Mahindra Logistics Ltd Management Discussions.

OVERVIEW

The Indian logistics industry was estimated at INR 15,40,000 crores in the Fiscal Year 2018, according to a report titled "India Logistics Clear Road Ahead" dated 26 November 2018, authored by Edelweiss Securities Ltd (hereinafter referred to as "Edelweiss Report").

Mahindra Logistics Limited (hereinafter referred to as "the Company", "We", "Our", "MLL") is one of India’s largest* Third Party Logistics ("3PL") Solutions provider. We believe that our competitive advantage is our "asset-light" business model pursuant to which assets necessary for our operations, such as vehicles and warehouses, are owned or provided by a large network of Business Partners. Our technology enabled, "asset-light" business model allows for scalability of services as well as the flexibility to develop and offer customized logistics solutions across a diverse set of industries.

We operate in two distinct business segments, Supply Chain Management ("SCM") and People Transport Solutions ("PTS").

Our SCM business: We offer customized and end-to-end logistics solutions and services including transportation and distribution, warehousing, in-factory logistics and value-added services to our clients. We operate through a pan-India network comprising 29 offices and over 500 client and operating locations. We have a large network of over 1,450 Business Partners who supply vehicles, warehouses and other assets and services. We manage over 15 million ("mn") square feet ("sq. ft") of warehousing space spread across our pan-India network of multi-user warehouses, built-to-suit warehouses, stockyards, network hubs and cross-docks. We operate in-factory stores and linefeed at over 50 manufacturing locations. Our "asset-light" business model along with our solutions design capabilities enables us to serve over 300 domestic and multinational companies operating in several industry verticals in India, including automotive, engineering, consumer goods, pharmaceuticals, e-commerce and bulk. We have sourced and developed our customized technology systems to provide innovative and cost-efficient solutions to improve transparency and visibility for our clients.

Our PTS business: We provide technology-enabled people transportation solutions and services across India to over 100 domestic and multinational companies operating in the information technology ("IT"), information technology-enabled services ("ITeS"), business process outsourcing, financial services, consulting and manufacturing industries. We offer our services through a fleet of vehicles provided by a large network of over 350 Business Partners across 12 cities.

Our subsidiaries and joint ventures:

Lords Freight (India) Private Limited, an 83% subsidiary of the Company, provides international freight forwarding services for exports and imports, customs brokerage operations, project cargo services and charters.

2x2 Logistics Private Limited, a 55% subsidiary of the Company, provides logistics and transportation services to OEMs to carry finished automobiles from the manufacturing locations to stockyards or directly to the distributors through specially designed vehicles.

Transtech Logistics Private Limited, a Joint Venture, offers ShipX, a SaaS (Software as a Service) based transport management solution (TMS) platform to 3PLs, shippers and transporters. We acquired a strategic stake (40%) in Transtech Logistics during the Fiscal Year 2019.

* Based on annual revenues

INDUSTRY OVERVIEW AND TRENDS Overview of the Indian Economy

The International Monetary Fund (IMF) has pared India’s growth forecast for the just-concluded fiscal and the next two years, citing softer recent growth and weaker global outlook, but expects the country to retain its place as the fastest growing major economy. According to IMF estimates, India’s economy grew 7.1% in FY19 and is expected to accelerate to 7.3% growth in FY20 and to 7.5% in FY21.

India’s (GDP) growth is supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy.

The total GST revenue collections during the financial year 2018-19 was ~ 11.77 lakh crores with a monthly gross average of ~ 98,114 crores. It is expected that the trend of reforms will continue with focus on further simplifying compliances, providing relief measures for certain industrial sectors which have been adversely impacted after the implementation of GST, ensuring fast-track clearance for pending export refunds, etc. among others.

Stabilization of GST collections over the past one-and-a-half years is evidence of the GST regime overcoming initial teething issues, gaining stability and gradually entering a growth phase. GST collection target for FY20 is pegged at र 13.7 lakh crores, 16.1% higher than FY19.

We at MLL believe the benefits of GST and policy simplification will accrue to Indian businesses and the same is likely to reflect in our performance in times to come.

