Notes to Accounts of CIE Automotive India Ltd.

Dec 31, 2023

1. Â Â Â These properties are in the name of Bill Forge Private Limited, Mahindra Ugine Steel CompanyÂ Limited, Coimbatore City Building Private Ltd and Vishrant Engineering Private Ltd. These PropertiesÂ have vested into the Company pursuant to amalgamations of these entities with the Company. TheÂ Company is in the process of getting these properties transferred in its name.

2. Â Â Â The Company has change its name from Mahindra CIE Automotive Limited to CIE Automotive IndiaÂ Limited in the current year ended 31^stÂ December 2023. The Company is in the process of getting theseÂ properties transferred in its name.

6. Goodwill

Goodwill is tested for impairment on an annual basis. Goodwill is monitored by management at the level of cash generating units, which is India in this case. For the current and previous financial year, the recoverable amountÂ of Cash Generating Unit (CGU) was determined based on value-in-use calculations which require the use ofÂ assumptions. The calculations use cash flow projections based on financial budgets approved by managementÂ covering a five year period.

Sensitivity to changes in assumptions of CGU

The management believes that no reasonably possible change (say 10%) in any of the key assumptions used in the value in use calculation would cause the carrying value of the CGU to materially exceed its value in use.

Results of the analysis

Based on the above assessment, the Company concluded that in both current year as well as previous year, goodwill has not suffered any impairment. Further, the result of using before-tax cash flows and discount ratesÂ does not differ significantly from the outcome of using after-tax cash flows and discount rates.

a) Â Â Â During the year, the Company has made additional investment amounting ' 41.60 Millions in Clean MaxÂ Deneb Power LLP and amounting ' 9.24 Millions Strongsun Solar Private Limited which are engaged in solarÂ energy business.

b) Â Â Â In September 2018, the Board of Directors of CIE Automotive India Limited (formerly known as Mahindra CIEÂ Automotive Limited) decided to dispose off the forging business in the United Kingdom, corresponding toÂ the company Stokes Group Limited. The Stokes Group Limited has been liquidated on September 05, 2023.

Transferred Receivables

The carrying amount of the trade receivable includes receivables which are subject to factoring arrangement. Under this arrangement, the Company has transferred the relevant receivables to the factor in exchangeÂ for Cash and is prevented from selling or pledging the receivables. However, the Company has retained lateÂ payment and credit risk. The Company therefore continues to recognize the transferred assets in their entiretyÂ in its balance sheet. The amount repayable under the factoring agreement is presented as borrowing. TheÂ Company considers the held to collect business model to remain appropriate for these receivables and henceÂ continues measuring them at amortized cost.

Write-downs in inventories of finished goods, work-in-progress & raw materials amounted to ' 251.35 Million (31 December 2022: ' 267.02 million) as at the period end. Accordingly, an amount of ' 15.65 million (31 DecemberÂ 2022: ' 34 million) was reversed during the year. The write-downs and reversals are included in cost of materialÂ consumed.

*Shareholders of the Company had approved reclassification of authorised preference share capital vide EGM held on 13^thÂ Oct 2016. Amount is below the rounding off norm adopted by the Company.

AMahindra Composites Limited which was merged with the company in the year 2013 had issued 1,050 equity shares and not allotted the same to the shareholders. Based on the swap ratio the Company has issued 945Â equity shares and not allotted the same and the same has been kept in abeyance.

Information regarding issue of shares in the last five years

- Â Â Â TheÂ Â Â Â Company has not issued any shares without payment beingÂ Â Â Â received in cash.

- Â Â Â TheÂ Â Â Â Company has not issued any bonus shares.

- Â Â Â TheÂ Â Â Â Company has not undertaken any buy-back of shares

Shares reserved for issue under options

Information relating to CIE Automotive India Limited Employee Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is setÂ out in note 36.

Nature and purpose of Reserves Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilized in accordance with the provisions of the law.

Equities settled employees' benefits reserve

The Equities settled employees benefits reserve is used to recognize the grant date fair value of options issued to employees under the CIE Stock Options Scheme.

Capital reserve

Capital reserve is reserves generated on account of:

1. Â Â Â Merger under the Integrated Scheme of Amalgamation and the Composite Scheme of AmalgamationÂ (Sections 391-395 of the Companies Act, 1956) for the merger of Mahindra Ugine Steel Company LimitedÂ (MUSCO), Mahindra Hinoday Industries Limited (MHIL), Mahindra Gears International Limited (MGIL),Â Mahindra Investment India Private Limited (MIIPL), Participaciones Internacionales Autometal Tres S.L.Â (PIA3) and Mahindra Composites Limited (MCL). The merger was approved by the Honourable High CourtÂ of Judicature at Bombay on October 31, 2014. The Schemes came into effect on December, 10, 2014, the dayÂ on which the order was delivered to the Registrar of Companies. The reserve is capital in nature and is notÂ available for distribution as dividend.

2. Â Â Â Merger under the Scheme of Amalgamation (Sections 230-234 and other applicable provisions of theÂ Companies Act, 2013) of Mahindra Gears and Transmission Private Limited, Mahindra Forging GlobalÂ Limited, Mahindra Forging International Limited and Crest Geartech Private Ltd. The merger was approvedÂ by the Honourable National Company Law Tribunal (NCLT) at Mumbai on December 13, 2017. The reserve isÂ capital in nature and is not available for distribution as dividend.

General reserve

General reserve created by virtue of merger of Mahindra Stokes Holding Company Limited, Mahindra Forgings Overseas Limited and Mahindra Forgings Mauritius Limited into the Company vide High Court Order datedÂ 27^thÂ December, 2007, is reserve available for distribution as dividend.

Capital redemption reserve

Capital redemption reserve is transferred by virtue of the merger referred to above, which was in the books of MUSCO and was crea ted to redeem preference shares issued by MUSCO before merg er. These shares ha veÂ since been redeemed and this reserve is available for use as per the relevant provisions of Companies Act, 2013.

# Provision of ' 262 million is towards an ongoing dispute with the Irrigation Department (Water Resource Department) in respect of levy of charge for use of water for the period July 1991 to May 2012 for an aggregateÂ amount of ' 587 million including penal charge of ' 102 million and late fee charge of ' 223 million. PresentlyÂ the matter is being legally pursued. The Company has provided ' 262 million towards arrears of water charges.Â Refer Note 30 Contingent liabilities and commitments.

a Majorly includes provision of ' 120 million (31 December, 2022: ' 120 Million) has been recognised for Provident Fund liability basis Supreme Court judgement in 'Regional provident fund commissioner (ll) West Bengal vsÂ Vivekananda Vidyamandir and Others' in accordance with Ind AS-37. The remaining amount pertains to provisionÂ against levy of cross subsidy charges and additional surcharge by Maharashtra State Electricity DistributionÂ Company Limited during the year on account of power consumption from non-captive generating plant.

* This represents provisions made for probable liabilities payable to regulatory authorities. Above provisions are affected by various uncertainties and management has taken all efforts to make a best estimate. It is notÂ practicable for the Company to estimate the accurate timing of cash outflows, if any, in respect of the above.

Financial instrument carried at amortized cost

Fair value of financial assets and financial liabilities carried at amortized cost is not materially different from the carrying amount. This disclosure is not applicable for lease liabilities.

Investments do not include investments in subsidiaries which are carried at cost and hence are not required to be disclosed as per Ind AS 107 Financial Instruments Disclosures.

29. Employee benefits plans

(a) Â Â Â Defined Contribution plan

The Company's contribution to Provident Fund and other funds aggregating ' 150.46 Million (' 128.00 Million) has been recognised in the statement of Profit or Loss under the head Employee Benefit expenses.

(b) Â Â Â Defined benefit plans

(i) Gratuity

The Company operates gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company's schemeÂ applicable to the employee. The benefit vests upon completion of five years of continuous serviceÂ and once vested it is payable to employees on retirement or on termination of employment. In caseÂ of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual

contribution to the Company gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

(ii) Compensated absences

Company's liability towards leave encashment are determined using the Projected Unit Credit method which considers each period of service as giving rise to an additional unit of benefit entitlement andÂ measures each unit separately to build up the final obligation. Past service costs are recognised onÂ straight line basis over the statement of Profit or loss as income or expense. Obligation is measured atÂ the present value of estimated future cash flow using a discount rate that is determined by referenceÂ to market yields at the Balance Sheet date on government bonds where the currency and terms ofÂ the government bonds are consistent with the currency and estimated terms of the defined benefitÂ obligation.

Through its defined benefit plans the Company is exposed to risks, the most significant of which are detailed below:

(i) Â Â Â Asset Volatility

The plan liabilities are calculated using a discount rate set with references to government bond yields; if plan assets under perform compared to the government bond's discount rate, this will createÂ or increase a deficit.

(ii) Â Â Â Changes in Bond Yields

A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plans' bond holdings.

*Maharashtra State Electricity Distribution Company Limited (MSEDCL) has levied the Cross Subsidy Surcharge (CSS) and Additional Surcharge levied (ASC) on the units of power consumed by the Company as a captiveÂ consumer from two Captive Generating Plant (CGP) Units of Sai Wardha Power Generation Limited (SWPGL)Â which was an independent Special Purpose Vehicle set up for Generation and supply of electricity. The Hon'bleÂ Maharashtra Electricity Regulatory Commission (MERC) vide its separate orders dated October 22, 2020 andÂ October 29, 2020 has rejected the captive status of the said two CGP units of SWPGL for the year 2016-17 andÂ the year 2017-18 respectively. MSEDCL has raised supplementary invoices of ' 208.00 million (including interest)Â for the year 2016-17 and of ' 263.00 million (including interest) for the year 2017-18 towards alleged CrossÂ Subsidy Surcharge and Additional Surcharge applicable for non-captive power consumption. The CompanyÂ has challenged the impugned orders before Hon'ble Appellate Authority of Electricity (APTEL). Hon'ble APTELÂ vide its Order dated November 26, 2021 (APTEL Order) set aside the Orders of MERC and remanded the matterÂ to MERC for fresh determination of captive status based on the opinion expressed in the APTEL Order. MERC videÂ its Order dated 16^thÂ March, 2022 (MERC Remand Order) held Unit 3 and Unit 4 of Sai Wardha Power GeneratingÂ Limited as captive generating plant for FY 2016-17 and FY 2017-18. MERC further held that 24.73 MUs and 53.53Â MUs for FY 2016-17 and FY 2017-18 respectively were injected from the non-captive units and thus unscheduledÂ power. Hence, the Distribution Licensees were directed to treat this unscheduled power in accordance with theÂ applicable provisions of the Electricity Act, 2003 and the relevant Rules and Regulations. However, DISCOMsÂ have filed an appeal against the APTEL Order before Hon'ble Supreme Court of India which is sub-judice. TheÂ Company has also filed appeal against the MERC Remand Order for limited issue of the units which were held asÂ Unscheduled Power.

The Hon'ble Maharashtra Electricity Regulatory Commission vide its dated February 09, 2018 in Case No.77 of 2015 for FY 2014-15 and order dated March 19, 2018 in Case No.159 of 2016 for FY 2015-16 (Original MERC Order)Â had upheld the captive status of the units of SWGPL for those years. However, it had treated the units supplied byÂ SWGPL from other two non-CGP units of SWGPL, as non-contracted power for 2015-16. MSEDCL has accordinglyÂ raised a supplementary bill of ' 33 million for the year 2015-16 towards the units supplied by SWGPL fromÂ non-CGP units. Thereafter MERC had in its review order, allowed review of the said MERC orders and held thatÂ the captive status of SWPGL be redetermined for FY 2014-15 and FY 2015-16. APTEL vide the APTEL Order set asideÂ the Review Order and upheld the Original MERC Orders holding SWPGL as captive for these two years as well.Â However, DISCOMs have filed an appeal against the APTEL Order before Hon'ble Supreme Court of India. TheÂ Company is also contesting the issue of non-CGP units of 2015-16.

During the year, the Hon'ble Supreme Court of India have delivered a common judgment on 9^thÂ October, 2023, whereby the Court has elucidated the interpretation of the relevant provisions of the Electricity Act, 2003 andÂ Rule 3 of the Electricity Rules, 2005. The Court has also mentioned that these principles shall be applied to theÂ facts and circumstances of each case. As per the record of proceedings issued separately, the matters will beÂ listed for hearing and disposal before the appropriate Bench of the Court.

** Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgement/decisionsÂ pending with various forums/authorities.

Further, the Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in the standaloneÂ financial statements. The management believes that the ultimate outcome of above proceeding will not haveÂ a material adverse effect on the Company's financial position and results of operations.

36. Employee Stock Option Scheme (ESOS 2007)

The Company instituted the Employees Stock Options Scheme 2007 (ESOS 2007) plan for employees in pursuance of a special resolution passed by the shareholders approving the scheme on July 25, 2007, amended by specialÂ resolution dated July 29, 2008, August 02, 2011 and pursuant to the Integrated scheme of Amalgamation andÂ Composite Scheme of Amalgamation in terms of High Court dated October 13, 2014. Further, the CompanyÂ instituted the Employees Stock Options Scheme 2015 (ESOS 2015) plan for employees in pursuance of a specialÂ resolution passed by the shareholders approving the scheme on September 15, 2015

Pursuant to the schemes, the Company has granted options to eligible employees at various exercise prices per equity share of ' 10 each. Under the terms of scheme, the vesting period will be spread equally over 4 yearsÂ (ESOS 2007) and 3 years (ESOS 2015). Options will vest at 25% (ESOS 2007) and 33% (ESOS 2015) from the grantÂ date. When exercisable, each option is convertible into one equity share of the Company.

38. Â Â Â Additional disclosures required by schedule III

(i) Â Â Â The Company do not have any Benami property, where any proceeding has been initiated or pendingÂ against the Company for holding any Benami property.

(ii) Â Â Â The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond theÂ statutory period,

(iii) Â Â Â The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

(iv) Â Â Â The Company have not any such transaction which is not recorded in the books of accounts that has beenÂ surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961Â (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)

(v) Â Â Â The Company does not have any investments through more than two layer of investment companies asÂ per section 2(87)(d) and section 186 of Companies Act, 2013

(vi) Â Â Â The Company has not revalued any of its Property, Plant and Equipment (including Right-of-Use Assets)Â during the year.

(vii) Â Â Â The Company is not declared as willful defaulter by any bank or financial institution (as defined under theÂ Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on willfulÂ defaulters issued by the Reserve Bank of India.

