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Ceps 3 � D:\Sales\Joe Rego\Mahindra & Mahindra\Index.p65 � vk17-6/Sagam/17-6/ravi/18-6

MANAGEMENT BOARDAnand G. MahindraVice-Chairman & Managing DirectorK. J. DavasiaPresident � Farm Equipment SectorBharat DoshiPresident � Trade & Financial Services SectorAlan E. DurantePresident � Automotive SectorA. K. NandaPresident � Infrastructure Development SectorUlhas N.YargopPresident � Telecom & Software SectorUday Y. PhadkeExecutive Vice President � Finance, Accounts & Legal AffairsAnjanikumar ChoudhariExecutive Vice-Chairman � Bristlecone Ltd.R. R. KrishnanManaging Director � Mahindra Intertrade Ltd.Hemant LuthraExecutive Vice President � Corporate StrategyRaghunath MurtiExecutive Vice President � Business DevelopmentRajeev DubeyExecutive Vice President � Human Resources & Corporate Services

COMMITTEES OF THE BOARDAudit CommitteeDeepak S. ParekhChairmanNadir B. GodrejR. K. KulkarniV. K. Chanana

Remuneration/Compensation CommitteeNarayanan VaghulChairmanKeshub MahindraNadir B. GodrejM.M.Murugappan

Share Transfer and Shareholders/Investors Grievance CommitteeKeshub MahindraChairmanAnand G. MahindraR. K. PitamberBharat DoshiA. K. NandaR. K. Kulkarni

Loans & Investment CommitteeAnand G. MahindraK. J. DavasiaBharat DoshiAlan E. DuranteA. K. NandaR. K. Kulkarni

Research & Development CommitteeA. S. GangulyChairmanAnand G. MahindraK. J. DavasiaBharat DoshiAlan E. Durante

BOARD OF DIRECTORS

Keshub MahindraChairmanAnand G. MahindraVice-Chairman & Managing DirectorR. K. PitamberDeepak S. ParekhNadir B. GodrejM. M. MurugappanDavid FriedmanV. K. ChananaNominee of Unit Trust of IndiaR. N. BhardwajNominee of Life Insurance Corporation of IndiaNarayanan VaghulA. S. GangulyR. K. KulkarniAnupam PuriK. J. DavasiaExecutive DirectorBharat DoshiExecutive DirectorAlan E. DuranteExecutive DirectorA. K. NandaExecutive Director & Secretary

3

DIRECTORS� REPORT TO THE SHAREHOLDERS

Your Directors present their Report together with the audited accounts of your Company for the year ended 31st March,2004.

Financial Highlights

(Rs. in lakhs)

2004 2003

Gross Income 600123 459679

Less : Excise Duty 95543 78501

Net Income 504580 381178

Profit before Depreciation, Interest, Provision for Contingencies,Exceptional items and Taxation 62892 39559

Less : Depreciation /Amortisation 16520 16544

Profit before Interest, Provision for Contingencies,Exceptional items and Taxation 46372 23015

Less : Interest (Net) 5159 8690

Profit before Provision for Contingencies, Exceptional items and Taxation 41213 14325

Less : Provision for Contingencies 342 387

Profit before Exceptional items and Taxation 40871 13938

Add : Exceptional items 2948 5765

Profit before Taxation 43819 19703

Less : Provision for tax � Current tax 6350 1230

Less : Provision for tax � Deferred tax (Net) 2615 3920

Profit for the year 34854 14553

Balance of profit for earlier years 42394 33306

Add : Transfer from Debenture Redemption Reserve 12315 3233

Profit available for appropriation 89563 51092

Less : General Reserve 3500 1500

Dividend paid for the previous year[Rs.0.21 lakhs (previous year : Rs. Nil)]

Income-tax on dividend paid[Rs.0.03 lakhs (previous year : Rs. Nil)]

Proposed Dividend 10441 6381

Income-tax on Proposed Dividend 1338 817

Balance carried forward 74284 42394

4

Performance Review

Your Company during the year continued its leadership

position in both its major businesses i.e. utility vehicles

and tractors.

The Automotive Sector of your Company continued to be

the dominant utility vehicle manufacturer in India and

also continued to make inroads into the large three wheeler

market. During the year under review, your Company

produced 99,874 vehicles (i.e. utility vehicles and light

commercial vehicles) and 17,796 three wheelers as against

76,809 vehicles and 10,279 three wheelers in the previous

year. Sales of vehicles and three wheelers were significantly

higher by 30% and 73% respectively as the Company

sold 1,00,043 vehicles and 17,356 three wheelers during

the year as compared to the sales of 76,861 vehicles and

10,029 three wheelers in the previous year. The Company

exported 1,607 vehicles during the year under review

(previous year 1,061 vehicles). There was a notable growth

in the sales of Spare parts at Rs.172.73 crores (including

exports Rs.39.89 crores), as compared to Rs.106.73 crores

(including exports Rs.15.36 crores) in the previous year.

The favorable monsoon and credit availability on better

terms arrested the decline of tractor industry and set it

for recovery. In line with the trends, the Farm Equipment

Sector of your Company produced 50,102 tractors as

against 45,183 tractors produced in the previous year.

Sales of tractors were higher by 5% as the Company

sold 49,576 tractors during the year as compared to the

sales of 47,028 tractors in the previous year. It continued

its thrust on exports and maintained its market leadership

position for the 21st consecutive year.

The Tractor Division of your Company won the coveted

DEMING PRIZE making it the only tractor

manufacturing company in the world to secure this prize

recognising the Company�s efforts towards establishing

world class quality control measures in every sphere of

its business.

The profit for the year before Depreciation, Interest,

Provision for Contingencies, Exceptional items and

Taxation was Rs.628.92 crores as compared to Rs.395.59

crores in the previous year registering an increase of

approximately 59%. Profit after tax was Rs.348.54 crores

as against Rs.145.53 crores in the previous year recording

an increase of approximately 139%. Your Company

continues with its rigorous cost restructuring exercises

which over a period of time will result in significant savings

through value engineering, economizing, optimum plant

working and right sizing in almost all areas.

A detailed analysis of the Company�s performance is

contained in the Management Discussion and Analysis

Report, which forms part of this Annual Report.

Dividend

Your Directors have recommended a dividend at 90% (Rs.9

per share). The dividend, together with the tax on

distributed profit, will absorb a sum of Rs.117.79 crores

(previous year Rs.71.98 crores) and will be paid to those

shareholders whose names stand registered in the books

of the Company as on the book closure date.

5

Finance

During the year, the Company bought back high cost

debentures, and prepaid rupee loan aggregating about

Rs.373 crores. The Company refinanced a part of these

debentures/loan by raising about Rs.92 crores through

low cost foreign currency loans resulting in savings in

interest costs. The Company during the year also prepaid

Sales Tax loan of about Rs.46 crores at an attractive

discount rate. Further, the Company availed of new

derivative instruments to reduce interest cost on the debt

portfolio.

CRISIL Limited has reaffirmed the credit rating �AA�

assigned to the Company�s outstanding debentures. The

rating indicates high safety on timely payment of interest

and principal. Fitch Ratings India Private Limited (FITCH)

has also reaffirmed the �AA+� rating assigned by it to

the Company�s outstanding debentures. This rating indicates

high credit quality and negligible risk factors. The Consortium

of bankers continues to rate the Company as Prime customer

and extends facilities/services at prime pricing.

During the year the Company further implemented its new

initiative in channel management by expanding its co-

branded retail finance solutions for its utility vehicles and

tractors. This initiative has resulted in affordable credit

to its customers, especially to farmers and rural self

employed. During the year, your Company has implemented

CFM module of SAP in Treasury � one of the first

corporates to do so in India � to ensure integration in

financial transactions, efficiency in processes and value

added MIS for decision making.

In May 2004 of the current financial year your Company

successfully completed its USD 100 million Foreign

Currency Convertible Bond (FCCB) offering to

international investors. The issue was well received by

global investors and priced at Zero coupon for a five year

tenure with a redemption price of 117.50% to yield 3.25%

till maturity. The conversion price was fixed at Rs.647.05,

which was at 37% premium to the then prevailing share

price of Rs.472.30. The issue proceeds will be used to

finance capital expenditure, organic as well as inorganic

growth and for such other purposes as may be permitted

from time to time under applicable laws.

Scheme of Arrangement

As a part of rationalisation of its multi-tier holding

structure, your Company had merged three subsidiaries

with itself during the accounting year ended on 31st March,

2002. In furtherance of this process of rationalisation,

the Company has, during the year under review,

amalgamated two of its wholly owned subsidiaries viz.,

Mahindra Eco Mobiles Limited (MEML) and Mahindra

Information Technology Services Limited (MITS) with

itself, with effect from 1st July, 2003. The amalgamation

was approved by the High Court of Judicature at Bombay.

In the process of amalgamation, investments held by MITS

in subsidiaries of the Company have been restated at their

respective net asset values. The surplus of around Rs.118

6

crores that has arisen on restatement of such investments

has been transferred to �Investment Fluctuation Reserve�

Account which will be utilized for providing diminution in

value of and /or loss on sale of Investments and certain

other assets of the Company. Also, as an integral part of

the Scheme, the Company has written off the amount of

Investments in the amalgamating companies and loans

and/or advances due from the amalgamating companies,

amounting to Rs. 35.23 crores, against the Share Premium

Account of the Company.

Stock Options

On the recommendation of the Remuneration/Compensation

Committee of your Company, the Trustees of the Mahindra

& Mahindra Employees� Stock Option Trust have granted

1,15,880 Stock Options to Eligible Employees during the

year under review.

Details required to be provided under the Securities and

Exchange Board of India (Employee Stock Options Scheme

and Employee Stock Purchase Scheme) Guidelines, 1999

are set out in Annexure I to this Report.

Industrial Relations

Industrial Relations have generally remained cordial

throughout the year. The Management Discussion and

Analysis gives an overview of the developments in Human

Resources/Industrial Relations during the year.

The Zaheerabad plant in Andhra Pradesh was nominated

the �Best Management for outstanding contribution for

maintenance of Industrial Relations and Labour Welfare�

by the Government of Andhra Pradesh.

Safety, Health and Environmental Performance

The Company pursues its various safety improvement

measures and an updated Health & Safety Policy was

released during the year. The Safety performance has

improved further with a very low accident rate and

minimum instances of Man days lost due to reportable

accidents. Environment audits were conducted in line with

the Policy of good corporate citizenship and to maintain

the ecological balance in and around the Company�s

manufacturing plants. Environmental Improvement

Projects are regularly implemented to improve the

surroundings. Safety standards were further improved by

conducting health awareness program, bi-annual medical

checkup for employees and additional lessons in total well

being for those working in high risk areas. The statutory

requirements specified by the Pollution Control Boards

were fully complied. Your Company is accredited with

internationally recognised Environment Management

System and its Auto and Tractor Divisions location-wise

are awarded ISO-14001 and ISO-14000 certification

respectively.

Directors

Life Insurance Corporation of India nominated Mr. R. N.

Bhardwaj to the Board in place of Mr. Baldev Raj Gupta

with effect from 29th April, 2004. Consequently Mr. Gupta

7

ceased to be a member of the Audit Committee of the

Company. Mr. V. K. Chanana has been appointed to the

Audit Committee of the Board in place of Mr. Baldev Raj

Gupta.

The Board has placed on record its sincere appreciation

of the valuable services rendered by Mr. Baldev Raj Gupta

during his tenure as a Director.

Mr. R. K. Pitamber, Dr. A. S. Ganguly, Mr. R. K. Kulkarni,

Mr. Anupam Puri and Mr. Alan E. Durante retire by rotation

and, being eligible, offer themselves for re-appointment.

Directors� Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956,

your Directors, based on the representations received from

the Operating Management, and after due enquiry, confirm

that:

(i) in the preparation of the annual accounts, the

applicable accounting standards have been followed;

(ii) they have, in the selection of the accounting policies,

consulted the Statutory Auditors and these have been

applied consistently and reasonable and prudent

judgments and estimates have been made so as to

give a true and fair view of the state of affairs of the

Company as at 31st March, 2004 and of the profit of

the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the

maintenance of adequate accounting records in

accordance with the provisions of the Companies

Act, 1956 for safeguarding the assets of the Company

and for preventing and detecting fraud and other

irregularities;

(iv) the annual accounts have been prepared on a going

concern basis.

Subsidiary Companies

With a view to expanding its business footprint in the

international IT services business, and particularly in the

US, your Company had explored options to strategically

merge the operations of some of its IT services subsidiaries

with an overseas company having an established brand

and client service track record. Bristlecone Inc., USA

was identified as a suitable partner which would enable

the various IT services subsidiaries of your Company

operating under the Mahindra Consulting Group (MC) to

significantly expand their business activities at a global

level. The consolidation would bring together entities that

complement each other�s strengths and would offer

significant synergy in business development by combining

the European and Asia-Pacific market presence of MC

with the extensive presence of Bristlecone Inc.

The transaction envisages your Company holding a majority

stake in Bristlecone Limited, Cayman Islands, a company

established for the consolidation of operations between

MC and Bristlecone Inc., for a consideration partly by

cash investment not exceeding US$ 7 million and partly

8

by swapping your Company�s 100% shareholding in

Mahindra Consulting Limited, Mahindra Intertrade (UK)

Limited and Mahindra Consulting Inc. for allotment of

Ordinary Shares, Preference Shares and Warrants in

Bristlecone Limited whereby your Company�s subsidiaries

Mahindra Consulting Limited (alongwith its subsidiaries

viz. Mahindra Consulting (Singapore) Pte. Limited and

Mahindra Consulting GmbH), Mahindra Consulting Inc.

USA and Mahindra Intertrade (UK) Limited would become

wholly owned subsidiaries of Bristlecone Limited.

Consequent to the above and subsequent to the year end,

Bristlecone Limited, Cayman Islands, has become a

subsidiary of your Company. Bristlecone Inc. which is a

subsidiary of Bristlecone Limited has also become a

subsidiary of your Company.

As mentioned elsewhere in this Report, Mahindra

Information Technology Services Limited and Mahindra

Eco Mobiles Limited, subsidiaries of your Company, were

merged with the Company with effect from 1st July, 2003,

pursuant to the approval of the shareholders of the

respective companies and of the High Court of Judicature

at Bombay. The necessary formalities having been

concluded, these companies have ceased to be subsidiaries

of your Company.

During the year under review, Mahindra Holidays & Resorts

Inc., USA (through Mahindra Holidays & Resorts India

Limited) and Mahindra Consulting GmbH (through

Mahindra Consulting Limited) became subsidiaries of your

Company.

Subsequent to the year-end, Mahindra Insurance Brokers

Limited became subsidiary of Mahindra & Mahindra

Financial Services Limited which is a subsidiary of your

Company.

The Statement pursuant to section 212 of the Companies

Act, 1956 containing details of the Company�s subsidiaries

is attached.

The Consolidated Financial Statements of the Company

and its subsidiaries, prepared in accordance with

Accounting Standard 21 prescribed by The Institute of

Chartered Accountants of India, form part of the Annual

Report and Accounts.

The Company has made an application to the Central

Government seeking exemption from attaching the

accounts, etc., of its subsidiary companies with the Balance

Sheet of the parent company. If in terms of the approval

granted by the Central Government, the accounts, etc., of

the subsidiary companies are not required to be attached

with the Balance Sheet of the parent company, these

documents will be submitted on request to any member

wishing to have a copy, on receipt of such request by the

Assistant Company Secretary at the Registered Office of

the Company.

Auditors

Messrs. A. F. Ferguson & Co., Chartered Accountants,

retire as auditors of the Company and have given their

consent for re-appointment. The shareholders will be

9

required to elect auditors for the current year and fix

their remuneration.

As required under the provisions of section 224 of the

Companies Act, 1956, the Company has obtained a written

certificate from the above Auditors proposed to be re-

appointed to the effect that their re-appointment, if made,

would be in conformity with the limits specified in the

said section.

Public Deposits and Loans/Advances

Out of the total 21,520 deposits of Rs.3954.47 lakhs

from the public and shareholders as at 31st March, 2004,

224 deposits amounting to Rs.29.06 lakhs, which had

matured, had not been claimed as at the end of the financial

year. Since then, 127 of these deposits of the value of

Rs.15.59 lakhs have been claimed.

The particulars of loans/advances and investment in its

own shares by listed companies, their subsidiaries,

associates, etc., required to be disclosed in the annual

accounts of the Company pursuant to Clause 32 of the

Listing Agreement are furnished separately.

Current Year

During the period 1st April, 2004 to 30th May, 2004,

20,170 vehicles were produced as against 15,082 vehicles,

and 19,572 vehicles were despatched as against 14,700

vehicles during the corresponding period in last year. 9,817

tractors were produced and 9,460 tractors despatched

during the same period as against 7,596 tractors produced

and 7,153 tractors despatched during the corresponding

period in the previous year.

The operations for the current year both in the Automotive

and Farm Equipment Sectors look promising and if the

economy continues to grow at the levels that are being

predicted, the current year should augur well for your

Company.

Energy Conservation, Technology Absorption and

Foreign Exchange Earnings and Outgo

Particulars required to be disclosed under the Companies

(Disclosure of Particulars in the Report of Board of

Directors) Rules, 1988 are set out in Annexure II to this

Report.

Particulars of Employees

The Company had 170 employees who were in receipt of

remuneration of not less than Rs.24,00,000 during the

year ended 31st March, 2004 or not less than Rs.2,00,000

per month during any part of the said year. However, as

per the provisions of section 219(1)(b)(iv) of the Companies

Act, 1956, the Directors� Report being sent to the

shareholders does not include this Annexure. Any

shareholder interested in obtaining a copy of the Annexure

may write to the Assistant Company Secretary at the

Registered Office of the Company.

For and on behalf of the Board

KESHUB MAHINDRAChairman

Mumbai, 31st May, 2004

10

ANNEXURE I TO THE DIRECTORS� REPORT FOR THE YEAR ENDED 31ST MARCH, 2004Information to be disclosed under the Securities and Exchange Board of India (Employee Stock Options Scheme andEmployee Stock Purchase Scheme) Guidelines, 1999:

(a) Options granted 20,93,896(b) The pricing formula The Options were priced based on the average of the daily

high and low of the prices for the Company�s equity sharesquoted on The Stock Exchange, Mumbai during the fifteendays preceding the date on which the Remuneration/Compensation Committee decided to recommend, to theMahindra & Mahindra Employees� Stock Option Trust,the grant of Options to Eligible Employees.

(c) Options vested 18,47,709 Options stand vested on 31st March, 2004.(d) Options exercised 5,78,678(e) The total number of shares arising as a result of 5,78,678 equity shares of Rs.10 each. These were

exercise of option transferred from the Mahindra & Mahindra Employees�Stock Option Trust (Trust) to the Eligible Employees.

(f) Options lapsed 1,38,082(g) Variation of terms of options Nil(h) Money realised by exercise of options Rs.3,41,42,002. This amount was received by the Trust.(i) Total number of options in force 13,77,136(j) Employee-wise details of options granted to:

(i) Senior managerial personnel As per statement attached(ii) Any other employee who receives a grant in any Mr. Raghunath Murti � 15,000 Options

one year of option amounting to 5% or more of Mr. Hemant Luthra � 15,240 Optionsoption granted during that year Mr. Ramesh Iyer � 25,920 Options

(iii) Identified employees who were granted option, duringany one year, equal to or exceeding 1% of the issuedcapital (excluding outstanding warrants andconversions) of the company at the time of grant Nil

(k) Diluted Earnings Per Share (EPS) pursuant to issueof shares on exercise of option calculated in accordancewith International Accounting Standard (IAS) 33 Not applicable

STATEMENT ATTACHED TO ANNEXURE I TO THE DIRECTORS� REPORT FOR THE YEAR ENDED 31ST MARCH, 2004

Name of Senior Managerial Persons to No. of Optionswhom Stock Options have been granted grantedMr. R. K. Pitamber 20,000*Mr. Deepak S. Parekh 20,000*Mr. Nadir B. Godrej 20,000*Mr. M. M. Murugappan 20,000*Mr. Narayanan Vaghul 20,000*Dr. A. S. Ganguly 20,000*Mr. R. K. Kulkarni 20,000*Mr. Anupam Puri 20,000Mr. K. J. Davasia 1,00,000**Mr. Bharat Doshi 1,00,000**Mr. Alan E. Durante 1,00,000**Mr. A. K. Nanda 1,00,000**

* including the first tranche of 6,666 Options exercised on 5th December, 2003.** including the first tranche of 33,333 Options exercised on 5th December, 2003.

11

A) Conservation of Energy

During the year, the Company has taken the following

initiatives for conservation of energy:

1. Engineering Initiatives

a) Installation of Variable Frequency Drive for

Air Make Up units in Paint Shop at Auto

Sector, Kandivli and Zaheerabad.

b) Low Voltage Transformer for Lighting at Auto

Sector, Zaheerabad.

c) Optimising the illumination in office and

assembly areas resulting in approximately 5%

saving in power consumption in that area.

d) Provision of Timers for Window Air

Conditioners to switch off automatically after

set period.

e) Energy Alert System for compressor installed

at Body PU Compressor House resulting in

reduction of compressed air consumption and

savings in energy.

f) Automatic Power factor improvement systems

provided at Auto Sector, Nashik and Igatpuri

to bring Power factor nearer to one.

g) Introduction of limit switches and stoppers

on some of the machines like internal

grinding, cleaning machines resulting in

reduction of idle running of machines and

savings in energy.

h) Optimization of the running cycle in some of

the equipment like exhaust fans of Rotary

and Gleason furnace.

2. Through Process Improvement

a) Use of alternate energy, Piped Natural Gas

(PNG) for equipments running on electricity,

LPG and Light Diesel Oil (LDO) resulting in

energy saving.

b) Value engineering initiatives on some of the

Machines resulting in elimination of milling

and drilling operations.

3. Awareness for Energy Conservation

a) TPM energy loss Kaizens were further

implemented at Auto Sector, Nashik, Igatpuri

and Zaheerabad. More than 200 Kaizens were

implemented.

b) The importance of energy conservation was

emphasized through various forums and Total

ANNEXURE II TO THE DIRECTORS� REPORT FOR THE YEAR ENDED 31ST MARCH, 2004

PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF

DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS� REPORT FOR THE YEAR ENDED 31ST

MARCH, 2004

12

Productive Maintenance (TPM) methodology.

c) Energy Audit was initiated through external

agencies like Confederation of Indian

Industry (CII). The first phase of Energy

Audit has been completed.

d) Energy conservation plans, policy and

structure are reviewed periodically, Energy

Conservation Week is celebrated every year

and Management Policy is displayed in the

plant for creating energy conservation

awareness.

e) Cross-functional teams consisting of members

of user departments and functional specialists

were formed with senior executives as facilitators,

to discuss areas of cost savings and chart out

action plans for achieving the same. The teams

also conducted audits on wastage like air leaks

etc. and plugged them off.

Besides the above the Company�s Auto Sector,

Kandivli received �National Energy

Conservation Award � First Prize� from

Ministry of Power, Government of India.

B) Technology Absorption

The Company spent Rs.7669.71 lakhs on Research

and Development work during the year, which is

approximately 1.27% of the total turnover.

C) Imported Technology for the last 5 years

Technology Imported Year of Import Status

I. Development of New Sheet metal styling 1999 Technology Absorbed

II. NEF with Turbo charger and intercooler � BS II 2000 Technology Absorbed

III. 2000-Streched life & Improved performance of engines 2000 Technology Absorbed

IV. Development of Transmission and Hydraulics for Higher HP segment 2001 In the process of Absorption

V. MDI Engine upgradation 2002 Technology Absorbed

VI. Design of 4 Wheel Drive 2002 In the process of Absorption

VII. Power shift transmission for higher HP tractors 2003 In the process of Absorption

Foreign Exchange Earnings and Outgo

The information on foreign exchange earnings and outgo is furnished in the Notes on Accounts.

For and on behalf of the Board

KESHUB MAHINDRAChairman


13

Particulars of loans/advances and investment in its own shares by listed companies, their subsidiaries, associates,etc., required to be disclosed in the Annual Accounts of the Company pursuant to Clause 32 of the ListingAgreementLoans and Advances in the nature of loans to subsidiaries:

Rs. in lakhs

Name of the Company Balance as on Maximum outstanding31st March, 2004 during the year

Mahindra & Mahindra Financial Services Limited 3,900.00 4,400.00

Mahindra Holdings & Finance Limited 2,500.00 6,425.00

(including loans where the repayment schedule is more thanSeven years and no interest) (2,500.00) (2,500.00)

Mahindra Intertrade Limited 1,313.50 1,688.50

(including loans where there is no interest) (1,313.50) (1,313.50)

Mahindra Consulting Limited 802.76 802.76

Automartindia Limited 550.00 550.00

Mahindra Engineering & Chemical Products Limited 0.00 1,690.00

Mahindra Gesco Developers Limited 0.00 1,511.08

Mahindra Shubhlabh Services Limited 0.00 900.00

Mahindra Holidays & Resorts India Limited 0.00 450.00

Mahindra Logisoft Business Solutions Limited 0.00 399.00

Mahindra Ashtech Limited 0.00 300.00

Mahindra Gujarat Tractor Limited 0.00 160.00

Loans and Advances in the nature of loans to associates :Rs. in lakhs


Mahindra Ugine Steel Company Limited 500.00 1,400.00

Mahindra Construction Company Limited 0.00 150.00

Loans and advances in the nature of loans to firms/companies in which Directors are interested :Rs. in lakhs


Housing Development Finance Corporation Limited 1,500.00 1,500.00

Mahindra & Mahindra Employees� Stock Option Trust 2,570.55 3,104.00

(including Loans where there is no interest) (2,570.55) (3,104.00)

Infrastructure Leasing & Financial Services Limited 1,500.00 2,500.00

14

Except as indicated above, the Company has not made any loans and advances in the nature of loans to associates orloans and advances in the nature of loans where there is no repayment schedule or repayment beyond seven years or nointerest or interest below section 372A of the Companies Act, 1956.

Investments by the Loanee in the shares of Company and Subsidiary Company, when the Company has made loans oradvances in the nature of loan :

Investment in the shares of the Company :

Rs. in lakhs

Name of the Loanee Investment as on Maximum investment31st March, 2004 during the year

Mahindra & Mahindra Employees� Stock Option Trust 2,917.87 3,100.00

Investment in the shares of the Subsidiary Company :

Rs. in lakhsName of the Loanee Investment as on Maximum investment

31st March, 2004 during the year

Mahindra Holdings & Finance Limited 2,157.14 2,157.14


THE PROCESS OF WINNING

It is perhaps a slight understatement to say that M&M

has had a winning year. 2003- 04 saw the highest ever

annual profits. Share prices reached new highs. We became

the first tractor company in the world to win the Deming

Award. The Kandivili plant was the first automotive OEM

plant in India to bag the TPM Excellence Award from the

Japanese Institute of Plant Management. The Scorpio

continued to garner a slew of accolades, including the

Business Standard Brand Derby Award and a BBC �Car

of the Year� Award. The highest customer ratings among

SUVs in the NFO Customer Satisfaction Survey also went

to the Scorpio. The Government of India awarded us the

DSIR Award for outstanding in-house R&D. Indeed, we

found ourselves uncorking the champagne with almost

monotonous regularity this past year.

At M&M, however, we aim not only to win, but to win

consistently. We understand that in today�s competitive

world, a company is only as great as its last balance

sheet. It is a sobering thought that out of the 12 companies

that originally constituted the Dow Jones average, only

General Electric still retains its slot. In M&M therefore,

winning is not an end but a process, not a goal but a part

of the journey. It is the emphasis on the process of winning

across the Mahindra Group that has made us number one

in SUVs, number one in tractors, number one in the

timeshare business, a leading player in the telecom software

business, the leading non-banking finance company in rural

financing, and the first listed real estate Company. Our

philosophy is that if winning is a part of the process, it

will surely be a part of the outcome.

The process of winning is embodied in the four principles

that are the foundation of our business strategy. Every

business must achieve and maintain Leadership in its area

of endeavour. Every business must Think Global to achieve

its maximum potential. Every business must stay ahead

by Constant Innovation. And, the most important, every

business must focus unwaveringly on Financial Returns.

Adherence to this blueprint has, quite literally, paid

substantial dividends at the end of the last twelve months.

Looking ahead, we are strengthening our winning processes

so that M&M can achieve sustainable and profitable growth

regardless of ups and downs in a volatile environment.

We are institutionalizing ways to anticipate change in the

market place, to listen to what our younger people have

to say, to constantly review and refresh strategy, to get

closer to our stakeholders and to maintain and improve

on our cost leadership. At the same time, we continue to

stretch our aspirations and our goals each year so that

there is always a new horizon to race towards, always a

new world to conquer.

We firmly believe that the best is yet to be.


Contents

Directors� Report -----------------------------------------------------------------3

Management Discussion and Analysis -------------------------------------- 15

Corporate Governance --------------------------------------------------------- 29

Accounts -------------------------------------------------------------------------- 49

Statement pursuant to Section 212 ---------------------------------------- 96

Consolidated Accounts --------------------------------------------------------- 97

Bankers

Bank of America N. T. & S.A

Bank of Baroda

Bank of India

Canara Bank

Central Bank of India

HDFC Bank Ltd.

Standard Chartered Bank

State Bank of India

Union Bank of India

Auditors

A. F. Ferguson & Co., Allahabad Bank Buildings,

Bombay Samachar Marg, Mumbai 400 001.

Advocates

Little & Co., Central Bank Building, Mahatma Gandhi Road, Mumbai 400 023.

Registered Office

Gateway Building, Apollo Bunder, Mumbai 400 001.

Branches

7, Dr. Ishaque Road (Old KYD Street), Kolkata 700 016.

Jeevan Deep Building, No. 8, Parliament Street, New Delhi 110 001.

Dhun Bldg., 827, Anna Salai, Chennai 600 002.

Raheja Chambers, First Floor, 12, Museum Road, Bangalore 560 001.

15

MANAGEMENT DISCUSSION & ANALYSIS

Industry Structure

The Automotive Sector

The Automotive Sector of Mahindra & Mahindra is a

major player in the automotive industry in India. It

manufactures Multi Utility Vehicles (MUVs), (further

classified into soft tops, hard tops and pick-ups) Light

Commercial Vehicles (LCVs) and three wheelers. The

market is largely a domestic one with over 95% of the

MUVs manufactured being sold within the country. In

F-04, around 185,000 MUVs were sold in India.

Currently there are 6 major manufacturers of MUVs in

India. M&M is the largest manufacturer of MUVs in

India with an offering of 23 models.

LCVs are commercial vehicles that have a gross vehicle

weight (GVW) of less than 6 MT. In India, these tend to

be used mostly for intra-state movement. There are 6

major LCV manufacturers in India. In F-04, total LCV

sales in India were around 57,100. Lower end LCVs i.e.

LCVs with a payload of up to 4 MTs, make up about two

thirds of these. The LCVs made by M&M fall into this

category.

India is the largest market in the world for three wheelers,

which are predominantly commercial vehicles used for the

transport of passengers or goods. Due to the favourable

economics of operation, this business, especially the load-

carrying segment, has been growing at high rates.

Around 80% of the volumes in the three wheeler segment

come from the smaller 0.5 MT GVW three wheelers, which

in the passenger form carry up to three passengers. The

remaining 20% volumes are generated by three wheelers

with a GVW of over 1 MT and a passenger capacity of 6.

(These are often referred to as �large three wheelers�).

M&M�s products fall in the category of �large three

wheelers�. There are three organized sector manufacturers

in India that manufacture >1.0 MT three wheelers. Apart

from these, there are a few regional manufacturers from

the small-scale sector.

The Farm Equipment Sector

M&M�s Farm Equipment Sector (FES) is the largest

manufacturer of tractors in India with sustained market

leadership of over 20 years. The tractor industry in India

is segmented by horsepower into three levels - the lower

segment of 25 HP, the mid segment of 35 HP and the

higher segment of 45 plus HP. Two multinational companies

have made a foray into the middle and higher HP segments.

All the other major players cater to all the three segments.

However, their relative strengths and market positions

differ from segment to segment. 191,600 tractors were

16

sold in India for the period of April 2003 to March 2004.

M&M�s Farm Equipment Sector (FES) designs, develops,

manufactures and markets tractors as well as implements

that are used in conjunction with tractors. These tractors

are used for both agricultural and non-agricultural

applications, with the agricultural application being the

dominant one. The FES also exports tractors to the U.S.A.

and SAARC countries like Nepal, Bangladesh and Sri

Lanka, where they are sold under the Mahindra brand

name. This year FES made its maiden entry into Europe

by selling tractors in Spain.

Industry Developments


India�s domestic automotive industry, enjoyed high growth

in F-04, continuing the healthy trend set in F-03. Increased

industrial growth contributed to the upward graph.

All the automotive industry segments in which M&M has

a presence witnessed a growth in demand in F-04. The

total number of MUVs sold in India increased by 35%,

while LCV sales volumes for the industry grew 10%. The

�large three wheelers segment�, saw volumes grow 21%.

Two catalysts largely fueled this growth. Firstly the reduced

interest rates in vehicle financing (in line with the

continuing fall in interest rates in F-04) supported growth

since a large percentage of commercial as well as personal

use vehicles are purchased with the help of such financing.

Secondly, good monsoons resulted in improved disposable

incomes in the rural areas during the later part of the

year, perking up demand.

Within the MUV category, pick-ups continued their high

rate of growth. This market grew 78%, making it the

fastest growing MUV sub segment. The hard top MUV

sub segment�s volumes increased 31% in F-04. More than

half of this was attributable to M&M. The soft top MUV

sub segment has been consistently declining over the last

few years. However, even this sub segment grew marginally

by 1% in F-04.

In LCVs, there was a change of trend. Traditionally, the

higher GVW sub segment tended to outperform the lower

GVW sub segment over the past 4 years. However in F-

04, the lower LCV sub segment (of up to 4MT GVW)

grew 14%, while 4-6 MT GVW LCVs grew only 2%.


The Indian tractor industry too saw an upward trend after

a severe downturn period, thanks to a favorable monsoon.

The average monsoon received this year was not only

heavier than the normal monsoon but also better

17

distributed, with thirty-two out of thirty-six sub divisions

of India receiving normal or excess rainfall. Higher farm

production and better credit terms also helped to build

positive sentiments. As a result, the tractor industry in

F-04 showed clear signs of revival. 191,600 tractors were

sold as against 172,500 last year.

The steps that the tractor industry has taken to set its

house in order also showed results. The practice of �Advance

Delivery�, which had earlier gained a foothold, wherein

dealers deliver a tractor to the customer in advance of

receipt of payment, was severely affecting cash flow, both

for dealers & manufacturers and was increasing the

business risk. During F-03 the Tractor Manufacturers

Association (TMA) had initiated collective corrective action

by conducting pilots in some states to stop the practice of

advance delivery. This year, this corrective action was

extended to other states as well. A few states do require

further streamlining. The TMA has formed a marketing

sub committee to facilitate further implementation.

On the adverse side, both industries had to bear the severe

impact of raw material price hikes. The prices of important

input materials like steel and pig iron rose by almost 15-

20% in a single year. Although a part of this rise was

passed on to the market, it has put pressure on margins.

M&M Performance


In F-04, M&M vehicle production and sales touched an

all-time high. Total vehicle sales crossed the 100,000

mark for the first time.

M&M�s MUV sales volumes grew 33%, in alignment with

the total industry MUV sales growth. M&M sold 91,434

MUVs in the domestic market in F-04 as against the sale

of 68,852 MUVs in the previous year. M&M continued to

be the domestic market leader in MUVs with a market

share of 49.5% for F-04.

Among the MUV sub segments, M&M product volumes in

the hard top sub segment grew by 43% against an industry

growth of 23% in the same sub segment. This was due to

the success of the Scorpio SUV and the launch of a DI

Engine version of the Bolero. The demand for the Scorpio

continued to be strong. After receiving three �Car of the

Year� awards in early 2003, the Scorpio was also awarded

the Business Standard Brand Derby for the most successful

new product launch. It also received the BBC World Award

in the �Best SUV under Rs 10 lakh� category.

M&M also grew its volumes in the soft top sub segment

by 4%. This was due to the launch late last year of a new,

18

significantly improved version of the popular Commander

650 and the launch of the Invader, a soft top version of

the Bolero. These initiatives not only increased M&M�s

volumes, but also added 1% to the industry soft top sub

segment, since M&M is the largest player in this sub

segment.

In F-04, the third MUV sub segment of pick-ups grew

78% due to new launches from the competition. M&M�s

pick-up volumes increased 33% in F-04. M&M also

launched a wider and longer pick-up version called the

Maxx Pick Up. The response has been very encouraging.

In LCVs, M&M has a presence only in the lower GVW

segment of the market. M&M�s LCV sales volumes were

only marginally higher than last year, against an industry

growth of 14% in this sub segment. This was mainly due

to a sharp decline in the passenger sub segment due to the

loss of CNG powered minibus sales volume. This was caused

by the cessation of permit issuances for such minibuses in

Delhi, the only market for them. Another reason was the

decline in demand for minibuses in one of the largest

minibus markets in South India. However, M&M�s 42%

growth in the load-carrying segment (largely due to high

demand for the Load King model) is much better than the

industry growth of 20% in this sub segment. As a result,

M&M�s load carrying volumes are, for the first time,

higher than those of the passenger sub segment, which is

more in line with the industry trend. The strong

performance in the load carrying sub segment has partially

offset the volume drop in the passenger sub segment.

Sales of LCVs were 7,002 as compared to the previous

year�s 6,948.

M&M continued to make strong inroads into the

�large three wheeler� markets. Sales volumes increased

73% against industry�s 21% growth. In F-01,

M&M had introduced the Champion, its large diesel three

wheeler, in both passenger and load carrying forms, as a

strategic move to consolidate the company�s presence in

the business of providing mass/goods transportation

products. In F-04, M&M achieved a market share of

30.9%, and sold 17,343 three wheelers against 10,029

in F-03. This growth of 73% is an achievement, particularly

considering that M&M entered the segment only in

late F-01.

Total domestic spare parts sales during the year under

review were Rs.132.8 crores compared to the previous

year�s Rs.91.4 crores. For F-04, M&M export volumes of

fully built vehicles increased 51% to 1,607. M&M also

exported 4,848 engines in F-04, a growth of 320%. Total

export of spares and aggregates grew 160%, amounting

to Rs. 40 crores.

19

M&M�s technological achievements were gratifyingly

recognised in F-04. The Research and Development team

of the Automotive Sector won the Department of Science

and Industrial Research (DSIR) award for outstanding in-

house R&D from the Government of India for the design

and development of the Scorpio. The Scorpio also scored

the highest, for an MUV/SUV, in the NFO Total Customer

Satisfaction Study. These accolades demonstrate the

success of the M&M strategy of positioning the Scorpio

as a car substitute to capture a greater share of the

personal transport market.

The Automotive Sector continued its rigorous cost

reduction exercise with the involvement of all employees

from the shop floor worker to the top management. This

resulted in significant savings through value engineering,

economizing, reduced plant working and right sizing in

almost all areas. The Automotive Sector�s Kandivli plant

was presented with the �TPM Excellence Award� from

the Japanese Institute of Plant Management, becoming

the first Automobile OEM plant in India to be so

distinguished. The Kandivli plant�s focus on TPM, and the

learnings that the other plants have derived from this,

have helped in improving productivity, reducing rejections,

improving quality and hence reducing costs.


M&M�s Farm Equipment Sector created history in F-04

by becoming the first Tractor Company in the world to

secure the coveted Deming Prize that has become a

synonym for quality and excellence. The Deming Prize is

instituted by the Japanese Union of Scientists and

Engineers (JUSE). The award of this prestigious prize

recognizes the results shown by the Farm Equipment Sector

in developing and meeting world-class standards of effective

quality management methods.

The Sector sustained its leadership position for the 21st

consecutive year with a market share of 25.9% in the

total tractor industry. In F-04, 49,576 tractors were sold

as against 47,028 tractors sold during the same period

last year. This includes export of 4,769 tractors as against

5,746 tractors exported last year. USA was the major

contributor to this export. Moreover, this year also marks

the entry of M&M into Europe, with Spain becoming the

first European country to use the Mahindra brand of

tractors in its fields. Over 20% of the tractors were

manufactured at satellite and skid plants, in accordance

with manufacturing strategy.

The thrust on the Engine business continued. More than

60 Mahindra Authorized Genset & Industrial Engine

Centers (MAGIECs) were set up all across India for sales

20

and service. 1813 genset engines were sold during F-04

as against 1385 sold during F-03.

The sector also continued its thrust for improvements on

all fronts in F-04. The bold market corrections started

during the lean period in F-03 continued. Dealer stocks

were further reduced by more than 60%. The market

outstandings also stand reduced by around 60%. Several

tie-ups with leading banks were proactively initiated for

retail & wholesale finance, offering a wide range of choices

to tractor customers and dealers.

