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Directors Report of Mahindra & Mahindra Ltd.

Mar 31, 2016

The Directors present their Twenty-Ninth Annual Report together with the audited accounts of your Company for the year ended March 31, 2016.

FINANCIAL RESULTS (STANDALONE)

(Rs. in Million)

For the year ended March 31 2016 2015

Income 220,782 192,872

Profit before Interest, Depreciation, exceptional items and tax 45,221 33,903

Interest (533) (479)

Depreciation (5,455) (4,733)

Profit before exceptional items and tax 39,233 28,692

Exceptional items - 613

Profit Before Tax 39,233 29,305

Provision for taxation (7,033) (6,743)

Profit after tax 32,200 22,562

Balance brought forward from previous year 63,55 943,856

Adjustments on account of Amalgamation 2,010 1,140

Profit available for appropriation 97,769 67,558

Transfer from Debenture Redemption Reserve - 2,972

Final Dividend Including tax* (7) (33)

Reversal of Provision for Tax on Dividend 1,137 -

Dividend (Proposed) (11,614) (5,765)

Tax on dividend (2,364) (1,173)

Transfer from General Reserve 7,732 -

Balance carried forward 92,653 63,559

* In respect of equity shares issued pursuant to exercise of Stock Options after March 31, 2015 but before book closure period, the Company paid dividend of Rs. 5.5 Million for the year 2014-15 and tax on dividend thereto of Rs. 1.1 Million as approved by the shareholders at the Annual General Meeting held on July 28, 2015.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 12/- per Equity Share (240%), payable to those Shareholders whose names appear in the Register of Members as on the Book Closure Date. The dividend includes an additional special dividend of Rs. 6/- per share to commemorate the 10th year of Company''s listing on the stock exchanges.

SHARE CAPITAL

During the year under review, your Company allotted 7,021,157 equity shares on the exercise of stock options under various Employee Stock Option Plans. Consequently the issued, subscribed and paid-up equity share capital has increased from Rs. 4,803.94 Million divided into 960,788,912 equity shares of Rs. SI- each to Rs. 4,839.05 Million divided into 967,810,069 equity shares of t SI- each.

BUSINESS PERFORMANCE / FINANCIAL OVERVIEW

The Company offers a bouquet of services which includes Telecom IT & Network Services, Consulting, Application Outsourcing, Infrastructure Outsourcing, Engineering Services, BPO, Platform Solutions and Mobile Value Added products and Services. With an impeccable track record of delivery and strong alliances with leading technology and product vendors, the Company serves more than 800 customers, including several of the Fortune 500 Companies.

In the fiscal year 2015-16 the Company''s consolidated revenues increased to Rs. 264,942 Million from Rs. 226,213 Million in the previous year, a growth of 17.1%. The geographic split of revenue was balanced with 47% share of Americas, 29% share of Europe and 24% from Rest of the World.

The consolidated Profit before Interest, Depreciation, Tax and Exceptional Items was at Rs. 48,750 Million, against Rs. 42,987 Million in the previous year. The consolidated Profit After Tax, amounted to Rs. 31,180 Million as against Rs. 26,277 Million in the previous year. The number of customers increased from 767 in the previous year to 807 at the end of fiscal year 2015-16.

In emerging areas of Big Data, Mobility, Network, Cloud, Security, Platforms and Engineering Services, Tech Mahindra is well placed with its breadth of service offerings. Your company has also progressed well in building intellectual property through various Products & Services and Platforms. Your Company is committed towards building a synergistic relationship with its partners to enable, deliver, complete and customized solutions to customers. Tech Mahindra developed an integrated program ''BROP''(Building Relationships and Opportunities and Projects) program, which helps partner organizations and customers to succeed.

There are no material changes or commitments affecting the financial position of the Company between the end of the financial year and to the date of the report.

In summary, Tech Mahindra is well positioned in the markets it serves with a broad range of service offerings and a diversified customer base.

MERGER

During the year under review two wholly owned subsidiaries of the Company viz., Tech Mahindra BPO Limited and New vC Services Private Limited got amalgamated with the Company pursuant to the Scheme of Amalgamation (the "Scheme") sanctioned by the Honorable High Court of Bombay vide its order dated March 4, 2016. The Scheme came into effect on March 29, 2016, upon fling of the court order with the Registrar of Companies, Mumbai and pursuant thereto the entire business and all the assets and liabilities, duties, taxes and obligations of both the transferor companies have been transferred to and vested in the Company from the appointed date i.e., April 1, 2015.

During the year under review, Mahindra Engineering GmbH, a wholly owned subsidiary of the Company, got amalgamated with Tech Mahindra GmbH another wholly owned subsidiary of your Company in Germany.

ACQUISITIONS

During the year, your Company and Mahindra & Mahindra Limited (M&M), have jointly entered into an agreement with Pincar S.r.l., to purchase a controlling stake in Pininfarina S.p.A., an iconic 85 year old legendary Italian styling brand associated among others with Ferrari, Alfa Romeo and Peugeot. The acquisition will complement existing engineering capability of the Company with High-end styling and Engineering Services. As part of the agreement, Tech Mahindra and M&M shall purchase 76.06% of Pininfarina shares from the current controlling shareholder Pincar S.r.l. at a price of Euro 1.1 per share through a Special Purpose Vehicle (SPV), the ownership of which will be with your Company and M&M in the ratio of 60:40. The SPV would also make an open offer to the public shareholders of Pininfarina for the balance 23.94% stake at the same price. The SPV will infuse further funds into Pininfarina by way of Rights issue. Pininfarina will continue to remain an independent Company, listed on the Milan Stock Exchange, with Mr. Paolo Pininfarina continuing as the Chairman of its board.

DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES

As on March 31, 2016, your Company has 148 subsidiaries which includes 109 step-down subsidiaries and 4 Associate Companies. There has not been any material change in the nature of the business of the subsidiaries. As required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the Companies Act, 2013, the Consolidated Financial Statements of your Company and all its subsidiaries are provided in this Annual Report. The Consolidated Financial Statements have been prepared in accordance with Accounting Standards AS 21, AS 23 and AS 27 issued by The Institute of Chartered Accountants of India and shown the financial resources, assets, liabilities, income, profits and other details of your Company and its subsidiaries and its share in Associate Company as a single entity, after elimination of minority interest.

The performance and financial position of subsidiaries, associate companies and joint venture companies included in the Consolidated Financial Statement is provided in accordance with the provisions of Section 129 read with Rule 5 of the Companies (Accounts) Rules, 2014 as a separate statement annexed to the Notes on Accounts containing the salient features of the financial statement of Company''s subsidiaries/joint ventures or associate companies in Form AOC – 1.

Pursuant to Rule 8 (5) (iv) of the Companies (Accounts) Rules, 2014, the names of the companies which have become or ceased to be the subsidiaries, joint ventures or associate companies during the year are provided in "Annexure I" to this report.

The policy for determining Material Subsidiaries formulated by the Board of Directors is disclosed on the Company''s website and is accessible on http://www. techmahindra.com/investors/corporate_governance.aspx

HUMAN RESOURCES

Your Company believes that while Technology can enable processes but it is People who actually make things happen. In a journey of delivering tangible business value to stakeholders, Associates are envisioned as a strategic differentiator for the Company. Tech Mahindra''s Employee Value Proposition - Freedom to Explore: Connect, Co-Create and Celebrate – is at the core of its people practices and policies.

Tech Mahindra nurtures globally competitive professionals through robust training programs enabling continuous learning for the Associates. The Company also enables young achievers to demonstrate their leadership skills and strategic thought process through focused early leadership programs like Young CEO, 1000 Leaders, Shadow Board, Global Leadership Cadre (GLC) and Achievers in the Making (AIM). As a refection on the sustained efforts and initiatives undertaken by the learning and career development teams, your Company was ranked No.14 globally at the Training Top 1251 awards – the top rank among all IT organizations worldwide and all Indian organizations across sectors.

Your Company promotes an empowered and collaborative work environment where leaders stay engaged with the Associates and encourage them to challenge conventional thinking. Through the Intrapreneurship Program, Associates have the opportunity to pursue their business ideas and commercialize them with support from mentors and resources from your Company. Your Company also has a comprehensive reward program that appreciates individuals and teams at the unit, functional and organizational levels. Your Company''s Knowledge Management program is one of the best in the 1 Training Top 125 is a premier US based learning industry award. Award winners are organizations with the most successful learning and development programs in the world.

industry and the Company was conferred with the ASIAN Knowledge Management MAKE (Most Admired Knowledge Enterprise) Award in 2015. Similarly, the social Intranet portal, MyBeatPlus, fosters connecting, co-creating and celebrating within the organization, and was awarded the "Best Marketing Idea Award" at The Great Indian IT Marketing Summit.

Your Company is committed to providing a holistic employment experience to Associates with the flexibility to balance both professional and personal commitments. The comprehensive Wealth of Wellness (WoW) offerings enhance physical, mental, emotional and spiritual wellbeing of the Associates. The Company was ranked 2nd in the country for Wellness practices at Chestnut Global Partner''s Employee Health and Wellness Ranking 2015. There is a significant focus on creating a fun-filled, high energy work environment where personal milestones, organizational successes and special occasions are celebrated with fervour and enthusiasm involving not just Associates but also their families.

During the year under review, Tech Mahindra''s people practices, policies and programs have been awarded in various external forums representing members from not just the Information Technology industry but the entire spectrum of the corporate world.

Tech Mahindra won 4 Awards at the Society for Human Resources Management (SHRM) India Annual Awards 2015:

- Winner of Excellence in Social Media People Practices

- Winner of Excellence in Developing Leaders of Tomorrow

- Winner of Excellence in Community Impact

- Runners Up in Employee Health and Wellness Practices

Tech Mahindra was also recognized as one amongst the Top 3 in the country for its People Practices at the Business World HR Excellence Awards 2015 apart from being awarded the Change Champion Award.

These awards and recognitions have positioned Tech Mahindra as an organization that puts people first, delivers future focused excellence in the field of People Management and recognizes the importance of human capital as a key driver of business growth.

QUALITY

Your Company continues its focus on quality and strives to exceed customer expectations at all times. It is certified under various standards to meet client demands and enhance value delivery - Successfully assessed at CMMI Dev & SVC V1.3 L5, TMMi L5, TL9K, ISO 9001:2008, ISO 20000:2011, ISO 27001: 2013, ISO 13485, Auto Spice, AS9100:2009 (Standard for Aerospace domain – scope of certification limited to the aerospace business within Tech Mahindra). In addition to these, your Company also maintains its commitment to health, safety and environment by continually improving its processes in accordance with ISO 14001 and OHSAS 18001 standards.

Your Company is also certified on ISO 22301:2012 (Societal Security) and has a comprehensive Business Continuity and Disaster Recovery framework, to prevent potential business disruptions in the event of any disaster. It has processes that will help resume services to customers ''acceptable service levels. Automated Service Desk with SLAs for enabling business and Vulnerability Assessment and Penetration Testing Lab for secured corporate network operations are highlights showcasing information security posture of the Organization.

Tech Mahindra (IT Division) has emerged as the ''organization with highest maturity of business excellence practices ''at Mahindra Group (Services Sector). It has been assessed at TMW Maturity Stage 6 (on scale of 1-10 stages) of Mahindra Business Excellence Framework – The Mahindra Way.

These certifications are testimony of the robustness of business processes and at large the quality culture imbibed in the organization.

Your Company has also introduced Practices for transforming Quality Assurance processes to Delivery Assurance processes with focus on Product Assurance and Architecture Assurance; these are measured and monitored through various indices. One such initiative is "Execution Excellence Index" focusing on achieving high project maturity, improved tools usage and standardization, knowledge management and performance on key business metrics, in order to strengthen further the Business Excellence in what we deliver to the customers, thereby achieve better Customer satisfaction. Your Company is putting all the initiatives in place in order to ensure we deliver as stated in Quality Policy.

DIRECTORS

During the year under review, Mr. Vineet Nayyar Executive Vice Chairman of the Company retired on August 09, 2015 and the Board thought it appropriate that the Company should continue to avail the benefit of Mr. Nayyar''s vast experience and expertise. Accordingly, your Board of Directors approved the recommendation of the Nomination and Remuneration Committee of the Board (the Committee) and appointed Mr. Vineet Nayyar as an Additional Director and designated him as Vice Chairman of the Company with effect from August 10, 2015. Mr. Nayyar has been associated with the Company for more than a decade - initially as Managing Director and subsequently as Executive Vice Chairman. Mr. Nayyar has contributed immensely to the growth of the Company and has been instrumental in bringing the Company to its current status.

Further, the Board considered the recommendation of the Committee and appointed Mr. V. S. Parthasarathy, who is the Group CFO & Group CIO of Mahindra & Mahindra Ltd. and member of the Group Executive Board, as an Additional Director with effect from August 10, 2015.

The approval of the Members is sought for appointment of Mr. Vineet Nayyar (DIN: 00018243) and Mr. V. S. Parthasarathy (DIN: 00125299) as Directors of the Company, liable to retire by rotation.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and Regulation 16 (1) (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Pursuant to the provisions of Section 152 (6) (c) of the Companies Act, 2013, Mr. C. P. Gurnani, Director (DIN: 00018234) is liable to retire by rotation and offers himself for reappointment.

Board evaluation

Pursuant to the provisions of the Companies Act, 2013, the Board has devised a policy on evaluation of performance of Board of Directors, Committees and Individual directors. This policy is also in compliance to Regulation 19 read with Schedule II, Part D of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Accordingly, the Chairman of the Nomination and Remuneration Committee obtained from all the board members duly filled in evaluation forms for evaluation of the Board as a whole, evaluation of the Committees and peer evaluation. The summary of the evaluation reports were presented to the respective Committees and the Board for their consideration.

policy on Directors Appointment and Remuneration

The Governance policies laid down by the Board of directors of your Company include:

i. Policy on appointment and removal of Directors, Key Managerial Personnel and Senior Management

ii. Policy on remuneration to the Directors, Key Management Personnel, Senior Management and other Employees

The extract of these two policies are provided in "Annexure II".

training

The Company has laid down a policy on training for Independent Directors, as part of the governance policies. The directors are updated on the regulatory changes, Business strategy and operations by the senior leadership of the Company periodically.

Key Managerial personnel (KMps)

Pursuant to the provisions of Section 203 of the Companies Act, 2013, Mr. C. P. Gurnani, Managing Director & Chief Executive Officer, Mr. Milind Kulkarni, Chief Financial Officer and Mr. G. Jayaraman, Company Secretary & Chief Compliance Officer are the Key Managerial Personnel of the Company.

During the year under review, Mr. Vineet Nayyar ceased to be Key Managerial Personnel of the Company with effect from August 10, 2015 consequent to his retirement from the position of Executive Vice Chairman.

DIRECTORS''RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, your Directors, based on the representation(s) 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 along with proper explanation relating to material departures, if any;

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 March 31, 2016 and of the profit of the Company for the year ended on that date;

iii. proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the annual accounts have been prepared on a going concern basis;

v. they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

vi. the proper systems to ensure compliance with the provisions of all applicable laws are in place and are adequate and operating effectively.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has internal financial controls which are adequate and were operating effectively. The controls are adequate for ensuring the orderly & efficient conduct of the business, including adherence to the Company''s policies, the safe guarding of assets, the prevention & detection of frauds & errors, the accuracy & completeness of accounting records and timely preparation of reliable financial information.

STATUTORY AUDITORS

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, [Firm''s Registration No. 117366W/W-100018] the Auditors of your Company, hold office upto the conclusion of the forthcoming Annual General Meeting (AGM) of the Company. Pursuant to provisions of Section 139(2) of Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, M/s. Deloitte Haskins & Sells LLP are eligible for appointment as Auditors. Your Company has received a written confirmation from M/s. Deloitte Haskins & Sells LLP, Chartered Accountants to the effect that their appointment, if made, would satisfy the criteria provided in Section 141 of the Companies Act, 2013 for their appointment. The Board recommends the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants as the Auditors of the Company from the conclusion of the ensuing AGM to the conclusion of the next AGM. There are no qualifications, reservation or adverse remark or disclaimer made in the audit report for the Financial Year 2015-16.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Dr. K. R. Chandratre, Practicing Company Secretary, Pune to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is provided as "Annexure III". There are no qualifications, reservation or adverse remark or disclaimer made in the Secretarial Audit Report.

EXTRACT OF THE ANNUAL RETURN

Pursuant to the provisions of Section 134 (3) (a) of the Companies Act, 2013, the extract of the Annual Return in Form MGT-9 is attached as "Annexure IV".

MANAGERIAL REMUNERATION

Disclosures of the ratio of the remuneration of each director to the median employee''s remuneration and other details as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as "Annexure V".

None of the directors or Managing Director of the Company, received any remuneration or commission from Subsidiary Companies of your Company.

The details of remuneration paid to the Directors including Executive Directors of the Company are given in Form MGT-9 forming part of the Directors Report.

PARTICULARS OF EMPLOYEES

The information required under Section 197(12) of the Companies Act, 2013 ("the Act") read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, pursuant to first proviso to Section 136(1) of the Act, this Report is being sent to the Shareholders excluding the aforesaid information. Any shareholder interested in obtaining said information, may write to the Company Secretary at the Registered Office / Corporate Office of the Company and the said information is available for inspection at the Registered Office of the Company.

Anti-Sexual Harassment policy

Your Company laid down Anti Sexual Harassment policy and it is made available on the website of the Company. The Company has zero tolerance on Sexual Harassment at workplace. During the year under review, there were no cases fled pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

EMPLOYEE STOCK OPTION PLANS

During the year under review, there were no material changes in the Employee Stock Option Plans (ESOPs) of the Company and the Schemes are in compliance with the SEBI Regulations on ESOPs. As per Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 read with SEBI circular dated June 16, 2015 the details of the ESOPs are uploaded on the Company''s website http://www.techmahindra.com/sites/ResourceCenter/ brochures/investors/corporategovernance/Details-of- ESOPs.pdf.

CORPORATE GOVERNANCE

A report on Corporate Governance covering amongst others, composition, details of meetings of the Board and Committees along with a certificate for compliance with the conditions of Corporate Governance issued by the Statutory Auditors of the Company, in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of your Company''s performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

RISK MANAGEMENT

The Risk Management Committee of the Board of Directors periodically reviews the Risk Management framework, identified risks with criticality and mitigation plan. The elements of risk as identified for the Company with impact and mitigation strategy are set out in the Management Discussion and Analysis Report.

ESTABLISHMENT OF VIGIL MECHANISM

Your Company has laid down Whistle Blower Policy covering Vigil Mechanism with protective Clauses for the Whistle Blowers. The Whistle Blower Policy is made available on the website of the Company.

DEPOSITS / LOANS & ADVANCES, GUARANTEES OR INVESTMENTS

Your Company has not accepted any deposits from the public during the year under review. The particulars of loans/advances, guarantees and investments under Section 186 of the Companies Act, 2013 are given in the notes forming part of the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All transactions entered into with Related Parties as defined under Section 2(76) of the Companies Act, 2013 and Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, during the financial year were in the ordinary course of business and are at an arm''s length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties in the financial year which were in conflict with the interest of the Company and requiring compliance of the provisions of revised Regulation 23 of the Listing Regulations. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes forming part of the Financial Statements.

