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Notes to Accounts of Mahindra & Mahindra Ltd.

Mar 31, 2015

A) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.2/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the board of directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b) Shares issued to ESOS Trust

The Guidance note issued by The Institute of Chartered Accountants of India on accounting for employee share-based payment requires that shares allotted to a Trust but not transferred to the employees be reduced from Share capital and Reserves. Accordingly, the Company has reduced the Share capital by Rs. 92.49 Lacs (March 31, 2014 : Rs. 104.80 Lacs), Securities premium reserve by Rs.64.39 Lacs (March 31, 2014 :

Rs. 86.83 Lacs] in respect of 46,24,289 equity shares of face value of Rs.2/- each (March 31, 2014 : 52,39,841 equity shares of face value of Rs.2/- each) held by the Trust, as at the year end pending allotment of shares to eligible employees.

iii) During the year, the Company has made following equity investments -

a] Rs. 2,190.00 Lacs in Mahindra Rural Housing Finance Ltd., its subsidiary, being the payment towards final call money @ Rs. 12.50 per Equity share (including premium of Rs.7.50 per Equity share) on 1,75,20,003 Equity shares of Rs.10/- each issued on a rights basis in May, 2013 for cash at a premium of Rs.15/- per Equity share, which now stands fully paid up.

b) Rs. 100.00 lacs being the additional investment by subscription to 10,00,000 equity shares of face value of Rs.10/- each issued on a rights basis at par for cash in Mahindra Asset Management Company Private Limited, a wholly owned subsidiary.

c) Rs. 5.00 Lacs as initial investment in 50,000 equity shares of face value of Rs.10/- each in Mahindra Trustee Company Private Limited, a newly formed subsidiary, which was incorporated on July 10, 2013.

d) Rs. 2,998.96 Lacs (US $ 4.92 million) (March 2014 : Rs. 2,193.73 Lacs equivalent to US $3.84 million) being additional equity infusion in Mahindra Finance USA LLC, a 49% joint venture company formed jointly with De Lage Landen Financial Services Inc. in United States.

e) Rs. 0.05 Lacs as investment in 500 equity shares of face value of Rs.10/- each in New Democratic Electoral Trust, a section 8 company formed by Mahindra & Mahindra Limited.

# Term deposits with scheduled banks under lien include:

i) Rs. 24,505.00 Lacs (March 31, 2014 :

Rs. 18,464.00 Lacs) being the Term deposits kept with Banks as Statutory Liquid Assets as required under Section 45 IB of The Reserve Bank of India Act,1934 vide a floating charge created in favour of public deposit holders through a "Trust Deed" with an independent trust, pursuant to circular RBI/2006-07/225 DNBS (PD) C.C.No. 87/03.02.004/2006-07 dated January 04, 2007 issued by The Reserve Bank of India.

ii) Rs. 22,085.00 Lacs (March 31, 2014 :

Rs. 20,196.00 Lacs) being collateral deposits kept with banks as retained exposure under credit enhancements pertaining to securitization transactions (refer note no. 51 (iv)).

iii) Rs. 20.00 Lacs (March 31, 2014 : Rs. 20.00 Lacs) as special deposits kept with banks towards guarantee against legal suits filed by the Company.

iv) Rs. 500.00 Lacs (March 31, 2014 : Rs. 500.00 lacs) as collateral deposits kept with banks towards Constituent Subsidiary General Ledger (CSGL) account for holding securities for SLR purpose.

NOTE 27. Disclosure under the Accounting Standard relating to ''Financial Reporting of Interests in Joint Ventures'' (AS-27]. The Company has interest in the following jointly controlled entity:

ii] Interest in the assets, liabilities, income and expenses with respect to jointly controlled entities:

NOTE 2 EMPLOYEE STOCK OPTION PLAN

a] The Company had allotted 1,34,32,750 equity shares (face value of Rs.2/- each] on December 06, 2005 and 48,45,025 Equity shares (face value of Rs.2/- each] on February 03, 2011, to Mahindra and Mahindra Financial Services Limited Employees'' Stock Option Trust set up by the Company. The Trust holds these shares for the benefit of the employees and issues them to the eligible employees as per the recommendation of the Compensation Committee. The Trust had issued 1,36,53,486 equity shares to employees (March 31, 2014 : 1,30,37,934 equity shares] up to March 31, 2015, of which 6,15,552 equity shares (March 31, 2014 : 5,04,944 equity shares] were issued during the current year.

f] Method used for accounting for share based payment plan

The Company has elected to use intrinsic value method to account for the compensation cost of stock options to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Employee stock compensation cost is amortized over the vesting period.

g) Fair value of options

The fair value of options used to compute proforma net profit and earnings per share in note 28 (h) have been estimated on the date of grant using the black-scholes model. The key assumptions used in black-scholes model for calculating fair value as on the date of grant are:

NOTE 3 LOAN PROVISIONS AND WRITE OFFS

a] The Company has made adequate provision for the Non-performing assets identified, in accordance with the guidelines issued by The Reserve Bank of India. As per the practice consistently followed, the Company has also made additional provision on a prudential basis. The cumulative additional provision made by the Company as on March 31, 2015 is Rs.53,319.01 Lacs (March 31, 2014 : Rs. 35,253.77 Lacs).

b] In accordance with the Notification No. DNBS.222/ CGM (US]-2011 dated January 17, 2011 issued by The Reserve Bank of India (RBI) vide its directions to all NBFC''s to make a general provision of 0.25% on the Standard assets, the Company has made a provision of Rs. 1,057.00 Lacs (March 31,2014 : Rs. 2,110.00 Lacs].

The total amount of provision on Standard assets of Rs.12,682.00 Lacs (March 31, 2014 : Rs. 11,625.00 Lacs] is shown separately as "Contingent provision for Standard assets" under Long-term and Short-term provisions in the balance sheet (refer note no.5 and 9]. The said amount includes additional / accelerated provision of 0.15% for Rs.4,757.00 Lacs as at March 31, 2015 (March 31, 2014 : Rs. 4,370.00 Lacs].

c] Bad debts and write offs includes loss on termination which mainly represents shortfall on settlement of certain contracts due to lower realisation from such hire purchase/leased/loan assets on account of poor financial position of such customers.

d] In accordance with the Prudential norms for restructured advances, the Company has made provisions of Rs. 31.87 Lacs on account of restructured advance which are included under this head.

NOTE 4 Commission and brokerage mainly represents amount incurred in respect of acquisition of customers and mobilisation of public deposits.

NOTE 5 The Company is engaged primarily in the business of financing and accordingly there are no separate reportable segments as per Accounting Standard 17 dealing with Segment Reporting.

NOTE 6 In the opinion of the Board, Current assets, Loans and advances are approximately of the value stated if realised in the ordinary course of business.

NOTE 7 Deposits/advances received against loan agreements are on account of loan against assets, which are repayable / adjusted over the period of the contract.

NOTE 8 DISCLOSURE ON DERIVATIVES

Outstanding derivative instruments and un-hedged foreign currency exposures as on March 31, 2015

The Company has outstanding Foreign Currency Non- Repatriable (FCNR (b)) loans of US $ 872.71 Lacs (March 31, 2014 : US $ 872.71 Lacs). The said loan has been fixed to INR liability using a cross currency swap and floating interest thereon in LIBOR plus rate has been swapped for fixed rate in Indian rupee. There is no un-hedged foreign currency exposure as on March 31, 2015.

NOTE 36 SECURITISATION / ASSIGNMENT TRANSACTIONS

a) During the year, the Company has without recourse securitised on "at par" basis vide PTC route loan receivables of 27907 contracts (March 31, 2014 : 47122 contracts) amounting to Rs. 72,229.92 Lacs (March 31,2014: Rs.1,26,292.70 Lacs) for a consideration of Rs 72,229.92 Lacs (March 31, 2014: Rs. 1,26,292.70 Lacs) and de-recognised the assets from the books.

b) During the year, the Company has without recourse assigned loan receivables of Nil contracts (March 31, 2014: 6490 contracts) amounting to Rs. Nil (March 31,2014 : Rs. 19,850.83 Lacs) for a consideration of Rs. Nil (March 31, 2014 : Rs. 15,554.19 Lacs towards 90% of receivables assigned and de- recognised the assets from the books). Out of the total receivables assigned, an amount of Rs. Nil (March 31, 2014: Rs. 1,985.08 Lacs equivalent to 10% of the receivables) have been recognized as "Retained interest in assignment transactions" representing Minimum Retention Requirement (MRR) as required under revised guidelines on securitization transactions vide RBI Circular dated August 21, 2012 (refer note no. 13 and 18).

The amount of profit in cash of Rs. 120.64 Lacs (March 31,2014: Rs.314.94 Lacs) on assignment transaction has been held under an accounting head "Cash profit on loan transfers under assignment transactions pending recognition" and the same is amortized in line with above referred guidelines (refer note no. 4 and 8).

c) Income from assignment / securitization transactions include write back of provision for loss / expenses in respect of matured assignment transactions amounting to Rs 8,807.91 Lacs (March 31,2014 : Rs. 4,189.65 Lacs) considered no longer necessary (refer Accounting policy 3 (IV) A (iii)).

d) In terms of the accounting policy stated in 3 (IV) (B) (i) (c), securitisation income is recognized as per RBI Guidelines dated 21st August, 2012. Accordingly, interest only strip representing present value of interest spread receivable has been recognized and reflected under loans and advances (refer note no. 13 and 18) and equivalent amount of unrealised gains has been recognised as liabilities (refer note no. 4 and 8).

e) Excess interest spread redeemed during the year by the Special Purpose Vehicle Trust (SPV Trust) has been recognised as income and included in Income from assignment / securitisation transactions amounting to Rs.11,024.71 Lacs (March 31, 2014: Rs. 5,146.47 Lacs)

NOTE 9 There were 119 cases (March 31,2014: 77 cases) of frauds amounting to Rs.353.81 Lacs (March 31, 2014 : Rs 560.32 Lacs) reported during the year. The Company has recovered an amount of Rs. 107.39 Lacs (March 31, 2014 : Rs 46.38 Lacs) and has initiated appropriate legal action against the individuals involved. The claims for the un-recovered losses have been lodged with the insurance companies.

NOTE 10 The gold loans outstanding as a percentage of total assets is at 0.02% (March 31, 2014 : 0.03%).

NOTE 11 During the year, the Company has incurred expenditure of Rs. 2,374.07 Lacs towards CSR activities which includes contribution / donations made to the trusts which are engaged in activities prescribed under section 135 of the Companies Act, 2013 read with Schedule VII to the said Act and expense of Rs.113.56 Lacs towards the CSR activities undertaken by the Company (refer note no. 26).

NOTE 12 The Company has received show cause-cum- demand notice from Service Tax Department to show cause as to why service tax of Rs. 4,631.54 Lacs should not be levied on subvention income and on collection charges on receivables in respect of securitisation transactions for the period from 2007-08 to 2013-14. The Company has given a detailed reply to the department justifying why the transactions would fall outside the purview of service tax. The Company has appointed an expert to consult on the matter, who have opined that the Company has a strong case on merits to defend and the chances of getting an unfavourable outcome are remote.

NOTE 13 SCHEME OF AMALGAMATION

i) Scheme details and balance sheet position:

I n terms of Scheme of Arrangement under section 391 and 394 of the Companies Act, 1956 (the "Scheme") between the Company and Mahindra Business & Consulting Services Private Ltd. ("MBCSPL"), an erstwhile wholly owned subsidiary of the Company and their respective shareholders, all the assets and liabilities, including reserves, of MBCSPL were transferred and vested in the Company effective from April 01, 2014 ("the Appointed date"). The Scheme was approved by the Honourable High Court of judicature at Bombay ("the Court") vide its order dated March 20, 2015. The said Scheme became effective from April 18, 2015 (the "’Effective date") on filing of the certified Court order with Registrar of Companies, Maharashtra.

With effect from the appointed date, the whole of assets, properties, liabilities of MBCSPL including all debts, liabilities, contingent liabilities, duties and obligations of every kind, nature and description relatable to the said business is transferred to and vested in and / or be deemed to be transferred to and vested in the Company.

ii) Consideration:

The Scheme entails the amalgamation of MBCSPL, a wholly owned subsidiary of the Company with its parent MMFSL, with the consequent dissolution without winding up of MBCSPL. Accordingly, the scheme does not envisage any issue of shares or payment of the consideration.

iii) Accounting:

a) The assets and liabilities, including reserves as at April 1, 2014 were incorporated in the financial statements of the Company at their existing carrying amount.

b) 1,00,000 Equity Shares of Rs. 10/- each fully paid up in MBCSPL, held as investment by the Company stands cancelled and the difference, if any, is debited to opening balance of surplus in the Statement of Profit and Loss (refer note no.2).

c) All inter-corporate deposits, loans and advances, outstanding balances or other obligations between MBCSPL and the Company, stand cancelled and there shall be no obligation / outstanding in that behalf.

d) In accordance with the Scheme, MBCSPL continued to carry on the business and activities in relation on account of and in trust for the Company from April 1, 2014 (the "Appointed date") till April 18, 2015 (the "Effective date"). Accounts for the year also comprise of operations of business transacted out of MBCSPL and therefore certain figures may not be exactly comparable with the previous year''s figures.

NOTE 14 RELATED PARTY DISCLOSURE AS PER ACCOUNTING STANDARD 18 A) List of the related parties and nature of relationship which have transactions with our Company during the year:

Holding Company : Mahindra and Mahindra Limited

Subsidiary Companies

Mahindra Insurance Brokers Limited Mahindra Rural Housing Finance Limited Mahindra Business & Consulting Services Private Limited (amalgamated with the Company effective from April 1, 2014) Mahindra Asset Management Company Private Limited Mahindra Trustee Company Private Limited

Joint Ventures : Mahindra Finance USA, LLC

Fellow subsidiary Companies:

2 x 2 Logistics Private Limited Mahindra USA, Inc.

Mahindra Holidays and Resorts India Ltd. NBS International Ltd.

Mahindra First Choice Wheels Ltd. Mahindra First Choice Services Ltd. Mahindra Defence Systems Ltd. Mahindra Retail Pvt. Ltd.

Key Management Personnel : Mr. Ramesh Iyer (Managing Director)

Relatives of Key Management Personnel

Ms. Janaki Iyer Ms. Ramlaxmi Iyer Mr. Risheek Iyer

As at March 31

March 20151 March 2014

NOTE 15 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

i) Contingent liabilities

a) Demand against the Company not acknowledged as debts

- Income tax 4,379.05 7,476.70

- Value Added Tax (VAT) 191.98 60.92

b) Corporate guarantees towards assignment transactions 31,338.63 55,631.29

c) Credit enhancement in terms of corporate guarantee for securitization transactions (refer note no. 51 (iv)) 8,307.81 4,782.00

d) Legal suits filed by customers in consumer forums and civil courts claiming compensation from the Company 3,110.83 2,726.48

47,328.30 70,677.39

NOTE 16 The Company has sent letters to suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006 seeking information for which replies are awaited. In view of this, information required under Schedule III of the Companies Act, 2013 is not given.