39.Â Â Â Â The Company have not advanced or loaned or invested funds to any other person(s) or entity(is), including

foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) Â Â Â directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or onÂ behalf of the company (Ultimate Beneficiaries) or

(b) Â Â Â provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

40.Â Â Â Â The Company have not received any fund from any person(s) or entity(is), including foreign entities (Funding

Party) with the understanding (whether recorded in writing or otherwise) that the Group shall:

(a) Â Â Â directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or onÂ behalf of the Funding Party (Ultimate Beneficiaries) or

(b) Â Â Â provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

41.Â Â Â Â The following table summarises the transactions with the companies struck off under section 248 of the

Companies Act, 2013 or section 560 of Companies Act, 1956 for the year ended / as at December 31, 2023:

42.Â Â Â Â Secured Loan with only bank of Baroda non fund base for the period was ' 110 million. The quarterly returns orÂ statements filed by the Company for working capital limits with Bank of Baroda banks are in agreement with theÂ books of account of the Company except for statements filed for quarters ended March, 2023/ September, 2023/Â March, 2022/ June, 2022 and September, 2022 where differences were noted between the amount as per booksÂ of account for respective quarters and amount as reported in the quarterly statements. The differences are dueÂ to some of the items where not taken while reporting to banks due to grouping mismatch. The differences wereÂ in case of Payables with respect to period ended March, 2023/ September, 2023/ March, 2022/ June, 2022 andÂ September, 2022 are 173.36 million/ 109.60 million/ 652.18 million/ 682.09 million and 941.07 million respectively.Â For Receivables with respect to period March, 2022 difference was 102.89 million.

43.Â Â Â Â There are no significant events subsequent to year ended 31 December 2023.

Dec 31, 2022

Nature and purpose of Reserves

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilized in accordance

with the provisions of the law.

Equities settled employees'' benefits reserve

The Equities settled employees benefits reserve is used to recognize the grant date fair value of options issued

to employees under the MCIE Stock Options Scheme.

Capital reserve

Capital reserve is reserves generated on account of:

1. Merger under the Integrated Scheme of Amalgamation and the Composite Scheme of Amalgamation (Sections 391-395 of the Companies Act, 1956) for the merger of Mahindra Ugine Steel Company Limited (MUSCO), Mahindra Hinoday Industries Limited (MHIL), Mahindra Gears International Limited (MGIL), Mahindra Investment India Private Limited (MIIPL), Participaciones Internacionales Autometal Tres S.L. (PIA3) and Mahindra Composites Limited (MCL). The merger was approved by the Honorable High Court of Judicature at Bombay on October 31, 2014. The Schemes came into effect on December, 10, 2014, the day on which the order was delivered to the Registrar of Companies. The reserve is capital in nature and is not available for distribution as dividend.

2. Merger under the Scheme of Amalgamation (Sections 230-234 and other applicable provisions of the Companies Act, 2013) of Mahindra Gears and Transmission Private Limited, Mahindra Forging Global Limited, Mahindra Forging International Limited and Crest Geartech Private Ltd. The merger was approved

by the Honorable National Company Law Tribunal (NCLT) at Mumbai on December 13, 2017. The reserve is capital in nature and is not available for distribution as dividend.

General reserve

General reserve created by virtue of merger of Mahindra Stokes Holding Company Limited, Mahindra Forgings Overseas Limited and Mahindra Forgings Mauritius Limited into the Company vide High Court Order dated 27th December, 2007, is reserve available for distribution as dividend.

Capital redemption reserve

Capital redemption reserve is transferred by virtue of the merger referred to above, which was in the books of MUSCO and was created to redeem preference shares issued by MUSCO before merger. These shares have since been redeemed and this reserve is available for use as per the relevant provisions of Companies Act, 2013.

# Provision of g 262 million is towards an ongoing dispute with the Irrigation Department (Water Resource Department) in respect of levy of charge for use of water for the period July 1991 to May 2012 for an aggregate amount of g 587 million including penal charge of g 102 million and late fee charge of g 223 million. Presently the matter is being legally pursued. The Company has provided g 262 million towards arrears of water charges. Refer Note 30 Contingent liabilities and commitments.

a Provision of g 120 million (31 December, 2021: g 145 Million)has been recognised for Provident Fund liability basis Supreme Court judgement in ''Regional provident fund commissioner (ll) West Bengal vs Vivekananda Vidyamandir and Others'' in accordance with Ind AS-37. The remaining amount pertains to provision against levy of cross subsidy charges and additional surcharge by Maharashtra State Electricity Distribution Company Limited during the year on account of power consumption from non-captive generating plant.

* This represents provisions made for probable liabilities payable to regulatory authorities. Above provisions are affected by various uncertainities and management has taken all efforts to make a best estimate. It is not practicable for the Company to estimate the accurate timing of cash outflows, if any, in respect of the above.

*The Finance Act, 2021 has introduced an amendment to section 32 of the Income Tax Act, 1961, whereby Goodwill of a business will not be considered as a depreciable asset and depreciation on goodwill will not be allowed as deductible expenditure effective April 1, 2020.

In accordance with the requirements of Ind AS 12 - Income Taxes, the Company has recognised tax expense amounting to '' 1,426 million as the outcome on the difference between Goodwill as per the books of account and its updated tax base of NIL resulting from the aforementioned amendment, in addition to the current tax expense debited to the statement of profit and loss. This deferred tax liability is not expected to be a cash outflow in the future and its reversal is deemed unlikely as the value of its associated goodwill is expected by value in use.

29. Employee benefits plans

(a) Defined Contribution plan

The Company''s contribution to Provident Fund and other funds aggregating ^ 128 Million 147 Million) has been recognised in the statement of Profit or Loss under the head Employee Benefit expenses.

(b) Defined benefit plans

(i) Gratuity

The Company operates gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company''s 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 Company gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

(ii) Voluntary Retirement Scheme

Onetime expenses incurred towards voluntary retirement scheme are charged off in the statement of Profit and loss.(Refer Note 33)

(iii) Compensated absences

Company''s liability towards leave encashment are determined using the Projected Unit Credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognised on straight line basis over the statement of Profit or loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by reference to market yields at the Balance Sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

Through its defined benefit plans the Company is exposed to risks, the most significant of which are detailed below:

(i) Asset Volatility

The plan liabilities are calculated using a discount rate set with references to government bond yields; if plan assets under perform compared to the government bond''s discount rate, this will create or increase a deficit.

(ii) Changes in Bond Yields

A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plans'' bond holdings.

30. Contingent Liabilities and Commitments Contingent liabilities (to the extent not provided for): (a) Claims against the Company not acknowledged as debt		31 December, 2022	31 December, 2021
	Income tax claims against which the Company has preferred an appeal	515	499
	Excise cases against the Company	138	104
	Service Tax	62	69
	Sales Tax and VAT	6	47
	MSEDCL Related Litigations *	504	504
	Stamp Duty, Government Cess and others	108	107
	Water Charges (Refer Note 18)	325	325
(b)	The Company had imported capital goods under the Export Promotion Capital Goods (epcg), of the Government of India, at concessional rate of duty on an understanding to fulfill quantified exports against future obligation. Commitment	5	5
	Capital expenditure contracted for at the end of the reporting period but not recognized as liabilities.	675	993

Maharashtra State Electricity Distribution Company Limited (MSEDCL) has levied the Cross Subsidy Surcharge (CSS) and Additional Surcharge levied (ASC) on the units of power consumed by the Company from two Captive Generating Plant (CGP) Units of Sai Wardha Power Generation Limited (SWPGL) as a captive consumer. The Hon''ble Maharashtra Electricity Regulatory Commission (MERC) vide its separate orders dated October 22, 2020 and October 29, 2020 has rejected the captive status of the said two CGP units of SWPGL for the year 2016-17 and the year 2017-18 respectively. MSEDCL has raised supplementary invoices of '' 208 million (including interest) for the year 2016-17 and of '' 263 million (including interest) for the year 2017-18 towards alleged Cross Subsidy Surcharge and Additional Surcharge applicable for non-captive power consumption. The Company has challenged the impugned orders before Hon''ble Appellate Authority of Electricity (APTEL). Hon''ble APTEL vide its Order dated November 26, 2021 (APTEL Order) set aside the Orders of MERC and remanded the matter to MERC for fresh determination of captive status based on the opinion expressed in the APTEL Order. MERC vide its Order dated 16th March, 2022 (MERC Remand Order) held Unit 3 and Unit 4 of Sai Wardha Power Generating Limited as captive generating plant for FY 2016-17 and FY 2017-18. MERC further held that 24.73 MUs and 53.53 MUs for FY 2016-17 and FY 2017-18 respectively were injected from the non-captive units and thus unscheduled power. Hence, the Distribution Licensees were directed to treat this unscheduled power in accordance with the applicable provisions of the Electricity Act, 2003 and the relevant Rules and Regulations. However, DISCOMs have filed an appeal against the APTEL Order before Hon''ble Supreme Court of India which is sub-judice. The Company has also filed appeal against the MERC Remand Order for limited issue of the units which were held as Unscheduled Power. Both the appeals are sub-judice.

The Hon''ble Maharashtra Electricity Regulatory Commission vide its dated February 09, 2018 in Case No.77 of 2015 for FY 2014-15 and order dated March 19, 2018 in Case No.159 of 2016 for FY 2015-16 (Original MERC Order) had upheld the captive status of the units of SWGPL for those years. However, it had treated the units supplied by SWGPL from other two non-CGP units of SWGPL, as non-contracted power for 2015-16. MSEDCL has accordingly raised a supplementary bill of '' 33 million for the year 2015-16 towards the units supplied by SWGPL from non-CGP units. Thereafter MERC had in its review order, allowed review of the said MERC orders and held that the captive status of SWPGL be redetermined for FY 2014-15 and FY 2015-16. APTEL vide the APTEL Order set aside the Review Order and upheld the Original MERC Orders holding SWPGL as captive for these two years as well. However, DISCOMs have filed an appeal against the APTEL Order before Hon''ble Supreme Court of India which is sub-judice. The Company is also contesting the issue of non-CGP units of 2015-16.

36. Employee Stock Option Scheme (ESOS 2007)

The Company instituted the Employees Stock Options Scheme 2007 (ESOS 2007) plan for employees in pursuance of a special resolution passed by the shareholders approving the scheme on July 25, 2007, amended by special resolution dated July 29, 2008, August 02, 2011 and pursuant to the Integrated scheme of Amalgamation and Composite Scheme of Amalgamation in terms of High Court dated October 13, 2014. Further, the company instituted the Employees Stock Options Scheme 2015 (ESOS 2015) plan for employees in pursuance of a special resolution passed by the shareholders approving the scheme on September 15, 2015.

Pursuant to the schemes, the Company has granted options to eligible employees at various exercise prices per equity share of ^10 each. Under the terms of scheme, the vesting period will be spread equally over 4 years (ESOS 2007) and 3 years (ESOS 2015). Options will vest at 25% (ESOS 2007) and 33% (ESOS 2015) from the grant date. When exercisable, each option is convertible into one equity share of the Company.

38. Additional disclosures required by schedule III

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company do not have any transactions with companies struck off under section 248 of the Companies. Act, 2013.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

(v) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(vi) The Company does not have any investments through more than two layer of investment companies as per section 2(87)(d) and section 186 of Companies Act, 2013.

(vii) The Company has not revalued any of its Property, Plant and Equipment (including Right-of-Use Assets) during the year.

(viii) The Company is not declared as willful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India.

39. The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including

foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

40. The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding

Party) with the understanding (whether recorded in writing or otherwise) that the Group shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

41. The following table summarises the transactions with the companies struck off under section 248 of the

Companies Act, 2013 or section 560 of Companies Act, 1956 for the year ended / as at December 31, 2022:

42. The Board of Directors of company at their meeting held on February 22, 2023 recommended final dividend of g 2.5 per Equity Share of g 10 each fully paid up for finacial year 2022 (g 2.50 per Equity Share of g 10 each fully paid up for finacial year 2021)

43. Secured Loan with only bank of Baroda for non fund base Rs.110 million. The quarterly returns or statements filed by the Company for working capital limits with Bank of Baroda banks are in agreement with the books of account of the Company except for statements filed for quarters ended March 31, 2021/ June, 2021/ September, 21/ December, 21/March, 22/ June, 22 and September, 22 where differences were noted between the amount as per books of account for respective quarters and amount as reported in the quarterly statements. The differences are due to some of the items where not taken while reporting to banks due to grouping mismatch. The differences were in case of Payables with respect to period March, 21/ June, 21/ September, 21/ December, 21/ March, 22/ Jun,22/ September, 22 are 944 million/ 1379 million/ 1032 million/ 1605 million/ 652 million /682 million and 941 million. For Receivables with respect to period March, 21/ June, 21/ September, 21/ December, 21/ March, 22 differences are 12 million/ 229 million/ 126 million/ 349 million/ 103 million and for Inventory with respect to period September 21 and December 21 differences are 39 million and 92 million respectively. These statements were subsequently rectified and submitted to the respective banks.

44. The previous year''s financial statements were audited by a firm other than B S R & Co. LLP.

45. Previous period figures have been regrouped/reclassified, wherever necessary to conform to the recent changes in Schedule Ill of the Companies Act, 2013.

Dec 31, 2018

1. Denned benefits and contribution

(a) Defined Contribution plan

The Companyâs contribution to Provident Fund and other funds aggregating '' 163 Million ('' 125 Million) has been recognized in the statement of Profit or Loss under the head Employee Benefit expenses.

(b) Defined benefit plans

(i) Gratuity

The Company operates gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Companyâs 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 Company gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

(ii) Voluntary Retirement Scheme

Onetime expenses incurred towards voluntary retirement scheme are charged off in the statement of Profit or loss.

(iii) Compensated absences

Companyâs liability towards leave encashment are determined using the projected Unit Credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognized on straight line basis over the statement of Profit or loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by reference to market yields at the Balance Sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(c) Risks

Through its defined benefit plans the Company is exposed to risks, the most significant of which are detailed below:

(i) Asset Volatility

The plan liabilities are calculated using a discount rate set with references to government bond yields; if plan assets under perform compared to the government bondâs discount rate, this will create or increase a deficit.

(ii) Changes in Bond Yields

A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plansâ bond holdings.

