesh Jejurikar, Executive Director (Auto and Farm Sectors) (appointed with
effect from 1st April, 2020).
(e) Mr. Narayan Shankar – Company Secretary.
Mr. V S Parthasarathy ceased to be the Chief Financial Officer of the Company with
effect from 1st April, 2020.
Employees' Stock Option Scheme
During the year under review, on the recommendation of the Governance, Nomination and
Remuneration Committee ("GNRC") of your Company, the Trustees of Mahindra &
Mahindra Employees' Stock Option Trust have granted Stock Options to employees under the
Mahindra & Mahindra Limited Employees Stock Option Scheme 2010. No Stock
Options have been granted to employees under the Mahindra & Mahindra Limited Employees
Stock Option Scheme 2000.
The Company has in force the following Schemes which get covered under the provisions
of SEBI (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations):
1. Mahindra & Mahindra Limited Employees Stock Option Scheme – 2000 (2000
Scheme)
2. Mahindra & Mahindra Limited Employees Stock Option Scheme – 2010 (2010
Scheme)
3. M&M Employees Welfare Fund No. 1
4. M&M Employees Welfare Fund No. 2
5. M&M Employees Welfare Fund No. 3
During the year, M&M Employees Welfare Fund No. 1 sold 18,32,000 equity shares of
Rs. 5 each and M&M Employees Welfare Fund No. 2 sold 9,52,000 equity shares of
Rs. 5 each of the Company in compliance of Regulation 26(2) read with Regulation
31(2)(b)(ii) of SEBI (Share Based Employee Benefits) Regulations, 2014.
There are no material changes made to the above Schemes and these Schemes are in
compliance with the SBEB Regulations. Your Company's Auditors, Messrs B S R & Co. LLP,
have certified that the Company's above-mentioned Schemes have been implemented in
accordance with the SBEB Regulations, and the Resolutions passed by the Members for the
2000 Scheme and the 2010 Scheme.
Information as required under the SBEB Regulations read with SEBI Circular
CIR/CFD/POLICYCELL/2/2015 dated 16th June, 2015 have been uploaded on the Company's
website and can be accessed at the Web-link: https://www.mahindra.com/resources/FY20/AnnualReport.zip
Particulars of Employees and related disclosures
The Company had 372 employees who were in receipt of remuneration of not less than Rs.
1,02,00,000 during the year ended 31st March, 2020 or not less than Rs.
8,50,000 per month during any part of the year.
Details of employee remuneration as required under provisions of Section 197(12)
of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be made available
during 21 days before the Annual General Meeting in electronic mode to any
Shareholder upon request sent at agm.inspection@mahindra.com. Such details are also
available on your Company's website and can be accessed at the Web-link:
https://www.mahindra.com/ resources/FY20/AnnualReport.zip
Disclosures with respect to the remuneration of Directors, KMPs and employees as
required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in
Annexure V to this Report.
Industrial Relations
The year under review witnessed a very positive Industrial Relations Scenario across
all manufacturing locations for the Automotive and Farm Equipment Sectors.
Your Company's focus continues towards propagating proactive and employee centric
practices. The transformational work culture initiative that aims to create an engaged
workforce with an innovative, productive and a competitive shop-floor ecosystem continues
to grow in strength. Some examples of the programs put in place include ‘Rise for
Associates', industrial relations skills for frontline officers, cultural diagnostics
projects, transformational work culture projects, e-compliance, e-portal for reward and
recognition of associates, and Code of Conduct for associates. The Transformational Work
Culture Committee (TWCC) leads the design and implementation of these programs.
With the objective of developing skills and fostering togetherness at the workplace,
your Company implements multiple training and engagement programs on an ongoing basis.
These include various behavioural and functional programs such as team effectiveness,
individual effectiveness, safety and environment, quality tools, TPM, skill building
programs, and programs on union leadership development.
The Mahindra Skill Excellence initiative, a holistic approach to enhance the skill and
capabilities of shop floor associates, is receiving good participation across
manufacturing facilities. As a result of this effort, associates from your Company have
participated at various international skill competitions which include WorldSkills 2019
and Beijing Arc Cup. The Company's associate won the ‘Medallion of Excellence' at the
WorldSkills 2019. At the Beijing Arc Cup, the Company's associate won the bronze medal in
finished product category and a female associate from your Company was awarded as
‘Excellent Female Welder'.
In an endeavor to improve quality, reduce cost, ensure safety and improve productivity,
your Company's shop floor associates generated on an average 18 ideas per person.
Significant emphasis was also laid towards raising awareness on health and wellness of
employees through annual medical check-ups and health awareness activities. Diet food has
become a way of life over the past four years. Your Company maintains an ‘Employee
Health Index' at an individual level and this has been a useful tool in identifying
employees who require focused counselling and monitoring.
Proactive and employee-centric shop floor practices, a focus on transparent
communication of business goals, an effective concern resolution mechanism, and a firm
belief that employees are the most valuable assets of the Company, are the cornerstone of
your Company's employee relations approach. An ‘open door policy' with constant
dialogue to create win-win situations, have helped your Company build trust and harmony.
