Mahindra & Mahindra Ltd

Dear Shareholders

Your Directors present their Report together with the audited accounts of your Companyfor the year ended 31^st March, 2012.

Financial Highlights

The Financial Year 2011-12 was beset with challenges. Global macro risks, stemming fromsovereign debt issues in the advanced economies and turmoil in the Middle East, remainedhigh through the year. At the same time, a weak economic environment at home-rising fiscaland current account deficits, persistently high inflation, rising interest rates, aweakening currency and prolonged policy and regulatory uncertainty - added to the risksfacing domestic firms and households. Demand as a consequence, turned sluggish and thecountry's economic growth dropped to 6.9% this year (as per advance estimates put out bythe CSO), considerably below the 8.4% growth registered in the previous two fiscals.

While the agricultural and services sectors displayed some resilience, the unsettledglobal outlook and constrained domestic economic environment took a particularly heavytoll on industrial activity during the year. Environmental hurdles, corruption charges andslowing Government approvals brought mining activity to a standstill which severelyconstrained power generation and other core infrastructure activities in the country.Hemmed in by structural impediments and rising input costs on the one hand and weakeningdomestic and external demand on the other, manufacturing activity suffered a severe lossin momentum with volume growth dropping from 7.7% year-on-year in the first quarter of theFinancial Year 2012 to 0.2% in the fourth quarter of the Financial Year 2012. Over all,industrial production grew a paltry 2.8% in 2011-12, in sharp contrast to the 8.2%increase registered in the previous fiscal.

Financial Performance

In these challenging times, the Automotive and Farm Divisions of your Company havesecured good performance reflecting in substantial growth in the net income of the Companyby 35.3% to Rs.32,319 crores in the year under review from Rs.23,894 crores in theprevious year.

Consequent to this commendable performance, the Profit for the year beforeDepreciation, Finance Costs, Exceptional items and Taxation recorded an increase of 9.0%at Rs.4,237 crores as against Rs.3,888 crores in the previous year. Similarly, Profitafter tax clocked an increase of 8.1% at Rs.2,879 crores as against Rs.2,662 crores in theprevious year. Your Company continues with its rigorous cost restructuring exercises andefficiency improvements which have resulted in significant savings through continued focuson cost controls, process efficiencies and product innovations that exceed customerexpectations in all areas thereby enabling the Company to maintain profitable growth inthe current economic scenario.

Dividend

Your Directors are pleased to recommend a dividend of Rs.12.50 per Ordinary (Equity)Share of the face value of Rs.5 each, payable to those Shareholders whose names appear inthe Register of Members as on the Book Closure Date. The equity dividend outgo for theFinancial Year 2011-12, inclusive of tax on distributed profits (after reducing the tax ondistributed profits of Rs.23.38 crores payable by the subsidiaries on the dividendsreceivable from them during the current Financial Year) would absorb a sum of Rs.868.61crores (as against Rs.802.64 crores comprising the dividend of Rs.10.50 per Ordinary(Equity) Share and also a Special Dividend of Re.1 per Ordinary (Equity) Share aggregatingRs.11.50 per Ordinary (Equity) Share of the face value of Rs.5 each paid for the previousyear).

Automotive Division:

Your Company's Automotive Division recorded total sales of 3,98,357 vehicles (includingVerito) and 70,988 three-wheelers as compared to 2,99,342 vehicles (including Verito) and64,740 three-wheelers in the previous year registering a growth of 33.1% and 9.7% invehicle sales and three-wheeler sales respectively.

On the domestic sales front, your Company sold 2,45,700 Passenger Vehicles [including2,02,217 Utility Vehicles (UVs), 25,644 Multi Purpose Vehicles (MPVs) and 17,839 Cars]registering a growth of 36.4% over the previous year's volumes of 1,80,180 PassengerVehicles [including 1,69,205 UVs, 966 MPVs and 10,009 Cars by Mahindra AutomobileDistributor Private Limited] (for a meaningful comparison, sales numbers of Verito Car isalso added in the previous year's sales numbers). In the commercial vehicle segment, yourCompany sold 1,27,029 vehicles [including 53,895 vehicles < 2T GVW and 73,134 vehiclesbetween 2-3.5T GVW] registering a growth of 21.4% over the previous year's volume of1,04,622 commercial vehicles [including 43,717 vehicles < 2T GVW and 60,905 vehiclesbetween 2-3.5T GVW]. In the three-wheeler segment, your Company sold 67,440 three-wheelersregistering a growth of 8.5% over the previous year's volume of 62,142 three-wheelers.

Your Company's UV sales volume grew by 19.5% and your Company strengthened itsleadership position of the domestic UV market by posting a market share of 55.1% againstthe previous year market share of 53.7%. During this year, Bolero posted record sales andbecame the first SUV in India to cross the milestone of 1 lakh sales in a year. Boleroretains the title of India's largest selling SUV for the 6^th consecutive year.It is also the 7^th highest selling passenger vehicle in India. The Scorpiocontinues to strengthen its iconic status with sales of over 50,000 units in the yearunder review.

In September, 2011, your Company launched the XUV5OO. The XUV5OO is loaded withenhanced technology and safety features, a strong diesel engine, luxurious interiors andunprecedented refinement, all at a very competitive price. Twenty two awards received fromvarious Media Groups bear testimony to the mass appeal and acceptance of the product. TheXUV5OO was launched simultaneously in India and South Africa - a first for the IndianAutomotive Industry.

With an aim to strengthen its product portfolio and enter new segments, your Companysuccessfully launched many new products over the past two years. As a result, theCompany's share of the Indian Automotive market stood at 11.5% in 2011-12 as compared to9.6% in the previous year.

In the Overseas market, your Company registered a volume growth of 70.2% over theprevious year. This growth was driven by volume growth in the SAARC countries, Chile andSouth Africa. During the year under review, your Company sold 25,628 vehicles [including157 vehicles sourced from Mahindra Navistar Automotives Limited ("MNAL")] and3,548 three-wheelers in the Overseas market as compared to 14,540 vehicles [including 305vehicles sourced from MNAL] and 2,598 three-wheelers in the previous year.

Spare parts sales for the year stood at Rs.873.99 crores (including Exports of Rs.55.47crores) as compared to Rs.666.97 crores (including Exports of Rs.28.3 crores) in theprevious year, registering a growth of 31.0%.

Farm Division:

Your Company's Farm Division (including the SwarajDivision) recorded sales of 2,36,666tractors as against 2,14,325 tractors sold in the previous year, recording a growth of10.4%.

