Mahindra & Mahindra Financial Services Ltd Directors Report.

To,a

The Members of

Mahindra & Mahindra Financial Services Limited

Your Directors are pleased to present their Thirtieth Report together with the audited financial statements of your Company for the Financial Year ended 31st March, 2020.

The performance highlights and summarised financial results of the Company are given below:

PERFORMANCE HIGHLIGHTS

• Consolidated income for the year increased by 15% to Rs. 11,996.5 Crores as compared to Rs. 10,430.9 Crores in 2018-19;

• Consolidated income from operations for the year was Rs. 11,883.0 Crores as compared to Rs. 10,371.7 Crores in 2018-19, a growth of 15%;

• Consolidated profit before tax for the year was Rs. 1,602.0 Crores as compared to Rs. 2,840.8 Crores in 2018-19;

• Consolidated profit after tax and non-controlling interest for the year was Rs. 1,075.1 Crores as compared to Rs. 1,8273 Crores in 2018-19.

FINANCIAL RESULTS

Rs. in Crores

Consolidated

Standalone

March 2020 March 2019 March 2020 March 2019
Total Income 11,996.5 10,430.9 10,245.1 8,809.8
Less: Finance Costs 5,390.6 4,432.3 4,828.7 3,944.6
Expenditure 4,902.9 3,129.3 3,954.3 2,422.6
Depreciation, Amortization and Impairment 146.9 75.5 118.3 60.2
Total Expenses 10,440.4 7,637.1 8,901.3 6,427.4
Profit before share of Profit of Associates and Tax 1,556.1 2,793.8 1,343.8 2,382.4
Share of Profit of Associates 45.9 47.0 - -
Profit Before Tax 1,602.0 2,840.8 1,343.8 2,382.4
Less: Tax expense
Current tax (including (Excess) / Short Provision for Income Tax of earlier years) 646.1 711.4 556.9 576.8
Deferred tax (129.9) 262.1 (119.5) 248.5
Profit for the year 1,085.8 1,867.3 906.4 1,557.1
Less: Profit for the year attributable to Non-controlling interests 10.7 40.0 - -
Profit for the Year attributable to Owners of the Company 1,075.1 1,827.3 906.4 1,557.1
Balance of profit brought forward from for earlier years 3,957.3 3,282.5 3,834.0 3,193.1
Other Comprehensive Income/(Loss) (14.7) (9.5) (11.3) (8.6)
Transfers to Debenture Redemption Reserve - (146.7) - (146.7)
Transfers from Debenture Redemption Reserve 223.7 - 223.7 -
Balance available for appropriation 5,241.4 4,953.6 4,952.8 4,594.9
Less: Appropriations
Dividend paid on Equity Shares (including tax thereon) 484.2 296.6 477.9 293.8
Transfers to General Reserves - 155.7 - 155.7
Transfers to Statutory Reserves 222.8 385.2 181.3 311.4
Add / Less: Other Adjustments:
Gross obligation at fair value to acquire non-controlling interest 43.6 (158.8) - -
Balance profit carried forward to balance sheet 4,578.0 3,957.3 4,293.6 3,834.0

TRANSFER TO RESERVES

The Company proposes to transfer an amount of Rs. 181.3 Crores to the Statutory Reserve. An amount of Rs. 4,293.6 Crores is proposed to be retained in the Statement of Profit and Loss.

DIVIDEND

With a view to conserve capital, given the challenging situation caused by outbreak of the COVID-19 pandemic, the Board of Directors has not recommended any dividend on Equity Shares of the Company for the Financial Year ended 31st March, 2020.

DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy, containing the requirements prescribed in Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is appended as “Annexure I” and forms part of this Annual Report.

The Dividend Distribution Policy can also be accessed on the Companys website at the web-link: https:// mahindrafinance.com/discover-mahindra- finance/policies.

During the year, an amount of Rs. 7,82,488 being the unclaimed/unpaid dividend of the Company for the Financial Year ended 31st March, 2012 was transferred in September, 2019 to the Investor Education and Protection Fund Authority.

OPERATIONS

The year under review has been one of the most challenging years for your Company. The year started with the Lok Sabha elections in April - May 2019 followed by extreme weather conditions with floods on the one hand and drought in certain regions on the other. Overall the rainfall was normal in most States and saw increasing water levels foreboding well for rural cash flows especially for the Rabi crop in March 2020.

The year continued to witness sustained good collection efficiencies, month after month as there was a continuous deployment of existing assets, though the demand for new vehicles was subdued. Even in these times of lower market volumes your Company was able to increase its penetration in most vehicle and customer segments and also maintained collection efficiencies by continuously engaging with customers.

Your Company remains a significant financier to its customers in semi-urban and rural geographies by providing a wide range of easy and affordable products and services. Your Company expanded vide its channel connect with leading car dealers, and yet again emerged as a major financier for Maruti vehicles in semi-urban and rural India during this fiscal. Your Company has retained its leadership position in financing the Mahindra range of vehicles and tractors in addition to extending its lending to vehicles of other leading Original Equipment Manufacturers (OEMs) and also continued to be the preferred financier for Hyundai, Renault and Nissan range of vehicles.

During the year under review, the total value of assets financed was Rs. 42,388.2 Crores as against Rs. 46,210.3 Crores during the corresponding period last year, a decline of 8.3% over the same period in the previous year. While the Company has gained market share in many of the product lines, however in view of declining sales of vehicles, tractors, etc., the disbursements have been lower. The outbreak of COVID-19 pandemic has resulted in further slowdown in economic activities across the country, which even otherwise was on a slow pace. The impact of the pandemic led to closure of all the Companys branch offices, business and recovery touch points and completely halted the field operations from the last week of March 2020. As an organization, your Company has been strictly adhering to social distancing norms and lockdown announcements in accordance with the directives issued by the Central, State Government and Local Administration Guidelines.

SME LENDING

The SME lending faced significant head winds during the year due to the weak economic environment and in particular the slowdown in the auto segment. The lockdown in March caused significant disruption in business and consequently, the AUM as of March 2020 declined by 2% in comparison to March 2019. To counter the effects of the slowdown, your Company focused on strengthening its systems to reduce risk and enhance customer centricity. The Company developed a robust early warning system (EWS) and forged tie-ups with few fintechs to strengthen its credit assessment capabilities and monitor the customers better. Your Company also strengthened its product offerings and broadened its tie-ups with more OEMs. It is expected that with these measures, your Company would be able to grow its book significantly once the economic activity picks up.

Network Expansion

Your Company has an extensive pan-India distribution network with 1,322 offices spanning across 27 States and 7 Union Territories as of 31st March, 2020, which is one of the largest amongst Non-Banking Financial Companies. Your Companys widespread office network reduces its reliance on any one region in the country and allows it to apply best practices developed in one region to other regions. The geographic diversification also mitigates some of the regional, climatic and cyclical risks, such as heavy monsoons or droughts. In addition, the Companys extensive office network benefits from a de-centralized approval system, which allows each office to grow its business organically as well as leverage its customer relationships by offering distribution of insurance products and mutual funds. Your Company services multiple products through each of its offices, which reduces operating costs and improves total sales. Your Company believes that the challenges inherent in developing an effective office network in rural and semiurban areas have facilitated in catering to the diverse financial requirements of its customers by identifying and understanding the needs and aspirations of the people.

Getting future ready through Digital, Technology and Analytics

Digital

Your Company has an enhanced on-line and in-mobile presence to provide a superior digital experience to its customers. Employees, customers and partners are being enabled digitally for all their needs and substantial progress has been made in this direction. Today, the entire lending process is digitally enabled, which has facilitated the EMI collections being received through Digital and on-line means. Your Company and its subsidiaries have embraced digital in performing different activities like customer acquisition, offering Fixed Deposits, Mutual Funds and Insurance products.

Technology

Information technology has enabled the automation and digitisation of processes across the organisation, empowers employees with the workflows and knowledge for efficiency and controls, and engenders business products, analytical models and decision-making. The Companys digital channels of multi-lingual website, mobile app, and contact centre too are increasingly popular with the customers. Your Company has successfully leveraged enterprise technology platforms such as enterprise service bus, customer relationship management, mobile application management, datalake, and business intelligence.

Analytics

Your Companys presence for more than 25 years in the rural and semi-urban markets, working with several profiles gives them a huge advantage, applying Analytics and Artificial Intelligence (AI) on the data and the data base leading to customized product designed delivered with speed and personalized offerings with lower risks. Your Company has launched its proprietary algorithms to offer faster loan approvals at dynamic interest rates to low risk customers which shall help in gaining market share, improving portfolio quality and profitability. Customer acquisition, retention, cross selling and collections will be substantially enhanced with the combined Integrated Activation of Digital, Analytics and Technology.

The overall disbursement stood at Rs. 42,388.2 Crores as compared to Rs. 46,210.3 Crores in the previous year. Total Income grew by 16% at Rs. 10,245.1 Crores for the year ended 31st March, 2020 as compared to Rs. 8,809.8 Crores for the previous year. Profit Before Tax (PBT) declined by 44% at Rs. 1,343.8 Crores as compared to Rs. 2,382.4 Crores for the previous year. Profit After Tax (PAT) declined by 42% at Rs. 906.4 Crores as compared to Rs. 1,557.1 Crores in the previous year.