The industrial relations scenario continued to be largely positive across all the
manufacturing locations. Bonus settlements were amicably agreed upon at all locations. The
sustained efforts towards building a transformational work culture resulted in zero
production loss in the Financial Year 2019-20 and helped create a collaborative, healthy
and productive work environment.
Safety, Occupational Health and Environment
During the year under review, your Company revised its Safety, Occupational Health
& Environment (SOH&E) Policy to incorporate the new standard ISO: 45001. The
leadership's commitment towards SOH&E, is demonstrated through inclusion of
many new compliances along with its voluntary commitments. Implementation of various
initiatives under the policy and achievement to set objectives were assessed
through management reviews.
At each Plant location, annual events were organised and commemorated like Road Safety
Week, National Safety Day/ Month and Fire Service Week. Accelerated Learning Programs
(ALP) were deployed to train employees on Safety, Health and Environment. Similarly, ALPs
were deployed for suppliers, with special focus on fire load reduction. The training
programs leveraged virtual reality techniques to enhance learning.
To strengthen the safety practices, the Company continues to focus on Behaviour Based
Safety (BBS) Level 2. Additionally, your Company introduced 14 new safety standards for
standardisation in the M&M group companies, which are under implementation across all
plants.
Your Company carried out statutory safety audits, Fire Equipment Audit, Risk Assessment
as per updated safety standards. For the year under review, your Company achieved
substantial reduction in the fire load, resulting in reduction in fire incidences. The
initiatives in this space include installation of modern equipment, substituting stores
packaging material in critical areas and relocation of flammable material as appropriate.
In line with the ‘Go Green' philosophy, your Company is continuously adopting new
techniques to eliminate and minimise the overall environmental impact. Towards this
objective, various projects have been implemented by your Company in air, water - waste
water management, solid waste management, Plastic waste recycling management and E-waste
management. Further, your Company has initiated implantation of ‘tri-generation
project', a first in India. Many of these initiatives are also extended to the supplier
community by your Company. During the year under review, your Company signed agreements
with Extended Producer Responsibility Organizations (EPRO) recognised by Pollution Control
Boards. This agreement covers 100% integral plastic waste management (M&M plants,
Suppliers & Dealers). Your Company implemented Central Ground Water Authority (CGWA)
regulations for ground water management. This has helped your Company to improve water
neutrality, by way of reduction in freshwater requirement.
Your Company continued the commitment to improve the wellbeing of employees and
contract associates through various activities under project ‘Parivartan'. This
includes activities like fitness improvement challenge (MRise), Mindfulness, Mega event of
Mahindra Marathon, Dhyan Yoga, Zumba, medical check-ups, health consultation, nutrition
month along with consultation and counselling on Special diet for all employees. As a
result of many initiatives, the average Health index of its employees has improved as
compared to previous year. Further, all locations observed World Health Day, World Heart
Day, World Kidney Day and World Diabetes Day. To create awareness among society at large,
your Company has installed a display screen that displays real time readings for all air
quality parameters. This screen is installed just outside the manufacturing plant in
Mumbai, which is located on the Western Express highway with high density vehicular
traffic. In addition, awareness is generated amongst all stakeholders by observing on an
annual basis: World Ozone Day, World Environment Day, World Earth Day, World Water Day and
Energy Conservation Week and Water Conservation Week.
Certifications/Recertifications
All Plants of your Company are in the process of certification under standard ISO
45001: 2018 and recertification of ISO 14001: 2015. Further, all plants are in the process
of implementing, Integrated Management System (IMS), along with adopting the updated
standard ISO 45001:2018.
The Company revises its targets under SOH&E year on year, and the performance
against these targets are reviewed periodically by senior management. Focused initiatives
involving all stakeholders coupled with management reviews have helped to improve the
SOH&E performance of your Company in the period 2019-20.
K. BOARD & COMMITTEES
Directors
As mentioned in the previous Annual Report, at the 73rd Annual General
Meeting held on 7th August, 2019, Dr. Vishakha N. Desai was re-appointed
as an Independent Director for a period commencing from 8th August, 2019 to 30th
April, 2024 and Mr. Vikram Singh Mehta was also re-appointed as an Independent Director
for a period commencing from 8th August, 2019 to 7th August, 2024.
Further, Mr. Vijay Kumar Sharma was appointed as a Non-Executive Non-Independent
Director representing Life Insurance Corporation of India at the 73rd Annual
General Meeting held on 7th August, 2019, liable to retire by rotation.
Mr. R. K. Kulkarni and Mr. Anupam Puri ceased to hold office as Independent Directors
of the Company from 8th August, 2019, upon completion of their tenure as
approved by the Shareholders at the 68th Annual General Meeting of the Company.