In the Financial Year 2012, the Indian tractor industry continued to enjoy double digitgrowth. The domestic market recorded sales of around 5,35,210 tractors as compared to4,80,377 tractors in the previous year, recording a growth of 11.4%.

Your Company's performance was in line with the tractor industry with domestic sales of2,22,944 tractors as compared to 2,02,513 tractors in the previous year recording a growthof 10.1%. Your Company's market share now stands at 41.4% as compared to 42% in theprevious financial year, thus completing 29 years of leadership in the Indian tractorindustry. Your Company's tractor exports grew by 16.2% to reach 13,722 tractors ascompared to 11,812 tractors exported in the previous year.

Beyond agriculture, in the power generation space under the Mahindra Powerol Brand,your Company sold 29,122 engines in the current financial year as against 27,748 enginesin the previous year. The growth in volume was achieved inspite of adverse marketconditions in the Telecom Sector. Your Company, while retaining its leadership position inthe genset market catering to the telecom space, has focused its presence in the retailsegment. It strengthened its position in the fragmented inverter/Home UPS market and sold83,993 units against 47,217 units in the previous year, a growth of 78%.

Mahindra Special Services Group (MSSG):

Special Services Group business, a part of the Mahindra Defence Systems Division ofyourCompany provides corporate riskmanagement consultancy services, assisting organisations inmaintaining their competitive edge by protecting Information, Physical and Personnelassets through implementing the security strategy encompassing people, process andtechnology. During the year, MSSG has been successful in registering and maintainingbusiness growth across various industry verticals through a wide range of serviceofferings in the Corporate Security Risk landscape in India thereby enabling over 150major corporate customers secure their people, assets, information and reputation.

MSSG has witnessed tremendous growth opportunities in the areas of Governance and FraudRisk Management during the year. MSSG's marketing and brand promotion activities have beenstrengthened with increased manpower and as a result, MSSG has been able to make its brandvisible in many cities across India.

Management Discussion and Analysis Report

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

Corporate Governance

Your Company has a rich legacy of ethical governance practices most of which were inplace even before they were mandated. Your Company is committed to transparency in all itsdealings and places high emphasis on business ethics.

A Report on Corporate Governance alongwith a Certificate from the Statutory Auditors ofthe Company regarding the compliance of conditions of Corporate Governance as stipulatedunder Clause 49 of the Listing Agreement forms part of this Annual Report.

Finance

The Financial Year 2011-12 witnessed a period of uncertainty in both the global andIndian economic scenarios. The year saw the US recovery being slow, Europe under theshadow of a lengthened sovereign debt crisis and China's growth scaled down. On thedomestic front, tight liquidity conditions prevailed during most of the year, with shortterm interest rates on an upsurge. Fiscal and current account deficits and capital flowsdominated financial markets activity bringing volatilities to the fore. Reserve Bank ofIndia ("RBI") has in the last few months cut the CRR by 125 bps and also RepoRate by 50 bps to infuse liquidity and stem the faltering growth of the Indian economy.Despite the recent monetary actions, liquidity is expected to remain tight in the shortterm given the large Government of India debt programme in the Financial Year 2013 budgetproposals. RBI surprised the market by a larger than expected Repo cut, but indicated theywould be constrained in providing further reductions to boost growth.

To meet the challenges of the daunting environment, your Company continued to focus onmanaging cash efficiently and ensured that it had adequate liquidity and back-up lines ofcredit. Your Company successfully unlocked about Rs.750 crores from its working capital byemploying Non-fund based limits of banks to release statutory refunds under a facility onoffer by a State Government. The Company also actively assisted its business partnersincluding vendors by various initiatives in channel management and making available ane-enabled structured payment platform. The vendor initiative will enable freeing upworking capital relating to Rs.3,000 crores worth of annual supplies to the Company.

During the year, your Company raised External Commercial Borrowings of US$ 150 millionto finance its growth plans. The funds were raised for average maturity of 5 years at anopportune time at bench mark rates.

Your Company follows a prudent financial policy and aims to maintain optimum financialgearing at all times. The Company's total Debt to Equity Ratio was 0.29 as at 31^stMarch, 2012.

Your Company has been rated by CRISIL, ICRA Limited ("ICRA") and CreditAnalysis & Research Limited ("CARE") for its banking facilities under BaselII norms. CRISIL, ICRA and CARE have all re-affirmed the highest rating for your Company'sShort Term facilities. During the year,

CRISIL maintained the rating for your Company's Long Term Banking facilities to"AA+/Stable", ICRA maintained the Long Term Rating of "LAA+/Stable"and CARE also maintained the rating "CARE AA+".

Your Company's Bankers continue to rate your Company as a prime customer and extendfacilities/services at prime rates.

1. Voluntary Open Offer for 27% of the paid-up share capital of Swaraj AutomotivesLimited ("SAL")

Your Company had a shareholding of 44.19% in SAL which manufactures seats and seatingsystems for tractors, commercial vehicles, cars and passenger vehicles. Your Company madea voluntary open offer under the Securities and Exchange Board of India (SubstantialAcquisition of Shares and Takeovers) Regulations, 2011 to acquire upto 27% of the paid-upshare capital and consolidate its shareholding in SAL. The Offer was made at a price ofRs.90 per fully paid-up equity share of Rs.10 each and was for an offer size ofRs.5,82,64,380. The Offer was fully tendered. Consequently, the shareholding held by yourCompany in SAL has increased from 44.19% to 71.19%, thereby making SAL a subsidiary ofyour Company.

2. Open Offer to the Shareholders of EPC Industrie Limited ("EPC") and RightsIssue by EPC

As reported in the Annual Report for the Financial Year 2011, your Company acquired 38%of the equity share capital of EPC through a preferential allotment. EPC being a listedentity, open offer under the erstwhile Securities and Exchange Board of India (SubstantialAcquisition of Shares and Takeovers) Regulations, 1997 was triggered. Accordingly, an OpenOffer to acquire further 20% of the paid-up capital of EPC was made at an Offer price ofRs.67.55 per share of Rs.10 each. Your Company received shares to the extent of 0.11% ofthe share capital of EPC in the open offer. The current shareholding of your Company inEPC is 38.10%. During the year, EPC became a subsidiary of your Company on account of therights exercisable by your Company, under the Articles of Association of EPC to appointmajority Directors on the Board of EPC upon completion of the Open Offer. Subsequent tothe year end, EPC has made a Rights Issue of 1,03,58,199 Equity Shares of Rs.10 each at apremium of Rs.30 per Equity Share for an amount aggregating Rs.41.43 crores in the ratioof 3 Equity Shares for every 5 fully paid-up Equity Shares held by the existing EquityShareholders of EPC on the record date. The Rights Issue opened on 14^th May,2012 and will close on 31^st May, 2012.