NOTE 17 Schedule to the Balance Sheet of a Non-Banking Financial Company as required in terms of Paragraph 13 of Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

III) Derivatives

a) Forward Rate Agreement / Interest Rate Swap

The Company is not carrying out any activity of providing Forward/Interest rate swap cover to third parties

b) Exchange Traded Interest Rate (IR) Derivatives

The Company is not carrying out any activity of providing Derivative cover to third parties

c) Disclosures on Risk Exposure in Derivatives

Qualitative Disclosures

i) The Company undertakes the derivatives transaction to prudently hedge the risk in context of a particular borrowing or to diversify sources of borrowing and to maintain fixed and floating borrowing mix. The Company does not indulge into any derivative trading transactions. The Company reviews, the proposed transaction and outline any considerations associated with the transaction, including identification of the benefits and potential risks (worst case scenarios); an independent analysis of potential savings from the proposed transaction. The Company evaluates all the risks inherent in the transaction viz., counter party risk, Market Risk, Operational Risk, basis risk etc.

ii] Credit risk is controlled by restricting the counterparties that the Company deals with, to those who either have banking relationship with the Company or are internationally renowned or can provide sufficient information. Market/Price risk arising from the fluctuations of interest rates and foreign exchange rates or from other factors shall be closely monitored and controlled. Normally transaction entered for hedging, will run till its life, irrespective of profit or loss. However in case of exceptions it has to be un-winded only with prior approval of M.D/CFO/Treasurer. Liquidity risk is controlled by restricting counterparties to those who have adequate facility, sufficient information, and sizeable trading capacity and capability to enter into transactions in any markets around the world.

iii) The respective functions of trading, confirmation and settlement should be performed by different personnel. The front office and back-office role is well defined and segregated. All the derivatives transactions are quarterly monitored and reviewed by CFO and Treasurer. All the derivative transactions have to be reported to the board of directors at every quarterly board meetings including their financial positions.

IV) Disclosures relating to Securitisation

a] Disclosures in the notes to the accounts in respect of securitisation transactions as required under revised guidelines on securitization transactions issued by RBI vide circular no. DNBS. PD. No. 301/3.10.01/2012-13 dated August 21, 2012.

Applicable for transactions effected after the date of circular:

b) Details of Financial Assets sold to Securitisation / Reconstruction Company for Asset Reconstruction

During the current year and the previous year the Company has not sold any financial assets to Securitisation /Reconstruction Company for asset reconstruction.

d) Details of non-performing financial assets purchased / sold

i] Details of non-performing financial assets purchased:

During the current year and the previous year the Company has not purchased any non -performing financial assets.

ii] Details of Non-performing Financial Assets sold:

During the current year and the previous year the Company has not sold any non -performing financial assets.

V) Exposures

a) Exposure to Real Estate Sector

During the current year and the previous the Company has no Exposure to Real estate sector.

b) Exposure to Capital Market

During the current year and the previous year the Company has no Exposure to Capital Market.

c) Details of financing of parent company products of the total financing activity undertaken by the Company during the financial year 2014-15, 48% (March 31, 2014 : 48%) of the financing was towards parent company products.

d) Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the NBFC during the current year and the previous year, the Company has not exceeded the prudential exposure limits.

e) Unsecured Advances

During the current year, the Company has granted unsecured advances of Rs. 1,42,013.49 Lacs (March 31, 2014: Rs.1,44,294.39 Lacs).

VI) Miscellaneous

a) Registration obtained from other financial sector regulators

During the current year and the previous year, the Company has not obtained any registration from other financial sector regulators.

b) Disclosure of Penalties imposed by RBI and other regulators

During the current year and the previous year, there are no penalties imposed by RBI and other regulators

c) Related Party Transactions (refer note no.42)

d) Rating assigned by credit rating agencies and migration of ratings during the year 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 '' which is the highest level of rating.

During the year under review, India Ratings & Research Private Limited, which is part of Fitch Group, upgraded the rating of Company''s National Long-term instrument and Lower Tier II Subordinated Debt programme to ''IND AAA/Stable'' from ''IND AA /Stable''. The ''IND AAA'' national ratings denote the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

During the year under review, CARE Ratings has assigned the ''CARE AAA'' rating to Company''s Long-term debt instrument and Lower Tier II Subordinated Debt programme. The Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

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". ''BWR AAA'' stands for an instrument that is considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

VII) Net Profit or Loss for the period, prior period items and change in accounting policies

There are no such material items which require disclosures in the notes to Account in terms of the relevant Accounting Standard.

VIII) Revenue Recognition

(Refer note no. 3 under Summary of Significant Accounting Policies).

IX) Accounting Standard 21 - Consolidated

Financial Statements (CFS)

All the subsidiaries of the Company have been consolidated as per Accounting Standard 21. Refer consolidated financial statements (CFS) Additional Disclosures:

Draw Down from Reserves

Refer note no. 24 regarding transitional depreciation of Rs.317.77 Lacs (net of deferred tax of Rs.163.62 Lacs) arising pursuant to requirements of schedule II of the Companies Act 2013 which is charged to opening balance of surplus in Statement of Profit and Loss.

NOTE 18 DISCLOSURE ON RESTRUCTURED STANDARD ADVANCES

During the year, the Company has restructured one of the standard advance accounts resulting in reduction in rate of interest and increase in tenor of the loan.

NOTE 19 Previous year figures have been regrouped / reclassified wherever found necessary.


Mar 31, 2015

1. CORPORATE INFORMATION:

Tech Mahindra Limited (referred to as "TechM" or the "Company") operates mainly into two sectors i.e. Telecom business and Enterprise Solutions business. The telecom business provides consulting-led integrated portfolio services to customers which are Telecom Equipment Manufacturers, Telecom Service Providers and IT Infrastructure Services, Business Process Outsourcing as well as Enterprise Services (BFSI, Retail & Logistics, Manufacturing, E&U, and Healthcare, Life Sciences, etc.) of Information Technology (IT) and IT-enabled services delivered through a network of multiple locations around the globe. The enterprise solutions business provides comprehensive range of IT services, including IT enabled services, application development and maintenance, consulting and enterprise business solutions, extended engineering solutions and infrastructure management services to diversified base of corporate customers in a wide range of industries including insurance, banking and financial services, manufacturing, telecommunications, transportation and engineering services. The Company''s registered office is in Mumbai, India and has over 140 subsidiaries across the globe.

2. Scheme of Amalgamation and Arrangement:

Pursuant to the Scheme of Amalgamation and Arrangement (the "Scheme") sanctioned by the Honourable High Court of Andhra Pradesh vide its order dated June 11, 2013 and the Honourable High Court of Judicature at Bombay vide its order dated September 28, 2012, Venturbay Consultants Private Limited ("Venturbay"), CanvasM Technologies Limited ("CanvasM") and Mahindra Logisoft Business Solutions Limited ("Logisoft"), the wholly owned subsidiaries of the Company, and Satyam Computer Services Limited ("Satyam") an associate of the Company (through Venturbay) and C&S System Technologies Private Limited (C&S) a wholly owned subsidiary of erstwhile Satyam, merged with the Company with effect from April 1, 2011 (the "appointed date"). The Scheme came into effect on June 24, 2013, the day on which both the orders were delivered to the Registrar of the Companies, and pursuant thereto the entire business and all the assets and liabilities, duties and obligations of Satyam, Venturbay, CanvasM, Logisoft and C&S have been transferred to and vested in the Company with effect from April 1, 2011.

In accordance with the Scheme, the investments held in the respective subsidiaries and associate have been cancelled and the Company has issued 2 equity shares of Rs. 10 each fully paid-up in respect of every 17 equity shares of Rs. 2 each in the equity share capital of Satyam, aggregating 103 Million equity shares.

The Company transferred, out of its total holding in Satyam as on April 1, 2011, 204 Million equity shares to a Trust, to hold the shares and any additions or accretions thereto exclusively for the benefit of the Company. The balance shares held by the Company in Satyam have been cancelled.

As the other amalgamating companies i.e. Venturbay, Logisoft, CanvasM and C&S were wholly owned subsidiaries of the Company / Satyam, as applicable, no equity shares were exchanged to effect the amalgamation in respect thereof.

These amalgamations with the Company are non-cash transactions.

2.1 General nature of business of the amalgamating companies:

- Satyam is leading information, communications and technology (ICT) company providing a range of business consulting, information technology and communication services to companies across multiple industries and geographies.

- Venturbay is engaged in providing programming and software solutions, information technology, networking and consultancy services.

- CanvasM is engaged in the business of information technology (IT) and software services relating to developing, improving, designing, assembling, marketing, and allied activities including dealing in all types of computer programming, system software, data processing and warehousing, data base management systems and interactive multimedia and peripheral products.

- Logisoft is engaged in the business of information technology services relating to design and development of dealership management systems and IT software services.

- C&S is engaged in the business of providing information technology (IT) and software services relating to solutions and consultation in the space of learning management, communications and collaborations management, document and workflow management, eSecurity, identity, access and building management, managed services, etc.

The amalgamating companies operating in specialized domains of the information technology as indicated above, amalgamating the business in a single entity provides for consolidating the information technology business bringing in synergy benefits, enhanced depth and breadth of capabilities, attain efficiencies and reduce overall cost.

2.2 Accounting treatment of the amalgamation

The amalgamation is accounted under the ''pooling of interest'' method as per Accounting Standard 14 as notified under Section 211(3C) of the Companies Act, 1956 and as modified under the Scheme as under:

- All assets and liabilities (including contingent liabilities), reserves, benefits under income tax, benefits for and under special economic zone registrations, duties and obligations of Satyam, Venturbay, CanvasM, Logisoft and C&S have been recorded in the books of account of the Company at their existing carrying amounts and in the same form.

- The amount of Share Capital of Venturbay, CanvasM, Logisoft, Satyam and C&S have been adjusted against the corresponding investment balances held by the Company in the amalgamating companies and the equity shares issued by the Company pursuant to the Scheme and the excess of investments (gross) over the Share Capital, as given below, have been adjusted to reserves ("Amalgamation Reserve").

Accordingly, the amalgamation has resulted in transfer of assets and liabilities in accordance with the terms of the Scheme at the following summarised values:

- Further, in accordance with the Scheme, the debit balance in the Amalgamation Reserve as of April 1, 2011, if any, pursuant to the amalgamation have been adjusted against the securities premium account. The application and reduction of the securities premium account is effected as an integral part of the sanctioned Scheme which is also deemed to be the order under Section 102 of the Companies Act, 1956 (the "Act") confirming the reduction. Accordingly, the aforesaid balance in Amalgamation Reserve aggregating Rs. 2,489 Million as of April 1, 2011 has been adjusted against the securities premium account.

The Board of erstwhile Satyam had for the year ended March 31, 2013 proposed a dividend of Rs. 0.60 per equity share amounting to Rs. 826 Million (including dividend tax thereon), which was provided for in its financial statements for the year ended March 31, 2013. Since the merger has become effective on June 24, 2013, the dividend could not be approved by the shareholders in the AGM which was scheduled to be held on August 2, 2013. Erstwhile Satyam shareholders, who have been issued TechM shares in the ratio of 2 shares in TechM for 17 shares in erstwhile Satyam, became entitled to dividend of Rs. 5 per share. As shares of erstwhile Satyam held by Venturbay are cancelled on the merger, there is an excess provision of dividend of Rs. 217 Million, relating to the said shares of Venturbay that have been cancelled, which has been reversed from the proposed dividend.

The Board of Directors in its meeting held on June 25, 2013 had fixed July 5, 2013 as the Record Date for determining the shareholders of erstwhile Satyam who would be entitled to receive shares of the Company in the ratio of 2 equity Shares of Rs. 10/- each fully paid-up in respect of 17 equity shares of Rs. 2/- each fully paid-up of erstwhile Satyam in accordance with approved Scheme of Amalgamation and Arrangement. On July 6, 2013, the Securities Allotment Committee of the Board of Directors of the Company have allotted 103,485,396 equity shares of face value of Rs. 10/- each fully paid-up of the Company to the shareholders of erstwhile Satyam ranking pari-passu in all respects with the existing equity shares of the Company.

2.3 Other adjustments / matters arising out of amalgamation

In terms of the Scheme, the appointed date of the amalgamation being April 1, 2011, net profit from the amalgamating companies during the financial years 2011-12 and 2012-13 aggregating Rs. 19,735 Million has been transferred, to the extent not accounted already, to the Surplus in Statement of Profit and Loss in the books of the Company upon amalgamation.

2.4 Pursuant to the Scheme, the title deeds for the immovable properties pertaining to the amalgamating companies are pending conveyance in the name of the Company. Further, the Company has initiated the name change formalities to transfer the title in respect of the other properties, contracts etc.

2.5 Appeals against the order sanctioning the Scheme

Appeals against the order by the single judge of the Honourable High Court of Andhra Pradesh approving the Scheme of merger have been filed by 37 companies before the Division Bench of the Honourable High Court of Andhra Pradesh. No interim orders have been passed and the appeals are pending hearing.

One of the said company has also appealed against the order of the single judge rejecting the Petition for winding up of erstwhile Satyam. The matter has been combined with the above appeals for hearing.

3. Scheme of Amalgamation and Arrangement of Mahindra Engineering Services Limited (MESL):

Pursuant to the Scheme of Amalgamation and Arrangement (the "Scheme") sanctioned by the Honourable High Court of Bombay vide its order dated October 31, 2014, Mahindra Engineering Services Limited ("MESL"), merged with the Company with effect from April 1, 2013 (the "appointed date"). The Scheme came into effect on December 8, 2014, the day on which the order was delivered to the Registrar of the Companies, and pursuant thereto the entire business and all the assets and liabilities, duties, taxes and obligations of MESL have been transferred to and vested in the Company with effect from April 1, 2013.

In accordance with the Scheme approved by the Honourable High Court of Bombay, the Company has, in December, 2014, issued 5 equity shares of Rs. 10 each fully paid-up in respect of every 12 equity shares of Rs. 10 each outstanding in the equity share capital of MESL, aggregating to 4,259,011 equity shares as purchase consideration to the existing shareholders of MESL.

3.1 General nature of business of the amalgamating company

MESL is engaged in the business of rendering engineering services in relation to designing and developing parts, components, systems and aggregates relating to the automotive sector.

The amalgamating company operating in specialized domain of rendering engineering services as indicated above, amalgamating the business in a single entity provides for bringing in synergy benefits, single ''go- to-market'' strategy, benefits of scale, enhanced depth and breadth of capabilities, standardization and simplification of business processes, attain efficiencies and reduce overall cost.

3.2 Accounting treatment of the amalgamation

The amalgamation is accounted under the ''pooling of interest'' method as per Accounting Standard 14 as specified under the Companies Act, 1956 (which are deemed to be applicable as per Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014) and as modified under the Scheme as under:

- All assets, liabilities and reserves, including the surplus in the statement of Profit and Loss of MESL have been recorded in the books of account of the Company at their respective carrying amounts and in the same form.