The Board of Directors of the Company on the basis of recommendation by GNRC and after
taking into account the external business environment, business knowledge, acumen and
experience of Mr. Haigreve Khaitan and Ms. Shikha Sharma recommended to the Shareholders
their appointment as Independent Directors. The Shareholders at the 73rd Annual
General Meeting held on 7th August, 2019 approved the appointment of Mr.
Haigreve Khaitan and Ms. Shikha Sharma for a period of 5 years commencing from 8th
August, 2019 to 7th August, 2024 to hold office as Independent Directors of the
Company, not liable to retire by rotation on the Board of the Company.
Independent Directors
The Company has received declarations from all the Independent Directors of the Company
confirming that they meet the criteria of independence as prescribed both under the
Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
The Board is of the opinion that the Independent Directors of the Company hold highest
standards of integrity and possess requisite expertise and experience required to fulfill
their duties as Independent Directors. In terms of Section 150 of the Companies Act, 2013
read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules,
2014, Independent
Directors of the Company have confirmed that they have registered themselves with the
databank maintained by The Indian Institute of Corporate Affairs, Manesar (‘IICA').
The Independent Directors are also required to undertake online proficiency
self-assessment test conducted by the IICA within a period of 1 (one) year from the date
of inclusion of their names in the data bank, unless they meet the criteria specified for
exemption.
The Independent Directors of the Company except Dr. Vishakha N. Desai, are exempt from
the requirement to undertake online proficiency self assessment test. Dr. Vishakha N.
Desai will be undertaking the said test in due course.
Completion of tenure of Independent Directors
Mr. M. M. Murugappan and Mr. Nadir B. Godrej would cease to hold office as Independent
Directors of the Company from 8th August, 2020, upon completion of their tenure
as approved by the Shareholders at the 72nd Annual General Meeting of the
Company held on 7th August, 2018.
Mr. M. M. Murugappan, joined the Board in 1992. He has been Chairman of the Governance,
Nomination and Remuneration Committee and Research & Development Committee and Member
of Audit Committee and Risk Management Committee of the Board.
The Board placed on record its deep appreciation of the invaluable counsel rendered by
Mr. Murugappan to the Company and his contribution in guiding and supporting the
Management during his tenure as an Independent Director on the Board of Directors of the
Company. His inputs were valuable across all functions of the Company, but in particular,
his mentoring of the Board's Research & Development Committee was especially
appreciated by the Company's Management.
Quote from Executive Chairman
"Mr. Murugappan, (fondly known as "Murugu") who joined the Board in 1992
has added great value to its deliberations during his tenure. Being an industrialist
himself, he always brought a commercial mindset to his position. His strong focus on
reliable data, facts and industry trends contributed greatly to the robustness of decision
making while framing, evaluating and executing strategies of your Company.
Several senior leaders were due to retire in 2020. As Chairman of the Governance,
Nomination and Remuneration Committee (‘GNRC'), Murugu played a vital role in the
delicate task of crafting the succession plan. Under his leadership, the Committee planned
and implemented a structured and comprehensive succession-planning program and a rigorous
review for an orderly succession to the Board and to Senior Management positions. The
succession-planning program was approved by the Board and rolled out in December, 2019.
As a Member and later on as Chairman of the Research & Development Committee, he
guided and mentored the Management to focus on product design and development. His
insistence on developing high calibre talent including lateral talent in the Research
& Development Department, helped your Company to remain competitive and keep pace with
the ever changing tastes and preferences of customers in the auto industry.
Murugu is a versatile personality with a rare combination of talent and humility. I am
grateful for his counsel and friendship. Even though his term as a Director is ending, I
count on him for his continuous availability and support. I wish him many years of good
health and happiness."
Mr. Nadir B. Godrej, joined the Board in 1992 and has shared his vast knowledge and
experience with us over many years. He has been a Member of the Governance, Nomination and
Remuneration Committee, Audit Committee, Risk Management Committee, Strategic Investment
Committee and Research & Development Committee of the Board.
The Board placed on record its deep appreciation of the invaluable counsel rendered by
Mr. Godrej to the Company. The 28 years that Mr. Godrej was on the Board of the Company
were critical years in the Company's history.
Mr. Godrej's immense knowledge and financial expertise helped the Board and the Company
navigate through the sweeping changes with boldness while at the same time adhering
strictly to sound financial discipline and ethical and corporate values of the highest
order.
Quote from Executive Chairman
"Mr. Nadir Godrej joined the Board in 1992. His skills as an industrialist and
distinguished business strategist combined with his financial acumen, global mindset and
high standards of ethics and integrity made him a highly valued member of the Board.
His incisive mind enabled him to unearth important insights by quickly cutting through
the clutter and converting it into meaningful analysis. I was particularly impressed by
his ability to quickly aggregate operational and financial data, thus elevating the
discussion to the next level, facilitating strategic decision making.
He has laid down uncompromising standards of ethics. As a member of the Board and
various Committees, Nadir could raise the bar on governance and ethics without losing
sight of commercial aspects. As a Member of the Governance, Nomination and Remuneration
Committee he contributed immensely to shaping the succession-planning exercise carried out
by the Company, which paved way for an orderly Succession to the Board and to Senior
Management positions.
