Board’s Report - Mahindra Group

1 Board s ReportMahindra & Mahindra Limited Company OverviewBoard s ReportManagement Discussion and AnalysisCorporate GovernanceBusiness Responsibility ReportStandalone AccountsConsolidated Accounts19 Dear ShareholdersYour Directors present their Report together with the audited financial statements of your Company for the year ended31st March, FINANCIAL AND OPERATIONAL HIGHLIGHTS(Rs. in crores)2016 2015 Gross Income44,46141,481 Less: Excise Duty on Sales 2,722 2,18 8 Net Income41,739 39,293 Profit before Depreciation, Finance Costs, Exceptional items and Taxation5,425 5,022 Less: Depreciation/Amortisation 1,10 9 975 Profit before Finance Costs, Exceptional items and Taxation4,3164,047 Less: Finance Costs 155 214 Profit before Exceptional items and Taxation4 ,1613,833 Add: Exceptional items69336 Profit before Taxation4,2304 ,169 Less: Provision for Tax Current Tax (including MAT credit entitlement) 806 743 Less.

2 Provision for Tax Deferred Tax (Net) 257 105 Profit for the year3,1673,321 Balance of profit for earlier years 14,750 12,325 Less: Transfer to Debenture Redemption Reserve317 Add: Transfer from Debenture Redemption Reserve100 Profits available for appropriation18,01415,629 Add: Reversal of income tax on dividend paid for 2013-14 3 Less: Proposed Dividends745745 Income-tax on Proposed Dividend96102 Depreciation as per transitional provision as specified in Schedule II of the Companies Act, 2013 For 2014-15 [Net of Tax of Rs. crores] 35 Income-tax on Dividend Paid for 2014 -15* Balance carried forward17,17314,750* denotes amounts less than Rs.

3 50 lakhsThe fact that India s economic recovery remained on course throughout the Financial Year 2015-16, despite an extremely weak and volatile global operational environment, is impressive and bears testimony to the policy repair that has been wrought since the near crisis experienced in May 2013. Aided by subdued oil and metal prices and supported by positive policy actions, the country s key macroeconomic indicators inflation, fiscal deficits and current account balances have witnessed a remarkable turnaround and consolidated further through the year. The string of financial storms that hit global markets in 2015, engendered by uncertainty surrounding US monetary policy actions, rising risks of a hard-landing in China and the unfolding economic and geopolitical crises in Europe and the Middle East, resulted in portfolio flows to India, and other emerging markets, turning negative this fiscal.

4 However, consolidating macros, coupled with a steady improvement in policy and regulatory environment, led to a 28% increase in foreign direct investment flows to the country, providing it with a much needed buffer. Thus, even as portfolio flows reversed, the surge in FDI inflows allowed the central bank to grow international reserves by close to $20 billion by year end, strengthening the economy s ability to absorb future external shocks without de-stabilizing. Growth momentum, however, remained disappointingly modest and patchy through most of the year. With external demand remaining sluggish, rural incomes battered by four consecutively weak cropping seasons and domestic private investments constrained by excess capacities and rising balance sheet stress, urban consumption and public capital expenditures were virtually the only sources of demand that picked up pace this fiscal.

5 Economic activity, as a consequence, remained far feebler through 2015-16 than was anticipated at the start of the , even amidst this scenario, your Company recorded an increase of in net income at Rs. 41,739 crores in the year under review as against Rs. 39,293 crores in the previous Profit for the year before Depreciation, Finance Costs, Exceptional items and Taxation recorded an increase of at Rs. 5,425 crores as against Rs. 5,022 crores in the previous Board s ReportAnnual Report 2015-1620year. Profit after tax declined by at Rs. 3,167 crores as against Rs. 3,321 crores in the previous Company continues with its rigorous cost restructuring exercises and efficiency improvements which have resulted in significant savings through continued focus on cost controls and process efficiencies thereby enabling the Company to maintain profitable growth in the current economic material changes and commitments have occurred after the closure of the Financial Year 2015-16 till the date of this Report , which would affect the financial position of your ReviewAutomotive Division.

6 Your Company s Automotive Sector recorded total sales of 4,94,096 vehicles (4,37,911 four-wheelers and 56,185 three-wheelers) as against a total of 4,64,850 vehicles (4,05,446four wheelers and 59,404 three-wheelers) in the previous year, registering a growth of in vehicle the domestic sales front, your Company sold a total of 4,58,065 vehicles as compared to 4,34,654 vehicles in the previous year registering a growth of the Passenger Vehicle segment, your Company sold 2,36,307 vehicles [including 2,22,324 Utility Vehicles (UVs), 10,588 Vans and 3,395 Cars] which is a growth of over the previous year s volume of 2,23,968 vehicles [including 2,06,837 UVs, 13,947 Vans and 3,184 Cars].

7 In the commercial vehicle segment, your Company sold1,66,783 vehicles [including 27,834 vehicles < 2T GVW, 1,26,819 vehicles between GVW, 6,425 LCVs in the LCV > segment and 5,705 HCVs (Heavy Commercial Vehicles)] registering a growth of over the previous year s volume of 1,53,922 commercial vehicles [including 15,255 vehicles < 2T GVW, 1,29,755 vehicles between GVW, 5,413 LCVs in the LCV > segment and 3,499 HCVs].In the three-wheeler segment, your Company sold 54,975 three-wheelers registering a decline of over the previous year s volume of 56,764 key highlight for the year under review was the launch of fourteen new products by your Company.

8 These product launches were across product categories and have helped strengthen your Company s presence across industry the year under review, the Indian automotive industry (except 2W) grew and all segments of the industry (except LCV < 2T and 3W Goods) posted growth. This growth is much more broad-based as compared to the patchy growth in the Financial Year 2014-15, where many segments continued to be in the negative after the low of Financial Year 2013-14. In Financial Year 2015-16, the Passenger vehicle segment reported a growth of which was largely driven by new launches - both in Car and UV segments.

9 The commercial vehicle segment grew after three consecutive years of decline. Within the commercial vehicles, the < GVW segment continued to face difficult times due to slowdown in Agri incomes and finance Company s UV sales volume grew by , and your Company continued leadership of the domestic UV market by posting a market share of During this year, Bolero retained the title of India s largest selling SUV for the10th consecutive year, and the XUV500 continued to be the customer s choice in the premium UV segment with over 36,000 sales in the year. The highlight for the year under review was the launch of two all new UVs, the TUV300 and KUV100 in the compact UV segment.

10 Launched in September, 2015, the TUV300 is inspired by the design of a battle tank that lends it a tough, bold and stylish, true-blue SUV character. Despite the tough appearance of a true blue SUV on the outside, the TUV300 is stylish and extremely comfortable on the inside and comes loaded with a host of technology and safety features. The KUV100 which was launched in January, 2016, is designed to appeal to the cool and trendy, with its Aggressive Design with Imposing SUV Stance. Powered by the all new mFALCON family of petrol and diesel engines, the KUV100 marks Mahindra s entry into the petrol space.