Mahindra CIE Automotive Ltd Directors Report.

Dear Shareholders

The Directors present their Report together with the audited financial statements of your Company for the Financial Year (FY) ended 31st December 2020.

A. FINANCIAL SUMMARY AND HIGHLIGHTS

(Rs in Million)

PARTICULARS (STANDALONE) FY ended 31st December, 2020* FY ended 31st December, 2019*
Total Revenue 21,645 29,271
Profit before Interest, Depreciation, Exceptional Items and Tax 2,218 3,780
Less: Depreciation 1,084 1,127
Profit before Interest, Exceptional Items and Tax 1,134 2,653
Less: Interest and Finance cost 119 136
Profit before Exceptional Items and Tax 1,015 2,517
Less: Exceptional items - (119)
Profit before tax 1,015 2,636
Profit after tax 740 1,723

During the Financial Year under review total standalone revenue of the Company dropped to Rs 21,645 Million from Rs 29,271 Million for previous year and Profit before Interest, Depreciation, Exceptional Items and Tax dropped to 2,218 Million as against Rs 3,780 Million for the previous year. The profit before exceptional items & tax for the Financial Year reduced to Rs 1,015 Million in Financial Year 2020 from Rs 2,517 Million in Financial Year 2019. The drop-in revenue is mainly due to the impact caused by the Covid-19 pandemic.

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

Dividend

COVID19, the pandemic is not completely behind us. We need to conserve cash to meet unexpected operational requirements until we are sure that the Pandemic will no more have any impact on business. We also need to conserve cash for any organic or inorganic opportunity that may come up. In view of this your directors do not recommend any dividend for the financial year 2020.

Transfer to Reserves

The Company has not transferred any amount of profits to reserves.

B. OPERATIONAL PERFORMANCE - THE COMPANY AND SUBSIDIARIES

OPERATIONAL REVIEW

The market demand at the start of 2020 remained sluggish, continuing the trends from the second half of 2019. The effect of the Covid started being felt towards the end of Q1 2020 when many of the countries went into lockdown to counter the spread of the virus. Q2 2020 saw the impact of Covid induced downturn on MCIEs operations worldwide. Q3 and Q4 of 2020 have seen a sharp recovery in India and a slow & steady one in Europe.

To counter the pandemic driven downturn, the company initiated a program for cost reduction and cash protection. Post the easing of lockdown restrictions, the focus was on renewing and continuing operations in a safe and sustainable manner. The reopening of plants post lockdown was done in a manner that provides a safe working environment for the workforce. All Safety protocols mandated by local authorities at the different plant locations were followed. A much better than expected recovery in demand in the second half of the year posed operational challenges which were overcome by the operating team.

India

In the case of the Indian operations, efforts were accelerated to reduce the Break-Even level of the plants to make them more efficient and future ready. The plants also focused on improving capacity utilization through reduced outsourcing and by automation projects to improve manpower productivity. Diversifying the customer base has also received sharper focus, especially to increase exports. In some of the business divisions, the new order generation was also aided by customers choosing to shift sourcing from China to India.

While some of the planned plant improvements were delayed, the major activities planned to improve operations were carried out. Among them was the plan to concentrate the activities of the composites division at one location. Organisational improvements and new management structures were also introduced at certain divisions to effectively sharpen management bandwidth and focus.

Europe

In Europe, the focus has been to restructure operations especially in Germany & Italy, and bring them in line with the reduced demand post pandemic. The European operations benefited from government benefits of programs like Cassa Integrazione in Italy and similar programs in Germany & Spain wherein individual governments gave wage support equivalent to 70-80% of the cost of the employee for the days the plants were shutdown.

The focus in Europe is to sustain & improve profitability in the face of a slowly recovering market demand.

Investor Relations (IR)

In this year Participaciones lnternacionales Autometal, DOS S.L, one of the promoter of the Company has increased its stake from 56.25% to 60.18%. With these investments, CIE has reiterated its belief and commitment in MCIE and the Indian market.

The Company also continuously strives for excellence in its Investor Relations ("IR") engagement with International and Domestic investors through structured conference-calls and periodic investor/analyst interactions like individual Meetings, participation in investor conferences, quarterly earnings calls, and analyst meet from time to time. It participated in several investors meets organized by reputed Global and Domestic Broking Houses, during the year. Building a relationship of mutual understanding with investor/analysts is of utmost importance and critical information about the Company is available to all the investors, by uploading all such information on the Companys website.

C. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company and its subsidiary companies prepared in accordance with the Companies Act, 2013 (the Act) and applicable Accounting Standards along with all relevant documents and the Auditors Report forms a part of the Annual Report of 2020.

In accordance with section 136 of the Act, separate accounts in respect of each of the Subsidiaries are uploaded on the website of the Company and is accessible at the web-link: http://www. mahindracie.com/investors/investor-relations/annual-report. html#subsidiaries-annual-report and soft copies of the same shall be provided to shareholders of the Company on request for such copies.

Subsidiary Companies

The subsidiary companies also continue to contribute to the overall growth of the Company.

CIE Galfor S.A. registered consolidated revenue of 31,200 Million (includes MFE & Metalcastello revenue) during the financial year ended 31st December 2020 as compared to Rs 43,123 Million in the previous year. The consolidated net profit after tax for the financial year under review was Rs 144 Million (including MFE & Metalcastello) as compared to Rs 1,700 Million in the previous year.

Aurangabad Electricals Limited registered a revenue from operations of 7,268 Million during the year and the consolidated net profit after tax for the year stood at Rs 287 Million.

The Companys consolidated total revenue from the continuing operations was Rs 60,501 Million in the financial year ended 31st December 2020, of which about 65% was derived from the subsidiaries whereas about 35% was derived from operations of the Company.

As on 31st December 2020, the Company has 14 subsidiaries namely Stokes Group Limited (U.K.), CIE Galfor S.A. (Spain), CIE Legazpi S.A. (Spain), UAB ClE LT Forge (Lithuania), Mahindra Forgings Europe AG (Germany), Jeco Jellinghaus GmbH (Germany), Gesenkschmiede Schneider GmbH (Germany), Falkenroth Umformtechnik GmbH (Germany), Schoneweiss & Co. GmbH (Germany), Metalcastello S.p.A. (Italy), BF Precision Private Limited (India), Bill Forge de Mexico S de RL de CV (Mexico), Aurangabad Electricals Limited and AE Deutschland Gmbh.

In 2018, the Board of Directors of the Company, after reviewing the business situation, had agreed with the proposed closure of Stokes Group Limited (Stokes) and the business was classified as dis-continued operations. Stokes has completely stopped its production in CY2019. During the year under review the Liquidation and Dissolution formalities of Stokes Forgings Limited and Stokes Forgings Dudley Limited were completed and these entities ceased to exist in accordance with Laws applicable to these entities. The liquidation of Stokes shall be initiated in accordance with the Applicable Laws.

Jeco Jellinghaus GmbH has been operationally closed. AE Deutschland Gmbh is under liquidation and expected to be dissolved during CY2021 once all the formalities are completed.

All other subsidiaries are operational.

Associate Companies

The Company had four Associate entities as on 31st December 2020 namely Clean Max Deneb Power LLP, Sunbarn Renewables Private Limited, Gescrap India Private Limited and Galfor Eolica SL.

The Company has been taking various steps to optimize its power cost and to increase the proportion of green energy in the total energy consumption of the Company at the plants of the Company. Accordingly, during CY2019 the Company had invested in Clean Max Deneb Power LLP to supply green captive power to factories of Bill Forge Division in Bangalore. Further, during the year under review, the Company has entered into Power Purchase Agreement with two more SPVs namely Sunbarn Renewables Private Limited (Sunbarn) and Renew Surya Alok Private Limited (Renew). Sunbarn will supply the green captive power to plants of Forgings and Magnetic Products Division of the Company and Renew will supply green captive power to plant of Foundry Division of the Company.

All these entities shall be major contributors for use of renewable source of energy in operation of the Company and will also result in savings in energy cost.

Gescrap India Private Limited (Gescrap India) is engaged in metal recycling and total waste management in India.

Galfor Eolica SL is an associate Company of CIE Galfor S.A.

A Report on the performance and financial position of each of the subsidiaries and associate companies included in the Consolidated Financial Statement and their contribution to the overall performance of the Company, is provided in Note No. 41 of the Consolidated Financial Statements fo the Company and in Form AOC-1 attached to the Financial Statements.