Product development was another thrust area. The

Mahindra 595 DI Sarpanch Super Turbo - India�s first

tractor with a Turbo charged engine - was launched in

September 2003. The upgradation of the existing range

for aesthetics, styling and ergonomics is complete.

Opportunities and Threats

Opportunities

The generally buoyant state of the economy, last year�s

good monsoon and the positive economic outlook for India,

combined with M&M�s diligent expansion of its

technological and product development capabilities, augur

well for the coming year. M&M is also increasingly moving

towards multi-location manufacturing. The resultant cost

benefits and synergy of resources between the two major

sectors has major cost and competitive advantages for

M&M.

In the Automotive Sector the continuing convergence

between the car and the UV markets is a positive

development. High-end MUV sales accounted for 51% of

mid-size car sales in India in F-04, as compared to 16%

in F-00. We believe that as the car market expands in

India, MUVs will continue to take an increasing share of

this market. After the success of the Scorpio and Bolero,

M&M is well positioned to leverage this trend.

Reduced interest rates with the maturing of the vehicle

financing market will also add an impetus to vehicle sales

growth. Increased penetration of such financing products

in rural and semi-urban markets will directly benefit the

Company given its strong presence in these markets. M&M

has the additional advantage that its subsidiary, MMFSL

has a wide rural network.

The ongoing WTO & Free Trade Area negotiations with

Thailand, ASEAN, SAARC countries and the Mercosur

countries are likely to lead to lowered tariffs across many

of our target export markets. This could provide us with a

significant opportunity to generate larger volumes from

export sales.

Given the current state of road infrastructure in the

interiors as well as the extremely high cost required for

21

improvement, MUVs will continue to be the most

appropriate and economical vehicles for transporting people

in the interiors. Rural public transportation is not as

extensively developed as in the urban areas, providing

further opportunities for MUVs and LCVs.

MUVs are preferred vehicles for projects and construction

sites like the golden quadrilateral road project linking the

four metros of India. A higher level of industrial

development generally leads to a greater demand for MUVs

and LCVs. Hence if a reasonable rate of GDP growth is

achieved over the next decade, the demand for MUVs and

LCVs would increase commensurately at a fast pace.

Regulatory measures on compulsory scrapping of vehicles

beyond a particular vintage have been mooted in some

States. The adoption of these norms could lead to higher

demand due to a surge in the replacement demand of the

scrapped vehicles.

For the Farm Equipment Sector, the favorable monsoon,

coupled with better credit facilities has restored the

customer sentiments in the past year. In the event of a

normal monsoon in the coming year these positive

sentiments can translate into an encouraging revival for

the industry.

In accordance with a well-articulated business strategy to

improve M&Ms competitive position in each HP segment,

new models have been developed keeping specific customer

segments in mind. These products are scheduled for launch

in F-05. The expanded product portfolio will strengthen

M&M�s presence in various segments.

M&M has progressively reduced pipeline stocks and market

outstandings significantly. This gives M&M and its dealers

an edge over competition. Tie-ups with various banks

provide host of financial options to customers. The M&M

network is, therefore, in a better position to get the benefit

of potential market recovery, particularly since its own

subsidiary MMFSL has a very wide rural network.

The Deming Prize has enhanced the acceptance of M&M�s

farm equipment products especially in the global markets.

The process of attaining the Deming Prize has helped

immensely in improving management systems and processes

such as new product development. The thrust for cost

leadership continues.

Export markets are another thrust area. Besides its US

operations, M&M has entered the European market

recently through Spain. Other markets are being seriously

evaluated for extending geographical coverage.

Threats

For the Automotive Sector regulatory norms are gradually

being made more stringent. While these measures are

22

welcome, they may result in an increase in manufacturing

costs, which, in turn, may affect margins or demand in a

price sensitive situation.

Quantitative restrictions on vehicle imports were removed

from April 2001. Import tariffs have already been

progressively reduced from 38% to the current 20%. FTA

agreements with a number of countries will lead to

reduction and eventual elimination of import tariffs for

imports from these countries. This will increase the

competitive pressures on all Indian vehicle manufacturers.

The entry of new players has made the car and MUV

markets much more competitive affecting the margins of

all participants. M&M is countering this threat by a

stronger focus on reducing costs and increasing efficiency

of operations.

Reduction of the price differential between petrol and diesel

could increase demand for petrol MUVs at the expense of

diesel MUVs, especially with the decontrol of fuel pricing.

To counter this, M&M is offering several petrol

alternatives. M&M has a petrol offering � the MM soft

top. It has also launched a petrol version of the Scorpio

in readiness for such a shift. F-03 was the first year after

decontrol of fuel pricing, but a substantial differential has

been maintained.

Mandatory use of vehicles powered by alternative energy

sources could impact long-term demand for diesel vehicles.

M&M has developed products powered by alternate energy

like CNG and electricity to provide lower polluting products

for a better environment, which minimizes this risk. Hence,

the Company is well-placed to move with the trend towards

alternative energy vehicles, should it take place.

The weakening of the dollar as against the rupee could

affect FES, as the USA is a major export destination.

Any further decline in the dollar is likely to have an

adverse impact. However, M&M is developing other export

markets that will not be as vulnerable to dollar fluctuations.

Risks & Concerns

Input raw material costs have increased significantly over

the last two years, especially in F-04. While M&M has

passed on most of these price increases, a continuation of

these trends will lead to either reduced margins if not

passed on, or lower demand if passed on.

Given that the Company�s motor vehicles and tractors are

predominantly purchased using various forms of credit,

the company�s business will be negatively affected by

increases in interest rates or any decreased availability of

consumer credit.

23

Various taxes, duties and other levies imposed by the

Government of India or State governments or municipal

authorities in India account for between 20% and 50% of

the price of a vehicle. An increase in any of these taxes,

duties or levies, or the imposition of new taxes, duties or

levies in the future, may have a material adverse impact

on the business of the Company. However over the last

few years, these taxes have been reducing, thus reducing

the final vehicle cost to the end customers.

M&M expects to introduce new products that entail product

development costs including significant expenditures for

new products and aggregates development, capacity

expansion and modernisation, additional research and

development facilities. It is possible that completion of

such future projects may be subject to cost or time

overruns. Any significant cost overruns or delays could

adversely affect M&M.

Outlook

With the Indian economy growing at a very high pace,

demand conditions for the short to medium term are

expected to remain strong.

Given the high correlation of the automotive industry to

GDP growth and the fact that the industry itself accounts

for about 4.5% of India�s GDP, the long-term outlook for

the auto industry on a GDP growth forecast of more than

6% p.a. is quite bright. However, due to the high base

resulting from high growth in both F-03 and F-04, the

quantum of growth may reduce for F-05.

For the Farm Equipment Sector, the favorable monsoon,

better credit opportunities, ease of credit availability and

lower interest rate; have combined to create positive

sentiments in the tractor industry during F-04. A normal

monsoon in F-05 is likely to put the tractor industry on a

growth path. Emphasis on priority sector lending can

further improve the availability of finance.

The pressure on raw material prices could continue for

both Sectors. However, M&M with its updated product

portfolio aims to strengthen its position in all segments,

both for its automotive as well as farm equipment products.

Simultaneously, cost leadership measures to reduce

operating costs through leveraging synergies, focused cost

cutting / value engineering and improved efficiency

measures like supply chain management and countrywide

connectivity of all our suppliers and dealers are ongoing

initiatives at M&M.

Material Developments in Human Resources / Industrial

Relations

Industrial relations have been generally cordial at all of

our plants for both sectors.

24

Internal Control Systems

The Company maintains adequate internal control systems,

which provide, among other things, reasonable assurance

of recording the transactions of its operations in all material

respects and of providing protection against significant

misuse or loss of company assets. The Company uses an

Enterprise Resource Planning (ERP) package, which

enhances the internal control mechanism. The Company

has a strong and independent internal audit function. The

Chief Internal Auditor reports directly to the Chairman of

the Company. Professionally qualified technical and financial

personnel of the internal audit function conduct periodic

audits to ensure that the Company�s internal control systems

are adequate and are complied with.

Discussion on Financial Performance with respect to

Operational Performance

Overview

The financial statements have been prepared in compliance

with the requirements of the Companies Act, 1956, and

Generally Accepted Accounting Principles (GAAP) in India.

During the current year the Institute of Chartered

Accountants of India made Accounting Standard 26 on

�Accounting for Intangibles� mandatory. The Company has

complied with the requirements of the standard in the

compilation of the accounts of the year.

The Group�s consolidated financial statements have been

prepared in compliance with the standard AS 21 on

Consolidation of Accounts and presented in a separate

section. The company has provided segment reporting on

a consolidated basis as per standard AS 17 on segment

reporting. This information appears along with the

consolidated accounts.

A. FINANCIAL INFORMATION

1. Fixed Assets:

As at 31st March, 2004 the Gross Block of Fixed

Assets and Capital Work in Progress increased to

Rs. 2537.21 crores from Rs. 2489.13 crores as at

31st March, 2003. During the year, the Company

incurred capital expenditure of Rs. 83.77 crores

(previous year Rs 123.25 crores). The major items of

capital expenditure are for Manufacturing, Research

& Development and Information Technology.

2. Inventories:

March 31, March31,

2004 2003

Raw materials and bought

out components as a % of

consumption 6.00% 6.68%

Finished goods as a %

of sales 3.19% 3.97%

The reduction in inventory levels is due to focus on supply

chain management and better planning and control.

25

3. Sundry Debtors:

Sundry debtors amount to Rs. 400.47 crores as at March 31, 2004, as compared with Rs.517.08 crores as at

March 31, 2003. Debtors as a percentage of gross sales and income from operations are 6.77 % for the year ended

March 31, 2004, as compared to 11.45 % for the previous year. The significant decrease in sundry debtors is due to

judicious credit management and Control.

B. RESULTS OF OPERATIONS

1. Income :(Rs. crores)

Particulars F � 2004 F � 2003 Inc./(Dec.)

Amount % Amount % %

Gross Sales/Income from operations 5914.54 119.27 4517.14 121.03 30.94

Less : Excise Duty (net) 955.43 19.27 785.01 21.03 21.71

Net Sales/Income from operations 4959.11 100.00 3732.13 100.00 32.88

Other Income 86.68 1.75 79.65 2.13 8.83

Other Income:

Other Income comprises mainly of dividends from

subsidiaries and other companies and miscellaneous

income. Dividend income for the current year is Rs. 57.63

crores as compared to Rs. 58.72 crores for the year ended

31st March 2003. The dividends received from subsidiaries

are mostly from Mahindra-British Telecom Ltd. and

Mahindra & Mahindra Financial Services Limited. Both

these subsidiaries operate in Sectors considered core by

the Company and the dividends distributed by these

subsidiaries represent release of value created by them to

the shareholders of the Company.

26

2. Expenditure:

(Rs. crores)

Particulars F � 2004 F � 2003 Inc./(Dec.)

Amount % to Net Amount % to Net %

Income Income

Raw materials, Finished and Semi-finished

Products 3352.87 67.61 2500.22 66.99 34.10

Personnel expenses 417.45 8.42 381.29 10.22 9.48

Interest, commitment and finance charges 51.59 1.04 86.90 2.33 (40.63)

Depreciation 165.20 3.33 165.44 4.43 (0.15)

Other expenses 646.55 13.04 534.68 14.33 20.92

Provision for contingencies 3.42 0.07 3.87 0.10 (11.63)

Total Expenditure 4637.08 93.51 3672.40 98.40 26.27

Though the total expenditure has increased in absolute

amount, it has declined as a percentage of Net sales /

Income from Operations from 98.40 % last year to

93.51% in the current year.

Material Cost :

For the year ended March 31, 2004, material cost as a

% of net sales shows a marginal increase over the previous

year mainly due to changes in the product mix and increase

in price of steel and other inputs. The impact of these was

partially offset through selling price increase and cost-

reengineering initiatives undertaken by the Company.

Personnel Cost :

Personnel cost as a % of sales shows a sharp drop from

10.22% to 8.42 % mainly due to the increase in activity

without any increase in number of Personnel.

27

Other Expenses :

Despite competitive market conditions, which necessitated

increased marketing expenditure, other expenses as % of

Net sales shows a decrease over the previous year due to

cost control measures undertaken by the Company.

Depreciation :

The depreciation for year ended March 31, 2004 is

marginally lower at Rs. 165.20 crores as compared to

Rs. 165.44 crores in the previous year.

Interest (Net) :

The interest cost (net of interest income) for the year

ended March 31, 2004 was substantially lower at Rs.

51.59 crores as against Rs. 86.90 crores in the previous

year. Gross of interest income (CY: Rs. 25.35 crores, PY

Rs. 29.00 crores) the interest cost for the current period

at Rs. 76.94 crores was lower than Rs. 115.90 crores in

the previous year. The sharp reduction in Interest cost is

due to pre-payment of Rs. 373 crores of high cost debt

during the year.

Exceptional Items:

The profit on account of Exceptional items during the

year ended March 31, 2004 is Rs. 29.48 crores as against

Rs. 57.66 crores last year. The profit during the previous

year arose mainly out of the divestment by the company

of its entire holding of 51% in Mahindra Sintered Products

Limited to its joint venture partner GKN plc. The profit in

current year is mainly on account of gains on sale of

certain investments and prepayment of SICOM loan offset

partially by the charge to the P & L account of opening

balance on Intangible items not covered by the new

standard AS 26 and write-down of certain assets to their

realizable value.

Provision for taxation :

The provision for current tax for the year ended March

31, 2004 is Rs. 63.50 crores as compared to Rs. 12.30

crores in the previous year. The increase in current tax

provision is due to a significant increase in the profits of

the company. However the deferred tax charge for the

current year was only Rs. 26.15 crores as against Rs.

39.20 crores last year. The charge last year was higher

because tax depreciation was significantly higher than

book depreciation due to capitalisation of Scorpio Project.

Consolidated Financial Position of the M&M Group

As required by the Accounting Standards, the company

has published the consolidated Profit and Loss Account

and Balance Sheet for the M&M Group as a whole. The

Group comprises of the flagship holding company,

28

Mahindra & Mahindra Limited, 26 Subsidiaries, 4 Joint

Ventures and 11 Associates engaged in various businesses.

The Group Turnover increased during F2004 by 29% to

Rs.8020.69 crores from Rs.6194.98 crores in the previous

year. The consolidated balance of profit after tax for F2004

at Rs. 451.12 crores recorded a growth of 109% over the

previous year level of Rs.216.18 crores. Such a significant

growth in profits could be achieved due to the excellent

performance by some Group companies, a few of which

are mentioned here.

The Group�s Finance company, Mahindra & Mahindra

Financial Services Ltd., despite very stiff competition,

achieved a 43% growth in its disbursements from Rs.1609

crores last year to Rs. 2302 crores in the current year. Its

profit after tax grew even better by 47% from Rs. 44.35

crores in the previous year to Rs. 65.20 crores in the

current year. The Group�s trading subsidiary, Mahindra

Intertrade Limited, grew its turnover by 75 % from Rs

172.50 crores in F 2003 to Rs 301.26 crores in F 2004.

The subsidiary is engaged in imports, exports and domestic

trading, marketing and distribution activities for a wide

portfolio of products. The profit after tax of the subsidiary

more than doubled to Rs. 14.02 crores in the current year

as compared to Rs. 6.38 crores last year. The Group�s

major IT subsidiary, Mahindra-British Telecom Ltd.,

witnessed a Revenue growth of 16% with Income increasing

from Rs. 623.04 crores last year to Rs. 725.04 crores in

the current year. However, in view of the significant

investments made during the year to develop substantial

and sustainable business with a broader customer base

and to move its activities up the Value chain while the

existing business came under margin pressures, the profit

after tax during the year was only Rs. 94.13 crores as

compared to Rs. 171.55 crores in the previous year.

As required by the new standards, the results of the Group

have also been reported on a segment basis. The results

achieved by major business segments of the Group are

given below:

(Rs. Crores)

Segments F2004 F2003

1. Automotive Segment 299.55 145.69

2. Farm Equipment Segment 117.50 94.18

3. Financial Services 96.01 71.75

4. IT Services 58.90 163.00

Certain statements in the Management Discussion and

Analysis describing the Company�s objectives, projections,

estimates, expectations or predictions may be �forward-

looking statements� within the meaning of applicable

securities laws and regulations. Actual results could differ

from those expressed or implied. Important factors that

could make a difference to the Company�s operations

include raw material availability and prices, cyclical

demand and pricing in the Company�s principal markets,

changes in Government regulations, tax regimes, economic

developments within India and the countries in which the

Company conducts business and other incidental factors.

29

CORPORATE GOVERNANCE

The basic philosophy of corporate governance in the

Company is to achieve business excellence, comply with

laws and regulations and dedicate itself for increasing

long term shareholder value, keeping in view the needs

and interests of all its stakeholders. Your Company is

committed to transparency in all its dealings and places

high emphasis on business ethics. For several years your

Company has been following good corporate governance

procedures long before they were mandated.

Last year your Company adopted a Code of Corporate

Governance which is in line with the best practices. Every

employee of your Company is bound by this Code that sets

forth the Company�s policies. Your Company endeavours

to implement the Code of Corporate Governance in its

true spirit.

A report on the implementation of the Code of Corporate

Governance prescribed by the Securities and Exchange

Board of India and incorporated in the Listing Agreement

is given below.

I. Board of Directors

The Company is managed by the Vice-Chairman &

Managing Director and the four Executive Directors of

the Company. The Board reviews and approves strategy

and oversees the actions and results of management to

ensure that the long term objectives of enhancing

stakeholder value are met.

The Company presently has seventeen Directors. The Vice-

Chairman & Managing Director and the four Executive

Directors are Whole-time Directors. The Chairman, who

is a Non-Executive Chairman and the Vice-Chairman &

Managing Director, though professional Directors in their

individual capacities, belong to the Company�s promoter

group. One Director each has been nominated on the Board

by two financial institutions, viz., Unit Trust of India

(UTI) and Life Insurance Corporation of India (LIC). The

remaining eleven Non-Executive Directors are independent

directors and professionals, with expertise and experience

in general corporate management, finance, banking and

other allied fields.

Apart from reimbursement of expenses incurred in the

discharge of their duties, the remuneration that these

Directors would be entitled to under the Companies Act,

1956 as Non-Executive Directors and the remuneration

that some of the Directors may receive for professional

services rendered to the Company either in individual

capacity or through a firm in which one of them is a

partner, none of these Directors has any other material

30

pecuniary relationship or transactions with the Company,

its Promoters, its Management or its subsidiaries which

in the judgement of the Board would affect the

independence or judgement of the Directors.

Mr. R. K. Kulkarni, Non-Executive Director, is a partner

of Little & Co., Advocates & Solicitors, who receive

professional fees for the services rendered to the Company

which, during the year under review, amounted to

Rs. 58.55 lakhs.

The Company has not entered into any materially

significant transactions with its Promoters, Directors

or the Management or relatives, etc. that may have

potential conflict with the interests of the Company at

large.

A. The constitution of the Board as on 31st March, 2004

Director Total number of Total number of Number of Directorships*Committee Chairmanships held (excluding alternate

memberships+ of Committees+ directorships, directorshipsheld (other than held (other than in Section 25 companies,

in private companies and in private companies and private companies andforeign companies) as on foreign companies) as on foreign companies) as on

31st March, 2004 31st March, 2004 31st March, 2004

NON-EXECUTIVEMr. Keshub Mahindra(Chairman) 7 5 9Mr. R. K. Pitamber 7 1 8Mr. Deepak S. Parekh 9 5 15Mr. N. B. Godrej 10 2 15Mr. M. M. Murugappan 7 2 13Mr. David Friedman - - 3Mr. V. K. Chanana(Nominee of UTI) 6 2 5Mr. B. R. Gupta @(Nominee of LIC) 6 1 6Mr. Narayanan Vaghul 8 5 9Dr. A. S. Ganguly 3 2 5Mr. R. K. Kulkarni 7 2 5Mr. Anupam Puri 5 2 6EXECUTIVEMr. Anand G. Mahindra(Vice-Chairman &Managing Director) 2 - 12Mr. K. J. Davasia(Executive Director) - - 6Mr. Bharat Doshi(Executive Director) 5 1 9Mr. Alan E. Durante(Executive Director) - - 7Mr. A. K. Nanda(Executive Director & Secretary) 9 3 13

* Including Directorship in Mahindra & Mahindra Limited.+ Committees considered are Remuneration Committee, Audit Committee and Shareholders/Investors Grievance

Committee, including in Mahindra & Mahindra Limited.@ Resigned with effect from 29th April, 2004 and in his place Mr. R. N. Bhardwaj was appointed as Nominee Director

of LIC.

31

B. Board Procedure

A detailed Agenda folder is sent to each Director in advance

of Board and Committee Meetings. To enable the Board

to discharge its responsibilities effectively, the Vice-

Chairman & Managing Director apprises the Board at

every meeting of the overall performance of the Company,

followed by presentations by the Executive Directors. A

detailed functional report is also placed at Board Meetings.

The Board also reviews strategy and business plans, annual

operating and capital expenditure budgets, investment and

exposure limits, compliance with statutory/regulatory

requirements and review of major legal issues, adoption

of quarterly/half-yearly/annual results, significant labour

issues, transactions pertaining to purchase/ disposal of

property, major accounting provisions and write-offs,

corporate restructuring, minutes of meetings of the Audit

and other Committees of the Board, information on

recruitment of Officers just below the Board level, including

the Compliance Officer.

C. Attendance of the Directors at Meetings of the

Board and of the Members

Seven Board Meetings were held during the period 1st

April, 2003 to 31st March, 2004 on the following dates -

31st May, 2003, 25th July, 2003, 28th July, 2003, 21st

August, 2003, 30th October, 2003, 30th January, 2004

and 29th March, 2004. These were well attended.

The fifty-seventh Annual General Meeting (AGM) was held

on 28th July, 2003.

The attendance of the Directors at these meetings is as

under :

Director No. of Board Attendance at theMeetings Attended AGM

Mr. Keshub Mahindra 6 YesMr. R. K. Pitamber 5 NoMr. Anand G. Mahindra 5 YesMr. Deepak S. Parekh 7 YesMr. N. B. Godrej 5 YesMr. M. M. Murugappan 4 YesMr. K. J. Davasia 7 YesMr. Bharat Doshi 7 YesMr. Alan E. Durante 5 YesMr. A. K. Nanda 7 YesMr. David E. Friedman 5 YesMr. B. R. Gupta @ 6 YesMr. Narayanan Vaghul 7 YesDr. A. S. Ganguly 5 YesMr. R. K. Kulkarni 6 YesMr. Anupam Puri 4 YesMr. V. K. Chanana 5 Yes

@ Resigned with effect from 29th April, 2004 and in his place Mr. R. N. Bhardwaj was appointed as Nominee Directorof LIC.

32

D. Directors seeking appointment/re-appointment

Mr. R. K. Pitamber, Dr. A. S. Ganguly, Mr. R. K. Kulkarni,

Mr. Anupam Puri and Mr. Alan E. Durante retire by

rotation and, being eligible, have offered themselves for

re-appointment.

Mr. R. K. Pitamber

Mr. R. K. Pitamber, a Bachelor of Arts from Oxford

University, has been associated with the Company in

various capacities from 1958. He was initially appointed

to the Board as an Executive Director in August, 1980

(relinquished in June 1982), and after a three year tenure

as Deputy Managing Director (March, 1987 to

October, 1990) was appointed Managing Director in

November, 1990, which position he held upto March, 1997.

Mr. Pitamber was the President of the Bombay

Chamber of Commerce and Industry for the year 1997-

1998. He is Chairman of Owens Corning (India) Limited

and Gherzi Eastern Limited. He is a Director on the

Boards of Auto Ignition Limited, Gati Limited,

J. M. Financial & Investment Consultancy Services

Private Limited, Mahindra Holdings & Finance

Limited, Mark Securities Private Limited, National

Peroxide Limited and NTTF Industries Limited.

Mr. Pitamber is a member of the following Board

Committees:

Sr. No. Name of the Company Name of the Committee Position held

1 Mahindra & Mahindra Share Transfer and Shareholders/ MemberLimited Investors Grievance Committee

2 Mahindra Holdings & Audit Committee ChairmanFinance Limited

3 Gati Limited Remuneration Committee Member

4 Gati Limited Audit Committee Member

5 J. M. Financial & Investment Committee MemberInvestment ConsultancyServices Private Limited

6 National Peroxide Limited Remuneration Committee Member

7 Auto Ignition Limited Audit Committee Member

8 Auto Ignition Limited Remuneration Committee Member

Dr. A. S. Ganguly

Dr. A. S. Ganguly was appointed to the Board of Mahindra

& Mahindra Limited in 1997. Dr. Ganguly�s principal

professional career has spanned over thirty-five years.

Starting as a research scientist with Unilever, he went on

to become Chairman of Hindustan Lever Limited from

1980 to 1990 and a member of Unilever�s main Board of

Directors from 1990 to 1997, responsible for world wide

research and technology.

Dr. Ganguly is a First Class graduate from Bombay

University and has obtained M.S. and Ph.D. degrees from

the University of Illinois, U.S.A. Over the years, Dr.

33

Ganguly has been a member of several Government

Committees, including the Science Advisory Committee to

the Prime Minister of India. He is a Fellow of the Royal

Society of Chemistry, a Honorary Fellow of the Jawaharlal

Nehru Centre for Advanced Scientific Research and a

Honorary Professor of the Chinese Academy of Sciences

in Shanghai. He was selected as India�s Businessman of

the year in 1986. He was conferred the Padma Bhushan

in 1987 for his contribution to public service. The

University of Illinois, College of Food and Nutrition

selected Dr. Ganguly as their �Outstanding Alumnus� in

1997. Dr. Ganguly is also the recipient of the International

Alumni Award for Exceptional Achievement for the

academic year 2003-2004, from the University of Illinois.

Dr. Ganguly has several publications to his credit on the

topics of management, science and contemporary issues.

Dr. Ganguly is Chairman of ICICI OneSource Limited and

ABP Private Limited. He is a Director on the Boards of

Technology Network (India) Private Limited, British

Airways Plc, Reserve Bank of India, Hemogenomics

Private Limited, ICICI Knowledge Park Limited, NewSkies

Satellites NV, Tata AIG Life Insurance Company Limited

and WIPRO Limited. Dr. Ganguly is a member of the

following Board Committees:

Sr. No. Name of the Company / Bank Name of the Committee Position held

1 Mahindra & Mahindra Limited Research & Development ChairmanCommittee

2 British Airways Plc Audit Committee Member

3 British Airways Plc Safety Review Committee Member

4 Reserve Bank of India Board of Financial MemberSupervision (BFS)

5 Reserve Bank of India Audit Committee of BFS Member

6 Tata AIG Life Insurance Remuneration Committee ChairmanCompany Limited

7 Tata AIG Life Insurance Audit Committee MemberCompany Limited

8 ICICI OneSource Limited Compensation and Board ChairmanGovernance Committee

9 NewSkies Satellites NV Corporate Governance Committee Member

10 NewSkies Satellites NV Management Compensation & MemberDevelopment Committee

Mr. R. K. Kulkarni

Mr. Kulkarni has been a Director of the Company since

1997. An L.L.M. (Master of Laws) from the University of

Bombay, he is an Advocate and a Solicitor, and is currently

Senior Partner of Little & Co. He has been a partner for

over 25 years and in practice for over 33 years. Mr.

Kulkarni has vast and hands on experience in the legal

field, with particular emphasis on Corporate and

34

Commercial Law and legislation related to Securities. Mr.

Kulkarni has participated in National and International

conferences and seminars at which he has read papers on

foreign direct investment in India, infrastructure/

privatisation and reforms. He is a Director on the Boards

of Arthur Andersen India Private Limited, Aurangabad

Breweries Limited, Caprihans India Limited, Haden

International Group India Private Limited, Mahindra &

Mahindra Contech Limited, R&P Management

Communications Private Limited, Beck India Limited and

Unisto India Private Limited and Alternate Director of

Bloomberg Data Services (India) Private Limited and

Revertex-KA Latex (India) Private Limited. Mr. Kulkarni

is a member of the following Board Committees:


1 Mahindra & Mahindra Limited Audit Committee Member

2 Mahindra & Mahindra Limited Share Transfer and Shareholders/ MemberInvestors Grievance Committee

3 Mahindra & Mahindra Limited Loans & Investment Committee Member

4 Beck India Limited Audit Committee Chairman

5 Beck India Limited Shareholders�/ Investors MemberGrievance Committee

6 Caprihans India Limited Audit Committee Chairman

7 Caprihans India Limited Shareholders�/ Investors MemberGrievance Committee

8 Caprihans India Limited Remuneration Committee Member

Mr. Anupam Puri

Mr. Anupam Puri was appointed to the Board in 2001.

From 1970 to 2000, Mr. Puri was with McKinsey &

Company. He worked globally with corporate clients in

several industries on strategy and organizational issues,

and also served several Governments and multilateral

institutions on public policy. Mr. Puri spearheaded the

development of McKinsey�s India practice, oversaw the

Asian and Latin American offices, and was an elected

member of its Board of Directors. Mr. Puri is currently a

Special Advisor for General Atlantic Partners. Mr. Puri

holds a M.Phil in Economics, Nuffield College, Oxford

University, 1969; MA in Economics from Balliol College,

Oxford University, 1967; and BA in Economics from Delhi

University, India, 1965. He is a Director on the Boards of

Godrej Consumer Products Limited, Daksh eServices

Private Limited, Dr. Reddy�s Laboratories Limited, ICICI

Bank Limited, Mahindra-British Telecom Limited and

Patni Computer Systems Limited. Mr. Puri is a member

of the following Board Committees:

35


1 Dr. Reddy�s Laboratories Limited Board Nominations Committee Chairman

2 Dr. Reddy�s Laboratories Limited Compensation Committee Member

3 Dr. Reddy�s Laboratories Limited Strategy Committee Member

4 Daksh eServices Private Limited Compensation Committee Chairman

5 Godrej Consumer Products Limited Human Resources Committee Chairman

6 Godrej Consumer Products Limited Audit Committee Member

7 ICICI Bank Limited Business Strategy Committee Member

8 ICICI Bank Limited Board Governance and MemberRemuneration Committee

9 Mahindra-British Telecom Limited Audit Sub-Committee Chairman

10 Patni Computer Systems Limited Remuneration Committee Chairman

11 Patni Computer Systems Limited Compensation Committee Chairman

Mr. Alan E. Durante

Mr. Alan E. Durante, B.Sc. (Engg.) joined the Company

in 1962 and has been associated with the Mahindra Group

ever since. Mr. Durante has held several senior level

appointments in the Company and its Group companies

and prior to his induction on the Board of the Company in

August, 1992, headed the Company�s marketing operations

for vehicles and tractors. Mr. Durante is also the President

of the Company�s Automotive Sector since December, 1994.

He continues to be a member on various industry related

associations/ forums and was, for two years, the President

of the Tractor Manufacturers� Association (TMA). He is a

member of the CII Western Regional Council. He is also a

Director on the Boards of Automartindia Limited,

Mahindra & Mahindra Financial Services Limited,

Mahindra Automotive Steels Private Limited, Mahindra

Consulting Limited, Mahindra International Private

Limited, Mahindra Steel Service Centre Limited, PSL

Erickson Limited and Mahindra Sona Limited. Mr. Durante

is a member of the following Board Committees:

36

(Rs.in lakhs)

Director Commission for the yearended 31st March, 2003,

paid during thecurrent year

Mr. Keshub Mahindra 12.00Mr. R. K. Pitamber 3.00Mr. Deepak S. Parekh 3.00Mr. N. B. Godrej 3.00Mr. M. M. Murugappan 3.00Mr. David Friedman �Mr. Sanjiv Kapoor *Mr. V. K. Chanana **

3.00#

(Nominees of UTI)Mr. B. R. Gupta (Nominee of LIC) @ 3.00#Mr. Narayanan Vaghul 3.00Dr. A. S. Ganguly 3.00Mr. R. K. Kulkarni 3.00Mr. I. C. Jain (Nominee of ICICI Bank Limited) *** 1.50#Mr. Anupam Puri 3.00

# The Commission is payable to the Nominating Financial Institution/ Bank.* Ceased to be Director on 30th October, 2002.** Appointed Director on 30th October, 2002.*** Ceased to be Director on 5th September, 2002.@ Resigned with effect from 29th April, 2004 and in his place Mr. R. N. Bhardwaj was appointed as Nominee

Director of LIC.

}


1 Mahindra & Mahindra Limited Research & Development Committee Member

2 Mahindra & Mahindra Limited Loans & Investment Committee Member

3 Mahindra & Mahindra Financial Loans & Investment Committee MemberServices Limited

II Remuneration to Directors

A. Remuneration to Non-Executive Directors for theyear ended 31st March, 2004

The eligible Non-Executive Directors are paid commission

up to a maximum of 1% of the net profits of the Company

as specifically computed for this purpose. A commission

of Rs. 84.00 lakhs has been provided as payable to the

eligible Non-Executive Directors in the accounts of the

current year. The Directors are yet to determine the

distribution of this amount between themselves.

During the year under review, the Non-Executive Directors

were paid a commission of Rs. 43.50 lakhs (provided in

the accounts for the year ended 31st March, 2003),

distributed amongst the Directors as under:

37

Non-Executive Directors are also paid a sitting

fee of Rs. 10,000 (Rs. 5,000 upto 31st August, 2003) for

every meeting of the Board or Committee attended.

The fees paid to Non-Executive Directors for

the year ended 31st March, 2004 are as

under:

(Rs. in lakhs)

Director Sitting Fees for Board andCommittee meetingspaid during the year

Mr. Keshub Mahindra 0.80

Mr. R. K. Pitamber 0.45

Mr. Deepak S. Parekh 0.80

Mr. N. B. Godrej 0.70

Mr. M. M. Murugappan 0.50

Mr. David Friedman �

Mr. V. K. Chanana (Nominee of UTI) 0.30

Mr. B. R. Gupta (Nominee of LIC) @ 0.75

Mr. Narayanan Vaghul 0.80

Dr. A. S. Ganguly 0.65

Mr. R. K. Kulkarni 0.90

Mr. Anupam Puri 0.30

@ Resigned with effect from 29th April, 2004 and in his placeMr. R. N. Bhardwaj was appointed as Nominee Directorof LIC.

1,60,000 Stock Options were granted to Non-Executive

Directors under the Company�s Stock Option Scheme on

6th December, 2001. Details of these are given in the

Annexure I to the Directors� Report.

B. Remuneration paid/payable to Managing/Executive

Directors (Whole-time Directors) for the year ended

31st March, 2004

Remuneration to Whole-time Directors is fixed by the

Remuneration/ Compensation Committee and thereafter

approved by shareholders at a General Meeting.

38

Following is the remuneration paid/payable to the Whole-time Directors during the year ended 31st March, 2004.

(Rs. in lakhs)

Director Salary Commission Company�s Perquisites Total Contract No. of

Contributions and Period Options

to Funds* allowances granted

Mr. Anand G. Mahindra 27.00 54.00 7.29 25.20 113.49 4th April, Nil(Vice-Chairman & 2002 to 3rdManaging Director) April, 2007

Mr. K. J. Davasia 18.22 27.34 4.92 24.47 74.95 28th August, 1,00,000**(Executive Director) 2002 to 24th

January,2005

Mr. Bharat Doshi 18.22 27.34 4.92 18.12 68.60 28th August, 1,00,000**(Executive Director) 2002 to 27th

August,2007

Mr. Alan E. Durante 18.22 27.34 4.92 24.93 75.41 28th August, 1,00,000**(Executive Director) 2002 to 25th

September,2005

Mr. A. K. Nanda 18.22 27.34 4.92 17.92 68.40 28th August, 1,00,000**(Executive Director & 2002 to 27thSecretary) August,

2007

* Aggregate of the Company�s contributions to Superannuation Fund and Provident Fund.

** Including the first tranche of 33,333 Options exercised on 5th December, 2003.

Notes:

a) Notice period applicable to each of the Whole-time Directors � six months.

b) Commission is the only component of remuneration that is performance-linked. All other components are fixed.

c) The overall remuneration to the Vice-Chairman & Managing Director and the Executive Directors is approved by theRemuneration/Compensation Committee.

d) The Stock Options granted have vested on 6th December, 2002. The Options can be exercised in three tranches overa period of five years from the date of Vesting at an Exercise Price of Rs. 59 per share, based on the average of thedaily high and low of the prices for the Company�s equity shares quoted on The Stock Exchange, Mumbai during thefifteen days preceding the date on which, the Remuneration/Compensation Committee decided to recommend, to theMahindra & Mahindra Employees� Stock Option Trust, the grant of Options to Eligible Employees. The First trancheof the Options were exercised by the Executive Directors on 5th December, 2003.

39

III.Committees of the Board

A. Remuneration/Compensation Committee

The role of the Remuneration/Compensation Committee

is to review market practices and to decide on

remuneration packages applicable to the Vice-

Chairman & Managing Director, the Executive

Directors and Senior Executives of the Company.

During the course of its review, the Committee also

decides on the commission and/or other incentives

payable, taking into account the individual�s

performance as well as that of the Company. The

Committee has formulated and administers the

Mahindra & Mahindra Limited Employees� Stock

Option Scheme and also attends to such other matters

as may be prescribed from time to time.

Mr. N. Vaghul is the Chairman of the Committee.

Mr. Keshub Mahindra, Mr. N. B. Godrej and Mr. M.

M. Murugappan are the other members of the

Committee. Four meetings were held during the year.

All the meetings were attended by Mr. Keshub

Mahindra and Mr. N. Vaghul. Mr. N. B. Godrej

attended two meetings and Mr. M. M. Murugappan

attended three of them.

B. Audit Committee

This Committee comprises solely of Independent

Directors. The Committee comprises Mr. Deepak S.

Parekh (Chairman of the Committee), Mr. R. K.

Kulkarni, Mr. V. K. Chanana (appointed with effect

from 6th May, 2004 in place of Mr. B. R. Gupta who

resigned on 29th April, 2004) and Mr. N. B. Godrej.

The terms of reference of this Committee are very

wide.

Besides having access to all the required information

from within the Company, the Committee can obtain

external professional advice whenever required. The

Committee acts as a link between the Statutory and

the Internal Auditors and the Board of Directors of

the Company. It is authorised to select and establish

accounting policies, review reports of the Statutory

and the Internal Auditors and meet with them to

discuss their findings, suggestions and other related

matters. The Committee is empowered to review the

remuneration payable to the Statutory Auditors and

to recommend a change in Auditors, if felt necessary.

The meetings of the Audit Committee are also attended

by the Vice-Chairman & Managing Director, the

Executive Director (Finance & Corporate Affairs), the

Executive Director & Secretary, the Executive

Vice-President (Finance, Accounts & Legal

Affairs), the Statutory Auditors, the Head-Corporate

Management Services & Chief Internal Auditor and

the Head-Secretarial, Compliance Officer & Assistant

Company Secretary.

40

The Committee met four times during the year under

review. Mr. Deepak S. Parekh, Mr. R. K. Kulkarni

and Mr. B. R. Gupta (since resigned on 29th April,

2004) attended all the meetings and Mr. N. B. Godrej

attended two of them.

C. Share Transfer and Shareholders/Investors

Grievance Committee

The Company�s Share Transfer and Shareholders/

Investors Grievance Committee functions under the

Chairmanship of Mr. Keshub Mahindra, Chairman of

the Board and a Non-Executive Director. Mr. R. K.

Pitamber, Mr. R. K. Kulkarni, Mr. Anand G. Mahindra,

Mr. Bharat Doshi and Mr. A. K. Nanda are also on

the Committee. Mr. N. Shankar, Head-Secretarial &

Assistant Company Secretary, is the Compliance

Officer of the Company.

The Committee meets as and when required, to deal

with matters relating to transfers/transmissions of

shares and monitors redressal of complaints from

shareholders relating to transfers, non-receipt of

balance-sheet, non-receipt of dividends declared, etc.

With a view to expediting the process of share

transfers, the Executive Director & Secretary is

authorised to approve of transfers/ transmissions of

shares below 5,000 in number.

The Committee held two meetings during the year

under review, one meeting was attended by all its

members and the other meeting was attended by all

members except Mr. R. K. Pitamber and Mr. Anand

G. Mahindra.

During the year, 249 letters/complaints were received

from the shareholders, all of which have been attended

to/resolved to date.

As of date, there are no pending share transfers

pertaining to the year under review.

D. Research & Development Committee

(a voluntary initiative of the Company)

The Research & Development (R&D) Committee, which

was constituted by the Board in 1998, provides

direction on the R&D mission and strategy, and key

R&D and technology issues. The Committee also

reviews and makes recommendations on skills and

competencies required and the structure and the

process needed to ensure that the R&D initiatives

result in products that are in keeping with the business

needs.

