MAHINDRA AND MAHINDRA

INTRODUCTION

The Mahindra Group is an Indian multinational conglomerate holding

company headquartered in Mumbai, Maharashtra, India. It has operations in over 100
countries around the globe.. It is considered to be one of the most reputable Indian industrial
houses with market leadership in utility vehicles as well as tractors in India.

Mahindra & Mahindra was incorporated as Muhammad & Mahindra in 1945 by the brothers
J. C. Mahindra and K. C. Mahindra and Malik Ghulam Muhammad in Ludhiana, Punjab to
trade steel. Following the Partition of India in 1947, Malik Ghulam Muhammad left the
company and emigrated to Pakistan so in 1948, K. C. Mahindra changed the company's name
to Mahindra & Mahindra. 

Building on their expertise in the steel industry, the Mahindra brothers began trading steel
with UK suppliers. They also won a contract to manufacture Willys Jeep in India and began
producing them in 1947. By 1956, the company was listed on the Bombay Stock Exchange,
and by 1969 the company had entered the world market as an exporter of utility vehicles and
spare parts. Like many Indian companies, Mahindra responded to the restrictions of
the Licence Raj by expanding into other industries. Mahindra & Mahindra created
a tractor division in 1982 and a tech division (now Tech Mahindra) in 1986. It has continued
to diversify its operations ever since through both joint ventures and greenfield investments. 

By 1994, the Group had become so diverse that it undertook a fundamental reorganization,
dividing into different Strategic Business departments like
automobile, Equipment; Infrastructure; Trade and finance; Information Technology; and
Automotive Components. The new Managing Director, Anand Mahindra, followed this
reorganization with a new logo in 2000 and the successful launch of the Mahindra Scorpio in
2002. Together with an overhaul in production and manufacturing methods, these changes
helped make the company more competitive, and since then the Group's reputation and
revenues have risen noticeably.

Currently, Mahindra & Mahindra is one of the 20 largest companies in India. . In January
2011, the Mahindra Group launched a new corporate brand, Mahindra Rise, to unify
Mahindra's image across industries and geographies. The brand positions Mahindra products
and services as aspirational, supporting customers' ambitions to 'Rise.'

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 COMPANY OPERATIONS

Mahindra has a leadership position in utility vehicles, information technology, financial

services and vacation ownership in India and is the world’s largest tractor company, by
volume. It also enjoys a strong presence in agribusiness, components, commercial vehicles,
consulting services, energy, industrial equipment, logistics, real estate, steel, aerospace,
defence and two wheelers. Headquartered in India, Mahindra employs over 200,000 people
across 100 countries. The brand positions Mahindra products and services as aspirational,
supporting customers' ambitions to 'Rise.'

For effective and efficient operations the winning mantras are going to be around providing a
solution, delivering an experience and having a purpose. Customers are also increasingly
assigning value to a company that has a purpose.

Subsidiaries:

The group has a presence in aerospace, agribusiness, aftermarket, automotive, components,

construction equipment, defence, energy, farm equipment, finance and insurance, industrial
equipment, information technology, leisure and hospitality, logistics, real estate, retail, and
two wheelers.

Mahindra and Mahindra have the following subsidiaries: SsangYong Motors, Mahindra
Aerospace, Mahindra & Mahindra Financial Services Limited, Mahindra Systech, Tech
Mahindra, Mahindra Lifespace Developers, Mahindra Ugine Steel Company, Automobili
Pininfarina

Product:

The Company is a pioneer for Electric Vehicles in India, and is actively pursuing
development of the Electric Vehicle (EV) market, products and technology. SIAM (Society
of Indian Automobile Manufacturers) have forecasted the PV and CV industries to grow in
double digits. The Company is also closely working with the Government, both at the Centre
and at the State level and other participants of the mobility ecosystem to create an EV
ecosystem in India and is actively pursuing a strategy to develop and introduce Petrol engines
across the product range.

Plants:

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 M&M’s manufacturing plants are spread over 6 million sq.m at multiple locations across
India. All the plants have been recertified under the ISO 14001: 2015 and OHSAS
18001:2007 standards and are in the process of adopting the revised environmental standard
ISO 14001: 2015. In addition they have several other manufacturing plants located across the
globe.

