Mahindra Intertrade LimitedMahindra Electrical Steel Private Limited (MESPL): Mahindra Electrical...

Please check thoroughly. Vakils will not be responsible for errors not noted on this proof. Mukesh

Mahindra Intertrade Limited

1

Mahindra Intertrade

Limited

Book 1.indb 1 11/25/2016 2:45:43 PM

Please check thoroughly. Vakils will not be responsible for errors not noted on this proof.Mukesh


2

Board of directors

Bharat DoshiChairman

Zhooben BhiwandiwalaExecutive Director and Vice-Chairman

Sumit IssarManaging Director

Rajeev Dubey

P. N. Shah

Parag Shah

Sudhir Mankad

Dr. Punita Kumar-Sinha

company secretary

Romali Malvankar

chief financial officer

Percy Mahernosh

audit committee

Sudhir MankadChairman

Rajeev Dubey


nomination and remuneration committee

Bharat Doshi

Rajeev Dubey

Sudhir Mankad


corporate social responsiBility committee

Zhooben BhiwandiwalaChairman

Sumit Issar

Sudhir Mankad

auditors

Deloitte Haskins & SellsChartered Accountants

Tower 3, 27th - 32nd Floor, Indiabulls Finance Centre, Elphinstone Mill compound, Senapati Bapat Marg, Elphinstone (West), Mumbai - 400013, India.

Bankers

Axis Bank LimitedHDFC Bank LimitedICICI Bank LimitedIDBI Bank LimitedKotak Mahindra Bank Ltd.

State Bank of IndiaThe Bank of Nova ScotiaThe Hong Kong & Shanghai Banking Corporation Limited

registered office

Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai - 400018, India

CIN: U51900MH1978PLC020222Tel. No.: +91 22 24935185/86Fax: +91 22 24951236Email: [email protected]: mahindraintertade.com

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directors’ report

Your Directors present their Thirty-Eighth Report, together with the Audited Financial Statements of your Company for the year ended 31st March, 2016.

FINANCIAL HIGHLIGHTS AND COMPANY’S STATE OF AFFAIRS:

(Rs in crores)For the year ended 31st March

2016 2015

Income ..................................................................................................................... 1,019.03 1,213.69

Profit before depreciation, interest and taxation ........................................................ 101.26 117.06

Less: Depreciation .................................................................................................... 4.88 5.10

Profit before interest and taxation ............................................................................. 96.38 111.96

Less: Finance Cost .................................................................................................... 1.36 1.72

Profit before tax ........................................................................................................ 95.02 110.24

Less: Provision for taxation:

Current tax ........................................................................................................ 33.00 38.46

Provision for Tax relating to earlier years ................................................................... 0.42 –

Deferred tax ..................................................................................................... (0.78) (0.39)

Profit for the year after tax........................................................................................ . 62.38 72.17

Balance of profit of earlier years ............................................................................... 308.88 264.01

Profit available for appropriation ............................................................................. 371.26 336.18

Add: Reversal of Tax on Dividend Paid for 2014-2015 .............................................. 0.59 –

Depreciation on transition to Schedule II ................................................................. 0.00 0.10

Proposed dividend on equity shares ......................................................................... 19.92 16.60

Income-tax on proposed dividend ............................................................................ 4.06 3.38

Transfer to General Reserve ...................................................................................... 0.00 7.22

Balance carried to Balance Sheet .............................................................................. 347.87 308.88

Networth ................................................................................................................. 417.34 378.35

No material changes and commitments have occurred after the close of the year till the date of this Report which affect the financial position of your Company.

OPERATIONS

The slowdown in the domestic auto industry resulted in lower demand for processed steel. The demand from transformer industry continued to be robust resulting in better capacity utilization and margins.

Your Company’s income for the year was Rs. 1019.03 crores compared to Rs. 1213.69 crores in the previous year. The decline is owing to the subdued performance of auto industry. The power vertical continued to perform well during the year. Profit before tax for the year was at Rs. 95.02 crores as compared to Rs. 110.24 crores in the previous year.