Dr. A. S. Ganguly is the Chairman of the Committee.

Mr. Anand G. Mahindra, Mr. K. J. Davasia, Mr.

Bharat Doshi and Mr. Alan E. Durante are the other

members of the Committee. The Committee held four

meetings during the year under review, which were

well attended.

41

E. Loans and Investment Committee

(a voluntary initiative of the Company)

The Committee approves of the making of loans and

investment, borrowing moneys and related aspects of

fund management in accordance with the guidelines

prescribed by the Board. Mr. Anand G. Mahindra,

Mr. R. K. Kulkarni, Mr. K. J. Davasia, Mr. Bharat

Doshi, Mr. Alan E. Durante and Mr. A. K. Nanda are

members of the Committee.

IV. Shareholder Information

1. 58th Annual General Meeting

Date : 28th July, 2004

Time : 3.30 p.m.

Venue : Birla Matushri Sabhagar,

19, Sir Vithaldas Thackersey Marg,

(New Marine Lines),

Mumbai - 400 020.

2. Dates of Book Closure

1st July, 2004 to 28th July, 2004, both days inclusive.

3. Date of Dividend Payment

On or after 28th July, 2004.

4. Financial Calendar of the Company

The financial year covers the period from 1st April to

31st March.

Financial Reporting for :

Quarter ending 30th June, 2004 - End July, 2004

Half-year ending 30th September, 2004 - End October, 2004

Quarter ending 31st December, 2004 - End January, 2005

Year ending 31st March, 2005 - End May, 2005

Note: The above dates are indicative

5. Registered Office

Gateway Building,

Apollo Bunder,

Mumbai 400 001.

6. Listing of Equity Shares and Debentures on Stock

Exchanges

The Company�s Shares are listed on the Stock

Exchanges at The Stock Exchange, Mumbai and the

National Stock Exchange of India Limited. The

Company has received approval for delisting of the

Company�s Shares from Delhi Stock Exchange

Association Limited, Madras Stock Exchange Limited,

Pune Stock Exchange Limited and Bangalore Stock

Exchange Limited. Approval for delisting of the Shares

of the Company from The Calcutta Stock Exchange

Association Limited is awaited. The Global Depository

Receipts (GDRs) of the Company are listed on the

Luxembourg Stock Exchange. The Zero Coupon

Foreign Currency Convertible Bonds (FCCBs) issued

42

subsequent to the year end are listed at Singapore

Exchange Securities Trading Limited. The requisite

listing fees have been paid in full to all these Stock

Exchanges. The Company has received In-Principle

approval from The Stock Exchange, Mumbai and the

National Stock Exchange of India Limited for issue

and allotment of equity shares which may arise out of

conversion of the FCCBs into GDRs and/or Equity

Shares aggregating to US $ 100 Million.

The Company has also listed its Non-Convertible

Debentures with the National Stock Exchange of India

Limited with effect from 16th April, 2004 and has

paid listing fees in full.

7. Stock Code

1. The Stock Exchange, Mumbai (BSE) : 500520

2. Demat International Security Identification

Number in NSDL and CDSL for equity shares -

ISIN- INE101A01018

8. Stock Performance

The performance of the Company�s shares relative to

the BSE Sensitive Index is given in the chart below :

0

50

100

150

200

250

300

350

400

450

500

Mar-04Feb-04Jan-04Dec-03Nov-03Oct-03Sep-03Aug-03Jul-03Jun-03May-03Apr-030

1000

2000

3000

4000

5000

6000

7000

M&M on BSE

BSE Index

M&

M o

n B

SE

BS

E In

dex

Last Trading day of the month

43

9. Stock Price Data

Equity Shares GDRs

The Stock National Stock Luxembourg StockExchange, Exchange ExchangeMumbai

High Low High Low High LowRs. Rs. Rs. Rs. US $ US $

April, 2003 112.35 97.00 112.50 97.10 2.35 2.25

May, 2003 133.00 111.20 132.90 111.30 2.60 2.50

June, 2003 149.50 124.50 149.00 124.50 3.20 2.65

July, 2003 203.90 146.60 204.90 145.00 4.25 3.50

August, 2003 214.45 186.25 215.00 187.00 4.80 4.30

September, 2003 239.00 186.50 241.00 186.55 5.30 4.25

October, 2003 343.00 234.75 342.70 234.55 7.50 6.20

November, 2003 361.50 304.15 361.40 304.55 7.45 7.45

December, 2003 390.25 339.00 405.00 338.00 8.50 7.50

January, 2004 444.80 358.00 447.40 356.80 9.44 8.55

February, 2004 505.90 408.00 505.50 407.00 10.85 10.00

March, 2004 503.40 418.15 503.00 402.35 10.55 10.30

10. Registrar and Transfer Agents

Messrs. Sharepro Services

Unit: Mahindra & Mahindra Limited

Satam Estate, 3rd Floor,

Above Bank of Baroda,

Cardinal Gracious Road,

Chakala, Andheri (East),

Mumbai 400 099.

The Registrar and Transfer Agents also have an

office at:

912, Raheja Centre,

Free Press Journal Road,

Nariman Point,

Mumbai 400 021.

11. Share Transfer System

Trading in Equity Shares of the Company is permitted

only in dematerialised form.

44

Shares sent for transfer in physical form are registered

and returned within a period of thirty days from the

date of receipt of the documents, provided the

documents are valid and complete in all respects.

With a view to expediting the process of share

transfers, the Executive Director & Secretary is

authorised to approve of transfers/ transmissions of

shares below 5,000 in number. The Share Transfer

and Shareholders/Investors Grievance Committee

meets as and when required to consider the other

transfer proposals and attend to shareholder

grievances.

12. Distribution of shareholding as on 31st March, 2004

Number of Number of No. of Shares % Shareholding

Shares held Shareholders held

1 to 100 66,717 1,826,131 1.57

101 to 500 17,100 4,066,749 3.51

501 to 1000 3,177 2,290,448 1.97

1001 to 5000 2,014 3,896,983 3.36

5001 to 10000 173 1,253,310 1.08

10001 and above 296 102,674,978 88.51

Total 89,477 116,008,599 100.00

13. Dematerialisation of Shares

90.82% of the total Equity Capital is held in

a dematerialised form with National Securities

Depository Limited and Central Depository

Services (India) Limited as on 31st March,

2004.

14. Outstanding GDRs/ ADRs /Warrants or any

Convertible Instruments, Conversion date and

likely impact on equity

88,74,783 GDRs were outstanding as at 31st March,

2004. Since the underlying Equity Shares represented

by GDRs have been allotted in full, the outstanding

GDRs have no impact on the Equity of the

Company.

15. Plant Locations

The Company�s manufacturing facilities are located

at Kandivli, Nashik, Igatpuri, Nagpur, Zaheerabad,

Jaipur and Rudrapur.

45

16. Address for correspondence

Shareholders may correspond with the Registrar and

Transfer Agents, Messrs. Sharepro Services at:

Satam Estate, 3rd Floor,

Above Bank of Baroda,

Cardinal Gracious Road

Chakala, Andheri (East),

Mumbai 400 099.

Telephone Nos: 2821 5168/ 2832 9828

e-mail: [email protected]

on all matters relating to transfer/dematerialisation

of shares, payment of dividend, and any other query

relating to shares in or debentures of the Company.

Shareholders would have to correspond with the

respective Depository Participants for shares held in

demat mode.

For all investor related matters, Head-Secretarial,

Compliance Officer & Assistant Company Secretary

can be contacted at Mahindra Towers, 5th Floor, Dr.

G. M. Bhosale Marg, Worli, Mumbai 400 018.

Telephone Nos: 2490 5624, 2497 5074

Fax No. : 2490 0833

e-mail: [email protected]

The Company can also be visited at its website:

http://www.mahindra.com

V. Other Disclosures

1. Details of Annual/ Extraordinary General Meetings

Annual General Meetings held during the past 3 years:

Year Date Time

2001 31st July, 2001 3.30 p.m.

2002 16th August, 2002 3.30 p.m.

2003 28th July, 2003 3.30 p.m.

Extraordinary General Meetings held during the past

3 years:

Year Date Time

2002 18th March, 2002 11.00 a.m.

2003 30th October, 2003 11.00 a.m.

2004 29th April, 2004 11.00 a.m.

All the meetings were held at Birla Matushri

Sabhagar, 19, Sir Vithaldas Thackersey Marg, (New

Marine Lines), Mumbai 400 020.

The shareholders approved by an overwhelming

majority of 99.97 % votes, the amendment(s) to the

Objects Clause of the Memorandum of Association of

the Company by means of Postal Ballot through a

Special Resolution, the results of which were declared

at the 57th Annual General Meeting of the Company

held on 28th July, 2003.

2. Details of non-compliance

There was no non-compliance by the Company on any

matters related to capital markets during the last

three years.

3. Means of communication

The quarterly, half-yearly and yearly results are

published in national and local dailies. These are not

46

CERTIFICATE

To the Members of

Mahindra & Mahindra Limited

We have examined the compliance of conditions of Corporate Governance by Mahindra & Mahindra Limited for the year

ended on 31st March, 2004, as stipulated in Clause 49 of the Listing Agreement of the said company with stock

exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was

limited to procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions

of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the

company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing

Agreement.

We state that in respect of investor grievances received during the year ended 31st March, 2004, no investors grievances

are pending against the company as per the records maintained by the company and presented to the Shareholders/

Investors Grievance Committee of the Company.

We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency

or effectiveness with which the management has conducted the affairs of the company.

For A. F. Ferguson & Co.

Chartered Accountants

R. A. BANGA(Partner)


sent individually to the shareholders. The Company

results and official news releases are displayed on the

Company�s website http://www.mahindra.com

Presentations are also made to international and

national institutional investors and analysts.

4. The Management Discussion and Analysis Report

(MDA) has been attached to the Directors� Report

and forms part of this Annual Report.

5. Office of the Chairman, etc. [non-mandatory but

adopted]

The Company has provided the Chairman (Non-

Executive) with a full-fledged office, the expenses of

which are borne by the Company. The Chairman is

reimbursed all expenses incurred in the performance

of his duties.

Mumbai, 31st May, 2004.

47

Financial Position at a Glance(Rupees in lakhs)

2004 2003 2002 2001 2000 1999 1998 1997 1996 1995

Gross Fixed Assets 253721 248913 241677 223148 185892 161464 142653 114642 81314 62463

Net Fixed Assets 137138 146609 153723 148252 123199 109861 101741 81011 53835 37345

Intangible Assets 2022 � � � � � � � � �

Investments 111115 86227 80013 71000 82299 81030 65596 60934 41444 29004

Inventories 49970 45675 46904 55253 51554 43697 51485 44716 38298 34239

Debtors 40048 51708 64778 63201 46158 59207 51657 20805 15550 15945

Other Current Assets 60239 63964 61554 52911 68373 80381 72998 72926 42624 34725

Misc. Expenditurenot written off 964 3972 � 22361 15516 9684 5988 3623 1819 1687

BorrowingsLong-term 65426 107190 119180 79088 84481 133457 115147 95847 16809 23286

Short-term 7555 6794 18526 34304 10886 13162 18363 6924 20976 14681

Current Liabilities andProvisions 130687 109478 105074 92704 90021 87027 81623 71559 61070 40209

Deferred Tax Liability (Net) 20325 17710 13790 � � � � � � �

Equity Capital 11601 11601 11601 11049 11049 10337 10337 10179 10179 5633

Reserves 165902 145382 138801 195833 190662 139877 123995 99506 84536 69136

Net Worth 177503 156983 150402 206882 201711 150214 134332 109685 94715 74769

Book Value Per Share (Rupees) 149.15 130.56 128.26 165.50 166.90 134.14 122.29 102.20 * 89.19 125.96

* Book value per share is shown after giving effect to a 2:3 bonus issue in February,1996.

Book value per share is calculated after reducing Intangible Assets, Miscellaneous Expenditure not written off andRevaluation Reserve from Net worth.

48

Summary of Operations(Rupees in lakhs)

2004 2003 2002 2001 2000 1999 1998 1997 1996 1995

Income @ 600122 459679 399675 435290 440918 416697 405265 356111 285519 209158

MaterialsDirect 335287 250022 211723 235858 221023 222739 215135 196881 157899 114570

Indirect 4322 3939 3173 4893 4550 4307 4906 4413 3280 2597

Excise Duty (Net) 95543 78501 67644 75537 77324 65364 63983 50073 40651 30595

Personnel 42087 38516 37471 40063 39683 37729 38344 33607 29313 22736

Interest (Net) @ 5159 8690 8267 6216 7463 9384 4758 2115 378 2286

Depreciation (Net) 16520 16544 13938 14009 12327 11198 9929 6296 4233 3361

Other Expenses 60333 49529 47621 44337 42606 37163 34858 29333 21638 15274

Exceptional items (2948) (5765) 1729 1522 1252 805 405 560 708 655

Extra-ordinary items � � � � (358) � � � (1039) (837)

Profit before tax for the year 43819 19703 8109 12855 35048 28008 32947 32833 28458 17921

Tax for the year - Current 6350 1230 360 800 8700 5150 7800 11900 11650 6225

Deferred Tax Liability/(Asset) 2615 3920 (2520) � � � � � � �

Adj. pertaining to Prev. Years � � 578 � � 267 � � 574 342

Balance profit 34854 14553 9691 12055 26348 22591 25147 20933 16234 11354

Dividends #+11779 + 7198 5621 +6697 +6745 +6311 +6254 +5599 4414 3415

Equity Dividend (%) #90.00 55.00 50.00 55.00 55.00 55.00 55.00 50.00 45.00 65.00

Earnings per Share (Rupees) * 30.04 12.55 8.62 10.91 23.85 21.85 24.33 20.56 16.98 21.61

Vehicles produced** (Units) 117670 87088 66256 63146 76983 70639 77510 74653 65405 47760

Vehicles sold** (Units) 117399 86890 65338 62927 76437 70548 76954 75568 63623 49235

Tractors produced (Units) 50102 45183 54524 80261 73222 66211 71468 58028 49651 40051

Tractors sold (Units) 49576 47028 58006 79237 70571 69362 67780 57379 50005 41006

@ Interest income netted off ininterest expense 2535 2900 3297 5057 6682 5802 7530 5936 4437 2187

# Proposed Dividends.

+ Including Income-tax on Proposed Dividends.

* Calculated on effective capital during the year.

** Including CKD packs.

49

MAHINDRA & MAHINDRA LIMITED

1. We have audited the attached balance sheet of Mahindra &Mahindra Limited as at 31st March, 2004, the profit and lossaccount and also the cash flow statement for the year endedon that date annexed thereto. These financial statementsare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements.An audit also includes assessing the accounting principlesused and significant estimates made by management, aswell as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to inparagraph 3 above, we report that:

(i) we have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purposes of our audit;

(ii) in our opinion, proper books of account as required bylaw have been kept by the Company so far as appearsfrom our examination of those books and proper returnsadequate for the purpose of our audit have beenreceived from branches not visited by us;

(iii) the balance sheet, profit and loss account and cash flowstatement dealt with by this report are in agreementwith the books of account;

Report of the Auditors to the Shareholders

(iv) in our opinion, the balance sheet, profit and loss accountand cash flow statement dealt with by this report complywith the Accounting Standards referred to in sub-section(3C) of section 211 of the Companies Act, 1956;

(v) on the basis of the written representations receivedfrom the directors, as on 31st March, 2004, and takenon record by the Board of Directors, we report that noneof the directors is disqualified as on 31st March, 2004from being appointed as a director in terms of clause(g) of sub-section (1) of section 274 of the CompaniesAct, 1956;

(vi) in our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956, in the manner so required andgive a true and fair view in conformity with theaccounting principles generally accepted in India:-

(a) in the case of the balance sheet, of the state ofaffairs of the Company as at 31st March, 2004;

(b) in the case of the profit and loss account of theprofit for the year ended on that date;

and

(c) in the case of the cash flow statement, of the cashflows for the year ended on that date.



R. A. Banga

(Partner)Membership Number : 37915


50


(i) (a) The company is maintaining proper recordsshowing full particulars, including quantitativedetails and unitwise situation of fixed assets.

(b) Physical verification of fixed assets was carriedout during the year in accordance with thecompany’s policy of verifying the assets once inthree years. In our opinion the frequency ofverification is at reasonable intervals. No materialdiscrepancies between the book records and thephysical inventory were noticed.

(c) During the year, in our opinion, a substantial partof fixed assets has not been disposed off by thecompany.

(ii) (a) The inventory of the company has been physicallyverified by the management during the year andat the year end or after the year end. In respect ofstocks lying with third parties, a substantial portionwas physically verified or has been confirmed bythird parties. In our opinion the frequency ofverification is reasonable.

(b) In our opinion and according to the informationand explanations given to us, the procedures ofphysical verification of inventory followed by themanagement were found reasonable andadequate in relation to the size of the companyand the nature of its business.

(c) On the basis of our examination of records ofinventory, in our opinion, the company hasmaintained proper records of inventory and thediscrepancies noticed on physical verificationbetween the physical stocks and the book recordswere not material in relation to the operations ofthe company.

(iii) (a) In our opinion and according to the informationand explanation given to us, the company hasgranted unsecured loans, to fourteen companies/parties covered in the register maintained undersection 301 of the Companies Act, 1956. Themaximum amount of loans granted during the yearwas Rs. 21804.91 lakhs (including loansaggregating Rs.16304.91 lakhs which are at call )and the year end balance of loans granted to suchparties was Rs. 11134.46 lakhs (including loansaggregating Rs. 8134.46 lakhs which are at call ).In our opinion, the company has not taken anyloans, secured or unsecured, from companies,firms or other parties listed in the registermaintained under section 301 of the CompaniesAct,1956. As the Company has not taken any loansfrom parties listed in the register maintained undersection 301 of the Companies Act, 1956,paragraphs (iii)(b), (c) and (d) of the Order are notapplicable in respect of loans taken.

(b) In our opinion and according to the informationand explanations given to us, the rates of interestand other terms and conditions on which loanshave been granted to companies, firms or otherparties listed in the register maintained undersection 301 of the Companies Act, 1956 are not,prima facie, prejudicial to the interest of thecompany.

Annexure to the Auditors’ Report of Mahindra & Mahindra Limited for the year ended 31st March, 2004.

(Referred to in paragraph (3) thereof)

(c) In respect of loans granted where stipulations havebeen made, the parties are repaying the principalamount and paying the interest as stipulated or asrescheduled except in respect of loans,aggregating Rs. 1671.15 lakhs, which have beenfully provided for/written off during the year andinterest, aggregating Rs.80.00 lakhs, which has,however, been received during the year.

(d) In our opinion and according to the informationand explanation given to us in respect of partieswhere overdue amount is more than one lakhrupees, reasonable steps have been taken by thecompany for the recovery of the amount.

(iv) In our opinion and according to the information andexplanations given to us, having regard to the explanationthat many of the items are of a special nature and theirprices cannot be compared with alternative quotations,there are adequate internal control procedurescommensurate with the size of the company and thenature of its business for the purchase of inventory, fixedassets and for the sale of goods. Further, on the basis ofour examination and according to the information andexplanations given to us, we have neither come acrossnor have we been informed of any instance of majorweaknesses in the aforesaid internal control procedures.

(v) (a) In our opinion and according to the informationand explanations given to us, the transactions thatneed to be entered into the register maintainedunder Section 301 of the Companies Act, 1956have been so entered.

(b) In our opinion and according to the informationand explanations given to us, having regard to thecomments in (iv) above, the transactions made inpursuance of contracts or arrangements enteredin the register maintained under Section 301 ofthe Companies Act, 1956 and exceeding the valueof five lakh rupees in respect of any party duringthe year have been made at prices, which arereasonable having regard to the prevailing marketprices at the relevant time.

(vi) In our opinion and according to the information andexplanations given to us, the company has complied withthe provisions of Section 58A and 58AA of the CompaniesAct, 1956 and the Companies (Acceptance of Deposits)Rules, 1975, as applicable, with regard to the depositsaccepted from the public. According to the informationand explanations given to us, no order under the aforesaidsections has been passed by the Company Law Boardon the company.

(vii) In our opinion, the company has an internal audit systemcommensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of accountmaintained by the company relating to the manufactureof motor vehicles and tractors pursuant to the rules madeby the Central Government for the maintenance of costrecords under section 209 (1) (d) of the Companies Act,1956 and we are of the opinion that prima facie theprescribed accounts and records have been maintainedand are being made up. We have not, however, made adetailed examination of the records with a view ofdetermining whether they are accurate or complete. To

51


the best of our knowledge and according to theinformation given to us, the Central Government has notprescribed the maintenance of cost records under Section209(1)(d) of the Companies Act, 1956, for any otherproducts of the Company.

(ix) (a) According to the information and explanationsgiven to us and according to the books and recordsas produced and examined by us, in our opinion,the undisputed statutory dues including providentfund, investor education and protection fund,employees’ state insurance, income-tax, sales-tax,wealth tax, customs duty, excise duty, cess andother material statutory dues as applicable havegenerally been regularly deposited by the company

during the year with the appropriate authorities.According to the information and explanation givento us, there are no arrears of outstanding statutorydues as mentioned above as at 31st March, 2004for a period of more than six months from the datethey become payable.

(b) As at 31st March, 2004 according to the records ofthe company and the information and explanationgiven to us, the following are the particulars ofdues on account of sales-tax, income-tax, customsduty, wealth tax, excise duty and cess matters thathave not been deposited on account of anydispute:

Out of the above amounts aggregatingRs.46719.80 lakhs, Rs.41458.57 lakhs have beenstayed for recovery by the relevant authorities.

(x) The Company does not have accumulated losses as at31st March, 2004 and has not incurred cash losses duringthe financial year ended on that date or in the immediatelypreceding financial year.

(xi) In our opinion and according to the information andexplanations given to us, the Company has not defaultedin repayment of dues to a financial institution, bank or todebenture holders during the year.

(xii) In our opinion and according to the information andexplanations given to us, the Company has not grantedany loans and advances on the basis of security by wayof pledge of shares, debentures and other securities.

(xiii) The provisions of any special statute as specified underClause (xiii) of the Order are not applicable to the company.

(xiv) In our opinion and according to the information andexplanations given to us, the Company is not a dealer ortrader in securities.

(xv) According to the information and explanations given tous, the Company has not given any guarantees for loanstaken by others from banks or financial institutions, theterms and conditions, whereof, in our opinion, areprejudicial to the interest of the Company.

(xvi) In our opinion and according to the information andexplanation given to us, the term loans were applied forthe purpose for which the loans were obtained.

(xvii) Based on the information and explanations given to usand on an overall examination of the balance sheet of theCompany, in our opinion, there are no funds raised on ashort term basis which have been used for long terminvestment, and vice versa.

(xviii) The Company has not made any preferential allotment ofshares to parties and Companies covered in the registermaintained under Section 301 of the Companies Act, 1956during the year.

(xix) In our opinion and according to the information andexplanation given to us, the Company has created securityfor the debentures issued.

(xx) The Company has not raised any money by public issueduring the year.

(xxi) According to the information and explanations given tous, during the year, no fraud on or by the Company hasbeen noticed or reported.

For A. F. Ferguson & Co.Chartered Accountants

R. A. Banga(Partner)

Mumbai, 31st May, 2004 Membership Number : 37915

Name of the Nature of the Amount Period to which Forum where pendingstatute dues Rs. in lakhs the amount relates

Various yearscovering the period

Excise Duty Laws Excise Duty 130.25 1993-2003 Appellate Authority – uptoCommissioners’ level

3791.50 1988-2003 Appellate Authority –Tribunal level35270.85 1991-1996 High Court

Sales Tax Laws Sales Tax 466.30 1988-2004 Appellate Authority – upto Commissioners’level

15.11 1986-2002 Appellate Authority –Tribunal level265.75 1984-2003 High Court

Income Tax Laws Income Tax 6033.76 1998-2001 Appellate Authority – upto Commissioners’level

697.14 1995-1999 Appellate Authority –Tribunal level

Wealth Tax Laws Wealth Tax 49.14 1995-1997 Appellate Authority – upto Commissioners’level

52


Balance Sheet as at 31st March, 2004

2004 2003Schedule Rupees Rupees Rupees

lakhs lakhs lakhs

I. SOURCES OF FUNDS :

SHAREHOLDERS’ FUNDS :

Capital ................................................................................. I 116,00.86 116,00.86

Reserves and Surplus ........................................................ II 1,659,02.49 1,453,82.23

1,775,03.35 1,569,83.09

LOAN FUNDS ..................................................................... III 729,80.78 1,139,84.45

DEFERRED TAX LIABILITY (Net) ....................................... 203,25.00 177,10.00

Total ............ 2,708,09.13 2,886,77.54

II. APPLICATION OF FUNDS :

FIXED ASSETS ................................................................... IV 1,332,97.01 1,413,77.86

CAPITAL WORK-IN-PROGRESS ......................................... 38,41.10 52,31.00

1,371,38.11 1,466,08.86

INTANGIBLE ASSETS ......................................................... V 20,21.80 —

INVESTMENTS ................................................................... VI 1,111,15.31 862,26.96

NET CURRENT ASSETS :

Current Assets, Loans and Advances .................. VII 1,502,56.79 1,613,48.02

Less : Current Liabilities and Provisions ............... VIII 1,306,87.30 1,094,78.25

195,69.49 518,69.77

MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOTWRITTEN OFF OR ADJUSTED) ......................................... IX 9,64.42 39,71.95

Total ............ 2,708,09.13 2,886,77.54

NOTES ON ACCOUNTS .......................................................... XV

Per our report attached



R. A. Banga

Partner


}}Keshub Mahindra Chairman

Anand G. Mahindra Vice Chairman & Managing Director

K. J. Davasia

Bharat Doshi Executive DirectorsAlan E. Durante

A. K. Nanda Executive Director & Secretary


R. K. Pitamber

Deepak S. Parekh

N. B. Godrej

M. M. Murugappan

David E. Friedman DirectorsV. K. Chanana

R. N. Bhardwaj

Dr. A. S. Ganguly

R. K. Kulkarni

Anupam Puri

53


Profit and Loss Account for the year ended 31st March, 2004

2004 2003Schedule Rupees Rupees

lakhs lakhs

SALES – Traded and Manufactured Goods [Note 11(a)] ....................................... 5,829,24.59 4,452,64.97Less : Excise Duty on Sales (net) .......................................................................... 943,78.11 785,49.06

Net Sales ................................................................................................................ 4,885,46.48 3,667,15.91Other Income.......................................................................................................... X 171,98.19 144,14.24

Net Income 5,057,44.67 3,811,30.15EXPENDITURE :

Raw Materials, Finished and Semi-finished Products ................................. XI 3,352,86.52 2,500,21.84Excise Duty .................................................................................................. 11,65.34 (47.66)Personnel ..................................................................................................... XII 417,45.39 381,29.03Interest, Commitment and Finance Charges (Net) ..................................... XIII 51,58.65 86,89.75Depreciation / Amortisation [Note 5(g)(i)] .................................................... 165,19.90 165,43.65Other Expenses ........................................................................................... XIV 662,32.95 553,85.51

4,661,08.75 3,687,22.12Less : Cost of Manufactured Products capitalised ................................................ 15,77.55 19,17.07

4,645,31.20 3,668,05.05Profit before provision for contingencies, exceptional item and taxation ............. 412,13.47 143,25.10Less : Provision for contingencies (Note 10) ......................................................... 3,42.00 3,87.30

Profit before exceptional item and taxation ........................................................... 408,71.47 139,37.80Add : Exceptional Item (Note 22) .......................................................................... 29,47.83 57,65.61

Profit before taxation .............................................................................................. 438,19.30 197,03.41Less : Provision for tax - Current tax ..................................................................... 63,50.00 12,30.00

- Deferred tax (Net) (Note 23) .......................................... 26,15.00 39,20.00

Profit for the year ................................................................................................... 348,54.30 145,53.41

Balance of Profit for earlier years .......................................................................... 423,94.35 333,05.74Add : Transferred from Debenture redemption reserve (Net) .............................. 123,15.13 32,33.36

547,09.48 365,39.10

Total of Profit and Loss Account balances shown above ..................................... 895,63.78 510,92.51Deduct: General Reserve ....................................................................................... 35,00.00 15,00.00

: Dividends paid (Note 25) .......................................................................... 0.21 —: Income-tax on Dividend Paid ................................................................... 0.03 —: Proposed Dividends – See Directors’ Report .......................................... 104,41.27 63,80.64: Income-tax on Proposed Dividends ......................................................... 13,37.79 8,17.52

Balance for 2003-2004 and earlier years carried to Balance Sheet ...................... 742,84.48 423,94.35EARNINGS PER SHARE (Note 26) :(Face value Rs. 10/- per share) (Rupees)

Basic ............................................................................................................... 30.04 12.55Diluted ............................................................................................................ 30.04 12.55

NOTES ON ACCOUNTS ....................................................................................... XV

Per our report attached to the Balance Sheet



R. A. Banga

Partner


}

Keshub Mahindra Chairman


K. J. Davasia




}R. K. Pitamber

Deepak S. Parekh

N. B. Godrej

M. M. Murugappan


R. N. Bhardwaj

Dr. A. S. Ganguly

R. K. Kulkarni

Anupam Puri

54


Cash Flow Statement for the Year ended 31st March, 2004

2004 2003Rupees Rupees Rupees

lakhs lakhs lakhs

A. CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit before exceptional item and taxation ........................................................... 408,71.47 139,37.80

Adjustments for :

Depreciation/Amortisation .................................................................................... 165,19.90 165,43.65

Foreign Exchange ................................................................................................. 6,56.55 7,69.77

Investment Income .............................................................................................. (82,97.95) (87,73.09)

Interest, Commitment and Finance charges ........................................................ 76,93.27 115,90.39

Amortisation of Expenses .................................................................................... 2,06.93 8,46.50

Profit on sale of Investments (Net) ...................................................................... (5,20.51) (6,51.46)

Loss on fixed assets sold/scrapped/written off (Net) .......................................... 4,03.35 3,62.88

Excess of cost over fair value of current investments (Net) ................................ 96.26 25.74

Provision for diminution in the value of long term investments .......................... 5.08 3,00.30

167,62.88 210,14.68

Operating Profit before Working Capital changes ........................................................ 576,34.35 349,52.48

Changes in:

Trade and other receivables ................................................................................. 116,90.64 164,66.09

Inventories ............................................................................................................ (39,32.49) 12,29.41

Trade and other payables ..................................................................................... 159,84.85 101,91.65

237,43.00 278,87.15

Miscellaneous Expenditure (to the extent not written off or adjusted) incurred duringthe year ........................................................................................................................ (82.68) (69,34.15)

Cash generated from operations .................................................................................. 812,94.67 559,05.48

Income-taxes paid (net of refunds) .............................................................................. (72,05.01) (15,27.40)

NET CASH FROM OPERATING ACTIVITIES ................................................................ 740,89.66 543,78.08

55


2004 2003Rupees Rupees

lakhs lakhs

Cash Flow Statement (Contd.)

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets .............................................................................................. (79,57.72) (116,01.11)

Sale of fixed assets ...................................................................................................... 5,98.54 18,37.38

Payments for Intangible Assets ................................................................................... (13,63.81) —

Purchase of investments ............................................................................................. (2,990,75.29) (1,464,72.25)

Sale of investments ...................................................................................................... 2,840,04.04 1,342,96.60

Interest received .......................................................................................................... 24,43.52 24,18.78

Dividends received ....................................................................................................... 52,94.44 58,72.45

Inter corporate deposits (Net) ...................................................................................... 12,24.82 (19,99.77)

Balance sale proceeds in respect of the transfer of the business and undertaking of

MSL-Project Engineering Unit received. ...................................................................... 4,50.00 —

Exceptional Items :

Sale proceeds received on sale of long term investments ( Note 2 ) .......................... 31,85.85 101,88.54

Premium received on the redemption of Preference Shares ....................................... 4,59.97 —

NET CASH USED IN INVESTING ACTIVITIES ............................................................. (107,35.64) (54,59.38)

C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from borrowings ........................................................................................... 185,35.77 274,59.60

Repayments of borrowings (including premium on prepayments) .............................. (659,25.24) (528,35.41)

Dividends paid [including income-tax on dividends Rs. 817.55 lakhs (2003: Rs. Nil)] . (71,84.29) (55,96.16)

Interest, Commitment and Finance charges paid [including interest pertaining tocapital expenditure Rs. 33.40 lakhs (2003: Rs. 340.48 lakhs)] .................................... (98,19.54) (128,66.73)

NET CASH USED IN FINANCING ACTIVITIES ............................................................. (643,93.30) (438,38.70)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS .......................... (10,39.28) 50,80.00

CASH AND CASH EQUIVALENTS (Note 3) :

Opening Balance .......................................................................................................... 240,54.09 189,74.09

Cash and Bank balance acquired pursuant to the Scheme of Arrangement ............... 3,18.24 —

Closing Balance ............................................................................................................ 233,33.05 240,54.09

See Notes attached.




R. A. Banga

Partner


}



K. J. Davasia



Mumbai, 31st May, 2004}

R. K. Pitamber

Deepak S. Parekh

N. B. Godrej

M. M. Murugappan


R. N. Bhardwaj

Dr. A. S. Ganguly

R. K. Kulkarni

Anupam Puri

56


Notes to the Cash Flow Statement for the Year ended 31st March, 2004

2004 2003Rupees lakhs Rupees Lakhs

1. Scheme of Arrangement :Pursuant to the scheme of arrangement between Mahindra Eco Mobiles Limited(MEML) and Mahindra Information Technology Services Limited (MITS) (both wholly ownedsubsidiaries of the Company) with the Company as approved by the shareholders of the Companyin the court-convened meeting held on 30th October 2003 and subsequently sanctioned by theHon’able High Court of Bombay on 12th December 2003 the entire business and undertakings ofMEML and MITS including all their assets and liabilities were transferred to and vested in theCompany with effect from opening of business hours on 1st July, 2003 at the values indicated below.

Loan Funds .................................................................................................................................. 16,51.44

Fixed Assets (including CWIP) .................................................................................................... 7,09.71

Investment in Subsidiaries .......................................................................................................... 102,74.55

Cancellation of cost of investments in and loans and advances to subsidiaries ........................ 35,23.13

Other Investments ...................................................................................................................... 1,80.00

Current Assets ............................................................................................................................ 24,83.73

Current Liabilities ........................................................................................................................ 2,37.42

The amalgamation of these companies into M&M is a non-cash transaction.

2. Sale proceeds received on sale of investments include sale by the Company of its entire holdingin Mahindra Sintered Products Limited ( subsidiary company ) to the Joint Venture Partner. Thesale consideration and discharge thereof is as given below

Total proceeds on sale of shareholding ............................................................................................... — 65,00.00

Discharged by cash received upto 31st March, 2003. ......................................................................... — 65,00.00

3. Cash and cash equivalents include :

Cash, cheques and stamps on hand ................................................................................................... 142,33.55 126,92.81

Balances with scheduled banks :

On current account .............................................................................................................................. 47,99.76 46,00.72

On fixed deposit account .................................................................................................................... 41,72.38 67,20.28

On margin account .............................................................................................................................. 5.47 —

Balances with non-scheduled banks :

On current account .............................................................................................................................. 1,19.72 73.26

233,30.88 240,87.07

Unrealised translation loss/ (gain) on foreign currency cash and cash equivalents ............................ 2.17 (32.98)

233,33.05 240,54.09

4. Purchase of fixed assets include payments for items in capital work-in-progress and advances for purchase of fixed assets.

5. Previous year’s figures have been regrouped/restated wherever necessary.

57


SCHEDULE I2004 2003

Share Capital (Note 2) : Rupees Rupeeslakhs lakhs

Authorised :

17,50,00,000 Ordinary (Equity) Shares of Rs.10 each ................................................ 175,00.00 175,00.00

25,00,000 Unclassified Shares of Rs.100 each ...................................................... 25,00.00 25,00.00

Total ....... 200,00.00 200,00.00

Issued and Subscribed :

11,60,08,599 Ordinary (Equity) Shares of Rs.10 each fully paid-up ........................... 116,00.86 116,00.86

Total ....... 116,00.86 116,00.86

SCHEDULE II2003 Additions Deductions 2004

Reserves and Surplus : Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs

1 Capital Reserve* ..................................................................... 11,50.08 — — 11,50.0811,50.08 — — 11,50.08

2 Share Premium Account [Note 3(a) (i) and Note 24] ............... 351,88.47 2,02.54 101,82.85 252,08.16361,28.91 — 9,40.44 351,88.47

3 Revaluation Reserve [Note 3(a)(ii)] .......................................... 15,51.02 — 63.20 14,87.8216,11.89 — 60.87 15,51.02

4 Investment Allowance Reserve Account ............................... 2,45.00 — — 2,45.002,45.00 — — 2,45.00

5 General Reserve ..................................................................... 485,82.98 35,00.00‡ — 520,82.98470,82.98 15,00.00‡ — 485,82.98

6 Debenture Redemption Reserve ............................................ 150,76.92 — 123,15.13§ 27,61.79183,10.28 — 32,33.36§ 150,76.92

7 Investment Fluctuation Reserve (Note 24, 29 and 30) ........... 8,82.39 117,59.13 42,68.00 83,73.528,82.39 — — 8,82.39

8 (a) Employee Stock Option Outstanding [Note 3(b)] .................... 6,45.97 6.70 2,01.80 4,50.876,92.31 — 46.34 6,45.97

8 (b) Less : Deferred Employee Compensation Expense ................ (3,34.95) (6.70) (1,99.44) (1,42.21)(6,08.98) — 2,74.03 (3,34.95)

Net [8 (a) – 8 (b)] ...................................................................... 3,11.02 — 2.36 3,08.6683.33 — (2,27.69) 3,11.02

1,029,87.88 154,61.67 268,31.54 916,18.011,054,94.86 15,00.00 40,06.98 1,029,87.88

9 Balance for 2003-2004 and earlier years as per Profitand Loss Account ................................................................... 742,84.48

423,94.35

Total.......... 1,659,02.491,453,82.23

* Includes Rs. 11,49.08 lakhs being State Government grant (sanctioned and receivable) for a manufacturing unit located in a developing area.

‡ Transfer from Profit and Loss Account Rs. 35,00.00 lakhs (2003: Rs. 15,00.00 lakhs)

§ Transfer to Profit and Loss Account net of charge created during the year Rs. 1,72.92 lakhs (2003: Rs. 19,10.64 lakhs)2003 figures are in italic

58


SCHEDULE III2004 2003

Loan Funds (Note 4): Rupees Rupees Rupeeslakhs lakhs lakhs

(A) Secured:

(1) Debentures/Bonds .............................................................................................. 157,50.73 676,02.73

(2) Foreign Currency Loans from Banks .................................................................. 294,11.67 217,94.58

(3) Rupee Loans :

(a) From Financial Institutions ......................................................................... — 7,01.40

(b) From Others ............................................................................................... — 20.62

— 7,22.02(4) Loans and Advances on cash credit account from Banks ................................. 33,60.35 22,96.03

485,22.75 924,15.36

(B) Unsecured :

(1) Fixed Deposits .................................................................................................... 39,54.47 42,28.84

(2) Short-term Loans :

Borrowings from Companies ............................................................................. 2,40.00 2,70.00

(3) Other Loans:

(a) From Financial Institutions ......................................................................... 200,34.04 170,66.54

(b) From Banks ................................................................................................ 2,23.06 —

(c) From Others [including interest accrued and due Rs. 2.03 lakhs(2003 : Rs. 2.03 lakhs)] ............................................................................... 6.46 3.71

202,63.56 170,70.25

244,58.03 215,69.09

Total ...... 729,80.78 1,139,84.45

59


SCHEDULE IV

Fixed Assets (Note 5) :

Cost/Prof- Additions Deduc- Cost/Prof- Deprecia- Deprecia- Deduc- Depre- Net Netessional and ad- tions and essional tion to tion for tions and ciation to Balance Balance

Description valuation justments adjust- valuation 31st 2003-2004 Adjust- 31st as at as atof Assets as at 31st during ments as at 31st March, ment of March, 31st 31st

March, the year during March, 2003 Deprecia- 2004 March, March,2003 at cost the year 2004 tion 2004 2003

Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs

Land [Note 5 (a) (b) and (c)] 43,79.04 — 64.48 43,14.56 68.52 6.09 1.36 73.25 42,41.31 43,10.52

Buildings [Note 5 (d) and (e)]... 334,69.62 6,36.74 75.15 340,31.21 68,42.03 9,53.25 (5.09) 78,00.37 262,30.84 266,27.59

Plant and Machinery..... 1,963,86.58 79,03.77 27,43.45 2,015,46.90 912,58.75 147,06.96 18,45.04 1,041,20.67 974,26.23 1,051,27.83

Furniture and Fittings.... 56,49.32 3,17.54 1,46.16 58,20.70 22,21.87 3,29.28 2.13 25,49.02 32,71.68 34,27.45

Vehicles, Cycles, etc.... 37,97.38 9,08.79 5,39.85 41,66.32 19,12.91 5,23.36 3,96.90 20,39.37 21,26.95 18,84.47

Total....... 2,436,81.94 97,66.84 35,69.09 2,498,79.69 1,023,04.08 165,18.94 22,40.34 1,165,82.68 1,332,97.01 1,413,77.862,068,03.70 419,66.95 50,88.71 2,436,81.94 879,54.50 166,48.75 22,99.17 1,023,04.08 1,413,77.86

Schedule VIntangible Assets :

Description of Gross carrying Additions and Retirements Gross carrying Accumulated Amortisation Deductions and Accumulated Net BalanceAssets amount as at adjustments and disposals amount as at amortisation to for 2003-2004 adjustments of amortisation to as at 31st

1st April, 2003 during the 31st March, 1st April, 2003 amortisation 31st March, March, 2004year at cost 2004 2004

Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs

Technical Knowhow .... 76.55 — — 76.55 25.52 25.52 — 51.04 25.51

DevelopmentExpenditure ................. 7,66.22 10,81.03 — 18,47.25 — 39.49 — 39.49 18,07.76

Software Expenditure.. — 2,82.78 — 2,82.78 — 94.25 — 94.25 1,88.53

Total ............................. 8,42.77 13,63.81 — 22,06.58 25.52 1,59.26 — 1,84.78 20,21.80

Note :- Until 31st March, 2003 Technical Knowhow, Development Expenditure and Software Expenditure were included in Miscellaneous Expenditure (to theextent not written off or adjusted). Effective 1st April, 2003, the carrying amounts in respect thereof have been recognised as Intangible Assets with theapplicability of Accounting Standard 26 on Intangible Assets issued by the Institute of Chartered Accountants of India. Accordingly no comparatives have beenstated.