Water Charges:

The Company has an ongoing dispute pertaining to the Stamping Division of the Company [formerly known as Mahindra Ugine Steel Company Limited (MUSCO)] with the Irrigation Department (Water Resource Department) in respect of levy of charge for use of water from Patalganga River, for the period from July 1991 to May 2012 for an aggregate amount of'' 587 Million including penal charge of'' 102 Million and late fee charge of? 223 Million. Presently the matter is pending before the Honâble High Court of Bombay (âthe Courtâ) where the Company had filed a writ and the Court, vide Order dated 2^nd July, 2012, has admitted the writ petition of the Company. In compliance with the Order admitting the Companyâs petition, the Company has deposited an amount of'' 233 Million with the Irrigation Department, being the arrears of water charges for the period from July 1991 to May 2012 and has also given a bank guarantee towards penal rate charges of? 102 Million claimed by the Irrigation Department. The High Court has also allowed the Irrigation Department to withdraw the amount of arrears of'' 29 Million deposited earlier by the Company with it in respect of disputed water charge claim for the period from July 1991 to March 2001. As per the Order, the Company is entitled to pursue the proceedings filed by it before the Honorable Bombay High Court and that the State of Maharashtra (Irrigation Department) shall not adopt any coercive steps for recovery of the aforesaid penal rate charges of'' 102 Million and the late fee of'' 223 Million.

The company leases various factory premises and offices under non-cancellable operating leases expiring within 1 to 5 years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

2. Related Party Transactions

Names of Related Parties

(a) Ultimate Holding Company - CIE Automotive S.A.

Principal Shareholder of the Holding Company - CIE Berriz, S.L Holding Company - Participations Internacionales Autometal, DOS S.L

(b) Names of Subsidiary Companies No. Name of the Company

1 Stokes Group Limited

2 Stokes Forgings Limited

3 Stokes Forgings Dudley Ltd.

4 MahindraForgingsEurope AG

5 Jeco Jellinghaus GmbH Jeco

6 Gesenkschmiede Schneider GmbH

7 Falkenroth Umformtechnik GmbH

8 Schoneweiss & Co. GmbH

9 CIE Galfor S. A.U

10 CIELegazpiS.A.,

11 UABCIELT Forge

12 MetalcastelloS.p.A.

13 Bill Forge Private Limited

14 BF Precisions Private Limited

15 Bill Forge de Mexico S.Ade C.V.

16 Bill Forge Global DMCC, Dubai (upto 24^th September, 2017)

17 Mahindra Forgings International Limited (upto 30^th June, 2017)

18 Mahindra Forgings Global Limited (upto 30^th June, 2017)

19 Mahindra Gears & Transmission Private Limited (upto 30^th June, 2017)

20 Crest Geartech Private Limited (upto 30^th June, 2017)

1 Gescrap India Private Limited (w.e.f27^th March, 2018)

(d) Names of the Companies exercising significant influence over the Company where transactions have taken place during the period

A) Mahindra Vehicle Manufacturers Limited(MVML) (investing company in respect of which the Company is an Associate)

B) Mahindra & Mahindra Limited (M&M) (Holding Company of the investing company in respect ofwhich the Company is an Associate.)

(e) Names of other related parties where transactions have taken place during the period Fellow Subsidiaries

1 Gameko FabricaciOn de Components, S.A.

Subsidiary Companies of the investing company (MVML) in respect of which the Company is an Associate

1 Mahindra Intertrade Limited

2 Mahindra Steel Service Centre Limited

3 Mahindra Auto Steel Private Limited

4 Mahindra Electric Mobility Limited (Formerly known as Mahindra Reva Electric Vehicles Limited) (Name changed w.e.f. 15.02.2017)

5 Mahindra Heavy Engines Limited

6 Mahindra Middle East Electrical Steel Service Centre

7 Mahindra Two Wheelers Limited

8 Mahindra MSTC Recycling Private Limited

Fellow Subsidiary Companies of the investing company (MVML)

1 Mahindra Trucks & Buses Private Limited

2 Gromax Agri Equipmentâs Limited (Formerly known as Mahindra Gujarat Tractor Limited)

3 Mahindra Integrated Business Solutions Private Limited

4 NBS International Limited

5 Mahindra Sanyo Special Steels Private Limited

6 Mahindra Consulting Engineers Limited

7 Defence Land Systems Limited (upto 18^th October, 2017)

8 Mahindra Defence Naval Systems Limited (Formerly known as Mahindra Defence Naval Systems Private Limited)

9 Mahindra Logistics Limited

10 Bristlecone Limited

(f) Key Managerial Personnel (KMP)

No. Name Designation

1 Mr. Hemant Luthra Chairman (upto 31^st March, 2018)

Non-Executive Chairman (w.e.f 1^st April, 2018)

2 Mr. AntonioMariaParadera Director (upto 16^th October, 2018)

3 Mr. Jesus Marice Herrera Director

4 Mr. Ander Arenaza Alvarez ExecutiveDirector

5 Mr. Zhooben Bhiwandiwala Director

6 Mr. Shriprakash Shukla Director

7 Mr. K Ramaswami Director (upto 3^rd October, 2017)

8 Mr. Daljit Mirchandani Director

9 Mr. Dhananjay Mungale Director

10 Mr.ManojMaheshwari Director

11 Mrs Neelam Deo Director

12 Mr. Juan Maria Bilbao Ugarizza Director

13 Mr.JoseSabinoVelascolbnaz Director (upto 20^th February, 2018)

14 Mr. Suhail Nathani Director

As gratuity and compensated absences are computed for all the employees in aggregate, the amount relating to the key managerial personnel, cannot be individually identified.

3 Earnings per share

a) Calculation of basic and diluted earnings per share

Basic earnings per share are calculated by dividing the profit attributable to the parent Companyâs shareholders by the weighted average number of ordinary shares in the year.

4. Exceptional Items

Exceptional Items relating to current year:

a. Provision for impairment on additional investment in Stokes Group Limited, wholly owned subsidiary of Company, amounting to '' 1,161 Million, to facilitate closure of business. Company does not anticipate any amount to be recovered from this investment. Hence, the Company has recognized full impairment loss on the said investment.

b. Loss on sale of investment in Mahindra Forgings Europe AG (MFE), one of the wholly owned subsidiaries of the Company, to CIE Galfor S.A. (Galfor), another wholly owned subsidiary of the Company amounting to '' 125 Million.

Exceptional Items relating to previous year:

Onetime payment made to employees opting for early retirement under The Voluntary Retirement Scheme declared in November 2017 in Forgings division.

5. Segment Information

In accordance with paragraph 4 of notified IND AS 108 âOperating Segmentsâ, the Company has disclosed segment information only in consolidated financial statements.

6. The Company instituted the Employees Stock Options Scheme 2007 (ESOS 2007) plan for employees in pursuance of a special resolution passed by the shareholders approving the scheme on July 25, 2007, amended by special resolution dated July 29, 2008, August 02, 2011 and pursuant to the Integrated scheme of Amalgamation and Composite Scheme of Amalgamation in terms of High Court dated October 13, 2014. Further, the company instituted the Employees Stock Options Scheme 2015 (ESOS 2015) plan for employees in pursuance of a special resolution passed by the shareholders approving the scheme on September 15, 2015.

Pursuant to the schemes, the Company has granted options to eligible employees at various exercise prices per equity share of '' 10 each. Under the terms of scheme, the vesting period will be spread equally over 4 years (ESOS 2007) and 3 years (ESOS 2015). Options will vest at 25% (ESOS 2007) and 33% (ESOS 2015) from the grant date. When exercisable, each option is convertible into one equity share of the Company.

7. Revenue from operations for the year ended 31^st December, 2017 include excise duty for the period April to June 2017 which is discontinued with effect from 1^st July, 2017 upon implementation of Goods and Services Tax (âGSTâ) in India. In accordance with Ind AS 18 âRevenueâ, GST is not included in revenue from operation. In view of the aforesaid restructuring of Indirect taxes, Revenue from operation for the year ended 31^st December, 2018 and year ended 31^st December, 2017 are not comparable.

8. Events occurring after the reporting period

There are no reportable events occurring after the reporting period.

9. Previous year figures have been regrouped and/or reclassified wherever found necessary in order to conform to this yearâs classification.

Dec 31, 2017

a) Amendment to Ind AS 7 :

The amendment in Ind AS 7 introduces an additional disclosure that will enable the users of financial statements to evaluate changes in liabilities arising from financing activities. These include changes arising from

(i) Cash flows, such as drawdownâs and repayments of borrowings

(ii) Non-cash changes (i.e. changes in fair values) , changes resulting from acquisitions and disposals of subsidiaries/ businesses and the effect of foreign exchange differences. Hence, the amendment will enable the users of financial statements to better understand the changes in entity''s debt.

The Company does not have such transactions and therefore the amendment is not expected to have any impact on the financial statements.

b) Amendment to Ind AS 102 :

The amendment in Ind AS 102 addresses three classification and measurement issues. These relate to :-

(i) Measurement of cash-settled share-based payments that include non-market based performance condition

(ii) Modification of cash-settled arrangements to equity-settled share-based payments

(iii) Equity-settled awards that include a ''net-settlement'' feature relating to tax obligations

The Company does not have share based payment awards. Hence, the amendment is not expected to have any impact on the financial statements.

1. Financial risk management

2. Financial risk factors

The Company''s activities expose it to a variety of financial risks viz. market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Company''s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company''s financial performance.

a. Market risk (i) Foreign Currency Risk:-

The Company has several investments in foreign operations whose net assets are denominated in EURO, exposing it to foreign exchange translation risk.

The exposure on the rest of the assets denominated in other foreign currencies in respect of operations is not material.

(ii) Interest rate risk

The Company''s borrowings are largely benchmarked to variable rates. The expectation of any change in the benchmark rate is monitored regularly and hedging is initiated as and when required.

The Company believes that the on-going initiatives will prevent liquidity shortfalls. In this respect, management expects that the cash generated will be sufficient to service payment obligations for the year without problem.

The Company monitors the Company''s forecast liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining enough headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants on any of its borrowing facilities.

Noteworthy is the existence at 31 December 2017 of Rs, 2,601 million in unused loans and credit lines (31 December 2016: INR 1,400 million).

One of the Company''s strategies is to ensure the optimization and maximum saturation of the resources assigned to the business. The Company therefore pays special attention to the net operating working capital invested in the business. In this regard, as in previous years, considerable work has been performed to control and reduce collection periods for trade and other receivables, as well as to optimize accounts payable with the support of banking arrangements to mobilize funds and minimize inventories through logistic and industrial management, allowing JIT (just in time) supplies to our customer.

As a result of the above, it may be confirmed that there are no significant liquidity risks at the Company.

c. Credit Risk

Credit risk from cash and cash equivalents, derivative financial instruments and bank deposits is considered immaterial in view of the creditworthiness of the banks the Company works with. If management detects liquidity risk in respect of its banks under certain specific circumstances, it recognizes impairment provisions as warranted.

In addition, company has specific policies for managing customer credit risk; these policies factor in the customersâ financial position, past experience and other customer specific factors.

With respect to customer credit limits, it should be noted that the Company policy is to spread its volumes across customers or manufacturing platforms.

One of the customer group exceeds 10% of the Company''s turnover for the years 2017 and 2016. Sales to this customer in 2017 are '' 12,475 Mio. (2016: '' 9,014 Mio.)

d. Raw material price risk

The Company does not have significant risk in raw material variations. In case of any variation in price, the same is passed on to customers through appropriate adjustments to selling prices.

3. Fair Value estimation Fair value measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities

- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period (Refer Note 21).

4. Capital risk management

The Company''s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for the other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company can adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry the Company monitors capital on the basis of the leverage ratio, this ratio is calculated as net debt divided by total capital employed. Net debt is calculated as total borrowings plus current financial liabilities less cash, cash equivalents and current financial assets, all of which are shown in the annual accounts. Total capital employed is calculated as ''equity'', as shown in the consolidated annual accounts, plus net debt.

5. Accounting estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions affecting the application of accounting policies and the amounts presented under assets and liabilities, income and expenses. Actual results may differ from these estimates.

a) Estimated impairment loss on goodwill

The Company tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-generating units basically which were determined on the basis of calculations of value in use did not give rise to impairment risks on the Company''s goodwill at 31^st December 2017.

b) Estimated fair value of assets, liabilities and contingent liabilities associated with a business combination.

In business combinations, the Company classifies or designates, at the acquisition date, the identifiable assets acquired and liabilities assumed as necessary, based on contractual agreements, financial conditions, accounting policies and operating conditions or other pertinent circumstances that exist at the acquisition date.

The measurement of the assets acquired and liabilities assumed at fair value requires the use of estimates that depend on the nature of those assets and liabilities in accordance with their prior classification and which, in general, are based on generally accepted measurement methods that take into consideration discounted cash flows associated with those assets and liabilities, comparable quoted prices on active markets and other procedures, as disclosed in the relevant notes to the annual financial statements, broken down by nature. In the case of the fair value of property, plant and equipment the Company uses appraisals prepared by independent experts.

c) Income tax

Income tax expense for the period ended 31^st December 2017 has been estimated based on profit before taxes, as adjusted for any permanent and/or temporary differences envisaged in tax legislation governing the corporate income tax base calculation. The tax is recognized in the income statement, except insofar as it relates to items recognized directly in equity, in which case, it is also recognized in equity.

Tax credits and deductions and the tax effect of applying tax-loss carry forwards that have not been capitalized are treated as a reduction in the corporate income tax expense for the year in which they are applied or offset.

The calculation of income tax expense did not require the use of significant estimates except in tax credits recognized in the year, which was at all times consistent with the annual financial statements.

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated annual accounts. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred taxes on temporary differences are recognized when arising on investments in subsidiaries, associates and joint ventures, except in those cases where the Company can control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax assets deriving from the carry forward of unused tax credits and unused tax losses are recognized to the extent that it is probable that future taxable profit will be available against which the tax assets can be utilized. In the case of investment tax credits the counterpart of the amounts recognized is the deferred income account. The tax credit is accrued as a decrease in expense over the period during which the items of property, plant and equipment that generated the tax credit are depreciated, recognizing the right with a credit to deferred income.

d) Pension benefits

The present value of the Company''s pension obligations depends on a series of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.

The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Company considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation. Other key assumptions for employee benefits are based in part on current market conditions.

Other forecast movements in cash flows related to tax are projected to these EBITDA''s to obtain after-tax free cash flow for each year.