National Logistics Policy

A National Logistics Policy has been drafted to enable integrated development of the logistics sector in the country with a Vision to drive economic growth and trade competitiveness of the country through a truly integrated, seamless, efficient, reliable and cost-effective logistics network, leveraging best in class technology, processes and skilled manpower.

A Logistics wing, under the Department of Commerce and Industry, has been created in July 2017 to overcome the issues of high logistics cost, skewed modal mix and lack of integration.

The National Logistics Policy identifies key thrust areas to reduce logistics cost, promote logistics efficiency, optimize modal mix and improve first and last mile connectivity:

• Reducing Logistics Cost

• Optimizing modal mix

• Strengthening of warehousing sector

• Development of Multi Modal Logistics Parks

• Enhancing rolling infrastructure

• Improving road transportation

• Strengthening EXIM processes

• Promoting e-commerce trade

• Enhancing skills in the Logistics sector

• Strengthening MSME sector

• Promoting green and sustainable logistics

• Startup acceleration fund

• National Logistics action plan

• Creating a Center of Trade Facilitation and Logistics Excellence (CTFL)

• Single window logistics e-marketplace

• Logistics data and analytics center

• Standardization in the logistics sector

A non-lapsable Logistics Fund will be created to drive progress against key policy thrust areas, and can be deployed for select logistics initiatives for

• Reducing logistics costs

• Improving Logistics Performance Index

• Employment generation

• Reduction of waste

We believe that the National Logistics Policy will give us the opportunity to scale up our business as the industry moves towards the organized sector.

Salient trends in the Indian logistics industry

Indian logistics industry to grow at a Compound Annual Growth Rate (CAGR) of approximately 12-13% to INR 31,50,000 crores in the Fiscal Year 2025

The Indian logistics sector was estimated to be at INR 15,40,000 crores in the Fiscal Year 2018. According to the Edelweiss Report, a confluence of favorable factors-GST tailwinds, reducing transit times, warehouse consolidation, infrastructure status and rapid adoption of technology will drive sector growth to 12-13% CAGR for the next 5 to 7 years.

The demand for logistics services is significantly affected by the general level of commercial/economic activity and performance of the end-use sectors. India is expected to remain one of the fastest growing major economies in the world in the Fiscal Year 2020. The consumer goods and e-commerce sectors are forecasted to grow strongly over the next one to three years. The automotive sector however is expected to show slower growth in the coming year.

Nearly two thirds of the Indian logistics spend is in transportation, the remainder is in warehousing/container freight stations/ inland container depots and storage (including inventory costs). Road transport accounts for approximately 75% of transportation (by volume)-rail, ocean, and air account for the remainder. The government is making large investments in road infrastructure -and road transportation will continue to be the main mode for goods transportation in India in the near future, despite the imminent completion of dedicated train freight corridors. 90% of road transportation is full truck load, the balance is less than truck load and express. With improving road transportation speeds, demand is shifting from air express to surface express. Rail is primarily being used for the transportation of bulk commodities.

Based on a study by JLL India Industrial Services, 2018 witnessed a 22% y-o-y growth in total stock in the grade A and B warehousing space in the top eight cities at 169 mn sq. ft. compared to 138 mn sq. ft., a year ago. Absorption of grade A and B warehousing clocked an unprecedented growth of 63% y-o-y growth to 31.8 mn sq. ft. in 2018 from 19.7 mn sq. ft. a year ago. 3PL and logistics companies accounted for 40% of the absorption.

The Indian government’s increased focus on improving logistics efficiency

Logistics in India is inefficient due to a non-optimal modal mix (significantly skewed in favor of road transport), poor infrastructure, lack of standardization, slow technology adoption, and a historically inefficient tax structure (pre-GST). India was ranked 44th in the World Bank’s Logistics Performance Index in 2018. Logistics costs in India account for 12-13% of the Gross

Domestic Product (GDP), which is higher than the logistics cost to GDP ratio in developed countries such as the US and France (9-10%).