The Company has formulated a policy on materiality of Related Party Transactions and dealing with Related Party Transactions which has been uploaded on the Company''s website http://www.techmahindra. com/sites/Resource Center/Brocheres/investors/ corporate governance/RPTPolicyAmended.pdf.

The particulars of Related Party Transactions in prescribed Form AOC - 2 are attached as "Annexure VI".

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in "Annexure VII" which forms part of this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR vision of your Company is "Empowerment through Education."

In compliance with the guidelines prescribed under Section 135 of the Companies Act, 2013, your

Company constituted a Corporate Social Responsibility (CSR) Committee. Your Board of Directors laid down the CSR Policy, covering the Objectives, Focus Areas, Governance Structure and Monitoring & Reporting Framework among others. The policy is available at http://www.techmahindra.com/society/default.aspx.

Your Company''s social initiatives are carried out by Tech Mahindra Foundation and Mahindra Educational Institutions.

TECH MAHINDRA FOUNDATION (TMF)

The Tech Mahindra Foundation, the CSR arm of the Company, established in 2007 as a Section 25 Company of erstwhile Companies Act, 1956, works towards a stated mission:

"Educated, skilled and able women and men are a country''s true strength".

During the year under review, Tech Mahindra Foundation conducted 160 high-impact projects with 90 partners, reaching out to 150,000 children and youth across these locations.

School education

The Foundation''s work in school education focuses upon three thematic areas: school improvement, teacher empowerment and learning enrichment. The key initiatives include:

All Round Improvement in School education (ARISE):

Tech Mahindra Foundation''s educational initiatives under ARISE are long-term school improvement programmes, run in partnership with local governments and partner organisations. The Foundation has adopted 60 schools across India and is working with 18 partners to turn them around completely into model schools of excellence. ARISE initiatives encompass educational empowerment programmes for children with disabilities.

Shikshaantar:

Shikshaantar, envisioned as a programme for enhancing capacity of government school teachers, has taken rapid strides during the year. TMF has been working with the East Delhi Municipal Corporation to manage its In-Service Teacher Education Institute (ITEI), where teachers from nearly 400 primary schools receive quality training on a regular basis.

Shiksha Samvardhan:

Shiksha Samvardhan, or the education enrichment programme, is a thematic intervention around learning enhancement initiatives of the Foundation, towards making learning interesting, child-centred and activity-based to reduce cumulative burden of non-comprehension and to promote grade appropriate competencies.

employability:

Skills for Market Training (SMART) is the Foundation''s fagship programme in employability. It is built on the vision of an educated, enlightened and employed India, and a belief that educated and skilled youth are the country''s true strength. The programme started with 3 Centres in 2012 and is currently running 65 Centres at 10 locations across India. These include SMART Centres, SMART Centres (training for people with disabilities), SMART-T Centres (training in technical trades) and the first SMART Academy for Healthcare in Delhi. The Academy will closely engage with the industry stalwarts for constant curriculum upgradation and placement.

During the year under review, your Company trained ~16,000 young women and men under its SMART programme. More than 75-80% of the graduates are placed in jobs upon successful completion of the training, across multiple industries.

MAHINDRA EDUCATIONAL INSTITUTIONS (MEI)

technical education

Your Company''s initiatives in technical education are carried out through Mahindra Educational Institutions (MEI), under which the Institution has extended infrastructural and operational support to Mahindra Ecole Centrale, a state of-the-art technical institution in Hyderabad. The institution offers a four-year B.Tech Programme in association with Ecole Centrale, Paris under an industry academia memorandum of understanding with Jawaharlal Nehru Technological University, Hyderabad.

The institution''s vision is to train engineers to be entrepreneurial and innovative as well as technically trained, so that they are capable of meeting the greatest challenges of the era. It is aligned to MEI''s work for the cause of promoting quality higher education by establishing institutions of higher learning, encourage education and research work in different disciplines and to promote innovation and technology development.

The Annual Report on CSR activities is provided as "Annexure VIII".

SUSTAINABILITY

Your company believes that responsible business can be possible only when aligned to sustainable development. Thus the Company concentrated its efforts on leveraging Sustainability as a core aspect when implementing strategies across all dimensions- social, economic and environmental. The focus on next generation solutions, attracting and retaining the right talent and identifying the environmental goals ensure that company adheres to a business strategy that impacts positively and creates a sustainable value for all its stakeholders. Your company''s current rankings in Sustainability indices affirm its efforts and validate the decision in aligning business with sustainability. With its sustainable development efforts remaining an unchanging priority, your Company is now looking at a future that is economically viable, environmentally friendly and socially just.

Tech Mahindra has been part of the Sustainability movement within the M&M Group and had been earlier reporting its sustainability performance in the Mahindra Group Sustainability Report. Since 2013-14, your Company has been highlighting the Sustainability performance in stand-alone Tech Mahindra Sustainability reports. The performance for both years has been externally assured by KPMG in accordance with the latest guidelines of the internationally accepted, Global Reporting Initiative (GRI). The detailed reports can be accessed at http:// www.techmahindra.com/company/Sustainability.aspx.

The focused efforts of your Company ensured that it has done well in the 3-year targets taken for critical material issues identifed in its business operations. Your Company is now in the process of mapping out the next 3-year roadmap with more emphasis on carbon emissions, carbon pricing and becoming carbon neutral.

The Company''s responsibilities and emphasis on its green eco-system is seen through the various energy, water and waste reduction initiatives that have helped cut down the carbon emissions. The Company insistence on associates following 4Ps- Pedal, Paidal, Pool and Public transport have also highlighted the importance of reducing pollution and being environmentally friendly. The Green Marshals at TechM, a small band of passionate associates spearhead the cause of environment and advocate sustainability across the organisation. The customers were helped by the Company to realize their sustainability objectives through its spectrum of services such as SMART cities solutions, Mobility, Cloud based solutions, platforms, data center consolidation services, MICRO Grid and Energy Management Services. We have ensured that we attract, mentor and retain the best talent through effecting an assured career development path and a feasible work-life balance.

The recent leadership position across platforms such as DJSI, CDP and CSR NewsAsia Rankings 2015, affrm its efforts and organizational strategy on sustainability. The highlights for the year 2015-16 have been in the following areas:

- Installation of 4277 Occupancy sensors across Pune, Hyderabad, Noida, Chennai & Bhubaneshwar led to reduced electricity consumption of 1159067 kWh & Carbon Emission Savings of 950.43 MTCO2.

- Ergonomics, Yoga and Wealth of Wellness initiative for associate well being.

- Successful commissioning of solar plants with a capacity of 1928 kWp at Chennai and Hyderabad. The overall capacity of Solar plants is now 2442kWp and the plants generated 2232875 units of Green power and Carbon Emission Savings of 1830.95 MTCO2.

- Participation and merit inclusion in Carbon Disclosure Project 2015 and Dow Jones Sustainability Index 2015.

- 121348 Kg of E-waste disposed through government authorized certifed vendors for recycling.

- Sewage Treatment Plants across 8 locations helped recycle and reuse 405139.2 Kl of water.

- Recycling of wet waste through vermicompost yielded 53.7 tons of manure which was used for landscaping.

- Green procurement of 2353 Laptops & 4795 Desktops helped save 607296 kWh of electricity & Carbon Emission Savings of 497.98 MTCO2.

- Reduction of Carbon emissions Scope 1 & 2 by 4.32% since base year FY 2012-13.

Pursuant to Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Business Responsibility Report is attached and forms part of this Annual Report.

AWARDS AND RECOGNITION

Your Company continued its quest for excellence in its chosen area of business to emerge as a true global brand. Several awards and rankings continue to endorse your Company as a thought leader in the industry. Mr. C. P. Gurnani, Managing Director & Chief Executive Officer was awarded the Best CEO of the Year Award at Forbes India Leadership Awards 2015. The awards / recognitions received by the Company during the year 2015-16 include:

- Golden Peacock Award in Innovation

- National Award for Supply Chain and Logistics Excellence

- ISG UK & Ireland Paragon Award for Collaboration

- Indo American Corporate Excellence Award for Excellence in CSR

- European IT Excellence Awards

- Dow Jones Sustainability Index under both emerging Markets and DJSI world Category

- Golden Peacock Award for Risk Management

- Deloitte Tech Fast 50 India 2015 Program

- Forbes 100 Middle East - Global meets Local 2015 Award

- Golden Peacock HR Excellence Award for Outstanding People Management Practices

- ET Telecom Awards for Cloud Technology

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the contributions made by employees towards the success of your Company. Your Directors gratefully acknowledge the co-operation and support received from the shareholders, customers, vendors, bankers, regulatory and Governmental authorities in India and abroad.



For and on behalf of the Board

Place: Mumbai Anand G. Mahindra

Date: May 24, 2016 Chairman


Mar 31, 2015

Dear Members,

The Directors are pleased to present their Twenty-Fifth Report together with the audited accounts of your Company for the Financial Year ended 31st March, 2015.

The performance highlights and summarised financial results of the Company are given below:

PERFORMANCE HIGHLIGHTS

- Consolidated income for the year increased by 14% to Rs.6,060.91 Crores as compared to Rs.5,300.55 Crores in 2013-14;

- Consolidated income from operations for the year was Rs. 6,021.14 Crores as compared to Rs. 5,275.23 Crores in 2013-14, a growth of 14%;

- Consolidated profit before tax for the year was Rs.1,399.87 Crores as compared to Rs. 1,461.53 Crores in 2013-14;

- Consolidated profit after tax and minority interest for the year was Rs. 912.91 Crores as compared to Rs.954.42 Crores in 2013-14.

FINANCIAL RESULTS

Rs. in Crores

CONSOLIDATED STANDALONE March 2015 March 2014 March 2015 March 2014

Total Income 6,060.9 5,300.6 5,584.7 4,953.0

Less : Finance Costs 2,643.0 2,281.0 2,496.7 2,188.0

Expenditure 1,972.5 1,532.0 1,792.9 1,394.9

Depreciation/ Amortisation 45.5 26.1 41.5 24.3

Total Expenses 4,661.0 3,839.1 4,331.1 3,607.2

Profit Before Tax 1,399.9 1,461.5 1,253.6 1,345.8

Less : Provision For Tax Current Tax 576.1 580.0 520.0 535.4

Deferred Tax [101.1] [83.3] [98.2] [76.8]

Profit After Tax for the Year before 924.9 964.8 831.8 887.2

Minority Interest

Less : Minority Interest 12.0 10.4 - -

Profit After Tax for the Year after 912.9 954.4 831.8 887.2

Minority Interest

Add : Amount brought forward from 1,883.4 1,457.5 1,728.3 1,358.8

Previous Years

Add : Transfer of opening balance - - 5.3 - in profit and loss statement on amalgamation of Mahindra Business & Consulting Services Private Ltd

Less : Transitional depreciation 9.6 - 3.2 - charge/Special Reserve

Amount available for Appropriation 2,786.7 2,411.9 2,562.2 2,246.0

Appropriations

General Reserve 88.8 91.6 83.2 88.7

Statutory Reserve 179.3 184.7 166.4 177.5

Proposed Dividend on Equity Shares 227.5 216.1 227.5 216.1

Income-tax on Proposed Dividend 45.5 36.1 44.2 35.4

Surplus carried to Balance Sheet 2,245.6 1,883.4 2,040.9 1,728.3

TRANSFER TO RESERVES

The Company proposes to transfer an amount of Rs. 83.2 Crores to the General Reserve and Rs.166.4 Crores to the Statutory Reserve. An amount of Rs. 2,040.9 Crores is proposed to be retained in the Statement of Profit and Loss.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 4 per Equity Share of the face value of Rs. 2 each payable to those Members whose names appear in the Register of Members as on the Book Closure date. The dividend including dividend tax will absorb a sum of Rs. 271.7 Crores [as against Rs. 251.5 Crores on account of dividend of Rs. 3.80 per Equity Share paid for the previous year].

OPERATIONS

Your Company during the year under review, continued to offer a wide range of financial products and services to its customers through diversification of its product portfolio within its vehicle financing business as well as through the introduction and growth of other financial products in rural and semi-urban markets. The overall disbursement registered a decline of 4% at Rs. 24,331.1 Crores as compared to Rs. 25,400.0 Crores in the previous year, on account of difficult market conditions. Despite the diminution in disbursement, your Company was able to retain its leadership position in financing the Mahindra range of vehicles and tractors in addition to extending its lending to vehicles of other Original Equipment Manufacturers (OEMs).

Your Company has a pan-India presence with a network of 1 ,1 08 offices, which is one of the largest amongst Non-Banking Financial Companies operating in rural and semi-urban areas. The new branches opened by the Company in the villages are aimed at enhancing collections and providing services closer to the customers'' doorsteps. Your Company''s nationwide network of branches and locally recruited employees have facilitated in catering to the diverse financial requirements of its customers as well as in developing and strengthening relationship with them. Your Company has cumulatively financed over three and half million customers since its inception.

Total Income grew by 13% to Rs. 5,584.7 Crores for the year ended 31st March, 2015 as compared to Rs. 4,953.0 Crores for the previous year. Profit Before Tax (PBT) declined by 7% to Rs. 1,253.6 Crores as compared to Rs. 1,345.8 Crores for the previous year. Profit After Tax (PAT) declined by 6% to Rs. 831.8 Crores as compared to Rs. 887.2 Crores in the previous year.

During the year under review, the Assets Under Management stood at Rs. 36,878 Crores as at 31st March, 2015 as against Rs. 34,133 Crores as at 31st March, 2014.

There is no change in the nature of business of the Company during the year under review.

DISTRIBUTION OF MUTUAL FUND PRODUCTS

During the year under review, the activity of distribution of Mutual Fund Products (MFP) was carried out across 157 branches covering 20 States. As on 31st March, 201 5, the amount of Assets Under Management outstanding through the Company''s Advisory and Distribution Services on MFP, aggregate of institutional and retail segment, was Rs. 1,601.45 Crores and the number of clients stood at 42,967.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of the Company''s performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

CORPORATE GOVERNANCE

Your Company practices a culture that is built on core values and ethical governance practices and is committed to transparency in all its dealings. A Report on Corporate Governance along with a Certificate from the Statutory Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement are annexed to this Report.

SHARE CAPITAL

The issued, subscribed and paid- up Equity Share Capital as on 31st March, 2015 was Rs. 113.75 Crores comprising of 56,87,64,960 Equity Shares of the face value of Rs.2 each. During the year under review, the Company has neither issued shares with differential rights as to dividend, voting or otherwise, nor has issued sweat equity, other than Employee Stock Options under the Employees'' Stock Option Scheme referred to in this Report. As on 31st March, 2015, none of the Directors of the Company holds instruments convertible into Equity Shares of the Company.

STOCK OPTIONS

During the year under review, on the recommendation of the Nomination and Remuneration Committee of your Company, the Trustees of the Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Trust have granted 16,01,507 Stock Options to Eligible Employees under the Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Scheme-2010. No new Options have been granted under the Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Scheme - 2005.

Disclosure pertaining to details of the grants under the Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Scheme-2005 and Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Scheme-2010, in compliance with Clause 14 of the Securities and Exchange Board of India (Share Based Employee Benefits] Regulations, 2014 are set out in Annexure I to this Report. No employee has been issued stock options during the year, equal to or exceeding 1% of the issued capital of the Company at the time of grant.

Voting rights on the Shares issued to employees under the aforesaid schemes are either exercised by them directly or through their appointed proxy.

ECONOMY

The global economy continued to expand during 2014 at a moderate, however, uneven pace at 3.3% up from 3% in 201 3. Increasingly divergent trends have been observed in major economies. U.S. exceeded growth expectations. India and the U.K. recorded significant pickups in economic growth. Eurozone showed modest recovery in growth. However, this was offset by Japan struggling to strengthen its weak recovery, further slowdown in China, Russian and Brazilian economies faltering. Weaker-than- expected growth has been reflected in falling oil prices, which in turn have pushed inflation rates lower. Central banks have responded with a new wave of stimulus measures. The Reserve Bank of India''s (RBI] inflation focus, strong government mandate, over and above the benign global commodity prices have led to improvement in India''s economic fundamentals.

India''s macroeconomic fundamentals have improved in 2014-15. The annual growth rate of the Indian economy is estimated to have increased to 7.4% in 2014-15 as compared to 6.9% in the fiscal year 2013-14. The growth in 2014-15 is largely due to domestic demand. The growth in the exports is projected to be only 0.9% and the growth rate of imports, around -0.5%. The deceleration in imports owe substantially to the sharp decline in international oil prices. Acceleration in services and manufacturing growth in the face of subdued global demand conditions point to the strengthening of domestic demand. Manufacturing is expected to grow further with the Government of India making it a focus area with the ''Make in India'' initiative. However, agriculture suffered due to poor monsoon. The Gross Value Added (GVA] at basic prices in agriculture is expected to decline from 3.7 per cent in 2013-14, an exceptionally good previous year from the point of view of rainfall, to 1.1 per cent in 2014-15. Inflation has declined by over 6 percentage points since late 2013. Current Account Deficit came down from a peak of 6.7% of GDP (in Q3, 2012-13] to an estimated 1% in 2014-15. The average Wholesale Price Index inflation declined in 2014-15 to 3.5% (April-December] vis-a-vis 8.9% in 2013-14. Average retail inflation moderated to 6.3% in 2014-15 (April-December] from 9.5% in 2013-14.

With easing of inflationary conditions, the RBI signalled softening of the monetary policy stance by cutting policy repo rates by 25 bps in January and 25 bps in February to 7.5%. RBI also reduced the Statutory Liquidity Ratio by 50 bps to 21 .5% of Net Demand and Time Liabilities (NDTL]. RBI decided to infuse liquidity to banks on weekends through MSF operations. Liquidity conditions are expected to be comfortable in the coming year. These conditions should augur well for a reinvigoration of private consumption demand. This coupled with a stable government, thrust on rural infrastructure and reforms, it is expected that India''s growth will be strong.

The Company has maintained its leadership position for vehicles and tractors in the rural and semi-urban markets. Despite unfavourable monsoons affecting the tractor segment, the Company maintained a healthy growth of business backed by growth in the overall auto industry. All vehicle categories were in the positive territory except for commercial vehicles, which are gradually moving towards positive territory.

Source for global growth rates:

1. http://www.imf.org/external/ pubs/ft/weo/2015/ update/01/info.htm

2. http://www.kpmg.com/IN/en/ services/Tax/FlashNews/IES- 2014-15.pdf

3. http://rbi.org.in FINANCE

During the year under review, the Reserve Bank of India (RBI) remained focused on keeping the economy on a disinflationary glide path and targeted to hit 8% Consumer Price Index (CPI) inflation by January 2015 and 6 % by January 2016. The RBI continued its stance against inflation by holding the policy rates for the first nine months of the Fiscal Year 2014-15, while allowing the effects of past monetary policy tightening to work to bring down inflation. However, at the same time, RBI through active liquidity management operations ensured that Liquidity conditions remained broadly stable and it continued to provide liquidity through overnight and term repos. RBI remained committed to provide liquidity/credit to the productive sectors, and hence reduced the Statutory Liquidity Ratio (SLR) by 1 50 basis points (bps) during the year. With softening of international commodity prices, particularly crude oil, CPI decelerated sharply in second half of the year from September 2014, which allowed the RBI to cut the policy (Repo) rates by 50 bps during the last quarter of the year. The actions of RBI resulted in sovereign and corporate bond yields declining by 80 bps and more in the year. However, despite a generalized fall in the cost of funds, banks did not transmit that by reducing their base rates. Liquidity conditions remained in a deficit but stable mode throughout the year. However, your Company was able to take advantage of reduction in interest rates by devising appropriate borrowing strategies and ensuring that prudent Asset Liability Management Guidelines are adhered to.