The result of using before-tax cash flows and discount rates does not differ significantly from the outcome of using after-tax cash flows and discount rates. Cash flows beyond the five-year period covered by the Company''s forecasts are extrapolated applying prudent assumptions with respect to the forecast future growth rate 6% based on GDP growth estimates and the inflation rate in each market, and evaluating the level of investment required to achieve such growth. In order to calculate the residual value, a normalized annual flow is discounted, taking into account the discount rate applied on the projections, less the growth rate taken into account.

b) Results of the analysis

Based on the above assessment, the Company concluded that in 2017, goodwill has not suffered any impairment. Additionally, if the revised estimated discount rate, which is applied to cash flows, were 10% higher than management''s estimates, the Company would still not need to reduce the carrying value of goodwill.

1. During the year, the Company had filed an application for merger of four of its subsidiaries namely Mahindra Forgings International Limited (MFIL), Mahindra Forgings Global Limited (MFGL), Mahindra Gears & Transmission Private Limited (MGTPL) and Crest Geartech Private Limited (Crest Geartech) (âTransferor Companiesâ) with the Company. Pursuant to the Order of Hon''ble National Company Law Tribunal bench, Mumbai , passed on December 13, 2017, approving the Scheme of Amalgamation (âthe Schemeâ), the assets and liabilities of the Transferor Companies have been transferred to and vested in the Company with effect from July 01, 2017, the appointed date as per the Scheme. As a result of this, in accordance with Appendix C to Ind AS 103, Business Combinations, all the assets and liabilities of Transferor Companies as on June 30, 2017 are recognized in the books of the Company at their carrying amounts as appearing in the consolidated financial statements of the Company as on July 01, 2017 (being the appointed date as per the aforesaid scheme of amalgamation). Accordingly, numbers are not comparable.

2. The Company has investment of Rs,. 6,974 Mio in Mahindra Forgings Europe AG (MFE AG), Germany. After the significant decline in demand due to economic downturn in Europe and some onetime costs due to one plant closure, MFE AG results got impacted in 2015 and 2016. Actions initiated by the new management team have shown significant improvement in results for 2017. In view of this and the expected improvements, the Company is of the view that, there is no diminution in the Company''s investments in MFE AG.

Equity shares have a par value of Rs,10/-. They entitle the holder to participate in dividends, and to share in the proceeds of winding up the company in proportion to the number of and amounts paid on the shares held.

Every holder of equity shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote.

Reconciliation of the number of shares outstanding at the beginning and at the end of the year.

*Shareholders of the Company had approved reclassification of authorised preference share capital vide EGM held on 13^th Oct 2016. Amount is below the rounding off norm adopted by the Company.

**Authorised Share capital of the Company has increased pursuant to the merger scheme (Note 8a)

^AMahindra Composites Limited which was merged with the company in the year 2013 had issued 1050 equity shares and not allotted the same to the shareholders. Based on the swap ratio the Company has issued 945 equity shares and not allotted the same and the same has been kept in abeyance.

Details of shares held by the holding Company, the ultimate holding Company, their subsidiaries and associates

Capital reserve

Capital reserve is reserves generated on account of merger under the Integrated Scheme of Amalgamation and the Composite Scheme of Amalgamation (Sections 391-395 of the Companies Act, 1956) for the merger of Mahindra Ugine Steel Company Limited (MUSCO), Mahindra Hinoday Industries Limited (MHIL), Mahindra Gears International Limited (MGIL), Mahindra Investment India Private Limited (MIIPL), Participaciones Internacionales Autometal Tres S.L. (PIA3) and Mahindra Composites Limited (MCL). The merger was approved by the Honorable High Court of Judicature at Bombay on October 31, 2014. The Schemes came into effect on December 10, 2014, the day on which the order was delivered to the Registrar of Companies. The reserve is capital in nature and is not available for distribution as dividend.

Addition to capital reserve during the year is on account of merger under the Scheme of Amalgamation (Sections 230-234 and other applicable provisions of the Companies Act, 2013) of Mahindra Gears and Transmission Pvt Ltd, Mahindra Forging Global Limited, Mahindra Forging International Limited and Crest Geartech Pvt Ltd. The merger was approved by the Honorable National Company Law Tribunal (NCLT) at Mumbai on December 13, 2017. The reserve is capital in nature and is not available for distribution as dividend.

General reserve

General reserve created by virtue of merger of Mahindra Stokes Holding Company Limited, Mahindra Forgings Overseas Limited and Mahindra Forgings Mauritius Limited into the Company vide High Court Order dated December 27, 2007 is reserve available for distribution as dividend.

Capital redemption reserve

Capital redemption reserve is transferred by virtue of the merger referred to above which was in the books of MUSCO and was created to redeem preference shares issued by MUSCO before merger. These shares have since been redeemed and this reserve is available for distribution.

6. Defined benefits and contribution (a) Defined Contribution plan

The Company''s contribution to Provident Fund aggregating ''125 Million ('' 105 Million) has been recognized in the statement of Profit or Loss under the head Employee Benefit expenses.

(b) Defined benefit plans

(i) Gratuity

The Company operates gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company''s 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 Company gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

(ii) Voluntary Retirement Scheme

Onetime expenses incurred towards voluntary retirement scheme are charged off in the statement of Profit or loss.

(iii) Compensated absences

Company''s liability towards leave encashment are determined using the projected Unit Credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognized on straight line basis over the statement of Profit or loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by reference to market yields at the Balance Sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(c) Risks

Through its defined benefit plans the Company is exposed to risks, the most significant of which are detailed below:

(i) Asset Volatility

The plan liabilities are calculated using a discount rate set with references to government bond yields; if plan assets under perform compared to the government bonds discount rate, this will create or increase a deficit.

(ii) Changes in Bond Yields;

A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plans'' bond holdings.

Water Charges:

The Company has an ongoing dispute pertaining to the Stamping Division of the Company [formerly known as Mahindra Ugine Steel Company Limited (MUSCO)] with the Irrigation Department (Water Resource Department) in respect of levy of charge for use of water from Patalganga River, for the period from July 1991 to May 2012 for an aggregate amount of '' 587 Million including penal charge of '' 102 Million and late fee charge of '' 223 Million. Presently the matter is pending before the Hon''ble High Court of Bombay (âthe Courtâ) where the Company had filed a writ and the Court, vide Order dated 2^nd July, 2012, has admitted the writ petition of the Company. In compliance with the Order admitting the Company''s petition, the Company has deposited an amount of '' 233 Million with the Irrigation Department, being the arrears of water charges for the period from July 1991 to May 2012 and has also given a bank guarantee towards penal rate charges of '' 102 Million claimed by the Irrigation Department. The High Court has also allowed the Irrigation Department to withdraw the amount of arrears of '' 29 Million deposited earlier by the Company with it in respect of disputed water charge claim for the period from July 1991 to March 2001. As per the Order, the Company is entitled to pursue the proceedings filed by it before the Honorable Bombay High Court and that the State of Maharashtra (Irrigation Department) shall not adopt any coercive steps for recovery of the aforesaid penal rate charges of '' 102 Million and the late fee of '' 223 Million.

7. Related Party Transactions

(a) Names of Related Parties

Ultimate Holding Company - CIE Automotive S.A.

Holding Company - Participaciones Internacionales Autometal, DOS S.L

Associate Company - Mahindra Vehicle Manufactures Limited, the investing Company in respect of which the Company is an associate w.e.f. Dec 30, 2015

(b) Names of Related Parties where transactions have taken place during the period (Fellow Subsidiaries)

Subsidiary Companies

No. Name of the Company

1 Stokes Group Limited(SGL)

2 CIE Galfor SA(Galfor)

3 Bill Forge Private Limited(BF)

4 Mahindra Forgings Europe AG (MFE) (subsidiary of MFIL)

5 Mahindra Gear Global Limited (Till 1^st June, 2017)

6 Mahindra Gear Tranmission Private Ltd (Till 30^th June, 2017)

7 Mahindra Forgings International Limited (Till 30^th June, 2017)

8 Crest Geartech Private Limited (Till 30^th June, 2017)

9 Mahindra Forgings Global Limited (MFGL) (Till 30^th June, 2017)

Step Down subsidiary companies

10 Gesenkschmiede Schneider GmbH(subsidiary of MFE)

11 Jeco Jellinghaus GmbH(subsidiary of MFE)

12 Falkenroth Unformtechnik GmbH(subsidiary of MFE)

13 Schonoeweiss & Co GmbH(subsidiary of MFE)

14 Stokes Forgings Dudley Limited(subsidiary of SGL)

15 Stokes Forgings Limited(subsidiary of SGL)

16 CIE Legazpi SA(subsidiary of Galfor)

17 UAB CIE LT Forge (subsidiary of Galfor)

18 Metalcastello S.p.A (MC)(subsidiary of MGGL)

19 Bill Forge Precision Private Limited (subsidiary of BF)

20 Bill Forge Global DMCC (BFG) (subsidiary of BF) (Till 25^th September, 2017)

21 Bill Forge Mexico S. DE R. L. DE C V (subsidiary of BFG)

Fellow subsidiaries

No. Name of the Company

1 CIE Berriz, S.L.

2 Grupo Componentes Vilanova, S.L.

3 CIE Mecauto, S.A., Sociedad Unipersonal

4 CIE Compiegne, S.A.S.

5 Praga Louny

6 Componentes de Automocion Recytec, S.L.U

7 Componentes de Direccion Recylan S.L.U.

8 Nova Recyd, S.A.U.

9 CIE Metal CZ, s.r.o.

10 Nanjing Automotive Forging Co., Ltd

11 CIE Automotive Parts , Co. Ltd.

12 Forjas de Celaya, S.A. de C.V.

13 Matic Dolares

14 Gameko Fabricacion de Componentes, S.A.

15 Global Near S.L.

16 Pintura y Ensambles de Mexico, S.A. de C.V

17 CIEB Mexico

18 Autoforjas, Ltda.

(c ) Names of the Associate Companies exercising significant influence over the Company where transactions have taken place during the period

1 Mahindra Vehicle Manufacturers Limited(MVML) ( investing company in respect of which the Company is an Associate w.e.f .31^st Dec 2015

2 Mahindra & Mahindra Limited (M&M) (Holding Company of the investing company in respect of which the Company is an Associate.

Subsidiary Companies of the investing compnay (MVML) of in respect of which the Company is an Associate w.e.f. 31^st Dec 2015

1 Mahindra Intertrade Limited

2 Mahindra Steel Service Centre Limited

3 Mahindra Auto Steel Limited

4 Mahindra Electric Mobility Limited (Formerly known as Mahindra Reva Electric Vehicles Limited. Name Changed w.e.f. 15.02.2017)

5 Mahindra Heavy Engines Private Limited

6 Mahindra Two Wheelers Limited

7 Mahindra Electrical Steel Private Limited

Fellow Subsidiary Companies of the investing company(MVML)

1 Mahindra Sanyo Special Steels Private Limited

2 Gromax Agri Equipments Limited (Formerly known as Mahindra Gujarat Tractor Limited. Name Changed w.e.f. 24.08.2017)

3 Mahindra Trucks & Buses Private Limited

4 Mahindra Defence Systems Limited

5 Mahindra World City Developers Limited

6 Tech Mahindra Limited

7 Mahindra Logistics Limited

8 Bristlecone Limited

9 NBS International Limited

10 Mahindra Consulting Engineers Limited

(d) Key Managerial Personnel (KMP)

No. Name Designation

1 Mr. Hemant Luthra Chairman

2 Mr. Antonio Maria Pradera Jauregui Director

3 Mr. Jesus Maria Herrera Barandiaran Director

4 Mr. Ander Arenaza Alvarez Executive Director

5 Mr. K. Ramaswami (upto Oct 3, 2017) Managing Director

6 Mr. Daljit Mirchandani Director

7 Mr. Dhananjay Mungale Director

8 Mr. Manoj Maheshwari Director

9 Mrs. Neelam Deo Director

10 Mr. Juan Maria Bilbao Ugarizza Director

11 Mr. Jose Sabino Velasco Ibanez Director

12 Mr. Suhail Nathani Director

13 Mr. Shriprakash Shukla Director

14 Mr. Zhooben Dosabhoy Bhiwandiwala Director

15 Mr. Romesh Kaul Chief Executive - Forgings, Stampings &

composites

16 Mr. Manoj Menon (w. e. f. Dec 14, 2017) Chief Executive - Gears, Foundry & Magnetics

17 Mr. K Jayaprakash C.F.O.

18 Mr. Krishnan Shankar (Pursuant to Sec 2(76) of the Company Secretary and Head Legal Companies Act, 2013)

(ii) Diluted earnings per Share

The diluted earnings per share has been computed by dividing the Net profit after tax available for Equity shareholders by the weighted average number of equity shares, after giving dilutive effect of the outstanding Warrants, Stock options and Convertible bonds for the respective periods. Since, the effect of the conversion of Preference shares was anti-dilutive, it has been ignored.

8. Exceptional Costs

Exceptional Items relates to onetime payment made to employees opting for early retirement under The Voluntary Retirement Scheme declared in November 2017 In Forgings division and June 2016 in Hinoday division.

9. Segment Information

The Operation of company comprises a single business i.e. Automotive component manufacture in India.

*The remaining balance will be spent subsequently.

10. Revenue from operations for the year ended December 31, 2016 include excise duty which is discontinued with effect from July 1, 2017 upon implementation of Goods and Services Tax (''GST'') in India. In accordance with Ind AS 18, Revenue, GST is not included in revenue from operation. In view of the aforesaid restructuring of Indirect taxes, Revenue from operation for the year ended 31^st Dec 2017 and year ended 31^st Dec 2016 are not comparable.

11. Events occurring after the reporting period

There are no reportable events occurring after the reporting period.

Dec 31, 2016

1. Exceptional Items

Exceptional Items relates to one-time payment made to employees opting for early retirement under The Voluntary Retirement Scheme declared in June, 2016.

2. Defined benefits and contribution

3. Defined Contribution plan

The Companyâs contribution to Provident Fund aggregating Rs. 104.6 Million (2015 Rs. 84.0 Million) has been recognized in the statement of Profit or Loss under the head Employee Benefit expenses.

4. Defined benefit plans

5. 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, 1972 or the Companyâs 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.

6. Voluntary Retirement Scheme

One-time expenses incurred towards voluntary retirement scheme are charged off in the statement of Profit or loss. Deferred payments are fair valued through P&L.