The Company has formulated a Policy for determining Material Subsidiaries and the same has been uploaded on the website of the Company and is accessible at the web-link: http://www. mahindracie.com/investors/investor-relations/governance. html#policies-and-code-of-conduct

Credit Rating

ICRA Limited ("ICRA"), the Credit Rating Agency, have reaffirmed / assigned rating(s) to the Commercial Paper and Line of Credit of the Company. Details of credit rating is provided in the Corporate Governance Report.

The Company has not been identified as a "Large Corporate" as per the criteria under SEBI Circular No. SEBI/HO/DDHS/ CIR/P/2018/144 dated November 26, 2018.

D. INTERNAL FINANCIAL CONTROLS

The Company uses ERP System as a business enabler and also to maintain its books of accounts. The transactional controls built in ERP System provides segregation of duties, appropriate level of approval mechanism and maintenance of supporting records. The System and the Standard Operating Procedures are reviewed by the management and strengthen wherever required. These systems and controls are audited by the Internal Auditors and their findings and recommendations are reviewed by the Audit Committee. Actions Plan is prepared by the management for all the Audit findings and recommendations which is continuously monitored on monthly basis and action taken report is reviewed by the Audit Committee on quarterly basis. The Company continuously automates its processes to enhance the controls.

The Company has in place adequate internal financial controls which commensurate with the size, scale and complexity of its operations. These controls have been assessed during the year under review taking into consideration the essential components of internal controls stated in the Guidance note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Based on the results of such assessments carried out by the management, no reportable or significant deficiencies, no material weakness in the design or operation of any control was observed. Nonetheless the Company recognizes that any internal control framework, no matter how well designed, has inherent limitations and accordingly, regular audits and review processes ensure that such system are re-enforced on an ongoing basis.

E. MANAGEMENT DISCUSSION AND ANALYSIS

Management discussion and analysis of financial condition and results of operations of the Company along-with the performance and financial position of each of the subsidiaries is provided in the Management Discussion and Analysis which forms part of this Annual Report.

F. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under review, all transactions entered into with Related Parties of the Company were in the Ordinary Course of Business and were transacted at arms length basis.

Mahindra Vehicle Manufacturers Limited (MVML) is one of the Promoters of the Company which hold(s) more than 10% of the paid-up equity capital of the Company. The details of the transactions of the Company with MVML, as required to be disclosed pursuant to Para A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is disclosed at Note. No. 31 of the Notes to the Standalone Financial Statements.

Further, the Company had entered into Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements of the Company with Mahindra & Mahindra Limited, the holding company of MVML. These transactions were in the Ordinary Course of Business of the Company and were at arms length basis. The details of these transactions, as required to be provided under section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure I and forms part of this Report.

The Policy on materiality of and dealing with Related Party Transactions as approved by the Board is uploaded on the website of the Company and is accessible at the web-link: https://www.mahindracie.com/investors/investor-relations/ governance.html#policies-and-code-of-conduct

G. AUDITORS

Statutory Auditors and Auditors report

The members of the Company at the 18th Annual General Meeting (AGM) had appointed Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/N500016) as the Statutory Auditors of the Company to hold office from the conclusion of 18th AGM until the conclusion of the 23rd AGM of the Company to be held in the year 2022.

The Securities and Exchange Board of India ("SEBI") vide its order number WTM/GM/DRA 1/83/2017-18 dated 10th January, 2018 banned the firms practicing as Chartered Accountants in India under the brand and banner of Price Waterhouse (PW), to directly or indirectly issue any certificate of audit to listed companies or certificate in relation to any compliance of obligations of a listed companies for the period of two years.

Against the said order PW has filed an appeal before the Honble Securities Appellate Tribunal (Tribunal). The Tribunal vide its Order dated 9th September 2019 has Quashed the SEBI order restricting PW Bangalore and 10 other PW firms. SEBI has filed appeal against the Order of SAT before Honble Supreme Court of India. Honble Supreme Court has stayed the Order of SAT to the extent it deals with the Jurisdiction of SEBI. The appeal is pending.

Price Waterhouse Chartered Accountants LLP, Chartered Accountants have, under Section 139(1) of the Act and the Rules framed thereunder furnished a certificate of their eligibility and has confirmed that they are eligible to act as statutory auditor of the Company for financial year 2021.