During the year under review, the Assets Under Management stood at Rs. 77,160 Crores as at 31st March, 2020 as against Rs. 68,948 Crores as at 31st March, 2019, a growth of 12%.

There has been no change in the nature of business of the Company during the year under review.

DISTRIBUTION OF MUTUAL FUND PRODUCTS

During the year under review, the activity of distribution of Mutual Fund Products (MFP) was carried out across 163 branches covering 24 States.

As on 31st March, 2020, the amount of Assets Under Management outstanding through the Companys Distribution Services on MFP, aggregate of institutional and retail segment, was Rs. 1,384.93 Crores and the number of clients stood at 60,628.

MORATORIUM OF LOANS

In accordance with the Board approved Moratorium Policy read with the RBI Guidelines on the COVID-19 Regulatory Package announced on 27th March, 2020 and 17th April, 2020, your Company has granted a moratorium of three months on the payment of all installments and/ or interest, as applicable, falling due between 1st March, 2020 and 31st May, 2020 to all eligible customers.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the applicable provisions of the Master Direction issued by the Reserve Bank of India and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed analysis of the Companys performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

CORPORATE GOVERNANCE

Your Company practices a culture that is built on core values and ethical governance practices. Your Company is committed to transparency in all its dealings and places high emphasis on business ethics.

In accordance with the applicable provisions of the Master Direction issued by the Reserve Bank of India and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance along with a Certificate from Messrs. KSR & Co., Company Secretaries LLP regarding compliance with the conditions of Corporate Governance as stipulated in Regulations 17 to 27, clauses (b) to (i) of sub-regulation (2) of Regulation 46 and paragraphs C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of the Annual Report.

SHARE CAPITAL

The issued, subscribed and paid-up Equity Share Capital as on 31st March, 2020 was Rs. 123.55 Crores, comprising of 61,77,64,960 Equity Shares of the face value of Rs. 2 each, fully paid-up.

There was no change in the Share Capital during the year under review.

During the year, the Company has not issued any sweat equity shares or equity shares with differential voting rights.

As on 31st March, 2020, none of the Directors of the Company holds instruments convertible into Equity Shares of the Company.

STOCK OPTIONS

During the year under review, no Options were granted to Eligible Employees under the Mahindra & Mahindra Financial Services Limited Employees Stock Option Scheme-2010 ("2010 Scheme”). The Company does not have any scheme to fund its employees to purchase the shares of the Company. No employee has been issued stock options during the year, equal to or exceeding 1% of the issued capital of the Company at the time of grant.

The 2010 Scheme of the Company is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (“SBEB Regulations”) and there were no material changes made to the said Scheme. A Certificate from Messrs. B S R & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, pursuant to Regulation 13 of the SBEB Regulations would be available for inspection by the Members through electronic mode.

Voting rights on the Shares issued to employees under the aforesaid Scheme are either exercised by them directly or through their appointed proxy.

The details of the Employees Stock Options and the Companys Employees Stock Option Trust as required under the SBEB Regulations read with SEBI Circular CIR/ CFD/ POLICY CELL/2/2015 dated 16th June, 2015 have been uploaded on the Companys website and can be accessed at the web-link: https://mahindrafinance.com/ investor-zone/financial-information#Financialresults.

ECONOMY

Global and Domestic Growth

The global economic activity has been slow paced but differentiated across geographies. For Calendar Year (CY) 2020, the global growth is at 2.9% with advanced economies having growth of 1.7% while emerging and developed economies having growth of 3.7% with Indias growth at 4.2%. With the onset of the COVID-19 pandemic in the 1st quarter of CY 2020, there is a high and rising human cost worldwide.

Financial markets have become extremely volatile from January onwards due to the outbreak of the pandemic. Panic sell-offs have resulted in wealth destruction across advanced and emerging economies. US dollar is the only safe haven in a highly uncertain outlook. On crude, disagreement on production cuts has led to supply scale-ups and a price war resulting in price being under pressure.

Outlook

This health crisis, never seen before, is having a severe impact on economic activity. This has resulted in a negative growth outlook for the world economy at -3.0% and 5.8% respectively in Calendar Year (CY) 2020 and CY 2021. This shall plunge the economy into the worst recession since the Great Depression, far worse than Global Financial Crises. Emerging market growth is expected at -1.0% and 6.6% respectively in CY 2020 and CY 2021. Indias growth at 1.9% and 74% in the coming years is amongst the most resilient economies on account of its dependence on agriculture and consumption.

The growth in CY 2021 assumes fading of the pandemic by the second half of 2020, containment activity can then be gradually unwounded and economy normalizing thereafter. The coming year shall however continue to be a year of uncertainty and shall be dependent upon government policies and global financial market conditions. Effective policies to contain impact of pandemic may cause short term toll on economic activity but shall be an investment for long term human and economic health.

Domestic Economy

Few data releases on domestic development are available but many of them are disjointed to allow a comprehensive assessment of the state of economy. The continuing resilience of agriculture and allied activities on the back of record production with higher buffer stock will auger well. The acreage under Kharif sowing is much higher than previous year despite the lockdown. The India Metrological Department (IMD) anticipates rainfall at 100 percent of the long period average.

During the year under review, headline Consumer Price Index (CPI) inflation had moved up to 76% in January 2020, highest since July 2014. It has thereafter declined sharply on the back of food inflation coming down and CPI inflation for March 2020 was at 5.9%, based on partial information. It is expected that inflation may recede even further except for any supply disruptions and settle well below the 4% mark by the second half of FY 2021.

In its 7th bi-monthly monetary policy, Reserve Bank of India continuing with its measures to alleviate financial stress, announced additional measures to provide liquidity support which apart from reducing the policy rates and injecting liquidity also permitted providing moratorium by financial institutions to its customers.

Finance

The NBFC sector continued to experience liquidity problems in the financial year 2019-20 with the spreads over the G-Sec also continuing to widen for the sector. The risk-appetite further weakened in the third quarter of FY 2020 due to uncertainties caused by CoronaVirus (COVID-19). This led to funding primarily being available to companies having strong parentage, brand and business model, robust corporate governance and conservative ALM. Your Company continued to focus on managing cash efficiently and ensured that it had adequate levels of liquidity apart from back-up lines of credit to support business requirement and near term liability maturity.

During the year under review, the Reserve Bank of India ("RBI”) held seven Bi-monthly Monetary Policy Committee ("MPC”) meetings. The Policy Repo rates under the Liquidity Adjustment Facility ("LAF”) was at 6.25% at the beginning of the year. Out of the 7 MPC meetings held during the year, the Policy rates were reduced in 5 of those and remained unchanged in the balance two. This led to a cumulative reduction of 185 basis points during the financial year with the Policy Repo rate finally closing at 4.40%. The initial reduction in policy rates were with an accommodative stance to maintain a balance between growth and inflation, while a sharper 75 basis points cut in March 2020 was primarily to mitigate the impact of COVID-19 on the economy.

At the start of the fiscal year (April 2019), 10-year G-Sec benchmark yields (726% Government Stock 2029), was trading at 735% levels which after a slew of cuts led to a fall in G-Sec rates and it closed the year at 6.52%. The shorter duration paper of around 3 years has seen a much higher reduction in yields coinciding with the Long Term Reverse Repo Operation (LTRO). With further announcement and policy measures being announced, the expectation of further rate cuts and reduction in yield is anticipated as we wade through the pandemic.

During the third quarter of the year under review, a new 10-year benchmark (6.45% GS 2029) was introduced in October 2019. Its yield continues to fall and closed the year at 6.14%. During the year, the INR depreciated sharply by 9% from INR 69.17 to INR 75.39 per USD demonstrating flight to safety towards safe-haven.

Your Company has been identified as a "Large Corporate” under the framework provided by the Securities and Exchange Board of India and accordingly, has ensured that more than 25% of its incremental borrowings during the year was by way of issuance of Debt securities.

During the year under review, your Company continued with its diverse methods of sourcing funds in addition to regular borrowings like Secured and Unsecured Debentures, Term Loans, Fixed Deposits, Commercial Papers, etc., and maintained prudential Asset Liability match throughout the year. Your Company sourced long-term debentures and loans from banks and other institutions at attractive rates. Your Company continues to expand its borrowing profile by tapping into new lenders and geographies.

During the year, your Company has successfully completed 10 (ten) securitisation transactions aggregating to Rs. 7,721.60 Crores and raised upwards of USD 200 million through External Commercial Borrowings.

• Private Placement Issues of Non-Convertible Debentures

During the year under review, your Company issued Secured/Unsecured Redeemable Non-Convertible Debentures including Secured Redeemable Principal Protected Non-Convertible Market Linked Debentures ("NCDs”) and raised an amount aggregating to Rs. 4,95780 Crores on a private placement basis, in various tranches.

Details of all the above-mentioned issues were provided to the Board on a periodic basis.

As specified in the respective offer documents, the funds raised from NCDs were utilised for the purpose of financing, repayment of dues of other financial institutions/Banks or for long-term working capital.

The Company is in compliance with the applicable guidelines issued by the Reserve Bank of India, as amended from time to time.