3. Demerger of Automotive Business of Mahindra Automobile Distributor Private Limited

Mahindra Automobile Distributor Private Limited ("MADPL"), a subsidiary ofyour Company, was engaged in the business of assembling and selling Automotive vehiclesand accessories ("Automotive Business") and spare parts ("SparesBusiness").

MADPL, earlier known as Mahindra Renault Private Limited, was a Joint Venture betweenRenault s.a.s., France ("Renault") and your Company. After the divestment ofRenault from the Joint Venture, your Company has assumed full control over the activitiesof MADPL. However, Renault will continue to supply components and sub-assemblies to MADPLat re-negotiated prices and will continue to support the product in India.

Your Company is already dealing in all segments of automobile industry e.g. passengervehicles, commercial vehicles, light commercial vehicles and three-wheelers. Verito brandof vehicles which replaced the earlier Logan brand, is a perfect fit in the entire productportfolio.

Due to the divestment of Renault and in order to consolidate, it was proposed todemerge the Automotive Business of MADPL into your Company. The proposed demerger of theAutomotive Business would enable MADPL to streamline its operations by being focused onthe Spares Business so as to enhance its profitability and to rationalise its management,businesses and finances. It will also provide your Company more flexibility in themanufacturing and supply chain.

To achieve the above, a Scheme of Arrangement was announced by your Company wherebyMADPL would demerge the Automotive Business into your Company. The same was approved bythe Shareholders of your Company at the Court Convened Meeting held on 7^thFebruary, 2012. The Scheme has been approved by the High Court on 30^th March,2012 and the same has been effective from 23^rd April, 2012 by filing thecertified copy of the Order with the Registrar of Companies. The appointed date of theScheme is 1^st April, 2011. As per the Scheme and pursuant to the demerger, theshare capital of MADPL has been restructured and shares held by your Company and itswholly owned subsidiary viz. Mahindra Holdings Limited, stand cancelled to the extent ofcapital restructuring. As per the Scheme, your Company has on 17^th May, 2012allotted 5,917 Ordinary (Equity) Shares of Rs.5 each to Infina Finance Private

Limited, the Shareholder of MADPL in the share exchange ratio of 1 fully paid-upOrdinary (Equity) Share of Rs.5 each for every 3,162 fully paid-up Equity Shares of Rs.10each held in MADPL.

4. Consolidation of Two Tractor Joint Ventures in China

Your Company through Mahindra Overseas Investment Company (Mauritius) Limited("MOICML"), a wholly owned subsidiary of your Company has a stake of 88.55% inMahindra China Tractor Company Limited ("MCTCL") - a Joint Venture in JiangsuProvince with Jiangling Motors Co. Group and a 51% stake in Mahindra Yueda YanchengTractor Co. Limited ("MYYTCL") - a Joint Venture in Jiangxi Province with YuedaGroup. These two Joint Venture companies were formed in 2005 and 2009 respectively.

In order to synergise the business in China it is proposed to create a single face forbrand Mahindra at the market place through integrating sales and marketing approach,manufacturing operations and supply chain for both the companies, leveraging sizeadvantage of MYYTCL and optimising financial resources to support growth at both thecompanies. With a view to achieve the above, MYYTCL would purchase MOICML's 88.55% stakein MCTCL, resulting in MCTCL becoming a subsidiary of MYYTCL. This process is currently inprogress in China, in terms of getting approvals from the respective ProvincialGovernments and other Government agencies in China.

5. Proposed Amalgamation of Satyam Computer Services Limited and other companies withTech Mahindra Limited

The Board of Directors of Tech Mahindra Limited, a Joint Venture of your Company("transferee company" or "TechM") alongwith Venturbay ConsultantsPrivate Limited, Satyam Computer Services Limited ("Mahindra Satyam"), C&SSystem Technologies Private Limited, Mahindra Logisoft Business Solutions Limited andCanvasM Technologies Limited (collectively referred to as "the transferorcompanies") at their respective Meetings held on 21^st March, 2012 havepursuant to the provisions of sections 391 to 394 read with sections 78, 100 to 104 andother applicable provisions of the Companies Act, 1956 and subject to the requisiteapproval of the Shareholders of the respective companies and subject to all necessarystatutory approvals, approved Amalgamation of the transferor companies with TechM.Pursuant to the Scheme of Amalgamation and Arrangement of the transferor companies withthe transferee company, TechM shall issue and allot 2 equity shares of Rs.10 each fullypaid-up in its capital in respect of every 17 equity shares of Rs.2 each fully paid-up inthe equity share capital of Mahindra Satyam to the Shareholders of Mahindra Satyam.

The proposed Amalgamation would result in creation of a new off-shore services leaderwith deep competencies and a balanced mix of revenues of over $ 2.4 billion, from variousgeographies and domains and more than 75,000 professionals and 350 + active clients. Thecombined entity would provide an edge with diversification benefits arriving from MahindraSatyam's Enterprise Mobility and TechM's Telecom domain expertise and would lead to abalanced mix of revenues from Telecom, Manufacturing, Media & Entertainment andBanking, Financial Services, Insurance, Retail and Healthcare.

Share Capital

As reported in the Annual Report for the Financial Year 2011, your Company had allotted34,730 Ordinary (Equity) Shares of Rs.5 each to International Finance Corporation, theShareholder of Mahindra Shubhlabh Services Limited ("MSSL"), a subsidiary ofyour Company in the share exchange ratio of 1 fully paid-up Ordinary (Equity) Share ofRs.5 each for every 190 fully paid-up Equity Shares of Rs.10 each held in MSSL pursuant tothe Scheme of Arrangement between MSSL and the Company and their respective Shareholders("the Scheme"). The Scheme became effective on 15^th April, 2011.

Subsequent to the year end, your Company has allotted 5,917 Ordinary (Equity) Shares ofRs.5 each to Infina Finance Private Limited, the Shareholder of Mahindra AutomobileDistributor Private Limited ("MADPL") on 17^th May, 2012, pursuant tothe Scheme of Arrangement between MADPL and the Company and their respective Shareholdersand Creditors based on the swap ratio determined by the Independent Valuer. Consequently,the issued, subscribed and paid-up Share Capital of the Company stood at Rs.307 crorescomprising of 61,39,80,756 Ordinary (Equity) Shares of Rs.5 each fully paid-up as on thedate of this Report.