As on 31st March, 2018, the property, plant and equipment (including capital work-in-
progress) stood at ` 9,472 Cr. During the year, and incurred a capital expenditure of
2,857 Cr., where the major focus was on new product development and capacity
enhancement.

Joint ventures, acquisitions and other matters:

 Demerger of Two-Wheeler Business of Mahindra Two Wheelers Limited (MTWL) into

your Company
 Divestment of 87,211 Equity Shares of Swaraj Engines Limited in the Buy-back offer
 Sale of 64,50,000 shares representing 5% of the total share capital of CIE Automotive
S.A
 Scheme of Amalgamation between Defence Land Systems India Limited (Transferor
Company) and Mahindra Defence Systems Limited (Transferee Company) and their
respective Shareholders and Creditors (Scheme)
 Consolidation of Smartshift and Porter
 Exploration of Strategic Co-operation with Ford
 Acquisition of Erkunt Traktor Sanayii A.S. and Erkunt Sanayi A.S.
 Merger of Mahindra Telecommunications Investment Private Limited and Gateway
Housing Company Limited (Transferor Companies) with Mahindra Holdings Limited
(Transferee Company) and their respective Shareholders (Scheme)
 Capital Raising by Mahindra & Mahindra Financial Services Limited, a listed subsidiary
of your Company

Proposed Plan for Growth and Business Expansion:

1. Expansion in urban and rural areas: The proposed strategy involves entrenching themselves
in upcountry rural India with their existing strong brands like Bolero and Scorpio they will be
able to consolidate their rural India presence and in urban centres, they will further entrench
themselves with XUV500 and will use the latest portfolio of products to target new range of
customers.

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2. Strong Engine Strategy : M&M have been working on their strong engine platforms – engine
strategy rather. So far, they have petrol engine available only on KUV 100. Going forward,
they will have it available in other products too. M&M will be tweaking in displacement and
fuel type for the existing models to overcome its diesel dependency, regulatory hurdles (ban
on diesel vehicle with displacement>2000 cc) & higher applicable tax rates on buyers of
higher displacement cars.
3. Diversification and Investment Strategy: As against the previous plan of investing Rs. 15000
crores over a three-year period, Mahindra will now be investing Rs 18000 crore. This
investment will go into capacity expansion, product portfolio expansion for both farm and
automotive and also for new investment opportunities
4. Expansion into Electric Vehicles : M&M has tied up with cab aggregator Uber to introduce
electric vehicles (EVs) in the latter’s fleet. To make this model sustainable, M&M and Uber
will work closely with public and private players that are in the process of setting up a
common use charging ecosystem across multiple locations. The company has invested Rs 500
crore in the EV business, and plans to pump in another Rs 600 crore in the next two to three
years.

FINANCIAL ANALYSIS

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 Income Statement
Particulars 2019 2018
Revenue from Operations 53614 49445
Other Income 1689 1036
Profit before Depreciation 8328 7259
Less : Depreciation and 1860 1479
Amortization expenses
Profit before finance cost 6468 5780
Less : Finance Cost 113 112
Profit before exceptional items 6355 5668
and taxation
Add: Exceptional Items (30) 434
Profit before Taxation 6325 6102
Less : Tax Expense 1529 1746
Profit for the year 4796 4356
Balance of profit for earlier 25206 21781
years
Less: Transfer to debenture 14 14
redemption Reserves
Profits available for 29988 26123
appropriation
Add: other comprehensive (9) 8
income and loss
Less: Dividend paid on equity 932 807
shares
Less: Income Tax 80 118
Balance carried forward 28967 25206

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M&M Income Statement Analysis
 Company recorded an increase of 8.4% in revenue from operations at Rs. 53,614 crores in
the year under review as against Rs. 49,445 crores in the previous year.
 The Profit for the year before Depreciation, Finance Costs, Exceptional items and
Taxation recorded an increase of 14.7% at Rs. 8,328 crores as against Rs. 7,259 crores in
the previous year.
 Profit after tax increased by 10.1% at Rs. 4,796 crores as against Rs. 4,356 crores in the
previous year.
 The rigorous cost restructuring exercises and efficiency improvements which have
resulted in significant savings through continued focus on cost controls, process
efficiencies and product innovations.