The Company has been regular in making payments of principal and interest on all the NCDs issued by the Company on a private placement basis and through public issue. There are no NCDs which have not been claimed by investors or not paid by the Company after the date on which the NCDs became due for redemption.

• Rupee Denominated Medium Term Note (MTN)

During the year under review, your Company had raised funds in the overseas market amounting to Rs. 35,000 lakhs (equivalent to USD 50 million) through issue of Rupee denominated USD settled, Unlisted, Secured Notes ("Masala Bonds") under External Commercial Borrowings accessed through automatic route. The net proceeds from the issue of these Masala Bonds were applied for the purpose of on-lending, in accordance with the directions issued by the RBI. The Rupee Denominated Medium Term Note (MTN) programme of your Company, is listed on the Singapore Exchange Securities Trading Limited.

INVESTOR RELATIONS

Your Company has been continuously interacting by participating either in-person meetings or through use of technology i.e. conference calls, video-conferencing, Telepresence meetings and endeavours to further improve its engagement with Domestic and International investors/ analysts. Your Company attended multiple investor meets organised by reputed Global and Domestic Broking Houses during the year, both in India and abroad, to communicate details of its performance, important regulatory and market developments and exchange of information. Quarterly and annual earnings calls are scheduled through structured conference calls to keep various stakeholders informed about the past performance and future outlook of the industry, especially those having a bearing on the Company. These interactions with institutional shareholders, fund managers and analysts are based on generally available information that is accessible to the public on a non-discriminatory basis. Your Company uploads the transcript of the quarterly earnings calls on its website which can be accessed by existing and potential investors and lenders. With the ongoing pandemic, your Company has lately been interacting only by tele-conference or through the use of video-conferencing applications.

Your Company believes in transparent communication and building a relationship of mutual understanding and trust. Your Company further ensures that critical information about the Company is available to all the investors by hosting such information on the Companys website.

CAPITAL ADEQUACY

As on 31st March, 2020, the Capital to Risk Assets Ratio (CRAR) of your Company was 19.6% which is well above the minimum requirement of 15% CRAR prescribed by the Reserve Bank of India.

Out of the above, Tier I capital adequacy ratio stood at 15.4% and Tier II capital adequacy ratio stood at 4.2% respectively.

RBI GUIDELINES

The Company continues to comply with all the applicable regulations prescribed by the Reserve Bank of India (“RBI”), from time to time.

CREDIT RATING

Your Company believes that its credit rating and strong brand equity enables it to borrow funds at competitive rates. The credit rating details of the Company as on 31st March, 2020 were as follows:

* The ratings mentioned above were reaffirmed by the Rating Agencies during the Financial Year 2019-20. With the above rating affirmations, your Company continues to enjoy the highest level of rating from all major rating agencies at the same time.

ACHIEVEMENTS

Your Company won several awards and accolades during the year under review. Select few awards/ recognition are enumerated hereunder:

Business & Marketing:

• Won the Indian Oil Logistics Award CV Financer of the Year 2019.

• Bagged the first position for Excellence in Cost Management - 2018 in 16th National Awards for "Excellence in Cost Management - 2018” in Banking, Financial Services and Insurance Category.

• Won the Marketing Award for "Best Customer Engagement” at ABP News - BFSI Awards 2019.

CSR & Sustainability:

• Won the Global Corporate Sustainability Award in the award category: Reporting, Emerging Market at Taipei, Taiwan.

• Honoured with the IDF CSR Award 2019 for participation in Resource Mobilization for Humanitarian Causes.

• Listed in the renowned FTSE4 Good Emerging Markets Index in the reporting year.

• Ranked 49th amongst Top 100 Indian companies for Sustainability & CSR under Responsible Business Rankings 2019 by Futurescape.

• Recognized as the only Financial Institute from India to be in the DJSI Sustainability Index for Emerging Markets category, for 7th year in a row.

• Won the 8th India CSR Awards - Recognition for Excellence in Corporate Social Responsibility for the category; Livelihood Creation: Project Hunnar.

Human Resources

• Ranked 25th among "Indias Best Companies to Work For 2020”, by Great Place to Work Institute.

• Ranked 6th among "Best Large Workplaces in Asia 2020” by Great Place to Work Institute.

• Won the Best Employer Award by Aon Best Employers-India 2019 Programme.

• Recognized amongst the Best 50 People Capital Index (PCI) Companies 2019.

• Recognized among Best Companies in Career Management 2020 by Great Place to Work Institute.

• Recognized among Indias Best Workplaces in NBFC 2020 by Great Place to Work Institute.

• Recognized among Indias 25 Best Workplaces in BFSI 2020 by Great Place to Work Institute.

FIXED DEPOSITS AND LOANS/

ADVANCES

Your Company provides a wide range of Fixed Deposit schemes that cater to the investment needs of various classes of investors. These Deposits carry attractive interest rates with superior service enabled by robust processes and technology. In order to tap rural and semiurban savings and reach out to the farthest customers, your Company continues to expand its network and make its presence felt in the most remote areas of the country.

During the year, CRISIL has reaffirmed a rating of CRISIL FAAA/Stable for your Companys Fixed Deposits. This rating represents the highest degree of safety regarding timely servicing of financial obligations and carries the lowest credit risk. Your Companys Deposits continue to be a preferred investment amongst the investors.

As on 31st March, 2020, your Company has mobilised funds from Fixed Deposits to the tune of Rs. 8,853.95 Crores, with an investor base of over 2,28,565 investors.

Your Company continues to serve the investors by introducing several customer centric measures on an ongoing basis to further strengthen its processes in sync with the requirements of the Fixed Deposit holders. The Company communicates various intimations via SMS, e-mails, post, etc., to its investors as well as sends reminder emails to clients whose TDS is likely to be deducted before any payout/ accrual. Your Company also provides online renewal facility, online generation of TDS certificates from customer/broker portal and Seamless Investment process for employees.

During the year under review, your Company has rolled out several initiatives aimed at offering a superior customer experience. Some key ones are:

• Call center activation;

• Activation of Toll free number exclusively for Fixed Deposit investors;

• Welcome calls with Feedback survey;

• Extending Deposit acceptance module to channel partners through digital mode which enhances the transaction turn-around time and offers convenience to all stakeholders;

• Initiated the process of updating CKYC (Central Know Your Customers) data for all existing depositors, wherever the same is not updated.

As at 31st March, 2020, 7,464 Deposits amounting to Rs. 767 Crores had matured for payment and remained unclaimed. The unclaimed Deposits have since reduced to 6,911 Deposits amounting to Rs. 6.69 Crores. There has been no default in repayment of Deposits or payment of interest during the year.

Your Company being a Non-Banking Financial Company, the disclosures required as per Rule 8 (5) (v) and (vi) of the Companies (Accounts) Rules, 2014 read with Sections 73 and 74 of the Companies Act, 2013, are not applicable to it.

The information pursuant to Clause 35(1) of Master Direction DNBR.PD.002/03.10.119/ 2016-17 dated 25th August, 2016 issued by the Reserve Bank of India on Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016, regarding unpaid/unclaimed public deposits as on 31st March, 2020, is furnished below:

i. total number of accounts of Public Deposits of the Company which have not been claimed by the depositors or not paid by the Company after the date on which the deposit became due for repayment: 7,464.

ii. the total amounts due under such accounts remaining unclaimed or unpaid beyond the dates referred to in clause (i) as aforesaid: Rs. 7,66,65,649.

Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their Deposits. Your Company continues to send intimation letters/reminders every 3 months to all those Fixed Deposit holders whose Deposits have matured as well as to those whose Deposits remain unclaimed. Where the Deposit remains unclaimed, follow-up action is also initiated through the concerned agent or branch.

Pursuant to Section 125(2) (i) of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF Rules”) as amended from time to time, matured Deposits remaining unclaimed for a period of seven years from the date they became due for payment are required to be transferred to the Investor Education and Protection Fund (IEPF) Authority established by the Central Government. Further, interest accrued on the matured deposits which remain unclaimed for a period of seven years from the date of payment will also be transferred to the IEPF under Section 125(2) (k). The concerned depositor can claim the Deposit and/or interest from the IEPF Authority by following the procedure laid down in the IEPF Rules.

During the year, an amount of Rs. 0.05 Crores has been transferred to the IEPF Authority.

The Particulars of loans/advances, etc., required to be disclosed pursuant to Regulation 34 read with paragraph A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, are furnished separately.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS IN SECURITIES

Pursuant to Section 186(11) of the Companies Act, 2013 ("the Act”), the provisions of Section 186(4) of the Act requiring disclosure in the Financial Statements of the full Particulars of the loans made and guarantees given or securities provided by a Non- Banking Financial Company in the ordinary course of its business and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security are exempted from disclosure in the Annual Report.

Further, pursuant to the provisions of Section 186 (4) of the Act, the details of investments made by the Company are given in the Notes to the Financial Statements.