7. Compensated absences

Companyâs liability towards leave encashment are determined using the projected Unit Credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service cost are recognized on straight line basis over the statement of Profit or loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount rate that is determined by reference to market yields at the Balance Sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

8. Risks

Through its defined benefit plans the Company is exposed to risks, the most significant of which are detailed below:

9. Asset Volatility

10. Changes in Bond Yields;

A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plansâ bond holdings.

Water Charges:

The Company has an on-going dispute pertaining to the Stamping Division of the Company [formerly known as Mahindra Ugine Steel Company Limited (MUSCO)] with the Irrigation Department (Water Resource Department) in respect of levy of charge for use of water from Patalganga River, for the period from July, 1991 to May, 2012 for an aggregate amount ofRs. 587.3 Million including penal charge of Rs. 101.9 Million and late fee charge of Rs. 223.1 Million. Presently the matter is pending before the Honâble High Court of Bombay (âthe Courtâ) where the Company had filed a writ and the Court, vide Order dated 2^nd July, 2012, has admitted the writ petition of the Company. In compliance with the Order admitting the Companyâs petition, the Company has deposited an amount of Rs. 233.5 Million with the Irrigation Department, being the arrears of water charges for the period from July, 1991 to May, 2012 and has also given a bank guarantee towards penal rate charges of Rs. 101.9 Million claimed by the Irrigation Department. The High Court has also allowed the Irrigation Department to withdraw the amount of arrears of Rs. 28.8 Million deposited earlier by the Company with it in respect of disputed water charge claim for the period from July, 1991 to March 2001. As per the Order, the Company is entitled to pursue the proceedings filed by it before the Honâble Bombay High Court and that the State of Maharashtra (Irrigation Department) shall not adopt any coercive steps for recovery of the aforesaid penal rate charges of Rs. 101.9 Million and the late fee of Rs. 223.1 Million.

11. Related Party Transactions

12. Names of Related Parties

Ultimate Holding Company - CIE Automotive S.A.

Holding Company - Participaciones Internacionales Autometal, DOS S.L

13. Names of Related Parties where transactions have taken place during the period Subsidiary Companies

No. Name of the Company

14 Stokes Group Limited (SGL)

15. Mahindra Forgings International Limited (MFIL)

16. Mahindra Forgings Global Limited (MFGL)

17. Mahindra Gears Global Limited (MGGL)

18. UAB CIE Galfor S.A. (Galfor)

19. Mahindra Gears and Transmissions Private Limited (MGTPL)

20. Bill Forge Private Limited (BF)

Step Down subsidiary companies

21. Mahindra Forgings Europe AG (MFE) (subsidiary of MFIL)

22. Gesenkschmiede Schneider GmbH (subsidiary of MFE)

23. Jeco Jellinghaus GmbH (subsidiary of MFE)

24. Falkenroth Unformtechnik GmbH (subsidiary of MFE)

25. Schonoeweiss & Co GmbH (subsidiary of MFE)

26. Stokes Forgings Dudley Limited (subsidiary of SGL)

27. Stokes Forgings Limited (subsidiary of SGL)

28. CIE Legazpi S.A. (subsidiary of Galfor)

29. UAB CIE LT Forge (subsidiary of Galfor)

30. Metalcastello S.p.A (MC) (subsidiary of MGGL)

31. Crest Geartech Private Limited(subsidiary of MC)

32. Bill Forge Precision Private Limited (subsidiary of BF) w.e.f Oct 2016

33. Bill Forge Global DMCC (BFG) (subsidiary of BF) w.e.f. Oct 2016

34. Bill Forge Mexico S de RLde CV (subsidiary of BFG) w.e.f. 2016

35. Companies exercising significant influence over the Company

Sr. Name of the Company No.

36. Mahindra Vehicle Manufacturers Limited (MVML) (investing company in respect of which the Company is an Associate with effect from 31^st December, 2015).

37. Mahindra & Mahindra Limited (M&M) (Holding Company of the investing company in respect of which the Company is an Associate).

Subsidiary Companies of MVML

38. Mahindra Intertrade Limited

39. Mahindra Steel Service Centre Limited

40. Mahindra Auto Steel Limited

41. Mahindra Electric Vehicles Private Limited

42. Mahindra Heavy Engines Private Limited Fellow Subsidiary Companies of MVML

43. Mahindra Trucks & Buses Private Limited

44. Mahindra Gujarat Tractor Limited

45. Mahindra Aerospace Structures Private Limited

46. Mahindra Integrated Business Solutions Private Limited

47. NBS International Limited

48. Mahindra Sanyo Special Steels Private Limited

49. Mahindra Consulting Engineers Limited

50 Defence Land Systems Limited

51 Mahindra Naval Defence Systems Limited

52. Mahindra Contech Limited

53. Key Managerial Personnel (KMP)

No. Name Designation

54. Mr. Hemant Luthra Chairman & Executive Director

55. Mr. Ander Arenaza Alvarez (w.e.f. 26^th July, 2016) Chief Executive Officer

56. Mr. K. Ramaswami Managing Director

57. Mr. Pedro Echergaray (till 12^th September, 2016 ) Executive Director

58. Mr. Sanjay Joglekar (till 30^th September, 2016) Chief Financial Officer

59 Mr. Romesh Kaul Chief Executive - Stampings &

Composites

60. Mr. K Jayaprakash (w.e.f. 24^th October, 2016) Chief Financial Officer

61. Mr. Krishnan Shankar (Pursuant to Sec 2(76) of the Companies Act, 2013) Company Secretary & Head-Legal

62.. Other information

Corporate Social Responsibility (CSR)

The Company was required to spend the sum of Rs. 16.7 Million (PY Rs.10.4 Million) as part of the CSR during the year. The details of actual expenses are as under:

Mar 31, 2015

1 Rights, preferences and restrictions attached to the shares

Equity shares:

The Company has one class of equity shares having a par value of Rs. 10/- per equity share held.

Each shareholder is eligible for one vote per share.

If any dividend is proposed by the board of directors, then the same is subject to approval of the shareholders in the ensuing annual general meeting except in the case of interim dividend.

On liquidation the equity shareholders are eligible to receive the residual value of assets of the company in the proportion of their shareholding in the company after all secured and unsecured creditors of the company are paid off.

2 Note:

(a) Terms loans from banks comprise of loans pertaining to the castings and magnetic product divisions (erstwhile Mahindra Hinoday Industries Limited) of the company and the composites division (erstwhile Mahindra Composites Limited ) acquired in amalgamation.

(b) The loans pertaining to composite division is repayable in equal quarterly installments commencing from November 2012 till November 2016.

The loan carries an interest rate of 12.50% p.a. and is secured by a first charge on the current and future immediate assets of the Pimpri and Mangaon factories and a second pari passu charge on the moveable assets of division

(c) The loans pertaining to castings division is repayable in monthly installments commencing from April 2012 till September 2017.

The loan carries an interest rate of Base Rate plus 1.40 % p.a. and is secured by a first charge on Urse and Bhosari units of the Company.

(d) Sales Tax deferral loan is payable in annual installments commencing from 2009 - 2010 to 2020 - 2021.

(e) Loan from CIE Automotive SA has devolved on the company due to the merger of Mahindra Gears International Limited. The same is subject to approval from Reserve Bank of India and classified as Long term.

1 Investment in Sai Wardha Power Company Limited entitles the company to obtain energy equivalent of 15MW (PY 5 MW) from the Group Captive Power Plant. This investment would be amortised over a period of 25 years. The preference shares carry a coupon rate of 0.01% per annum of the face value and is redeemable on expiry of 25 years.

2 The Company''s subsidiary, Stokes Group Limited, UK had incurred losses and the net-worth of the said subsidiary company has eroded during the earlier year and accordingly the Company has in earlier years recognised a provision for diminution in the value of the investment of Rs. 901.86 million representing the entire value of investment.

3 The Company has invested in Mahindra Forgings Europe AG (MFE AG), Germany through its wholly owned subsidiaries in Mauritius namely Mahindra Forgings International Limited (MFIL) and Mahindra Forgings Global Limited (MFGL). The management has initiated actions to improve operating efficiencies and combined with the expertise of CIE''s European Technical Team expects improvement in performance. The results have been encouraging and profitability of MFE AG has improved substantially compared to the previous year.

3 XXVI Contingent Liabilities

(Rs. in Million)

As at

31-March-15 31-March-14

Claims against the company not acknowledged as debts

a) Income Tax claims against which company has preferred an appeal. 3.8 -

b) Disallowance of certain expenses 157.4 123.8

c) Excise Cases against the Company , appealed by the Company with CESTAT 92.7 -

d) Relating to Cenvat availed on rejected goods 42.6 8.9

e) Interest on Supplementary Invoices 1.0 1.0

f) Show Cause cum Demand Notice pending with the Commissioner of Central Excise 0.7 -

g) Relating to reversal of Cenvat on shortages in inventories 9.2 8.1

h) Service Tax 56.4 -

i) Sales Tax 157.9 -

j) Water Charges (Refer Note Below) 507.4 -

k) Claims against the company not acknowledged as debt: Stamp duty & Others 81.3 -

l) Government Cess on extraction of minor mineral 10.5 -

m) During the previous year/s the Company had extended guarantee to ICICI Bank plc, UK - 413.0

for EURO 5 Million for a loan taken by step down subsidiary Mahindra Forging Europe AG Germany

n) Bill Discounting facilities availed under Bill Marketing Scheme from customers 158.7 49.5

o) The Company had imported capital goods under the Export Promotion Capital Goods 79.9 161.5 ( EPCG) scheme, of the Government of India, at concessional rates of duty on an understanding to fulfill quantified exports against future obligation

Commitment

Estimated value of contracts remaining to be executed on capital account ( net of advances) and 178.1 23.4 not provided for

The Company has an ongoing dispute pertaining to the Stamping Division of the Company (formerly known as Mahindra Ugine Steel Company Limited (MUSCO) with the Irrigation Department (Water Resource Department) in respect of levy of charge for use of water from Patalganga River, for the period from July 1991 to May 2012 for an aggregate amount of Rs. 507.4 Million including penal charge of Rs.101.9 Million and late fee charge of Rs. 223.1 Million. The Hon''ble Court of Alibag district, before whom the appeal was filed by the Irrigation Department against the Order of the Court of the Civil Judge, Senior Division Panvel, decided the appeal against the Company. Consequently the Company filed an appeal before the Hon''ble High Court of Judicature of Bombay challenging the Order of the Alibag Court. The Hon''ble Bombay High Court has admitted the appeal for the disputed period of July 1991 to March 2001, since for the period April 2001 to May 2012 there has been no agreement in force between the Company and the Irrigation department. As per the directions of the Hon''ble Bombay High Court, the Company has deposited Rs. 28.8 Million with the Hon''ble Bombay High Court, being the demand as per the Irrigation department for the said period of July 1991 to March 2001.

In respect of the demand for period from April 2001 to May 2012, the Company has filed a writ petition before the Hon''ble Bombay High Court. The Hon''ble Bombay High Court, vide Order dated 2nd July, 2012, has admitted the writ petition of the Company in relation to water charges demanded by the Irrigation Department, District - Raigad for the said period. In compliance with the conditions of the Order, the Company has paid an amount of Rs. 233.5 Million with the Irrigation Department, being the arrears of water charges for the period from July 1991 to May 2012 and has also given a bank guarantee towards penal rate charges of Rs. 101.9 Million claimed by the Irrigation Department. The High Court has also allowed the Irrigation Department to withdraw the amount of arrears of Rs. 28.8 Million deposited earlier with it in respect of disputed water charge claim for the period from July 1991 to March 2001. As per the Order, the Company is entitled to pursue the proceedings filed by it before the Hon''ble Bombay High Court and that the State of Maharashtra (Irrigation Department) shall not adopt any coercive steps for recovery of the aforesaid penal rate charges of Rs. 101.9 Million and the late fee of Rs. 223.1 Million.

4 Related Party Transactions

a) Names of the related parties Ultimate Holding company

Sr. Name of the Company No

1 CIE Automotive SA

Holding company

Sr. Name of the Company No

1 Participaciones Internacionales Autometal, DOS S.L (Holding Company since October 4, 2013)

2 Mahindra & Mahindra Limited (Holding company till 3rd October, 2013) and the investing company in respect of which the Company is an associate w.e.f. December 12, 2014

Fellow Subsidiaries (with whom the company has entered into transactions during the previous year till October 3, 2013) Sr. Name of the Company Sr. Name of the Company No. No.

1 Mahindra Ugine Steel Company Limited 7 Mahindra Vehicle Manufacturers Limited 2 Mahindra Integrated Business Solutions Private Limited 8 Mahindra Hinoday Industries Limited

3 Mahindra Logistics Limited 9 Defence Land Systems India Private Limited 4 Mahindra Trucks & Buses Limited 10 Mahindra Reva Electric Vehicles Private Limited

5 Mahindra Engineering Services Limited 11 Mahindra Sanyo Special Steels Private Limited

6 Mahindra Conveyor Systems Private Limited

Fellow Subsidiaries (with whom the company has entered into transactions during the previous year after October 4, 2013)

Sr. Name of the Company No.

1 Mahindra Hinoday Industries Limited

Subsidiary Companies Sr. Name of the Company No.