DIVIDEND

Your Directors recommend a dividend @ 120% on its equity shares, i.e. Rs. 12 per equity share on 1,21,00,007 fully paid-up equity shares of Rs. 10 each and pro rata dividend of Rs. 3.60 per equity share on 1,50,00,000 partly paid-up equity shares of Rs. 10 each, Rs. 3 per equity share paid-up, aggregating Rs. 19.92 crores.

If approved by the shareholders at the ensuing Annual General Meeting, the above equity dividend will be paid to those equity shareholders whose names appear on the Register of Members as on the record date fixed for this purpose, i.e. 24th June, 2016, the date of the Annual General Meeting of the Company.

Equity dividend for the year, together with income tax thereon, will absorb a sum of Rs. 23.98 crores as against Rs. 19.98 crores paid for the previous year.

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CURRENT YEAR

Your Company expects an improvement in auto demand which would help to improve its overall performance, during the current year.

SUBSIDIARIES

Mahindra Steel Service Centre Limited (MSSCL):

The financial performance of Mahindra Steel Service Centre Limited (MSSCL) was adversely impacted by the slowdown in auto demand and consequent lower job work volumes and income. Power vertical continues to perform well during the year under review. MSSCL’s income for the year was Rs. 194.93 crores as against Rs. 151.06 crores in the previous year. The profit after tax stood at Rs. 5.49 crores as against Rs. 7.54 crores in the previous year.

Mahindra MiddleEast Electrical Steel Service Centre (FZC) - (MME):

The financial performance of Mahindra MiddleEast Electrical Steel Service Centre (FZC) (MME) was affected during the year on account of muted demand. The total income of MME for the year under review decreased to USD 5.68 million (INR 376.59 million) from USD 6.07 million (INR 403.02 million), a decrease of nearly 6%.

Profit for the year was USD 0.05 million (INR 3.70 million) as compared to USD 0.00 million (INR 0.25 million) in the previous year through improved cost efficiencies.

The transformer core line remained under-utilised during the year under review.

Mahindra Electrical Steel Private Limited (MESPL):

Mahindra Electrical Steel Private Limited (MESPL) is in the process of evaluating options for its projects. During the year under review, MESPL had sold its land at Naini at a profit. During the current financial year, MESPL’s income for the year was Rs. 74.82 lakhs as against Rs. 0.67 lakhs in the previous year. The profit after tax for the year was Rs. 42.50 lakhs as against a loss of Rs. 26 lakhs in the previous year.

Mahindra Auto Steel Private Limited (MASPL):

Mahindra Auto Steel Private Limited (MASPL), commenced operations during the year under review. Its products were well received by the market and the company made a profit during its maiden year of operations. During the current financial year, MASPL’s income for the year was Rs. 61.82 crores as against Rs. 1.25 crores in the previous year and the profit after tax was Rs. 6.54 crores as against Rs. 0.93 crores in the previous year.

STATEMENT PURSUANT TO SECTION 129 OF THE COMPANIES ACT, 2013:

A Statement pursuant to Section 129(3) of the Companies Act, 2013 containing the salient features of the said financial statements in Form AOC – 1 is attached as Annexure I.

HUMAN RESOURCES

Happy and enthused employees is one of the strategic goals of your Company as reflected in its employee engagement interventions.

Your Company had been recognized as one of ‘India’s Best Companies to work for’ in 2015 and ranked 4th in Manufacturing sector and overall ranked 36th in India.

Your Company’s MCARES and Employee as Promoter Score (EPS)-metrics used by the Mahindra Group to assess employee engagement were a robust 4.57/5.00 and 73% respectively, in the top league in the Mahindra group.

Your company has embarked on gender diversity at its plants and has recruited women engineers who handle shop floor operations.