SUSTAINABILITY INITIATIVES

From the outset, Sustainability has been deeply embedded in the Companys business model. At the heart of our organizational strategy is an inclusive business model which enables the residents of semi-urban and rural India to access formal channels of credit/finance, helping them create long-term value. In line with the Mahindra Groups motto: Rise for Good we are also gearing up to be future ready by making sustainability and climate change an integral part of the business strategy & risk framework. Your Company has been enabling customers to meet their aspirations through financial product offerings. It has helped people build their homes through affordable home loan services provided by Mahindra Rural Housing Finance Limited, secure their life and assets by insurance solutions of Mahindra Insurance Brokers Limited and offers investment options by Mahindra Asset Management Company Private Limited. By providing the right set of opportunities and prospects in the remote areas your Company has helped customers to forge ahead. The Company lays strong emphasis on customer centricity with its customer base spread across more than 3.8 lakh villages in India with majority of them belonging to the Earn and Pay segment.

Your Company commenced its journey towards reporting sustainability performance in 2008-09 through Mahindra Groups Sustainability Report and in the year 2012-13 the Company released its first standalone Sustainability Report. In FY 2018-19, the Company released its Seventh Sustainability Report with the theme "Change is Good”. The report adheres to the Global Reporting Initiatives (GRI) Standards and is based on Integrated Reporting framework. The report is externally assured by KPMG. The Content index has been checked by GRI and carries the GRI logo. The Report expounds how Change has been a harbinger of possibilities and prompted the Company to transcend the value-creation abilities. It also showcases how the agile culture has enabled the Organisation to believe Change is Good and set further on the road to success.

This Report is hosted on the Companys website at the web-link: https://mahindrafinance.com/media/124177/ mahindra_finance_sr_2019_final.pdf.

Your Company continued to focus on integrating Sustainability into the business practices and on building awareness for different stakeholders by taking various initiatives to engage them. In FY 2018-19, your Company became the 1st Financial Company in India to be committed towards call to action for Science Based Targets. The Science Based Targets initiative (SBTi) requires companies to publicly commit to setting carbon emission reduction targets that are in line with climate science. In the reporting year the Companys preliminary validation for carbon reduction target setting is complete. The SBTi Team has also invited the Company for methodology development exercise for Financial Institutions.

Your Company was recognized for its Sustainability initiatives during the year under review, by way of:

• Winning the Global Corporate Sustainability Award (GCSA) in Taipei, Taiwan on 28th November, 2019. The award category was Reporting (Emerging Market) for Sustainability Report 2017-18.

• Being ranked 49th amongst Top 100 Indian companies for Sustainability & CSR under Responsible Business Rankings 2019 by Futurescape.

• Getting listed in the renowned FTSE4Good Emerging Markets Index in the reporting year. FTSE4Good is an equity index series that is designed to facilitate investment in companies that meet globally recognised corporate responsibility standards. It is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance practices.

• Retaining the status of getting listed on the Dow Jones Sustainability Index ("DJSI”)-2019 under the Emerging Market Trends for the seventh consecutive year. Your Company was the only Company from amongst the Diversified Financial Services Companies in India to have made it to this list. To be included in the DJSI, companies are assessed and selected based on their long term Environmental, Social and Governance management plans and actions.

Your Companys approach has been to make its environmental disclosure transparent, and accordingly, it has been reporting disclosures and reports on its performance through the Carbon Disclosure Project (CDP) India since Financial Year 2011-12. During the reporting year, your Company attained CDP Performance Band - C meaning that your Company is at "Awareness” band and also attained Band - A in the Supplier Engagement Rating.

Sensitising the employees to a novel concept such as Sustainability has been one of the key initiatives of the Company for the Financial Year. Capacity building on Sustainability has been driven by Sustainability Courses on Coursera Platform and through Sustainability channel on Edcast. Both of these are global knowledge building/ learning platforms.

During the year, your Company made proactive efforts to reduce CO2 emissions (carbon footprint) through Project "Mahindra Hariyali”, by planting more than 1 lakh saplings throughout the country.

Your Company is gearing up to be future ready by making sustainability and climate change an integral part of its risk framework and taking measures to mitigate and manage them. Weather reports are assessed on a regular basis and aligned with business operations to protect the customers and minimize the risk impact. The outlook for the future has been positive and your Company is well equipped to enable its customers and communities to progress through its inclusive and sustainable business model.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report ("BRR”) of your Company for the year 2019-20 forms part of this Annual Report as required under Regulation 34(2) (f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and is appended as “Annexure II”.

Your Company is building an inclusive organisation by empowering all the stakeholders and facilitating their contribution towards growth that is both holistic and long term. Through the inclusive business model, your Company is endeavoring to cater to the bottom of the pyramid in the rural and semi-urban areas, enabling them to earn their livelihood through varied financial products and services. Your Company has always been conscious of its role as a responsible corporate citizen. Through its wide network of branches with locally-recruited employees, strong and lasting relationships with its stakeholders, large customer base, vast experience and market knowledge, your Company is providing financial resources to underserviced regions of the country.

The BRR can also be accessed on the Companys website at the web-link: https://mahindrafinance.com/discover- mahindra-finance/sustainability.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

With a vision to transform rural and semi-urban India into a self-reliant, flourishing landscape, your Company started its journey in 1991 and has become one of the leading NBFCs with an employee base of over 21,000 employees all over India. By supporting about 100 NGOs and implementing partners in the areas of Education & Livelihood, Healthcare and Environment, the Company strives to become an asset in the communities where it operates.

Building on the momentum created last year through several education and livelihood projects, the Mahindra Finance Scholarship Program underwent a revamp and started the new version, Mahindra Finance Saksham Scholarship for the children of the driver community and the employees of Automobile dealers. In this year, your Company provided scholarship to 2,800 students studying from Grade 5th to 12th across India, organised 19 visits to Municipal Schools through which 2,482 students got benefitted. Your Company continued financial support to run a vocational skill building center

i.e. Divyang Vikas Kendra for 250 People with Disability to enhance their employability and to provide them independent and sustainable source of income. Further, your Company introduced Dhan Samvaad - Financial & Digital Literacy program empowering working population with the knowledge of sound financial practices to enable them in managing their finances better by conducting workshops along with web-based mobile application on financial literacy. Reaffirming its commitment to the cause of education, your Company continued its support to Nanhi Kali Program which has benefitted 9,927 underprivileged girl children from socially and economically marginalised families living in urban, rural and tribal parts of India. To promote inclusive growth of socially and economically disadvantaged youth, your Company continued its support to Mahindra Pride School which skilled 2,404 youth, out of which, 2,120 have been absorbed in various organisations. Further, Mahindra Pride Classrooms supported an additional 40-120 hours of training to 30,143 final year students covering English speaking course, Life Skills, Aptitude, Interview, Group Discussion and Digital Literacy through Polytechnics and Arts & Science Colleges in 14 States.

Under Healthcare, the three major initiatives implemented by your Company were nationwide Blood Donation Drives, Sehat and Ambulance Donation with the aim of providing access to healthcare services to patients residing in remote and rural areas.

Your Company also organised cleanliness drives in the vicinity of its corporate office and branch offices under the Swachh Bharat Abhiyan to create awareness about everyday sanitation practices as well as prevention of common diseases.

Your Company also contributes towards increasing the green cover through the Mahindra Hariyali project. Every year, employees of the Company pan-India, plant trees in selected locations. Over 1 Lakh saplings were planted in this year.

Your Company also made a contribution to the PM CARES Fund to combat the COVID-19 pandemic and extended support to flood affected victims in Odisha, Maharashtra and Bihar.

Apart from the key thrust areas, your Company contributed funds for other causes such as preservation and promotion of the fine arts & culture and conducted visits to orphanage homes, differently abled homes, homes for the elderly etc., to re-affirm its pledge to the society.

During the year under review, your Company has spent Rs. 2797 Crores towards Corporate Social Responsibility on CSR projects/programs. Your Company is in compliance with the statutory requirements in this regard.

Out of total contribution of Rs. 10 Crores made by the Company to the PM CARES Fund a contribution of Rs. 4.83 Crores has been allocated from the CSR spend of FY 2019-20 and Rs. 5.17 Crores would be apportioned towards the CSR spend of the Company for FY 2020-21.

CSR COMMITTEE

During the year under review, the CSR Committee comprised of Mr. Dhananjay Mungale (Chairman), Ms. Rama Bijapurkar, Mr. Ramesh Iyer, Mr. V. Ravi and Dr. Anish Shah. The Committee, inter alia, reviews and monitors the CSR activities.

Consequent upon the resignation of Dr. Anish Shah, as a Member of the Committee with effect from 16th May, 2020, the Committee stands reconstituted effective from 16th May, 2020 as follows:

Name Category
Mr. Dhananjay Mungale - Chairman of the Committee (Independent Director)
Ms. Rama Bijapurkar - Independent Director
Mr. Ramesh Iyer - Vice-Chairman & Managing Director
Mr. V. Ravi - Executive Director & Chief Financial Officer

CSR POLICY

The CSR Policy of the Company duly amended, is hosted on the Companys website at the web-link: https:// mahindrafinance.com/rise-for-good/csr-overview and

a brief outline of the CSR Policy and the CSR initiatives undertaken by the Company during the year as per Annexure prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as “Annexure IN” to this Report.

EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as at 31st March, 2020 in Form No. MGT-9 is appended as “Annexure IV” and forms part of this Report.