- In accordance with the Scheme sanctioned by the Honourable High Court of Bombay, the Company has, on December 20, 2014, issued 5 equity shares of Rs. 10 each fully paid-up in respect of every 12 equity shares of Rs. 10 each outstanding in the equity share capital of MESL, aggregating to 4,259,011 equity shares as purchase consideration to the existing shareholders of MESL ranking pari-passu in all respects with the existing equity shares of the Company.

- The difference between face value of equity shares issued by the Company pursuant to the Scheme and the amount of share capital of the amalgamating company, have been adjusted to Reserves of the transferee company.

- Accordingly, the amalgamation has resulted in transfer of assets and liabilities in accordance with the terms of the Scheme at the following summarized values:

3.3 Other adjustments / matters arising out of amalgamation

In terms of the Scheme, the appointed date of the amalgamation being April 1, 2013, net profit from the amalgamating company (aggregating to Rs. 428 Million) and movements in other components of reserves and surplus during the financial year 2013-14 has been transferred, to the extent not accounted already, at their respective carrying amounts and in the same form in the books of the Company upon amalgamation.

Accordingly, the figures for the year ended March 31, 2015 are after giving effect to the merger, while the comparative figures are before giving effect to the merger and, hence are not comparable.

3.4 Pursuant to the Scheme, the title deeds for the properties pertaining to the amalgamating company are pending conveyance in the name of the Company. Further, the Company has initiated the name change formalities to transfer the title in respect of the contracts, agreements, etc.

4. Certain matters relating to investigations pertaining to erstwhile Satyam Computer Services Limited (erstwhile Satyam):

4.1 Investigation by authorities in India

In the letter of January 7, 2009 (the "letter") of Mr. B. Ramalinga Raju, the then Chairman of erstwhile Satyam, admitted that the Balance Sheet of erstwhile Satyam as at September 30, 2008 carried an inflated cash and bank balances, non-existent accrued interest, an understated liability and an overstated debtors position. Consequently, various regulators / investigating agencies such as the Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) / Registrar of Companies (ROC), Directorate of Enforcement (ED), etc., had initiated their investigation on various matters. On April 09, 2015, the Special Session Court in its judgment has sentenced rigorous imprisonment to B. Ramlinga Raju including others for offence punishable under various sections of Indian Penal Code.

On May 22, 2013, the ED has issued a show-cause notice to erstwhile Satyam for contravention of provisions of the Foreign Exchange Management Act, 1999 (FEMA) for alleged non-repatriation of ADS proceeds aggregating USD 39.2 Million. The Company has responded to the show-cause notice.

Certain agencies viz., SFIO and ED, pursuant to the matters stated above, had conducted inspections and issued notices calling for information from certain subsidiaries which have been responded / in the process of being responded to. In furtherance to the investigation of erstwhile Satyam, certain Regulatory Agencies in India sought assistance from Overseas Regulators and accordingly, sought information from certain overseas subsidiaries.

As per the assessment of the Management, based on the forensic investigation and the information available up to this stage, all identified / required adjustments / disclosures arising from the identified financial irregularities, had been made in the financial statements of erstwhile Satyam as at March 31, 2009.

Considerable time has elapsed after the initiation of investigation by various agencies and erstwhile Satyam had not received any further information as a result of the various ongoing investigations against erstwhile Satyam which required adjustments to the financial statements.

Further, in the opinion of the Management, no new claims have been made when the Andhra Pradesh High Court considered and approved the merger, which need any further evaluation / adjustment / disclosure in the books, and all existing claims have been appropriately dealt with / recorded / disclosed in the books based on their current status.

Considering the above, notwithstanding the pendency of the various investigations/ proceedings, the Management is of the view that the above investigations / proceedings would not result in any additional material provisions / write-offs / adjustments (other than those already provided for, written-off or disclosed) in the financial statements of the Company.

4.2 Forensic investigation and nature of financial irregularities

Consequent to the aforesaid letter, the Government nominated Board of Directors of erstwhile Satyam appointed an independent counsel ("Counsel") to conduct an investigation of the financial irregularities. The Counsel appointed forensic accountants to assist in the investigation (referred to as "forensic investigation") and preparation of the financial statements of erstwhile Satyam.

The forensic investigation conducted by the forensic accountants investigated accounting records to identify the extent of financial irregularities and mainly focused on the period from April 1, 2002 to September 30, 2008, being the last date up to which erstwhile Satyam published its financial results prior to the date of the letter. In certain instances, the forensic accountants conducted investigation procedures outside this period.

The forensic investigation had originally indicated possible diversion aggregating USD 41 Million from the proceeds of the American Depositary Shares (ADS) relating to erstwhile Satyam. The amount was revised to USD 19 Million based on the further details of utilisation of ADS proceeds obtained by erstwhile Satyam.

The overall impact of the fictitious entries and unrecorded transactions arising out of the forensic investigation, to the extent determined was accounted in the financial statements for the financial year ended March 31, 2009 of erstwhile Satyam.

Based on the forensic investigation, an aggregate amount of Rs. 11,393 Million (net debit) was identified in the financial statements of erstwhile Satyam as at March 31, 2009 under "Unexplained differences suspense account (net)" comprising of fictitious assets, unrecorded loans or where complete information is not available. On grounds of prudence, these amounts had been provided for by erstwhile Satyam in the financial year ended March 31, 2009 and since there is no further information available with the Management even after the lapse of more than four years, the said amount has been completely written off in the books of account of the Company during the year ended March 31, 2014.

The forensic investigation was unable to identify the nature of certain alleged transactions aggregating Rs. 12,304 Million (net receipt) against which erstwhile Satyam had received legal notices from 37 companies claiming repayment of this amount which was allegedly given as temporary advances. Refer note 26.3 below.

4.3 Alleged Advances

Consequent to the letter of the erstwhile Chairman, on January 8, 2009, the erstwhile Satyam received letters from thirty seven companies requesting confirmation by way of acknowledgement for receipt of certain alleged amounts referred to as "alleged advances". These letters were followed by legal notices from these companies dated August 4/5, 2009, claiming repayment of Rs. 12,304 Million allegedly given as temporary advances. The legal notices also claim damages/ compensation @18% per annum from date of advance till date of repayment. The erstwhile Satyam has not acknowledged any liability to any of the thirty seven companies and has replied to the legal notices stating that the claims are legally untenable.

The 37 companies had filed petitions / suits for recovery against the erstwhile Satyam before the City Civil Court, Secunderabad ("Court"), with a prayer that these companies be declared as indigent persons for seeking exemption from payment of requisite court fees.

One petition where court fees have been paid and the pauper petition converted into a suit which is pending disposal and petitions filed by remaining 36 companies are before the Court, at various stages of rejection of pauperism / trial of pauperism / inquiry in condone delay applications.

The remaining petitions are at a preliminary stage before the Court, for considering condonation of delay in re-submission of pauper petitions. In one petition, the delay had been condoned by the Court and the Company has obtained an interim stay order from the Honourable High Court of Andhra Pradesh. The Hon''ble High Court after hearing the parties has remanded the matter to the lower directing to consider the application afresh.

The erstwhile Satyam had received legal notices from nearly all of the above companies, calling for payment of the amounts allegedly advanced by them (including interest and damages), failing which they would be constrained to file a petition for winding up the affairs of Satyam. In pursuance thereof, one of the aforesaid companies filed a winding up petition that was dismissed by the High Court. Against the said order of dismissal, the aforementioned company has filed an appeal before the Division Bench of High Court of Andhra Pradesh which is pending hearing.

Furthermore, even in connection with the merger proceedings, the erstwhile Satyam had received letters from the aforesaid companies claiming themselves to be "creditors". They had pleaded inter-alia before the High Court (hearing the merger petition of the erstwhile Satyam with the Company) that the mandatory provisions governing the scheme under the Companies Act, 1956 have not been complied with in so far as convening a meeting of the creditors is concerned. They contended that without convening a meeting of the creditors and hearing their objections, the merger scheme could not be proceeded with.

The High Court based on the report of an independent firm of Chartered Accountants appointed by the Court and the contentions of the erstwhile Satyam, held inter-alia, in its order approving the merger of the erstwhile Satyam with the Company, that the contention of the 37 companies that Satyam is retaining the money of the "creditors" and not paying them does not appear to be valid and further held that any right of the objecting creditors can be considered only if the genuineness of the debt is proved beyond doubt which is not so in this case.

The High Court in its order, further held that in the absence of Board resolutions and documents evidencing acceptance of unsecured loans by the former management of the erstwhile Satyam, the new management of the erstwhile Satyam is justified in not crediting the amounts received in their names and not showing them as creditors and further reflecting such amounts as Amounts pending investigation suspense account (net).

The Directorate of Enforcement (ED) is investigating the matter under the Prevention of Money Laundering Act, 2002 ("PMLA") and directed the erstwhile Satyam to furnish details with regard to the alleged advances and has also directed it not to return the alleged advances until further instructions from the ED. In furtherance to the investigation by the ED, the erstwhile Satyam was served with a provisional attachment order dated October 18, 2012 issued by the Joint Director, Directorate of Enforcement, Hyderabad under Section 5(1) of the PMLA ("the Order"), provisionally attaching certain Fixed Deposit accounts of the Company then aggregating to Rs. 8,220 Million for a period of 150 days. As stated in the Order, the investigations of the ED revealed that Rs. 8,220 Million constitutes "proceeds of crime" as defined in the PMLA. The erstwhile Satyam had challenged the Order in the Honourable High Court of Andhra Pradesh ("the Writ"). The Honourable High Court of Andhra Pradesh ("the High Court") has, pending further orders, granted stay of the said Order and all proceedings pursuant thereto vide its interim order dated December 11, 2012. The ED had challenged the interim order before the Division Bench of the Honourable High Court of Andhra Pradesh. By an order dated December 31, 2014, the Hon''ble High court has dismissed the Appeal filed by ED and continued the stay granted.

The criminal case has been commenced before the "Honourable XXI Additional Chief Metropolitan Magistrate, Hyderabad cum Special Sessions Court" by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002 against erstwhile Satyam, since merged with the Company, along with 212 Accused persons. In the complaint, ED has alleged that the Company has been involved in the offence of money laundering by possessing the proceeds of crime and projecting them as untainted. The Company had challenged the above complaint before the Honourable High Court of Hyderabad and the Hon''ble High court has quashed the criminal complaint against the Company vide its order dated December 22, 2014. On appeal, the Divisional Bench of the High Court, however passed an interim order allowing the hearing for framing ''Charges''. On Special Leave Petition before the Supreme Court of the India, the Hon''ble Supreme Court directed the Hon''ble High Court of Andhra Pradesh to dispose of the writ appeal within a period of four months and further directed the trial court to defer the trial till the Hon''ble High Court of Andhra Pradesh disposes of the writ appeal.

In view of the aforesaid developments and also based on legal opinion, the erstwhile Satyam''s management''s view, which is also the Company''s Management''s view, that the claim regarding the repayment of "alleged advances" (including interest thereon) of the 37 companies are not legally tenable has been reinforced.

However, notwithstanding the above, pending the final outcome of the recovery suit filed by the 37 companies in the City Civil Court and the ED matter under the PMLA pending before the High Court, the Company, as a matter of prudence, at this point of time, is continuing to classify the amounts of the alleged advances as "Amounts Pending Investigation Suspense Account (net)", and the same would be accordingly dealt with / reclassified as and when appropriate.

4.4 Documents seized by CBI/other authorities

Pursuant to the investigations conducted by CBI / other authorities, most of the relevant documents in possession of erstwhile Satyam relating to period affected by the financial irregularities were seized by the CBI. On petitions filed by erstwhile Satyam, the ACMM granted partial access to it including for taking photo copies of the relevant documents as may be required in the presence of the CBI officials. Further, there were also certain documents which were seized by other authorities such as the Income Tax Authorities, of which erstwhile Satyam could only obtain photo copies.

4.5 Management''s assessment of the identified financial irregularities

As per the assessment of the Management, based on the forensic investigation and the information available upto this stage, all identified / required adjustments / disclosures arising from the identified financial irregularities, had been made in the financial statements of erstwhile Satyam as at March 31, 2009.

Considerable time has elapsed after the initiation of investigation by various regulators / agencies and the erstwhile Satyam has not received any further information as a result of the various ongoing investigations against the erstwhile Satyam which requires adjustments to the financial statements.

Further, in the opinion of the Management, no new claims have been made when the Andhra Pradesh High Court considered and approved the merger, which need any further evaluation / adjustment / disclosure in the books, and all existing claims have been appropriately dealt with / recorded / disclosed in the books based on their current status.

Considering the above, notwithstanding the pendency of the various investigations / proceedings, the Management is of the view that the above investigations / proceedings would not result in any additional material provisions / write-offs / adjustments (other than those already provided for, written-off or disclosed) in the financial statements of the Company.

5. Aberdeen action (USA)

On November 13, 2009, a trustee of two trusts that are purported assignees of the claims of twenty investors who had invested in the erstwhile Satyam''s ADS and common stock, filed a complaint against erstwhile Satyam, its former auditors and others (the "Action") alleging the losses suffered by the twenty investors (Claimants) is over USD 68 Million.

On July 27, 2012, the erstwhile Satyam entered into an Agreement of Settlement ("the Settlement") with Aberdeen Claims Administration, Inc., the trustee for the two trusts and twenty underlying investors.

The obligations incurred pursuant to the Settlement are in full and final disposition of the Action and the appropriate consent order of the Court in the Southern District of New York has been received on July 30, 2012. In terms of the Settlement, erstwhile Satyam has deposited in an Escrow Account an amount of USD 12 Million ("Settlement Amount") during the financial year ended March 31, 2013. Remittance out of the Escrow is subject to determination of appropriate withholding tax by the Authority for Advance Ruling (AAR).

6. Aberdeen (UK) complaint

In April 2012, erstwhile Satyam was served with an Amended Claim Form and Amended Particulars of claim dated December 22, 2011, initiating proceedings in the Commercial Court in London ("the English Court") by Aberdeen Asset Management PLC on behalf of 23 "Claimants" who are said to represent 30 funds who had invested in the Company''s common stock that traded on the exchanges in India. On December 12, 2012, the Company entered into a confidential Settlement Agreement ("the Settlement") settling claims brought in the English Court by Aberdeen Global and twenty-two other funds (collectively, the "Claimants") managed by Aberdeen Asset Management PLC ("Aberdeen") and/or its subsidiaries (the "Claims"). The Claims included certain allegations of fraudulent misrepresentations said to have been made by the former management of erstwhile Satyam in London and relied upon by the Claimants'' investment manager and/ or communicated in meetings alleged to have taken place in London. The Claimants have claimed that they have suffered losses of an estimated sum of USD 298 Million and additional consequential losses. By virtue of the Settlement, the Claims have been fully and finally disposed off on the basis of, inter-alia, for a payment to be made by the Company of USD 68 Million ("Settlement Amount").

In terms of the Settlement, erstwhile Satyam has deposited a total amount of USD 68.16 Million towards the Settlement Amount and interest in an Escrow Account during financial year ended March 31, 2013. Remittance out of the Escrow is subject to determination of appropriate withholding tax by the Authority for Advance Ruling (AAR).