 Operating income during the year rose 13.7% on a year-on-year (YoY) basis from Rs.
920,940 crore to Rs. 1,044,207 crore. This is due to the profitable returns in its
investment activities and also due to increase in sales over the period.
 The company's operating profit increased by 15.0% (YoY) during the fiscal. Operating
profit margins witnessed a fall and down at 14.5% in FY19 as against 14.4% in FY18.
 Depreciation charges increased by 21.7% and finance costs increased by 25.9% YoY,
respectively.
 Other income grew by 72.0% YoY.
 Net profit for the year declined by 24.4% YoY. This is because the Company is
subject to periodic tax challenges by tax authorities leading to protracted litigations.
As such, accounting for taxes involves management judgment in developing estimates
of tax exposures and contingencies in order to assess the adequacy of tax provision.

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 Net profit margins during the year declined from 8.6% in FY18 to 5.7% in FY19. The
reason for this was also increase in tax regimes by the government as we can see an
increase of 20.5% in the taxes whereas the operating income rose by only 13.7% and
there was also increase in non-operating expenses as well.

Balance Sheet

%
No. of Months Year Ending Mar-18 Mar-19
Change
Equity Share Capital 30,294.04 34,209.23
Current Liabilities Rs. 13,329.02 14,334.07 7.54 %
Long-term Debt Rs. 3,823.64 4,153.76 8.63 %
Total Liabilities Rs. 47,446.70 52,697.06 11.06 %
Current assets Rs. 16,480.28 18,071.06 9.65 %
Fixed Assets Rs.   30,966.42 34,626.00 11.81%
Total Assets Rs. 47,446.70 52,697.06 11.06 %

M&M Balance Sheet Analysis

 The company's current liabilities during FY19 stood at Rs. 14334.07 crore as
compared to Rs. 13329.02 crore in FY18, thereby witnessing an increase of 7.54%.
 Long-term debt stood at Rs. 4153.76 crore as compared to Rs. 3,823.64 crore during
FY18, a growth of 8.63%.
 Current assets rose 9.65% and stood at Rs. 18,071.06 crore , while fixed assets rose
11.81% and stood at Rs. 16,480.28 crore in FY19.
 Overall, the total assets and liabilities for FY19 stood at Rs. 52,697.06 crore as against
Rs. 47,446.70 crore during FY18, thereby witnessing a growth of 11.06%.
 The Company has long-term investments in subsidiaries, joint ventures and associates
aggregating Rs 19,032 crores as at 31 March 2019.
 The Company has Rs 1,713 crores of intangible assets under development and Rs 2,334
crores of development expenditure capitalized as at 31 March 2019.

Cash Flow

No. of
12 12
months %
Particulars
Year Change
Mar-18 Mar-19
Ending
Cash Flow from Operating
Rs 7027.08 4923.87 (29.93)%
Activities

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 Cash Flow from Investing
Rs (5110.42) (2548.71) 50.12 %
Activities
Cash Flow from Financing
Rs (1033.31) (1555.22) 50.51 %
Activities
Net Cash Flow Rs 1,417.95 2237.58 57.80 %

M&M Cash Flow Statement Analysis

 M&M's cash flow from operating activities (CFO) during FY19 stood at Rs.4923.87
crores n a YoY basis.
 Cash flow from investing activities (CFI) during FY19 stood at Rs. 2548.71 crore , an
improvement of 50.12% on a YoY basis.
 Cash flow from financial activities (CFF) during FY19 stood at Rs. 1555.22, an
improvement of 50.51% on a YoY basis.
 Overall, net cash flows for the company during FY19 stood at Rs. 2237.58 crore from
the Rs. 1417.95 crore net cash flows seen during FY18.