His wise guidance on prudent fiscal management combined with his formidable strategic
skills were invaluable to us. Nadir is a valued and a trusted personal friend and I wish
him peace and happiness in the years to come."
Re-designation and Re-appointment of Dr. Pawan Goenka, Managing Director
Pursuant to the recommendation of the GNRC, the Board at its Meeting held on 20th
December, 2019, approved re-designation of Dr. Pawan Kumar Goenka, Managing Director of
the Company as the ‘Managing Director and Chief Executive Officer' with effect from 1st
April, 2020 till the end of his current term, i.e., upto 11th November, 2020
and his re-appointment as Managing Director of the Company, liable to retire by rotation,
designated as ‘Managing Director and Chief Executive Officer', for a period
commencing from 12thNovember, 2020 to 1 st April, 2021 (both days
inclusive).
Appointment of Whole Time Directors Dr. Anish Shah
Pursuant to the recommendation of the GNRC, the Board at its Meeting held on 20th
December, 2019, appointed Dr. Anish Shah as an Additional Director of the Company with
effect from 1st April, 2020 to hold office up to the date of the 74th
Annual General Meeting (AGM) of the Company scheduled to be held on 7th August,
2020 and subject to the approval of the Members at the said AGM as Whole time Director of
the Company, liable to retire by rotation, designated as ‘Deputy Managing Director
and Group Chief Financial Officer' from 1st April, 2020 to 1st
April, 2021 (both days inclusive) and as ‘Managing Director and Chief Executive
Officer' for a period commencing from 2nd April, 2021 to 31st March,
2025 (both days inclusive).
The Company has received the requisite Notice from a Member in writing proposing his
appointment as a Director of the Company.
Mr. Rajesh Jejurikar
Pursuant to the recommendation of the GNRC, the Board at its Meeting held on 20th
December, 2019, appointed Mr. Rajesh Jejurikar as an Additional Director of the Company
with effect from 1st April, 2020, to hold office up to the date of the 74th
AGM of the Company scheduled to be held on 7th August, 2020 and subject to the
approval of the Members at the said AGM as a Whole Time Director of the Company,
liable to retire by rotation, designated as ‘Executive Director (Auto and Farm
Sectors)' for a period of Five Years from 1st April, 2020 to 31st
March, 2025 (both days inclusive).
The Company has received the requisite Notice from a Member in writing proposing his
appointment as a Director of the Company.
Appointment of Non-Executive, Non-Independent Director Mr. CP Gurnani
Pursuant to the recommendation of the GNRC, the Board at its Meeting held on 20th
December, 2019, appointed Mr. CP Gurnani as an Additional Director of the Company with
effect from 1st April, 2020, to hold office up to the date of the 74th
AGM of the Company scheduled to be held on 7th August, 2020 and thereafter,
subject to the approval of the Members at the said AGM, as a Non-Executive
Non-Independent Director, liable to retire by rotation.
The Company has received the requisite Notice from a Member in writing proposing his
appointment as a Director of the Company.
Retirement by rotation
Mr. Anand G. Mahindra retires by rotation and, being eligible, offers himself for
re-appointment at the 74th Annual General Meeting of the Company scheduled to
be held on 7th August, 2020.
Performance Evaluation
Pursuant to the provisions of the Companies Act, 2013, and the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an
annual evaluation of its own performance and that of its Committees as well as performance
of the Directors individually. Feedback was sought by way of a structured questionnaire
covering various aspects of the Board's functioning such as adequacy of the composition of
the Board and its Committees, Board culture, execution and performance of specific duties,
obligations and governance and the evaluation was carried out based on responses received
from the Directors.
The performance evaluation of Committees was based on criteria such as structure and
composition of Committees, attendance and participation of member of the Committees,
fulfilment of the functions assigned to Committees by the Board and applicable regulatory
framework, frequency and adequacy of time allocated at the Committee meetings to fulfil
duties assigned to it, adequacy and timeliness of the Agenda and Minutes circulated,
comprehensiveness of the discussions and constructive functioning of the Committees,
effectiveness of the Committee's recommendation for the decisions of the Board, etc.
A separate exercise was carried out by the GNRC of the Board to evaluate the
performance of individual Directors. The performance evaluation of the Non-Independent
Directors and the Board as a whole was carried out by the Independent Directors. The
performance evaluation of the Executive Chairman of the Company was also carried out by
the Independent Directors, taking into account the views of the Managing Director and
Non-Executive Directors. The Directors expressed their satisfaction with the evaluation
process. The Independent Directors and Executive Chairman also carried out performance
evaluation of the Managing Director of the Company.
Policies
Your Company has adopted the following Policies which, inter alia, include criteria for
determining qualifications, positive attributes and independence of a Director: (a) Policy
on Appointment of Directors and Senior Management and succession planning for orderly
succession to the Board and the Senior Management; (b) Policy for remuneration of the
Directors, Key Managerial Personnel and other employees.