During the year under review, your Company continued with its diverse methods of sourcing funds in addition to regular borrowings like Secured and Unsecured Debentures, Term Loans, Commercial Papers, etc., and maintained prudential Asset/ Liability match throughout the year. Your Company sourced long term debentures and loans from banks and other institutions at attractive rates.

Your Company also issued Subordinated Debt amounting to Rs. 21 5 Crores and successfully completed five at par securitisation transactions aggregating to Rs. 722.3 Crores.

During the year, your Company actively participated in a number of investor meets both in India and abroad organised by reputed Global and Domestic Broking Houses. Your Company also periodically conducted analysts'' meets and conference calls to communicate details of performance, important developments and exchange of information.

CAPITAL ADEQUACY

As on 31 st March, 2015, the Capital to Risk Assets Ratio (CRAR) of your Company was 18.3%, which is well above 1 5.0% CRAR prescribed by the RBI.

RBI GUIDELINES

The Company has complied with all the applicable regulations of the Reserve Bank of India (RBI). As a prudent practice, your Company makes accelerated provisioning for Non-Performing Assets (NPAs) than that required by RBI for NBFCs. Your Company continues to make a general provision at 0.40% on the standard assets outstanding as against 0.25% mandated by the RBI.

CREDIT RATING

During the year under review, India Ratings & Research Private Limited, which is part of Fitch Group, upgraded the rating of the Company''s National Long-term instrument and Lower Tier II Subordinated Debt programme to ''IND AAA/Stable'' from ''IND AA /Stable''.

During the year under review, CARE Ratings, has assigned the ''CARE AAA'' rating to the Company''s Long-term Debt instruments and Lower Tier II Subordinated Debt programme.

Brickwork Ratings India Private Limited has, during the year, upgraded the rating of the Company''s Long-term Subordinated Debt Issue to ''BWR AAA/Stable'' from ''BWR AA /Positive''.

The ''AAA'' ratings denote the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risks.

During the year under review, CRISIL Limited [CRISIL], has reaffirmed the rating to the Company''s Long- term Debt Instruments and Bank Facilities as ''CRISIL AA / Stable'' and the Company''s Fixed Deposit Programme as ''FAAA/Stable'', respectively. The ''AA /Stable'' rating indicates a high degree of safety with regard to timely payment of financial obligations. The rating on the Company''s Short-term Debt and Bank Loans has been reaffirmed at ''CRISIL A1 '' which is the highest level of rating.

ACHIEVEMENTS

During the year under review, your Company was awarded the ''Golden Peacock HR Excellence'' for 2014, the Golden Peacock National Training Award, CII National HR Excellence Award, CSR Award by Indian Development Foundation, and the BFSI Award for CSR, Health Care and Combating Diseases category.

Your Company has won three awards in the "IT-NEXT 100 CIOs" for the third year in a row as well as topped the charts by winning the highest number of PRCI (Public Relations Council of India] Awards in twelve categories. Your Company was also awarded the LACP Awards for its Annual Report for the financial year 2013-14, IDC Insights Award for Excellence in Innovation, the Financial Inclusion & Payment Systems (FIPS] Award 2014 and the RMAI - Flame Awards 2014.

The Company''s IS020000:2011 certification of Information Technology has been confirmed and extended till 11th April, 2017. Your Company has also been included in the RobecoSAM Sustainability Yearbook 2015.

FIXED DEPOSITS AND LOANS/ ADVANCES

As on 31st March, 2015, your Company has mobilized funds from Fixed Deposits to the tune of Rs. 4,680 Crores, with an investor base of over 1,68,306 investors.

Your Company has initiated several measures towards improvement of service levels in sync with the requirements of the Fixed Deposit holders. As a customer-centric process, the Company communicates various intimations via SMS, e-mails, etc., to its investors. During the year under review the Company has started sending E-receipts (FDR E-receipts], pre-printed Forms 15G and 15H with barcode, bulk intimation letters, etc., on the customers'' e-mail ID registered with the Company. Further, in order to encourage investments by small investors, your Company has also introduced Micro Deposits (under its Cumulative Scheme] with a minimum investment amount of Rs. 5,000 and upto a maximum investment amount of Rs.9,000 having a tenure of 12 months to 60 months.

As at 31st March, 2015, 987 deposits amounting to Rs. 4.9 Crores had matured for payment and remained unclaimed. The unclaimed deposits have since reduced to 823 deposits amounting to Rs. 4.0 Crores.

Your Company being a Non-Banking Financial Company, the disclosures required as per Rule 8 (5](v] and (vi] of the Companies (Accounts] Rules, 2014 read with Sections 73 and 74 of the Companies Act, 2013, are not applicable to it.

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.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS IN SECURITIES

Pursuant to section 186 (11] of the Companies Act, 2013 (''the Act''], the provisions of section 186(4] of the Act requiring disclosure in the financial statement of the full particulars of the loans made and guarantees given or securities provided by a Non-Banking Financial Company in the ordinary course of its business and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security are exempted from disclosure in the Annual Report.

Further, pursuant to the provisions of Section 186 (4] of the Act, the details of investments made by the Company are given in the Notes to the Financial Statement.

SUSTAINABILITY INITIATIVES

Your Company continues to protect and sustain the rural livelihoods through a sustainable business model. The business model aims at transforming rural lives and driving positive change in the community. Your Company has been reporting on Triple Bottom Line Performance;

i.e., People, Profit and Planet since the Financial Year 2008-09 through the Mahindra Group Sustainability Report.

During the Financial Year 2014-15, your Company released its second standalone Sustainability Report for the previous Financial Year 2013- 14. This Report portrays a balanced approach towards economic activity, environmental responses and social progress. This Report is externally assured and in line with international reporting standards of Global Reporting Initiative (GRI] G3.1 Guidelines. The theme of the Report is ''Co-Creating Opportunities Empowering Lives'' and the same has been hosted on the Company''s website.

During the year under review, your Company continued with its focus on sustainability awareness for employees, vendors and customers and took various initiatives in this direction. Your Company made proactive efforts to fight against global warming through Project ''Mahindra Hariyali'', by planting more than 78,000 saplings across the country. Various initiatives were also taken for energy, paper and e-waste management.

In addition to this, your Company continues to report on Carbon Disclosure Project (CDP] from the Financial Year 2011-1 2. CDP seeks information on carbon emissions disclosures from the world''s largest companies and focuses on how companies are geared up, to deal with the challenges of climate change in a carbon constrained economy. During the year under review, your Company also became part of CDP''s Carbon Disclosure Leadership

Index [CDLI] 2014, acknowledging the Company''s efforts for climate change mitigation.

Your Company has been listed on the Dow Jones Sustainability Index (DJSI] Emerging Market Trends for the second consecutive year. To be incorporated in the DJSI, companies are assessed and selected based on their long term Environmental Social Governance (ESG] asset management plans.

Your Company was also included in the ''RobecoSAM Sustainability Yearbook'', which lists the world''s most sustainable companies in each industry as determined by their score in RobecoSAM''s annual Corporate Sustainability Assessment (CSA]. Your Company is the first and only Indian Company from amongst the Banks and Financial Services Companies in India to have made it to this list.

CORPORATE SOCIAL RESPONSIBILITY

Through its various Corporate Social Responsibility ("CSR"] initiatives, the Mahindra Group is enabling entire communities to ''RISE''. With a vision of transforming the lives of youth from socially weaker and economically disadvantaged sections of society, the Mahindra Group is committed to ''building possibilities'' to enable them to ''RISE'' above their limiting circumstances by innovatively supporting them through programs in the domains of education, health and environment.

The Company has duly constituted a CSR Committee in accordance with section 135 of the Companies Act, 2013 to assist the Board and the Company in fulfilling the corporate social responsibility objectives of the Company. The CSR Committee presently comprises Mr. Bharat Doshi (Chairman], Mr. Piyush Mankad, Mr. Uday Y. Phadke and Mr. Ramesh Iyer.

During the year under review, your Company organised a nationwide Blood Donation Drive, Health check- up camps and visits to Orphanages/ Differently-abled Homes/Old-age homes, to re-affirm its pledge to the society. The ''Lifeline Express'', a hospital on wheels, in association with Impact India Foundation, catered to the medical needs of 4,936 underprivileged people in Motihari (Bihar].

As a part of its commitment to Corporate Social Responsibility, during the year, your Company initiated projects for scholarships for undergraduate and graduate students, vocational training, financial literacy, supporting technology incubators, agri-based livelihood skills and sanitation. The Company also continued its support to Nanhi Kali, the flagship programme of the K.C. Mahindra Education Trust, which aids the education of the disadvantaged girl child.

During the year under review, your Company has spent Rs. 24.9 crores on CSR projects/programs. Your Company is in compliance with the statutory requirements in this regard.

The CSR Policy of the Company is hosted on the Company''s website at the link http://www. mahindrafinance.com/csr.aspx and a brief outline of the CSR Policy and the CSR initiatives undertaken by the Company during the year as per Annexure prescribed in the Companies (Corporate Social Responsibility Policy] Rules, 2014 have been appended as Annexure II to this Report.

EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3(a] of Section 1 34 and sub-section (3] of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration] Rules, 2014, an extract of the Annual Return as at 31st March, 2015 forms part of this Report and is appended herewith as Annexure III.

BOARD MEETINGS AND ANNUAL GENERAL MEETING

The calendar of the Board/ Committee Meetings and the Annual General Meeting are circulated to the Directors in advance to enable them to plan their schedule for effective participation at the respective meetings. Additional Board Meetings are convened by giving appropriate notice to address business exigencies. At times certain decisions are taken by the Board/Committee through circular resolutions.

The Board met seven times in the financial year 2014-15 viz., on 23rd April, 2014, 24th July, 2014, 22nd October, 2014, 16th December, 2014, 16th January, 2015,

17th January, 2015 and 20th March, 2015. The gap between two Meetings did not exceed one hundred and twenty days. The 24th Annual General Meeting ("AGM"] of the Company was held on 24th July,

2014.

Detailed information on the meetings of the Board, its Committees and the AGM is included in the Report on Corporate Governance, which forms part of this Annual Report.

MEETING OF INDEPENDENT DIRECTORS

The Independent Directors met once during the year under review. The Meeting was conducted in an informal manner without the presence of the Chairman, the Managing Director, the Non-Executive Non-Independent Directors and the Chief Financial Officer.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company has various committees which have been constituted as a part of the good corporate governance practices and the same are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

Your Company has an adequately qualified and experienced Audit Committee with Mr. Dhananjay Mungale as the Chairman and Mr. M. G. Bhide, Mr. Uday Y. Phadke, Ms. Rama Bijapurkar, Mr. Piyush Mankad, Mr. C.B. Bhave and Mr. V. S. Parthasarathy as Members. The recommendations of the Audit Committee were duly approved and accepted by the Board during the year under review.

The other Committees of the Board are :

i) Nomination and Remuneration Committee

ii) Stakeholders Relationship Committee

iii) Corporate Social Responsibility Committee

iv) Risk Management Committee

v) Asset Liability Committee

vi) Strategy Committee for Acquisitions

The details with respect to the composition, powers, roles, terms of reference, Meetings held and attendance of the Directors at such Meetings of the relevant Committees are given in detail in the Report on Corporate Governance of the Company which forms part of this Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors

The Members of the Company at the Annual General Meeting held on 24th July, 2014 had appointed Mr. Piyush Mankad, Mr. M. G. Bhide, Mr. Dhananjay Mungale and Ms. Rama Bijapurkar as Independent Directors for a period of five consecutive years commencing from 24th July, 2014.

Pursuant to the provisions of section 152 of the Companies Act, 2013 (''the Act''), Mr. Uday Y. Phadke, Non- Executive Non-Independent Director of the Company retires by rotation at the forthcoming Annual General Meeting scheduled to be held on 24th July, 2015. Mr. Phadke has expressed his desire not to seek re- appointment. It is proposed not to fill up the vacancy thereby caused.

Mr. Uday Y. Phadke joined the Board of Directors of the Company in May 1999. He was elevated as the Vice-Chairman in April 2008. While continuing as a Member of the Board of Directors Mr. Phadke stepped down as the Vice-Chairman in October 2011.

The Board acknowledged Mr. Phadke''s contribution to the Company and placed on record its deep appreciation of the invaluable counsel rendered by him to the Company and his immense contribution in guiding the management during his tenure as Vice-Chairman and as a Director of the Company.

On the recommendation of the Nomination and Remuneration Committee, the Board at its adjourned Meeting held after the Annual General Meeting on 24th July, 2014 had appointed Mr. V. S. Parthasarathy as an Additional Director on the Board of Directors of the Company. Mr. Parthasarathy holds office up to the date of the Annual General Meeting of the Members to be held on 24th July, 2015.

The Company has received a notice from a Member under section 160 of the Act, signifying his intention to propose Mr. V. S. Parthasarathy as a candidate for the office of Director of the Company at the forthcoming Annual General Meeting.

On the recommendation of the Nomination and Remuneration Committee and the Board of Directors, Mr. C. B. Bhave has been appointed as an Independent Director of the Company for a period of five consecutive years commencing from 3rd February, 2015, by the Shareholders by means of a Postal Ballot voting process.

None of the Independent Directors are due for re-appointment.

Key Managerial Personnel

Mr. Ramesh Iyer, Managing Director, Mr. V. Ravi, Chief Financial Officer and Ms. Arnavaz M. Pardiwala, Company Secretary of the Company are the Key Managerial Personnel of the Company as per the provisions of the Companies Act, 2013. Their appointment as Key Managerial Personnel have been duly formalised pursuant to section 203 of the Companies Act, 2013, which came into effect from 1st April, 2014.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming that they fulfill the criteria of independence as prescribed under sub-section (6) of section 149 of the Companies Act, 201 3 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, (''the Act'') your Directors confirm that:

i. In the preparation of the annual accounts for financial year ended 31st March, 2015, the applicable accounting standards have been followed and there are no material departures in adoption of these standards;

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at 31st March, 2015 and of the profit of the Company for the year ended on that date.

iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. The Directors have prepared the annual accounts for financial year ended 31st March, 2015 on a ''going concern'' basis.

v. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and have been operating efficiently.

vi. The Directors have devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively.

PERFORMANCE EVALUATION OF THE BOARD

The Companies Act, 2013 and revised Clause 49 of the Listing Agreement entered into with the Stock Exchanges stipulates the evaluation of the performance of the Board, its Committees, Individual Directors and the Chairperson.

The Company has formulated a Policy for performance evaluation of the Independent Directors, the Board, its Committees and other individual Directors which includes criteria for performance evaluation of the Non-Executive Directors and Executive Directors.

The evaluation framework for assessing the performance of Directors comprises of various key areas such as attendance at Board

and Committee Meetings, quality of contribution to Board discussions and decisions, strategic insights or inputs regarding future growth of the Company and its performance, ability to challenge views in a constructive manner, knowledge acquired with regard to the Company''s business/ activities, understanding of industry and global trends, etc.

The evaluation involves self- evaluation by the Board Member and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/her evaluation.

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees.

Well-defined and structured questionnaires were prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, areas of responsibility, execution and performance of specific duties, obligations and governance, compliance, oversight of Company''s subsidiaries, etc.

A separate exercise was carried out to evaluate the performance of individual Directors who were evaluated on several parameters such as level of engagement and contribution, independence of judgment safeguarding the interest of the Company and its minority shareholders and knowledge acquired with regard to the Company''s business/activities.

The performance evaluation of the Independent Directors was carried

out by the entire Board excluding the Director being evaluated. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. Qualitative comments and suggestions of Directors were taken into consideration by the Chairman of the Board and the Chairman of the Nomination and Remuneration Committee. The Directors have expressed their satisfaction with the evaluation process.

Familiarisation Programme for Independent Directors

The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are given in the Report on Corporate Governance and the same are also available on the website of the Company at the link: http://www.mahindrafinance.com/ pdf/familiarisation-programme-for- IDs.pdf.

Policies on Appointment of Directors and Remuneration of Directors, Key Managerial Personnel and Employees

In accordance with the provisions of section 134(3](e] of the Companies Act, 2013 ("the Act"] read with sections 178(2] of the Act and Clause 49 of the Listing Agreement, the Company has formulated a Policy on Appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management, which inter alia, includes the criteria for determining qualifications, positive attributes and independence of Directors.

The Company has also adopted the Policy on Remuneration of Directors and the Remuneration Policy for Key Managerial Personnel and Employees of the Company in accordance with the provisions of sub-section [4] of section 178, and the same are appended as Annexure IV-A and Annexure IV-B and form part of this Report.

The criteria for determining qualifications, positive attributes and independence of a Director and the Remuneration Policy for Directors, Key Managerial Personnel and other employees have been discussed in detail in the Report on Corporate Governance.

AUDITORS Statutory Auditors

Messrs. B. K. Khare & Co., Chartered Accountants, [ICAI Firm Registration No.105102W] the Statutory Auditors of the Company, hold office till the conclusion of the forthcoming Annual General Meeting [AGM] and are eligible for re-appointment. Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules framed thereunder, it is proposed to appoint Messrs. B. K. Khare & Co., as the Statutory Auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the next AGM.

As required under the provisions of section 139(1) of the Companies Act, 2013 the Company has received a written consent from Messrs. B. K. Khare & Co., Chartered Accountants to their re-appointment and a Certificate, to the effect that their re-appointment, if made, would be in accordance with the Companies Act, 2013 and the Rules framed thereunder and that they satisfy the criteria provided in section 141 of the Companies Act, 2013 read with Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014.

The Auditors'' Report does not contain any qualification, reservation or adverse remark.

Secretarial Auditor

The Board of Directors of the Company has appointed Dr. K. S. Ravichandran, Managing Partner, KSR & Co., Company Secretaries LLP, to conduct the Secretarial Audit of the Company for the Financial Year 2014-15, pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. In accordance with the provisions of sub-section (1) of section 204, the Secretarial Audit Report for the Financial Year 2014-15 is appended to this Report as Annexure V.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts/arrangements/

transactions entered into by the Company during the Financial Year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the Policy on Related Party Transactions. Pursuant to section 134(3) (h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no transactions to be reported under Section 188(1) of the Companies Act, 2013. None of the Non-Executive Directors has any pecuniary relationships or transactions vis-a-vis the Company.

The Policy on Related Party Transactions as approved by the Audit Committee and the Board of Directors of the Company is uploaded on the website of the Company and same can be accessed on the web link : http://www.mahindrafinance. com/policies.aspx.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statement relate and the date of this Report.