Share Data

No. of Months Year Ending Mar-18 12 Mar-19

Sales per share Rs 740.8 962.6
Earnings per share (EPS) Rs 36.64 40.29
Diluted earnings per share Rs 64.1 48.4
Price to Cash Flow  x 7.8 9.1
TTM P/E ratio x 16.4 16.4
Price / Book Value ratio x 3.8 2.2
Market Cap Rs 786,318 785,681
Dividends per share Rs 7.5 8.5

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Current Valuations for M&M
 The trailing twelve-month earnings per share (EPS) of the company stands at Rs.
36.64 an decline from the EPS of Rs 40.29 recorded last year.
 The price to earnings (P/E) ratio, at the current price of Rs 632.5, stands at 16.4
times its trailing twelve months earnings.
 The price to book value (P/BV) ratio at current price levels stands at 2.2 times,
while the price to sales ratio stands at 0.8 times.
 The company's price to cash flow (P/CF) ratio stood at 9.1 times its end-of-year
operating cash flow earnings

Key Ratio Analysis

No. of Months Year Ending 12 Mar-18 12 Mar-19

Current ratio x 1.2 1.2
Debtors’ Days Days 34 32
Interest coverage x 2.7 2.4
Debt to equity ratio x 0.9 1.1
Return on assets % 8.7 6.8
Return on equity % 21.6 15.0
Return on capital employed % 20.3 16.6

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Solvency Ratios 

1. Current Ratio: The company's current ratio deteriorated and stood at 1.2x during FY19,
from 1.2x during FY18. The current ratio measures the company's ability to pay short-
term and long-term obligations.
2. Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at
2.4x during FY19, from 2.7x during FY18. The interest coverage ratio of a company
states how easily a company can pay its interest expense on outstanding debt. A higher
ratio is preferable.

Profitability Ratios 

1. Return on equity: The ROE for the company declined and down at 15.0% during FY19,
from 21.6% during FY19. The ROE measures the ability of a firm to generate profits
from its shareholders capital in the company.
2. Return on Capital Employed (ROCE): The ROCE for the company declined and down at
16.6% during FY19, from 20.3% during FY18. The ROCE measures the ability of a firm
to generate profits from its total capital (shareholder capital plus debt capital) employed
in the company.
3. Return on assets: The ROA of the company declined and down at 6.8% during FY19,
from 8.7% during FY18. The ROA measures how efficiently the company uses its assets
to generate earnings.

M&M Share Price Performance

1. Over the last one year, M&M share price has moved up from Rs 932.9 to Rs 632.5,
registering a loss of Rs 300.4 or around 32.2%.
2. Meanwhile, the S&P BSE AUTO Index is trading at Rs 17,063.2 (down 0.4%). Over the
last one year it has moved down from 24,854.9 to 17,063.2, a loss of 7,792 points (down
31.3%).
3. Overall, the S&P BSE SENSEX is up 7.1% over the year.

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Revenue- Sales

 In the Financial Year 2018-19, your Company sold 607,548 vehicles (a growth of 10.8%
in comparison to the previous year) and 330,436* tractors (a growth of 3.4% over the
previous year).

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 The Automotive and Farm Sectors, along with their subsidiary, associate companies and
joint ventures, achieved global sales of 1.1 million vehicles and tractors (755,978 vehicles
and 345,415 tractors), a growth of 6.8% over the previous year.
 In the Calendar Year (CY) 2018, worldwide sales of Passenger Cars and Light
Commercial Vehicles (LCVs) remained at 86 million, with a marginal de-growth of
0.5%.
 Passenger car and pick up sales were down 0.6% to 81.8 million. Small declines in
Europe, United States, and a 2.8% decline in China had a significant impact on global car
sales. Global LCV sales were up 2.5% to 4.2 million.
 The fastest growing segment worldwide was that of Electric Vehicles (EVs), which grew
by more than 70% albeit over a low base, to over 1.2 million sales. The momentum for
EV growth is being driven by the global recognition of the need for clean mobility and
many governments providing incentives to promote adoption.
 Growth in PVs has slowed down from a CAGR of 10.1% in period F09 - F14, to 6.1%
CAGR in the period F14 - F19. this softening of demand for PVs is also because of urban
congestion and growth of shared mobility.
 The growth in Commercial Vehicles (CVs) has held on to 9.7% CAGR in period F14-F19
as against 10.4% in the period F09-F14, driven by sustained investment in infrastructure
and road development.
 In Financial Year 2018-19, Indian auto industry sales (excluding two wheelers) crossed
the five million mark with a volume of 5.09 million.
 The CV industry posted a growth of 17.6% for FY19. This is the second consecutive year
of good double-digit growth. The LCV Goods segment grew 20.8%
 The MHCV (Goods) industry posted a volume of 351,128 units, a growth of 15.3% over
the previous year, which is in line with the five-year CAGR growth of 16.8%.