The Annual Return of the Company as at 31st March, 2020 has been placed on the website of the Company and can be accessed at https://mahindrafinance.com/ investor-zone/financial-information#Financialresults.

BOARD MEETINGS AND ANNUAL GENERAL MEETING

The calendar of the Board/Committee Meetings and the Annual General Meeting is circulated to the Directors in advance to enable them to plan their schedule for effective participation at the respective meetings. Additional Board Meetings are convened by giving appropriate notice to address business exigencies. At times certain decisions are taken by the Board/Committee through circular resolutions.

All the decisions and urgent matters approved by way of circular resolutions are placed and noted at the subsequent Board/Committee Meeting(s).

The Board of Directors met seven times during the year under review, on 24th April, 2019, 23rd July, 2019, 13th August, 2019, 23rd September, 2019, 22nd October, 2019, 28th January, 2020 and 5th March, 2020. The requisite quorum was present for all the Meetings. The maximum time gap between any two Meetings was not more than one hundred and twenty days. These Meetings were well attended. The 29th Annual General Meeting (AGM) of the Company was held on 23rd July, 2019.

Detailed information on the Meetings of the Board, its Committees and the AGM is included in the Report on Corporate Governance, which forms part of this Annual Report.

MEETINGS OF INDEPENDENT DIRECTORS

The Independent Directors met twice during the year under review, on 21st August, 2019 and 4th March, 2020. The Meetings were conducted in an informal manner without the presence of the Whole-time Directors, the Non-Executive Non-Independent Directors, or any other Management Personnel.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company has various Committees which have been constituted as a part of good corporate governance practices and the same are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

During the year under review, the Audit Committee comprised of Mr. C. B. Bhave as the Chairman and Mr. Dhananjay Mungale, Ms. Rama Bijapurkar, Mr. Milind Sarwate, Mr. Arvind V. Sonde, Mr. V. S. Parthasarathy and Dr. Anish Shah as Members.

Mr. Arvind V. Sonde has been appointed as an Independent Director of the Company with effect from 9th December, 2019 and was inducted as a Member of the Committee with effect from 28th January, 2020.

The recommendations of the Audit Committee were duly approved and accepted by the Board during the year under review.

The other Committees of the Board are:

i) Nomination and Remuneration Committee

ii) Stakeholders Relationship Committee

iii) Corporate Social Responsibility Committee

iv) Risk Management Committee

v) Asset Liability Committee

vi) Committee for Strategic Investments

vii) IT Strategy Committee

The details with respect to the composition, powers, roles, terms of reference, Meetings held and attendance of the Directors at such Meetings of the relevant Committees are given in detail in the Report on Corporate Governance of the Company which forms part of this Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointment/Re-appointment and Cessation of Directors

i) Appointment of Mr. Milind Sarwate as an Independent Director

As mentioned in the previous Annual Report, Mr. Milind Sarwate was appointed as an Independent Director of the Company with effect from 1st April, 2019 for a term of five consecutive years, vide an Ordinary Resolution passed by means of a Postal Ballot on 31st March, 2019.

ii) Re-appointment of Mr. Dhananjay Mungale,

Ms. Rama Bijapurkar and Mr. C. B. Bhave, as Independent Directors for a second term

Mr. Dhananjay Mungale and Ms. Rama Bijapurkar were re-appointed at the 29th Annual General Meeting held on 23rd July, 2019, as Independent Directors of the Company for a second term of five consecutive years each, commencing from 24th July, 2019 to 23rd July, 2024, by passing a Special Resolution.

Based on the recommendation of the Nomination and Remuneration Committee and on the proposal of the Board of Directors, Mr. C. B. Bhave was re-appointed as an Independent Director of the Company for a second term of five consecutive years commencing from 3rd February, 2020 to 2nd February, 2025, by way of a Special Resolution passed by means of a Postal Ballot on 8th December, 2019.

iii) Appointment of Mr. Arvind V. Sonde as an Independent Director

Pursuant to the recommendation of the Nomination and Remuneration Committee and on the proposal of the Board of Directors, Mr. Arvind V. Sonde was appointed as an Independent Director of the Company for a term of five consecutive years commencing from 9th December, 2019 to 8th December, 2024, vide an Ordinary Resolution passed by means of a Postal Ballot on 8th December, 2019.

iv) Retirement by rotation of Mr. V. S. Parthasarathy

Mr. V. S. Parthasarathy, Non-Executive Non-Independent Director, retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-appointment.

Mr. V. S. Parthasarathy is not debarred or disqualified from holding the office of Director by virtue of any SEBI Order or any other such authority, pursuant to circulars dated 20th June, 2018 issued by BSE Limited and the National Stock Exchange of India Limited pertaining to enforcement of SEBI Orders regarding appointment of Directors by the listed companies.

v) Completion of Tenure of Mr. V. Ravi as Executive Director & Chief Financial Officer

Mr. V. Ravi was appointed as a Whole-time Director of the Company under the provisions of the Companies Act, 2013, designated as "Executive Director & Chief Financial Officer” for a period of 5 (five) years with effect from 25th July, 2015 to 24th July, 2020, by the Shareholders by means of a Postal Ballot on 16th June, 2016. Accordingly, Mr. V. Ravi would cease to hold office as Executive Director & Chief Financial Officer of the Company upon completion of his tenure as approved by the Shareholders and consequent to his retirement from the services of the Company.

Mr. V. Ravi has been associated with the Company since inception, and has had an illustrious career spanning over 34 years of service (of which 5 years were as an Executive Director). Mr. V. Ravi was part of the founding team of the Company and its subsidiaries and joint venture(s). His vast experience in financial reporting and processes, expertise in fiscal management and in streamlining various major functions like Finance & Accounts, Treasury and Information Technology, was pivotal in growth and diversification initiatives of the Company, over a period of time.

The Board has placed on record its deep appreciation of Mr. V. Ravis immense contribution and valuable services during his long association with the Company and acknowledged Mr. Ravis outstanding experience and expertise in serving the Company including the Groups Financial Services Sector companies.

Declaration by Directors

All the Directors of the Company have confirmed that they satisfy the "fit and proper” criteria as prescribed under Chapter XI of RBI Master Direction No. DNBR. PD. 008/ 03.10.119/2016-17 dated 1st September, 2016 and that they are not disqualified from being appointed/ continuing as Directors in terms of section 164(2) of the Companies Act, 2013.

Declaration by Independent Directors

All the Independent Directors of the Company have given declarations and confirmed that they meet the criteria of Independence as provided under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and 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 judgment and without any external influence.

The Board of the Company after taking these declarations on record and acknowledging the veracity of the same, concluded that the Independent Directors are persons of integrity and possess the relevant proficiency, expertise and experience to qualify as Independent Directors of the Company and are Independent of the Management of the Company

In accordance with the provisions of Section 150 of the Act read with the applicable Rules made thereunder, the Independent Directors of the Company have registered themselves in the data bank of Independent Directors maintained by the Indian Institute of Corporate Affairs, Manesar ["llCA"]. The Independent Directors unless exempted, are required to pass an online proficiency selfassessment test conducted by llCA within one year from the date of their registration in the llCA databank.

Pursuant to the above, the Company has received Declarations of compliance under Rules 6(1) and 6(2) of the Companies (Appointment and Qualification of Directors) Rules, 2014, from all the Independent Directors of the Company confirming that they have registered their names in the data bank of Independent Directors maintained with the IICA.

The Independent Directors of the Company except Mr. Arvind V. Sonde, are exempt from the requirement to undertake the online proficiency self-assessment test. Mr. Arvind V. Sonde has passed the online proficiency self-assessment test undertaken by him.

Key Managerial Personnel

Mr. Ramesh Iyer, Vice-Chairman & Managing Director, Mr. V. Ravi, Executive Director & Chief Financial Officer and Ms. Arnavaz M. Pardiwalla, Company Secretary of the Company have been designated as the Key Managerial Personnel of the Company (KMP) pursuant to the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

There has been no change in the KMP during the year under review.

Directors Responsibility Statement

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, ("the Act”) your Directors, based on the representations received from the Operating Management and after due enquiry, confirm that:

i. in the preparation of the annual accounts for financial year ended 31st March, 2020, the applicable accounting standards have been followed and there are no material departures in adoption of these standards.

ii. they have in consultation with the Statutory Auditors 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 as at 31st March, 2020 and of the profit of the Company for the year ended on that date.

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. they have prepared the annual accounts for financial year ended 31st March, 2020 on a going concern basis.

v. they have laid down adequate internal financial controls to be followed by the Company and that such internal financial controls were operating effectively during the financial year ended 31st March, 2020.

vi. they have devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31st March, 2020.

Performance Evaluation of the Board

The Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations”) stipulate the evaluation of the performance of the Board, its Committees, Individual Directors and the Chairperson.

The Company has formulated a Policy for performance evaluation of the Independent Directors, the Board, its Committees and other individual Directors which includes criteria for performance evaluation of the Non-Executive Directors and Executive Directors.

The evaluation framework for assessing the performance of Directors comprises of various key areas such as attendance at Board and Committee Meetings, quality of contribution to Board discussions and decisions, strategic insights or inputs regarding future growth of the Company and its performance, ability to challenge views in a constructive manner, knowledge acquired with regard to the Companys business/ activities, understanding of industry and global trends, etc.