The Auditors Report on the Financial Statement for the year ended 31st December, 2020, is unmodified i.e. it does not contain any qualification, reservation or adverse remark and notes thereto are self-explanatory and do not require any explanations.

The terms of appointment of statutory auditors have been amended in line with SEBI circular CIR/CFD/CMD1/114/2019 dated 18th October, 2019.

Secretarial Auditor and Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice No. 6029), as a Secretarial Auditor to undertake the Secretarial Audit of the Company for the Financial Year ended 31st December, 2020. The Secretarial Audit Report for the Financial Year ended 31st December, 2020 is appended to this Report as Annexure II. The report does not contain any qualification, reservation, or adverse remark.

Secretarial Audit of Material Unlisted Indian Subsidiary

Aurangabad Electricals Limited (AEL), a material subsidiary of the Company undertakes secretarial audit every year under Section 204 of the Companies Act, 2013. The Secretarial Audit of AEL for the financial year ended 31st December 2020 was carried out pursuant to Section 204 of the Companies Act, 2013 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Secretarial Audit Report submitted by Mr. R. V. Pore, Practicing Company Secretary, (Certificate of Practice No. 1913) does not contain any qualification, reservation or adverse remark and the same is enclosed herewith as Annexure III.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the Financial Year ended 31st December, 2020 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice No. 6029) has been submitted to the Stock Exchanges within the prescribed timelines.

Cost Records

As per Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost records and accordingly, such accounts and records are maintained.

Cost Auditors

The Board had appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm Registration Number 000030) as Cost Auditor for conducting the audit of Cost Records of the Company for Financial year ended 31st December, 2020.

In accordance with Section 148 of the Companies Act, 2013, the Board of Directors of the Company, on recommendation of the Audit Committee, re-appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune (Firm Registration Number 000030) as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by the Company for the Financial Year ending 31st December, 2021. Messrs. Dhananjay V. Joshi & Associates have confirmed that their appointment is within the limits of section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) read with Section 148(5) of the Companies Act, 2013.

As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking Members ratification for the remuneration payable to Messrs. Dhananjay V. Joshi & Associates, Cost Auditors is included in the Notice convening the 22nd Annual General Meeting.

Reporting of Frauds by Auditors

During the year under review, the Statutory Auditors, Cost Auditors and the Secretarial Auditor have not reported any instance of fraud committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.

H. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES

Particulars of investments made by the Company are provided in the Note No. 8 of the Notes to the Standalone Financial Statements.

Further, disclosure required pursuant to Regulation 34(3) read with Part A of Schedule V of the Listing Regulations in respect of loans or advances in the nature of loan given by the Company to its Subsidiaries is provided at the end of this report.

The Company has not provided any guarantee or security to any person or entity and has not made any loans and advances in the nature of loans to firms/companies in which directors of the Company are interested.

I. PUBLIC DEPOSITS

The Company has not accepted any deposits during the year under review.

J. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

The Company did not have any amounts which were required to be transferred to IEPF during the financial year under review.

The Company had, in February 2015, distributed the sale proceeds of fractional shares arising out of issuance of shares pursuant to the Integrated Scheme and Composites Scheme of Amalgamation to the eligible shareholders as per their respective fractional entitlements. Fractional Entitlements in respect of few shareholders is lying unclaimed with the Company, details thereof is uploaded on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/ investors/downloads/documents.html#unclaimed-amounts and also on the website of IEPF viz. www.iepf.gov.in.

Details of all the unclaimed amounts transferred by the Company to IEPF in earlier years is also available on the aforesaid link.

For any claims that are lodged with IEPF for unclaimed amounts, the Company has nominated Mr. Pankaj Goyal, the Company Secretary of the Company as Nodal officer for the purposes of verification of claims and coordination with Investor Education and Protection Fund Authority as required under Investor

Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2016 as amended from time to time, the Contact details of the nodal officer are available on the website of the Company.