Net Worth

No. of Months Year Ending 12 Mar-18 12 Mar-19 % Change

Net worth Rs. Crore 367,752 399,834 8.7

 There is a growth of 8.7 % in the networth of the company. The networth of the company
means the difference between the total assets and total liabilities i.e. shareholders equity.

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 The reason for growth in the networth of the company is increase in the market price of
the share in relation to its book value. The earning per share of the company has also
increased.
 The reason for increase in the share price and growth of the company is its consistently
growing performance of the company in the market. This has led to increase in the
shareholders trust in the company and has valued the company as a reliable source to
invest in the country.
 The Company’s Bankers continue to rate your Company as a prime customer and extend
facilities/services at prime rates.

COST ANALYSIS

 The material cost as a percentage of net sales & Income from operations has increased

from 70.2% in the previous year to 71.4% in the current year mainly on account of

elevated levels of inputs costs witnessed during FY19.

 The total expenditure during the year as a percentage of net sales & Income from

operations is 91.3% as compared to 90.5% in the previous year. The increase is mainly

attributable to higher material costs in FY19.

 The personnel cost as a percentage of net sales & Income from Operations has decreased

from 5.8% in the previous year to 5.6% in the current year.

 Other expenses as a percentage of net sales and operating income has decreased mainly

on account of stricter cost control measures adopted by the Company.

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 Depreciation and amortization expenses as a percentage of net sales and operating income

shows an increase over the previous year. This is mainly on account of higher

depreciation and amortization charges on new products launched during FY19.

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 The interest expense for the year ended 31 March 2019 is relatively at as compared to

the previous year.

 The provision for current tax and deferred tax for the year ended March 31, 2019 as a

percentage to profit before tax (after exceptional items) is lower than the previous year

mainly on account of write-back of tax provision with respect to earlier periods.

 In recognition with Research and Development expensed to profit and loss account by the

company is aggregated to Rs. 812.27 crore as compared to 802.00 crores in 2018.

 Sales volume grew by 10.76% to 6,07,548 in F19 from 5,48,508 units in F18, which is

the major cause for the increase in expense.

 A growth of 9.4% over the previous year which has led to an increase in the expenses of

the company as with growth more material is consumed.

 Number of employees increased to 42,875 in FY19 from 41,673 in FY18, which has

increased the employee benefit expenses to a 4.9% change.

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 MANAGEMENT ANALYSIS

The company’s exclusive management policies and guidelines provided direction on the
mission and strategy and key technology issues. The reporting system also reviews and
makes recommendations on the skills and competencies required and the structure and the
process needed to ensure that the all their initiatives result in products that are in keeping with
the business needs.
They consist of varied strategic committees required to lay down the procedures to inform to
the Board about the risk assessment and minimization procedures, financial and managerial
procedures implementation and the Board shall be responsible for framing, implementing and
monitoring all the framed plans of the Company.

 The Company has long-term investments in subsidiaries, joint ventures and associates
aggregating Rs 19,032 crores as at 31 March 2019. Changes in business environment
could have a significant impact on the valuation of these investments.
 Capital Management - The Group’s capital management strategy is to effectively
determine, raise and deploy capital so as to create value for its shareholders. The same is
done through a mix of either equity and/or preference and/or convertible and/or
combination of short term /long term debt as may be appropriate. The Group determines
the amount of capital required on the basis of its product, capital expenditure, operations
and strategic investment plans. The capital structure is monitored on the basis of equity,
net debt and maturity profile of overall debt portfolio of the Group.
 Financial and Risk Management - In the course of its business, the Group is exposed to a
certain financial risk namely credit risk, interest risk, currency risk & liquidity risk. The
Group’s primary focus is to achieve better predictability of financial markets and seek to
minimize potential adverse effects on its financial performance. The financial risks are

15
 managed in accordance with the risk management policy which has been approved by
Board of Directors of the respective Group companies.
 Asset and Liability Management Committee -which is responsible for developing and
monitoring risk management policies for their businesses. The financial services
businesses are exposed to high credit risk given the unbanked rural customer base and
diminishing value of collateral. The credit risk is managed through credit norms
established based on historical experience.