60


SCHEDULE VI

Investments (At Cost, unless otherwise specified) :2004 2003

Face Value Note

Per Unit Long Term Current Long Term CurrentNumber Rupees Rupees Rupees Rupees Rupees

lakhs lakhs lakhs lakhs

Shares (Non-trade and fully paid-up unless otherwise specified) :

Unquoted :

(a) In Subsidiary Companies :

(i) Equity Shares :

53,78,235 10 Mahindra Engineering & Chemical Products Limited ..................... 5,63.88 — 5,63.88 —

271,00,006 10 Mahindra Intertrade Limited [including 1,50,00,000 shares partlypaid-up] .......................................................................................... (b) 16,60.00 — 16,60.00 —

37,23,874 10 Mahindra Steel Service Centre Limited ......................................... 6,38.38 — 6,38.38 —12,16,00,593 10 Mahindra Holdings & Finance Limited ........................................... (c) (1) 121,60.06 — 117,60.06 —

— 10 Mahindra Information Technology Services Limited ...................... (c) (2) — — 10,09.01 —5,88,21,537 10 Mahindra & Mahindra Financial Services Limited .......................... (b) (c) (3) 129,74.11 — 129,66.70 —

10,00,000 GB £ 1 Mahindra Intertrade (UK) Limited [all shares partly paid-up] .......... 1,71.29 — 1,71.29 —4,50,00,000 US $ 0.10 Mahindra USA Inc .......................................................................... 19,37.89 — 19,37.89 —

91,81,188 10 Mahindra Gujarat Tractor Limited ................................................... 19,36.39 — 19,36.39 —

1,76,39,665 10 Mahindra Shubhlabh Services Limited ........................................... (b) (c) (4) 19,21.52 — 11,40.00 —5,76,00,060 2 Mahindra British Telecom Limited ................................................. (c) (5) 205,45.15 — 104,42.92 —

71,944 100 Mahindra Consulting Limited ......................................................... 3,78.54 — 3,78.54 —29,40,000 10 Automartindia Limited (2003 : 21,30,000 nos. at Value Re. 1) ....... (c) (6) 2,76.79 — —74,70,000 10 Mahindra Logisoft Business Solutions Limited .............................. (c) (7) 6,83.00 — 1,28.00 —

— 10 Mahindra Eco Mobiles Limited ...................................................... (c) (8) — — 10.20 —2,89,365 US $ 1 Mahindra Consulting Inc., U.S.A. ................................................... (c) (9) 6,92.48 — — —

(ii) 6% Cumulative Redeemable Preference Shares :— 100 Mahindra Intertrade Limited .......................................................... (c) (11) — — 18,75.00 —

(iii) 7.25% Cumulative Redeemable Preference Shares :18,75,000 100 Mahindra Intertrade Limited .......................................................... (c) (10) 18,75.00 — — —

(iv) 10% Cumulative Redeemable Preference Shares :77,81,936 10 Mahindra Gesco Developers Limited ............................................. (c) (12) 23,34.58 — — —

(v) 8.5% Cumulative Redeemable Preference Shares :10,00,000 100 Mahindra Ashtech Limited ............................................................. (c) (13) 10,00.00 — — —

(vi) 13% Non-Cumulative Redeemable Preference Shares :55,00,000 100 Mahindra Gesco Developers Limited ............................................. 55,00.00 — 55,00.00 —

672,49.06 — 521,18.26 —

(b) In Other Companies :

(i) Equity Shares :312 100 Montreal Engineering International Limited ................................... 0.11 — 0.11 —

8,55,646 10 Machinery Manufacturers Corporation Limited ............................. (b) 94.25 — 94.25 —1,00,000 10 Judricks (India) Private Limited ...................................................... 10.00 — 10.00 —

35,000 10 Mahindra & Mahindra Contech Limited ......................................... 3.50 — 3.50 —— 10 Andromeda Investment & Finance Private Limited ....................... (c) (14) — — 0.13 —

75,000 10 NTTF Industries Limited ................................................................ 15.00 — 15.00 —— 100 Ridge Business Centre Private Limited ......................................... (c) (15) — — 15.75 —

30,000 10 Mahindra Allied Investments Limited ............................................ 3.92 — 3.92 —1,35,00,000 100 Ford India Private Limited .............................................................. 135,00.00 — 135,00.00 —

60,00,000 10 Ford Credit Kotak Mahindra Limited .............................................. 6,00.00 — 6,00.00 —— 10 Azrael Investments Limited ........................................................... (c) (16) — — 2,20.50 —

3,50,000 10 + Jayem Automotives Limited .......................................................... 35.00 — 35.00 —7,49,997 10 Officemartindia.com Limited ......................................................... 22.52 — 22.52 —

50,000 10 Indian NGOs.com Private Limited ................................................. 6.19 — 6.19 —20,000 10 Sixth Sense Studios Private Limited .............................................. (c) (17) 2.00 — — —

2,85,000 10 Utility Engineers (India) Limited ..................................................... 28.50 — 28.50 —

+ Trade Investments

61


Others (a) — —

(ii) 12% Cumulative Redeemable Preference Shares :— 100 + Mahindra Ugine Steel Company Limited ....................................... (c) (18) — — 2,00.00 —

(iii) 6% Cumulative Redeemable Preference Shares :1,25,000 100 + Pranay Sheetmetal Stampings Limited .......................................... 1,25.00 — 1,25.00 —

(iv) 4% Tax-free Cumulative Preference Shares :2,296 100 Machinery Manufacturers Corporation Limited ............................. (b) 2.25 — 2.25 —

(v) 18% Redeemable Non-Cumulative Preference Shares :— 100 Azrael Investments Limited ........................................................... (c) (16) — — 2,75.00 —

(vi) 11% Redeemable Preference Shares :1,78,000 100 Sixth Sense Studios Private Limited .............................................. (c) (17) 1,78.00 — — —

146,26.24 — 151,57.62 —

Quoted :(a) In Subsidiary Companies :

(i) Equity Shares :1,25,66,126 10 Mahindra Gesco Developers Limited ............................................. (b) (c) (12) 67,21.29 — — —

67,21.29 — — —

(b) In Non-Subsidiary Companies :(i) Equity Shares :

13,91,860 10 + Fairfield Atlas Limited .................................................................... 1,39.18 — 1,39.18 —4,28,160 10 Industrial Development Bank of India ............................................ — 3,49.18 3,49.18 —

1,39.18 3,49.18 4,88.36 —

Less : Excess of cost over fair value of current investments of Equity Shares (Net) ............................................................................. — (1,00.42) — —

1,39.18 2,48.76 4,88.36 —Debentures / Bonds (Non-trade & fully paid-up) :

Unquoted :

(a) In Subsidiary Companies :

25,00,000 100 0% Mahindra Holdings & Finance Limited .................................... 25,00.00 — 25,00.00 —

4 1,00,00,000 11.19% Mahindra & Mahindra Financial Services Limited ................... 4,00.00 — 4,00.00 —

— 1,00,00,000 12.75% Mahindra & Mahindra Financial Services Limited ................... (d) (1) — — 10,22.81 —

15 1,00,00,000 8.80% Mahindra & Mahindra Financial Services Limited ................... (d) (2) — 15,52.46 — —

20 1,00,00,000 6.90% Mahindra & Mahindra Financial Services Limited ................... (d) (3) — 20,31.67 — —

(b) In Other Companies : ...........................................................................

13 100 0.50% The East India Clinic Limited ................................................... 0.01 — 0.01 —

20,00,000 10 + 18.00% Jayem Automotives Limited ............................................... 2,00.00 — 2,00.00 —

31,00.01 35,84.13 41,22.82 —

Quoted :

4,50,000 100 6.75% Tax Free US-64 Bonds ............................................................ (d) (4) — 4,72.77 — —

— 4,72.77 — —

31,00.01 40,56.90 41,22.82 —

Other Investments :

Government Securities :

Unquoted :

— 4,04,000 § 6 Years National Savings Certificates .................................................... (e) (1) 4.04 — 4.04 —

4.04 — 4.04 —

SCHEDULE VI (Contd.)


Face Value Note

Per Unit Long Term Current Long Term Current

Number Rupees Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs

+ Trade investments§ Total Face Value

62


Quoted :

— 46,92,00,000 § Treasury Bills ......................................................................................... (e) (2) — 45,43.75 — 76,91.90

— 35,00,00,000 § Government of India Securities ............................................................. (e) (3) — 41,11.68 — 34,87.35

— 86,55.43 — 111,79.25

— 86,55.43 4.04 111,79.25

Less : Excess of cost over fair value of current investments of Government Securities ............................................................ — (35.15) — (44.00)

4.04 86,20.28 4.04 111,35.25

UnitsUnquoted :

39,690 1,000 Templeton India Mutual Fund ................................................................ (f)(1) — 6,00.10 — 5,00.00

33,93,087 10 Templeton India Mutual Fund ................................................................ (f)(1) — 4,00.51 — —

92,19,801 10 Prudential ICICI Mutual Fund ................................................................. (f)(2) — 10,00.05 — 4,00.00

1,07,52,380 10 Kotak Mahindra Mutual Fund ................................................................ (f)(3) — 12,03.41 — 7,50.61

94,02,738 10 HDFC Mutual Fund ................................................................................ (f)(4) — 10,00.11 — 5,00.00

1,01,98,292 10 Standard Chartered Mutual Fund .......................................................... (f)(5) — 10,50.06 — 10,50.00

44,96,483 10 Tata Mutual Fund ................................................................................... (f)(6) — 5,00.00 — —

10,00,000 10 Deutsche Mutual Fund .......................................................................... (f)(7) — 1,00.00 — —

50,00,000 10 Principal Mutual Fund ............................................................................ (f)(8) — 5,00.00 — —

— 63,54.24 — 32,00.61

Less : Excess of cost over fair value of current investments of Mutual Funds ............................................................................. — (4.69) — —

— 63,49.55 — 32,00.61

918,39.82 192,75.49 718,91.10 143,35.86

Total.................. 1,111,15.31 862,26.96

Cost (net of amounts written off) of Unquoted Investments ................ 949,17.72 746,03.35

Cost of Quoted Investments ................................................................. 163,37.85 116,67.61

1,112,55.57 862,70.96

Less : Excess of cost over fair value of Current Investments (Net) ....... (1,40.26) (44.00)

1,111,15.31 862,26.96

Market Value of Quoted Investments ................................................... 121,38.32 112,56.22

Notes :Face Value 2004 2003

Per Unit Long Term Long TermNumber Rupees Rupees Rupees

(a) Shares (unquoted) in other companies comprise :21 100 # The United Spices Importers Limited (Equity “B” Shares) ............ 1 174 16,667 # Engineering & Metal Works, Tehran .............................................. 1 1

(Rials)Total................ 2 2

# Written off to Re.1(b) Equity investments in these companies carry certain restrictions on transfer of shares in terms of funds raised by these companies from

financial institutions/ banks.



Face Value Note

Per Unit Long Term Current Long Term Current

Number Rupees Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs

§ Total Face Value

63



Investments (At Cost, unless otherwise specified) :

(c) The following are the movements in Shares during the year :

Equity Shares Preference Shares

Acquired Sold Acquired Cancellation Acquiredpursuant to pursuant to Acquired/ pursuant toScheme of Scheme of (Redeemed/ Scheme of

Arrangement Arrangement Sold) Arrangement

Nos. Nos. Nos. Nos. Nos. Nos.

(1) Mahindra Holdings & Finance Limited 40,00,000 * — — — — —

(2) Mahindra Information Technology Services Limited — — — 1,00,90,100 — —

(3) Mahindra & Mahindra Financial Services Limited 35,575 — — — — —

(4) Mahindra Shubhlabh Services Limited 62,39,665 — — — — —

(5) Mahindra British Telecom Limited — — 2,53,64,237 — — —

(6) Automartindia Limited 8,10,000 — — — — —

(7) Mahindra Logisoft Business Solutions Limited 55,50,000 * — — — — —

(8) Mahindra Eco-Mobiles Limited — — — 15,00,000 — —

(9) Mahindra Consulting Inc., U.S.A 58,365 — 2,31,000 — — —

(10) Mahindra Intertrade Limited — — — — 18,75,000 —

(11) Mahindra Intertrade Limited — — — — (18,75,000) —

(12) Mahindra Gesco Developers Limited 1,25,66,126 — — — 77,81,936 —

(13) Mahindra Ashtech Limited — — — — 10,00,000 —

(14) Andromeda Investment & Finance Private Limited — 1,270 — — — —

(15) Ridge Business Centre Private Limited — 94,482 — — — —

(16) Azrael Investments Limited — 7,35,000 — — (2,75,000) —

(17) Sixth Sense Studios Pvt. Limited — — 20,000 — — 1,78,000

(18) Mahindra Ugine Steel Company Limited — — — — (2,00,000) —

* Subscribed on a right basis

(d) The following are the movements in Debentures / Bonds during the year :

Acquired Matured

Nos. Rs. lakhs Nos.

(1) Mahindra & Mahindra Financial Services Limited 12.75% — — 10

(2) Mahindra & Mahindra Financial Services Limited 8.80% 15 15,52.46 —

(3) Mahindra & Mahindra Financial Services Limited 6.90% 20 20,31.67 —

(4) Tax Free US-64 Bonds * 6.75% 4,50,000 4,72.77 —

* Pursuant to the Scheme of Conversion Units under the scheme “Units 64” were converted into “Tax Free US-64 Bonds” in theratio of 10:1

64



Investments (At Cost, unless otherwise specified) :

(e) Government Securities :

(1) of the face value of Rs. 3.04 lakhs (2003 : Rs. 3.04 lakhs) were lodged as security deposit.

(2) Treasury Bills of the face value of Rs. 79798.00 lakhs (2003 : Rs. 30120.00 lakhs) were purchased and those of the face value ofRs. 82856.00 lakhs (2003 : Rs. 22470.00 lakhs) were sold/matured during the year.

(3) Government of India Securities of the face value Rs. 12000.00 lakhs (2003 : Rs. 8000.00 lakhs) were purchased and of the facevalue of Rs. 11500.00 lakhs (2003 : Rs. 6500.00 lakhs) were sold during the year.

(f) The following are the movements in Units during the year :

Acquired Sold

Nos. Rs. lakhs Nos.

(1) Templeton India Mutual Fund .......................................... 1,15,73,056 249,82.28 81,73,494

(2) Prudential ICICI Mutual Fund ........................................... 23,35,20,183 279,04.75 22,69,89,928

(3) Kotak Mahindra Mutual Fund ........................................... 22,14,14,612 259,88.66 21,69,09,021

(4) HDFC Mutual Fund .......................................................... 28,04,92,183 306,29.55 27,52,46,032

(5) Standard Chartered Mutual Fund ..................................... 43,75,30,639 463,59.23 43,69,40,401

(6) Tata Mutual Fund .............................................................. 16,40,76,610 181,52.69 15,95,80,127

(7) Deutsche Mutual Fund ..................................................... 6,01,26,050 61,65.53 5,91,26,050

(8) Principal Mutual Fund ....................................................... 2,60,50,672 26,05.25 2,10,50,672

(9) HSBC Mutual Fund .......................................................... 4,16,88,647 42,77.32 4,16,88,647

(10) SBI Mutual Fund .............................................................. 1,07,57,474 10,76.83 1,07,57,474

(11) Reliance Mutual Fund ...................................................... 22,93,893 3,50.22 22,93,893

(12) Units 64 * ......................................................................... 45,00,000 4,72.72 45,00,000

* Pursuant to the Scheme of Conversion Units under the scheme “Units 64” were converted into “Tax Free US-64 Bonds” in theratio of 10:1

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SCHEDULE VII2004 2003

Current Assets, Loans and Advances : Rupees Rupees Rupeeslakhs lakhs lakhs

(A) Current Assets :Interest accrued on investments ............................................................................... 3,77.07 2,85.97Stores and Spares (at cost or net realisable value whichever is lower) .................. 11,95.17 12,79.16Tools ............................................................................................................................ 14,42.70 15,18.85

Stock in Trade and Work-in-Progress (at cost or net realisable value whichever islower) :(i) Finished Products produced and purchased for sale ........................................ 185,78.64 176,58.49(ii) Contracts and Work-in-Progress ........................................................................ 33,32.88 23,53.87(iii) Manufactured Components. .............................................................................. 28,78.96 25,07.18(iv) Raw Materials and Bought-out Components .................................................... 201,31.42 167,03.90(v) Property Development Activity – Work-in-Progress [including completed flats

and premises Rs. 850.94 lakhs (2003 : Rs. 791.22 lakhs)] [Note 11 (b)] ........ 24,10.39 36,53.22

473,32.29 428,76.66Plant & Machinery and other assets held for sale (at cost or estimated netrealisable value, whichever is lower) 43.85 29.98Sundry Debtors (Note 6) :

Unsecured unless otherwise stated :Outstanding over six months : Considered good ................................. 81,31.35 69,95.29

: Considered doubtful ............................ 20,68.20 26,30.65

101,99.55 96,25.94

Other Debts : Considered good ................................. 318,08.18 446,04.61: Considered doubtful ............................ 2,05.09 2,89.25

320,13.27 448,93.86

422,12.82 545,19.80Less : Provision for Doubtful Debts .......................................................... 2165.29 28,11.90

400,47.53 517,07.90Cash and Bank Balances :

Cash, cheques and stamps on hand ................................................................. 142,33.55 126,92.81Balances with Scheduled Banks : (i) On Current Account .................... 47,99.76 46,00.72

(ii) On Fixed Deposit Account. ......... 41,72.38 67,20.28(iii) On Margin Account ..................... 5.47 —

89,77.61 113,21.00Balances with Non-Scheduled Banks (Note 7) : On Current Account 1,19.72 73.26

(B) Loans and Advances (Note 8) :(Unsecured, considered good unless otherwise stated) :Advances and loans to subsidiaries : Considered good ................................ 22,94.08 55,84.65

: Considered doubtful ........................... 19,54.56 26,34.33

42,48.64 82,18.98Less : Provision for Doubtful Advances and Loans .......................................... 1,62.25 10,38.33

40,86.39 71,80.65Bills of exchange, considered doubtful ...................................................................... 1,55.04 2,05.37Less : Provision for doubtful Bills .............................................................................. 1,55.04 2,05.37

— —Advances recoverable in cash or in kind or for value to be received :

Considered good ................................................................................................ 236,12.16 246,06.11Considered doubtful ........................................................................................... 55,93.42 46,59.84

292,05.58 292,65.95Less : Provision for Doubtful Advances ............................................................ 44,42.38 36,71.84

247,63.20 255,94.11Payments towards Income - tax and Surtax (net of provisions) [Note 19(d)] ............. 75,90.56 67,35.55Balances - Customs, Port Trust, Excise, etc. .............................................................. 47.15 52.12

Total ................. 1,502,56.79 1,613,48.02

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SCHEDULE VIII2004 2003

Current Liabilities and Provisions : Rupees Rupeeslakhs lakhs

(A) Current Liabilities * :

Acceptances 125,30.39 110,61.71

Sundry Creditors :

(i) Total outstanding Dues of small scale industrial undertakings [Note 9] ............. 67,54.37 65,09.13

(ii) Total outstanding Dues of creditors other than small scale industrialundertakings [including Rs. 5544.58 lakhs (2003 : Rs. 4585.86 lakhs) beingadvance payments for which value has still to be given] ................................ 794,54.50 674,33.19

(iii) Dues to Subsidiaries ........................................................................................... 2,78.31 1,63.83

864,87.18 741,06.15

Dividend payable ........................................................................................................ 2,08.34 1,94.23

Balances on Directors’ Current Accounts .................................................................. 1,71.67 1,04.27

Interest accrued but not due on loans ........................................................................ 15,89.46 36,82.33

(B) Provisions :

Proposed Dividends - See Directors’ Report. ............................................................. 104,41.27 63,80.64

Provision for Tax on Proposed Dividends ................................................................... 13,37.79 8,17.52

Provision for diminution in the value of long term investments [Note 12(d)] ............. 5,83.89 5,78.81

Provision for premium payable on redemption of debentures [Note 4 (c)] ................ — 13.00

Provision for Contingencies (Note 10) ........................................................................ 3,42.00 7,16.10

Provision for diminution in value of investments and other assets [Note22(i) (a) and 28] ........................................................................................................... 82,31.85 54,75.00

Provision for leave encashable at retirement/cessation ............................................. 40,73.64 35,14.95

Provision : Others ....................................................................................................... 46,89.82 28,33.54

Total ....... 1,306,87.30 1,094,78.25

* There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund.

SCHEDULE IX2004 2003

Miscellaneous Expenditure : Rupees Rupees(to the extent not written off or adjusted) lakhs lakhs

(a) Finance Charges ......................................................................................................... 36.89 24.56

(b) Separation and Other Costs ....................................................................................... 9,27.53 19,30.43

(c) Development Expenditure .......................................................................................... — 19,65.93

(d) Fee for use of Technology / Consultancy ................................................................... — 51.03

Total ....... 964.42 39,71.95

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SCHEDULE X2004 2003

Other Income : Rupees Rupeeslakhs lakhs

Income from services rendered ......................................................................................... 40,65.22 28,93.33

Property Development Activity-Property ............................................................................ 17,20.27 16,66.97

Dividends on Investments in subsidiaries-Gross ............................................................... 50,89.29 58,41.46

Dividends on other Investments-Gross [Note 12(a)] ......................................................... 6,74.04 30.99

Rent received ................................................................................................................... 1,74.66 1,46.04

Miscellaneous Income........................................................................................................ 49,54.20 31,83.99

Profit on sale of Investments (Net) [Note 12 (d)] .............................................................. 5,20.51 6,51.46

Total ............. 171,98.19 144,14.24

SCHEDULE XI2004 2003

Raw Materials, Finished and Semi-Finished Products : Rupees Rupeeslakhs lakhs

(A) Decrease/(Increase) in Stock of Finished Goods, Work-in-Progress andManufactured Components :

Opening Stock :

(i) Finished Products produced and purchased for sale ........................................ 176,58.49 205,33.48

(ii) Contracts and Work-in-Progress ........................................................................ 23,53.87 22,61.92

(iii) Manufactured Components ............................................................................... 25,07.18 20,03.60

225,19.54 247,99.00Add : Stock taken over pursuant to the Scheme of Merger

(i) Finished Products produced and purchased for sale ........................................ 1,22.79 78.52

(ii) Contracts and Work-in-Progress ........................................................................ 4.92 —

1,27.71 78.52

Less : Closing Stock :

(i) Finished Products produced and purchased for sale ........................................ 185,78.64 176,58.49

(ii) Contracts and Work-in-Progress ........................................................................ 33,32.88 23,53.87

(iii) Manufactured Components ............................................................................... 28,78.96 25,07.18

247,90.48 225,19.54

Decrease /(Increase) in Stock .................................................................................... (21,43.23) 23,57.98

(B) Consumption of Raw Materials and Bought-out Components :

Opening Stock ............................................................................................................ 167,03.90 143,11.94

Add : Purchases [including outside processing charges Rs. 14164.32lakhs (2003 : Rs. 12176.79 lakhs)] .......................................................... 3,273,52.92 2,392,18.61

Add : Stock taken over pursuant to the Scheme of Merger .............................. 2,35.30 —

3,442,92.12 2,535,30.55

Less : Closing Stock 201,31.42 167,03.90

3,241,60.70 2,368,26.65

(C) Purchases of Finished Products for Sale ............................................................... 132,69.05 108,37.21

Total ....... 3,352,86.52 2,500,21.84

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SCHEDULE XII2004 2003

Personnel : Rupees Rupeeslakhs lakhs

Salaries, Wages, Bonus, etc. [Note 3 (a) (iii) and 3 (b)] ....................................................... *330,14.14 *304,85.19

Contribution to Provident and other funds .......................................................................... 24,92.23 25,26.38

Gratuity ............................................................................................................................... 17,78.33 15,24.35

Welfare [Note 22(ii)] ............................................................................................................ 44,60.69 35,93.11

Total ....... 417,45.39 381,29.03

* Net of provision for contingencies made in the previous years of Rs.716.10 lakhs (2003 :Rs. 514.14 lakhs).

SCHEDULE XIII2004 2003

Interest, Commitment and Finance Charges : Rupees Rupeeslakhs lakhs

On Term Loans and Debentures ......................................................................................... *75,61.88 *110,03.87

On Others (Net) .................................................................................................................. 1,31.39 4,93.19

Finance charges .................................................................................................................. — 93.33

76,93.27 115,90.39

Less : Interest Income :

Interest on Government Securities, Debentures and Bonds – Gross [Note 12(b)] 7,47.95 5,74.87

Interest – Others – Gross [Note 12(c)] .................................................................. 17,86.67 23,25.77

Total ....... 51,58.65 86,89.75

* Net of interest capitalised Rs. 33.40 lakhs (2003 : Rs. 340.48 lakhs).

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SCHEDULE XIV2004 2003

Other Expenses : Rupees Rupees Rupeeslakhs lakhs lakhs

Stores consumed (Note 13) ................................................................................................ 32,76.69 29,74.97

Tools consumed .................................................................................................................. 10,45.50 9,63.70

Power and Fuel (Note 13) ................................................................................................... 45,64.27 44,00.90

Rent including lease rentals ................................................................................................ 9,91.18 10,04.48

Rates and Taxes .................................................................................................................. 19,13.16 16,73.67

Insurance ............................................................................................................................ 7,83.97 6,65.13

Repairs & Maintenance (Note 14):

Buildings ................................................................................................................... 6,33.27 6,25.87

Machinery ................................................................................................................... 40,58.91 32,19.18

Others ................................................................................................................... 9,79.91 8,59.65

56,72.09 47,04.70

Advertisement ................................................................................................................... 52,37.93 28,95.94

Commission on sales/contracts (Net) ................................................................................. 39,48.05 33,48.56

Discount allowed ................................................................................................................ 76.00 51.37

Freight outward ................................................................................................................... 114,84.04 77,52.32

Sales Promotion Expenses ................................................................................................. 81,35.58 54,91.40

Miscellaneous Expenses [Note 15] .................................................................................... 191,71.61 152,83.98

Amortisation of expenses[Note 1 (E) (a) ] ........................................................................... 6.76 4,86.95

Directors’ fees ................................................................................................................... 6.95 4.40

Donations and contributions ............................................................................................... 2,16.96 60.01

Loss on Fixed Assets sold/scrapped/written off (Net) (Note 16) ........................................ 4,03.35 3,62.88

Excess of cost over fair value of Current Investments(Net) ............................................... 96.26 25.74

Provision for doubtful debts/advances (Net) (Note 29) ....................................................... (8,02.48) 29,34.11

Provision for diminution in value of Long term investments (Note 30) .............................. 5.08 3,00.30

Total ................. 662,32.95 553,85.51

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SCHEDULE XV

Notes on Accounts for the year ended 31st March, 2004

1. Significant Accounting Policies :

(A) Fixed Assets :

(a) (i) All Fixed Assets are carried at cost less depreciation except as stated in (ii) below. Cost includes financing cost relating to borrowedfunds attributable to the construction or acquisition of fixed assets upto the date the asset is ready for use. In case of borrowedfunds and liabilities in foreign currencies for the acquisition of fixed assets, the exchange differences are adjusted to the cost ofsuch asset.When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account andresultant profit (including capital profit) or loss, if any, is reflected in the Profit and Loss Account.

(ii) Land and Buildings, had been revalued as at 31st October, 1984 at depreciated replacement values on the basis of a valuation madeby a firm of Chartered Surveyors & Valuers. The indices, if any, used are not stated in the valuation.

(b) (i) Leasehold land is amortised over the period of the lease.(ii) Depreciation on assets is calculated on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the

Companies Act, 1956, except for :(1) certain items of Plant & Machinery individually costing more than Rs. 5,000 - over their useful lives (2 years, 5 years or 7 years,

as the case may be) as determined by the Company.(2) Cars and Vehicles - at 15% of cost.

(iii) Depreciation charge for each year is after deducting the amount representing the depreciation on the increase due to revaluation ofLand and Buildings, transferred from the Revaluation Reserve.

(B) Intangible Assets :All Intangible Assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits areconsumed.

(a) Technical Knowhow :The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year ofpurchase of the technology.

(b) Development Expenditure :This expenditure is incurred on technical services and other project/product related expenses. As the benefit of these costs is expectedin future years, the expenditure is being/ will be appropriately amortised.

(c) Software Expenditure :The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure isincurred.

(C) Investments :All long term investments are valued at cost or lower, if written down. Current investments are valued at the lower of cost and fair value,determined by category of investment.

(D) Inventories :

Inventories are stated at cost or net realisable value, whichever is lower. Cost is arrived at on a weighted average method and includes, whereappropriate, manufacturing overheads and excise duty. Long term contracts in progress are valued at cost.

(E) Miscellaneous Expenditure (to the extent not written off or adjusted) :Expenditure carried forward under this head is being amortised as follows :

(a) Finance charges :The expenditure incurred in raising long term borrowings is amortised over the period of the borrowings. On early buyback, conversion orrepayment of borrowings, any unamortised expenditure is fully written off in that year.

(b) Separation and Other Costs :Special Payments/Pensions under Voluntary Retirement Schemes.The liability inclusive of retirement benefits such as gratuity and leave encashment is amortised over a period of five years from themonth in which the liability is incurred.

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(F) Foreign Exchange Transactions :All assets and liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year end, except those coveredby forward exchange contracts which are translated at contracted rates, where the difference between the contracted rate and the spot rateon the date of the transaction (other than in respect of the contracts for the acquisition of fixed assets) is charged to Profit and Loss Accountover the period of the contract.In case of current assets, current liabilities and long term liabilities (other than those for acquisition of fixed assets and technical know-how)the exchange differences are recognised in the Profit and Loss Account.In the case of borrowed funds and liabilities incurred for the acquisition of fixed assets and technical know-how, the exchange differences areadjusted to the cost of such assets/technical know-how.

(G) Revenue Recognition :Sales of products and services are recognised when the products are shipped or services rendered. In respect of sale of property (concerningproperty development activity), the Company accounts for the income on the percentage to completion basis. [Refer paragraph (H) below].Dividend from investments are recognised in the Profit and Loss Account when the right to receive payment is established. .

(H) Property Development Activity :The Company accounts for income on the percentage to completion basis which necessarily involves technical estimates of the percentageof completion, and costs to completion of the activity, on the basis of which profits/losses are accounted. Such estimates, made by theCompany and certified to the auditors, have been relied upon by them, as these are of a technical nature.

(I) Government Grants :The Company is entitled to various incentives from a State Government, such as grants by way of refund of octroi duty paid by the Companyfor its manufacturing unit located in a developing region. The said grants to which the Company has been entitled for a number of years remainto be received, creating uncertainty. Hence, such grants are accounted for as and when the disbursements are received.

(J) Retirement Benefits :Retirement Benefits in respect of gratuity and leave encashable at retirement/cessation are provided for based on valuations, as at theBalance Sheet date, made by independent actuaries.

(K) Product Warranty :In respect of warranties given by the Company on sale of certain products, the estimated costs of these warranties are accrued at the time ofsale. The estimates for accounting of warranties are reviewed and revisions are made as required.

(L) Leases :The Company’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns etc.).The leasing arrangements, which are not cancellable, range between 11 months and three years generally, and are usually renewable bymutual consent on agreed terms. The aggregate lease rentals payable are charged as rent including lease rentals.

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

2. Share Capital :

(a) Issued and Subscribed Capital include :

(i) 1,66,809 Ordinary Shares allotted as fully paid-up pursuant to a contract without payment having been received in cash.

(ii) 5,45,98,605 Ordinary Shares allotted as fully paid-up by way of Bonus Shares by capitalisation of Share Premium Account andReserves.

(iii) 12,56,562 Ordinary Shares issued consequent to the Scheme of Amalgamation with the Union Bank of India Limited. Of these, 13,737Ordinary Shares were issued on conversion of 41,211 8% Bonds.

(iv) 12,98,202 Ordinary Shares issued consequent to the Scheme of Amalgamation with International Tractor Company of India Limitedwithout payment having been received in cash.

(v) 1,88,166 Ordinary Shares issued consequent to the Scheme of Amalgamation with Mahindra Spicer Limited without payment havingbeen received in cash.

(vi) 9,73,200 Ordinary Shares issued consequent to the Scheme of Amalgamation with Mahindra Nissan Allwyn Limited without paymenthaving been received in cash.

72


3. Reserves and Surplus :2004 2003

Rupees Rupeeslakhs lakhs

(a) Movements during the year :

(i) Share Premium Account :

Additions, arising out of of exercise of options 2,02.54 —

Applied, in accordance with Section 78 of the Companies Act, 1956,towards :Writing-off of share and debenture issue expenses. ................................ 1.01 1.14

Premium on redemption/ buyback of debentures .................................... 66,58.71 9,39.30

66,59.72 9,40.44

Cancellation of cost of investments in and loans and advances to

subsidiaries pursuant to Scheme of Arrangement [Note 24 (b)(iii)] ......... 35,23.13 —

101,82.85 9,40.44

(ii) Revaluation Reserve :

Adjusted against depreciation for the year [Note 1 (A)(b) (iii)] .................. 62.86 60.87

Adjusted in respect of revalued Land and Buildings sold/demolished ..... 0.34 —

63.20 60.87

(iii) Deferred Employee Compensation Expense :

Amortisation included in salaries, wages, bonus etc. .............................. 2,00.17 2,27.69

(b) In respect of options granted under the Employee Stock Option plan, in accordance with guidelines issued by SEBI, the accounting valueof the options is accounted as deferred employee compensation, which is amortised on a straight line basis over the period between thedate of grant of options and eligible dates for conversion into equity shares. Consequently, salaries, wages, bonus, etc. includes Rs. 200.17lakhs (2003 : Rs. 227.69 lakhs) being the amortisation of deferred employee compensation, after adjusting for reversals on account ofoptions lapsed.

4. Loans :

(a) Debentures are redeemable at par as follows –

(i) Rs. 1700 lakhs on 31 st March, 2005.

(ii) Rs. 1500 lakhs on 22 nd May, 2005.

(iii) Rs. 1000 lakhs are redeemable in three annual instalments commencing from 14 th December 2007.

(iv) Rs. 5500 lakhs on 27 th April, 2008.

(v) Rs. 3500 lakhs on 3 rd May, 2008.

(vi) Rs. 500 lakhs on 16 th July, 2008.

(vii) Rs. 550 lakhs on 22 nd May, 2011.

(viii) Rs. 1500 lakhs on 28 th August, 2012.

(ix) Also refer Note 4 (e) below

b) Of the total Debentures and Bonds issued by the Company, certificates aggregating to Rs. 7950 lakhs (2003: Rs.6528 lakhs) have been boughtback and kept alive for the purpose of re-issue.

(c) Provision has been made on a pro-rata basis for the premium payable on redemption of debentures from the date of allotment/issue/ reissueupto 31st March, 2004.

(d) (i) All Debentures of Rs. 15750.73 lakhs and certain Foreign Currency Loans from Banks of Rs. 17255.55 lakhs are secured by a pari-passucharge on immovable properties of the Company both present and future, subject to certain exclusions and are also secured by pari-passu charge on the movable properties of the Company including movable machinery, machinery spares, tools and accessories, bothpresent and future, subject to the prior charge for loans referred to in (d) (ii) below.

73


(ii) Foreign Currency Loans (FCNR) from State Bank of India and Union Bank of India of Rs. 11193.37 lakhs and Loans and Advances fromthe Company’s Bankers are secured by a first charge on the whole of the current assets of the Company namely inventories, certainbook debts, outstanding monies, receivables, claims, etc. both present and future.

(iii) Foreign Currency Loans of Rs. 962.75 lakhs are secured by a first exclusive charge on company’s immovable property located at Puneand a first exclusive charge on the Company’s movable fixed assets both present and future, located at Pune and Mumbai.

(e) Debentures of the face value of Rs. 110 each and Zero Interest Bonds of the face value of Rs. 90 each were both compulsorily and automati-cally fully converted into two equity shares of Rs. 10 each at a premium of Rs. 45 per share and Rs. 35 per share respectively on 1st April,1991, 1st October, 1991 and 18th July, 1992. The balance amount of Rs. 0.73 lakhs will be converted, into appropriate number of equityshares, on receipt of the balance amount due on allotment.

(f) The following amounts are repayable by 31st March, 2005 :

(i) Debenture holders ..................................................................................... : Rs. 1700.00 lakhs (2003 : Rs. 8452.00 lakhs)

(ii) Foreign currency loans from Banks .......................................................... : Rs.14471.84 lakhs (2003 : Rs. 3275.14 lakhs)

(iii) Rupee Loans from financial institutions:

(a) Secured .............................................................................................. : Rs. Nil (2003 : Rs. 321.22 lakhs)

(b) Unsecured .......................................................................................... : Rs. 7.64 lakhs (2003 : Rs. 7.64 lakhs)

(iv) Rupee Loans from Others ......................................................................... : Rs. 0.96 lakhs (2003 : Rs. Nil)

Fixed Deposit-holders ................................................................................ : Rs. 1642.35 lakhs (2003 : Rs. 699.57 lakhs)

5. (a) Land includes leaseholds at professional valuation/cost Rs. 421.64 lakhs (2003: Rs. 477.21 lakhs).

(b) Land includes a sum of Rs.782.27 lakhs (2003 : Rs. 782.27 lakhs) for which the conveyance is pending receipt of approval from the appropriateauthorities.

(c) The Company has filed the necessary return under Section 6 of the Urban Land (Ceiling and Regulation) Act, 1976, in respect of vacant landheld by it and has also applied to the Government of Maharashtra under Section 20 of the said Act requesting for exemption of the saidvacant land from the ceiling restrictions of the Act.

(d) Buildings include leasehold at professional valuation/cost Rs. 27.04 lakhs (2003 : Rs. 27.04 lakhs).

(e) Buildings include Rs. 0.05 lakhs (2003 : Rs. 0.08 lakhs) being the value of shares in co-operative housing societies.

(f) Additions to Plant and Machinery include Rs. 4.27 lakhs (credit) (Net) [2003 : Rs. 0.38 lakhs (credit) (Net)] on account of foreign exchangefluctuation.

(g) (i) The depreciation charge for the year excludes :

(a) An amount of Rs. 62.86 lakhs (2003 : Rs. 60.87 lakhs), representing depreciation on the increase due to revaluation of Land andBuildings transferred from the Revaluation Reserve.

(b) An amount of Rs. 95.44 lakhs (2003 : Rs. 44.23 lakhs), representing depreciation on assets used for development work. Thisexpenditure is transferred to Development Expenditure and is appropriately amortised.

(ii) The Revaluation Reserve is also adjusted for an amount of Rs. 0.34 lakhs (2003 : Rs. Nil) in respect of revalued Land and Buildings sold/demolished during the year.

(iii) The net credit to the Profit and Loss Account consequent to the above adjustments to the Revaluation Reserve is Rs. 63.20 lakhs(2003 : Rs. 60.87 lakhs).