RISK MANAGEMENT POLICY

Your Company has a comprehensive Risk Management Policy in place and has laid down a well-defined risk management framework to identify, assess and monitor risks and strengthen controls to mitigate risks. Your Company has established procedures to periodically place before the Risk Management Committee and the Board of Directors, the risk assessment and minimisation procedures being followed by the Company and steps taken by it to mitigate these risks.

The development and implementation of Risk Management Policy adopted by the Company is discussed in detail in the Management Discussion and Analysis chapter, which forms part of this Annual Report.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

The Company promotes ethical behaviour in all its business activities and has established a vigil mechanism for Directors and Employees to report their genuine concerns.

The Vigil Mechanism as envisaged in the Companies Act, 2013 and the Rules prescribed is implemented through the Whistle Blower Policy, to provide for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairperson of the Audit Committee.

As per the Whistle Blower Policy implemented by the Company, the Employees are free to report illegal or unethical behaviour, actual or suspected fraud or violation of the Company''s Codes of Conduct or Corporate Governance Policies or any improper activity to the Chairman of the Audit Committee of the Company or Chairman of the Company or the Corporate Governance Cell.

The Whistle Blower Policy provides for protected disclosure and protection to the Whistle Blower. Under the Whistle Blower Policy, the confidentiality of those reporting violation(s) is protected and they are not subject to any discriminatory practices.

The Whistle Blower Policy has been appropriately communicated within the Company and has also been hosted on the website of the Company: http://www.mahindrafinance.com/ pdf/MMFSL_VigilMechanism.pdf. No personnel have been denied access to the Audit Committee.

SUBSIDIARIES, JOINT VENTURE AND ASSOCIATES

A Report on the performance and financial position of each of the subsidiaries and the joint venture company as per the Companies Act, 2013 is provided as Annexure A to the Consolidated Financial Statement and hence not repeated here for the sake of brevity. The policy for determining material subsidiaries as approved may be accessed on the Company''s website at the web link : http://www.mahindrafinance.com/ policies.aspx

Subsidiaries

Mahindra Insurance Brokers Limited

During the year under review, Mahindra Insurance Brokers Limited (MIBL) serviced 1.1 million insurance cases, with a total of 11,37,981 cases for both Life and Non-Life Retail business. The customized Life insurance cover "Mahindra Loan Suraksha" (MLS) declined from 5,09,864 lives covered with a Sum Assured of Rs. 14,393.5 crores in the Financial Year 2013- 14 to 4,59,781 lives covered with a Sum Assured of Rs. 13,515.4 crores in the Financial Year 2014- 15. This primarily was on account of the general economic slowdown witnessed during the year having a cascading impact on the auto- manufacturing and auto financing industry. A substantial portion of MLS though continued to be covered in the rural markets.

MIBL achieved a growth of 22% in Gross Premium facilitated for the Corporate and Retail business lines, increasing from Rs. 825.2 crores in the Financial Year 2013-14 to Rs. 1,002.7 crores in the Financial Year 2014-15 crossing the 1,000 crores mark.

The Total Income of MIBL increased by 14% from Rs. 111.2 crores in the Financial Year 2013-14 to Rs.126.2 crores in the Financial Year 2014-15. The Profit before Tax increased by 2% from Rs. 63.8 crores to Rs. 65.3 crores, and the Profit after Tax increased by 2% from Rs. 42.0 crores to Rs. 42.9 crores during the same period.

Mahindra Rural Housing Finance Limited

Mahindra Rural Housing Finance Limited (MRHFL) has during the year ended 31st March, 2015, disbursed loans aggregating Rs. 989.6 crores (previous year Rs. 630.6 crores) achieving a growth of 57% over the previous year. Profit after tax was 63% higher at Rs. 44.2 crores as compared to Rs. 27.1 crores for the previous year. The outstanding loan portfolio as at 31st March, 2015 stood at Rs. 2,098.3 crores.

MRHFL continued its focus on serving customers in rural India. Majority of the loans disbursed were to customers in villages with an average annual household income of less than Rs. 2 lakhs. During the year under review, around 81,960 families were given home loans (in addition to around 1,81,120 existing families as on 31st March, 2014). MRHFL has been expanding its geographical presence, to provide affordable services for rural households and has also entered the semi-urban market segment.

Mahindra Asset Management Company Private Limited

Mahindra Asset Management Company Private Limited (MAMCPL), the wholly-owned subsidiary of the Company, which will be engaged as an investment manager to the proposed Mahindra Mutual Fund, is currently in the process of obtaining regulatory approval from the Securities and Exchange Board of India. During the year under review, MAMCPL has not commenced any business activities.

Mahindra Trustee Company Private Limited

Mahindra Trustee Company Private Limited (MTCPL), the wholly-owned subsidiary of the Company, which will be engaged as a Trustee to the proposed Mahindra Mutual Fund, is currently in the process of obtaining regulatory approval from the Securities and Exchange Board of India. During the year under review, MTCPL has not commenced any business activities.

Amalgamation of Mahindra Business & Consulting Services Private Limited ("MBCSPL") with the Company

Mahindra Business & Consulting Services Private Limited (MBCSPL), a wholly-owned subsidiary of your Company was engaged in the business of providing staffing services to the Mahindra group companies and had no business operations as on the date of announcement of the Scheme of Amalgamation of MBCSPL with the

Company and their Shareholders and Creditors.

In order to have a simplified corporate structure, rationalisation of administrative, operative and marketing costs and to enable cost saving and optimum utilization of valuable resources leading to higher operational efficiency, a Scheme of Amalgamation of MBCSPL with the Company and their Shareholders and Creditors was announced. The same was approved by the Public Shareholders by means of a Postal Ballot voting process (including e-voting) on 13th January, 2015.

The Scheme has been approved by the Honourable High Court of Judicature at Bombay on 20th March, 2015 and the same has been made effective from 18th April, 201 5, by filing the certified copy of the Order with the Registrar of Companies. The appointed date of the Scheme is 1st April, 2014.

Joint Venture Mahindra Finance USA LLC.

The joint venture company''s disbursement registered a growth of 22.42% to USD 5,337.09 Lacs for the year ended 31st March, 2015 as compared to USD 4,359.69 Lacs for the previous year. Income grew by 36.35% to USD 220.43 Lacs for the year ended 31st March, 2015 as compared to USD 161.66 Lacs for the previous year. Profit Before Tax was 41.30% higher at USD 70.99 Lacs as compared to USD 50.24 Lacs for the previous year. Profit After Tax grew at a healthy rate of 38.59% to USD 45.47 Lacs as compared to USD 32.81 Lacs in the previous year.

Names of companies which have become or ceased to be subsidiaries, joint ventures or associate companies during the year

During the year under review, no company has become a subsidiary of the Company.

Consequent upon the amalgamation of Mahindra Business & Consulting Services Private Limited (MBCSPL) with the Company, MBCSPL has ceased to be a subsidiary of the Company.

Further, no company has become or ceased to be a joint venture or associate during the Financial Year 2014-15.

The Company shall provide the copy of the annual accounts of its subsidiary companies and the related information to the Members of the Company on their request. The annual accounts of the subsidiary companies will also be kept open for inspection by any Members at the Registered Office of the Company and also at the Registered Office of the respective subsidiary companies during working hours upto the date of the Annual General Meeting. The Annual Reports of the subsidiaries will also be available on your Company''s website at the link : http://www.mahindrafinance.com/ annual-reports.aspx

Material Non-Listed Indian Subsidiary

Pursuant to Clause 49 of the Listing Agreement entered into by the Company with the Stock Exchanges, if the turnover or net worth (i.e. paid- up capital and free reserves) of any unlisted Indian subsidiary company exceeds 20% of the consolidated turnover or net worth respectively of the listed holding company and its subsidiaries in the immediately preceding accounting year; that subsidiary would be termed as a ''Material Non-Listed Indian Subsidiary''.

In view of the above, there is no material non-listed Indian subsidiary of your Company for the Financial Year 2014-15.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company and its four subsidiaries viz. Mahindra Insurance Brokers Limited, Mahindra Rural Housing Finance Limited, Mahindra Asset Management Company Private Limited and Mahindra Trustee Company Private Limited prepared in accordance with Accounting Standard AS 21 prescribed by The Institute of Chartered Accountants of India, form part of this Annual Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies and its joint venture viz. Mahindra Finance USA LLC.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company’s operations in future There are no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

Details in respect of adequacy of internal financial controls with reference to the Financial Statements

Your Company has in place adequate internal financial controls with reference to financial statements, commensurate with the size, scale and complexity of its operations. Review of the internal financial controls environment of the Company was undertaken during the year which covered verification of entity level control, process level control and IT controls, identification, assessment and definition of key business processes and analysis of risk control matrices, etc. Reasonable Financial Controls are operative for all the business activities of the Company and no material weakness in the design or operation of any control was observed.

Mr. Ramesh Iyer, Managing Director of the Company does not receive any remuneration or commission from any of the subsidiaries of the Company. However, Mr. Iyer has been granted stock options under the Employees'' Stock Option Scheme of the holding Company, Mahindra & Mahindra Limited.

20 employees were in receipt of remuneration of Rs.60 lakhs per annum or more amounting to Rs. 23.66 crores for the Financial Year ended 31st March, 2015.

In terms of the provisions of section 197 of the Act read with Rules 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 details in respect of employees of the Company employed during the year and in receipt of remuneration for the year not less than sixty lakh rupees or employed for a part of the financial year and in receipt of remuneration not less than five lakh rupees per month, is provided in Annexure VI.

None of the employees listed in the said Annexure is a relative of any Director of the Company.

None of the employees holds either by himself or along with his spouse or dependent children, more than two per cent of the Equity Shares of the Company.

Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company is an equal opportunity employer and is committed to ensuring that the work environment at all its locations is conducive to fair, safe and harmonious relations

between employees. It strongly believes in upholding the dignity of all its employees, irrespective of their gender or seniority. Discrimination and harassment of any type are strictly prohibited.

The Company has in place an appropriate Policy in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, to prevent sexual harassment of its employees. All employees are covered under this Policy. The Company ensures that no employee is disadvantaged by way of gender discrimination.

During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder.

Conservation of Energy,

Technology Absorption, and Foreign Exchange Earnings and Outgo

The particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under sub-section (3) (m) of section 134 of the Companies Act, 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 are given as under :

(A) Conservation of Energy

(i) The steps taken or impact on conservation of energy :

The operations of your Company are not energy intensive. However, adequate measures have been initiated to reduce energy consumption.

(ii) The steps taken by the Company for utilizing alternate sources of energy:

During the year the Company has spent Rs.0.16 crores towards implementing solar power system in various branches.

(iii) The capital investment on energy conservation equipments: Nil

(B) Technology Absorption

(i) The efforts made towards technology absorption : Not Applicable.

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution : Not Applicable.

(iii) i n case of imported technology (imported during the last three years reckoned from the beginning of the Financial Year): Not Applicable.

(a) Details of Technology Imported;

(b) Year of Import;

(c) Whether the Technology has been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof.

(iv) Your Company has not incurred any expenditure on Research and Development during the year under review.

(C) Foreign Exchange Earnings and Outgo

The information on foreign exchange outgo is furnished in the Notes to the Accounts. There were no foreign exchange earnings during the year.

For and on behalf of the Board

Bharat Doshi Chairman


Mar 31, 2015

Dear Members,

The Directors present their Twenty-Eighth Annual Report together with the audited accounts of your Company for the year ended 31st March, 2015.

FINANCIAL RESULTS (STANDALONE)

(Rs. Million)

For the year ended 31st March 2015 2014

Income 192,872 163,654

Profit before Interest, Depreciation, exceptional items and tax 33,511 36,316

Interest (86) (868)

Depreciation (4,733) (4,270)

Profit before exceptional items and tax 28,692 31,178

Exceptional items 613 1,200

Profit Before Tax 29,305 32,378

Provision for taxation (6,743) (5,523)

Profit after tax 22,562 26,855

Balance brought forward from previous year 43,856 27,495

Adjustments on account of Amalgamation 1,140 (2,396)

Profit available for appropriation 67,558 51,954

Transfer from Debenture Redemption Reserve 2,972 2,366

Final Dividend (28)* (1)

Tax on final dividend

Dividend (Proposed) (5,765) (4,669)

Tax on dividend (1,173) (794)

Transfer to General Reserve - (5,000)

Balance carried forward 63,559 43,856

* In respect of equity shares issued pursuant to exercise of Stock Options after 31st March 2014 but before book closure date, the Company paid dividend of Rs. 27.9 Million for the year 2013-14 and tax on dividend thereto of Rs. 4.7 Million as approved by the shareholders at the Annual General Meeting held on August 1, 2014.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 6/- per Equity Share (120%), payable to those Shareholders whose names appear in the Register of Members as on the Book Closure Date.

SHARE CAPITAL

During the year under review, your Company allotted 4,259,011 equity shares of face value of Rs. 10/- each to the shareholders of erstwhile Mahindra Engineering Services Limited (''MESL'') upon consummation of the amalgamation of MESL with your Company. Further, your Company allotted 2,572,284 equity shares on the exercise of stock options under various Employee Stock Option Plans.

Your Board of Directors recommended for issue of Bonus shares in the ratio of 1:1 and sub-division of

Equity Shares of Rs. 10/- each into two Equity Shares of Rs. 5/- each which was approved by the Shareholders through postal ballot and e-voting on 10th March, 2015. Accordingly, bonus shares in the ratio of 1:1 were allotted to the members who held the equity shares on the Record Date i.e., March 20, 2015 by capitalization of balance in the Free Reserves amounting to Rs. 2,401,615,770. Further, the Equity Shares of face value of Rs. 10/- each were sub-divided into two Equity Shares of face value of Rs. 5/- each by way of corporate action to the shareholders who held the shares on the Record Date mentioned hereinabove.

Consequently the issued, subscribed and paid-up equity share capital has increased from Rs. 2,401.6 Million divided into 240,161,577 equity shares of Rs. 10/- each to Rs. 4,803.2 Million divided into 960,646,308 equity shares of Rs. 5/- each.

BUSINESS PERFORMANCE / FINANCIAL OVERVIEW

The Company offers a full range of IT services and industry specific solutions to its clients. The Company has partnered with several Fortune 100 companies to deliver outstanding solutions across industries. The Company offers a bouquet of services which includes Telecom Services, Consulting, Application Outsourcing, Infrastructure Outsourcing, Engineering Services, BPO, Platform Solutions and Mobile Value Added Services. With an impeccable track record of delivery and strong alliances with leading technology and product vendors, the Company serves 767 customers, including several of the Fortune 500 Companies. Your Company has 85 delivery centers and 49 sales offices spread over India & abroad.

In the fiscal year 2014-15 the Company''s consolidated revenues increased to Rs. 226,213 Million from Rs. 188,314 Million in the previous year, a growth of 20.1%. The growth during the year was led by acquisitions as well as organic growth. The geographic split of revenue was balanced with 47% share of Americas, 31% share of Europe, and 22% from Rest of the World.

The consolidated Profit before Interest, Depreciation, Tax and Exceptional Items was at Rs. 42,594 Million, against Rs. 42,968 Million in the previous year. The consolidated Profit after Tax, amounted to Rs. 26,277 Million as against Rs. 30,288 Million in the previous year.

The number of customers increased from 629 in the previous year to 767 at the end of fiscal year 2014-15.

In emerging areas of Big Data, Mobility Network, Cloud, Security, Platforms and Engineering Services, Tech Mahindra is well placed with its breadth of service offerings. Your company has also progressed well in building intellectual property through various Products & Services and Platforms. Your Company is committed towards building a synergistic relationship with its partners to enable, deliver, complete and customized solutions to customers. During the year, Tech Mahindra has developed an integrated program ''BROP'' (Building Relationships and Opportunities and Projects) program, which helps partner organizations and customers to succeed.

In summary, Tech Mahindra is well positioned in the markets it serves with a broad range of service offerings and a diversified customer base.

MERGER

During the year under review, the Scheme of Amalgamation and Arrangement between your Company and Mahindra Engineering Services Limited (MESL) got consummated on December 8, 2014. Subsequent to the Scheme of Amalgamation & Arrangement between MESL and Tech Mahindra Limited becoming effective, the Board of Directors fixed December 17, 2014 as the Record Date for MESL Shareholders for issue of Tech Mahindra Shares in the approved share swap ratio. This resulted in the issued capital of your Company going up from 236 Million shares to 240 Million shares. The shares swap got completed and the Stock Exchanges accorded their approval for trading of the new shares effective January 8, 2015.

ACQUISITIONS

Lightbridge Communications Corporation

Your Company acquired 100% shareholding of Lightbridge Communications Corporation (LCC), a Global Network service leader, through its wholly owned subsidiary Tech Mahindra Americas Inc. USA effective January 2, 2015. LCC is one of the world''s largest independent Global providers of Network Engineering Services to the Telecommunication industry.

The acquisition gives your Company an opportunity to offer full range of network services and integrated infrastructure solutions to both communication service providers as well as to the ecosystem of partners who cater to the communication sector. LCC has presence in over 50 countries. LCC has built 350 networks and designed more than 350,000 cell sites for over 400 customers worldwide.

Sofgen Holdings Limited

Your Company acquired 100% shareholding of SOFGEN Holdings Limited (SOFGEN), a niche consulting and Services Company with worldwide presence specializing in Private, Wealth, Commercial and Retail Banking solutions, with effect from March 13, 2015.

The acquisition gives your Company an opportunity to enhance expertise and to implement modernized Core Banking & Transformation services capabilities.

FixStream Networks Inc

The Company on 18th April, 2014 entered into an agreement to acquire majority stake (75%) in

FixStream Networks Inc (FSNI), a technology startup Company, and it has completed the acquisition on April 30, 2014.

Tech Mahindra Business Services GmbH

Tech Mahindra GmbH, a wholly owned subsidiary of the Company in Germany, entered into a share and asset purchase agreement with BASF Business Services Holding GmbH in February, 2014 for acquiring 100% stake in the equity of BASF Business Services holding GmbH (BASF). Upon payment of the consideration on July 29, 2014 the shares were transferred in the name of Tech Mahindra GmbH and its nominees were appointed on BASF''s Board of Directors. Subsequently, BASF''s name was changed in August 2014 to Tech Mahindra Business Services GmbH.

Complex IT

As you know your Company had acquired 51% stake in Complex IT one of the largest SAP consulting providers in Brazil through its wholly owned subsidiary Tech Mahindra Servicos De Informatica LTDA in May 2013. During the year under review, the balance stake of 49% in Complex IT Services was acquired. As at 31st March, 2015, Complex IT Services has become a 100% subsidiary of Tech Mahindra Servicos De Informatica LTDA, a wholly owned subsidiary of your Company in Brazil.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES

As on 31st March, 2015, your Company has 149 Subsidiaries which includes 109 step-down subsidiaries and 4 Associate Companies. There has not been any material change in the nature of the business of the subsidiaries. As required under the Listing Agreements with the Stock Exchanges and the Companies Act, 2013, the Consolidated Financial Statements of your Company and all its subsidiaries are provided in this Annual Report. The Consolidated Financial Statements have been prepared in accordance with Accounting Standards AS 21, AS 23 and AS 27 issued by The Institute of Chartered Accountants of India and shown the financial resources, assets, liabilities, income, profits and other details of your Company and its subsidiaries and share in associate company as a single entity, after elimination of minority interest.