7. Commitment and Contingencies

7.1 Capital Commitments

i. The estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for as at March 31, 2015 is Rs. 5,821 Million (March 31, 2014: Rs. 9,441 Million).

ii. In respect of land, refer note 31(c).

7.2 Purchase commitments In respect of investments

i. On July 2, 2014, the Company entered in to a joint venture agreement with Midad Holdings in Saudi Arabia. As per agreement, the Company will hold 51% stake in that entity i.e. Tech Mahindra Arabia. The said entity is yet to be incorporated as at March 31, 2015.

ii. Sofgen Holdings Limited (Refer note 35 (k))

iii. Avion Networks Inc. (Refer note 35 (o))

iv. On April 25, 2015 the Company has entered into a tripartite Joint Venture Agreement to form a limited liability company ("LLC") with Qatar Engineering Trading & Contracting Company (QETCC) and KPC Aurion Holding WLL (Aurion). This LLC would be incorporated in the State of Qatar with a paid-up capital of QAR 0.36 Million out of which equivalent to USD 0.02 Million would be contributed by the Company. The Company would hold 20% Equity Ownership in the LLC. The said entity is yet to be incorporated and no investment has been made by the Company.

v. Tech Mahindra Servicos De Informatica LTDA (Refer note 35 (n))

7.3 Other commitments

i. On April 2, 2013, the Company had taken over certain LAB equipments and 7 associates from one of its customers in Sweden vide its agreement dated March 21, 2013 for a purchase consideration of USD 6 Million (Rs. 326 Million). As per the terms of agreement, the purchase consideration shall be discharged by the Company by providing services for next three years. As at March 31, 2015 the Company, against the said purchase consideration, has provided services amounting to USD 6 Million (Rs. 326 Million) (March 31, 2014: USD 2.90 Million (Rs. 157 Million)). As per the terms of agreement, we have provided full services amounting to USD 6 Million (Rs. 326 Million).

ii. The company has outstanding commitments with respect to discharge of services to an international sports federation amounting to Rs. 27 Million as at March 31, 2015. (March 31, 2014: Rs. 380 Million)

7.4 Contingent Liabilities

i. Bank Guarantees / comfort letters/ corporate guarantee outstanding as at March 31, 2015: Rs. 9,592 Million (March 31, 2014: Rs. 9,761 Million).

ii. During the year ended March 31, 2015, the Company has given letter of support of USD 91 Million (Rs. 5,687 Million) to banks for loans availed by Lightbridge Communications Corporation (100% subsidiary of the Company).

iii. Outstanding Bill discounting as at March 31, 2015Rs.2,696 Million (March 31, 2014: Rs. Nil).

7.5 Income Taxes

7.5.1 Income Taxes / Fringe Benefit Tax

The Company has received demand notices from Income Tax Authorities resulting in a contingent liability of Rs. 4,663 Million (March 31, 2014: Rs. 4,407 Million). This is mainly on account of the following:

i. An amount of Rs. 1,137 Million (March 31, 2014: Rs. 822 Million) relating to Transfer pricing adjustment on account of arm''s length transactions. The Company has filed an appeal against the same. For the Assessment Year 2011-12, the Company has received draft assessment order, against which the Company has filed an appeal before Dispute Resolution Panel ("DRP").

ii. An amount of Rs. 742 Million (March 31, 2014: Rs. 818 Million) on account of adjustment of expenditure in foreign currency being excluded only from Export turnover and not from Total turnover. The Company has already won the appeal before the Commissioner of Income Tax (Appeals) "CIT(A)" for Assessment Year 2004-05, 2005-06, 2006-07, 2007-08. Income Tax Department is in appeal before the Income Tax Appellate Tribunal ("ITAT") against the Order of CIT (A) for above mentioned Assessment Years, except for Assessment Year 2006-07, for which the company is in Appeal before ITAT against the order of DRP.

iii. An amount of Rs. 2,769 Million (March 31, 2014: Rs. 2,751 Million) relating to Assessment Year 2007-08 for denial of deduction under section 10A of the Income Tax Act, 1961 on transfer pricing adjustment. The Company has won the appeal before CIT (A) and the Income Tax department has filed an appeal before ITAT.

iv. An amount of Rs. 16 Million (March 31, 2014: Rs. 16 Million) relating to Fringe Benefit Tax. The Company has won the appeal before ITAT. The Income Tax department may intend to appeal before High Court against the ITAT order.

7.5.2 Income tax matters related to erstwhile Satyam

i. Financial years 2002-03 to 2005-06

Consequent to the letter of the erstwhile Chairman of the erstwhile Satyam, the Assessing Officer rectified the assessments earlier completed for the financial years 2002-03 to 2005-06, by passing rectification orders under Section 154 of the Income-tax Act, 1961 by withdrawing foreign tax credits and raising net tax demands aggregating Rs. 2,358 Million (including interest) against which refunds of financial years 2007-08 and 2009-10 aggregating Rs. 17 Million have been adjusted. During the financial year ended March 31, 2010, erstwhile Satyam had filed an appeal with the Commissioner of Income Tax (Appeals) (CIT (A)). In August, 2010 the CIT (A) dismissed the appeals. Subsequently, erstwhile Satyam had filed appeals before the Income Tax Appellate Tribunal (ITAT) for the aforesaid years which are pending disposal as on date. During the financial year 2010-11, the assessments (in the normal course of assessment) for the financial years 2004-05 and 2005-06 were further modified by issuing consequential orders re-computing the tax exemptions claimed by the erstwhile Satyam and enhancing the tax demands. The total contingent liability resulting for these years including consequential orders is Rs. 576 Million. Against the consequential orders, erstwhile Satyam has filed appeals before CIT (A) against the said enhancement of tax for the aforesaid years which are pending disposal as on date.

ii. Financial year 2007-08

Erstwhile Satyam has received a demand notice from Additional Commissioner of Income Tax by disallowing the foreign tax credits claimed in the return resulting in a contingent liability of Rs. 2,765 Million (including interest). The revised return filed by erstwhile Satyam was rejected by the Income Tax Department. Erstwhile Satyam has filed an appeal against the said order which is pending before the ITAT.

Erstwhile Satyam''s contention with respect to the above tax demands is that the Income Tax Department should take a holistic view of the assessments and exclude the fictitious sales and fictitious interest income. If the said contention of erstwhile Satyam is accepted, there would be no tax demand payable.

iii. Petition before Honourable High Court of Judicature at Hyderabad: Financial years 2002-03 to 2007-08

Erstwhile Satyam had filed various petitions before Central Board of Direct Taxes (CBDT) requesting for stay of demands for the financial years 2002-03 to 2007-08 till the correct quantification of income and taxes payable is done for the respective years. In March 2011, the CBDT rejected erstwhile Satyam''s petition and erstwhile Satyam filed a Special Leave Petition before the Honourable Supreme Court which directed erstwhile Satyam to file a comprehensive petition / representation before CBDT giving all requisite details / particulars in support of its case for re-quantification / re-assessment of income for the aforesaid years and to submit a Bank Guarantee (BG) for Rs. 6,170 Million. Pursuant to the direction by the Honourable Supreme Court, erstwhile Satyam submitted the aforesaid BG favouring the Assistant Commissioner of Income tax and also filed a comprehensive petition before the CBDT in April 2011.

The CBDT, vide its order dated July 11, 2011, disposed off the erstwhile Satyam''s petition directing it to make its submissions before the Assessing Officer in course of the ongoing proceedings for the aforesaid years and directed the Income Tax Department not to encash the BG furnished by erstwhile Satyam till December 31, 2011. Aggrieved by CBDT''s order, erstwhile Satyam filed a writ petition before the Honourable High Court of Judicature at Hyderabad on August 16, 2011.

The Honourable High Court of Judicature at Hyderabad, vide its order dated January 31, 2012, directed the parties to maintain status quo and directed the Income Tax Department not to en-cash the BG until further orders. The BG has been extended upto October 16, 2015.

In the meanwhile, the Assessing Officer served an order dated January 30, 2012, for provisional attachment of properties under Section 281B of the Income Tax Act, 1961 attaching certain immovable assets of erstwhile Satyam on the grounds that there is every likelihood of a large demand to be raised against erstwhile Satyam for the financial years 2002-03 to 2008-09 along with interest liability. Aggrieved by such order, erstwhile Satyam filed a writ petition in the Honourable High Court of Judicature at Hyderabad that has granted a stay on the operation of the provisional attachment order until disposal of this writ.

iv. Appointment of Special Auditor and re-assessment proceedings

a. Financial year 1998-99

In November 2014, the company has received a notice from Income tax department for filing of petition in Honourable High Court of Judicature at Hyderabad against the ITAT order for financial year 1998-99. The Income tax department has raised demand of Rs. 13 Million on account of dispute in treatment of foreign taxes payment treated as self-assessment tax thereby levying Interest u/s. 234B & 234C.

b. Financial years 2001-02 and 2006-07

The Assessing Officer had commissioned a special audit which has been challenged by the erstwhile Satyam on its validity and terms vide writ petitions filed before the Honourable High Court of Judicature at Hyderabad. The said petitions are pending disposal.

In August, 2011, the Additional Commissioner of Income Tax issued the Draft of Proposed Assessment Orders accompanied with the Draft Notices of demand resulting in a contingent liability of Rs. 7,948 Million and Rs. 10,329 Million for the financial years 2001-02 and 2006-07, respectively, proposing variations to the total income, including variations on account of Transfer Pricing adjustments. Erstwhile Satyam has filed its objections to the Draft of Proposed Assessment Orders for the aforesaid years on September 16, 2011 with the Dispute Resolution Panel, Hyderabad, which is pending disposal.

c. Financial years 2002-03 and 2007-08

In December 2011, the Additional Commissioner of Income Tax appointed a Special Auditor under section 142(2A) of the Income Tax Act, 1961 to audit the accounts of erstwhile Satyam for the financial years 2002-03 and 2007-08. Erstwhile Satyam had filed a writ petition before Honourable High Court of Judicature at Hyderabad challenging the special audit.

The proceedings set out above are also subject to the Honourable High Court of Judicature at Hyderabad order dated January 31, 2012, referred to in note 29.5.2.iii directing the parties to maintain status quo.

d. Financial year 2003-04

In December 2014, the Company has received a notice from Income tax department for filing of petition in High Court of Judicature at Hyderabad against the ITAT order for financial year 2003-04. The Income tax department has raised demand of Rs. 173 Million on account of dispute in treatment of foreign taxes payment treated as self-assessment tax, not allowing setoff of losses of eligible STPI units and levying Interest u/s. 234B & 234C. In February 27, 2015 the Company has filed counter affidavit challenging IT department''s petition filed with Honourable High Court, pending hearing.

e. Financial year 2008-09

In January 2013, the Additional Commissioner of Income Tax appointed a Special Auditor under section 142(2A) of the Income Tax Act, 1961 to audit the accounts of erstwhile Satyam for the financial year 2008-09. Erstwhile Satyam has challenged the appointment and terms of reference of the special audit by filing a writ petition before the Honourable High Court of Judicature at Hyderabad and the Court vide its interim order dated April 22, 2013, has directed parties to maintain status quo. The writ petition is pending hearing.

f. Financial year 2009-10

In March 2014, the Deputy Commissioner of Income Tax appointed a Special Auditor under section 142(2A) of the Income Tax Act, 1961 to audit the accounts of erstwhile Satyam for the financial year 2009-10. The audit was completed on September 17, 2014 with certain observations made by the Special Auditor. The Special Audit report was submitted to Income tax Assessing officer for assessment.

In January 2015, the Assessing officer has issued assessment order, making addition of Rs. 1,106 Million. The Company has filed appeal before CIT (A) against the said Order.

g. Financial year 2010-11

On March, 30 2015, the Assessing officer has issued draft assessment order, making addition of Rs. 379 Million. The Company intends to file an Appeal with CIT (A) against final Order.

v. Provision for taxation

Erstwhile Satyam was carrying a total amount of Rs. 4,989 Million (net of taxes paid) as at March 31, 2013 (before giving effect to its amalgamation with the Company) towards provision for taxation, including for the prior years for which the assessments are under dispute.

Subsequent to the amalgamation, duly considering the professional advice obtained in the matter, the Management has re-evaluated the effects of the possible outcomes of the tax matters in dispute relating to erstwhile Satyam and the estimated excess tax provision amounting to Rs. 2,266 Million determined based on such evaluation in respect of the prior years have been written back during the previous year ended March 31, 2014. In the opinion of the Management the balance provision for taxation carried in the books with respect to the prior year disputes relating to erstwhile Satyam is adequate.

29.5.3 Income tax matters related to erstwhile Mahindra Engineering Services Limited Income Taxes

The Company has received demand notices from Income Tax Authorities resulting in a contingent liability of Rs. 364 Million. This is mainly relating to denial of deduction under section 10A of the Income Tax Act, 1961 on account of Splitting up or the Reconstruction of the business already in existence.

7.5.4 Italian Tax claim

Italian Tax Authorities has levied tax demand of EUR 0.10 Million (Rs. 8 Million). The Provincial Tax Commission rejected the Company''s plea against which erstwhile MESL has filed an appeal in the Regional Court of Emilia Romagna.

7.5.5 Notice from Chad Tax Administration

The Company has received a notice from Chad Tax Administration for payment of FCFA 40 Million (Rs. 4 Million) in relation to fiscal year 2012. This amount relates to dispute towards withholding taxes. The company has issued Bank Guarantee in favour of Deputy General Manager of Tax Authorities for the same.

7.6 Customs fine/penalty matters relating to erstwhile Mahindra Engineering Services Limited

i. Erstwhile MESL received a demand from Customs for import of vehicles for an amount of Rs. 2 Million, which the company has paid the said amount "under protest" and filed an appeal before the Honourable Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and pending hearing.

ii. Erstwhile Tech Mahindra (R & D Services) Limited (TMRDL) received demand (including fine and interest) from Commissioner of Customs amounting to Rs. 2 Million (March 31, 2014: Rs. 2 Million) related to misplace of imported capital goods bonded in the company premises during physical verification conducted by the customs authorities. The Company has filed an appeal before the Honorable Customs, Excise & Service Tax Appellate Tribunal (CESTAT).