K. EMPLOYEES

Key Managerial Personnel (KMP)

The following officers of the Company have been designated as the Key Managerial Personnel in accordance with Section 2(51) and Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

1. Mr. Ander Arenaza - Executive Director

2. Mr. Manoj Menon - Executive Director and Chief Executive Officer - Stampings, Composites, Foundry, Magnetics and Gears Divisions

3. Mr. Anil Haridass - Executive Director

4. Mr. Hari Krishnan - Chief Executive Officer - Forgings and Bill Forge Division of the Company

5. Mr. K. Jayaprakash - Chief Financial Officer

6. Mr. Pankaj Goyal - Company Secretary and Compliance Officer

Employees Stock Option Scheme

The Company has in force the following Schemes which are covered under the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations"):

a) Mahindra CIE Automotive Limited - Employees Stock Option Scheme (ESOS-2007)

b) Mahindra ClE Automotive Limited - Employees Stock Options Scheme 2015 (ESOS-2015)

Voting rights on the shares issued to employees under above ESOS are either exercised by the employees directly or through their appointed proxies.

During the year, there have been no material changes to these schemes and no stock options were granted to the employees under the said schemes.

Both the schemes are in compliance with the SBEB Regulations. The Certificate issued by the Statutory Auditors of the Company to the effect that the Schemes have been implemented in accordance with the said Regulations and the resolution passed by the members will be placed before the shareholders at the ensuing Annual General Meeting.

The information as required to be disclosed, in relation to ESOS under the Companies Act, 2013, and the details of the ESOS being implemented, as specified by SEBI under Clause 14 of SBEB Regulations, 2014 is uploaded on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/downloads/documents.html#other-documents-and- disclosures

The said information is also provided in the Note No. 36 of the Notes to Financial Statements.

Particulars of Employees and related disclosures

Disclosures with respect to the remuneration of Directors, KMPs and employees as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure IV to this Report.

Further, as required under provisions of section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement including the names and other details of the top ten employees in terms of remuneration drawn and the name of every employee, who were in receipt of remuneration not less than Rs 10,200,000/- per annum during the year ended 31st December, 2020 or employee who were employed for a part of the Financial Year and were in receipt of remuneration of not less than Rs 850,000/- per month during any part of the said year is annexed as Annexure V to this report.

During the year, the Company has no employee who was employed throughout the Financial Year or part thereof and was in receipt of remuneration, which in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than 2% of the equity shares of the Company.

Industrial Relations

The relationship between the Management and Workers Union continued to remain cordial.

The Management Discussion and Analysis gives an overview of the developments in Human Resources/Industrial Relations during the year.

L. BOARD AND COMMITTEES

Retirement by rotation

Mr. Shriprakash Shukla (DIN: 00007418) and Mr. Jesus Maria Herrera Barandiaran (DIN: 06705854) are liable to retire by rotation and, being eligible, have offered themselves for re-appointment at the 22nd Annual General Meeting (AGM) of the Company scheduled to be held on 29th April, 2021.

Detailed profile of the Directors seeking appointment/ re-appointment along with other necessary details as may be required are provided in the in the Notice of 22nd Annual General Meeting of the Company.

Declaration of the Independent Directors

All the Independent Directors have confirmed that they meet the criteria as mentioned in Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013. The Independent Directors have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. Further, the Board after taking these declaration/disclosures on record and acknowledging the veracity of the same, opined that the Independent Directors are persons of integrity and possess the relevant expertise and experience, fulfils the conditions specified in the Listing Regulations and the Act for appointment of Independent Directors and are Independent of the Management.

Directors Responsibility Statement

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

a) in the preparation of the annual accounts for the financial year ended 31st December, 2020, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the financial year ended on 31st December, 2020 ;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the financial year ended 31st December, 2020;

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31st December, 2020.

Board, Committee and Annual General Meeting

The Board of Directors of the Company met five times during the Financial Year ended 31st December, 2020, on 26th February, 2020, 23rd April, 2020, 21st July, 2020, 20th October, 2020 and 10th December, 2020.

Details of attendance of meetings of the Board, its Committees and the AGM are included in the Report on Corporate Governance, which forms part of this Annual Report.

Meeting of Independent Directors

The Independent Directors of the Company met on 26th February, 2020 and 10th December, 2020 without the presence of the Chairman, Executive Directors, other Non-Independent Director(s) and any other Managerial Personnel.

Performance Evaluation

During the year under review, the Nomination and Remuneration Committee and Independent Directors have ascertained and reconfirmed that the deployment of "questionnaire" as a methodology, is effective for evaluation of performance of Board, its Committees and Individual Directors including non-independent Directors and the performance evaluation of the Chairman, respectively.

