COMMITTEES OF THE BOARD

Audit CommitteeDeepak S. ParekhChairmanNadir B. GodrejM. M. MurugappanR. K. Kulkarni

Share Transfer and Shareholders/Investors Grievance CommitteeKeshub MahindraChairmanAnand G. MahindraBharat DoshiA. K. NandaR. K. Kulkarni

Remuneration/Compensation CommitteeNarayanan VaghulChairmanKeshub MahindraNadir B. GodrejM. M. Murugappan

Loans & Investment CommitteeKeshub MahindraChairmanAnand G. MahindraBharat DoshiA. K. NandaR. K. Kulkarni

Research & Development CommitteeA. S. GangulyChairmanAnand G. MahindraNadir B. GodrejM. M. MurugappanBharat Doshi

GROUP MANAGEMENT BOARDAnand G. MahindraVice-Chairman & Managing DirectorBharat DoshiPresident - Trade & Financial Services SectorA. K. NandaPresident - Infrastructure Development SectorAnjanikumar ChoudhariPresident - Farm Equipment SectorRajeev DubeyPresident - Human Resources & Corporate ServicesPawan GoenkaPresident - Automotive SectorHemant LuthraPresident - Systems & Technologies SectorRaghunath MurtiExecutive Vice Chairman - Mahindra Intertrade LimitedUday Y. PhadkePresident - Finance & Legal AffairsUlhas N. YargopPresident - Telecom & Software Sector

BOARD OF DIRECTORS

Keshub MahindraChairman

Anand G. MahindraVice-Chairman & Managing Director

Deepak S. ParekhNadir B. Godrej

M. M. MurugappanNarayanan VaghulA. S. Ganguly

R. K. KulkarniAnupam PuriThomas Mathew T.Nominee of Life Insurance Corporation of India

Bharat DoshiExecutive Director

A. K. NandaExecutive Director

Narayan ShankarCompany Secretary

2

MAHINDRA & MAHINDRA LIMITED

Contents

Directors� Report ................................................................................................... 3

Management Discussion and Analysis ................................................................... 19

Corporate Governance ......................................................................................... 37

Accounts .............................................................................................................. 63

Statement pursuant to Section 212 ................................................................... 119

Consolidated Accounts ....................................................................................... 121

Bankers

Bank of America N.A.

Bank of Baroda

Bank of India

Canara Bank

Central Bank of India

HDFC Bank Limited

Standard Chartered Bank

State Bank of India

Union Bank of India

Auditors

A. F. Ferguson & Co., Allahabad Bank Buildings,

Bombay Samachar Marg, Mumbai 400 001.

Advocates

Khaitan & Co., Meher Chambers,

R K Marg, Ballard Estate, Mumbai 400 038.

Registered Office

Gateway Building, Apollo Bunder, Mumbai 400 001.

Branches

7, Dr. Ishaque Road (Old KYD Street), Kolkata 700 016.

Mahindra Towers, 2-A Bhikaji Cama Place, New Delhi 110 066.

Mahindra Towers, First Floor, 17/18, Pattulous Road, Chennai 600 002.

Raheja Chambers, First Floor, 12, Museum Road, Bangalore 560 001.

3

DIRECTORS� REPORT TO THE SHAREHOLDERS

Your Directors present their Report together with the audited accounts of your Company for the year ended 31st March, 2007.

Financial Highlights

(Rs. in crores)

2007 2006

Gross Income 11558 9451

Less: Excise Duty on Sales 1313 1125

Net Income 10245 8326

Profit before Depreciation, Interest, Provision for Contingencies,

Exceptional items and Taxation 1458 1072

Less: Depreciation /Amortisation 209 200

Profit before Interest, Provision for Contingencies, Exceptional items and Taxation 1249 872

Less: Interest (Net) (67) (18)

Profit before Provision for Contingencies, Exceptional items and Taxation 1316 890

Less: Provision for Contingencies - 1

Profit before Exceptional items and Taxation 1316 889

Add: Exceptional items 122 210

Profit before Taxation 1438 1099

Less: Provision for tax � Current tax (including Fringe Benefit Tax) 366 285

Less: Provision for tax � Deferred tax (Net) (15) (43)

Profit for the year before prior period adjustments 1087 857

Prior Period Adjustment (Net of Tax) 19 -

Profit for the year 1068 857

Balance of profit for earlier years 1476 996

Add: Transfer from Debenture Redemption Reserve 16 1

Profit available for appropriation 2560 1854

Less: General Reserve 110 100

Interim Dividend paid 184 -

Income-tax on Interim Dividend paid 26 -

Proposed Dividends 98 244

Income-tax on Proposed Dividends 17 34

Balance carried forward 2125 1476

4

Performance Review

Automotive Sector:

The financial year ended 31st March, 2007 is the fifth

consecutive year of record growth in terms of vehicle

production and sales. During the year under review, your

Company produced 1,44,090 vehicles [i.e. multi utility

vehicles (MUVs), cars and light commercial vehicles (LCVs)

including 8,811 LCVs produced for Mahindra International

Limited (MIL), a subsidiary of the Company and 614 cars

produced for Mahindra Renault Private Limited (MRPL),

another subsidiary of the Company] and 34,892 three-

wheelers as compared to 1,28,601 vehicles [including 2,705

LCVs produced for MIL] and 22,317 three-wheelers in the

previous year.

Your Company recorded sales of 1,35,961 vehicles and

33,718 three-wheelers as compared to 1,25,172 vehicles

and 22,419 three-wheelers in the previous year registering

a growth of 8.6% and 50% in vehicles sales and three-

wheelers sales respectively.

The domestic total sales volume of 1,61,658 vehicles and

three-wheelers was higher by 14% than the previous year�s

volume of 1,42,057 vehicles and three-wheelers.

Over all, a record number of 1,27,856 MUVs were sold by

the Company in the domestic market during the year under

review as against the sale of 1,14,694 MUVs in the previous

year. The Company�s domestic MUVs sales volumes grew by

11% as against the industry MUVs sales growth of 14%. In

the large three-wheeler segment, the Company�s sales volumes

declined by 22% against a 28% decline for the industry as

a whole. In the smaller three-wheeler segment, which the

Company had entered in the previous year, your Company

during the year under review sold 19,554 Champion Alfas

against the sale of 4,307 Champion Alfas in the previous

year.

Your Company�s subsidiary MIL, sold 8,550 LCVs during

the year. The combined LCVs sales of the Company and

MIL stood at 8,652 as compared to the last year�s sales of

6,777 [including 1,833 sold by MIL] registering an increase

of 28% against the industry (upto 4 MT payload LCVs

segment) growth of 4%.

The spare parts sales volume was Rs.307.33 crores (Exports

Rs.23.54 crores) in the current year as compared to Rs.236.00

crores (Exports Rs.12.84 crores) in the previous year.

The commencement of the manufacture of the Logan, a

mid-sized sedan, in the last quarter of the year marked the

entry of the Company into the passenger car segment through

its subsidiary MRPL, a joint venture of the Company with

Renault s.a.s. of France.

Over the last three years, the Company introduced its vehicles

in many new overseas markets including Europe, Middle

East, South America and South-East Asia by adapting unique

business models for each country. The Company launched a

pick-up version of the Scorpio in South Africa during the

year, becoming the first Indian automotive company to launch

a product internationally. These initiatives resulted in your

Company exporting 8,021 vehicles [including 254 LCVs

sourced from MIL] during the year under review which is

an increase of 45% over the previous year�s exports of

5,534 vehicles [including 175 LCVs sourced from MIL].

The Company�s performance also reflected a significantly

improved level of customer satisfaction as demonstrated by

its 2006-07 scores in independent syndicated customer

satisfaction and sales satisfaction studies. In the TNS study

on Dealer Satisfaction released in 2007, your Company came

first. The Company was also rated in a TNS study, one

among the top two Most Trusted Indian car companies. The

all new Scorpio launched at the end of the previous year received

the Business World National Institute of Design Award in

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the �Best Automobile Design � Four Wheeler� category and

was also awarded the coveted Golden Peacock Award for

Innovative Products/Services in the Automobile segment.

These awards augur well for the future. In the last quarter,

your Company also unveiled the bio-diesel Scorpio and Bolero

DI vehicles for 100% real world usage trials. The Scorpio

with indigenously developed CRDe technology is the first

Asian vehicle in its class to run on 100% bio-diesel.

Given the high growth expectations from the Indian

automotive industry and given the Company�s participation

in ever increasing areas of the industry, your Company is

planning to set up two greenfield plants, one near Pune and

another near Chennai, to meet future domestic and export

requirements. The plant near Pune will specialize in

commercial vehicles for the Company as well as for MIL.

The plant near Chennai will be set up in partnership with

Renault s.a.s. and Nissan Motor Company Ltd. to

manufacture new generation personal segment Utility

Vehicles and Sports Utility Vehicles for the Company as

well as cars and other vehicles for Renault and Nissan. Both

the plants should become operational over the next three

years.

Farm Equipment Sector:

During the year under review, the tractor industry grew by

21.2%. It is the fourth consecutive year the industry saw

growth which was due to a good monsoon, better availability

of credit and focus on retail tractor financing by the Banking

Sector. However, the growth has tapered in the last quarter

on account of the retail squeeze.

During the year, your Company sold 1,02,531 tractors as

against 85,029 tractors sold in the previous year registering

a significant growth of 21% and produced 1,03,847 tractors

as against 87,075 produced in the previous year recording

a notable growth of 19%. The Company maintained its

market leadership for the 24th consecutive year in the

domestic tractor market.

During the year under review, the Company launched the

�Mahindra Shaan�, a Multi-Utility Tractor, another �first of

its kind� in India. Shaan is a 25 HP innovative product

designed to serve small and medium farmers in multiple

ways, not only on the field but also on the road. Besides,

being used as a regular tractor, the inbuilt trolley feature

enables the customer to use Shaan for transportation of

farm produce and other commercial loads.

Your Company continued with its export focus with volumes

growing by 8%. Some of the major export markets such as

Sri Lanka and Bangladesh recorded highest ever sales growth

with a market share of 22% and 27% respectively. Satellite

Plants were set up in Chad, Mali in Africa and there were

strategic tie-ups with Al-Frat in Syria and ITMCO in Iran.

The turnover of your Company�s Genset and Engine businesses

also touched a new high of Rs.271 crores. The Company has

started manufacturing Gensets at Delhi and Pune and has

added several corporate clients in the current year for

supplying Gensets and Engines. The Company sold 24,141

Engines and Gensets during the year under review as against

15,776 sold during the previous year, registering a

phenomenal growth of 53%.

Mahindra Defence Systems Division:

Your Company provides world-class armouring solutions for

Light Combat Vehicles, Multi-Utility Vehicles and Sports

Utility Vehicles besides design and development for

prototyping special Military Vehicles and conversion of

available vehicle platforms to special vehicles. The Company

supplied 200 Rakshaks, a bullet proof vehicle to the Indian

Army during the year under review. The Company is also

considering venturing into supply of light armoured vehicles,

high mobility vehicles and underwater naval systems.

6

Mahindra Logistics Division:

The Company offers differential and specialised end to end

logistics solutions to select industries in the Automotive,

Retail, BPO and ITES Segments by channelising internal

and global capabilities and resources. This Division of your

Company achieved revenues of Rs.382 crores with a client

base of more than 165 customers including various corporates

and multinationals, registering an impressive growth of 52%

over the previous year.

Profits:

The Profit for the year before Depreciation, Interest,

Provision for Contingencies, Exceptional items and Taxation

was Rs.1,457.83 crores as against Rs.1,071.88 crores in

the previous year registering an increase of 36.01%. Profit

after tax was Rs.1,068.39 crores as against Rs.857.10

crores in the previous year recording an increase of 24.65%.

Your Company continues with its rigorous cost restructuring

exercises, which have resulted in significant savings by

efficiency improvements through continued focus on

optimisation of plant capacity utilisation, market

performance and controlling operating and financing costs

and right sizing in almost all areas.

Management Discussion and Analysis Report

A detailed analysis of the Company�s performance is

discussed in the Management Discussion and Analysis Report,

which forms part of this Annual Report.

Dividend

An interim dividend of 75% (Rs.7.50 per Ordinary (Equity)

Share) has been paid to the Shareholders whose names

appeared in the Register of Members as on 26th March,

2007, the record date fixed for this purpose. The amount so

distributed, including tax on distributed profits amounted to

Rs.209.84 crores.

Keeping in mind the overall performance during the year

and the positive outlook of the Company, your Directors

recommend a final dividend of 25% (Rs.2.50 per Equity

Share) and a Special Dividend of 15% (Rs.1.50 per Equity

Share) aggregating Rs.4 per Equity Share, payable to those

Shareholders whose names appear in the Register of Members

as on the Book Closure Date. The Special Dividend has been

recommended in the light of the very successful listing of

the Tech Mahindra Limited Equity Shares on the Stock

Exchanges. The final dividend, inclusive of tax on distributed

profits, would absorb a sum of Rs.114.89 crores.

The total equity dividend outgo for the financial year

2006-07, inclusive of tax on distributed profits, would be

Rs.324.73 crores (as against Rs.278.19 crores comprising

a dividend of 75% and a special dividend of 25% paid for

the previous year).

Finance

Your Company in May, 2004, had made a US$ 100 million

Foreign Currency Convertible Bond (FCCB) offering to

international investors. During the period upto 28th May,

2007, several Bondholders exercised their conversion

option resulting into Bonds of value US$ 98.20 million

getting converted into Equity Shares/Global Depositary

Receipts.

As already reported last year, in April, 2006, the Company

made a FCCB issue of US$ 200 million to the international

investors. The issue carried a zero coupon rate and the

tenure of the issue was five years with a yield to maturity of

5%, the conversion price being Rs.922.04. The issue proceeds

are earmarked for product development, modernisation and

expansion of existing manufacturing facilities and expansion

by internal growth as well as overseas acquisitions and in

addition, for such purposes as may be permitted from time

to time under applicable laws.

7

During the year, the Company raised an External Commercial

Borrowing of US$ 20 million for meeting part of funds

required for modernization and expansion plans. Funds were

raised for a three year period at highly competitive rates.

The Consortium of Bankers continue to rate the Company as

a prime customer and extend facilities/services at prime rates.

Your Company follows a prudent financial policy and aims

to maintain optimum financial gearing at all times. The

Company�s total Debt to Equity Ratio was 0.46 as at

31st March, 2007.

During the year, Fitch Ratings India Private Limited (FITCH)

reaffirmed the �AA+(Ind) with a Positive Outlook� rating

assigned by it to the Company�s outstanding Debentures in

the previous financial year. The rating indicates strong

capacity for timely payment of financial commitments and

low expectation of credit risk. Similarly, CRISIL Limited

(CRISIL) has reaffirmed the �AA+� rating but has revised

its rating outlook to �Negative� from �Stable�. The revision

in outlook reflects CRISIL�s belief that the Company could

leverage its Balance Sheet to finance its capital expenditure

and inorganic growth plans, thereby increasing its financial

risk profile. CRISIL�s rating indicates High Safety on timely

payment of interest and principal.

Stock Options

On the recommendation of the Remuneration/Compensation

Committee of your Company, the Trustees of the Mahindra

& Mahindra Employees� Stock Option Trust have granted

9,92,921 Stock Options to Eligible Employees during the

year under review.

Details required to be provided under the Securities and

Exchange Board of India (Employee Stock Option Scheme

and Employee Stock Purchase Scheme) Guidelines, 1999

are set out in Annexure I to this Report.

Industrial Relations

Industrial Relations generally remained cordial and

harmonious throughout the year. The Management Discussion

and Analysis Report gives an overview of the developments

in Human Resources/Industrial Relations during the year.

Safety, Health and Environmental Performance

Your Company�s commitment and responsibility towards

Safety, Occupational Health and Environment stems from

its vision, which enjoins upon the Company to sustain business

growth with deep commitment to the environment. The

Company has a well-established Safety, Occupational &

Environmental Policy which inter alia ensures safety of

public, employees, plant and equipment, ensuring compliance

with all statutory rules and regulations on regular basis,

imparting training to its employees as per Training Calendar,

carrying out statutory safety audits of its facilities as per

legal requirement, conducting regular medical check-up of

its employees and promoting eco-friendly activities. During

the year under review, your Company�s oldest Automotive

Plant at Kandivli achieved a remarkable feat by receiving

the National Energy Conservation Award for the 4th year in

a row. In addition, the Automotive Sector�s Zaheerabad

Plant also received this award. The Automotive Sector�s

Nashik Plant won the National Award for Excellence in

water conservation. The Kandivli, Nashik and Igatpuri Plants

of the Automotive Sector have been certified with the

amended standard for Environmental Management System

ISO 14001:2004 and have also been certified for

Occupational Health and Safety Management System

(OHSAS 18001:1999). Similarly, in the year under review,

the Tractor Division obtained certification for OHSAS 18001

for its Kandivli Plant and obtained OHSAS 18001 and ISO

14001 certification for its Rudrapur Plant. This makes all

the Tractor Division Plants OHSAS certified. The Company

strives to enrich the environment wherever possible by various

8

initiatives such as Greenbelt Development, Water and Waste

Water Management, Solid Waste Management and Air

Pollution Management. Your Company also strives for

elimination of accidents in all its units by organizing Safety

Patrol Rounds, Safety Kaizens, safety training, external

audits of the Company�s safety practices and systems,

Occupational Health Examination, etc.

Corporate Social Responsibility

As a Corporate Citizen, your Company has always recognised

that the business has to be sensitive enough to perceive the

needs of the Society in which the corporates operate. The

Company therefore believes that the weaker sections of our

Society need help and support for them to be self-reliant.

With this in view, the Mahindra Group (�the Group�) has

redefined its Corporate Social Responsibility (CSR) in its

60th year and committed to pledge upto 1% of its Profit

after Tax (PAT) to benefit the socially and economically

disadvantaged sections of society.

Recognizing the potential that education holds to transform

lives, the Mahindra Group has chosen education as its prime

focus area, with special emphasis on the girl child.

Some of the major social development programmes the Group

has invested in are described below:

Mahindra Pride Schools

During its 60th year, the Company had announced plans for

providing youth from socially weaker sections of society

with livelihood training to enable them to gain employment

based on the skills learned. The Group has set up the first

training institute, Mahindra Pride School in Chinchwad,

near Pune. The courses being offered are vocational in nature

and are in line with market requirements in the region.

Support to Government Schools

Continuing its commitment to make quality education

accessible to all children, the Group is supporting seven

government schools in Mumbai. The majority of the children

attending these schools belong to socially and economically

disadvantaged sections of society. With the help of the

Group�s implementation partner, Naandi Foundation, a

reputed NGO, the Group hopes to improve learning outcomes

of children attending these schools with an aim that they

achieve grade specific learning competencies in Science,

Maths and language.

Supporting Nanhi Kalis

Nanhi Kali, which supports the education of the

disadvantaged girl child has been the flagship programme

of the K. C. Mahindra Education Trust (KCMET). The Group

has made a commitment to support 6,000 girls in rural and

tribal areas in various parts of India by providing academic

support as well as material support in the form of uniforms,

clothes, school bags, shoes, etc. Encouraged by the success

of the programme, the Government of Rajasthan partnered

with KCMET to support the education of 10,000

disadvantaged girl children in the tribal area of Udaipur

District through the Nanhi Kali project.

Mahindra All India Talent Scholarships

The Group has also doubled the number of Mahindra All

India Talent Scholarships, as a result of which

approximately 500 students belonging to the lower socio-

economic strata of society were provided with scholarships

to pursue job oriented diploma courses at recognized

polytechnic colleges. The scholarships are given for a

three year period. Surveys conducted amongst Mahindra

All India Talent Scholarship awardees have revealed that

the beneficiaries of this scholarship programme have secured

jobs with reasonable starting monthly salaries. Over the

years, 3,252 students across the country have benefited

from this scholarship.

9

Cochlear Implants

To give a new lease of life to the hearing impaired, the

Group has agreed to donate 60 Cochlear Implants over a

3-year period to children below the age of 5 years,

belonging to the socially and economically weaker sections

of society. Each Cochlear Implant costs approximately

Rs.5 lakhs. In the past two years, 25 children have

benefited from the Cochlear Implants donated through

the Mahindra Foundation.

Mid-Day Meal Kitchen

A Memorandum of Understanding has been signed between the

Government of Rajasthan, your Company and Naandi

Foundation to set up a centralized mid-day meal kitchen in a

backward area in Jaipur District of Rajasthan which will feed

over 25,000 children studying in government schools. Providing

a nutritious mid-day meal helps in reduction of dropout rates

besides adding to the general welfare of these children. The

kitchen is expected to be set up in the coming year.

Location Specific Community Initiatives

Apart from the above activities, various business units of

your Company carry out location specific community

initiatives largely focused on health, education and

environment including water management and sanitation

projects.

Employee Social Options (ESOPs)

Employee participation is a vital ingredient of the Mahindra

way of doing CSR. An unique initiative of your Company is

it�s ESOPs Programme, through which the entire workforce

of the Mahindra Group is provided with an array of options

for volunteering their time and resources in the CSR

activities. As a result of this, the Company�s employees can

be seen on any given day contributing directly to society in

some part or other of the country.

Directors

Mr. Keshub Mahindra, Mr. Anupam Puri, Dr. A. S. Ganguly

and Mr. R. K. Kulkarni retire by rotation and, being eligible,

offer themselves for re-appointment.

Directors� Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956,

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, the applicable

accounting standards have been followed;

(ii) they have, in the selection of the accounting policies,

consulted the Statutory Auditors and these have been

applied consistently and reasonable and prudent

judgments and estimates have been made so as to give a

true and fair view of the state of affairs of the Company

as at 31st March, 2007 and of the profit of the Company

for the year ended on that date;

(iii) proper and sufficient care has been taken for the

maintenance of adequate accounting records in

accordance with the provisions of the Companies Act,

1956 for safeguarding the assets of the Company and

for preventing and detecting fraud and other

irregularities;

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

concern basis.

Subsidiary Companies

The subsidiary companies of your Company are moving on

from strength to strength and contributing to the overall

growth of the Company. These subsidiaries have created a

niche for themselves by venturing into newer businesses and

with their excellent performance are blazing ahead at a fast

pace thereby continuing to add shareholder value. The major

10

subsidiaries such as Tech Mahindra Limited, Mahindra &

Mahindra Financial Services Limited, Mahindra Holidays &

Resorts (India) Limited, Mahindra Gesco Developers Limited,

etc. registered a significantly improved performance. The

consolidated Group Profit for the year after exceptional

items, prior period adjustments and tax and after deducting

minority interests is Rs.1,497.15 crores as against

Rs.1,269.72 crores earned last year - a growth of 17.91%.

During the year under review, PT Tech Mahindra Indonesia,

Mahindra Forgings Overseas Limited, Mahindra Forgings

International Limited, CanvasM Technologies Limited,

CanvasM (Americas) Inc., JECO Holding AG,

Gesenkschmiede Schneider GmbH, JECO-Jellinghaus GmbH,

Falkenroth Umformtechnik GmbH, Falkenroth

Grundstucksgesellschaft GmbH, MHR Hotel Management

GmbH, iPolicy Networks Limited, Mahindra Stokes Holding

Company Limited, Mahindra Forgings Mauritius Limited,

Mahindra Forgings Global Limited, Schöneweiss & Co.

GmbH, Fried. Hunninghaus GmbH, Fried. Hunninghaus

GmbH & Co. KG and DGP Hinoday Industries Limited

became subsidiaries of your Company. Mahindra Gesco

Developers Limited and its subsidiaries, viz. Mahindra World

City (Jaipur) Limited, Mahindra World City Developers

Limited, Mahindra Infrastructure Developers Limited,

Mahindra Integrated Township Limited and Mahindra World

City (Maharashtra) Limited which had ceased to be

subsidiaries of your Company during the year under review,

again became subsidiaries of the Company. Mahindra

Forgings Limited ceased to be a subsidiary of the Company.

Your Directors are pleased to report that during the year

under review, the Company divested 38,23,808 Equity Shares

in Tech Mahindra Limited (TML) through an Offer for Sale

as a part of the Initial Public Offering (IPO) of TML resulting

in a gross cash realisation of Rs.139.57 crores. The

IPO of TML was for a sum of Rs.465.22 crores comprising

a fresh issue of 31,86,480 Equity Shares and an Offer for

Sale of 95,59,520 Equity Shares by the Company and its

joint venture partner in TML, viz. British Telecommunications

plc. at a price of Rs.365 per Equity Share. Post IPO and

post allotment of shares by TML under its ESOP Scheme(s),

your Company�s shareholding alongwith the shareholding of

its subsidiary, Mahindra-BT Investment Company (Mauritius)

Limited in TML as on 31st March, 2007 stands at

52.56%. This divestment was made in line with the

Company�s policy of promoting investments in

appropriate businesses and monetizing the same at an

opportune moment for creating wealth for the Company�s

shareholders. TML got itself listed on 28th August, 2006

on National Stock Exchange of India Limited and Bombay

Stock Exchange Limited. The IPO received an overwhelming

response and was oversubscribed by 71.59 times.

Subsequent to the year-end, Mahindra Rural Housing Finance

Limited (MRHFL) became a subsidiary of Mahindra &

Mahindra Financial Services Limited and Mahindra Hotels

and Residences India Limited (MHRIL) and Ashtamudi

Resorts Private Limited (Ashtamudi) became wholly owned

subsidiaries of Mahindra Holidays & Resorts (India) Limited.

MRHFL, MHRIL and Ashtamudi in turn have become

subsidiaries of your Company. Mahindra Automotive Limited

has also become a wholly owned subsidiary of the Company.

Tech Mahindra (R&D Services) Pte. Limited, a subsidiary

of Tech Mahindra Limited, has ceased to be a subsidiary of

the Company.

The Statement pursuant to section 212 of the Companies

Act, 1956 containing details of the Company�s subsidiaries

is attached.

The Consolidated Financial Statements of the Company and its

subsidiaries, prepared in accordance with Accounting Standard

AS21 prescribed by The Institute of Chartered Accountants of

India, form part of the Annual Report and Accounts.

11

In terms of approval granted by the Central Government

under section 212(8) of the Companies Act, 1956, copy of

the Balance Sheet, Profit and Loss Account, Reports of the

Board of Directors and Auditors of the subsidiaries have not

been attached to the Balance Sheet of the Company. The

Company Secretary will make these documents available

upon receipt of request from any Member of the Company

interested in obtaining the same. However as directed by

the Central Government, the financial data of the subsidiaries

have been separately furnished forming part of the Annual

Report. These documents will also be available for inspection

at the Head Office of the Company and the office of the

respective subsidiary companies, during working hours upto

the date of the Annual General Meeting.

Auditors

Messrs. A. F. Ferguson & Co., the existing Statutory Auditors

are now part of Messrs. Deloitte Haskins & Sells and it has

been decided that Messrs. Deloitte Haskins & Sells, Chartered

Accountants (DHS) would be appointed as the Statutory

Auditors of the Company. Accordingly, Messrs. A. F. Ferguson

& Co. have not offered themselves for re-appointment at the

ensuing Annual General Meeting. The Company has received

a Special Notice from a Member of the Company, in terms

of the provisions of the Companies Act, 1956, signifying the

intention to propose the appointment of DHS as the Statutory

Auditors of the Company from the conclusion of the ensuing

Annual General Meeting till the conclusion of the next Annual

General Meeting. DHS have also expressed their willingness

to act as Auditors of the Company, if appointed, and have

further confirmed that the said appointment would be in

conformity with the provisions of section 224(1B) of the

Companies Act, 1956.

Public Deposits and Loans/Advances

Out of the total 2,378 deposits of Rs.398.94 lakhs from the

public and Shareholders as at 31st March, 2007, 139 deposits

amounting to Rs.21.31 lakhs, which had matured, had not

been claimed as at the end of the financial year. Since then,

21 of these deposits of the value of Rs.3.85 lakhs have been

claimed.

The particulars of loans/advances and investment in its own

shares by listed companies, their subsidiaries, associates,

etc., required to be disclosed in the annual accounts of the

Company pursuant to Clause 32 of the Listing Agreement

are furnished separately.

Current Year

During the period 1st April, 2007 to 27th May, 2007, 28,680

vehicles were produced as against 20,703 vehicles and

27,247 vehicles were despatched as against 19,225 vehicles

during the corresponding period in the last year. During the

same period 16,010 tractors were produced and 16,099

tractors despatched during the same period as against 16,381

tractors produced and 15,630 tractors despatched during

the corresponding period in the previous year.

The Indian economy continues to maintain a healthy

momentum with high accelerating economic growth averaging

an impressive 8% in the previous three years. The

acceleration was powered largely by a robust double digit

expansion in both manufacturing and service sector activities.

The current year should augur well for the Company in the

light of the prevailing economic scenario. Although volatility

of exchange rates and input costs are a cause for concern,

the Company�s outlook for the rest of the year continues to

remain positive.

Acquisitions and other matters

With a view to further consolidating its presence in the

tractor industry, your Company along with Mahindra

Holdings & Finance Limited (MHFL), a wholly owned

subsidiary of the Company, entered into a Share Purchase

Agreement with Actis Group and the Burman Family to

12

acquire 43.3% of the issued and fully paid-up equity capital

of Punjab Tractors Limited (PTL). In addition to this, your

Company along with MHFL has made an open offer to

acquire an additional stake of upto 20% in PTL and also

for acquiring upto 20% stake in Swaraj Engines Limted

and Swaraj Automotives Limited, in accordance with

Regulations 10 and 12 of the Securities and Exchange Board

of India (Substantial Acquisition of Shares and Takeovers)

Regulations, 1997, as amended.

PTL is a strategic fit to your Company. Its Swaraj brand

has a good reputation in the market for reliability and

efficient working and PTL has significant unutilized

capacity which the Company would be utilizing to ramp

up not only sales of Swaraj tractors but also manufacture

of Mahindra tractors. The Company will be in a unique

position to leverage upon these opportunities coupled with

other advantages such as economies of scale, sourcing

benefits and some amount of vendor rationalization. To

add to these, PTL has certain products in the above 50

HP range which will add to the portfolio strengths of the

Company.

During the year, the Systems & Technologies Sector of the

Company strengthened its presence in the forgings business

by acquiring a 67.90% stake in JECO Holding AG (Jeco)

and a 100% stake (90.47% voting power) in Schöneweiss &

Co. GmbH (Schöneweiss). Jeco with 120 years of experience

is primarily focused on the trucks, bus and trailer market.

Its major products include gear boxes, engine and axle parts,

hubs, gears and piston heads. Its top customers include

Daimler Chrysler Group, ZF Group, Volvo, Renault, AGCO

and Kolbenschmidt. Schöneweiss, a leading company in the

forgings sector in Germany with 140 years of experience in

the forgings industry, is one of the top five axle

beam manufacturers in the world and specializes in

suspension, power train and engine parts. Its core competency

lies in products with complex geometric shapes.

During the year, the Systems & Technologies Sector also

made its foray into the Castings business through the

acquisition of a 66.10% equity stake in DGP Hinoday

Industries Limited (DHIL), located at Pune in the State of

Maharashtra. DHIL manufactures SG Iron castings for the

Automotive Industry like Turbo Charger Housing, Gear

carrier Housings, Differential Cases, Crank shafts, Exhaust

manifold, etc. It also has facilities to manufacture Ceramic

Magnets for Automotive Electricals and Industrial DC Motors

and Ferrite Cores for electronics, telecommunications and

specialized applications.

Energy Conservation, Technology Absorption and Foreign

Exchange Earnings and Outgo

Particulars required to be disclosed under the Companies

(Disclosure of Particulars in the Report of Board of Directors)

Rules, 1988 are set out in Annexure II to this Report.

Particulars of Employees

The Company had 173 employees who were in receipt of

remuneration of not less than Rs.24,00,000 during the year

ended 31st March, 2007 or not less than Rs.2,00,000 per

month during any part of the said year. However, as per the

provisions of section 219(1)(b)(iv) of the Companies Act,

1956, the Directors� Report and Accounts are being sent to

all the Shareholders of the Company excluding the Statement

of particulars of employees. Any Shareholder interested in

obtaining a copy of the Statement may write to the Company

Secretary of the Company.

For and on behalf of the Board

KESHUB MAHINDRAChairman

Mumbai, 28th May, 2007

13

ANNEXURE I TO THE DIRECTORS� REPORT FOR THE YEAR ENDED 31ST MARCH, 2007

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

(a) Options granted 55,79,169

(b) 1st Tranche 2nd Tranche 3rd Tranche 4th Tranche 5th Tranche 6th Tranche 7th Tranche

The pricing formula Average Average Discount Discount Average Discount Discountprice price of 5.13% of 4.85% price of 5.02% of 4.89%preceding preceding on the on the preceding on the on thethe the average average the average averagespecified specified price price specified price pricedate - 27th date - 30th preceding preceding date - 14th preceding precedingSeptember, May, 2003 the the September, the the2001 specified specified 2005 specified specified

date - 31st date - 30th date - 29th date - 13th

May, 2004 May, 2005 May, 2006 September,2006

Average price - Average of the daily high and low of the prices for the Company�sEquity Shares quoted on Bombay Stock Exchange Limited duringthe 15 days preceding the specified date

The specified date - Date on which the Remuneration/Compensation Committeedecided to recommend to the Mahindra & Mahindra Employees�Stock Option Trust (Trust), the grant of Options

(c) Options vested 43,77,597 Options stand vested on 31st March, 2007.(d) Options exercised 25,13,441(e) The total number of shares 25,13,441 Equity Shares of Rs.10 each. These were transferred from the Trust to

arising as a result of exercise the Eligible Employees.of option

(f) Options lapsed 2,34,552(g) Variation of terms of options Nil(h) Money realised by exercise Rs.12,30,63,360. This amount was received by the Trust.

of options(i) Total number of options in force 28,31,176(j) Employee-wise details of

options granted to:(i) Senior managerial personnel As per Statement attached(ii) Any other employee who Names Options granted Names Options granted

receives a grant in any one during the year during the yearyear of option amounting to ended 31st March, ended 31st March,5% or more of option 2004* 2005*granted during that year

Mr.Raghunath Murti 15,000 Mr. Pranab Datta 15,240Mr. Hemant Luthra 15,240 Mr. Rajeev Dubey 15,000Mr. Ramesh Iyer 25,920 Mr. Allen Sequeira 10,160

Mr. Prince M. Augustin 5,080* The Options granted stand augmented by an equal number of Options and the

Exercise Price stands reduced to half on account of the 1:1 Bonus Issue made inSeptember, 2005.

(iii) Identified employees who Nilwere granted option,during any one year, equalto or exceeding 1% of theissued capital (excludingoutstanding warrants andconversions) of the companyat the time of grant

14

(k) Diluted Earnings Per Share (EPS) pursuant to issue ofshares on exercise of option calculated in accordancewith Accounting Standard (AS) 20 �Earnings per Share�

(l) Where the company has calculated the employeecompensation cost using the intrinsic value of the stockoptions, the difference between the employeecompensation cost so computed and the employeecompensation cost that shall have been recognised if ithad used the fair value of the options, shall be disclosed.The impact of this difference on profits and on EPS ofthe company shall also be disclosed.

(m) Weighted-average exercise prices and weighted-averagefair values of options shall be disclosed separately foroptions whose exercise price either equals or exceedsor is less than the market price of the stock.

(n) A description of the method and significant assumptionsused during the year to estimate the fair values ofoptions, including the following weighted-averageinformation:

STATEMENT ATTACHED TO ANNEXURE I TO THE DIRECTORS� REPORT FOR THE YEAR ENDED 31ST MARCH, 2007

Name of Senior Managerial Persons to whom Options granted in Options granted in Options granted inStock Options have been granted December, 2001* June, 2005** September, 2006Mr. Deepak S. Parekh 20,000 5,000 Nil

Mr. Nadir B. Godrej 20,000 5,000 Nil

Mr. M. M. Murugappan 20,000 5,000 Nil

Mr. Narayanan Vaghul 20,000 5,000 Nil

Dr. A. S. Ganguly 20,000 5,000 Nil

Mr. R. K. Kulkarni 20,000 5,000 Nil

Mr. Anupam Puri 20,000 5,000 Nil

Mr. Bharat Doshi 1,00,000 10,000 11,345

Mr. A. K. Nanda 1,00,000 10,000 11,345

* All the above Options have been exercised.** The Options granted stand augmented by an equal number of Options and the Exercise Price stands reduced to half on

account of the 1:1 Bonus Issue made in September, 2005.

Rs.40.94

The Company has calculated the employee compensationcost using the intrinsic value of stock options. Had the fairvalue method been used, in respect of stock options grantedon or after 30th June, 2003, the employee compensationcost would have been higher by Rs.8.44 crores, Profit aftertax lower by Rs.8.44 crores and the basic and dilutedearnings per share would have been lower by Re.0.36 &Re.0.33 respectively.

Options Exercise Fair valueGrant Date price (Rs.) (Rs.)

31st July, 2006 620.00 138.51

29th September, 2006 616.00 212.57

The fair-value of the stock options granted on 31st July,2006 and 29th September, 2006 have been calculated usingBlack-Scholes Options pricing Formula and the significantassumptions made in this regard are as follows:

31st July, 2006 29th September, 2006

(i) risk-free interest rate, 7.55% 7.56%

(ii) expected life, 2.50 years 3.00 years

(iii) expected volatility, 35.62% 35.41%

(iv) expected dividends, and 2.66% 2.66%

(v) the price of the underlying share inmarket at the time of option grant. Rs.590.10 Rs.680.10

15

ANNEXURE II TO THE DIRECTORS� REPORT FOR THE YEAR ENDED 31ST MARCH, 2007

PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF

DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS� REPORT FOR THE YEAR ENDED

31ST MARCH, 2007

A) Conservation of Energy

During the year, the Company has taken the following

initiatives for conservation of energy:

1. Engineering Initiatives

a) Installation of Sullair screw air compressors

with latest spiral valve technology at Kandivli

Plant. Similarly, centac type air compressors

are installed at Nashik Plant and energy

efficient Atlas Copco screw compressor installed

at Igatpuri.

b) Unique development of super heat recovery from

air conditioning units to eliminate use of

conventional electrical heaters at washing

machines in Engine & Gear carrier assembly.

c) Energy alert system for air compressors at

Zaheerabad.

d) Natural draft Turbine air ventilators instead of

electrical driven exhaust fans at Kandivli,

Igatpuri, Nashik and Zaheerabad.

e) Air line separation of Paint Kitchen by installing

new air line from Compressor Room (Utility)

to Paint Kitchen (Plant) and stopped

unnecessary air circulation in plant during the

night shift and on Sundays/holidays.

f) Energy saving low voltage transformer installed

for lighting in Administration Building and

IDAM.

g) Improvement of Power Factor from 0.98 to

0.99 by adding Capacitor bank.

h) Solar water heating for eliminating use of

electrical heaters in washing machine.

i) Solar street lights, Changeover relays for street

lights at Kandivli, Igatpuri and Haridwar.

j) Solar water heating system for guest house and

residential quarters at Zaheerabad.

k) Revamping of Red primer oven with new fuel

efficient burners, energy efficient blowers, air

handling units and improved insulation.

l) Use of Flat belt instead of V belt at shot blasting

machine in Foundry PU.

m) Automatic power factor controllers installed at

all locations for improving the power factor to

unity.

n) Electricity generation through Engine testing

alternator at Igatpuri.

o) Installation of variable frequency drives for

Paint Shop-primer booth and base coat booth

at Zaheerabad.

16

2. Through Process Improvement

a) Recovering waste heat from Exhaust Flue gas

at continuous Gas carburising Furnace in Heat

Treatment to eliminate use of electrical heaters

at post wash and dryer section.

b) Conversion of thermopacs with efficient

burners using Piped Natural Gas (PNG),

eliminating complete Light Diesel Oil (LDO)

utilization.

c) Optimization of air-fuel ratio for Furnaces and

ovens at all locations.

d) Usage of recycler for taking out the Paint sludge

thereby avoiding in-house burning of HSD

resulting into major savings.

e) More than 1,000 ingenious ideas were

implemented at all locations such as:

i) Continuous to intermittent operation of

motors.

ii) Timers for blowers, fans and lights.

iii) Higher H.P to lower H.P motors.

iv) Use of compact fluorescent Lamps (CFL).

v) Use of air blow guns and pressure

regulators.

vi) Rain water Harvesting.

vii) Energy efficient scroll compressor for Air

conditioning.

3. Awareness for Energy Conservation

a) Celebrated Energy Conservation Week from 14th

December, 2006 to 21st December, 2006 to

promote energy saving and conservation of

resources. Conducted slogan, poster and

suggestion Competition on Energy Efficiency

which received an overwhelming response from

all the product units at Kandivli Plant.

b) Energy Conservation awareness has been

created amongst vendors, suppliers by various

interactions and seminars.

c) Made a cross functional Team for reducing the

consumption of electricity during non-production

time.

d) Reward and Recognition of power saving

projects.

e) Started red tag system to reduce the air

leakages.

The Automotive Sector, Kandivli Plant has received

�National Energy Conservation Award� for the fourth

time in succession from Ministry of Power, Government

of India. The Zaheerabad Plant of the Automotive

Sector also received this Award for the year 2006.

B) Technology Absorption

The Company spent Rs.170 crores on Research and

Development work during the year, including expenditure

on capital assets purchased for Research and

Development, which was approximately 1.46% of the

total turnover.

17

C) Imported Technology for the last 5 years

Sr. No. Technology Imported Year of StatusImport

1. MDI Engine upgradation 2002 Technology Absorbed2. Design of 4 Wheel Drive 2002 Technology Absorbed3. Power shift transmission for higher HP tractors 2003 In the process of Absorption4. NEF TCI 2004 Technology Absorbed5. NEF performance improvements 2004 Technology Absorbed6. MDI Engine upgradation 2004 Technology Absorbed7. Antilock Braking System on utility vehicle 2004 Technology Absorbed8. Common Rail Diesel on utility vehicle 2004 Technology Absorbed9. New CRDe Engine development 2004 Technology Absorbed10. Development of a new MPV 2004 In the process of Absorption11. Euro IV Emission development for exports 2004 Technology Absorbed12. Multi Link Suspension for utility vehicle 2004 Technology Absorbed13. Development of Air Bags on utility vehicle 2005 In the process of Absorption14. Development of Cruise control on Utility vehicle 2005 In the process of Absorption15. Fatigue Lab and track design for MRV, Chennai 2005 In the process of Absorption16. Sandwich material for noise absorption 2005 In the process of Absorption17. Development of Nano-technology for IP etc. 2005 In the process of Absorption18. Climate control (Heated and Cooled) seats 2005 In the process of Absorption19. Bio-Diesel and Gas based engine 2005 In the process of Absorption20. Transmission Design of Compact Tractor 2006 In the process of Absorption21. Development of Integrated Cabin for Tractor 2006 In the process of Absorption22. Hydrophilic Nano coated Feature 2007 In the process of Absorption23. Automatic Transmission for SUV 2007 In the process of Absorption24. Transmission for new SUV 2007 In the process of Absorption25. New Generation system for Brakes for SUV 2007 In the process of Absorption26. New Electricals & Electronics Features 2007 In the process of Absorption27. CNG engines for LCV 2007 Technology Absorbed28. Common Rail Diesel on Light commercial vehicle 2007 Technology Absorbed29. Next generation Common rail adaptation 2007 In the process of Absorption30. Hydrogen ICE 2007 In the process of Absorption31. Fuel Cell Vehicle Development 2007 In the process of Absorption32. 2nd Generation Biofuels 2007 In the process of Absorption

(Biomass to Liquid / Gas to Liquid)

Foreign Exchange Earnings and Outgo

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

For and on behalf of the Board

KESHUB MAHINDRAChairman

Mumbai, 28th May, 2007

18

Particulars of loans/advances and investment in its own shares by listed companies, their subsidiaries, associates,etc., required to be disclosed in the Annual Accounts of the Company pursuant to Clause 32 of the ListingAgreement.Loans and advances in nature of loans to subsidiaries:

Rupees in crores

Name of the Company Balances Maximumas on outstanding

31st March, during the2007 year

Mahindra & Mahindra Financial Services Limited 4.00 4.00Mahindra Holdings & Finance Limited 0.00 25.00(including loans where the repayment schedule is more thanseven years and no interest) (25.00)Mahindra Intertrade Limited 3.13 7.13(including loans where there is no interest) (3.13) (7.13)Bristlecone India Limited 8.03 8.03Mahindra Gujarat Tractor Limited 1.00 1.00Mahindra Ashtech Limited 1.50 2.00Mahindra Shubhlabh Services Limited 0.00 2.75Plexion Technologies (India) Private Limited 0.00 2.00Mahindra Ugine Steel Company Limited(formerly Pranay Sheetmetal Stampings Limited,since merged with Mahindra Ugine Steel Company Limited) 0.00 2.00Mahindra Overseas Investment Company (Mauritius) Ltd. 0.00 32.80Mahindra Forgings Overseas Limited 118.01 119.37

Mahindra Forgings Mauritius Limited 115.87 118.15

Loans and advances in the nature of loans to firms/companies in which Directors are Interested:

Rupees in crores

Name of the Company Balances Maximumas on outstanding

31st March, during the2007 year

Housing Development Finance Corporation Limited 0.00 25.00Infrastructure Development Finance Company Limited 15.00 15.00

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

Investments by the Loanee in the shares of Subsidiary Company, when the Company has made loans or advances inthe nature of loan:

Investment in the shares of the Subsidiary Company

Rupees in crores

Name of the Company Balances Maximumas on outstanding

31st March, during the2007 year

Mahindra Holdings & Finance Limited 0.00 12.00

19

MANAGEMENT DISCUSSION & ANALYSIS

Industry Structure

The Automotive Sector

The automotive industry is one of the key

components of the Indian manufacturing

economy. The Indian automotive industry

achieved a turnover of Rs.1,65,000 crores in

2005-06 and accounted for over 13 million

direct and indirect jobs and 17% of the total

indirect taxes. (Source: Automotive Mission

Plan 2016, Government of India). In the year

under review, total vehicle production (including

two wheelers) grew 14%.

The total production of Multi Utility Vehicles

(MUVs), Light Commercial Vehicles (LCVs) and

three wheelers in India during the year under

review was 1,088,676 vehicles. This is a growth

of 25% over the previous year (Source: SIAM).

The Company�s production was 178,982

vehicles. Thus the Company accounted for

16.4% of the Indian production of MUVs, LCVs

and three wheelers in the year under review.

MUVs are a family of vehicles having versatile

forms for various applications like passenger

transport or goods transport or a combination

of the two. MUVs are further categorized into

soft tops, hard tops and pick-ups. There are six

manufacturers of MUVs in India. The Company

is the largest manufacturer of MUVs in India,

offering a range of over 20 models. 274,520

MUVs were sold in India in the year F-07, a

growth of 14% over F-06 (Source: Industry

and internal).

LCVs carrying 2MT to 4 MT of payload are

commercial vehicles (CVs) used mostly for intra-

state movement of goods. The Company

competes in this category of LCVs through its

subsidiary Mahindra International Ltd. (MIL).

In F-07 43,113 LCVs (upto 4 MT payload)

were sold � a growth of 4% over F-06 (Source:

Industry and internal). There are six

manufacturers in India in this specific LCV

segment.

India provides the largest market in the world

for three wheelers. 403,909 three wheelers were

sold in India in F-07 demonstrating a growth

of 12% (Source: SIAM). The larger three

wheeler segment, (i.e. three wheelers with a

gross vehicle weight (GVW) of over 1 MT)

accounts for roughly 13% of the three wheeler

market in volume terms (Source: SIAM) The

Company has established a very strong presence

in this segment, since its entry in 2001.

In F-06 the Company made an entry into the

smaller three wheeler category with the launch

of its small load carrying three wheeler

Champion Alfa.

The Farm Equipment Sector

The Indian Tractor market is the largest in the

world, in terms of sales volumes. In the current

year 3,18,317 tractors were sold in India and

34,415 tractors were exported.

The tractor market is segmented by horsepower

into the low 25 HP segment, the mid segment

of 35 HP and the higher segment of above 45

HP. Most of the major players cater to all the

three segments. However, their relative strengths

and market positions differ from segment to

20

segment. The domestic tractor industry is

fragmented, with about 14 major players and a

couple of small local players. Many factors

affect tractor sales including the monsoon,

means of irrigation and reach of water,

government declared support prices for crops,

commodity prices, crop production expenses

(including seeds, fuel, fertilizer, pesticides and

other costs) and the credit policy announced by

RBI. This last factor is relevant since more

than 90% of tractor sales are on credit.

M&M�s Farm Equipment Sector (FES), which

designs, develops, manufactures and markets

tractors for Indian and overseas markets, is

the largest manufacturer of tractors in India

and has sustained its market leadership in the

Indian tractor market for over 24 years. FES

is going global at a rapid pace. Mahindra

tractors are exported to U.S.A., China, and

Australia, African countries, the SAARC

countries like Nepal, Bangladesh and Sri Lanka

and Eastern European nations, where they are

sold under the parent �Mahindra� brand name.

IndustrIndustrIndustrIndustrIndustry Developmentsy Developmentsy Developmentsy Developmentsy Developments

The Automotive Sector

The high growth of the Indian economy in the

year under review fuelled the growth of the

Indian automotive industry - vehicle production

(including two wheelers) increased by 14% over

the previous year (Source: SIAM). This growth

needs to be seen in the context of several adverse

developments during the year. High fuel prices

and increase in commodity prices led to

increased vehicle prices for all segments except

small cars (as excise duty on small cars dropped

from 24% to 16% in the 2006 Union Budget).

Interest rates went up significantly during the

year. Clearly these adverse developments were

overcome by the increased purchasing power of

the Indian consumer as well as the economic

boom in manufacturing and services sectors.

The total number of MUVs sold in India

increased by 14%. The LCV segment (2-4 MT

of payload) increased by 4% in sales volumes.

The large three wheeler segment witnessed a

decline in volumes of 28% following the 20%

decline last year. (Source: Industry and internal)

Within MUVs, after a 7% decline last year, the

pick-up market bounced back to grow 20%.

The hard top sub segment, which is the largest

sub segment in MUVs, saw volumes increase

16 % in the year under review. The soft tops

sub segment has been declining significantly

over the last few years and declined a further

24 % in the year under review.

The Farm Equipment Sector

The first monsoon (between June and

September) of FY 06-07 was 99% of the Long

Period Average. The second monsoon was also

good and resulted in a 2.6% increase in Rabi

sowing this year. Due to this and water

availability during the year, crop production

(Rabi and Kharif combined) is estimated to be

1.4% higher than last year. The Government

also announced higher Minimum Support Prices

for various crops for both Rabi and Kharif

periods. It is estimated that the agricultural

GDP of India will grow by 2.7%.

Increased credit to agriculture, estimated at

Rs.194,000 Crores, in this year, and a better

21

focus on retail tractor financing by the banking

sector, helped the growth of the tractor industry.

The industry witnessed a growth of 21.2% in

domestic sales volumes over F-06. The domestic

industry closed at 3,18,317 tractors in F-07,

compared to 2,62,621 tractors in F-06. Exports

from India amounted to 34,415 tractors in F-

07, a growth of 13.4% over last year.

The industry had to bear the impact of hikes in

the price of raw materials. Over the last three

years, the prices of important input materials

like steel, pig iron, and rubber have continuously

increased. The prices of crude oil increased

significantly in the current year. Margins

therefore continued to be under pressure, despite

the upturn in the industry.

The industry is witnessing consolidation in the

domestic market. In F-06 Tractor and Farm

Equipment Ltd. (TAFE) bought Eicher Tractors

Ltd. This year, M&M successfully bid for a

43.3% shareholding in Punjab Tractors Ltd.

(PTL).

M&M PM&M PM&M PM&M PM&M Perererererformanceformanceformanceformanceformance

The Automotive Sector

The Automotive Sector (AS) of the Company

has been a full participant in the robust growth

of the automobile industry. It is engaged in the

MUV and three wheeler segments and in the

LCV segment through its subsidiary MIL. The

Company is now entering the passenger car

segment through another subsidiary Mahindra

Renault Pvt. Ltd (MRPL). Production of the

Logan mid sized sedan commenced around the

end of the fiscal year 2006-07. Sales

commenced from April 2007. The Company

manufactures LCVs for MIL and passenger cars

for MRPL on contract basis and also markets

these under distribution contract for a fee.

For the fifth consecutive year, the Company�s

vehicle production and sales touched an all-

time high during the year under review. 144,090

vehicles [including 8,811 LCVs for MIL and

614 cars for MRPL] and 34,892 three wheelers

were produced, a growth of 12% and 56%

respectively. A total of 127,958 vehicles and

33,700 three wheelers were sold by the

Company in the domestic market, a growth of

7% and 50% respectively. MIL sold 8,550 LCVs

in the domestic market. Thus the Company and

its subsidiary MIL together sold 170,208

vehicles and three wheelers in the domestic

market demonstrating a growth of 18% over

the previous year.

Overall, a record number of 127,856 MUVs

were sold by M&M in the domestic market in

the year under review as against the sale of

114,694 MUVs in the previous year. The

Company�s domestic MUV sales volumes grew

11%, against the industry MUV sales growth

of 14%. LCV sales volume of the Company and

MIL taken together was 28% higher than last

year against the industry growth of the 2-4 MT

payload segment of 4%. In the large three

wheeler segment, the Company�s sales volumes

declined by 22% against a 28% decline for

industry as a whole, leading to an improvement

in market share.

The success of the refreshed Scorpio and the

Bolero variants helped the Company grow by

11% in the hard top MUV sub segment. A

refreshed version of the Bolero was launched in

March 2007.

22

In the pick up sub segment, the Company

launched a new low priced model, Maxi Truck,

during the year, which did very well in the

market leading to the Company�s pick up

volumes increasing 25% and hence also driving

the industry sub segment growth of 20% which

made this the fastest growing MUV sub segment

once again. The soft tops MUV sub segment

declined 24 %, while the Company�s soft top

sale volume declined 21 %. Due to these sub

segment shifts and performances, the Company�s

MUV market share in India declined slightly

from 47.6% in the previous year to 46.6% in

the year under review.

In LCVs, M&M, through its subsidiary MIL,

has a presence only in the lower GVW (< 4MT)

segment of the market. As mentioned earlier,

this LCV sub segment witnessed a growth of

4% in the year under review, while the

Company�s and its subsidiary�s LCV sales

improved by 28% due to recent launches in the

passenger segment as well as the repositioning

of a load carrying model. One of the principal

reasons for this very healthy growth was the

increased focus on the business through its

subsidiary. This led to an increase in market

share in the segment from 16.3% in the previous

year to 20.1% in the year under review. The

subsidiary company is currently also working

on developing products for the higher end of

the LCV segment as well as larger CVs.

In the declining large three wheeler segment,

the Company sold 14,146 large three wheelers

against 18,112 in the previous year and against

22,953 the year prior to that. The Company�s

small goods carrying three wheeler, Champion

Alfa that was launched in select markets last

year was introduced in all the major markets

in the year under review. The Company sold

19,554 Champion Alfas in the year under review

against 4,307 sold in the previous year.

Given the high growth expectations from the

Indian automotive industry, and given the

Company�s participation in ever increasing areas

of the industry, the Company is planning to set

up two greenfield plants, one near Pune and

another near Chennai, to meet future domestic

and export capacity requirements. The plant

near Pune will specialize in commercial types

of vehicles for the Company as well as CVs for

MIL. The plant near Chennai will be set up in

partnership with Renault s.a.s and Nissan Motor

Company Ltd. to manufacture new generation

personal segment MUVs for the Company and

cars and other vehicles for Renault and Nissan.

The Company has intensified its efforts to

identify niche markets for its automotive

products throughout the world, especially

geographical areas that have similar sales,

distribution and marketing conditions as India.