The Indian government has launched initiatives to organize the logistics sector and reduce the cost of logistics in India. Recent government actions include:

The GST regulation has been implemented. Companies are now making supply chain decisions based on logistics efficiency and not tax efficiency.

The e-way bill has helped streamline documentation and enabled faster transportation of goods across states.

The Department of Logistics within the Ministry of Commerce has published a draft of the National Logistics Policy. The Economic Advisory Council to the Prime Minister has constituted a logistics development committee to make it easier to trade in India. In addition, the government is formulating a policy for the integrated development of multimodal logistics parks.

The government continues to invest in logistics infrastructure such as the Sagarmala project, UDAN scheme, Bharatmala pariyojana, and Dedicated Freight Corridors (DFCs). DFCs are expected to be commissioned in 2020-this should help improve the average speed of freight trains from 26 kmph to 70 kmph.

The government has granted the logistics sector infrastructure status with the objective of reducing logistics costs.

3PL market in India to grow at a CAGR of 17-18% through the fiscal year 2025

The Edelweiss Report estimates the INR 42,000 crores Indian 3PL market in the fiscal year 2018 to clock 17-18% CAGR and potentially become a INR 1,20,000 crores market by the Fiscal Year 2025. Globally, the organized 3PL market is ~10% of the overall logistics market. In India, it is ~3%, indicating significant room for 3PL adoption. A mindset shift in large companies outsourcing their logistics requirements to 3PL players and focusing on their core business is helping drive the growth of the 3PL sector. In addition, regulatory interventions such as GST are helping organize the logistics sector.

PTS industry to reach a market size of INR 8,500- 9,500 crores in the Fiscal Year 2020

PTS businesses have been growing over the past few years, driven by the growth in the IT and ITeS sectors. Clients are beginning to explore electric vehicle-based mobility to reduce the impact on the environment. In addition, smart city and metro development projects are creating opportunities in the last mile mobility space.

OPPORTUNITIES AND THREATS SCM business

Post GST, companies are consolidating their supply chains for market/supply chain efficiency (and not tax efficiency) and leasing large format warehouses. Consumer, retail, and e-commerce companiesaredrivingthedemandforgradeAmodernwarehouses. Large format warehouses are adding to the complexity of supply chains and fueling the demand for 3PL services.

Entities within the Mahindra Group together constituted 56% of our revenues in the Fiscal Year 2019. In addition to contributing significantly to our business, our association with the Mahindra Group has enabled us to build long-standing relationships with many clients outside the Mahindra Group (hereinafter referred to as "external clients"). The capabilities that we have developed while working with the Mahindra Group clients operating across different industry verticals has enabled us to understand the requirements and preferences of our external clients. We can further leverage learnings from serving Mahindra Group clients to grow our external clients. Our business is significantly influenced by the performance of the automotive industry. 63% of our revenues in the Fiscal Year 2019 were from clients in the automotive industry. Due to our dependence on Mahindra & Mahindra Ltd. and the automotive sector, any downturn in the sector may impact our business. We operate in a very competitive industry, with many unorganized players. Many segments within the logistics industry are highly commoditized and have low barriers to entry, leading to a market with a very high degree of fragmentation. In the recent past, startups and international logistics companies have entered the India market. Competition from these segments is likely to increase. We will need to stay ahead of our competition through consistent investments in modern technology and focus on service quality and value-added services.

PTS business

Growth in vehicle ownership and demand for transportation is leading to high congestion in India’s urban centers. According to the ‘Moving Forward Together’ report by the NITI Aayog, the cost of traffic congestion is estimated to be INR 1.47 lakh crores annually in Delhi, Mumbai, Kolkata and Bangalore. In addition, vehicular emissions rates are increasing, with negative implications on human health and the environment. The government is therefore promoting shared mobility. This creates an opportunity for our corporate people transport business, which promotes the shared usage of vehicles. On the other hand, competitive intensity is increasing, with technology start-ups and automotive OEMs increasing their investments in the shared mobility space. In addition, development of metro train networks in cities may act as a substitute for the corporate people transport services we offer.

SEGMENT WISE PERFORMANCE

Set forth below is a table illustrating the breakdown of our consolidated revenue from operations, across the business segments that we operate in, for the periods indicated.