Accordingly, feedback was sought on the structured questionnaire from all the Directors of the Company, through electronic platform provided by an Independent Agency, covering various aspects, on performance evaluation of the Board, Committees of Board, Independent Directors, Non-Independent Directors, and the Chairman. A report aggregating the responses of all the directors of the Company was generated by the system.

Performance Evaluation of Individual Directors

The reports of the performance evaluation of Individual Directors were shared with respective Directors and Chairman of the Nomination and Remuneration Committee (NRC). Based on the same the NRC evaluated the performance of all individual directors.

The Independent Directors at their meeting separately evaluated the performance of non-independent Directors and the Chairman.

Performance Evaluation of the Board and Committees of Board

The report of the feedback received from all the Directors on performance evaluation of Board and Committees of Board was shared with the Chairman of the Company and the Chairman of the respective Committees. The Board reviewed the reports and evaluated its own performance and performance of the Committees of the Board.

The Independent Directors at their meeting separately evaluated the performance of the Board.

For details, please refer to the Report on Corporate Governance, which forms part of this Annual Report.

Familiarisation Programme for Independent Directors

The details of programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are given in the Report on Corporate Governance. The familiarisation programme and other disclosures as specified under regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available on the website of the Company at the link: http://www.mahindracie.com/investors/downloads/documents.html#other-documents-and- disclosures.

Policy on Appointment and Remuneration

In line with the principles of transparency and consistency, the Company has adopted the following Policies which, inter alia includes criteria for determining qualifications, positive attributes and independence of a Director.

i) Policy on Appointment of Directors, Key Managerial Personnel and Senior Management Employees and succession planning;

ii) Policy for the remuneration of Directors, Key Managerial Personnel and other employees of the Company.

During the year under review, the Board of Directors on the recommendation of the Nomination and Remuneration Committee reviewed the said policy and have amended the policy, inter alia, to align it with the amendments in Listing Regulations and the Act. Salient features of these policies are enumerated in the Corporate Governance Report which forms part of the Annual Report.

The Policies mentioned above are also uploaded on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct.

Committees of the Board

The Company has duly constituted the Committees required under the Companies Act, 2013 read with applicable Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Audit Committee

The Committee comprises of four directors viz:

1) Mr. Dhananjay Narendra Mungale - Chairman,

2) Mr. Manojkumar Madangopal Maheshwari

3) Mrs. Roxana Meda Inoriza

4) Mr. Alan Savio DSilva Picardo

Mr. Zhooben Bhiwandiwala, Non-Executive Director of the Company is a permanent invitee at the Committee. All the Members of the Committee are Independent Directors and possess strong accounting and financial management knowledge.

The Company Secretary is the Secretary to the Committee. All the recommendations of the Audit Committee were accepted by the Board during the financial year under review.

M. GOVERNANCE Corporate Governance

The Company believes in attainment of highest levels of transparency in all facets of its operations and maintains an unwavering focus on imbibing good Corporate Governance practices. The Company continues to strengthen its governance principles to generate long-term value for its various stakeholders on a sustainable basis thus ensuring ethical and responsible leadership both at the Board and at the Management levels.

A Report on Corporate Governance along with a Certificate from Mr. Sachin Bhagwat, Practicing Company Secretary (ACS Number - 10189, CP Number - 6029) and Secretarial Auditor of the Company regarding the compliance with the conditions of Corporate Governance as stipulated in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.

Vigil Mechanism

The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is implemented through the Companys Whistle Blower Policy to enable the directors, employees and all stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee. The detail of the Policy is explained in the Corporate Governance Report and has been uploaded on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/investor-relations/governance.html#whistle-blower.

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

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral.

During the year under review, there was no complaint of discrimination and harassment including sexual harassment received by the committee.

Business Responsibility Report

The Business Responsibility Report (BRR) of the Company for the Financial Year 2020 forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Company strongly believes that sustainable and inclusive growth is possible by using the levers of environmental and social responsibility while setting aspirational targets and improving economic performance to ensure business continuity and growth.

Risk Management

The Board has constituted a Risk Management Committee which comprises of Executive Directors and Chief Executive Officer of the Company. The Committee also has permanent invitees who are from Senior Management. The other details and terms of reference of the Committee are covered under the Corporate Governance report which forms part of this Annual Report.