Over the last three years the Company

introduced its vehicles into many new

geographies including Europe, Middle East,

South America and South-East Asia by adapting

unique business models for each country. It

established a beachhead for Europe with a JV

in Italy that sells the Scorpio (called the Goa

in Europe) and the Bolero. The Company�s

vehicles are now sold in Italy, France, Spain

and Portugal as part of a plan to cover Europe

gradually. The Company launched a pick up

version of the Scorpio in South Africa during

23

the year, becoming the first Indian automotive

company to launch a product internationally

outside India for sale. These initiatives resulted

in a continuation of the strong growth in the

Company�s export volumes. Volumes grew 45%

from 5,534 [including 175 vehicles sourced

from MIL] in the previous year to 8,021

vehicles [including 254 vehicles sourced from

MIL] in the year under review. In line with the

Company�s objective of promoting and

establishing the Mahindra brand across the

globe, the entry into all these new markets was

under the �MAHINDRA� brand name.

In Operations, the Company focused on

increasing capacity at existing plants, a ramp

up of its new Uttaranchal plant and on rigorous

cost reduction. In recognition of the Company�s

efforts at conserving energy, the Kandivli Plant

and the Zaheerabad Plant were awarded the

National Energy Conservation Award � with

the Kandivli Plant being given the Award for

the 4th consecutive year, a unique feat. It also

bagged a State level award for Energy

Conservation. AS� Nashik plant won the

National Award for excellence in water

conservation. During the year, the Company was

granted a patent for an apparatus developed by

AS for testing the decorative automotive

components for combined effects of chemical

and mechanical wiping.

The Company has also been making significant

efforts to take customer satisfaction to even

higher levels. The Company significantly

improved its ranking on customer and sales

satisfaction in syndicated studies conducted by

independent third party agencies like J.D. Power.

In the TNS study on Dealer Satisfaction released

in 2007, the Company ranked first. The

Company was also rated second in a TNS study

on Most Trusted Indian car companies. The all-

new Scorpio launched at the end of the previous

year received the Business World National

Institute of Design Award in the �Best

Automobile Design � Four Wheeler� category

and was also awarded the coveted Golden

Peacock Award for Innovative Products /

Services in the Automobile segment. These

awards augur well for the future.

In the last quarter, the Company also unveiled

the bio-diesel Scorpio and Bolero DI vehicles

for 100% real world usage trials. The Scorpio

is the first Asian vehicle in its class to run on

100% bio-diesel.

The Farm Equipment Sector

M&M became the first tractor company in India

to sell more than one lakh tractors in a year.

The Company sold 1,02,531 tractors in F-07

as against 85,029 tractors sold during F-06.

This includes export of 7,525 tractors as against

6,981 tractors exported last year. The Company

crossed another milestone in F-07; the

cumulative sale of tractors till date crossed the

12,00,000 tractors mark. It sustained its

leadership position for the 24th consecutive year

with a market share of 29.8% in the domestic

tractor market.

The Company has been a pioneer in the Indian

tractor industry in many ways. It had introduced

the first Turbo tractor in India. It was the first

tractor company in the world to win the

prestigious Deming Award. In the current year,

24

F-07, it launched the �Mahindra Shaan�, a Multi

Utility Tractor, another �first of its kind� in

India. Shaan is a 25 HP innovative product

designed to serve small and medium farmers in

multiple ways, not only on the field but also on

the road. Besides being used as a regular

tractor, the inbuilt trolley feature enables the

customer to use Shaan for transportation of

farm produce and other commercial goods like

sand, bricks and flowers.

The Arjun Ultra-1, which was launched in F-06

for the domestic market, was well received and

has significantly contributed to growth in the

higher HP segment in F-07. Apart from this,

the Company continued to evolve new products

and upgrade the aesthetics, styling and

ergonomics of existing products. It also rolled

out two new product variants each for the 55

and 60 HP categories for the US markets.

This year, the Company has trained a special

focus on Customer Centricity and rural

technology development. A 24x7 toll free

number has been introduced to address customer

queries and complaints - another first in India

from M&M. In line with the growing demand

for automobiles running on alternate fuels, a

Bio-Diesel programme for tractors was initiated.

On 7th February 2007, a tractor that can run

on 5% bio-diesel was displayed in New Delhi in

the presence of the Union Minister for

Petroleum and Natural Gas.

The Company also sells engines and gensets to

various industries. The gensets are sold under

the �Mahindra Powerol� brand. In F-07, engine

and genset sales put together increased by 53%

in volume terms while the sales more than

doubled in value terms. In F-06, the Company

had made an entry into the retail and non-

genset segments. This year it developed noise

resistant canopies for gensets in accordance with

the Central Pollution Control Board norms. It

became the market leader in the telecom sector

for Powerol gensets.

On the global front the Company�s strategic

joint venture in China - Mahindra China Tractor

Company Ltd. (MCTCL) - was able to reach

planned capacity by the end of its first year.

A few products of MCTCL are being tested in

target markets. It is also using suppliers in

China as an alternative source for some

commodities. MCTCL aids this process.

Strategically, this JV offers M&M a faster entry

into China and a complementary product range

for China as well as for export markets.

In the USA, the 0-70 HP tractor industry

declined by 12% between April 2006 and March

2007. The major reasons were fuel price

increases, softening of the housing market and

higher energy costs. Mahindra USA slowed

down at the lesser rate of 7%.

The overall growth in exports for Rest of the

World (ROW) tractor markets (excluding USA

and China) in F-07 was an impressive 132%.

Australia and Africa were major contributors

to this growth. The Australia operations, which

began in F-06 with the setting up of an assembly

plant at Brisbane, are doing well. The Company

also entered new markets in F-07 including the

Middle East and South America.

The Company continued its journey towards

excellence in business process improvements in

25

several ways. A Lean Manufacturing initiative

was started at all its plants. TPM was launched

at the Mumbai plant in November 2006.

Involving suppliers in the process strengthened

the ongoing focus on continuous improvement.

The Mumbai and Rudrapur plants were certified

in F-07 for �Occupational Health & Safety

Assessment Series� (OHSAS- 18001). This

makes all the four of the Company�s plants

OHSAS certified. The Company was also

granted a patent for a Self Air-bleeding fuel

supply system with gravity-primed fuel feed

pump developed by it for diesel engines.

The Company continues to improve its supply

chain by reducing dealer stocks and

outstandings. It believes that its dealer stocks

and outstandings, in terms of number of days,

are much lower than other industry players.

OpportunitiesOpportunitiesOpportunitiesOpportunitiesOpportunities

The Indian economy has been growing at an

annual average growth rate of well above 8%

for the last three years making it one of the

fastest growing large economies in the world.

This kind of growth focus combined with the

Company�s diligent expansion of its

technological and product development

capabilities, and its active search for overseas

partners and markets, augurs well for the

coming years.

India�s automotive sector is one of the fastest

growing in the world. With the Indian economy

on a high growth path and with the consequently

increased disposable incomes of the population

at large, the Indian automotive industry is

expected to have significant growth

opportunities. The Indian Government is also

working on a plan to significantly increase the

growth prospects of the Indian automobile

industry. It has announced a new automotive

policy, viz. Automotive Mission Plan 2016

(AMP 2016), in partnership with the industry

with the objective of doubling its contribution

to the Indian economy over the next ten years.

With the Company�s enhanced presence in the

Indian automotive industry through its joint

ventures for CVs and cars as well with its entry

into the smaller three wheeler category, the

Company is well poised to garner an increasing

share of this fast growing segment of the Indian

economy.

In the Automotive Sector, the Company believes

that its core MUV market is likely to increase

its share in the light vehicles category due to

the inherent versatility of MUVs for a fast

growing developing country. The proportion of

MUVs in India is relatively low compared to

corresponding figures in Asian countries that

share a similar or more developed profile. In

the long term, we believe that the light vehicle

market will expand at a fast clip in India and

that MUVs will take an increasing share of

this market. The AMP 2016 also states that

fiscal benefits should be provided to MUVs,

which could lead to further MUV growth. The

Company�s entry into the car market through a

joint venture and its strong presence in the MUV

segment will enable the leveraging of the full

range of opportunities.

The ongoing WTO and Free Trade Area

negotiations with Thailand, ASEAN, SAARC

countries and the Mercosur countries are likely

to lead to lowered tariffs across many target

26

export markets. This could provide a significant

opportunity to generate larger volumes from

export sales and further the sector�s strategic

emphasis on the development of exports.

Given the current state of road infrastructure

in the interiors, as well as the extremely high

cost required for improvement, MUVs will

continue to be the most appropriate and

economical vehicles for transporting people in

the interiors. Rural public transportation is not

as extensively developed as in the urban areas,

providing further opportunities for MUVs and

LCVs.

MUVs and CVs are preferred vehicles for

projects and construction sites like the Golden

Quadrilateral road project and the North, South,

East and West Corridor project. A higher level

of industrial development generally leads to a

greater demand for MUVs and CVs. Hence if

the planned rate of GDP growth is achieved

over the next decade, the demand for MUVs

and CVs should increase commensurately.

The increased infrastructural investments

required to maintain the high growth of the

Indian economy - like the North South East

West corridor which has a budget of tens of

thousands of crores - and the increased goods

movement from a fast growing economy, would

maintain a high demand for CVs. To capture a

share of the growing medium and heavy CV

segment, the Company�s subsidiary, MIL, will

launch a new range of medium and heavy CVs

over the next few years and thus ensure the

Company�s participation in this important

segment of the Indian automotive industry.

The burgeoning Indian middle class population,

with fast growing disposable incomes, with an

increasing propensity to spend, along with the

huge increase in the working age population

expected over the next 10 years, will drive high

growth for passenger vehicles. Given that over

half the Indian market is accounted for by

passenger cars, the Company�s partnership with

Renault to introduce Renault models suitable

for India through its subsidiary MRPL will

provide the Company incremental growth from

participating in the other fast growing segment

of the Indian auto industry.

Thus, through these strategic initiatives, the

Company has put in place plans to increase its

size of the addressable market of the Indian

automotive industry from the current 17% to

75%, providing a huge opportunity for growth.

Regulatory measures on compulsory scrapping

of vehicles beyond a particular vintage have

been mooted in some States. The adoption of

these norms could lead to higher demand due

to a surge in the replacement demand of the

scrapped vehicles.

There are opportunities for the Farm Equipment

Sector as well. The Government of India has

given increased focus to agriculture in the

budget for F-08. The crop and water situation

also appears satisfactory, which is an

encouraging sign for the tractor industry. The

Rabi crop sowing increased by 2.6% this year,

compared to F-06. This crop will be harvested

in the first quarter of next year. In India, 76

water reservoirs are identified as �major

reservoirs� since they contribute to 63% of the

27

total water capacity in the country. The water

level in these major reservoirs across India was

higher than last year by 12%.

There are also certain states in India where

penetration is low and these provide

opportunities for growth. The Company will

leverage these opportunities by strong marketing

initiatives like brand building, creating stronger

franchises, restructuring dealers and the

introduction of new products.

The USA and China are among the top three

tractor markets in the world apart from India.

The Company plans to continue its focus on

these markets to become a global leader.

Mahindra USA plans to introduce a new series

of models in US markets that will open up new

customer segments. In China, MCTCL has

started selling tractors in the domestic Chinese

market. M&M is well positioned to grow sales

in the Chinese market. M&M is also exploring

various global tractor markets in Africa, East

Europe and the Middle East.

Facilities at the Nagpur and Rudrapur Plants

will ensure low cost manufacturing bases for

the Company. China will also serve as a low

cost sourcing base for its products.

The pressing need of overseas automotive

players to cut costs has created an outsourcing

opportunity for India in the area of automotive

systems/aggregate production. India has a

competitive edge due to its strong base of highly

skilled (and relatively low cost) engineers. M&M

already has domain expertise in many of the

required areas and can offer global O.Es and

Tier 1 suppliers, products and services across

the chain, right from the sourcing of steel to

the design of systems. These capabilities have

been strategically integrated into a single sector,

Mahindra Systech. This move is expected to

result in further business growth and to establish

the Mahindra brand in the global automotive

arena. It will also partially de-risk the cyclicality

inherent in the Automotive and Farm Equipment

businesses.

Apart from this, the sectors will share synergies

of resources, especially for sourcing, giving

major opportunities for savings.

ThreatsThreatsThreatsThreatsThreats

For the Automotive Sector more stringent

regulatory norms are being introduced. While

these measures are welcome, they may result

in an increase in manufacturing costs, which,

in turn, may affect margins or demand in a

price sensitive situation.

Import tariffs have been progressively reduced

and are expected to be reduced further in the

future in line with India�s obligations under

WTO and its bilateral free trade agreements

with certain countries, with the possible eventual

elimination of import tariffs on imports from

these countries. This will increase competitive

pressures on the Company.

The Company�s exports, a strong thrust area,

can be adversely affected if the Rupee continues

to appreciate.

Current trends indicate that interest rates for

vehicle and tractor loans given by NBFCs and

Banks in India are likely to increase over the

years and this may affect the Company�s sales

volume leading to lower profitability.

28

The entry of new players has made the

passenger car and MUV markets much more

competitive affecting the margins of all

participants. The Company is countering this

threat by a stronger focus on reducing costs

and increasing efficiency of operations. It also

hopes to garner greater economies of scale

from its entry into the car market with its

joint venture with Renault.

Any reduction in the price differential between

petrol and diesel could increase demand for

petrol MUVs at the expense of diesel MUVs.

Almost all of the Company�s MUV models are

diesel powered and an increase in preference

for petrol vehicles could be a disadvantage to

the Company. However even after four years of

fuel price decontrol, a substantial differential

has been maintained.

Mandatory use of vehicles powered by

alternative energy sources could lead to a

demand for different types of vehicles. The

Company has developed products powered by

alternate energy like CNG and electricity to

provide lower polluting products for a better

environment, which minimizes this risk. The

Company has also developed prototypes of a

hybrid Scorpio and hydrogen powered three

wheeler, thus demonstrating its capabilities. As

mentioned earlier, it also developed bio diesel

powered Scorpio and Bolero in the year. Hence

the Company is well placed to move with the

trend towards alternative energy vehicles, should

it take place.

Consistently high fuel prices increase the

running cost of vehicles, and may therefore

impact demand for automobiles. The impact

could be felt on the auto sector bottom-line if

not passed on to the customer. The Company

continued to be amongst the most aggressive in

passing on these costs to consumers, but may

not be able to always do so in the future.

High fuel prices increase the running costs, and

may directly impact the tractor industry. Diesel

constitutes over 60% of the running cost of a

tractor. Any further increase in the price of

diesel may adversely impact input costs for

farmers. If not compensated by a crop price

increase, this can impact the availability of

funds with farmers and, in turn, the tractor

demand.

For the Company, the mandatory use of vehicles

powered by alternative energy sources could

lead to a demand for different types of tractors.

To minimise this risk, it is customising products

powered by alternate energy like bio diesel. In

F-07 it successfully tested a tractor powered

by 5% bio diesel and will introduce it soon.

The Company is well placed to move with the

trend towards alternative energy tractors, should

it become a norm in future.

With M&M�s strong focus on globalisation, any

form of tariff/non-tariff barriers imposed by

any country where M&M has a significant

presence or has plans to grow will be a threat.

As for all exporters, any political, economic

uncertainty or natural calamity in the countries

of export would be a potential threat.

A major threat to both sectors lies in the

escalation in raw material prices. Such price

hikes, especially for iron, steel and rubber are

likely to put pressure on prices and could affect

29

margins or demand. Apart from this, a steep

increase in crude oil prices globally, has an

inflationary impact on the overall economy.

Risks and ConcernsRisks and ConcernsRisks and ConcernsRisks and ConcernsRisks and Concerns

Stringent legislation on pollution and emission

requirements will increase the cost of the

Company�s products for the Automotive Sector.

Holding the price line could have an impact on

profitability. Price increases on the other hand

could impact volumes.

The Company has established two joint ventures

during F-06. If these do not develop as per their

business plan, the returns from them may be

lower than expected and this could have an

impact on the Company�s margins and cash flows.

The Company is planning to set up two new

greenfield plants in association with global

partners. With the addition of the full capacity

of these new plants, the Company�s dedicated

final capacity will significantly increase as

compared to its current capacity. If for some

reason, the demand for the Company�s products

does not allow a significant utilization of these

new capacities, the increased fixed costs would

impact the Company�s profitability in the future.

The Company has plans to bring in the

incremental capacity from these new plants,

phase wise to protect it from this risk.

Additionally, the Company has tied up with other

OEMs to jointly share the costs and bring in

economies of scale for the full plant, even if

individually the Company�s volumes would

account for only a part of the total.

For the Farm Equipment Sector a fluctuation

in forex rates could be a risk. However, M&M,

as a practice, is taking appropriate steps to

hedge currency exposure thus limiting the

impact of risk. It will continue to focus on cost

cutting measures through value engineering.

Domestically, growing NPAs of banks are a

concern for the Company, as this puts pressure

on the credit availability to the farmers, 90%

of whom buy tractors against loans.

Interest rates for tractor loans tend to be higher

than for housing and car loans. Banks have

been increasing the interest rates, which could

impact the loan repayment ability of the

farmers, and thus impact tractor demand.

However, the Finance Minister, in his budget

speech, has talked about 2% subvention to

support farmers for short-term crop loans.

ExciseExciseExciseExciseExcise

In 1991, an excise dispute arose at the Nashik

and Kandivili factories relating to the

Commander range of ten-seater vehicles. The

jurisdictional Central Excise authorities, after

due inquiry, approved the classification of these

vehicles as ten-seaters which attracted a lower

rate of excise duty under Tariff Entry 8702.

The Company successfully contested the

subsequent challenge by the excise authorities,

in two different fora. The Excise Department

accepted these decisions and the classification

of the vehicle as a ten-seater was consistently

approved by the authorities.

Inspite of the above, the Excise Department

subsequently disputed the classification on the

ground that classification of the Commander

under Tariff Entry 8702 as ten-seater did not

meet certain parameters of the Motor Vehicles

30

Act, 1988 and the Maharashtra Motor Vehicles

Rules, 1989, and demanded differential duty.

The Department�s stand was that the

Commander should be classified under Tariff

Entry 8703, attracting a higher rate of excise

duty. The Company challenged these demands

by writ petitions before the Bombay High Court,

which stayed the further proceedings

unconditionally. The High Court remanded

these matters for adjudication before the Excise

authorities.

The Commissioner (Adjudication), Navi Mumbai

passed an order dated 30th March 2005

confirming the demand of Rs.216.03 crores and

imposed a penalty of Rs. 88.08 crores. The

Company has filed an appeal and a stay

application in the Tribunal challenging this

order. Initially, a bench of the Tribunal passed

an order (stay order) directing the Company to

pay Rs. 54 crores and furnish bank guarantee

of Rs. 54 crores as pre-deposit. The Company

challenged this before the Bombay High Court,

which was pleased to set aside this stay order

and remand the matter back to the Tribunal for

hearing on the stay application afresh. The

matter is yet to be heard.

In another concurrent proceeding, the Tribunal

passed an order in July 2005 holding that the

vehicles were appropriately classifiable under

Tariff Entry 8702 as ten-seaters. The

Department has challenged this order by filing

a Civil Appeal, before the Supreme Court, which

has been admitted. The matter is yet to be

finally heard.

The Company does not expect any liability on

this account as it has been advised that an

extraneous legislation like the Motor Vehicles

Act cannot be referred to for the purpose of

excise classification. The Excise Commissioners,

the Tribunal and various expert/statutory bodies

holding the vehicle to be a ten-seater have

accepted this stand.

During the current year, the Commissioner of

Central Excise, Nashik has also confirmed a

demand of Rs. 24.55 crores and imposed a

penalty of Rs. 20 lacs in respect of �Armada�

range of vehicles manufactured by its Nashik

Unit during the period 1992 to 1996, on the

same basis as adopted for Commander range

of vehicles. The Tribunal was pleased to grant

an unconditional stay against this order as

well. The final hearing in the matter is awaited.

OutlookOutlookOutlookOutlookOutlook

There is a strong linkage between the strength

of the automotive industry and the strength of

the economy of a country. High growth of the

industry leads to accelerated growth of the

economy, which in turn leads to a higher growth

for the automotive industry in a virtuous cycle.

The last five years have seen both the Indian

economy and the Indian automotive industry

growing at a fast clip. The Indian auto industry

is one of the fastest growing automotive

industries in the world. Between 1997 and

2005, the global production of vehicles

increased from 55.9 mn to 66.5 mn - an average

growth of 2.2% p.a. (Source: OICA). Over the

same period, vehicle production in India

increased by an average 9.3% p.a. (Source:

SIAM). In fact the growth of production across

31

all categories of vehicles averaged 17% p.a.

over the last five years (Source: Automotive

Mission Plan 2016, Government of India).

If the Indian economy continues to grow at a

high rate, demand conditions for the short to

medium term are expected to remain strong.

However, due to the high base and the upward

bias on interest rates there is a also a possibility

that the growth in F-08 may be relatively lower

than F-07.

In the longer term, given the high correlation

of the automotive industry to GDP growth and

the fact that the industry itself accounts for

about 4.5% of India�s GDP, the outlook for the

auto industry on a GDP growth forecast of 7-

8% p.a. is quite bright. Over the longer term

AS will be increasing its participation in the

growth of the Indian auto industry by entering

into other segments like cars and medium and

heavy commercial vehicles due to its JVs.

For F-08, the Government of India has proposed

to allocate Rs. 2.37 lakh crores for agricultural

credit, which is an important factor for the

tractor industry. Moreover there is a strong

focus on irrigation projects and investment for

development of rainless areas. The government�s

emphasis on rural economic development and

supporting the agriculture sector provides

longer-term opportunities for faster farm

mechanisation. There is a focus on seeds

production. Moreover, Rs.12,400 crores has

been announced for water related schemes.

Rainwater Harvesting, as a means of improving

the water table is also on the government�s

agenda. This opens several possibilities for the

FES and it is working on the development of a

number of new products, particularly value for

money solutions, for small farmers.

The tractor industry saw a steep growth in F-

07 and has now reached a high base. It is

therefore estimated that the industry will witness

a moderate growth path in F-08 depending on

the monsoon.

Both sectors with their updated product

portfolios and their exploration of global

horizons, will strive to maintain their leadership

position. Simultaneously, the Company will

continue its focus on achieving cost leadership

through focused cost optimization, value

engineering, improved efficiency measures like

supply chain management, countrywide

connectivity of all its suppliers and dealers, and

exploiting synergies between its Sectors.

Material developments in human resources/Material developments in human resources/Material developments in human resources/Material developments in human resources/Material developments in human resources/

industrial relationsindustrial relationsindustrial relationsindustrial relationsindustrial relations

Industrial relations during the year for AS were

cordial at all the plants and area offices of

M&M. A new agreement was signed at the

Zaheerabad Plant that provides for increased

productivity linked to increased wages.

Industrial relations during the year for FES

were cordial at all the plants and area offices

of M&M. A major wage settlement was signed

at the Nagpur Plant on 30th April 2006 aiming

for 30% higher productivity. Manpower

utilization is now at an effectiveness level of

almost 100%.

This year there was a major thrust to increase

workman participation in improvements.

Continuous Improvement Teams have been

32

formed amongst workmen to get inputs for

process improvements with a focus on total

quality and cost effectiveness.

The permanent employee strength of the

Company as on 31st March 2007 was 13089.

Internal Control SystemsInternal Control SystemsInternal Control SystemsInternal Control SystemsInternal Control Systems

The Company maintains adequate internal control

systems, which provide, among other things,

reasonable assurance of recording the

transactions of its operations in all material

respects and of providing protection against

significant misuse or loss of company assets.

The Company uses an Enterprise Resource

Planning (ERP) package, which enhances the

internal control mechanism. The Company has a

strong and independent internal audit function.

The Chief Internal Auditor reports directly to

the Chairman of the Board. Professionally

qualified technical and financial personnel of the

internal audit function conduct periodic audits

to ensure that the Company�s internal control

systems are adequate and are complied with

Discussion on Financial Performance with

respect to Operational Performance

OverOverOverOverOverviewviewviewviewview

The financial statements have been prepared in

compliance with the requirements of the

Companies Act, 1956, and Generally Accepted

Accounting Principles (GAAP) in India.

The Group�s consolidated financial statements

have been prepared in compliance with

the standard AS 21 on Consolidation

of Accounts and presented in a separate

section. The company has provided segment

reporting on a consolidated basis as per

standard AS 17 on segment reporting.

This information appears along with the

consolidated accounts.

Financial Information

1.1.1.1.1. FixFixFixFixFixed Assets:ed Assets:ed Assets:ed Assets:ed Assets:

As at 31st March 2007 the Gross Block of

Fixed Assets and Capital Work in Progress

increased to Rs. 3510.28 crores from

Rs. 3064.71 crores as at 31st March 2006.

During the year, the Company incurred

capital expenditure of Rs. 544.59 crores

(previous year Rs. 294.57 crores). The major

items of capital expenditure are for Capacity

Enhancement, New Product Development

and Research & Development. This includes

purchase of Intangible assets aggregating to

Rs. 36.95 crores (previous year Rs. 10.62

crores)

2.2.2.2.2. Inventories:Inventories:Inventories:Inventories:Inventories:

March 31, 2007 March 31, 2006

Raw materials and bought out components as

a % of consumption 4.62% 5.52%

Finished goods as a % of gross sales 4.10% 4.70%

There was an appreciable reduction in inventories due to focus on supply chain management and

better planning and control.

33

RESULRESULRESULRESULRESULTS OF OPERATS OF OPERATS OF OPERATS OF OPERATS OF OPERATIONSTIONSTIONSTIONSTIONS

1.1.1.1.1. Income :Income :Income :Income :Income :

(Rs. crores)

Particulars F � 2007F � 2007F � 2007F � 2007F � 2007 F � 2006F � 2006F � 2006F � 2006F � 2006 Inc./(Dec.)Inc./(Dec.)Inc./(Dec.)Inc./(Dec.)Inc./(Dec.)

Amount % Amount % %

Gross Sales/Income from operations 11363.05 113.06 9347.57 113.68 21.56

Less : Excise Duty on Sales 1312.79 13.06 1124.89 13.68 16.70

Net Sales/Income from operations 10050.26 100.00 8222.68 100.00 22.23

Other Income 194.97 1.94 103.86 1.26 87.72

Other Income:

Other income during F-2007 at Rs. 194.97 crores was significantly higher than Rs 103.86 crores

earned in the previous year. It comprises mainly of dividends from subsidiaries/ other companies,

income from surplus fund investments and other miscellaneous income.

Expenditure:

(Rs. crores)

Particulars F � 2007 F � 2006 Inc./(Dec.)Amount % to Net Amount % to Net %

Income Income

Raw materials, Finished and

Semi-finished Products 6851.92 68.18 5713.77 69.49 19.92

Personnel expenses 666.15 6.63 551.78 6.71 20.73

Interest, commitment and

finance charges (67.45) (0.67) (18.40) (0.22) 266.58

Depreciation 209.58 2.08 200.01 2.43 4.79

Other expenses 1269.34 12.63 989.11 12.03 28.33

Provision for contingencies - - 0.78 0.01 -

Total Expenditure 8929.54 88.85 7437.05 90.45 20.07

Though the total expenditure has increased in absolute amount, it has declined as a percentage of

Net sales / Income from Operations from 90.45 % last year to 88.85 % in the current year.

SundrSundrSundrSundrSundry Debtors:y Debtors:y Debtors:y Debtors:y Debtors:

Sundry debtors amount to Rs.700.89 crores as

at March 31, 2007, as compared with Rs.

637.97 crores as at March 31, 2006. Debtors

as a percentage of gross sales and income from

operations are 6.17 % for the year ended March

31, 2007, as compared to 6.82 % for the

previous year. This decrease in sundry debtors

is due to judicious credit management and

control.

34

Material Cost :Material Cost :Material Cost :Material Cost :Material Cost :

For the year ended March 31, 2007, material

cost as a percentage of net sales shows a

decrease over the previous year mainly due to

efficiencies arising out of strategic sourcing and

reengineering initiatives undertaken by the

company. Material cost is also impacted by

product-mix changes.

PPPPPersonnel Cost :ersonnel Cost :ersonnel Cost :ersonnel Cost :ersonnel Cost :

Personnel cost as a percentage of sales has

decreased from 6.71 % to 6.63 %. Increase in

personnel cost in absolute value is mainly due

to increase in officers� strength, annual

increments and the impact of wage settlements.

Other Expenses :Other Expenses :Other Expenses :Other Expenses :Other Expenses :

Other expenses as a percentage of net sales

shows an increase over the previous year is

mainly because of increase in variable expenses

on account of higher volumes and increase in

Advertising and Brand Building.

Depreciation :

The depreciation for the year ended March 31,

2007 is at Rs. 209.58 crores as compared to

Rs. 200.01 crores in the previous year.

Interest (Net) :Interest (Net) :Interest (Net) :Interest (Net) :Interest (Net) :

The interest expense (net of interest income)

for the year ended March 31, 2007 is a net

income of Rs. 67.45 crores as against a net

interest income of Rs 18.40 crores in the

previous year. Gross of interest income (CY:

Rs. 87.25 crores, PY Rs. 45.36 crores) the

interest cost for the current period at Rs. 19.80

crores was lower than Rs. 26.96 crores in the

previous year due to more efficient funds

management.

Exceptional Items :Exceptional Items :Exceptional Items :Exceptional Items :Exceptional Items :

The profit from Exceptional items during the

year ended 31st March 2007 is Rs.121.98 crores

as against Rs.210.01 crores last year. The profit

in the current year is mainly from profit on

sale of shares of Tech Mahindra Limited offered

as a part of that Company�s Initial Public

Offering while in the previous year profit from

Exceptional items included profit on sale of

shares of MMFSL and profit arising out of the

transfer of the right to carry on LCV business

along with congeries of rights therein and

intellectual property rights to the subsidiary

Mahindra International Limited.

Provision for taxation :

The provision for current tax, fringe benefit

tax and deferred tax for the year ended March

31, 2007 as a percentage to profit before tax

is higher than the previous year, on account of

the incremental profit of Rs.191.80 crores

during the current year being subjected to tax

at the maximum marginal rate of 33.66%.

Prior PPrior PPrior PPrior PPrior Period Adjustments:eriod Adjustments:eriod Adjustments:eriod Adjustments:eriod Adjustments:

Prior period adjustments (net of tax) Rs.

1918.84 lakhs (previous year nil) are on account

of Provision for Gratuity Rs. 2584.59 lakhs

Gross arising from certain refinements in the

actuarial assumptions, accrual of Post Retirement

Medical Benefits on an actuarial basis

Rs. 307.85 lakhs Gross and the resultant tax

credit on both the items of Rs. 973.60 lakhs.

35

Consolidated Financial PConsolidated Financial PConsolidated Financial PConsolidated Financial PConsolidated Financial Position of the M&Mosition of the M&Mosition of the M&Mosition of the M&Mosition of the M&M

GroupGroupGroupGroupGroup

As required by the Accounting Standards, the

company has published the consolidated Profit

and Loss Account and Balance Sheet for the

M&M Group as a whole. The Group comprises

of the flagship holding company, Mahindra &

Mahindra Limited, 75 Subsidiaries, 4 Joint

Ventures and 10 Associates engaged in various

businesses.

The Gross turnover for the year ended 31st

March 2007 of Consolidated Mahindra Group

is Rs. 19436.81 crores as against Rs. 13908.37

crores for the previous year. The Group�s net

turnover grew by 41.62% to Rs.17912.28

crores in the current year from Rs. 12648.41

crores in F-2006. The profit before exceptional

items and tax for the current year is Rs.

2319.69 crores as compared to Rs. 1539.11

crores in the previous year � a growth of

50.72%. This is due to the excellent

performance of the parent company and group

companies like Tech Mahindra Limited,

Mahindra & Mahindra Financial Services

Limited, Mahindra Holidays and Resorts India

Limited, Mahindra Gesco Developers Limited

and others. During the year there was an

exceptional charge of Rs 117.29 crores arising

mainly on account of an upfront payment of

Rs. 524.94 crores by Tech Mahindra to a

customer, a profit of Rs. 209.61 crores on

account of deemed divestiture of Mahindra

Gesco Developers Ltd. at the time of its

successful Qualified Institutional Placement of

shares and a profit of Rs 152.53 crores arising

from the Initial Public Offering of Tech

Mahindra Ltd. During the year there was also

a Prior period profit of Rs 15.18 crores mainly

due to, reversal of certain excess provisions for

income tax of previous years. The consolidated

group profit for the year after exceptional items,

prior period adjustments and tax and after

deducting minority interests is Rs.1497.15

crores as against Rs.1269.72 crores earned last

year � a growth of 17.91%.

This growth in profits could be achieved due to

the excellent performance by some Group

companies, a few of which are mentioned here.

The Group�s Finance company, Mahindra &

Mahindra Financial Services Limited

(MMFSL), despite very stiff competition,

achieved a 41.62 % growth in its total income

from Rs. 596.41 crores to Rs. 844.61 crores.

It is one of the leading NBFCs in financing of

four wheelers and its profit after tax grew by

22.73 % from Rs. 108.27 crores in the previous

year to Rs. 132.88 crores in the current year.

The Group�s major IT subsidiary, Tech Mahindra

Limited (Consolidated), witnessed a Revenue

growth of 130.03 % with total income

increasing from Rs. 1276.68 crores last year

to Rs.2936.73 crores in the current year. The

profit after tax before exceptional items for

the year was Rs. 612.62 crores as compared to

Rs 235.38 crores in the previous year � an

increase of 160.27 %.

Mahindra Holidays and Resorts India Ltd.,

during the year under review, continued to grow

towards dominance in the Holiday Segment with

membership growing to 53113 nos. The total

income grew by 53.54% from Rs. 156.73 crores

36

to Rs. 240.65 crores. The profit after tax for

the year registered a growth of 100.38 % from

Rs. 20.84 crores in F-2006 to Rs.41.76 crores

in F-2007.

Mahindra Gesco Developers Limited (MGDL),

the Group�s subsidiary in the business of real

estate and infrastructure development showed

impressive growth during the year under

review. The demand for housing is buoyant

and is expected to remain so at least for the

near medium term. The Company (through its

Segment RSegment RSegment RSegment RSegment Resultsesultsesultsesultsesults

The results achieved by major business segments of the Group are given below:

(Rs. crores)

Segments F-2007 F-2006

1. Automotive 653.04 538.46

2. Farm Equipment 499.67 310.54

3. Financial Services 207.56 164.19

4. Steel Processing & Trading 49.28 48.03

5. Infrastructure 9.62 18.68

6. Hospitality 63.95 32.03

7. IT Services 161.23 261.66

8. Systech 165.69 98.76

Certain statements in the Management Discussion and Analysis describing the Company�s objectives,

projections, estimates, expectations or predictions may be �forward-looking statements� within

the meaning of applicable securities laws and regulations. Actual results could differ from those

expressed or implied. Important factors that could make a difference to the Company�s operations

include raw material availability and prices, cyclical demand and pricing in the Company�s principal

markets, changes in Government regulations, tax regimes, economic developments within India

and the countries in which the Company conducts business and other incidental factors.

subsidiary, Mahindra World City Developers

Limited) has successfully operationalised the

SEZ at Chennai and has formed a SPV

Mahindra World City Jaipur Ltd along with

the Government of Rajasthan for building a

new SEZ at Jaipur. The Company�s total

income increased from Rs. 124.13 crores to

Rs 163.25 crores � a growth of 31.52%. The

profit after tax during the year increased by

28.82% from Rs 11.00 crores to Rs 14.17

crores.

37

Your Company is fully committed towards

transparency in all its dealings, adhering to the

corporate values and leveraging the corporate

resources in alignment with the benefits to the

stakeholders.

Your Company promotes and practices a culture

that is built on core values and ethics. It is

committed to all its stakeholders including

fulfilling its societal obligations. CRISIL Limited,

which was engaged to conduct a �Governance

and Value Creation� rating has assigned a

�CRISIL GVC Level 1� rating to your Company.

The rating indicates that M&M�s capability with

regard to Corporate Governance and Value

Creation for all its stakeholders is the highest.

Your Company has been practising the principles

of good Corporate Governance and ethical

business practices over the decades. A report

on compliance with the Code of Corporate

Governance as prescribed by the Securities and

Exchange Board of India and incorporated in

the Listing Agreement is given below.

I. Board of Directors

The Company has a Non-Executive Chairman

and the number of Independent Directors is

more than 1/3rd of the total number of Directors.

The number of Non-Executive Directors is more

than 50% of the total number of Directors. The

composition of the Board is in conformity with

Clause 49 of the Listing Agreement. The Board

reviews and approves strategy and oversees the

results of management to ensure that the long

term objectives of enhancing stakeholders� value

are met.

The Vice-Chairman & Managing Director and

the two Executive Directors are Whole-time

Directors. The Chairman, who is a Non-

Executive Chairman and the Vice-Chairman &

Managing Director, though professional

Directors in their individual capacities, belong

to the Company�s promoter group. Life

Insurance Corporation of India (LIC) had with

effect from 29th May, 2006, nominated

Mr. Thomas Mathew T., its current Managing

Director as its representative on the Board.

The remaining eight Non-Executive Directors

(including the Nominee Director) are

Independent Directors, and professionals, with

expertise and experience in general corporate

management, finance, banking, insurance and

other allied fields.

Apart from reimbursements of expenses incurred

in the discharge of their duties, the remuneration

that these Directors would be entitled to under

the Companies Act, 1956 as Non-Executive

Directors and the remuneration that some of

the Directors may receive for professional

services rendered to the Company either in

individual capacity or through a firm in which

one of them is a partner, none of these Directors

has any other material pecuniary relationships

or transactions with the Company, its

Promoters, its Directors, its Senior Management

or its Subsidiaries and Associates which in their

judgement would affect their independence.

CORPORATE GOVERNANCE

38

Khaitan & Co., Advocates & Solicitors, in which

Mr. R. K. Kulkarni, Non-Executive Director is

a partner, received professional fees of Rs.86.28

lakhs.

The Senior Management have made disclosures

to the Board confirming that there are no

material, financial and/or commercial

transactions between them and the Company

which could have potential conflict of interest

with the Company at large.

A. Composition of the Board

The Company presently has twelve Directors. The

names and categories of Directors, the number

of Directorships and Committee positions held

by them in the companies are given below. None

of the Directors on the Board is a Member on

more than 10 Committees and Chairman of more

than 5 Committees (as specified in Clause 49 of

the Listing Agreement), across all the companies

in which he is a Director.

Directors Category Total Number of Committee Memberships,Chairmanships and Directorships of public

companies* as on 31st March, 2007

Committee Committee Directorships $Memberships+ Chairmanships+

NON-EXECUTIVE

Mr. Keshub Mahindra Promoter 1 1 6(Chairman)

Mr. Deepak S. Parekh Independent 6 4 12

Mr. N. B. Godrej Independent 6 3 14

Mr. M. M. Murugappan Independent 5 1 9

Mr. Narayanan Vaghul Independent 4 1 11

Dr. A. S. Ganguly Independent 1 - 4

Mr. R. K. Kulkarni Independent 7 2 7

Mr. Anupam Puri Independent 2 1 4

Mr. Thomas Mathew T.** Independent - - 5

EXECUTIVE

Mr. Anand G. Mahindra Promoter 1 - 12(Vice-Chairman &Managing Director)

Mr. Bharat Doshi Non-independent 4 2 9(Executive Director)

Mr. A. K. Nanda Non-independent 9 4 14(Executive Director)

* Excludes private limited companies, foreign companies, companies registered under section 25 of theCompanies Act, 1956 and government bodies

+ Committees considered are Audit Committee and Shareholders/Investors Grievance Committee, includingthat of Mahindra & Mahindra Limited

** Appointed as Nominee Director of LIC with effect from 29th May, 2006

$ Excludes Alternate Directorships but includes Additional Directorships and Directorship in Mahindra &Mahindra Limited

39

B. Board Procedure

A detailed Agenda folder is sent to each Director

in advance of Board and Committee Meetings.

To enable the Board to discharge its

responsibilities effectively, the Vice-Chairman &

Managing Director apprises the Board at every

Meeting of the overall performance of the

Company, followed by presentations by the Sector

Presidents. A detailed functional report is also

placed at Board Meetings. The Board also inter

alia reviews strategy and business plans, annual

operating and capital expenditure budgets,

investment and exposure limits, compliance

reports of all laws applicable to the Company,

as well as steps taken by the Company to rectify

instances of non-compliances, review of major

legal issues, Minutes of the Board Meetings of

your Company�s unlisted subsidiary companies,

significant transactions and arrangements entered

into by the unlisted subsidiary companies,

adoption of quarterly/half-yearly/annual results,

significant labour issues, transactions pertaining

to purchase/disposal of property(ies), major

accounting provisions and write-offs, corporate

restructuring, Minutes of Meetings of the Audit

and other Committees of the Board, and

information on recruitment of Officers just below

the Board level, including the Company

Secretary and Compliance Officer.

C. Number of Board Meetings, Attendance

of the Directors at Meetings of the Board

and at the Annual General Meeting (AGM)

Eight Board Meetings were held during the

period 1st April, 2006 to 31st March, 2007 on

the following dates � 29th May, 2006, 26th July,

2006, 26th October, 2006, 21st November, 2006,

31st January, 2007, 5th March, 2007, 21st

March, 2007 and 26th March, 2007. The gap

between two Meetings did not exceed four

months. These were well attended.

The Sixtieth Annual General Meeting (AGM)

was held on 26th July, 2006.

The attendance of the Directors at these

Meetings is as under:

Directors Number of Board Attendance at theMeetings Attended AGM

Mr. Keshub Mahindra 8 YesMr. Anand G. Mahindra 7 YesMr. Deepak S. Parekh 6 YesMr. N. B. Godrej 6 YesMr. M. M. Murugappan 5 YesMr. Bharat Doshi 8 YesMr. A. K. Nanda 8 YesMr. Narayanan Vaghul 6 YesDr. A. S. Ganguly 6 YesMr. R. K. Kulkarni 8 YesMr. Anupam Puri 5 YesMr. Thomas Mathew T. * 6 YesMr. T. S. Vijayan @ - -

* Appointed as Nominee Director of Life Insurance Corporation of India (LIC) with effect from29th May, 2006

@ Mr. T. S. Vijayan resigned as Nominee Director of LIC with effect from 29th May, 2006

40

D. Directors seeking appointment/

re-appointment

Mr. Keshub Mahindra, Mr. Anupam Puri,

Dr. A. S. Ganguly and Mr. R. K. Kulkarni retire

by rotation and, being eligible, have offered

themselves for re-appointment.

Mr. Keshub Mahindra

Mr. Keshub Mahindra has been the Chairman

of the Board since 1963. A graduate from

Wharton, University of Pennsylvania, he joined

the Company as a Director in 1948.

Mr. Mahindra is Chairman of the Board of

Governors of Mahindra United World College

of India, Vice-Chairman of Housing

Development Finance Corporation Limited and

Director of United World Colleges International

Limited, U.K. amongst other companies.

Mr. Mahindra is associated with several

committees. He is a Member of the Prime

Minister�s Council on Trade & Industry, New

Delhi, Member of the Apex Advisory Council of

ASSOCHAM, a Member of the Governing Board

of Bombay First and President of the Governing

Council of the University of Pennsylvania

Institute for the Advanced Study of India,

among others.

Mr. Mahindra was the President of the Bombay

Chamber of Commerce and Industry,

ASSOCHAM, the Indo-American Society and

the Employers� Federation of India. He was

also the Chairman of Indian Institute of

Management, Ahmedabad, and was appointed

by the Government to serve on a number of

high level Committees including the Sachar

Commission on Company Law & MRTP and

the Central Advisory Council of Industries.

Mr. Mahindra has received several national and

international awards for his contribution to

public life and industry, including the Chevalier

De La Legion D�honneur, the Businessman of

the Year 1989 of Business India Award, The

Sir Jehangir Ghandy Medal for Industrial Peace

1994 of XLRI, Jamshedpur, the IMC Diamond

Jubilee Endowment Trust Award in 1998,

Dadabhai Naoroji International Award for

Excellence & Lifetime Achievement, All India

Management Association Lifetime Achievement

Award for Management in 2003 and the

�Lakshya Business Visionary Award 2006�

instituted by NITIE and Indian Business School

(IBS) Kolkata Lifetime Achievement Award

presented by The Institute of Chartered

Financial Analysts of India (ICFAI) in 2007.

He is Chairman of Mahindra Holdings &

Finance Limited, Mahindra Ugine Steel

Company Limited, Tech Mahindra Foundation

and Kema Services (International) Private

Limited. He is a Director in Bombay Burmah

Trading Corporation Limited, The Bombay

Dyeing & Manufacturing Company Limited,

Rodal Investments Private Limited and

Pratham-India Education Initiative.

Mr. Keshub Mahindra holds 2,01,148 Ordinary

(Equity) Shares in the Company.

41

Mr. Anupam Puri

Mr. Anupam Puri was appointed to the Board

of the Company in 2001. From 1970 to 2000,

he was with McKinsey & Company

(�McKinsey�). He worked globally with

corporate clients in several industries on

strategy and organisational issues, and served

several governments and multilateral institutions

on public policy.

Mr. Puri spearheaded the development of

McKinsey�s India practice, oversaw the Asian

and Latin American offices, and was an elected

member of the Board. He is currently a Special

Adviser for General Atlantic Partners.

Mr. Keshub Mahindra is a Member of the following Board Committees:

Sr. No. Name of the Company Name of the Position heldCommittee

1. Mahindra & Mahindra Limited Share Transfer and ChairmanShareholders/InvestorsGrievance Committee

2. Mahindra & Mahindra Limited Loans & Investment ChairmanCommittee

3. Mahindra & Mahindra Limited Remuneration/ MemberCompensationCommittee

4. Housing Development Finance Compensation ChairmanCorporation Limited Committee

5. The Bombay Dyeing & Remuneration ChairmanManufacturing Company Limited Committee

Mr. Puri did an M. Phil in Economics from

Nuffield College, Oxford University in 1969,

a MA in Economics from Balliol College,

Oxford University in 1967 and a BA in

Economics from Delhi University, India in 1965.

Mr. Puri also serves on the Boards of

Dr. Reddy�s Laboratories Limited, ICICI Bank

Limited and Tech Mahindra Limited.

Mr. Anupam Puri holds 40,000 Ordinary

(Equity) Shares in the Company.

Mr. Anupam Puri is a Member of the following

Board Committees:

Sr. No. Name of the Companies/Bank Name of the Committee Position held

1. Dr. Reddy�s Laboratories Limited Audit Committee Member

2. Dr. Reddy�s Laboratories Limited Compensation Committee Member

3. Dr. Reddy�s Laboratories Limited Nomination Committee Chairman

4. Dr. Reddy�s Laboratories Limited Strategy Committee Member

5. ICICI Bank Limited Board Governance and MemberRemuneration Committee

6. Tech Mahindra Limited Audit Sub-Committee Chairman

42

Dr. A. S. Ganguly

Dr. A. S. Ganguly was appointed to the Board

of the Company in 1997. Dr. Ganguly is

currently the Chairman of Firstsource Solutions

Limited and a Director on the Central Board of

the Reserve Bank of India, since November,

2000. Dr. Ganguly�s principal professional

career spanned 35 years with Unilever Plc/N.V.

Dr. Ganguly graduated with distinction from

the Bombay University and has obtained the

M.S. and Ph.D. degrees from the University of

Illinois, USA. Over the years, Dr. Ganguly has

been a member of several government

committees, including the Science Advisory

Committee to the Prime Minister of India. He

is presently a member of the Prime Minister�s

Council on Trade and Industry as well as the

Investment Commission. More recently, he has

been appointed a member of the National

Knowledge Commission to the Prime Minister.

Dr. Ganguly is also the recipient of the

International Alumni Award for Exceptional

Achievement for the academic year 2003-04,

from the University of Illinois. In 2006, Dr.

Ganguly was awarded the CBE (Hon) by the

United Kingdom.

Dr. Ganguly is Director of ICICI Knowledge

Park Limited, ABP Private Limited, Wipro

Limited, Hemogenomics Private Limited and

Tata AIG Life Insurance Company Limited.

Dr. Ganguly is a Member of the Advisory Board

of Microsoft Corporation (India) Private

Limited and Advisory Director on Blackstone�s

India Advisory Board.

Dr. A. S. Ganguly holds 40,000 Ordinary

(Equity) Shares in the Company.

Dr. A. S. Ganguly is a Member of the following

Board Committees:

Mr. R. K. Kulkarni

Mr. R. K. Kulkarni has been a Director of the

Company since 1997. An L.L.M. (Master of

Laws) from the University of Bombay, he is an

Advocate and a Solicitor, and is all India

Partner in Khaitan & Co., Advocates &

Sr. No. Name of the Companies/ Bank Name of the Committee Position held

1. Mahindra & Mahindra Limited Research & Development ChairmanCommittee

2. Firstsource Solutions Limited Compensation and Board ChairmanGovernance Committee

3. Tata AIG Life Insurance Audit Committee MemberCompany Limited

4. Tata AIG Life Insurance Remuneration Committee ChairmanCompany Limited

5. Wipro Limited Corporate Governance Committee Chairman

6. Reserve Bank of India Board of Financial Supervision (BFS) Member

7. Reserve Bank of India Audit Committee of BFS Member

43

Solicitors since 2005. Mr. Kulkarni has been

in legal practice for about 37 years and prior

to joining Khaitan & Co. was a partner of

another leading firm for 26 years.

Mr. Kulkarni has vast and hands on experience

in the legal field, with particular emphasis on

Corporate and Commercial Laws. Apart from

his indepth knowledge of Companies and related

legislation, Mr. Kulkarni has considerable

experience in the fields of mergers and

acquisitions, joint ventures, capital markets and

project finance for infrastructure projects.

Mr. Kulkarni has participated in National &

International conferences and seminars at which

he has read papers on foreign direct investment

in India, Infrastructure privatisation and

reforms. He is also on the Advisory Board as

also on the Faculty of the Post Graduate

Diploma Course in Securities Law at the

Government Law College, Mumbai.

Mr. Kulkarni is Director of Mahindra &

Mahindra Contech Limited, Beck India Limited,

Caprihans India Limited, Associated Polymers

Limited, Revertex India Private Limited,

Shamrao Vithal Co-operative Bank Limited and

Entertainment Network (India) Limited.

Mr. R. K. Kulkarni holds 38,788 Ordinary

(Equity) Shares in the Company.

Mr. R. K. Kulkarni is a Member of the following

Board Committees:

Sr. No. Name of the Companies Name of the Committee Position held

1. Mahindra & Mahindra Limited Audit Committee Member

2. Mahindra & Mahindra Limited Share Transfer and MemberShareholders/InvestorsGrievance Committee

3. Mahindra & Mahindra Limited Loans & Investment Committee Member

4. Beck India Limited Audit Committee Chairman

5. Beck India Limited Shareholders� / Investors MemberGrievance Committee

6. Caprihans India Limited Audit Committee Chairman

7. Caprihans India Limited Shareholders� / Investors MemberGrievance Committee

8. Caprihans India Limited Remuneration Committee Member

9. Entertainment Network Audit Committee Member(India) Limited

E. Codes of Conduct

The Board has laid down two separate Codes

of Conduct (Codes), one for Board Members

and other for Senior Management and

Employees of the Company. These Codes have

been posted on the Company�s website

44

www.mahindra.com. All Board Members and

Senior Management Personnel have affirmed

compliance with these Codes. A declaration

signed by the Vice-Chairman & Managing

Director to this effect is enclosed at the end of

this Report.

II. Remuneration to Directors

A. Remuneration Policy

While deciding on the remuneration for

Directors, the Board, Remuneration/

Compensation Committee (Committee) considers

the performance of the Company, the current

trends in the industry, the qualification of the

appointee(s), their experience, past performance

and other relevant factors. The Board/

Committee regularly keeps track of the market

trends in terms of compensation levels and

practices in relevant industries through

participation in structured surveys. This

information is used to review the Company�s

remuneration policies.

B. Remuneration to Non-Executive Directors

for the year ended 31st March, 2007

The eligible Non-Executive Directors are paid

commission upto a maximum of 1% of the net

profits of the Company as specifically computed

for this purpose. A commission of Rs.96 lakhs

has been provided as payable to the eligible

Non-Executive Directors in the accounts of the

year under review. The Directors are yet to

determine the distribution of this amount

between themselves on the basis of individual

Director�s contribution, guidance, etc.

During the year under review, the Non-Executive

Directors were paid a commission of Rs.101.22

lakhs (provided in the accounts for the year

ended 31st March, 2006), distributed amongst

the Directors as under:

(Rs. in lakhs)

Directors Commission for the year ended31st March, 2006, paid during

the year under reviewMr. Keshub Mahindra 32.00Mr. Deepak S. Parekh 8.00Mr. N. B. Godrej 8.00Mr. M. M. Murugappan 8.00Mr. V. K. Chanana (Nominee of UTI)* 7.80#Mr. Narayanan Vaghul 8.00Dr. A. S. Ganguly 8.00Mr. R. K. Kulkarni 8.00Mr. Anupam Puri 8.00Mr. T. S. Vijayan (Nominee of LIC)** 5.42#

* Resigned with effect from 22nd March, 2006** Appointed with effect from 28th July, 2005 as Nominee Director of Life Insurance Corporation

of India and resigned with effect from 29th May, 2006

# The Commission is payable to the Nominating Financial Institutions

45

1,60,000 Stock Options granted to Non-

Executive Directors under the Company�s Stock

Option Scheme on 6th December, 2001 have

been fully exercised by them. 35,000 Stock

Options granted in June, 2005 to the Non-

Executive Directors which have vested in June,

2006 can be exercised in three tranches over a

period of five years from the date of vesting at

an Original Exercise Price of Rs.454 per share.

The Options granted stand augmented by an

equal number of Options and the Exercise Price

stands reduced to half on account of the 1:1

Bonus Issue made in September, 2005. Details

of the Options granted to each of the Directors

are given in the Statement attached to Annexure

I to the Directors� Report.

C. Remuneration paid/payable to Managing/

Executive Director(s) (Whole-time Directors)

for the year ended 31st March, 2007

Remuneration to Whole-time Directors is fixed

by the Remuneration/ Compensation Committee

and thereafter approved by Shareholders at a

General Meeting.

Non-Executive Directors are also paid a sitting fee of Rs.10,000 for every Meeting of the Board

or Committee attended. The fees paid to Non-Executive Directors for the year ended 31st March,

2007 alongwith their shareholdings are as under:

Directors Sitting Fees No. of Ordinaryfor Board and (Equity) SharesCommittee Meetings held as onpaid during the year 31st March, 2007ended 31st March, 2007(Rs. in lakhs)

Mr. Keshub Mahindra 1.30 2,01,148

Mr. Deepak S. Parekh 1.10 46,090

Mr. N. B. Godrej 1.20 80,000

Mr. M. M. Murugappan 1.30 40,000

Mr. Thomas Mathew T. (Nominee of LIC)* 0.60 Nil

Mr. Narayanan Vaghul 0.90 40,000

Dr. A. S. Ganguly 0.80 40,000

Mr. R. K. Kulkarni 2.00 38,788

Mr. Anupam Puri 0.50 40,000

* Appointed as Nominee Director of Life Insurance Corporation of India (LIC) with effect from 29th May,2006. Sitting Fees for Board Meetings were paid to LIC.

46

III. Risk Management

Your Company has a well-defined risk

management framework in place. The risk

management framework adopted by the

Company is discussed in detail in the

Management Discussion and Analysis Chapter

of this Annual Report. Your Company has

established procedures to periodically place

before the Board the risk assessment and

minimisation procedures being followed by the

Company and steps taken by it to mitigate these

risks.

Following is the remuneration paid/payable to the Whole-time Directors during the year ended

31st March, 2007.