1 Stokes Group Limited

2 Stokes Forgings Dudley Limited

3 Stokes Forgings Limited

4 Mahindra Forgings International Limited

5 Mahindra Forgings Europe AG

6 Jeco Jellinghaus GmbH

7 Gesenkschmiede Schneider GmbH

8 Falkenroth Umformtechnik GmbH

9 Schonoeweiss & Co GmbH

10 Mahindra Forgings Global Limited

11 Mahindra Gears & Transmissions Private Limited

12 Mahindra Gears Global Limited

13 Metalcastello S.A.

14 Crest Geartech Private Limited Subsidiaries post merger of companies 15 CIE Galfor S.A.

16 UAB CIE LT Forge

17 CIE LEGAZPI, S.A.

Key Managerial Personnel

Sr. Name Designation No

1 Mr. K.Ramaswami Managing Director

2 Mr. Pedro Echergaray (w.e.f. October 21,2014) Executive Director

3 Mr. Sanjay Joglekar (w.e.f. December 12, 2014) C.F.O

4 Mr. Romesh Kaul (w.e.f. December 12, 2014) Head Composites

5 Mr. Ajit Lele (w.e.f. December 12, 2014) Head Stampings

6 Mr. K.Jayaprakash (April 29, 2014 to December 11, 2014) C.F.O

7 Mr. Krishnan Shankar (w.e.f. April 1,2014 pursuant to Company Secretary & Head Legal

Section 2(76) of the Companies Act, 2013)

5 Employee Stock Option Scheme

Employees'' Stock Option Scheme (ESOS) was formulated by the Remuneration/Compensation committee of directors of the Company and approved by it on 26th October, 2007. This was subject to the authority vested in it by the shareholders at the general meeting of the Company held on 25th July, 2007 in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999. Under this scheme, each option is entitled to one equity share of Rs.10/- each fully paid up and were granted as follows:-

i) 296,000 options to the employees of the Company at a fixed price of Rs. 197.00 per share on October 26, 2007.

ii) 391,000 options to the employees of the holding company (M&M) at a fixed price of Rs. 83 per share on February 26, 2008.

iii) 88,000 and 12,000 options to the directors of the company at a fixed price of Rs. 197.00 per share on October 26, 2007 and February 26, 2008 respectively.

iv) 250,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 151.80 per share on May 9, 2008.

v) 245,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 102.00 per share on July 29, 2008.

vi) 500,000 options to the employees of the Company at a fixed price of Rs. 109.00 per share on August 26, 2008.

vii) 93,000 options to the employees of the Company at fixed price of Rs. 97.06 per share on May 12, 2010.

viii) 2,000,000 option to the employees of the Company at fixed price of Rs. 57.00 per share on April 1,2011

ix) 589,883 option to the employees of the Company at fixed price of Rs. 44.00 per share on January 20, 2012

The equity settled options vest in 4 equal installments on the expiry of 12 months, 24 months, 36 months and 48 months respectively from the date of the grant and are exercisable on specified dates in 4 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 options and maximum 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 / lapsed till that date.

Consequent to the amalgamation effective October 1, 2013 the Company has issued options to the employees of the amalgamating companies (See Note XXVI (4)) as follows:

206,610 options to the employees of Mahindra Ugine Steel Company Limited (MUSCO)

20,697 options to the employees of Mahindra Composites Limited (MCL)

The above options are also equity settled and the options have the following vesting and exercise periods

Options granted to MUSCO employees - The Options vest one year from the date of the grant and are exercisable on specified dates in 4 tranches within a period of 5 years from the date of each vesting. The eligible employee must exercise a minimum of 50 (Fifty only) Options or Options vested, whichever is lower; and the Options in respect of each tranche may be exercised on the date of vesting or at the end of each year from the date of each vesting, provided that at the end of five (5) years from the date of each vesting (or such extended period as may be decided by the Remuneration Committee), the eligible employee may exercise all Options vested but not exercised by him/her failing which all the unexercised Options shall lapse

Options granted to MCL employees - The options vest over a period of one to three years from the date of grant and are exercisable over a period of five years from the respective dates of vesting.

In respect of options granted the accounting value of options (equal to intrinsic value) was treated as form of employee compensation, to be amortised on a straight line basis over the vesting period. Unamortised portion is disclosed under the head Employee Stock Options outstanding in Note II (D) as deferred employee compensation expenses.

The company has adopted the intrinsic value method of accounting for determining compensation cost for its stock based compensation plan which is amortized on a straight line basis over the vesting period. Consequently, salaries, wages, bonus, etc. includes Rs. 1.8 Million (PY 10 Million) being the amortization of deferred employee compensation, after adjusting for reversals on account of options lapsed.

Had the company adopted Fair Value Method in respect of Options granted, the employee compensation cost would have been higher by Rs. 15.8 Million (PY Rs. 8.3 Million ), Profit after tax lower by Rs. 10.4 Million (PY Rs. 5.5 Million), and the basic and diluted earnings per share would have been lower by Rs. 0.04 (PY lower by Rs. 0.07 )

6 Scheme/s of Amalgamation

The Integrated Scheme of Amalgamation and the Composites Scheme of Amalgamation under Sections 391-395 of the Companies Act, 1956 for the merger of Mahindra Ugine Steel Company Limited (MUSCO), Mahindra Hinoday Industries Limited (MHIL), Mahindra Gears International Limited(MGIL), Mahindra Investment India Private Limited (MIIPL), Participaciones Internacionales Autometal Tres S.L.(PIA3) and Mahindra Composites Limited ( MCL) (collectively "the amalgamating companies") which are also engaged in a business similar to that of the company were approved by the Honorable High Court of Judicature at Bombay on October 31, 2014. The Schemes came into effect on December 10, 2014, the day on which the order was delivered to the Registrar of Companies, and pursuant thereto the entire business of the amalgamating companies has been transferred to and vested in the Company with effect from the appointed date of October 1, 2013.

The Board of Directors at its meeting held on December 12, 2014 approved the issue of equity shares to the shareholders of the Amalgamating companies as on December 24, 2014, the record date for the purpose and constituted an Allotment Committee for working out the modalities of allotment.

The Allotment committee at the meeting held on January 2, 2015 approved the issue of 229,331,464 equity shares to the shareholders of the Amalgamating companies representing their entire share capital.

Further the committee approved the allotment of 229,330,519 equity shares thereby increasing the total number of shares issued.

MCL, the transferor company had kept allotment of 1,050 equity shares in abeyance. Consequently the Allotment committee, kept in abeyance the allotment of 945 equity shares in line with the SWAP ratio.

Consequent to the issue of the equity shares the promoter and promoter group held 74.87% of the paid up capital of the Company.

Consequent to the merger becoming effective, the entire undertaking of the amalgamating companies has vested with the Company with effect from Oct 1,2013.

In accordance with Accounting Standard (AS) 14 - Accounting for Amalgamations issued by the Institute of Chartered Accountants of India the merger has been accounted for under the pooling of interests method and all the assets, liabilities and reserves of the amalgamating companies have been recorded in the books of the Company at their carrying amounts on the appointed date.

For giving effect to the merger the financial statements of the MUSCO, MHIL, MGIL,MIIPL, PIA3 and MCL audited by the auditors of those companies at the appointed date and for the period from the appointed date to March 31, 2014 have been considered. In accordance with AS 14, the difference between the amount recorded as share capital issued and the share capital of the amalgamating companies has been adjusted in the reserves by the Company.

In terms of the Scheme/s the appointed date being October 1 2013, the net profit and other changes in reserves of the amalgamating companies during the period from October 1,2013 to March 31,2014 aggregating to Rs. 1911.9 Million has been added to the surplus in the Profit & Loss account in the books of the Company.

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

Consequent to the merger, Mahindra Gear & Transmissions Private Limited (MGTPL), India, Mahindra Gears Global Limited (MGGL) , Mauritius and CIE Galfor SA (Galfor), Spain became subsidiaries of the company and Metalcastello SpA, Italy (MC) (subsidiary of MGGL), CIE Legazpi S.A., Spain (subsidiary of Galfor) and UAB CIE LT Forge, Lithuania (subsidiary of Galfor) and Crest Geartech Private Limited, India (subsidiary of MC) became step subsidiaries of the company.

7 The operations of the Company comprise a single business and geographical segment, ie automotive components manufactured in India.

8 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2014

Note : XXVI

1 Repayment of term loan from Bank

Sales Tax deferral loan is payable in annual installments commencing from 2009-2010 to 2020-2021.

2 Micro & Small enterprises

The identification of suppliers as micro and small enterprises covered under the "Micro Small and medium enterprises development Act, 2006" was done on the basis of the information to the extent provided by the supplier to the company. Total outstanding due to micro and small enterprises, which were outstanding for more than stipulated period are given below:

3 Contingent Liabilities

(Rs. In Lakhs) Particulars As at As at March 31, 2014 March 31, 2013

Claims against the company not acknowledged as debts

i) Income Tax claims against which company has preferred an appeal

a) Non Deduction of TDS and interest thereon - 22.98

b) Disallowance of certain expenses 1,237.59 418.14

ii) Excise Cases against the Company , appealed by the Company with CESTAT

a) Relating to Cenvat availed on rejected goods 89.28 89.28

b) Interest on Supplementary Invoices 9.59 9.59

iii) Show Cause cum Demand Notice pending with the Commissioner of Central Excise

Relating to reversal of Cenvat on shortages in inventories 8115 -

iv) Bill Discounting facilities availed under Bill Marketing Scheme from c Customers 495.26 717.59

v) During the previous year the Company has given guarantee to ICICI Bank plc, UK for EURO 5 Million for a loan taken by step down subsidiary Mahindra Forging Europe AG Germany 4,129.50 3,47450

vi) The Company had imported capital goods under the Export Promotion Capital Goods (EPCG) scheme, of the Government of India, at concessional rates of duty on an understanding to fulfill quantified exports against future obligation 1,615.17 1,519.30

vii) Estimated value of contracts remaining to be executed on capital account (net ofadvances) and not provided for 234.06 508.98

4. Employees'' Stock Option Scheme (ESOS) was formulated by the Remuneration/Compensation committee of directors of the company and approved by it on 26th October, 2007. This was subject to the authority vested in it by the shareholders at the general meeting of the company held on 25th July 2007 in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999. Under this scheme, options entitled to one equity share of Rs..10/- each fully paid up were granted as follows:- i 2,96,000 options to the employees of the company at a fixed price of Rs. 197.00 per share on 26th October, 2007. ii 3,91,000 options to the employees of the holding company (M&M) at a fixed price of Rs. 83 per share on 26th February, 2008

i 88,000 and 12,000 options to the directors of the company at a fixed price of Rs. 197.00 per share on 26th October, 2007 and 26th February 2008 respectively.

ii 2,50,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 151.80 per share on 9th May 2008.

iii 2,45,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 102.00 per share on 29th July 2008.

iv 5,00,000 options to the employees of the company at a fixed price of Rs. 109.00 per share on 26th August 2008.

v 93,000 options to the employees of the company at fixed price of Rs. 97.06 per share on 12th May 2010.

vi 20,00,000 option to the employees of the company at fixed price of Rs. 57.00 per share on 1st April 2011.

vii 5,89,883 option to the employees of the company at fixed price of Rs. 44.00 per share on 20th January 2012.

a. The equity settled options vest one year from the date of the grant and are exercisable on specified dates in 4 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 options and maximum 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 / lapsed till that date.

Options granted, vest in 4 equal installments on the expiry of 12 months, 24 months, 36 months and 48 months respectively.

c. The company has adopted the intrinsic value method of accounting for determining compensation cost for its stock based compensation plan. Consequently, salaries, wages, bonus, etc. includes Rs.. (95.00) Lakhs (Previous Year: Rs..40.67 Lakhs) being the amortisation of deferred employee compensation, after adjusting for reversals on account of options lapsed.

Had the company adopted Fair Value Method in respect of Options granted, the employee compensation cost would have been lower by Rs.. 42.58 Lakhs (Previous Year Rs.. Nil Lakhs), Profit after tax lower by Rs.. 42.58 (Previous Year Rs.. Nil Lakhs), and the basic and diluted earnings per share would have been higher by Rs.. Nil (Previous Year Rs.. (Nil).

d. In respect of options granted during the period, accounting value of options (equal to intrinsic value) was treated as form of employee compensation, to be amortised on a straight line basis over the vesting period. Unamortised portion was disclosed under the head Employee Stock Options outstanding in Schedule 1B as deferred employee compensation expenses.

2. Long term investment in Mahindra Forgings Global Limited (MFGL) and Mahindra Forgings International Limited (MFIL)

MFGL and MFIL, the wholly owned subsidiaries of the Company have invested in Mahindra forging Europe AG (MFE AG) and its wholly owned subsidiary companies namely Jeco Jellinghaus GmbH, Schoneweiss & Co GmbH, Gesenkschmine Schineider GmbH and Falkenroth Unfirmtechnick GmbH (collectively referred to as step-down subsidiaries). After the significant decline in demand due to economic downturn in Europe the market demand showed a gradual recovery in the year under consideration. Action initiated by management such as improving operational efficiencies, close monitoring and improving piece realisation, under active guidance and CIE Automotive S.A., the ultimate parent company, started yielding results which were more visible in Q4 F14. Market demand picked up in Q4 F14 which coupled with management actions, results in a positive net result after successive losses. During the year the company invested a further Rs. 5912.90 Lakhs through equity in MFE and its subsidiaries, which helped partly offset the net worth erosion.

The management expects this momentum to continue in future. The company will continue to closely monitor the performance with periodic reviews to facilitate timely corrective actions to improve profitability.

Accordingly, erosion in the net worth is considered to be temporary and hence no provision has been made for diminution in value of these investments.

7. Related parties during the year ending on 31st March, 2014 are as follows:

Holding Company (till 3rd October, 2013) 1. Mahindra & Mahindra Limited

Subsidiary Companies (With whom the company has entered into transactions during the current/previous year)

1. Stokes Group Limited_

2. Mahindra Forgings International Limited

3. Mahindra Forgings Europe AG_

4. JECO-Jellinghaus GmbH_

5. Schonoeweiss & Co GmbH

6. Mahindra Forgings Global Limited

Fellow Subsidiaries ( With whom the company has entered into transactions during the current (till 3rd October, 2013)/previous year)

1. Mahindra Ugine Steel Company Limited_

2. Mahindra Trucks & Buses Limited_

3. Mahindra Logistics Limited_

4. Mahindra Hinoday Industries Limited._

5. Mahindra Engineering Services Limited_

6. Mahindra Vehicle Manufacturers Limited

7. Mahindra Reva Electric Vehicles Private Limited

8. Mahindra Conveyors systems Private Limited

9. Mahindra BPO Services Private Limited_

10. Mahindra Sanyo Special Steels Private Limited (Formerly known as Navyug Special Steels Private

_ Limited

8. Defence Land system India Private Limited

Fellow Subsidiaries (With whom the company has entered into transactions during the current year after 4th October, 2013)

1. Mahindra Hinoday Industries Limited.

The company ceased to be a subsidiary of Mahindra & Mahindra Limited effective from 4th October, 2013. Consequently the transactions indicated above with Mahindra & Mahindra Limited and its Fellow subsidiaries are till the date the company was a subsidiary of Mahindra & Mahindra Limited.

9. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2013

1. Employees'' Stock Option Scheme (ESOS) was formulated by the Remuneration Compensation committee of directors of the company and approved by it on 26th October, 2007. This was sub ect to the authority vested in it by the shareholders at the general meeting of the company held on 25th July 2007 in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999. nder this scheme, options entitled to one equity share of Rs. 10 - each fully paid up were granted as follows:-

i 2,96,000 options to the employees of the company at a fixed price of Rs. 197.00 per share on 26th October, 2007.

ii 3,91,000 options to the employees of the holding company (M&M) at a fixed price of Rs. 83 per share on 26th February, 2008

iii 88,000 and 12,000 options to the directors of the company at a fixed price of Rs. 197.00 per share on 26th October, 2007 and 26th February 2008 respectively.

iv 2,50,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 151.80 per share on 9th May 2008.

v 2,45,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 102.00 per share on 29th July 2008.

vi 5,00,000 options to the employees of the company at a fixed price of Rs. 109.00 per share on 26th August 2008.

vii 93,000 options to the employees of the company at fixed price of Rs. 97.06 per share on 12th May 2010.

viii 20,00,000 option to the employees of the company at fixed price of Rs. 57.00 per share on 1st April 2011

ix 5,89,883 option to the employees of the company at fixed price of Rs. 44.00 per share on 20th January 2012

a. The equity settled options vest one year from the date of the grant and are exercisable on specified dates in 4 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 options and maximum 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 lapsed till that date.

Options granted, vest in 4 equal installments on the expiry of 12 months, 24 months, 36 months and 48 months respectively.

c. The company has adopted the intrinsic value method of accounting for determining compensation cost for its stock based compensation plan. Consequently, salaries, wages, bonus, etc. includes Rs. 40.67Lakhs (Previous ear: Rs. 133.86 Lakhs) being the amortisation of deferred employee compensation, after ad usting for reversals on account of options lapsed.

Had the company adopted Fair Value Method in respect of Options granted, the employee compensation cost would have been lower by Rs. Nil Lakhs (Previous ear Rs. 120.76 Lakhs), Profit after tax higher by Rs. Nil (Previous ear Rs. 120.76 Lakhs), and the basic and diluted earnings per share would have been higher by Rs. Nil (Previous ear Rs. 0.14).

d. In respect of options granted during the period, accounting value of options (equal to intrinsic value) was treated as form of employee compensation, to be amortised on a straight line basis over the vesting period. namortised portion was disclosed under the head Employee Stock Options outstanding in Schedule 1B as deferred employee compensation expenses.

2. In previous year other expenses includes Rs. 118.41 Lakhs against the impairment of con rod machine which was part of capital- work - in progress.

3. In Previous year exceptional items represents Rs. 155.89 Lakhs interest pertaining to previous period paid on settlement of liability relating to a borrowing.

4. Long term investment in Mahindra Forgings Global Limited (MFGL) and Mahindra Forgings Investment Limited (MFIL) MFGL and MFIL, the wholly owned subsidiaries of the Company have invested in Mahindra Forgings Europe AG (MFE AG) and its wholly owned subsidiary companies namely Jeco Jellinghaus GmbH, Schoneweiss & Co. GmbH, Gesenkschmiede Schneider GmbH and Falkenroth mformtechnik GmbH(collectively referred to as step-down subsidiaries). Due to downturn in the economic situation in Europe, the market demand declined significantly impacting the sales and profitability of MFEAG and its wholly owned subsidiaries, as a result of which the net worth of MFGL and MFIL together with net worth of the step- down subsidiaries has been substantially eroded as on 31st March 2013.

Necessary actions are being taken in MFEAG to:

- Improve the operating efficiencies and align the cost structure in line with current market demand.

- Enhanced Focus on exploiting the synergies of business in Europe and India.

- Closely monitor the performance with increased periodic reviews to facilitate timely corrective actions to improve profitability.

The management also considers the current market situation, to be temporary and expects that together with its above actions, the company should turnaround its performance in the next few years planned.

Accordingly, erosion in the net worth is considered temporary and no provision for diminution in value of these investments has been made.

5. Previous year''s figures have been regrouped reclassified wherever necessary to correspond with the current year''s classification disclosure.

Mar 31, 2012

1 Investment in Wardha Power Company Limited entitles the Company to obtain energy equivalent of 5MW from the Group Captive Power Plant.

These shares will receive restrictive dividend not more than 0.01% of the face value of the equity shares

The preference shares carry a coupon rate of 0.01% per annum of the face value and is redeemable on expiry of 25 years.

This investment would be amortised over a period of 25 years from the year in which the supply of power starts.

2 The Company's subsidiary, Stokes Group Limited, UK had incurred losses and the net worth of the said subsidiary company had eroded during the previous years. Accordingly during the previous years, the Company had recognised provision for diminution in the value of the investment of Rs 9018.59 Lakh representing 100% of the value of the investment.

The above figures are excluding charge for provision for leave encashment on separation and gratuity payable provided on actuarial basis.

The Company has received, an approval from the Central Government for the Managerial Remuneration till 31st August, 2012.

The appointment of Mr. K.Ramaswami is subject to the approval of the shareholders at the ensuing Annual General Meeting.

3 Micro & Small enterprises

The identification of suppliers as micro and small enterprises covered under the 'Micro small and medium enterprises development act 2006' was done on the basis of the information to the extent provided by the supplier to the Company. Total outstanding dues to micro and small enterprises, which were outstanding for more than stipulated period are given below:

4 Contingent Liabilities

(Rs In Lakhs)

Particulars As at As at March 31,2012 March 31, 2011

Claims against the company not acknowledged as debts

i)Income Tax claims against which company has preferred an appeal.

a)Non deduction of TDS and interest thereon 29.89 29.89

b) Disallowance of certain expenses 613.68 469.06

ii) Excise cases against the company, appealed by the company with CESTAT

a) Relating to cenvat availed on rejected goods 89.28 89.28

b) Interest on supplementary invoices 9.59 9.59

iii) Bill discounting facilities availed under Bill Marketing Scheme from customers 583.56 1,225.53

iv) The Company had imported capital goods under the Export Promotion Capital 10,266.75 10,172.80 Goods (EPCG) scheme, of the Government of India, at concessional rates of duty on an understanding to fulfill quantified exports against future obligation aggregates to USD 200.84 Lakhs (P.Y.USD 227.63 Lakhs) converted at year end exchange rate

v)Estimated value of contracts remaining to be executed on capital account (net 544.42 1,082.34 of advances) and not provided for

vi) Claim for interest by a financial institutions on a loan which was interest free - 164.93 loan

1. During the year, the Company received subscription of Rs 4,417.50 lakhs representing the balance 75% of 42,99,270 warrants issued @ Rs 137 per warrant to the promoter Mahindra & Mahindra Limited. The said warrants were converted into 42,99,270 equity shares of Rs 10 each with a share premium of Rs 127 per equity share.

2. Employees' Stock Option Scheme (ESOS) was formulated by the Remuneration/Compensation committee of directors of the Company and approved by it on 26th October, 2007. This was subject to the authority vested in it by the shareholders at the general meeting of the company held on 25th July, 2007 in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999. Under this scheme, options entitled to one equity share of Rs 10/ - each fully paid up were granted as follows:-

i 2,96,000 options to the employees of the company at a fixed price of Rs 197.00 per share on 26th October, 2007.

ii 3,91,000 options to the employees of the holding company (M&M) at a fixed price of Rs 83 per share on 26th February, 2008

iii 88,000 and 12,000 options to the directors of the company at a fixed price ofRs 197.00 per share on 26th October, 2007 and 26th February, 2008 respectively.

iv 2,50,000 options to the employees of Foreign subsidiaries at a fixed price of Rs 151.80 per share on 9th May, 2008.

v 2,45,000 options to the employees of Foreign subsidiaries at a fixed price ofRs 102.00 per share on 29th July, 2008.

vi 5,00,000 options to the employees of the company at a fixed price of Rs 109.00 per share on 26th August, 2008.

vii 93,000 options to the employees of the company at fixed price of Rs 97.06 per share on 12th May, 2010.

viii 20,00,000 options to the employees of the company at fixed price of Rs 57.00 per share on 1st April, 2011

ix 5,89,883 options to the employees of the company at fixed price of Rs 44.00 per share on 20th January, 2012

a. The equity settled options vest one year from the date of the grant and are exercisable on specified dates in 4 tranches within a period of 5 years from the date of vesting. The number of options exercisable in each trance is between the minimum of 100 options and maximum 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, vest in 4 equal installments on the expiry of 12 months, 24 months, 36 months and 48 months respectively.

c. The Company has adopted the intrinsic value method of accounting for determining compensation cost for its stock based compensation plan. Consequently, salaries, wages, bonus, etc. includes Rs 133.86 Lakhs (Previous Year: Rs 81.33 Lakhs) being the amortization of deferred employee compensation, after adjusting for reversals on account of options lapsed.

Had the company adopted Fair Value Method in respect of Options granted, the employee compensation cost would have been lower by Rs 120.76 Lakhs (Previous Year Rs 49.40 lakhs), Profit after tax higher by Rs 120.76 Lakhs (Previous Year Rs 49.40 lakhs), and the basic and diluted earnings per share would have been higher by Rs 0.14 (Previous Year Rs (0.05).

d. In respect of options granted during the period, accounting value of options (equal to intrinsic value) was treated as form of employee compensation, to be amortised on a straight line basis over the vesting period. Unamortized portion was disclosed under the head Employee Stock Options outstanding in Schedule II as deferred employee compensation expenses.

1. In terms of Accounting Standard - 17 (Segment Reporting) issued by the Institute of Chartered Accountants of India, the Company operates in only one segment i.e. Forgings.

2. Exceptional items represents Rs 155.89 Lakhs interest pertaining to previous period paid on settlement of liability relating to a borrowing.

3. Other expenses include Rs 118.41 Lakhs against the impairment of con rod machines which was part of capital-work-in- progress.

4. Provision for tax is not made in view of brought forward book losses / unabsorbed depreciation.

5. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

Mar 31, 2011

1. During the previous year, the Company has issued 1,62,41,300 equity shares of Rs. 10/- each at a premium of Rs. 97.75 per share aggregating to Rs. 17,500 Lakhs to Qualifed Institutional Buyers (QIB) though Qualifed Institutional Placement (QIP) in accordance with the Chapter VIII of Securities & Exchange Board of India (Issue of Capital & Disclosure requirements) Regulations, 2009.

2. During the previous year, the Company has issued 72,99,270 Preferential Warrants to Mahindra & Mahindra Limited (the holding company) at a price of Rs. 137/- per Warrant for conversion into 1 Equity Share per Warrant in one or more tranches within 18 months from the date of allotment of the Warrant. Out of the above, 30,00,000 warrants were converted into equity shares on exercise of options by Mahindra & Mahindra Limited. The Company received an amount of Rs. 1,472.50 Lakhs @25% of Rs. 137/- per warrant towards the balance Warrants of 42,99,270 issued to Mahindra & Mahindra Limited (the holding company) in the previous year.

3. The cost of issue of the shares to QIP holders amounting to Rs. 481.45 Lakhs was adjusted against the Securities Premium Account (including adjustment of Rs. 5 Lakhs in the current year) in accordance with the provisions of the Companies Act, 1956.

- Further the Company has issued 14,750 Equity Shares of Rs. 10/- each to ESOP holders under the Employees Stock Option Scheme at a premium of Rs. 102/- each.

- During the current year Stamp Duty liability on Amalgamation of the Companies made in 2007-08 was discharged and an amount Rs. 27.53 Lakhs which was over and above the provision made was adjusted against the Securities Premium. This adjustment was necessitated due to the adjustment of the Original Stamp Duty Provision against the Securities Premium in 2007-08.

5. Contingent Liabilities not provided for:

(Rs. in Lakhs)

Particulars As at As at 31st March, 2011 31st March, 2010

(i) Income Tax Claims against which Company has preferred an appeal

(a) Non Deduction of TDS and interest thereon 29.89 29.89

(b) Disallowance of certain expenses 469.06 93.04

(ii) Excise Caseagainst the Company, appealed by the Company with

CESTAT.

(a) Relating to Cenvat availed on rejected goods 89.27 89.27

(b) Interest on Supplementary Invoices 9.59 9.59

(iii) Claim for Interest by a Financial Institution on a loan which was interest 164.93 - free loan.

- the Company has availed Bill Discounting Facilities under Bill Marketing Scheme, from its customers for an amount of Rs.1,225.53 Lakhs. (31st March, 2010 Rs. 1,579.80 Lakhs)

6. The Company had imported capital goods under the Export Promotion Capital Goods (EPCG) scheme, of the Government of India, at concessional rates of duty on an understanding to fulfll quantifed exports against which future obligation aggregates to USD 227.63 Lakhs (31st March, 2010 USD 276.80 Lakhs) equivalent to Rs. 10,172.78 Lakhs (Previous Year Rs. 12,491.98 Lakhs) converted at year end exchange rates.

7. Estimated value of contracts remaining to be executed on capital account (net of advances) and not provided forRs. 1,082.34 Lakhs (31st March, 2010 Rs.127.52 Lakhs.)

8. Employees Stock Option Scheme (ESOS) was formulated by the Remuneration/Compensation Committee of Directors of the company and approved by it on 26th October, 2007. This was subject to the authority vested in it by the shareholders at the general meeting of the company held on 25th July 2007 in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999. Under this scheme, options entitled to one equity share of Rs. 10/ - each fully paid up were granted as follows :-

i. 2,96,000 options to the employees of the Company at a fixed price of Rs. 197/- per share on 26th October, 2007.

ii. 3,91,000 options to the employees of the holding Company (M&M) at a fixed price of Rs.83/- per share on 26th February, 2008

iii. 88,000 and 12,000 options to the directors of the Company at a fixed price of Rs.197/- per share on 26th October, 2007 and 26th February, 2008 respectively.

iv. 2,50,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 151.80 per share on 9th May, 2008.

v. 2,45,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 102/- per share on 29th July, 2008.

vi. 5,00,000 options to the employee of the Company at a fixed price of Rs. 109/- per share on 26th August, 2008.

vii. 93,000 options to the employee of the company at fixed price of Rs.97.06 per share on 12th May, 2010.

a. The equity settled options vest one year from the date of the grant and are exercisable on specifed dates in 4 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 options and maximum 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 / lapsed till that date.

Options granted, vest in 4 equal installments on the expiry of 12 months, 24 months, 36 months and 48 months respectively.

c. The Company has adopted the intrinsic value method of accounting for determining compensation cost for its stock based compensation plan. Consequently, salaries, wages, bonus, etc. includes Rs. 81.33 Lakhs (Previous Year: Rs. 133.18 Lakhs) being the amortisation of deferred employee compensation, after adjusting for reversals on account of options lapsed.