The evaluation involves self-evaluation by the Board Member and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/her evaluation.

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the Listing Regulations, the Board has carried out an annual evaluation of its own performance and that of its Committees as well as performance of the Directors individually (including Independent Directors).

Feedback was sought by way of well-defined and structured questionnaires covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, areas of responsibility, execution and performance of specific duties, obligations and governance, compliance, oversight of Companys subsidiaries, etc., and the evaluation was carried out based on responses received from the Directors.

A separate exercise was carried out by the Nomination and Remuneration Committee of the Board to evaluate the performance of individual Directors who were evaluated on several parameters such as level of engagement and contribution, independence of judgment safeguarding the interest of the Company and its minority shareholders and knowledge acquired with regard to the Companys business/activities.

The performance evaluation of the Non-Independent Directors and the Board as a whole was carried out by the Independent Directors. The performance evaluation of the Chairman of the Company was also carried out by the Independent Directors, taking into account the views of the Executive Directors and Non-Executive Directors.

The performance evaluation of the Independent Directors was carried out by the entire Board excluding the Director being evaluated. Qualitative comments and suggestions of Directors were taken into consideration by the Chairman of the Board and the Chairman of the Nomination and Remuneration Committee. The Directors have expressed their satisfaction with the evaluation process.

Familiarisation Programme for Independent Directors

The details of programmes for familiarisation 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 along with details of number of programmes and number of hours spent by each of the Independent Directors during the Financial Year 2019-20, in terms of the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are available on the website of the Company and can be accessed at the web-link: https:// mahindrafinance.com/media/236819/familiarisation- programme-for-independent-directors-2019-20.pdf.

Policies on Appointment of Directors and Senior Management and Remuneration of Directors, Key Managerial Personnel and Employees

i) Policy on Appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management

In accordance with the provisions of Section 134(3) (e) of the Companies Act, 2013 ("the Act”) read with Section 178(2) of the Act and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has adopted a Policy on Appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management, which inter alia, includes the criteria for determining qualifications, positive attributes and independence of Directors, identification of persons who are qualified to become Directors and who may be appointed in the Senior Management team, succession planning for Directors and Senior Management, and the Talent Management framework of the Company.

ii) Policy on Remuneration of Directors and the Remuneration Policy for Key Managerial Personnel and Employees of the Company

Your Company has also adopted the Policy on Remuneration of Directors and the Remuneration Policy for Key Managerial Personnel and Employees of the Company in accordance with the provisions of sub-section (4) of Section 178 of the Act.

The Policy on Remuneration of Directors, as amended, and the Remuneration Policy for Key Managerial Personnel and Employees of the Company are appended as “Annexure V-A” and “Annexure V-B”, respectively and form part of this Report.

The criteria for determining qualifications, positive attributes and independence of a Director and the Remuneration Policies for Directors, Key Managerial Personnel and other employees have been discussed in detail in the Report on Corporate Governance.

AUDITORS

Statutory Auditors

Messrs. B S R & Co. LLP, Chartered Accountants, (ICAI Firm Registration No.101248W/W-100022), were appointed as Statutory Auditors of the Company at the Twenty-seventh Annual General Meeting ("AGM”) to hold office for a period of five consecutive years, commencing from the conclusion of the 27th AGM held on 24th July, 2017 till the conclusion of the 32nd AGM of the Company to be held in the year 2022.

The Statutory Auditors have given a confirmation to the effect that they are eligible to continue with their appointment and that they have not been disqualified in any manner from continuing as Statutory Auditors. The remuneration payable to the Statutory Auditors shall be determined by the Board of Directors based on the recommendation of the Audit Committee.

The Report given by the Auditors on the Financial Statements of the Company for the Financial Year 201920 is a part of the Annual Report. The Report is unmodified and does not contain any qualification, reservation, adverse remark or disclaimer.

The Statutory Auditors were present at the last AGM.

Secretarial Auditor

The Board of Directors of the Company has appointed Messrs. KSR & Co., Company Secretaries LLP to conduct the Secretarial Audit of the Company pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. In accordance with the provisions of sub-section (1) of Section 204, the Secretarial Audit Report for the Financial Year 2019-20 is appended to this Report as “Annexure VI”.

The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Secretarial Audit of Material Unlisted Indian Subsidiary

Mahindra Rural Housing Finance Limited (“MRHFL), a material subsidiary of the Company undertakes Secretarial Audit every year under Section 204 of the Companies Act, 2013. The Secretarial Audit of MRHFL for the Financial Year 2019-20 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 of MRHFL submitted by Messrs. KSR & Co., Company Secretaries LLP, does not contain any qualification, reservation or adverse remark or disclaimer. The Secretarial Audit Report is appended as “Annexure VII” and forms part of this Report.

Cost Records and Cost Audit

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable in respect of the business activities carried out by the Company.

Reporting of Frauds by Auditors

During the year under review, the Statutory Auditors and the Secretarial Auditor have not reported any instances of frauds 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 need to be mentioned in this Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts/arrangements/transactions entered into by the Company during the Financial Year with related parties were in the ordinary course of business and on an arms length basis. During the year under review, your Company had not entered into any contract/ arrangement/transaction with Related Parties which could be considered material in accordance with the Policy on Related Party Transactions. Pursuant to Section 134

(3) (h) read with Rule 8 (2) of the Companies (Accounts) Rules, 2014, there are no transactions to be reported under Section 188 (1) of the Companies Act, 2013. Accordingly, the disclosure of Related Party Transactions, as required under Section 134 (3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable to the Company.

During the year under review, the Board of Directors based on the recommendations of the Audit Committee, amended the Policy on Related Party Transactions in line with the amendment(s) made in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same is uploaded on the Companys website at the web-link: https://mahindrafinance.com/discover- mahindra-finance/policies.

Further details on the transactions with related parties are provided in the accompanying financial statements.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

The ongoing COVID-19 pandemic has increased the estimation uncertainty in the preparation of the Financial Statements for the year ended 31st March, 2020.

The Company has developed various accounting estimates in these Financial Statements based on forecasts of economic conditions which reflect expectations and assumptions as at 31st March, 2020 about future events that the Management believe are reasonable in the circumstances. There is a considerable degree of judgement involved in preparing forecasts. The underlying assumptions are also subject to uncertainties which are often outside the control of the Company. Accordingly, actual economic conditions are likely to be different from those forecast since anticipated events frequently do not occur as expected, and the effect of those differences may significantly impact accounting estimates included in these financial statements.

The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to expected credit losses, fair value measurement, and recoverable amount assessments of non-financial assets.

The spread of COVID-19 pandemic and the subsequent pan-India lockdown announced by the Government of India are the events which have continued till the date of the announcement of financial results of the Company. The uncertainty on the restart of the Companys complete operations still prevails. Your Company has initiated the process of resuming operations in its branch offices located in the green and orange zones identified under the COVID-19 guidelines.

?then than the above mentioned situation affecting the Company, there is no material change and commitment that have occurred after the closure of the Financial Year 2019-20 till the date of this Report, which would affect the financial position of your Company.

RISK MANAGEMENT POLICY

Your Company has a comprehensive Risk Management Policy in place and has laid down a well-defined risk management framework to identify, assess and monitor risks and strengthen controls to mitigate risks. Your Company has established procedures to periodically place before the Risk Management Committee and the Board of Directors, the risk assessment and minimisation procedures being followed by the Company and steps taken by it to mitigate these risks.

The Risk Management Policy, inter alia, includes identification therein of elements of risk, including Cyber Security and related risks as well as those risks which in the opinion of the Board may threaten the existence of the Company. The Risk management process has been established across the Company and is designed to identify, assess and frame a response to threats that affect the achievement of its objectives.

Further, it is embedded across all the major functions and revolves around the goals and objectives of the Company.

The development and implementation of Risk Management Policy adopted by the Company is discussed in detail in the Management Discussion and Analysis chapter, which forms part of this Annual Report.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Company promotes ethical behaviour in all its business activities and has established a vigil mechanism for its Directors, Employees and Stakeholders associated with the Company to report their genuine concerns. The Vigil Mechanism as envisaged in the Companies Act, 2013 and the Rules prescribed thereunder and the Listing Regulations is implemented through the Whistle Blower Policy, to provide for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairperson of the Audit Committee.

As per the Whistle Blower Policy implemented by the Company, the Employees, Directors, customers, dealers, vendors, suppliers, or any Stakeholders associated with the Company are free to report illegal or unethical behaviour, actual or suspected fraud or violation of the Companys Codes of Conduct or Corporate Governance Policies or any improper activity to the Chairman of the Audit Committee of the Company or Chairman of the Company or Convenor of the Corporate Governance Cell.

The Whistle Blower Policy provides for protected disclosure and protection to the Whistle Blower. Under the Whistle Blower Policy, the confidentiality of those reporting violation(s) is protected and they are not subject to any discriminatory practices. Protected disclosures can also be made by sending an email at the designated email id: mmfsl_whistleblower@mahindra.com.