Policy (a) mentioned above includes the criteria for determining qualifications,
positive attributes and independence of a Director, identification of persons who are
qualified to become Directors and who may be appointed in the Senior Management Team in
accordance with the criteria laid down in the said Policy, succession planning for
Directors and Senior Management, and Policy statement for Talent Management framework of
the Company.
Policy (b) mentioned above sets out the approach to Compensation of Directors, Key
Managerial Personnel and other employees in the Company.
Policies mentioned at (a) and (b) above are available on the website at the following
link: https://www.mahindra. com/resources/FY20/AnnualReport.zip
Familiarisation Programme for Independent Directors/Non-Executive Directors
The Members of the Board of the Company are afforded many opportunities to familiarise
themselves with the Company, its Management and its operations. The Directors are provided
with all the documents to enable them to have a better understanding of the Company, its
various operations and the industry in which it operates. All the Independent Directors of
the Company are made aware of their roles and responsibilities at the time of their
appointment through a formal letter of appointment, which also stipulates various terms
and conditions of their engagement. Executive Directors and Senior Management provide an
overview of the operations and familiarise the new Non-Executive Directors on matters
related to the Company's values and commitments. They are also introduced to the
organisation structure, constitution of various committees, board procedures, risk
management strategies, etc.
Strategic Presentations are made to the Board where Directors get an opportunity to
interact with Senior Management. Directors are also informed of the various developments
in the Company through Press Releases, emails etc.
The Company has developed a web based portal i.e. Board portal, accessible to
all the Directors which, inter alia, contains the following information:
| • Roles, responsibilities and liabilities of Independent Directors under the
Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. |
| • Board Minutes, Agenda and Presentations. |
| • Annual Reports. |
| • Code of Conduct for Directors. |
| • Terms and conditions of appointment of Independent Directors. |
Pursuant to Regulation 25(7) of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("SEBI Listing Regulations"), the Company imparted
various familiarisation programmes for its Directors including review of Investments of
the Company by Strategic Investment Committee, Industry Outlook at the Board Meetings,
Regulatory updates at Board and Audit Committee Meetings covering changes with respect to
the Companies Act, SEBI Listing Regulations, Taxation and other matters, Presentations on
Internal Control over Financial Reporting, Operational Control over Financial Reporting,
Prevention of Insider Trading Regulations, SEBI Listing Regulations, Framework for Related
Party Transactions, Plant Visit, Meeting with Senior Executive(s) of your Company, etc.
Pursuant to Regulation 46, the details required are available on the website of your
Company at the web link: https://www. mahindra.com/resources/FY20/AnnualReport.zip
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, your Directors, based on the
representations received from the Operating Management, and after due enquiry, confirm
that: (a) in the preparation of the annual accounts for the Financial Year ended 31st
March, 2020, the applicable accounting standards have been followed; (b) they had in
consultation with Statutory Auditors, selected accounting policies and applied them
consistently, and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as at 31st
March, 2020 and of the profit of the Company for the year ended on that date; (c) they
have taken proper and sufficient care for the maintenance of adequate accounting records
in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets
of the Company and for preventing and detecting fraud and irregularities; (d) they have
prepared the annual accounts on a going concern basis; (e) they have laid down adequate
Internal Financial Controls to be followed by the Company and such Internal Financial
Controls were operating effectively during the Financial Year ended 31st March,
2020; (f) they had devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively throughout
the Financial Year ended 31st March, 2020.
Board Meetings and Annual General Meeting
A calendar of Meetings is prepared and circulated in advance to the Directors.
During the year 1st April, 2019 to 31st March, 2020, six Board
Meetings were held on: 29th May, 2019, 7th August, 2019, 8th
November, 2019, 20th December, 2019, 8th February, 2020 and 27th
March, 2020. The 73rd Annual General Meeting (AGM) of the Company was held on 7th
August, 2019.
Meetings of Independent Directors
The Independent Directors of your Company meet before the Board Meetings without the
presence of the Executive Chairman or the Managing Director or other Non-Independent
Director or Chief Financial Officer or any other Management Personnel.
These Meetings are conducted in an informal and flexible manner to enable the
Independent Directors to discuss matters pertaining to, inter alia, review of performance
of Non-Independent Directors and the Board as a whole, review the performance of the
Executive Chairman of the Company (taking into account the views of the Executive and
Non-Executive Directors), review the performance of the Company, assess the quality,
quantity and timeliness of flow of information between the Company Management and the
Board that is necessary for the Board to effectively and reasonably perform their duties.
Five Meetings of Independent Directors were held during the year and these meetings
were well attended.
Audit Committee
The Board at its Meeting held on 7th August, 2019 re-constituted the Audit
Committee and appointed Ms. Shikha Sharma as the Member of the Committee with effect from
8th August, 2019. Mr. R. K. Kulkarni ceased to be the Member of the Committee
upon the end of his term. The Committee comprises of four Directors viz. Mr. T. N.