(iv) Depreciation charge for the Plant and Machinery includes Rs. Nil (2003 : Rs. 154.06 lakhs) towards provision for writing down the valueof machinery to its realisable value.

(h) Additions to assets includes assets taken over on merger :Rupees lakhs

Description of Assets Amount

Buildings .................................................... 3,93.21

Plant and Machinery .................................... 2,36.42

Furniture and Fittings ................................... 71.45

Vehicles .................................................... 3.98

Total 7,05.06

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6. Sundry Debtors others include Rs. 2288.81 lakhs (2003 : Rs. 8553.60 lakhs), which, in accordance with the terms of the contracts, were not duefor payment as at 31st March, 2004.

7. Cash and Bank Balances include balances lying with non-scheduled banks :

Bank Tejarat, Tehran The Municipal Co-op.Bank Ltd

On current account On current account

Rupees lakhs Rupees lakhs

Balance as at 31st March, 2004 .............................................................................. 0.06 1,19.66

Balance as at 31st March, 2003 ................................................................................ 0.06 73.20

Maximum balance during the year ........................................................................ 0.06 1,99.67

Maximum balance during the previous year ............................................................. 0.06 1,55.94

8. Loans and Advances include :

(i) Fixed/Call deposits with/loans to limited companies Rs. 9576.31 lakhs (2003 : Rs. 10801.13 lakhs) including Rs. 3877.76 lakhs (2003 :Rs. 6560.00 lakhs) with/to subsidiaries.

(ii) Amounts paid towards joint development of property Rs. 154.05 lakhs (2003 : Rs. 154.05 lakhs).

9. The identification of suppliers as Small Scale Industrial undertaking (SSIs) has been done on the basis of the information to the extent provided bythe suppliers to the Company. On this basis, the disclosure of total outstanding dues of SSIs and the names of SSIs shown in Schedule XVIII hasbeen made.

10. Provision for contingencies Rs. 342.00 lakhs (2003 : Rs. 716.10 lakhs) including Rs. 342.00 lakhs (2003 : Rs. 387.30 lakhs ) provided during theyear, is for labour demands under negotiations at certain locations of the Company.

11. (a) Sales include :

(i) Export benefits Rs. 77.68 lakhs (2003 : Rs. 247.13 lakhs)

(ii) Cost of items given for sales promotion/as donations Rs.4.00 lakhs (2003 : Rs. 35.72 lakhs).

(b) Stock-in-Trade, Property Development Activity, includes completed premises Rs.531.82 lakhs (2003 : Rs. 313.10 lakhs), which, pending sale,have been given out on leave and licence basis for which fresh agreement is under negotiation.

12. (a) Dividends on other investments include tax deducted at source Rs. Nil (2003 : Rs. 0.69 lakhs) and comprise Rs.Nil (2003 : Rs. 6.42 lakhs) andRs.674.04 lakhs (2003 : Rs. 24.57 lakhs) in respect of long term and current investments respectively.

(b) Interest on Government Securities, Debentures and Bonds includes tax deducted at source Rs.66.70 lakhs (2003 : Rs. 51.25 lakhs) andcomprise Rs.80.92 lakhs (2003 : Rs. 184.69 lakhs) and Rs. 667.03 lakhs (2003 : Rs. 390.18 lakhs) in respect of long term and currentinvestments respectively. Interest on Government Securities, Debentures and Bonds also include Rs. 36.10 lakhs (2003 : Rs. 36.00 lakhs) inrespect of trade investments.

(c) Interest received - others includes tax deducted at source Rs. 308.86 lakhs (2003 : Rs. 466.38 lakhs).

(d) Profit on sale of investments (net) includes profit on disposal of current investments (net) Rs. 543.32 lakhs (2003 : Rs. 555.96 lakhs), loss ondisposal of long term investments Rs. 22.81 lakhs (2003 : Rs. 95.50 lakhs profit) and is net of write back of provision for diminution in thevalue of long term investments Rs.Nil (2003 : Rs. 225.01 lakhs).

13. Stores consumed includes consumption for power and fuel (amount not ascertained).

14. Repairs and Maintenance includes machinery spares consumed Rs.1216.62 lakhs (2003 : Rs. 874.23 lakhs) but does not include itemsincluded under Consumption of Raw Materials and Bought-out Components and amounts charged to salaries and wages (amounts notascertained).

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15. Miscellaneous Expenses include :

(a) Amounts paid/payable to Auditors (inclusive of service tax where applicable) (2003 figures are in Italics) :Statutory Auditors Cost Auditors


(i) Audit Fees .................................................................................................. 48.60 1.4048.60 1.42

(ii) Company Law matters .............................................................................. 0.19 —0.19 —

(iii) Other Services ........................................................................................... 48.49 —22.71 —

(iv) Reimbursement of expenses :As auditor 1.85 0.22

1.52 0.14

99.13 1.6273.02 1.56

(b) An amount of Rs. 84.00 lakhs (2003 : Rs.43.50 lakhs) payable as commission to non-wholetime Directors - Note 17 and Schedule XVI.

(c) Provision - Others Rs. 2143.36 lakhs (Net) (2003 : Rs.2348.01 lakhs).

(d) The cost of property sold including movement in work-in-progress in respect of property development activity are as under:


lakhs lakhs lakhs

Opening balance as on 1st April ........................................................................ 30,21.00 39,91.88

Add : Construction Cost .................................................................................... 1,82.76 2,91.22

Architect’s Fees ....................................................................................... — 15.85

1,82.76 3,07.07

32,03.76 42,98.95

Less: Cost of Property Development Activity – Work-in-Progress as at

31st March ................................................................................................ 17,78.17 30,21.00

14,25.59 12,77.95

16. Profit/Loss on fixed assets sold/scrapped/written off (net) includes an aggregate capital profit of Rs. 108.52 lakhs (2003 : Rs. 37.45 lakhs).

17. Managerial remuneration for Directors included in the Profit and Loss Account is Rs. 508.93 lakhs (2003 : Rs. 387.48 lakhs) including Directors’fees of Rs. 6.95 lakhs (2003 : Rs. 4.40 lakhs), perquisites Rs.154.73 lakhs (2003 : Rs. 155.98 lakhs) and commission Rs. 247.35 lakhs(2003 : Rs. 138.30 lakhs) (See Schedule XVI) and excluding charge for gratuity and provision for leave encashable on separation as separateactuarial valuation figures are not available. The above perquisites include amortisation of Employees Stock Options amounting to Rs.59.89 lakhs(2003 : Rs. 70.78 lakhs)

18. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March, 2004 is Rs. 6359.67lakhs (2003 : Rs. 3893.18 lakhs).

19. Contingent Liabilities not provided for :

(a) Guarantees given by the Company :

Amount of guarantees Outstanding amountsagainst the guarantees

2004 2003 2004 2003

Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs

For employees ................................................................... 1,05.00 1,05.00 0.47 1.32

For other companies ......................................................... 74,05.00 56,25.00 72,97.90 45,48.38

76


(b) Claims against the Company not acknowledged as debts :2004 2003


Excise ..................................................................................... : Gross ...................... 37,20.13 31,77.84: Net of Tax .............. 30,34.35 26,41.24

Sales Tax ..................................................................................... : Gross ...................... 9,53.73 11,09.92: Net of Tax .............. 6,43.64 7,02.02

Others (excluding claims where amounts are not ascertainable) : Gross ...................... 3,68.13 6,66.81: Net of Tax .............. 2,36.06 4,21.76

On capital account ................................................................................................................... 1,18.20 1,18.20

(c) Uncalled liability on equity shares partly paid Rs. 1658.25 lakhs (2003 : Rs. 1614.53 lakhs).

(d) Taxation matters :

(i) Demands against the Company not acknowledged as debts and not provided for, in respect of which the Company is in appeal andexclusive of the effect of similar matters in respect of assessments remaining to be completed :

– Income-tax : Rs. 11823.49 lakhs (2003 : Rs. 11845.32 lakhs) .

(ii) Items in respect of which the Company has succeeded in appeal, but the Income-tax Department is pursuing/likely to pursue in appeal/reference and exclusive of the effect of similar matters in respect of assessments remaining to be completed :

– Income-tax matters : Rs. 4664.98 lakhs (2003 : Rs. 4635.80 lakhs)

– Surtax matters : Rs. 12.80 lakhs (2003 : Rs. 12.80 lakhs)

(iii) In addition to the amounts given in (i) and (ii) above, there are amounts of Rs. 5071.14 lakhs (2003 : Rs. 5100.68 lakhs) and Rs. 1196.04lakhs (2003 : Rs. 272.29 lakhs) respectively. However, the claim in question, if not ultimately allowed as claimed by the Company,would be allowed in a future year.

(e) Bills discounted not matured Rs. 11275.39 lakhs (2003: Rs. 5777.12 lakhs).

(f) In respect of contracts for design, manufacture, supply, erection and commissioning of plant and equipment placed with the Company byvarious customers, the committed dates of completion had expired and, hence, strictly in terms of the relative contracts, the Companycould be liable for liquidated damages/penalties, the amount of which is estimated at a ceiling of Rs. Nil - Net of tax Rs. Nil (2003 :Rs. 91.21 lakhs - Net of tax Rs. 57.69 lakhs). However, the Company expects to have the liquidated damages/penalties waived, as in thepast.

20. Research and Development expenditure debited to the Profit and Loss Account, including certain expenditure based on allocations made by theCompany, aggregate Rs.6919.44 lakhs (2003 : Rs. 6079.68 lakhs) [excluding depreciation Rs.1757.37 lakhs (2003 : Rs. 1941.06 lakhs)].

21. The net difference in foreign exchange debited to the Profit and Loss Account is Rs. 150.18 lakhs (2003 : Rs. 700.59 lakhs). The debit onaccount of exchange differences in respect of forward exchange contracts to be recognised in the Profit and Loss Account or capitalised insubsequent accounting periods is Rs.287.15 lakhs (2003 : Rs. 1028.00 lakhs).

22. (i) Exceptional items of Rs. 2947.83 lakhs (2003 : Rs. 5765.61 lakhs) comprise of :

(a) Profit on sale of certain long term investments Rs.2674.47 lakhs (2003: Rs.5826.35 lakhs net of provision for diminution in the value ofinvestments and related assets Rs. 2000 lakhs)

(b) Amortisation of liability and other retirement benefits made under Voluntary Retirement Schemes aggregating to Rs. 238.73 lakhs(2003 : Rs. 60.74 lakhs)

(c) Benefit of Rs. 2558.43 lakhs (2003: Rs. Nil) arising out of early repayment of Sales tax Loan.

(d) Premium received on early redemption of certain long term investments Rs. 459.97 lakhs (2003 : Rs. Nil)

(e) Provision for diminution in value of certain assets substantially retired from active use Rs. 1306.59 lakhs ( 2003 : Rs. Nil)

(f ) Charge of Rs. 1199.72 lakhs on account of opening balance of Product Launch expenses recognised as an expense.

(ii) As per Accounting Standard on “Intangible Assets “ (AS –26) issued by the Institute of Chartered Accountants of India, which has becomeeffective from 1st April 2003, Intangible items such as product launch expenses and welfare expenses involving benefits to the futureperiods have to be recognised as an expense in the period in which they are incurred. In view of this the Company has charged the balancecarried forward in the Balance Sheet as on 31st March 2003 on account of product launch expenses of Rs. 1199.72 lakhs as an exceptionalitem and welfare expenses involving benefits to the future years Rs. 830.37 lakhs as welfare expenses.

77


23. The components of Deferred tax liability and assets as at 31st March, 2004 are as under:2004 2003


Deferred tax liability:

(i) On fiscal allowances on fixed assets ................................................................................ 224,21.00 227,10.00

(ii) Others ................................................................................................................................. 8,52.00 10,30.00

232,73.00 237,40.00

Deferred tax assets:

(i) Provision for leave encashable at retirement/cessation ................................................... 13,18.00 11,45.00

(ii) Provision for Doubtful debts /Advances ............................................................................ 10,74.00 15,12.00

(iii) Unabsorbed depreciation carried forward # ...................................................................... — 28,55.00

(iv) Others ................................................................................................................................. 5,56.00 5,18.00

29,48.00 60,30.00

Net Deferred tax liability ............................................................................................................ 203,25.00 177,10.00

# (considered, as there are compensatory timing differences the reversal of which, will result insufficient future taxable income against which this can be realised)

24. Scheme of Arrangement :

(a) Pursuant to the scheme of arrangement between Mahindra Eco Mobiles Limited (MEML) and Mahindra Information Technology ServicesLimited (MITS) (both wholly owned subsidiaries of the Company) with the Company as approved by the shareholders of the Company in thecourt-convened meeting held on 30th October, 2003 and subsequently sanctioned by the Hon’able High Court of Bombay on 12th December,2003 the entire business and undertakings of MEML and MITS including all their assets and liabilities were transferred to and vested in theCompany with effect from opening of business hours on 1 st July, 2003.

(b) The accounting of the merger of MEML and MITS with the Company was done on the basis of purchase method as per the guidelinesprescribed by the Hon’able High Court of Bombay while sanctioning the above referred Scheme of Arrangement. Accordingly,

(i) All assets (other than the investments held by MITS in subsidiaries of the Company) and all liabilities (other than loans and advances dueto the Company) of MEML and MITS were recorded by the Company at their respective book values.

(ii) The investments held by MITS in subsidiaries of the Company were recorded in the books of the Company based on the net assetvalues of the respective investee companies as on 30th June, 2003, proportionate to their holdings in such investee companies. Theloans and advances due to the Company by MEML and MITS were taken over and recorded at Nil value.

(iii) The book value of shares held by the Company as on 1st July, 2003 in MEML and MITS were cancelled and loans and advances givenby the Company to MEML and MITS and appearing in the books of accounts of the Company as on 1st July, 2003, were debited to theshare premium account. Such debit amounted to Rs. 3523.13 lakhs.

(iv) The surplus of the value of the assets over the value of the liabilities of MEML and MITS transferred to the Company amounting to Rs.11759.13 lakhs was transferred to the existing Investment Fluctuation Reserve account.

(c) MEML was engaged in the business of manufacturing and promoting eco friendly vehicles.MITS was engaged in software related business.Accordingly, to this extent, the figures of current year are not comparable with the previous year.

25. Dividends paid Rs.0.21 lakhs (2003 : Rs. Nil) in the current year represent the difference, between the proposed dividends for the year ended31st March, 2003 and the actual dividends paid for that year, arising due to rounding off of the dividend payments as per the directives of theSecurities and Exchange Board of India.

26. Earnings per Share : 2004 2003Amount used as the numerator – Balance of profit for 2003-2004 (Rupees lakhs) ................................. 348,54.30 145,53.41Nominal value of shares (Rupees lakhs) .................................................................................................... 116,00.86 116,00.86Reconciliation between basic and diluted earnings per share:Basic Earnings per share (Rs.) ..................................................................................................................... 30.04 12.55Effect of potential ordinary (equity) shares on conversion of bonds/debentures (Rs.) ................................ — —Diluted Earnings per share (Rs.) .................................................................................................................. 30.04 12.55Weighted average number of equity shares used in computing basic earnings per share ......................... 11,60,08,599 11,60,08,599Effect of potential ordinary (equity) shares on conversion of bonds/debentures ........................................ 2,972 2,972Weighted average number of equity shares used in computing diluted earnings per share ...................... 11,60,11,571 11,60,11,571

78


27. Future lease rental obligations, under finance leases taken by the Company prior to 1st April, 2001 are Rs. 31.26 lakhs (2003 : Rs144.85lakhs).

28. Credit to “Provision for diminution in value of Investments and Other assets” pursuant to the Schemes of Arrangement approved by theHon’ble High Court consists of :

2004 2003Rupees lakhs Rupees lakhs

Provision for diminution in value of investments # .................................................................................... 51,80.50 27,83.00

Provision for diminution in value of other assets #@ ................................................................................. 30,51.35 26,92.00

Total ........................ 82,31.85 54,75.00

# Of the above , Provision for diminution in the value of Investments of Rs. 2397.50 lakhs (2003: Nil) and Provision for diminution in the value ofother assets Rs. 1870.50 lakhs (2003 : Rs. Nil) has been set up during the year.

@ Out of the total amounts due and outstanding from a subsidiary in respect of a business transferred in an earlier year, a remission of Rs. 1511lakhs (included in Rs. 1870.50 lakhs above) was made as a one time settlement and charged to provision for diminution in value of other assets.

29.29.29.29.29. Provision for doubtful debts and advances include :2004 2003


Provision for diminution in value of other assets, made during the year .................................................... 18,70.50 —

Less: Transfer from Investment Fluctuation Reserve ................................................................................. 18,70.50 — Provision for doubtful debts and advances written back .................................................................. 8,02.48 —

Total ........................ (8,02.48) —

30. Provision for diminution in the value of investments include :2004 2003


Provision for diminution in value of investments, made during the year .................................................... 24,02.58 —

Less: Transfer from Investment Fluctuation Reserve ................................................................................. 23,97.50 —

Total ........................ 5.08 —

31. Related Party Transactions :(a) Related parties where control exist:(i) Subsidiaries :

Sl No Name of the Company Sl. No Name of the Company

1. Mahindra Intertrade Limited 2. Mahindra Engineering & Chemical Products Limited

3. Mahindra Holdings & Finance Limited 4. Mahindra Steel Service Centre Limited

5. Mahindra Acres Consulting Engineers Limited 6. Mahindra Gesco Developers Limited

7. Mahindra Holidays & Resorts India Limited 8. Mahindra Infrastructure Developers Limited

9. Mahindra & Mahindra Financial Services Limited 10. Mahindra Ashtech Limited

11. Mahindra-British Telecom Limited 12. NBS International Limited

13. Mahindra Consulting (Singapore) Pte. Limited 14. Mahindra Information Technology Services Limited(upto 30th June 2003)

15. MBT Gmbh 16. MBT Software Technologies Pte. Limited

17. Mahindra Logisoft Business Solutions Limited 18. MBT International Incorporated

19. Mahindra Consulting Incorporated 20. Mahindra Consulting Limited

21. Mahindra Intertrade (UK) Limited 22. Automartindia Limited

23. Mahindra Shubhlabh Services Limited 24. Mahindra USA Incorporated

25. Mahindra Eco-Mobiles Limited (upto 30th June 2003) 26. Mahindra Gujarat Tractor Limited

27. Mahindra Holidays & Resorts U.S.A. Inc. (from 4th Nov. 2003) 28. Mahindra Consulting Gmbh (From 9th Dec. 2003)

79


(b) Other parties with whom transactions have taken place during the year.

(i) Associates:


1. Mahindra Industrial Park Limited 4. Owens Cornings (India) Limited

2. Mahindra Ugine Steel Company Limited 5. Officemartindia.com Limited

3. Mahindra Construction Company Limited

(ii) Joint Ventures :


1. Mahindra Sona Limited 3. Jayem Automotives Limited

2. PSL Erickson Limited 4. Ford Credit Kotak Mahindra Limited

(iii) Key Management Personnel :

Vice Chairman and Managing Director ..................................... Mr. Anand MahindraExecutive Directors: .................................................................. Mr. K.J. Davasia

Mr. B.N. DoshiMr. A.E. DuranteMr. A.K. Nanda

(c) The related party transactions are as under :Rupees lakhs

Sl. Nature of Transactions Subsidiaries Associate Joint Key ManagementNo. Companies Ventures Personnel

1. Purchases :Goods ........................................................... 56,33.63 5,02.81 32,43.40 —

(31,48.69) (4,59.12) (21,57.96) (—)Fixed Assets ................................................ 21.87 — — —

(46.75) (1,36.53) (6.79) (—)Services ....................................................... 11,02.48 7,04.95 62.49 —

(9,72.51) (7,66.81) (1,13.11) (—)2. Sales :

Goods ........................................................... 192,28.07 4.80 — —(208,16.64) (1.44) (0.20) (—)

Fixed Assets ................................................ 6.37 — — —(1.93) (—) (—) (—)

Services ....................................................... 97.29 — — —(6.75) (1.63) (—) (—)

3. Investments :Purchase ...................................................... 141,86.95 — — —

(46,94.00) (—) (—) (—)Sales/Redemption ........................................ 28,75.00 2,00.00 — —

(41,51.03) (—) (—) (—)4. Deputation of Personnel :

From Related Parties ................................... 16.83 — — —(18.12) (—) (—) (—)

To Related Parties ........................................ 90.10 13.73 — —(1,18.79) (8.54) (0.54) (—)

5. Remission of Receivables ................................. 15,11.15 — — —(20,00.00) (—) (—) (—)

6. Write Back of Provision for doubtfuldebts and advances ........................................... 6,17.28 — — —

(—) (—) (—) (—)

80


7. Provision for Doubtful debt /Advance ................ 1,96.30 — 1,63.05 —(—) (—) (—) (—)

8. Finance :Inter Corporate Deposits given .................... 111,08.50 19,00.00 1,07.00 —

(77,96.26) (12,00.00) (92.55) (—)Inter Corporate Depositsrefunded by parties ...................................... 126,38.00 25,02.58 — —

(70,73.26) (10,50.00) (—) (—)Interest received .......................................... 7,71.33 43.68 70.50 —

(13,37.69) (1,64.57) (61.14) (—)Dividend received ........................................ 50,89.29 — — —

(58,41.46) (—) (—) (—)Security Deposits Taken .............................. 35,00.00 — — —

(—) (—) (—) (—)Security Deposits refundedto parties ...................................................... 35,00.00 — — —

(—) (—) (—) (—)9. Guarantees & Collaterals given ......................... 5,80.00 55,00.00 — —

(—) (22,00.00) (—) (—)10. Other Transactions :

Other Income ............................................... 8,21.15 91.04 2.46 —(4,03.23) (5.27) (9.03) (—)

Other Expenses ........................................... 8,72.44 0.12 1.12 —(12,14.26) (32.14) (59.71) (—)

Reimbursements receivedfrom parties .................................................. 12,18.02 1,72.14 4.04 —

(5,59.48) (1,67.30) (2.37) (—)Reimbursements made to parties ............... 5,30.85 2.13 5.98 —

(2,29.44) (36.02) (0.47) (—)11. Outstandings :

Payable ......................................................... 6,16.08 1,25.99 7,64.30 —(1,63.83) (—) (5,89.32) (—

Receivable .................................................... 184,87.49 5,98.82 4,41.55 —(140,93.64) (2,83.65) (9.06) (—)

Inter Corporate Deposits Given ................... 32,35.26 10,04.42 3,41.55 —(59,17.50) (16,07.00) (2,34.55) (—)

Guarantees & Collaterals given .................... 7,31.54 57,63.30 8,03.07 —(1,50.00) (35,95.49) (8,02.89) (—)

12. Managerial Remuneration ................................. — — — 3,58.09(—) (—) (—) (2,68.80)

13. Dividends ........................................................... — — — 7.72(—) (—) (—) (6.35)

14. Provision for diminution in value ofinvestments and other assets ........................... 66,41.80 8,12.00 5,98.05 —

(42,28.00) (8,12.00) (4,35.00) (—)15. Provision for doubtful debts/ advances ............. — — — —

(14,31.89) (30.83) (1,48.23) (—)16. Provision for diminution in value of

investments and other assets written back ...... — — — —(20,00.00) (—) (—) (—)

17. Stock Options .................................................... — — — 42.78(—) (—) (—) (50.56)

Previous year’s figures are given in brackets.Mahindra Construction Company Limited was grouped under “other entities where control exists” in the previous year and is now grouped as anassociate company. The previous year figures are suitably regrouped.

c) The related party transactions are as under : (Contd.)Rupees lakhs

Sl. Nature of Transactions Subsidiaries Associate Joint Key ManagementNo. Companies Ventures Personnel

81


The significant related party transactions are as underRupees lakhs

Sl. Nature of Transactions Subsidiaries Amount Associate Amount Joint AmountNo. Companies Ventures

1. Purchase –Goods Mahindra Intertrade Ltd 49,27.28 Mahindra Ugine 5,02.81 Mahindra 32,43.40Steel Co Ltd Sona Ltd

Mahindra Steel Service 6,48.18Centre Ltd

2. Sale –Goods Mahindra USA Inc. 141,59.43 Mahindra Ugine 4.80Steel Co Ltd

NBS International Ltd 48,89.44

3. Provision for doubtful ........ Mahindra Gujarat 1,96.30 Jayem 1,63.05debts/advances ................. Tractor Limited Automotives Ltd

4. Investment – Purchase * Mahindra Engineering & 90,55.26 Chemical Products LtdMahindra Intertrade Ltd 18,75.00

5. Remission of receivable Mahindra Gesco 15,11.15Developers Ltd

6. Write Back of Provision for Mahindra Engineering & 6,17.28Doubtful debt/Advances ... Chemical Products Ltd

7. Inter Corporate Mahindra Engineering & 16,90.00 Mahindra Ugine 19,00.00Deposits given ................. Chemical Products Ltd Steel Co Ltd

Mahindra Holdings & 78,68.50Finance Ltd

8. Inter Corporate Deposits Mahindra Engineering & 22,74.00 Mahindra Ugine 23,14.00refunded by parties ........... Chemical Products Ltd Steel Co Ltd

Mahindra Holdings & 78,25.00Finance Ltd

9. Guarantees given ............... Automartindia.com Ltd 5,00.00 Mahindra Ugine 55,00.00Steel Co Ltd

Mahindra Gujarat 80.00Tractor Limited

* * * * * In order to make the Company’s investment portfolio structure financially more efficient, the Company, during the year, has purchased 1,25,66,126equity shares (constituting 40.5% stake) of Mahindra Gesco Developers Limited for an aggregate consideration of Rs. 6720.68 lakhs, from a whollyowned subsidiary of the Company at the cost of acquisition for the wholly owned subsidiary. The market price of the shares at the time of acquisitionwas Rs. 22.55 per share and its book value as at March 31, 2004 was Rs. 44.78 per share.

82


32. Joint Venture Disclosure

i) Jointly Controlled Entities by the Company :

Name of the Entity CountrCountrCountrCountrCountry of Incorporationy of Incorporationy of Incorporationy of Incorporationy of Incorporation % Holding% Holding% Holding% Holding% Holding

a) Mahindra Sona Limited * India 29.77%

b) Jayem Automotives Limited India 35.00%

c) PSL Erickson Limited * India 20.00%

* Shareholding is through a subsidiary, Mahindra Holdings & Finance Limited.

ii) Interests in the Assets, Liabilities, Income and Expenses with respect to Jointly Controlled Entities.

20042004200420042004 2003Rupees lakhsRupees lakhsRupees lakhsRupees lakhsRupees lakhs Rupees lakhs

IIIII ASSETSASSETSASSETSASSETSASSETS

1 Fixed Assets ............................................................................................................................ 4,35.90 3,79.94

2 Current Assets, Loans and Advances .....................................................................................

a Inventories ...................................................................................................................... 3,20.50 2,06.84

b Sundry Debtors ................................................................................................................ 7,42.51 5,68.88

c Cash and Bank Balances ................................................................................................. 1,27.30 65.76

d Other Current Assets ....................................................................................................... 0.65 0.65

e Loans and Advances ........................................................................................................ 1,13.37 1,08.14

3 Deferred Tax - Net ................................................................................................................... (11.23) (28.75)

II LIABILITIES

1 Loan Funds

a Secured Loans ................................................................................................................. 2,27.86 1,84.88

b Unsecured Loans ............................................................................................................. 5,25.71 4,88.27

2 Current Liabilities and Provisions

a Liabilities .......................................................................................................................... 6,86.75 4,96.26

b Provisions ......................................................................................................................... 69.16 77.48

III INCOME

1 Sales ........................................................................................................................................ 27,32.84 19,79.97

2 Other Income .......................................................................................................................... 78.69 74.46

IV EXPENSES

1 Raw Materials, Finished and Semi Finished Products ............................................................ 14,41.38 9,81.09

2 Excise Duties .......................................................................................................................... 2,56.34 1,90.47

3 Manufacturing, Selling Expenses ............................................................................................ 7,97.37 7,27.83

4 Depreciation ............................................................................................................................ 66.48 59.35

5 Provision for Taxation .............................................................................................................. 1,14.47 55.29

V OTHER MATTERS

1 Contingent Liabilities ............................................................................................................... 68.82 86.23

2 Capital Commitments ............................................................................................................. 35.52 15.22

3 Guarantee given by the Company [Note 19(a)]. ...................................................................... 8,03.07 8,02.89

33. Additional information pursuant to the provisions of paragraphs 3(i)(a) and (ii), 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 - SeeSchedule XVII. Previous year’s figures are indicated below the current year’s figures.

34. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 - See Schedule XIX.

35. Previous year’s figures have been regrouped/restated wherever necessary.

83


Schedule XVI

Computation of Net Profit in accordance with Section 309(5) of the Companies Act, 1956 for the year ended 31st March, 2004


lakhs lakhs lakhs

Profit before Taxation as per Profit and Loss Account .......................................................................... 438,19.30 197,03.41

Add : Depreciation charged in the Accounts ................................................................................ 163,60.64 165,43.65

: Directors’ Remuneration including Directors’ fees ............................................................. 5,08.93 3,87.48

: Provision for doubtful debts and advances (Net) ................................................................ (8,02.48) 29,34.11

: Loss on sale, etc. of Fixed Assets (Net) ............................................................................. 4,03.35 3,62.88

: Net reduction in the fair value of current investments ....................................................... 96.26 25.74

: Voluntary Retirement Schemes amortisation included in Exceptional Item ....................... 2,38.73 59.08

: Provision for diminution in value of long term investments ............................................... 5.08 3,00.30

168,10.51 206,13.24

606,29.81 403,16.65

Less : Depreciation under Section 350 of the Companies Act, 1956 ........................................... 157,47.23 160,60.00

: Profit on sale of Investments (Net) ..................................................................................... 31,94.98 64,77.81

: Loss on sale of Fixed Assets as per Section 349 (3)(d) of the Companies Act, 1956 (Net) 57.52 2,93.21

: Bad Debts and Advances written off / adjusted against provision .............................. 32,62.52 20,72.40

222,62.25 249,03.42

Total ....................... 383,67.56 154,13.23

Commission payable to the wholetime Directors ................................................................................. 1,63.35 94.80

Commission payable to the non-wholetime Directors .......................................................................... 84.00 43.50

84


Notes :Notes :Notes :Notes :Notes :

(i) (a) The installed capacity has been certified by Executive Directors, which the auditors have relied on without verification as this is a technical matter.

(b) The licensed capacities include/represent, as the case may be, registrations granted and Industrial Entrepreneur Memorandum filed with, and duly acknowledged by, theGovernment pursuant to the schemes of delicensing. [Also see note (vi) below].

(c) Within the overall licensed capacity in item 1 above, the Company is permitted to manufacture for outside sale 10,000 petrol/diesel engines and 4,000 tonnes grey ironcastings. The information given against item 5 is in respect of such petrol/diesel engines transferred to the Marketing Unit for sale.

(d) Bullet proof work and fabrication on base vehicles has been carried out at third party facilities. 1212121212 (2003 : 39 ) vehicles were produced and sold using such third party facilitiesand are included in item A 1(a).

(ii) Actual Production includes production for captive consumption.

1. a. On Road Automobiles having four or morewheels such as light, medium and heavycommercial vehicles, jeep type vehiclesand passenger cars covered under subheading (5) of Heading (7) of First Schedule[Note (iv) below] ........................................ Nos. 2,15,000 1,42,000 99,874

2,15,000 1,25,000 76,809b. Three Wheelers ........................................ Nos. 20,000 18,000 17,796

20,000 18,000 10,2792. a. Agricultural Tractor Diesel wheeled upto

55 HP [Notes (iv) and (vi) below] ............. Nos. 2,12,000 1,12,000 47,5281,81,000 1,12,000 43,025

b. Tractor Skids .............................................. These aremanufactured 2,574against spare 2,158

capacity under 2(a)3. Manufactured and Purchased Parts and

Accessories for sale [Note (iii)(a) and (b)Below] .............................................................. Nos. These are

manufactured 1,34,203against spare 1,01,998

capacity under1 and 2 above

4. Internal Combustion Piston Engines ............... Nos. 75,000 75,000 70,18452,000 52,000 53,743

5. Petrol/Diesel Engines 15 HP to 80 HP [Note(i)(c) below] ..................................................... Nos. — — 90

— — 1046. Industrial Petrol Engines ................................ Nos. 500 500 —

500 500 —7. Agricultural Implements ................................. Nos. 2,38,000 — —

2,38,000 — —8. Parts and accessories of motor vehicles .... Nos. 5,00,000 1,25,000 1,18,459

5,00,000 1,25,000 1,07,1989. Basic Natural Chemicals ................................ Litres — — —

6,21,000 1,73,000 1,80310. Internal Combustion Engine ........................... Nos. 50,000 — —

— — —

11. Export benefits ...............................................

SCHEDULE XVII

Additional Information pursuant to the Provisions of Paragraphs 3(i)(a) and (ii), 4C and 4D, of Part II of Schedule VI to theCompanies Act, 1956.

(A) PARTICULARS IN RESPECT OF GOODS MANUFACTURED :

Sl. Class of Goods Unit of Licensed Installed ActualNo. Measurement Capacity per Capacity per Production

annum [Note (i)] annum [Note (i)] [Notes (ii) and (iii)(a)]

85


(iii) (a) The actual production disclosed against manufactured components/sub-assemblies/steel blanks is the number of such components transferred during the year to theMarketing Unit/Spare Parts Stores for sale or sold otherwise.

(b) The Opening and Closing Stocks and Sales of goods shown under item 3 above consist of manufactured and purchased parts. The bifurcation of stocks/sales into manufac-tured and bought-out parts is not practicable.

(iv) Production figures include “jeep type vehicles” at a stage without body, and light commercial vehicles at cowl & chassis stage. Closing stocks include 17 (2003 : 94 ) vehiclesvalued at Rs.31.27 lakhs (2003 : Rs. 200.40 lakhs) on which body-building work was in progress as at the year end.

(v) With regard to clause 3(ii) of Part II of Schedule VI to the Companies Act,1956, the Company is of the view that, in respect of the property development activity, the Company isnot a ‘manufacturing’, a ‘trading’ or a ‘service’ company falling under sub-clause (a), (b) and (c) thereof, but it is an ‘other’ company falling under sub-clause (e) thereof.

(vi) Licensed capacity in respect of Agricultural Tractor Diesel wheeled upto 55 HP includes a Letter of Intent from the Government of India for expansion of the manufacturing capacityfrom 25,000 to 60,000 tractors at Mumbai subject to fulfillment of conditions mentioned therein; an Industrial License will be issued on fulfillment of the conditions mentioned inthe Letter of Intent.

3,068 98,02.54 2,735 88,14.54 1,00,043 3,946,07.973,300 98,53.49 3,068 98,02.54 76,861 2,885,39.12

552 6,58.63 1,027 12,21.10 17,356 246,98.07333 4,44.88 552 6,58.63 10,029 142,57.27

1,508 32,43.93 2,015 46,04.45 46,984 1,255,24.693,363 68,65.65 1,508 32,43.93 44,862 1,143,08.04

40 1,47.13 44 1,78.72 2,570 92,55.0531 93.36 40 1,47.13 2,146 85,17.11

36,41.37 35,15.68 241,53.5532,47.63 36,41.37 173,60.14

62 46.09 163 1,09.76 5,069 36,86.0518 8.92 62 46.09 1,877 14,34.99

27 13.30 25 7.44 50 37.5235 19.14 27 13.30 45 34.98— — — — — —— — — — — —— — — — — —— — — — — —

435 16.49 281 9.98 146 4.87147 5.38 435 16.49 217 17.84777 0.54 — — — —

— — 777 0.54 546 0.33— — — — — —— — — — —

77.672,47.13

Total.... 5,820,45.444,447,16.95

Opening Stock Closing Stock Sales

Quantity Value Quantity Value Quantity Value

Rupees Rupees Rupeeslakhs lakhs lakhs

86


(C) PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED :

Sl. Unit of Value

No. Description Measurement Quantity Rupees lakhs

1. Steel Items (Sheets, Tubes, etc.) ................................................................................ Nos. 75,792

57,706

Sq.Feet 2,714 116,51.79

8,172 77,27.84

Metric Tonnes 38,34429,198

2. Aluminium Sections and Other Aluminium Items ...................................................... Metric Tonnes 810 7,17.95

700 6,86.30

3. Other Metals (Steel Shots, Lead, Tin, etc.) ................................................................. Metric Tonnes 41 11.09

43 9.95

4. Paints ........................................................................................................... Nos. 29,918

2,04,299

Kgs. 14,64,934 42,58.20

10,56,714 32,00.61

Litres 58,60,90716,12,458

5. Steel Scrap ........................................................................................................... Metric Tonnes 5,569 6,03.19

4,892 3,98.19

6. Pig Iron ........................................................................................................... Metric Tonnes 1,785 2,03.46

1,384 92.90

7. Miscellaneous Foundry Materials ............................................................................... Nos. 10,88,828

8,72,078

Metric Tonnes 5,481 2,62.25

3,968 1,60.77

Litres 31,6646,153

SCHEDULE XVII (Contd...)

(B) PARTICULARS IN RESPECT OF GOODS TRADED :

Purchases Opening Stock Closing Stock Sales

Sl. Unit ofNo. Class of Goods Measurement Quantity Value Quantity Value Quantity Value Quantity Value

Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs

1. Tractors ................................................................... Nos. 22 1,06.92 — — — — 22 1,10.63

20 68.29 — — — — 20 70.06

2. Agricultural Implements .......................................... Nos. 3,697 6,88.41 665 88.47 955 1,16.97 3,920 7,17.22

5,985 4,04.88 607 73.55 665 88.47 5,293 4,02.21

3. Bought-out Spares for Resale [Note (iii)(b) toitem “A”] ................................................................ 124,23.94 —

102,92.88 — — — —

4. Others ............................................................ Nos. 49.78 — — — 51.30

71.16 — — — 75.75

Total..... 132,69.05 88.47 116.97 8,79.15

108,37.21 73.55 88.47 5,48.02

Note (v) to item (A).

}}}

87


8. Other Materials (Direct Stores, Patterns, Oils, etc.) Not practicableto givequantitative details *19,12.88

*14,40.50

9. Tyres and Tubes .......................................................................................................... Nos. *15,45,285 *150,22.42

*12,12,398 *123,54.51

10. CKD Components for Light Commercial Vehicles ...................................................... Nos. 888 9,63.30

948 10,97.30

11. Components other than Tyres and Tubes (including processing charges) ................. *2,743,65.99

*1,993,06.59

12. Material handling and transportation charges, etc. incurred onthe above items not separately allocable ................................................................... 141,88.18

103,51.19

Total..... 3,241,60.70

2,368,26.65

* Includes items used for other than production, amounts not ascertained.

Notes :

(i) The consumption in value has been ascertained on the basis of opening stock plus purchases less closing stock and includes the adjustment ofexcesses and shortages as ascertained on physical count and write-off of obsolete and unserviceable raw materials and components.

(ii) The consumption in value shown against item 11 is a balancing figure based on the total consumption shown in the Profit and Loss Account.

(D) VALUE OF IMPORTS ON C.I.F. BASIS ACCOUNTED FOR DURING THE YEAR :2004 2003

Rupees lakhs Rupees lakhs1. Raw Materials (including CKD Components for Light Commercial Vehicles) .... 14,86.82 8,75.75

2. Components, Spare Parts, etc. .......................................................................... 62,36.56 60,16.35

3. Capital Goods ..................................................................................................... 3,11.11 24,95.73

4. Items imported for Resale .................................................................................. 2,67.55 3,94.31

Total..... 83,02.04 97,82.14

Notes :(i) Credits, if any, recoverable in respect of short landings, etc. are not considered.

(ii) The value of imports shown above includes :

(a) imports on C&F basis as per suppliers’ invoices Rs. 1350.23 lakhs (2003 : Rs. 656.17 lakhs)

(b) imports on ‘cost’ basis Rs. 3785.45 lakhs (2003 : Rs. 6181.09 lakhs)

(E) EXPENDITURE IN FOREIGN CURRENCIES (SUBJECT TO DEDUCTION OF TAX WHERE APPLICABLE) :2004 2003


1. Professional and Consultancy Fees [including Rs. Nil(2003 : Rs. 439.63 lakhs) capitalised] 4,54.79 8,37.06

2. Commission on Exports 15,60.64 15,30.49

3. Royalty 17.53 97.67

4. Others 15,29.83 8,17.57

Total..... 35,62.79 32,82.79


(C) PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED :

Sl. Unit of Value

No. Description Measurement Quantity Rupees lakhs

88


Notes :

(1) Fee for use of technology, development expenditure and software expenditure [refer to in Note 1 (D)] :

(a) written off during the year Rs.25.52 lakhs (2003: Rs. 25.52 lakhs); and

(b) amount remitted during the year Rs. 134.35 lakhs (2003 : Rs. 1063.88 lakhs) net of tax deducted at source Rs. 4.20 lakhs (2003 : Rs. 10.84lakhs) are not included in the above figures.