Decisions:
 They follow the policy of the key to raising farm productivity, is increase the level of
mechanisation and improve farming practices.
 The Company strengthened its position in neighbouring markets of Sri Lanka, Nepal,
Bangladesh and Myanmar, and continued to growing key markets of USA, Mexico and
Brazil.
 The company has developed and demonstrated technology that would take another
pioneering step to revolutionise India
 The company has adopted Mahindra AppliTrac which offers efficient and affordable
mechanisms solutions across the spectrum of operations.
 With focus of changing the customer needs, the company has further expanded the
business in tele infra management and in energy management solutions space.
 Going forward, the Auto Industry is expected to show good growth across all segments
on back of healthy economic outlook, finance penetration, urbanisation, investment in
roads, infrastructure and new launches by OEMs. Continued thrust of Government for
development of agriculture and rural sector will also help keep the sentiment upbeat.

Investments:

 The company is making continuous investments in technology development and patent

acquisitions to enable us to develop and launch new products and sustain value-creation
over the long-term.

 The likely introduction of new emission norms (TREM IV) for Tractors will call for
additional investments by OEMs, increasing the material costs for tractors.

 Acquiring leadership position by investments in technology with global partnerships

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  through partnerships with the government, shared mobility players and other key
stakeholders.

 The Company continuously strives for excellence in its IR engagement with International
and Domestic investors and has set up feedback mechanism to measure IR effectiveness.

 The Company has created a ‘Group Investor Relations Council’ to share best practices
across all the listed group companies and learn from each other.

 In September 2017, your Company and Ford Motor Company agreed to explore a
strategic alliance - designed to leverage the benefits of Ford's global each and expertise
and Mahindra's scale in India and successful operating model.
 Mahindra Electric Mobility Ltd. has set up a first-of-its-kind electric vehicle technology
manufacturing facility in Bengaluru, Karnataka, with a total investment of Rs.100 crore.
Invested both in products and EV technologies
Invested in manufacturing of Battery Packs, Power Electronics and Motor Assembly, and
Power Train

Research and Development:

 The company has an integrated R&D facility near Chennai, India which is a state of the
art research & development centre spread over 120 acres

 They have extensive R&D to deliver innovative and world-class products through the
synergy of its people’s skills & knowledge, combined with state-of-the-art infrastructure
and equipment. MRV is the crucible of innovation and new technology development
within Mahindra where our engineers collaborate with their colleagues at Mahindra’s
other R&D centres around the world to create path-breaking new innovations and
technologies of the future.

 The Company spent Rs.1,991.94 crores (including Rs.1,094.89 crores on Capital

Expenditure) for Research & Development work during the year, which was
approximately 3.95% of the total turnover.

Significant Changes in Ownership - Disposal / Dilution of investments in associates and

joint ventures

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 Mahindra CIE Automotive Limited (MCIE): During the year ended March 31, 2019, the
Group sold 2,19,26,895 shares representing 5.79% of share capital of Mahindra CIE
Automotive Limited (MCIE), for an aggregate consideration amounting to Rs. 562.14
crores.
 Mahindra Sanyo Special Steel Private Limited (MSSSPL) : During the year ended March
31, 2019, the Group sold 26,36,401 shares representing 22% of share capital of Mahindra
Sanyo Special Steel Private Limited (MSSSPL), for an aggregate consideration
amounting to Rs. 146.32 crores.
 Brainbees Solutions Private Limited (Brainbees): During the year ended March 31, 2019,
due to capital infusion by other investors in Brainbees, the Group’s interest in Brainbees
has reduced from 26.76% to 20.20%.
 Employee Stock Option Plan: The Company has allotted 55,24,219 Ordinary (Equity)
Shares of Rs. 10 each, 10,00,000 Ordinary (Equity) Shares of Rs. 10 each, 1,73,53,034
Ordinary (Equity) Shares of Rs. 5 each, 19,11,628 Ordinary (Equity) Shares of Rs. 5 each

and 52,00,000 Ordinary (Equity) Shares of Rs. 5 each in the years ended 31st March,

2002, 31st March, 2010, 31st March, 2011, 31st March 2014 and 31st March, 2015
respectively 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 eligible employees as per the recommendation of the Compensation Committee.