As part of the Talent Development process, your Company continues to invest in premium learning opportunities to groom our next generation of leaders.

CUSTOMER SATISFACTION

Your Company’s Customer as Promoter Score (CaPS), a metric used by the group to assess customer satisfaction stood at a healthy (+) 55%.

Your Company believes that customer is the raison d’etre of its existence. To reinforce this, during the year, your Company launched the Customer Engagement Programme (CEP), an initiative that seeks to reward employees who excel in external customer interface.

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RISK MANAGEMENT POLICY

Your Company has formulated a Risk Management Policy which identifies and evaluates risks and frames a response to mitigate the risks which may threaten the existence of the Company.

Implementation of the Risk Management Policy is expected to be helpful in managing the risks associated with the business of the Company.

CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

The Corporate Social Responsibility Committee had formulated and recommended the Corporate Social Responsibility Policy to the Board of the Company in accordance with the relevant provisions of Companies Act, 2013 read with the Rules made thereunder. The weblink to the Company’s CSR Policy is: http://www.mahindraintertrade.com.

CSR INITIATIVES:

During the year under review, your Company implemented a number of CSR initiatives in the areas of education, health and environment.

In an endeavor to strengthen educational infrastructure around the Company’s service centres, classrooms were constructed for ZP schools at Jambhul, Takwe and at Gonde villages. K-Yan (e-learning centers) were provided to schools to improve the education quality around the service centres. In addition, your Company had undertaken several CSR initiatives such as distribution of school bags, note books, stationery, etc. in ZP schools.

In order to improve the educational infrastructure around the Company’s head office at Worli, Science Laboratory was renovated at Maratha High school and classrooms were constructed at Babasaheb Gawde High school and Door Step School.

To improve recreational facilities for children, garden equipment in Anganwadi compound at Gonde village were provided during the year under review. Free Eye checkup camps plus distribution of glasses were organized in the villages near the Company’s service centre at Vadodara.

Your Company successfully ran tree plantation programs near its Service Centers at Nashik, Kanhe and Vadodara.

Your Company also contributed funds to the K. C. Mahindra Education Trust to support its initiatives for the education of girl child, through its Nanhi Kali project.

During the year under review your Company spent Rs. 192.28 lakhs on its CSR activities. The mandated spend on the CSR activities of your Company for the year ended 31st March, 2016 i.e. an amount equal to 2% of the average net profit for the past three financial years was Rs. 184.42 lakhs.

A detailed Annual report on Corporate Social Responsibility activities is enclosed as Annexure II and forms part of this report.

POLICY ON PREVENTION OF SEXUAL HARASSMENT

Your Company has put in place a policy for prevention of sexual harassment. Your Company has also constituted an “Internal Complaints Committee” to which employees can address their complaints. During the year, no complaints were received by the said Committee.

POLICY ON CRITERIA FOR APPOINTMENT/REMOVAL OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL AND POLICY ON REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In line with the principles of transparency and consistency and upon the recommendation of the Nomination and Remuneration Committee your Board had approved:

• Policyoncriteriafortheappointment/removalofDirectorsandseniormanagementpersonnel,togetherwiththecriteriafor determining qualifications, positive attributes and independence of Directors and

• PolicyontheremunerationofDirectors,keymanagerialpersonnelandotheremployees.

These policies are provided as Annexure III and forms part of this Report.

SUSTAINABILITY INITIATIVES

Your Company views sustainability not only as a responsibility but also as an opportunity to create lasting value across economic, environment and social bottom lines. Sustainability has been integrated in all its business operations and decision making processes. Your Company’s sustainability performance was covered in the consolidated group sustainability report of Mahindra and Mahindra Limited. This report was externally assured by KPMG with a GRI A+ rating.

Your Company has mapped out a Sustainability Roadmap under which a series of commitments have been made to improve the Company’s environmental footprint and the social impact of its business.