The performance and financial position of each of the subsidiaries, associate companies and joint venture companies included in the consolidated financial statement is provided in accordance with the provisions of Section 129 read with Rule 5 of the Companies (Accounts) Rules, 2014 as a separate statement annexed to the Notes on Accounts containing the salient features of the financial statement of Company''s subsidiaries/joint ventures or associate companies in Form AOC - 1.

Pursuant to Rule 8(5)(iv) of the Companies (Accounts) Rules, 2014, the names of the companies which have become or ceased to be the subsidiaries, joint ventures or associate companies during the year are provided in "Annexure I" to this report.

During the year the Board of Directors has formulated a policy for determining Material Subsidiaries. The policy is disclosed on the company''s website and is accessible on http://www.techmahindra.com/investors/ corporate governance.aspx

HUMAN RESOURCES

The ever dynamic technological landscape of today''s world makes it imperative for us to focus on continuously shaping our talent for tomorrow and delivering value to our customers through differentiated service offerings. Associates'' career development is therefore a key focus area at Tech Mahindra. We have an effective performance and career management process, 360 degree learning and focused leadership development programs to help associates grow in their careers. Our people practices have received recognition at national and global level, with ASTD (American Society for Training and Development) ranking us amongst the Top 5 organizations, globally, for learning practices as also, our Performance and Career Management practices being recognised amongst the Best Talent Management practices in Asia by L&OD Roundtable for the year 2014. We continued to focus on recognizing, rewarding and enabling higher performance amongst our Associates through various Recognition and Reward Mechanism.

The Company endeavours to create an environment that is encouraging for the associates to innovate and collaborate to leverage the collective knowledge of Tech Mighties. We provide a host of platforms to nurture innovation such as IRIS and the Intrapreneurship Program where associates have the opportunity to pursue their innovative ideas and even commercialize them with support from mentors and resources from within Tech Mahindra.

QUALITY

Your Company continues - to focus on quality and strives to exceed customer expectations at all times. The Company has been successfully assessed at CMMI Dev & SVC V1.3 L5, TMMi, TL9K, ISO 9001:2008, ISO 20000:2012, ISO 27001: 2005, AS9100 (Standard for Aerospace domain - scope of certification limited to the aerospace business within TechM). In addition to these, your Company has undergone SA800 certification, a Social Accountability Standard, for applicable accounts as per the contractual obligations and also maintains its commitment to health, safety and environment by continually improving its processes in accordance with ISO 14001 and OHSAS 18001 standards.

Your Company is also certified on ISO 22301:2012 (Societal Security) and has a comprehensive Business Continuity and Disaster Recovery framework, to prevent potential business disruptions in the event of any disaster. It can quickly resume services to customer''s acceptable service levels. Automated Service Desk with SLAs for enabling business and Vulnerability Assessment and Penetration Testing Lab for secured corporate network operations are highlights showcasing information security posture of the Organization.

These certifications are testimony of the robustness of business processes and at large the quality culture imbibed in the organization.

Your Company has also introduced high maturity practices to measure the effectiveness of the processes and manages them quantitatively. One such initiative is "Execution Excellence Index" focusing on achieving high project maturity, improved tools usage and standardization, knowledge management and performance on key business metrics, in order to strengthen further the Business Excellence in what the Company deliver to the customers. Your Company is putting all the initiatives in place in order to ensure that it delivers as stated in Quality Policy.

DIRECTORS

During the year under review there was no change in Directors of your Company.

Pursuant to the provisions of Section 152 (6) (c) of the Companies Act, 2013, Mr. Bharat N. Doshi, Director (DIN: 00012541) is liable to retire by rotation and does not offer himself for reappointment.

Mr. Bharat N. Doshi served on your Board since 6th June, 1997 as a Non - Executive Director. The Board places on record its appreciation for the valuable advice and guidance of Mr. Doshi during his tenure as a Director on the Board.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has devised a policy on evaluation of performance of Board of Directors, Committees and Individual directors. Accordingly, the Chairman of the Nomination and Remuneration Committee obtained from all the board members duly filled in evaluation templates for evaluation of the Board as a whole, evaluation of the committees and peer evaluation. The summary of the evaluation reports were presented to the respective Committees and the Board for their consideration.

Policy on Directors Appointment and Remuneration

The Governance policies laid down by the Board of directors of your company include:

i. Policy on appointment and removal of Directors, Key Managerial Personnel and Senior Management

ii. Policy on remuneration to the Directors, Key Management Personnel and Senior Management and other Employees

The extract of these two policies are provided in "Annexure II".

Training

The Company has laid down a policy on training for Independent Directors, as part of the governance policies. The directors are updated on the regulatory changes, Business strategy and operations by the senior leadership of the Company periodically. Apart from this, during the year under review two external professionals provided orientation on latest trends in Cloud and Digital Businesses.

Key Managerial Personnel (KMPs)

Pursuant to provisions of Section 203 of the Companies

Act, 2013, Mr. Vineet Nayyar, Executive Vice Chairman, Mr. C. P. Gurnani, Managing Director & Chief Executive Officer, Mr. Milind Kulkarni, Chief Financial Officer and Mr. G. Jayaraman, Company Secretary are the Key Managerial Personnel of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, your Directors, based on the representation received from the Operating Management and after due enquiry, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

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, 2015 and of the profit of the Company for the year ended on that date;

iii. proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the annual accounts have been prepared on a going concern basis;

v. they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

vi. the proper systems to ensure compliance with the provisions of all applicable laws are in place and are adequate and operating effectively.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has internal financial controls which are adequate and were operating effectively. The controls are adequate for ensuring the orderly & efficient conduct of the business, including adherence to the company''s policies, the safe guarding of assets, the prevention & detection of frauds & errors, the accuracy & completeness of accounting records and timely preparation of reliable financial information.

STATUTORY AUDITORS

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, [ICAI Registration No. 117366W/W-100018] the Auditors of your Company, hold office upto the conclusion of the forthcoming Annual General Meeting of the Company. Pursuant to provisions of Section 139(2) of Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, M/s. Deloitte Haskins & Sells LLP are eligible for appointment as Auditors. Your Company has received a written confirmation from M/s. Deloitte Haskins & Sells LLP, Chartered Accountants to the effect that their appointment, if made, would satisfy the criteria provided in Section 141 of the Companies Act, 2013 for their appointment. The Board recommends the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants as the Auditors of the Company from the conclusion of the ensuing AGM to the conclusion of the next AGM.

The information and explanations on the qualification contained in the Auditors'' report are provided in detail in the Note 26.3 forming part of the financial statements. Your board opines that no further explanation is required in this regard.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Dr. K. R. Chandratre, Practicing Company Secretary, Pune to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is provided as "Annexure III". There are no qualifications, reservation or adverse remark or disclaimer made in the Secretarial Audit Report.

EXTRACT OF THE ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, the extract of the Annual Return in Form MGT-9 is attached as "Annexure IV".

MANAGERIAL REMUNERATION

Disclosures of the ratio of the remuneration of each director to the median employee''s remuneration and other details as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as "Annexure V".

None of the directors who are in receipt of any commission from the Company and Managing Director or Whole-time Director of the Company, shall receive any remuneration or commission from any Subsidiary Company of your Company.

The details of remuneration paid to the Directors including Executive Directors of the Company are given in Form MGT-9 forming part of the Directors Report.

PARTICULARS OF EMPLOYEES

The information required under Section 197(12) of the Companies Act, 2013 ("the Act") read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, pursuant to first proviso to Section 136(1) of the Act, this Report is being sent to the Shareholders excluding the above said information. Any shareholder interested in obtaining this Report, may write to the Company Secretary at the Registered Office / Corporate Office of the Company.

Anti Sexual Harassment Policy

Your Company laid down Anti Sexual Harassment policy and it is made available on the website of the Company. The Company has zero tolerance on Sexual Harassment at workplace. During the year under review there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

EMPLOYEE STOCK OPTION PLANS

Details as required under Rule 12 (9) of Companies (Share Capital and Debentures) Rules, 2014 and as required to be provided under the Securities and Exchange Board of India Guidelines as on March 31, 2015 are set out in "Annexure VI" to this Report.

CORPORATE GOVERNANCE

A report on Corporate Governance covering among others details of meetings of the Board and Committees along with a certificate for compliance with the Clause 49 of the Listing Agreement issued by the statutory auditors of the Company, forms part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of your Company''s performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

RISK MANAGEMENT

During the year, your Company had constituted a Risk Management Committee and approved detailed framework for Risk Management. The details of Committee and its terms of reference including elements of risk as identified for the Company are set out in the Corporate Governance Report and Management Discussion and Analysis Report (MDA) forming part of the Board''s Report.

ESTABLISHMENT OF VIGIL MECHANISM

Your Company has laid down Whistle Blower Policy covering Vigil Mechanism with protective Clauses for the Whistle Blowers. As part of the Vigil Mechanism a dedicated telephone line and email address are provided. The Whistle Blower Policy is made available on the website of the Company.

DEPOSITS / LOANS & ADVANCES, GUARANTEES OR INVESTMENTS

Your Company has not accepted any deposits from the public during the year under review. The particulars of loans/advances, guarantees and investments under Section 186 of the Companies Act, 2013 and as per Clause 32 of the Listing Agreement are given in the notes forming part of the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All transactions entered into with Related Parties as defined under Section 2(76) of the Companies Act, 2013 and Clause 49(VII) of the Listing Agreement during the financial year were in the ordinary course of business and on an arm''s length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties in the financial year which were in conflict with the interest of the Company and requiring compliance of the provisions of revised Clause 49 of the Listing Agreement. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes forming part of the Financial Statements.

The Company has formulated a policy on materiality of Related Party Transactions and dealing with Related Party Transactions which has been uploaded on the Company''s website and can be accessed at http://www.techmahindra.com/sites/ResourceCenter/ Brochures/investors/corporategovernence/RPT Policy Amended.pdf

The particulars of related party transactions in prescribed Form AOC - 2 is attached as "Annexure VII".

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in "Annexure VIII" which forms part of this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR vision of your Company is "Empowerment through Education."

In compliance with the guidelines prescribed under Section 135 of the Companies Act, 2013, your company constituted a Corporate Social Responsibility (CSR) Committee. Your Board of Directors laid down CSR Policy, covering the Objectives, Focus Areas, Governance Structure and Monitoring & Reporting Framework among others and the policy is available at http://www.techmahindra.com/society/default.aspx.

Your company''s social initiatives are carried out by Tech Mahindra Foundation and Mahindra Educational Institutions.

- TECH MAHINDRA FOUNDATION (TMF)

The Tech Mahindra Foundation, the CSR arm of the Company, established in 2007 as a Section 25 Company, works towards a stated mission: "Educated, skilled and able women and men are a country''s true strength".

During the year under review, Tech Mahindra Foundation expanded its operations to two more locations, upscaling its presence to nine states/ union-territories through ten India Chapters - Bengaluru, Bhubaneswar, Chandigarh, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai, Pune and Visakhapatnam. The Foundation ran 135 high-impact projects with 90 partners, reaching out to 125,000 children and youth across these locations.

School Education

The Foundation''s work in school education focuses upon three thematic areas: school improvement, teacher empowerment and learning enrichment. The key initiatives include:

All Round Improvement in School Education (ARISE):

Tech Mahindra Foundation''s educational initiatives under ARISE are long-term school improvement programmes, run in partnership with local governments and partner organisations. The Foundation has adopted 55 schools across India and is working with 18 partners to turn them around completely into model schools of excellence. ARISE initiatives encompass educational empowerment programmes for children with disabilities.

Shikshaantar:

Shikshaantar, envisioned for creating a difference to education, describes the Foundation''s teacher empowerment and system enhancement programme. Another aspect of Shikshaantar is felicitating outstanding teachers of municipal schools of Delhi through the Foundation''s flagship Shikshak Samman Award programme.

Shiksha Samvardhan:

Shiksha Samwardhan, or the education enrichment programme, is a thematic intervention around learning enhancement initiatives of the Foundation, towards making learning interesting, child-centred and activity-based to reduce cumulative burden of non-comprehension and to promote grade- appropriate competencies.

Employability:

Skills for Market Training (SMART) is the Foundation''s flagship programme in employability. It is built on the vision of an educated, enlightened and employed India, and a belief that educated and skilled youth are the country''s true strength. The programme started with 3 Centres in 2012 and is currently running 65 Centres at 10 locations across India. These include SMART Centres, SMART Centres (training for people with disabilities), SMART-T Centres (training in technical trades) and the SMART Academy. The Academy will closely engage with the industry stalwarts for constant curriculum up- gradation and placement.

During the year under review, your Company trained ~12,000 young women and men under its SMART programme. More than 75-80% of the graduates are placed in jobs upon successful completion of the training, across multiple industries.

- MAHINDRA EDUCATIONAL INSTITUTIONS: TECHNICAL EDUCATION

Your Company''s initiatives in technical education are carried out through Mahindra Educational Institutions (MEI), under which the Foundation has extended infrastructural and operational support to Mahindra Ecole Centrale, a state- of-the-art technical institution in Hyderabad. The institution offers a four year B Tech Programme in association with Ecole Centrale, Paris under an industry-academia memorandum of understanding with Jawaharlal Nehru Technological University, Hyderabad.

The institution''s vision is to train engineers, to be entrepreneurial and innovative as well as technically trained, so that they are capable of meeting the greatest challenges of the era. It is aligned to MEI''s work for the cause of promoting quality higher education by establishing institutions of higher learning, encourage education and research work in different disciplines and to promote innovation and technology development.

The Annual Report on CSR activities is provided as "Annexure IX".

SUSTAINABILITY

Your Company believes in business growth with responsibility. The Company has taken many steps strategically leveraging sustainability to its competitive advantage. Your Company has created "Green" strategies to identify high impact material issues across the social, economic and environmental dimensions and concentrate individually on each one of them with a sole goal of a sustainable business model creating value for all stakeholders. The Company''s initiatives aligning economic performance with environmental & social operations has ensured that business growth would not affect the future of our society, its ecological balance and life support functions.

Tech Mahindra has been publishing its sustainability performance since 2007-08 as part of the Mahindra Group Sustainability Report. The detailed Reports are available on the website http://www.mahindra.com/ How-We-Help/Environment/Sustainability-Reports

With emerging sustainability awareness in the market we have taken 3 year comprehensive targets against each of the material issues identified which are critical to business operations such as Improving Operational Eco-Efficiency, Associate Care & Development, Creating a Green Value Chain & Societal Care.

Tech Mahindra has managed environmental footprint essentially through a process which addresses issues ranging from Emission Reduction to Water Management and Green Infrastructure. There are also services and solutions for the customers such as bringing data center efficiency, platforms mobility and cloud services.

The Company has continuously striven to fine tune processes and systems in order to identify, quantify and reduce the environmental impacts of businesses and operations. Our efforts can be seen with the efforts put in across various areas in Sustainability Recognitions & Awards bestowed on the Company during the Financial Year 2014-15, mentioned elsewhere under Awards & Recognitions heading separately. During the year under review, efforts were made among others in the following areas:

- Occupancy sensors to reduce the electricity consumption.

- Wealth of Wellness initiative for associate wellbeing.

- Successful commissioning of solar plants at Pune (250kWh) & Chennai (264 kWh) campuses.

- Participation in Carbon Disclosure Project''s Supply Chain Program-2014.

- Focused approach towards green solutions for clients that has helped the Company to reduce 5756 metric tonnes carbon emissions per annum.

- The suite of cloud based solutions & platforms of the Company, have showcased benefits in not only better performance but also how they consume less electricity.

AWARDS AND RECOGNITION

Your Company continued its quest for excellence in its chosen area of business to emerge as a true global brand. Several awards and rankings continue to endorse your Company as a thought leader in the industry. The awards / recognitions received during the year 2014-15 include:

- Ranked 5th in IT and Software ranking by DUN and Bradstreet;

- Digital Humanitarian Award at TMF World 2014 for deploying Women Safety Mobile Application Fightback;

- Porter prize in recognition of company''s best strategic management practices;

- Businessworld identified Tech Mahindra among the fastest growing companies in India based on financial performance;

- Featured in FINTECH TOP 25 rankings for the year 2014 by IDC Financial Insights;

- The Association for Talent Development has ranked Tech Mahindra as the Top 5 BEST Organization across the globe for employee learning and talent development;

- European Software Testing Awards (TESTA), in the following categories, namely;

i) ''The Sogeti Green Testing Team of the Year''.

ii) ''Best Overall Use of Technology''.

iii) ''The Sage Most Innovative Project''.

- Business Today ranked among the top 50 companies in India''s most valuable companies ranking.

- Mr. C. P. Gurnani recognized as the CEO of the Year 2014 by Business Standard;

- Tech Mahindra Foundation (TMF) was awarded Pandit Madan Mohan Malviya Award for ''Best CSR Practices in Education'' by CSR Times;

- Mr. C. P. Gurnani, Managing Director and CEO, has been recognized as the ''Business Leader of the Year for Indian Companies in the US'' by Indo- American Chamber of Commerce (IACC);

- ''Golden Peacock Award for Excellence in Corporate Governance'' from Institute of Directors;

- The Business Services Group of the Company, has been declared as the Winner of ''Golden Peacock National Quality Award'' for the year 2014;

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the contributions made by employees towards the success of your Company. Your Directors gratefully acknowledge the co-operation and support received from the shareholders, customers, vendors, bankers, regulatory and Governmental authorities in India and abroad.

For and on behalf of the Board

Place: Mumbai Anand G. Mahindra

Date : May 26, 2015 Chairman


Mar 31, 2013

To, The members of Mahindra & Mahindra Financial Services Limited

The Directors are pleased to present their Twenty-third Report together with the audited accounts of your Company for the Financial Year ended 31st March, 2013. The summarised financial results of the Company are given below:

FINANCIAL RESULTS (Rs. in Crores)

March 2013 March 2012

Total Income 3,894.7 2,794.6

Less : Finance Costs 1,618.8 1,120.3

Expenditure 1,003.1 729.5

Depreciation/Amortisation 22.2 19.6

Total Expenses 2,644.1 1,869.4

Profit Before Tax and Exceptional Item 1,250.6 925.2

Add: Exceptional Item 28.6 0.0

Profit Before Tax 1,279.2 925.2

Less : Provision For Tax

Current Tax 433.5 289.6

Deferred Tax (37.0) 15.5

Profit After Tax for the Year 882.7 620.1

Add : Amount brought forward from Previous Years 979.8 713.5

Amount available for Appropriation 1,862.5 1,333.6

Appropriations

General Reserve 88.3 62.0

Statutory Reserve 176.5 124.0

Proposed Dividend on Equity Shares 204.8 145.6

Income-tax on proposed Dividend 34.1 22.6

Excess provision for Corporate Dividend Tax on Equity Shares 0.0 (0.4) of earlier year

Surplus carried to Balance Sheet 1,358.8 979.8

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 3.60 per Equity Share of the face value of Rs. 2 each (including a special dividend of Re. 0.20 per Equity Share), payable to those Members whose names appear in the Register of Members as on the Book Closure date. The dividend including dividend tax will absorb a sum of Rs. 238.9 Crores (as against Rs. 168.2 Crores on account of dividend of Rs. 14 per Equity Share of the face value of Rs.10 each, paid for the previous year).