Stock Options

During the year under review, on the recommendation of the Governance, Remuneration andNomination Committee of your Company, the Trustees of the Mahindra & MahindraEmployees' Stock Option Trust have granted 6,55,334 Stock Options to the EligibleEmployees under the Mahindra & Mahindra Limited Employees Stock Option Scheme - 2010.Further, no new Options have been granted under the Mahindra & Mahindra LimitedEmployees Stock Option Scheme - 2000.

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

Industrial Relations

A cordial Industrial Relations environment prevailed at all the manufacturing unitsacross your Company during the year under review. The focus has been on propagatingproactive and employee centric shop floor practices, quick grievance resolution mechanismsand alignment to overall business goals thus ensuring no loss of production in FinancialYear 2012. Propagating employee engagement as a business imperative and the belief thathighly engaged employees deliver exceptional performance has resulted in record productionin Financial Year 2012.

Over the last few years, your Company has provided an impetus to enhancing capabilitiesat the shop floor - beyond the immediate technical skills which is usually undertaken.Operators are trained and encouraged to work in Teams for resolving quality concerns,reducing cost, improving safety and efficiency. For the year under review, the workmengenerated over 10 ideas per person towards this cause.

In a restructuring exercise to right size the workforce during the year under review,your Company accepted Voluntary Retirement from 28 employees at Igatpuri Plant of theAutomotive Division. The 'Management Discussion and Analysis Report' shares an overview ofthe developments in Human Resources/Industrial Relations during the year.

Safety, Occupational Health and Environment

Your Company continues to demonstrate a strong commitment towards Safety, Health andEnvironment and as a part of the same, multiple measures and actions through safetyKaizens and Poka Yoke's were undertaken during the year under review. Through itswell-established Safety, Occupational Health & Environmental Policy, the objectivesand targets derived are supported by respective Management Programs.

Among the core organisational values is the Safety & Occupational Health ofemployees of the Company. The Policy inter alia covers and ensures safety of public,employees, plant and equipment, ensures compliance on a monthly basis, imparting trainingto all its employees and stakeholders as per training calendar, carrying out statutorysafety assurance and audits of its facilities as per legal requirements, conductingregular internal and external medical and occupational check-up of its employees andpromoting health-friendly sustainable activities.

Ongoing initiatives like Road Safety Week, Safety Week and Fire Service Day areorganised, coupled with Safety Audits/Inspection and Safety awareness training withbenchmarks on overall safety performance.

Regular Occupational Health Examination Camps, medical check-ups, consultation andcounselling were organised to monitor employees and contract workmen.

Through stakeholders' engagement and employees' involvement, your Company demonstratesits road map on the fundamentals of Planet, People and Profit. Various path breakingprojects have been implemented by your Company in the areas of Air Pollution Management,Water and Waste Water Management, Solid Waste Management and Greenbelt Development.

Subsequent to the year end, a fire broke out in one of the storage areas pertaining tomanufacturing of Scorpio/Xylo TCF lines of the Company's Automotive Plant 1 at Nasik. Thefire was confined to this specific area and there has been no casualty. The Plant assetsare adequately covered by insurance. Post the incident, necessary actions were taken torestore normalcy of operations and recover lost production. Further, the Company hasstrengthened the safety and fire audit procedures across all its locations.

Certifications / Re-certifications

Your Company's commitment to the environment stems from the Mahindra Group's abidingconcern for Stakeholder engagement in and around the Society. The nature of operations hasa low impact on the environment as your Company has implemented an Environment ManagementSystem wherein a healthy work environment is provided to its employees and environmentfriendly businesses are conducted. Besides, to bring cross cultural sensitivity of theCompany's business associates, promotional activity towards increasing the awareness onGreen Supply Chain Management in the vendor community has also been initiated. Through theSustainability Reporting System, your Company annually revises its objectives and targetsand helps in continually improving its air quality by controlling emissions, waterpollution and minimising waste from its processes.

Implementation of the Safety, Occupational Health & Environment Management SystemStandard has been re-enforced by way of a re-certification process towards the Company'scommitment to Safety, Occupational Health and Environment of the highest levels. AllPlants of the Automotive and Farm Division have been certified under OHSAS 18001: 2007& EMS ISO 14001: 2004. The EMS & OHSAS systems aim to eliminate or minimise riskand environmental impact on employees and other interested parties who may be exposed toOccupational Safety risks/impacts associated with its activities. Sustainable developmentis promoted across the Divisions through sharing of best practices and monitoringmechanism of the Policy in the fields of Safety, Occupational Health & Environment.

Corporate Social Responsibility

Last year the Mahindra Group introduced 'Rise' to the world, a symbol of Mahindra'sdedication to continual improvement within ourselves and in the communities the Grouptouches. Your Company kept to its commitment of spending 1% of its Profit After Tax todrive positive change in the communities where it operates. While education remains thefocus area as can be seen in the Corporate Social Responsibility ("CSR")initiatives listed below, environment and health are also areas your Company has investedin, especially through the Hariyali project and sponsoring of the Lifeline Express.

Some of the major CSR initiatives the Company has invested in during 2011-2012 aredescribed below:

A. Nanhi Kali

Bearing in mind the millennium development goals, the Mahindra Group has beensupporting the cause of Girl Child education for many years through investing in NanhiKali, a project that supports the education of underprivileged girl children. During thelast financial year, 74,383 girls across 9 states in India were provided academic andmaterial support, of which, the Mahindra Group supports the education of 27,887 NanhiKalis. Significant outcomes include curtailing drop out of girls from school to less than10% and a 20% increase in learning outcomes across all project areas.

B. Mahindra Pride Schools

Your Company continues to support the Government mandate for affirmative action byproviding youth from socially disadvantaged sections of Society with livelihood trainingthrough the Mahindra Pride Schools. 3,830 students from socially disadvantaged sections ofSociety have been provided training at the 3 Mahindra Pride Schools in Pune, Chennai andPatna. The students are being trained in three areas of Hospitality, Craft, InformationTechnology Enabled Services (ITES - for BPOs and KPOs) and Customer RelationshipManagement. The highlight of the placement process has been 100% placement of students inlucrative jobs.

C. Scholarships and Grants

Your Company established various scholarships which have helped transform the lives ofyouth. These scholarships range from rewarding excellence in academics in 35 schools toproviding vocational scholarship to students from disadvantaged sections of Society, toproviding interest free loan scholarship to students who wish to pursue post graduatestudies overseas. During the year under review, almost 2,100 students benefitted fromthese scholarships. Your Company is also supporting 28 Mumbai Public Schools which providequality English medium education to students from the lower socio- economic strata ofsociety.