(2) Item 3 above does not include royalty on assets capitalised Rs. Nil (2003 : Rs. 4.22 lakhs) net of tax deducted at source Rs. Nil (2003 :Rs. 0.84 lakhs).

(F) REMITTANCE IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDENDS TO NON-RESIDENT SHAREHOLDERS :

Number of Amount remitted Dividend relating to

Shareholders Equity Shares

Rupees lakhs

2004 : 3 62,19,849 3,42.09 Year ended 31st March, 2003

2003 : 4 72,09,849 2,88.49 Year ended 31st March, 2002

(G) EARNINGS IN FOREIGN EXCHANGE :


1. Export of goods on F.O.B. basis ................................................................................. 217,46.24 203,04.89

2. Others (freight, etc.) ................................................................................................... 10,95.37 11,02.38

Total..... 22,841.61 214,07.27

Notes :

F.O.B. value of exports includes local sales which qualify for export benefits and for which payment is receivable in foreign currency and local/exportsales under rupee credit which qualify for export benefits.

(H) VALUE OF IMPORTED AND INDIGENOUS CONSUMPTION :*Raw Materials and Components

Rupees %lakhs

1. Imported 93,57.80 2.89

85,16.77 3.60

2. Indigenously obtained 3,148,02.90 97.11

2,283,09.88 96.40

Total..... 3,241,60.70 100.002,368,26.65 100.00

* Includes items used for other than production, amount not ascertained.

Notes :

(1) Items purchased through canalising agencies have been considered as imported.

(2) See Note (i) to item C.

(3) In giving the above information the Company has taken the view that spares and components as referred to in paragraph 4 (D)(c) of Part II ofSchedule VI covers only such items as go directly into production.


89


SCHEDULE XVIII

Following are the names of Small Scale Industrial Undertakings (SSIs) to whom the Company owes and which are outstanding for morethan 30 days as on 31st March, 2004.

Sl. No. Name of the SSIs Sl. No. Name of the SSIs Sl. No. Name of the SSIs

1 A R Industries Pvt Ltd

2 A J Auto Pvt Ltd

3 A J Industries

4 A R Corporation

5 A Shakti Rubber Products

6 A-1 Products

7 Aakash Engineers

8 Abhijat Engineers

9 Abs Rubber Products

10 Accurate Products Corporation

11 Accurate Springs

12 Acey Engg Pvt Ltd

13 Acme Engineers

14 Acmi Industries

15 Acro

16 Aditya Auto Parts Pvt Ltd

17 Aerocom Automotives Pvt Ltd

18 Aerona Industrial Springs

19 Agrofab Machineries India Pvt Ltd

20 Ahuja Engg Works

21 Ajanta Agencies

22 Ajanta Engineering

23 Akar Industry

24 Alf Engineering Co

25 Alfa Industrial Corporation

26 Allied Spares And Auto

27 Almats Enterprise

28 Amar Auto Agency

29 Ambad Woodpeckers Pvt Ltd

30 Ambuja Industries

31 Ameya Engineering Works

32 Ami Engineering Corporation

33 Amit Engineers

34 Amtech Electronics Indialtd

35 Amtek

36 Amul Industries Pvt Ltd

37 Anandji Haridas & Co Pvt Ltd

38 Andrew Engineering Corporation

39 Anil Weld Mesh Fabrics Steel & Wire

40 Anitha Enterprises

41 Anu Enterprises

42 Apollo Sales Syndicate

43 Apt Pneumatics Pvt Ltd

44 Aquarious Chemical Industries

45 Armatech Associates

46 Asha Engg Works

47 Asha Industries Pvt Ltd

48 Ashish Auto Parts Pvt Ltd

49 Ashish Press Tools

50 Ashra Filtration Solutions Pvt Ltd

51 Asia Automotive Ltd

52 Atai Auto Ancillaries

53 Atai Filters Pvt Ltd

54 Atit Engineering Co

55 Atop Products Pvt Ltd

56 Auto Mech

57 Auto Shell Foundry

58 Auto Turn Industries

59 Autoforms

60 Automotion Of India

61 Automotive & Industrial Seals

62 Automotive Engg Works

63 Automotive Industries

64 Autosilencers India

65 Auto-Weld Systems

66 Avanti Bufa Pvt Ltd

67 Avanti Components

68 Avdel India Ltd

69 Avesta Enterprises Pvt Ltd

70 Awon Auto Ancillaries Pvt Ltd

71 Awon Engineers

72 Aytida Tools Pvt Ltd

73 Baba Enterprises

74 Badal Enterprises

75 Behzad Engineering Pvt Ltd

76 Belgaum Industries

77 Bemco India Pvt Ltd

78 Benara Udyog Pvt Ltd

79 Bentex Engineering Pvt Ltd

80 Bhagyashree Engg Pvt Ltd

81 Bhagyashri Home Appliances Pvt Ltd

82 Bharat Kumar & Co

83 Bhpl Auto Engineers Pvt Ltd

84 Bhushan Engineering Works

85 Bil Metal Industries Ltd

86 Bill Industries

87 Bobson Engineers & Contractors

88 Boltmaster India Pvt Ltd

89 Bombay Commercial Syndicate

90 Bombay Trpt Elect Components Pvt Ltd

91 Bond Safety Belts

92 Brahans Rubber Pvt Ltd

93 Brytax Auto Industries Ltd

94 Bull Machines Pvt Ltd

95 C M Smith And Sons Ltd

96 C P Foundry Works Nagpur

97 Camata Enterprises

98 Caspro Metal Industries Pvt Ltd

99 Cast Metal Industries Pvt Ltd

100 Castall Industries

101 Castwel

102 Century Alloy Industries

103 Champ Engineeing Works

104 Chandan Enterprise

105 Chavan Industries

106 Chisty Engineers Pvt Ltd

107 Choice Precitech India Pvt Ltd

108 Chopra Engineering Works

109 Chougule Industries

110 Circlips India Pvt Ltd

111 Conal International

112 Coolwells Auto Engineers

113 Creative Industries

114 Crushwell Engineers Pvt Ltd

115 D C Engineering Industries

116 D G Corporation

117 D V S Industries Pvt Ltd

118 Deepjyote Paint Industries

119 Deepnanda Technologies Pvt Ltd

120 Delite Plastics

121 Delta Enterprises

122 Delux Engineering

123 Deshpande Automech Pvt Ltd

124 Devgiri Forgings Pvt Ltd (Cnc Div )

125 Devi Enterprises

126 Devki Auto Industries Pvt Ltd

127 Dham Fasteners

128 Dinamatic Gears Pvt Ltd

129 Disha Engineering

130 Drill Jig Bushing Co (Madras) Pvt Ltd

131 Durano Process (Hyderabad)

132 Dwaraka Industries

133 Eagle Enterprises

134 Eastman Cast & Forge Ltd

90


SCHEDULE XVIII (Contd...)



135 Eata Plast Fabrics

136 Echjay Ind Pvt Ltd

137 Ehara Engineering Pvt Ltd

138 Ehara Industries

139 Ekvira Coats

140 El-Digi Systems

141 Electrols India

142 Electromags Automotive Products

143 Elfab Industries

144 Emdet Engineers Pvt Ltd

145 Enginetech Systems Pvt Ltd

146 Enpy Metalform Pvt Ltd

147 Eros Metal Work Pvt Ltd

148 Esoofali Esmailji Karachiwalla & Co149 Evershine Engineers

150 Evershine Products

151 Excel Auto Industries

152 Excel Packaging

153 Excel Process Pvt Ltd

154 Exhaust Mfg Co

155 F Tool Tech

156 Fabomech Engineers

157 Fairfield Mfg Co

158 Fibre Glass Auto Products

159 Fibreglass Auto Industries

160 Fibreglass Fabrications

161 Fine Engineering Tools Pvt Ltd

162 Fledon Engineering Works

163 Flex Chemie Industries

164 Fluid-Metal

165 Formatic Engineering Works

166 Forming Techniques

167 Fortuna Engineering (Nasik) Pvt Ltd

168 Fortuna Industries

169 Fosan Company

170 Fouress Enterprises

171 Free Field Engineer

172 Friends Auto Industries

173 Friends Engg Works

174 Friends Industrial Works

175 G Engineering

176 G Dayaram & Co

177 Gajanana Auto Engineering Pvt Ltd

178 Gain Max Enterprises

179 Gamma Industries

180 Ganesh Engineering

181 Ganesh Patterns

182 Gaurav Electronics

183 Gear Master Engineering Corporation

184 Geeta Pumps Pvt Ltd

185 Geneva Engineering Works

186 Genuine Manufacturing Co

187 Globe Metal Industry

188 Goldseal Engg Product Ltd

189 Goldseal Saargummi India Pvt Ltd190 Gole Precision Tools Pvt Ltd

191 Gramos Chemicals India Pvt Ltd

192 Gujarat Gears Industries

193 Gujarat Ptfe Processors Pvt Ltd

194 Gujarat Steel Industries

195 Guru Nanak Industries Sales Corpn

196 H N Enterprises

197 H R Corporation

198 Hari Om Tools Industries

199 Harko Metal Pvt Ltd

200 Hem Engg Works

201 Himsons Steel Pvt Ltd

202 Hind Auto Cranks Pvt Ltd

203 Hindustan Fasteners Pvt Ltd

204 Hindustan Miltek Industrial Product

205 Hipro Tools Pvt Ltd

206 Hi-Tech Fabricators & Engineers

207 Hodek Vibration Technologies Pvt Ltd

208 Hyderabad Electro-Mech Systems Pvt Ltd

209 Hyderabad Industrial Product

210 Hyderabad Press Products

211 Imi Machine Tools Pvt Ltd

212 Imperial Auto Industries Ltd

213 Impressive Impressions

214 Index Tool

215 Indian Auto Industries

216 Indian Engineering Company

217 Indu Engineers

218 Industrial Engg Syndicate

219 Industrial Engineering Works

220 Industrial Rubber Products

221 Industrial Rubber Products Pvt Ltd

222 Industrial Springs Mfg Co

223 Innova Rubbers Pvt Ltd

224 Innovative Industries

225 Insulation & Electrical Prod Pvt Ltd

226 Interface Microsystems

227 J B Industries

228 J B Tools

229 J M Industries

230 J P Tools & Components

231 Jadhao Steel Alloys

232 Jagdeesh Engineering Works

233 Jai Industries

234 Jay Industries

235 Jayess Industries

236 Jayson Industries

237 Jifcon Tools Pvt Ltd

238 Jitesh Enterprises

239 Jmc Mechanical Engg Pvt Ltd

240 Jmco Rubber Products

241 Johnson Engineering Works

242 Juhi Enterprises

243 Jyoti Products Pvt Ltd

244 K P Tools Pvt Ltd

245 K S Agriculture Industries (Regd )

246 K T Industries

247 K V Enterprises

248 Kailash Engg Works

249 Kakade Cnc Services

250 Kamala Engineering (Diamonds) Pvt Ltd

251 Kapil Industries

252 Karishma Engg Works

253 Kartar Agro Industries Pvt Ltd

254 Kay Kay Fluid Seals Ltd

255 Kay-Es Auto-Tech Pvt Ltd

256 Kaygee Foam Pvt Ltd

257 Kelvin Engineers

258 Kineco Pvt Ltd

259 Kinetic Gears

260 Kiran Industries

261 Kishor Engineering Works

262 Klipco Pvt Ltd

263 Krishna Industries

264 Kshitij Enterprises

265 Kushal Engineers Pvt Ltd

266 Kwality Silencer Industries

267 Kym Assemblers & Manufacturers

268 Lakshmi Engineering Works

269 Lalit Metal Industries

91





270 Lathe Engg Works

271 Laxmi Precision Components

272 Laxmi Precision Screws Ltd

273 Lumax Industries Ltd

274 Lunar Electrical Inds

275 M B Auto Industries

276 M D Industries

277 M G Industries

278 M Nagaraj Industries

279 M S Dalal And Co

280 Mac Steel Pvt Ltd

281 Machine Elements

282 Mack Springs Pvt Ltd

283 Madanlal And Bros

284 Magna Industries

285 Magnum Engineers

286 Magnum Industries

287 Mahabal Metals Pvt Ltd

288 Maharashtra Engineering

289 Maharashtra Rubber Industries

290 Maharashtra Udyog

291 Mahendra Metal Industries

292 Mahesh Enterprises

293 Mahnot Engineering Industries

294 Malati Founders Pvt Ltd

295 Malhar Auto Industries

296 Manbar Industries

297 Mangirish Plastic Works

298 Mangla Udyoga Pvt Ltd

299 Manjul Laminates Pvt Ltd

300 Mas Aluminium Pvt Ltd

301 Matchwell Engineering Pvt Ltd

302 Mayur Industries Ltd

303 Mayura Steels Pvt Ltd

304 Mayuresh Engineering Works

305 Mayuri Enterprises

306 Mazda Windows Pvt Ltd

307 Mazhar Weld

308 Mechpart

309 Meena Elastomers

310 Meenakshi Polymers

311 Meera Engineering Works

312 Megha Plastics

313 Metal Bright Engineers

314 Metal Goods Manufacturing Co

315 Metal Pressing Ind Pvt Ltd

316 Metal Shine Industries

317 Metalage Industries

318 Metlok Company

319 Micro Turners

320 Mitter Enterprises

321 Mitter Fasteners

322 Model Fasteners Pvt Ltd

323 Monarch Engg Works

324 Moonlight Auto Pvt Ltd

325 Morex Industrial Corporation

326 Mungi Brothers

327 Nandi Fasteners

328 Narasipur Precison Pvt Ltd

329 Nash Machines & Electronics Pvt Ltd

330 Nasik Super Tools Pvt Ltd

331 Natesan Precision Components Pvt Ltd

332 National Industries

333 National Rubber Products

334 Neel Controls

335 Neema Forge Press Pvt Ltd

336 Neeta Instruments

337 Netalkar Engineering Works

338 Netalkar Power Transmission

339 New Gambin Machine Tools

340 New Krishna Metal Arts

341 New Randhir Press Tools

342 Nimai Export Pvt Ltd

343 Nipa Rubber Products

344 Nippon Audiotronix Ltd

345 Nirmal Engineering Works

346 Omega Lining Industries

347 Oriental Engineering Company

348 P M Enterprises

349 Padmini Engg Pvt Ltd

350 Panetrical Engineers Pvt Ltd

351 Panorama Automotive Ind Pvt Ltd

352 Paras Mechanical Works P Ltd

353 Parth Engineers

354 Patodiya Glass Inds Ltd

355 Paulson Industries

356 Pearl Plastic Products

357 Perfect Dies Works

358 Perfect Engineering Products Pvt Ltd

359 Perfo-Mesh

360 Pest Control India Pcl

361 Pilot Products

362 Pioneer Automotive And Tools Ind

363 Polar Auto & Engg Indus Pvt Ltd

364 Polymech Components Pvt Ltd

365 Poona Shims Pvt Ltd

366 Popular Automobile Industries

367 Popular Founders

368 Powerflex Industries

369 Prabha Engineering Pvt Ltd

370 Prabha Engineers

371 Praful Engg & Mfg Works

372 Pramod Industries

373 Pramukh Engineers

374 Pratap Enterprise

375 Pravin Ancillary Products Pvt Ltd

376 Pravin Auto Engg Pvt Ltd

377 Pravin Engineering And Plastic

378 Pravin Wipers & Anciliar Pvt Ltd

379 Prayag Engg Inds

380 Precimac Industries

381 Preci-Metcut Toolings Pvt Ltd

382 Precise Industries

383 Precision

384 Precision Autowares Ltd

385 Precision Auto Industries

386 Precision Auto Products

387 Precision Forging & Stamping

388 Precision Gears Indore Pvt Ltd

389 Precision Industrial Corporation

390 Precision Tool Crafters

391 Precision Tools & Accessories

392 Premier Fasteners

393 Premier Founders And Engineers

394 Premier Multiweb Ltd

395 Press Components

396 Press-O-Fab Industries

397 Pressto Forms Pvt Ltd

398 Presto-Mech Industry

399 Prince Metal Works

400 Profile Engg Co

401 Progressive Engg Works (Chinchani)

402 Progressive Engineering Works

403 Purvi Industries

404 R K Agro Industries

92





405 R Engineering

406 R K Engineering Works

407 R M Industries

408 R S Fasteners

409 R V Chumble

410 Radheya Machining Ltd

411 Radix Sensors Pvt Ltd

412 Raghuvamshi Associate Engg Pvt Ltd

413 Raina Agrico Pvt Ltd

414 Raina Engineering

415 Raina Industrial Alliance

416 Rainbow Industries

417 Ramkrishna Iron Works Pvt Ltd

418 Rase Engineering Works

419 Rathod Industries

420 Ravi & Co

421 Ravi Industries Pvt Ltd

422 Reliable Autotech Pvt Ltd

423 Reliable Technocrats Pvt Ltd

424 Reliance Motors

425 Right-Tight Fasteners Pvt Ltd

426 Ritvij Plastics Pvt Ltd

427 Rohtas Auto Industries

428 Rukmini Enterprises

429 S & M Induction

430 S B Industries

431 S E A Co

432 S K P Industries

433 S N Industries

434 S P Industries

435 S P Technocrats

436 S S Engineering Works

437 S S Industries

438 Sah Petroleums Ltd

439 Sai Baba Suppliers

440 Sainath Auto Industries

441 Saki Auto Products Pvt Ltd

442 Samarth Metallurgicals

443 Sameer Auto Pvt Ltd

444 Sameer Linkages Pvt Ltd

445 Sandeep Plastic Industries

446 Sang Fasterners Pvt Ltd

447 Sanjay Rubber Pvt Ltd

448 Sanjyot Metal Industries

449 Sarna Autotex Pvt Ltd

450 Satish Industrial Plastics

451 Satpuda Engg Pvt Ltd

452 Satyay Industry India

453 Savera Plastics

454 Savita Auto Industries

455 Scriptograf Engraving & Marking Mac

456 Seaco Engineering Works

457 Seagull Graphics

458 Sealexcel India Pvt Ltd

459 Seam Engineers

460 Seven Seas Forgings Pvt Ltd

461 Shad Auto Industries

462 Shah Auto Industries

463 Shah Concabs Pvt Ltd

464 Sharada Timber Depot & Saw Mill

465 Sharp Engineering

466 Shashi Dhawal Hydraulics Pvt Ltd

467 Shear Bend Mechanical Works

468 Sheel Metal Industries

469 Shekhar Industries

470 Shilp Enterprises

471 Shilpa Industries

472 Shital Auto Industries

473 Shiv Shakti Industries

474 Shivam Industries

475 Shivam Paints Pvt Ltd

476 Shraddha Industries

477 Shree Auto Plast

478 Shree Balaji Textiles

479 Shree Engineering Works

480 Shree Industry

481 Shree Krupa Engineering Works

482 Shree Products

483 Shree Sai Engineering

484 Shree Sainath Industries

485 Shree Services

486 Shreekripa Enterprises

487 Shreeram Industries

488 Shri Gajanan Auto Engg Pvt Ltd

489 Shri Padmavati Industries

490 Shri Radha Polymers

491 Shri Siddivinayak Enterprises

492 Shrijay Udyog

493 Shroff Textiles Ltd

494 Shyam Engineering Works

495 Siddhi Forge Pvt Ltd

496 Sikands Ltd

497 Singh Steel Fab Works

498 Sip Tools

499 Siri Technocrats

500 Size Control Gauges & Tools Pvt Ltd

501 Sizer India

502 Slidewell

503 Smc Industries

504 Sonali Castings Pvt Ltd

505 Sony Enterprises

506 Soubhagya Packer

507 Sound Castings Pvt Ltd

508 Southern Auto Castings Pvt Ltd

509 Spark Automech Pvt Ltd

510 Sparlex Engineering Pvt Ltd

511 Spencer Enterprises

512 Spring Fastners

513 Spring India

514 Sri Archana Industries

515 Sri Balaji Castings Pvt Ltd

516 Sri Gurukrupa Enterprise

517 Sri Siva Sai Industries

518 Sri Siva Shakti Industries

519 Sriato

520 Srikanth Industries

521 Standard Engg Products

522 Standard Engineering Industries

523 Standard Spring & Metal Pressing Work

524 Star Auto Industries

525 Star Industries

526 Star Springs Com

527 Steel Smith

528 Steerwels

529 Sterling Industries

530 Sudha Engineering Works

531 Sudhir Fasteners

532 Sudtrac Linkages Pvt Ltd

533 Sujan Industries

534 Sujata Steel Works Pvt Ltd

535 Sumati Engineering Co Pvt Ltd

536 Sumo Auto-Tech Pvt Ltd

537 Sunax Automotive Plastic Pvt Ltd

538 Sunil & Co

539 Sunita Electro Engineerings

93





540 Sunitha Enterprises

541 Super Coil Spring Mfg Co Pvt Ltd

542 Supreme Pressfab Pvt Ltd

543 Surex Auto Works

544 Suri Auto Products

545 Suri Automotive

546 Sushil Traders

547 Sushmi Engineering

548 Susira Industries

549 Suvidh Engineering Industries

550 Suvidh Industries

551 Suyog Rubber India Pvt Ltd

552 Swastik Metal Works Pvt Ltd

553 Swetha Enterprises

554 Taj Auto Accessories

555 Taysons Industries

556 Tech Services

557 Technocrats India

558 Texso Industries

559 Tfe Coating Industries

560 Thacker Brothers

561 The Edward Engg Corpn

562 The Gentleman

563 The Oriental Science Apparatus

564 Thirumala Precicasts Pvt Ltd

565 Tide Water Oil Co India Ltd

566 Tigon Pipe Benders Pvt Ltd

567 Tool Concept

568 Tools Craft

569 Toyo Metallurgical Ltd

570 Trijama Filterall Pvt Ltd

571 Trikaya Coatings Pvt Ltd

572 Trimwell Enterprises

573 Trio Enterprises

574 Tristar Engineers

575 Tristar Industrial Equipments

576 Trivedi Udyog

577 Trusa Engineering Pvt Ltd

578 Truthread Gauges & Tools Pvt Ltd

579 Tushar Auto Parts Pvt Ltd

580 Tushar Industry

581 Ucal Products Pvt Ltd

582 Ukay Metal Industries Pvt Ltd

583 Uni Auto Parts

584 Uniparts India Ltd

585 Unique Rubber Works

586 Unique Welding Products Pvt Ltd

587 Unitech Engineers Pvt Ltd

588 United Engg Works

589 United Enterprises

590 United Rubber Industries

591 Unity Bushes And Tools Co

592 Unity Guage & Tools Co Pvt Ltd

593 Unity Industries

594 Universal Auto & Dairy Product

595 Universal Industries

596 Universal Springs

597 V R V Machine Tools

598 Vasu Chemicals

599 Veeresha Castings Pvt Ltd

600 Veltech Forging Pvt Ltd

601 Venkateswara Laminations & Presings

602 Venus Manufacturing Co

603 Versatile Equipments Pvt Ltd

604 Vibrant Auto Components Pvt Ltd

605 Vico Forge Pvt Ltd

606 Victor Enterprise

607 Victoria Enterprises

608 Victory Luminaires

609 Vidarbha Gas Vessels Pvt Ltd

610 Vidharbha Agro Industries Pvt Ltd

611 Vijay Engg Works

612 Vijay Engineering

613 Vijay Enterprises

614 Vijay Rolling Mills

615 Vijay Trade Centre

616 Vijaya Enterprises

617 Vikas Automatic Fasteners Pvt Ltd

618 Vikman Steel Ball Industires

619 Vikrant Auto Industries

620 Vikrant Auto Suspensions

621 Vikrant Tools Co

622 Vimal Polymer Industries

623 Vinaya Enterprises

624 Viraj Engineering Co

625 Viral Engineers

626 Viren Sales Corporation

627 Vishal Industries

628 Vi-Son Cables Pvt Ltd

629 Vit-Rukh Engineering

630 Vivibichu Auto Industries

631 Vora Industries

632 Wellpack Enterprises

633 Western Auto Spares

634 Wimson Electronics

635 Win Win Industries

636 Windals Auto Pvt Ltd

637 Windals Precision Pvt Ltd

638 Yantra Engineering

639 Yash Metalics Pvt Ltd

640 Zeroleak Industries

641 Zodiac Powder Coaters

642 Zoroastrian Automobiles Pvt Ltd

94


SCHEDULE XVII

ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956.

Balance Sheet Abstract and Company‘s General Business Profile :

SCHEDULE XIX

I. Registration Details

Registration No. 4 5 5 8 State Code 1 1

Balance Sheet Date 3 1 0 3 2 0 0 4Date Month Year

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities includingShareholders' Funds Total Assets

4 0 4 4 4 4 4 3 4 0 4 4 4 4 4 3

Sources of Funds

Paid-up Capital Reserves & Surplus

1 1 6 0 0 8 6 1 6 5 9 0 2 4 9

Secured Loans Unsecured Loans

4 8 5 2 2 7 5 2 4 4 5 8 0 3

Deferred Tax Liability (Net)

2 0 3 2 5 0 0

Application of Funds

Net Fixed Assets Intangible Assets

1 3 7 1 3 8 1 1 2 0 2 1 8 0

Investments Net Current Assets

1 1 1 1 1 5 3 1 1 9 5 6 9 4 9

Miscellaneous Expenditure Accumulated Losses

9 6 4 4 2 N I L

IV. Performance of Company (Amount in Rs. Thousands)

Turnover (Sales and Other Income) ★ Total Expenditure ✦

6 0 5 8 1 5 6 5 5 6 1 9 9 6 3 5

+ – Profit/Loss before Tax + – Profit/Loss after Tax

ü 4 3 8 1 9 3 0 ü 3 4 8 5 4 3 0

(Please tick appropriate box + for Profit – for Loss)Earnings per Share in Rupees ▲

Basic Diluted Dividend Rate %

Rs. 30.04 Rs. 30.04 9 0 . 0 0

(Refer Note 26)

95


V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) :

Item Code No. (ITC Code) 8 7 0 1

Product Description T r a c t o r s


Product Description Motor vehicles for the transport of more than six persons, excluding the driver


Product Description Other motor vehicles principally designed for the transport of persons

✦ after considering the provision for contingencies and exceptional item.

★ after considering exceptional item.

▲ computed on the basis of the weighted average number of shares outstanding during the year.

Signatures to Schedules I to XIX

}



K. J. Davasia




}R. K. Pitamber

Deepak S. Parekh

N. B. Godrej

M. M. Murugappan


R. N. Bhardwaj

Dr. A. S. Ganguly

R. K. Kulkarni

Anupam Puri

96


Statement pursuant to Section 212 of the Companies Act, 1956,relating to subsidiary companies

Number of Shares in The net aggregate of profits/(losses) of the Subsidiary Companies so far asthe Subsidiary Company they concern the members of Mahindra & Mahindra Limited

held by Mahindra & For Current Financial Year For Previous Financial YearsName of the Subsidiary Companies Mahindra Limited at Dealt with in the Not dealt with in Dealt with in the Not dealt with in

the financial year accounts of the accounts of accounts of the accounts ofending date Mahindra & Mahindra & Mahindra & Mahindra &

Equity Extent Mahindra Limited Mahindra Limited Mahindra Limited Mahindra Limitedof for the year for the year for the year for the year

holding ended 31st ended 31st ended 31st ended 31stMarch, 2004 March, 2004 March, 2004 March, 2004

Nos. % Rupees lakhs Rupees lakhs Rupees lakhs Rupees lakhs

Mahindra Engineering & Chemical Products Limited 53,78,235 100.00% — 10,59.52 — 38,68.94Mahindra Intertrade Limited 2,71,00,006 99.99% — 14,01.99 1,12.50 (5,33.79)Mahindra Steel Service Centre Limited 37,23,874 61.00% — 1,11.30 27.93 2,55.97Mahindra Holdings & Finance Limited 12,16,00,593 99.99% — 3,80.42 — 36,06.53

★ Mahindra Acres Consulting Engineers Limited — 50.99% — 2.19 — 30.86★ Mahindra Ashtech Limited — 99.99% — (13,92.57) — (5,15.59)★ Mahindra Holidays & Resorts India Limited — 99.99% — 10,38.45 — (6,89.42)# Mahindra Holidays & Resorts (USA) Incorporated — 99.99% — — — —★ NBS International Limited — 99.99% — 27.88 — 40.79

Mahindra Gesco Developers Limited 1,25,66,126 75.31% — 4,79.28 — 1,16.91✪ Mahindra Infrastructure Developers Limited — 60.25% — 1.84 — (16.37)

Mahindra & Mahindra Financial Services Limited 5,88,21,537 97.03% 6,47.04 59,29.96 5,87.86 57,95.08Mahindra Information Technology Services Limited(upto 30th June 2003) 1,00,90,100 100.00% — (82.96) 8,07.21 6,85.76Mahindra Consulting Inc. 2,89,365 100.00% — (7,11.58) — (16,47.76)Mahindra-British Telecom Limited 5,76,00,060 56.83% 7,41.42 45,89.19 8,38.13 204,03.34

* MBT International Incorporated — 56.83% — (6,62.26) — 1,47.50* MBT Gmbh — 56.83% — (10,41.23) — (2,17.78)* MBT Software Technologies Pte. Limited — 56.83% — 3.92 — 57.67

Mahindra Consulting Limited 71,944 100.00% — (2,65.26) — 3,79.22« Mahindra Consulting (Singapore) Pte. Limited — 100.00% — 6.87 — 2.92« Mahindra Consulting Gmbh — 100.00% — 0.08 — —

Mahindra Logisoft Business Solutions Limited 74,70,000 100.00% — (94.77) — (8,18.07)Automartindia Limited 29,40,000 69.99% — (1,32.62) — (6,47.34)Mahindra USA Inc. 4,50,00,000 100.00% — 3,78.26 — 7,04.88Mahindra Intertrade (UK) Limited 10,00,000 100.00% — 40.39 — (1,39.37)Mahindra Gujarat Tractor Limited 91,81,188 60.00% — (1,72.81) — (12,85.01)Mahindra Shubhlabh Services Limited 1,76,39,665 72.77% — (6,05.67) — (13,56.14)Mahindra Eco Mobiles Limited (upto 30th June 2003) 15,00,000 100.00% — (42.20) — (2,94.19)

★ a subsidiary of Mahindra Holdings & Finance Limited ✪ a subsidiary of Mahindra Gesco Developers Limited# a subsidiary of Mahindra Holidays & Resorts India Limited * a subsidiary of Mahindra-British Telecom Limited« a subsidiary of Mahindra Consulting Limited

Note :

The financial year of all the subsidiary companies ended on 31st March 2004 except for Mahindra Holidays & Resorts (USA ) Incorporated (MHRUSA). MHRUSA has beenincorporated on 24 th October, 2003 and became a subsidiary of Mahindra Holidays & Resorts India Limited on 4 th November, 2003. No accounts have been prepared for thesubsidiary as at 31 st March. 2004

}Keshub Mahindra Chairman


K. J. Davasia



Mumbai, 31st May, 2004}

R. K. Pitamber

Deepak S. Parekh

N. B. Godrej

M. M. Murugappan


R. N. Bhardwaj

Dr. A. S. Ganguly

R. K. Kulkarni

Anupam Puri

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

97

1. We have audited the attached consolidated balance sheet ofMahindra & Mahindra Limited and its subsidiaries (the Group)as at 31st March,2004, and the consolidated profit and lossaccount and the consolidated cash flow statement for theyear ended on that date, annexed thereto. These consolidatedfinancial statements are the responsibility of Mahindra &Mahindra Limited’s management. Our responsibility is toexpress an opinion on these consolidated financial statementsbased on our audit.

2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonableassurance about whether the financial statements areprepared, in all material respects, in accordance with anidentified financial reporting framework and are free ofmaterial misstatement. An audit includes examining on atest basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessingthe accounting principles used and significant estimatesmade by management, as well as evaluating the overallfinancial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

3. We did not audit the financial statements of certainsubsidiaries and joint ventures, whose financial statementsreflect Group’s share of total assets of Rs.349676.27 lakhsas at 31st March, 2004 and Group’s share of total revenuesof Rs.222965.93 lakhs and Group’s share of net cash inflowof Rs.1214.02 lakhs for the year ended on that date, andassociates whose financial statements reflect the Group’sshare of profit (net) upto 31st March, 2004 of Rs.895.58 lakhsand the Group’s share of profit (net) of Rs.587.09 lakhs forthe year ended on the date as considered in the consolidatedfinancial statements. These financial statements have beenaudited by other auditors whose reports have been furnishedto us, and our opinion insofar as it relates to the amountsincluded in respect of these subsidiaries, joint ventures andassociates, is based solely on the report of the other auditors.

4. We report that the consolidated financial statements havebeen prepared by the Company in accordance with therequirements of Accounting Standard 21, ConsolidatedFinancial Statements, Accounting Standard 23, Accountingfor Investments in Associates in Consolidated FinancialStatements and Accounting Standard 27, Financial Reportingof Interests in Joint Ventures, issued by the Institute ofChartered Accountants of India and on the basis of theseparate audited financial statements of Mahindra & MahindraLimited and its subsidiaries, joint ventures and associatesincluded in the consolidated financial statements.

5. On the basis of the information and explanations given to usand on the consideration of the separate audit reports onindividual audited financial statements of Mahindra &Mahindra Limited and its aforesaid subsidiaries, joint venturesand associates, in our opinion, the consolidated financialstatements give a true and fair view in conformity with theaccounting principles generally accepted in India:

(a) in the case of the consolidated balance sheet of theconsolidated state of affairs of Mahindra & MahindraLimited and its subsidiaries as at 31st March, 2004;

(b) in the case of the consolidated profit and loss accountof the consolidated results of operations of Mahindra &Mahindra Limited and its subsidiaries for the year endedon that date; and

(c) in the case of consolidated cash flow statement of theconsolidated cash flows of Mahindra & Mahindra Limitedand its subsidiaries for the year ended on that date.



R. A. Banga

Mumbai, 31st May, 2004. PartnerMembership Number : 37915

Report of the Auditors to the Board of Directors of Mahindra & Mahindra Limited

98


Consolidated Balance Sheet as at 31st March, 2004

2004 2003Schedule Rupees Rupees

lakhs lakhs

I. SOURCES OF FUNDS :

SHAREHOLDERS’ FUNDS :

Capital ........................................................................................ I 116,00.86 116,00.86

Reserves and Surplus ................................................................ II 1,897,20.86 1,664,51.28

2,013,21.72 1,780,52.14

MINORITY INTEREST ................................................................ 248,53.13 236,86.29

LOAN FUNDS ............................................................................ III 2,495,42.64 2,629,18.09

DEFERRED TAX LIABILITY (Net) ............................................... 148,47.76 139,68.27

DEFERRED INCOME :

Advance towards Club Mahindra members’ facilities ............... 121,10.57 97,97.35

Total ........ 5,026,75.82 4,884,22.14

II. APPLICATION OF FUNDS :

FIXED ASSETS ........................................................................... IV 1,708,15.07 1,797,77.46

CAPITAL WORK-IN-PROGRESS ................................................ 63,54.32 95,24.93

1,771,69.39 1,893,02.39

INTANGIBLE ASSETS ................................................................ V 64,29.22 36,79.85

INVESTMENTS .......................................................................... VI 538,48.91 443,01.18

NET CURRENT ASSETS :

Current Assets, Loans and Advances ................................ VII 4,473,21.08 3,963,29.56

Less : Current Liabilities and Provisions ............................. VIII 1,843,13.92 1,505,10.03

2,630,07.16 2,458,19.53

MISCELLANEOUS EXPENDITURE (TO THE EXTENTNOT WRITTEN OFF OR ADJUSTED) ....................................... IX 22,21.14 53,19.19

Total ........ 5,026,75.82 4,884,22.14

NOTES ON ACCOUNTS .......................................................... XV




R. A. Banga

Partner




K. J. Davasia




R. K. Pitamber

Deepak S. Parekh

N. B. Godrej

M. M. Murugappan


R. N. Bhardwaj

Dr. A. S. Ganguly

R. K. Kulkarni

Anupam Puri


99

Consolidated Profit and Loss Account for the year ended 31st March, 20042004 2003

Schedule Rupees Rupeeslakhs lakhs

SALES (Note 20) ...................................................................................................... 6,600,07.94 5,011,20.66Less: Excise Duty on Sales (Note 20) ...................................................................... 973,58.31 808,06.59Net Sales .................................................................................................................. 5,626,49.63 4,203,14.07Income from Operations & Other Income ............................................................... X 1,420,60.58 1,183,77.19Net Income .............................................................................................................. 7,047,10.21 5,386,91.26EXPENDITURE :Raw Materials, Finished and Semi-finished Products… ............................................ XI 3,893,22.40 2,840,64.62Personnel ................................................................................................................. XII 782,37.94 626,91.70Interest, Commitment and Finance Charges (Net) .................................................. XIII 164,32.59 218,29.41Depreciation / Amortisation (Notes 6 and 20) .......................................................... 209,36.82 212,84.92Other Expenses ....................................................................................................... XIV 1,481,60.49 1,180,21.57

6,530,90.24 5,078,92.22Less : Cost of Manufactured Products capitalised .................................................. 19,30.02 20,04.52

6,511,60.22 5,058,87.70Profit before provision for contingencies, exceptional item and taxation ................ 535,49.99 328,03.56Less : Provision for contingencies .......................................................................... 3,42.00 3,87.30Profit before exceptional item and taxation ............................................................. 532,07.99 324,16.26Add : Exceptional Item [Note 14(i)] ......................................................................... 24,87.86 24,29.40Profit before taxation ............................................................................................... 556,95.85 348,45.66Less : Provision for Tax – Current tax (Note 20) .................................................. 136,34.68 87,85.59

– Deferred tax (Net) (Notes 13 and 20) ......................... 9,11.50 38,28.79Profit for the year before prior year adjustments and extra ordinary items ............. 411,49.67 222,31.28Add : Adjustments pertaining to previous years (Note 15) ..................................... 6,15.88 (13.61)Profit for the year before extra ordinary items ......................................................... 417,65.55 222,17.67Add : Extra ordinary items [Note 14(iii)] .................................................................. 5,82.91 —Balance of profit for 2003-2004 before share of profit / loss of Associates andMinority Interests ..................................................................................................... 423,48.46 222,17.67

Add : Share of Profit of Associates for the year ..................................................... 27,63.60 (5,99.98)Balance of profit before Minority Interests ............................................................. 451,12.06 216,17.69Minority Share in Profits for 2003-2004 ................................................................... 25,51.54 74,46.57

425,60.52 141,71.12Balance of profit for earlier years ............................................................................. 414,14.52 348,59.68Add: Transfer from Debenture Redemption Reserve ............................................ 123,15.13 34,27.14Total of Profit and Loss Account balances shown above ........................................ 962,90.17 524,57.94Deduct :

Statutory Reserve ..................................................................................... 13,88.90 8,49.37General Reserve ........................................................................................ 48,94.61 29,95.89Dividends Paid ........................................................................................... 0.21 —Income-tax on Dividends ........................................................................... 7,88.73 —Proposed Dividends on Equity Shares ...................................................... 104,41.27 63,80.64Income-tax on Proposed Dividends ......................................................... 13,37.79 8,17.52

Balance for 2003-2004 and earlier years carried to Balance Sheet .......................... 774,38.66 414,14.52

EARNINGS PER SHARE : (Note 18)(Face value Rs 10/- per share) (Rupees)

Basic and Diluted (Before Extraordinary Item) .................................................. 36.18 12.22Basic and Diluted (After Extraordinary Item) ..................................................... 36.69 12.22

NOTES ON ACCOUNTS ......................................................................................... XV

Per our report attached to the Balance Sheet



R. A. Banga

Partner




K. J. Davasia




R. K. Pitamber

Deepak S. Parekh

N. B. Godrej

M. M. Murugappan


R. N. Bhardwaj

Dr. A. S. Ganguly

R. K. Kulkarni

Anupam Puri

100


Consolidated Cash Flow statement for the year ended 31st March, 2004

2004 2004 2003Rupees lakhs Rupees lakhs Rupees lakhs

A. Cash Flow from Operating Activities :

Net Profit before exceptional item, taxation and adjustments pertaining to previous years 532,07.99 324,16.26Adjustments for :

Depreciation/Amortisation ..................................................................................... 209,36.82 212,84.92Foreign Exchange .................................................................................................. 10,83.84 1,77.42Investment Income [Excluding Rs. 6,29.49 lakhs (2003 : Rs. 3,44.97 lakhs) in respectof financial enterprises consolidated] .................................................................... (46,86.83) (55,10.40)Interest, Commitment and Finance charges [Excluding Rs. 89,94.37 lakhs(2003 : Rs. 81,61.62 lakhs) in respect of financial enterprises consolidated] ........ 116,31.90 191,16.73Amortisation of Miscellaneous Expenditure .......................................................... 4,91.24 14,94.79(Profit)/Loss on sale of Investments (Net) [Excluding Profit on sale of investmentRs. 1,41.15 lakhs (2003: Loss Rs. 7,79.26 lakhs) in respect of financialenterprises consolidated] ....................................................................................... 60.20 (14,49.60)Loss on fixed assets sold/scrapped/written off (Net) ............................................ 75.60 6,90.08Advances written off .............................................................................................. — 1,58.06Provision for diminution in value of long term investments (Net) .......................... (11,60.83) 2,53.15Excess of cost over fair value of current investments (Net) ................................. — 6.15

284,31.94 362,21.30

Operating Profit before Working Capital changes ................................................. 816,39.93 686,37.56Changes in: Stock on hire ..................................................................................... 246,48.28 443,24.06

Leased assets ................................................................................... 2,80.54 6,37.57Deferred income – advances towards membership fees ................. 23,13.22 24,98.81Trade and other receivables .............................................................. (722,68.56) (674,54.05)Inventories ......................................................................................... (53,74.80) (55,62.83)Trade and other payables .................................................................. 316,18.23 181,50.61

(187,83.09) (74,05.83)Miscellaneous Expenditure (to the extent not written off or adjusted) incurredduring the year ....................................................................................................... (2,55.39) (69,88.01)

Cash generated from operations ........................................................................... 626,01.45 542,43.72Income-taxes paid (net of refunds) ........................................................................ (125,56.20) (94,96.09)

Net Cash from Operating Activities .................................................................. 500,45.25 447,47.63B. Cash Flow from Investing Activities :

Purchase of fixed assets .............................................................................................. (149,48.21) (170,26.87)Sale of fixed assets ..................................................................................................... 51,62.60 20,17.53Purchase of intangible assets ...................................................................................... (14,07.76) —Purchase of investments ............................................................................................. (2,911,34.39) (1,491,87.98)Sale of investments ..................................................................................................... 2,826,52.87 1,386,23.95Interest received .......................................................................................................... 34,01.13 37,52.74Dividends received ..................................................................................................... 4,97.77 3,36.72Inter corporate deposits (Net) ...................................................................................... 3,41.34 3,04.08Purchase consideration paid on further acquisition of interest in subsidiaries ............ (7,17.29) (87.18)Sales consideration received on divesture of interest in subsidiaries .......................... 12,67.60 59.81Exceptional Items:— Sale proceeds received on the sale of long term investments .............................. 31,85.85 —— Proceeds received on Sale of Subsidiaries ............................................................. — 65,00.00— Cash balance in respect of subsidiaries disposed off during the year .................... — (14,88.63)— Grant received ........................................................................................................ — 50.00

Net Cash used in Investing Activities ....................................................................... (116,98.49) (161,45.83)


101

C. Cash Flow from Financing Activities :

Proceeds from issue of share capital (including share premium) ................................ — 7.41Proceeds from borrowings ........................................................................................... 3,166,58.74 3,128,26.28Repayments of borrowings .......................................................................................... (3,346,18.05) (3,055,22.91)Dividends paid .............................................................................................................. (79,72.99) (101,37.94)Interest, Commitment and Finance charges paid ........................................................ (126,35.25) (196,77.86)

Net Cash (Used in) / from Financing Activities ........................................................ (385,67.55) (225,05.02)

D. Net Increase / (Decrease) In Cash And Cash Equivalents (A + B + C) ........................ (2,20.79) 60,96.78Cash And Cash Equivalents [Note (a)]

E. Opening Balance .......................................................................................................... 442,37.59 381,40.81

F. Closing Balance ............................................................................................................ 440,16.80 442,37.59

Notes to the Consolidated Cash Flow Statement for the year ended 31st March, 2004


(a) Cash and cash equivalents include :

Cash, cheques and stamps on hand .......................................................................................................... 158,72.90 135,84.51

Balances with scheduled banks :


On fixed deposit account .................................................................................................................... 118,52.20 170,12.43

On margin account .............................................................................................................................. 55.10 61.98

Balances with non-scheduled banks :


Group share in cash and bank balances of joint ventures .......................................................................... 1,21.57 1,49.44

434,85.50 444,78.64Unrealised (Net) translation loss/(gain) on foreign currency cash and cash equivalents ............................ 5,31.30 (2,41.05)

440,16.80 442,37.59

(b) Purchase of fixed assets includes payments for items in capital work-in-progress and advances for purchase of fixed assets.