OPERATIONS

The overall disbursement registered a growth of 22.2 per cent at Rs. 23,838.6 Crores as compared to Rs. 19,504.3 Crores in the previous year. Your Company during the year under review, continued to provide a wide range of financial products and services to its customers through diversification of its product portfolio within its vehicle financing business as well as through the introduction and growth of other financial products and maintained its market leadership position in rural and semi-urban markets.

Your Company has increased its presence in financing of commercial vehicle, construction equipment, as well as, pre-owned vehicle while maintaining aggressive growth in car financing, retaining its leadership position in financing Mahindra range of vehicles and tractors in addition to extending its lending to vehicles of other Original Equipment Manufacturers (OEMs).

Your Company has one of the largest network of branches amongst Non-Banking Financial Companies operating in rural and semi-urban areas. Your Company''s nationwide network of branches and locally recruited employees have facilitated in enhancing and strengthening long-term relationship with its customers.

During the year under review, your Company expanded its reach in the Micro Small and Medium Enterprises (MSME) segment as well as continued to explore the opportunities in the emerging Gold Loan industry in India.

Income grew by 39.4 per cent to Rs. 3,894.7 Crores for the year ended 31st March, 2013 as compared to Rs. 2,794.6 Crores for the previous year. Profit Before Tax was 38.3 per cent higher at Rs. 1,279.2 Crores as compared to Rs. 925.2 Crores for the previous year. Profit After Tax grew at a healthy rate of 42.4 per cent to Rs. 882.7 Crores as compared to Rs. 620.1 Crores in the previous year.

Your Company has cumulatively financed over two and a half million customers since its inception. The number of contracts entered into by the Company during the year was 5,33,134 as against 4,66,416 in the previous year.

During the year under review, the Assets Under Management have crossed Rs. 27,000 Crores and stood at Rs. 27,913 Crores as at 31st March, 2013.

DISTRIBUTION OF MUTUAL FUND PRODUCTS

During the year under review, the activity of distribution of Mutual Fund Products (MFP) was carried out across 152 branches covering 19 States.

As on 31st March, 2013, the amount of Assets Under Management outstanding through the Company''s Advisory Services on MFP, aggregate of institutional and retail segment, was Rs. 1,109 Crores and the number of clients stood at 41,023.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of the Company''s performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

CORPORATE GOVERNANCE

Your Company practices a culture that is built on core values and ethical governance practices and is committed to transparency in all its dealings. A Report on Corporate Governance along with a Certificate from the Statutory Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement are annexed to this Report.

ECONOMY

In the current year the global economy continued to witness sluggish growth. Overall growth at 3 per cent was 0.5 per cent lower compared to the pre- crisis levels in 2008. While the US grew at better than expected levels, the entire Euro Zone was lurching from one crisis to another. Apart from the financial crisis staring at the PIIGS (Portugal, Italy, Ireland, Greece and Spain) countries, major economies like Germany and France experienced low growths. European Central Bank''s attempts to kickstart the economy through its own version of quantitative easing did not yield the desired results and more steps would be required to reignite the growth. The implementation of the Basel III guidelines would cause the European Banks to deleverage. This might affect the capital flows to the emerging markets and the consequent liquidity crunch would lead to a possible hike in interest rates.

Against the backdrop of an adverse global environment and a spiraling current account deficit, India''s growth slowed down significantly. GDP growth for the Financial Year 2012-13 is expected to be around 5 per cent, the slowest growth in more than a decade. While there was a slowdown across the entire economy, it was more pronounced in the industrial sector. Low capex by the corporate sector as a result of uncertain policy environment and delay in key approvals was the primary reason behind this. Inflation, an area of significant concern of the Reserve Bank of India (RBI), eased considerably in the latter part of the year and was 5.96 per cent in March 2013. Despite the easing of inflation the RBI adopted a conservative approach and reduced the rates by only 25 basis points in March 2013.

Liquidity remained under pressure throughout the year because of persistently high government cash balances with RBI and elevated incremental credit to deposit ratio for significant part of the year. The net average liquidity injection under the daily liquidity adjustment facility (LAF) at Rs. 730 billion during the first half of the year, increased significantly to Rs. 1,012 billion during the second half. In order to alleviate liquidity pressures, RBI lowered the Cash Reserve Ratio (CRR) cumulatively by 75 basis points on three occasions and the statutory liquidity ratio (SLR) by 100 basis points during the year. Additionally, RBI injected liquidity to the tune of Rs. 1.5 trillion through Open Market Operations (OMO) purchase auctions.

Against this back drop of sharp decline in the GDP growth and moderation in headline WPI inflation, the stance of the RBI Monetary Policy is intended to appropriately manage liquidity to ensure adequate flow to the productive sectors of the economy, guard against the risk of inflation pressures re-emerging and continue to address risks to growth.

While the overall economy decelerated significantly, the rural and semi-urban markets, the focus areas of the Company, witnessed higher growth. The governmental thrust on rural areas through programmes like MGNREGA, high agri commodity prices, etc., led to an increase in disposable income thereby leading to a robust demand for various products and services. Consequently, there was enhanced demand for vehicles in these geographies. With broad-basing of economic activities in the rural areas and the governmental thrust on rural infrastructure, it is expected that rural India will continue to grow rapidly in the next year.

FINANCE

During the year under review, RBI shifted its stance from an inflation focused to an accommodating growth focused policy and reduced the Repo Rate three times totalling to 100 basis points to contain the increasing risk to the growth, which resulted in medium/long term interest rates coming-off approximately by 50 basis points. RBI has clearly indicated that even as the policy stance emphasises addressing the growth risk, the headroom for further monetary easing remains quite limited. Liquidity conditions remained in a deficit mode throughout the year. In order to mitigate the liquidity tightness, RBI conducted OMOs and reduced CRR by 75 basis points during the last year. However, your Company was able to reduce the impact of volatility in the interest rates by ensuring that prudent Asset Liability Management Guidelines were adhered to.

During the year under review, your Company continued with its diverse methods of sourcing funds in addition to regular borrowings like Secured and Unsecured Debentures, Term Loans, Commercial Paper, etc., and maintained prudential Asset/ Liability match throughout the year. Your Company sourced long term loans from banks at attractive rates. Your Company also issued Subordinated Debt amounting to Rs. 115 Crores and successfully completed five securitisation transactions (at par structure) amounting to Rs. 1,433.6 Crores.

During the year, your Company actively participated in a number of investor meets both in India and abroad organised by reputed Global and Domestic Broking Houses. Your Company also periodically conducted analysts'' meets and conference calls to communicate details of performance, important developments and exchange of information.

SHARE CAPITAL

Qualified Institutions Placement

On 16th November, 2012, your Company successfully concluded the Qualified Institutions Placement (QIP) issue to Qualified Institutional Buyers aggregating Rs. 866.80 Crores through the issue of 97,50,257 Equity Shares of the Face Value of Rs. 10 each at a price of Rs. 889 per Equity Share including a premium of Rs. 879 per Equity Share, which is a 0.94 per cent premium to the price of Rs. 880.70 per share, arrived at as per Regulation 85 of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

The Company received bids of approximately Rs. 4,345 Crores. Despite it being launched in markets clouded by bearish sentiments, the second QIP offering by your Company received an overwhelming response, as seen by the high levels of subscription and strong participation from International and Domestic Institutional Investors.

Your Company has duly utilised the issue proceeds to augment its capital base, meet its capital requirements, for other general corporate purposes and for payment of Issue Expenses. This is in line with the issue purpose mentioned in the Placement Document filed with various Regulatory Authorities.

Sub-Division ("Stock-Split") of Face Value of Equity Shares

Pursuant to the approval received from the Members of the Company by way of Postal Ballot on 5th February, 2013, your Company has on 19th February, 2013, upon sub-division, issued 5 (Five) Equity Shares of Rs. 2 each fully paid-up in the Equity Share Capital of the Company for every 1 (One) Equity Share of the face value of Rs. 10 fully paid-up held by the Members in the Equity Share Capital of the Company as on the Record Date i.e. 18th February, 2013.

Post allotment of Equity Shares and sub-division of Equity Shares as aforesaid, the issued, subscribed and paid-up Share Capital of the Company stands at Rs. 113.8 Crores comprising of 56,87,64,960 Equity Shares of Rs. 2 each fully paid-up and the Authorised Share Capital of the Company stands at Rs. 190 Crores comprising of 70,00,00,000 Equity Shares of Rs. 2 each and 50,00,000 Redeemable Non-Convertible Preference Shares of Rs. 100 each. Consequent to the Stock-split, a new International Securities Identification Number (ISIN) INE774D01024 has been created by the Depositories for the Company''s Equity Shares of the face value of Rs. 2 each.

CAPITAL ADEQUACY

Consequent upon the allotment of Equity Shares to the Qualified Institutional Buyers under the Qualified Institutions Placement, the paid-up share capital of the Company has increased to Rs. 113.8 Crores as on 31st March, 2013 from Rs. 104.0 Crores as on 31st March, 2012. The securities premium account has also increased to Rs. 2,014.5 Crores from Rs. 1,165.3 Crores. As a result of the increased net worth, your Company was able to enhance the Capital to Risk Assets Ratio (CRAR) to 19.7 per cent as on 31st March, 2013, which is well above 15.0 per cent CRAR prescribed by RBI.

HOLDING COMPANY

Pursuant to the allotment of Equity Shares to the Qualified Institutional Buyers under the Qualified Institutions Placement, the shareholding of Mahindra & Mahindra Limited, the holding company, stands reduced to 51.2 per cent from 56.0 per cent.

STOCK OPTIONS

During the year under review, no new Options have been granted under the ''Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Scheme-2005'' and ''Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Scheme-2010'' respectively.

Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure I to this Report.

RBI GUIDELINES

The Company has complied with all the applicable regulations of the Reserve Bank of India (RBI). As a prudent practice, your Company makes accelerated provisioning for Non-Performing Assets (NPAs) than that required by RBI for NBFCs.

Standard Assets'' Provisioning

Pursuant to the Notification No. DNBS.222/CGM (US)-2011 dated 17th January, 2011 issued by the RBI for making a general provision at 0.25 per cent on the outstanding standard assets of NBFCs, your Company has made a provision of Rs. 16.0 Crores as at 31st March, 2013, towards the same. With effect from the current year, the Company has, on a prudent basis, decided to make additional/ accelerated general provision on its standard assets and has provided Rs. 36.0 Crores for the same which is reflected as "Exceptional Items" in the Statement of Profit and Loss.

CREDIT RATING

During the year under review, CRISIL Limited [CRISIL], has reaffirmed the rating to the Company''s Long-term Debt Instruments and Bank Facilities as ''CRISIL AA / Stable'' and the Company''s Fixed Deposit Programme as ''FAAA/Stable'', respectively. The ''AA /Stable'' rating indicates a high degree of safety with regard to timely payment of financial obligations. The rating on the Company''s Short-term Debt and Bank Loans has been reaffirmed at ''CRISIL A1 '' (earlier P1 ) which is the highest level of rating.

During the year under review, India Ratings & Research Private Limited, which is part of the Fitch Group, has reaffirmed the Company''s National Long-term Rating Instrument and Lower Tier II Subordinated Debt programme to ''IND AA /Stable''. The ''IND AA'' denotes that Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. Modifiers {" " (plus) / "-" (minus)} can be used with the rating symbols for the categories ''IND AA'' to ''IND C''. The modifiers reflect the comparative standing within the category.

Brickwork Ratings India Private Limited has, during the year, re-affirmed the ''BWR AA '' rating with Positive outlook to the Company''s Long-term Subordinated Debt Issue. ''BWR AA '' stands for an instrument that is considered to offer high credit quality/safety in terms of timely servicing of principal and interest obligations.

FIXED DEPOSITS AND LOANS/ADVANCES

As on 31st March, 2013, your Company has mobilised funds from Fixed Deposits to the tune of Rs. 2,327.9 Crores, with an investor base of over 1,52,553 investors.

Your Company has initiated various measures towards improvement of service levels to the Fixed Deposit holders. As a customer-centric process, the Company has initiated the process of online repayment directly to the customer''s account on maturity of the Fixed Deposit. In cases where electronic transfer facility is not available, the repayment is made through a post-dated cheque sent before the maturity date to the depositors. Your Company has also launched across-the-counter facility at its Corporate Office Annexe, to issue Fixed Deposit Receipts promptly to its customers and the same is expected to be implemented across its branches shortly.

As at 31st March, 2013, 1,224 deposits amounting to Rs. 6.8 Crores had matured for payment and remained unclaimed. The unclaimed deposits have since reduced to 809 deposits amounting to Rs. 4.4 Crores.

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.

SUSTAINABILITY INITIATIVES

Your Company has been way ahead in the Financial Services Sector in India to protect and sustain the rural livelihoods through a sustainable business model. The business model aims at transforming rural lives and driving positive change in the community. From the Financial Year 2008-09 onwards, your Company has taken steady but impactful steps towards sustainability by charting out a roadmap of five years on Triple bottom line for balanced approach towards economic activity, environmental responses and social progress. Your Company''s Sustainability Report continues to attain ''A '' rating from Global Reporting Initiative (GRI).

Your Company continued with its focus on sustainability awareness for employees, vendors, suppliers and customers and took various initiatives in this direction. Your Company made proactive efforts to fight against global warming through Project ''Mahindra Hariyali'', by planting around 54,000 saplings across the country. Various initiatives were also taken for conservation of water and energy, reduction of noise pollution and paper consumption. Along with this your Company has also started reporting on Carbon Disclosure Project (CDP) from the Financial Year 2011-12. CDP focuses on how companies are geared up, to deal with the challenges of Climate change in a carbon constrained economy. CDP works for 655 institutional investors with $78 trillion under management.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As a socially responsible citizen, the Mahindra Group, through its various Corporate Social Responsibility (CSR) initiatives, is enabling entire communities to ''RISE''. Rise is a symbol of the Mahindra Group''s dedication to continual improvement within itself and in the Communities the Group touches. CSR continues to be an integral part of the vision of the Mahindra Group and this year too, your Company has pledged 1 per cent of its Profit after Tax for CSR initiatives, largely to benefit the economically weaker and socially disadvantaged sections of the Society and has continued to be incessantly engaged in activities, which add value to the community around it.

As a part of its commitment to Corporate Social Responsibility initiatives, your Company, during the year continued to involve itself in social welfare activities by contributing to recognised charitable institutions, which specifically benefit the economically weaker sections of the society as well as extended its support to Nanhi Kali, the flagship programme of the K.C. Mahindra Education Trust, which supports the education of the disadvantaged girl child.

During the year under review, your Company organised a nationwide Blood Donation Drive to re- affirm its pledge to the society and collected 1,084 bottles of blood. Your Company also conducted a cancer detection camp in the interior areas of Dharward. The ''Lifeline Express'' Train, in association with Impact India, catered to the medical needs of 2,550 underprivileged people in Puri (Odhisha). Your Company also donated funds for the purchase of 4 ambulances, 3 DG sets and Palliative Care Unit equipment to numerous charitable institutions. The Company also took a step in lighting up the lives of the people in the interior locations of Tamil Nadu by installing 165 Solar Street Lights.

During the year under review, your Company contributed Rs. 5.7 Crores towards Corporate Social Responsibility to various institutions for charitable purposes.

ACHIEVEMENTS

During the year under review, your Company was featured in the ET 500 ''Star Trek : The Dazzling Dozen'' as well as in the ET 500 2012 ''India''s Biggest 500 Companies''. Your Company was also awarded the inaugural Porter Prize for creating Distinctive Value, the NASSCOM IT User Awards 2012, the EDGE Award 2012 for best use of Technology, the Silver Award 2012 for Best Corporate Website from ABCI (Association of Business Communicators of India), eOdisha Awards 2013 for Information and Communication Technologies in Financial Inclusion Initiative, Asian Leadership Awards 2012 for best use of IT in Investment Banking by the Asian Confederation of Businesses and the First Runner-up Trophy in the NBFCs - Asset Backed Lending category at the Best Bank & Financial Institution Awards 2012 by CNBC TV18.

Your Company has won the Golden Peacock HR Excellence Awards 2012 and was also awarded the Commendation Certificate for ''Strong Commitment to HR Excellence'' in the 3rd National HR Excellence Awards by the Confederation of Indian Industry. The Company was ranked 5th in the Financial Services Sector by the Great Places to Work Institute and was also included in the Top 80 Indian Power Brands. Your Company was also conferred with 6 PRCI Annual Corporate Collateral Awards 2012 by the Public Relations Council of India (PRCI) as well as adjudged the First Runner-up at the Best Learning Organisation of Asia Awards by the L&OD Round Table, 2012.

DIRECTORS

Mr. Bharat Doshi, Chairman and Mr. Dhananjay Mungale, Independent Director, retire by rotation at the forthcoming Annual General Meeting 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 representation received from the Operating Management, and after due enquiry, confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed;

ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 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

Mahindra Insurance Brokers Limited

MIBL has crossed the 8,00,000 mark in terms of policies serviced, with a total of 8,39,408 policies for both Life and Non-Life retail business lines, for the year ended 31st March, 2013. The customised Life insurance cover "Mahindra Loan Suraksha" (MLS) continued to receive an encouraging response and grew by 21 per cent from 3,63,691 lives covered with a Sum Assured of Rs. 8,255.0 Crores in the financial year 2011-12 to 4,40,553 lives covered with a Sum Assured of Rs. 11,798.2 Crores in the financial year 2012-13, with a substantial portion being covered in the rural markets.

MIBL achieved a growth of 33.8% in Net Premium generated for the Corporate and Retail business lines, increasing from Rs. 413.8 Crores (Gross Premium Rs. 456.2 Crores) in the financial year 2011-12 to Rs. 553.8 Crores (Gross Premium Rs.619.8 Crores) in the financial year 2012-13, crossing a milestone of Rs.600 Crores of Gross Premium.

The Income increased by approximately 85 per cent from Rs. 46.6 Crores in the financial year 2011-12 to Rs. 86.3 Crores in the financial year 2012-13. The Profit before Tax increased by 154.2 per cent from Rs. 20.1 Crores to Rs. 51.2 Crores, and the Profit after Tax increased by 155 per cent from Rs. 13.5 Crores to Rs. 34.5 Crores during the same period.

During the year under review, MIBL has entered into Definitive Agreements with Inclusion Resources Private Limited (IRPL), a subsidiary of LeapFrog Inclusion Fund (LFIF), incorporated in Singapore and the Company, to expand MIBL''s services to consumers in rural and semi-urban areas of India, by bringing in IRPL''s international knowledge and experience, especially in using low cost technology solutions to provide insurance in mass markets. In addition, given IRPL''s expertise and association in reinsurance globally, IRPL would help MIBL to connect with various global reinsurers to assist in MIBL''s reinsurance broking business.