Manoharan (Chairman of the Committee), Mr. Nadir B. Godrej, Mr. M. M. Murugappan and Ms.
Shikha Sharma. All the Members of the Committee are Independent Directors and possess
strong accounting and financial management knowledge. The Company Secretary of the Company
is the Secretary of the Committee.
All the recommendations of the Audit Committee were accepted by the Board.
L. GOVERNANCE
Corporate Governance
Your Company has a rich legacy of ethical governance practices many of which were
implemented by the Company, even before they were mandated by law. Your Company is
committed to transparency in all its dealings and places high emphasis on business ethics.
During the year under review, your Company has been conferred the coveted Golden Peacock
Global Award for Excellence in Corporate Governance for the year 2019 by the Institute of
Directors (IOD) and the National Award for Excellence in Corporate Governance in Listed
segment: Large Category for 2019 by the Institute of Company Secretaries of India. Both
these Awards validate your Company's ‘Best in Class' corporate governance practices
and reflect its transparent and ethical dealings with stakeholders across the entire value
chain.
A Report on Corporate Governance along with a Certificate from the Statutory Auditors
of the Company regarding compliance with the conditions of Corporate Governance as
stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 forms part of the Annual Report.
Vigil Mechanism
The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed
thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 is implemented through the Company's Whistle Blower Policy to enable the Directors,
employees and all stakeholders of the Company to report genuine concerns, to provide for
adequate safeguards against victimisation of persons who use such mechanism and make
provision for direct access to the Chairman of the Audit Committee.
Whistle Blower Policy of your Company is available on the Company's website and
can be accessed at the Web-link: https://www.mahindra.com/resources/FY20/ AnnualReport.zip
Further details are available in the Report on Corporate Governance that forms part of
this Annual Report.
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013
The Company has a detailed policy in place in line with the requirements of The Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Internal Complaints Committees (ICC) have been set up to redress complaints received
regarding sexual harassment and the Company has complied with provisions relating to the
constitution of Internal Complaints Committee under The Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent,
contractual, temporary, trainees) are covered under this Policy. During the year under
review, 2 complaints with allegations of sexual harassment were filed and both were
disposed-off as per the provisions of The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. No complaint was pending as of 31st
March, 2020.
Business Responsibility Report
The ‘Business Responsibility Report' (BRR) of your Company for the year 2019-20
forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015.
Your Company strongly believes that sustainable and inclusive growth is possible by
using the levers of environmental and social responsibility while setting aspirational
targets and improving economic performance to ensure business continuity and rapid growth.
Your Company is committed to leverage ‘Alternative Thinking' to build competitive
advantage in achieving high shareholder returns through customer centricity, innovation,
good governance and inclusive human development while being sensitive to the environment.
Risk Management
Your Company has a well-defined risk management framework in place. The risk management
framework works at various levels across the enterprise. These levels form the strategic
defence cover of the Company's risk management. The Company has a robust organisational
structure for managing and reporting on risks.
Your Company has constituted a Risk Management Committee of the Board which is
authorised to monitor and review risk management plan and risk certificate. The Committee
is also empowered, inter alia, to review and recommend to the Board the modifications to
the Risk Management Policy. Further, the Board has constituted a Corporate Risk Council
comprising the Senior Executives of the Company. The terms of reference of the Council
comprises review of risks and Risk Management Policy on periodic intervals.
Your Company has developed and implemented a Risk Management Policy which is approved
by the Board. The Risk Management Policy, inter alia, includes identification of risks,
including cyber security and related risks and also those which in the opinion of the
Board may threaten the existence of the Company. Risk management process has been
established across the Company and is designed to identify, assess and frame a response to
threats that affect the achievement of its objectives. Further, it is embedded across all
the major functions and revolves around the goals and objectives of the organisation.
M. CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY
Corporate Social Responsibility (CSR)
Your Company continues to focus its Corporate Social Responsibility (CSR) initiatives
to drive positive and sustainable change in building resilient communities. Resilience was
tested at the end of the Financial Year 2020 marked by the COVID-19 crisis. The crisis is
testing the world's capability to respond to a pandemic at a time when the world is
already grappling with acute inequalities based on gender, class, access to livelihood
opportunities, amongst others. With the socio economic impacts of the pandemic hitting
vulnerable and marginalised groups particularly hard, there was a need for businesses to
step up to support communities in need. Swiftly responding to this, your Company extended
its support to the efforts of the Government machinery by responding to the crying need
for products required to fight the COVID crisis. Accordingly, a decision was taken to use
the Company's manufacturing facilities to make personal protection equipment e.g. low-cost
innovative ventilators, face masks and face shields.