(Rs.in lakhs)

Directors Salary Com- Company�s Perquisites Total Contract No. of No. ofmission Contribu- and Period Options Options

tion to allowances granted granted inFunds* in June, September,

2005 $ 2006 $$

Mr. Anand G. 53.60 107.19 14.47 39.13 214.39 4th April, Nil NilMahindra 2002 to(Vice-Chairman 3rd April,& Managing 2007 @Director)

Mr. Bharat Doshi 45.77 68.66 12.36 17.27 144.06 28th August, 10,000 11,345(Executive Director) 2002 to

27th August,2007 @@

Mr. A. K. Nanda 45.77 68.66 12.36 17.98 144.77 28th August, 10,000 11,345(Executive Director) 2002 to

27th August,2007 @@

* Aggregate of the Company�s contributions to Superannuation Fund, Provident Fund, Gratuity Paid and PrivilegeLeave Encashment

$ The Options vested in June, 2006 in each of the Executive Directors can be exercised in three tranches over aperiod of five years from the date of vesting at an Original Exercise Price of Rs.454 per share. The Optionsgranted stand augmented by an equal number of Options and the Exercise Price stands reduced to half onaccount of the 1:1 Bonus Issue made in September, 2005

$$ These Options would vest in four equal instalments in September, 2007, September, 2008, September, 2009 andSeptember, 2010 respectively. These Options can be exercised within five years from the date of vesting of theOptions at an Exercise Price of Rs.616 per share

@ The Contract with the Vice-Chairman & Managing Director expired on 3rd April, 2007 and has been renewed fora further period of five years with effect from 4th April, 2007 to 3rd April, 2012. The approval from theShareholders is being sought for the same as mentioned in the Notice

@@ The Contracts with the Executive Directors expire on 27th August, 2007 and are being renewed for a furtherperiod of five years with effect from 28th August, 2007 to 27th August, 2012. The approval from the Shareholdersis being sought for the same as mentioned in the Notice

Notes:a) Notice period applicable to each of the Whole-time Directors � six months.b) Commission is the only component of remuneration that is performance-linked. All other components are fixed.c) The remuneration payable to the Vice-Chairman & Managing Director and the Executive Directors is fixed by the

Remuneration/Compensation Committee which is subsequently approved by the Board of Directors and Shareholders.

47

IV. Committees of the Board

A. Remuneration/Compensation Committee

The role of the Remuneration/Compensation

Committee is to review market practices and

to decide on remuneration packages applicable

to the Vice-Chairman & Managing Director,

the Executive Directors and Senior Executives

of the Company. During the course of its review,

the Committee also decides on the commission

of the Directors and/or other incentives

payable, taking into account the individual�s

performance as well as that of the Company.

The Committee has formulated and administers

the Mahindra & Mahindra Limited Employees�

Stock Option Scheme and also attends to such

other matters as may be prescribed from time

to time.

Mr. N. Vaghul is the Chairman of the

Committee. Mr. Keshub Mahindra, Mr. N. B.

Godrej and Mr. M. M. Murugappan are the

other Members of the Committee. Three

Meetings were held during the year. The

attendance at the Meetings is as follows:

Members Number ofMeetings attended

Mr. N. Vaghul (Chairman) 3

Mr. Keshub Mahindra 3

Mr. N. B. Godrej 2

Mr. M. M. Murugappan 3

B. Audit Committee

This Committee comprises solely of Independent

Directors. The Committee comprises of

Mr. Deepak S. Parekh (Chairman of the

Committee), Mr. R. K. Kulkarni, Mr. N. B.

Godrej and Mr. M. M. Murugappan (appointed

with effect from 29th May, 2006). All the

Members of the Committee possess strong

accounting and financial management

knowledge. The Company Secretary is the

Secretary to the Committee.

The terms of reference of this Committee are

very wide. Besides having access to all the

required information from within the

Company, the Committee can obtain external

professional advice whenever required. The

Committee acts as a link between the

Statutory and the Internal Auditors and the

Board of Directors of the Company. It is

authorised to select and establish accounting

policies, review reports of the Statutory and

the Internal Auditors and meet with them to

discuss their findings, suggestions and other

related matters. The Committee is empowered

to inter alia review the remuneration payable

to the Statutory Auditors and to recommend

a change in Auditors, if felt necessary. It is

also empowered to review Financial

Statements and investments of unlisted

subsidiary companies, Management Discussion

& Analysis, material individual transactions

with related parties not in normal course of

business or which are not on an arm�s length

basis. Generally all items listed in Clause 49

II D of the Listing Agreement are covered in

the terms of reference. The Audit Committee

48

has been granted powers as prescribed under

Clause 49 II C.

The Meetings of the Audit Committee are also

attended by the Vice-Chairman & Managing

Director, the Executive Directors of the

Company, the President-Finance & Legal

Affairs, the Statutory Auditors, Chief Internal

Auditor and the Company Secretary. The

Chairman of the Audit Committee, Mr. Deepak

S. Parekh was present at the Annual General

Meeting of the Company held on 26th July,

2006.

The Committee met five times during the year

under review and the gap between two Meetings

did not exceed four months. The attendance at

the Meetings is as under:

Members Number ofMeetings attended

Mr. Deepak S. Parekh 5

(Chairman)

Mr. R. K. Kulkarni 5

Mr. N. B. Godrej 3

Mr. M. M. Murugappan 4

C. Share Transfer and Shareholders/

Investors Grievance Committee

The Company�s Share Transfer and

Shareholders/Investors Grievance Committee

functions under the Chairmanship of Mr. Keshub

Mahindra, Chairman of the Board and a Non-

Executive Director. Mr. Anand G. Mahindra,

Mr. R. K. Kulkarni, Mr. Bharat Doshi and

Mr. A. K. Nanda are also on the Committee.

Mr. Narayan Shankar, Compliance Officer has

been appointed as Company Secretary with

effect from 26th October, 2006.

The Committee meets as and when required, to

deal with matters relating to transfers/

transmissions of shares and monitors redressal

of complaints from shareholders relating to

transfers, non-receipt of balance-sheet, non-

receipt of dividends declared, etc. With a view

to expediting the process of share transfers,

Mr. A. K. Nanda, Executive Director as well as

Mr. Narayan Shankar, Company Secretary of

the Company are severally authorised to approve

the transfers of not more than 5,000 Ordinary

(Equity) Shares per transfer.

The Committee held two Meetings during the

year under review. Both the Meetings were

attended by all its Members.

During the year, 53 letters/complaints were

received from the Shareholders, all of which

have been attended to/resolved to date.

As of date, there are no pending share transfers

pertaining to the year under review.

D. Research & Development Committee

(a voluntary initiative of the Company)

The Research & Development (R&D) Committee,

which was constituted by the Board in 1998,

provides direction on the R&D mission and

strategy and key R&D and technology issues.

The Committee also reviews and makes

recommendations on skills and competencies

required and the structure and the process

49

needed to ensure that the R&D initiatives result

in products that are in keeping with the business

needs.

Dr. A. S. Ganguly is the Chairman of the

Committee. Mr. Anand G. Mahindra, Mr. N. B.

Godrej, Mr. Bharat Doshi and Mr. M. M.

Murugappan are the other Members of the

Committee.

The Committee held two Meetings during

the year under review, which were well

attended.

E. Loans & Investment Committee

(a voluntary initiative of the Company)

The Committee approves of the making of loans

and investment, disinvestment, borrowing

moneys and related aspects of fund management

in accordance with the Guidelines prescribed

by the Board. Mr. Keshub Mahindra is the

Chairman of the Committee. Mr. Anand G.

Mahindra, Mr. R. K. Kulkarni, Mr. Bharat Doshi

and Mr. A. K. Nanda are the other Members of

the Committee.

V. Subsidiary Companies

The revised Clause 49 defines a �material

non-listed Indian subsidiary� as an unlisted

subsidiary, incorporated in India, whose

turnover or net worth (i.e. paid up capital

and free reserves) exceeds 20% of the

consolidated turnover or net worth

respectively, of the listed holding company

and its subsidiaries in the immediately

preceding accounting year.

Under this definition, the Company does not

have any �material non-listed Indian

subsidiary� during the year under review.

VI. Disclosures

A. Disclosure of transactions with Related

Parties

During the financial year 2006-07, there were

no materially significant transactions entered

into between the Company and its promoters,

Directors or the management, subsidiaries or

relatives, etc. that may have potential conflict

with the interests of the Company at large.

Further details of related party transactions are

presented in Note Number �30� in Schedule

XIV to Annual Accounts of the Annual Report.

B. Disclosure of Accounting Treatment in

Preparation of Financial Statements

The Company has followed the Accounting

Standards laid down by The Institute of

Chartered Accountants of India (ICAI) in

preparation of its financial statements.

C. Code for Prevention of Insider Trading

Practices

In compliance with SEBI�s Regulations on

prevention of insider trading, the Company has

instituted a comprehensive Code of Conduct for

prevention of Insider Trading for its designated

employees. The Code lays down Guidelines,

which advises them on procedures to be followed

and disclosures to be made, while dealing with

shares of the Company, and cautioning them of

the consequences of violations.

50

VII. Shareholder Information

1. 61st Annual General Meeting

Date : 30th July, 2007

Time : 3.30 p.m.

Venue : Birla Matushri Sabhagar,

19, Sir Vithaldas

Thackersey Marg

(New Marine Lines),

Mumbai - 400 020.

2. Dates of Book Closure/Record Date

Record Date for Interim Dividend was 26th

March, 2007, and

Dates of Book Closure for Final Dividend

will be from 7th July, 2007 to 30th July,

2007, both days inclusive.

3. Date of Dividend Payment

Date of payment of Interim Dividend was

29th March, 2007, and

Date of payment of Final Dividend would

be on or after 30th July, 2007.

4. Financial Year of the Company

The financial year covers the period from

1st April to 31st March.

Financial Reporting for:

Quarter ending

30th June, 2007 - End July, 2007

Half-year ending

30th September, 2007- End October, 2007

Quarter ending

31st December, 2007 - End January, 2008

Year ending

31st March, 2008 - End May, 2008

Note: The above schedules are indicative.

5. Registered Office

Gateway Building,

Apollo Bunder,

Mumbai - 400 001.

6. Listing of Ordinary (Equity) Shares and

Debentures on Stock Exchanges

The Company�s Shares are listed on the

Stock Exchanges at Bombay Stock

Exchange Limited (BSE) and National

Stock Exchange of India Limited (NSE).

The Company has applied for approval for

delisting its shares with The Calcutta Stock

Exchange Association Limited and the

approval for delisting of the Shares is

awaited. The Global Depositary Receipts

(GDRs) of the Company are listed on the

Luxembourg Stock Exchange. The US$ 100

million Zero Coupon Foreign Currency

Convertible Bonds (FCCBs) due for

redemption in 2009 and US$ 200 million

Zero Coupon FCCBs due for redemption in

2011 are both listed at Singapore

Exchange Securities Trading Limited. The

requisite listing fees have been paid in full

to all these Stock Exchanges.

The Non-convertible Debentures of the

Company are listed with NSE and the Company

has paid the requisite listing fees in full.

51

7. Stock Code

1. Bombay Stock Exchange Limited (BSE): 500520

2. National Stock Exchange of India Limited (NSE): M&M

3. Demat International Security Identification Number in NSDL and CDSL for Equity Shares -

ISIN - INE101A01018

8. Stock Performance

The performance of the Company�s shares relative to the BSE Sensitive Index is given in the chart

below:

The performance of the Company�s shares relative to the NSE Sensitive Index (S&P CNX Nifty

Index) is given in the chart below:

0

100

200

300

400

500

600

700

800

900

1000

Mar-07

Feb-07

Jan-07

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Nov-06

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0

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4000

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8000

10000

12000

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M&M on BSEBSE Index

M&

M o

n B

SE

BSE

Ind

ex

0

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200

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400

500

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800

900

1000

Mar-07

Feb-07

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Dec-06

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0

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M&

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52

9. Stock Price Data

Equity Shares GDRs

Bombay Stock National Stock LuxembourgExchange Exchange of StockLimited India Limited Exchange*

High Low High Low High LowRs. Rs. Rs. Rs. US $* US $*

April, 2006 665.00 559.90 665.00 537.50 14.72 13.98

May, 2006 719.00 530.00 723.85 523.65 15.78 12.80

June, 2006 630.00 488.00 631.00 456.65 12.57 11.19

July, 2006 635.00 495.10 638.40 494.60 13.50 11.07

August, 2006 674.90 573.10 672.00 556.00 14.30 12.25

September, 2006 688.00 610.00 682.75 609.05 14.54 13.66

October, 2006 806.70 672.10 806.40 643.00 16.89 14.77

November, 2006 853.00 757.60 852.35 750.15 18.80 16.50

December, 2006 909.95 744.00 915.00 745.10 19.48 16.85

January, 2007 1002.00 872.00 1001.00 873.35 22.46 17.11

February, 2007 950.75 795.00 954.75 758.60 21.35 19.26

March, 2007 817.00 694.00 817.00 693.30 19.28 15.90

* Based on closing prices

10. Registrar and Transfer Agents

Sharepro Services (India) Private Limited

Unit: Mahindra & Mahindra Limited

Satam Estate, 3rd Floor,

Above Bank of Baroda,

Cardinal Gracious Road,

Chakala, Andheri (East),

Mumbai - 400 099.

Telephone No.: +91-22-28215168

Fax: +91-22-28375646

email: sharepro@vsnl.com

The Registrar and Transfer Agents also have an office at:

912, Raheja Centre,

Free Press Journal Road,

Nariman Point, Mumbai - 400 021.

Telephone No.: +91-22-22881569

Fax: +91-22-22825484

53

11. Share Transfer System

Trading in Ordinary (Equity) Shares of the

Company through recognized Stock

Exchanges is permitted only in

dematerialised form.

Shares sent for transfer in physical form

are registered and returned within a period

of thirty days from the date of receipt of

the documents, provided the documents are

valid and complete in all respects. With a

view to expediting the process of share

transfers, Mr. A. K. Nanda, Executive

Director as well as Mr. Narayan Shankar,

Company Secretary of the Company are

severally authorised to approve the transfers

of not more than 5,000 Equity Shares per

transfer. The Share Transfer and

Shareholders/Investors Grievance

Committee meets as and when required to

consider the other transfer proposals and

attend to shareholder grievances.

12. Distribution of shareholding as on 31st March, 2007

Number of Shares held Number of Number of % ofShareholders Shares held Shareholding

1 to 500 1,27,969 2,05,93,902 8.39

501 to 1000 391 27,06,796 1.10

1001 to 5000 326 74,73,368 3.05

5001 to 10000 85 61,21,793 2.50

10001 and above 205 20,84,75,406 84.96

Total 1,28,976 24,53,71,265 100.00

Shareholding Pattern as on 31st March, 2007

Sr. No. Category of Shareholders Total Holdings Percentage

1. Promoters and Promoter Group 5,61,78,406 22.902. Mutual Funds 1,32,26,717 5.393. Banks, Financial Institutions,

Insurance Companies, State Government 3,87,51,783 15.794. FIIs/FFIs/FCs* 7,93,68,533 32.355. Private Corporate Bodies 1,32,57,527 5.406. Indian Public 2,51,71,278 10.257. NRIs/OCBs 22,26,425 0.918. Bank of New York (for GDR holders) 1,71,90,596 7.01

Grand Total 24,53,71,265 100.00

* FIIs/FFIs/FCs does not include shareholding aggregating 117.50 lakhs Shares representing

4.79% of the paid-up share capital of the Company held by a FII as the same is included

under the category of Promoters and Promoter Group

54

13. Dematerialisation of Shares

97.81% of the paid-up Equity Share

Capital is held in a dematerialised form

with National Securities Depository Limited

and Central Depository Services (India)

Limited as on 31st March, 2007. The

market lot of the share is one share, as the

trading in the Equity Shares of the

Company is permitted only in

dematerialized form. Non-Promoters�

holding is 77.10% and the stock is highly

liquid.

14. Outstanding GDRs/ADRs/Warrants or any

Convertible Instruments, Conversion

date and likely impact on equity

1,71,90,596 GDRs were outstanding as at

31st March, 2007. Since the underlying

Ordinary (Equity) Shares represented by

GDRs have been allotted in full, the

outstanding GDRs have no impact on the

Equity of the Company.

1,00,000 Zero Coupon Convertible Bonds

(due 2009) of US$ 1000 each (FCCBs)

aggregating US$ 100 million issued in May,

2004, were at the option of the Bondholders

convertible into around 68,61,911 Equity

Shares/GDRs (each GDR representing one

Equity Share of the Company) at an initial

conversion price of Rs.647.05 per Share

at any time between 7th June, 2004 and 8th

April, 2009. Consequent to the issue of

Bonus Equity Shares by the Company in

the ratio of 1:1 in September, 2005, the

initial conversion price of Rs.647.05 per

Share was adjusted to Rs.323.52 per Share

with effect from 3rd September, 2005

resulting into an increase in the number of

Equity Shares underlying FCCBs to around

1,37,24,035.

During the year, FCCBs aggregating US$

3,25,70,000 were converted into 44,69,913

Equity Shares/GDRs. As at 31st March,

2007, FCCBs amounting to US$ 27,00,000

convertible into around 3,70,548 Equity

Shares/GDRs were outstanding. Subsequent

to 31st March, 2007, FCCBs aggregating

US$ 9,00,000 have been converted into

1,23,516 Equity Shares/GDRs and as of

date FCCBs amounting to US$ 18,00,000

convertible into around 2,47,032 Equity

Shares/GDRs are outstanding.

2000 Zero Coupon Convertible Bonds

(due 2011) of US$ 1,00,000 each

aggregating US$ 200 million issued in

April, 2006, may at the option of the

Bondholder, be converted into around

96,35,156 Equity Shares/GDRs at an

initial conversion price of Rs.922.04 at

any time between 7th May, 2006 and 7th

March, 2011. Till date, no conversion of

any Bonds have taken place.

15. Plant Locations

The Company�s manufacturing facilities are

located at Kandivli, Nashik, Igatpuri,

Nagpur, Zaheerabad, Jaipur, Rudrapur,

Haridwar and Pune.

55

16. Address for correspondence

Shareholders may correspond with the

Registrar and Transfer Agents at:

Sharepro Services (India) Private Limited

Unit : Mahindra & Mahindra Limited

Satam Estate, 3rd Floor,

Above Bank of Baroda,

Cardinal Gracious Road,

Chakala, Andheri (East),

Mumbai - 400 099.

Telephone No.: +91-22-28215168

Fax: +91-22-28375646

email: sharepro@vsnl.com

on all matters relating to transfer/

dematerialisation of shares, payment of

dividend and any other query relating to

shares in or debentures of the Company.

The Company has also designated

investors@mahindra.com as an email ID

for the purpose of registering complaints

and the same has been displayed on the

Company�s website.

Shareholders would have to correspond with

the respective Depositary Participants for

Shares held in demateralised form.

For all investor related matters, the

Compliance Officer & Company Secretary

can be contacted at :

Mahindra Towers, 5th Floor, Dr. G. M.

Bhosale Marg, Worli, Mumbai - 400 018.

Telephone No.: +91-22-24905624,

+91-22-24975074

Fax: +91-22-24900833

email: investors@mahindra.com

OR

narayan.shankar@mahindra.com

The Company can also be visited at its

website: http://www.mahindra.com

VIII. OTHER DISCLOSURES

1. Details of General Meetings and Special Resolutions passed

Annual General Meetings held during the past 3 years and the Special Resolutions passed

therein:

Year Date Time Special Resolutions passed

2004 28th July, 2004 3.30 p.m. Allotment of further shares to Mahindra &Mahindra Employees� Stock Option Trust.

2005 28th July, 2005 3.30 p.m. 1. Payment of Commission to Non-wholetimeDirectors including Non-Resident Directors.

2. Revision in the remuneration payable toMr. Anand G. Mahindra, Vice-Chairman& Managing Director and the twoExecutive Directors of the Company viz.Mr. Bharat Doshi and Mr. A. K. Nanda.

56

3. Approval for commencement of newbusinesses of the Company.

4. Approval for increase in limit for holdingsby FIIs from 35% to 49% of the paid-upEquity Share Capital of the Company.

5. Alteration of Article 3 in the Articles ofAssociation of the Company.

2006 26th July, 2006 3.30 p.m. No Special Resolution was passed at the AGM.

Extraordinary General Meeting held during the past 3 years:

Year Date Time Special Resolutions passed

2004 29th April, 2004 11.00 a.m. 1. Issue of Securities in International/Domestic markets for an amount notexceeding US$ 100 million with a rightto retain 15% for additional allotment.

2. Approval for increase in limit for holdingsby FIIs from 24% to 35% of the paid-upEquity Share Capital of the Company.

Extraordinary General Meeting held subsequent to the year end:

Year Date Time Special Resolution passed

2007 20th April, 2007 11.00 a.m. Making investments, etc. in excess of the limitsprescribed under section 372A of theCompanies Act, 1956 upto an amount ofRs.1500 crores.

All the Meetings were held at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg (New

Marine Lines), Mumbai - 400 020.

Details of Special Resolutions passed through Postal Ballot:

Date of passing the Description % of Votes in favour of the

Special Resolution Special Resolution

5th April, 2006 Issue of Securities in International / 93.51

Domestic markets for an amount

not exceeding US$ 200 Million.

Mr. B. H. Wani, Advocate & Solicitor, Mumbai acted as a Scrutinizer for conducting the Postal

Ballot in a fair and transparent manner.

Year Date Time Special Resolutions passed

57

Subsequent to the year end, the Board of Directors, have proposed the following Special Resolutions

to be passed through Postal Ballot.

Date of Description Last Date Date of

Board of receiving Declaration

Meeting Postal Ballot of Result(s)

Forms

20th April, 2007 1. Authorising the Board to offer, 31st May, 2007 4th June, 2007

issue and allot Securities and/

or QIP Securities as specified

in the Postal Ballot Notice

dated 27th April, 2007.

2. Authorising the Board to make

loan(s), and/or give

guarantee(s), and/or provide

security(ies) in excess of the

limits prescribed under section

372A of the Companies Act,

1956 upto an amount of

Rs.1500 crores as specified in

the Postal Ballot Notice dated

27th April, 2007.

28th May, 2007 Authorising the Board to make 12th July, 2007 20th July, 2007

loan(s) and/or give guarantee(s) (proposed)

and/or provide security(ies) and/or

make investment(s) in excess of the

limits prescribed under section

372A of the Companies Act, 1956

upto an amount of Rs.2000

crores as may be specified in the

Postal Ballot Notice.

Dr. S. D. Israni, Practising Company Secretary, Mumbai has been appointed as a Scrutinizer for

conducting the above Postal Ballots in a fair and transparent manner.

The procedure for Postal Ballot is as per section 192A of the Companies Act, 1956 and Rules

made thereunder namely Companies (Passing of the Resolution by Postal Ballot) Rules, 2001.

58

2. Details of non-compliance etc.

The Company has complied with all the

requirements of regulatory authorities.

During the last three years, there were no

instances of non-compliance by the

Company and no penalty or strictures were

imposed on the Company by the Stock

Exchanges or SEBI or any statutory

authority, on any matter related to the

capital markets.

3. Means of Communication

The quarterly, half-yearly and yearly

results are published in Business Standard

and Sakal which are national and local

dailies. These are not sent individually

to the Shareholders. The Company�s

results and official news releases are

displayed on the Company�s website

http://www.mahindra.com

Presentations are also made to international

and national institutional investors and

analysts which are also put up on the

website of the Company.

The Company also regularly posts

information relating to its financial results

and shareholding pattern on the SEBI

EDIFAR Website at www.sebiedifar.nic.in

4. The Management Discussion and

Analysis Report

The Management Discussion and Analysis

Report (MDA) has been attached to the

Directors� Report and forms part of this

Annual Report.

5. Compliance with Mandatory

requirements

The Company has complied with all the

mandatory requirements of Clause 49 of

the Listing Agreement relating to Corporate

Governance.

6. Compliance with Non-mandatory

requirements

a. Office of the Chairman

The Company has provided the

Chairman (Non-Executive) with a full-

fledged office, the expenses of which

are borne by the Company. The

Chairman is reimbursed all expenses

incurred in the performance of his

duties.

b. Remuneration Committee

The Company has set up the

Re m u n e r a t i o n / C o m p e n s a t i o n

Committee long before application of

Clause 49.

c. Audit Qualifications

During the period under review, there

is no audit qualification in the

Company�s financial statements. The

Company continues to adopt best

practices to ensure regime of

unqualified financial statements.

The Company has not adopted the other non-

mandatory requirements as specified in

Annexure I D of the Clause 49.

Mumbai, 28th May, 2007

59

DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49

OF THE LISTING AGREEMENT

To

The Members of Mahindra & Mahindra Limited

I, Anand G. Mahindra, Vice-Chairman & Managing Director of Mahindra & Mahindra Limited

declare that all the Members of the Board of Directors and Senior Management Personnel have

affirmed compliance with the Codes of Conduct for the year ended 31st March, 2007.

Anand G. Mahindra

Vice-Chairman & Managing Director

Mumbai, 28th May, 2007

CERTIFICATE

To

The Members of Mahindra & Mahindra Limited

We have examined the compliance of conditions of Corporate Governance by Mahindra & Mahindra

Limited, for the year ended on 31st March, 2007, as stipulated in Clause 49 of the Listing

Agreement of the said company with stock exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the management.

Our examination was limited to procedures and implementation thereof, adopted by the company

for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit

nor an expression of opinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us, we

certify that the company has complied with the conditions of Corporate Governance as stipulated

in the above mentioned Listing Agreement.

We state that such compliance is neither an assurance as to the future viability of the company nor

the efficiency or effectiveness with which the management has conducted the affairs of the company.

For A. F. Ferguson & Co.

Chartered Accountants

R. A. Banga

(Partner)

Membership Number: 37915

Mumbai, 28th May, 2007

60

Financial Position at a Glance(Rupees in lakhs)

2007 2006 2005 2004 2003 2002 2001 2000 1999 1998

Gross Fixed Assets 351028 306471 281044 255927 248913 241677 223148 185892 161464 142653

Net Fixed Assets 187117 155445 147488 139160 146609 153723 148252 123199 109861 101741

Investments 223746 166909 118979 111115 86227 80013 71000 82299 81030 65596

Inventories 87848 87874 75983 49970 45675 46904 55253 51554 43697 51485

Debtors 70089 63797 51153 40048 51708 64778 63201 46158 59207 51657

Other Current Assets 216880 123235 102820 62476 63964 61554 52911 68373 80381 72998

Misc. Expenditure not written off 1755 1805 2438 964 3972 � 22361 15516 9684 5988

Long-term 155810 83718 94140 65203 107190 119180 79088 84481 133457 115147

Borrowings

Short-term 7791 4621 11122 7778 6794 18526 34304 10886 13162 18363

Current Liabilities and Provisions 266564 205164 175971 132924 109478 105074 92704 90021 87027 81623

Deferred Tax Liability (Net) 1979 14675 18975 20325 17710 13790 � � � �

Equity Capital 23803 23340 11165 11601 11601 11601 11049 11049 10337 10337

Reserves 331488 267547 187488 165902 145382 138801 195833 190662 139877 123995

Net Worth 355291 290887 198653 177503 156983 150402 206882 201711 150214 134332

Book Value Per Share (Rupees) *147.98 *123.29 174.46 150.89 130.56 128.26 165.50 166.90 134.14 122.29

* Book value per share is shown after giving effect to a 1:1 bonus issue in September, 2005

Book value per share is calculated after reducing Miscellaneous Expenditure not written off and Revaluation Reserve from Net worth.

61

Summary of Operations(Rupees in lakhs)

2007 2006 2005 2004 2003 2002 2001 2000 1999 1998

Income @ 1155802 945143 780409 600123 459679 399675 435290 440918 416697 405265

Direct 685192 571377 460264 335287 250022 211723 235858 221023 222739 215135Materials

Indirect 7884 6824 5987 4323 3939 3173 4893 4550 4307 4906

Excise Duty (Net) 131065 113650 105482 95543 78501 67644 75537 77324 65364 63983

Personnel 66615 55257 46459 42087 38516 37471 40063 39683 37729 38344

Interest (Net) @ (6745) (1840) (558) 5159 8690 8267 6216 7463 9384 4758

Depreciation (Net) 20959 20001 18405 16520 16544 13938 14009 12327 11198 9929

Other Expenses 119263 90925 74308 60333 49529 47621 44337 42606 37163 34858

Exceptional items (12198) (21001) (1355) (2948) (5765) 1729 1522 1252 805 405

Extra-ordinary items � � � � � � � (358) � �

Profit before tax for the year 143767 109950 71417 43819 19703 8109 12855 35048 28008 32947

Tax for the year - Current 36573 28540 21500 6350 1230 360 800 8700 5150 7800

Deferred Tax Liability / (Asset) (1564) (4300) (1350) 2615 3920 (2520) � � � �

Adj. pertaining to Prev. Years 1919 � � � � 578 � � 267 �

Balance profit 106839 85710 51267 34854 14553 9691 12055 26348 22591 25147

Dividends #+32473 +27819 +17196 +11779 + 7198 5621 +6697 +6745 +6311 +6254

Equity Dividend (%) #115.00 100.00 130.00 90.00 55.00 50.00 55.00 55.00 55.00 55.00

Earnings per Share (Rupees) 45.15 38.07 23.04 15.02 6.28 4.31 5.46 11.93 10.93 12.17

Vehicles produced ** (Units) 169557 148213 148025 117670 87088 66256 63146 76983 70639 77510

Vehicles sold ** (Units) 169679 147591 145024 117399 86890 65338 62927 76437 70548 76954

Tractors produced (Units) 103847 87075 67115 50102 45183 54524 80261 73222 66211 71468

Tractors sold (Units) 102531 85029 65390 49576 47028 58006 79237 70571 69362 67780

@ Interest income netted off ininterest expense 8725 4536 3582 2535 2900 3297 5057 6682 5802 7530

# Including Proposed Dividend @40% : Rs. 9820 lakhs

+ Including Income tax on Proposed Dividend/Dividends.

** Including CKD packs.

62

Net

Inco

me

PA

T

0

2000

4000

6000

8000

10000

12000

Net Income

0

250

500

750

1000

1250

1500

Profit After Tax

FY 2007FY 2006FY 2005FY 2004FY 2003

3811

5057

6769

8327

10245

146

349

513

857

1068

0

10

20

30

40

50

60

FY 2007FY 2006FY 2005FY 2004FY 2003

6.28

23.04

15.02

38.07

45.15

EP

S (

Rs.

)

Automotive

60.6%

Farm

Equipment

37.0%

Others

2.4%

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

FY 2007FY 2006FY 2005FY 2004FY 2003

0.75

0.42

0.53

0.31

0.46

Perc

enta

ge

Financial Highlights

PAT and Net Income (Rupees Crores) Earnings Per Share (Rs.)

Net Segment Revenue F-2007 Debt Equity Ratio

63

MAHINDRA & MAHINDRA LIMITED

ACCOUNTS

64

MAHINDRA & MAHINDRA LIMITED

1. We have audited the attached balance sheet of Mahindra &Mahindra Limited as at 31st March, 2007, the profit andloss account and also the cash flow statement for the yearended on that date annexed thereto. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financial statementsare free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used andsignificant estimates made by management, as well asevaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for ouropinion.

3. As required by the Companies (Auditor’s Report) Order,2003 (hereinafter referred to as ‘the Order’) issued by theCentral Government of India in terms of sub-section (4A) ofsection 227 of the Companies Act, 1956, we enclose in theAnnexure, a statement on the matters specified inparagraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to inparagraph 3 above, we report that:

i. we have obtained all the information and explanationswhich to the best of our knowledge and belief werenecessary for the purposes of our audit;

ii. in our opinion, proper books of account as required bylaw have been kept by the company so far as appearsfrom our examination of those books;

iii. the balance sheet and the profit and loss account dealtwith by this report are in agreement with the books ofaccount;

Auditors’ Report to the members of Mahindra & Mahindra Limited

iv. in our opinion, the balance sheet and the profit andloss account dealt with by this report comply with theaccounting standards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956;

v. on the basis of the written representations receivedfrom the directors, as on 31st March, 2007, and takenon record by the Board of Directors, we report thatnone of the directors is disqualified as on 31st March,2007 from being appointed as a director in terms ofclause (g) of sub-section (1) of section 274 of theCompanies Act, 1956;

vi. in our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts give the information required by theCompanies Act, 1956, in the manner so required andgive a true and fair view in conformity with theaccounting principles generally accepted in India:

(a) in the case of the balance sheet, of the state ofaffairs of the company as at 31st March, 2007;

(b) in the case of the profit and loss account, of theprofit for the year ended on that date; and

(c) in the case of the cash flow statement, of thecash flows for the year ended on that date.

For A. F. Ferguson & Co.Chartered Accountants

R. A. Banga(Partner)

Membership Number: 37915

Mumbai, 28th May, 2007

65

MAHINDRA & MAHINDRA LIMITED

(i) (a) The company is maintaining proper records showingfull particulars, including quantitative details and unitwise situation of fixed assets.

(b) Physical verification of fixed assets was carried outduring the year in accordance with the company’s policyof verifying the assets once in three years. In our opinion,the frequency of verification is at reasonable intervals.No material discrepancies between book records andthe physical inventory were noticed.

(c) During the year, in our opinion, a substantial part offixed assets has not been disposed off by the company.

(ii) (a) The inventory of the company has been physicallyverified by the management during the year and at orafter the year end. In respect of stocks lying with thirdparties, a substantial portion was physically verified orhas been confirmed by third parties during the year orat the year end. In our opinion the frequency ofverification is reasonable.

(b) In our opinion and according to the information andexplanations given to us, the procedures of physicalverification of inventory followed by the managementwere found reasonable and adequate in relation to thesize of the company and the nature of its business.

(c) On the basis of our examination of records of inventory,in our opinion, the company has maintained properrecords of inventory and the discrepancies noticed onphysical verification between the physical stocks andthe book records were not material in relation to theoperations of the company.

(iii) (a) In our opinion and according to the information andexplanations given to us, the company has grantedunsecured loans to five companies/parties covered inthe register maintained under section 301 of theCompanies Act, 1956. The maximum amount of loansduring the year was Rs. 4,712.77 lakhs (including loansaggregating Rs. 2,212.77 lakhs which were at call) andthe year end balance of loans granted to suchcompanies/parties was Rs. 772.92 lakhs, which, wereat call.

(b) In our opinion and according to the information andexplanations given to us, the rates of interest and otherterms and conditions on which loans have been grantedto companies, firms or other parties covered in theregister maintained under Section 301 of the CompaniesAct, 1956 are not, prima facie, prejudicial to the interestof the company.

(c) In respect of loans granted where stipulations havebeen made, the parties are repaying the principalamount and paying the interest as stipulated or asrescheduled except in respect of a loan of Rs. 459.42lakhs which is at call and has been fully provided for in

an earlier year. As a matter of prudence, interest onthe same is not recognised during the year.

(d) In our opinion and according to the information andexplanations given to us, other than the item referredto in (c) above, there is no overdue amount of morethan rupees one lakh.

(e) In our opinion and according to the information andexplanations given to us, the company has not takenany loan secured or unsecured from companies/partiescovered in the register maintained under section 301of the Companies Act, 1956 and accordingly paragraph4 (iii) (f) and (g) of the said Order are not applicable.

(iv) In our opinion and according to the information andexplanations given to us, having regard to the explanationthat many of the items are of a special nature and theirprices cannot be compared with alternative quotations, thereis an adequate internal control system commensurate withthe size of the company and the nature of its business forthe purchase of inventory and fixed assets and for the saleof goods and services. Further, on the basis of ourexamination and according to the information andexplanations given to us, we have neither come across norhave we been informed of any instance of major weaknessesin the aforesaid internal control system.

(v) (a) In our opinion and according to the information andexplanations given to us, the particulars of contracts orarrangements referred to in section 301 of theCompanies Act, 1956 have been entered in the registerrequired to be maintained under that section.

(b) In our opinion and according to the information andexplanations given to us, having regard to thecomments in (iv) above, the transactions made inpursuance of such contracts or arrangements andexceeding the value of rupees five lakhs in respect ofany party during the year have been made at prices,which are reasonable having regard to the prevailingmarket prices at the relevant time.

(vi) In our opinion and according to the information andexplanations given to us, the company has complied withthe provisions of Section 58A, 58AA and any other relevantprovisions of the Companies Act, 1956 and the Companies(Acceptance of Deposits) Rules, 1975, as applicable, withregard to the deposits accepted from the public. Accordingto the information and explanations given to us, no orderunder the aforesaid sections has been passed by theCompany Law Board or National Company Law Tribunal orReserve Bank of India or any Court or any other Tribunal,on the company.

(vii) In our opinion, the company has an internal audit systemcommensurate with its size and the nature of its business.

Annexure to the Auditors’ Report

(Referred to in paragraph 3 of the Auditors’ Report of even date to the members of Mahindra & Mahindra Limited)

66

MAHINDRA & MAHINDRA LIMITED

(viii) We have broadly reviewed the books of account maintainedby the company relating to the manufacture of motor vehiclesand tractors pursuant to the rules made by the CentralGovernment for the maintenance of cost records underSection 209 (1) (d) of the Companies Act, 1956 and we areof the opinion that prima facie the prescribed accounts andrecords have been maintained and are being made up. Wehave not, however, made a detailed examination of therecords with a view to determining whether they are accurateor complete. To the best of our knowledge and accordingto the information given to us, the Central Government hasnot prescribed the maintenance of cost records underSection 209 (1) (d) of the Companies Act, 1956, for anyother products of the company.

(ix) (a) According to the information and explanations given tous and according to the books and records as producedand examined by us, in our opinion, the undisputed

statutory dues including provident fund, investoreducation and protection fund, employees’ stateinsurance, income-tax, sales-tax, wealth tax, servicetax, customs duty, excise duty, cess and other materialstatutory dues as applicable have generally beenregularly deposited by the company during the yearwith the appropriate authorities. According to theinformation and explanations given to us, there are noarrears of outstanding statutory dues as mentionedabove as at 31st March, 2007 for a period of more thansix months from the date they became payable.

(b) As at 31st March, 2007 according to the records of thecompany and the information and explanations givento us, the following are the particulars of dues onaccount of income-tax, sales-tax, wealth tax, servicetax, customs duty, excise duty and cess matters thathave not been deposited on account of any dispute:

Name of theName of theName of theName of theName of the NaturNaturNaturNaturNature ofe ofe ofe ofe of AmountAmountAmountAmountAmount Period to whichPeriod to whichPeriod to whichPeriod to whichPeriod to which Forum wherForum wherForum wherForum wherForum where pendinge pendinge pendinge pendinge pendingstatutestatutestatutestatutestatute the duesthe duesthe duesthe duesthe dues Rs. in lakhsRs. in lakhsRs. in lakhsRs. in lakhsRs. in lakhs the amount rthe amount rthe amount rthe amount rthe amount relateselateselateselateselates

VVVVVarious yearsarious yearsarious yearsarious yearsarious yearscovering the periodcovering the periodcovering the periodcovering the periodcovering the period

Income - Tax Laws Income - Tax 80.78 1997-1999 Appellate Authority - Tribunal level

3620.45 2003-2004 Appellate Authority - uptoCommissioner of Income-tax (Appeals)

3.00 1998-1999 Appellate Authority - uptoCommissioner level

Sales - Tax Laws Sales - Tax 234.82 1985-2003 High Court

37.47 1986-2002 Appellate Authority - Tribunal level

80.48 2007 Appellate Authority - uptoCommissioner (Appeals) level

707.51 1988-2005 Appellate Authority - uptoCommissioner level

Wealth Tax Laws Wealth Tax 30.77 1998-2000 Appellate Authority uptoCommissioner of Income-tax (Appeals) level

Service Tax Laws Service Tax 34.19 2001-2003 Appellate Authority - Tribunal level

18.46 2001-2002 Appellate Authority - uptoCommissioner (Appeals) level

Excise Duty Laws Excise Duty 36863.38 1987-2007 Appellate Authority - Tribunal level

266.57 1995-2006 Appellate Authority - uptoCommissioner (Appeals) level

67

MAHINDRA & MAHINDRA LIMITED

Out of the above amounts aggregating Rs. 41,977.88 lakhs, Rs.5,200.09 lakhs have been stayed for recovery by the relevantauthorities.

(x) The company does not have accumulated losses as at 31st

March, 2007 and has not incurred cash losses during thefinancial year ended on that date and in the immediatelypreceding financial year.

(xi) In our opinion and according to the information andexplanations given to us, the company has not defaulted inrepayment of dues to a financial institution, bank ordebenture holders during the year.

(xii) In our opinion and according to the information andexplanations given to us, the company has not granted anyloans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

(xiii) The provisions of any special statute as specified underparagraph 4 (xiii) of the Order are not applicable to thecompany.

(xiv) In our opinion, the company is not dealing in or trading inshares, securities, debentures and other investments.Accordingly, the provisions of paragraph 4 (xiv) of the Orderare not applicable to the company.

(xv) According to the information and explanations given to us,the company has not given any guarantees for loans takenby others from banks or financial institutions, the terms andconditions, whereof, in our opinion, are prejudicial to theinterest of the company.

(xvi) In our opinion and according to the information andexplanations given to us, the term loans were applied forthe purpose for which the loans were obtained.

(xvii) Based on the information and explanations given to us andon an overall examination of the balance sheet of thecompany, in our opinion, there are no funds raised on shortterm basis which have been used for long term investments.

(xviii) The company has not made any preferential allotment ofshares to parties and companies covered in the registermaintained under section 301 of the Companies Act, 1956,during the year.

(xix) In our opinion and according to the information andexplanations given to us, as the company has not issuedany debentures during the year, paragraph 4 (xix) of theOrder is not applicable to the company.

(xx) The company has not raised any money by public issueduring the year.

(xxi) During the course of our examination of the books andrecords of the company, carried out in accordance with thegenerally accepted auditing practices in India, and accordingto the information and explanations given to us, we haveneither come across any instance of significant fraud on orby the company, noticed or reported during the year norhave we been informed of such case by the management.

For A. F. Ferguson & Co.Chartered Accountants

R. A. Banga(Partner)

Membership Number: 37915

Mumbai, 28th May, 2007

68

MAHINDRA & MAHINDRA LIMITED

Balance Sheet as at 31st March, 20072007 2006

Schedule Rupees Rupees Rupeeslakhs lakhs lakhs

I. SOURCES OF FUNDS :

SHAREHOLDERS’ FUNDS :Capital ................................................................................. I 238,03.27 233,39.96Employee Stock Options Outstanding ................................ 3,18.12 1,58.73Reserves and Surplus ......................................................... II 3,311,69.56 2,673,88.40

3,552,90.95 2,908,87.09LOAN FUNDS :(a) Secured Loans. ............................................................ III A 106,65.34 216,67.60(b) Unsecured Loans. ........................................................ III B 1,529,35.32 666,70.62

1,636,00.66 883,38.22DEFERRED TAX LIABILITY (Net) ......................................... 19,78.62 146,75.00

Total........ 5,208,70.23 3,939,00.31

II. APPLICATION OF FUNDS :

FIXED ASSETS :Gross Block ........................................................................ 3,229,68.47 2,885,52.54Less : Depreciation ............................................................. 1,639,11.62 1,510,26.61

Net Block ............................................................................ IV 1,590,56.85 1,375,25.93CAPITAL WORK-IN-PROGRESS ........................................ 280,59.91 179,18.60

1,871,16.76 1,554,44.53INVESTMENTS .................................................................... V 2,237,45.70 1,669,08.84

CURRENT ASSETS, LOANS AND ADVANCES :(a) Inventories .................................................................... VI A 878,48.37 878,74.37(b) Sundry Debtors ............................................................ VI B 700,88.67 637,96.89(c) Cash and Bank Balances ............................................ VI C 1,326,07.19 730,30.60(d) Other Current Assets ................................................... VI D 3,31.24 3,14.12(e) Loans and Advances ................................................... VI E 839,41.48 498,89.83

3,748,16.95 2,749,05.81CURRENT LIABILITIES AND PROVISIONS :(a) Current Liabilities .......................................................... VII A 1,950,21.91 1,520,84.12(b) Provisions ..................................................................... VII B 715,42.52 530,80.21

2,665,64.43 2,051,64.33NET CURRENT ASSETS..................................................... 1,082,52.52 697,41.48

MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOTWRITTEN OFF OR ADJUSTED) .......................................... VIII 17,55.25 18,05.46

Total........ 5,208,70.23 3,939,00.31

NOTES ON ACCOUNTS ........................................................... XIV

Per our report attached

For A. F. Ferguson & Co. M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing DirectorA. S. Ganguly Directors

R. A. Banga A. P. Puri Bharat DoshiPartner Thomas Mathew T. A. K. Nanda Executive Directors

N. B. GodrejNarayan Shankar Company Secretary

Mumbai, 28th May, 2007 Mumbai, 28th May, 2007

} }

69

MAHINDRA & MAHINDRA LIMITED

Profit and Loss Account for the year ended 31st March, 20072007 2006

Schedule Rupees Rupeeslakhs lakhs

SALES - Traded and Manufactured Goods [Note 11(a)] ....................................... 10,940,50.23 9,113,66.15Less : Excise Duty on Sales (Net) ........................................................................... 1,312,79.14 1,124,89.36

Net Sales .............................................................................................................. 9,627,71.09 7,988,76.79Income from Operations and Other Income ........................................................... IX 617,51.31 337,77.15

Net Income ........................................................................................................... 10,245,22.40 8,326,53.94

EXPENDITURE :Raw Materials, Finished and Semi-finished Products ...................................... X 6,851,91.69 5,713,76.57Excise Duty ...................................................................................................... (2,13.80) 11,61.05Personnel ......................................................................................................... XI 666,15.33 551,78.39Interest, Commitment and Finance Charges (Net) ........................................... XII (67,45.43) (18,40.16)Depreciation/Amortisation [Note 5(e)(i)] ............................................................ 209,58.65 200,00.53Other Expenses ................................................................................................ XIII 1,318,57.27 1,004,03.20

8,976,63.71 7,462,79.58Less : Cost of Manufactured Products capitalised ................................................ 47,09.94 26,53.40

8,929,53.77 7,436,26.18Profit before provision for contingencies, exceptional items and taxation .............. 1,315,68.63 890,27.76Less : Provision for contingencies [Note 10 (b) & (c)] ............................................ — 78.45

Profit before exceptional items and taxation ........................................................... 1,315,68.63 889,49.31Add : Exceptional Items [Note 24] .......................................................................... 121,98.47 210,01.18

Profit before taxation ............................................................................................... 1,437,67.10 1,099,50.49Less : Provision for Tax — Current tax (including Fringe Benefit Tax) .................. 365,72.87 285,40.00

— Deferred tax (Net) [Note 25] ...................................... (15,63.26) (43,00.00)

Profit for the year before prior period adjustments ................................................. 1,087,57.49 857,10.49Prior Period Adjustment (Net of Tax) : [Note 17] .................................................... 19,18.84 —

Profit for the year .................................................................................................... 1,068,38.65 857,10.49

Balance of Profit for earlier years ............................................................................ 1,475,74.47 996,39.74Add : Transferred from Debenture redemption reserve (Net) ................................. 15,67.20 43.39

1,491,41.67 996,83.13

Total of Profit and Loss Account balances shown above ....................................... 2,559,80.32 1,853,93.62Deduct : General Reserve ..................................................................................... 110,00.00 100,00.00

: Interim Dividend Paid ............................................................................. 184,03.05 —: Income tax on Interim Dividend Paid ..................................................... 25,81.03 —: Proposed Dividends - see Directors’ Report ......................................... 98,19.90 243,97.41: Income tax on Proposed Dividends ....................................................... 16,68.89 34,21.74

Balance for 2006-2007 and earlier years carried to Balance Sheet ...................... 2,125,07.45 1,475,74.47

EARNINGS PER SHARE [Note 26] :(Face value Rs. 10/- per share) (Rupees)

Basic ................................................................................................................ 45.15 38.07Diluted .............................................................................................................. 40.94 34.93

NOTES ON ACCOUNTS ........................................................................................ XIV

Per our report attached

For A. F. Ferguson & Co. M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing DirectorA. S. Ganguly Directors

R. A. Banga A. P. Puri Bharat DoshiPartner Thomas Mathew T. A. K. Nanda Executive Directors

N. B. GodrejNarayan Shankar Company Secretary

Mumbai, 28th May, 2007 Mumbai, 28th May, 2007

} }

70

MAHINDRA & MAHINDRA LIMITED

Cash Flow Statement for the year ended 31st March, 20072007 2006

Rupees Rupees Rupeeslakhs lakhs lakhs

A. CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit before exceptional items and taxation ................................... 1,315,68.63 889,49.31

Adjustments for :

Depreciation/Amortisation ............................................................... 209,58.65 200,00.53

Unrealised Profit on Exchange (Net) ............................................... 6,36.34 (4,02.81)

Investment and Interest Income ..................................................... (234,64.52) (94,46.56)

Interest, Commitment and Finance charges ................................... 19,79.63 26,95.61

Amortisation of Expenses ............................................................... 2,06.09 7,57.61

Profit on sale of Investments (Net) .................................................. (5,62.00) (8,27.00)

(Profit)/Loss on fixed assets sold/scrapped/written off (Net) .......... 1,72.60 (17,89.78)

Excess of cost over fair value of current investments (Net) ........... 2,36.09 68.55

Provision for diminution in the value of long term investments (Net) — (22,17.50)

1,62.88 88,38.65

Operating Profit before Working Capital changes .................................. 1,317,31.51 977,87.96

Changes in :

Trade and other receivables ........................................................... (168,16.91) (164,27.02)

Inventories ....................................................................................... 26.00 (118,91.41)

Trade and other payables ............................................................... 365,67.56 27,817.25

197,76.65 (5,01.18)

Miscellaneous Expenditure (to the extent not written offor adjusted) incurred during the year ..................................................... (2,73.10) (75.81)

Cash generated from operations ........................................................... 1,512,35.06 972,10.97

Income taxes paid (Net of refunds) ........................................................ (343,40.49) (285,20.71)

NET CASH FROM OPERATING ACTIVITIES ......................................... 1,168,94.57 686,90.26

71

MAHINDRA & MAHINDRA LIMITED

Cash Flow Statement (Contd.)2007 2006

Rupees Rupeeslakhs lakhs

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets ........................................................................ (504,44.51) (294,26.21)

Sale of fixed assets ................................................................................ 22,55.38 19,59.46

Purchase of investments ........................................................................ (9,267,62.13) (4,790,29.20)

Sale of investments ................................................................................ 8,652,07.80 4,309,87.03

Interest received ..................................................................................... 80,09.24 55,25.01

Dividends received ................................................................................. 120,39.32 37,48.99

Inter corporate deposits (Net) ................................................................ (196,19.20) (27,93.70)

Exceptional Items :

Sales Proceeds (Net) on sale of Long Term Investments ...................... 142,75.32 187,62.82

NET CASH USED IN INVESTING ACTIVITIES ....................................... (950,38.78) (502,65.80)

C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from borrowings ..................................................................... 1,078,56.74 249,35.86

Repayments of borrowings (including premium on prepayments) ......... (149,22.15) (140,47.10)

Dividends paid [including income tax on dividends Rs. 6002.77 lakhs(2006 : Rs. 2115.18 lakhs)] ................................................................... (483,46.07) (171,49.73)

Interest, Commitment and Finance charges paid .................................. (27,80.67) (27,16.81)

NET CASH FROM/(USED IN) FINANCING ACTIVITIES ......................... 418,07.85 (89,77.78)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS .... 636,63.64 94,46.68

CASH AND CASH EQUIVALENTS [Note 1] :

Opening Balance .................................................................................... 725,15.25 630,68.57

Closing Balance ..................................................................................... 1,361,78.89 725,15.25

See Notes attached.

Per our report attached

For A. F. Ferguson & Co. M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing DirectorA. S. Ganguly Directors

R. A. Banga A. P. Puri Bharat DoshiPartner Thomas Mathew T. A. K. Nanda Executive Directors

N. B. GodrejNarayan Shankar Company Secretary

Mumbai, 28th May, 2007 Mumbai, 28th May, 2007

} }

72

MAHINDRA & MAHINDRA LIMITED

Notes to the Cash Flow Statement for the year ended 31st March, 2007

2007 2006Rupees Rupees

lakhs lakhs

1 Cash and bank balances ....................................................................... 1,326,07.19 730,30.60

Unrealised (Gain)/Loss on foreign currency cash and cash equivalents 35,71.70 (5,15.35)

Total cash and cash equivalents ............................................................ 1,361,78.89 725,15.25

2 During the year, the Company, has acquired the following subsidiaries -

a) DGP Hinoday Industries Limited Rs. 9584.32 lakhs.

b) Mahindra Stokes Holding Company Rs. 5.00 lakhs.

c) Mahindra Forging Overseas Limited Rs. * lakh.

d) Mahindra Forging Mauritius Limited Rs. * lakh.

* denotes amounts less than Rs. 500.00

3 During the year, the Company has consolidated its business interest in Stokes Group Limited by swapping the shares held bythe Company in Stokes Group Limited for shares of Mahindra Stokes Holding Company Limited. This being a non cashtransaction does not form part of Cash Flow.

4 Previous year’s figures have been regrouped/restated wherever necessary.

73

MAHINDRA & MAHINDRA LIMITED

SCHEDULE I2007 2006

Rupees RupeesShare Capital [Note 2] : lakhs lakhsAuthorised :

27,50,00,000 Ordinary (Equity) Shares of Rs. 10 each .................................................... 275,00.00 275,00.0025,00,000 Unclassified Shares of Rs.100 each ........................................................... 25,00.00 25,00.00

Total........ 300,00.00 300,00.00

Issued and Subscribed :24,53,71,265 (2006 - 24,09,01,352) Ordinary (Equity) Shares of

Rs.10 each fully paid up ............................................................................. 245,37.13 240,90.14

245,37.13 240,90.14Less :

73,38,558 (2006 - 75,01,768) Ordinary (Equity) Shares of Rs. 10 each fullypaid up issued to ESOP Trust but not allotted to employees .................... 7,33.86 7,50.18

Adjusted : Issued and Subscribed Share Capital ....................................... 238,03.27 233,39.96

SCHEDULE II2006 Additions Deductions 2007

Reserves and Surplus : Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs

1 Capital Reserve .............................................................. 11,50.08 — — 11,50.0811,50.08 — — 11,50.08

2 Securities Premium Account [Note 3(a)(i)] ...................... 516,20.24 148,94.52 163,04.57 502,10.19171,45.21 347,22.85 2,47.82 516,20.24

Less : Premium on shares issued to ESOP Trustbut not allotted to employees [Note 3(b)] ...................... 18,37.93 — 39.98 17,97.95

21,36.73 — 2,98.80 18,37.93

497,82.31 148,94.52 162,64.59 484,12.24150,08.48 347,22.85 (50.98) 497,82.31

3 Revaluation Reserve [Note 3(a)(ii)] .................................. 13,33.46 — 47.06 12,86.4014,31.52 — 98.06 13,33.46

4 General Reserve ............................................................. 604,82.09 110,00.00! 80,90.35• 633,91.74620,82.98 100,00.00! 116,00.89+ 604,82.09

Add : Bonus shares issued to ESOP Trustbut not alloted to employees [Note 3(b)] ....................... 3,75.09 — 8.16 3,66.93

— 3,75.09 — 3,75.09

608,57.18 110,00.00 80,98.51 637,58.67620,82.98 103,75.09 116,00.89 608,57.18

5 Debenture Redemption Reserve .................................... 16,78.87 — 15,67.20***** 1,11.6717,22.26 — 43.39***** 16,78.87

6 Investment Fluctuation Reserve [Note 28] ..................... 50,12.03 — 10,68.98 39,43.0562,42.03 — 12,30.00 50,12.03

1,198,13.93 258,94.52 270,46.34 1,186,62.11876,37.35 450,97.94 129,21.36 1,198,13.93

7 Balance for 2006-2007 and earlier years as perProfit and Loss Account ................................................ 2,125,07.45

1,475,74.47

Total........ 3,311,69.562,673,88.40

! Transfer from Profit and Loss Account Rs. 11000.00 lakhs (2006 : Rs. 10000.00 lakhs)• Adjustment on adoption of Accounting Standard 15 (revised 2005) ‘Employee Benefits’ (Net of Tax of Rs. 4104.93 lakhs).