The Whistle Blower Policy has been appropriately communicated within the Company and is available on the website of your Company at the web-link: https:// mahindrafinance.com/media/125151/whistle- blower-policy.pdf.

No personnel have been denied access to the Audit Committee.

SUBSIDIARIES, JOINT VENTURE AND ASSOCIATES

The Companys Subsidiaries, Joint Venture and Associates continue to contribute to the overall growth in revenues and overall performance of your Company.

A Report on the performance and financial position of each of the subsidiaries and the associate companies included in the Consolidated Financial Statements and their contribution to the overall performance of the Company, is provided in Form AOC-1 as Annexure A to the Consolidated Financial Statements and forms part of this Annual Report.

Your Company has formulated a Policy for determining Material Subsidiaries as defined in Regulation 16 of the Listing Regulations. This Policy has been hosted on the website of the Company and can be accessed through the web-link: https://mahindrafinance.com/investor-zone/ corporate-governance#Policies.

SUBSIDIARIES

Mahindra Insurance Brokers Limited

During the year under review, Mahindra Insurance Brokers Limited (MIBL), the subsidiary in the business of Direct and Re-insurance Broking, serviced approximately 2.23 million insurance cases, with a total of 22,33,711 cases for both Life and Non-Life Retail business. The customized Life insurance cover "Mahindra Loan Suraksha” (MLS) decreased from 8,13,742 lives covered with a Sum Assured of Rs. 27,765 Crores in the Financial Year 2018-19 to 6,84,186 lives covered with a Sum Assured of Rs. 25,391 Crores in the Financial Year 2019-20. A substantial portion of MLS continues to be covered in the rural markets.

MIBL achieved a growth of 7% in Gross Premium facilitated for the Corporate and Retail business lines, increasing from Rs. 2,265.10 Crores in the Financial Yean 2018-19 to Rs. 2,431.89 Crores in the Financial Year 2019-20. The Total Income increased by 4% from Rs. 323.36 Crores in the Financial Year 2018-19 to Rs. 336.89 Crores in the Financial Year 2019-20. The Profit before Tax decreased by 28% from Rs. 102.89 Crores to Rs. 73.90 Crores and the Profit after Tax decreased by 25% from Rs. 71.49 Crores to Rs. 53.36 Crores during the same period.

MIBL has been able to reach the benefit of insurance to over 3 lakh villages across India.

Mahindra Rural Housing Finance Limited

Mahindra Rural Housing Finance Limited (MRHFL), the Companys subsidiary in the business of providing loans for purchase, renovation, construction of houses to individuals in the rural and semi-urban areas of the country, registered a total income of Rs. 1,5276 Crores as compared to Rs. 1,383.9 Crores for the previous year, registering a growth of 10.4%. Profit before tax was 43.9% lower at Rs. 205.6 Crores as compared to Rs.366.2 Crores for the previous year. Profit after tax was 40.7% lower at Rs. 148.6 Crores as compared to Rs. 250.5 Crores for the previous year.

During the year under review, MRHFL disbursed loans aggregating to Rs. 1,876.4 Crores as against Rs. 2,581.1 Crores in the previous year.

MRHFL continued its focus on serving customers in rural India. Majority of the loans disbursed were to customers in villages with an average annual household income of less than Rs.1.97 lakhs. During the year under consideration, MRHFL disbursed home loans to around 95,523 households (in addition to around 9,50,375 existing households as on 31st March, 2019). MRHFL has been expanding its geographical presence to provide affordable services for rural households.

During the year under review, operations of MRHFL were strengthened in the States of Maharashtra, Gujarat, Rajasthan, Tamil Nadu, Andhra Pradesh, Telangana, Chhattisgarh, Kerala, Karnataka, Madhya Pradesh, Uttar Pradesh, Uttarakhand, Bihar and Odisha.

Mahindra Asset Management Company Private Limited

Mahindra Asset Management Company Private Limited (MAMCPL), a subsidiary of the Company acts as an Investment Manager for the schemes of Mahindra Mutual Fund. As on 31st March, 2020, MAMCPL was acting as the Investment Manager for thirteen schemes.

The Average Assets under Management in these thirteen schemes were Rs. 4,771 Crores in March 2020 as compared to Rs. 4,871 Crores in March 2019. Of these assets, Rs. 1,616 Crores were in equity schemes in March 2020 as compared to Rs. 1,449 Crores in March 2019. MAMCPL has empaneled more than 14,200 distributors and opened 1,90,330 investor accounts in these schemes recording a rise of more than 19%.

During the year under consideration, the total income of MAMCPL was Rs. 17 Crores as compared to Rs. 28.1 Crores for the previous year. The reduction in income is mainly due to the change in the accounting treatment of certain items of Scheme related expenses, consequent upon the change in the SEBI Regulations in this regard, with effect from October 2018. The operations for the year under consideration have resulted in a loss of Rs. 379 Crores as against a loss of Rs. 39.5 Crores during the previous year.

Mahindra Trustee Company Private Limited

Mahindra Trustee Company Private Limited (MTCPL), your Companys subsidiary, acts as the Trustee to Mahindra Mutual Fund.

During the year, MTCPL earned trusteeship fees of Rs. 20.9 lakhs and other income of Rs. 1 lakh as compared to Rs. 23.5 lakhs and Rs. 1.1 lakh respectively, for the previous year. The total expenses for the year were Rs. 23.7 lakhs as against Rs. 25.3 lakhs in the previous year. MTCPL recorded a loss of Rs. 1.8 lakh for the year under review as against a loss of Rs. 0.8 lakh in the previous year.

Equity Infusion by Manulife Investment Management (Singapore) Pte. Limited

Manulife Investment Management (Singapore) Pte. Limited (formerly known as Manulife Asset Management (Singapore) Pte. Limited) ("Manulife") has acquired a 49% stake in MAMCPL and MTCPL on 29th April, 2020, pursuant to the execution of the Share Subscription Agreement and Shareholders Agreement by and amongst the Company, MAMCPL, MTCPL and Manulife on 21st June, 2019. Consequently, the shareholding of the Company in MAMCPL and MTCPL has come down from 100% to 51% respectively, and accordingly, MAMCPL and MTCPL have ceased to be wholly-owned subsidiaries of the Company but, continue to remain the Companys subsidiaries.

Mahindra Finance CSR Foundation

Mahindra Finance CSR Foundation, has been incorporated on 2nd April, 2019 as a wholly-owned subsidiary of the Company registered under Section 8 of the Companies Act, 2013, to promote and support CSR projects and activities.

JOINT VENTURE

Mahindra Finance USA LLC.

The joint venture companys disbursement registered a growth of 2.3% to USD 772.22 Million for the year ended 31st March, 2020 as compared to USD 755.11 Million for the previous year.

Total Income grew by 1.69 % to USD 68.84 Million for the year ended 31st March, 2020 as compared to USD 6768 Million for the previous year. Profit before tax was 1.55 % lower at USD 18.06 Million as compared to USD 18.34 Million for the previous year. Profit after tax was 5.84% lower to USD 13.18 Million as compared to USD 13.95 Million in the previous year.

Names of Companies which have become or ceased to be Subsidiaries, Joint Ventures or Associate Companies during the year

Pursuant to the execution of the Share Subscription, Share Purchase and Shareholders Agreement by the Company with Ideal Finance Limited (Sri Lanka) ("Ideal Finance”) and its existing Shareholders on 28th February, 2020, the Company has acquired 5,56,39,098 Equity Shares of Ideal Finance aggregating to 38.20% of the paid-up share capital of Ideal Finance.

Accordingly, Ideal Finance has become an Associate of your Company, pursuant to Section 2(6) of the Companies Act, 2013.

During the year under review, no company has ceased to be a Subsidiary, Joint Venture or Associate of your Company.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company, its subsidiaries, associates and joint venture for the Financial Year 2019-20, prepared in accordance with the relevant provisions of the Companies Act, 2013 and applicable Indian Accounting Standards along with all relevant documents and the Auditors Report form part of this Annual Report.

The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies, associates and joint venture.

Pursuant to the provisions of Section 136 of the Companies Act, 2013, the Financial Statements of the Company, Consolidated Financial Statements along with relevant documents and separate annual accounts in respect of each of the subsidiaries are available on the website of the Company and can be accessed at the web-link: https://mahindrafinance.com/investor-zone/ financial-information#Financialresults.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANYS OPERATIONS IN FUTURE

There are no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

Your Company has in place adequate internal financial controls with reference to the Financial Statements commensurate with the size, scale and complexity of its operations.

Your Company uses various industry standard systems to enable, empower and engender businesses and also to maintain its Books of Account. The transactional controls built into these systems ensure appropriate segregation of duties, the appropriate level of approval mechanisms and maintenance of supporting records. The systems, Standard Operating Procedures and controls are reviewed by Management. These systems and controls are audited by Internal Audit and their findings and recommendations are reviewed by the Audit Committee and the IT Strategy Committee which ensures the implementation.

Your Companys Internal Financial Controls were deployed through Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), that addresses material risks in your Companys operations and financial reporting objectives. Such 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. The risk control matrices are reviewed on a yearly basis and control measures are tested and documented on a quarterly basis. Based on the results of such assessments carried out by Management, no reportable material weakness or significant deficiencies in the design or operation of internal financial controls was observed.