7.7 Service Tax

The Company has received demand notices from Service Tax Authorities amounting to Rs. 14,688 Million (net of provision), (March 31, 2014: Rs. 883 Million (net of provision)) out of which:

i. Rs. 389 Million (March 31, 2014: Rs. 389 Million) relates to disallowance of input tax credits paid on services for the period March 2005 to March 2011 for erstwhile Satyam. An amount of Rs. 55 Million has been paid "under protest". The Company has filed an appeal before the Honorable Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and is pending hearing.

ii. Erstwhile CanvasM received demand in March 2014 from Service tax department amounting to Rs. 180 Million (March 31, 2014: Rs. 180 Million) under reverse charge on onsite services rendered by overseas subsidiaries for the financial year 2010-11. The Company has filed an appeal before the Honorable Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and is pending hearing.

iii. Rs. 77 Million (March 31,2014: Rs. 77 Million) relates to marketing and onsite services rendered by overseas subsidiaries for the financial years 2004-05 to 2007-08 for erstwhile Tech Mahindra (R & D Services) Limited (TMRDL). An amount of Rs. 7 Million (March 31, 2014: Rs. 7 Million) has been paid "under protest". The Company has filed an appeal before the Honorable Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and is pending hearing.

iv. Rs. 13 Million (March 31, 2014: Rs. 13 Million) pertains towards services provided under Management Consultancy services for the Company for which the Company has filed a reply against the same.

v. The Company received an order from Honorable High Court dated September 15, 2014, upholding the order passed by Honourable Customs, Excise & Service Tax Appellate Tribunal (CESTAT) issued in March 2013, wherein the services rendered onsite either by the Company''s subsidiary/ branch have been held as not export from India for the period November 2008 to February 2010 and the company paid the said amount of Rs. 224 Million. Based on the legal opinion obtained, the company is of the view that the said amount is cenvatable and no provision is made in the books of account and the Company has filed an appeal before the Honorable Supreme Court.

vi. The Company has received an order from Commissioner of service tax confirming demand for interest and penalty amounting to Rs. 12 Million (March 31, 2014: Nil) on the short payment of service tax discharged under reverse charge as per the applicable rate of 10.30% and not as per revised rate of 12.36% for the period of February 2009. The Company has filed an appeal before the Honorable Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and is pending hearing.

vii. The Company, during the year ended March 31, 2015, received a refund order issued by Deputy Commissioner of Service Tax after adjusting interest amounting to Rs. 146 Million (March 31, 2014: Nil) on the liability of Rs. 224 Million refunded by the department in earlier years giving effect to the order issued by Honorable High Court dated September 15, 2014. The Company has filed an appeal before the Commissioner (Appeals) against the said order.

viii. The company received an order from Commissioner of service tax confirming service tax demand, interest and penalty amounting to Rs. 12,753 Million (March 31, 2014: Nil) under reverse charge on onsite services rendered by overseas branches for the period May 2008 to July 2013. The Company has filed an appeal before the Honorable Customs, Excise & Service Tax Appellate Tribunal (CESTAT).

ix. The Company has received an order from Commissioner (Appeals) of service tax allowing service tax refund amounting to Rs. 894 Million (March 31, 2014: Nil) related to onsite services provided by subsidiary treated as export of services for the period July 2012 to June 2013. The Deputy Commissioner, Service tax has filed an appeal before the Honorable Customs, Excise & Service Tax Appellate Tribunal (CESTAT).

7.8 Value Added Tax / Central Sales Tax

i. The Company received a demand notice under Maharashtra Value Added Tax Act, 2002 (MVAT) for financial year 2008-09 relating to mismatch of input Vat credit availed in VAT return amounting to Rs. 5 Million (including penalty and interest where applicable) (March 31, 2014: Rs. 5 Million).

ii. The Company has received a demand notice under Himachal Pradesh Value Added Tax Act, 2005 (HPVAT) for the period June 2013 to December 2014 considering the transaction as local sale and levying VAT liability amounting to Rs. 10 Million (including penalty and interest) (March 31, 2014: Nil) on the material delivered by the vendor to the customer located in state of Himachal Pradesh. The Company has filed an appeal with Additional Excise and Taxation Commissioner Cum -Appellate Authority.

iii. The Company has received a demand notice under Maharashtra Value Added Tax Act, 2002 (MVAT) for financial year 2008-09 to 2011-12 relating to Entry tax on purchase of Air conditioner and part thereof and Tiles amounting to Rs. 42 Million (including penalty and interest) (March 31, 2014: Nil) from outside the state of Maharashtra and import from outside India. The company has filed an appeal with Deputy Commissioner (Appeal).

iv. Erstwhile C & S had received a demand notice aggregating to Rs. 12 Million (March 31, 2014: Rs. 12 Million) (including penalty and interest) under Gujarat Value Added Tax Act, 2003 for financial year 2006-07 to financial year 2008-09 relating to charging the type of VAT i.e. Sales Transaction / Local Value Added Tax against which the company has paid an amount of Rs. 7 Million under protest.

v. Erstwhile CanvasM has received demand notice under Delhi Value Added Tax Act, 2004 relating to levy of Central Sales Tax on handset taken for testing purpose (which are returned back after testing), aggregating to Rs. 1 Million (March 31, 2014: 1 Million) against which the Company has paid Rs. 1 Million under protest.

vi. Erstwhile Satyam had received demand orders/claims relating to issues of applicability and classification aggregating Rs. 463 Million (March 31, 2014: Rs. 423 Million) (including penalty and interest, where applicable) against which the Company has paid an amount of Rs. 258 Million (including penalty and interest, where applicable) under protest.

The above excludes show cause notices relating to Tamil Nadu General sales tax Act, 1959 amounting to Rs. 4,555 Million (March 31, 2014Rs.4,555 Million) and Andhra Pradesh Value Added Tax Act, 2005 amounting to Rs. 2,717 Million (March 31, 2014Rs.3,824 Million) (including penalty).

7.9 Foreign Exchange Management Act (FEMA), 1999

The Directorate of Enforcement has issued a show-cause notice to erstwhile Satyam for contravention of the provisions of the Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000, in respect of the realisation and repatriation of export proceeds to the extent of foreign exchange equivalent to Rs. 506 Million for invoices raised during the period July 1997 to December 31, 2002. The erstwhile Satyam has responded to the show-cause notice and the matter is pending.

7.10 Other Claims on the Company not acknowledged as debt

i. Alleged Advances: Refer note 26.3.

ii. Claims against erstwhile Satyam not acknowledged as dues: Rs. 1,000 Million and interest (March 31, 2014Rs.1,000 Million).

iii. Claims made on the erstwhile Satyam by vendors, its employees and customers: Rs. 82 Million (March 31, 2014Rs.68 Million).

iv. Dispute in relation to a subsidiary, refer note 32.

v. Claims made on the Company not acknowledged as debts: Rs. 107 Million (March 31, 2014Rs.107 Million).

vi. Other claims: Rs. 6 Million (March 31, 2014Rs.6 Million) against which the erstwhile Satyam has paid an amount of Rs. 3 Million under protest.

vii. Claims on erstwhile MESL for disputed stamp duty of Rs. 1 Million on sanction of credit facilities. The Appeal is pending before Honourable High Court of Karnataka.

viii. Claims on erstwhile MESL under Motor vehicle Act, 1988Rs.1 Million.

7.11 Management''s assessment of contingencies / claims

The amounts disclosed under contingencies/claims represent the best possible estimates arrived at on the basis of the available information. Due to high degree of judgment required in determining the amount of potential loss related to the various claims and litigations mentioned above and the inherent uncertainty in predicting future settlements and judicial decisions, the Company cannot estimate a range of possible losses.

However, the Company is carrying a provision for contingencies as at March 31,2015, which, in the opinion of the Management, is adequate to cover any probable losses in respect of the above litigations and claims. Refer note 51.

8. Other regulatory non-compliances / breaches (of the erstwhile Satyam under erstwhile Management [prior to Government nominated Board])

The management of erstwhile Satyam had identified certain non-compliances / breaches of various laws and regulations by erstwhile Satyam under the erstwhile management (prior to Government nominated Board) including but not limited to the following - payment of remuneration / commission to whole- time directors / non-executive directors in excess of the limits prescribed under the Act, unauthorised borrowings, excess contributions to Satyam Foundation, loan to ASOP Trust (Satyam Associates Trust) without prior Board approval under the Act, delay in deposit of dividend in the bank, dividend paid without profits, non-transfer of profits to general reserve relating to interim dividend declared, utilisation of the Securities Premium account, declaration of bonus shares and violation of SEBI ESOP Guidelines. In respect of some of these matters, erstwhile Satyam (under the Management post Government nominated Board) has applied to the Honourable Company Law Board for condonation Any adjustments, if required, in the financial statements of the Company, would be made as and when the outcomes of the above matters are concluded.

In respect of foreign currency receivables for the period''s upto March 31, 2009, the required permission under the provisions of FEMA for extension of time had not been obtained from the appropriate authorities. Erstwhile Satyam under the management post Government nominated Board has fully provided for these receivables.

9. Land

(a) In respect of certain land admeasuring 19.72 acres purchased by erstwhile Satyam in Hyderabad, erstwhile Satyam entered into an agreement with the Government of Andhra Pradesh (GoAP) pursuant to which, it is eligible for incentives, concessions, privileges and amenities under the Information and Communications Technology (ICT) Policy of the GoAP. During the financial year ended March 31, 2009, erstwhile Satyam accounted for an eligible grant amounting to Rs. 96 Million towards the basic cost of the land on acquisition which was adjusted to the cost of the land. Erstwhile Satyam''s entitlement to the aforesaid grant is subject to the fulfillment of certain conditions (secured by bank guarantees issued in favor of Andhra Pradesh Industrial Infrastructure Corporation), including employment of a minimum of eligible employees in facilities constructed over the said land, that have been substantially met and are under validation by the GoAP. The company has earlier provided bank guarantee of Rs. 23 Million which is expired and no new bank guarantee has been submitted by the Company. Further, the Company has filed an application dated March 26, 2014 to A.P. Industrial Infrastructure Corporation Limited requesting execution of sale deed. Sale deed was executed on December 04, 2014 and original documents are in process of being obtained from the TSIICL.

(b) In respect of land admeasuring 50 acres purchased from Andhra Pradesh Industrial Infrastructure Corporation Limited in Vishakhapatnam for a total cost of Rs. 50 Million there are certain disputes which have arisen and the Government of Andhra Pradesh has ordered the District Collector to allot alternate land to erstwhile Satyam. The Government of Andhra Pradesh has signed MOU with the Company on September 29, 2014, to allot 10 acres of land to Company on lease in lieu of land earlier allotted. The Company is in process of registering the lease deed and take possession of the said land. Pending the registration and possession, the amount of Rs. 50 Million is included in Capital Advances (under Long- term loans and advances) as at March 31, 2015 (March 31, 2014: Rs. 50 Million).

(c) The erstwhile Satyam has entered into an agreement with the Maharashtra Airport Development Company Ltd (MADC) for the land taken on lease in Nagpur for which it has received extension to erect buildings and commence commercial activities by July 27, 2015.

10. Dispute with Venture Global Engineering LLC

Pursuant to a Joint Venture Agreement in 1999, the erstwhile Satyam and Venture Global Engineering LLC (VGE) incorporated Satyam Venture Engineering Services Private Limited (SVES) in India with an objective to provide engineering services to the automotive industry.

On or around March 20, 2003, numerous corporate affiliates of VGE filed for bankruptcy and consequently the erstwhile Satyam, exercised its option under the Shareholders Agreement (hereinafter referred to as "the SHA"), to purchase VGE''s shares in SVES. The erstwhile Satyam''s action, disputed by VGE, was upheld in arbitration by the London Court of International Arbitration vide its award in April 2006 ("the Award").

The Courts in Michigan, USA, confirmed and directed enforcement of the Award. They also rejected VGE''s challenge to the Award. In 2008, the District Court of Michigan further held VGE in contempt for its failure to honour the Award and inter-alia directed VGE to dismiss the nominees of VGE on its Board and replace them with individuals nominated by the erstwhile Satyam. This Order was also confirmed by the Sixth Circuit Court of Appeals in 2009. Consequently, VGE the erstwhile Satyam''s nominees were appointed on the Board of SVES and SVES confirmed the appointment at its Board meeting held on June 26, 2008. The erstwhile Satyam was legally advised that SVES became its subsidiary only with effect from that date.

In the meantime, while proceedings were pending in the USA, VGE filed a suit in April 2006, before the District Court of Secunderabad in India for setting aside the Award. The City Civil Court, vide its judgment in January 2012, has set aside the Award, against which the erstwhile Satyam preferred an appeal ("Company Appeal") before the High Court.

VGE also filed a suit before the City Civil Court, Secunderabad inter alia seeking a direction to the Company to pay sales commission that it was entitled to under the Shareholders Agreement. In the said suit, two ex- parte orders were issued directing the Company and Satyam to maintain status quo with regard to transfer of 50% shares of VGE and with regard to taking major decisions which are prejudicial to interest of VGE. The said suit filed by VGE is still pending before the Civil Court.

The Company has challenged the ex-parte orders of the City Civil Court Secunderabad, before the High Court ("SVES Appeal").

The High Court of Andhra Pradesh consolidated all the Company appeals and by a common order dated August 23, 2013 set aside the Order of the City Civil Court, Hyderabad setting aside the award and also the ex-parte orders of the City Civil Court, Secunderabad. The High Court as an interim measure ordered status quo with regard to transfer of shares, originally given by Supreme Court to be maintained for four weeks which was extended for a further period of three weeks. VGE has filed special leave petition against the said Order before Supreme Court of India, which is currently pending. The Supreme Court by an interim Order dated October 21, 2013 extended the High Court order on the status-quo on transfer of shares. The Company has also filed a Special Leave Petition before the Supreme Court of India challenging the judgment of the High Court only on the limited issue as to whether the Civil Court has jurisdiction to entertain VGE''s challenge to the Award. The said Petition is pending before the Supreme Court.

In a related development, in December 2010, VGE and the sole shareholder of VGE (the "Trust", and together with VGE, the "Plaintiffs"), filed a complaint against the erstwhile Satyam in the United States District Court for the Eastern District of Michigan ("District Court") inter alia asserting claims under the Racketeer Influenced and Corrupt Organization Act, 1962 (RICO), fraudulent concealment and seeking monetary and exemplary damages ("the Complaint"). The District Court vide its order in March 2012 has dismissed the Plaintiffs Complaint. The District Court also rejected VGE''s petition to amend the complaint. In June 2013, VGE''s appeal against the order of the District Court has been allowed by the US Court of Appeals for the Sixth Circuit. The matter is currently before the District Court and the Company has filed a petition before District Court seeking dismissal of the Plaintiff''


Mar 31, 2014

I Employee Stock Option Plan

a) The Company had allotted 1,34,32,750 equity shares (face value of Rs.2/- each] on 6th December 2005 and 43,45,025 Equity shares (face value of Rs.2/- each] on 3rd February, 2011, to Mahindra and Mahindra Financial Services Limited Employees'' Stock Option Trust set up by the Company. The Trust holds these shares for the benefit of the employees and issues them to the eligible employees as per the recommendation of the Compensation Committee. The Trust had issued 1,30,37,934 equity shares to employees (March 2013 : 1,25,32,990 equity shares] up to 31 st March, 2014, of which 5,04,944 equity shares (March 2013:8,31,035 equity shares] were issued during the current year.

I Loan provisions and write offs

a. The Company has made adequate provision for the Non-performing assets identified, in accordance with the guidelines issued by The Reserve Bank of India. As per the practice consistently followed, the Company has also made additional provision on a prudential basis. The cumulative additional provision made by the Company as on 31st March, 2014 is Rs. 35,253.77 Lacs (March 2013 : Rs. 19,692.65 Lacs]

b. In accordance with the Notification No. DNBS.222/ CGM (US)-2011 dated 17.01.2011 issued by The Reserve Bank of India [RBI] vide its directions to all NBFC''s to make a general provision of 0.25% on the Standard assets, the Company has made a provision of Rs. 2,110.00 Lacs (March 2013 : Rs. 5,165.00 Lacs, including additional / accelerated provision of Rs. 3,568.00 Lacs, refer note no. 27].