Refer Note 17.+ Utilised for issue of Bonus Shares***** Transfer to Profit and Loss Account net of charge created during the year Rs. 22.08 lakhs (2006 : Rs. 331.61 lakhs)

74

MAHINDRA & MAHINDRA LIMITED

SCHEDULE III2007 2006

Rupees Rupees Rupeeslakhs lakhs lakhs

Loan Funds [Note 4] :

(A) Secured :

(1) Debentures/Bonds ............................................................................. 5,50.67 90,50.67

(2) Foreign Currency Loans from Banks ................................................. 35,25.36 92,40.48

(3) Loans and Advances on cash credit account from Banks ............... 65,89.31 33,76.45

106,65.34 216,67.60

(B) Unsecured :

(1) Fixed Deposits ................................................................................... 3,98.94 8,43.06

(2) Short-term Loans :

From Banks ....................................................................................... 8,02.87 3,96.15

From Companies ............................................................................... — 5.00

8,02.87 4,01.15

(3) Other Loans :

(a) From Financial Institutions .......................................................... 326,66.85 270,32.99

(b) Foreign Currency Loan from Banks ............................................ 262,62.91 175,85.91

(c) Zero Coupon Convertible Bonds ................................................ 879,41.40 157,41.00

(d) From Others [including interest accrued and due Rs. 2.03 lakhs(2006 : Rs. 2.03 lakhs)] .............................................................. 48,62.35 50,66.51

1,517,33.51 654,26.41

1,529,35.32 666,70.62

Total........ 1,636,00.66 883,38.22

75

MAHINDRA & MAHINDRA LIMITED

SCHEDULE IV

Fixed Assets [Note 5] :

Description of Assets Cost/ Additions Deduc- Cost/Pro- Deprecia- Deprecia- Deductions Deprecia- Net NetProfessional and tions fessional tion/Amor- tion/ and tion/ Balance Balance

valuation adjust- and valuation tisation Amor- adjust- Amortisa- as at as atas at 31st ments adjust- as at 31st to 31st tisation ments tion 31st 31st

March, during the ments March, March, for 2006- of Depre- to 31st March, March,2006 year during 2007 2006 2007 ciation/ March, 2007 2006

the year Amorti- 2007sation

Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs

Land - Freehold ........................ 40,61.28 3,16.37 5.08 43,72.57 — — — — 43,72.57 40,61.28

Land - Leasehold ...................... 55,36.30 10,83.92 — 66,20.22 1,04.13 68.08 — 1,72.21 64,48.01 54,32.17

Buildings .................................... 375,41.23 94,04.85 4,25.36 465,20.72 96,13.10 11,03.83 1,32.31 105,84.62 359,36.10 279,28.13

Plant and Machinery ................. 2,236,41.51 262,60.61 80,73.76 2,418,28.36 1,336,52.41 170,10.90 70,38.32 1,436,24.99 982,03.37 899,89.10

Furniture and Fittings ................ 71,52.25 12,37.43 3,23.06 80,66.62 32,79.26 5,02.38 2,20.10 35,61.54 45,05.08 38,72.99

Vehicles, Cycles, etc. ................ 74,60.46 23,19.81 10,74.48 87,05.79 30,46.55 10,90.72 7,28.84 34,08.43 52,97.36 44,13.91

Development Expenditure ......... 26,27.63 22,84.21 — 49,11.84 9,95.89 6,16.07 — 16,11.96 32,99.88 16,31.74

Software Expenditure ................ 5,31.88 14,10.47 — 19,42.35 3,35.27 6,12.60 — 9,47.87 9,94.48 1,96.61

Total........ 2,885,52.54 443,17.67 99,01.74 3,229,68.47 1,510,26.61 210,04.58 81,19.57 1,639,11.62 1,590,56.85 1,375,25.932,699,71.62 226,10.07 40,29.15 2,885,52.54 1,335,56.39 200,46.91 25,76.69 1,510,26.61 1,375,25.93

76

MAHINDRA & MAHINDRA LIMITED

SCHEDULE VInvestments (At Cost, unless otherwise specified) :

Note 2007 2006

Face Value Long Term Current Long Term CurrentPer Unit Rupees Rupees Rupees Rupees

Number Rupees lakhs lakhs lakhs lakhsShares (Non-trade and fully paid-up unless otherwise specified) :Unquoted :(a) In Subsidiary Companies :

(i) Equity Shares :53,78,235 10 Mahindra Engineering & Chemical Products Limited .......................... 5,63.88 — 5,63.88 —

2,71,00,006 10 Mahindra Intertrade Limited [including 1,50,00,000 sharespartly paid-up Rs. 3 per share] ........................................................... 16,60.00 — 16,60.00 —

37,23,874 10 Mahindra Steel Service Centre Limited ............................................... 6,38.38 — 6,38.38 —14,66,00,593 10 Mahindra Holdings & Finance Limited ................................................. (c) (1) 146,60.06 — 121,60.06 —

4,50,00,000 US $ 0.10 Mahindra USA Incorporated ................................................................ 19,37.89 — 19,37.89 —16,83,218 10 Mahindra Gujarat Tractor Limited ........................................................ (c) (2) 3,55.00 — 19,36.39 —

1,48,33,793 10 Mahindra Shubhlabh Services Limited ................................................ (b)(c)(3) 15,87.31 — 19,21.52 —— 2 Tech Mahindra Limited (transferred to Quoted during the year) ........ (c)(17)(18) — — 205,45.15 —

2,26,25,348 10 Automartindia Limited .......................................................................... (b)(c)(4) 29,21.33 — 14,03.46 —63,49,500 10 Mahindra Logisoft Business Solutions Limited ................................... (c) (5) 5,77.83 — 11,33.00 —79,05,000 10 Mahindra Ashtech Limited ................................................................... (c) (6) 7,90.50 — 10,00.00 —42,22,250 US $ 0.001 Bristlecone Limited ............................................................................... 19,26.19 — 19,26.19 —35,70,000 ZAR 1 Mahindra & Mahindra South Africa (Proprietary) Limited ................... (b) 2,49.20 — 2,49.20 —70,50,000 10 Mahindra Engineering Design & Development Company Limited .......... 7,05.01 — 7,05.01 —88,10,000 US $ 1 Mahindra Overseas Investment Company (Mauritius) Limited ............ (c) (7) 38,45.98 — 2,26.32 —31,25,739 10 Mahindra SAR Transmission Private Limited ...................................... 14,62.85 — 14,62.85 —

— 10 Mahindra Forgings Limited (formerly known asMahindra Automotive Steels Limited) (transferred toQuoted Others during the year) ........................................................... — — 80,01.01 —

8,69,79,225 10 Mahindra Renault Private Limited ........................................................ (b)(c)(8) 129,47.92 — 26,26.50 —5,03,75,600 10 Mahindra International Limited ............................................................ 52,34.11 — 52,34.11 —

— GBP£ 0.10 Stokes Group Limited .......................................................................... (c) (9) — — 29,09.77 —45,03,011 10 Plexion Technologies (India) Private Limited ....................................... (b) 37,27.85 — 37,27.85 —

4,88,88,001 EURO 1 Mahindra Forgings Overseas Limited .................................................. (c) (10) 286,50.11 — — —1,32,30,001 EURO 1 Mahindra Forgings Mauritius Limited .................................................. (c) (11) 78,15.97 — — —1,49,38,258 10 DGP Hinoday Industries Limited ......................................................... (c) (12) 95,84.32 — — —

82,21,107 10 Mahindra Stokes Holding Company Limited ...................................... (c)(13)(14) 40,90.55 — — —18,75,000 100 (ii) 7.25% Cumulative Redeemable Preference Shares :

Mahindra Intertrade Limited ................................................................. 18,75.00 — 18,75.00 —11,00,000 100 (iii) 8.50% Cumulative Redeemable Preference Shares :

Mahindra Ashtech Limited ................................................................... 11,00.00 — 11,00.00 —— 100 (iv) 13.10% Non-Cumulative Redeemable Preference Shares :

Mahindra Gesco Developers Limited .................................................. (c) (15) — — 55,00.00 —70,00,000 US $ 0.001 (v) Series’A’ Preference Shares: Bristlecone Limited ............................... 31,71.84 — 31,71.84 —69,20,000 US $ 0.001 (vi) Series’B’ Preference Shares: Bristlecone Limited .............................. 15,12.40 — 15,12.40 —80,00,000 10 (vii) 8.00% Non-Cumulative Redeemable Preference Shares :

DGP Hinoday Industries Limited ......................................................... (c) (12) 8,41.73 — — —

1,144,33.21 — 851,27.78 —

(b) In Other Companies :(i) Equity Shares :

312 100 Montreal Engineering International Limited ......................................... 0.11 — 0.11 —8,55,646 10 Machinery Manufacturers Corporation Limited ................................... (b) 94.25 — 94.25 —1,00,000 10 Judricks (India) Private Limited ............................................................ 10.00 — 10.00 —

35,000 10 Mahindra & Mahindra Contech Limited ............................................... 3.50 — 3.50 —75,000 10 NTTF Industries Limited ....................................................................... 15.00 — 15.00 —

1 10 Jayem Automotives Limited ................................................................. — — — —7,49,997 10 Officemartindia.com Limited ................................................................ 22.52 — 22.52 —

50,000 10 Indian NGOs.com Private Limited ....................................................... 6.19 — 6.19 —20,000 10 Sixth Sense Studios Private Limited ................................................... 2.00 — 2.00 —

2,85,000 10 Utility Engineers (India) Limited ............................................................ 28.50 — 28.50 —5,000 10 Mahindra Renault Automotive Private Limited .................................... (c) (16) 0.50 — — —

Others ................................................................................................... (a) — — — —2,296 100 (ii) 4.00% Tax-free Cumulative Preference Shares :

Machinery Manufacturers Corporation Limited ................................... (b) 2.25 — 2.25 —1,78,000 100 (iii) 11.00% Redeemable Preference Shares :

Sixth Sense Studios Private Limited ................................................... 1,78.00 — 1,78.00 —

3,62.82 — 3,62.32 —

77

MAHINDRA & MAHINDRA LIMITED

Quoted :(a) In Subsidiary Companies :

(i) Equity Shares :1,54,01,126 10 Mahindra Gesco Developers Limited .................................................. (b)(c)(15) 216,33.39 — 67,21.29 —5,82,41,532 10 Mahindra & Mahindra Financial Services Limited ............................... (b) 150,90.95 — 150,90.95 —5,37,76,252 10 Tech Mahindra Limited

(transferred from Unquoted during the year) ...................................... (b)(c)(17)(18) 191,81.25 — — —

559,05.59 — 218,12.24 —

(b) In Non-Subsidiary Companies :(i) Equity Shares :

13,91,860 10 + Fairfield Atlas Limited ........................................................................... 1,39.18 — 1,39.18 —1,32,00,370 10 Mahindra Forgings Limited (formerly known as

Mahindra Automotive Steels Limited transferred fromUnquoted Subsidiary during the year) ................................................. (c) (19) 128,51.01 — — —

129,90.19 — 1,39.18 —

Debentures/Bonds (Non-trade & fully paid-up) :Unquoted :(a) In Subsidiary Companies :

— 100 0% Mahindra Holdings & Finance Limited .................................................... (d) (1) — — 25,00.00 —4 1,00,00,000 11.19% Mahindra & Mahindra Financial Services Limited ............................ 4,00.00 — 4,00.00 —

200 10,00,000 7.50% Mahindra & Mahindra Financial Services Limited .............................. — 20,22.28 — 20,22.28(b) In Other Companies :

13 100 0.50% The East India Clinic Limited ............................................................. 0.01 — 0.01 —13,21,500 100 9.00% Jayem Automotives Limited ............................................................... 13,21.50 — 13,21.50 —

17,21.51 20,22.28 42,21.51 20,22.28

Quoted :(a) In Subsidiary Companies :

— 1,00,00,000 6.90% Mahindra & Mahindra Financial Services Limited .............................. (d) (2) — — — 19,95.08100 10,00,000 8.60% Mahindra & Mahindra Financial Services Limited .............................. (d) (3) — 10,01.67 — —

(b) In Other Companies :7,75,000 100 6.75% Tax Free US-64 Bonds ....................................................................... — 8,09.36 — 8,09.36

18 10,00,000 7.00% Power Finance Corporation Limited (2011) Series XXII .................... — 1,80.00 — 1,80.00150 10,00,000 7.99% Infrastructure Development Finance Company Limited .................... (d) (4) — 15,00.00 — —

— 34,91.03 — 29,84.44

17,21.51 55,13.31 42,21.51 50,06.72

Less : Excess of cost over fair value of current investmentsof Debentures/Bonds ..................................................................................... — (3,49.52) — (1,20.01)

17,21.51 51,63.79 42,21.51 48,86.71

Other Investments :Government Securities :Unquoted :

— 36,000 § 6 Years National Savings Certificates ...................................................................... (e) (1) 0.36 — 0.29 —

0.36 — 0.29 —

Quoted :— 1,92,70,000 § Government of India Securities ................................................................................ — 2,01.56 — 2,01.56

— 2,01.56 — 2,01.56

0.36 2,01.56 0.29 2,01.56

Less : Excess of cost over fair value of current investmentsof Government Securities ............................................................................... — (16.31) — (9.73)

0.36 1,85.25 0.29 1,91.83

+ Trade Investment§ Total face value

SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :

Note 2007 2006

Face Value Long Term Current Long Term CurrentPer Unit Rupees Rupees Rupees Rupees

Number Rupees lakhs lakhs lakhs lakhs

78

MAHINDRA & MAHINDRA LIMITED

Units :Unquoted :

— 10 ABN AMRO Mutual Fund - Cash Fund Institutional Plus Daily Dividend ............... (f) (1) — — — 15,02.99— 10 ABN AMRO Mutual Fund - Flexi Debt Regular Daily Dividend ............................... (f) (2) — — — 5,04.19— 10 ABN AMRO Mutual Fund - Fixed Term Plan Series 2 Quarterly Plan A Dividend . (f) (3) — — — 5,02.47

50,00,000 10 ABN AMRO Mutual Fund - Dual Advantage Fund Plan A Series 1Institutional Growth ................................................................................................... (f) (4) — 5,00.00 — —

— 10 Birla Mutual Fund - Cash Fund Institutional Premium Daily Dividend .................... (f) (14) — — — 15,83.57— 10 Birla Mutual Fund - Fixed Maturity Plan Quarterly Series 2 Dividend Payout .............. (f) (16) — — — 5,00.00— 10 Chola Mutual Fund - Fixed Maturity Plan Series 2 (Qtrly Plan -I) Dividend ........... (f) (21) — — — 10,00.00— 10 Chola Mutual Fund - Fixed Maturity Plan Series 3 (Qtrly Plan -I) Dividend ........... (f) (22) — — — 10,00.00— 10 Deutsche Mutual Fund - Insta Cash Plus Institutional Plan Daily Dividend ........... (f) (23) — — — 10,76.09

40,00,000 10 Deutsche Mutual Fund - Fixed Term Series 9 Growth Option ................................ — 4,00.00 — 4,00.00— 10 Deutsche Mutual Fund - Money Plus Dividend Option ........................................... (f) (25) — — — 5,00.00— 1,000 DSP Merrill Lynch Mutual Fund - Fixed Term Plan Series IB Dividend .................. (f) (29) — — — 5,02.04— 1,000 DSP Merrill Lynch Mutual Fund - Fixed Term Plan Series IC Dividend .................. (f) (30) — — — 7,07.05

2,12,149 1,000 DSP Merrill Lynch Mutual Fund - Liquid Plus Institutional Plan Daily Dividend ..... (f) (33) — 21,21.91 — —50,00,000 10 Franklin Templeton Fixed Tenure Fund Series V 13 Months Plan Growth ............. — 5,00.00 — 5,00.00

— 10 HDFC Mutual Fund - Cash Management Fund Savings Plan Daily Dividend ........ (f) (38) — — — 9,89.5550,00,000 10 HDFC Mutual Fund - Multiple Yield Fund - Plan 2005 Growth .............................. — 5,00.00 — 5,00.0041,89,254 10 HDFC Mutual Fund - Multiple Yield Fund - Growth ................................................ (f) (40) — 5,00.00 — 1,03.86

1,89,03,587 10 HDFC Mutual Fund - Cash Management Fund Call Plan Daily Dividend .............. (f) (45) — 19,71.00 — 24,50.57— 10 HDFC Mutual Fund - FMP 3M March 2006(1) Institutional Plan Dividend ............. (f) (46) — — — 10,00.00

1,00,00,000 10 HDFC Mutual Fund - FMP 13M March 2006(1) Institutional Plan Growth ............. (f) (47) — 10,00.00 — 10,00.00— 10 HSBC Mutual Fund - Cash Fund Institutional Plus Daily Dividend ........................ (f) (48) — — — 13,81.66— 10 HSBC Mutual Fund - Fixed Term Series -7-Dividend ............................................. (f) (49) — — — 5,02.95— 10 HSBC Mutual Fund - Fixed Term Series -8-Dividend ............................................. (f) (50) — — — 5,00.00

2,25,49,389 10 HSBC Mutual Fund - Liquid Plus Institutional Plan Daily Dividend ........................ (f) (52) — 22,57.07 — —— 10 JM Financial Mutual Fund - Fixed Maturity Fund - Series II Qtrly Plan

QSA Dividend ........................................................................................................... (f) (54) — — — 5,00.0023,34,038 10 JM Financial Mutual Fund - Liquid Fund Growth Plan ............................................ (f) (56) — 2,39.50 — —

— 10 Kotak Mahindra Mutual Fund - Liquid Institutional Premium Plan Daily Dividend . (f) (60) — — — 23,48.57— 10 Kotak Mahindra Mutual Fund - Fixed Maturity Plan Series XVIII –Dividend ........... (f) (66) — — — 5,00.00— 10 Kotak Mahindra Mutual Fund - Fixed Maturity Plan Series 19 Dividend ................ (f) (67) — — — 5,00.00— 10 Kotak Mahindra Mutual Fund - Fixed Maturity Plan Series 23 Dividend ................ (f) (68) — — — 10,00.00— 10 Principal Mutual Fund - Cash Management Fund Liquid Option Institutional

Premium Plan Daily Dividend ................................................................................... (f) (69) — — — 8,04.00— 10 Principal Mutual Fund - Fixed Maturity Plan 91 Days Dividend Payout ................. (f) (70) — — — 10,06.39— 10 Principal Mutual Fund - Fixed Maturity Plan 91 Days Series I ............................... (f) (72) — — — 5,04.92— 10 Principal Mutual Fund - Fixed Maturity Plan 91 Days Series III .............................. (f) (73) — — — 5,00.00

1,92,44,216 10 Principal Mutual Fund - Income Fund Growth Plan ................................................ (f) (75) — 20,02.76 — —— 10 Prudential ICICI Mutual Fund - Super Institutional Daily Dividend .......................... (f) (76) — — — 14,26.77— 10 Prudential ICICI Mutual Fund - Blended Plan B Institutional Dividend ................... (f) (79) — — — 5,11.50— 10 Prudential ICICI Mutual Fund - FMP Yearly Series XXV Dividend ........................... (f) (81) — — — 10,13.48— 10 Prudential ICICI Mutual Fund - FMP Monthly Plan Dividend XXVII ......................... (f) (82) — — — 5,00.00

1,00,02,856 10 Prudential ICICI Mutual Fund - Sweep Cash Option Daily Dividend ...................... (f) (86) — 10,00.29 — —— 10 Reliance Fixed Maturity Fund Quarterly Plan III - Series II Dividend Option .......... (f) (105) — — — 5,00.00— 10 SBI Mutual Fund - Magnum Institutional Income Savings Dividend. ...................... (f) (111) — — — 13,64.04— 10 SBI Mutual Fund - Magnum Debt Fund Series 13 Months Growth Option ........... (f) (112) — — — 10,00.00— 10 Standard Chartered Mutual Fund - Grindlays Fixed Maturity 19th Plan Dividend . (f) (116) — — — 5,00.00— 10 Standard Chartered Mutual Fund - Grindlays Fixed Maturity 21st Plan Dividend . (f) (117) — — — 5,00.00— 10 Standard Chartered Mutual Fund - Liquidity Manager Daily Dividend ................... (f) (118) — — — 1,30.03— 10 Standard Chartered Mutual Fund - Fixed Maturity 3rd Plan Dividend ................... (f) (119) — — — 5,00.00

50,00,000 10 Standard Chartered Mutual Fund - Fixed Maturity 2nd Plan Dividend .................. — 5,00.00 — 5,00.0099,007 1,000 Standard Chartered Mutual Fund - Liquidity Manager Plus Daily Dividend ........... (f) (120) — 9,90.16 — 8,00.48

50,00,000 10 Standard Chartered Mutual Fund - Fixed Maturity Plus Plan III B Growth ............ (f) (121) — 5,00.00 — —— 10 Sundaram Mutual Fund - Money Fund Super Institutional Daily Dividend ............. (f) (126) — — — 8,22.43

SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :

Note 2007 2006

Face Value Long Term Current Long Term CurrentPer Unit Rupees Rupees Rupees Rupees

Number Rupees lakhs lakhs lakhs lakhs

79

MAHINDRA & MAHINDRA LIMITED

— 10 Sundaram Mutual Fund - Fixed Term Plan Series 1Feb 06 (100 Days)Dividend Plan ............................................................................................................ (f) (127) — — — 5,00.00

— 10 Tata Mutual Fund - Fixed Horizon Fund Series 3 Scheme A – Dividend ............... (f) (128) — — — 5,12.32— 1,000 Tata Mutual Fund - Liquidity Management Fund Daily Dividend ............................ (f) (134) — — — 15,77.07— 10 Tata Mutual Fund - Fixed Horizon Fund Series 5 Scheme A – Dividend ............... (f) (135) — — — 5,00.00

44,875 1,000 Tata Mutual Fund - Liquid Super High Investment Fund Daily Dividend ................ (f) (136) — 5,00.14 — —— 10 UTI Mutual Fund - Fixed Maturity Plan QFMP 106/11 Dividend Plan .................... (f) (139) — — — 5,00.00— 10 UTI Mutual Fund - Fixed Maturity Plan QFMP Growth Plan ................................... (f) (142) — — — 5,00.53— 10 UTI Mutual Fund - Money Market Fund Daily Dividend Option .............................. (f) (143) — — — 18,20.49

1,00,00,000 10 UTI Mutual Fund - Fixed Maturity Plan YFMP Growth Plan ................................... (f) (144) — 10,00.00 — —

— 164,82.83 — 423,50.01

Others :Commercial PaperUnquoted :

— Export Import Bank of India ..................................................................................... (g) (1) — — — 19,47.00

— — — 19,47.00

Certificate of DepositUnquoted :

25,00,00,000 § State Bank of Travancore ......................................................................................... (h) (1) — 23,60.20 — 4,94.37— § ICICI Bank Limited .................................................................................................... (h) (2) — — — 9,83.87

10,00,00,000 § ABN AMRO Bank ..................................................................................................... (h) (3) — 9,30.27 — 4,89.9125,00,00,000 § State Bank of Mysore ............................................................................................... (h) (4) — 23,83.15 — 14,70.2715,00,00,000 § Allahabad Bank ......................................................................................................... (h) (5) — 13,89.18 — 14,70.0935,00,00,000 § Kotak Mahindra Bank Limited .................................................................................. (h) (6) — 33,02.03 — 9,61.4630,00,00,000 § HDFC Bank ............................................................................................................. (h) (10) — 28,33.31 — —10,00,00,000 § State Bank of Bikanner & Jaipur ............................................................................. (h) (11) — 9,48.84 — —10,00,00,000 § State Bank of Hyderabad ......................................................................................... (h) (12) — 9,51.47 — —15,00,00,000 § State Bank of Patialia ............................................................................................... (h) (13) — 14,01.70 — —

— 165,00.15 — 58,69.97

1,854,13.68 383,32.02 1,116,63.32 552,45.52

Total 2,237,45.70 1,669,08.84

Cost (Net of amounts written off) of Unquoted Investments .................................. 1,515,23.16 1,419,01.16Cost of Quoted Investments .................................................................................... 725,88.37 251,37.42

2,241,11.53 1,670,38.58Less : Excess of cost over fair value of Current Investments (Net) ....................... (3,65.83) (1,29.74)

2,237,45.70 1,669,08.84Market Value of Quoted Investments ....................................................................... 10,285,25.22 2,030,84.89

§ Total Face Value

Notes : 2007 2006

Face ValuePer Unit Long Term Long Term

Number Rupees Rupees Rupees(a) Shares (unquoted) in other companies comprise :

21 100 * The United Spices Importers Limited (Equity “B” Shares) ......................... 1 174 16,667 * Engineering & Metal Works, Tehran ............................................................ 1 1

(Rials)

Total........ 2 2

* Written off to Re.1(b) Equity investments in these companies carry certain restrictions on transfer of shares

in terms of funds raised by these companies from financial institutions/banks.

SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :

Note 2007 2006

Face Value Long Term Current Long Term CurrentPer Unit Rupees Rupees Rupees Rupees

Number Rupees lakhs lakhs lakhs lakhs

80

MAHINDRA & MAHINDRA LIMITED

(c) The following are the movements in Shares during the year :

Equity Shares Preference Shares

Acquired Sold Acquired/(Redeemed/Sold)

Nos. Nos. Nos.(1) Mahindra Holdings & Finance Limited 2,50,00,000$ — —(2) Mahindra Gujarat Tractor Limited — 74,97,970 —(3) Mahindra Shubhlabh Services Limited 48,47,645* 76,53,517 —(4) Automartindia Limited 1,51,78,690* — —(5) Mahindra Logisoft Business Solutions Limited — 61,00,500 —(6) Mahindra Ashtech Limited — 20,95,000 —(7) Mahindra Overseas Investment Company (Mauritius) Limited 82,90,000 — —(8) Mahindra Renault Private Limited 6,07,14,225* — —(9) Stokes Group Limited 10,00,000 24,65,310# —(10) Mahindra Forgings Overseas Limited 4,88,88,001 — —(11) Mahindra Forgings Mauritius Limited 1,32,30,001 — —(12) DGP Hinoday Industries Limited 1,49,38,258 — 80,00,000(13) Mahindra Stokes Holding Company Limited 50,000 — —(14) Mahindra Stokes Holding Company Limited 81,71,107# — —(15) Mahindra Gesco Developers Limited 28,35,000 — (55,00,000)(16) Mahindra Renault Automotive Private Limited 5,000 — —(17) Tech Mahindra Limited — 4,60,80,048£ —(18) Tech Mahindra Limited 4,60,80,048� 38,23,808 —(19) Mahindra Forgings Limited 49,78,444 — —

* Subscribed to on a rights basis# Consideration other than Cash$ Conversion of Debentures into Equity£ Due to Consolidation from Rs. 2 per share to Rs. 10 per share� Bonus Shares

(d) The following are the movements in Debentures/Bonds during the year :

Acquired Sold Matured

Nos. Rs. lakhs Nos. Nos.

(1) Mahindra Holdings & Finance Limited ........................................................... 0.00% — — 25,00,000$ —(2) Mahindra & Mahindra Financial Services Limited .......................................... 6.90% — — 20 —(3) Mahindra & Mahindra Financial Services Limited .......................................... 8.60% 100 10,01.67 — —(4) Infrastructure Development Finance Company Limited ................................ 7.99% 150 15,00.00 — —

$ Conversion of Debentures into Equity

(e) Government Securities :(1) Of face value Rs. 0.08 lakhs (2006 : Rs. 0.02 lakhs) were purchased and of face value Rs. 0.01 lakhs (2006 : Rs. 3.00 lakhs) matured

during the year. Face value of Rs. 0.36 lakhs (2006 : Rs. 0.29 lakhs) were lodged as security deposit.(2) Government of India Securities of the face value Rs. Nil (2006 : Rs. 193 lakhs) were purchased during the year.

(f) The following are the movements in Units during the year :

Acquired Sold

Nos. Rs. lakhs Nos.

(1) ABN AMRO Mutual Fund - Cash Fund Institutional Plus Daily Dividend .................................. 1,44,12,112 14,41.21 2,94,41,905(2) ABN AMRO Mutual Fund - Flexi Debt Regular Daily Dividend ................................................. 2,01,80,276 20,18.05 2,52,22,144(3) ABN AMRO Mutual Fund - Fixed Term Plan Series 2 Quarterly Plan A Dividend .................... 54,358 5.44 50,79,052(4) ABN AMRO Mutual Fund - Dual Advantage Fund Plan A Series 1 Institutional Growth ......... 50,00,000 5,00.00 —(5) ABN AMRO Mutual Fund - Fixed Term Plan Series 2 Quarterly Plan D Dividend Payout ....... 50,98,116 5,09.81 50,98,116(6) ABN AMRO Mutual Fund - Fixed Term Plan Series 3 Quarterly Plan G Dividend ................... 1,00,00,000 10,00.00 1,00,00,000(7) ABN AMRO Mutual Fund - Long Term Floating Rate Fund Weekly Dividend .......................... 1,54,84,439 15,50.06 1,54,84,439(8) ABN AMRO Mutual Fund - Cash Fund - Institutional Plus Daily Dividend ............................... 50,98,116 5,09.81 50,98,116(9) ABN AMRO Mutual Fund - Fixed Term Plan Series 2 Quarterly Plan B Dividend .................... 1,00,00,000 10,00.00 1,00,00,000(10) ABN AMRO Mutual Fund - Fixed Term Plan Series 3 Quarterly Plan A Dividend Pay Out ..... 1,00,00,000 10,00.00 1,00,00,000(11) ABN AMRO Mutual Fund - Fixed Term Plan Series 3 Quarterly Plan D Dividend Pay Out ..... 50,98,116 5,09.81 50,98,116(12) ABN AMRO Mutual Fund - Fixed Term Plan Series 3 Quarterly Plan E Dividend Pay Out ..... 1,50,00,000 15,00.00 1,50,00,000(13) Birla Mutual Fund - Cash Manager IP Daily Dividend Reinvestment ........................................ 2,00,39,708 20,04.37 2,00,39,708(14) Birla Mutual Fund - Cash Fund Institutional Premium Daily Dividend. ...................................... 56,40,94,151 565,19.41 57,98,99,018(15) Birla Mutual Fund - Short Term Fund - Dividend Reinvestment ................................................ 96,17,049 10,00.00 96,17,049(16) Birla Mutual Fund - Fixed Maturity Plan Quarterly Series 2 Dividend Payout .......................... — — 50,00,000(17) Chola Mutual Fund - FMP Series 4, (Quarterly Plan III) Dividend Payout ................................. 50,00,000 5,00.00 50,00,000

SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :

81

MAHINDRA & MAHINDRA LIMITED

(18) Chola Mutual Fund - FMP Series 4 (Quarterly Plan -I ) Dividend ............................................. 1,00,00,000 10,00.00 1,00,00,000(19) Chola Mutual Fund - Liquid Institutional Dividend Reinvestment Plan ...................................... 5,23,91,103 52,55.56 5,23,91,103(20) Chola Mutual Fund - Short Term Floating Rate Fund Daily Dividend Reinvestment Plan ........ 7,51,28,197 75,25.04 7,51,28,197(21) Chola Mutual Fund - Fixed Maturity Plan Series 2 (Quarterly Plan -I) Dividend ....................... — — 1,00,00,000(22) Chola Mutual Fund - Fixed Maturity Plan Series 3 (Quarterly Plan -I) Dividend ....................... — — 1,00,00,000(23) Deutsche Mutual Fund - Insta Cash Plus Institutional Daily Dividend Plan .............................. 13,05,71,885 130,82.65 14,13,11,850(24) Deutsche Mutual Fund - Fixed Term Fund Series 12 Dividend Payout .................................... 50,00,000 5,00.00 50,00,000(25) Deutsche Mutual Fund - Money Plus Dividend Option .............................................................. 1,03,78,078 10,45.68 1,53,78,078(26) Deutsche Mutual Fund - Fixed Term Fund - Series 13 - Dividend Plan ................................... 1,00,00,000 10,00.00 1,00,00,000(27) Deutsche Mutual Fund - Insta Cash Plus Fund -Institutional Plan Daily Dividend Plan ........... 12,75,60,652 127,80.94 12,75,60,652(28) Deutsche Mutual Fund - Money Plus Fund Institutional Plan Dividend Option ........................ 4,07,97,407 40,81.81 4,07,97,407(29) DSP Merrill Lynch Mutual Fund - Fixed Term Plan Series IB Dividend ..................................... 584 5.84 50,788(30) DSP Merrill Lynch Mutual Fund - Fixed Term Plan Series IC Dividend ..................................... 1,305 13.05 72,010(31) DSP Merrill Lynch Mutual Fund - Fixed Term Plan Series ID Dividend ..................................... 70,968 7,09.68 70,968(32) DSP Merrill Lynch Mutual Fund - Liquidity Fund Institutional Daily Dividend ........................... 11,72,012 117,22.46 11,72,012(33) DSP Merrill Lynch Mutual Fund - Liquid Plus Institutional Plan Daily Dividend ........................ 6,26,272 62,63.77 4,14,123(34) Franklin Templeton Short Term Income Plan Weekly Dividend Reinvestment .......................... 46,098 5,03.05 46,098(35) Franklin Templeton Floating Rate Income Fund Long Term Institutional Option ....................... 1,47,78,678 15,27.25 1,47,78,678(36) Franklin Templeton Short Term Income Institutional Plan Weekly Dividend Reinvestment ....... 1,50,601 15,14.36 1,50,601(37) Franklin Templeton Treasury Management Account Super Institutional Plan Daily Dividend

Reinvestment ............................................................................................................................... 66,64,680 666,63.46 66,64,680(38) HDFC Mutual Fund - Cash Management Fund Savings Plan Daily Dividend ........................... 35,73,44,342 380,08.57 36,66,47,789(39) HDFC Mutual Fund - Cash Management Fund Savings Plus Plan Dividend ........................... 1,52,14,830 15,24.78 1,52,14,830(40) HDFC Mutual Fund - Multiple Yield Fund- Growth .................................................................... 41,89,254 5,00.00 9,39,022(41) HDFC Mutual Fund - FMP 3M June 2006 (I) Institutional Plan Dividend Pay Out ................... 1,00,01,700 10,00.17 1,00,01,700(42) HDFC Mutual Fund - FMP 3M September 2006 (I) Institutional Plan Dividend Payout ........... 1,00,03,600 10,00.36 1,00,03,600(43) HDFC Mutual Fund - Liquid Fund Premium Plan Dividend Daily Reinvestment ....................... 8,17,23,419 100,19.13 8,17,23,419(44) HDFC Mutual Fund - FMP 3M August 2006 (I) Institutional Plan Dividend .............................. 1,00,01,700 10,00.17 1,00,01,700(45) HDFC Mutual Fund - Cash Management Fund Call Plan Daily Dividend ................................. 16,71,47,829 174,27.84 17,17,47,263(46) HDFC Mutual Fund - FMP 3M March 2006(1) Institutional Plan Dividend ................................ — — 1,00,00,000(47) HDFC Mutual Fund - FMP 13M March 2006(1) Institutional Plan Growth ................................ 1,00,00,000 10,00.00 1,00,00,000(48) HSBC Mutual Fund - Cash Fund Institutional Plus Daily Dividend ........................................... 45,50,31,871 455,28.67 46,88,40,696(49) HSBC Mutual Fund - Fixed Term Series -7-Dividend ................................................................ 45,695 4.57 50,75,205(50) HSBC Mutual Fund - Fixed Term Series -8-Dividend ................................................................ 86,129 8.61 50,86,129(51) HSBC Mutual Fund - Income Fund Short Term Institutional Dividend ...................................... 1,01,65,392 10,20.84 1,01,65,392(52) HSBC Mutual Fund - Liquid Plus Institutional Plan Daily Dividend ........................................... 6,76,47,595 67,69.49 4,50,98,206(53) JM Financial Mutual Fund - Fixed Maturity Series III Quarterly Plan FMP Q2 Dividend Plan .. 51,24,848 5,12.48 51,24,848(54) JM Financial Mutual Fund - Fixed Maturity Series II Quarterly Plan QSA Dividend ................. 80,511 8.06 50,80,511(55) JM Financial Mutual Fund - High Liquidity Super Institutional Plan Daily Dividend .................. 4,01,40,529 40,20.68 4,01,40,529(56) JM Financial Mutual Fund - Liquid Fund Growth Plan .............................................................. 1,46,18,446 15,00.00 1,22,84,408(57) JM Financial Mutual Fund - Manager Fund Super Plan Daily Dividend .................................... 1,00,22,420 10,02.24 1,00,22,420(58) JM Financial Mutual Fund - Manager Fund Super Plus Plan Daily Dividend ........................... 2,29,79,041 22,97.91 2,29,79,041(59) Kotak Mahindra Mutual Fund - Flexi Debt Scheme - Daily Dividend ........................................ 1,00,52,109 10,05.39 1,00,52,109(60) Kotak Mahindra Mutual Fund - Liquid Institutional Premium Plan Daily Dividend .................... 52,14,44,269 637,62.72 54,06,50,645(61) Kotak Mahindra Mutual Fund - Bond (Short Term) - Monthly Dividend .................................... 1,00,43,935 10,15.73 1,00,43,935(62) Kotak Mahindra Mutual Fund - Floater Long Term Weekly Dividend ........................................ 1,03,33,596 10,37.30 1,03,33,596(63) Kotak Mahindra Mutual Fund - FMP 3M Series 2 Dividend Payout ......................................... 1,00,00,000 10,00.00 1,00,00,000(64) Kotak Mahindra Mutual Fund - FMP 3M Series 3 Dividend Payout ......................................... 1,00,00,000 10,00.00 1,00,00,000(65) Kotak Mahindra Mutual Fund - FMP 3M Series 5 Dividend Payout ......................................... 1,00,00,000 10,00.00 1,00,00,000(66) Kotak Mahindra Mutual Fund - Fixed Maturity Plan Series XVIII Dividend ............................... — — 50,00,000(67) Kotak Mahindra Mutual Fund - Fixed Maturity Plan Series 19 Dividend .................................. — — 50,00,000(68) Kotak Mahindra Mutual Fund - Fixed Maturity Plan Series 23 Dividend .................................. — — 1,00,00,000(69) Principal Mutual Fund - Cash Management Fund Liquid Option Institutional Premium Plan

Daily Dividend. ............................................................................................................................. 36,85,22,490 368,54.83 37,65,61,934(70) Principal Mutual Fund - Fixed Maturity Plan 91 Days Dividend Payout .................................... — — 1,00,63,874(71) Principal Mutual Fund - Deposit Fund (FMP30) 91 Days September 06 Plan Dividend Payout 50,00,000 5,00.00 50,00,000(72) Principal Mutual Fund - Fixed Maturity Plan 91 Days Series I .................................................. 69,156 6.92 51,18,338(73) Principal Mutual Fund - Fixed Maturity Plan 91 Days Series III ................................................ 70,238 7.02 50,70,238

SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :

Acquired Sold

Nos. Rs. lakhs Nos.

82

MAHINDRA & MAHINDRA LIMITED

(74) Principal Mutual Fund - Income Fund Short Term Plan Institutional Plan Dividend Weekly .... 92,38,136 10,10.46 92,38,136(75) Principal Mutual Fund - Income Fund Growth Plan ................................................................... 4,81,10,541 50,06.91 2,88,66,325(76) Prudential ICICI Mutual Fund - Super Institutional Daily Dividend ............................................ 60,25,59,529 602,56.03 61,68,27,244(77) Prudential ICICI Mutual Fund - Flexible Income Plan Dividend Fortnightly ............................... 96,36,597 10,17.18 96,36,597(78) Prudential ICICI Mutual Fund - FMP Series 32 One Month Plan A Retail Dividend ................. 1,00,53,100 10,05.31 1,00,53,100(79) Prudential ICICI Mutual Fund - Blended Plan B Institutional Dividend ...................................... 1,65,551 16.66 52,63,935(80) Prudential ICICI Mutual Fund - FMP Series 32 Three Months Plan A Retail Dividend ............ 53,78,833 5,37.89 53,78,833(81) Prudential ICICI Mutual Fund - FMP Yearly Series XXV Dividend ............................................. 1,63,384 16.34 1,02,98,184(82) Prudential ICICI Mutual Fund - FMP Monthly Plan Dividend XXVII ........................................... 85,250 8.53 50,85,250(83) Prudential ICICI Mutual Fund - FMP Monthly Plan Dividend Monthly ....................................... 20,00,658 2,32.92 20,00,658(84) Prudential ICICI Mutual Fund - Institutional Short Term Plan DR Fortnightly ............................ 91,81,419 10,14.26 91,81,419(85) Prudential ICICI Mutual Fund - FMP Series 32 Three Months Plan D Retail Dividend ............ 1,01,61,400 10,16.14 1,01,61,400(86) Prudential ICICI Mutual Fund - Sweep Cash Option Daily Dividend ......................................... 5,50,18,279 55,01.83 4,50,15,423(87) Reliance Mutual Fund - Fixed Horizon Fund Dividend Option .................................................. 50,00,000 5,00.00 50,00,000(88) Reliance Mutual Fund - Fixed Horizon 11 Monthly Plan Series 1 Institutional Dividend Plan . 2,00,00,000 20,00.00 2,00,00,000(89) Reliance Mutual Fund - Fixed Horizon Monthly Plan Series I Dividend Plan ............................ 50,24,298 5,02.43 50,24,298(90) Reliance Mutual Fund - Fixed Horizon Monthly Plan Series II Dividend Plan ........................... 1,00,24,298 10,02.43 1,00,24,298(91) Reliance Mutual Fund - Fixed Horizon Monthly Plan A Series II Dividend Option ................... 50,00,000 5,00.00 50,00,000(92) Reliance Mutual Fund - Fixed Horizon Monthly Plan A Series III Dividend Option .................. 1,50,00,000 15,00.00 1,50,00,000(93) Reliance Mutual Fund - Fixed Horizon Fund Monthly Plan A Series IV Dividend Option ......... 1,50,00,000 15,00.00 1,50,00,000(94) Reliance Mutual Fund - Fixed Horizon Monthly Plan A Series VI Dividend Option .................. 1,50,00,000 15,00.00 1,50,00,000(95) Reliance Mutual Fund - Fixed Horizon Quarterly Plan B Series I Dividend Option .................. 50,54,490 5,05.45 50,54,490(96) Reliance Mutual Fund - Fixed Horizon Monthly Plan A Series V Dividend Option ................... 1,50,00,000 15,00.00 1,50,00,000(97) Reliance Mutual Fund - Fixed Horizon Quarterly Plan B Series IV Dividend Option ................ 1,00,00,000 10,00.00 1,00,00,000(98) Reliance Mutual Fund - Fixed Horizon Quarterly Plan B Series II Dividend Option ................. 1,00,00,000 10,00.00 1,00,00,000(99) Reliance Mutual Fund - Fixed Horizon Quarterly Plan B Series V Dividend Option ................. 50,54,490 5,05.45 50,54,490(100) Reliance Mutual Fund - Fixed Horizon Quarterly Plan I Series I Dividend Option .................... 1,00,00,000 10,00.00 1,00,00,000(101) Reliance Mutual Fund - Fixed Horizon Quarterly Plan B Series III Dividend Option ................ 1,00,00,000 10,00.00 1,00,00,000(102) Reliance Mutual Fund - Floating Rate Daily Dividend ................................................................ 99,67,337 10,02.89 99,67,337(103) Reliance Mutual Fund - Liquid Cash Plan Daily Dividend Option ............................................. 15,60,05,771 173,80.76 15,60,05,771(104) Reliance Mutual Fund - Liquidity Daily Dividend Reinvestment ................................................. 9,67,46,281 96,77.63 9,67,46,281(105) Reliance Mutual Fund - Fixed Maturity Quarterly Plan III Series II Dividend Option ................. — — 50,00,000(106) SBI Mutual Fund - Magnum Debt Series 180 Days (August 06) Dividend Option ................... 1,02,88,572 10,28.90 1,02,88,572(107) SBI Mutual Fund - Magnum Debt Series 90 Days (June 06) Dividend Option ........................ 1,00,00,000 10,00.00 1,00,00,000(108) SBI Mutual Fund - Magnum Debt Series 60 Days (September 06) Dividend Option .............. 1,00,00,000 10,00.00 1,00,00,000(109) SBI Mutual Fund - Magnum Debt Series 90 Days (August 06) Dividend Option ..................... 50,00,000 5,00.00 50,00,000(110) SBI Mutual Fund - Magnum Debt Series 90 Days (October 06) Dividend Option ................... 1,00,00,000 10,00.00 1,00,00,000(111) SBI Mutual Fund - Magnum Institutional Income Savings Dividend ......................................... 18,88,61,914 189,47.57 20,24,58,121(112) SBI Mutual Fund - Magnum Debt Fund Series 13 Months Growth Option .............................. — — 1,00,00,000(113) SBI Mutual Fund - Magnum Debt Series 90 Days (May 06) Dividend Option .......................... 50,00,000 5,00.00 50,00,000(114) Standard Chartered Mutual Fund - Medium Term Monthly Dividend Option ............................ 1,00,98,438 10,09.84 1,00,98,438(115) Standard Chartered Mutual Fund - ST Plan C Fortnightly Dividend ......................................... 1,51,39,607 15,15.26 1,51,39,607(116) Standard Chartered Mutual Fund - Grindlays Fixed Maturity 19th Plan Dividend .................... 68,832 6.88 50,68,832(117) Standard Chartered Mutual Fund - Grindlays Fixed Maturity 21st Plan Dividend .................... 47,100 4.71 50,47,100(118) Standard Chartered Mutual Fund - Liquidity Manager Daily Dividend ...................................... 5,989 0.60 13,06,195(119) Standard Chartered Mutual Fund - Fixed Maturity 3rd Plan Dividend ...................................... 27,500 2.75 50,27,500(120) Standard Chartered Mutual Fund - Liquidity Manager Plus Daily Dividend .............................. 97,13,492 971,44.63 96,94,533(121) Standard Chartered Mutual Fund - Fixed Maturity Plus Plan III B Growth ............................... 50,00,000 5,00.00 —(122) Sundaram Mutual Fund - Fixed Term Plan Series IX (90 Days) Dividend Plan ........................ 1,00,46,044 10,04.60 1,00,46,044(123) Sundaram Mutual Fund - BNP FTP Series VI June 06 (100 Days) Dividend Payout ............... 1,00,00,000 10,00.00 1,00,00,000(124) Sundaram Mutual Fund - Fixed Term Plan Series VIII (30 Days) Dividend Plan ....................... 1,00,05,400 10,00.54 1,00,05,400(125) Sundaram Mutual Fund - Fixed Term Plan Series X (30 Days) Dividend Plan ......................... 1,00,05,400 10,00.54 1,00,05,400(126) Sundaram Mutual Fund - Money Fund Super Institutional Daily Dividend ................................ 6,99,11,686 70,57.79 7,80,58,304(127) Sundaram Mutual Fund - Fixed Term Plan Series 1Feb 06(100 days) Dividend Plan .............. — — 50,00,000(128) Tata Mutual Fund - Fixed Horizon Fund Series 3 Scheme A Dividend ..................................... 37,761 3.78 51,60,912(129) Tata Mutual Fund - Fixed Horizon Series 5 Scheme C Dividend .............................................. 1,01,40,173 10,14.02 1,01,40,173(130) Tata Mutual Fund - Fixed Horizon Series 5 Scheme D Dividend .............................................. 1,01,42,920 10,14.29 1,01,42,920(131) Tata Mutual Fund - Fixed Horizon Series 6 Scheme G Dividend .............................................. 1,03,01,119 10,30.12 1,03,01,119

SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :

Acquired Sold

Nos. Rs. lakhs Nos.

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MAHINDRA & MAHINDRA LIMITED

(132) Tata Mutual Fund - Fixed Horizon Series 8 Scheme B Dividend Institutional Plan .................. 1,50,00,000 15,00.00 1,50,00,000(133) Tata Mutual Fund - Fixed Horizon Series 8 Scheme C Dividend Institutional Plan .................. 1,54,95,648 15,49.56 1,54,95,648(134) Tata Mutual Fund - Liquidity Management Fund Daily Dividend ............................................... 2,00,922 20,13.76 3,58,302(135) Tata Mutual Fund - Fixed Horizon Fund Series 5 Scheme A Dividend ..................................... — — 50,00,000(136) Tata Mutual Fund - Liquid Super High Investment Fund Daily Dividend .................................. 40,92,041 456,06.61 40,47,166(137) UTI Mutual Fund - Fixed Maturity Plan Quarterly Series QFMP/0806/11 Dividend Plan Payout 1,00,00,000 10,00.00 1,00,00,000(138) UTI Mutual Fund - Liquid Cash Plan Institutional Daily Income Option .................................... 35,24,111 359,24.17 35,24,111(139) UTI Mutual Fund - Fixed Maturity Plan QFMP 106/11 Dividend Plan ....................................... — — 50,00,000(140) UTI Mutual Fund - Fixed Maturity Plan QFMP/0506/1 Dividend Option ................................... 50,00,000 5,00.00 50,00,000(141) UTI Mutual Fund - Fixed Maturity Plan QFMP/1006/11 Dividend Plan Payout ........................ 1,00,00,000 10,00.00 1,00,00,000(142) UTI Mutual Fund - Fixed Maturity Plan QFMP Growth Plan ...................................................... — — 50,05,250(143) UTI Mutual Fund - Money Market Fund Daily Dividend Option ................................................. 7,71,78,679 134,90.18 8,76,25,060(144) UTI Mutual Fund - Fixed Maturity Plan YFMP Growth Plan ...................................................... 1,00,00,000 10,00.00 —

(g) The following are the movements in Commercial Paper during the year :

Acquired Sold Matured

Face Value Total Value Face Value Face ValueRs. lakhs Rs. lakhs Rs. lakhs Rs. lakhs

(1) Export Import Bank of India ....................................... — — 10,00.00 10,00.00(2) Housing Development Finance Corporation Limited . 10,00.00 9,80.50 — 10,00.00

(h) The following are the movements in Certificate of Deposits during the year :

Acquired Sold Matured

Face Value Total Value Face Value Face ValueRs. lakhs Rs. lakhs Rs. lakhs Rs. lakhs

(1) State Bank of Travancore .......................................... 50,00.00 48,21.97 30,00.00 —(2) ICICI Bank Limited ..................................................... — — 5,00.00 5,00.00(3) ABN AMRO Bank ....................................................... 40,00.00 38,61.84 20,00.00 15,00.00(4) State Bank of Mysore ................................................ 25,00.00 23,83.15 15,00.00 —(5) Allahabad Bank .......................................................... 15,00.00 13,89.18 — 15,00.00(6) Kotak Mahindra Bank Limited ................................... 60,00.00 57,63.84 — 35,00.00(7) State Bank of Indore .................................................. 10,00.00 9,81.53 — 10,00.00(8) Punjab National Bank ................................................. 25,00.00 24,81.92 — 25,00.00(9) HSBC Bank ................................................................ 10,00.00 9,71.82 — 10,00.00

(10) HDFC Bank ................................................................ 30,00.00 28,33.31 — —(11) State Bank of Bikaner & Jaipur ................................. 10,00.00 9,48.84 — —(12) State Bank of Hyderabad .......................................... 10,00.00 9,51.47 — —(13) State Bank of Patiala ................................................. 15,00.00 14,01.70 — —

SCHEDULE V (Contd.)Investments (At Cost, unless otherwise specified) :

Acquired Sold

Nos. Rs. lakhs Nos.

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SCHEDULE VI 2007 2006Rupees Rupees Rupees

lakhs lakhs lakhsCurrent Assets, Loans and Advances :(A) Inventories (at cost or net realisable value whichever is lower) :

(i) Finished Products produced and purchased for sale ..................... 448,33.53 427,95.22(ii) Contracts and Work-in-Progress .................................................... 38,24.28 47,31.69(iii) Manufactured Components ............................................................ 44,99.13 49,89.18(iv) Raw Materials and Bought-out Components ................................. 305,52.15 308,27.38(v) Property Development Activity - Work-in-Progress [including

completed flats and premises Rs. 632.22 lakhs(2006 : Rs.726.14 lakhs)] [Note 11(b)] ............................................ 6,32.32 8,42.85

(vi) Stores and Spares .......................................................................... 17,18.84 18,78.79(vii) Tools ................................................................................................ 17,88.12 18,09.26

878,48.37 878,74.37(B) Sundry Debtors [Note 6] :

Unsecured unless otherwise stated :Outstanding over six months : Considered good............................... 85,85.41 61,38.45

: Considered doubtful .......................... 45,94.77 35,67.16131,80.18 97,05.61

Other Debts : Considered good............................... 615,03.26 576,58.44: Considered doubtful .......................... 6,44.12 5,95.73

621,47.38 582,54.17753,27.56 679,59.78

Less : Provision for Doubtful Debts ....................................................... 52,38.89 41,62.89700,88.67 637,96.89

(C) Cash and Bank Balances :Cash, cheques and stamps on hand .................................................... 329,95.79 182,59.56Balances with Scheduled Banks :(i) On Current Account ........................................................................ 81,61.95 72,00.32(ii) On Fixed Deposit Account * ........................................................... 910,12.33 471,71.02(iii) On Margin Account ......................................................................... 5.42 5.42

991,79.70 543,76.76* (includes balance of unutilised monies raised by issue :Rs. 85836.01 lakhs (2006 : Rs. Nil))Balances with Non-Scheduled Banks [Note 7] :(i) On Current Account ........................................................................ 4,31.70 3,78.70(ii) On Fixed Deposit Account .............................................................. — 15.58

4,31.70 3,94.281,326,07.19 730,30.60

(D) Other Current Assets :Interest accrued on investments ............................................................ 3,17.14 3,00.02Plant and Machinery and other assets held for sale(at cost or netrealisable value whichever is lower) ....................................................... 14.10 14.10

3,31.24 3,14.12(E) Loans and Advances [Note 8] :

(Unsecured, considered good unless otherwise stated) :Advances and Loans to subsidiaries :

Considered good ............................................................................ 290,21.20 124,14.75Considered doubtful ........................................................................ 7,23.72 7,27.01

297,44.92 131,41.76Less : Provision for doubtful Advances and Loans ........................ 7,23.72 7,27.01

290,21.20 124,14.75Bills of exchange, considered doubtful .................................................. 1,55.04 1,55.04Less : Provision for doubtful bills ........................................................... 1,55.04 1,55.04

— —Advances recoverable in cash or in kind or for value to be received :

Considered good ............................................................................ 448,44.12 274,02.18Considered doubtful ........................................................................ 50,02.72 53,03.99

498,46.84 327,06.17Less : Provision for Doubtful Advances .......................................... 50,02.72 53,03.99

448,44.12 274,02.18Payments towards Income tax and Surtax [Note 21(d)] ........................ 100,42.28 100,10.15Balances - Customs, Port Trust, Excise, etc. ........................................ 33.88 62.75

839,41.48 498,89.83Total........ 3,748,16.95 2,749,05.81

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MAHINDRA & MAHINDRA LIMITED

SCHEDULE VII 2007 2006Rupees Rupees Rupees

lakhs lakhs lakhsCurrent Liabilities and Provisions :

(A) Current Liabilities * :

Acceptances .......................................................................................... 121,85.22 132,57.00

Sundry Creditors :

(i) Total outstanding dues of small scale industrial undertakings[Note 9 (a)] ...................................................................................... 89,85.52 57,81.15

(ii) Total outstanding dues of creditors other than small scale industrialundertakings [including Rs. 7770.40 lakhs (2006 : Rs. 4630.45 lakhs)being advance payments for which value has still to be given] ..... 1,695,21.12 1,288,88.31

(iii) Dues to Subsidiaries ....................................................................... 28,56.63 23,98.58

1,813,63.27 1,370,68.04

Dividend payable .................................................................................... 7,33.15 2,75.99

Balances on Directors’ Current Accounts .............................................. 2,45.77 2,15.86

Interest accrued but not due on loans .................................................. 4,94.50 12,67.23

1,950,21.91 1,520,84.12

* There are no amounts due and outstanding to be credited to theInvestor Education and Protection Fund.