(c) Previous year’s figures have been regrouped/restated wherever necessary.




R. A. Banga

Partner




K. J. Davasia




R. K. Pitamber

Deepak S. Parekh

N. B. Godrej

M. M. Murugappan


R. N. Bhardwaj

Dr. A. S. Ganguly

R. K. Kulkarni

Anupam Puri

See Notes attached


102


SCHEDULE I2004 2003


Share Capital :

Authorised :

17,50,00,000 Ordinary (Equity) Shares of Rs. 10 each ........................................................ 175,00.00 175,00.00

25,00,000 Unclassified shares of Rs.100 each .............................................................. 25,00.00 25,00.00

200,00.00 200,00.00

Issued and Subscribed :

11,60,08,599 Ordinary (Equity) Shares of Rs.10 each fully paid up .................................... 116,00.86 116,00.86

Total ................ 116,00.86 116,00.86

SCHEDULE II

2003 Additions Deductions 2004Reserves and Surplus : Rupees Rupees Rupees Rupees

lakhs lakhs lakhs lakhs

1 Capital Reserve .................................................................................. 23,26.01 – – 23,26.0112,80.30 10,55.91 10.20 23,26.01

2 Capital Reserve on consolidation ...................................................... 49,32.04 1,50.84 – 50,82.8848,84.87 47.17 – 49,32.04

3 Share Premium Account (Note 4b) ..................................................... 375,60.80 6,39.16 66,63.52 315,36.44383,51.68 1,51.19 9,42.07 375,60.80

4 Revaluation Reserve ........................................................................... 15,51.02 – 63.20 14,87.8216,11.89 – 60.87 15,51.02

5 Investment Allowance Reserve Account ........................................... 2,45.00 – – 2,45.002,45.00 – – 2,45.00

6 General Reserve ................................................................................. 583,05.14 @ 88,19.57 118,90.04 552,34.67562,94.06 29,95.89 9,84.81 583,05.14

7 Debenture Redemption Reserve ........................................................ 151,22.86 – 123,15.13 28,07.73185,50.00 – 34,27.14 151,22.86

8 Investment Fluctuation Reserve ........................................................ – 117,59.13 # 42,68.00 74,91.13– – – –

9 Export Development Reserve ............................................................ – – – –2.27 – 2.27 –

10 Special Reserve (As per Section 45 IC of the RBI Act) ...................... 43,55.25 13,88.90 – 57,44.1535,05.88 8,49.37 – 43,55.25

11(a) Employee Stock Option Outstanding (Note 4a) ................................. 6,45.97 6.70 2,01.80 4,50.876,92.31 – 46.34 6,45.97

11(b) Less : Deferred Employee Compensation Expense .......................... (3,34.95) (6.70) (1,99.44) (1,42.21)(6,08.98) – (2,74.03) (3,34.95)

Net [11(a) – 11(b)] ............................................................................... 3,11.02 – 2.36 3,08.6683.33 – (2,27.69) 3,11.02

12 Foreign Exchange Fluctuation Reserve .............................................. 3,27.62 (1,22.97) 1,86.94 17.71– 3,27.62 – 3,27.62

1,250,36.76 226,34.63 353,89.19 * 1,122,82.20

1,248,09.28 54,27.15 51,99.67 1,250,36.76

*[including Group Share in Joint Ventures Rs.178.91 lakhs (2002-2003: Rs.143.68 lakhs)]

13 Balance for 2003-2004 and earlier years as per Profit and Loss Account 785,62.66414,36.45

Group Share in Joint Ventures ........................................................... (11,24.00)(21.93)

Total ................ 1,897,20.86

1,664,51.28

@ includes transfer of Rs.3,924.96 lakhs from Investment Fluctuation Reserve per contra pursuant to the Scheme of Arrangement# includes transfer of Rs. 3,924.96 lakhs to General Reserve per contra pursuant to the Scheme of Arrangement [Note 3 b (ii)]


103

SCHEDULE III

Loan Funds : 2004 2003Rupees Rupees

lakhs lakhs

(A) Secured : (Note 5)

(1) Debentures/Bonds ............................................................................................................ 1,063,50.73 980,02.73

(2) Foreign Currency Loans from Banks ................................................................................ 353,58.56 306,60.57

(3) Rupee Loans :

(a) From Financial Institutions ...................................................................................... 49,00.00 94,10.40

(b) From Others ............................................................................................................ 29,41.96 98.79

78,41.96 95,09.19

(4) Loans and Advances on cash credit account from Banks ................................................ 391,58.60 326,75.24

1,887,09.85 1,708,47.73

Group Share in Joint Ventures .......................................................................................... 38,30.77 26,52.86

1,925,40.62 1,735,00.59

(B) Unsecured :

(1) Fixed Deposits .................................................................................................................. 75,57.65 86,04.10

(2) Short-term Loans :

(a) From Banks ............................................................................................................. 40,91.16 84,06.86

(b) From Others ............................................................................................................ 8,94.00 52,57.46

49,85.16 136,64.32

(3) Other Loans:

(a) From Financial Institutions ...................................................................................... 254,78.04 400,63.54

(b) Debentures .............................................................................................................. 110,00.00 230,00.00

(c) From Government of Gujarat .................................................................................. 8,19.92 7,81.90

(d) From Others ............................................................................................................ 52,43.60 23.35

425,41.56 638,68.79

550,84.37 861,37.21

Group Share in Joint Ventures .......................................................................................... 19,17.65 32,80.29

570,02.02 894,17.50

Total ................ 2,495,42.64 2,629,18.09

104

MA

HIN

DR

A &

MA

HIN

DR

A LIM

ITED

(CO

NS

OLID

ATE

D)

SCHEDULE IV

Fixed Assets : Cost/ Additions Deductions Cost/ Depreciation Depreciation Deduc- Depre- Lease Addit- Deduct- Lease Total Total Net NetProfessional and and Profes- to 31st for tions ciation Terminal ions/ ions and Terminal Depre- Depre- Balance Balance

Description valuation adjust- adjust- sional March, 2003-2004 and to 31st Adjust- adjust- adjust- Adjust- ciation ciation as at as atof Assets as at 31st ments ments valuation 2003 adjust- March, ment as ments ments ment to 31st to 31st 31st 31st

March, during during as at 31st ment of 2004 at 31st during during as at 31st March, March, March, March,2003 the year the year March, Deprec- March, the the March, 2003 2004 2004 2003

at cost 2004 iation 2003 year year 2004Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees

lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhsA : Assets on LeasePlant and Machinery .... 52.07 — — 52.07 2.99 3.62 — 6.61 — — — — 2.99 6.61 45.46 49.08Vehicles ........................ 15,21.62 3,00.80 6,43.83 11,78.59 3,66.90 2,02.65 2,30.48 3,39.07 3,25.06 1,08.72 2,70.70 1,63.08 6,91.96 5,02.15 6,76.44 8,29.66Office Equipments ....... 27.44 — 27.44 — 2.85 0.65 3.50 — 16.67 4.53 21.20 — 19.52 — — 7.92Computers ................... 1,68.70 8.08 1,44.39 32.39 69.88 17.73 73.99 13.62 43.83 14.48 56.85 1.46 1,13.71 15.08 17.31 54.99

Sub Total A 17,69.83 3,08.88 8,15.66 12,63.05 4,42.62 2,24.65 3,07.97 3,59.30 3,85.56 1,27.73 3,48.75 1,64.54 8,28.18 5,23.84 7,39.21 9,41.65

B : Owned AssetsLand ............................. 65,00.15 — 5,10.93 59,89.22 64.51 6.09 1.36 69.24 — — — — 64.51 69.24 59,19.98 64,35.64Land - Leasehold .......... 15.26 — (4.24) 19.50 1.60 0.34 (0.86) 2.80 — — — — 1.60 2.80 16.70 13.66Buildings ...................... 615,93.92 33,82.19 52,94.85 596,81.26 97,87.93 19,91.35 11,53.54 106,25.74 — — — — 97,87.93 106,25.74 490,55.52 518,05.99Plant and Machinery .... 2,129,63.32 106,16.21 45,36.98 2,190,42.55 1,011,34.78 167,15.49 40,80.97 1,137,69.30 — — — — 1,011,34.78 1,137,69.30 1,052,73.25 1,118,28.54Furniture and Fittings ... 103,14.02 16,93.73 7,52.63 112,55.12 45,33.32 10,39.15 5,41.52 50,30.95 — — — — 45,33.32 5,030.95 6,224.17 5,780.70Vehicles, Cycles, etc. ... 50,16.55 12,58.04 8,53.92 54,20.67 23,36.07 6,77.97 5,02.41 25,11.63 — — — — 23,36.07 2,511.63 2,909.04 2,680.48Property - Leasehold .... 4,51.61 2,69.04 2,89.22 4,31.43 3,90.53 62.68 2,89.22 1,63.99 — — — — 3,90.53 163.99 267.44 61.08

Sub Total B 2,968,54.83 172,19.21 122,34.29 3,018,39.75 1,182,48.74 204,93.07 65,68.16 1,321,73.65 — — — — 1,182,48.74 132,173.65 169,666.10 178,606.09

C: RepossesedLeased AssetsVehicles ........................ 3.34 — 3.34 — 0.96 (0.96) — — 1.39 (1.39) — — 2.35 — — 0.99

TOTAL (A+B+C) 2,986,28.00 175,28.09 130,53.29 3,031,02.80 1,186,92.32 207,16.76 68,76.13 1,325,32.95 3,86.95 1,26.34 3,48.75 1,64.54 1,190,79.27 1,326,97.49 1,704,05.31 1,795,48.73

D.Group Share inJoint Ventures ............ 6,39.46 2,56.41 34.29 8,61.58 4,10.73 65.51 24.42 4,51.82 — — — — 4,10.73 4,51.82 4,09.76 2,28.73

TOTAL (A+B+C+D) 2,992,67.46 177,84.50 130,87.58 3,039,64.38 1,191,03.05 2,07,82.27 69,00.55 1,329,84.77 3,86.95 1,26.34 3,48.75 1,64.54 1,194,90.00 1,331,49.31 1,708,15.07 1,797,77.46

2,699,73.54 458,74.10 165,80.18 2,992,67.46 1,057,11.85 209,75.69 75,84.49 1,191,03.05 6,51.35 4,08.10 6,72.50 3,86.95 1,063,63.20 1,194,90.00 1,797,77.46

SCHEDULE V

Intangible Assets : (Refer Note 16)Description of Gross carrying Additions and Retirements Gross carrying Accumulated Amortisation Deductions and Accumulated Net Balance Net BalanceAssets amount as at adjustments and disposals amount as at amortisation to for 2003-2004 adjustments of amortisation to as at 31st as at 31st

1st April, 2003 during the 31st March, 2004 1st April, 2003 amortisation 31st March, March, 2004 March, 2003year at cost 2004

Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs

Technical Knowhow ............... 76.55 40.69 — 1,17.24 25.52 25.52 (40.69) 91.73 25.51 —Development Expenditure ..... 7,66.22 10,81.03 — 18,47.25 — 39.49 — 39.49 18,07.76 —Software Expenditure ............ ————— 3,26.61 — 3,26.61 — 1,08.85 — 1,08.85 2,17.76 —Time share weeks ................. @ 62.28 — — 62.28 @ 6.23 6.23 — 12.46 49.82 56.05Goodwill + ............................. @ 36,23.80 6,95.42 — 43,19.22 — — — — 43,19.22 36,23.80Group Share inJoint Venture ....................... 62.74 3.26 — 66.00 50.42 6.43 — 56.85 9.15 —

TOTAL 45,91.59 21,47.01 — 67,38.60 82.17 1,86.52 (40.69) 3,09.38 64,29.22 36,79.85

36,23.80 62.28 — 36,86.08 — 6.23 — 6.23 36,79.85+ Goodwill arising on consolidation.@ As at 31st March, 2003.


105

SCHEDULE VI

Investments (At Cost, unless otherwise specified) : 2004 2004 2003 2003[Note 1(b)] Long Term Current Long Term Current

Rupees Rupees Rupees Rupees lakhs lakhs lakhs lakhs

Shares (Non-trade and fully paid-up unless otherwise specified) :

Unquoted :

(a) Equity Shares .................................................................................... 163,17.80 — 148,92.02 —

(b) Equity Shares - Associates [Note 1(c) & Note 19] ............................ 32,35.76 — 26,49.17 —

(c) Preference Shares ............................................................................. 40,65.40 — 11,22.75 —

(d) Preference Shares - Associates ........................................................ 10,86.00 — 4,23.85 —

247,04.96 — 190,87.79 —

Quoted :

(a) Equity Shares .................................................................................... 11,30.85 3,49.18 15,32.96 —

(b) Equity Shares - Associates [Note 1(c) & Note 19] ............................ 30,91.56 — 9,14.55 —

42,22.41 3,49.18 24,47.51 —

289,27.37 3,49.18 215,35.30 —

Debentures / Bonds (Non Trade & fully paid-up) :

(a) Unquoted .......................................................................................... 1,77.20 — 19,60.01 —

(b) Quoted .............................................................................................. — 4,72.77 — —

1,77.20 4,72.77 19,60.01 —

Other Investments :

Government Securities (including Treasury Bills):

(a) Unquoted .......................................................................................... 4.94 — 4.93 —

(b) Quoted .............................................................................................. — 91,89.53 — 117,61.57

4.94 91,89.53 4.93 117,61.57

Units :

(a) Unquoted .......................................................................................... 45,69.84 63,54.25 38,20.75 32,00.61

(b) Quoted .............................................................................................. — — — 77.82

45,69.84 63,54.25 38,20.75 32,78.43

Others :

(a) Unquoted (Note 8) ............................................................................. 0.03 39,44.06 1.00 20,08.11

0.03 39,44.06 1.00 20,08.11

336,79.38 203,09.79 273,21.99 170,48.11

Total .......................................................................................................... 539,89.17 443,70.10

Cost (net of amounts written off ) of Unquoted Investments .................. 397,55.28 300,83.20

Cost /Carrying Value of Quoted Investments ........................................... 142,33.89 142,86.90

539,89.17 443,70.10

Less : Excess of cost over fair value of Current Investments (Net) ......... 1,40.26 68.92

538,48.91 443,01.18

Market value of Quoted investments ....................................................... 151,43.57 142,24.34

106


SCHEDULE VII

2004 2004 2003Rupees Rupees Rupees

lakhs lakhs lakhsCurrent Assets, Loans and Advances :

(A) Current Assets :Interest accrued on investments 6,65.47 3,46.43

Stores and Spares (at cost or net realisable value whichever is lower) ............................ 13,16.27 13,64.51

Tools ..................................................................................................................................... 15,73.15 16,39.93

Stock in Trade and Work-in-Progress (at cost or net realisable value whichever is lower) :

(i) Finished Products produced and purchased for sale ................................................... 292,10.40 272,85.99

(ii) Contracts and Work-in-Progress .................................................................................. 35,99.50 27,94.47

(iii) Manufactured Components ......................................................................................... 28,83.11 25,77.01

(iv) Raw Materials and Bought-out Components ............................................................... 272,78.19 226,98.50

(v) Work-in-Progress – Property Development Activity and Long Term Contracts .......... 87,60.31 106,18.18

(vi) Food, Beverages, Smokes and Operating Supplies ..................................................... 42.47 49.64

717,73.98 660,23.79

753,28.87 693,74.66

Group Share in Inventories of Joint Ventures .............................................................................. 77,53.83 80,14.20

Plant & Machinery and other assets held for sale ...................................................................... 43.85 43.86

(at cost or estimated net realisable value, whichever is lower)

Sundry Debtors:

Unsecured unless otherwise stated :

Outstanding over six months : Considered good ....................................................... 106,13.52 72,53.57

: Considered doubtful .................................................. 77,60.32 73,93.29

183,73.84 146,46.86

Other Debts : Considered good .............................................................................. 832,46.56 792,17.99

: Considered doubtful ......................................................................... 2,19.13 3,15.40

834,65.69 795,33.39

1,018,39.53 941,80.25

Less : Unmatured Finance Charges ............................................................................ 3,82.45 6,39.04

Less : Provision for Doubtful Debts ............................................................................ 79,79.45 77,08.69

934,77.63 858,32.52

Group Share in Debtors of Joint Ventures ................................................................................... 7,38.15 5,64.50

Cash and Bank Balances :

Cash, cheques and stamps on hand ................................................................................. 158,72.90 135,84.51

Balances with Scheduled Banks :

(i) On Current Account .............................................................................. 152,76.40 135,62.88

(ii) On Fixed Deposit Account ......................................................................... 118,52.20 170,12.43

(iii) On Margin Account ......................................................................................................................................................................................................................................................................................................................................................... 55.10 61.98

271,83.70 306,37.29Balances with Non-Scheduled Banks :

On Current Account ............................................................................................................. 3,07.33 1,07.40

433,63.93 443,29.20

Group Share in Cash and Bank Balances of Joint Ventures ..................................................... 1,21.57 1,49.44

Stock on Hire ............................................................................................................................... 99,55.84 401,49.05

Less : Unmatured Finance Charges ............................................................................................ 21,81.55 77,26.48

77,74.29 324,22.57


107

(B) Loans and Advances :

(Unsecured, considered good unless otherwise stated) :

Bills of exchange, considered good ..................................................................................... 1,28.02 98.39

Bills of exchange, considered doubtful… .............................................................................. 2,13.09 2,78.42

3,41.11 3,76.81Less: Provision for doubtful debts ....................................................................................... 2,13.09 2,55.37

Less: Provision for Non Performing Assets ......................................................................... — 24.52

1,28.02 96.92

Advances recoverable in cash or in kind or for value to be received :

Considered good .......................................................................................................... 524,34.19 658,34.83

Considered doubtful ..................................................................................................... 81,10.50 77,14.00

605,44.69 735,48.83

Less : Provision for Doubtful Advances ....................................................................... 89,11.47 86,78.01

516,33.22 648,70.82

Loans against assets ( Secured considered good) ............................................................... 1,598,27.56 830,94.87

Payments towards Income - tax and Surtax (net of provisions) .......................................... 65,23.07 70,17.68

Balances - Customs, Port Trust, Excise, etc ........................................................................ 2,12.15 1,46.46

2,183,24.02 1,552,26.75

Group Share in Loans and Advances of Joint Ventures ....................................................... 3,94.94 3,71.86

Total............... 4,473,21.08 3,963,29.56

SCHEDULE VII (Contd...)

2004 2004 2003

Rupees Rupees Rupees

lakhs lakhs lakhs

108


SCHEDULE VIII

Current Liabilities and Provisions : 2004 2004 2003Rupees Rupees Rupees

(A) Current Liabilities : lakhs lakhs lakhs

Acceptances ..................................................................................................................... 189,54.82 154,56.19

Sundry Creditors :

(i) Total outstanding Dues of small scale industrial undertakings ................................ 69,06.03 66,04.66

(ii) Total outstanding Dues of creditors other than small scale industrialundertakings ............................................................................................................. 1,084,51.37 893,77.26

1,153,57.40 959,81.92

Dividend payable ............................................................................................................... 2,08.34 1,94.23

Balances on Directors’ Current Accounts ......................................................................... 1,71.67 1,04.27

Interest accrued but not due on loans .............................................................................. 56,31.75 66,01.70

Deposits/Advances received against hire purchase/lease agreements ........................... 51,58.51 12,43.51

Other current liabilities ...................................................................................................... 110,68.83 70,95.24

1,565,51.32 1,266,77.06

Group Share in Current Liabilities of Joint Ventures ......................................................... 11,77.15 28,00.43

(B) Provisions :

Proposed Dividends .......................................................................................................... 104,41.27 63,80.64

Provision for Tax on Proposed Dividend ............................................................................ 13,37.79 8,17.52

Provision for diminution in value of investments & other assets ..................................... 14,70.94 24,51.77

Provision for premium payable on redemption of debentures .......................................... — 13.00

Provision for Contingencies (Note 10) .............................................................................. 3,42.00 7,16.10

Provision for leave encashable at retirement/cessation ................................................... 55,42.47 47,90.17

Provision : Others .............................................................................................................. 74,09.45 58,30.97

265,43.92 210,00.17

Group Share in Provisions of Joint Ventures 41.53 32.37

Total.......... 1,843,13.92 1,505,10.03

SCHEDULE IX

Miscellaneous Expenditure 2004 2003(to the extent not written off or adjusted) : Rupees Rupees

lakhs lakhs

(a) Fee for use of Technology / Consultancy .......................................................................... — 51.03

(b) Finance Charges ................................................................................................................ 36.89 1,03.81

(c) Software Expenditure ....................................................................................................... 34.17 81.61

(d) Separation and other costs ............................................................................................... 16,71.18 19,30.43

(e) Product Development Expenditure ................................................................................... — 19,65.93

(f) Others ........................................................................................................................ 2,87.39 7,12.73

20,29.63 48,45.54Group Share in Miscellaneous Expenditure of Joint Ventures ................................................. 1,91.51 4,73.65

Total........... 22,21.14 53,19.19


109

SCHEDULE X2004 2003

Income from Operations and Other income : Rupees Rupeeslakhs lakhs

Income from services rendered ................................................................................................ 906,41.90 754,30.81

Income from long term contracts ............................................................................................. 20,22.94 23,86.73

Income from Project Management, etc ................................................................................... 82,17.28 69,38.98

Hire Purchase income, Lease income and other rentals .......................................................... 302,64.77 244,31.22

Commission ........................................................................................................................ 6,08.06 5,83.53

Dividends on other Investments ............................................................................................... 11,22.64 4,06.43

Rent received ........................................................................................................................ 3,09.74 1,43.86

Miscellaneous Income .............................................................................................................. 75,45.14 64,32.48

Profit on sale of Investments .................................................................................................... 80.95 14,53.16

Profit on sale of Fixed assets .................................................................................................... — 55.33

Provision for Diminution in value of long term investments written back ................................ 11,60.83 —

1,419,74.25 1,182,62.53

Group Share in Joint Ventures .................................................................................................. 86.33 114.66

Total............ 1,420,60.58 118,377,19

SCHEDULE XI 2004 2003Rupees Rupees

Raw Materials, Finished and Semi-Finished Products : lakhs lakhs(A) (Increase)/Decrease in Stock of Finished Goods, Work-in-Progress and Manufactured

Components :Opening Stock :

(i) Finished Products produced and purchased for sale ............................................... 272,85.99 253,87.01

(ii) Contracts and Work-in-Progress .............................................................................. 27,94.47 31,72.72

(iii) Manufactured Components ..................................................................................... 25,77.01 20,05.83

326,57.47 305,65.56Less: Adjustments consequent upon disposal of subsidiaries

(i) Finished Products produced and purchased for sale ............................................... — 2,65.58

(ii) Contracts and Work-in-Progress .............................................................................. — 3,97.71

— 6,63.29Less : Closing Stock :

(i) Finished Products produced and purchased for sale ............................................... 292,10.40 272,85.99

(ii) Contracts and Work-in-Progress .............................................................................. 35,99.50 27,94.47

(iii) Manufactured Components ..................................................................................... 28,83.11 25,77.01

356,93.01 326,57.47

(Increase)/Decrease in Stock ................................................................................... (30,35.54) (27,55.20)

(B) Consumption of Raw Materials and Bought-out Components :

Opening Stock ................................................................................................................... 226,98.50 196,05.75

Add : Purchases ................................................................................................................ 3,417,40.94 2,659,91.05

3,644,39.44 2,855,96.80Less: Adjustments consequent upon disposal of subsidiaries ......................................... — 4,01.41

Less : Closing Stock .......................................................................................................... 272,78.19 226,98.50

3,371,61.25 2,624,96.89

(C) Purchases of Finished Products for sale ....................................................................... 540,22.78 258,11.46

3,881,48.49 2,855,53.15

Group Share in Joint Ventures .................................................................................................. 11,73.91 (14,88.53)

Total............ 3,893,22.40 2,840,64.62

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SCHEDULE XII 2004 2003Rupees Rupees

Personnel : lakhs lakhs

Salaries, Wages, Bonus, etc ......................................................................................................................... 656,87.07 519,69.85

Contribution to Provident and other funds .................................................................................................... 38,96.34 37,83.08

Gratuity ......................................................................................................................................................... 24,52.89 19,94.26

Welfare ......................................................................................................................................................... 58,34.36 46,26.71

778,70.66 623,73.90

Group Share in Joint Ventures ...................................................................................................................... 3,67.28 3,17.80

Total.................. 782,37.94 626,91.70

SCHEDULE XIII 2004 2003Rupees Rupees

Interest, Commitment and Finance Charges : lakhs lakhs

On Term Loans and Debentures ................................................................................................................... 177,45.14 217,50.89

On Others (Net) ............................................................................................................................................ 18,01.64 21,69.27

Finance charges ............................................................................................................................................ 2,78.00 16,98.55

198,24.78 256,18.71

Group Share in Joint Ventures ...................................................................................................................... 8,01.49 16,59.64

Total................. 206,26.27 272,78.35

Less: Interest Income:

Interest on Government Securities, Debentures and Bonds - Gross ........................................................... 8,42.09 5,24.50

Interest - Others - Gross ............................................................................................................................... 33,51.39 49,23.03

41,93.48 54,47.53

Group Share in Joint Ventures ...................................................................................................................... 0.20 1.41

41,93.68 54,48.94

Total................. 164,32.59 218,29.41


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SCHEDULE XIV2004 2004 2003

Rupees Rupees RupeesOther Expenses : lakhs lakhs lakhs

Stores consumed ...................................................................................................... 34,95.81 32,51.47

Tools consumed ........................................................................................................ 10,84.55 10,43.68

Power and Fuel .......................................................................................................... 57,60.60 54,33.21

Rent including lease rentals ....................................................................................... 34,91.82 34,33.99

Rates and Taxes ........................................................................................................ 40,24.89 22,59.28

Insurance ................................................................................................................... 14,30.10 11,44.25

Repairs & Maintenance :

Buildings .......................................................................................................... 10,43.28 9,19.54

Machinery ........................................................................................................ 42,91.41 34,98.86

Others .............................................................................................................. 16,66.69 12,43.11

70,01.38 56,61.51

Advertisement ........................................................................................................... 85,35.08 56,17.78

Commission on sales/contracts (Net) ....................................................................... 67,83.84 53,72.95

Discount allowed ....................................................................................................... 2,44.90 3,32.36

Freight outward ......................................................................................................... 121,84.01 97,31.72

Sales Promotion Expenses ........................................................................................ 89,82.61 61,21.53

Travelling Expenses ................................................................................................... 259,50.95 234,85.56

Cost of Projects, Property etc. .................................................................................. 55,83.77 54,69.03

Miscellaneous Expenses ........................................................................................... 510,64.03 298,34.24

Amortisation of expenses ......................................................................................... 2,51.58 11,35.24

Directors’ fees ........................................................................................................... 6.95 4.40

Donations and contributions ...................................................................................... 3,64.48 1,15.99

Loss on sale of investments ..................................................................................... — 7,82.82

Loss on Fixed Assets sold/scrapped/written off ....................................................... 75.60 7,45.41

Provision for diminution in value of Long Term investments .................................... — 2,53.15

Excess of cost over fair value of Current Investments(Net) ..................................... — 6.15

Provision for doubtful debts/advances (Net) ............................................................. 4,37.42 55,97.03

1,467,54.37 1,168,32.75Group Share in Joint Ventures 14,06.12 11,88.82

Total .............................. 1,481,60.49 1,180,21.57

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Schedule XV

Notes on the Consolidated Accounts for the year ended 31st March, 2004

1. The Consolidated Financial Statements relate to Mahindra & Mahindra Limited (M&M, the Company) and its subsidiary companies. The ConsolidatedFinancial Statements have been prepared in accordance with Accounting Standard 21 (AS 21) “Consolidated Financial Statements”, AccountingStandard 23 (AS 23) “Accounting for Investment in Associates in Consolidated Financial Statements” and Accounting Standard 27 (AS 27) “FinancialReporting of Interests in Joint Ventures” issued by The Institute of Chartered Accountants of India. The Consolidated Financial Statements have beenprepared on the following basis:

(a) Investments in Subsidiaries :

i) The Financial Statements of the Company and its subsidiary companies have been combined on a line by line basis by adding together thebook values of like items of assets, liabilities, income and expenses after fully eliminating intra group balances and intra group transactionsresulting in unrealised profits or losses.

ii) The difference between the cost of investment in the subsidiaries over the Company’s portion of equity of the subsidiary is recognised in thefinancial statements as Goodwill or Capital Reserve.

iii) The difference between the proceeds from disposal of investment in a subsidiary and the carrying amount of its assets less liabilities as ofdate of disposal is recognised in the Profit and Loss Account as profit or loss on disposal of investment in subsidiary.

iv) Minority Interest in the net assets of consolidated subsidiaries consist of :

a) the amount of equity attributable to minorities at the date on which investment in a subsidiary is made and

b) the minorities’ share of movements in equity since the date the parent subsidiary relationship comes into existence.

v) The Financial Statements of the subsidiaries are drawn upto 31st March 2004.

The subsidiaries (which along with Mahindra & Mahindra Limited, the parent, constitute the group) considered in the presentation of these consolidatedfinancial statements are:

Name of the SubsidiarName of the SubsidiarName of the SubsidiarName of the SubsidiarName of the Subsidiary Companyy Companyy Companyy Companyy Company CountrCountrCountrCountrCountry ofy ofy ofy ofy of PrPrPrPrProporoporoporoporoportion oftion oftion oftion oftion of PrPrPrPrProporoporoporoporoportion of Vtion of Vtion of Vtion of Vtion of Voting Poweroting Poweroting Poweroting Poweroting PowerOriginOriginOriginOriginOrigin ownership ownership ownership ownership ownership held if difheld if difheld if difheld if difheld if differferferferferent frent frent frent frent from prom prom prom prom proporoporoporoporoportiontiontiontiontion

interinterinterinterinterestestestestest of ownership interof ownership interof ownership interof ownership interof ownership interestestestestest

Mahindra Engineering & Chemical Products Limited ................... India 100.00%

Mahindra Intertrade Limited ......................................................... India 99.99% 100.00%

Mahindra Steel Service Centre Limited ....................................... India 61.00%

Mahindra Holdings & Finance Limited ......................................... India 99.99% 100.00%

Mahindra Acres Consulting Engineers Limited ............................ India 50.99% 51.00%

Mahindra Ashtech Limited ........................................................... India 99.99% 100.00%

Mahindra Holidays & Resorts India Limited ................................. India 99.99%

Mahindra Holidays & Resorts (USA) Incorporated ....................... U.S.A 99.99%

NBS International Limited ............................................................ India 99.99% 100.00%

Mahindra Gesco Developers Limited ........................................... India 75.31%

Mahindra Infrastructure Developers Limited ............................... India 60.25%

Mahindra & Mahindra Financial Services Limited ........................ India 97.03%

Mahindra Information Technology Services Limited (upto 30th June 2003) India 100.00%

Mahindra Consulting Incorporated ............................................... U.S.A 100.00%

Mahindra-British Telecom Limited ............................................... India 56.83%

MBT International Incorporated .................................................... U.S.A 56.83%

MBT Gmbh ................................................................................... Germany 56.83%


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MBT Software Technologies Pte. Limited ................................... Singapore 56.83%

Mahindra Consulting Limited ....................................................... India 100.00%

Mahindra Consulting (Singapore) Pte. Limited ............................. Singapore 100.00%

Mahindra Consulting Gmbh .......................................................... Germany 100.00%

Mahindra Logisoft Business Solutions Limited ............................ India 100.00%

Automartindia Limited .................................................................. India 69.99%

Mahindra USA Incorporated ......................................................... U.S.A 100.00%

Mahindra Intertrade (UK) Limited ................................................. U.K. 100.00%

Mahindra Gujarat Tractor Limited ................................................. India 60.00%

Mahindra Shubhlabh Services Limited ......................................... India 72.77%

Mahindra Eco Mobiles Limited (upto 30th June 2003) ................ India 100.00%

(b)(b)(b)(b)(b) InterInterInterInterInterests in Joint Vests in Joint Vests in Joint Vests in Joint Vests in Joint Venturenturenturenturentureseseseses

The Group’s interests in jointly controlled entities of the Group are :

Name of the EntityName of the EntityName of the EntityName of the EntityName of the Entity CountrCountrCountrCountrCountry of Incorporationy of Incorporationy of Incorporationy of Incorporationy of Incorporation % Holding% Holding% Holding% Holding% Holding

a) Mahindra Sona Limited * ....................................................... India 29.77%

b) Jayem Automotives Limited .................................................. India 35.00 %

c) PSL Erickson Limited * .......................................................... India 20.00 %

d) Mahindra Industrial Park Limited $ ........................................ India 44.48%

* Shareholding is through a subsidiary, Mahindra Holdings & Finance Limited.

$ Shareholding is through a subsidiary, Mahindra Gesco Developers Limited.

The financial statements of all the Joint Ventures are drawn upto 31st March 2004.

(c)(c)(c)(c)(c) Investment in AssociatesInvestment in AssociatesInvestment in AssociatesInvestment in AssociatesInvestment in Associates

The Group’s Associates are:

Name of the EntityName of the EntityName of the EntityName of the EntityName of the Entity CountrCountrCountrCountrCountry of Incorporationy of Incorporationy of Incorporationy of Incorporationy of Incorporation % Holding% Holding% Holding% Holding% Holding

a) Mahindra Ugine Steel Company Limited ............................... India 49.28%

b) Owens Corning India Limited ................................................ India 21.50%

c) Mahindra Water Utilities Limited ........................................... India 50.00%

d) Mahindra InfraMan Water Utilities Private Limited ............... India 50.00%

e) Sembcorp Infrastructure (India) Private Limited .................... India 20.00%

f) Mega One Stop Farm Services Limited ................................. India 45.00%

g) Mriyalguda Farm Solution Limited ......................................... India 45.00%

h) Kota Farm Services Limited ................................................... India 45.00%

i) Mahindra Construction Company Limited ............................. India 49.99%

j) Officemartmartindia.com Limited .......................................... India 50.00%

k) Rathna Bhoomi Enterprises Private Limited .......................... India 50.00%

The financial statements of all the Associates are drawn upto 31st March, 2004 other than for Owens Corning India Limited where it is upto31st December 2003.

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2. Accounting Policies :

(A) Fixed Assets :

(a) (i) All Fixed Assets are carried at cost less depreciation except as stated in (ii) below. Cost includes financing cost relating to borrowedfunds attributable to the construction or acquisition of fixed assets upto the date the asset is ready for use. In case of borrowedfunds and liabilities in foreign currencies for the acquisition of fixed assets, the exchange differences are adjusted to the cost ofsuch asset.

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

(ii) Land and Buildings, of the parent company had been revalued as at 31st October, 1984 at depreciated replacement values on the basisof a valuation made by a firm of Chartered Surveyors & Valuers. The indices, if any, used are not stated in the valuation.

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

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

(a) for the following class of assets where depreciation is calculated at rates, based on useful life of the assets, which are in no caselower than the rates specified in Schedule XIV to the Companies Act, 1956 :

Building ( at sites) : at 25.00 % to 100.00 %

Building (others) : at 2.56 % to 6.67 %

Plant & Machinery : at 14.29 % to 33.33 %

Furniture & Fixture : at 7.69 % to 33.33 %

Vehicles : at 10.00 % to 50.00 %

(b) Fixed Assets of Mahindra Gujarat Tractor Limited is depreciated on Written Down Value Method (WDV). The difference betweenthe SLM and WDV basis is however not significant.

(iii) Depreciation charge for each year is after deducting the amount representing the depreciation on the increase due to revaluation of Landand Buildings, transferred from the Revaluation Reserve.

(B) Intangible Assets :

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

(a) Fee for use of technology / consultancy :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year of purchaseof the technology.

(b) Development Expenditure :

This expenditure is incurred on technical services and other project related expenses. As the benefit of these costs is expected in future years,the expenditure is/will be appropriately amortised on the completion of the development work.

(c) Software Expenditure :

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

(d) Time Share Weeks :

Intangible assets representing ‘time share weeks’ is amortised over a period of ten years.

(C) Investments :

All long term investments, other than in Associates, are valued at cost or lower, if written down. Current investments are valued at the lower ofcost and fair value, determined by category of investment.


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(D) Inventories :

Inventories are stated at cost or net realisable value, whichever is lower. Cost is arrived at on a weighted average method and includes, whereappropriate, manufacturing overheads and excise duty. Cost of the inventory, includes interest, where appropriate, for long term projects.

(E) Miscellaneous Expenditure (to the extent not written off or adjusted) :

Expenditure carried forward under this head is amortised as follows :

(a) Finance Charges :

The expenditure incurred in raising long term borrowings is amortised over the period of the borrowings. On early buyback, conversion orrepayment of borrowings, any unamortised expenditure is fully written off in that year.