The total amount of provision on Standard assets of Rs. 11,625.00 Lacs (March 2013 : Rs. 9,515.00 Lacs] is shown separately as "Contingent provision for Standard assets" under Long-term and Short-term provisions in the balance sheet (refer note no.5 and 9). The said amount includes additional / accelerated provision of 0.15% for Rs.4,370.00 Lacs as at 31st March, 2014 (March 2013 : Rs.3,568.00 Lacs).

c. Bad debts and write offs includes loss on termination which mainly represents shortfall on settlement of certain contracts due to lower realisation from such hire purchase/leased/loan assets on account of poor financial position of such customers.

Commission and brokerage mainly represents amount incurred in respect of acquisition of customers and mobilisation of public deposits.

The Company has single reportable segment "Financial services" for the purpose of Accounting Standard 17 on Segment reporting.

In the opinion of the Board, Current assets, Loans and advances are approximately of the value stated if realised in the ordinary course of business.

Deposits/advances received against loan agreements are on account of loan against assets, which are repayable / adjusted over the period of the contract.

Disclosure on derivatives

Outstanding derivative instruments and un-hedged foreign currency exposures as on 31st March, 2014

The Company has outstanding Foreign Currency Non- Repatriable (FCNR (b)) loans of US $ 872.71 Lacs (March 2013 : US $ 699.13 Lacs]. The said loan has been fixed to INR liability using a cross currency swap and floating interest thereon in LIBOR plus rate has been swapped for fixed rate in Indian rupee. There is no un-hedged foreign currency exposure as on 31st March, 2014.

Securitisation / assignment transactions

a] During the year, the Company has without recourse securitised on "at par" basis vide PTC route loan receivables of 47122 contracts (March 2013 : 54374 contracts] amounting to Rs. 1,26,292.70 Lacs (March 2013 : Rs. 1,43,361.38 Lacs] for a consideration of Rs. 1,26,292.70 Lacs (March 2013 : Rs. 1,43,361.38 Lacs] and de-recognised the assets from the books.

b] During the year, the Company has without recourse assigned loan receivables of 6490 contracts (March 2013 : NIL contracts] amounting to Rs. 19,850.83 Lacs (March 2013 : Rs.NIL] for a consideration of Rs. 15,554.19 Lacs (March 2013 : Rs.NIL] towards 90% of receivables assigned and de-recognised the assets from the books. Out the total receivables, an amount of Rs. 1,985.08 Lacs equivalent to 10% of the receivables have been recognized as "Retained interest in assignment transactions" representing Minimum Retention Requirement [MRR] as required under revised guidelines on securitization transactions vide RBI Circular dated August 21, 2012 (refer note no. 13 and 18].

The amount of profit in cash of Rs. 314.94 Lacs on this assignment transaction has been held under an accounting head "Cash profit on loan transfers under assignment transactions pending recognition" and the same is amortized in line with above referred guidelines (refer note no. 4 and S).

c] Income from assignment / securitization transactions include write back of provision for loss / expenses in respect of matured assignment transactions amounting to Rs.4,189.65 Lacs (March 2013 : Rs. 3,193.08 Lacs] considered no longer necessary (refer Accounting policy 3 [IV] A (iii).

d] In terms of the accounting policy stated in 3 [IV] [B] [i] [c], securitisation income is recognized as per RBI Guidelines dated 21st August, 2012. Accordingly, interest only strip representing present value of interest spread receivable has been recognized and reflected under loans and advances (refer note no. 13 and 18] and equivalent amount of unrealised gains has been recognised as liabilities (refer note no. 4 and S).

e] Excess interest spread redeemed during the year by the Special Purpose Vehicle Trust (SPV Trust] has been recognised as income and included in Income from assignment / securitisation transactions amounting to Rs.5,146.47 Lacs (March 2013 : Rs. 106.98 Lacs]

f] Disclosures in the notes to the accounts in respect of securitisation transactions as required under revised guidelines on securitization transactions issued by RBI vide circular no.DNBS.PD.No.301 /3.10.01 /2013-13 dated August 21, 2012.

There were 77 cases (March 2013 : 28 cases] of frauds amounting to Rs. 560.32 Lacs (March 2013 : Rs 450.31 Lacs] reported during the year. The Company has recovered an amount of Rs.46.3S Lacs (March 2013 : Rs 31.53 Lacs] and has initiated appropriate legal action against the individuals involved. The claims for the un-recovered losses have been lodged with the insurance companies.

The gold loans outstanding as a percentage of total assets is at 0.03% (March 2013 : 0.05%].

The Company has sent letters to suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006 seeking information for which replies are awaited. In view of this, information required under Schedule VI of the Companies Act, 1956 is not given.

During the current financial year, the Company has incorporated Mahindra Trustee Company Private Limited [MTCPL] and has proposed to subscribe 49,998 equity shares of Rs. 10/- each amounting to Rs. 4.99 Lacs being 99.99% of the shareholding as a promoter shareholder. However, the Company has not made any investment during the year in MTCPL.

Schedule to the Balance Sheet of a Non-Banking Financial Company as required in terms of Paragraph 13 of Non-Banking Financial (Deposit Accepting or Holding] Companies Prudential Norms (Reserve Bank] Directions, 2007

Previous year figures have been regrouped / reclassified wherever found necessary.


Mar 31, 2013

1. In compliance with the Accounting Standard relating to ''Financial Reporting of Interests in Joint Ventures'' (AS-27), the Company has interest in the following jointly controlled entity

2. The Board of Directors of the Company at its meeting held on 9th October, 2012, and special resolution passed by the members at the Extraordinary General Meeting held on 6th November, 2012, had approved the infusion of share capital.

Pursuant to the passing of the above resolutions and in accordance with Chapter VIII of Securities & Exchange Board of India (Issue of Capital & Disclosure requirements) Regulations, 2009, as amended, the Company allotted 97,50,257 equity shares of face value of Rs.10/- each at a price of Rs. 889/- per equity share including a premium of Rs.879/- per equity share aggregating to Rs. 86,679.78 Lacs to Qualified Institutional Buyers (QIBs) through Qualified Institutional Placement (QIP). This has resulted in an increase of equity share capital by Rs. 975.02 Lacs and securities premium reserve by Rs. 85,704.76 Lacs.

The share issue expenses amounting to Rs.1,280.06 Lacs is adjusted against the securities premium reserve in accordance with the provisions of the Companies Act, 1956.

EMPLOYEE STOCK OPTION PLAN

a) The Company had allotted 1,34,32,750 equity shares (face value of Rs. 2/- each) on 6th December, 2005 and 48,45,025 Equity shares (face value of Rs. 2/- each) on 3rd February, 2011, to Mahindra & Mahindra Financial Services Limited Employees'' Stock Option Trust set up by the Company. The Trust holds these shares for the benefit of the employees and issues them to the eligible employees as per the recommendation of the Compensation Committee. The trust had issued 1,25,32,990 equity shares (March 2012: 1,17,01,955 equity shares) up to 31st March, 2013 and 8,31,035 equity shares (March 2012: 11,73,035 equity shares) for the current year to the employees.

e) Method used for accounting for share based payment plan:

The Company has elected to use intrinsic value method to account for the compensation cost of stock options to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option.

f) Fair value of options:

The fair value of options used to compute proforma net profit and earnings per share in note 30(g) have been estimated on the date of grant using The Black-Scholes Model. The key assumptions used in Black-Scholes Model for calculating fair value as on the date of grant are:

# Dilution in Earnings per share is on account of 57,44,785 equity shares of face value of Rs. 2/- each (March 2012: 65,75,820 equity shares of face value of Rs. 2/- each held by the Employees Stock Option Trust issued under the Employees Stock Option Scheme.

* Earnings Per Share under Fair value method is computed on proforma net profit after tax after adjusting for employee compensation costs under fair value method. Employee compensation cost under fair value method is Rs. 476.72 Lacs (March 2012: Rs. 698.62 Lacs).

3. LOAN PROVISIONS AND WRITE OFFS

a. The Company has made adequate provision for the Non- performing assets identified, in accordance with the guidelines issued by The Reserve Bank of India. The Company also makes additional provision on a prudential basis. The cumulative additional provision made by the Company as on 31st March, 2013 is Rs. 19,692.65 Lacs (March 2012: Rs. 13,178.47 Lacs)

b. In accordance with the Notification No. DNBS.222/ CGM (US)- 2011 dated 17th January, 2011 issued by The Reserve Bank of India (RBI) vide its directions to all NBFC''s to make a general provision of 0.25% on the Standard assets, the Company has made a provision of Rs. 5,165.00 Lacs on the Standard assets as on 31st March, 2013 (March 2012: Rs. 4,350.00 Lacs). 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. 3,568.00 Lacs on this account, which is reflected as "Exceptional Items" in the Statement of profit and loss. The total amount of provision on Standard assets of Rs. 9,515.00 Lacs is shown separately as "Contingent provision against Standard assets" under "Provisions" in the balance sheet.

c. Bad debts and write offs includes loss on termination which mainly represents shortfall on settlement of certain contracts due to lower realisation from such hire purchase/ leased/loan assets on account of poor financial position of such customers.

Commission and brokerage mainly represents amount incurred in respect of acquisition of customers and mobilisation of public deposits.

4. The Company has single reportable segment "Financial services" for the purpose of Accounting Standard 17 on Segment reporting.

5. In the opinion of the Board, Current assets, Loans and advances are approximately of the value stated if realised in the ordinary course of business.

Deposits/advances received against loan agreements are on account of loan against assets, which are repayable / adjusted over the period of the contract.

6. DISCLOSURE ON DERIVATIVES

Outstanding derivative instrument and un-hedged foreign currency exposures as on 31st March, 2013

The Company has outstanding Foreign Currency Non- Repatriable (FCNR (b)) loans of USD 699.13 Lacs (March 2012: USD 199.13 Lacs and JPY 18,451.97 Lacs). The loan of USD 699.13 Lacs (March 2012: USD 199.13 Lacs and JPY 18,451.97 Lacs) and interest thereon has been fixed to INR liability using a cross currency swap. There is no un-hedged foreign currency exposure as on 31st March, 2013.

7. SECURITISATION / ASSIGNMENT TRANSACTIONS

a) During the year, the Company has without recourse securitised on "at par" basis vide PTC route loan receivables of 54,374 contracts (March 2012: Nil contracts) amounting to Rs. 1,43,361.38 Lacs (March 2012: Rs. Nil) for a consideration of Rs. 1,43,361.38 Lacs (March 2012: Rs. Nil) and de-recognised the assets from the books.

b) During the year, the Company has without recourse assigned loan receivables of Nil contracts (March 2012: 56,559 contracts) amounting to Rs. Nil (March 2012: Rs. 1,48,741.39 Lacs) for a consideration of Rs. Nil (March 2012: Rs.1,48,741.39 Lacs) and de-recognised the assets from the books. The income booked in respect of assignment of receivables includes certain amount towards cost of future servicing of the assigned pool and an appropriate amount has been provided towards expenditure for future services.

c) Income from assignment / securitisation includes write back of provision in respect of assignment transactions amounting to Rs. 3,193.08 Lacs (March 2012: Rs. 2,479.18 Lacs) considered no longer necessary.

d) In terms of the accounting policy stated in 3 (iv), securitisation income is recognised as per RBI Guidelines dated 21st August, 2012. Accordingly, interest only strip representing present value of interest spread receivable has been recognised and reflected under loans and advances (refer note no. 13 and 18) and equivalent amount of unrealised gains has been recognised as liabilities (refer note no. 4 and 8).

e) Excess interest spread redeemed during the year by the Special Purpose Vehicle Trust (SPV Trust) has been recognised as income and included in Income from assignment / securitisation amounting to Rs.106.98 Lacs (March 2012: Rs. Nil).

f) Disclosures in the notes to the accounts in respect of securitisation transactions as required under revised guidelines on securitisation transactions issued by RBI vide circular no.DNBS.PD.No.301/3.10.01/2012-13 dated 21st August, 2012.

8. There were 28 cases (March 2012: 22 cases) of frauds amounting to Rs. 450.31 Lacs (March 2012: Rs. 33.46 Lacs) reported during the year. The Company has recovered an amount of Rs. 31.53 Lacs (March 2012: Rs. 14.92 Lacs) and has initiated appropriate legal actions against the individuals involved. The claims for the un-recovered losses have been lodged with the insurance companies.

9. The gold loans outstanding as a percentage of total assets is at 0.05% (March 2012: 0.05%).

10. The Company has sent letters to suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006 seeking information for which replies are awaited. In view of this, information required under Schedule VI of the Companies Act, 1956 is not given.

11. Managerial Remuneration paid to Directors included in the Statement of profit and loss is Rs. 289.26 Lacs (March 2012: Rs. 247.40 Lacs) includes Directors'' Fees of Rs.10.24 Lacs (March 2012: Rs. 7.59 Lacs) and Perquisites Rs. 4.95 Lacs (March 2012: Rs. 2.21 Lacs) and excluding charge for gratuity, provision for leave encashment and sick leave as separate actuarial valuation figures are not available. The above perquisites do not include amortisation of Employees Stock Options.

12. Previous year figures have been regrouped / reclassified wherever found necessary.


Mar 31, 2012

1. The Company has made adequate provision for the Non-performing Assets identified, in accordance with the guidelines issued by the Reserve Bank of India. The Company also makes additional provision on a prudential basis. The cumulative additional provision made by the Company as on 31st March, 2012 is Rs. 13,178.47 Lacs (Previous year : Rs. 14,477.68 Lacs)

2. In accordance with the Notification No. DNBS.222/ CGM (US)-2011 dated 17.01.2011 issued by the Reserve Bank of India (RBI) vide its directions to all NBFC's to make a general provision of 0.25% on the standard assets, the Company has made a provision of Rs.4,350.00 Lacs on the standard assets as on 31st March, 2012 (Previous year : Rs.3,143.00 Lacs). The amount of provision on standard assets is shown separately as "Contingent Provision against Standard Assets" under "Provisions" in the Balance Sheet.

3. Bad debts & Write offs includes loss on termination which mainly represents shortfall on settlement of certain contracts due to lower realisation from such Hire Purchase/Leased/Loan assets on account of poor financial position of such customers.

4. Commission & Brokerage mainly represents amount incurred in respect of acquisition of customers & mobilisation of public deposits.

5. The Company has single reportable segment "Financial Services" for the purpose of Accounting Standard 17 on Segment Reporting.

6. In the opinion of the Board, Current assets, Loans & Advances are approximately of the value stated if realised in the ordinary course of business.

7. Deposits/Advances received are on account of loan against assets, which are repayable / adjusted over the period of the contract.

8. Disclosure on Derivatives :

There were no Derivative instruments (Previous year : 2) for hedging interest rate risk outstanding as on 31st March, 2012.