(B) Provisions :

Proposed Dividends - see Directors’ Report ......................................... 98,19.90 243,97.41

Provision for tax on Proposed Dividend ................................................ 16,68.89 34,21.74

Provision for diminution in value of long term investments .................... 52,24.91 70,91.99

Provision for premium payable on redemption of convertible bonds .... 244,58.29 10,07.52

Provision for contingencies [Note 10 (b) & (c)] ....................................... — 78.45

Provision for compensated absences .................................................... 169,95.15 56,72.44

Provision for taxation .............................................................................. 29,93.80 31,08.17

Provision : Others [Note 10 (a) & (c)] ..................................................... 103,81.58 83,02.49

715,42.52 530,80.21

Total........ 2,665,64.43 2,051,64.33

SCHEDULE VIII 2007 2006Rupees Rupees

lakhs lakhsMiscellaneous Expenditure(to the extent not written off or adjusted) :

(a) Finance Charges .................................................................................... 5,33.50 2,19.38

(b) Separation and Other Costs .................................................................. 12,21.75 15,86.08

Total........ 17,55.25 18,05.46

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MAHINDRA & MAHINDRA LIMITED

SCHEDULE IX 2007 2006Rupees Rupees

lakhs lakhsIncome from Operations and Other Income :

Income from services rendered ..................................................................... 285,55.83 152,39.32

Property Development Activity-Property ....................................................... 5,93.39 7,03.58

Dividends on Investments in subsidiaries-Gross. .......................................... 114,09.69 36,44.41

Dividends on other Investments-Gross [Note 12(a)] ..................................... 33,29.77 12,66.38

Rent received ................................................................................................ 6,50.00 3,39.68

Miscellaneous Income ................................................................................... 166,50.63 99,67.00

Profit on sale of Fixed Assets sold/scrapped/written off (Net) [Note 15] ...... — 17,89.78

Profit on sale of Investments (Net) [Note 12(d)] ............................................ 5,62.00 8,27.00

Total........ 617,51.31 337,77.15

SCHEDULE X 2007 2006Rupees Rupees Rupees

lakhs lakhs lakhsRaw Materials, Finished and Semi-Finished Products :

(A) Decrease/(Increase) in Stock of Finished Goods,Work-in-Progress and Manufactured Components :

Opening Stock :

(i) Finished Products produced and purchased for sale ..................... 427,95.22 333,46.82

(ii) Contracts and Work-in-Progress .................................................... 47,31.69 47,29.92

(iii) Manufactured Components ............................................................ 49,89.18 41,19.17

525,16.09 421,95.91Less : Closing Stock :

(i) Finished Products produced and purchased for sale ..................... 448,33.53 427,95.22

(ii) Contracts and Work-in-Progress .................................................... 38,24.28 47,31.69

(iii) Manufactured Components ............................................................ 44,99.13 49,89.18

531,56.94 525,16.09

Decrease/(Increase) in Stock ................................................................. (6,40.85) (103,20.18)

(B) Consumption of Raw Materials and Bought-out Components :

Opening Stock ....................................................................................... 308,27.38 295,37.39

Add : Purchases [including outside processing chargesRs. 23205.20 lakhs (2006 : Rs. 24147.45 lakhs)] ...................... 6,605,76.83 5,601,39.57

6,914,04.21 5,896,76.96

Less : Closing Stock .............................................................................. 305,52.15 308,27.38

6,608,52.06 5,588,49.58

(C) Purchases of Finished Products for sale .......................................... 249,80.48 228,47.17

Total........ 6,851,91.69 5,713,76.57

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SCHEDULE XI 2007 2006Rupees Rupees

lakhs lakhsPersonnel :

Salaries, Wages, Bonus, etc. ........................................................................ 554,95.62 446,85.32

Contribution to Provident and other funds .................................................... 38,05.73 31,95.12

Gratuity .......................................................................................................... 7,85.26 16,38.34

Welfare .......................................................................................................... 65,28.72 56,59.61

Total........ 666,15.33 551,78.39

SCHEDULE XII 2007 2006Rupees Rupees

lakhs lakhsInterest, Commitment and Finance Charges :

On Term Loans and Debentures ................................................................... 17,49.90 24,95.65

On Others (Net) ............................................................................................. 2,29.73 1,99.96

19,79.63 26,95.61Less : Interest Income :

(i) Interest on Government Securities, Debentures and Bonds - Gross[Note 12(b)] ............................................................................................ 4,81.85 4,37.69

(ii) Interest - Others - Gross [Note 12(c)] .................................................... 82,43.21 40,98.08

87,25.06 45,35.77

Total........ (67,45.43) (18,40.16)

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SCHEDULE XIII 2007 2006Rupees Rupees Rupees

lakhs lakhs lakhsOther Expenses :

Stores consumed .......................................................................................... 64,53.42 54,09.31

Tools consumed ............................................................................................ 14,30.49 14,14.63

Power and Fuel ............................................................................................. 65,19.22 57,46.36

Rent including lease rentals .......................................................................... 21,07.90 18,26.69

Rates and Taxes ............................................................................................ 22,12.42 24,67.71

Insurance ....................................................................................................... 12,66.84 9,41.21

Repairs and Maintenance [Note 13] :

Buildings ................................................................................................. 18,22.08 17,86.07

Machinery ............................................................................................... 68,80.32 54,43.72

Others .................................................................................................... 21,00.36 16,10.86

108,02.76 88,40.65

Advertisement ................................................................................................ 82,27.04 54,86.82

Commission on sales/contracts (Net) ........................................................... 52,84.60 57,04.36

Discount allowed ........................................................................................... 2,60.01 1,87.05

Freight outward ............................................................................................. 366,70.17 260,64.43

Sales Promotion Expenses ........................................................................... 130,68.54 83,89.06

Miscellaneous Expenses [Note 14] ............................................................... 357,04.87 294,06.41

Amortisation of Expenses [Note 1(E)(a)] ........................................................ 33.19 27.99

Directors’ fees ............................................................................................... 9.70 9.80

Donations and contributions ......................................................................... 6,25.97 5,48.56

Loss on Fixed Assets sold/scrapped/written off (Net) [Note 15] .................. 1,72.60 —

Excess of cost over fair value of Current Investments (Net) ......................... 2,36.09 68.55

Provision for doubtful debts/advances (Net) [Note 27] ................................. 7,71.44 81.11

Provision for diminution in value of Long term investments (Net) [Note 28] . — (22,17.50)

Total........ 1,318,57.27 1,004,03.20

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MAHINDRA & MAHINDRA LIMITED

SCHEDULE XIV

Notes on Accounts for the year ended 31st March, 2007

1. Significant Accounting Policies :

(A) Fixed Assets :

(a) (i) All Fixed Assets are carried at cost less depreciation except as stated in (ii) below. Cost includes financing cost relating toborrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the asset is ready for use.In case of borrowed funds and liabilities in foreign currencies for the acquisition of fixed assets from a country outside India, theexchange differences are adjusted to the cost of such asset.

When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of accountand resultant profit (including capital profit) or loss, if any, is reflected in the Profit and Loss Account.

(ii) Land and Buildings, had been revalued as at 31st October, 1984 at depreciated replacement values on the basis of a valuationmade by a firm of Chartered Surveyors & Valuers. The indices, if any, used are not stated in the valuation.

(b) (i) Leasehold land is amortised over the period of the lease.

(ii) Depreciation on assets is calculated on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to theCompanies Act, 1956, except for :

(1) certain items of Plant & Machinery individually costing more than Rs. 5,000 - over their useful lives (2 years, 3 years, 5 yearsor 7 years, as the case may be) as determined by the Company.

(2) Cars and Vehicles - at 15% of cost.

(iii) Depreciation charge for each year is after deducting the amount representing the depreciation on the increase due to revaluationof Land and Buildings, transferred from the Revaluation Reserve.

(B) Intangible Assets :

All Intangible Assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits areconsumed.

(a) Technical Knowhow :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year ofpurchase of the technology.

(b) Development Expenditure :

The expenditure incurred on technical services and other project/product related expenses are amortised over the estimated periodof benefit, not exceeding five years.

(c) Software Expenditure :

The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure isincurred.

(C) Investments :

All long term investments are valued at cost. However, provision for diminution in value is made to recognise a decline other thantemporary in the value of investments. Current investments are valued at the lower of cost and fair value, determined by category ofinvestment.

(D) Inventories :

Inventories are stated at cost or net realisable value, whichever is lower. Cost is arrived at on a weighted average method and includes,where appropriate, manufacturing overheads and excise duty. Long term contracts in progress are valued at cost.

(E) Miscellaneous Expenditure (to the extent not written off or adjusted) :

Expenditure carried forward under this head is being amortised as follows :

(a) Finance Charges :

The expenditure incurred in raising long term borrowings is amortised over the period of the borrowings. On early buyback,conversion or repayment of borrowings, any unamortised expenditure is fully written off in that year.

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MAHINDRA & MAHINDRA LIMITED

(b) Separation and Other Costs :

Special Payments/Pensions under Voluntary Retirement Schemes.

The liability is amortised over a period of five years from the month in which the liability is incurred.

(F) Foreign Exchange Transactions :

All foreign currency monetary items are translated at the relevant rates of exchange prevailing at the year end. In respect of forwardexchange contracts the premium or discount arising at the inception of such a contract is amortised as expense or income over the life ofthe contract.

In case of monetary items (other than those for acquisition of fixed assets from a country outside India) the exchange differences arerecognised in the Profit and Loss Account.

In the case of monetary items incurred for the acquisition of fixed assets and technical know-how from a country outside India, theexchange differences are adjusted to the cost of such assets.

(G) Revenue Recognition :

Sales of products and services are recognised when the products are shipped or services rendered. In respect of sale of property(concerning property development activity), the Company accounts for the income on the percentage of completion basis. [Refer paragraph(H) below].

Dividend from investments are recognised in the Profit and Loss Account when the right to receive payment is established.

(H) Property Development Activity :

The Company accounts for income on the percentage of completion basis which necessarily involves technical estimates of the percentageof completion, and costs to completion of the activity, on the basis of which profits/losses are accounted. Such estimates, made by theCompany and certified to the auditors, have been relied upon by them, as these are of a technical nature.

(I) Government Grants :

The Company is entitled to various incentives from a State Government, such as grants by way of refund of octroi duty paid by theCompany for its manufacturing unit located in a developing region. In view of the uncertainty in respect of the collection of these grants,such grants are accounted for as and when the disbursements are received.

(J) Employee Benefits :

i) Defined Contribution Plan

Company’s contributions paid/payable during the year to Provident Fund, Superannuation Fund, ESIC, and Labour Welfare Fund arerecognised in the Profit and Loss Account.

ii) Defined Benefit Plan/Long term compensated absences

Company’s liability towards gratuity, compensated absences and post retirement medical benefit schemes are determined byindependent actuaries, using the projected unit credit method. Past services are recognised on a straight line basis over the averageperiod until the benefits become vested. Actuarial gains and losses are recognised immediately in the statement of Profit and LossAccount as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted ratethat is determined by reference to the market yields at the Balance Sheet date on Government Bonds where the currency and termsof the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(K) Redemption Premium :

Premium payable on redemption of Bonds/Debentures is fully provided and charged to Securities Premium Account (net of tax) in the yearof issue.

(L) Product Warranty :

In respect of warranties given by the Company on sale of certain products, the estimated costs of these warranties are accrued at the timeof sale. The estimates for accounting of warranties are reviewed and revisions are made as required.

(M) Leases :

The Company’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns,computer hardware etc.). The leasing arrangements, which are not non-cancellable, range between eleven months and three yearsgenerally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals payable are charged as rentincluding lease rentals.

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MAHINDRA & MAHINDRA LIMITED

(N) Taxes on Income :

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject toconsideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate inone period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbeddepreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidencethat sufficient future tax income will be available against which such deferred tax assets can be realised.

(O) Excise duty recovered on sales is included in “Sales – Traded and Manufactured Goods”. Excise duty in respect of Finished Goodsmanufactured is shown separately as an item of expense and included in valuation of finished goods produced.

2. Share Capital :

Issued and Subscribed Capital include :

(i) 1,66,809 Ordinary Shares allotted as fully paid-up pursuant to a contract without payment having been received in cash.

(ii) 17,06,07,504 Ordinary Shares allotted as fully paid-up by way of Bonus Shares by capitalisation of Securities Premium Account andReserves.

(iii) 12,56,562 Ordinary Shares issued consequent to the Scheme of Amalgamation with the Union Bank of India Limited. Of these, 13,737Ordinary Shares were issued on conversion of 41,211 8% Bonds.

(iv) 12,98,202 Ordinary Shares issued consequent to the Scheme of Amalgamation with International Tractor Company of India Limitedwithout payment having been received in cash.

(v) 1,88,166 Ordinary Shares issued consequent to the Scheme of Amalgamation with Mahindra Spicer Limited without payment having beenreceived in cash.

(vi) 9,73,200 Ordinary Shares issued consequent to the Scheme of Amalgamation with Mahindra Nissan Allwyn Limited without paymenthaving been received in cash.

3. Reserves and Surplus :

2007 2006Rupees Rupees

lakhs lakhs(a) Movements during the year :

(i) Securities Premium Account :

Additions, arising out of exercise of options ............................................. 13.51 2,03.95

Premium on conversion of Debentures and Bonds .................................. 140,14.07 278,51.83

Reversal of premium on redemption of Zero Coupon Convertible Bonds

pursuant to conversion .............................................................................. 8,66.94 66,67.07

148,94.52 347,22.85

Applied, in accordance with Section 78 of the Companies Act, 1956,towards :

Writing-off of share and bonds/debenture issue expenses (net of tax ofRs. 47.68 lakhs (2006 : Rs. Nil)) ................................................................ 1,73.52 2,27.73

Premium on redemption/buyback of debentures and Zero Coupon

Convertible Bonds (net of tax of Rs. 8186.66 lakhs (2006 : Rs. Nil)) ....... 161,31.05 20.09

163,04.57 2,47.82

(ii) Revaluation Reserve :

Adjusted against depreciation for the year [Note 1 (A)(b) (iii)] 42.87 43.28

Adjusted in respect of revalued Land and Buildings sold/demolished 4.19 54.78

47.06 98.06

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MAHINDRA & MAHINDRA LIMITED

(b) The Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India requiresthat shares allotted to a trust but not transferred to employees be reduced from Share Capital and Reserves. Accordingly, the Companyhas reduced the Share Capital by Rs. 366.93 lakhs (2006 : Rs. 375.09 lakhs), Securities Premium by Rs. 1797.95 lakhs (2006 :Rs. 1837.93 lakhs) for the 36,69,279 shares (2006 : 37,50,884 shares) held by the trust pending transfer to the eligible employees.

The Share Capital of the Company has also been reduced and the General Reserve increased by Rs. 366.93 lakhs (2006 : Rs. 375.09lakhs) for the bonus shares issued by the Company in September 2005 to the trust but not yet transferred by the trust to the employees.The above monies which is treated as advance received from it, is included under current liabilities.

4. Loans :

(a) Debentures are redeemable at par as follows –

(i) Rs. 500 lakhs on 16th July, 2008.

(ii) Rs. 50 lakhs on 22nd May, 2011.

(iii) Also refer Note 4 (c) below.

(b) (i) All Debentures of Rs. 550.67 lakhs and certain Foreign Currency Loans from Banks of Rs. 3525.36 lakhs are secured by a pari-passu charge on immovable properties of the Company both present and future, subject to certain exclusions and are also securedby pari-passu charge on the movable properties of the Company including movable machinery, machinery spares, tools andaccessories, both present and future.

(ii) Loans and Advances from the Company’s Bankers are secured by a first charge on a pari-passu basis on the whole of the currentassets of the Company namely inventories, certain book debts, outstanding monies, receivables, claims etc. both present and future.

(c) Debentures of the face value of Rs. 110 each and Zero Interest Bonds of the face value of Rs. 90 each were both compulsorily andautomatically fully converted into two equity shares of Rs.10 each at a premium of Rs. 45 per share and Rs. 35 per share respectively on1st April, 1991, 1st October, 1991 and 18th July, 1992. The balance amount of Rs. 0.67 lakhs will be converted, into appropriate number ofequity shares, on receipt of the balance amount due on allotment.

(d) The following amounts are repayable by 31st March, 2008 :

(i) Debentures/Bonds.............................. ........................................... : Rs. Nil (2006 : Rs. 8500.00 lakhs)

(ii) Foreign currency loans from Banks ................................................ : Rs. 1175.12 lakhs (2006 : Rs. 5715.12 lakhs)

(iii) Fixed deposit holders ...................................................................... : Rs. 158.58 lakhs (2006 : Rs. 516.10 lakhs)

(iv) Rupee Loans - from others ............................................................. : Rs. 342.67 lakhs (2006 : Rs. 204.16 lakhs)

The Company had issued during the year ended 31st March, 2005, Zero Coupon Foreign Currency Convertible Bonds (Bonds 2009)aggregating US $ 100 million, at par. Out of these upto 31st March, 2007, Bonds aggregating US $ 97.30 million have been convertedinto equity shares/GDRs. Subsequent to the year end, Bonds aggregating US $ 0.90 million have been converted into equity shares/GDRs.

Premium payable on redemption of Bonds 2009 had been fully provided in the previous year by debiting the same to Securities PremiumAccount (SPA). Consequent to the conversion premium aggregating Rs. 866.94 lakhs no longer payable on bonds converted into equityshares/GDRs has been credited back to SPA during the year.

During the year, the Company issued Zero Coupon Foreign Currency Convertible Bonds (Bonds 2011) aggregating US $ 200 million, atpar. The bond holders have an option to convert these bonds into Equity Shares with full voting rights or Global Depository Receipts(GDRs) determined at an initial conversion price of Rs. 922.04 per share with fixed exchange rate of conversion of Rs. 44.42 = US $ 1, atany time on or after 7th May, 2006 upto 7th March, 2011.

The Bonds 2011 may be redeemed, in whole but not in part, at the option of the Company at any time on or after 13th April, 2008 subjectto satisfaction of certain conditions. Unless previously converted, redeemed or purchased and cancelled, the bonds fall due for redemptionon 14th April, 2011 at 128.03 per cent of their principal amount. Upto 31st March, 2007, none of the Bonds 2011 have been converted intoequity shares/GDRs.

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MAHINDRA & MAHINDRA LIMITED

The net proceeds of Rs. 85836.01 lakhs, unutilised as at 31st March, 2007, is disclosed under Cash and Bank balances.

The Company has during the year debited the provision for premium payable on redemption of convertible bonds to the SecuritiesPremium Account net of tax, in accordance with the Announcement “Tax effect of expenses/income adjusted directly against the reservesand/or Securities Premium Account” issued by The Institute of Chartered Accountants of India, which was hitherto being debited gross oftax. As a result the Securities Premium Account as at 31st March, 2007 is higher by Rs. 8186.66 lakhs, Deferred Tax Asset is higher byRs. 6761.45 lakhs, tax expense for the year is higher by Rs. 1425.21 lakhs and consequently the profit for the year is lower byRs. 1425.21 lakhs.

5. (a) Land includes a sum of Rs. 129.98 lakhs (2006 : Rs. 129.98 lakhs) for which the conveyance is pending receipt of approval from theappropriate authorities.

(b) The Company has filed the necessary return under Section 6 of the Urban Land (Ceiling and Regulation) Act, 1976, in respect of vacantland held by it and has also applied to the Government of Maharashtra under Section 20 of the said Act requesting for exemption of thesaid vacant land from the ceiling restrictions of the Act.

(c) Buildings include Rs. 0.05 lakhs (2006 : Rs. 0.04 lakhs) being the value of shares in co-operative housing societies.

(d) Additions to Plant and Machinery include Rs. 21.94 lakhs debit (Net) [2006 : Rs. 16.86 lakhs (credit) (Net)] on account of foreign exchangefluctuation.

(e) (i) The depreciation charge for the year excludes :

(a) An amount of Rs. 42.87 lakhs (2006 : Rs. 43.28 lakhs), representing depreciation on the increase due to revaluation of Landand Buildings transferred from the Revaluation Reserve.

(b) An amount of Rs. 3.06 lakhs (2006 : Rs. 3.10 lakhs), representing depreciation on assets used for development work. Thisexpenditure is transferred to Development Expenditure and is appropriately amortised.

(ii) The Revaluation Reserve is also adjusted for an amount of Rs. 4.19 lakhs (2006 : Rs. 54.78 lakhs) in respect of revalued Land andBuildings sold/demolished during the year.

(iii) The net credit to the Profit and Loss Account consequent to the above adjustments to the Revaluation Reserve is Rs. 47.06 lakhs(2006 : Rs. 98.06 lakhs).

6. Sundry Debtors others include Rs. 737.94 lakhs (2006 : Rs. 1561.46 lakhs), which, in accordance with the terms of the contracts, were notdue for payment as at 31st March, 2007.

7. Cash and Bank Balances include balances lying with non-scheduled banks :

(a) In Current AccountRupees lakhs

Bank Tejarat, Bank of Australia Bank of China The MunicipalTehran Co-op. Bank Ltd

Balance as at 31st March, 2007 0.06 1,37.07 62.28 2,32.29

Balance as at 31st March, 2006 0.06 2,54.26 7.84 1,16.54

Maximum balance during the year 0.06 6,43.25 77.52 3,81.32

Maximum balance during the previous year 0.06 5,24.51 19.41 2,35.94

(b) In Deposit Account

Rupees lakhs

Bank of Australia

Balance as at 31st March, 2007 –

Balance as at 31st March, 2006 15.58

Maximum balance during the year 15.58

Maximum balance during the previous year 15.58

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MAHINDRA & MAHINDRA LIMITED

8. Loans and Advances include :

(i) Fixed/Call deposits with/loans to limited companies Rs. 25906.05 lakhs (2006 : Rs. 7551.96 lakhs) including Rs. 25239.21 lakhs (2006 :Rs. 2876.26 lakhs) with/to subsidiaries.

(ii) Amounts paid towards joint development of property Rs. 154.05 lakhs (2006 : Rs. 154.05 lakhs).

(iii) Share Application money pending allotment Rs. 1571.94 lakhs (2006 : Rs. 8469.66 lakhs) to subsidiaries.

(iv) Amount held in escrow account towards acquisition of shares in companies Rs. 9972.13 lakhs (2006 : Rs. Nil).

9. (a) The identification of suppliers as Small Scale Industrial undertaking (SSIs) has been done on the basis of the information to the extentprovided by the suppliers to the Company. On this basis, the disclosure of total outstanding dues of SSIs and the names of SSIs shownin Schedule XVII has been made.

(b) Micro, Small and Medium enterprises have been identified by the Company on the basis of the information available. Total outstandingdues of Micro and Small enterprises, which are outstanding for more than the stipulated period are given below :

Rupees lakhs

(i) Dues remaining unpaid as at 31st March, 2007

Principal ............................................................................................................................................................ 1,49.93

Interest .............................................................................................................................................................. 0.22

(ii) Interest paid in terms of Section 18 of the Act ............................................................................................... –

(iii) Amount of interest due and payable for the period of delay on paymentsmade beyond the appointed day during the year ........................................................................................... 0.76

(iv) Amount of interest accrued and remaining unpaid as at 31st March, 2007 ................................................... 0.98

10. (a) Provision – Others Rs. 10381.58 lakhs (2006 : Rs. 8302.49 lakhs) includes provision for warranty Rs. 8532.18 lakhs (2006 : Rs. 6321.48lakhs). This, relates to warranty provision made in respect of sale of certain products, the estimated costs of which is accrued at the timeof sale. The products are generally covered under a free warranty period ranging from 6 months to 3 years.

(b) Provision for Contingencies Rs. Nil (2006 : Rs. 78.45 lakhs) is in respect of labour demands under negotiations at certain locations of theCompany.

(c) The movement in above provisions is as follows :

Warranty ContingencyRupees lakhs Rupees lakhs

Provisions 2007 2006 2007 2006

Balance as at 1st April, ........................................... 63,21.48 47,02.40 78.45 33.99

Add : Provision made during the year ................... 81,54.59 44,20.09 – 78.45

Less : Utilisation during the year ............................ 59,43.89 28,01.01 78.45 33.99

Balance as at 31st March, ................................... 85,32.18 63,21.48 – 78.45

11. (a) Sales include :

(i) Export benefits Rs. 4848.98 lakhs (2006 : Rs. 3135.78 lakhs).

(ii) Cost of items given for sales promotion/as donations Rs. 34.39 lakhs (2006 : Rs. 18.35 lakhs).

(b) Stock-in-Trade, Property Development Activity, includes completed premises Rs. 313.10 lakhs (2006 : Rs. 407.03 lakhs), which, pendingsale, have been given out on leave and licence basis for which fresh agreement is under negotiation.

12. (a) Dividends on other investments Rs. 3329.77 lakhs (2006 : Rs. 1266.38 lakhs) is in respect of current investments.

(b) Interest on Government Securities, Debentures and Bonds includes tax deducted at source Rs. 93.52 lakhs (2006 : Rs. 88.59 lakhs) andcomprise Rs. 133.24 lakhs (2006 : Rs. 158.53 lakhs) and Rs. 348.61 lakhs (2006 : Rs. 279.16 lakhs) in respect of long term and currentinvestments respectively.

(c) Interest received - others includes tax deducted at source Rs. 544.17 lakhs (2006 : Rs. 474.80 lakhs).

(d) Profit on sale of investments (net) includes profit on disposal of current investments (net) Rs. 562.00 lakhs (2006 : Rs. 569.96 lakhs), andprofit on disposal of long term investments (net) Rs. Nil (2006 : Rs. 257.04 lakhs).

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MAHINDRA & MAHINDRA LIMITED

13. Repairs and Maintenance includes machinery spares consumed Rs. 2110.08 lakhs (2006 : Rs. 1905.59 lakhs) but does not include itemsincluded under Consumption of Raw Materials and Bought-out Components and amounts charged to salaries and wages (amounts notascertained).

14. Miscellaneous Expenses include :

(a) Amounts paid/payable to Auditors (net of service tax where applicable) :

Statutory Auditors Cost AuditorsRupees lakhs Rupees lakhs

(i) Audit Fees .................................................................................................. 76.00 1.99

65.00 1.80

(ii) Company Law matters ............................................................................... 0.20 –

0.20 –

(iii) Other Services ............................................................................................ 47.05 1.47

22.56* –

(iv) Reimbursement of expenses :

As auditor ................................................................................................... 1.13 0.07

1.34 0.22

1,24.38 3.53

89.10 2.02

* Net of service tax of Rs. 8.41 lakhs pertaining to an earlier year.

The above amounts exclude Rs. 35.00 lakhs (2006 : Rs. Nil) paid to the Statutory Auditors which is being adjusted against SecuritiesPremium Account being FCCB issue expenses.

(b) An amount of Rs. 96.00 lakhs (2006 : Rs. 101.22 lakhs) payable as commission to non-wholetime Directors – Note 16 and Schedule XV.

(c) The cost of property sold including movement in work-in-progress in respect of property development activity are as under :

Rupees lakhs

2007 2006

Opening balance as on 1st April, ....................................................................................... 1,68.66 5,76.55

Add : Construction Cost .................................................................................................... 11.34 57.95

1,80.00 6,34.50

Less : Flats Capitalised ...................................................................................................... 1,68.15 –

Less : Cost of Property Development Activity – Work-in-Progress as at 31st March, ..... 0.10 1,68.66

1,68.25 1,68.66

11.75 4,65.84

15. Profit/Loss on fixed assets sold/scrapped/written off (net) includes an aggregate capital profit of Rs. 799.18 lakhs (2006 : Rs. 2356.64 lakhs).

16. Managerial remuneration for Directors included in the Profit and Loss Account is Rs. 615.14 lakhs (2006 : Rs. 688.79 lakhs) including Directors’fees of Rs. 9.70 lakhs (2006 : Rs. 9.80 lakhs), perquisites Rs. 119.79 lakhs (2006 : Rs. 193.03 lakhs) and commission Rs. 340.51 lakhs(2006 : Rs. 341.97 lakhs) (See Schedule XV) and excluding charge for gratuity, provision for leave encashment and post retirement medicalbenefits as separate actuarial valuation figures are not available. The above perquisites include amortisation of Employees Stock Optionsamounting to Rs. 10.96 lakhs (2006 : Rs. 16.30 lakhs).

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MAHINDRA & MAHINDRA LIMITED

17. Employee Defined Benefits :

Defined benefit plans – as per Actuarial valuation on 31st March, 2007Rupees lakhs

Gratuity Post Retirement(Funded) Medical Benefits

(Unfunded)

I. Expense recognised in the Statement of Profit and LossAccount for the year ended 31st March, 2007

1. Current Service Cost 13,38.60 19.66

2. Interest 13,24.04 23.03

3. Expected Return on plan assets (10,80.70) –

4. Actuarial (Gain)/Loss (8,63.66) (12.69)

5. Payments on account of employees transferred 66.98 –

6. Total expense 7,85.26 30.00

II. Net Asset/(Liability) recognised in the Balance Sheetas at 31st March, 2007

1. Present Value of Defined Benefit Obligation as at 31st March, 2007 184,42.82 3,21.71

2. Fair Value of plan assets as at 31st March, 2007 127,03.59 –

3. Funded status [Surplus/(Deficit)] (57,39.23) (3,21.71)

4. Net Asset/(Liability) as at 31st March, 2007 (57,39.23) (3,21.71)

III. Change in the obligation during the year ended 31st March, 2007

1. Present Value of Defined Benefit Obligation at the beginning of the year 173,07.75 3,07.85

2. Current Service Cost 13,38.60 19.66

3. Interest Cost 13,24.04 23.03

4. Actuarial (Gain)/Loss (8,63.66) (12.69)

5. Benefit payments (6,63.91) (16.14)

6. Present Value of Defined Benefit Obligation at the end of the year 184,42.82 3,21.71

IV. Change in Fair Value of Assets during the year ended 31st March, 2007

1. Fair Value of plan assets at the beginning of the year 109,65.85 –

2. Expected return on plan assets 10,80.70 –

3. Contributions by employer 13,20.95 16.14

4. Actual benefits paid (6,63.91) (16.14)

5. Fair Value of plan assets at the end of the year 127,03.59 –

6. Actual return on plan assets 10,80.70 –

V. The major categories of plan assets as a percentage of total plan

Funded with LIC 100% –

VI. Actuarial assumptions As at 31st March, 2007

1. Discount Rate 8.20%

2. Expected rate of return on plan assets 9.20%

3. In-service Mortality Indian Assured Lives Mortality(1994-96) Modified ultimate

4. Turnover Rate Age 21 to 44 - 2.00%Age 45 to 60 - 1.00%

5. Medical premium inflation 3.00%

VII. Effect of one percentage point change in the assumed One percentage point One percentage pointmedical inflation rate increase in medical in decrease medical

inflation rates inflation rates

1. Effect on the aggregate service and interest cost of Post EmploymentMedical Benefits 9.05 (5.80)

2. Effect on the accumulated Post Employment Medical Benefits obligations 41.55 (39.52)

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MAHINDRA & MAHINDRA LIMITED

Basis used to determine expected rate of return on assets :

Based on expectation of the average long term rate of return expected on investment of the fund, during the estimated term of obligation.

The estimate of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors,such as supply and demand in the employment market.

During the year the Company has adopted Accounting Standard (AS) 15 (revised 2005) Employee Benefits. Read with the Accounting StandardBoard Guidance on implementing AS 15, Employee Benefits (revised 2005) issued by The Institute of Chartered Accountants of India in May2007, the Company has

(i) Accounted for Rs. 8090.35 lakhs (Net of Tax of Rs. 4104.93 lakhs) as a reduction from Revenue Reserves.

(ii) Accounted as prior period adjustment (net of tax) Rs. 1918.84 lakhs being on account of Provision for Gratuity Rs. 2584.59 lakhs Gross(2006 : Rs. Nil) arising from certain refinements in the actuarial assumptions and accrual of Post Retirement Medical Benefits on anactuarial basis Rs. 307.85 lakhs Gross (2006 : Rs. Nil) and the resultant tax credit thereon is Rs. 973.60 lakhs.

18. The Company had allotted 55,24,219 ordinary (equity) shares in the year ended 31st March, 2002, to the Mahindra & Mahindra Employees’Stock Option Trust set up by the Company. The trust holds these shares for the benefit of the employees and issues them to the eligibleemployees as per the recommendation of the Compensation Committee.

In respect of options granted prior to 29th September, 2006, the equity settled options vest one year from the date of the grant and areexercisable on specified dates in 3 tranches within a period of 5 years from the date of vesting. The number of options exercisable in eachtranche is between the minimum of 100 and a maximum of 1/3rd of the options vested, except in case of the last date of exercise, where theemployee can exercise all the options vested but not exercised till that date.

Options granted on or after 29th September, 2006 vest in 4 equal instalments on the expiry of 12 Months, 24 Months, 36 Monthsand 48 Months from the date of grant. The options may be exercised on the date of vesting and on specified dates within 5 years from thedate of vesting. Number of vested options exercisable on each specified date is subject to a minimum of 50 or number of options vestedwhichever is lower, except in case of the last date of exercise, where the employee can exercise all the options vested but not exercised tillthat date.

The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value method.

Summary of Stock Options

No. of stock options Weighted averageexercise price (Rs.)

Options outstanding on 1st April, 2006 20,50,200 196.16

Options granted during the year 9,92,921 616.78

Options forfeited/lapsed during the year 48,735 421.65

Options exercised during the year 1,63,210 100.06

Options outstanding on 31st March, 2007 28,31,176 345.33

Options vested but not exercised on 31st March, 2007 18,64,156 304.52

Average share price on the date of exercise of theoptions are as under

Date of exercise Average share price (Rs.)

30th May, 2006 616.88

10th June, 2006 544.00

5th December, 2006 850.03

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MAHINDRA & MAHINDRA LIMITED

Information in respect of options outstanding as at 31st March, 2007.

Range of exercise price Number of options Weighted averageremaining life

Rs. 29.50 - Rs. 61.50 2,40,296 1.16 yrs

Rs. 215.00 - Rs. 227.00 15,89,748 4.12 yrs

Rs. 361.00 34,112 4.57 yrs

Rs. 616.00 - Rs. 620.00 9,67,020 6.67 yrs

The fair value of options granted during the year on 31st July, 2006 & 29th September, 2006 is Rs. 138.51 and Rs. 212.57 per share respectively.

The fair value has been calculated using the Black Scholes Options Pricing Model and the significant assumptions made in this regard are asfollows :

Grant dated Grant dated31-Jul-06 29-Sep-06

Risk free interest rate 7.55% 7.56%

Expected life 2.50 Years 3.00 Years

Expected volatility 35.62% 35.41%

Expected dividend yield 2.66% 2.66%

Exercise price 620.00 616.00

Stock Price 590.10 680.10

In respect of Options granted under the Employee Stock Option plan, in accordance with guidelines issued by SEBI, the accounting valueof the options is accounted as deferred employee compensation, which is amortised on a straight line basis over the period between the dateof grant of options and eligible dates for conversion into equity shares. Consequently, salaries, wages, bonus, etc. includes Rs. 172.90 lakhs(2006 : Rs 151.62 lakhs) being the amortisation of deferred employee compensation, after adjusting for reversals on account of optionslapsed.

Had the Company adopted fair value method in respect of options granted on or after 1st April, 2005, the employee compensation cost wouldhave been higher by Rs. 824.87 lakhs, Profit after tax lower by Rs. 824.87 lakhs and the basic and diluted earning per share would have beenlower by Rs. 0.35 & Rs. 0.32 respectively.

19. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March, 2007 is Rs. 36391.50lakhs (2006 : Rs. 22616.53 lakhs).

20. The Commissioner of Central Excise (Adjudication), Navi Mumbai, passed an order on 30th March, 2005, which was received by theCompany on 4th April, 2005, confirming the demand made on the Company for payment of differential excise duty (including penalty) ofRs. 30411.00 lakhs in connection with the classification of Company’s Commander range of vehicles, during the years 1991-1996. Whilst theCompany had classified the Commander range of vehicles as 10-seater attracting a lower rate of excise duty, the Commissioner of CentralExcise (Adjudication), Navi Mumbai, has held that these vehicles could not be classified as 10-seaters and as such attracted a higher rate ofexcise duty. In earlier proceedings, the Collector of Central Excise, Mumbai as also the Collector Central Excise (Appeals), Mumbai had upheldthe classification of these vehicles as 10-seaters. Similarly, certain statutory/expert bodies have also confirmed the concerned vehicles tobe 10-seater vehicles.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has also by its order dated 19th July, 2005 upheld this classification. Thedepartment’s Statutory Appeal against this order has been admitted by the Supreme Court.

The Company has been legally advised that the order dated 30th March, 2005 passed by the Commissioner is unsustainable in law and has filedan appeal against this order, along with stay application, before the CESTAT. The Company is confident that it would succeed in the case andthe Company’s stand that the Commander and Armada Vehicles are 10-seater vehicles would be upheld. As such, the Company does notexpect any liability on this account.

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MAHINDRA & MAHINDRA LIMITED

During the current year, the Commissioner of Central Excise, Nasik confirmed a demand of Rs. 24.55 crores and imposed a penalty ofRs. 20.00 lakhs in respect of Company’s Armada range of vehicles manufactured during the years 1992 – 1996, on the same grounds asadopted for Commander range of vehicles. The Tribunal has in this case too granted an unconditional stay against the order. The final hearingin the matter is awaited.

21. Contingent Liability :

(a) Guarantees given by the Company :

Amount of guarantees Outstanding amountsagainst the guarantees

2007 2006 2007 2006

Rupees lakhs Rupees lakhs Rupees lakhs Rupees lakhs

For employees .................................. 1,05.00 1,05.00 0.35 0.35

For other companies ........................ 50,95.00 52,70.00 46,94.00 27,17.00

(b) Claims against the Company not acknowledged as debts comprise of :

(i) Excise Duty, Sales Tax and Service Tax claims disputed by the Company relating to issues of applicability and classificationaggregating Rs. 5237.49 lakhs (Net of Tax : Rs. 4012.11 lakhs) [2006 : Rs. 13387.18 lakhs (Net of Tax : Rs. 9942.51 lakhs)].

(ii) Other Matters (excluding claims where amounts are not ascertainable) : Rs. 1026.62 lakhs (Net of Tax : Rs. 733.23 lakhs)[2006 : Rs. 514.38 lakhs (Net of Tax : Rs. 341.24 lakhs)].

(iii) Claims on capital account : Rs. 118.20 lakhs (2006 : Rs. 118.20 lakhs).

(c) Uncalled liability on equity shares partly paid Rs. 1050.00 lakhs (2006 : Rs. 1050.00 lakhs).

(d) Taxation matters :

(i) Demands against the Company not acknowledged as debts and not provided for, relating to issues of deductibility and taxability inrespect of which the Company is in appeal and exclusive of the effect of similar matters in respect of assessments remaining to becompleted :

— Income tax : Rs. 14053.00 lakhs (2006 : Rs. 11317.07 lakhs).

(ii) Items in respect of which the Company has succeeded in appeal, but the Income tax Department is pursuing/likely to pursue inappeal/reference and exclusive of the effect of similar matters in respect of assessments remaining to be completed :

— Income tax matters : Rs. 3796.45 lakhs (2006 : Rs. 4962.35 lakhs).

— Surtax matters : Rs. 12.80 lakhs (2006 : Rs. 12.80 lakhs).

(e) Bills discounted not matured Rs. 6266.43 lakhs (2006 : Rs. 8696.91 lakhs).

22. Research and Development expenditure debited to the Profit and Loss Account, including certain expenditure based on allocations made bythe Company, aggregate Rs. 14587.63 lakhs (2006 : Rs. 11535.83 lakhs) [excluding depreciation Rs. 2097.23 lakhs (2006 : Rs. 2427.53lakhs)].

23. The net difference in foreign exchange credited to the Profit and Loss Account is Rs. 277.95 lakhs (2006 : Rs. 171.23 lakhs). The credit onaccount of exchange differences in respect of forward exchange contracts, to be recognised in the Profit and Loss Account or capitalised insubsequent accounting periods is Rs. 52.26 lakhs (2006 : Rs. 40.90 lakhs debit).

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MAHINDRA & MAHINDRA LIMITED

24. Exceptional items of Rs. 12198.47 lakhs (2006 : Rs. 21001.18 lakhs) comprise of :

(a) Profit on sale of certain long term investments Rs. 12835.90 lakhs (2006 : Rs. 16757.83 lakhs) after considering a write back of provisionfor diminution in value of investment and other assets Rs. 2936.06 lakhs (2006 : Rs. Nil).

(b) A profit of Rs Nil (2006 : Rs. 4840.00 lakhs) arising out of the transfer of the right to carry on LCV business along with the congeries ofrights therein and intellectual property rights to its subsidiary Mahindra International Limited for a consideration of Rs. Nil (2006 :Rs. 4840.00 lakhs).

(c) Amortisation of liability and other retirement benefits made under Voluntary Retirement Schemes aggregating to Rs. 637.43 lakhs (2006 :Rs. 596.65 lakhs).

25. The components of Deferred tax liability and assets as at 31st March, 2007 are as under :

2007 2006Rupees lakhs Rupees lakhs

Deferred tax liability :

(i) On fiscal allowances on fixed assets ................................................................. 182,90.20 187,44.00

(ii) Others ................................................................................................................. 5,65.32 2,95.00

188,55.52 190,39.00

Deferred tax assets :

(i) Provision for Compensated absences ............................................................... 56,33.84 18,16.00

(ii) Provision for Doubtful debts/Advances .............................................................. 21,18.68 17,96.00

(iii) Premium on redemption of Zero Coupon Convertible Bonds ........................... 67,61.45 –

(iv) Provision for Gratuity .......................................................................................... 13,52.86 –

(v) Provision for Post Retirement Medical Benefits ................................................. 1,08.29 –

(vi) Others ................................................................................................................. 9,01.78 7,52.00

168,76.90 43,64.00

Net Deferred tax liability ............................................................................................. 19,78.62 146,75.00

26. Earnings per Share :

2007 2006

Amount used as the numerator – Balance of profit for 2006-2007 (Rupees lakhs) ....................... 1,068,38.65 857,10.49

(Gain)/Loss on difference in exchange on bonds (Rupees lakhs) ................................................... (24,08.15) 1,18.93

Amount used as the numerator for diluted earnings per share (Rupees lakhs) ............................. 1,044,30.50 858,29.42

Weighted average number of equity shares used in computing basic earnings per share ............ 23,66,07,123 22,51,11,765

Effect of potential ordinary (equity) shares on conversion of bonds/debentures ............................ 1,84,51,156 206,32,529

Weighted average number of equity shares used in computing diluted earnings per share .......... 25,50,58,279 24,57,44,294

Basic Earnings per share (Rs.) (Face value of Rs. 10 per share) .................................................... 45.15 38.07

Diluted Earnings per share (Rs.) ....................................................................................................... 40.94 34.93

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MAHINDRA & MAHINDRA LIMITED

27. Provision for doubtful debts and advances for the year comprises :

2007 2006Rupees lakhs Rupees lakhs

Provision for doubtful debts and advances made during the year(Net) (including Rs. Nil (2006 : Rs. Nil) pursuant to the Scheme ofArrangement approved by the Hon’ble High Court of Bombay on12th December, 2003). ..................................................................................... 7,71.44 81.11

Less: Transfer from Investment Fluctuation Reserve pursuant to the above

Scheme of Arrangement ................................................................................. – –

Total ................................................................................................................. 7,71.44 81.11

28. Provision for diminution in the value of long term investmentsfor the year comprises :

2007 2006Rupees lakhs Rupees lakhs

Provision for diminution in value of investments, made during the year (Net)(including provision of Rs. 1068.98 lakhs (2006 : Rs. 1230.00 lakhs) pursuantto the Scheme of Arrangement approved by the Hon’ble High Court ofBombay on 12th December, 2003). ................................................................. 10,68.98 (9,87.50)

Less : Transfer from Investment Fluctuation Reserve pursuant to the above

Scheme of Arrangement ................................................................................. 10,68.98 12,30.00

Total ................................................................................................................. – (22,17.50)

29. The outstanding derivative instruments as on 31st March, 2007 :

The Company has taken forward contracts to hedge exposures arising out of trade payables in foreign currency. Such outstanding forwardcontracts have been booked for fixing of exchange rates between cross currencies like Euro/JPY and the USD. The amounts hedged are JPY3500 lakhs and Euro 20 lakhs (2006 : JPY 2500 lakhs and Euro 35 lakhs)

The Exports receivables of the Company have been hedged in part by forward contracts US$ 272.73 lakhs (2006 : US$ 305 lakhs) and partlyUS$ Nil (2006 : US$ 120 lakhs) by a derivative structure in the form of “Range Forward”.

The Company has outstanding borrowings of JPY 53904 lakhs and US$ 200 lakhs (2006 : JPY 56864 lakhs and US$ 100 lakhs) under theExternal Commercial Borrowing facility. The borrowing of JPY 53904 lakhs (2006 : JPY 56864 lakhs and US$ 100 lakhs) has been completelyhedged using a currency swap structure converting the liability into a full fledged Rupee liability. The borrowing of US$ 200 lakhs (2006 : US$Nil) has not been hedged.

The Company has made an issue of US$ 1000 lakhs in the form of Foreign Currency Convertible Bonds in May, 2004 & US$ 2000 lakhs in theform of Foreign Currency Convertible Bonds in April, 2006. Out of these issues, Bonds of value US$ 2027.00 lakhs (2006 : US$ 352.70 lakhs)are outstanding and have not been hedged.

The Foreign Currency Exposures not hedged by a derivative instrument or otherwise as on 31st March, 2007 are – Receivablesof EURO 402.44 lakhs, GBP 8.56 lakhs, AUD 14.52 lakhs, JPY 220.23 lakhs, USD 1381.42 lakhs, RMB 1.01 lakhs andPayables of CHF 0.14 lakhs, SAR 1.09 lakhs, SEK 3.26 lakhs, SGD 0.40 lakhs, ZAR 57.16 lakhs. (2006 : Receivables of EURO 4.94 lakhs,GBP 1.87 lakhs, AUD 12.87 lakhs, CHF 0.14 lakhs, SEK 1.42 lakhs and Payables of USD 135.80 lakhs, AUD 0.14 lakhs, DKK 0.43 lakhs andSGD 0.15 lakhs).

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30. Related Party Transactions :

(a) Related parties where control exist :

(i) Subsidiaries :

Sl. No. Name of the Company Sl. No. Name of the Company

1. Mahindra Engineering & Chemical Products Limited 43. Stokes Group Limited

2. Mahindra Ashtech Limited 44. Jensand Limited

3. Mahindra Logisoft Business Solutions Limited 45. Stokes Forgings Limited

4. Automartindia Limited 46. Stokes Forgings Dudley Limited

5. Mahindra USA Incorporated 47. Plexion Technologies (India) Private Limited

6. Mahindra Gujarat Tractor Limited 48. Plexion Technologies (UK) Limited

7. Mahindra (China) Tractor Company Limited 49. Plexion Technologies GmbH

8. Mahindra Shubhlabh Services Limited 50. Plexion Technologies Incorporated

9. Mahindra & Mahindra South Africa (Pty) Limited 51. Mahindra Gesco Developers Limited (upto 10th October, 2006

10. Mahindra Europe s.r.l. & w.e.f. 30th March, 2007)

11. Mahindra Engineering Design & Development 52. Mahindra World City (Jaipur) Limited (upto 10th October, 2006

Company Limited & w.e.f. 30th March, 2007)

12. Mahindra SAR Transmission Private Limited 53. Mahindra World City Developers Limited (upto 10th October,

13. Mahindra Overseas Investment Company (Mauritius) Ltd. 2006 & w.e.f. 30th March, 2007)

14. Mahindra-BT Investment Company (Mauritius) Limited 54. Mahindra Infrastructure Developers Limited (upto 10th October,

15. Mahindra Intertrade Limited 2006 & w.e.f. 30th March, 2007)

16. Mahindra Steel Service Centre Limited 55. Mahindra Integrated Township Limited ( from 4th May, 2006

17. Mahindra Middleeast Electrical Steel Service Centre (FZC) to 10th October, 2006 & w.e.f. 30th March, 2007)

18. Mahindra Holdings & Finance Limited 56. Mahindra World City (Maharashtra) Limited (upto 10th October,

19. Mahindra Consulting Engineers Limited (formerly known as 2006 & w.e.f. 30th March, 2007)

Mahindra Acres Consulting Engineers Limited) 57. PT Tech Mahindra Indonesia (w.e.f. 28th April, 2006)

20. Mahindra Holidays & Resorts India Limited 58. Mahindra Forgings Overseas Limited (w.e.f. 11th August, 2006)

21. Mahindra Holidays and Resorts USA Incorporated 59. Mahindra Forgings International Limited (w.e.f. 27th September, 2006)

22. NBS International Limited 60. CanvasM Technologies Limited (w.e.f. 5th October, 2006)

23. Mahindra Ugine Steel Company Limited 61. CanvasM (Americas) Inc. (w.e.f. 5th October, 2006)

24. Mahindra & Mahindra Financial Services Limited 62. JECO Holdings AG (w.e.f. 29th November, 2006)

25. Mahindra Insurance Brokers Limited 63. Gesenkschmiede Schneider GmbH

26. Tech Mahindra Limited (w.e.f. 29th November, 2006)

27. Tech Mahindra (Americas) Incorporated 64. JECO-Jellinghaus GmbH (w.e.f. 29th November, 2006)

28. Tech Mahindra GmbH 65. Falkenroth Umformtechnik GmbH (w.e.f. 29th November, 2006)

29. Tech Mahindra (Singapore) Pte. Limited 66. Falkenroth Grundstucksgesellschaft GmbH

30. Tech Mahindra (Thailand) Limited (w.e.f. 29th November, 2006)

31. Tech Mahindra Foundation 67. Mahindra Forgings Mauritius Limited

32. Tech Mahindra (R & D Services) Limited (w.e.f. 5th December, 2006)

33. Tech Mahindra (R & D Services) Incorporated 68. Mahindra Forgings Global Limited (w.e.f. 7th December, 2006)

34. Tech Mahindra (R & D Services) Pte. Limited 69. Schöneweiss & Co. GmbH (w.e.f. 1st January, 2007)

35. Bristlecone Limited 70. Fried. Hunninghaus GmbH (w.e.f. 1st January, 2007)

36. Bristlecone Incorporated 71. Fried. Hunninghaus GmbH & Co. KG (w.e.f. 1st January, 2007)

37. Bristlecone UK Limited 72. DGP Hinoday Industries Limited (w.e.f. 6th January, 2007)

38. Bristlecone India Limited 73. iPolicy Networks Limited (w.e.f. 22nd January, 2007)

39. Bristlecone (Singapore) Pte. Limited 74. MHR Hotel Management GmbH (w.e.f. 12th March, 2007)

40. Bristlecone GmbH 75. Mahindra Stokes Holding Company Limited (w.e.f. 21st March, 2007)

41. Mahindra Renault Private Limited 76. Mahindra Forgings Limited (upto 21st May, 2006)

42. Mahindra International Limited (formerly known as Mahindra Automotive Steels Limited)

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(b) Other parties with whom transactions have taken place during the year.

(i) Associates :

Sl. No. Name of the Company Sl. No. Name of the Company

1. Mahindra Composite Limited (formerly known as Siroplast Limited) 5. Mahindra Forgings Limited (w.e.f. 22nd May, 2006)

2. Mahindra Construction Company Limited (formerly known as Mahindra Automotive Steels Limited)

3. Owens Cornings (India) Limited 6. Mahindra Gesco Developers Limited (from 11th October,

4. Mahindra Water Utilities Limited 2006 to 29th March, 2007)

(ii) Joint Ventures :

Sl. No. Name of the Company

1. Mahindra Sona Limited

(iii) Key Management Personnel :

Vice Chairman and Managing Director .................. Mr. Anand Mahindra

Executive Directors ................................................. Mr. B.N. Doshi

Mr. A.K. Nanda

(c) The related party transactions are as under :Rupees lakhs

Sl. No. Nature of Transactions Subsidiaries Associate Joint Ventures Key ManagementCompanies Personnel

1. Purchases :

Goods ................................................................... 226,86.50 55,13.69 39,27.28 -

(253,28.62) (5,65.70) (45,86.66) (-)

Fixed Assets ......................................................... 2,49.64 - 0.02 -

(41,36.55) (25.69) (-) (-)

Services ................................................................ 47,71.89 - - -

(68,08.12) (-) (-) (-)

2. Sales :

Goods ................................................................... 602,46.01 - - -

(439,55.89) (-) (0.39) (-)

Fixed Assets ......................................................... 61.40 - - -

(29,28.89) (-) (-) (-)

Services ................................................................ 30,84.64 5,83.04 2.40 -

(13,13.24) (-) (0.15) (-)

3. Investments :

Purchase ............................................................... 609,25.00 182,70.89 - -

(244,52.14) (-) (-) (-)

Sales/Redemption ................................................ 125,82.20 - - -

(16,61.76) (-) (-) (-)

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4. Share Application Money (Net) ............................. 15,71.94 - - -

(42,83.60) (-) (-) (-)

5. Deputation of Personnel :

From Related Parties ............................................ 29.10 - - -

(68.70) (-) (-) (-)

To Related Parties ................................................ 2,11.02 - - -

(3,86.27) (2.66) (-) (-)

6. Provision for diminution in value of otherassets written back .............................................. 3.35 - - -

(3,00.29) (45.00) (-) (-)

7. Finance :

Inter Corporate Deposits given ............................ 38,79.60 - - -

(6,90.00) (-) (-) (-)

Inter Corporate Deposits refunded by parties ..... 40,04.60 - - -

(9,75.00) (45.00) (-) (-)

Interest received ................................................... 9,02.79 - - -

(5,35.39) (31.63) (-) (1.17)

Dividend received ................................................. 114,09.69 - - -

(36,44.41) (-) (-) (-)

Dividend distributed ...................................... …… - - - -

(3.25) (-) (-) (-)

Security Deposits Accepted ................................. - - - -

(1,81.43) (-) (-) (-)

8. Guarantees & Collaterals given ............................ 32,25.00 - - -

(8,70.00) (-) (-) (-)

9. Other Transactions :

Other Income ........................................................ 5,61.46 6,16.85 4.67 -

(2,47.11) (1.20) (4.32) (-)

Other Expenses .................................................... 25,29.28 1,73.22 0.10 -

(5,01.51) (-) (-) (-)

(c) The related party transactions are as under : (Contd.)Rupees lakhs

Sl. No. Nature of Transactions Subsidiaries Associate Joint Ventures Key ManagementCompanies Personnel

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MAHINDRA & MAHINDRA LIMITED

Reimbursements received from parties ............... 24,67.20 34.17 2.59 -

(47,20.41) (1,32.31) (2.68) (-)

Reimbursements made to parties ........................ 19,16.85 18.73 - -

(11,63.74) (0.43) (-) (-)

Advance given ...................................................... 237,53.07 - - -

(2,35.00) (-) (-) (-)

Advance refunded ................................................ 9,00.00 - - -

(6,50.00) (2,00.00) (-) (-)

10. Outstandings :

Payable ................................................................. 28,56.63 3,94.80 9,22.89 2,45.46

(23,98.58) (-) (8,37.20) (2,15.86)

Receivable ............................................................ 351,28.96 2,96.79 1.75 -

(187,16.45) (2,39.61) (3.25) (-)

Inter Corporate Deposits given ............................ 17,08.76 4,59.42 - -

(18,33.76) (4,59.42) (-) (-)

Guarantees & Collaterals given ............................ 46,94.00 - - -

(27,17.00) (-) (-) (-)

11. Managerial Remuneration ..................................... - - - 4,98.47

(-) (-) (-) (5,61.47)

12. Dividends .............................................................. - - - 76.82

(-) (-) (-) (33.08)

13. Provision for diminution in value of other assets . 5,62.06 6,68.71 - -

(5,65.43) (6,68.71) (-) (-)

14. Provision for doubtful debts/advances ................ 1,61.66 - - -

(1,61.66) (8.32) (-) (-)

15. Share Application Money. ..................................... 15,71.94 - - -

(84,69.66) (-) (-) (-)

16. Stock Options ...................................................... - - - 4.74

(-) (-) (-) (8.38)

17. Loan Refunded by Key Management Personnel . - - - -

(-) (-) (-) (80.00)

Previous year’s figures are given in brackets.