(b) Special Payments/Pensions under Voluntary Retirement Schemes:

The liability inclusive of retirement benefits such as gratuity and leave encashment is amortised over a period of five years from themonth in which the liability is incurred.

(c) Preliminary expenses are written off over a period of five years from the date of incurring such expenditure.

(F) Foreign Exchange Transactions :

All assets and liabilities in foreign currencies are translated at the relevant rates of exchange prevailing at the year end and recognised in theProfit and Loss Account, except those covered by forward exchange contracts which are translated at contracted rates, where the differencebetween the contracted rate and the spot rate on the date of the transaction (other than in respect of the contracts for the acquisition of fixedassets and technical know-how) is charged to Profit and Loss Account over the period of the contract.

In the case of borrowed funds and liabilities incurred for the acquisition of fixed assets and technical know-how, the exchange differences areadjusted to the cost of such assets/technical know-how.

The net exchange differences resulting from the translation of items in the financial statements of foreign subsidiaries are recognised as incomeor expense in the Profit and Loss Account.

(G) Revenue Recognition :

(a) Sales of products and services are recognised when the products are shipped or services rendered. Income from long term contracts andsale of property (concerning property development activity) is, accounted for on percentage to completion basis. [Refer paragraph (H)below].

(b) Dividend from investments are recognised in the Profit and Loss Account when the right to receive payment is established.

(H) Long term contracts and Property Development Activity :

Income on long term contracts and property development activity is accounted on the percentage to completion basis which necessarily involvestechnical estimates of the percentage of completion of each contract/activity, and costs to completion of the contract/activity, on the basis of whichprofits/losses are accounted. Such estimates, made by the management and certified to the auditors, have been relied upon by them, as theseare of a technical nature.

(I) Income from Lease/Hire Purchase :

Finance earnings on lease transactions are calculated by applying the interest rate implicit in the lease, to the investment in the leased assets,as reduced by the net present value of the lease instalments falling due.

Income from hire purchase contracts entered prior to 1st April 2001 is accounted for on equated basis in accordance with the terms of the contract(except in some cases in which it is accounted for by applying the interest rate implicit in such contracts). For hire purchase transactions enteredon or after 1st April 2001 the income is accounted for by applying the interest rate implicit in such contracts.

(J) Government Grants :

Entitlements to various incentives from a State Government, such as grants by way of refund of octroi duty paid for manufacturing unit locatedin a developing region have remained outstanding for a number of years and remain to be received, creating uncertainty. Hence, such grants areaccounted for as and when the disbursements are received.

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(K) Time Share Business :

The activity of selling Timeshare and providing holiday facilities to members for a specified period each year, over a number of years, for whichmembership fee is collected either in full up front, or on a deferred payment basis. Out of the total membership fee, relevant portion reasonablyattributable towards direct cost required to sell Timeshare units, which is revised periodically, is recognised as Timeshare income in the year inwhich the purchaser of Timeshare units becomes a member and the balance representing ‘Advance towards members’ facilities’ is beingrecognised as Timeshare income equally over a period for which holiday facilities are provided commencing from the year in which the memberis entitled to benefits of membership under the scheme.

(L) Retirement Benefits :

Retirement Benefits in respect of gratuity and leave encashable at retirement/cessation are provided for based on valuations, as at the BalanceSheet date, made by independent actuaries.

(M) Product Warranty :

In respect of warranties on sale of certain products, the estimated costs of these warranties are accrued at the time of sale. The estimates foraccounting of warranties are reviewed and revisions are made as required.

(N) Leases :

The Group’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns, etc.). Theleasing arrangements which are not cancellable range between 11 months and three years generally, and are usually renewable by mutualconsent on agreed terms. The aggregate lease rentals payable are charged as Rent including lease rentals.

(O) Segment Reporting :

The accounting policies adopted for segment reporting are in line with the accounting policies of the Group. Segments are identified havingregard to the dominant source and nature of risks and returns and internal organisation and management structure.

Revenues and expenses have been identified to the segments based on their relationship to the business activity of the segment. Income /Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocatedcorporate income / expenses. Inter-segment transfers are at prices which are generally market led.

(P) Taxes on Income:

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

(Q) Income from Securitisation:

Securitised assets are derecognised as the contractual rights therein are transferred to the special purpose vehicle. On derecognition, thedifference between book value of the securitised asset and consideration received is recognised as gain or loss arising on securitisation.

3. Scheme of Arrangement :

a) Pursuant to the scheme of arrangement between Mahindra Eco Mobiles Limited (MEML) and Mahindra Information Technology Services Limited(MITS) (both wholly owned subsidiaries of the Company) with the Company as approved by the shareholders of the Company in the court-convenedmeeting held on 30th October 2003 and subsequently sanctioned by the Hon’able High Court of Bombay on 12th December 2003 the entire businessand undertakings of MEML and MITS including all their assets and liabilities were transferred to and vested in the Company with effect from theopening hours on 1st July 2003.

(b) The accounting of the merger of MEML and MITS with the Company was done as per the guidelines prescribed by the Hon’able High Court ofBombay while sanctioning the above referred Scheme of Arrangement. Accordingly,


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(i) The investments held in subsidiaries were recorded in the books of the Company based on the net asset values of the respective investeecompanies as on 30th June 2003, proportionate to their holdings in such investee companies. The other assets and liabilities of the mergingcompanies were recorded by the Company at their book values as on 30th June 2003.

(ii) The surplus of the value of the assets over the value of liabilities of MEML and MITS transferred to the Company amounting to Rs. 11759.13lakhs was transferred to Investment Fluctuation Reserve account. In the Consolidated Accounts, the Investment Fluctuation Reserve accountis reflected with a corresponding adjustment to ‘General Reserve’. In accordance with the Scheme of Arrangement, the InvestmentFluctuation Reserve has been utilized against diminution in value of certain investments and other assets in the accounts of the Company.Accordingly, an amount of Rs. 3924.96 lakhs utilized for provision for investment in subsidiaries and other amounts recoverable fromsubsidiaries in the standalone accounts of the Company, and not set up in the consolidated accounts, has been transferred from InvestmentFluctuation Reserve to General Reserve.

44444. (a) In respect of options granted under the Employee Stock Option plan, in accordance with guidelines issued by SEBI, the accounting value of theoptions is accounted as deferred employee compensation, which is amortised on a straight line basis over the period between the date of grantof options and eligible dates for conversion into equity shares. Consequently, salaries, wages, bonus, etc. includes Rs. 200.17 lakhsRs. 200.17 lakhsRs. 200.17 lakhsRs. 200.17 lakhsRs. 200.17 lakhs (2003 :Rs. 227.69 lakhs) being the amortisation of deferred employee compensation, after adjusting for reversals on account of options lapsed.

(b) Premium on redemption/buy-back of Debentures of Rs.6658.71 lakhsRs.6658.71 lakhsRs.6658.71 lakhsRs.6658.71 lakhsRs.6658.71 lakhs (2003 : Rs. 939.03 lakhs) has been debited to Share Premium Account.

5. Loans :

(a) Secured borrowings are secured/to be secured by a pari-passu charge on immovable properties of the entities both present and future, subjectto certain exclusions and are also secured by pari-passu charge on the movable properties of the Entities including movable Machinery, MachinerySpares, Tools and Accessories, both present and future, subject to certain exclusions.

(b) Loans and advances from Banks are secured by a first charge on whole of the current assets namely inventories, certain book debts, outstandingmonies, receivables, claims, etc. both present and future.

6. The depreciation charge for the year excludes :

a) An amount of Rs. 62.86 lakhsRs. 62.86 lakhsRs. 62.86 lakhsRs. 62.86 lakhsRs. 62.86 lakhs (2003 : Rs. 60.87 lakhs), representing depreciation on the increase due to revaluation of Land and Buildingstransferred from the Revaluation Reserve.

b) An amount of Rs. 95.45 lakhs (2003 : Rs. 44.23 lakhs), representing depreciation on assets used for development work. This expenditure istransferred to Development Expenditure and is appropriately amortised.

7.7.7.7.7. During the year ended 31st March, 2004, Mahindra & Mahindra Financial Services Limited has without recourse securitised loan receivables of 14367

(2003: 6762) contracts amounting to Rs. 31896.27 lakhs (2003 : Rs.17540.97 lakhs) (including future interest receivable) for a consideration ofRs. 29783.01 lakhs (2003 : Rs. 16288.36 lakhs). The excess of consideration received over the principal amount of the loan receivables is booked asincome from securitisation.

8.8.8.8.8. Current Investment includes investment in ‘Pass Through Certificates’ amounting to Rs. 3939.45 lakhs (2003: Rs.2003.50 lakhs) issued in pursuanceof securitisation of receivables by the Vehicle Hire Purchase Finance Securitisation Trust, VE Trust – 2, VE Trust – 3, VE Trust – 4 & VE Trust – 5.

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9. Contingent Liabilities not provided for :

(a) Guarantees given :

Amount of guarantees

2004 2003


For employees …....................................................................................... 15.97 1,25.03

For other companies ................................................................................. 96,68.78 105,91.39

Group Share in Joint Ventures .................................................................. — 17.13

(b) Claims not acknowledged as debts :


Excise : Gross ................... 38,61.20 32,96.88: Net of Tax ............ 31,52.77 27,45.17

Sales Tax : Gross ................... 12,66.77 9,88.04: Net of Tax ............ 8,44.37 6,31.95

Others (excluding claims where amounts are not ascertainable) : Gross ................... 8,33.45 9,61.09: Net of Tax ............ 5,46.31 6,72.24

On capital account 1,18.20 1,18.20

Group Share in Joint Ventures 0.88 1.14

(c) Taxation matters:

(i) Demands not acknowledged as debts and not provided for, in respect of which the matters are in appeal and exclusive of the effect ofsimilar matters in respect of assessments remaining to be completed :

– Income-tax : Rs. 14441.96 lakhs Rs. 14441.96 lakhs Rs. 14441.96 lakhs Rs. 14441.96 lakhs Rs. 14441.96 lakhs (2003 : Rs. 12835.10 lakhs)

– Service-tax : Rs. 2.25 lakhs Rs. 2.25 lakhs Rs. 2.25 lakhs Rs. 2.25 lakhs Rs. 2.25 lakhs (2003: Rs. Nil)Group Share in Joint Ventures : Rs. 67.94 lakhsRs. 67.94 lakhsRs. 67.94 lakhsRs. 67.94 lakhsRs. 67.94 lakhs (2003: Rs. Nil)

(ii) Items which have succeeded in appeal, but the Income-tax Department is pursuing/likely to pursue in appeal/reference and exclusive of theeffect of similar matters in respect of assessments remaining to be completed :

– Income-tax matters : Rs. 4664.98 lakhs (2003 : Rs.4703.75 lakhs)

– Surtax matters : Rs. 12.80 lakhs (2003 : Rs. 12.80 lakhs)

(iii) In addition to the amounts given in (i) and (ii) above, there are amounts of Rs. 5071.14 lakhsRs. 5071.14 lakhsRs. 5071.14 lakhsRs. 5071.14 lakhsRs. 5071.14 lakhs (2003 : Rs. 5372.92 lakhs) and Rs. 1196.04Rs. 1196.04Rs. 1196.04Rs. 1196.04Rs. 1196.04lakhslakhslakhslakhslakhs (2003 : Rs. 272.29 lakhs) respectively. However, the claim in question, if not ultimately allowed as claimed by the Company, would beallowed in a future year.

(d) Bills discounted not matured Rs. 10649.16 lakhsRs. 10649.16 lakhsRs. 10649.16 lakhsRs. 10649.16 lakhsRs. 10649.16 lakhs (2003 : Rs. 5843.25 lakhs).

(e) In respect of contracts for design, manufacture, supply, erection and commissioning of plant and equipment placed by various customers, thecommitted dates of completion had expired and, hence, strictly in terms of the relative contracts, the liability for liquidated damages/penalties,the amount of which is estimated at a ceiling of Rs. 564.75 lakhs Rs. 564.75 lakhs Rs. 564.75 lakhs Rs. 564.75 lakhs Rs. 564.75 lakhs (2003 : Rs. 1289.55 lakhs) - Net of tax Rs. 362.15 lakhsRs. 362.15 lakhsRs. 362.15 lakhsRs. 362.15 lakhsRs. 362.15 lakhs (2003 : Rs. 815.64 lakhs).However, it is expected to have the liquidated damages/penalties waived, as in the past.

10. Provision for contingencies Rs. 342.00 lakhsRs. 342.00 lakhsRs. 342.00 lakhsRs. 342.00 lakhsRs. 342.00 lakhs (2003 : Rs. 716.10 lakhs) including Rs. 342.00 lakhsRs. 342.00 lakhsRs. 342.00 lakhsRs. 342.00 lakhsRs. 342.00 lakhs (2003 : Rs.387.30 lakhs) provided during the year,is for labour demands under negotiations at certain locations of the Company.

11. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March 2004 is Rs. 1335.28 lakhsRs. 1335.28 lakhsRs. 1335.28 lakhsRs. 1335.28 lakhsRs. 1335.28 lakhs (2003: Rs. 4604.35 lakhs).....Group Share in Joint Ventures: Rs. 35.52 lakhs Rs. 35.52 lakhs Rs. 35.52 lakhs Rs. 35.52 lakhs Rs. 35.52 lakhs (2003: Rs. 15.22 lakhs).

12. Research and Development expenditure debited to the Profit and Loss Account, including certain expenditure based on allocations made aggregateRs. 6934.40 lakhs Rs. 6934.40 lakhs Rs. 6934.40 lakhs Rs. 6934.40 lakhs Rs. 6934.40 lakhs (2003 : Rs. 6099.93 lakhs).Group Share in Joint Ventures: Rs. 0.15 lakhs Rs. 0.15 lakhs Rs. 0.15 lakhs Rs. 0.15 lakhs Rs. 0.15 lakhs (2003: Rs. 0.07 lakhs)


119

13. The components of Deferred tax liability and assets as at 31st March 2004 are as under:


Deferred tax liability:

(i) Depreciation .............................................................................................. 246,20.04 251,74.79

(ii) Others ..................................................................................................... 13,83.71 18,20.12

Group Share in Joint Ventures .................................................................. 29.00 35.59

260,32.75 270,30.50Deferred tax assets:

(i) Provision for leave encashable at retirement/cessation ........................... 13,84.88 11,99.39

(ii) Provision for Doubtful debts /Advances ................................................... 40,00.66 36,93.74

(iii) Unabsorbed depreciation carried forward # .............................................. 11,24.40 50,07.80

(iv) Others ....................................................................................................... 46,57.27 31,54.46

Group Share in Joint Ventures .................................................................. 17.78 6.84

111,84.99 130,62.23

Net Deferred tax liability ........................................................................... 148,47.76 139,68.27

# (considered, as there are compensatory timing differences the reversal of which, will result in sufficient future taxable income against which thiscan be realised).

1414141414. (i) Exceptional Items of Rs. 2487.86 lakhs Rs. 2487.86 lakhs Rs. 2487.86 lakhs Rs. 2487.86 lakhs Rs. 2487.86 lakhs [2003: Rs 2429.40 lakhs (Credit)], comprise of the following :


1. Profit on disposal of subsidiaries .............................................................. — 26,42.05

2. Profit on sale of Long Term Investments ................................................. 26,74.47 —

3. Amortisation of liability and other retirement benefits made under

Voluntary Retirement Schemes ................................................................ (2,38.73) (60.74)

4. Charge on account of opening balance of Product Launch expenses

recognised as an expense ....................................................................... (11,99.72) —

5. Grant from Ministry of Non-conventional Energy Sources ....................... — 50.00

6. Provision for diminution in value of certain assets substantially retired

from active use ......................................................................................... (13,06.59) —

7. Benefit arising out of early repayment of sales tax loan ........................... 25,58.43 —————

8. Others ....................................................................................................... — (2,01.91)

Total ......................................................................................................... 24,87.86 24,29.40

Figures in brackets signify charge to Profit & Loss Account

(ii) As per Accounting Standard on “Intangible Assets “ (AS –26) issued by the Institute of Chartered Accountants of India, which has become effectivefrom 1st April 2003, Intangible items such as product launch expenses and welfare expenses involving benefits to the future periods have to berecognised as an expense in the period in which they are incurred. In view of this the Company has charged the balance carried forward in theBalance Sheet as on 31st March 2003 on account of product launch expenses of Rs. 1199.72 lakhs as an exceptional item and welfare expensesinvolving benefits to the future years Rs. 830.37 lakhs as welfare expenses.

(iii) Extraordinary items comprise writeback of group’s share of losses in subsidiary consequent to reduction in the group’s percentage holding in thesubsidiary.

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15. Adjustments pertaining to previous years, net of current and deferred tax, comprise of the following :

20042004200420042004 2003Rupees lakhsRupees lakhsRupees lakhsRupees lakhsRupees lakhs Rupees lakhs

1. Excess provision of Income Tax in respect of previous years .................. 6,19.876,19.876,19.876,19.876,19.87 —

2. Others ....................................................................................................... ————— (13.61)

3. Group share in Joint Ventures .................................................................. (3.99)(3.99)(3.99)(3.99)(3.99) —

Total .......................................................................................................... 6,15.886,15.886,15.886,15.886,15.88 (13.61)

Figures in brackets signify charge to Profit & Loss Account

16. Until 31st March 2003, technical knowhow, development expenditure and software expenditure were included in Miscellaneous Expenditure (to theextent not written off or adjusted). The carrying amounts in respect thereof have been recognised as Intangible Assets with the applicability ofAccounting Standard 26 on Intangible Assets, effective 1st April 2003, issued by the Institute of Chartered Accountants of India. Accordingly, figuresof the previous year have not been restated in respect of these items.

17. Related Party Transactions :

(a) Names of related parties where transactions have taken place during the year:

Associates :Associates :Associates :Associates :Associates :

Sr. No..... Name of the Company Sr. No..... Name of the Company

1. Mahindra Ugine Steel Company Limited 7. Kota Farm Services Limited

2. Officemartindia.com Limited 8. Mriyalguda Farm Solution Limited

3. Owens Cornings (India) Limited 9. Mega One Stop Farm Services Limited

4. Sembcorp (I) Infrastructure Private Limited 10. Mahindra InfraMan Water Utilities Private Limited

5. Mahindra Water Utilities Limited 11. Mahindra Construction Company Limited

6. Ford Credit Kotak Mahindra Limited

Joint VJoint VJoint VJoint VJoint Venturenturenturenturentures :es :es :es :es :

SrSrSrSrSr. No.. No.. No.. No.. No. Name of the CompanyName of the CompanyName of the CompanyName of the CompanyName of the Company

1. Mahindra Sona Limited

2. PSL Erickson Limited

3. Jayem Automotives Limited

4. Mahindra Industrial Park Limited

Key Management Personnel :

Vice Chairman and Managing Director ............................................................ Mr. Anand Mahindra

Executive Directors ........................................................................................ Mr. K.J. DavasiaMr. B.N. DoshiMr. A.E. DuranteMr. A.K. Nanda


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(b) The related party transactions are as under : Rupees lakhs

Sr. No. Nature of Transactions Associate Joint Ventures Key Companies Management

Personnel

1. PurchasesGoods ........................................................................ 39,68.55 32,43.40 —

(22,12.53) (21,58.69) (—)Fixed Assets .............................................................. 7.28 — —

(1,36.53) (6.79) (—)Services ..................................................................... 7,26.05 63.58 —

(7,75.31) (1,55.49) (—)2. Sales

Goods ........................................................................ 34,22.38 — —(20,65.70) (0.20) (—)

Fixed Assets .............................................................. 7.18 0.35 —(—) (—) (—)

Services ..................................................................... 3,31.38 26.04 —(2,90.80) (21.15) (—)

Lease ......................................................................... — — —(12.08) (—) (—)

Hire purchase ............................................................ — — —(9.80) (—) (—)

3. InvestmentsPurchase .................................................................... 5,46.50 65,00.00 —

(2,73.85) (—) (—)Redemption ............................................................... 4,84.88 — —

(6.15) (—) (—)4. Deputation of Personnel

From Related Parties ................................................. 0.73 — —(0.33) (—) (—)

To Related Parties ...................................................... 13.73 — —(8.54) (0.54) (—)

5. ProvisionsUnder Hire Purchase ................................................. — — —

(3,39.55) (—) (—)Diminution in investment value ................................. 68.85 — —

(—) (—) (—)Doubtful Advances .................................................... 12.22 1,63.05 —

(1,00.00) (—) (—)6. Finance

Inter Corporate Deposits given ................................. 19,42.00 1,07.00 —(13,50.00) (92.55) (—)

Inter Corporate Deposits refunded by parties ........... 25,92.58 31,92.12 —(11,50.00) (—) (—)

Interest received ....................................................... 2,18.24 6,13.13 —(3,45.96) (10,17.21) (—)

Dividend received ...................................................... — 36.68 —(—) (—) (—)

Inter Corporate Deposits taken ................................. — 55.00 —(85,75.00) (3,42.00) (—)

Inter Corporate Deposits refunded to parties ............ — 1,10.00 —(90,25.00) (3,32.00) (—)

Interest paid on Inter Corporate Deposits ................. — — —(56.30) (4.23) (—)

Stock on hire .............................................................. 16.27 — —(53.13) (—) (—)

Unmatured Finance Charges ..................................... 1.29 — —(6.65) (—) (—)

Cash discount received ............................................. 94.03 — —(56.89) (—) (—)

Interest on Hire Purchase .......................................... 7.18 — —(—) (—) (—)

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Significant related party transactions are as under Rupees lakhs

Nature of Transactions Associate Companies Amount Joint Ventures Amount

Purchase -Goods Mahindra Ugine Steel Company Limited 39,68.5539,68.5539,68.5539,68.5539,68.55 Mahindra Sona Limited 32,43.4032,43.4032,43.4032,43.4032,43.40

Sale -Goods Mahindra Ugine Steel Company Limited 33,47.8933,47.8933,47.8933,47.8933,47.89

Investment - Purchase Mahindra Ugine Steel Company Limited 5,46.005,46.005,46.005,46.005,46.00 Mahindra Industrial Park Limited 65,00.0065,00.0065,00.0065,00.0065,00.00

Provision for Doubtful Advance Mriyalguda Farm Solution Limited 2.112.112.112.112.11 Jayem Automotives Limited 1,63.051,63.051,63.051,63.051,63.05

Provision for Doubtful Advance Mega One Stop Farm Services Limited 10.1110.1110.1110.1110.11

Inter Corporate Deposits Given Mahindra Ugine Steel Company Limited 19,00.0019,00.0019,00.0019,00.0019,00.00 Jayem Automotives Limited 1,07.001,07.001,07.001,07.001,07.00

Inter Corporate DepositsRefunded by Parties Mahindra Ugine Steel Company Limited 23,14.0023,14.0023,14.0023,14.0023,14.00 Mahindra Industrial Park Limited 31,92.1231,92.1231,92.1231,92.1231,92.12

Inter Corporate DepositsRefunded by Parties Mahindra Construction Company Limited 2,38.582,38.582,38.582,38.582,38.58

Guarantees Given Mahindra Ugine Steel Company Limited 55,00.0055,00.0055,00.0055,00.0055,00.00

7. Guarantees & Collaterals given ........................................ 55,00.00 — —(22,00.00) (—) (—)

8. Other TransactionsOther Income ................................................................... 3,32.77 2.46 —

(1,08.80) (9.03) (—)Other Expenses ................................................................ 1.61 5.62 —

(32.15) (79.59) (—)Reimbursements received from parties ........................... 1,89.36 28.76 —

(1,78.00) (15.10) (—)Reimbursements made to parties .................................... 2.77 10.17 —

(36.56) (0.47) (—)9. Outstandings

Payable ...................................................................... 1,66.70 7,66.02 —(2,87.86) (6,49.63) (—)

Receivable ................................................................. 45,68.98 11,45.24 —(17,70.12) (35,50.93) (—)

Inter Corporate Deposits given ................................. 16,44.80 3,41.55 —(17,66.94) (34,26.73) (—)

Guarantees and Collaterals given .............................. 57,65.22 8,03.07 —(35,95.49) (8,02.89) (—)(—)(—)(—)(—)

Deferred payment under hire purchase ................... 7.50 — —(—) (—)—)—)—)—) (—)

10. Provision for Diminution in value of investments andother assets ...................................................................... 68.85 — —

(—) (—) (—)

Provision for Doubtful debts/advances ............................. 4,77.07 — —(—) (—) (—)

11. Managerial Remuneration ................................................ 3,58.09(2,68.80)

12. Dividends .......................................................................... 7.72(6.35)

13. Stock Options ................................................................... 42.78(50.56)

Previous year’s figures are in brackets.Mahindra Construction Company Limited was grouped under “other entities where control exists” in the previous year and is now grouped as anassociate company. The previous year figures are suitably regrouped.

Sr. No. Nature of Transactions Associate Joint Ventures Key Companies Management

Personnel

Rupees lakhs


123

18.18.18.18.18. Earnings per Share :Earnings per Share :Earnings per Share :Earnings per Share :Earnings per Share :20042004200420042004 2003

Amount used as the numerator – Balance of profit for 2003-2004 (Rupees lakhs) ................ 425,60.52425,60.52425,60.52425,60.52425,60.52 141,71.12

Nominal value of shares (Rupees lakhs) ................................................................................. 116,00.86116,00.86116,00.86116,00.86116,00.86 116,00.86

Reconciliation between basic and diluted earnings per share:

Basic Earnings per share (Rs.) ................................................................................................ 36.6936.6936.6936.6936.69 12.22

Effect of potential ordinary (equity) shares on conversion of bonds/debentures (Rs.) ........... ————— —

Diluted Earnings per share (Rs.) ............................................................................................. 36.6936.6936.6936.6936.69 12.22

Weighted average number of equity shares used in computing basic earnings per share .... 11,60,08,59911,60,08,59911,60,08,59911,60,08,59911,60,08,599 11,60,08,599

Effect of potential ordinary (equity) shares on conversion of bonds/debentures ................... 2,9722,9722,9722,9722,972 2,972

Weighted average number of equity shares used in computing diluted earnings per share . 11,60,11,57111,60,11,57111,60,11,57111,60,11,57111,60,11,571 11,60,11,571

EPS Before Extra – Ordinary itemsEPS Before Extra – Ordinary itemsEPS Before Extra – Ordinary itemsEPS Before Extra – Ordinary itemsEPS Before Extra – Ordinary items 20042004200420042004 2003

Profit before Extra – Ordinary items ....................................................................................... 419,77.61419,77.61419,77.61419,77.61419,77.61 141,71.12

Nominal value of shares (Rupees lakhs) ................................................................................. 116,00.86116,00.86116,00.86116,00.86116,00.86 116,00.86

Basic Earnings per share (Rs.) ................................................................................................ 36.1836.1836.1836.1836.18 12.22

Effect of potential ordinary (equity) shares on conversion of bonds/debentures (Rs.) ........... ————— —

Diluted Earnings per share (Rs.) ............................................................................................. 36.1836.1836.1836.1836.18 12.22

Weighted average number of equity shares used in computing basic earnings per share .... 11,60,08,59911,60,08,59911,60,08,59911,60,08,59911,60,08,599 11,60,08,599

Effect of potential ordinary (equity) shares on conversion of bonds/debentures ................... 2,9722,9722,9722,9722,972 2,972

Weighted average number of equity shares used in computing diluted earnings per share . 11,60,11,57111,60,11,57111,60,11,57111,60,11,57111,60,11,571 11,60,11,571

19.19.19.19.19. Investment in AssociatesInvestment in AssociatesInvestment in AssociatesInvestment in AssociatesInvestment in Associates

No. of Equity % of Holding Cost of Goodwill/ Share in Carryingshares held Investments capital accumulated Cost

(Equity reserve Profit/(Loss)Shares) /Reserves

(Nos) (Rupees lakhs)Mahindra Ugine Steel Co Ltd ................................ 1,52,41,885 49.28% 63,44.04 22,67.09 (32,52.48) 30,91.56

Owens Corning India Ltd. ..................................... 2,81,24,794 21.50% 28,12.48 (7,63.78) 401.36 32,13.84

Mahindra Construction Company Ltd. .................. 12,00,000 49.99% 1,29.17 — (1,29.17) —

Officemartindia.com Ltd. ...................................... 14,99,997 50.00% 22.00 — (22.00) —

Sembcorp Infrastructure (I) Private Ltd ................ 8,75,000 20.00% 87.50 0.17 (87.50) —

Mahindra Water Utilities Ltd ................................. 50,000 50.00% 5.00 — 12.16 17.16

Rathna Bhoomi Enterprises Private Ltd ................ 500 50.00% 0.05 — (0.01) 0.04

Mahindra InfraMan Water Utilities Private Ltd ..... 4,998 50.00% 0.50 — (0.50) —

Kota Farm Services Ltd ......................................... 2,73,420 45.00% 11.46 — (6.74) 4.72

Mriyalguda Farm Solution Ltd ............................... 3,37,500 45.00% 7.08 — (7.08) —

Mega One Stop Farm Services Ltd ...................... 3,51,000 45.00% — 2.52 — —

20. 20. 20. 20. 20. Joint Ventures Disclosure:Joint Ventures Disclosure:Joint Ventures Disclosure:Joint Ventures Disclosure:Joint Ventures Disclosure:

Group’s Share in Joint Ventures with respect to other items:20042004200420042004 2003

Rupees Lakhs Rupees Lakhs

a) Sales .............................................................................................................................. 27,03.6427,03.6427,03.6427,03.6427,03.64 19,01.91

b) Excise Duty .................................................................................................................... (2,56.37)(2,56.37)(2,56.37)(2,56.37)(2,56.37) (1,90.49)

c) Depreciation / Amortisation ........................................................................................... (72.87)(72.87)(72.87)(72.87)(72.87) (61.46)

d) Provision for Current Tax ............................................................................................... (1,28.02)(1,28.02)(1,28.02)(1,28.02)(1,28.02) (62.52)

e) Provision for Deferred Tax (Net) .................................................................................... 17.5317.5317.5317.5317.53 10.52

Figures in brackets signify charge to Profit and Loss Account

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21. Segment Information :

Segment Report for the year ended 31st March 2004.

Primary Segment Disclosure - Business Segment Rupees lakhs

Automotive Farm IT Services Financial Other Eliminations ConsolidatedSegment Equipment Services Segments Total

Segment

REVENUE

Gross External Sales ............................... 4,404,80.89 1,861,89.83 782,99.67 304,00.25 608,60.71 7,962,31.353,152,88.81 1,593,79.57 661,78.34 247,12.41 500,10.46 6,155,69.59

Less : Excise Duty on Sales ................... 773,51.37 177,27.94 — — 22,79.00 973,58.31635,92.72 153,98.84 — — 18,15.03 808,06.59

Net External Sales .................................. 3,631,29.52 1,684,61.89 782,99.67 304,00.25 585,81.71 6,988,73.042,516,96.09 1,439,80.73 661,78.34 247,12.41 481,95.43 5,347,63.00

Inter Segment Sales ............................... 3,61.54 15,85.60 12,24.22 2,95.87 134,21.27 (168,88.50) —5,54.99 7,83.29 12,54.74 2,76.87 68,18.57 (96,88.46) —

Total Revenue ........................................ 3,634,91.06 1,700,47.49 795,23.89 306,96.12 720,02.98 (168,88.50) 6,988,73.042,522,51.08 1,447,64.02 674,33.08 249,89.28 550,14.00 (96,88.46) 5,347,63.00

RESULTSegment result before exceptional item 326,90.86 117,59.23 58,90.23 96,00.65+ 42,45.36 — 641,86.33

145,72.97 94,24.90 162,60.56 71,75.36+ 49,87.43 (23.69) 523,97.53

Exceptional item allocated to Segments (27,36.12) (8.92) — — — — (27,45.04)(3.93) (6.81) 40.21 — — — 29.47

Segment result after exceptional item 299,54.74 117,50.31 58,90.23 96,00.65+ 42,45.36 — 614,41.29145,69.04 94,18.09 163,00.77 71,75.36+ 49,87.43 (23.69) 524,27.00

Unallocable Corporate expenses ............ (16,75.07)(net of income) 35,42.91

Operating Profit 631,16.36488,84.09

Less : Interest expense not allocable to segments 118,41.60191,16.73

Add : Interest Income not allocable to segments 44,21.0950,78.30

Less : Income Taxes — Current Tax ....... 136,34.6887,85.59

— Deferred Tax .... 9,11.5038,28.79

PROFIT FROM ORDINARY ACTIVITY 411,49.67222,31.28

Add : Adjustments pertaining to previous years 6,15.88(13.61)

Balance of Profit for the year before Extra ordinary Items and Share of Profit / (Loss) in Associates 417,65.55222,17.67

Extraordinary Items 5,82.91—

Share of Profit / (Loss) in Associates 27,63.60(5,99.98)

Profit for the year 451,12.06216,17.69

+ In line with Accounting Standard 17 on Segment Reporting, results of “Financial Services” segment , are computed after charge of interest cost assegment expense.


125

Automotive Farm IT Services Financial Other Eliminations ConsolidatedSegment Equipment Services Segments Total

Segment

OTHER INFORMATION

Segment Assets 1,629,99.70 946,02.85 472,19.77 1,963,81.32 915,48.96 — 5,927,52.601,702,88.53 937,93.48 479,98.84 1,426,04.59 911,09.35 (23.69) 5,457,71.10

Unallocated Corporate Assets 1,032,00.991,009,04.11

Total Assets 6,959,53.596,466,75.21

Segment Liabilities 755,84.57 381,94.76 88,46.09 1,738,22.83* 343,95.63 3,308,43.88651,17.23 303,76.38 74,87.88 1,227,09.97* 282,05.41 2,538,96.87

Unallocated Corporate Liabilities 1,411,56.001,963,59.10

Total Liabilities 4,719,99.884,502,55.97

Capital Expenditure 50,76.18 22,32.46 35,37.60 6,69.59 27,28.5972,45.63 45,75.47 17,12.73 3,42.86 19,46.70

Depreciation 118,27.84 42,61.35 23,93.99 4,60.48 12,08.43115,23.85 43,70.04 24,71.85 8,46.58 12,58.66

Non cash expenditure other thandepreciation 4,66.56 1,15.50 10.57 39.83 3,11.76

6,20.05 4,66.15 53.94 32.84 3,85.05

* In line with Accounting Standard 17 on Segment Reporting, segment liabilities of “Financial Services” segment , include the related interest bearing liabilities.

Secondary Segment Disclosure - Geographical Segment Rupees Lakhs

Domestic Overseas Total

Revenue From External Customers 6,561,95.96 1,400,35.39 7,962,31.355,015,68.55 1,140,01.04 6,155,69.59

Segment Assets 5,713,87.56 213,65.04 5,927,52.605,256,71.71 200,99.39 5,457,71.10

Capital Expenditure 138,65.32 3,79.10 142,44.42156,18.13 2,05.26 158,23.39

Notes :1. Business Segments

The Group has considered business segments as the primary segment for disclosure.The segments have been identified taking into account the organisational structure as well as the differing risks and returns of these segments.Automotive Segment comprises of sales of automobiles, spare parts and related services.Farm Equipment Segment comprises of sales of Tractors, spare parts and related services.IT services comprise of services rendered for IT and Telecom.Financial Services comprise of services relating to financing, leasing and hire purchase of automobiles and tractors.Others comprise of Steel trading, Project management, Investment, Electrical components, Power plant, Timesharing, etc.

2. Secondary SegmentsThe geographical segments are considered for disclosure as secondary segment.Domestic segment includes sales to customers located in India and service income accrued in India.Overseas segment includes sales and services rendered to customers located outside India.

3. Segment Revenue comprises of :-

2004 2003Rupees Lakhs Rupees Lakhs

Sales .................................................................................................................................................................... 6,600,07.94 5,011,20.66Income from Services rendered .......................................................................................................................... 905,41.90 754,73.17Income from long term contracts ........................................................................................................................ 20,56.65 23,86.73Income from project management ...................................................................................................................... 82,17.28 69,38.98Hire purchase and lease income .......................................................................................................................... 302,64.77 244,31.22Other operational income * ................................................................................................................................. 51,42.81 52,18.83Total .................................................................................................................................................................... 7,962,31.35 6,155,69.59

*Other operational income includes :-Interest Income ................................................................................................................................................... 1,92.15 3,70.64Scrap Sales .......................................................................................................................................................... 20,91.65 14,30.20Commission ......................................................................................................................................................... 3,92.48 5,83.53Dividend ............................................................................................................................................................... 1,19.30 69.71Others .................................................................................................................................................................. 23,47.23 27,64.75Total .................................................................................................................................................................... 51,42.81 52,18.83

Rupees lakhs

126


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1,18

3.27

123.

751,

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52—

Mah

indr

a In

tert

rade

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ited

3,53

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779.

7615

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31.5

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9936

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Mah

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3.89

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2,56

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8530

3.34

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8818

2.46

61.9

8

Mah

indr

a H

oldi

ngs

& F

inan

ce L

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3,98

7.76

20,9

47.4

320

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18,4

34.8

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4.69

438.

1157

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380.

42—

Mah

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Con

sulti

ng E

ngin

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Lim

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100.

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342.

1734

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1.71

4.68

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4.29

—

Mah

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2,97

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2,97

9.42

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92.5

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Mah

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dia

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2,84

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2.96

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Mah

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SA

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d #

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——

——

—

NB

S In

tern

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nal L

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1581

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652.

7544

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827

.89

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4

Mah

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39,6

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539

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8,39

8.68

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67.0

176

9.19

132.

7463

6.45

—

Mah

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Dev

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Lim

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1,30

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(18.

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8.59

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8.59

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37.3

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Mah

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Mah

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6,06

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124,

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8531

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10,1

87.0

13,

666.

786,

520.

231,

162.

64

Mah

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Inc.

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7.44

(14.

51)

250.

5425

0.54

—86

4.65

(711

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11.5

8)—

Mah

indr

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ritis

h Te

leco

m L

imite

d2,

027.

2841

,506

.94

56,1

53.9

856

,153

.98

7,32

3.65

72,5

04.2

810

,914

.85

1,50

2.09

9,41

2.76

1,60

0.92

MB

T In

tern

atio

nal I

ncor

pora

ted

#16

5.15

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.46)

2,66

3.01

2,66

3.01

—6,

840.

67(1

,763

.80)

(650

.53)

(1,1

13.2

7)—

MB

T G

mbh

#30

9.87

216.

1487

3.23

873.

23—

682.

06(1

,826

.82)

—(1

,826

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—

MB

T S

oftw

are

Tech

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gies

Pte

. Lim

ited

#13

.12

108.

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1.16

131.

16—

389.

186.

88—

6.88

—

Mah

indr

a C

onsu

lting

Lim

ited

71.9

427

6.73

2,13

1.17

2,13

1.17

43.0

94,

265.

60(2

61.6

9)—

(261

.69)

—

Mah

indr

a C

onsu

lting

(Sin

gapo

re) P

te. L

imite

d #

13.1

29.

6767

.18

67.1

8—

160.

307.

310.

526.

79—

Mah

indr

a C

onsu

lting

Gm

bh #

26.9

50.

0812

9.68

129.

68—

88.1

00.

130.

050.

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Mah

indr

a Lo

giso

ft B

usin

ess

Sol

utio

ns L

imite

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245.

00(1

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92.3

792

.37

0.03

171.

77(1

10.3

3)—

(110

.33)

—

Aut

omar

tindi

a Li

mite

d42

0.09

(1,5

25.9

8)1,

366.

461,

366.

461.

006,

457.

87(2

59.4

6)—

(259

.46)

—

Mah

indr

a U

SA

Inc.

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981.

801,

083.

1518

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.20

18,0

18.2

0—

44,4

84.7

563

3.11

254.

8537

8.26

—

Mah

indr

a In

tert

rade

(UK

) Lim

ited

#20

1.80

(116

.94)

139.

0113

9.01

—59

5.13

40.3

9—

40.3

9—

Mah

indr

a G

ujar

at T

ract

or L

imite

d2,

030.

20(3

,884

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1,95

9.96

1,95

9.96

4.61

5,13

2.36

(295

.19)

(7.1

7)(2

88.0

2)—

Mah

indr

a S

hubh

labh

Ser

vice

s Li

mite

d2,

423.

82(1

,456

.51)

1,26

5.17

1,26

5.17

39.7

51,

333.

64(6

05.6

8)—

(605

.68)

—

# Th

e fin

anci

al s

tate

men

ts o

f the

For

eign

Sub

sidi

arie

s ha

ve b

een

conv

erte

d in

to In

dian

Rup

ees

at a

n ap

prop

riate

exc

hang

e ra

te.

M C

KY

M C

KY

M C

KY

M C

KY

M C

KYM C

KY

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