Your Company also plans on carrying out Relief and Rehabilitation work at the cycloneaffected areas of Tamil Nadu. The Mahindra Group will construct houses and associatedinfrastructural facilities such as water supply, sanitation, rain water harvestingfacilities, etc. in the severely affected villages.

Employee Social Options

The Esops initiative which was undertaken in the year 2005 on the 60^th yearof the Company has now become a rising movement within the Company. "Esops" herestands for Employee Social Options, a systematic employee volunteering Programme under theCSR initiatives.

Esops for the Mahindra-ites means sharing a part of your time to help the lessfortunate. It implies looking beyond oneself. It means sharing one's skills to makesociety healthier, cleaner, greener, more literate and hence more sustainable.

Esops is a set of social work volunteering options that are created and implementedexclusively by employees themselves based on the needs of underprivileged communities inand around their areas of operation. In a way, it is each employee's personal CSR.

Esops enables the Mahindra workforce to collectively donate thousands of person-hoursfor various social projects, in the three focused areas of Education, Health andEnvironment, making social work an integral part of their lives. Esops, a way of givingback to society, delivers not only a Management value but also a Team value.

Some of the notable Esops initiatives this year were the Lifeline Express at Haridwarin Uttarakhand and at Rajgir in Bihar where jointly 4,429 people were either surgicallytreated or given medicines and appliances free of cost, Mahindra Hariyali for plantingmore than 1.2 million trees, Esops Awards - 2011, Esops Star Performers Awards, etc.

The other Esops activities included numerous initiatives in Education, Health,Environment and others having short term as well as long term impact on the beneficiariesor society at large.

'Sustainability' Initiative

Your Company continued with its journey on sustainable development with consciousefforts to minimise the environmental impact caused by products & processes andsimultaneously taking responsibility to enable communities to Rise without losing focus oneconomic performance. The triple bottom line performance for 2010-11 was published inaccordance with the latest guidelines of the internationally accepted Global ReportingInitiative or the GRI standards. As in case of the previous three Reports, this Report wasalso externally assured by Ernst & Young with an A+ rating and GRI checked. The Reportfor the year 2011-12 is under preparation and will be ready for release shortly.

In order to follow a structured path towards sustainable development, in 2008-2009 yourCompany has devised a road map with seven commitments for reducing the environmentalfootprint of its operations. So far, all targets have been surpassed. A percentagereduction in energy and water consumption as well as GHG emission was recorded in theAutomotive as well as the Farm Division, as compared to the previous year. This was theresult of the continuous improvement approach followed at the plant level.

After four years into this journey, your Company's operations have naturally aligneditself to the National Agenda on Climate Change articulated through the National ActionPlan for Climate Change ("NAPCC"). Business models have been created thatsupport the missions under the NAPCC e.g. the conscious progression from Farm EquipmentManufacturing to Farm Prosperity which directly addresses the National Mission forSustainable Agriculture. Entry into the renewable energy segment is in keeping with theNational Solar mission. Constant improvements in energy and water efficiencies support theNational Mission for enhanced energy efficiency and Water Mission. These are humblecontributions to National goals, which your Company is committed to pursue.

This transparency about the impact of business on environment and local communities hasmade your Company secure first place in the Standard & Poor ESG India Index 2011amongst the top 50 best performing companies on the Stock Market. Your Company also hadthe distinction of receiving an invitation to participate in the Dow Jones SustainabilityIndex ("DJSI") 2011, in the category of Industrial Engineering. Your Company'sperformance under each of the three dimensions, i.e. Economic, Environmental and Social,is above the average score of all companies rated in the category.

Over the years, Alternative Thinking has been ingrained in your Company. It is also oneof the three brand pillars of Rise. Processes, Products and People, all are driven byAlternative Thinking. It is helping your Company not only in rising to emerging challengesbut also in translating them into opportunities. This transformative power stems from yourCompany's commitment to create a sustainable enterprise, which in turn is derived from theGroup's purpose - to enable people to Rise.

Directors

At the Meeting of the Board of Directors of the Company held on 30^th May,2012, the Chairman Mr. Keshub Mahindra expressed his intention to relinquish his positionas Chairman and Director of the Company and requested the Board to accept this request andmake his retirement as Chairman and Director of the Company effective at the conclusion ofthe next Annual General Meeting.

The Board with great reluctance and utmost regret accepted the Chairman's request torelinquish his office as Chairman and Director of the Company at the conclusion of the 66^thAnnual General Meeting of the Shareholders which is scheduled to be held on 8^thAugust, 2012. The Board however, requested the Chairman to accept the position as ChairmanEmeritus of the Company so that his advice and guidance would continue to be available tothe Company. The Chairman thanked the Board and stated that this would indeed be a greathonour which he would accept with humility.

The Board Members unanimously complimented the Chairman on the illustrious servicesrendered by him to the Company, the Industry and the Nation. The Board recalled that Mr.Keshub Mahindra joined the Board in 1948 and became the Chairman in 1963. His continuedMembership of the Board for a little over six decades and as Chairman for close to 50years is unparalleled in the annals of Corporate History.

During this period, the Mahindra Group grew from a manufacturer of automobiles to afederation of companies operating in a range of businesses which include automobiles,tractors, auto components, information technology, real estate, financial services andhospitality. Over the years, the Company under his leadership successfully createdbusiness alliances with global majors such as the Willys Corporation, Mitsubishi,International Harvester, United Technologies, British Telecom, Ford, Renault and manyothers, laying the foundation for the emergence of the Group as an Indian multi-national.

While pursuing the growth objectives of the Company, Mr. Keshub Mahindra never lostsight of the larger interests of the nation. Even before the buzz word of Corporate SocialResponsibility came into vogue in the Corporate World, the Mahindra Group quietly andunobtrusively developed a high sense of philanthropy on a wide range of social issues andmore particularly education to benefit diverse sections of the Society.

An important contribution of the Chairman had been to develop and mentor a broad rangeof leaders in the Company to carry on the legacy inherited over six decades of exceptionalgovernance. The depth of managerial talent that is available in the Company has been amajor factor for the continued growth of the Company.

The Board Members placed on record their deep sense of gratitude and appreciation forall that Mr. Keshub Mahindra had given to the Company during the last six decades andwished him continued good health and active retirement for years to come.

In the light of Mr. Keshub Mahindra relinquishing his office as the Chairman andDirector of the Company, the Board after due deliberations unanimously decided that Mr.Anand G. Mahindra, Vice- Chairman and Managing Director of the Company, in recognition ofthe immense contribution that he had made to the growth of the Company and the vastexperience that he had gathered during his over two decades of association with theCompany, be elevated to the position of the Chairman. The appointment of Mr. Anand G.Mahindra as the Chairman would become effective after Mr. Keshub Mahindra ceases to be theChairman and Director at the conclusion of the forthcoming Annual General Meetingscheduled to be held on 8^th August, 2012 and Mr. Anand G. Mahindra wouldthereafter function as the Chairman and Managing Director of the Company.