The previous year figures are suitably regrouped.

(c) The related party transactions are as under : (Contd.)Rupees lakhs

Sl. No. Nature of Transactions Subsidiaries Associate Joint Ventures Key ManagementCompanies Personnel

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MAHINDRA & MAHINDRA LIMITED

The significant related party transactions are as under

Rupees lakhs

S.No. Nature of Transactions Subsidiaries Amount Associate Companies Amount Joint Ventures Amount

1. Purchase – Goods Mahindra Intertrade Ltd. 159,05.22 Mahindra Ugine - Mahindra 39,27.28(167,26.85) Steel Company Ltd. (4,16.07) Sona Ltd. (45,86.66)

Mahindra SAR Transmission 29,19.07 Mahindra Composite -Pvt. Ltd. (31,65,52) Ltd. (1,49.63)

Mahindra Forgings 53,61.81Ltd. (36,57.22)

2. Sale – Goods Mahindra USA Inc. 175,68.74 Mahindra -(194,00.72) Sona Ltd. (0.39)

Mahindra International Ltd. 114,92.36(44,62.63)

Mahindra & Mahindra South 196,18.64Africa (Pty) Ltd. (119,56.10)

3. Investment – Purchase Mahindra - Mahindra Forgings 48,50.00International Limited (52,33.12) Limited (80,00.00)

Mahindra Renault 103,21.42 Mahindra Gesco 134,20.89Private Limited (26,25.50) Developers Ltd. (-)

Stokes Group Limited -(28,96.55)

Plexion Technologies (India) -Private Limited (32,61.61)

Mahindra Forgings 286,50.11Overseas Ltd. (-)

Mahindra Forgings 78,15.97Mauritus Ltd. (-)

Mahindra Holdings & 25,00.00Finance Ltd. (-)

4. Investments – Sales Mahindra Holdings & 4,96.65Finance Ltd. (-)

Mahindra Stokes Holding 40,85.55Company Limited (-)

5. Investments – Redemption Mahindra Ugine Steel -Company Limited (16,61.76)

Mahindra Gesco 55,00.00Developers Limited (-)

Mahindra Holdings & 25,00.00Finance Ltd. (-)

6. Share Application Money(Net) Mahindra OverseasInvestment Company 15,71.94 Mahindra Forgings -

(Mauritius) Limited (1,32.82) Limited (48,50.00)

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MAHINDRA & MAHINDRA LIMITED

7. Advances Given Mahindra Forgings 119,37.55Overseas Limited (-)

Mahindra Forgings 118,15.52Mauritius Limited (-)

8. Inter Corporate Deposits given Mahindra Shubhlabh -Services Limited (2,50.00)

Mahindra International -Limited (1,25.00)

Mahindra Engineering -Design& Development (2,40.00)

Company Limited

Plexion Technologies -(India) Private Limited (75.00)

Mahindra Overseas 32,79.60Investment Company (-)

(Mauritius) Ltd.

9. Inter Corporate Deposits Mahindra Intertrade - Mahindra Construction -refunded by parties Limited (1,50.00) Company Limited (45.00)

Mahindra Holdings & -Finance Limited (2,10.00)

Mahindra Shubhlabh -Services Limited (2,50.00)

Mahindra International -Limited (1,25.00)

Mahindra Engineering -Design & Development (2,40.00)

Company Limited

Mahindra Overseas 32,79.60Investment Company (-)

(Mauritius) Ltd.

10. Guarantees given Mahindra Overseas 32,25.00Investment Company (8,70.00)

(Mauritius) Limited

Previous year’s figures are given in brackets.

31. Joint Venture Disclosure

i) Jointly Controlled Entities by the Company :

Name of the Entity Country of Incorporation % Holding

a) Mahindra Sona Limited * ............................................................................ India 29.77 %

b) PSL Erickson Limited* ................................................................................ India 18.06 %

* Shareholding is through a subsidiary, Mahindra Holdings & Finance Limited.

The significant related party transactions are as under (Contd.)

Rupees lakhs

S.No. Nature of Transactions Subsidiaries Amount Associate Companies Amount Joint Ventures Amount

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MAHINDRA & MAHINDRA LIMITED

ii) Interests in the Assets, Liabilities, Income and Expenses with respect to Jointly Controlled Entities.

2007 2006Rupees lakhs Rupees lakhs

I ASSETS

1 Fixed Assets ............................................................................................................. 4,86.98 4,78.32

2 Investment ................................................................................................................ 3.38 3.38

3 Current Assets, Loans and Advances

a Inventories ........................................................................................................ 4,05.76 3,86.71

b Sundry Debtors ................................................................................................ 11,91.10 10,58.97

c Cash and Bank Balances ................................................................................ 2,41.53 1,67.32

d Loans and Advances ....................................................................................... 1,15.21 1,25.73

4 Deferred Tax – Net ................................................................................................... 40.74 23.84

II LIABILITIES

1 Loan Funds

a Secured Loans ................................................................................................. 2,23.34 3,19.63

b Unsecured Loans ............................................................................................. 50.48 50.48

2 Current Liabilities and Provisions

a Liabilities ........................................................................................................... 6,08.68 6,14.99

b Provisions ......................................................................................................... 2,68.20 2,51.47

III INCOME

1 Sales ......................................................................................................................... 49,92.15 41,39.19

2 Other Income ........................................................................................................... 1,13.89 1,20.68

IV EXPENSES

1 Raw Materials, Finished and Semi Finished Products ............................................ 28,55.01 24,57.74

2 Excise Duties ............................................................................................................ 4,11.43 3,38.88

3 Manufacturing, Selling Expenses, etc. ..................................................................... 10,50.58 8,39.14

4 Depreciation/Amortisation ........................................................................................ 56.71 52.23

5 Provision for Taxation ............................................................................................... 2,39.80 1,94.83

V OTHER MATTERS

1 Contingent Liabilities ................................................................................................ 3,01.79 2,82.09

2 Capital Commitments ............................................................................................... 11.60 1.56

32. Additional information pursuant to the provisions of paragraphs 3(i)(a) and (ii), 4C and 4D of Part II of Schedule VI to the Companies Act, 1956- See Schedule XVI. Previous year’s figures are indicated below the current year’s figures.

33. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 - See Schedule XVIII.

34. Previous year’s figures have been regrouped/restated wherever necessary.

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MAHINDRA & MAHINDRA LIMITED

SCHEDULE XV

Computation of Net Profit in accordance with Section 309(5) of the Companies Act, 1956 for the year ended 31st March, 2007

2007 2006Rupees Rupees Rupees

lakhs lakhs lakhs

Profit before Taxation as per Profit and Loss Account .................................................................. 1,437,67.10 1,099,50.49

Add : Depreciation/Amortisation charged in the Accounts ..................................................... 209,58.65 200,00.53

: Directors’ Remuneration including Directors’ fees ......................................................... 6,15.14 6,88.79

: Provision for doubtful debts and advances (Net) .......................................................... 7,71.44 81.11

: Profit on sale of Fixed Assets as per Sec 349 (3)(d) of the Companies Act, 1956 (Net) 4.07 —

: Loss on sale, etc. of Fixed Assets (Net) ........................................................................ 1,72.60 —

: Net reduction in the fair value of current investments ................................................... 2,36.09 68.55

: Voluntary Retirement Schemes amortisation included in Exceptional Item ................... 6,37.43 5,96.65

: Provision for diminution in value of long term investments (Net) ................................... — (22,17.50)

233,95.42 192,18.13

1,671,62.52 1,291,68.62

Less : Depreciation under Section 350 of the Companies Act, 1956 ..................................... 175,90.05 171,68.98

: Profit on sale of Investments (Net) ................................................................................. 133,97.90 175,84.83

: Prior Period Adjustments Gross of Tax [Refer Note 17] ................................................ 28,92.44 —

: Profit on sale, etc. of Fixed Assets (Net) ....................................................................... — 17,89.78

: Loss on sale of Fixed Assets as per Section 349 (3)(d) of the Companies Act, 1956 (Net) — 1,34.40

: Profit on sale of LCV business together with congeries of rights ................................. — 48,40.00

338,80.39 415,17.99

Total..... 1,332,82.13 876,50.63

Commission payable to the wholetime Directors restricted to ...................................... 2,44.51 2,40.75

Commission payable to the non-wholetime Directors restricted to .............................. 96.00 1,01.22

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MAHINDRA & MAHINDRA LIMITED

SCHEDULE XVIAdditional Information pursuant to the Provisions of Paragraphs 3 (i)(a) and (ii), 4C and 4D, of Part II of Schedule VI to the Companies Act, 1956.

(A) PARTICULARS IN RESPECT OF GOODS MANUFACTURED :

Sl. Class of Goods Unit of Licensed Installed ActualNo. Measurement Capacity Capacity Production

per annum per annum [Notes (ii)[Note (i)] [Note (i)] & (iii)(a)]

1. a. On Road Automobiles having four or morewheels such as light, medium and heavycommercial vehicles, jeep type vehicles andpassenger cars covered under sub heading (5)of Heading (7) of First Schedule[Note (iv) below] .................................................... Nos. 2,76,000 1,92,000 1,34,665

2,21,000 1,56,000 1,25,896b. Three Wheelers ..................................................... Nos. 80,000 54,000 34,892

80,000 36,000 22,3172. a. Agricultural Tractors [Note (vi) below] ...................... Nos. 1,69,000 1,58,000 1,01,202

1,69,000 1,35,500 83,708b. Tractor Skids ......................................................... These are

manufacturedagainst spare

capacity under 2(a) 2,6453,367

3. Manufactured and Purchased Parts and Accessories . Nos. These are for sale [Notes (iii)(a) and (b) below] ........................... manufactured

against sparecapacity under1 and 2 above 1,87,449

2,10,1414. Internal Combustion Piston Engines .............................. Nos. 1,10,000 1,10,000 1,00,076

1,10,000 1,02,000 92,2655. Petrol/Diesel Engines 15 HP to 80 HP [Note (i)(c) below] Nos. - - -

- - 4386. Industrial Petrol Engines ................................................. Nos. 500 500 -

500 500 -7. Agricultural Implements ................................................... Nos. 2,38,000 - -

2,38,000 - -8. Parts and accessories of motor vehicles ....................... Nos. 5,00,000 1,25,000 1,04,971

5,00,000 1,25,000 1,05,3789. Internal Combustion Engine ........................................... Nos. 50,000 39,000 36,973

50,000 33,600 27,27810 D. G. Sets ....................................................................... Nos. Assembly 8,877

at 3rd Party 1,085Locations

11 D. G. Sets ....................................................................... Nos. 24,000 - -- - -

12 Export benefits ................................................................

* Used for Captive Consumption

Notes :

(i) (a) The installed capacity has been certified by Presidents, which the auditors have relied on without verification as this is a technical matter.

(b) The licensed capacities include/represent, as the case may be, registrations granted and Industrial Entrepreneur Memorandum filed with,and duly acknowledged by, the Government pursuant to the schemes of de-licensing. [Also see note (vi) below].

(c) Within the overall licensed capacity in item 1 above, the Company is permitted to manufacture for outside sale 10,000 petrol/dieselengines and 4000 tonnes grey iron castings. The information given against item 5 is in respect of such petrol/diesel engines transferred tothe Marketing Unit for sale.

(d) Bullet proof work and fabrication on base vehicles has been carried out at third party facilities. 190 (2006 : 172) vehicles were producedand sold using such third party facilities and are included in item (A) 1(a).

(e) The installed capacity mentioned against item no. (A) 1(a) above includes 42000 (2006 : 18000) for production of vehicles for third parties.

(ii) Actual Production includes production for captive consumption.

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MAHINDRA & MAHINDRA LIMITED

SCHEDULE XVI (Contd.)

Opening Stock Closing Stock Sales

Quantity Value Quantity Value Quantity ValueRupees lakhs Rupees lakhs Rupees lakhs

5,869 204,48.53 4,473 179,73.89 1,35,707 6,373,48.395,186 178,39.25 5,869 20,448.53 1,24,997 5,646,23.421,157 15,59.94 2,312 26,63.11 33,718 405,72.031,302 16,17.66 1,157 15,59.94 22,419 318,57.485,846 132,67.43 7,163 164,72.98 99,797 3,093,00.243,720 85,54.95 5,846 132,67.43 81,556 2,415,02.00

120 5,80.12 119 4,22.18 2,637 120,16.1063 2,79.97 120 5,80.12 3,306 137,58.44

- 62,81.18 - 64,21.21 - 575,32.00- 45,38.94 - 62,81.18 - 522,19.39

379 3,74.11 917 2,91.65 11,411 106,79.93335 2,93.60 379 3,74.11 281 2,48.86

- - - - - -28 9.47 - - - -

- - - - - -- - - - - -- - - - - -- - - - - -6 0.52 70 3.34 2,532 3,53.44

290 9.81 6 0.52 2,354 3,38.2166 -* 90 -* - -

179 - 66 - - -1 1.29 97 1,22.64 8,781 175,19.01- - 1 1.29 1,084 16,75.31

- - - - - -- - - - - -

48,48.9831,35.76

Total..... 10,901,70.129,093,58.87

(iii) (a) The actual production disclosed against manufactured components/sub-assemblies/steel blanks is the number of such componentstransferred during the year to the Marketing Unit/Spare Parts Stores for sale or sold otherwise.

(b) The Opening and Closing Stocks and Sales of goods shown under item 3 above consist of manufactured and purchased parts. Thebifurcation of stocks/sales into manufactured and bought-out parts is not practicable.

(iv) Production figures include “jeep type vehicles” at a stage without body, and light commercial vehicles at cowl & chassis stage. Closing stocksinclude 1 (2006 : 14) vehicles valued at Rs. 3.16 lakhs (2006 : Rs. 31.27 lakhs) on which body-building work was in progress as at the year end.

(v) With regard to clause 3(ii) of Part II of Schedule VI to the Companies Act,1956, the Company is of the view that, in respect of the propertydevelopment activity, the Company is not a ‘manufacturing’, a ‘trading’ or a ‘service’ company falling under sub-clause (a), (b) and (c) thereof,but it is an ‘other’ company falling under sub-clause (e) thereof.

(vi) Licensed capacity in respect of Agricultural Tractor includes a Letter of Intent from the Government of India for expansion of the manufacturingcapacity from 25,000 to 60,000 tractors at Mumbai subject to fulfillment of conditions mentioned therein; an Industrial License will be issued onfulfillment of the conditions mentioned in the Letter of Intent.

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MAHINDRA & MAHINDRA LIMITED

SCHEDULE XVI (Contd.)

(B) PARTICULARS IN RESPECT OF GOODS TRADED :

Purchases Opening Stock Closing Stock Sales

Sl. Unit ofNo. Class of Goods Measurement Quantity Value Quantity Value Quantity Value Quantity Value

Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs

1. Tractors ................................................. Nos. 109 3,87.70 41 1,25.54 33 1,12.13 97 4,60.55194 5,38.13 15 48.67 41 1,25.54 167 6,83.73

2. Agricultural Implements ........................ Nos. 6,588 17,67.22 1,006 1,56.56 1,645 3,50.40 5,860 22,23.803,847 6,44.39 1,003 1,54.51 1,006 1,56.56 3,759 6,99.97

3 Light Commercial Vehicles .................... Nos. 254 9,61.10 - - - - 254 10,94.16175 5,86.75 - - - - 175 6,20.60

4. Bought-out Spares for Resale[Note (iii)(b) to item “A”] ........................ 217,93.90 - - -

210,74.92 - - -5. Others ................................................... 70.56 - - 1,01.60

2.98 - - 2.98

Total..... 249,80.48 2,82.10 4,62.53 38,80.11228,47.17 2,03.18 2,82.10 20,07.28

Note (v) to item (A).

(C) PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED :

Sl. Unit of ValueNo. Description Measurement Quantity Rupees lakhs

1. Steel Items (Sheets, Tubes, etc.) ............................................................................ Nos. 77,9091,83,050

Sq.Feet 76 213,87.35- 204,74.88

Metric Tonnes 56,94452,825

2. Aluminium Sections and Other Aluminium Items .................................................... Metric Tonnes 131,34.425125,47.03Kgs. 88,533

-

3. Other Metals (Steel Shots, Lead, Tin, etc.) ............................................................. Metric Tonnes 66.63 26.6369.00 22.16

4. Paints ....................................................................................................................... Nos. 34,93686,212

Kgs. 16,24,099 58,39.4517,25,723 54,44.75

Litres 26,72,99425,32,947

5. Steel Scrap .............................................................................................................. Metric Tonnes 4,398 7,16.615,413 8,18.56

}

}

}

113

MAHINDRA & MAHINDRA LIMITED

(C) PARTICULARS OF RAW MATERIALS AND COMPONENTS CONSUMED (Contd.):

Sl. Unit of ValueNo. Description Measurement Quantity Rupees lakhs

6. Pig Iron ..................................................................................................................... Metric Tonnes 1,839 2,73.672,094 3,17.21

7. Miscellaneous Foundry Materials ............................................................................. Nos. 12,05,71413,37,921

Metric Tonnes 6,678 4,87.077,733 5,27.16

Litres 1,90,1942,20,965

8. Other Materials (Direct Stores, Patterns, Oils, etc.) ................................................ Not practicableto give quantitativedetails *57,17.72

*43,42.66

9. Tyres and Tubes ....................................................................................................... Nos. *22,40,763 *357,55.28*20,82,052 *264,99.71

10. CKD Components for Light Commercial Vehicles .................................................. Nos. - -1,909 3,73.94

11. Components other than Tyres and Tubes (including processing charges) ............. *5,622,03.16*4,750,56.96

12. Material handling and transportation charges, etc. incurred on the above itemsnot separately allocable ........................................................................................... 283,10.70

244,24.56

Total..... 6,608,52.065,588,49.58

* Includes items used for other than production, amounts not ascertained.

Notes :

(i) The consumption in value has been ascertained on the basis of opening stock plus purchases less closing stock and includes the adjustmentof excesses and shortages as ascertained on physical count and write-off of obsolete and unserviceable raw materials and components.

(ii) The consumption in value shown against item 11 is a balancing figure based on the total consumption shown in the Profit and Loss Account.

}

(D) VALUE OF IMPORTS ON C.I.F. BASIS ACCOUNTED FOR DURING THE YEAR :

2007 2006Rupees lakhs Rupees lakhs

1. Raw Materials (including CKD Components for Light Commercial Vehicles) ......... 17,96.23 36,85.66

2. Components, Spare Parts, etc. ............................................................................... 107,45.59 97,86.94

3. Capital Goods .......................................................................................................... 82,72.37 29,07.16

4. Items imported for Resale ....................................................................................... 8,00.14 9,21.39

Total….. 216,14.33 173,01.15

Notes :(i) Credits, if any, recoverable in respect of short landings, etc. are not considered.(ii) The value of imports shown above includes :

(a) Imports on C&F basis as per suppliers’ invoices Rs. 1601.34 lakhs (2006: Rs. 2269.74 lakhs)

(b) Imports on ‘cost’ basis Rs. 13058.47 lakhs (2006 : Rs. 12197.97 lakhs)

SCHEDULE XVI (Contd.)

114

MAHINDRA & MAHINDRA LIMITED

(E) EXPENDITURE IN FOREIGN CURRENCIES (SUBJECT TO DEDUCTION OF TAX WHERE APPLICABLE) :

2007 2006Rupees lakhs Rupees lakhs

1. Professional and Consultancy Fees [ including Rs. 40.25 lakhs(2006 : Rs.19.42 lakhs) capitalised] ........................................................................ 18,59.23 5,65.41

2. Commission on Exports .......................................................................................... 15,53.85 14,49.003. Royalty ..................................................................................................................... 6.70 1.144. Interest ..................................................................................................................... 15,98.29 13,52.215. Others ...................................................................................................................... 39,63.44 25,78.97

Total..... 89,81.51 59,46.73

Notes :(1) Fee for use of technology, development expenditure and software expenditure [refer to in Note 1 (B)] :

(a) written off during the year Rs. 265.31 lakhs (2006 : Rs. 15.36 lakhs); and(b) amount remitted during the year Rs. 1845.41 lakhs (2006 : Rs. 428.43 lakhs) net of tax deducted at source Rs. 182.24 lakhs (2006 : Rs.

11.12 lakhs) are not included in the above figures.

(F) REMITTANCE IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDENDS TO NON-RESIDENT SHAREHOLDERS :

Number of Amount remitted Dividend relating to

Shareholders Equity shares

Rupees lakhs

2007 : 5 4,87,984 48.80 Year ended 31st March, 2006

2006 : 2 2,43,393 31.64 Year ended 31st March, 2005

(G) EARNINGS IN FOREIGN EXCHANGE :2007 2006

Rupees lakhs Rupees lakhs1. Export of goods on F.O.B. basis ............................................................................. 614,96.08 465,10.26

2. Interest ..................................................................................................................... 51,86.41 11,15.75

3. Others (freight, etc.) ................................................................................................. 46,04.17 31,81.71

Total..... 712,86.66 508,07.72

Notes :F.O.B. value of exports includes local sales which qualify for export benefits and for which payment is receivable in foreign currency and local/export sales under rupee credit which qualify for export benefits.

(H) VALUE OF IMPORTED AND INDIGENOUS CONSUMPTION :

*Raw Materials and Components

Rupees lakhs %1. Imported 130,82.09 1.98

103,98.47 1.86

2. Indigenously obtained 6,477,69.97 98.025,484,51.11 98.14

Total..... 6,608,52.06 100.005,588,49.58 100.00

* Includes items used for other than production, amount not ascertained.

Notes :

(1) Items purchased through canalising agencies have been considered as imported.(2) See Note (i) to item (C).(3) In giving the above information the Company has taken the view that spares and components as referred to in paragraph 4 (D)(c) of Part II

of Schedule VI covers only such items as go directly into production.

SCHEDULE XVI (Contd.)

115

MAHINDRA & MAHINDRA LIMITED

SCHEDULE XVII

Following are the names of Small Scale Industrial Undertakings (SSIs) to whom the Company owes and which are outstanding for more than 30 daysas on 31st March, 2007.

Sr. No. Name of the SSIs Sr. No. Name of the SSIs Sr. No. Name of the SSIs

1 AMETEEP MACHINE TOOLS PRIVATE LTD.2 ASIA AUTOMOTIVE LTD3 AUTOLEC INDUSTRIES LTD4 VIREN SALES CORPORATION5 ARMATECH ASSOCIATES6 ANTHIA MACHINE TOOLS7 APT PNEUMATICS PVT LTD.8 AAKASH ENGINEERS9 ASHRA CONSULTANTS (P) LTD

10 AUTOMOTIVE ENGG WORKS11 AYTIDA TOOLS PVT. LTD.12 BALA INDUSTRIES13 BHARAT KUMAR & CO14 BUI PRIVATE LIMITED15 A.R.INDUS16 HIND AUTO17 CENTURY ALLOY INDUSTRIES18 CONSOLIDATED HOISTS PRIVATE

LIMITED19 HEMANT TOOLS PVT LTD20 KRAMPE HYDRAULIC PVT LTD21 TRISTAR ENGINEERS22 D M CORPORATION23 A.J.AUTO PVT.LTD.24 A.R.CORPORATION25 A-1 PRODUCTS26 ABS RUBBER PRODUCTS27 ACCURATE SPRINGS28 ACME ENGINEERS (P) LTD29 ADITYA AUTO PARTS PVT LTD30 AERONA INDUSTRIAL SPRINGS31 AJANTA AGENCIES.32 ALF ENGINEERING PVT LTD33 ALLIED SPARES AND AUTO34 ALMATS PRINT PACK PVT LTD35 ALPUMP PVT LTD36 AMAR AUTO AGENCY37 AMARDEEP ENGINEERS38 AMTEK39 AMUL INDUSTRIES LTD40 ANIL WELDMESH FAB STEEL & WIRE41 ANITHA ENTERPRISES42 ATIT ENGINEERING COMPANY43 ATOP PRODUCTS PRIVATE LIMITED44 AUTOSILENCERS INDIA45 AUTO TURN INDUSTRIES46 AUTO WINDOW47 AUTOFORMS48 AUTO MECH49 AUTOMOTIVE INDUSTRIES50 AUXI AUTO51 AVANTI COMPONENTS52 AVDEL INDIA LTD.53 AVESTA ENTERPRISES PVT LTD.54 A J INDUSTRIES55 AMBUJA INDUSTRIES56 ATAI FILTERS PVT LTD57 AUTO SHELL FOUNDRY58 AEROCOM AUTOMOTIVES PVT.LTD.59 BABA ENTERPRISES60 BEHZAD ENGINEERING PVT LTD61 BEMCO INDIA62 BENARA UDYOG PRIVATE LTD63 BERU DIESEL START SYSTEMS PVT LTD64 BHAGYASHRI HOME APPL P LTD65 BILL INDUSTRIES66 BLOW RUBBER INDUSTRIES67 BOBSON ENGINEERS AND

CONTRACTORS68 BOMBAY COMMERCIAL SYNDICATE69 BOMBAY TRPT ELECT COMPONENT

PVT LTD70 BRYTAX AUTO INDUSTRIES LTD.

71 CAMATA ENTERPRISES72 CARLINE PRESSINGS PVT. LTD.73 CASPRO METAL INDUSTRIES PVT LTD74 CAST METAL INDUSTRIES P.LTD75 CASTALL INDUSTRIES76 CASTWEL AUTOPARTS PVT. LTD77 CHAMP ENGINEERING WORKS78 CHANDAN ENTERPRISE.79 CHEMETALL - RAI INDIA LTD.80 CIRCLIPS INDIA (P) LTD.81 D G CORPORATION82 DELITE PLASTICS83 DELTA ENTERPRISE84 DELUX ENGINEERING85 DESHPANDE AUTOMECH PVT LTD86 DEVI ENTERPRISES87 DHAM FASTENERS88 DIN ENGG CORPORATION89 DURANO PROCESS (HYDERABAD)90 DEEPJYOTE PAINT INDUSTRIES91 DEEPNSHO INDUSTRIES92 DWARAKA INDUSTRIES93 EASTMAN CAST & FORGE LIMITED94 EHARA ENGINEERING PVT LTD95 EHARA INDUSTRIES96 ELECTROMAGS AUTOMOTIVE

PRODUCTS97 EXCEL AUTO INDUSTRIES98 EXCEL PACKAGING99 EATA PLAST FABRICS

100 EKVIRA COATS101 EAGLE ENTERPRISES102 FIBRE FOAM (BOMBAY) PVT LTD103 SR FIBREGLASS AUTO PVT. LTD104 FORMATIC ENGINEERING WORKS105 FORTUNA ENG (NASIK) P LTD106 FREE FIELD ENGINEER107 FRIENDS AUTO INDUSTRIES108 FRIENDS INDUSTRIAL WORKS109 F TOOL TECH110 FABOMECH ENGINEERS111 FIBREGLASS FABRICATIONS112 GANESH ENGINEERING.113 GAUTAM CASTING INDS. PVT LTD114 GAUTAM TECHNOCAST115 GEAR MASTER ENGINEERING

CORPORATION116 GENEVA ENGINEERING WORKS117 GUJARAT STEEL INDUSTRIES118 GAINMAX FERRO CAST PVT LTD119 H N ENTERPRISES120 HIMSONS STEEL PVT. LTD.121 HIND AUTO CRANKS PVT. LTD.122 HINDUSTAN ENGINEERS.123 HINDUSTAN FASTENERS PVT LTD124 HODEK VIBRATION TECHNOLOGIES P

LTD125 HEM ENGG WORKS126 HERALD ENGINEERS127 IMPRESSIVE IMPRESSIONS128 INDIAN ENGINEERING CO129 INDU ENGINEERS130 INDUSTRIAL ENGG SYNDICATE131 INDUSTRIAL RUBBER PRODUCTS132 INTERFACE MICROSYSTEMS133 INNOVA RUBBERS PVT. LTD.134 J B INDUSTRIES135 J M INDUSTRIES136 J.P.TOOLS & COMPONENTS137 JAI INDUSTRIES138 JAY INDUSTRIES139 JAY USHIN LTD140 JITESH ENTERPRISES

141 JYOTI PRODUCTS PRIVATE LIMITED142 K V ENTERPRISES143 KAY KAY FLUID SEALS LTD144 KAYGEE FOAM PVT LTD145 KISHORE ENGINEERING WORKS146 KLIPCO PRIVATE LTD147 KYM ASSEMBLERS & MANUFACTURERS148 K P TOOLS PVT LTD149 KELVIN ENGINEERS150 KIRAN MECHANICAL INDUSTRIES.151 KSHITIJ ENTERPRISES152 LALIT METAL INDUSTRIES153 LAXMI NARASIMHA RUBBER

INDUSTRIES154 LUMAX INDUSTRIES LTD155 M B AUTO INDUSTRIES156 M.D. INDUSTRIES157 M G AUTOMOTIVES PVT LTD158 M G INDUSTRIES159 MAC STEEL PRIVATE LIMITED160 MUNGI BROTHERS161 MACK SPRINGS PVT LTD162 MAGNA INDUSTRIES163 MAHABAL METALS PVT. LTD.164 MAHARASHTRA UDYOG165 MALATI FOUNDERS PRIVATE LIMITED166 MALHAR AUTO INDUSTRIES167 MANABAR INDUSTRIES168 MANGIRISH PLASTIC WORKS169 MANGLA UDYOG PVT LTD170 MANJUL LAMINATES (P) LTD.171 MAS ALUMINIUM PVT. LTD.172 MAYURESH ENGINEERING WORKS173 MEENA ELASTOMERS174 MEENAKSHI POLYMERS175 MICRO TURNERS176 MITTER FASTENERS177 MODEL FASTENERS P LTD178 MONARCH ENGG WORKS179 MOONLIGHT AUTO PVT LTD.180 MOREX INDUSTRIAL CORPORATION181 MADANLAL AND BROS182 MEHNAT PRODUCT ENGINEERS183 NARASIPUR PRECISON PVT LTD184 NATESAN PRECISION COMPONENTS(P)

LTD185 NATIONAL INDUSTRIES.186 NEEMA FORGE PRESS P. LTD.187 NEOLITE INDUSTRIES188 NETALKAR ENGG WORKS189 NETALKAR POWER TRANSMISSION.190 NEW KRISHNA METAL ARTS191 NIPA RUBBER PRODUCTS192 NIPPON AUDIOTRONIX LTD193 OMEGA LINING INDUSTRIES194 OSWAL POLY RUBBERS195 P. M. ELECTRO-AUTO PVT LTD196 PADMINI ENGG PVT LTD197 PANCHAL ROLL FORMING198 PANETRICAL ENGINEERS PVT. LTD199 PANORAMA AUTOMOTIVE PVT LTD200 PARTH ENGINEERS.201 PAUL COMPONENTS P LTD202 PAULSON INDUSTRIES203 PEARL PLASTIC PRODUCTS204 PERFECT ALLOY COMP P LTD205 PHIROZE SETHNA P LTD206 PIONEER AUTOMOTIVE & TOOLS

INDUSTRIES207 PLASTMOULD AUTO ANCILLARIES P

LTD208 POLAR AUTO & ENGG.IND.PVT.LTD.209 PRABHA ENGINEERING PVT. LTD.

116

MAHINDRA & MAHINDRA LIMITED

210 PRAMOD PLASTIC INDUSTRIES211 PRATAP ENTERPRISE212 PRAVIN ANCILLARY PRODUCTS PVT

LTD213 PRAVIN AUTO ENGG PVT. LTD.214 PRAVIN WIPERS & ANCILLARIES

PVT.LTD215 PRECISE INDUSTRIES.216 PRECISION AUTO INDUSTRIES217 PRECISION AUTOWARES (P) LTD218 PRECISION FORGING & STAMPING219 PRECISION INDUSTRIAL CORPN220 PREMIER SEALS INDIA PVT. LTD221 PRESS COMPONENTS222 PRESSTO FORMS (P) LTD.223 PRINCE METAL WORKS224 PROGRESSIVE ENGINEERING WORKS225 PUSHKAR ALLOY CASTINGS PVT.LTD.226 P.G.ENGINEERS PVT LTD227 POLYMECH COMPONENTS PVT LTD228 R ENGINEERING229 R S FASTENERS230 RADHEYA MACHINING LIMITED231 RAGHUVAMSHI ASSOCIATE ENG232 RAINA ENGINEERING233 RAMKRISHNA IRON WORKS PVT LTD234 RATHOD INDUSTRIES235 RAVI & CO236 RAVI INDUSTRIES PVT.LTD.237 RELIABLE AUTOTECH PVT LTD.238 RELIABLE TECHNOCRATS P LTD239 RIGHT-TIGHT FASTENERS PVT LTD240 RITVIJ PLASTICS PVT LTD241 RUKMINI ENTERPRISES242 R K ENGINEERING WORKS243 RAINBOW INDUSTRIES244 RELIANCE MOTORS245 R I POLYMERS246 S & M INDUCTION247 S B INDUSTRIES248 S K METAL WORKS249 S.S.ENGINEERING WORKS.250 SAKI AUTO PRODUCTS PVT.LTD.251 SAMEER AUTO PVT LTD252 SAMEER LINKAGES PRIVATE LIMITED253 SANDEEP PLASTIC INDUSTRIES254 SANE STEEL WORKS255 SANJYOT METAL INDUSTRIES256 SARNA AUTOTEX PVT LTD257 SATISH INDUSTRIAL PLASTICS258 SATPUDA ENGG PVT LTD259 SATYAY INDUSTRY (INDIA)260 SAVERA PLASTICS261 SAVITA AUTO INDUSTRIES262 SEACO ENGINEERING WORKS263 SHAH AUTO INDUSTRIES264 SHAH CONCABS PVT. LTD265 SHAREEN AUTO PVT LTD266 SHEAR BEND MECHANICAL WORKS267 SHILP ENTERPRISES268 SHILPA INDUSTRIES269 SHIVSHAKTI INDUSTRIES270 SHIVAM PAINTS PVT LTD271 SHRADDHA INDUSTRIES272 SHREE ENGG WORKS273 SHREE SAINATH INDUSTRIES274 SHRI GAJANAN AUTO ENGG PVT LTD275 SIDDHIVINAYAK FOUNDERS &

ENGINEERING WORKS276 SHROFF TEXTILES LIMITED277 SIDDHI FORGE PVT. LTD.278 SIKANDS LIMITED279 SOUND CASTINGS PVT LTD

280 SOUTHERN AUTO CASTINGS PVT LTD281 SPRING FASTNERS282 SPRING INDIA283 SRI GURUKRUPA ENTERPRISES284 STANDARD ENGG.PRODUCTS285 STANDARD ENGINEERING INDUSTRIES286 STANDARD SPRINGS & METAL PRESS

WORK287 STAR AUTO INDUSTRIES PVT. LTD.288 STAR INDUSTRIES289 STAR SPRINGS290 STEERWELS291 STERLING INDUSTRIES292 SUJAN INDUSTRIES293 SUJATA STEEL WORKS PVT LTD.294 SUMO AUTO-TECH PVT LTD295 SUSHMI ENGINEERING296 SUSIRA INDUSTRIES LTD297 SUVIDH ENGINEERING INDUSTRIES298 SUYOG RUBBER (INDIA) PVT LTD299 SWASTIK METAL WORKS PVT.LTD.300 S N INDUSTRIES301 SHARADA TIMBER DEPOT & SAW MILL302 SHREE ENGINEERING WORKS303 SHREE PLASTIC INDUSTRIES304 SLIDEWELL305 SPARLEX ENGINEERING PVT. LTD.306 SUNAX AUTOMOTIVE PLASTIC P LTD307 TAJ AUTO ACCESSORIES308 TAYSONS INDUSTRIES309 TECHNOCRATS INDIA310 THAKKARSONS AUTO311 TOSHIRA AUTO INDUSTRIES PVT LTD.312 TOYO METALLURGICAL LTD313 TRIMWELL ENTERPRISES314 TUSHAR INDUSTRY315 TUSHAR AUTO PARTS PVT. LTD316 UCAL PRODUCTS P LTD317 UKAY METAL INDUSTRIES PVT LTD318 UNI AUTO PARTS319 UNITED ENGG WORKS320 UNITED RUBBER INDUSTRIES321 UNITY INDUSTRIES322 UNIQUE RUBBER WORKS323 VELTECH FORGING PVT. LTD.324 VERSATILE EQUIPMENTS PVT LTD325 VICO FORGE PRIVATE LIMITED326 VICTORY LUMINAIRES327 VIDARBHA GAS VESSELS PVT. LTD.328 VIDHARBHA AGRO INDUSTRIES

PVT.LTD.329 VIJAY ENTERPRISES330 VIJAY ROLLING MILLS331 VIKAS AUTOMATIC FASTENERS PVT

LTD.332 VIKMAN STEEL BALL INDUSTRIES333 VIKRANT AUTO INDUSTRIES334 VIKRANT AUTO SUSPENSIONS335 VINAYA ENTERPRISES336 VIRAJ ENGINEERING CO.337 VIRAL ENGINEERS338 VI-SON CABLES PVT. LTD.339 VIBRANT AUTO COMPONENTS PVT LTD340 VIJAY ENGINEERING WORKS341 WESTERN AUTO SPARES342 WIMSON ELECTRONICS PRIVATE

LIMITED343 ZODIAC POWDER COATERS344 ZOROASTRIAN AUTOMOBILES PVT LTD.345 ESOOFALI ESMAILJI KARACHIWALLA &

CO346 EDWARD ENGG CORPORATION347 ENSONS INDUSTRIES

348 EL-DIGI SYSTEMS PVT LTD349 ELECTRO TECH ELECTRICALS350 ELFAB INDUSTRIES351 FUJI AIR TOOLS (INDIA) PVT LTD.352 FINE ENGINEERING TOOLS P LTD353 FOURESS ENTERPRISES354 GAURAV ELECTRONICS355 GOLE PRECISION TOOLS PVT LTD356 GRAMOS CHEMICALS INDIA PVT LTD357 GANESH PATTERNS358 GAMMA INDUSTRIES359 H J CORPORATION360 HARKO METAL PVT LTD.361 HYDERABAD GENERAL ENGG.WORKS362 HYDERABAD INDUSTRIAL PRODUCT363 HYDERABAD PRESS PRODUCTS364 INSULATION & ELECTRICAL PROD PVT

LTD365 INDMECH INDUSTRIAL CORPN366 INDUSTRIAL ENTERPRENEURS367 INNOVATIVE INDUSTRIES368 HIPRO TOOLS PVT LTD369 KISHOR ENGINEERING COMPANY370 KARISHMA ENGG WORKS371 LUNAR ELECTRICAL INDUSTRIES372 MAGNUM ENGINEERS373 MAHESH ENTERPRISES374 MAYURI ENTERPRISES375 MEERA ENGINEERING WORKS376 MEHTA FASTNERS377 NASIK SUPER TOOLS PVT LTD378 NASH ROBOTICS & AUTOMATION PVT

LTD379 NIRMAL ENGINEERING WORKS380 NATIONAL RUBBER PRODUCTS381 PREMIER FREIGHT SYSTEM382 PROGRESSIVE STEEL PROCESSORS383 PRECISION384 PRESS-O-FAB INDUSTRIES385 PRANAV INDUSTRIES386 PRAMOD INDUSTRIES387 QUICK TOOLS CORPORATION388 RADIX SENSORS PVT LTD389 RAJA TOOLS390 R M INDUSTRIES391 STEEL SMITH392 SHAH AGENCIES393 SRIATO394 SUSHIL TRADERS395 SIZE CONTROL GAUGES & TOOLS396 SHRIPAD AGENCIES397 SHREE SERVICES398 SEAM ENGINEERS399 SEVEN SEAS FORGINGS PVT LTD400 SHEEL METAL INDUSTRIES401 SWAN REFRIGERATION402 S S INDUSTRIES403 SOUBHAGYA PACKER404 SYLEA AUTOMOTIVE INDIA LTD.405 D D ENTERPRISES406 PEST CONTROL (INDIA) LIMITED407 TIDKE PRINTING PRESS408 TOOL CONCEPT409 TOOLS CRAFT410 TRIJAMA FILTERALL PVT. LTD.411 VIJAY ENGINEERING412 VASU CHEMICALS413 VORA INDUSTRIES414 WELLPACK ENTERPRISES415 PERFECT DIES WORKS416 UNIVERSAL AUTO & DAIRY PRODUCTS

SCHEDULE XVII (Contd.)

Following are the names of Small Scale Industrial Undertakings (SSIs) to whom the Company owes and which are outstanding for more than 30 daysas on 31st March, 2007.

Sr. No. Name of the SSIs Sr. No. Name of the SSIs Sr. No. Name of the SSIs

117

MAHINDRA & MAHINDRA LIMITED

SCHEDULE XVIII

ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956.

Balance Sheet Abstract & Company’s General Business Profile :

I. Registration Details :

Registration No. State Code

Balance Sheet Date

Date Month Year

II. Capital Raised during the Year (Amount in Rs. Thousands) :

Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) :

Total Liabilities including Shareholders’ Funds Total Assets

Sources of Funds :

Paid-up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Deferred Tax Liability (Net)

Application of Funds :

Net Fixed Assets

Investments Net Current Assets

Miscellaneous Expenditure Accumulated Losses

IV. Performance of Company (Amount in Rs. Thousands) :

Turnover (Sales & Other Income)★ Total Expenditure ◆

+ - Profit/Loss Before Tax + - Profit/Loss After Tax

(Please tick appropriate box + for Profit - for Loss)Earnings per Share in Rupees ▲

Basic Diluted Dividend Rate %

(Refer Note 26)

4 5 5 8

N I L

N I L N I L

8 0 4 3 1 1 5 6 8 0 4 3 1 1 5 6

2 3 8 0 3 2 7 3 3 1 4 8 7 6 8

1 0 6 6 5 3 4 1 5 2 9 3 5 3 2

1 8 7 1 1 6 7 6

2 2 3 7 4 5 7 0 1 0 8 2 5 2 5 2

1 1 7 7 3 6 2 5 0 1 0 3 3 5 9 5 4 0

1 4 3 7 6 7 1 0 1 0 6 8 3 8 6 5

Rs. 45.15

N I L

1 1

3 1 0 3 2 0 0 7

!

1 9 7 8 6 2

1 7 5 5 2 5 N I L

1 1 5

!

Rs. 40.94

118

MAHINDRA & MAHINDRA LIMITED

V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) :

Item Code No. (ITC Code) 8 7 0 1

Product Description Tractors

Item Code No. (ITC Code) 8 7 0 2

Product Description Motor Vehicles for the transport of more than six persons, excluding the driver

Item Code No. (ITC Code) 8 7 0 3

Product Description Other motor vehicles principally designed for the transport of persons

◆ after considering the provision for contingencies and exceptional items.

★ after considering exceptional items.

▲ computed on the basis of the weighted average number of shares outstanding during the year.

Signatures to Schedules I to XVIII

M. M. Murugappan Keshub Mahindra ChairmanN. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing DirectorA. S. Ganguly Directors

A. P. Puri Bharat DoshiThomas Mathew T. A. K. Nanda Executive Directors

N. B. GodrejNarayan Shankar Company Secretary

Mumbai, 28th May, 2007

} }

119

MAHINDRA & MAHINDRA LIMITED

Mahindra Engineering & Chemical ProductsLimited ..................................................................... 53,78,235 100.00% 2,68.91 20,93.51 - 64,82.76Mahindra Intertrade Limited ................................. 2,71,00,006 100.00% 4,31.60 19,40.42 2,09.16 35,17.33@ Mahindra Middleeast Electrical Steel Service

Centre (FZC) ....................................................... - 90.00% - 76.17 - 49.77Mahindra Steel Service Centre Limited ............... 37,23,874 61.00% - 2,76.21 64.24 4,40.42Mahindra Holdings & Finance Limited ................ 14,66,00,593 100.00% 6,08.00 24,17.96 - 174,70.92" Mahindra Consulting Engineers Limited (formerly

known as Mahindra Acres Consulting EngineersLimited) ............................................................... - 51.00% - 14.15 - 31.72

" Mahindra Holidays & Resorts India Limited ....... - #96.99% - 40,49.99 - 32,53.87 + MHR Hotel Management GmbH ........................ - #72.74% - - - - + Mahindra Holidays & Resorts USA Inc. ............. - #96.99% - 47.32 - (2.08)" NBS International Limited ................................... - 100.00% - 21.78 - 82.81" Mahindra Ugine Steel Company Limited ............ - 50.69% - 22,76.36 - 64,01.72Mahindra Ashtech Limited .................................... 79,05,000 100.00% - (1,85.60) - (26,88.28)Mahindra Gesco Developers Limited .................. 1,54,01,126 50.03% - 7,08.14 1,25.66 8,21.02! Mahindra Infrastructure Developers Limited ....... - 40.02% - 10.61 - 12.54! Mahindra World City Developers Limited ........... - 41.33% - 13,78.13 - (9,41.75)! Mahindra World City (Jaipur) Limited ................. - 37.02% - (82.85) - (0.09)! Mahindra Integrated Township Limited .............. - 47.77% - (20.87) - -! Mahindra World City (Maharashtra) Limited ....... - 50.03% - (2.84) - (0.19)Mahindra & Mahindra Financial Services Limited 5,82,41,532 #67.72% 11,64.83 76,07.53 11,64.83 158,52.90" Mahindra Insurance Brokers Limited .................. - #67.72% - 2,59.83 - 3,14.69Tech Mahindra Limited .......................................... 5,37,76,252 49.03% 12,67.44 34,17.61 50,68.81 317,62.21# Tech Mahindra (Americas) Incorporated ............. - 49.03% - 3,36.37 - (7,69.85)# Tech Mahindra GmbH ........................................ - 49.03% - 99.65 - (18,42.79)# Tech Mahindra Singapore Pte. Limited .............. - 49.03% - 1,36.23 - 38.81# Tech Mahindra (Thailand) Limited ....................... - 49.03% - 23.11 - (21.98)# PT Tech Mahindra Indonesia .............................. - 49.03% - - - -# Tech Mahindra (R&D Services) Limited .............. - 49.03% - 4,56.35 - 5,67.12o Tech Mahindra (R&D Services) Incorporated ..... - 49.03% - 49.91 - 68.70o Tech Mahindra (R&D Services) Pte. Limited ...... - 49.03% - 0.14 - (0.16)# CanvasM Technologies India Limited ................. - 39.27% - 17.01 - -♣ CanvasM (Americas) Incorporated ..................... - 39.27% - - - -# Tech Mahindra Foundation .................................. - 49.03% - 41.47 - (0.20)# iPolicy Network Limited ...................................... - 49.03% - (2,08.90) - -Bristlecone Limited ................................................ 42,22,250 82.20% - (1,55.84) - (1,92.16)$ Bristlecone Inc .................................................... - 82.20% - (24.82) - (7,82.17)$ Bristlecone India Limited .................................... - 82.20% - 5,22.30 - 4.05# Bristlecone (Singapore) Pte. Limited .................. - 82.20% - (46.52) - 24.20# Bristlecone GmbH .............................................. - 82.20% - 18.39 - 65.81$ Bristlecone UK Limited ....................................... - 82.20% - 0.07 - (92.83)Mahindra Logisoft Business Solutions Limited .. 63,49,500 100.00% - 2,42.83 - (7,51.03)Automartindia Limited ........................................... 2,26,25,348 75.89% - (5,74.35) - (10,42.19)Mahindra USA Inc. ................................................. 4,50,00,000 100.00% - 3,80.70 - 18,42.41Mahindra Gujarat Tractor Limited ........................ 16,83,218 60.00% - 10.55 - (16,88.25)Mahindra Shubhlabh Services Limited ................ 1,48,33,793 77.31% - (1,01.85) - (18,96.42)Mahindra & Mahindra South Africa(Proprietary) Ltd. .................................................... 35,70,000 51.00% 1,79.76 2,14.12 - 8,88.23Mahindra Engineering Design & DevelopmentCompany Limited ................................................... 70,50,000 100.00% - 17,11.35 - 4,01.71Mahindra Overseas Investment Company(Mauritius) Limited ................................................. 88,10,000 100.00% - (1,99.08) - 67.64

Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies

For Current Financial Year For Previous Financial Years

Name of the Subsidiary Companies Dealt with in Not dealt Dealt with in Not dealtthe accounts with in the the accounts with in the

of Mahindra & accounts of of Mahindra & accounts ofMahindra Mahindra & Mahindra Mahindra &

Limited for Mahindra Limited for Mahindrathe year Limited for the year Limited for

Equity Extent ended 31st the year ended 31st the year of March, 2007 ended 31st March, 2007 ended 31st

holding March, 2007 March, 2007

Nos. % Rupees lakhs Rupees lakhs Rupees lakhs Rupees lakhs

Number ofShares in the

SubsidiaryCompany heldby Mahindra &

MahindraLimited at thefinancial yearending date

The net aggregate of profits/(losses) of the SubsidiaryCompanies so far as they concern the members of Mahindra

& Mahindra Limited

120

MAHINDRA & MAHINDRA LIMITED

✠ Mahindra (China) Tractor Company Limited ....... - 80.00% - (15,57.14) - (9,34.54)✠ Mahindra-BT Investment Company (Mauritius)

Limited ................................................................ - 57.00% - 1,89.91 - 4.37✠ Mahindra Europe s.r.l .......................................... - 80.00% - 63.39 - (45.57)Mahindra SAR Transmission Private Limited ...... 31,25,739 51.00% - (36.50) - 49.13Plexion Technologies (India) Pvt. Limited ........... 45,03,011 100.00% - (2,48.80) - (15.77)✡ Plexion Technologies (UK) Limited ...................... - 100.00% - 26.45 - 3.38✡ Plexion Technologies GmbH ............................... - 100.00% - (9.67) - 1.14✡ Plexion Technologies Incorporated ..................... - 100.00% - (32.43) - (25.86)Mahindra Stokes Holding Company Limited ...... 82,21,107 100.00% - (8.95) - -£ Stokes Group Limited ......................................... - 99.52% - 0.85 - -$ Stokes Forgings Dudley Limited ......................... - 99.52% - (47.39) - 16.71$ Jensand Limited ................................................. - 99.52% - (44.98) - 1.13% Stokes Forgings Limited ..................................... - 99.52% - (5,41.60) - (1,58.21)Mahindra Renault Pvt Limited .............................. 8,69,79,225 51.00% - (18,38.35) - (5,97.63)Mahindra International Limited ............................. 5,03,75,600 51.00% - (1,68.86) - (16.82)Mahindra Forgings Overseas Limited .................. 4,88,88,001 67.90% - (2.99) - -§ Mahindra Forgings International Limited……...... . - 67.90% - (2,47.38) - -!JECO Holdings AG ................................................ - 67.90% - 16.17 - -• Gesenkschmiede Schneider GmbH ..................... - 67.90% - 9,11.22 - -• JECO-Jellinghaus GmbH ...................................... - 67.90% - 2,27.11 - -• Falkenroth Umformtechnik GmbH ........................ - 67.90% - 1,37.21 - -• Falkenroth Grundstucksgesellschaft GmbH ......... - 67.90% - 11.04 - -Mahindra Forgings Mauritius Limited .................. 1,32,30,001 100.00% - (3.23) - -" Mahindra Forgings Global Limited ........................ - 100.00% - (1,81.02) - -$ Schöneweiss & Co. GmbH ................................... - 100.00% - 1,34.72 - -# Fried. Hunninghaus GmbH .................................. - 100.00% - (1.16) - -# Fried. Hunninghaus GmbH & Co. KG.................. - 100.00% - 1,97.64 - -DGP Hinoday Industries Limited .......................... 1,49,38,258 #66.10% - 93.09 - -# after considering shares issued to its ESOP Trust but not allotted to its employees.

Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies

For Current Financial Year For Previous Financial Years

Name of the Subsidiary Companies Dealt with in Not dealt Dealt with in Not dealtthe accounts with in the the accounts with in the

of Mahindra & accounts of of Mahindra & accounts ofMahindra Mahindra & Mahindra Mahindra &

Limited for Mahindra Limited for Mahindrathe year Limited for the year Limited for

Equity Extent ended 31st the year ended 31st the year of March, 2007 ended 31st March, 2007 ended 31st

holding March, 2007 March, 2007

Nos. % Rupees lakhs Rupees lakhs Rupees lakhs Rupees lakhs

Number ofShares in the

SubsidiaryCompany heldby Mahindra &

MahindraLimited at thefinancial yearending date

The net aggregate of profits/(losses) of the SubsidiaryCompanies so far as they concern the members of Mahindra

& Mahindra Limited

@ a subsidiary of Mahindra Intertrade Limited" a subsidiary of Mahindra Holdings & Finance Limited+ a subsidiary of Mahindra Holidays & Resorts India Limited! a subsidiary of Mahindra Gesco Developers Limited" a subsidiary of Mahindra & Mahindra Financial Services Limited# a subsidiary of Tech Mahindra Limitedo a subsidiary of Tech Mahindra (R&D Services ) Limited♣ a subsidiary of CanvasM Technologies India Limited$ a subsidiary of Bristlecone Limited# a subsidiary of Bristlecone India Limited✠ a subsidiary of Mahindra Overseas Investment Company (Mauritius) Limited

✡ a subsidiary of Plexion Technologies (India ) Pvt Limited£ a subsidiary of Mahindra Stokes Holding Company Limited$ a subsidiary of Stokes Group Limited% a subsidiary of Jensand Limited§ a subsidiary of Mahindra Forgings Overseas Limited! a subsidiary of Mahindra Forgings International Limited• a subsidiary of JECO Holdings AG" a subsidiary of Mahindra Forgings Mauritius Limited$ a subsidiary of Mahindra Forgings Global Limited# a subsidiary of Schöneweiss & Co. GmbH

M. M. Murugappan Keshub Mahindra ChairmanN. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing DirectorA. S. Ganguly Directors

A. P. Puri Bharat DoshiThomas Mathew T. A. K. Nanda

Executive Directors

N. B. GodrejNarayan Shankar Company Secretary

Mumbai, 28th May, 2007

} }

Note : The financial year of all subsidiaries ended on 31st March, 2007 except for MHR Hotel Management GmbH whose first financial year wouldbe from 16th February, 2007 to 31st March, 2008.

121

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Report of the Auditors to the Board of Directors of Mahindra & Mahindra Limited

1. We have audited the attached consolidated balance sheetof Mahindra & Mahindra Limited and its subsidiaries(the Group) as at 31st March, 2007, and also the consolidatedprofit and loss account and the consolidated cash flowstatement for the year ended on that date, annexed thereto.These consolidated financial statements are the responsibilityof Mahindra & Mahindra Limited’s management and havebeen prepared by the management on the basis of separatefinancial statements and other financial information regardingcomponents. Our responsibility is to express an opinion onthese consolidated financial statements based on our audit.

2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financial statementsare free of material misstatement. An audit includesexamining on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used andsignificant estimates made by management, as well asevaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for ouropinion.

3. We did not audit the financial statements of certainsubsidiaries and joint ventures, whose financial statementsreflect Group’s share of total assets of Rs. 1242955.00lakhs as at 31st March, 2007 and Group’s share of totalrevenues of Rs. 684215.68 lakhs for the year ended onthat date and Group’s share of net cash inflow of Rs.27799.83 lakhs for the year ended on that date andassociates whose financial statements reflect the Group’sshare of profit (net) upto 31st March, 2007 of Rs. 206.41lakhs and the Group’s share of profit (net) of Rs. 1631.39lakhs for the year ended on that date as considered in theconsolidated financial statements. These financial statementsand other financial information have been audited by otherauditors whose reports have been furnished to us, and our

opinion in so far as it relates to the amounts included inrespect of these subsidiaries, joint ventures and associates,is based solely on the report of the other auditors.

4. We report that the consolidated financial statements havebeen prepared by Mahindra & Mahindra Limited’smanagement in accordance with the requirements ofAccounting Standard 21, Consolidated Financial Statements,Accounting Standard 23, Accounting for Investments inAssociates in Consolidated Financial Statements andAccounting Standard 27, Financial Reporting of Interests inJoint Ventures, issued by the Institute of CharteredAccountants of India.