During the year under review MIBL has received the necessary approvals from the Insurance Regulatory and Development Authority, the Foreign Investment Promotion Board as well as the Reserve Bank of India and the Company has in pursuance of the aforesaid Definitive Agreements, sold 3,09,278 Equity Shares of Rs. 10 each of MIBL to IRPL, for an amount aggregating Rs. 64.3 Crores, vide issue of transfer instruction dated 30th March, 2013. On account of a technical issue raised by the Depository Participant of IRPL, the actual transfer of 309,278 Equity Shares on sale by the Company from the demat account of the Company, was recorded in the demat account of IRPL on 2nd April, 2013, being the next working day. MIBL has also made a preferential allotment to IRPL of 77,320 Equity Shares of Rs. 10 each for cash at a premium of Rs. 2,070 per share aggregating to Rs. 16.1 Crores.

Pursuant to the preferential allotment and transfer of Equity Shares to IRPL, the shareholding of the Company in MIBL stands reduced to 85 per cent from 100 per cent and hence MIBL has ceased to be a wholly-owned subsidiary of the Company.

Mahindra Rural Housing Finance Limited

Mahindra Rural Housing Finance Limited (MRHFL) has during the year ended 31st March, 2013, disbursed loans aggregating Rs. 432.9 Crores (previous year Rs. 266.8 Crores), covering over 61,000 families. The profit after tax for the year ended 31st March, 2013 is Rs. 20.3 Crores (previous year Rs. 11.9 Crores). The outstanding loan portfolio as at 31st March, 2013 stood at Rs. 879.5 Crores.

The housing loans sanctioned during the year ended 31st March, 2013 were to the extent of Rs. 541.0 Crores as against Rs. 292.2 Crores sanctioned during the previous year. The cumulative loan sanctions of MRHFL as at the end of financial year 2012-13 were Rs. 1,253.3 Crores as compared to Rs. 718.4 Crores in the previous year. The cumulative loan disbursement at the end of the year stood at Rs. 1,040.5 Crores as compared to Rs. 607.4 Crores in the previous year.

MRHFL has been expanding its geographical presence, especially to provide affordable services for rural households. During the year under review, operations were strengthened in the states of Maharashtra, Gujarat, Rajasthan, Tamilnadu, Andhra Pradesh, Kerala, Karnataka, Madhya Pradesh and Bihar.

Mahindra Business & Consulting Services

Private Limited

Mahindra Business & Consulting Services Private Limited (MBCSPL) provides staffing services mainly for your Company and its subsidiaries viz. MIBL and MRHFL and the ultimate parent company, viz. Mahindra & Mahindra Limited. As at 31st March, 2013, MBCSPL had on rolls 8,098 employees who were deputed to these companies to provide services under ongoing contracts. MBCSPL earns its income in the form of fees towards staffing services. MBCSPL registered a Profit after Tax of Rs. 173.79 Lacs for the year ended 31st March, 2013 as compared to Rs. 7.06 Lacs in the previous year.

The Statement pursuant to section 212 of the Companies Act, 1956, containing details of the Company''s subsidiaries is attached. In accordance with the General Circular No. 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached to the Balance Sheet of the Company.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information, upon receipt of request from any Member of the Company interested in obtaining the same. However, as directed by the Central Government, the financial data of the subsidiaries have been separately furnished, forming part of the Annual Report. Further, the Annual Accounts of the subsidiaries would also be available for inspection at the Head Office of the Company and at the Office of the respective subsidiary companies, during working hours up to the date of the Annual General Meeting. The Company shall also put the details of accounts of individual subsidiary companies on its website www.mahindrafinance.com.

JOINT VENTURE

Mahindra Finance USA LLC.

Mahindra Finance USA LLC is a joint venture company incorporated in Delaware, U.S.A, for the purpose of providing wholesale inventory financing to US based dealers, financing dealer purchases of Mahindra products and providing retail financing to end- user customers to finance their lease or purchase of Mahindra products or used products from dealers, in U.S.A. The Company has a 49 per cent shareholding along with De Lage Landen Financial Services Inc., a wholly-owned subsidiary of the Rabobank Group, which holds the balance 51 per cent shareholding in the joint venture company.

The joint venture company''s disbursement registered a growth of 67.63 per cent as compared to the previous year. Income grew by 144.66 per cent to USD 104.42 Lacs for the year ended 31st March, 2013 as compared to USD 42.68 Lacs for the previous year. Profit Before Tax was 205.99 per cent higher at USD 26.04 Lacs as compared to USD 8.51 Lacs for the previous year. Profit After Tax grew at a healthy rate of 212.69 per cent to USD 16.26 Lacs as compared to USD 5.20 Lacs in the previous year.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company and its three subsidiaries viz. MIBL, MRHFL and MBCSPL, prepared in accordance with Accounting Standard AS21 prescribed by The Institute of Chartered Accountants of India, form part of this Annual Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies and its joint venture viz. Mahindra Finance USA LLC.

AUDITORS

Messrs. B. K. Khare & Co., Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment. The shareholders would be required to elect Auditors for the current year and fix their remuneration.

As required under the provisions of section 224(1B) of the Companies Act, 1956, the Company has obtained a written certificate from Messrs. B. K. Khare & Co., Chartered Accountants, to the effect that their re- appointment, if made, would be in conformity with the limits specified in the said section.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

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

PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956 AND THE RULES MADE THEREUNDER

The Company had eight employees who were in receipt of remuneration of not less than Rs. 60,00,000 during the year ended 31st March, 2013 or not less than Rs. 5,00,000 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 and Accounts are being sent to all the Shareholders of the Company excluding the Statement of particulars of employees. Any Shareholder interested in obtaining a copy of the Statement may write to the Company Secretary of the Company.

For and on behalf of the Board

Bharat Doshi

Chairman

Mumbai, 23rd April, 2013


Mar 31, 2012

To The members of Mahindra & Mahindra Financial Services Limited

The Directors are pleased to present their Twenty-second Report together with the audited accounts of your Company for the Financial Year ended 31st March, 2012. The summarised financial results of the Company are given below:

(Rs. in Crores)

March 2012 March 2011

Total Income 2,794.6 1,977.5

Less : Finance Costs 1,120.3 660.2

Expenditure 729.5 599.1

Depreciation/Amortisation 19.6 15.8

Total Expenses 1,869.4 1,275.1

Profit Before Tax 925.2 702.4 Less : Provision For Tax

Current Tax 289.6 249.1

Deferred Tax 15.5 (9.8)

Profit After Tax for the Year 620.1 463.1

Add : Amount brought forward from Previous Years 713.6 510.7

Amount available for Appropriation 1,333.7 973.8 Appropriations :

General Reserve 62.0 46.3

Statutory Reserve 124.0 92.6

Proposed dividend on Equity Shares 145.6 104.0

Income-tax on proposed dividend 22.6 17.3

Excess provision for Corporate Dividend Tax on Equity Shares (0.4) - of earlier year

Surplus carried to Balance Sheet 979.9 713.6

1,333.7 973.8

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.14 per Equity Share of the face value of Rs. 10 each, payable to those Members whose names appear in the Register of Members as on the Book Closure date. The dividend including dividend tax will absorb a sum of Rs. 168.2 Crores (as against Rs. 121.3 Crores on account of dividend of Rs. 10 per Equity Share, paid for the previous year).

OPERATIONS

The overall disbursement registered a growth of 35.3 per cent at Rs. 19,504.3 Crores as compared to Rs. 14,419.9 Crores in the previous year. Your Company during the year under review, continued to provide a wide range of financial products and services to its customers through diversification of its product portfolio within its vehicle financing business as well as through the introduction and growth of other financial

products and maintained its market leadership position in rural and semi-urban markets. Your Company has increased its presence in financing of commercial vehicle, construction equipment, as well as, pre-owned vehicle while maintaining aggressive growth in car financing, retaining its leadership position in financing Mahindra range of vehicles and tractors in addition to extending its lending to vehicles of other Original Equipment Manufacturers (OEMs).

Your Company has one of the largest network of branches amongst Non-Banking Financial Companies operating in rural and semi-urban areas. Your Company's nationwide network of branches and locally recruited employees have facilitated in developing and strengthening relationship with its customers.

During the year under review, your Company continued to explore the opportunities in the Micro Small and Medium Enterprises (MSME) segment as well as in the emerging Gold Loan industry in India.

Income grew by 41.3 per cent to Rs. 2,794.6 Crores for the year ended 31st March, 2012 as compared to Rs. 1,977.5 Crores for the previous year. Profit Before Tax was 31.7 per cent higher at Rs. 925.2 Crores as compared to Rs. 702.4 Crores for the previous year. Profit After Tax grew at a healthy rate of 33.9 per cent to Rs. 620.1 Crores as compared to Rs. 463.1 Crores in the previous year.

Your Company has achieved a very important milestone of cumulatively financing over two million customers since its inception. The number of contracts entered into by the Company during the year was 4,66,416 as against 3,67,774 in the previous year.

During the year under review, the Assets Under Management have crossed Rs. 20,000 Crores and stood at Rs. 20,643.0 Crores as at 31st March, 2012.

DISTRIBUTION OF MUTUAL FUND PRODUCTS

During the year under review, the activity of distribution of Mutual Fund Products (MFP) was carried out across 31 branches covering 14 States.

The amount of MFP outstanding through the Company's Advisory Services, aggregate of institutional and retail segment crossed an amount of Rs.875 Crores and the number of clients stood at 41,074.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed discussion on the Company's operations is presented in the chapter on Management Discussion and Analysis, which forms part of this Annual Report.

ECONOMY

The global economy witnessed significant volatility during the year. While growth and employment in the US economy appeared to be improving, the crisis in the Euro Zone threatened to plunge the entire financial world into turmoil. European Central Bank's intervention has seemingly defused the situation but it is expected that other steps need to be taken for the threat of a crisis to recede. The deleveraging of the European Banks is expected to affect capital flows to emerging markets and the resultant liquidity crunch might drive up the interest rates.

Faced with global uncertainty, cyclical and structural factors, India's growth slowed down to less than 7 per cent for the Financial Year 2011-12. While the services continued to grow at a rapid pace (8.7 per cent growth), there was a sharp slowdown in industrial growth to 2.8 per cent. During the year, inflation continued to be a key concern for the Reserve Bank of India (RBI) and the various steps taken by it in the first half helped in reducing the inflation rate to 6.9 per cent by March 2012. However, this led to a steep rise in the interest costs and the weighted average lending rates of the five major public sector banks increased from 11 per cent in March 2011 to 12.8 per cent by March 2012. The slowdown in growth coupled with high interest rates has led to a decline in investment rates.

Liquidity conditions were tight throughout the year and the situation aggravated post November 2011 when the liquidity deficit exceeded 1 per cent of net demand and time liabilities (NDTL) of banks. To ease the situation, RBI conducted significant Open Market Operations (OMOs) and cut the Cash Reserve Ratio (CRR) by 125 basis points leading to an improvement in the liquidity situation. It is expected that the scenario of tight liquidity and high interest rates will continue in the Financial Year 2012-13.

Amidst the overall slowdown in the economy, the semi-urban and rural markets, the focus areas of the Company, continued to witness rapid growth. The combination of increased disposable incomes along with favourable demographics led to a robust demand for various products and services in these markets. Consequently, vehicle demand in rural areas grew at a faster pace, an area which is core to the Company's operations. With broad-basing of economic activities in the rural areas and the governmental thrust on rural infrastructure, it is expected that rural India will continue to grow rapidly in the next year.

FINANCE

During the year under review, RBI continued its stance against inflation and adopted a calibrated approach by hiking the Repo Rate five times totalling to 175 basis points to contain the inflationary pressure, which resulted in medium/long term interest rates moving up approximately by 150 basis points. Liquidity conditions remained in a deficit mode throughout the year resulting in the increase of short term money market rate by 200 basis points. In order to mitigate the liquidity tightness, RBI conducted OMOs and reduced CRR by 125 basis points during the last quarter of the year. However, your Company was able to reduce the impact of increase in the interest rates by ensuring that prudent Asset Liability Management Guidelines are adhered to.

In its Monetary Policy for the Financial Year 2011-12, RBI discontinued the priority sector status for bank loans to Non-Banking Financial Companies (NBFCs), thereby placing additional pressure on NBFCs in raising funds.

During the year under review, your Company continued with its diverse methods of sourcing funds in addition to regular borrowings like Secured and Unsecured Debentures, Term Loans, Commercial Paper, etc., and maintained prudential Asset/Liability match through out the year. Your Company sourced long term loans from banks at attractive rates. Your Company also issued Subordinated Debt amounting to Rs. 100.5 Crores and successfully assigned receivables to the tune of Rs. 1,487.4 Crores.

During the year, your Company actively participated in a number of investor meets both in India and abroad organised by reputed Global and Domestic Broking Houses. Your Company also periodically conducted analysts' meets and conference calls to communicate details of performance, important developments and exchange of information.

SHARE CAPITAL

The shareholders have by a Special Resolution passed by means of a Postal Ballot Voting process on 1st March, 2012, approved the issue of Redeemable Non- Convertible Preference Shares of an aggregate nominal amount not exceeding Rs. 50 Crores, in the course of domestic offering.

CAPITAL ADEQUACY

As on 31st March, 2012, the Capital to Risk Assets Ratio (CRAR) of your Company was 18.0 per cent as against the minimum requirement of 15.0 per cent prescribed by RBI.

STOCK OPTIONS

During the year under review, on the recommendation of the Remuneration/Compensation Committee of your Company, the Trustees of the Mahindra & Mahindra Financial Services Limited Employees' Stock Option Trust have granted 42,426 Stock Options to Eligible Employees under the 'Mahindra & Mahindra Financial Services Limited Employees' Stock Option Scheme-2010' No new Options have been granted under the 'Mahindra & Mahindra Financial Services Limited Employees' Stock Option Scheme-2005'

Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure I to this Report.

RBI GUIDELINES

The Company has complied with all the applicable regulations of the Reserve Bank of India (RBI). As a prudent practice, your Company makes accelerated provisioning for Non-Performing Assets (NPAs) than that required by RBI for NBFCs.

Standard Assets' Provisioning

Pursuant to the Notification No. DNBS.222/CGM (US)- 2011 dated 17th January, 2011 issued by the RBI for making a general provision at 0.25 per cent on the outstanding standard assets of NBFCs, your Company has made a provision of Rs.43.5 Crores as at 31st March, 2012, towards the same.

CREDIT RATING

During the year under review, CRISIL Limited [CRISIL], has reaffirmed the rating to the Company's Long-term Debt Instruments and Bank Facilities as 'CRISIL AA / Stable' and the Company's Fixed Deposit Programme as 'FAAA/Stable', respectively. The 'AA /Stable' rating indicates a high degree of safety with regard to timely payment of financial obligations. The rating on the Company's Short-term Debt and Bank Loans has been re-affirmed at 'CRISIL A1 ' (earlier P1 ) which is the highest level of rating. CRISIL has, pursuant to Circular No. CIR/MIRSD/4/2011 dated 15th June, 2011 issued by the Securities and Exchange Board of India (SEBI) on 'Standardisation of Rating Symbols and Definitions' revised its rating symbols and definitions with effect from 11th July, 2011.

During the year under review, Fitch Ratings India Private Limited has, after due consideration, upgraded the Company's National Long-term Rating instrument and Lower Tier II Subordinated Debt programme to 'Fitch AA (ind)'/Stable from 'Fitch AA(ind)'/Positive. The 'AA(ind)' national ratings denote a very strong credit risk relative to other issuers or issues in the country. The credit risk inherent in these financial commitments differs only slightly from the country's highest rated issuers or issues. Within a band of rating symbols from 'AA(ind)' to 'B(ind)', the signs " " or "-" may be appended to a rating to denote relative status within the rating category.

Brickworks Ratings India Private Limited has, during the year, re-affirmed the "BWR AA " rating with Positive outlook to the Company's Long-term Subordinated Debt Issue. 'BWR AA ' stands for an instrument that is considered to offer high credit quality/safety in terms of timely servicing of principal and interest obligations.

FIXED DEPOSITS AND LOANS/ADVANCES

As on 31st March, 2012, your Company has mobilised funds from Fixed Deposits to the tune of Rs.1,670 Crores, with an investor base of over 85,000 investors.

Your Company has initiated various measures towards improvement of service levels to the Fixed Deposit holders. As a customer-centric process, the Company has initiated the process of online repayment directly to the customer's account on maturity of the Fixed Deposit. In cases where electronic transfer facility is not available, the repayment is made through a post-dated cheque before the maturity date to the depositors.

As at 31st March, 2012, 708 deposits amounting to Rs.3.3 Crores had matured for payment and remained unclaimed. The unclaimed deposits have since reduced to 351 deposits amounting to Rs. 1.7 Crores.

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.

SUSTABILITY INITIATIVES

Your Company has taken a lead role in Financial Services Sector in India to protect and sustain the rural livelihoods through a sustainable business model. The model aims at transforming rural lives and driving positive change in the community. From the Financial Year 2008-09 onwards, your Company has taken steady but impactful steps towards sustainability by charting out a roadmap of five years on Triple bottom line for balanced approach towards economic activity, environmental responses and social progress. In the Financial Year 2009-10, your Company released the Finance Sector supplement stipulated by Global Reporting Initiative (GRI) giving an overview of Product Portfolio and initiatives of Financial Literacy for customers. Your Company's Sustainability Report continues to attain A rating from GRI.

During the year, your Company enhanced the scope of Sustainability Reporting to its two subsidiaries, viz. Mahindra Insurance Brokers Limited and Mahindra Rural Housing Finance Limited. The Company has started with initiatives like Online Drona (Induction) Program as well as Online Appraisal aimed at reducing the consumption of paper. Your Company is glad to inform that it was able to reduce 95 per cent of paper consumed in these two processes. Your Company also gave an option to the shareholders to avail of a copy of the Annual Report in electronic form instead of a physical copy. Your Company continued installation of Solar Hybrid Photovoltaic Power System at various branches, which operates on Solar Power during day time. Around twenty-five branches have been installed with Solar panels. Enquiry Management and Loan Application Process (EMLAP) and Handheld Devices have led to complete automation of the field related activities, which not only helped to achieve reduction in the Green House Gas emissions but also resulted into reduced paper consumption and improved the quality of service. Around 700 desktops have been replaced with Thin Client for power efficiency in branches resulting in saving of around 125 watts of electricity per hour.

Your Company continued with its focus on enhancing the concept of sustainability in the minds of its employees, vendors, suppliers and customers and has taken various initiatives for conservation of water and energy as well as reduction of noise pollution.

CORPORATESOCIAL RESPONSIBILITY INTIATIVES

As a socially responsible citizen, the Mahindra Group continues to contribute to the economic well being of the communities it interacts with and enhance their social well being. The Mahindra Group has incessantly been engaged in activities, which add value to the community around it.

Your Company has always been committed to the fact that, since corporations are vital organs of the society, corporate interests must address societal concerns for the sustainable development of the society and towards this end your Company has played an active role in discharging its social responsibilities. During the year under review, your Company continued to involve itself in social welfare activities by contributing to recognised Charitable Institutions, which specifically benefit the economically weaker and socially disadvantaged sections of the society. Your Company has sponsored 376 Nanhi Kalis, the flagship programme of the K.C. Mahindra Education Trust, which supports the education of the disadvantaged girl child.

Your Company organised a nationwide Blood Donation Drive to re-affirm its pledge to the society and collected 1,000 bottles of blood. During the year under review, your Company also donated funds for purchase of ambulance to numerous Charitable Institutions.