Segments Fiscal 2019 Fiscal 2018
Amount % of total revenue from operations Amount % of total revenue from operations
(र crores) (%) (र crores) (%)
SCM 3,465.9 89.99 3,075.7 90.03
PTS 385.5 10.01 340.5 9.97
Revenue 3,851.3 100.00 3,416.1 100.00
from
operations

Set forth below is a breakdown of percentage of revenue from operations with respect to our products and services. Goods Transportation Services continue to be the largest contributor to revenues.

Service offerings Fiscal 2019 Fiscal 2018
(%) (%)
Transportation 71.96 72.60
Warehousing and other related 13.59 12.26
activities
Freight forwarding 4.44 5.17
People Transport Solutions 10.01 9.97
Total 100.00 100.00

BUSINESS STRATEGY

We intend to continue to focus on the strategies set out below:

Continue to grow share of our business from external clients. Diversify our revenues beyond the current industry verticals such as engineering, consumer goods, pharmaceuticals, and e-commerce

Over the years, we have capitalized on the expertise gained from serving Mahindra Group companies and added external clients. We believe that this has contributed in reducing our dependence on the Mahindra Group. We intend to acquire large external clients and provide them with integrated, end-to-end solutions to address their logistics requirements. This gives our clients flexibility and scalability in their operations along with cost efficiencies. This approach is intended to result in increased revenues and a higher rate of renewal of contracts. We will continue to diversify across industry verticals (e.g. engineering, consumer goods, pharmaceuticals, e-commerce) which are expected to grow strongly in the future. This will also help reduce our dependence on the automotive industry.

Continue to expand our relationship with existing clients

We serve over 400 domestic and multi-national clients across our SCM and PTS businesses. We will continue to expand business with our existing clients by offering additional logistics services to them. We have launched initiatives to strengthen customer relationships, and to help us become a trusted supply chain partner for our clients.

Continue to establish new multi-user warehouses

Post GST, companies are re-aligning/consolidating their supply chains for market efficiency (not tax efficiency). We intend to take advantage of this opportunity. We have recently contracted large, multi-user warehouses in certain strategic locations on a long-term basis. We will continue to sell technology based warehousing and value-added services at these multi-user warehouses.

Continue to support the Mahindra Group for its supply chain needs

MLL started out initially by servicing the entire supply chain requirements of the Auto and Farm Sectors (AFS) of the Mahindra Group. Over the years, MLL has played a vital role in managing this supply chain covering inbound, in-factory and outbound operations for AFS. We will continue to nurture this relationship as this business is the anchor customer for our operations. Companies within the Mahindra Group other than AFS offer additional business opportunity for MLL. The business acquisition cycle for these companies is identical to that for other external clients.

Continue to focus on digitization and enhancements in technology

We have made consistent investments in digitization and technology over the past several years and intend to continue making these investments. We will continue digitizing existing processes to improve transparency, data availability, and efficiency. Planned investments in technology systems include upgrade of our ERP (financial accounting and controlling module), enhancements to our Transport Management System, development of our Warehouse Management System, PTS technology platform, and a portal for our Business Partners. In addition, we are implementing an advanced human resources management system.

We are actively assessing opportunities to work with logistics technology start-ups, either by incubating them or partnering with them. We may consider acquiring technologies to help us achieve our digitization objectives.

Expand margins

We continue pursuing initiatives to enhance our gross margins. Digitization and the use of data analytics is helping us improve process efficiency and enhance productivity. Our company-wide program, MLL Idea Network, has encouraged innovation, and resulted in cost savings. We will continue executing more such programs.

RISKS AND CONCERNS

The Company is committed to recognizing and managing the risks it is exposed to, both internal and external and has put in place mechanisms to handle the same proactively and efficiently. The Company also recognizes that these risks could adversely affect its ability to create value for all stakeholders and has taken steps to mitigate the same.

The major risks to which the Company is exposed to are:

1. The Company depends significantly on clients in the automotive industry and is highly dependent on the performance of the automotive industry. The Company has taken steps to diversify into other industry segments and over time has reduced its dependence on the automotive industry.