Further, your Company set up a COVID-19 relief fund under the aegis of Mahindra
Foundation, to provide relief to those most severely affected by the pandemic e.g. small
businesses and traders, workers in the supply chain, and daily wage labourers. Your
Company also contributed Rs. 20 crores to the ‘Prime Minister's Citizen Assistance
and Relief in Emergency Situations Fund' (PM CARES FUND). Through these initiatives, your
Company has not only provided support to the Government agencies but has reached out to a
large section of the poor and vulnerable by providing immediate relief. While continuing
work towards addressing the COVID-19 crisis, in the next Financial Year, your Company will
in accordance with its CSR vision, focus its support on the constituencies of girls, youth
and farmers. This will be done through its ongoing CSR programs in the domains of
education, public health and environment. Below are some of the ongoing CSR programs that
your Company focused on during the Financial Year 2020 and will continue supporting the
following:
– Project Nanhi Kali supported the education of over 1,74,681
underprivileged girls across India. Of these, 78,437 girls at secondary school level were
provided access to digital tablets preloaded with educational content. The Mahindra Group
supported the education of 67,337 Nanhi Kalis of which 14,462 were supported by your
Company.
– The Mahindra Pride Schools, trained 6,045 youth from socially and economically
disadvantaged communities across 9 locations and 100% of them were placed in lucrative
jobs. Your Company supported the Mahindra Pride Schools in Chandigarh, Srinagar, Varanasi,
Hyderabad and two in Chennai which trained 3,641 youth in Financial Year 2020. Further,
the Mahindra Pride Classrooms (MPC) provided training to 1,01,391 youth from 856 ITIs,
Polytechnics, Arts and Science Colleges across 16 states through the Mahindra Pride
Classrooms module. Your Company supported the training of 71,248 MPC students.
– Over 3,383 students benefitted through a variety of Scholarship Programs. These
ranged from providing opportunities to youth from low income group families to undergo
diploma courses at vocational education institutes, to enabling meritorious students to
pursue their post graduate studies at reputed universities overseas, to allowing
meritorious and deserving students to study at the Mahindra United World College in Pune.
– Through Mahindra Hariyali, the Mahindra Group planted 1.52 million trees, which
contributed to building green cover and protecting biodiversity in the country. Of these,
1.13 million trees were planted in the Araku valley, which besides greening the
environment also provided livelihood support to tribal farmers growing coffee and fruit
bearing trees in this region. Of the 1.52 million, the plantation of 1.32 million trees
was done by your Company. The average survival rate of trees planted was 96% in the Araku
Valley and above 80% for other locations.
– The Integrated Water Management Program (IWMP) is a Public Private Partnership
(PPP) with Government of Madhya Pradesh at Bhopal and with National Bank for Agriculture
and Rural Development (NABARD) at Hatta. In Financial Year 2020, the project benefitted
38,447 people in 48 villages, as increased water availability led to improved agricultural
productivity and increased farmer income.
– Through the Wardha Farmer Family Project and Krishi Mitra Project your Company
continued to support small and marginal farmers by training them in effective farming
practices including soil health, crop planning, creating model farms with bio-dynamic
farming practices, and increasing the water table with a view to increasing crop
productivity.
– Rise for Safe Roads: The first of its kind in India ‘Road Safety' project
aims to make the Mumbai Pune Expressway a near ‘Zero Fatality Corridor' by 2021. The
interventions are guided by the "4E" principle i.e. Engineering, Enforcement,
Education and Emergency Response. In addition, long haul truck drivers were trained
through the Anticipatory Driving and Action Prevention Training (ADAPT™) program.
– ESOPs (Employee Social Options) - In Financial Year 2020, 91,943 ESOPs
volunteers from the Mahindra Group contributed 6,93,305 person-hours for various social
initiatives. Of these, Company's 22,877 employees contributed 1,63,818 person-hours giving
back to the Society.
Mahindra continues its work on building strong communities that are equipped to cater
to its most vulnerable sections of Society. During the last Financial Year, as
acknowledgment for its CSR initiatives impact, your Company received the following awards
(from the Ministry of Corporate Affairs, GOI) and recognition:
| • Winner of the ‘National CSR Award 2018' in the category ‘Corporate
Award for Excellence in CSR'. |
| • Winner of the ‘National CSR Award 2018' in the category ‘Contribution
to National Priority Area Agriculture and Rural Development' (For Project Integrated
Watershed Management in MP). |
| • Honourable Mention for the ‘National CSR Award 2018' in the category
‘Contribution to National Priority Area Education' (For Project Nanhi Kali). |
| • Mahindra Group was recognised in the Limca Book of Records for the India Record
of "Most trees planted". |
CSR Policy
The Corporate Social Responsibility Committee had formulated and recommended to the
Board, a Corporate Social Responsibility Policy (CSR Policy) which was subsequently
adopted by it and is being implemented by the Company. The CSR Policy including a brief
overview of the projects or programs undertaken can be accessed at the Company's website
through the Web-link: https:// www.mahindra.com/resources/FY20/AnnualReport.zip
CSR Committee
The Board at its Meeting held on 7th August, 2019 re-constituted the
Corporate Social Responsibility Committee. Mr. R. K. Kulkarni ceased to be the Member of
the Committee upon end of his term. The CSR Committee comprises of Dr. Vishakha N. Desai
(Chairperson), Mr. Anand G. Mahindra, Dr. Pawan Goenka and Mr. Vikram Singh Mehta. The
Committee, inter alia, reviews and monitors the CSR as well as Sustainability activities.