Mr. Anand G. Mahindra commenced his professional career with Mahindra Ugine SteelCompany Limited in 1989 and then joined the Company in 1991 as Deputy Managing Director.He has been largely credited for the Company's diversification into new businesses viz.real estate and hospitality management. In April, 1997, Mr. Anand G. Mahindra wasappointed as Managing Director and in January, 2001 was given additional responsibility ofVice-Chairman.

Life Insurance Corporation of India withdrew the nomination of Mr. Arun Kanti Dasgupta,as a Nominee Director with effect from 9^th August, 2011. Consequently, Mr.Dasgupta ceased to be a Director of the Company.

The Board has placed on record its sincere appreciation of the valuable servicesrendered by Mr. Dasgupta during his tenure as a Director of the Company.

Mr. Deepak S. Parekh, Mr. A. K. Nanda, Mr. Narayanan Vaghul and Mr. R. K. Kulkarniretire by rotation and, being eligible, offer themselves for re-appointment.

The Board of Directors at its Meeting held on 20^th March, 2012 have pursuantto the approval of the Governance, Remuneration and Nomination Committee of the Board andsubject to the approval of the Members to be obtained at the ensuing Annual GeneralMeeting of the Company, re-appointed Mr. Anand G. Mahindra as the Managing Director for aperiod of 5 years with effect from 4^th April, 2012 to 3^rd April,2017 and Mr. Bharat Doshi as the Executive Director for a period with effect from 28^thAugust, 2012 to 31^st March, 2015.

Pursuant to the recommendation of the Governance, Remuneration and NominationCommittee, Dr. Vishakha N. Desai and Mr. Vikram Singh Mehta were appointed as AdditionalDirectors of the Company with effect from 30^th May, 2012 at the Meeting of theBoard of Directors of the Company held on 30^th May, 2012.

Dr. Vishakha N. Desai is President and CEO of Asia Society, a leading globalorganisation committed to strengthening partnerships among the people, leaders andinstitutions of Asia and the United States. Dr. Desai holds a B.A. in Political Sciencefrom Bombay University and an M.A. and Ph.D. in Asian Art History from the University ofMichigan.

Mr. Vikram Singh Mehta is the Chairman of the Shell Group of Companies in India since1994. Mr. Mehta completed his Bachelors' Degree in Mathematics (Hons.) from St. StephensCollege, Delhi University. He also has a Master's Degree in Politics and Economics (Hons.)from Magdalen College, Oxford University, UK and a Master's Degree in Energy Economicsfrom the Fletcher School of Law and Diplomacy, Tufts University in USA.

Dr. Desai and Mr. Mehta hold office upto the date of the ensuing Annual General Meetingof the Company.

The Company has received a Notice from a Member signifying his intention to propose Dr.Desai and Mr. Mehta for the office of Directors at the forthcoming Annual General Meeting.

Directors' Responsibility Statement

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

(i) in the prepara47tion of the annual accounts, the applicable accounting standardshave been followed;

(ii) they have, in the selection of the accounting policies, consulted the StatutoryAuditors and these have been applied consistently and reasonable and prudent judgments andestimates have been made so as to give a true and fair view of the state of affairs of theCompany as at 31^st March, 2012 and of the profit of the Company for the yearended on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

Subsidiary Companies

The subsidiary companies of your Company continue to contribute to the overall growthof the Company. Major subsidiaries such as Mahindra & Mahindra Financial ServicesLimited with a 30.6% growth in its consolidated profits and Mahindra Lifespace DevelopersLimited with a 10.1% growth in its consolidated profits deserve special mention. Theconsolidated Group Profit for the year after exceptional items, prior period adjustmentsand tax and after deducting minority interests is Rs.3,126.66 crores as againstRs.3,079.73 crores earned in the previous year.

During the year under review, Bristlecone International AG, EPC Industrie Limited,Mahindra Telecommunications Investment Private Limited, Navyug Special Steel PrivateLimited, Bell Tower Resorts Private Limited, Mahindra Racing S.r.l. and Swaraj AutomotivesLimited became subsidiaries of your Company.

During the year under review, Engines Engineering S.r.l., Eff Engineering S.r.l. andGipp Aero International Pty. Limited ceased to be subsidiaries of the Company.

Subsequent to the year end, Mahindra Defence Naval Systems Private Limited was formedas a wholly owned subsidiary of your Company.

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

In accordance with the General Circular issued by the Ministry of Corporate Affairs,Government of India, the Balance Sheet, Profit and Loss Account and other documents of thesubsidiary companies are not being attached with the Balance Sheet of the Company. TheCompany will make available the Annual Accounts of the subsidiary companies and therelated detailed information to any Member of the Company who may be interested inobtaining the same. Further, the Annual Accounts of the subsidiaries would also beavailable for inspection by any Member at the Head Office of the Company and at the Officeof the respective subsidiary companies, during working hours upto the date of the AnnualGeneral Meeting.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company and its subsidiaries, prepared inaccordance with Accounting Standard AS21 form part of this Annual Report.

The Consolidated Financial Statements presented by the Company include the financialresults of its subsidiary companies, associates and joint ventures.

Auditors

Messrs Deloitte Haskins & Sells, Chartered Accountants, retire as Auditors of theCompany and have given their consent for re-appointment. The Members would be required toelect Auditors for the current year and fix their remuneration.

As required under the provisions of section 224(1B) of the Companies Act, 1956, theCompany has obtained a written Certificate from the above Auditors proposed to bere-appointed to the effect that their re-appointment, if made, would be in conformity withthe limits specified in the said section.

Cost Auditors

As per the Order of the Central Government and in pursuance of section 233B of theCompanies Act, 1956, your Company carries out an audit of its cost records. The due datefor filing of the Cost Audit Report with the Ministry of Corporate Affairs for theFinancial Year ended 31^st March, 2011 was 30^th September, 2011. TheReports were filed on 14^th September, 2011 for the Farm Equipment Sector and 20^thSeptember, 2011 for Motor Vehicles. The Central Government has approved the appointment ofM/s. N. I. Mehta & Co., Cost Accountants as Cost Auditors for conducting Cost Auditfor the Financial Year 2011-12.