Had the Company adopted Fair Value Method in respect of Options granted, the employee compensation cost would have been lower by Rs. 49.40 Lakhs (Previous Year Rs. 92.71 Lakhs), profit after tax higher by Rs. 49.40 Lakhs (Previous Year Rs. 92.71 Lakhs), and the basic and diluted earning per share would have been higher by Rs. 0.05 (Previous Year Rs. 0.13).

d. In respect of options granted during the period, accounting value of options (equal to intrinsic value) was treated as form of employee compensation, to be amortised on a straight line basis over the vesting period. Unamortised portion was disclosed under the head Employee Stock Options outstanding in Schedule 1B as deferred employee compensation expenses.

(b) Defned Contribution Plans Ã

Amount recognised as an expense and included in the Schedule 12 "Contribution to Provident and other funds" of Personnel Expenses Rs. 100.32 Lakhs (Previous year Rs. 99.45 Lakhs).

22. In terms of Accounting Standard Ã 17 (Segment Reporting) issued by the Institute of Chartered Accountants of India, the Company operates in only one segment i.e. Forgings.

23. Related parties during the year ending on 31st March, 2011 are as follows:

Holding Company

1. Mahindra & Mahindra Limited

Subsidiary Companies

1. Stokes Group Limited

2. Stokes Forgings Dudley Limited

3. Jensand Limited

4. Stokes Forgings Limited

5. Mahindra Forgings International Limited

6. Mahindra Forgings Europe AG

7. Gesenkschmiede Schneider GmbH

8. JECO-Jellinghaus GmbH

9. Falkenroth Umformtechnik GmbH

10. Mahindra Forgings Global Limited

11. SchÃÂ¶neweiss & Co. GmbH

Fellow Subsidiaries

1. Mahindra First Choice Wheels Limited

2. Mahindra Gears & Transmissions Private Limited

3. Mahindra Ugine Steel Company Limited

4. Bristlecone India Limited

5. Mahindra Navistar Automotives Limited

6. Mahindra Logistics Limited

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

8. Mahindra Engineering Services Limited

9. Mahindra Vehicle Manufacturers Limited

10. Mahindra Reva Electric Vehicles Private Limited

Key management personnel

1. Deepak Dheer

26. Investments:

The Company had entered into a Share Subscription Agreement with Wardha Power Company Limited on 29th February, 2008 to invest Rs. 325 Lakhs by way of subscription to 8,81,111 Class A Equity Shares of Rs. 10 each, 11,18,889 Class A 0.01% Redeemable Preference Shares of Rs. 10 each and 12,50,000 Class C 0.01% Redeemable Preference Shares of Rs. 10 each. The Company will be entitled to 5 MW of power generated from the Group Captive Power Plant as per the Power Delivery Agreement dated 29th February, 2008. The Company has paid share application money of Rs. 200 Lakhs for Class A Equity and Redeemable Preference Shares.

Upon the expiry of the Power Purchase Agreement, Class A Equity Shares and Class A 0.01% Redeemable Preference Shares will be bought back for a total consideration of Rs. 1. One-tenth of Class C Redeemable Preference Shares will be redeemed on every anniversary from the date of issue @ Rs. 0.01per share.

Consequent to the amendment to the share subscription agreement dated 3rd December, 2009, there has been a change in the number of Class A Equity Shares of Rs. 10 each from 8,81,111 to 8,84,485 and Redeemable Preference Shares of Rs. 10 each from 11,18,889 to 11,15,515. The shares instead of being allotted by Wardha Power Company Limited, were to be transferred by KSK Energy Limited to the Company.

Accordingly, the Company received 8,84,485 Class A Equity Shares of Rs. 10/- each of Wardha Power Company Limited valuing to Rs. 88.45 Lakhs after adjusting the Share Subscription Money paid by the company. The balance amount of Rs. 111.55 Lakhs is treated as Share Application Money against 11,15,515 Class A 0.01% Redeemable Preference Shares of Rs. 10/- each. This investment would be amortised over a period of 25 years from the year in which supply of power starts.

27. The Companys subsidiary, Stokes Group Limited, UK had incurred losses and the net worth of the said subsidiary company had eroded during the previous year Accordingly during the previous year, the company has recognised provision for diminution in the value of investment of Rs. 9,018.59 Lakhs representing 100% of the value of investment.

28. During the previous year, Company had invested Euro 9 million (Rs. 5,583 Lakhs) in 11% Redeemable, Non-cumulative Preference Shares of Mahindra Forgings International Limited, its wholly owned subsidiary. Said preference shares are redeemable after 7 years. The preference shares, being a monetary item forming part of net investment in a non-integral foreign operation, Exchange difference of Rs. 103.67 Lakhs (profit) (P.Y. Rs. 140.22 lakh (loss)) arising on the restatement as on 31st March 2011 is accumulated in foreign currency translation reserve.

29. During the year the companys direct 100% subsidiary Mahindra Forgings Global Limited, Mauritius transferred its holding in SchÃÂ¶neweiss & Co GmbH to the companys 100% step down subsidiary to Mahindra Forgings Europe AG, Germany, thereby consolidating all its German operations under one holding company, Mahindra Forgings Europe A.G.

30. Figures for the previous year have been regrouped and rearranged wherever necessary.DIRECTORS REPORT TO THE SHAREHOLDERS

Mar 31, 2010

1. The Company, at its Extra-Ordinary General Meeting held on 18th February, 2010, had approved by a Special Resolution, increase in the Authorised Capital of the Company and issue of equity shares and preferential warrants.

Pursuant to the passing of the above resolutions and in accordance to Chapter VIII of Securities & Exchange Board of India (Issue of Capital & Disclosure requirements) Regulations, 2009, as amended :

- The Company allotted 1,62,41,300 Equity Shares of face value of Rs.10/- each at price of Rs. 107.75/- per Equity Share including a premium of Rs. 97.75 per Equity Share aggregating to Rs.17,500 Lakhs to Qualified Institutional Buyers(QIB) through Qualified Institutions Placement(QIP).

- Further the Company issued 72,99,270 Preferential Warrants to Mahindra & Mahindra Limited (the holding company) at a price of Rs. 137/- per Warrant for conversion into 1 Equity Share per Warrant in one or more tranches within 18 months from the date of allotment of the Warrant.

- Out of the above Preferential Warrants issued to Mahindra & Mahindra Limited (the holding company), the Company converted 30,00,000 Preferential Warrants into Equity Shares at a face value of Rs.10/- each with a Share Premium of Rs. 127/- each. The Company has received the entire amount of Rs. 4,110 Lakhs against the issue of these shares.

- Further, the Company has received an amount of Rs. 1,472.50 Lakhs @25% of the face value of Rs.137/- per warrant towards the balance Warrants of 42,99,270 issued to Mahindra & Mahindra Limited (the holding company).

- Further the Company has issued 46000 Equity Shares of Rs.10/- each to ESOP holders under the Employees Stock Option Scheme at a premium of Rs.73/- each.

- All the term lenders have 1st charge on immovable assets & 2nd charge on movable assets whereas Working Capital lenders have 1st charge on movable assets & 2nd charge on Immovable assets of the Company.

2. Contingent Liabilities not provided for :

(Rs. in lakhs) Particulars As at 31st As at 31s1 March, 2010 March, 2009 (i) Income Tax Claims against which Company has preferred an appeal (a) Non Deduction of TDS and interest thereon 29.89 29.89 (b) Disallowance of certain expenses 93.04 71.62 (ii) Excise Cases against the Company, appealed by the Company with CESTAT. a) Relating to Cenvat availed on rejected goods 89.27 89.27 b) Interest on Supplementary Invoices 9.59 9.59

- In addition to above, the Company has availed Bill Discounting Facilities under Bill Marketing Scheme, during the year from its customers for an amount of Rs. 1,579.80 Lakhs. (31st March, 2009 Rs. 1,666.32 Lakhs)

3. The Company had imported capital goods under the Export Promotion Capital Goods (EPCG) scheme, of the Government of India, at concessional rates of duty on an understanding to fulfill quantified exports against which future obligation aggregates to USD 276.80 Lakhs (31st March, 2009 USD 283.83 Lakhs).

4. Estimated value of contracts remaining to be executed on capital account (net of advances) and not provided tor Rs. 127.52 Lakhs (31st March, 2009 Rs 432.26 lakhs).

5. Employees Stock Option Scheme (ESOS) was formulated by the Remuneration/Compensation Committee of directors of the Company and approved by it on 26"1 October, 2007. This was subject to the authority vested in it by the shareholders at the General Meeting of the Company held on 25th July, 2007 in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999. Under this scheme, options entitled to one equity share of Rs.10A each fully paid up were granted as follows :-

i. 2,96,000 options to the employees of the Company at a fixed price of Rs.197/- per share on 26th October, 2007.

ii. 3,91,000 options to the employees of the holding company (M&M) at a fixed price of Rs. 83/- per share on 26th February, 2008

iii. 88,000 and 12,000 options to the directors of the Company at a fixed price of Rs. 197/- per share on 26th October, 2007 and 26th February, 2008 respectively.

iv. 2,50,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 151.80/- per share on 9th May, 2008.

v. 2,45,000 options to the employees of Foreign subsidiaries at a fixed price of Rs. 102/- per share on 29th July, 2008.

vi. 5,00,000 options to the employee of the Company at a fixed price of Rs. 109/- per share on 26th August, 2008.

a. The equity settled options vest one year from the date of the grant and are exercisable on specified dates in 4 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 options and maximum 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, vest in 4 equal instalments on the expiry of 12 months, 24 months, 36 months and 48 months respectively.

c. The Company has adopted the intrinsic value method of accounting for determining compensation cost for its stock based compensation plan. Consequently, salaries, wages, bonus, etc. includes Rs. 133.18 Lakhs (Previous Year: Rs. 299.97 Lakhs) being the amortisation of deferred employee compensation, after adjusting for reversals on account of options lapsed.

Had the Company adopted Fair Value Method in respect of Options granted, the employee compensation cost would have been lower by Rs. 92.71 Lakhs (Previous Year 173.26 lakhs), Profit after tax higher by Rs. 92.71 Lakhs (Previous Year Rs. 173.26 lakhs), and the basic and diluted earning per share would have been higher by Rs. 0.13 (Previous Year Rs.0.25).

d. In respect of options granted during the period, accounting value of options (equal to intrinsic value) was treated as form of employee compensation, to be amortised on a straight line basis over the vesting period. Unamortised portion was disclosed under the head Employee Stock Options outstanding in Schedule 1B as deferred employee compensation expenses.

(b) Defined Contribution Plans -

Amount recognized as an expense and included in the Schedule 12 "Contribution to Provident and other funds" of Personnel Expenses Rs 99.45 Lakhs.

6. In terms of Accounting Standard - 17 (Segment Reporting) issued by the Institute of Chartered Accountants of India, the Company operates in only one segment i.e. Forgings.

7. Amount of borrowing cost capitalised during the period is Rs. Nil (Previous. Year Rs. 119.75 Lakhs)

8. Prior Period Items include Payment of additional VAT liability arising out of VAT audit for the previous years of Rs.71.04 Lakhs (Previous year Stamp Duty related to Demerger of Chakan unit of Amforge Industries Ltd. with the Company of Rs. 132.79 Lakhs).

9. The Company had entered into a Share Subscription Agreement with Wardha Power Company Private Limited on 29th February, 2008 to invest Rs. 325 Lakhs by way of subscription to 8,81,111 Class A Equity Shares of Rs. 10/- each , 11,18,889 Class A 0.01% Redeemable Preference Shares of Rs. 10/- each and 12,50,000 Class C 0.01% Redeemable Preference Shares of Rs. 10/- each. The Company will be entitled to 5 MW of power generated from the Group Captive Power Plant as per the Power Delivery Agreement dated 29lh February, 2008. The Company has paid share application money of Rs. 200 Lakhs for Class A Equity and Redeemable Preference Shares.

Upon the expiry of the Power Purchase Agreement, Class A Equity Shares and Class A 0.01 % Redeemable Preference Shares will be bought back for a total consideration of Re.1/-. One-tenth of Class C Redeemable Preference Shares will be redeemed on every anniversary from the date of issue @ Rs. 0.01 per share.

Consequent to the amendment to the share subscription agreement dated 3rd December 2009, there has been a change in the number of Class A Equity Shares of Rs. 10/- each from 8,81,111 to 8,84,485 and Redeemable Preference Shares of Rs. 10/- each from 11,18,889 to 11,15,515. The shares instead of being allotted by Wardha Power Company Limited, were to be transferred by KSK Energy Limited to the Company.

Accordingly, the Company received 8,84,485 Class A Equity Shares of Rs.10 each of Wardha Power Company Private Limited valuing to Rs. 88.45 Lakhs after adjusting the Share Subscription Money paid by the Company. The balance amount of Rs. 111.55 Lakhs is treated as Share Application Money against 11,15,515 Class A 0.01% Redeemable Preference Shares of Rs. 10/- each. This investment would be amortised over a period of 25 years from the year in which supply of power starts.

10. The Companys subsidiary, Stokes Group Limited, UK has incurred losses and the net worth of the said subsidiary company has eroded. Accordingly during the year, the Company has recognised provision for diminution in the value of investment of Rs. 9,018.59 Lakhs representing 100% of the value of investment.

11. During the year, Company has invested Euro 9 million (Rs. 5,583 Lakhs) in 11% Redeemable, Non-cumulative Preference Shares of Mahindra Forgings International Limited, its wholly owned subsidiary. Said preference shares are redeemable after 7 years. The preference shares, being a monetary item forming part of net investment in a non-integral foreign operation, Exchange difference of Rs. 140.22 Lakhs (loss) arising on the restatement as on 31st March, 2010 is accumulated in foreign currency translation reserve.

12. The Company has made an investment of Rs. 66,952.45 Lakhs in its subsidiary companies, Mahindra Forgings International Limited (holding Jeco Group of companies) and Mahindra Forgings Global Limited (holding Schoneweiss Group of companies). Taking into account the restructuring undertaken by the Company during the entire year, future business plan of the subsidiaries diminution in the value of investments is considered temporary and does not require provisioning.

13. Figures for the previous year have been regrouped and rearranged wherever necessary.

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