5. Based on our audit and on consideration of the reports ofother auditors on separate financial statements and on theother financial information of the components, in our opinionand to the best of our information and according to theexplanations given to us, the attached consolidated financialstatements give a true and fair view in conformity with theaccounting principles generally accepted in India:

a) in the case of the consolidated balance sheet, of thestate of affairs of Mahindra & Mahindra Limited Groupas at 31st March, 2007;

b) in the case of the consolidated profit and loss account,of the profit for the year ended on that date; and

c) in the case of the consolidated cash flow statement, ofthe cash flows for the year ended on that date.

For A. F. Ferguson & Co.Chartered Accountants

R. A. Banga(Partner)

Mumbai, 28th May, 2007 Membership Number: 37915

122

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Consolidated Balance Sheet as at 31st March, 20072007 2006

Schedule Rupees Rupeeslakhs lakhs

I. SOURCES OF FUNDS :SHAREHOLDERS’ FUNDS :Capital ........................................................................................ I 238,03.27 233,39.96Employee Stock Options Outstanding ....................................... 4,52.42 2,13.84Reserves and Surplus ................................................................ II 4,613,53.96 3,486,08.79

4,856,09.65 3,721,62.59MINORITY INTEREST ................................................................ 1,659,48.17 852,50.68LOAN FUNDS :(a) Secured Loans ...................................................................... III A 5,619,34.62 4,042,20.62(b) Unsecured Loans .................................................................. III B 2,209,68.05 1,229,13.78

7,829,02.67 5,271,34.40

DEFERRED TAX LIABILITY (Net) ................................................ – 115,65.70DEFERRED INCOME :Advance towards Club Mahindra members’ facilities ................ 319,51.20 222,09.64

Total ............................................................................................ 14,664,11.69 10,183,23.01

II. APPLICATION OF FUNDS :FIXED ASSETS :Gross Block ............................................................................... 7,818,71.58 4,335,07.83Less : Depreciation .................................................................... 3,591,27.16 2,040,25.41

Net Block ................................................................................... IV 4,227,44.42 2,294,82.42CAPITAL WORK-IN-PROGRESS ............................................... 559,30.18 310,71.67

4,786,74.60 2,605,54.09INVESTMENTS ........................................................................... V 1,003,30.00 1,180,32.71DEFERRED TAX ASSETS (Net) .................................................. 14,70.88 –CURRENT ASSETS, LOANS AND ADVANCES :(a) Inventories ............................................................................. VI A 2,428,60.56 1,663,16.54(b) Sundry Debtors ..................................................................... VI B 2,702,56.78 1,851,63.74(c) Cash and Bank Balances ..................................................... VI C 2,045,11.83 1,187,18.54(d) Other Current Assets ............................................................ VI D 2,96.94 2,84.89(e) Loans and Advances ............................................................ VI E 6,860,34.29 5,020,45.21

14,039,60.40 9,725,28.92LESS : CURRENT LIABILITIES AND PROVISIONS :(a) Current Liabilities ................................................................... VII A 4,275,61.79 2,792,92.49(b) Provisions .............................................................................. VII B 923,62.44 559,44.12

5,199,24.23 3,352,36.61

NET CURRENT ASSETS............................................................ 8,840,36.17 6,372,92.31MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOTWRITTEN OFF OR ADJUSTED) ................................................. VIII 19,00.04 24,43.90Total ............................................................................................ 14,664,11.69 10,183,23.01

NOTES ON ACCOUNTS .......................................................... XIV

Per our report attached

For A. F. Ferguson & Co. M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing DirectorA. S. Ganguly Directors

R. A. Banga A. P. Puri Bharat DoshiPartner Thomas Mathew T. A. K. Nanda Executive Directors

N. B. GodrejNarayan Shankar Company Secretary

Mumbai, 28th May, 2007 Mumbai, 28th May, 2007

} }

123

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Consolidated Profit and Loss Account for the year ended 31st March, 2007

2007 2006Schedule Rupees Rupees

lakhs lakhsSALES [Note 23] ....................................................................................................... 14,439,51.95 11,067,29.75Less: Excise Duty on Sales [Note 23] ....................................................................... 1,524,52.74 1,259,95.96Net Sales .................................................................................................................. 12,914,99.21 9,807,33.79Income from Operations & Other Income ................................................................. IX 4,997,28.77 2,841,07.17

17,912,27.98 12,648,40.96EXPENDITURE :Raw Materials, Finished and Semi-finished Products ............................................... X 8,985,23.12 6,912,15.69Personnel .................................................................................................................. XI 2,388,40.22 1,399,38.47Interest, Commitment and Finance Charges (Net) .................................................... XII 299,20.24 219,37.48Depreciation/Amortisation [Notes 6 and 23] ............................................................. 379,86.41 283,30.69Other Expenses ......................................................................................................... XIII 3,616,94.12 2,352,39.34

15,669,64.11 11,166,61.67Less : Cost of Manufactured/Purchased Products capitalised ................................ 78,78.71 61,75.10

15,590,85.40 11,104,86.57Profit before provision for contingencies, exceptional item and taxation .................. 2,321,42.58 1,543,54.39Less : Provision for contingencies ............................................................................ 1,73.52 4,43.75Profit before exceptional item and taxation ............................................................... 2,319,69.06 1,539,10.64Add : Exceptional Item [Note 16] ............................................................................. (117,29.03) 263,40.42Profit before taxation ................................................................................................. 2,202,40.03 1,802,51.06Less : Provision for Tax - Current tax including Fringe Benefit Tax [Note 23] ........ 624,34.48 439,08.86

- Deferred tax (Net) [Notes 15 and 23] ............................ (28,62.98) (36,15.04)Profit for the year before prior year adjustments ...................................................... 1,606,68.53 1,399,57.24Less : Adjustments pertaining to previous years [Note 17] ...................................... (15,18.17) 23.11Balance of profit for 2006-2007 before share of profit/loss of Associates andMinority Interests ....................................................................................................... 1,621,86.70 1,399,34.13Add : Share of Profit of Associates for the year ...................................................... 16,38.05 4,66.69Profit before Minority Interests .................................................................................. 1,638,24.75 1,404,00.82Minority Share in Profits for 2006-2007 .................................................................... 141,10.16 134,29.16Net Profit ................................................................................................................... 1,497,14.59 1,269,71.66Balance of profit for earlier years .............................................................................. 1,940,95.86 1,137,29.67Less : Charge on adoption of Accounting Standard - 15 (revised) ......................... 69.08 –Add : Transfer from Debenture Redemption Reserve (Net) ..................................... 16,00.24 55.25

1,956,27.02 1,137,84.92Total of Profit and Loss Account balances shown above ......................................... 3,453,41.61 2,407,56.58Deduct : Statutory Reserve ...................................................................................... 24,73.75 34,86.77

: General Reserve (Net) ................................................................................ 140,03.95 146,96.72: Interim Dividends Paid ............................................................................... 184,03.05 –: Income tax on Dividends ........................................................................... 44,59.24 6,58.08: Proposed Dividends on Equity Shares ...................................................... 98,19.90 243,97.41: Income tax on Proposed Dividends .......................................................... 16,68.89 34,21.74

Balance for 2006-2007 and earlier years carried to Balance Sheet ........................ 2,945,12.83 1,940,95.86

EARNINGS PER SHARE : [Note 21](Face value Rs.10/- per share) (Rupees)Basic ......................................................................................................................... 63.28 56.40Diluted ....................................................................................................................... 57.75 51.72NOTES ON ACCOUNTS .......................................................................................... XIV

Per our report attached

For A. F. Ferguson & Co. M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing DirectorA. S. Ganguly Directors

R. A. Banga A. P. Puri Bharat DoshiPartner Thomas Mathew T. A. K. Nanda Executive Directors

N. B. GodrejNarayan Shankar Company Secretary

Mumbai, 28th May, 2007 Mumbai, 28th May, 2007

} }

124

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Consolidated Cash Flow Statement for the year ended 31st March, 20072007 2006

Rupees Rupees Rupeeslakhs lakhs lakhs

A. CASH FLOW FROM OPERATING ACTIVITIES :Net Profit before exceptional item, taxation and adjustments pertaining toprevious years ............................................................................................. 2,319,69.06 1,539,10.64Adjustments for:Depreciation/Amortisation ........................................................................... 379,86.41 283,30.69Unrealised Profit on Exchange (Net) ........................................................... (3,39.73) (6,13.94)Investment and Interest Income (Excluding Rs. 784.74 lakhs(2006 : Rs. 365.05 lakhs) in respect of financial enterprises consolidated). (154,02.61) (87,84.73)Interest, Commitment and Finance charges (Excluding Rs. 31438.36 lakhs(2006 : Rs. 21082.59 lakhs) in respect of financial enterprises consolidated) 95,39.09 73,53.06Amortisation of Expenses ........................................................................... 9,28.60 9,51.00(Profit)/Loss on sale of Investments (Net) ................................................... (12,80.05) (105,60.48)(Profit)/Loss on fixed assets sold/scrapped/written off (Net) ...................... 3,71.62 (4,03.91)Provision for diminution in value of long term investments (Net) ................ 2,14.19 (25.12)Excess of cost over fair value of current investments (Net) ....................... 2,36.69 71.23

322,54.21 163,17.80

Operating Profit before Working Capital changes ....................................... 2,642,23.27 1,702,28.44Changes in : Stock on hire ......................................................................... 52.39 1,24.86

Deferred income – advances towards membership fees ...... 97,41.56 61,78.72Trade and other receivables .................................................. (997,81.08) (570,26.11)Loans against Assets * .......................................................... (1,501,07.30) (1,376,57.77)Inventories ............................................................................. (446,16.48) (290,41.17)Trade and other payables ...................................................... 1,135,78.50 433,02.22

(1,711,32.41) (1,741,19.25)Exceptional Items :Upfront payment to a customer.................................................................. (524,93.80) -Miscellaneous Expenditure (to the extent not written off or adjusted)incurred during the year .............................................................................. (15,42.62) (86.38)

Cash generated/(used) from operations ..................................................... 390,54.44 (39,77.19)Income taxes paid (net of refunds including for prior years) ...................... (552,97.14) (419,10.18)

NET CASH (USED IN)/FROM OPERATING ACTIVITIES ............................. (162,42.70) (458,87.37)* In respect of financial enterprises consolidated.

B. CASH FLOW FROM INVESTING ACTIVITIES :Purchase of fixed assets ............................................................................. (1,374,58.21) (525,29.14)Sale of fixed assets ..................................................................................... 58,56.63 17,39.62Purchase of investments ............................................................................. (9,752,50.13) (5,396,42.80)Sale of investments ..................................................................................... 9,929,65.66 4,771,53.68Interest received .......................................................................................... 109,88.72 64,40.11Dividends received ...................................................................................... 16,45.26 11,24.94Inter corporate deposits (Net) ..................................................................... 67,05.98 (119,12.57)Purchase consideration paid on acquisition of interest in subsidiary ......... (936,17.39) (248,75.07)Sales Proceeds (Net) received on divesture of interest in subsidiaries ....... 727,74.33 543,19.57Exceptional Item:Sale of a Business undertaking .................................................................. 32,40.63 -

NET CASH (USED IN)/FROM INVESTING ACTIVITIES ............................... (1,121,48.52) (881,81.66)

125

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from borrowings .......................................................................... 16,633,98.18 7,319,53.17

Repayments of borrowings [including premium on repayment] .................. (13,944,79.69) (5,621,82.80)

Dividends paid ............................................................................................ (502,24.28) (178,07.81)

Interest, Commitment and Finance charges paid ....................................... (67,07.28) (51,41.93)

NET CASH (USED IN)/FROM FINANCING ACTIVITIES .............................. 2,119,86.93 1,468,20.63

NET INCREASE IN CASH AND CASH EQUIVALENTS (A + B + C) ........... 835,95.71 127,51.60CASH AND CASH EQUIVALENTS [Note (a)]

Opening Balance ......................................................................................... 1,180,03.25 1,013,72.53Cash & Bank Balance Acquired on Acquisition of Subsidiaries ................. 69,16.48 38,79.12

Closing Balance .......................................................................................... 2,085,15.44 1,180,03.25

See Notes attached.

Notes to the Consolidated Cash Flow Statement for the year ended 31st March, 2007

2007 2006

Rupees lakhs Rupees lakhs

(a) Cash and Bank Balances ........................................................................... 2,045,11.83 1,187,18.54

Unrealised (Net) translation (Gain)/Loss on foreign currency cash and cashequivalents .................................................................................................. 40,03.61 (7,15.29)

Total cash and cash equivalent ................................................................... 2,085,15.44 1,180,03.25

(b) During the year, the Company has consolidated its business interest in Stokes Group Limited by swapping the shares held bythe Company in Stokes Group Limited for shares of Mahindra Stokes Holding Company Limited. This being a non cashtransaction does not form part of Cash Flow.

(c) Previous year’s figures have been regrouped/restated wherever necessary.

Consolidated Cash Flow Statement (Contd.)2007 2006

Rupees Rupeeslakhs lakhs

Per our report attached

For A. F. Ferguson & Co. M. M. Murugappan Keshub Mahindra ChairmanChartered Accountants N. Vaghul

R. K. Kulkarni Anand G. Mahindra Vice Chairman & Managing DirectorA. S. Ganguly Directors

R. A. Banga A. P. Puri Bharat DoshiPartner Thomas Mathew T. A. K. Nanda Executive Directors

N. B. GodrejNarayan Shankar Company Secretary

Mumbai, 28th May, 2007 Mumbai, 28th May, 2007

} }

126

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE I2007 2006

Share Capital : Rupees Rupeeslakhs lakhs

Authorised :27,50,00,000 Ordinary (Equity) Shares of Rs.10 each ............................................................. 275,00.00 275,00.00

25,00,000 Unclassified Shares of Rs.100 each .................................................................. 25,00.00 25,00.00

Total ........................... 300,00.00 300,00.00

Issued and Subscribed :24,53,71,265 (2006 - 24,09,01,352) Ordinary (Equity) Shares of Rs.10 each fully paid up .... 245,37.13 240,90.14

245,37.13 240,90.14Less:

73,38,558 (2006 - 75,01,768) Ordinary (Equity) Shares of Rs.10 each fully paid upissued to ESOP Trust but not allotted to employees ........................................ 7,33.86 7,50.18

Adjusted : Issued and Subscribed Share Capital ....................................................................... 238,03.27 233,39.96

SCHEDULE II2006 Additions Deductions 2007

Reserves and Surplus : Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs

1 Capital Reserve ................................................................... 23,42.87 – – 23,42.8723,08.56 34.31 – 23,42.87

2 Capital Reserve on consolidation ........................................ 41,40.32 161,98.08 64,82.78 138,55.6240,92.16 48.16 – 41,40.32

3 Securities Premium Account [Note 4] ................................. 579,60.36 148,94.52 174,52.47 554,02.41234,77.92 347,37.86 2,55.42 579,60.36

Less : Premium on shares issued to ESOP Trust but notallotted to employees [Note 4] ............................................ 18,37.93 – 39.98 17,97.95

21,36.73 – 2,98.80 18,37.93

561,22.43 148,94.52 174,12.49 536,04.46213,41.19 347,37.86 (43.38) 561,22.43

4 Revaluation Reserve ............................................................ 13,33.46 – 47.06 12,86.4014,31.52 – 98.06 13,33.46

5 General Reserve [Note 4] .................................................... 726,45.15 @150,72.93 **134,19.74 742,98.34683,19.32 @159,26.72 **116,00.89 726,45.15

Add : Bonus shares issued to ESOP Trust but not allottedto employees [Note 4] ......................................................... 3,75.09 – 8.16 3,66.93

– 3,75.09 – 3,75.09

730,20.24 150,72.93 134,27.90 746,65.27683,19.32 163,01.81 116,00.89 730,20.24

6 Debenture Redemption Reserve ......................................... 17,36.21 – 16,00.24 1,35.9717,91.46 – 55.25 17,36.21

7 Investment Fluctuation Reserve .......................................... 41,29.64 – #10,68.98 30,60.6653,59.64 – #12,30.00 41,29.64

8 Capital Redemption Reserve .............................................. – ***50,00.00 – 50,00.00– – – –

9 Special Reserve (As per Section 45 IC of the RBI Act) ...... 120,72.88 24,73.75 – 145,46.6385,86.11 34,86.77 - 120,72.88

10 Foreign Exchange Fluctuation Reserve ............................... (3,85.12) – 12,71.63 (16,56.75)1,62.36 – 5,47.48 (3,85.12)

1,545,12.93 536,39.28 413,11.08 *1,668,41.131,133,92.32 546,08.91 134,88.30 1,545,12.93

*(including Group Share in Joint Ventures Rs. 287.98 lakhs(2006 : Rs.250.37 lakhs))

11 Balance for 2006-2007 and earlier years as per Profit andLoss Account ...................................................................... 2,928,46.56

1,928,53.76Group Share in Joint Ventures ............................................ 16,66.27

12,42.10

Total 4,613,53.963,486,08.79

@ includes transfer of Rs. 1068.98 lakhs (2006 : Rs.1230.00 lakhs) from Investment Fluctuation Reserve per contra pursuant tothe Scheme of Arrangement approved by the Hon’ble High Court of Bombay on 12th December, 2003.

** includes transfer of Rs. 5000.00 lakhs (2006 : Rs. Nil) to Capital Redemption Reserve and Adjustment on adoption ofAccounting Standard -15 (revised 2005) Employee benefits [Refer Note 9].

# transfer of Rs.1068.98 lakhs (2006 : Rs.1230.00 lakhs) to General Reserve per contra pursuant to the above Scheme ofArrangement [Note 3].

*** transfer of Rs. 5000.00 lakhs (2006 : Rs. Nil) from General Reserve.

127

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE III2007 2006

Rupees Rupees Rupeeslakhs lakhs lakhs

Loan Funds :

(A) Secured : [Note 5]

(1) Debentures/Bonds .......................................................................... 3,067,50.67 2,690,50.67

(2) Foreign Currency Loans from Banks .............................................. 269,73.14 149,99.43

(3) Rupee Loans :

(a) From Financial Institutions . ..................................................... – 53.83

(b) From Banks ............................................................................. 1,287,09.43 675,44.81

(c) From Others ............................................................................. 35,30.00 105,91.95

1,322,39.43 781,90.59

(4) Loans and Advances on cash credit account from Banks ............ 957,48.04 416,60.26

5,617,11.28 4,039,00.95

Group Share in Joint Ventures ............................................................... 2,23.34 3,19.67

Total ......................................................................................... 5,619,34.62 4,042,20.62

(B) Unsecured :

(1) Fixed Deposits ................................................................................ 11,04.02 26,48.99

(2) Short-term Loans :

(a) From Banks ............................................................................. 107,43.90 213,41.10

(b) From Others ............................................................................. 58,89.04 2,17.00

166,32.94 215,58.10

(3) Other Loans:

(a) From Financial Institutions ....................................................... 367,26.85 322,61.32

(b) Zero Coupon Convertible Bonds ............................................. 879,41.40 157,41.00

(c) Debentures/Bonds ................................................................... 291,40.00 261,08.30

(d) From Government of Gujarat ................................................... 9,25.66 8,87.63

(e) From Banks ............................................................................. 359,34.28 185,85.91

(f) From Others ............................................................................. 125,12.42 50,72.04

2,031,80.61 986,56.20

2,209,17.57 1,228,63.29

Group Share in Joint Ventures ........................................................ 50.48 50.49

Total ......................................................................................... 2,209,68.05 1,229,13.78

Total ......................................................................................... 7,829,02.67 5,271,34.40

128

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE IV

Fixed Assets :

Description of Assets Cost/ Additions Deduc- Cost/Pro- Deprecia- Deprecia- Deductions Deprecia- Net NetProfessional and tions fessional tion/Amor- tion/ and adjust- tion/ Balance Balance

valuation adjust- and valuation tisation Amor- ments Amortisa- as at as atas at 31st ments adjust- as at 31st to 31st tisation of Depre- tion 31st 31st

March, during the ments March, March, for 2006- ciation/ to 31st March, March,2006 year during 2007 2006 2007 Amorti- March, 2007 2006

the year sation 2007

Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupeeslakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs lakhs

A : Assets on Lease

Plant and Machinery ....................... 7,63.62 - - 7,63.62 18.70 - - 18.70 7,44.92 7,44.92

Vehicles ........................................... 8,40.03 12.91 1,20.10 7,32.84 3,11.08 1,61.47 65.78 4,06.77 3,26.07 5,28.95

Computers ...................................... 1.77 - 1.77 - 1.29 0.08 1.37 - - 0.48

Sub Total A ..................................... 16,05.42 12.91 1,21.87 14,96.46 3,31.07 1,61.55 67.15 4,25.47 10,70.99 12,74.35

B : Owned Assets

Land - Freehold .............................. 125,19.48 54,63.67 5.81 179,77.34 1,00.56 77.49 0.02 1,78.03 177,99.31 124,18.92

Land - Leasehold ........................... 6,23.57 26,16.34 - 32,39.91 16.31 31.40 - 47.71 31,92.20 6,07.26

Buildings - Freehold ....................... 780,39.57 346,63.85 5,54.96 1,121,48.46 169,88.01 180,61.06 2,15.65 348,33.42 773,15.04 610,51.56

Buildings - Leasehold ..................... 5,96.32 9,90.08 - 15,86.40 1,97.19 93.93 - 2,91.12 12,95.28 3,99.13

Plant and Machinery ....................... 2,846,00.48 1,912,81.65 101,35.43 4,657,46.70 1,699,76.80 1,199,42.20 86,98.90 2,812,20.10 1,845,26.60 1,146,23.68

Furniture and Fittings ...................... 172,49.48 305,25.05 8,80.10 468,94.43 91,17.91 198,53.79 3,98.48 285,73.22 183,21.21 81,31.57

Vehicles, Cycles, etc. ..................... 101,72.01 57,72.67 16,03.91 143,40.77 40,15.73 32,26.35 9,87.36 62,54.72 80,86.05 61,56.28

Technical Knowhow ........................ 93.53 98,67.58 52.84 99,08.27 55.18 3,45.16 21.54 3,78.80 95,29.47 38.35

Development Expenditure .............. 27,45.51 38,94.93 1,46.70 64,93.74 10,20.32 6,74.38 37.84 16,56.86 48,36.88 17,25.19

Software Expenditure ..................... 20,54.67 39,31.44 1,14.56 58,71.55 11,90.84 24,17.60 1,09.40 34,99.04 23,72.51 8,63.83

Websites ......................................... 3,73.74 - - 3,73.74 3,73.74 - - 3,73.74 - -

Non-Compete Fees ........................ 23.25 - - 23.25 - - - - 23.25 23.25

Time share weeks .......................... 62.28 - - 62.28 24.92 6.23 - 31.15 31.13 37.36

Trademarks ..................................... 32.53 15,88.93 - 16,21.46 2.73 6,91.99 - 6,94.72 9,26.74 29.80

Goodwill + ...................................... 217,41.50 748,58.70 35,39.06 930,61.14 - - - - 930,61.14 217,41.50

Sub Total B ..................................... 4,309,27.92 3,654,54.89 170,33.37 7,793,49.44 2,030,80.24 1,654,21.58 104,69.19 3,580,32.63 4,213,16.81 2,278,47.68

C : Group Share in Joint Ventures 9,74.49 65.16 13.86 10,25.68 6,14.10 64.00 9.04 6,69.06 3,56.62 3,60.39

TOTAL (A+B+C) .............................. 4,335,07.83 3,655,32.96 171,69.10 7,818,71.58 2,040,25.41 1,656,47.13 105,45.38 3,591,27.16 4,227,44.42 2,294,82.423,446,37.40 940,06.00 51,35.57 4,335,07.83 1,550,79.03 521,13.60 31,67.22 2,040,25.41 2,294,82.42

+ Goodwill arising on consolidation.Refer Note 6 (b)

129

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE V2007 2007 2006 2006

Long Term Current Long Term CurrentRupees Rupees Rupees Rupees

lakhs lakhs lakhs lakhsInvestments (At Cost unless otherwise specified) :

Shares (Non-trade and fully paid-up unless otherwise specified):Unquoted :(a) Equity Shares ................................................................ 35,47.08 - 30,78.42 -(b) Equity Shares - Associates [Note 1(c) & Note 22] ........ 42,46.97 - 116,70.83 -(c) Preference Shares ......................................................... 17,75.68 - 3,53.75 -(d) Preference Shares - Associates .................................... 5,63.85 - 5,63.85 -

101,33.58 - 156,66.85 -

Quoted :(a) Equity Shares ................................................................ 23,16.76 0.14 3,30.05 0.14(b) Equity Shares - Associates [Note 1(c) & Note 22] ........ 122,40.66 - 3,94.58 -

145,57.42 0.14 7,24.63 0.14

246,91.00 0.14 163,91.48 0.14

Debentures/Bonds (Non-trade & fully paid-up) :(a) Unquoted ...................................................................... 13,21.51 - 13,21.51 -(b) Quoted .......................................................................... 33.23 24,89.36 33.23 9,89.36

13,54.74 24,89.36 13,54.74 9,89.36

Other Investments :Government Securities (including Treasury Bills) :(a) Unquoted ...................................................................... 1.22 - 1.13 -(b) Quoted .......................................................................... - 3,35.83 - 4,57.42

1.22 3,35.83 1.13 4,57.42

Units :(a) Unquoted ...................................................................... 25,46.78 365,99.86 2,49.98 904,76.03

25,46.78 365,99.86 2,49.98 904,76.03

Investment in the Capital of Partnership(a) Unquoted ...................................................................... 4,21.41 - 4,21.41 -

4,21.41 - 4,21.41 -

Others :(a) Unquoted ...................................................................... 23.24 322,33.70 0.03 78,21.58

23.24 322,33.70 0.03 78,21.58

290,38.39 716,58.89 184,18.77 997,44.53

Total ................................................................ 1,006,97.28 1,181,63.30Group Share in Investments of Joint Ventures ..................... 3.38 3.38

Total ................................................................ 1,007,00.66 1,181,66.68

Cost (net of amounts written off ) of Unquoted Investments 832,84.68 1,159,61.90Cost/Carrying Value of Quoted Investments ........................ 174,15.98 22,04.78

1,007,00.66 1,181,66.68Less : Excess of cost over fair value of Current Investments (Net) 3,70.66 1,33.97

1,003,30.00 1,180,32.71

Market value of Quoted Investments ................................... 409,22.69 62,38.26

130

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE VI2007 2006

Rupees Rupeeslakhs lakhs

Current Assets, Loans and Advances :

(A) Inventories (at cost or net realisable value whichever is lower) :(i) Finished Products produced and purchased for sale ................ 787,57.13 670,32.38(ii) Contracts and Work-in-Progress ............................................... 279,94.00 115,59.44(iii) Manufactured Components ....................................................... 45,05.96 49,91.53(iv) Raw Materials and Bought-out Components ............................ 793,47.97 487,98.32(v) Work-in-Progress – Property Development Activity and Long

Term Contracts .......................................................................... 428,86.08 261,59.15(vi) Food, Beverages, Smokes and Operating Supplies .................. 1,78.46 87.23(vii) Stores and Spares ..................................................................... 54,70.46 44,92.71(viii) Tools ........................................................................................... 33,14.74 28,09.04

2,424,54.80 1,659,29.80Group Share in Inventories of Joint Ventures ................................... 4,05.76 3,86.74

Total .................................................................................... 2,428,60.56 1,663,16.54

(B) Sundry Debtors :Unsecured unless otherwise stated :Outstanding over six months : Considered good ............................ 392,36.65 128,93.80

: Considered doubtful ....................... 82,37.58 64,50.92

474,74.23 193,44.72

Other Debts : Considered good ..................................................... 2,317,64.45 1,721,35.00: Considered doubtful ................................................. 8,07.90 6,64.18

2,325,72.35 1,727,99.18

2,800,46.58 1,921,43.90Less : Unmatured Finance Charges ................................................. 25,45.24 11,83.91Less : Provision for Doubtful Debts .................................................. 86,84.26 71,15.10

2,688,17.08 1,838,44.89Group Share in Debtors of Joint Ventures ........................................ 14,39.70 13,18.85

Total .................................................................................... 2,702,56.78 1,851,63.74

(C) Cash and Bank Balances :Cash, cheques and stamps on hand ............................................... 384,71.91 226,05.75Balances with Scheduled Banks :(i) On Current Account ................................................................... 297,25.55 255,42.34(ii) On Fixed Deposit Account ......................................................... 1,313,19.78 675,17.39(iii) On Margin Account .................................................................... 60.64 6,65.06

1,611,05.97 937,24.79Balances with Non-Scheduled Banks :On Current Account & Fixed Deposit Account ................................. 42,86.45 21,30.43

2,038,64.33 1,184,60.97Group Share in Cash and Bank Balances of Joint Ventures ............ 6,47.50 2,57.57

Total .................................................................................... 2,045,11.83 1,187,18.54

131

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE VI (Contd.)2007 2006

Rupees Rupees Rupeeslakhs lakhs lakhs

(D) Other Current Assets :

Interest accrued on investments ....................................................... 2,82.84 2,14.35

Plant & Machinery and other assets held for sale ............................ 14.10 18.15(at cost or estimated net realisable value, whichever is lower)

Stock on Hire .................................................................................... – 84.34

Less : Unmatured Finance Charges ................................................. – 17.55

– 66.79Less : Provision for Non Performing Assets & Doubtful Debts ........ – 14.40

– 52.39

Total .................................................................................... 2,96.94 2,84.89

(E) Loans and Advances :(Unsecured, considered good unless otherwise stated) :

Bills of exchange, considered good .................................................. 4,91.05 4,62.93

Bills of exchange, considered doubtful ............................................. 2,05.04 2,13.09

6,96.09 6,76.02

Less: Provision for doubtful debts .................................................... 2,05.04 2,13.09

4,91.05 4,62.93

Advances recoverable in cash or in kind or for value to be received :

Considered good .............................................................................. 1,197,72.01 859,09.35

Considered doubtful .......................................................................... 83,31.78 90,68.03

1,281,03.79 949,77.38

Less : Provision for Doubtful Advances ............................................ 83,31.78 90,68.03

1,197,72.01 859,09.35

Loans against assets/Retained Interest in Securitised Assets(Secured) :

Considered good .............................................................................. 5,428,26.87 3,984,22.61

Considered doubtful .......................................................................... 345,41.87 225,73.26

5,773,68.74 4,209,95.87

Less : Provision for Doubtful Advances ............................................ 149,10.61 86,45.04

5,624,58.13 4,123,50.83

Payments towards Income tax and Surtax (net of provisions) ......... 15,12.65 28,46.52

Balances - Customs, Port Trust, Excise, etc. ................................... 16,77.77 3,93.04

6,859,11.61 5,019,62.67

Group Share in Loans and Advances of Joint Ventures ................... 1,22.68 82.54

Total .................................................................................... 6,860,34.29 5,020,45.21

Total .................................................................................... 14,039,60.40 9,725,28.92

132

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE VII 2007 2006Rupees Rupees Rupees

lakhs lakhs lakhsCurrent Liabilities and Provisions :

(A) Current Liabilities :

Acceptances .................................................................................... 340,83.88 304,45.81

Sundry Creditors :

(i) Total outstanding dues of small scale industrial undertakings ... 118,42.43 60,36.82

(ii) Total outstanding dues of creditors other than small scaleindustrial undertakings ............................................................... 3,257,66.08 2,079,48.58

3,376,08.51 2,139,85.40

Dividend payable ............................................................................... 7,33.15 2,75.99

Balances on Directors’ Current Accounts ......................................... 2,45.77 2,15.86

Interest accrued but not due on loans ............................................. 123,26.16 94,66.04

Deposits/Advances received against hire purchase/leaseagreements ....................................................................................... 34,40.81 49,05.53

Other current liabilities ....................................................................... 383,18.56 192,56.32

4,267,56.84 2,785,50.95

Group Share in Current Liabilities of Joint Ventures ......................... 8,04.95 7,41.54

Total ........................................................................................... 4,275,61.79 2,792,92.49

(B) Provisions :

Proposed Dividends .......................................................................... 98,19.90 243,97.41

Provision for Tax on Proposed Dividend ........................................... 16,68.89 34,21.74

Provision for diminution in value of long term investments ............... 23,22.57 19,64.00

Provision for premium payable on redemption of convertible bonds 244,58.29 10,07.53

Provision for Contingencies [Note 12 (b)] ......................................... 3,46.20 4,43.75

Provision for compensated absences ............................................... 271,82.81 91,41.40

Provision for Estimated Loss/Expenses on Securitisation ................ 67,43.13 47,17.93

Provision : Others [Note 12 (a)] ......................................................... 196,98.36 107,84.97

922,40.15 558,78.73

Group Share in Provisions of Joint Ventures .................................... 1,22.29 65.39

Total ........................................................................................... 923,62.44 559,44.12

Total ........................................................................................... 5,199,24.23 3,352,36.61

SCHEDULE VIII 2007 2006Rupees Rupees

lakhs lakhs

Miscellaneous Expenditure(to the extent not written off or adjusted) :

(a) Finance Charges ........................................................................ 5,33.50 2,19.38

(b) Separation and other costs ....................................................... 13,20.47 21,76.60

(c) Others ........................................................................................ 46.07 47.92

Total ........................................................................................... 19,00.04 24,43.90

133

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE IX 2007 2006Rupees Rupees

Income from Operations and Other Income : lakhs lakhsIncome from services rendered ........................................................ 3,685,19.05 1,715,24.31Income from long term contracts ..................................................... 135,81.17 164,64.00Income from Project Management, etc. ........................................... 2,02.45 13,50.40Hire Purchase income, Lease income and other rentals .................. 54,22.71 58,67.60Income from Loan, Retained Interest in securitised assets &securitisation ..................................................................................... 821,05.96 568,40.93Commission ...................................................................................... 7,41.45 8,62.16Dividends on other Investments [Note 18 (a)] ................................... 51,30.14 26,51.61Rent received .................................................................................... 4,61.92 3,52.19Miscellaneous Income . ..................................................................... 217,46.32 163,60.60Profit on sale of Investments [Note 18 (c)] ....................................... 12,80.05 105,60.48Profit on sale of Fixed Assets ........................................................... – 4,03.91

4,991,91.22 2,832,38.19Group Share in Joint Ventures .......................................................... 5,37.55 8,68.98

Total........ 4,997,28.77 2,841,07.17

SCHEDULE X 2007 2007 2006Rupees Rupees Rupees

Raw Materials, Finished and Semi-Finished Products : lakhs lakhs lakhs

(A) (Increase)/Decrease in Stock of Finished Goods,Work-in-Progress and Manufactured Components :Opening Stock :(i) Finished Products produced and purchased for sale ................ 670,32.38 503,30.39(ii) Contracts and Work-in-Progress ............................................... 115,59.44 58,19.59(iii) Manufactured Components ....................................................... 49,91.53 41,20.89

835,83.35 602,70.87Add : Stock taken over on acquisition :

(i) Finished Products produced and purchased for sale ................ 64,40.72 1,15.00(ii) Contracts and Work-in-Progress ............................................... 156,99.57 40,62.84

221,40.29 41,77.84Less : Closing Stock :

(i) Finished Products produced and purchased for sale ................ 787,57.13 670,32.38(ii) Contracts and Work-in-Progress ............................................... 279,94.00 115,59.44(iii) Manufactured Components ....................................................... 45,05.96 49,91.53

1,112,57.09 835,83.35

(Increase)/Decrease in Stock ............................................................ (55,33.45) (191,34.64)

(B) Consumption of Raw Materials and Bought-out Components :Opening Stock .................................................................................. 487,98.32 397,09.19Add : Purchases ............................................................................... 8,158,61.58 6,164,35.80

8,646,59.90 6,561,44.99Add: Stock taken over on acquisition ............................................... 75,65.83 43,35.03

Less : Closing Stock ......................................................................... 793,47.97 487,98.32

7,928,77.76 6,116,81.70

(C) Purchases of Finished Products for sale ..................................... 1,083,23.80 962,10.63

8,956,68.11 6,887,57.69Group Share in Joint Ventures .......................................................... 28,55.01 24,58.00

Total........ 8,985,23.12 6,912,15.69

134

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE XI 2007 2006Rupees Rupees

Personnel : lakhs lakhs

Salaries, Wages, Bonus, etc. ............................................................ 2,129,88.62 1,218,76.33

Contribution to Provident and other funds ....................................... 127,58.15 77,53.21

Welfare .............................................................................................. 125,56.54 98,31.31

2,383,03.31 1,394,60.85

Group Share in Joint Ventures .......................................................... 5,36.91 4,77.62

Total........ 2,388,40.22 1,399,38.47

SCHEDULE XII 2007 2006Rupees Rupees

lakhs lakhs

Interest, Commitment and Finance Charges :

On Term Loans and Debentures ....................................................... 340,53.71 236,75.40

On Others (Net) ................................................................................. 52,77.43 39,72.84

Finance charges ................................................................................ 16,19.30 7,53.43

409,50.44 284,01.67

Group Share in Joint Ventures .......................................................... 27.01 33.98

Total........ 409,77.45 284,35.65

Less : Interest Income :

Interest on Government Securities, Debentures and Bonds -Gross [Note 18(b)] ................................................................... 2,51.69 1,99.77

Interest - Others - Gross ......................................................... 107,95.55 62,93.27

110,47.24 64,93.04

Group Share in Joint Ventures ................................................ 9.97 5.13

Total........ 110,57.21 64,98.17

299,20.24 219,37.48

135

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

SCHEDULE XIII2007 2006

Rupees Rupees Rupeeslakhs lakhs lakhs

Other Expenses :

Stores consumed .............................................................................. 120,62.06 92,81.70

Tools consumed ................................................................................ 25,04.43 18,48.23

Power and Fuel ................................................................................. 252,91.18 145,67.37

Rent including lease rentals .............................................................. 117,51.18 57,05.57

Rates and Taxes ............................................................................... 50,22.50 50,83.27

Insurance ........................................................................................... 36,84.48 20,70.63

Repairs & Maintenance :

Buildings .................................................................................... 28,34.68 28,02.69

Machinery .................................................................................. 125,04.41 69,37.48

Others ........................................................................................ 41,22.00 30,00.84

194,61.09 127,41.01

Advertisement ................................................................................... 148,42.87 97,65.95

Commission on sales/contracts (Net) ............................................... 119,07.89 108,07.12

Discount allowed ............................................................................... 13,07.31 7,17.46

Freight outward ................................................................................. 402,72.08 300,08.61

Sales Promotion Expenses ............................................................... 190,64.30 109,88.82

Travelling Expenses ........................................................................... 473,39.27 266,19.14

Cost of Projects, Property, etc. ......................................................... 48,04.33 145,27.12

Subcontracting Charges ................................................................... 362,82.88 86,34.74

Miscellaneous Expenses ................................................................... 957,10.12 655,09.04

Amortisation of expenses .................................................................. 1,43.91 1,42.58

Directors’ fees ................................................................................... 9.70 9.80

Donations and contributions ............................................................. 14,26.63 21,78.33

Loss on Fixed Assets sold/scrapped/written off ............................... 3,71.62 -

Provision for diminution in value of Long term investments ............. 2,14.19 (25.12)

Excess of cost over fair value of Current investments(Net) .............. 2,36.69 71.23

Provision for doubtful debts/advances (Net) ..................................... 72,94.63 32,24.91

3,610,05.34 2,344,77.51

Group Share in Joint Ventures .......................................................... 6,88.78 7,61.83

Total........ 3,616,94.12 2,352,39.34

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SCHEDULE XlV

Notes on the Consolidated Accounts for the year ended 31st March, 2007

1. The Consolidated Financial Statements relate to Mahindra & Mahindra Limited (M&M, the Company) and its subsidiary companies. TheConsolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21) “Consolidated Financial Statements”,Accounting Standard 23 (AS 23) “Accounting for Investment in Associates in Consolidated Financial Statements” and Accounting Standard 27(AS 27) “Financial Reporting of Interests in Joint Ventures” issued by The Institute of Chartered Accountants of India. The Consolidated FinancialStatements have been prepared on the following basis :

(a) Investments in Subsidiaries :

i) The Financial Statements of the Company and its subsidiary companies have been combined on a line by line basis by addingtogether the book values of like items of assets, liabilities, income and expenses. Intra group balances, intra group transactions andunrealised profits or losses have been fully eliminated.

ii) The difference between the costs of investment in the subsidiaries over the Company’s portion of equity of the subsidiary isrecognised in the financial statements as Goodwill or Capital Reserve.

iii) The difference between the proceeds from disposal of investment in a subsidiary and the carrying amount of its assets less liabilitiesas of date of disposal is recognised in the Profit and Loss Account as profit or loss on disposal of investment in subsidiary.

iv) Minority Interest in the net assets of consolidated subsidiaries consist of :

a) the amount of equity attributable to minorities at the date on which investment in a subsidiary is made and

b) the minorities’ share of movements in equity since the date the parent subsidiary relationship comes into existence.

v) The Financial Statements of the subsidiaries are drawn upto 31st March, 2007.

The subsidiaries (which along with Mahindra & Mahindra Limited, the parent, constitute the group) considered in the presentation of theseconsolidated financial statements are :

Proportion of Proportion of Voting

Name of the Subsidiary CompanyCountry of ownership interest Power where different

Incorporation as at as at as at as at31-03-2007 31-03-2006 31-03-2007 31-03-2006

Automartindia Limited India 75.89% 75.89% - -

Mahindra Gesco Developers Limited (upto 10th October, 2006 &

w.e.f. 30th March, 2007) India 50.03% 55.00% - -

Mahindra Consulting Engineers Limited (formerly known as

Mahindra Acres Consulting Engineers Limited) India 51.00% 51.00% - -

Mahindra Ashtech Limited India 100.00% 100.00% - -

Tech Mahindra Limited India 49.03% 56.26% 52.56% 60.06%

Tech Mahindra GmbH Germany 49.03% 56.26% 100.00% 100.00%

Tech Mahindra (Americas) Incorporated U.S.A. 49.03% 56.26% 100.00% 100.00%

Tech Mahindra (Singapore) Pte. Limited Singapore 49.03% 56.26% 100.00% 100.00%

Bristlecone India Limited India 82.20% 86.54% 100.00% 100.00%

Bristlecone (Singapore) Pte. Limited Singapore 82.20% 86.54% 100.00% 100.00%

Bristlecone GmbH Germany 82.20% 86.54% 100.00% 100.00%

Mahindra Engineering & Chemical Products Limited India 100.00% 100.00% - -

Mahindra Gujarat Tractor Limited India 60.00% 60.00% - -

Mahindra Holdings & Finance Limited India 100.00% 100.00% - -

Mahindra Holidays & Resorts India Limited * India 99.99% 99.99% - -

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Proportion of Proportion of Voting

Name of the Subsidiary CompanyCountry of ownership interest Power where different

Incorporationas at as at as at as at

31-03-2007 31-03-2006 31-03-2007 31-03-2006

Mahindra Infrastructure Developers Limited

(upto 10th October, 2006 & w.e.f. 30th March, 2007) India 40.02% 44.00% 80.00% 80.00%

Mahindra Intertrade Limited India 100.00% 100.00% - -

Bristlecone UK Limited U.K. 82.20% 86.54% 100.00% 100.00%

Mahindra Logisoft Business Solutions Limited India 100.00% 100.00% - -

Mahindra & Mahindra Financial Services Limited * India 69.32% 69.91% - -

Mahindra Steel Service Centre Limited India 61.00% 61.00% - -

Mahindra Shubhlabh Services Limited India 77.31% 72.77% - -

Mahindra USA Incorporated U.S.A. 100.00% 100.00% - -

NBS International Limited India 100.00% 100.00% - -

Bristlecone Limited Cayman Islands 82.20% 86.54% - -

Bristlecone Incorporated U.S.A. 82.20% 86.54% 100.00% 100.00%

Mahindra Insurance Brokers Limited * India 69.32% 69.91% 100.00% 100.00%

Mahindra & Mahindra South Africa (Pty) Limited South Africa 51.00% 51.00% - -

Mahindra Engineering Design & Development Company Limited India 100.00% 100.00% - -

Mahindra Middleeast Electrical Steel Service Centre (FZC) Sharjah 90.00% 90.00% - -

Mahindra Overseas Investment Company (Mauritius) Limited Mauritius 100.00% 100.00% - -

Mahindra Holidays & Resorts USA Incorporated * U.S.A. 99.99% 99.99% 100.00% 100.00%

Mahindra World City Developers Limited

(upto 10th October, 2006 & w.e.f. 30th March, 2007) India 41.33% 54.38% 82.62% 82.62%

Mahindra SAR Transmission Private Limited India 51.00% 51.00% - -

Mahindra-BT Investment Company (Mauritius) Limited Mauritius 57.00% 57.00% - -

Tech Mahindra (Thailand) Limited Thailand 49.03% 56.25% 100.00% 100.00%

Mahindra (China) Tractor Company Limited China 80.00% 80.00% - -

Mahindra Europe s.r.l. Italy 80.00% 80.00% - -

Mahindra International Limited India 51.00% 51.00% - -

Mahindra World City (Maharashtra) Limited

(upto 10th October, 2006 & w.e.f. 30th March, 2007) India 50.03% 54.84% 100.00% 100.00%

Mahindra Renault Private Limited India 51.00% 51.00% - -

Mahindra Ugine Steel Company Limited India 50.69% 50.69% - -

Mahindra World City (Jaipur) Limited

(upto 10th October, 2006 & w.e.f. 30th March, 2007) India 37.02% 55.00% 74.00% 100.00%

Tech Mahindra (R & D Services) Limited India 49.03% 56.24% 99.99% 99.99%

Tech Mahindra (R & D Services) Incorporated U.S.A. 49.03% 56.24% 100.00% 100.00%

Tech Mahindra (R & D Services) Pte. Limited Singapore 49.03% 56.24% 100.00% 100.00%

Stokes Group Limited U.K. 99.52% 99.20% - -

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Stokes Forgings Dudley Limited U.K. 99.52% 99.20% 100.00% 100.00%

Jensand Limited U.K. 99.52% 99.20% 100.00% 100.00%

Stokes Forgings Limited U.K. 99.52% 99.20% 100.00% 100.00%

Plexion Technologies (India) Private Limited India 100.00% 100.00% - -

Plexion Technologies (UK) Limited U.K. 100.00% 100.00% - -

Plexion Technologies GmbH Germany 100.00% 100.00% - -

Plexion Technologies Incorporated U.S.A. 100.00% 100.00% - -

Mahindra Forgings Overseas Limited (w.e.f. 11th August,2006) Mauritius 67.90% - - -

Mahindra Forgings International Limited (w.e.f. 27th September, 2006) Mauritius 67.90% - 100.00% -

JECO Holdings AG (w.e.f. 29th November, 2006) Germany 67.90% - 100.00% -

Gesenkschmiede Schneider GmbH (w.e.f. 29th November, 2006) Germany 67.90% - 100.00% -

JECO-Jellinghaus GmbH (w.e.f. 29th November, 2006) Germany 67.90% - 100.00% -

Falkenroth Umformtechnik GmbH (w.e.f. 29th November, 2006) Germany 67.90% - 100.00% -

Falkenroth Grundstucksgesellschaft GmbH

(w.e.f. 29th November, 2006) Germany 67.90% - 100.00% -

PT Tech Mahindra Indonesia (w.e.f. 28th April, 2006) Indonesia 49.03% - 100.00% -

CanvasM Technologies Limited (w.e.f. 5th October, 2006) India 39.27% - 80.10% -

CanvasM (Americas) Inc. (w.e.f. 5th October, 2006) U.S.A. 39.27% - 100.00% -

iPolicy Networks Limited (w.e.f. 22nd January, 2007) India 49.03% - 100.00% -

Mahindra Forgings Mauritius Limited (w.e.f. 5th December, 2006) Mauritius 100.00% - - -

Mahindra Forgings Global Limited (w.e.f. 7th December, 2006) Mauritius 100.00% - - -

Schöneweiss & Co. GmbH (w.e.f. 1st January, 2007)** Germany 100.00% - 90.47% -

Fried. Hunninghaus GmbH (w.e.f. 1st January, 2007) Germany 100.00% - - -

Fried. Hunninghaus GmbH & Co. KG (w.e.f. 1st January, 2007) Germany 100.00% - - -

DGP Hinoday Industries Limited (w.e.f. 6th January, 2007) * India 66.36% - - -

Mahindra Stokes Holding Company Limited

(w.e.f. 21st March, 2007) India 100.00% - - -

Mahindra Integrated Township Limited (from 4th May, 2006 to

10th October, 2006 & w.e.f. 30th March, 2007) India 47.77% - 100.00% -

MHR Hotel Management GmbH (w.e.f. 12th March, 2007) * Germany 74.99% - 75.00% -

* excluding shares issued to ESOP Trust but not allotted to employees as per the Guidance Note on Accounting for Employee Share-basedPayments issued by The Institute of Chartered Accountants of India.

** includes fundamental economic rights and administrative rights (including but not limited to voting rights, information rights and right toparticipate in shareholders meetings) in respect of 9.53% shares.

Note : Tech Mahindra Foundation is not consolidated as a subsidiary as it can apply its income for charitable objects only and cannot paydividend or transfer funds to its parent.

Proportion of Proportion of Voting

Name of the Subsidiary CompanyCountry of ownership interest Power where different

Incorporationas at as at as at as at

31-03-2007 31-03-2006 31-03-2007 31-03-2006

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

(b) Interests in Joint Ventures

The Group’s interests in jointly controlled entities of the Group are :

Name of the Entity Country of Percentage of Percentage ofIncorporation ownership ownership

interest interestas at 31-03-2007 as at 31-03-2006

(a) Mahindra Sona Limited * India 29.77% 29.77%

(b) PSL Erickson Limited * India 18.06% 18.06 %

(c) Mahindra Water Utilities Limited $ India 50.00% 50.00%

(d) Mahindra Inframan Water Utilities Private Limited $ India 50.00% 50.00%

Interest in Joint Ventures are accounted for using Proportionate Consolidation Method.

* Shareholding is through a subsidiary, Mahindra Holdings & Finance Limited.

$ Shareholding is through a subsidiary, Mahindra Infrastructure Developers Limited.

The financial statements of all the Joint Ventures are drawn upto 31st March, 2007.

(c) Investment in Associates

The Group’s Associates are :

Name of the Entity Country of Percentage of Percentage ofIncorporation ownership ownership

interest interestas at 31-03-2007 as at 31-03-2006

Owens Corning (India) Limited India 21.63% 21.50%

Mahindra Construction Company Limited India 37.49% 37.49%

Officemartindia.com Limited India 50.00% 50.00%

Rathna Bhoomi Enterprises Private Limited India 20.01% 22.00%

Kota Farm Services Limited India 34.79% 32.74%

Mriyalguda Farm Solution Limited India 34.79% 32.74%

Mega One Stop Farm Services Limited India 34.79% 32.74%

Mahindra Forgings Limited

(formerly known as Mahindra Automotive Steels Limited ) India 47.11% 47.11%

Mahindra Composites Limited (formerly known as Siroplast Limited) India 30.56% 30.56%

Mahindra Gesco Developers Limited(from 11th October, 2006 to 29th March, 2007) India 46.09% -

Mahindra Renault Automotive Private Limited (w.e.f. 23rd February, 2007) India 50.00% -

The financial statements of all the Associates are drawn up to 31st March, 2007.

2. Accounting Policies :

(A) Fixed Assets :

(a) (i) All Fixed Assets are carried at cost less depreciation except as stated in (ii) below. Cost includes financing cost relating toborrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the asset is ready for use.In case of borrowed funds and liabilities in foreign currencies for the acquisition of fixed assets from a country outside India, theexchange differences are adjusted to the cost of such asset.

When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of accountand resultant profit (including capital profit) or loss, if any, is reflected in the Profit and Loss Account.

(ii) Land and Buildings, of the parent company had been re-valued as at 31st October, 1984 at depreciated replacement values onthe basis of a valuation made by a firm of Chartered Surveyors & Valuers. The indices, if any, used are not stated in the valuation.

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(b) (i) Leasehold land is amortised over the period of the lease.

(ii) Depreciation on assets is calculated on Straight Line Method (SLM) at the rates and in the manner prescribed in Schedule XIVto the Companies Act, 1956, except :

For the following class of assets where depreciation is calculated at rates, based on useful life of the assets, which are in nocase lower than the rates specified in Schedule XIV to the Companies Act, 1956 :

Building (at sites) : at 25.00 % to 100.00 %

Building (others) : at 2.56 % to 6.67 %

Plant & Machinery : at 14.29 % to 33.33 %

Furniture & Fixture : at 7.69 % to 33.33 %

Vehicles : at 10.00 % to 50.00 %

(iii) Depreciation charge for each year is after deducting the amount representing the depreciation on the increase due to revaluationof Land and Buildings, transferred from the Revaluation Reserve.

(B) Intangible Assets :

All Intangible Assets are initially measured at cost and amortised so as to reflect the pattern in which the asset’s economic benefits areconsumed :

(a) Technical Knowhow :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding six years commencing with the year ofpurchase of the technology.

(b) Development Expenditure :

The expenditure incurred on technical services and other project related expenses are amortised on the completion of the developmentwork over the estimated period of benefit not exceeding five years.

(c) Software Expenditure :

The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure is incurred.

(d) Websites :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding five years.

(e) Time Share Weeks :

Intangible assets representing ‘time share weeks’ are amortised over a period of ten years.

(f) Trademarks :

The expenditure incurred is amortised over the estimated period of benefit, not exceeding ten years.

(g) Non Compete Fees :

Non compete payments are amortised equally over the estimated period of benefit, not exceeding ten years.

(C) Investments :

All long term investments, other than in Associates, are carried at cost. However, provision for diminution in value is made to recognise adecline other than temporary, in the value of investments. Current investments are valued at the lower of cost and fair value, determined bycategory of investment. Investments in Associates are accounted using the equity method.

(D) Inventories :

Inventories are stated at cost or net realisable value, whichever is lower. Cost is arrived at on a weighted average method and includes, whereappropriate, manufacturing overheads and excise duty. Cost of the inventory, includes interest, where appropriate, for long term projects.

(E) Miscellaneous Expenditure (to the extent not written off or adjusted) :

Expenditure carried forward under this head is amortised as follows :

(a) Finance Charges :

The expenditure incurred in raising long term borrowings is amortised over the period of the borrowings. On early buyback,conversion or repayment of borrowings, any unamortised expenditure is fully written off in that year.

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

(b) Separation and Other Costs :

Special Payments/Pensions under Voluntary Retirement Schemes.

The liability is amortised over a period of five years from the month in which the liability is incurred.

(c) Preliminary expenses are written off over a period of five years from the date of incurring such expenditure.

(F) Foreign Exchange Transactions :

All foreign currency monetary items are translated at the relevant rates of exchange prevailing at the year end. In respect of forward exchangecontracts the premium or discount arising at the inception of such a contract is amortised as expense or income over the life of the contract.

In the case of monetary items (other than those for acquisition of fixed assets from a country outside India), the exchange differences arerecognised in the Profit and Loss Account.

In the case of monetary items incurred for the acquisition of fixed assets and technical know-how from a country outside India, theexchange differences are adjusted to the cost of such assets.

In respect of non-integral foreign operations, the assets and liabilities, both monetary and non-monetary are translated at the closing ratesand income and expenses are translated at exchange rates at the dates of transaction and all the resulting exchange differences areaccumulated in foreign exchange fluctuation reserve until the disposal of the net investment.

(G) Revenue Recognition :

(a) Sales of products and services are recognised when the products are shipped or services rendered. Income from long term contractsand sale of property (concerning property development activity) is, accounted for on percentage of completion basis. [Refer paragraph(H) below].

(b) Dividends from investments are recognised in the Profit and Loss Account when the right to receive payment is established.

(H) Long term contracts and Property Development Activity :

Income on long term contracts and property development activity is accounted on the percentage of completion basis which necessarilyinvolves technical estimates of the percentage of completion of each contract/activity, and costs to completion of the contract/activity, onthe basis of which profits/losses are accounted. Such estimates, made by the management and certified to the auditors, have been reliedupon by them, as these are of a technical nature.