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AWARDS

Your Company has been recipients of the following awards during the year:

a) Significant achievement in HR Excellence at the 6th CII National HR Excellence Awards 2016

b) First Place : Project Evaluation & Recognition Programme 2015 (Manufacturing Sector) at the Frost & Sullivan Awards 2015

c) First Place : Excellence in HR 2015 : 4th Annual Manufacturing Today Awards 2015

d) Awarded multiple awards at the ‘Malaysia Best Employer Brand Awards 2016’:

• DiversityImpactAwardfor‘InitiativestowardsWomenontheShopfloor’

• DreamCompanytoWorkFor

• HREventOfTheYear:GenNextinitiative

• OrganizationwithInnovativeHRPractices

e) Award for Best HR Strategy in Line with Business at the 6th Asia Best Employer Brand, Singapore

INTERNAL FINANCIAL CONTROLS

Your Company has in place, adequate internal financial controls with reference to Financial Statements, commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

SHARE CAPITAL

The authorised share capital of your Company as on 31st March, 2016 stood at Rs. 46.75 crores divided into 2,80,00,000 equity shares of Rs. 10/- each and 18.75 lakhs Cumulative redeemable preference shares of Rs. 100 each.

There was no change in the paid-up share capital of your Company during the year under review. Accordingly as on 31st March, 2016, the paid-up share capital of your Company stood at Rs. 16.60 crores divided into 1,21,00,007 equity shares of Rs. 10/- each fully paid-up and 1,50,00,000 equity shares of Rs. 10/- each, Rs. 3/- paid-up.

TRANSFER OF SHARES

During the year under review, the entire Shares held by Mahindra and Mahindra Ltd. (M&M) in the Company were transferred to its wholly owned subsidiary, Mahindra Vehicle Manufacturers Ltd. (MVML). Consequent to the said transfer of Shares, your Company on 18th January, 2016 has become the direct wholly owned subsidiary of MVML and continues to be the indirect subsidiary of M&M.

BOARD OF DIRECTORS

Composition:

Presently, the Board comprises of the following eight Directors:

Director (DIN) DesignationExecutive/ Non-Executive Director

Independent/Non-Independent Director

Mr. Bharat Doshi (00012541) Chairman Non-Executive Director Non-Independent Director

Mr. Zhooben Bhiwandiwala (00110373)

Vice-Chairman Executive Director Non-Independent Director

Mr. Sumit Issar (06951249) (w.e.f 1st October, 2015)

Managing Director Executive Director Non-Independent Director

Mr. Rajeev Dubey (00104817) Director Non-Executive Director Non-Independent Director

Mr. Pravin Shah (00056173) Director Non-Executive Director Non-Independent Director

Mr. Parag Shah (00374944) Director Non-Executive Director Non-Independent Director

Mr. Sudhir Mankad (00086077)

Director Non-Executive Director Independent Director

Dr. Punita Kumar-Sinha (05229262)

Director Non-Executive Director Independent Director

Mr. Harsh Kumar (DIN: 00082621) ceased to be the Managing Director of the Company with effect from 1st October, 2015. Your Board places on record its deep sense of gratitude for the immense contribution and valuable guidance received from Mr. Harsh Kumar during his tenure as Managing Director of the Company.

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Mr. Sudhir Mankad and Dr. Punita Kumar-Sinha who, in the opinion of the Board, are persons with integrity and possess relevant expertise and experience and have given declarations to the effect that they meet the criteria of independence as laid down under Section 149 of the Companies Act, 2013.

Mr. Parag Shah and Mr. Rajeev Dubey retire by rotation at the forthcoming Annual General Meeting, and being eligible, have offered themselves for re-appointment.

Your Directors have wide experience in business related to trading, finance and general corporate management.

Board Meetings and Annual general Meeting:

The Board met six times during the year, i.e. on 6th May, 2015, 27th May, 2015, 20th July, 2015, 27th October, 2015, 18th January, 2016 and 21st March, 2016. All these meetings were well attended and the gap between two consecutive meetings did not exceed 120 days. The 37th Annual General Meeting of the Company was held on 15th June, 2015.