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 Budgeting Decisions
Financial Capital 2017-18

Total Capital Employed ` 34,401 Cr.

Gross Debt to Equity Ratio 0.11

Manufactured Capital 2017-18

Number of plants in India 16

Material Cost ` 31,628 Cr.

Key Raw Materials Steel, Iron, Rubbe

Intellectual Capital 2017-18

Spend on R&D ` 2,066 Cr.

Spend on R&D (% of revenue) 4.3%

R&D nodes
Pininfarina, MAN

Patents Applied 161

Human Capital 2017-18

Number of Permanent employees 20,867

Employee Benefit Expense ` 3,177 Cr.

Natural Capital 2017-18

% of renewble energy 2%

Total Energy Consumption 17,03,273 GJ

Total water consumption 14,06,365 m3

Water Reused % AD: 35% FD + SD

Social & Relationship Capital 2017-18

CSR Investment ` 81.97 Cr.

Employees Voluntary hours 4,09,078

No. of Employees volunteered 69,274

Key Focus area Education, Health

Total Capital Expenditure of M&M

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 Budgeting Activity of M& M

Analysis
 They follow the policy of the key to raising farm productivity, is increase the level of
mechanisation and improve farming practices.
 The integrated watershed management program which is a Private Public Partnership
(PPP) model with Government of Madhya Pradesh and at Hatta with National Bank for
Agriculture and Rural Development (NABARD) for increasing the ground water table
resulting in increased agricultural productivity and improved living standards. The project
has a budget outlay of 3.11 crores which includes direct expenditure on projects and
overheads.
 The company has a kept a budget outlay of Rs. 1000 crore for its auto and tractor
segments. It has a plan to invest ` 18,000 crore over the next three years, including
`12,000 crore towards capital expenditure and `6,000 crore in its subsidiaries.
 A company has a budget outlay of 200 crore to be invested in manufacturing of Battery
Packs, Power Electronics and Motor Assembly, and Power Train
 An Integrated Village Development including water management through revival /
reconstruction of water structures, accessing Government schemes like Pradhan Mantri
Ujwala Yojana which will impact 33701 beneficiaries has a budget outlay of 2.24 crores
which also includes direct expenditure and overheads costs.

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 The Company has long-term investments in subsidiaries, joint ventures and associates
aggregating Rs 19,032 crores as at 31 March 2019. Changes in business environment
could have a significant impact on the valuation of these investments.

 Mahindra has implemented end to end PBF solution at large government agency and
with this we are proud to inform that we are one of the few Vendor experienced in the
successful implementation of SAP PBF project.

 The Company spent Rs.1,991.94 crores (including Rs.1,094.89 crores on Capital

Expenditure) for Research & Development work during the year, which was
approximately 3.95% of the total turnover.

Marginal Costing

The fixed costs will be the same for any volume of sales and production

 Revenue will increase by the sales value of the item sold.

 Cost will increase by the variable cost per unit.

 Profit will increase by the amount of contribution earned from the extra item.

a) The volume of sales falls, the profit will fall from amount of
contribution.
b)
Profitmeasurementshouldbaseonoftotalcontributionsincefixedcostsr
elatetoperiodof time and do not change with increases or decreases
in sales volume.

Marginal Costing Income Statement

We have used the marginal costing technique to get the income of the company.

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 DESCRIPTION AMOUNT
Sales 49444
Less: Variable Cost
Rent, rates and taxes 1479
Sales, Promotion 759
Advertising 194
Technical Services 23265
Other Expenses 5614
Contribution Margin 18133

Less: Op and Admin Exp

Rent, rates and taxes 564
Product Transportation 435
Salaries, wages and benefits 4654
Inventory maintenance Expenses 128
Research and Development 433
Net Profit 4365

Marginal Costing Decisions

 The result shows at the month of April the growth rate was increased above 15,000, at
the month of May, June, July, August, September the growth rate was at profit level
because it is above 100 percent and below 100 percent.