During the year under review, your Company spent Rs. 126.59 crores on CSR activities.
The amount equal to 2% of the average net profit for the past three financial years
required to be spent on CSR activities was Rs. 106.56 crores. The detailed Annual Report
on the CSR activities undertaken by your Company in Financial Year 2020, is annexed
herewith marked as Annexure VI.
Sustainability
During the year under review, the 12th Sustainability Report for the year
2018-19 was released. The Report was externally assured by KPMG and prepared in accordance
with the GRI Standards - Core option.
By implementing Mahindra Sustainability Framework, your Company continued the focus on
the Environmental, Social and Governance (ESG) parameters ensuring a common language for
sustainability across the Group. This framework defines sustainability as "Building
enduring businesses by rejuvenating the environment and enabling stakeholders to
rise". Under the three pillars People, Planet and Profit of Sustainability Framework;
various actions have been implemented across the Group.
Your Company has received an approval of Science Based Target, a commitment to restrict
average global temperature rise in alignment of Paris Climate Change Agreement. As an
environmental best practice, the Company is actively working towards making the locations
certified for Zero Waste to Landfill (ZWL). During the year, Mahindra Research Valley,
Spares Business Unit - Kanhe, Swaraj Plant 2, Mahindra Towers - Worli and IT Center
Building at Kandivli got certified.
Group Sustainability Council conducted its 50th meeting during the year. Ms.
Renata Lok- Desallien, United Nations resident coordinator of India was the special guest.
Mr. Anand G. Mahindra, Executive Chairman of your Company who is also a Board member of
the United Nations Global Compact launched report of the High-Level Commission on Carbon
Pricing and Competitiveness at the United Nation's Climate Action Summit in New York on 23rd
September, 2019.
The Sustainability performance for your Company for the Financial Year 2019-20 will be
elaborated in detail in the GRI Report which is under preparation and will be ready for
release shortly.
Your Company was recognised for its leadership position on the ESG dimensions during
the year under review, by way of:
| • Recognising as one of the India Climate Change Rising Stars 2019 in Carbon
Disclosure Project (CDP). |
| • Receiving Bronze medal in S & P Global Sustainability yearbook 2020 and
part of Dow Jones Sustainability Emerging Market Index. |
| • Igatpuri plant winning the ‘Sustainable Factory of the Year Award' and
‘Jury award for Zero Waste to Landfill' at India Sustainability Leadership Summit
2019. |
| • Winning the prestigious Business Vision ‘Best Corporate Governance –
India 2019' Award. |
| • Winning the prestigious Golden Peacock Global Award for Excellence in Corporate
Governance for 2019. |
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information pertaining to conservation of energy, technology absorption, foreign
exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013
read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as Annexure VII
and forms part of this Report.
N. SECRETARIAL
Share Capital
The issued, subscribed and paid-up Share Capital of the Company stood at Rs. 621.60
crores as at 31st March 2020 comprising of 1,24,31,92,544 Ordinary (Equity)
Shares of Rs. 5 each fully paid-up. There was no change in Share Capital during the year
under review.
Compliance with the provisions of Secretarial Standard 1 and Secretarial Standard 2
The applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of
the Board of Directors' and ‘General Meetings', respectively, have been duly complied
by your Company.
Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with
Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the
Annual Return as on 31st March, 2020 in Form No. MGT-9 is attached as Annexure
VIII and forms part of this Report.
The Annual Return of the Company has been placed on the website of the Company and can
be accessed at https://www.mahindra.com/resources/FY20/AnnualReport.zip
O. POLICIES
The details of the Key Policies adopted by the Company are mentioned at Annexure IX to
the Board's Report.
P. GENERAL
Neither the Executive Chairman nor the Managing Director of the Company received any
remuneration or commission from any of the subsidiary of your Company. Your Directors
state that no disclosure or reporting is required in respect of the following items as
there were no transactions/events on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of Shares (Including Sweat Equity Shares) to employees of the Company under
any Scheme save and except Employees Stock Option Schemes (ESOS) referred to in this
Report.
3. Significant or material orders passed by the Regulators or Courts or Tribunals which
impact the going concern status and the Company's operation in future.
4. Voting rights which are not directly exercised by the employees in respect of shares
for the subscription/ purchase of which loan was given by the Company (as there is no
scheme pursuant to which such persons can beneficially hold shares as envisaged under
Section 67(3) (c) of the Companies Act, 2013).
5. There has been no change in the nature of business of your Company.
| For and on behalf of the Board |
| ANAND G. MAHINDRA |
| Executive Chairman |
| Mumbai, 12th June, 2020 |