The attendance of the Directors at the Board Meetings of the Company were as under:

Name of the Director No. of Board Meetings attended

Mr. Bharat Doshi 5Mr. Zhooben Bhiwandiwala 5#Mr. Harsh Kumar 2$Mr. Sumit Issar 3Mr. Rajeev Dubey 5Mr. Pravin Shah 2Mr. Parag Shah 4Mr. Sudhir Mankad 5Dr. Punita Kumar-Sinha 6

# ceased as the Managing Director of the Company w.e.f 1st October, 2015.

$ appointed as the Managing Director of the Company w.e.f. 1st October, 2015.

Meeting of Independent Directors

The Independent Directors of the Company met on 22nd December, 2015 without the presence of the Chairman & Managing Director, Executive Director, the other Non-Executive Directors, the Chief Financial Officer, Company Secretary and any other Management Personnel. The Meeting was conducted in an informal and flexible manner to enable the Independent Directors to discuss matters pertaining to inter alia, review of performance of Non-Independent Directors and the Board as a whole, review the performance of the Chairman of the Company (taking into account the views of the Executive and Non-Executive Directors), assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Evaluation of performance of Directors:

Pursuant to the provisions of Section 178 of the Companies Act 2013, the Nomination and Remuneration Committee carried out the evaluation of the performance of individual Directors. Feedback was sought by way of a structured process covering various aspects such as attendance record, skills, experience, level of preparedness, knowledge on Company’s business/activities, understanding of industry and global trends, etc. and the evaluation was carried out based on responses received from the Directors.

As per the provisions of Schedule IV of the Companies Act, 2013, the Board evaluated the performance of Independent Directors, through a structured questionnaire.

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

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors based on representation from operating management and after due enquiry confirm that:

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(a) in the preparation of the annual accounts for the year ended 31st March, 2016 the applicable accounting standards have been followed and that there were no material departures in respect thereof;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year on 31st March, 2016 and of the profit of the Company for the financial year ended on that date;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared annual accounts on a going concern basis; and

(e) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CODES OF CONDUCT

Your Company has adopted Codes of Conduct for its Directors, and Senior Management and Employees (“the Codes”). These Codes enunciate the underlying principles governing the conduct of the Company’s business and seek to reiterate the fundamental precept that good governance must and always be an integral part of the Company’s ethos.

Your Company has, for the year under review, received declarations from members of the board, senior management and employees, affirming compliance with the respective Codes.

COMMITTEES OF THE BOARD

Audit Committee

The Audit Committee was reconstituted upon the appointment of Mr. Rajeev Dubey and resignation of Mr. Pravin Shah as the Member of the committee w.e.f 18th January, 2016 as under:

Name of the Director Designation

Mr. Sudhir Mankad Chairman

Mr. Rajeev Dubey Member

Dr. Punita Kumar-Sinha Member

The Audit Committee met four times during year, i.e. on 6th May, 2015, 27th May, 2015, 20th July, 2015 and 27th October, 2015.

The attendance at the Meetings of the Audit Committee were as under:

Name of the Director No. of Meetings attended

Mr. Sudhir Mankad 4

Dr. Punita Kumar-Sinha 4

Mr. Pravin Shah (upto 18th January, 2016)

1

Nomination and Remuneration Committee

The composition of the Nomination and Remuneration Committee is as follows:-


Mr. Bharat Doshi Member

Mr. Rajeev Dubey Member

Mr. Sudhir Mankad Member

Dr. Punita Kumar-Sinha Member

The Committee met five times during year, i.e. 6th May, 2015, 20th July, 2015, 27th October, 2015, 18th January, 2016 and 21st March, 2016.