2. The Company depends on a limited number of clients including its parent and promoter, Mahindra & Mahindra Limited and other Mahindra Group entities. This exposes the Company to a high risk of client concentration. The Company continues to take steps to create a larger base of customers. In addition, it uses technology and innovation to achieve cost efficiencies for customers which results in long term relationships with them.

3. The Company operates in a highly competitive industry dominated by many unorganized players. Many segments within the logistics industry are highly commoditized and have low barriers to entry or exit, leading to a market with a very high degree of fragmentation. Increased competition from other organized and unorganized third-party logistics or people transport providers may lead to a reduction in revenues, profit margin and a loss of market share. To mitigate this, the Company creates value through integrated technology-based solutions, transport network based solutions, and skill development of its employees.

4. We have an "asset-light" business model pursuant to which we outsource a large part of our operations to independent contractors for specific services, resulting in the engagement of a large pool of contract labor. As a result, compliance obligations of the Company with diverse and complex laws and regulations are significant. Failure to comply with the same exposes the Company to various implications-financial and otherwise. Also, some of these laws are subject to different interpretations, which makes compliance difficult. The Company is committed to comply with all statutory obligations as applicable to it from time to time.

5. The assets necessary for our operations such as vehicles, warehouses and manpower are owned or arranged by our Business Partners. We depend on our Business Partners for adequate and timely supply of such assets for our operations. Any shortage of such assets may result in additional costs. As a mitigation plan, the Company continues to develop multiple

Business Partners for every region, including developing different commercial models to attract Business Partners.

6. We deploy many workers at our in-factory stores and linefeed and warehouse operations. These operations may get impacted by labor unionization, unrest, and strikes. If labor issues are not resolved in a timely manner, they could limit our ability to serve our clients, and may impact our business.

7. We serve the supply chain logistics and people transport requirements of our clients in India. The demand for our services is highly dependent on the general level of economic activity and economic conditions in India. Our business and operations may be affected by fluctuations in performance of the Indian economy and general economic activity in India.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The management of the Company is committed to ensure effective internal control systems commensurate with the size and the complexity of the business. The Company has established adequate and effective internal controls to achieve its compliance and reporting objectives. The controls are deployed through various policies and procedures. These policies and procedures are periodically revisited to ensure that they remain updated with the changes in the business environment. Polices and processes are regularly tested by internal and statutory auditors. Suggestions to further strengthen polices and processes or to make them more effective are shared with respective process owners and changes are made.

The Company continues to invest in various IT initiatives to automate controls to an extent possible, in order to minimize errors and lapses. The Audit Committee reviews the adequacy and effectiveness of the Company’s internal control environment and monitors the implementation of audit recommendations.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013. The Company has adopted Indian Accounting Standard (IND AS) from 1 April 2016. The consolidated financial statements have been prepared in compliance with applicable IND AS 110 and are presented in a separate section.

Standalone Financial information

1. Share Capital

The authorized share capital of the Company is INR ("") 105 crores divided into 10,50,00,000 equity shares of र 10 each. The paid up capital of the Company as at the end of the year was at र 71.45 crores compared to र 71.14 crores as at the end of the previous year. The increase is due to the issue of 305,760 equity shares on account of exercise of options granted under the MLL-Key Executive Stock Option Scheme, 2012 during the year.

2. Retained Earnings

The retained earnings i.e. surplus in the statement of profit and loss as at 31 March 2019 was at र 319.42 crores compared to र 247.77 crores as at 31 March 2018.

3. Borrowings

The Company continues to remain debt free as at 31 March 2019.

4. Property, Plant and Equipment and other intangible assets

The property, plant and equipment and other intangible assets amounted to र 46.21 crores as at 31 March 2019 compared to र 31.63 crores as at 31 March 2018. The Company follows the asset light model for carrying out its operations and the capital expenditure incurred during the year of र 28.04 crores was mainly on account of purchase of material handling equipment for warehousing services and other IT equipment and software.