9. a) During the year, the Company has without recourse assigned loan receivables of 56559 contracts (Previous year : 36618 contracts) amounting to Rs.1,48,741.39 Lacs (Previous year : Rs. 1,22,764.34 Lacs, including future interest receivable) for a consideration of Rs.1,48,741.39 Lacs (Previous year : Rs. 1,08,930.92 Lacs) and de-recognised the assets from the books. The income booked in respect of assignment of receivables includes certain amount towards cost of future servicing of the assigned pool and an appropriate amount has been provided towards expenditure for future services. On assignment of receivables income recognised upfront for the current period is Rs. Nil (Previous year : Rs. 15,152.22 Lacs) against which a provision for estimated loss/expenses of Rs.Nil (Previous year : Rs. 9,830.08 Lacs) is made.

During the year, all the assignment transactions are on "at par" basis as against "premium structure" transactions during the previous year.

b) During the year, the provision in respect of assignment transactions amounting to Rs. 2,479.18 Lacs (Previous year : Rs. 3,648.00 Lacs) considered no longer necessary has been written back.

10. During the year, Company has acquired without recourse portfolio of Rs. Nil (Previous year : Rs. 2,076.46 Lacs) for a consideration of Rs. Nil (Previous year : Rs. 2,010.05 Lacs) through assignment agreements. Accounting for the same is in line with the other loans against assets given by the Company. The Company has received cash collateral amounting to Rs.Nil (Previous year : Rs. 221.11 Lacs) and over collateral of Rs. Nil (Previous year : Rs. 417.26 Lacs) against these assignments.

11. There were 22 cases (Previous year : 15 cases) of frauds amounting to Rs. 33.46 Lacs (Previous year : Rs 9.54 Lacs) reported during the year. The Company has recovered an amount of Rs.14.92 Lacs (Previous year : Rs 1.28 Lacs) and has initiated appropriate legal actions against the individuals involved. The claims for the un-recovered losses have been lodged with the insurance companies.

12. The gold loans outstanding as a percentage of total assets is at 0.05% (Previous year : 0.01%)

Rs. in Lacs

13. Particulars March 2012 March 2011 a) Contingent liabilities :

(a) Demand against the Company not acknowledged as debts on 4,629.06 5,569.24 taxation matters (income tax)

(b) Corporate Guarantees towards assignment transactions 86,274.38 73,253.29

(c) Legal suits filed by customers in Consumer Forums and Civil 2,067.45 1,721.99 courts claiming compensation from the Company 0.00 0.00

92,970.89 80,544.52

II) Commitments :

(a) Estimated amount of contracts remaining to be executed on 447.13 599.16 capital account ;

(b) Uncalled liability on shares and other investments partly paid 0.00 1,400.00 (On 3,50,00,000 partly paid equity shares of Mahindra Rural

447.13 1,999.16

Total 93,418.02 82,543.68

15. The Company has sent letters to suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006 seeking information for which replies are awaited. In view of this, information required under Schedule VI of the Companies Act, 1956 is not given.

16. Managerial Remuneration paid to Directors included in the Profit and Loss Account is Rs. 247.40 Lacs (Previous year : Rs. 207.34 Lacs) includes Directors' Fees of Rs. 7.59 Lacs (Previous year : Rs.5.30 Lacs) and Perquisites Rs.2.21 Lacs (Previous year : Rs.3.67 Lacs) and excluding charge for gratuity, provision for leave encashment and sick leave as separate actuarial valuation figures are not available. The above perquisites do not include amortisation of Employees Stock Options.

17. Schedule to the Balance Sheet of a Non-Banking Financial Company as required in terms of Paragraph 13 of Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

18. Previous year figures have been regrouped wherever found necessary.


Mar 31, 2010

1. Share Capital :

Issued and Subscribed Capital include :

(a) 3,33,618 Ordinary (Equity) Shares of Rs. 5 each (2009 : 1,66,809 Ordinary (Equity) Shares of Rs. 10 each) allotted as fully paid-up pursuant to a contract without payment having been received in cash.

(b) 34,12,15,008 Ordinary (Equity) Shares of Rs. 5 each (2009 : 17,06,07,504 Ordinary (Equity) Shares of Rs. 10 each) allotted as fully paid-up by way of Bonus Shares by capitalisation of Securities Premium Account and Reserves.

(c) 25,13,124 Ordinary (Equity) Shares of Rs. 5 each (2009 : 12,56,562 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with the Union Bank of India Limited. Of these, 27,474 Ordinary (Equity) Shares of Rs. 5 each (2009 : 13,737 Ordinary (Equity) Shares of Rs. 10 each) were issued on conversion of 41,211 8% Bonds.

(d) 25,96,404 Ordinary (Equity) Shares of Rs. 5 each (2009 : 12,98,202 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with International Tractor Company of India Limited without payment having been received in cash.

(e) 3,76,332 Ordinary (Equity) Shares of Rs. 5 each (2009 : 1,88,166 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with Mahindra Spicer Limited without payment having been received in cash.

(f) 19,46,400 Ordinary (Equity) Shares of Rs. 5 each (2009 : 9,73,200 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with Mahindra Nissan Allwyn Limited without payment having been received in cash.

(g) 2,56,55,104 Ordinary (Equity) Shares of Rs. 5 each (2009 : 1,28,27,552 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with Mahindra Holdings and Finance Limited without payment having been received in cash.

(h) 4,05,03,800 Ordinary (Equity) Shares of Rs. 5 each (2009 : 2,02,51,900 Ordinary (Equity) Shares of Rs. 10 each) issued consequent to the Scheme of Amalgamation with Punjab Tractors Limited without payment having been received in cash.

2. Reserves and Surplus :

(b) The Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India requires that shares allotted to a trust but not transferred to employees be reduced from Share Capital and Reserves. Accordingly, the Company has reduced the Share Capital by Rs. 3.63 crores (2009 : Rs. 3.10 crores). Securities Premium Account by Rs. 84.29 crores (2009 : Rs. 15.20 crores) for the 72,63,296 shares of Rs. 5 each (2009 : 31,02,653 shares of Rs. 10 each) held by the trust pending transfer to the eligible employees.

The Share Capital of the Company has also been reduced and the General Reserve increased by Rs. 2.63 crores (2009 : Rs. 3.10 crores) for the 52,63,296 bonus shares of Rs. 5 each (2009 : 31,02,653 bonus shares of Rs. 10 each) issued by the Company in September, 2005 to the trust but not yet transferred by the trust to the employees. The above monies which are treated as advance received from it, is included under current liabilities.

(c) Consequent to the announcement issued by The Institute of Chartered Accountants of India dated 29th March, 2008 in respect of forward exchange contracts and currency and interest rate swaps, the Company has applied the Hedge Accounting principles set out in the Accounting Standard (AS) 30 Financial Instruments : Recognition and Measurement. Accordingly, such contracts are marked to market and the loss aggregating Rs. 0.91 crores (Net of Tax of Rs. 0.45 crores) [2009 : Rs. 434.19 crores (Net of Tax of Rs. 223.57 crores)] arising consequently on contracts that were designated and effective as hedges of future cash flows has been recognized directly in the Hedging Reserve Account.

3. Loans :

(a) Debentures are redeemable as follows :

(i) Rs. 200.00 crores on 9th January, 2011.

(ii) Rs. 400.00 crores in three equal instalments from 12th December, 2013.

(iii) Rs. 0.01 crores of 12.50% Debentures and Zero Interest Bonds on receipt of balance amount due on allotment.

(b) (i) Debentures of Rs. 600.01 crores are secured by a pari-passu charge on immovable properties of the Company both present and future, subject to certain exclusions and are also secured by pari-passu charge on the movable properties of the Company including movable machinery, machinery spares, tools and accessories, both present and future.

(ii) Loans and Advances on cash credit accounts from the Companys bankers are secured by a first charge on a pari-passu basis on the whole of the current assets of the Company namely inventories, book debts, outstanding monies, receivables, claims, etc. both present and future.

4. (a) Buildings include Rs. * crores (2009 : Rs. * crores) being the value of shares in co-operative housing societies.

(b) Additions to fixed assets and capital work-in-progress include :

(i) Interest capitalised during the year Rs. 26.56 crores (2009 : Rs. 15.63 crores).

(ii) Foreign exchange fluctuation capitalised during the year Rs. 117.79 crores credit (Net) [2009 : Rs. 172.97 crores debit (Net)].

(c) (i) The depreciation charge for the year excludes :

(a) An amount of Rs. 0.41 crores (2009 : Rs. 0.38 crores), representing depreciation on the increase due to revaluation of Land and Buildings transferred from the Revaluation Reserve.

(b) An amount of Rs. 0.01 crores (2009 : Rs. Nil), representing depreciation on revalued buildings demolished during the year.

(ii) The net credit to the Profit and Loss Account consequent to the above adjustments to the Revaluation Reserve is Rs. 0.42 crores (2009 : Rs. 0.38 crores).

5. (a) Provision - Others Rs. 219.66 crores (2009 : Rs. 167.45 crores) includes provision for contingencies Rs. 3.58 crores (2009 : Rs. 8.25 crores), provision for warranty Rs. 179.61 crores (2009 : Rs. 137.45 crores), provision for post retirement medical benefits Rs. 9.65 crores (2009 : Rs. 4.84 crores), provision for post retirement housing allowance Rs. 10.99 crores (2009 : Rs. Nil) and provision for diminution in value of certain assets substantially retired from active use Rs. 15.83 crores (2009 : Rs. 16.89 crores). Provision for contingencies is in respect of labour demands under negotiations at certain locations of the Company. Provision for warranties relates to warranty provision made in respect of sale of certain products, the estimated cost of which is accrued at the time of sale. The products are generally covered under a free warranty period ranging from 6 months to 3 years.

6. (a) Dividends on other investments include Rs. 45.56 crores (2009 : Rs. 44.89 crores) in respect of current investments and Rs. 3.91 crores (2009 : Rs. 1.32 crores) in respect of long term investments.

(b) Profit on sale of investments (Net) includes profit on disposal of current investments (Net) Rs. 1.53 crores (2009 : Rs. 14.73 crores), and profit on disposal of long term investments (Net) Rs. 8.87 crores (2009 : Rs. 38.49 crores).

(c) Interest on Government Securities, Debentures and Bonds includes tax deducted at source Rs. 0.05 crores (2009 : Rs. 0.11 crores) and comprise Rs. 0.50 crores (2009 : Rs. 0.50 crores) and Rs. 4.18 crores (2009 : Rs. 4.26 crores) in respect of long term and current investments respectively.

(d) Interest received - others includes tax deducted at source Rs. 12.21 crores (2009 : Rs. 15.11 crores).

7. Repairs and Maintenance includes machinery spares consumed Rs. 33.85 crores (2009 : Rs. 26.25 crores) but does not include items included under Consumption of Raw Materials and Bought-out Components and amounts charged to salaries and wages (amounts not ascertained).

8. Managerial remuneration for Directors included in the Profit and Loss Account is Rs. 8.19 crores (2009 : Rs. 6.29 crores) including Directors fees of Rs. 0.14 crores (2009 : Rs. 0.09 crores), perquisites Rs. 1.68 crores (2009 : Rs. 1.27 crores) and commission Rs. 4.53 crores (2009 : Rs. 3.16 crores) (See Schedule XV) and excluding charge for gratuity, provision for leave encashment and post retirement medical benefit as separate actuarial valuation figures are not available. The above perquisites include amortisation of Employees Stock Options amounting to Rs. 0.06 crores (2009 : Rs. 0.09 crores).

9. Employee Benefits :

General description of defined benefit plans :

Gratuity

The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act or the Company scheme applicable to the employee. The benefit vests.upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

Post retirement medical

The Company provides post retirement medical cover to select grade of employees to cover the retiring employee and their spouse upto a specified age through mediclaim policy on which the premiums are paid by the Company. The eligibility of the employee for the benefit as well as the amount of medical cover purchased is determined by the grade of the employee at the time of retirement.

10. The Company has allotted 55,24,219 and 10,00,000 Ordinary (Equity) Shares of Rs. 10 each in the years ended 31st March, 2002 and 31st March, 2010 respectively to the Mahindra & Mahindra Employees Stock Option Trust set up by the Company. The trust holds these shares for the benefit of the employees and issues them to the eligible employees as per the recommendation of the Compensation Committee.

In respect of options granted prior to 29th September, 2006, the equity settled options vest one year from the date of the grant and are exercisable on specified dates in 3 tranches within a period of 5 years from the date of vesting. The number of options exercisable in each tranche is between the minimum of 100 and a maximum of 1/3"* of the options vested, except in case of the last date of exercise, where the employee can exercise all the options vested but not exercised till that date.

Options granted on or after 29th September, 2006 vest in 4 equal instalments on the expiry of 12 Months, 24 Months, 36 Months and 48 Months from the date of grant. The options may be exercised on the date of vesting and on specified dates within 5 years from the date of vesting. Number of vested options exercisable on each specified date is subject to a minimum of 50 or number of options vested whichever is lower, except in case of the last date of exercise, where the employee can exercise all the options vested but not exercised till that date.

The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value method.

11. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31" March, 2010 is Rs. 781.83 crores (2009 : Rs. 756.32 crores).

12. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) by its order dated 7th December, 2009 has rejected the Companys appeal against the order dated 30* March, 2005 passed by the Commissioner of Central Excise (Adjudication), Navi Mumbai confirming the demand made on the Company for payment of differential excise duty (including penalty) of Rs. 304.11 crores in connection with the classification of Companys Commander range of vehicles, during the years 1991-1996. Whilst the Company had classified the Commander range of vehicles as 10-seater attracting a lower rate of excise duty, the Commissioner of Central Excise (Adjudication), Navi Mumbai, has held that these vehicles could not be classified as 10-seater as they did not fulfil the requirement of 10-seater vehicles, as provided under the Motor Vehicles Act, 1988 (MVA) and Maharashtra Motor Vehicles Rules, 1989 (MMVR) and as such attracted a higher rate of excise duty.

In earlier collateral proceedings on this issue, the CESTAT had by an Order dated 19th July, 2005 settled the controversy in the Companys favour. The CESTAT had accepted the Companys submission that MVA and MMVR could not be referred to for determining the classification for the purpose of levy of excise duty and rejected the Departments appeal against the Order of the Collector, Central Excise classifying the Commander range of vehicles as 10-seater. The Departments appeal against the CESTAT Order dated 19th July, 2005 is pending before the Supreme Court of India but the operation of the Order has not been stayed.

The Company has filed an appeal against the aforesaid order dated 7th December, 2009 inter alia, on the grounds that the MVA and MMVR cannot be referred to for the purpose of determining the excise classification, as has been repeatedly held by various judicial fora, including the Supreme Court and particularly by CESTAT vide its order dated 19th July, 2005 in the Companys own case referred to above.

Without prejudice to the grounds raised in the appeal, the Company has paid an amount of Rs. 40.00 crores in January, 2010. Pending admission of the Companys appeal, the Supreme Court has passed an interim order staying the recovery of the balance amount till further orders.