During the year under review, your Company contributed Rs.460.73 Lacs towards CSR to various Non- Governmental Organisations for charitable purposes.

ACHIEVEMENTS

During the year under review, your Company was awarded the NASSCOM IT User Awards 2012, the National Awards for IT Excellence, the Edge VD (Virtual Desktop) Award 2011, the Edge BI (Business Intelligence) Award 2011, SKOCH Digital Inclusion Award 2011, InfoSecurity Top 100 CISO Award 2011 and IT Next 100 (Future CIO) Award.

Your Company has won the Asia's Best Employer Brand Awards 2011 as well as the Award for Best Corporate Social Responsibility (CSR) Practices. The Company was also bestowed with the Indian Development Foundation CSR Award for its excellent contribution and support towards blanket mobilisation drive for leprosy patients in October, 2011. Your Company was ranked 4th in the Financial Services Sector by the Great Places to Work Institute.

DIRECTORS

Mr. Uday Y. Phadke resigned as the Vice-Chairman of the Company with effect from 24th October, 2011. Mr. Phadke continues to be a Non-Executive Director of the Company.

Mr. Uday Y. Phadke, Non-Executive Director and Mr. M. G. Bhide, Independent Director, retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

A report on Corporate Governance along with a certificate from the Auditors of the Company regarding the compliance with conditions of Corporate Governance as also the Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreement are annexed to this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors, based on the representation received from the Operating Management, and after due enquiry, confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed;

ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 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

Mahindra Insurance Brokers Limited

The year under review represents the eighth year of insurance broking operations of your Company's

wholly-owned subsidiary Mahindra Insurance Brokers Ltd. (MIBL). During the year under review MIBL's Direct Broking license was renewed by the Insurance Regulatory and Development Authority (IRDA) with effect from 18th May, 2010 for a period of three years. The category of broker licence was subsequently upgraded from Direct to a Composite Broking licence, enabling MIBL to undertake Reinsurance broking business in addition to its existing Direct insurance broking for Life and Non-Life products.

During the year, MIBL crossed the 7,00,000 mark in terms of policies serviced, with a total of 7,03,730 policies for both Life and Non-Life Retail business lines. The customised Life Insurance covers "Mahindra Loan Suraksha" and "Sampoorna Suraksha" continued to receive an encouraging response and grew by 33 per cent from 2,73,138 lives covered with a Sum Assured of Rs.6,193.7 Crores in the Financial Year 2010-11 to 3,63,691 lives covered with a Sum Assured of Rs. 8,255.0 Crores in the Financial Year 2011-12, with a substantial portion being covered in the rural markets.

During the year, MIBL achieved a growth of 43.1 per cent in Net Premium generated for the Corporate and Retail business lines increasing from Rs.289.2 Crores (Gross Premium Rs. 318.6 Crores) in the Financial Year 2010-11 to Rs. 413.8 Crores (Gross Premium Rs.456.2 Crores) in the Financial Year 2011-12, crossing a milestone of Rs.400 Crores Gross Premium.

The Income decreased by 10.0 per cent from Rs.51.8 Crores in the Financial Year 2010-11 to Rs.46.6 Crores in the Financial Year 2011-12. The Profit Before Tax decreased by 38.9 per cent from Rs.32.9 Crores to Rs.20.1 Crores, and the Profit After Tax decreased by 38.0 per cent from Rs.21.8 Crores to Rs.13.5 Crores during the same period.

The decrease in Income and consequent decline in profits was due to the impact of the clarificatory Circular issued by the IRDA on Group Insurance Guidelines. The Guidelines became effective from 1st April 2011. MIBL has re-engineered its processes in line with the clarified Guidelines and has recommenced business income on the affected Group Insurance business, in December 2011.

Mahindra Rural Housing Finance Limited

Mahindra Rural Housing Finance Limited (MRHFL) has during the year ended 31st March, 2012, disbursed loans aggregating Rs. 266.75 Crores (previous year Rs. 203.63 Crores). The Profit After Tax for the year ended 31st March, 2012 was Rs. 11.91 Crores (previous year Rs. 8.86 Crores). The outstanding loan portfolio as on 31st March, 2012 stood at Rs. 535.23 Crores.

MRHFL continued its focus on serving customers in rural India. More than 90 percent of the loans disbursed were to customers in villages having an average annual household income of less than Rupees Two Lacs. During the year under review, over 32,000 households were given home loans. As against this, since inception, MRHFL had given loans to approximately 30,000 households till 31st March, 2011.

The housing loans sanctioned during the year ended 31st March, 2012 were Rs. 292.16 Crores as against Rs. 263.05 Crores sanctioned during the previous year. The cumulative loans sanctioned by MRHFL as at the end of the Financial Year 2011-12 was Rs. 718.44 Crores as compared to Rs. 426.28 Crores in the previous year. The cumulative loan disbursement at the end of the year stood at Rs. 607.36 Crores as compared to Rs. 340.61 Crores in the previous year.

MRHFL has been expanding its geographical presence, by leveraging the infrastructure of your Company, and currently operates in the states of Maharashtra, Gujarat, Rajasthan, Tamilnadu, Andhra Pradesh, Kerala, Karnataka and Madhya Pradesh.

Mahindra Business & Consulting Services Private Limited

Mahindra Business & Consulting Services Private Limited (MBCSPL) provides staffing services mainly for your Company and its subsidiaries viz. MIBL and MRHFL and the ultimate parent company, viz. Mahindra & Mahindra Limited. As at 31st March, 2012 MBCSPL had on its rolls 6,096 employees who were deputed to these companies to provide services under ongoing contracts.

MBCSPL earns its income in the form of fees towards staffing services. MBCSPL registered a Profit After Tax of Rs. 7.06 Lacs for the year ended 31st March, 2012 as compared to Rs. 54.43 Lacs in the previous year.

The Statement pursuant to section 212 of the Companies Act, 1956, containing details of the Company's subsidiaries is attached.

In accordance with the General Circular No. 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached to the Balance Sheet of the Company.

The Company Secretary will make available the Annual Accounts of the subsidiary companies and the related detailed information, upon receipt of request from any Member of the Company interested in obtaining the same. However, as directed by the Central Government, the financial data of the subsidiaries have been separately furnished forming part of the Annual Report. These documents will also be available for inspection at the Head Office of the Company and at the Office of the respective subsidiary companies, during working hours up to the date of the Annual General Meeting. The Company shall also put the details of accounts of individual subsidiary companies on its website www.mahindrafinance.com.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company and its three subsidiaries viz. MIBL, MRHFL and MBCSPL, prepared in accordance with Accounting Standard 21 prescribed by The Institute of Chartered Accountants of India, form part of this Annual Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies and its joint venture viz. Mahindra Finance USA LLC.

AUDITORS

Messrs. B. K. Khare & Co., Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment. The shareholders would be required to elect Auditors for the current year and fix their remuneration.

As required under the provisions of section 224(1B) of the Companies Act, 1956, the Company has obtained a written certificate from Messrs. B. K. Khare & Co., Chartered Accountants, to the effect that their re- appointment, if made, would be in conformity with the limits specified in the said section.

CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

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

PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT,1956 AND THE RULES MADE THEREUNDER

The Company had three employees who were in receipt of remuneration of not less than Rs. 60,00,000 during the year ended 31st March, 2012 or not less than Rs. 5,00,000 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 and Accounts are being sent to all the Shareholders of the Company excluding the Statement of particulars of employees. Any Shareholder interested in obtaining a copy of the Statement may write to the Company Secretary of the Company.

For and on behalf of the Board

Bharat Doshi Chairman

Mumbai, 23rd April, 2012


Mar 31, 2000

The Directors have pleasure in presenting their Tenth Report together with the audited accounts of your Company for the year ended March 31, 2000.

Summarised Financial Results Rs. in lakhs

2000 1999

Income from Operations 11,857.48 9,530.32

Less: Finance Costs 5,875.17 4,367.15

Expenditure 2,605.67 1,992.24

Depreciation 2,031.07 2,100.93

10,511.91 8,460.32

Profit before tax 1,345.57 1,070.00

Less: Provision for tax 804.25 617.20

Profit after tax 541.32 452.80

Less : Short provision for income-tax - earlier years (0.12) -

541.20 452.80



Add : Amount brought forward from previous year 271.15 280.33

Amount available for appropriation 812.35 733.13

Appropriations:

General Reserve - 25.00

Special Reserve 108.27 90.60

Dividend on 11.25% Preference Shares redeemed on 9th October, 1998 - 53.36

Income Tax on Preference Dividend - 5.33

Dividend on Equity Shares (interim) 216.69 -

Income Tax on Dividend (interim) 23.84 -

Proposed Dividend on Equity Shares (final) 43.34 259.18

Income Tax on Proposed Dividend (final) 9.53 28.51

Surplus carried to Balance Sheet 410.68 271.15

812.35 733.13

Interim Dividend

An interim dividend @ 5% on equity shares of Rs.10 each has been declared and paid as follows to those members whose names appeared on the Register of Members as on March 31, 2000, being the record date fixed for the purpose:

Rs. in lakhs

(a) A dividend of Re. 0.50 per share on 3,19,03,231 equity shares of Rs. 10 each 159.52

(b) A pro-rata dividend of Re. 0.289 per share on 46,18,508 equity shares of Rs. 10 each allotted on 02.09.99 13.37

(c) A pro-rata dividend of Re. 0.251 per share on 46,04,144 equity shares of Rs. 10 each allotted on 30.09.99 11.57

(d) A pro-rata dividend of Re. 0.165 per share on 1,94,97,420 equity shares of Rs. 10 each allotted on 02.12.99 32.23

Total 216.69

Final dividend

Your Directors have recommended a final dividend of 1 % per equity share of Rs. 10 each payable as follows to those members whose name appear on the Register of Members as on July 17, 2000:

Rs. in lakhs

(a) A dividend of Re. 0.10 per share on 3,19,03,231 equity shares of Rs. 10 each .. 31.90

(b) A pro-rata dividend of Re. 0.058 per share on 46,18,508 equity shares of Rs. 10 each allotted on 02.09.99 2.68

(c) A pro-rata dividend of Re. 0.0502 per share on 46,04,144 equity shares of Rs. 10 each allotted on 30.09.99 2.31

(d) A pro-rata dividend of Re. 0.03306 per share on 1,94,97,420 equity shares of Rs. 10 each allotted on 02.12.99 6.45

Total 43.34

The total Dividend paid/payable by the Company will absorb a sum of Rs.293.40 lakhs including Rs.33.37 lakhs as tax on distributed profits, as against an amount of Rs.346.38 lakhs for the previous year.

Rights Issue and Capital Adequacy

In order to strengthen its capital base, your Company had made Rights Issues amounting to Rs.63.18 crore in a phased manner during the year under review.

Consequent upon the rights issues, the share capital of the Company has increased to Rs.60.62 crore from Rs.31.90 crore and the share premium, to Rs.65.37 crore from Rs.30.91 crore.

As a result of the increased net worth, the Company was able to maintain the Capital to Risk Assets Ratio (CRAR) of 20% as on March 31, 2000 against the required CRAR of 12%. Your Company is thus well placed against any increase that the Reserve Bank of India may prescribe in the Capital Adequacy Ratio following the recommendations of the task force appointed by the Government to review the regulatory frame work for Non Banking Finance Companies.

Holding of Mahindra & Mahindra Limited

Pursuant to the allotments of equity shares under the rights issues during the year, the holding of Mahindra & Mahindra Limited in the share capital of the Company increased from 93.11 % to 95.99% as of March 31, 2000.

Operations

During the financial year 1999-2000, whilst the Automobile industry recorded a moderate growth over the previous year, the Utility Vehicle segment, which your Company mainly caters to, has not shown any significant improvement.

Your Company disbursed Rs.757 crore compared to Rs.505 crore disbursed during the previous financial year [including Rs.211 crore (previous year: Rs.117 crore) towards Tractor Financing to the dealers of Mahindra & Mahindra Limited], registering a growth of over 50%. This was possible mainly due to the Companys strategy of consolidating its position in rural and semi urban markets. Your Company has extended retail finance to automotive sales of Mahindra products and has a client base of over 50,000.

The Company also commenced retail tractor financing operations during the current financial year in Rajasthan, Madhya Pradesh and Gujarat.

The income of the Company during the year was Rs. 118.57 crore registering a growth of 24.42% over the previous year. The profit before tax has increased to Rs.13.46 crore from Rs.10.70 crore, a growth of 25.75%. The profit after tax at Rs.5.41 crore is 19.52% higher than the previous years profit of Rs.4.53 crore.

During the year, the Company has added 34 branches, taking the total number of branches to 115 as of March 31, 2000.

Your Directors are pleased to report that the strategic initiatives embarked upon have resulted in another year of impressive growth, both in business and profits.

RBI Inspection

During the current financial year, the Reserve Bank of India had carried out regular onsite inspection of the various records and the systems/procedures followed by the Company and no adverse comments have been received on conclusion of the inspection.

Credit Rating

During the year under review, the Credit Rating Services of India Limited (CRISIL) has, on two occasions, upgraded the Credit Rating assigned to the Companys Fixed Deposit Scheme from "FAA-" to "FAA" and thereafter, to "FAA+". The revised rating indicates that the degree of safety regarding timely payment of interest and principal is strong. Your Company is one of the few companies amongst NBFC companies whose credit rating by CRISIL has been upgraded twice in a year.

CRISIL has also rated the Companys short-term Non Convertible Debentures with "P1+" rating. A" P1+" rating indicates that the degree of safety regarding timely payment on the instrument is very strong. The Companys Long Term Non Convertible Debentures issue of Rs.50 crore was rated "Ind AA+" by Duff & Phelps Credit Rating India Private Limited. The rating of "Ind AA+" indicates high credit quality.

Finance

During the year under review, the Company had adopted pro- active financial management policies, which helped it reduce the weighted average cost of its borrowings by 2.6% through a variety of measures such as raising finance through innovative instruments, re-arranging the mix of borrowings, correction of the Asset/Liability mis-match.

The strong financials and enhanced credit rating has made it possible for the Company to arrange adequate external resources in keeping with its growth objective, whilst at the same time, reducing the reliance on borrowings from the parent Company.

Current Year

The new Fiscal Year 2000-2001 has commenced with a cut in the bank rate as well as Cash Reserve Ratio by 1 % in two stages. These measures should benefit the Company in terms of fund availability and associated borrowing costs.

Your Company anticipates a reasonable growth in business, and will continue to provide finance primarily for Mahindra range of vehicles and tractors, with an emphasis on retail sales, particularly in rural and semi urban markets.

Year 2000 (Y2K) Compliance

Due to adequate precautions undertaken by the Company and thorough testing of its various computer hardware systems and application software, your Company had smooth transition into the new millennium.

Corporate Governance

Your Company believes that Corporate Governance is a voluntary code of self-discipline. In line with its policy of self-discipline, the Board of Directors strongly believes that it is very important that the Company should follow healthy Corporate Governance practices and report to the shareholders the progress of various measures undertaken. Although your Company is unlisted, your Directors feel it prudent to initiate reporting on Corporate Governance measures adopted by your Company. The initiatives undertaken by your Company towards better Corporate Governance are summarized below:

Board of Directors

The Company presently has nine Directors against the maximum of twelve Directors permitted by its Articles of Association. All the Directors posses in-depth knowledge of Automotive/Tractor Markets and matters related to financial services business.

Board Meetings

Five Board Meetings were held during the year, at which the Performance Reports, business development plans, Statutory Compliance Certificates and general industry scenario were reviewed and discussed. The Board meetings were well attended. The Senior Executives of the Company are present at meetings of the Board.

Audit Committee

The Board has constituted an Audit Committee on 17th February, 2000 whose terms of reference includes a review of the Companys accounting practices and financial reporting systems, interaction with the Companys Internal and Statutory Auditor, selection of accounting policies and review of the Auditors Report on the Financial Statements. The members of the Audit Sub- Committee are Mr. Uday Kotak (Chairman of the Committee), Mr. Dhananjay Mungale and, Mr. U. Y. Phadke.

Board Committees

The Board periodically delegates matters related to borrowings and share issues for speedy implementation of decisions taken at Board meetings.

Additional Initiatives

We are pleased to summarise the initiatives undertaken by your Company during the last financial year:

a) Strategy Formulation:

In view of the fast changing market scenario, your Company had reviewed its strategy with the assistance of a reputed consulting firm to achieve its strategic business objective.

b) Balanced Scorecard:

The Company is in the process of implementing the Balanced Scorecard approach to implement the formulated strategy by developing appropriate measures of performance.

c) HR Assessment Centre:

Your Company recognises that its employees are its most valuable assets. To identify the areas of development of the employees and to facilitate better career planning for them, your Company will, on an ongoing basis, conduct scientific HR Assessments of its key employees.

d) Customer Relationship Management:

Your Company has devised a process for collecting regular feed-back from its clients. Such feed-back is conveyed to the parent company on a regular basis to help it better plan its product development initiatives.

Your Company regularly conducts surveys to assess the satisfaction level in respect of fixed deposit investors. The feedback of such survey is placed before the Management and is also used to effect improvements in the standards of service. The Company plans to conduct such surveys at regular intervals to maintain high standards of service to Depositors/Investors.

Accounting Standards

The financial statements of your Company comply with the Accounting Standards recommended by the Institute of Chartered Accountants of India as referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. The Company also adheres to the prudential guidelines prescribed by the Reserve Bank of India.

As a good practice, the Company gets its accounts audited on quarterly basis by the Statutory Auditors.

Fixed Deposits

As per the revised RBI guidelines, the. Company can accept Public Deposits upto four times its net owned funds, which works out to Rs. 53717.64 lakhs. Against this, your Company held fixed deposits of Rs.3694.88 lakhs as on March 31, 2000. Out of these deposits, 705 deposits aggregating Rs.110.35 lakhs which had matured as at March 31, 2000, had not been claimed as at the end of the financial year Since then, 112 of these deposits of the value of Rs.18.34 lakhs have been claimed.

Directors

Mr. Anand G. Mahindra, Mr. K. J. Davasia and Mr. Uday Kotak retire by rotation and, being eligible, offer themselves for re- appointment.

Auditors

M/s. B. K. Khare & Co., Chartered Accountants, retire as Auditors of the Company and have given their consent for re-appointment. The shareholders will be required to appoint Auditors for the current year and fix their remuneration.

As required under the provisions of Section 224 of the Companies Act, 1956, your Company has obtained a written certificate from M/s. B. K. Khare & Co., Chartered Accountants to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said section.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

In view of the nature of activities which are being carried out by the Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, concerning conservation of energy and technology absorption respectively are not applicable to the Company.

The information on foreign exchange outgo is furnished in the Notes to the accounts. There were no foreign exchange earnings during the year under review.

Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, and Rules thereunder

As required under Section 217(2A) of the Companies Act, 1956 and Rules thereunder, a statement containing particulars of the Companys employees who were in receipt of remuneration of not less than Rs.6,00,000 during the year ended March 31, 2000 or of not less than Rs.50,000 per month during any part of the said year is given in the Annexure to this Report.

For and on behalf of the Board

Anand G. Mahindra Chairman

Mumbai, 28th April, 2000

 
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