5. Trade Receivables

Trade receivables as at 31 March 2019 were र 601.49 crores which amounted to 16.41% of the Company’s Revenue from Operations compared to र 487.68 crores as at 31 March 2018, which amounted to 15.14% of the Revenue from Operations.

6. Results of Operations

Revenue from Operations

The Company is engaged in providing integrated logistics services in two distinct segments i.e. Supply Chain Management (SCM) and People Transport Solutions (PTS). Revenue from Operations increased to र 3,665.51 crores in the year ended 31 March 2019 from र 3,220.11 crores in the year ended 31 March 2018, registering an increase of 13.83%. Revenue from the SCM segment grew by 13.90% whereas the PTS segment grew by 13.22%.

Other Income:

Other income mainly comprises of interest income from fixed deposits, dividend from units of mutual funds, gain on sale of units of mutual funds, sundry balances/provisions written back, and interest on income tax refund. Increase in other income from र 4.73 crores in the year ended 31 March 2018 to र 7.27 crores in the year ended 31 March 2019 was mainly due to increase in investible surplus funds and interest on income tax refund.

Total Expenses:

Employee benefit expenses include salaries and wages including bonus, contribution to provident and other funds, gratuity, staff welfare etc. Employee benefit expense as a percentage of revenue from operations increased to 6.84% from 6.80% in the previous year. The increase in absolute value is mainly due to an increase in headcount and annual increments.

Depreciation and Amortization expenses increase is mainly due to the impact of capitalization of assets in the previous year and due to additions in the current year.

Operating expenses at 87.85% of revenue from operations in the current year as compared to 88.05% in the previous year mainly include freight and related expenses, labor and related expenses, warehouse and related expenses, rent, etc. Tight cost control and operating leverage have led to an improvement in the operating margin. Profit before tax for the year ended 31 March 2019 was at र 130.32 crores compared to र 97.40 crores in the year ended 31 March 2018, registering a growth of 33.80%. Similarly, profit after tax is at र 84.44 crores in the year ended 31 March 2019 compared to र 62.19 crores in the year ended 31 March 2018, registering a growth of 35.78% over the previous year.

Consolidated Financial Information

The consolidated financials include financials of the Company and two of its subsidiaries i.e. Lords Freight (India) Private Limited and 2x2 Logistics Private Limited. Consolidation of financial statements of the Company and its two subsidiaries is done on a line by line basis by adding together items like assets, liabilities, income, expenses after eliminating intercompany transactions in accordance with IND AS 110 on "consolidated financial statements". Share of Loss of Transtech Logistics Private Limited has been considered for calculating the Consolidated profit. The consolidated financial statements are presented in a separate section.

The consolidated Revenue from Operations was र 3,851.34 crores in the year ended 31 March 2019 as against र 3,416.12 crores in the year ended 31 March 2018, registering a growth of 12.74%. Consolidated Profit after tax is at र 86.65 crores compared to र 65.27 crores registering a growth of 32.76%. Profit after tax for the year attributable to non-controlling interest is at र 0.76 crores as against र 1.26 crores in the previous year.

Key Ratios:

Key Matrix FY 2019 FY 2018 Change y-o-y
Debtors Turnover 6.73 7.25 (7.20%)
Inventory Turnover Nil Nil
Interest Coverage Ratio * 815.50 315.19 158.73%
Current Ratio 1.36 1.47 (7.48%)
Debt Equity Ratio Nil Nil
Operating Profit Margin 3.96% 3.43% 53 bps
Net Profit Margin 2.30% 1.93% 37 bps
Return on Networth # 18.40% 16.20% 220 bps
Return on Capital 28.44% 25.45% 299 bps
Employed#

* Reduction of interest pay out in FY19 due to lower utilisation of Cash Credit Facility

# Increase in Return on Net worth and Return on Capital Employed is due to increase in profitability.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