In another case relating to Armada range of vehicles manufactured during the years 1992 to 1996, by the Company at its Nashik facility, the Commissioner of Central Excise, Nashik passed an order dated 20th March, 2006 confirming a demand of Rs. 24.75 crores, on the same grounds as adopted for Commander range of vehicles. The CESTAT has given an unconditional stay against this order, which is yet to be finally heard by the Tribunal.

The Company strongly believes, based on legal advise it has received, that the CESTAT order dated 7!h December, 2009 which is under appeal in the Supreme Court is not sustainable in law and hence the Company has a very good chance of succeeding in the matter. As such, the Company does not expect any liability on this account. However, in view of the CESTAT order, the Company has reflected the above amount aggregating Rs. 328.86 crores and the interest of Rs. 168.05 crores accrued on the same upto 31" March, 2010, as a Contingent Liability in the Accounts and the same is included in the amounts disclosed under Note 18 (b)(i).

13. Contingent Liability :

(a) Guarantees given by the Company : Rupees crores

Amount of guarantees Outstanding amounts against the guarantees

2010 2009 2010 2009

For employees 1.05 1.05 * *

For other companies 327.61 168.46 286.91 163.67

* denotes amounts less than Rs. 50,000

(b) Claims against the Company not acknowledged as debts comprise of :

(i) Excise Duty, Sales Tax and Service Tax claims disputed by the Company relating to issues of applicability and classification aggregating Rs. 968.22 crores (Net of Tax : Rs. 698.04 crores) [2009 : Rs. 386.32 crores (Net of Tax : Rs. 274.20 crores)].

(ii) Other matters (excluding claims where amounts are not ascertainable) : Rs. 17.78 crores (Net of Tax : Rs. 12.41 crores) [2009 : Rs. 17.37 crores (Net of Tax : Rs. 12.14 crores)].

(iii) Claims on capital account : Rs. 1.18 crores (2009 : Rs. 1.18 crores).

(c) Uncalled liability on equity shares partly paid Rs. 10.50 crores (2009 : Rs. 10.50 crores).

(d) Taxation matters :

(i) Demands against the Company not acknowledged as debts and not provided for, relating to issues of deductibility and taxability in respect of which the Company is in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be completed :

- Income-tax : Rs. 181.07 crores (2009 : Rs. 168.25 crores).

(ii) Items in respect of which the Company has succeeded in appeal, but the Income-tax Department is pursuing/likely to pursue in appeal/reference and exclusive of the effect of similar matters in respect of assessments remaining to be completed :

- Income-tax matters Rs. 70.58 crores (2009 : Rs. 58.63 crores).

- Surtax matters Rs. 0.13 crores (2009 : Rs. 0.13 crores).

(e) Bills discounted not matured Rs. Nil (2009 : Rs. 59.55 crores).

14. Research and Development expenditure :

(a) In recognised Research and Development units :

(i) debited to the Profit and Loss Account, including certain expenditure based on allocations made by the Company, aggregate Rs. 248.25 crores (2009 : Rs. 220.09 crores) [excluding depreciation and amortisation of Rs. 81.03 crores (2009 : Rs. 56.19 crores)].

(ii) Development Expenditure incurred during the year Rs. 131.28 crores (2009 : Rs. 128.94 crores).

(iii) Capitalisation of assets Rs. 41.64 crores (2009 : Rs. 15.64 crores).

(b) In other units :

(i) debited to the Profit and Loss Account, including certain expenditure based on allocations made by the Company, aggregate Rs. 25.89 crores (2009 : Rs. 18.69 crores) [excluding depreciation and amortisation of Rs. 2.25 crores (2009 : Rs. 1.50 crores)].

(ii) Development Expenditure incurred during the year Rs. 38.59 crores (2009 : Rs. 7.50 crores).

(iii) Capitalisation of assets Rs. 4.34 crores (2009 : Rs. 3.56 crores).

15. The net difference in foreign exchange loss debited to the Profit and Loss Account is Rs. 113.48 crores (2009 : Rs. 237.20 crores).

16. Exceptional items of Rs. 90.75 crores (2009 : Rs. 10.27 crores) comprise of :

(a) Profit on sale of certain long term investments Rs. 90.75 crores (2009 : Rs. Nil).

(b) Surplus on transfer of Logistics business Rs. Nil (2009 : Rs. 10.27 crores).

17. Scheme of Amalgamations :

(a) In the previous year, pursuant to the Scheme of Amalgamation (the scheme) as approved by the shareholders of the Company and subsequently sanctioned by the Honourable High Court of Bombay on 18th July, 2008, the entire business and all the assets and liabilities, duties and obligations of Mahindra Holdings and Finance Limited (MHFL) (an erstwhile wholly owned subsidiary of the Company) were transferred to and vested in the Company, with effect from 1st February, 2008. The excess of the value of the net assets of MHFL over the face value of the shares allotted, the face value of the shares cancelled and the amount of General Reserve and Profit and Loss Account of MHFL transferred to the Company was credited to the existing Investment Fluctuation Reserve Account.

(b) In the previous year, pursuant to the Scheme of Amalgamation (the scheme) as approved by the shareholders of the Company and subsequently sanctioned by the Honourable High Court of Bombay and the Honourable High Court of Punjab & Haryana on 9* January, 2009 and 16th January, 2009 respectively, the entire business and all the assets and liabilities, duties and obligations of Punjab Tractors Limited (PTL) (an erstwhile subsidiary of the Company) were transferred to and vested in the Company, with effect from 1st August, 2008. The excess of the value of the net assets of PTL over the face value of the shares allotted was credited to the existing Investment Fluctuation Reserve Account.

(c) Accordingly, Jhe figures for the current year are not strictly comparable with that of the previous year.

18. The outstanding derivative instruments as on 31st March, 2010 :

The Company has taken foreign exchange contracts amounting to US$ 54.80 crores comprising Forward Contracts US$ 32.10 crores (2009 : US$ 60.30 crores), Range Forwards US$ 7.20 crores (2009 : US$ 10.20 crores) and US$ 15.50 crores (2009 : US$ 33.20 crores) of derivative structures in the form of strips.

The foreign currency exposures not hedged by derivative instrument or otherwise as on 31st March, 2010 are - Receivables of ZAR 4.67 crores, EUR 0.58 crores, AUD 0.39 crores, GBP 0.27 crores, NZD 0.02 crores, CHF * crores and Payables of JPY 2.20 crores, US$ 1.33 crores, SEK 0.03 crores, SAR 0.01 crores, SGD * crores (2009 : Receivables of AUD 0.38 crores, RMB 0.01 crores, SEK * crores and Payables of US$ 2.71 crores, EUR 0.03 crores, GBP * crores, CHF * crores, JPY 2.38 crores, ZAR * crores, SAR 0.04 crores, SGD * crores, DKK * crores, NZD * crores ).

The Company has outstanding borrowings of JPY 1,126.44 crores (2009 : JPY 1,126.44 crores and US$ 9.45 crores) as Foreign Currency Borrowings. The borrowing of JPY 450.24 crores (2009 : JPY 450.24 crores) has been completely hedged using cross currency swap structure fixing the liability into a full fledged rupee liability. The borrowing of JPY 676.20 crores (2009 : JPY 676.20 crores) has been fixed to a US$ liability using a cross currency swap structure. The borrowing of US$ Nil (2009 : US$ 2.00 crores) has been hedged using a forward cover.

The Company had made an issue of US$ 20.00 crores in the form of Foreign Currency Convertible Bonds in April, 2006. Out of this issue, Bonds of value US$ 18.95 crores (2009 : US$ 18.95 crores) are outstanding and have not been hedged.

* denotes amounts less than 50,000 of respective currency.

19. Related Party Disclosure :

(a) Related parties where control exist :

(i) Subsidiaries :

Sl. No. Name of the Company

1. Mahindra Engineering and Chemical Products Limited

2. Mahindra Logisoft Business Solutions Limited (upto 22nd March, 2010)

3. Mahindra First Choice Wheels Limited

4. Mahindra USA Inc.

5. Mahindra Gujarat Tractor Limited

6. Mahindra (China) Tractor Company Limited

7. Mahindra Shubhlabh Services Limited

8. Mahindra & Mahindra South Africa (Proprietary) Limited

9. Mahindra Europe s.r.l.

10. Mahindra Engineering Services Limited

11. Mahindra Gears & Transmissions Private Limited (formerly known as Mahindra SAR Transmission Private Limited)

12. Mahindra Overseas Investment Company (Mauritius) Limited

13. Mahindra-BT Investment Company (Mauritius) Limited

14. Mahindra Intertrade Limited

15. Mahindra Steel Service Centre Limited

16. Mahindra Middleeast Electrical Steel Service Centre (FZC)

17. Mahindra Consulting Engineers Limited

18. Mahindra Holidays & Resorts India Limited

19. Mahindra Holidays and Resorts USA Inc.

20. NBS International Limited

21. Mahindra Ugine Steel Company Limited

22. Mahindra & Mahindra Financial Services Limited

23. Mahindra Insurance Brokers Limited

24. Tech Mahindra Limited (upto 22nd March, 2010)

25. Tech Mahindra (Americas) Inc. (upto 22nd March, 2010)

26. Tech Mahindra GmbH (upto 22nd March, 2010)

27. Tech Mahindra (Singapore) Pte. Limited (upto 22nd March, 2010)

28. Tech Mahindra (Thailand) Limited (upto 22nd March, 2010)

29. Tech Mahindra Foundation (upto 22nd March, 2010)

30. Bristlecone Limited

31. Bristlecone Inc.

32. Bristlecone (UK) Limited

33. Bristlecone India Limited

34. Bristlecone (Singapore) Pte. Limited

35. Bristlecone GmbH

36. Mahindra Renault Private Limited

37. Mahindra Navistar Automotives Limited

38. Stokes Group Limited

39. Jensand Limited

40. Stokes Forgings Limited

41. Stokes Forgings Dudley Limited

42. Mahindra Engineering Services (Europe) Limited

43. Mahindra Engineering GmbH (formerly known as Plexion Technologies GmbH)

44. Mahindra Technologies Inc. (upto 10th March, 2010)

45. Mahindra Lifespace Developers Limited

46. Mahindra World City (Jaipur) Limited

47. Mahindra World City Developers Limited

48. Mahindra Infrastructure Developers Limited

49. Mahindra Integrated Township Limited

50. Mahindra World City (Maharashtra) Limited

51. PTTech Mahindra Indonesia (upto 22nd March, 2010)

52. Mahindra Forgings International Limited

53. CanvasM Technologies Limited (upto 22nd March, 2010)

54. CanvasM (Americas) Inc. (upto 22nd March, 2010)

55. Mahindra Forgings Europe AG

56. Gesenkschmiede Schneider GmbH

57. JECO-Jellinghaus GmbH

58. Falkenroth Umformtechnik GmbH

59. Mahindra Vehicle Manufacturers Limited

60. Schoneweiss & Co. GmbH

61. MHR Hotel Management GmbH

62. Mahindra Forgings Limited

63. Mahindra Rural Housing Finance Limited

64. Mahindra Hotels and Residences India Limited

65. Mahindra Forgings Global Limited

66. Bristlecone (Malaysia) SDN.BHD

67. Tech Mahindra (Malaysia) SDN.BHD (upto 22nd March, 2010)

68. Mahindra Castings Limited (formerly known as Mahindra Castings Private Limited)

69. Knowledge Township Limited (formerly known as Mahindra Knowledge City Limited)

70. Mahindra Holdings Limited

71. Mahindra Logistics Limited

72. Tech Mahindra (Beijing) IT Services Limited (upto 22nd March, 2010)

73. Mahindra Navistar Engines Private Limited

74. Mahindra Residential Developers Limited

75. Mahindra Graphic Research Design s.r.l.

76. Mahindra Aerospace Private Limited

77. Heritage Bird (M) SDN.BHD

78. Mahindra First Choice Services Limited

79. Mahindra Bebanco Developers Limited

80. Mahindra Gears Global Limited

81. Mahindra Gears Cyprus Limited

82. Mahindra Gears International Limited

83. Metalcastello s.r.l. (formerly known as Mahindra Metalcastello s.r.l.)

84. Industrial Township (Maharashtra) Limited (formerly known as Mahindra Industrial Township Limited)

85. Metalcastello S.p.A (upto 31st December, 2009)

86. Crest Geartech Private Limited

87. Engines Engineering s.r.l.

88. EFF Engineering s.r.l.

89. ID-EE s.r.l.

90. Mahindra Business & Consulting Services Private Limited (formerly known as Mahindra IT Consulting Private Limited)

91. Mahindra Automotive Australia Pty. Ltd.

92. Mahindra Two Wheelers Limited

93. Mahindra United Football Club Private Limited

94. Defence Land Systems India Private Limited (formerly known as Mahindra Defence Land Systems Private Limited)

95. Mahindra Yeuda (Yancheng) Tractor Company Limited

96. Venturbay Consultants Private Limited (upto 22"d March, 2010)

97. Mahindra Metal One Steel Service Centre Limited (w.e.f. 11th June, 2009)

98. Raigad Industrial & Business Park Limited (w.e.f. 18th June, 2009)

99. Retail Initiative Holdings Limited (w.e.f. 1st July, 2009)

100. Mahindra Retail Private Limited (w.e.f. 1st July, 2009)

101. Mahindra Technologies Services Inc. (w.e.f. 4th June, 2009)

102. Tech Mahindra (Nigeria) Limited

(from 18th August, 2009 to 22nd March, 2010)

103. Mahindra Punjab Tractors Private Limited (w.e.f. 9th October, 2009)

104. Tech Mahindra Bahrain Limited S.P.C.

(w.e.f. 3,d November, 2009 & upto 22nd March, 2010)

105. Mahindra EcoNova Private Limited (w.e.f. 2nd January, 2010)

106. Mahindra Conveyor Systems Private Limited (w.e.f. 4th January, 2010)

107. BAH Hotelanlagen AG (w.e.f. 11th January, 2010)

(b) Other parties with whom transactions have taken place during the year. (i) Associates :

Sl. No. Name of the Company

1. Mahindra Composites Limited

2. Mahindra Construction Company Limited

3. Owens Comings (India) Limited

4. Satyam Computer Services Limited (from 5th May, 2009 to 22nd March, 2010)

5. Swaraj Automotives Limited

6. Swaraj Engines Limited

7. Mahindra Water Utilities Limited

(ii) Joint Venture :

Sl. No. Name of the Company

1. Mahindra Sona Limited

2. Tech Mahindra Limited (w.e.f 23rd March, 2010)_

(iii) Key Management Personnel :

Vice Chairman and Managing Director Mr. Anand Mahindra Executive Directors......................... Mr. B.N. Doshi

Mr. A.K. Nanda

(iv) Welfare Funds :

Sl. No. Name of the Fund

1. Mahindra World School Education Trust

2. M&M Benefit Trust

3. M&M Employees Welfare Fund

4. M&M Employees Farm Equipment Sector Employees Welfare Fund

20. Additional information pursuant to the provisions of paragraphs 3(i)(a) and (ii), 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 - See Schedule XVI. Previous years figures are indicated below the current years figures.

21. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 - See Schedule XVII.

22. Previous years figures have been regrouped/restated wherever necessary.

 
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