The Company has a well-defined risk management framework in place. The risk management framework works at various levels. The Company has a robust organisational structure for managing and reporting on risks. In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Framework. The Risk Management Committee, Audit Committee of the Board as well as the Board reviews the risks periodically. The Company has also established procedures to periodically place before the Board, the risk assessment and minimisation procedures being followed by the Company and steps taken by it to mitigate the Risks.

Important element of risk, including risk which may threaten the existence of the Company are provided in the Management Discussion and Analysis.

N. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY

Sustainability

Objectives

Generation of shared value for the Company and for Society by integrating Social, Environmental and Governance principles into the business model, business strategy and everyday operations.

Safety and Health

The Company considers safety as a value and not just a priority. The focus continuous to be on increasing awareness about safety among the employees and improve the safety culture.

Various initiatives were undertaken during the year to communicate importance of safety to each of the employees. The Company has formed Apex Safety Council, wherein all MCIE plants comes under one umbrella to integrate the safety systems and deploy safety practices across plants. 14 (fourteen) Uniform Safety Standards were developed and Launched in July 2020. These standards encompass all parts of operations. All plants are expected to embrace all these standards to take forward the process of safety in more formal assessable manner. The overall objective shall be to keep sensitizing the employees on safety and work towards improving their attitude towards safety.

The Company has system to investigate all the accidents thoroughly and to take corrective as well as preventive actions. During the year, an increased focus has been given on reporting of near miss incidents, analyzing first-aid injuries and taking preventive measures.

All the plants of the Company have Occupational health and safety management system (OHSMS). During the year, five plants of the Company upgraded the OHSMS certification to ISO 45001-2018. Other plants, which has ISO18001-2007 certification, shall be upgraded to ISO 45001:2018 in due course of time.

The Companys plants continue to improve well-being of all its personnel by organizing Occupational Health Examination Camps, Periodic Health Check-ups and workplace monitoring.

Environmental Initiatives

The Company has been focusing external certifications for achieving world class environmental standards. All the plants will be upgrading their EMS to include the requirements of the revised international standard by June 2021.

A system of assurance has been implemented to track the environment consent conditions compliance on monthly basis.

The highlights of different initiatives taken by the Company at its various plants for environment and sustainability are as under:

1) Water: All the plants have continued their efforts for water conservation. During the year the Company has recycled about 25-% of the water for re-usage in the process and also has re-used about 19-% of water for alternative applications like Gardening, Die washing etc. The Company has installed rain water harvesting at its Urse plant, which resulted in conservation of fresh water by 3.4% of their total consumption.

Further, the Company has reduced its overall water consumption in CY2020 by 8% of its total consumption compared to CY2019.

2) Energy: Various projects were initiated by the Company for energy conservation like Use of waste heat (Heat Recovery system), Replacement of old compressors by new efficient with VFD, cooling tower and blower pumps with new efficient VFD, LED lighting, arresting air leakages, IBH Coil modification, Energy efficient compressors etc. Due to various energy savings initiatives, the Company has reduced the energy consumption in CY2020 by 15.89% as compared to CY2019 .

The Company continued its efforts to increase the proportion of green energy in the total energy consumption of the Company. The Company has installed roof top solar systems at seven plants. The Company has also signed long term contracts to source green energy from captive generating plants through open access. Due to various efforts, the Company has consumed 30.28% of total energy consumption through green energy sources.

3) Waste Management: Waste reduction efforts have been continued across all the plants. The plants are looking at waste management as waste to wealth opportunities.

Overall, due to the combined efforts of all its Plants, waste generation in CY2020 is reduced by 48% as compared to CY2019.

Corporate Social Responsibility (CSR)

The Company has constituted a CSR Committee in accordance with section 135 of the Companies Act, 2013 and has developed and implemented the policy on Corporate Social Responsibility. The CSR Committee comprises of Mr. Kadambi Narhari (Chairman), Mr. Dhananjay Mungale, Mr. Manoj Menon and Mr. Anil Haridass. In accordance with the CSR Policy, CSR Committee of the Board is responsible for monitoring the implementation of CSR Policy from time to time. The CSR Committee is authorized to approve, on recommendation of the Management, the projects or programs to be undertaken, the modalities of execution and implementation schedule from time to time. The CSR thrust areas have been identified where the Company wishes to create equity and also had laid down guiding criteria for selecting projects which includes sustainability, social impact etc.