Your Company recognises Internal Financial Controls cannot provide absolute assurance of achieving financial, operational and compliance reporting objectives because of its inherent limitations. Also, projections of any evaluation of the Internal Financial Controls to future periods are subject to the risk that the Internal Financial Control may become inadequate because of changes in conditions on that the degree of compliance with the policies on procedures may deteriorate. Accordingly, regular audits and review processes ensure that such systems are reinforced on an ongoing basis.

COMPLIANCE WITH THE PROVISIONS OF SECRETARIAL STANDARD - 1 AND SECRETARIAL STANDARD - 2

The Directors 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.

The applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to Meetings of the Board of Directors and General Meetings, respectively, have been duly complied by your Company.

PARTICULARS OF REMUNERATION AND RELATED DISCLOSURES

Disclosures with respect to the remuneration of Directors, Key Managerial Personnel and Employees as required under Section 197(12) of the Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are as under:

Sr. Disclosure Requirement No.

Disclosure Details

Name of Director/ KMP Designation Ratio of the remuneration of each Director to median remuneration of employees
1. Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the Financial Year 2019-20. Mr. Dhananjay Mungale Chairman (Independent Director] 11.13X
Mr. C. B. Bhave Independent Director 8.75X
Ms. Rama Bijapurkar Independent Director 8.36X
Mr. Milind Sarwate ** Independent Director 8.70X
Mr. Arvind V. Sonde *** Independent Director 2.25X
Mr. V. S. Parthasarathy Non-Executive Director NIL*
Dr. Anish Shah Non-Executive Director NIL*
Mr. Ramesh Iyer Vice-Chairman & Managing Director 185.82X
Mr. V. Ravi Executive Director & Chief Financial Officer 95.61X
Ms. Arnavaz M. Pardiwalla Company Secretary & Compliance Officer 29.08X

* Mr. V. S. Parthasarathy and Dr. Anish Shah do not receive any remuneration from the Company.

** Appointed as an Independent Director of the Company w.e.f. 1st April, 2019.

*** Appointed as an Independent Director of the Company w.e.f. 9th December, 2019.

Disclosure Requirement

Disclosure Details

Name of Director/ KMP Designation % increase in Remuneration
2. Percentage increase in Remuneration of each Director, Chief Financial Officer and Company Secretary during the Financial Year 2019-20. Mr. Dhananjay Mungale Chairman (Independent Director] 7.67
Mr. C. B. Bhave Independent Director 6.92
Ms. Rama Bijapurkar Independent Director 12.60
Mr. Milind Sarwate ** Independent Director N.A.
Mr. Arvind V. Sonde *** Independent Director N.A.
Mr. V. S. Parthasarathy Non-Executive Director NIL*
Dr. Anish Shah Non-Executive Director NIL*
Mr. Ramesh Iyer Vice-Chairman & Managing Director -8.35
Mr. V. Ravi Executive Director & Chief Financial Officer 19.78
Ms. Arnavaz M. Pardiwalla Company Secretary & Compliance Officer 28.73

* Mr. V. S. Parthasarathy and Dr. Anish Shah do not receive any remuneration from the Company.

** Appointed as an Independent Director of the Company w.e.f. 1st April, 2019.

*** Appointed as an Independent Director of the Company w.e.f. 9th December, 2019.

3. Percentage increase in the median 19.97% considering employees who were in employment for the whole of the Remuneration of employees in the Financial Year 2018-19 and Financial Year 2019-20.

Financial Year 2019-20

4. Number of Permanent employees on the rolls of the Company as on 31st March, 2020 21,862
5. Average percentile increase already made in the salaries of employees other than the Managerial Personnel in the last Financial Year i.e. 2019-20 and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. For employees other than Managerial Personnel who were in employment for the whole of the Financial Year 2018-19 and Financial Year 2019-20, the average increase is 20.24%.
Justification: The remuneration of the Vice-Chairman & Managing Director and Executive Director & Chief Financial Officer is decided based on the individual performance, inflation, prevailing industry trends and benchmarks. The remuneration of eligible Non-Executive Directors consists of commission and sitting fees. While deciding the remuneration, various factors such as Directors participation in Board and Committee Meetings during the year, other responsibilities undertaken, such as Membership or Chairmanship/ Chairpersonship of Committees, etc., were taken into consideration.
The increment given to each individual employee is based on the employees potential, experience as also their performance and contribution to the Companys progress over a period of time and also benchmarked against a comparator basket of relevant companies in India.
6. Affirmation that the remuneration is as per the Remuneration Policy of the Company. The remuneration paid/payable is as per the Policy on Remuneration of Directors and Remuneration Policy for Key Managerial Personnel and Employees of the Company.

Notes:

1) The remuneration calculated is as per Section 2(78) of the Companies Act, 2013 and includes the perquisite value of Stock Options of the Company exercised during the year.

2) The calculations are based on Employees who were on the rolls of the Company for the whole of the Financial Year 2018-19 and Financial Year 2019-20.

Mr. Ramesh Iyer, Vice-Chairman & Managing Director and Mr. V. Ravi, Executive Director & Chief Financial Officer of the Company do not receive any remuneration or commission from its Holding Company. However, Mr. Iyer has been granted stock options under the Employees Stock Option Scheme of the Holding Company, Mahindra & Mahindra Limited. Mr. Iyer has exercised 1,650 Stock Options of the Holding Company, during the year, which were granted in the earlier year(s).

During the year under review, Mr. Ramesh Iyer and Mr. V. Ravi have received remuneration from the Companys subsidiary, Mahindra Insurance Brokers Limited, in form of Employees Phantom Stock Options amounting to Rs. 99,00,240 and Rs. 9,90,024, respectively.

Mr. Ramesh Iyer and Mr. V. Ravi have not exercised ESOPs of Mahindra Rural Housing Finance Limited, the subsidiary company, during the year, which were granted in the earlier year(s).

The Company had 21 employees who were in receipt of remuneration of not less than Rs.1,02,00,000 during the year ended 31st March, 2020 or not less than Rs. 8,50,000 per month during any part of the year.

Details of employee remuneration as required under provisions of Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) and 5 (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available on your Companys website and can be accessed at the web-link: https://mahindrafinance.com/ investor-zone/financial-information#Financialresults.

Any Member interested in obtaining a copy of the same may write to the Company Secretary at the investor Email Id: investorhelpline_mmfsl@mahindra.com.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company is an equal opportunity employer and is committed to ensuring that the work environment at all its locations is conducive to fair, safe and harmonious relations between employees. It strongly believes in upholding the dignity of all its employees, irrespective of their gender or seniority. Discrimination and harassment of any type are strictly prohibited.

The Company has in place an appropriate Policy in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, (“POSH Act”) to prevent sexual harassment of its employees.

All employees (permanent, contractual, temporary and trainees) are covered under this Policy. The Policy has been widely communicated internally and is placed on the Companys intranet portal. The Company ensures that no employee is disadvantaged by way of gender discrimination.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee (ICC) under the POSH Act to redress complaints received regarding sexual harassment.

The Company has an online e-learning module for employees covering topics pertaining to POSH awareness, reconciliation before filing POSH complaint, consequences of filing false complaint(s), etc. Training on POSH is an integrated part of induction to new joinees.

The following is a summary of Sexual Harassment complaint(s) received and disposed off during the year 2019-20, pursuant to the POSH Act and Rules framed thereunder:

a) Number of complaint(s) of Sexual Harassment received during the year - Nil

b) Number of complaint(s) disposed off during the year - Nil

c) Number of cases pending for more than 90 days - Nil

d) Number of workshops/awareness programme against sexual harassment carried out - One workshop was conducted under the "Speak-up” campaign for the employees.

e) Nature of action taken by the employer or District Officer -Not Applicable.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under sub-section (3) (m) of Section 134 of the Companies Act, 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 are given as under :

(A) Conservation of Energy

(i) The steps taken or impact on conservation of energy:

The operations of your Company are not energy intensive. However, adequate measures have been initiated to reduce energy consumption.

Select few steps are listed:

a) Replacement of conventional lighting with Light Emitting Diode (LED) lighting:

The Company has installed LED lighting in Regional Offices of the Company during the year under review and the same has been monitored in terms of electrical consumption and expenses.

b) Replacement of old air-conditioning with updated version of machines with R-410A gas, which helps in reducing Ozone depletion.

c) Reduction in water and energy consumption and recycling of waste paper generation at various locations.

(ii) The steps taken by the Company for utilising alternate sources of energy: Nil.

(iii) The capital investment on energy conservation equipments: Nil.

(B) Technology Absorption

(i) The efforts made towards technology absorption: Not Applicable.

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution: Not Applicable.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the Financial Year): Not Applicable.

(a) Details of Technology Imported;

(b) Year of Import;

(c) Whether the Technology has been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof.

(iv) Your Company has not incurred any expenditure on Research and Development during the year under review.

(C) Foreign Exchange Earnings and Outgo

The information on foreign exchange outgo is furnished in the Notes to the Accounts. There were no foreign exchange earnings during the year.

For and on behalf of the Board
Dhananjay Mungale
Chairman
Place : Mumbai
Date : 15th May, 2020