 But at the month of October and September it was decreased to below -100 and rest of
the months November, January, February, and March the growth rate was increased to
profit level.
 The company should improve more credit facilities to the customers. It will create
good sales. The company should concentrate on local sales by sales expert.
 Labor participation in the management should be encouraged.
 The product production of 10000 vehicles will give a company profit after tax of 4365
crore. This shows how much the marginal goods produced has cost and also the profit
incurred.

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 Application of Marginal Costing

Cost Control : Marginal costing divides the total cost into fixed and
variable cost. Fixed cost can be controlled by the top management
and that to a limited extent. Variable costs can be controlled by the
lower level of management. Marginal costing by concentrating all
efforts on the variable costs can control and thus provides a tool to
the management for control of total cost.
Evaluation of Performance : The different products, departments, markets
and sales divisions have different profit earning potentialities.
Marginal cost analysis is very useful for evaluating the performance
of each sector of a concern.

Performance evaluation is better done if distinction is made

between fixed and variable expenses. A product, department,
market or sales division giving higher contribution should be
preferred if fixed expenses remain same.
Fixation of Selling Price :

Marginal cost of a product represents the minimum price for that

product and any sale below the marginal cost would entail a cash
loss. The price for the product should be fixed at a level which not
only covers the marginal cost but also makes a reasonable
contribution towards the common fund to cover fixed overheads.
The fixation of such a price for a product would be easier if its
marginal cost and overall profitability of the concern is known.
Accepting of price level and total cost

A price less than the total cost but above marginal cost may be
acceptable when a specific order has been received and it shall not
affect the home market. The additional sales revenue should be
compared with the additional costs (which are only marginal costs
generally) and if the net revenue is greater, the order should be
accepted. 

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 CONCLUSION

The Mahindra Group is a USD 19 billion federation of companies that enables people to rise
through innovative mobility solutions, driving rural prosperity, enhancing urban living,
nurturing new businesses and fostering communities. It has a leadership position in utility
vehicles, information technology, financial services and vacation ownership in India and is
the world’s largest tractor company, by volume. It also enjoys a strong presence in
agribusiness, components, commercial vehicles, consulting services, energy, industrial
equipment, logistics, real estate, steel, aerospace, defence and two wheelers. Headquartered
in India, Mahindra employs over 200,000 people across 100 countries.

For the year under review improvement in overall  economic sentiment for two consecutive

years of normal monsoon governments focus on development of rural parts of the
country and the continued investment on the agriculture and infrastructure sectors coupled
with easy availability of affordable finance helped drive the demand for the company. The
company continues its efforts to grow presence and strengthen brand in key international
markets.

Financial Year 2017-18 saw the broadest synchronized global growth since the financial
crisis. World economy grew at 3.8% in 2017 up from 3.2% in 2016, on the back of growth in

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trade, pickup in investment particularly among advanced economies. The Company
continued to focus on managing cash efficiently and ensured that it had adequate liquidity
and back up lines of credit.

On the domestic front the year began on a jubilant note with the Union Budget giving a
strong thrust to the rural economy and a normal monsoon after two years of deficient rainfall.

The much awaited Goods and Services Tax (GST) was rolled out on 1st July, 2017, replacing
multiple taxes levied by Governments. Economic activity accelerated as is evident from high
frequency indicators such as strong retail sales, depleting finished goods inventories and
green shoots of renewal of capex cycle.

REFERENCES

 http://www.capitalmarket.com/Company-Information/Financials/Profit-and-
Loss/Mahindra-and-Mahindra-Ltd/365
 Society of Indian Automobile Manufacturers. (n.d.). Retrieved from
http://www.siamindia.com/
 http://www.moneycontrol.com/stocks/reports/mahindramahindra-updatesamalgamation-
merger-demerger-9604941.html
 https://economictimes.indiatimes.com/mahindra&mahindra.ltd/capitalstructure/companyi
d-11898.cms
 https://www.mahindra.com/resources/investor-reports/FY18/Announcements/Mahindra-
and-Mahindra-Annual-Report-2017-2018.pdf
 https://www.business-standard.com/company/m-m-365/peer-
comparison/marketcap/bse/sector-by-sector
 https://www.mahindraworldcity.com/?section=our_clients
 https://www.forbes.com/profile/anand-mahindra/#10e967d974d0
 https://in.finance.yahoo.com
 https://www.indiainfoline.com

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 https://en.m.wikipedia.org

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