The Company was required to spend an amount of Rs 116.13 Million (including Rs 72.21 Million unspent amounts of last year carried forward). The Company could spend an amount of Rs 71.12 Million during the year. The unspent amount in CY20 of Rs 45.01 Million has been allocated to existing long term CSR project and would be spent in next 2-3 years. Implementation of these long term CSR Projects was delayed due to Covid-19 pandemic and related expenditure is deferred to next year. The implementation of these approved projects shall be on the track as the situation improves and although with some delays, the Company is confident of achieving its social objective.

During the year, the Company has made specific efforts to support / help the people including migrant labour affected by Covid-19 pandemic in the areas located around Factories of the Company, by way of distribution of food packets, sanitization kits (which includes Soap, sanitizer, masks and gloves) and creating awareness about Covid-19 pandemic. Further, the Company has participated in the initiatives undertaken by Mahratta Chamber of Commerce, Industries & Agriculture (MCCIA) for setting up Jumbo Covid Centre in Pune by way of providing financial assistance. The Company has also contributed to PM- CARES fund setup by the Central Government.

The Company reiterate its commitment to discharge its social obligation. The CSR thrust areas have been identified where the Company wishes to create equity and also lay down guiding criteria for selecting projects which includes sustainability, social impact etc. The CSR Committee has confirms that, the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.

The CSR Policy of the Company is hosted on the Companys website and is accessible at the web-link: http://www.mahindracie.com/images/pdf/resources/Governance/csr-policy-mcie.pdf.

As prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 a brief outline of the CSR Policy, CSR activities undertaken by the Company during the year and the reason for not spending the entire CSR amount is provided in the Annual Report on CSR Activities which is annexed herewith as Annexure VI.

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

The information pertaining to energy conservation, technology absorption and foreign exchange earnings and outgo, as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in Annexure VII to this Report.

O. SECRETARIAL Issue of Shares

The Company has not issued any securities during the year under review.

Compliance with the provisions of Secretarial Standard 1 and Secretarial Standard 2

The Company have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. During the year under review the Company was in compliance with the Secretarial Standards, i.e., SS-1 and SS- 2, relating to "Meetings of the Board of Directors" and "General Meetings" respectively.

Compliance with Downstream Investment conditionalities

The Company is a Foreign Owned and Controlled Company within the meaning of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 ("FDI Regulations"). All the Downstream Investments made by the Company are in compliance with the conditionalities of Downstream Investment stipulated in the FDI Regulations.

During CY2020, the Company has obtained a certificate form the Statutory Auditors of the Company for compliance with the FDI Regulations in respect of the downstream investment made by the Company during CY2019 and except for delays in filings necessary intimations/forms with RBI/DPIIT/SIA, the Auditors have affirmed compliance with downstream investment conditionalities by the Company.

Annual Return

Pursuant to Section 92(3) read with section 134(3)(a) of the Companies Act, 2013, copies of the Annual Returns of the Company prepared in accordance with Section 92(1) of the Act read with Rule 11 of the Companies (Management and Administration) Rules, 2014 are placed on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/downloads/documents.html.

Other Policies under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

In accordance with the provisions of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed a Policy for determination of Materiality for disclosure of events or information. The same has been hosted on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct.

Dividend Distribution Policy

Pursuant to regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a dividend distribution policy which became effective from 1st January, 2018 stipulating factors to be considered in case of Dividend declaration which forms part of this report as Annexure VIII.

The same has also been hosted on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/investor-relations/governance.html#policies-and- code-of-conduct.

P. GENERAL

None of the Executive Directors (Whole-time Director or Managing Director) were in receipt of any commission from the Company or any remuneration from the Subsidiaries of the Company.

The Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events relating to these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of Shares (including sweat Equity shares) to employees of the Company under any Scheme save and except ESOS referred to in this Report.

3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and the Companys operation in future.

4. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3) (c) of the Companies Act, 2013).

Acknowledgement

The Directors wish to place on record their sincere appreciation to the Companys Customers, Investors, Vendors and to the Bankers for their continued support during the year.

The Directors also wish to place on record their appreciation for the dedication and contribution made by the employees at all levels and look forward to their support in future as well.

For and on behalf of the Board of Directors

Mahindra CIE Automotive Limited

Shriprakash Shukla
Chairman
DIN:00007418
Date: 19th February, 2021
Place: Mumbai