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The attendance at the Meeting of the Nomination and Remuneration Committee were as under:


Mr. Bharat Doshi 5Mr. Rajeev Dubey 4Mr. Sudhir Mankad 4Dr. Punita Kumar-Sinha 5

Corporate Social Responsibility (CSR) Committee

The CSR Committee re-constituted with the appointment of Mr. Sumit Issar and cessation of Mr. Harsh Kumar as the Managing Director of the Company with effect from 1st October, 2015, as under:

Name of the Director DesignationMr. Zhooben Bhiwandiwala ChairmanMr. Sumit Issar (w.e.f 27th October, 2015)

Member

Mr. Sudhir Mankad Member

The CSR Committee met twice during the year, i.e. 6th May, 2015 and 21st March, 2016.

The attendance at the Meeting of the Corporate Social Responsibility Committee were as under:


Mr. Zhooben Bhiwandiwala 2Mr. Sumit Issar 1Mr. Sudhir Mankad 2Mr. Harsh Kumar * 1

* Mr. Harsh Kumar ceased to be Managing Director of the Company with effect from 1st October, 2015.

KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Section 2(51) and Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following are the Key Managerial Personnel of your Company:

1. Mr. Zhooben Bhiwandiwala - Executive Vice-Chairman2. Mr. Harsh Kumar - Managing Director (ceased w.e.f. 1st October, 2015)3. Mr. Sumit Issar - Managing Director (appointed w.e.f. 1st October, 2015)4. Ms. Jyoti Walunj - Chief Financial Officer - (ceased w.e.f. 1st August, 2015) 5. Mr. Percy Mahernosh - Chief Financial Officer (appointed w.e.f. 1st August, 2015) 6. Mr. Abhishek Juvekar - Company Secretary (resigned w.e.f. 13th January, 2016) and 7. Ms. Romali Malvankar - Company Secretary (appointed w.e.f. 18th January, 2016)

STATUTORY AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, (ICAI registration Number 117365W) were appointed as Statutory Auditors of your Company at the thirty seventh Annual General Meeting to hold office up to the conclusion of the thirty eighth Annual General Meeting.

Pursuant to the first proviso of Section 139(2) of the Companies Act, 2013, members are requested to re-appoint Statutory Auditors at the 38th Annual General Meeting and fix their remuneration. If re-appointed, Statutory Auditors would hold office till the conclusion of the 39th Annual General Meeting.

As required under the provisions of Sections 139 and 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, your Company has obtained a written consent and certificate from Statutory Auditors to the effect that their re-appointment, if made, would be in conformity with the conditions, limits and criteria specified therein.

Your Directors confirm that the Auditors Report does not contain any qualification, reservation or adverse remark.

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INTERNAL AUDITOR

Pursuant to Section 138 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, Mr. Mario Nazareth was appointed as the Internal Auditor of your Company for the year ended 31st March, 2016. The Board at its meeting held on 27th April, 2016 re-appointed Mr. Mario Nazareth as the Internal Auditor of your Company for the year ending 31st March, 2017.

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. Mehta & Mehta, a firm of Company Secretaries in practice, was appointed as the Secretarial Auditor of your Company for the financial year ended 31st March, 2016.

A Secretarial Audit Report for the financial year ended 31st March, 2016 issued by the Secretarial Auditor pursuant to the aforesaid provisions is provided as Annexure IV and forms part of this report.

Your Directors confirm that the Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

COST AUDITOR

M/s. Shilpa & Co., Cost Accountants, Nashik (Firm Registration No. 100558), were appointed as the Cost Auditor by the Board of Directors on 6th May, 2015 to audit the cost accounts of your Company for the financial year ended 31st March, 2016. Remuneration of the Cost Auditor was ratified by the shareholders at the 37th Annual General Meeting held on 15th June, 2015. The said appointment was subsequently approved by the Central Government.