Project management fees receivable on fixed period contracts is accounted over the tenure of the contract/agreement. Where themanagement fee is linked to the input costs, revenue is recognised as a proportion of the work completed based on progress claimsubmitted. Where the management fees are linked to the revenue generation from the project, revenue is recognised on the percentage ofcompletion basis.

(I) Income from Lease/Hire Purchase :

Finance earnings on lease transactions are calculated by applying the interest rate implicit in the lease, to the investment in the leasedassets, as reduced by the net present value of the lease instalments falling due.

Income from hire purchase contracts entered prior to 1st April, 2001 is accounted for on equated basis in accordance with the terms of thecontract (except in some cases in which it is accounted for by applying the interest rate implicit in such contracts). For hire purchasetransactions entered on or after 1st April, 2001 the income is accounted for by applying the interest rate implicit in such contracts.

(J) Government Grants :

The Company is entitled to various incentives from a State Government, such as grants by way of refund of octroi duty paid by theCompany for its manufacturing unit located in a developing region. In view of the uncertainty in respect to the collection of these grants,such grants are accounted for as and when the disbursements are received.

(K) Time Share Business :

The activity of selling Timeshare and providing holiday facilities to members for a specified period each year, over a number of years, forwhich membership fee is collected either in full up front, or on a deferred payment basis. Upto 30th September, 2005 out of the totalmembership fee, relevant portion reasonably attributable towards cost required to market Timeshare, which is assessed and revisedperiodically, is recognised as Timeshare income in the year in which the purchaser of Timeshare becomes a member and the balancerepresenting ‘Advance towards members’ facilities’ is being recognised as Timeshare income equally over a period for which holidayfacilities are provided commencing from the year in which the member is entitled to benefits of membership under the scheme.

With effect from 1st October, 2005 in accordance with the new membership rules, admission fee, which is non-refundable, is recognised asincome on admission of a member. Entitlement fee, which entitles the Timeshare member for the Timeshare facilities over the membershipusage period, is recognised as income equally over the usage period.

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

(L) Employee Benefits :

i) Defined Contribution Plan

Group’s contributions paid/payable during the year to Provident Fund, Superannuation Fund, ESIC and Labour Welfare Fund arerecognised in the Profit and Loss Account.

ii) Defined Benefit Plan/Long term compensated absences

Group’s liability towards gratuity, compensated absences and post retirement medical benefit schemes are determined by independentactuaries, using the projected unit credit method. Past services are recognised on a straight line basis over the average period untilthe benefits become vested. Actuarial gains and losses are recognised immediately in the statement of Profit and Loss Account asincome or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that isdetermined by reference to the market yields at the Balance Sheet date on Government Bonds where the currency and terms of theGovernment Bonds are consistent with the currency and estimated terms of the defined benefit obligation.

(M) Product Warranty :

In respect of warranties on sale of certain products, the estimated costs of these warranties are accrued at the time of sale. The estimatesfor accounting of warranties are reviewed and revisions are made as required.

(N) Leases :

The Group’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns, etc.). Theleasing arrangements which are not non-cancellable range between 11 months and three years generally, and are usually renewable bymutual consent on agreed terms. The aggregate lease rentals payable are charged as Rent including lease rentals.

(O) Segment Reporting :

The accounting policies adopted for segment reporting are in line with the accounting policies of the Group. Segments are identified havingregard to the dominant source and nature of risks and returns and internal organisation and management structure.

Revenues and expenses have been identified to the segments based on their relationship to the business activity of the segment.

Income/Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected asunallocated corporate income/expenses. Inter-segment transfers are at prices which are generally market led.

(P) Taxes on Income :

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject toconsideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate inone period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on account of unabsorbeddepreciation or carry forward of tax losses are recognised only to the extent that there is virtual certainty supported by convincing evidencethat sufficient future tax income will be available against which such deferred tax assets can be realised.

(Q) Income from Securitisation and Assignment :

Securitised assets are derecognised as the contractual rights therein are transferred to the special purpose vehicle or buyers as the casemay be. On derecognition, the difference between book value of the securitised asset and consideration received as reduced by theestimated provision for loss/expense and incidental expenses related to the transaction is recognised as gain or loss arising on securitisation.

In case of assignment of receivables the assets are derecognised as all the rights, titles, future receivables & interest thereof are assigned tothe purchaser. On derecognising, the difference between book value of the receivables assigned and consideration received as reduced bythe estimated provision for loss/expenses & incidental expenses related to the transaction is recognised as gain or loss arising on assignment.

3. In the Consolidated Accounts, the Investment Fluctuation Reserve account is reflected with a corresponding adjustment to ‘General Reserve’.In accordance with the Scheme of Arrangement approved by the Hon’ble High Court of Bombay on 12th December, 2003, the InvestmentFluctuation Reserve has been utilised against diminution in value of certain investments in the accounts of the Company. Accordingly, anamount of Rs. 1068.98 lakhs (2006 : Rs. 1230.00 lakhs) utilised for provision for investment in subsidiaries in the standalone accounts of theCompany, and not set up in the consolidated accounts, has been transferred from Investment Fluctuation Reserve to General Reserve.

4. The Guidance Note on Accounting for Employee Share-based Payments issued by The Institute of Chartered Accountants of India requires thatshares allotted to a trust but not transferred to employees be reduced from Share Capital and Reserves. Accordingly the Company has reducedthe Share Capital by Rs. 366.93 lakhs (2006 : Rs. 375.09 lakhs), Securities Premium by Rs. 1797.95 lakhs (2006 : Rs. 1837.93 lakhs) for the36,69,279 shares (2006 : 37,50,884 shares) held by the trust pending transfer to the eligible employees.

The Share Capital of the company has also been reduced and the General Reserve increased by Rs. 366.93 lakhs (2006 : Rs. 375.09 lakhs)

for the bonus shares issued by the company in September, 2005 to the trust but not yet transferred by the trust to the employees. The abovemonies which is treated as advance received from it, is included under current liabilities.

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

5. Loans :

(a) Secured borrowings are secured by a pari-passu charge on immovable properties of the entities both present and future, subject to certainexclusions and are also secured by pari-passu charge on the movable properties of the entities including movable Machinery, MachinerySpares, Tools and Accessories, both present and future, subject to certain exclusions.

(b) Loans and Advances from Banks are secured by a first charge on whole of the current assets namely inventories, certain book debts,outstanding monies, receivables, claims, etc. both present and future.

6. (a) The depreciation charge for the year excludes :

(i) An amount of Rs. 42.87 lakhs (2006 : Rs. 43.28 lakhs), representing depreciation on the increase due to revaluation of Land andBuildings transferred from the Revaluation Reserve.

(ii) An amount of Rs. 3.06 lakhs (2006 : Rs. 3.10 lakhs), representing depreciation on assets used for development work. Thisexpenditure is transferred to Development Expenditure and is appropriately amortised.

(b) Additions to assets include assets taken over due to acquisition of subsidiaries :Rupees lakhs

Description of Assets * Cost/Professional Depreciation/Valuation Amortisation

Land ......................................................................................................................................... 21,59.81 -

Land - Leasehold ..................................................................................................................... 47.79 17.63

Building .................................................................................................................................... 225,36.41 130,86.36

Plant & Machinery .................................................................................................................... 1,190,17.63 951,38.68

Furniture & Fittings ................................................................................................................... 247,51.34 171,68.15

Property – Leasehold ............................................................................................................... 35.92 24.57

Vehicles, Cycles, etc. ............................................................................................................... 20,05.43 15,06.33

Technical Know-how ................................................................................................................ 60.30 11.19

Development Expenditure ........................................................................................................ 19.15 5.57

Trademarks .............................................................................................................................. 7,17.25 6,56.31

Total ......................................................................................................................................... 1,713,51.03 1,276,14.79

*The depreciation charge for the year includes an amount of Rs. Nil (2006 : Rs. 0.50 lakhs) representing lease terminal adjustment for the year.

Excludes transactions where a company ceased to be a subsidiary and again became a subsidiary.

7. (a) During the year ended 31st March, 2007, Mahindra & Mahindra Financial Services Limited has without recourse securitised/assigned loanreceivables of Rs. 21837.00 lakhs (2006 : Rs. 22644.00 lakhs) contracts amounting to Rs. 60996.22 lakhs (2006 : Rs. 55630.58 lakhs)(including future interest receivable) for a consideration of Rs. 55431.62 lakhs (2006 : Rs. 51468.22 lakhs). As the income booked inrespect of securitisation/assignment of receivables include certain amount towards cost of future servicing of the securitised/assignedpool, a matching amount has been provided for. The income booked on securitisation/assignment of receivables during the year isRs. 7409.45 lakhs (2006 : Rs. 5718.00 lakhs) and provision for estimated loss/expenses is Rs. 2735.28 lakhs (2006 : Rs. 2082.66 lakhs).

(b) During the year ended 31st March, 2007, Mahindra Holidays & Resorts India Limited has with recourse securitised receivables ofRs. 6136.13 lakhs (2006 : Rs. 2622.28 lakhs).

8. The Company had issued during the year ended 31st March, 2005, Zero Coupon Foreign Currency Convertible Bonds (Bonds 2009) aggregatingUS $ 100 million, at par. Out of these upto 31st March, 2007, Bonds aggregating US $ 97.30 million have been converted into equity shares/GDRs. Subsequent to the year end, Bonds aggregating US $ 0.90 million have been converted into equity shares/GDRs.

Premium payable on redemption of Bonds 2009 had been fully provided in the previous year by debiting the same to Securities PremiumAccount (SPA). Consequent to the conversion premium aggregating Rs. 866.94 lakhs no longer payable on bonds converted into equity shares/GDRs has been credited back to SPA during the year.

During the year, the company issued Zero Coupon Foreign Currency Convertible Bonds (Bonds 2011) aggregating US $ 200 million, at par. Thebond holders have an option to convert these bonds into Equity Shares with full voting rights or Global Depository Receipts (GDRs) determinedat an initial conversion price of Rs. 922.04 per share with fixed exchange rate of conversion of Rs. 44.42 = US $ 1, at any time on or after 7th

May, 2006 upto 7th March, 2011.

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

The Bonds 2011 may be redeemed, in whole but not in part, at the option of the Company at any time on or after 13th April, 2008 subject tosatisfaction of certain conditions. Unless previously converted, redeemed or purchased and cancelled, the bonds fall due for redemption on 14th

April, 2011 at 128.03 per cent of their principal amount. Upto 31st March, 2007, none of the Bonds 2011 have been converted into equityshares/GDRs.

The net proceeds of Rs. 85836.01 lakhs, unutilised as at 31st March, 2007, is disclosed under Cash and Bank balances.

In accordance with the announcement “Tax effect of expenses/income adjusted directly against the reserves and/or Securities PremiumAccount” issued by The Institute of Chartered Accountants of India, the company has during the year debited the provision for premium payableon redemption of convertible bonds to the Securities Premium Account net of tax, which was hitherto being debited gross of tax, as a result theSecurities Premium Account as at 31st March, 2007 is higher by Rs. 8186.66 lakhs, Deferred Tax Asset is higher by Rs. 6761.45 lakhs, the taxexpense for the year is higher by Rs. 1425.21 lakhs and consequently the profit for the year after tax is lower by Rs. 1425.21 lakhs.

9. Employee Defined Benefits :Defined benefit plans – as per Actuarial valuation on 31st March, 2007

Rupees lakhs

Gratuity Gratuity Post Retirement(Funded) (Unfunded) Medical Benefits

(Unfunded)I. Expense recognised in the Statement of Profit and Loss account

for the year ended 31st March, 2007

1. Current Service Cost 16,17.83 10,87.98 20.14

2. Interest 14,52.64 1,94.08 23.77

3. Expected Return on plan assets (12,03.23) - -

4. Actuarial (Gain)/Loss (7,95.16) (1,61.53) (15.20)

5. Payments on account of employees transferred 66.98 - -

6. Total expense 11,39.06 11,20.53 28.71

II. Net Asset/(Liability) recognised in the Balance Sheetas at 31st March, 2007

1. Present Value of Defined Benefit Obligation as at 31st March, 2007 204,46.33 32,05.16 3,30.06

2. Fair Value of plan assets as at 31st March, 2007 144,67.11 - -

3. Funded status [Surplus/(Deficit)] (59,79.22) (32,05.16) (3,30.06)

4. Net Asset/(Liability) as at 31st March, 2007 (59,79.22) (32,05.16) (3,30.06)

III. Change in the obligation during the year ended31st March, 2007

1. Present Value of Defined Benefit Obligation at thebeginning of the year 190,07.30 22,96.39 3,17.76

2. Current Service Cost 16,17.83 10,87.98 20.14

3. Interest Cost 14,52.64 1,94.08 23.77

4. Actuarial (Gain)/Loss (8,29.13) (1,61.53) (15.20)

5. Benefit payments (8,02.31) (2,11.76) (16.41)

6. Present Value of Defined Benefit Obligation at theend of the year 204,46.33 32,05.16 3,30.06

IV. Change in Fair Value of Assets during the yearended 31st March, 2007

1. Fair Value of plan assets at the beginning of the year 125,53.60 - -

2. Expected return on plan assets 12,05.62 - -

3. Contributions by employer 15,44.17 - 16.41

4. Actuarial Gain/(Loss) (33.97) - -

5. Actual benefits paid (8,02.31) - (16.41)

6. Fair Value of plan assets at the end of the year 144,67.11 - -

7. Actual return on plan assets 12,03.23 - -

V. The major categories of plan assets as a percentage of total plan

Funded with LIC 100% - -

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

VI. Actuarial assumptions As at 31st March, 2007

1. Discount Rate 7.50% - 8.35% 7.50% - 8.35% 8.20%

2. Expected rate of return on plan assets 6.00% - 9.20% - -

3. In-service Mortality Indian Assured Lives Mortality (1994-96) Modified ultimate

4. Turnover Rate Age 21 to 44 - 2.00% Age 45 to 60 - 1.00%

5. Medical premium inflation - - 3.00%

VII. Effect of one percentage point change in the assumedmedical inflation rate One percentage point One percentage

increase in point decrease inmedical inflation rates medical inflation rates

Effect on the aggregate service and interest cost of PostEmployment Medical Benefits 9.20 (5.93)

Effect on the accumulated Post Employment MedicalBenefits obligations 42.57 (40.39)

Basis used to determine expected rate of return on assets:

Based on expectation of the average long term rate of return expected on investment of the fund, during the estimated term of obligation.

The estimate of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors,such as supply and demand in the employment market.

Further, as at 31st March, 2007, Current Liabilities and Provisions include Pension liability of Rs. 9525.66 lakhs in respect of foreign subsidiariesacquied during the later part of the year.

During the year the Company has adopted Accounting Standard (AS) 15 (revised 2005) Employee Benefits. Read with the Accounting StandardBoard Guidance on implementing AS 15, Employee Benefits (revised 2005) issued by the Institute of Chartered Accountants of India in May2007, the Company has

(i) Accounted for (net of tax) Rs. 8419.74 lakhs as a reduction from General Reserve and Rs 69.08 lakhs as a reduction from Profit and Lossaccount.

(ii) Accounted as prior period adjustment (net of tax) Rs. 1918.84 lakhs being on account of Provision for Gratuity Rs. 2584.59 lakhs Gross(2006 : Rs. Nil) arising from certain refinements in the actuarial assumptions and accrual of Post Retirement Medical Benefits on anactuarial basis Rs. 307.85 lakhs Gross (2006 : Rs. Nil) and the resultant tax credit thereon is Rs. 973.60 lakhs.

10. The Commissioner of Central Excise (Adjudication), Navi Mumbai, passed an order on 30th March, 2005, which was received by the ParentCompany on 4th April, 2005, confirming the demand made on the Company for payment of differential excise duty (including penalty) ofRs. 30411.00 lakhs in connection with the classification of Company’s Commander range of vehicles, during the years 1991-1996. Whilst theCompany had classified the Commander range of vehicles as 10-seater attracting a lower rate of excise duty, the Commissioner of CentralExcise (Adjudication), Navi Mumbai, has held that these vehicles could not be classified as 10-seaters and as such attracted a higher rate ofexcise duty. In earlier proceedings, the Collector of Central Excise, Mumbai as also the Collector Central Excise (Appeals), Mumbai had upheldthe classification of these vehicles as 10-seaters. Similarly, certain statutory/expert bodies have also confirmed the concerned vehicles to be10-seater vehicles.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has also by its order dated 19th July, 2005 upheld this classification. Thedepartment’s Statutory Appeal against this order has been admitted by the Supreme Court.

The Company has been legally advised that the order dated 30th March, 2005 passed by the Commissioner is unsustainable in law and has filedan appeal against this order, along with stay application, before the CESTAT. The Company is confident that it would succeed in the case andthe Company’s stand that the Commander and Armada Vehicles are 10-seater vehicles would be upheld. As such, the Company does notexpect any liability on this account.

During the current year, the Commissioner of Central Excise, Nasik confirmed a demand of Rs. 24.55 crores and imposed a penalty of Rs.20.00 lakhs in respect of Company’s Armada range of vehicles manufactured during the years 1992 – 1996, on the same grounds as adoptedfor Commander range of vehicles. The Tribunal has in this case too granted an unconditional stay against the order. The final hearing in thematter is awaited.

Rupees lakhs

Gratuity Gratuity Post Retirement(Funded) (Unfunded) Medical Benefits

(Unfunded)

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

11. Contingent Liability :

(a) Guarantees given :

Outstanding amounts against the guarantees

2007 2006Rupees lakhs Rupees lakhs

For employees ............................................................................................................... 5.06 10.40

For other companies ..................................................................................................... - 2,00.00

Others ............................................................................................................................ 28,43.05 14,98.68

(b) Claims against the Companies not acknowledged as debts comprise of :

(i) Excise Duty, Sales tax and Service tax claims disputed by the Company relating to issues of applicability and classification aggregatingto Rs. 6285.11 lakhs (Net of Tax : Rs. 4706.86 lakhs) (2006 : Rs. 14242.00 lakhs (Net of Tax : Rs. 10503.60 lakhs)).

(ii) Other Matters (excluding claims where amounts are not ascertainable) : Rs. 3439.24 lakhs (Net of Tax : Rs. 2342.19 lakhs) (2006 :Rs. 12686.77 lakhs (Net of Tax : Rs. 8422.40 lakhs)).

(iii) On Capital account : Rs. 118.20 lakhs (2006 : Rs. 118.20 lakhs).

(iv) Group Share in Joint Ventures Rs. 0.88 lakhs (2006 : Rs. 0.88 lakhs).

(c) Taxation matters :

(i) Demands not acknowledged as debts and not provided for, relating to issues of deductibility and taxability in respect of which thematters are in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be completed :

— Income tax : Rs. 20527.56 lakhs (2006 : Rs. 15126.09 lakhs)

— Group Share in Joint Ventures : Rs. 6.69 lakhs (2006 : Rs. 0.88 lakhs)

(ii) Items which have succeeded in appeal, but the Income tax Department is pursuing/likely to pursue in appeal/reference and exclusiveof the effect of similar matters in respect of assessments remaining to be completed :

— Income tax matters : Rs. 5123.13 lakhs (2006 : Rs. 5186.54 lakhs)

— Surtax matters : Rs. 12.80 lakhs (2006 : Rs. 12.80 lakhs)

(d) Bills discounted not matured Rs. 784.32 lakhs (2006 : Rs. 1491.64 lakhs).

(e) In respect of contracts for design, manufacture, supply, erection and commissioning of plant and equipment placed by various customers,the committed dates of completion had expired and, hence, strictly in terms of the relative contracts, the liability for liquidated damages/penalties, the amount of which is estimated at a ceiling of Rs. 1008.25 lakhs (2006 : Rs. 946.71 lakhs) - Net of Tax Rs. 668.87 lakhs(2006 : Rs. 628.05 lakhs). However, it is expected to have the liquidated damages/penalties waived, as in the past.

(f) The Company had acquired Tech Mahindra (R&D services) Limited vide Share Purchase Agreement dated 15th November, 2005, for ainitial consideration of Rs. 17550.60 lakhs (including stamp duty). As a result, TMRDL and its two wholly owned subsidiaries have becomesubsidiary/step subsidiaries of the Company with effect from the date of acquisition i.e. 28th November, 2005.

During the year the Company has acquired additional 1600 shares at total consideration of Rs. 3.10 lakhs and the same has beenaccounted as additional cost of acquisition.

The terms of purchase also provide for payment of contingent consideration to all the selling shareholders, payable over three years andcalculated based on achievement of specific targets. The contingent consideration is payable in cash and cannot exceed Rs. 6407.80lakhs. The consideration so payable would be accounted in the books of account in the year of achieving the milestones under theAgreement. Accordingly Rs. 1011.50 lakhs (2006 : Rs. 328.29 lakhs) has been accounted for as at the year end, as additional cost ofacquisition.

12. (a) Provision - Others Rs. 19698.36 lakhs (2006 : Rs. 10784.97 lakhs) includes provision for warranty Rs. 10342.77 lakhs(2006 : Rs. 6321.48 lakhs). This relates to warranty provision made in respect of sale of certain products, the estimated costs of which isaccrued at the time of sale. The products are generally covered under a free warranty period ranging from 6 months to 3 years.

(b) Provision for Contingencies Rs. 346.20 lakhs (2006 : Rs. 443.75 lakhs) is in respect of labour demands under negotiations at certainlocations of the Company. The ultimate settlement is contingent on the conclusion of negotiations.

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

The movement in above provisions is as follows :Rupees lakhs

Warranty Contingency

Provisions 2007 2006 2007 2006

Balance as at 1st April, .................................................................................... 63,21.48 47,02.40 4,43.75 33.99

Add : Other entities ......................................................................................... 11,20.85 - - -

Add : Provision made during the year ............................................................ 98,97.73 44,20.09 2,93.45 4,43.75

Less : Utilisation/Reversal during the year ...................................................... 69,97.29 28,01.01 3,91.00 * 33.99 *

Balance as at 31st March, ............................................................................ 103,42.77 63,21.48 3,46.20 4,43.75

* includes utilisation during the year Rs. 271.07 lakhs (2006 : Rs. 33.99 lakhs)

13. The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March, 2007 is Rs. 64818.75lakhs (2006 : Rs. 60977.14 lakhs).

Group Share in Joint Ventures: Rs. 11.60 lakhs (2006 : Rs. 1.56 lakhs).

14. Research and Development expenditure debited to the Profit and Loss Account, including certain expenditure based on allocations madeaggregate Rs. 14936.88 lakhs (2006 : Rs. 11584.72 lakhs).

Group Share in Joint Ventures: Rs. 3.11 lakhs (2006 : Rs. 4.52 lakhs)

15. The components of Deferred tax liability and assets as at 31st March, 2007 are as under :Rupees lakhs

2007 2006Deferred tax liability :(i) On fiscal allowances on fixed assets ....................................................................................... 260,67.58 212,05.76

(ii) Others ....................................................................................................................................... 31,02.03 21,29.52

Group Share in Joint Ventures ................................................................................................. 42.78 53.81

292,12.39 233,89.09

Deferred tax assets :(i) Provision for Compensated absences ..................................................................................... 60,88.10 20,21.81

(ii) Provision for Doubtful debts/Advances .................................................................................... 96,06.16 66,90.27

(iii) Unabsorbed depreciation carried forward # ............................................................................ 30,68.29 2,75.27

(iv) Premium on Redemption of Zero Coupon Convertible Bonds ................................................ 67,61.45 -

(v) Provision for Gratuity ................................................................................................................ 13,52.86 -

(vi) Provision for Post Retirement Medical Expenses .................................................................... 1,08.29 -

(vii) Others 36,02.15 27,57.59

Group Share in Joint Ventures…………………………………………………………………. 95.97 78.45

306,83.27 118,23.39

Net Deferred tax liability/(assets) (14,70.88) 115,65.70

# (considered, as there are compensatory timing differences the reversal of which, will result in sufficient future taxable income against whichthis can be realised).

148

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

16. Exceptional items of Rs. 11729.03 lakhs (Debit) [2006 : Rs. 26340.42 lakhs (credit)], comprise of the following :2007 2006

Rupees lakhs Rupees lakhs

1. Profit on divesture of Long Term Investments ......................................................................... 395,35.11 275,79.06

2. Profit on Discontinuation of Operation in a subsidiary ............................................................ 20,02.06 -

3. Upfront Payment to a customer* ............................................................................................. (524,93.80) -

4. Amortisation of liability and other retirement benefits made underVoluntary Retirement Schemes ................................................................................................ (8,08.41) (8,34.07)

5. Premium on redemption of preference shares ........................................................................ - (4,04.57)

6. Others ....................................................................................................................................... 36.01 -

Total .......................................................................................................................................... (117,29.03) 263,40.42

* During the year, a group subsidiary has entered into Global Sourcing Agreement relating to the development of a global sourcing model forstrategic outsourcing services, with a customer for a term of five years.

As per the terms of agreement, a group subsidiary has made an upfront payment of Rs. 52493.80 lakhs to the customer which is unconditional,irrevocable and non-refundable. Accordingly, this payment has been disclosed as an exceptional item in the Profit and Loss Account.

Figures in brackets signify charge to Profit and Loss Account.

17. Adjustments pertaining to previous years, net of current and deferred tax, comprise of the following :2007 2006

Rupees lakhs Rupees lakhs

1. (Excess)/Short provision of Income Tax in respect of previous years. .................................... (34,40.32) 20.59

2. Gratuity and post retirement medical benefit (net of tax of Rs. 973.60 lakhs) ....................... 19,18.84 -

3. Other Adjustments .................................................................................................................... 3.31 2.52

Total .......................................................................................................................................... (15,18.17) 23.11

18. (a) Dividends on other investments Rs. 5130.14 lakhs (2006 : Rs. 2651.61 lakhs) is in respect of current investments.

(b) Interest on Government Securities, Debentures and Bonds comprise Rs. 99.73 lakhs (2006 : Rs. 109.15 lakhs) and Rs. 151.96 lakhs(2006 : Rs. 90.62 lakhs) in respect of long term and current investments respectively.

(c) Profit on sale of investments (net) includes profit on disposal of current investments (net) Rs. 784.32 lakhs (2006 : Rs. 706.09 lakhs), andprofit on disposal of long term investments (net) Rs. 495.73 lakhs (2006 : Rs. 9854.39 lakhs).

19. Work-in-progress – Property Development Activity and Long Term Contracts and Advances recoverable in cash or kind or for value to bereceived includes Group’s share of Rs. 4331.85 lakhs (2006 : Rs. 4762.18 lakhs) on account of certain projects, the commencement of whichhas been delayed pending resolution of certain matters including receipt of approvals and outcome of court cases.

20. Related Party Transactions :

(a) Names of related parties where transactions have taken place during the year :

Subsidiaries :

Sl. No. Name of the Company

1. Tech Mahindra Foundation

Associates :

Sl. No. Name of the Company Sl. No. Name of the Company

1. Mahindra Forgings Limited (formerly known as 6. Mriyalguda Farm Solution LimitedMahindra Automotive Steels Limited)

2. Owens Corning (India) Limited 7. Mega One Stop Farm Services Limited

3. Rathna Bhoomi Enterprises Private Limited 8. Mahindra Construction Company Limited

4. Mahindra Composites Limited 9. Mahindra Gesco Developers Limited(formerly known as Siroplast Limited) (from 11th October, 2006 to 29th March, 2007)

5. Kota Farm Services Limited

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Joint Ventures :

Sl. No. Name of the Company Sl. No. Name of the Company

1. Mahindra Sona Limited 3. Mahindra Inframan Water Utilities Private Limited2. Mahindra Water Utilities Limited

Key Management Personnel :Vice Chairman and Managing Director .......................... Mr. Anand MahindraExecutive Directors ......................................................... Mr. B.N. Doshi

Mr. A.K. Nanda

(b) The related party transactions are as under :Rupees lakhs

Sl. Nature of Transactions Subsidiary Associate Joint KeyNo. Companies Companies Ventures Management

Personnel

1. Purchases

Goods .......................................................................................... - 71,16.64 42,92.40 -

(36,57.22) (29,18.14) (46,51.49) (-)

Fixed Assets ................................................................................ - 0.11 0.12 -

(-) (25.69) (-) (-)

2. Sales

Goods .......................................................................................... - 39,04.16 - -

(-) (42,92.30) (0.39) (-)

Fixed Assets ................................................................................ - 64.11 - -

(16,28.89) (-) (-) (-)

Services ....................................................................................... - 6,90.81 49.80 -

(39.80) (3.56) (90.45) (-)

3. Investments

Purchase ...................................................................................... - 182,70.89 - -

(80,00.00) (-) (-) (-)

4. Share Application Money paid .................................................... - - - -

(48,50.00) (-) (-) (-)

5. Deputation of Personnel

From Related Parties ................................................................... - 3.45 - -

(-) (2.80) (-) (-)

To Related Parties ....................................................................... - 7.00 - -

(40.05) (2.66) (-) (-)

6. Provisions for :

Doubtful Advances during the year ............................................. - 37.80 - -

(-) (20.03) (-) (-)

Diminution in value of other assets written back ........................ - 6.39 - -

(-) (45.00) (-) (-)

7. Finance

Inter Corporate Deposits given ................................................... - - - -

(6,00.00) (-) (-) (-)

Inter Corporate Deposits refunded by parties ............................ - - - -

(6,00.00) (1,25.19) (-) (-)

Interest received .......................................................................... - 1,10.42 - -

(21.28) (1,18.10) (-) (1.17)

Dividend received ........................................................................ - 13.41 1,11.35 -

(-) (19.25) (91.70) (-)

Cash discount received ............................................................... - 28.55 - -

(-) (-) (-) (-)

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Rupees lakhs

Sl. Nature of Transactions Subsidiary Associate Joint KeyNo. Companies Companies Ventures Management

Personnel

8. Other Transactions

Other Income ............................................................................... - 7,06.34 4.67 -

(-) (3,29.15) (4.32) (-)

Other Expenses ........................................................................... 5,56.60 $ 1,74.12 0.10 -

(15,00.00) $ (-) (-) (-)

Reimbursements received from parties ....................................... - 34.95 2.59 -

(1,23.64) (1,84.05) (3.22) (-)

Reimbursements made to parties ............................................... - 18.73 - -

(-) (59.21) (-) (-)

Advance given by group company ............................................. - 12.70 - -

(-) (20.03) (-) (-)

Advance refunded by group company ........................................ - - - -

(-) (2,00.00) (-) (-)

9. Outstandings

Payable ........................................................................................ - 5,51.73 9,72.60 2,45.46

(2,87.54) (-) (8,49.18) (2,15.86)

Receivable ................................................................................... - 30,40.89 74.05 -

(1,51.82) (19,34.48) (64.41) (-)

Inter Corporate Deposits given ................................................... - 5,72.80 - -

(-) (5,72.80) (-) (-)

Guarantees and Collaterals given ............................................... - - - -

(-) (-) (9,00.00) (-)

10. Provision for Diminution in value of other related assets ............ - 7,64.90 - -

(-) (6,68.71) (-) (-)

Provision for Doubtful debts /advances ...................................... - 5,74.14 - -

(-) (5,04.71) (-) (-)

11. Share Application Money. ............................................................ - - - -

(48,50.00) (-) (-) (-)

12. Managerial Remuneration ............................................................ - - - 4,98.47

(-) (-) (-) (5,61.47)

13. Dividends ..................................................................................... - - - 78.77

(-) (-) (-) (33.08)

14. Stock Options .............................................................................. - - - 4.74

(-) (-) (-) (8.38)

15. Loan Refunded by Key Management Personnel ........................ - - - -

(-) (-) (-) (80.00)

Previous year’s figures are in brackets.$ Amount pertains to Tech Mahindra Foundation.

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Significant related party transactions are as under :Rupees lakhs

Nature of Transactions Associate Companies Amount Joint Ventures Amount

1. Purchase – Goods……………… . Mahindra Ugine Steel Company Limited - Mahindra Sona Limited 42,92.40

(27,10.95) (46,51.49)

Mahindra Forgings Limited 69,47.20(-)

2. Purchase – Fixed Assets ............. Kota Farm Services Limited 0.11 Mahindra Sona Limited 0.02

(-) (-)

Mahindra Inframan Water 0.10Utilities Private Limited (-)

3. Sale – Goods ............................... Mahindra Ugine Steel - Mahindra Sona Limited -

Company Limited (42,71.90) (0.39)

Mahindra Forgings Limited 39,03.80(-)

4. Sale – Fixed Assets ..................... Mahindra Forgings Limited 64.11

(-)

Sale – Services Mahindra Forgings Limited 6,14.43 Mahindra Water 47.40(-) Utilities Limited (-)

5. Investment – Purchase ................ Mahindra Forgings Limited 48,50.00

(-)

Mahindra Gesco 134,20.89Developers Limited (-)

6. Provision for Doubtful Advance ... Mega One Stop Farm 12.70

Services Limited (19.86)

Mriyalguda Farm Solution Limited -(0.17)

Kota Farm Services Limited 25.10

(-)

7. Inter Corporate Deposit refunded Mahindra Ugine Steel -by parties ..................................... Company Limited (80.19)

Mahindra Construction -Company Limited (45.00)

Previous year’s figures are in brackets.

21. Earnings per Share :2007 2006

Amount used as the numerator – Net Profit (Rupees lakhs) ........................................................................ 1,497,14.59 1,269,71.66

(Gain)/Loss on difference in exchange on bonds ......................................................................................... (24,08.15) 1,18.93

Amount used as the numerator for diluted earnings per share (Rupees lakhs) .......................................... 1,473,06.44 1,270,90.59

Weighted average number of equity shares used in computing basic earnings per share ......................... 23,66,07,123 22,51,11,765

Effect of potential ordinary (equity) shares on conversion of bonds/debentures ......................................... 1,84,51,156 2,06,32,529

Weighted average number of equity shares used in computing diluted earnings per share ....................... 25,50,58,279 24,57,44,294

Basic Earnings per share (Rs.) (Face value of Rs. 10 per share) ................................................................. 63.28 56.40

Diluted Earnings per share (Rs.) .................................................................................................................... 57.75 51.72

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MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

22. Investment in Associates

No. of Equity % of Cost of Goodwill/ Share in Carryingshares held Holding Investments Capital accumulated Cost

(Equity reserve Profit/(Loss)/Shares) Reserves

(Nos.) (Rupees lakhs)Unquoted :

Owens Corning (India) Limited ......................... 2,81,24,794 21.63% 28,12.48 (7,63.78) 14,33.99 42,46.47

2,81,24,794 21.50% 28,12.48 (7,63.78) 12,79.46 40,91.95

Mahindra Construction Company Limited ........ 9,00,000 37.49% 96.88 - (96.88) -

9,00,000 37.49% 96.88 - (96.88) -

Officemartindia.com Limited. ............................ 7,499,97 50.00% 22.00 - (22.00) -

7,499,97 50.00% 22.00 - (22.00) -

Rathna Bhoomi Enterprises Private Limited ..... 500 20.01% 0.05 - (0.05) -

500 22.00% 0.05 - (0.05) -

Kota Farm Services Limited .............................. 2,73,420 34.79% 27.34 - (27.34) -

2,73,420 32.74% 27.34 - (27.34) -

Mriyalguda Farm Solution Limited .................... 3,37,500 34.79% 33.75 - (33.75) -

3,37,500 32.74% 33.75 - (33.75) -

Mega One Stop Farm Services Limited ........... 3,51,000 34.79% 35.10 2.52 (35.10) -

3,51,000 32.74% 35.10 2.52 (35.10) -

Mahindra Renault Automotive Private Limited . 5,000 50.00% 0.50 - - 0.50

- - - - - -

Total .................................................................. 42,46.97

40,91.95

Quoted :Mahindra Composites Limited (formerly knownas Siroplast Limited) ......................................... 13,41,203 30.56% 290.13 54.92 1,11.10 4,01.23

13,41,203 30.56% 290.13 54.92 1,04.45 3,94.58Mahindra Forgings Limited (formerly known asMahindra Automotive Steels Limited)(transferred from unquoted to quoted duringthe year) ............................................................ 1,32,00,370 47.11% 128,51.89 43,72.44 (10,12.46) 118,39.43

82,21,936 47.11% 80,01.00 43,72.44 (4,22.12) 75,78.88

Total .................................................................. 122,40.66

79,73.46

23. Joint Ventures Disclosure :Group’s Share in Joint Ventures with respect to other items :

2007 2006Rupees Lakhs Rupees Lakhs

a) Sales ............................................................................................................................................................... 49,92.15 41,39.62

b) Excise Duty ..................................................................................................................................................... (4,11.43) (3,38.92)

c) Depreciation/Amortisation .............................................................................................................................. (60.34) (61.55)

d) Provision for Current Tax including FBT ......................................................................................................... (3,26.62) (3,22.52)

e) Provision for Deferred Tax (Net) ..................................................................................................................... 12.68 20.99

Figures in brackets signify charge to Profit and Loss Account.

153

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)24

. S

egm

ent

Info

rmat

ion

:

Seg

men

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t fo

r th

e ye

ar e

nded

31s

t M

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6 to

10th

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06.

154

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)In

form

atio

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* In

line

with

Acc

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ndar

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on

Seg

men

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seg

men

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bilit

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of “

Fina

ncia

l Ser

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incl

ude

the

rela

ted

inte

rest

bea

ring

liabi

litie

s.

155

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

Secondary Segment Disclosure - Geographical SegmentRupees lakhs

Domestic Overseas Total

Revenue from External Customers .............................. 14,047,72.30 5,318,65.27 19,366,37.57

11,248,15.25 2,599,88.39 13,848,03.64

Segment Assets ........................................................... 14,967,54.08 1,795,79.42 16,763,33.50

10,506,22.08 729,75.44 11,235,97.52

Capital Expenditure ...................................................... 2,143,29.13 46,46.66 2,189,75.79

559,94.01 48,60.67 608,54.68

Notes :

1. Business Segments

The Group has considered business segments as the primary segment for disclosure.

The segments have been identified taking into account the organisational structure as well as the differing risks and returns of these segments.

Automotive Segment comprises of sales of automobiles, spare parts and related services.

Farm Equipment Segment comprises of sales of Tractors, spare parts and related services.

IT Services comprises of services rendered for IT and Telecom.

Financial Services comprise of services relating to financing, leasing and hire purchase of automobiles and tractors.

Infrastructure comprise of operating of Commercial complexes, Project management and Development.

Hospitality comprises of sale of Time share.

SYSTECH comprises of Automotive components and other related products and services.

Others comprise of Investment, Transport solutions group etc.

2. Secondary Segments

The geographical segments are considered for disclosure as secondary segment.

Domestic segment includes sales to customers located in India and service income accrued in India.

Overseas segment includes sales and services rendered to customers located outside India.

Segment Revenue comprises of :2007 2006

Rupees lakhs Rupees lakhs

Sales ...........................................................................................…………………………… 14,439,51.95 11,067,29.75

Income from Services rendered ..................................................…………………………… 3,689,33.76 1,713,19.73

Income from long term contracts ...............................................…………………………… 135,81.17 172,12.46

Income from project management .............................................…………………………… 2,02.45 13,50.40

Hire purchase and lease income ................................................…………………………… 54,22.71 58,67.60

Income from Loan, Retained Interest in securitised Asset & Securitisation……………… 821,05.96 568,40.93

Other allocable income * .................................................................................................... 224,39.57 254,82.77

Total .......................... 19,366,37.57 13,848,03.64

156

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)

2007 2006Rupees lakhs Rupees lakhs

*Other allocable income includes :

Interest Income ................................................................................................................... 5,21.62 5,13.69

Scrap Sales ......................................................................................................................... 82,67.10 55,02.91

Commission ........................................................................................................................ 7,41.45 6,11.79

Dividend .............................................................................................................................. 6,73.39 2,73.17

Profit on Sale of Long Term Investments ........................................................................... 7,26.62 87,22.68

Others ................................................................................................................................. 115,09.39 98,58.53

Total .......................... 224,39.57 254,82.77

25. Previous year’s figures have been regrouped/restated wherever necessary.

157

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)D

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-

Falk

en

roth

Um

form

tech

nik

Gm

bH

#5

80

.30

67

0.2

46

13

0.8

66

13

0.8

6-

55

57

.53

35

9.7

81

42

.75

21

7.0

3-

Ma

hin

dra

Ge

sco

De

ve

lop

ers

Lim

ite

d5

44

7.6

37

16

28

.92

87

04

1.4

58

70

41

.45

16

06

3.1

61

63

24

.92

21

05

.01

68

8.0

31

41

6.9

88

23

.89

Ge

sen

ksc

hm

ied

e S

chn

eid

er

Gm

bH

#7

12

0.8

63

66

4.5

94

37

14

.58

43

71

4.5

81

9.7

32

34

36

.58

20

06

.10

77

4.1

21

23

1.9

8-

iPo

lic

y N

etw

ork

s L

imit

ed

17

13

.69

(10

50

.65

)1

33

6.0

81

33

6.0

8-

14

17

.98

(12

09

.32

)(5

.29

)(1

20

4.0

3)

-

JEC

O H

old

ing

s A

G#

29

01

.50

27

43

.08

16

33

8.9

21

63

38

.92

-2

76

.22

42

.94

21

.47

21

.47

-

Jen

san

d L

imit

ed

#5

1.2

22

06

1.0

73

27

7.2

43

27

7.2

4-

-(4

5.2

0)

-(4

5.2

0)

-

JEC

O-J

ell

ing

ha

us

Gm

bH

#2

97

6.9

47

20

.15

12

70

5.6

71

27

05

.67

3.4

87

82

5.3

54

59

.02

18

5.7

02

73

.32

-

Ma

hin

dra

Co

nsu

ltin

g E

ng

ine

ers

Lim

ite

d1

00

.00

11

5.6

63

68

.30

36

8.3

0-

41

8.5

74

7.4

81

9.7

32

7.7

5-

Ma

hin

dra

Ash

tech

Lim

ite

d3

10

0.0

0(2

48

5.3

2)

59

97

.44

59

97

.44

0.2

06

88

9.1

8(1

74

.19

)1

1.4

1(1

85

.60

)-

Ma

hin

dra

-BT

In

ve

stm

en

t C

om

pa

ny

(M

au

riti

us)

Lim

ite

d#

62

16

.21

90

58

.91

15

28

9.6

01

52

89

.60

-3

49

.98

34

3.4

51

0.2

83

33

.17

-

Ma

hin

dra

(C

hin

a)

Tra

cto

r C

om

pa

ny

Lim

ite

d#

61

09

.49

(30

62

.49

)5

49

9.8

35

49

9.8

3-

36

59

.83

(19

46

.62

)-

(19

46

.62

)-

Ma

hin

dra

En

gin

ee

rin

g &

Ch

em

ica

l P

rod

uc

ts L

imit

ed

53

9.8

54

61

7.4

96

05

7.0

36

05

7.0

33

74

8.3

67

78

1.9

22

77

5.6

73

75

.53

24

00

.14

-

Ma

hin

dra

En

gin

ee

rin

g D

esi

gn

& D

eve

lop

me

nt

Co

mp

an

y L

imit

ed

70

5.0

02

07

7.2

03

43

7.9

83

43

7.9

89

38

.98

54

78

.72

16

59

.00

(52

.35

)1

71

1.3

5-

Ma

hin

dra

Eu

rop

e s

.r.l.

#5

09

.74

98

.46

35

86

.85

35

86

.85

10

.82

75

56

.22

13

6.4

65

7.2

27

9.2

4-

Ma

hin

dra

Fo

rgin

gs

Glo

ba

l L

imit

ed

#7

67

7.3

7(1

81

.02

)1

95

32

.25

19

53

2.2

5-

5.1

5(1

81

.02

)-

(18

1.0

2)

-

Ma

hin

dra

Fo

rgin

gs

Inte

rna

tio

na

l L

imit

ed

#4

06

21

.00

(36

4.3

3)

58

35

2.0

75

83

52

.07

--

(36

4.3

3)

-(3

64

.33

)-

Ma

hin

dra

Fo

rgin

gs

Ma

uri

tiu

s L

imit

ed

#7

67

7.3

7(3

.23

)1

94

65

.20

19

46

5.2

0-

18

1.8

3(3

.23

)-

(3.2

3)

-

Ma

hin

dra

Fo

rgin

gs

Ov

ers

ea

s L

imit

ed

#4

17

81

.60

(4.4

0)

59

54

6.9

95

95

46

.99

--

(4.4

0)

-(4

.40

)-

Ma

hin

dra

Gu

jara

t Tr

ac

tor

Lim

ite

d2

03

0.2

0(4

25

0.7

7)

24

72

.17

24

72

.17

4.6

18

09

3.0

31

7.3

2(0

.26

)1

7.5

8-

Ma

hin

dra

Ho

ldin

gs

& F

ina

nce

Lim

ite

d1

46

60

.16

19

88

9.7

03

73

06

.46

37

30

6.4

61

84

45

.41

36

36

.62

32

56

.68

14

5.4

43

11

1.2

4-

Ma

hin

dra

Ho

lid

ay

s &

Re

sort

s In

dia

Lim

ite

d2

84

0.0

24

93

5.8

44

77

36

.68

47

73

6.6

85

90

.18

24

06

4.9

96

64

7.9

02

47

2.2

34

17

5.6

71

01

6.0

7

Ma

hin

dra

Ho

lid

ay

s &

Re

sort

s U

SA

In

corp

ora

ted

#0

.43

44

.83

21

40

.52

21

40

.52

-7

9.4

44

6.9

1-

46

.91

-

Ma

hin

dra

In

sura

nce

Bro

ke

rs L

imit

ed

50

.00

38

5.0

25

62

.52

56

2.5

2-

11

94

.69

60

1.1

12

17

.43

38

3.6

8-

Ma

hin

dra

In

fra

stru

ctu

re D

ev

elo

pe

rs L

imit

ed

18

00

.00

55

.06

19

81

.59

19

81

.59

15

31

.40

10

4.2

06

3.4

23

6.8

62

6.5

6-

Ma

hin

dra

In

tert

rad

e L

imit

ed

35

35

.00

54

76

.36

37

79

6.7

53

77

96

.75

-7

81

92

.72

36

23

.30

11

90

.75

24

32

.55

25

6.1

5

Ma

hin

dra

In

tern

ati

on

al

Lim

ite

d9

87

7.5

64

65

7.5

62

59

75

.71

25

97

5.7

16

22

.10

41

72

2.2

0(3

37

.55

)(6

.45

)(3

31

.10

)-

Ma

hin

dra

In

teg

rate

d T

ow

nsh

ip L

imit

ed

50

00

.00

(47

.50

)9

41

3.5

79

41

3.5

7-

0.8

1(4

7.5

0)

-(4

7.5

0)

-

Ma

hin

dra

Lo

gis

oft

Bu

sin

ess

So

luti

on

s L

imit

ed

12

45

.00

(78

0.3

1)

49

4.9

64

94

.96

0.0

34

57

.47

24

3.8

31

.01

24

2.8

2-

Ma

hin

dra

Mid

dle

ea

st E

lec

tric

al

Ste

el

Se

rvic

e C

en

tre

(F

ZC

)#2

37

.10

13

0.2

62

62

3.7

02

62

3.7

0-

52

71

.21

84

.63

-8

4.6

3-

(Ru

pe

es

La

kh

s)

158

MAHINDRA & MAHINDRA LIMITED (CONSOLIDATED)D

eta

ils

of

Su

bsi

dia

ry C

om

pa

nie

s (contd.) D

eta

ils o

f

Ca

pit

al

Inve

stm

en

ts

(in

clu

din

g(e

xclu

din

gP

rop

ose

d

Na

me

of

Su

bsi

dia

ry C

om

pa

ny

Pre

fere

nce

Re

serv

es

&To

tal

Tota

l I

nve

stm

en

ts i

nG

ross

Pro

fit

Pro

vis

ion

Pro

fit

Div

ide

nd

&

Ca

pit

al)

Su

rplu

sA

sse

tsL

iab

ilit

ies

sub

sid

iari

es)

Turn

ove

rb

efo

re T

ax

for

Tax

aft

er

Tax

Tax

the

reo

n

Ma

hin

dra

& M

ah

ind

ra F

ina

nci

al

Se

rvic

es

Lim

ite

d8

40

1.8

86

94

21

.56

62

80

88

.60

62

80

88

.60

26

36

.45

84

46

1.1

52

02

74

.01

69

85

.67

13

28

8.3

42

01

2.3

3

Ma

hin

dra

& M

ah

ind

ra S

ou

th A

fric

a (

Pty

) L

imit

ed

#4

19

.30

19

53

.78

13

44

9.4

71

34

49

.47

-3

05

77

.38

12

13

.35

39

1.6

08

21

.75

-

Ma

hin

dra

Ov

ers

ea

s In

vest

me

nt

Co

mp

an

y (

Ma

uri

tiu

s) L

imit

ed

#5

30

7.6

93

24

2.5

51

23

27

.75

12

32

7.7

5-

19

.54

(19

9.0

8)

-(1

99

.08

)-

Ma

hin

dra

Re

na

ult

Pri

va

te L

imit

ed

17

05

4.7

53

46

6.6

75

94

99

.24

59

49

9.2

4-

19

5.8

9(3

58

5.8

3)

18

.75

(36

04

.58

)-

Ma

hin

dra

Sto

ke

s H

old

ing

Co

mp

an

y L

imit

ed

82

2.1

13

25

9.4

94

09

0.5

54

09

0.5

5-

-(8

.95

)-

(8.9

5)

-

Ma

hin

dra

Ste

el

Se

rvic

e C

en

tre

Lim

ite

d6

10

.47

15

08

.49

39

28

.10

39

28

.10

-1

80

4.8

07

30

.38

27

7.5

74

52

.81

12

8.5

5

Ma

hin

dra

Sh

ub

hla

bh

Se

rvic

es

Lim

ite

d2

90

8.5

9(2

23

2.3

0)

27

33

.71

27

33

.71

0.5

62

79

1.8

5(1

21

.59

)1

0.1

5(1

31

.74

)-

Ma

hin

dra

SA

R T

ran

smis

sio

n P

riv

ate

Lim

ite

d6

12

.89

11

62

.21

61

89

.34

61

89

.34

-5

29

5.5

4(8

4.0

4)

(12

.47

)(7

1.5

7)

-

Ma

hin

dra

US

A I

nco

rpo

rate

d#

19

56

.15

21

99

.95

29

55

3.7

42

95

53

.74

-6

17

62

.05

66

7.3

82

86

.68

38

0.7

0-

Ma

hin

dra

Ug

ine

Ste

el

Co

mp

an

y L

imit

ed

32

48

.25

13

78

8.2

15

86

85

.05

58

68

5.0

58

6.8

68

62

86

.09

68

17

.75

23

27

.00

44

90

.75

95

0.0

7

Ma

hin

dra

Wo

rld

Cit

y D

eve

lop

ers

Lim

ite

d8

50

0.0

0(1

00

2.9

6)

10

62

0.4

81

06

20

.48

26

.00

14

36

0.6

93

94

1.2

24

0.4

13

90

0.8

11

56

5.0

0

Ma

hin

dra

Wo

rld

Cit

y (

Jaip

ur)

Lim

ite

d3

50

0.0

0(2

43

.26

)7

38

9.4

27

38

9.4

2-

-(2

41

.82

)1

.20

(24

3.0

2)

-

Ma

hin

dra

Wo

rld

Cit

y (

Ma

ha

rash

tra

) L

imit

ed

35

.00

(6.1

5)

29

.85

29

.85

-0

.13

(5.7

5)

0.0

1(5

.76

)-

NB

S I

nte

rna

tio

na

l L

imit

ed

5.0

59

4.0

75

78

.80

57

8.8

0-

39

50

.29

37

.74

15

.96

21

.78

4.4

3

Ple

xio

n T

ech

no

log

ies

Gm

bH

#3

4.2

4(5

.95

)5

0.7

55

0.7

5-

12

2.6

3(9

.76

)-

(9.7

6)

-

Ple

xio

n T

ech

no

log

ies

(In

dia

) P

riv

ate

Lim

ite

d4

50

.30

(32

3.7

2)

13

02

.65

13

02

.65

-1

21

8.4

2(2

28

.93

)1

9.8

7(2

48

.80

)-

Ple

xio

n T

ech

no

log

ies

(UK

) L

imit

ed

#5

5.4

96

4.0

43

68

.34

36

8.3

4-

11

08

.20

40

.55

14

.10

26

.45

-

Ple

xio

n T

ech

no

log

ies

Inco

rpo

rate

d#

25

6.4

7(2

02

.30

)2

80

.83

28

0.8

3-

68

2.6

1(3

2.4

3)

-(3

2.4

3)

-

Sch

ön

ew

eis

s &

Co

. Gm

bH

#2

90

1.5

01

07

72

.04

31

62

0.2

33

16

20

.23

-1

41

75

.22

76

5.4

12

68

.00

49

7.4

1-

Sto

ke

s Fo

rgin

gs

Du

dle

y L

imit

ed

#-

(60

.02

)2

30

1.8

82

30

1.8

8-

63

38

.29

(29

.09

)1

8.5

3(4

7.6

2)

-

Sto

ke

s Fo

rgin

gs

Lim

ite

d#

51

.22

43

.39

97

20

.44

97

20

.44

-1

69

37

.36

(68

6.9

6)

(14

2.7

5)

(54

4.2

1)

-

Sto

ke

s G

rou

p L

imit

ed

#2

11

.49

21

56

.88

29

65

.95

29

65

.95

--

--

--

Tech

Ma

hin

dra

(A

me

rica

s) I

nco

rpo

rate

d#

16

3.0

1(6

12

.67

)3

56

8.3

93

56

8.3

9-

22

06

2.7

11

16

8.9

74

82

.93

68

6.0

4-

Tech

Ma

hin

dra

Gm

bH

#3

33

.67

58

4.9

12

52

6.6

82

52

6.6

8-

66

49

.33

20

3.2

0-

20

3.2

0-

PT

Te

ch M

ah

ind

ra I

nd

on

esi

a#

21

7.3

53

67

.31

26

73

.74

26

73

.74

-6

64

5.3

75

39

.04

17

1.7

33

67

.31

-

Tech

Ma

hin

dra

Lim

ite

d1

21

35

.90

75

67

6.2

01

56

88

9.1

01

56

88

9.1

07

27

3.5

02

75

96

8.7

01

26

74

.40

27

56

.30

99

18

.10

-

Tech

Ma

hin

dra

(R

& D

Se

rvic

es)

Lim

ite

d4

60

.34

10

36

1.4

21

26

88

.08

12

68

8.0

82

51

2.1

51

25

57

.65

14

12

.08

48

1.3

39

30

.75

-

Tech

Ma

hin

dra

(R

& D

Se

rvic

es)

Pte

. Lim

ite

d#

11

4.5

8(1

14

.58

)-

--

13

.60

0.4

0-

0.4

0-

Tech

Ma

hin

dra

(R

& D

Se

rvic

es)

In

corp

ora

ted

#2

.18

47

2.0

86

84

.81

68

4.8

1-

26

06

.65

15

6.6

45

4.8

21

01

.82

-

Tech

Ma

hin

dra

(S

ing

ap

ore

) P

te. L

imit

ed

#1

4.3

33

53

.70

10

75

.46

10

75

.46

-4

98

1.8

53

21

.71

43

.86

27

7.8

5-

Tech

Ma

hin

dra

(T

ha

ila

nd

) L

imit

ed

#6

7.5

0(2

1.5

4)

76

8.2

17

68

.21

-1

05

2.4

34

7.1

3-

47

.13

-

Tech

Ma

hin

dra

Fo

un

da

tio

n5

.00

22

78

.43

22

83

.76

22

83

.76

-1

17

.09

84

.58

-8

4.5

8-

# T

he

fin

an

cia

l st

ate

me

nts

of

the

Fo

reig

n S

ub

sid

iari

es

ha

ve b

ee

n c

on

ve

rte

d i

nto

In

dia

n R

up

ee

s a

t th

e 3

1st

Ma

rch

, 20

07

exc

ha

ng

e r

ate

.

(Ru

pe

es

La

kh

s)