MLL became a public limited company in the last financial year, and the organization defined its Purpose statement which enabled it to envision the future course of action as well as direction. The HR function has played a crucial role by supporting the organization in aligning its business priorities through a sharpened focus on identification and development of talent, building future leaders, developing opportunities for career growth and ensuring harmonious industrial relations such that a culture of high performance is sustainably developed. As a leading 3PL Solutions provider, MLL is a people driven organization with more than 17,500+ employees (on-rolls and off-rolls) spread over 650 client and operating locations across India. Our inherent belief and conviction is that people are our greatest asset. The employer-employee relationship can be characterized as fair, just, trusting and caring. With the articulation of the Purpose statement and its principles, the HR function has created alignment and focused on building capability. It has diligently developed and deployed technology-driven tools to drive engagement, efficiency and empowerment. Since the launch of the Talent Development Framework last year, various initiatives have been undertaken to strengthen succession readiness and capability building, both functional and leadership in nature, across all levels in the organization. The iCoach programme that was launched for senior leaders has been successfully completed for 2 batches with trainees being assigned to the coaches such that there is organization wide impact. There is a diversity and inclusion focus in this endeavour wherein women associates have also been considered as trainees and their professional development has been focused upon. LEAP, the Leadership Acceleration Programme for first time leaders was conducted, wherein they were assigned strategic projects and mentored by senior leaders through their journey. Assessment Centers have been conducted for employees at the middle management level too, in order to provide deeper insights into their potential and ensure that their career growth is accurately managed. Sandhaan, the programme designed for leadership development and customer service excellence was conducted for mid-level managers with participants being provided a platform to share their learnings and drive business impact by creating ‘Moments of Truth’ for customers. The best presentations were reviewed by members of the Executive Committee with due recognition for their efforts. The organization also launched Disha, a program for first time supervisors on the shop floor, which exposed participants to various aspects of managing their teams effectively.

In order to develop functional capability, learning needs were identified and aggregated on which basis the AXLERATE platform was created to empower employees from the Operations team, named AXLERATORS, to deliver a wide variety of functional programmes which are then reinforced through business impact projects. Content has been developed and certified by senior leaders and the platform has resulted in over 65 AXLERATORS covering 1000+ employees which has enabled learning to become decentralized. Your Company has made good progress in implementing its five-year Diversity and Inclusion (D&I) road map wherein it has provided career opportunities to women officers from the armed officers and launched its Second Career Programme for women called Udaan. Over 950 employees have been part of several D&I Sensitization sessions and all employees have undergone orientation on the provisions of Prevention of Sexual Harassment (POSH) Act, through various media. An e-learning module on the POSH Act has also been launched to increase coverage. To strengthen the ability of women employees to balance their responsibilities at home and work, a unique ‘Birth & Beyond’ policy was created which encompasses the creation of a conducive work environment for women employees throughout the maternity continuum-pre-maternity, maternity & post maternity (early motherhood), by giving them flexibility in work schedules and workloads.

Statutory compliance of all applicable labour laws is a critical aspect of our corporate governance approach. In that regard, we have commenced regular audits, with the help of a third- party agency, not only for our locations but also in case of all the Business Partners providing third party manpower, in order to ascertain levels of compliance. Training is being imparted on statutory compliance not only to the members of the HR team, but also covers all Business Partners with a view to enhance their competency levels. The organization has also leveraged on eligible candidates under the National Employability Enhancement Mission (NEEM) scheme wherein they have been seamlessly inducted and their capabilities have been built through focused onboarding.

To assess the engagement levels of such a large workforce, your Company administered the Mahindra CARES (MCARES) engagement survey for its on-roll employees and a separate survey for fixed term contract and contract workmen. Based on the findings of these surveys, various strategic interventions have been rolled out and the impact of these have been measured. We are happy to inform you that the engagement scores coming out of these surveys have seen consistent improvement in the last few years and it is our commitment to sustain the momentum in this regard.

CAUTIONARY STATEMENT

Statements in this "Management Discussion and Analysis" and this Annual Report describing the Company’s objectives, projections, estimates, expectations, plans or predictions or industry conditions or events are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results, performance or achievements could differ materially from those expressed or implied. Several factors could make a significant difference to the Company’s operations. These include economic conditions affecting demand and supply, government regulations and taxation, natural calamities and so on over which Company does not have any direct control.