Pursuant to section 233B(2) of the Companies Act, 1956, the Board of Directors on therecommendation of the Audit Committee appointed M/s. N. I. Mehta & Co., CostAccountants, as the Cost Auditors of the Company for the Financial Year 2013. M/s. N. I.Mehta & Co. have confirmed that their appointment, is within the limits of section224(1B) of the Companies Act, 1956 and have also certified that they are free from anydisqualifications specified under section 233B(5) read with section 224 and sub section(3) or sub section (4) of section 226 of the Companies Act, 1956.

The Audit Committee has also received a Certificate from the Cost Auditor certifyingtheir independence and arm's length relationship with the Company.

Public Deposits and Loans/Advances

Out of the total 10,553 deposits of Rs.7,805.20 lakhs from the Public and Shareholdersas at 31^st March, 2012, 437 deposits amounting to Rs.190.84 lakhs had maturedand had not been claimed as at the end of the Financial Year. Since then, 205 of thesedeposits of the value of Rs.104.73 lakhs have been claimed.

The particulars of loans/advances and investment in its own shares by listed companies,their subsidiaries, associates, etc., required to be disclosed in the Annual Accounts ofthe Company pursuant to Clause 32 of the Listing Agreement are furnished separately.

Current Year

During the period 1^st April, 2012 to 29^th May, 2012, 56,811vehicles (including Verito) were despatched as against 52,304 vehicles (including Verito)during the corresponding period in the previous year. During the same period, 35,779tractors were despatched as against 40,971 tractors despatched during the correspondingperiod in the previous year.

Looking forward, your Company expects the economic environment in 2012-13 to be as, ifnot more challenging than that in 2011-12. The risks of a full fledged crisis in the eurozone are high and rising, the US economic recovery is looking increasingly more fragile,China is slowing and financial markets are in a state of flux. At the same time, weakdomestic macros and partisan coalition politics continue to constrain policy actionsneeded to support growth amidst a deteriorating global environment. While fallingcommodity and oil prices may provide some relief, the depreciation in the external valueof the rupee is likely to limit beneficial impact on domestic operations. The near termoutlook on the economy, thus, is cautious and watchful.

Whilst the economic terrain looks rough at present, your Company is confident that itwill, through a relentless focus on customer delight, new product introduction, processinnovation and cost controls, successfully negotiate the economic challenges that lieahead.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

Particulars required to be disclosed under the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules, 1988 are set out in Annexure II to this Report.

Particulars of Employees

The Company had 159 employees who were in receipt of remuneration of not less thanRs.60,00,000 during the year ended 31^st March, 2012 or not less thanRs.5,00,000 per month during any part of the said year. However, as per the provisions ofsection 219(1)(b)(iv) of the Companies Act, 1956, the Directors' Report and Accounts arebeing sent to all the Members of the Company excluding the Statement of particulars ofemployees. Any Member interested in obtaining a copy of the Statement may write to theCompany Secretary of the Company.

ANNEXURE I TO THE DIRECTORS' REPORT FOR THE YEAR ENDED 31^st MARCH, 2012

Information to be disclosed under the Securities and Exchange Board of India (EmployeeStock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999:

a Options Mahindra & Mahindra Limited Employees Stock Option Scheme - 2000("2000 Scheme") - 1,51,80,898 granted Mahindra & Mahindra Limited EmployeesStock Option Scheme - 2010 ("2010 Scheme") - 38,72,092

STATEMENT ATTACHED TO ANNEXURE I TO THE DIRECTORS' REPORT FOR THE YEAR ENDED 31^stMARCH, 2012

@ Unexercised options lapsed.

* All the above Options have been exercised.

** The Options granted stand augmented by an equal number of Options and the ExercisePrice stands reduced to half on account of the 1:1 Bonus Issue made in September, 2005.

*** Further, the number of Stock Options granted and outstanding as on 30^thMarch, 2010, stand augmented by an equal number of Options and Exercise Price standsreduced to half on account of Sub-division of each Ordinary (Equity) Share of the Companyhaving a Face Value of Rs.10 each fully paid-up into 2 (Two) Ordinary (Equity) Shares ofthe Face Value of Rs.5 each fully paid-up.

ANNEXURE II TO THE DIRECTORS' REPORT FOR THE YEAR ENDED 31^st MARCH, 2012

PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OFDIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31^stMARCH, 2012

A) Conservation of Energy

Your Company has always been aware of the need for conservation of energy and naturalresources and has been consciously making progress year on year towards this end. Energyefficiency improvement initiatives have been implemented at all the Plants and Offices ofthe Company by undertaking various energy conservation projects.

Your Company ensures strict compliance with all statutory requirements at all itsPlants/Units and takes several voluntary steps like Zero Discharge, reduced consumption ofwater, deploying reduce, recycle and reuse approach and takes various other steps asexplained under Sustainability Initiatives taken by the Company.

Your Company has also implemented the following activities to ensure betterenvironment:

• Reduction in carbon footprint.

• Move towards Carbon neutrality.

• Effective effluent and Sewerage treatment, recycle and reuse of water.

• Reduce, Recycle and Reuse of Waste.

• Move towards Water neutrality.

• Reducing solid waste and Eco friendly waste disposal.

• Saving of natural resources like water, fuel, etc.

• Environment friendly Ambient and work place.

• Use of Renewable Energy in Manufacturing.

• Optimisation of Compressed Air.

(i) Engineering Initiatives

• Installation of heat recovery equipment for furnaces and ovens.

• Use of Piped Natural Gas in place of electrical heating for heat treatment andindustrial washing.

• Installation of LPG flux saver in ovens.

• Installation of energy efficient Water cooled screw chiller for airconditioning.

• Introduction of energy efficient pumps.

• Installation of VFDs (Variable frequency drives) at select locations.

• Installation of LED lights for street lighting and Workshop lighting.Installation of solar panels and small wind turbine.

• Installation of Mag coupled magnetic lamps instead of sodium/mercury vapourlamps.

• Rainwater harvesting and water conservation.

• Installation of Heat pumps for washing machines combining heating and cooling.

(ii) Process Improvement

• Cycle time reduction of various manufacturing processes through introduction ofnew technology and process improvement.

• Optimising temperature settings on HVAC units, considering seasonal changes.

• Use of heat recovery in Paint shop for ASU heating during winter reducing Gasconsumption.

• Use of Oven heat recovery for using it in Hot water generator.

(iii) Initiatives Generating Awareness on Energy Consumption

• Awareness campaign is conducted by celebrating ECON week across the plants.

• E-mailer sent on various ECON topics.

• Display galleries.

• Display and sale of Energy efficient products for employees.

• Conference of all the stake holders.

• Guest lecture and quiz competition on "Sustainable Growth through EnergyConservation"

• Sustainability Audit conducted at Dealers, Suppliers end to reduce Carbonfootprint.

• Display of sustainability posters at workplace.

• Extensive involvement of shop floor operating teams in improvement activitiesand projects. Some examples are:

o Periodic checking of Pressure Regulators, Air Leakage audits.

o Shift from continuous to intermittent operation of motors (where possible).

o Optimisation of overhead lights.

• Extend energy conservation campaigns to nearby schools and colleges.

• Reward and recognition for energy saving projects.

• 5 kw Wind + Solar hybrid Installation.

• ASU Blower modification by replacing two fans with one single fan with VFD.

• ASU heating with heat recovery from Top coat and Primer Oven in Paint Shops.

• Improvement in efficiency of air conditioning units.

• Application of efficient Magnetic coupled lighting.

• VFD for Pumps.

• Solar assisted LPG vaporizer.

• Heat Pump for Washing Machine heating.

• PNG hot water Generator for Washing Machine heating.

(c) Impact of the measures at (a) & (b) above for reduction in energy consumptionand consequent impact on the cost of production of goods

The measures taken have resulted in lower energy consumption. In the AutomotiveDivision, the specific power consumption improved by 6.4% over the previous year and inthe Farm Division, the specific power consumption improved by 4.7% over the previous year.

During the current year, the Company has won several awards at National/ State/Regional level for Energy management and Environment protection.

(d) Total energy consumption and energy consumptions per unit of production as per FormA of the Annexure to the Rules in respect of industries specified in the Schedule

Not Applicable.

1. Areas in which Research & Development is carried out:

During the year under review, the Automotive Division focused on Technology upgradationand capability development in core areas of Engine, Driveline, Safety, Value engineeringthrough the use of modern manufacturing processes, alternate material and developingcapabilities in Automotive Electronics and infotainment.

The Farm Division focused on retaining fuel efficiency advantage while meeting theupcoming engine emission norms in India and US. This was done on the complete range of theengines with improvement focused on engine technology and system level overall tractoroptimisation. Beyond tractor, efforts were focused on development of a range ofmechanisation solutions for focused crops.

2. Benefits derived as a result of the above efforts:

Some significant achievements in the Automotive Division include the Global launch ofGenio, New Bolero, New Xylo and all new XUV5OO.

XUV5OO has Cheetah-inspired styling, refinement like never before, enhanced technologyand safety features along with luxurious interiors. XUV5OO is the first monocoqueconstructed vehicle from Mahindra and comes with 140bhp (103Kw) mHawk engine with 330Nmtorque and 5^th Generation Variable Geometry Turbocharger. It has a 6-speedtransaxle with all Wheel Drive and Interactive Torque Management.

For safety, XUV has Electronic Stability Program (ESP) with Rollover Mitigation, 6Airbags (front, side and curtain), ABS with Electronic Brakeforce Distribution (EBD), HillHold Control and Hill Descent Control.

XUV5OO comes with a host of features like - 6" touch screen Blue SenseInfotainment System with GPS, Driver Information System, Micro Hybrid technology; FullyAutomatic Temperature Control with dual HVAC; Static-bending projector headlamps with LEDparking lights; Voice Commands, Tyretronics (Tyre Pressure Monitoring System) andIntellipark (Reverse Parking Assist).

Moving on to the Farm Division, various variants of Bhoomiputra, Sarpanch and Arjunacross the domestic range were launched during the course of the year. Engines in >50HP segment have been upgraded to meet the Bharat TREM IIIA emission norms.

In the international space, for the US market, the Company has successfully launchedthe 4025 4WD Compact tractor strengthening your Company's position in the market.Similarly, 90 HP Tractor was launched for the African market.

The in-house engine development effort resulted in higher kVA engines adding to theMahindra Powerol portfolio.

During the year, the Automotive and Farm Divisions filed 54 new patents, while 7patents were granted.

3. Future plan of action:

Your Company continues its efforts on developing new products and technologies to meetthe ever growing customer needs, regulatory requirements, competitive pressures and toprepare for the future.

On 11^th April, 2012, your Company inaugurated its world class engineeringresearch and development centre, Mahindra Research Valley ("MRV") in Chennai.Your Company has always been committed to technology-driven innovation and MRV bearstestament to this conviction. Spread across 125 acres in Mahindra World City, aninvestment of over Rs.650 crores and a capacity of 3,000 employees, MRV will be the cradleof future innovation for the Company. All the Company's new technology and productprograms are already operating from MRV.

Sustainable mobility solutions are a key focus area and your Company will continue toaggressively pursue technology development in these areas. Some of the key thrust areas inthis direction are weight reduction by using alternate materials, designing modularity totake care of variants, VAVE (Value Analysis Value Engineering) approach for meeting costpressures. Development and adaptation of safety Technologies also remain a key focus area.

4. Expenditure on R&D:

The Company spent Rs.824.26 crores (including Rs.363.44 crores on Capital Expenditure)for Research & Development work during the year, which was approximately 2.37% of thetotal turnover.

1. Efforts, in brief, made towards technology absorption, adaptation and innovation

Your Company has continued its endeavor to absorb advanced technologies for its productrange to meet the requirements of a globally competitive market. All of the Company'sVehicles, Engines and Tractors are compliant with the prevalent regulatory norms in Indiaand also in the countries to which they are exported. Your Company is making good progressin its programs for development of vehicles which would run on alternate fuels like CNG,Bio-diesel, Hydrogen and Electric traction. The acquisition of a majority stake inMahindra Reva Electric Vehicles Private Limited has substantially helped your Company toleapfrog in EV technology capability.

• Launch of XUV5OO - the all new Cheetah - inspired SUV featuring host oftechnologies.

• Launch of XUV5OO in India and South Africa, Global launch of Genio Pick up, NewBolero, New Xylo and the Verito.

• Compliance with new emission norms for Tractors introduced in India with effectfrom October, 2011.

• Compliance with new emission norms for Tractors introduced in US with effectfrom January, 2012.

• New Engine for Construction equipment.

• Launch of Compact Tractor in US, Higher HP Tractor in Africa.

• Build a knowledge base for the Company.

• Emphasis on value analysis/value engineering and innovative cost reduction ideasto cut down costs.

3. Imported Technology for the last 5 years

All imported technologies 'In the process of Absorption' would be absorbed as per therespective Technology Absorption Schedule.

C) Foreign Exchange Earnings and Outgo

The Company continues to strive to improve its export earnings. Further details inrespect of exports are set out elsewhere in the Annual Report.

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

Loans and advances in nature of loans to subsidiaries:

Loans and advances in the nature of loans to associates:

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