The Board, upon recommendation of the Audit Committee, re-appointed M/s. Shilpa & Co. as the Cost Auditor of your Company on 27th April, 2016 to audit the cost accounts for the financial year ending 31st March, 2017. Shareholders of the Company would be required to ratify the remuneration of Rs. 1,64,325 (excluding taxes and out of pocket expenses) payable to M/s. Shilpa & Co. for the said period.

As required under the provisions of Sections 139, 141 and 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the Company has obtained a written confirmation from M/s. Shilpa & Co. to the effect that they are eligible for appointment as the Cost Auditor and that they are an independent firm of Cost Accountants and have an arm’s length relationship with your Company.

FRAUDS REPORTED BY AUDITORS

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instances of frauds committed in the Company by its officers or employees to the Audit Committee under section 143(12) of the Companies Act 2013, details of which needs to be mentioned in this report.

STOCK APPRECIATION RIGHTS (SARs)

Your Company has formulated a Stock Appreciation Rights Scheme to reward its employees and to provide an opportunity to them to participate in the growth of the Company. Accordingly, 31677 SARs were granted during the year to eligible employees by the Nomination and Remuneration Committee (NRC) at its meeting held on 27th October, 2015 and 18th January, 2016.

PARTICULARS OF PUBLIC DEPOSITS, LOANS, GUARANTEES OR INVESTMENTS

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013, from the public, or its employees during the year.

Particulars of loans given, investments made, and guarantees and securities are given under the notes to the audited financial statement and the same forms part of the annual report.

There are no loans/advances which are required to be disclosed in the annual accounts of the Company pursuant to Regulations 34(3) and 53(f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule V, applicable to the Ultimate Parent Company, Mahindra & Mahindra Limited.

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PARTICULARS OF TRANSACTIONS WITH RELATED PARTIES

All transactions entered into by your Company with its related parties during the year were in ordinary course of business and at arms lengths.

Particulars of material contracts or arrangements or transactions with related parties, referred to under Section 188(1) of the Companies Act, 2013, are furnished in Form AOC-2 as Annexure V and forms part of this report.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as on 31st March, 2016 is annexed as Annexure VI and forms part of this report.

SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE

Your Company subscribes to guidelines on safety, health and environment and encourages involvement of all its employees in activities related to safety including promotion of safety standards. Employees across facilities were trained in behavioural safety at work. Statutory requirements relating to environmental legislations and environment protection, have been duly complied with by your Company.

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

Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies Rule 8(3) of the Companies (Accounts) Rules, 2014 are provided in Annexure VII and forms part of this report.

DISCLOSURE OF PARTICULARS OF EMPLOYEES AS REQUIRED UNDER RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Being unlisted company, provisions of Rule 5 of the companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are not applicable to your Company.

GENERAL DISCLOSURES:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

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

b) Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

c) Neither the managing director nor the whole-time director of the Company receive any remuneration or commission from any of its subsidiaries.

d) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the Company’s going concern status and operations in future.

ACKNOWLEDGMENTS:

Your Directors are pleased to take this opportunity to thank the bankers, customers, vendors and all the other stakeholders for their co-operation to the Company during the year under review.

For and on behalf of the Board

Bharat Doshi Chairman

Mumbai, 27th April, 2016

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ANNEXURE I TO THE DIRECTORS’ REPORT

Form AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with Rule 5 of the Companies (Accounts) Rules, 2014)Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures

Part “A”: Subsidiaries

(Information in respect of each subsidiary to be presented with amounts in Rs. crores)

Sr. No.

Name of the subsidiary 1 2 3 4

Mahindra Steel Service

Centre Limited

Mahindra Auto Steel

Private Limited

Mahindra Electrical

Steel Private Limited

Mahindra Middle East Electrical Steel

Service Centre[FZC]

1. Reporting period for the subsidiary concerned, if different from the holding company’s reporting period

31 March, 2016

31 March, 2016

31 March, 2016

31 March, 2016

2. Reporting currency and exchange rate as on the last date of the relevant financial year in the case of foreign subsidiaries

INR INR INR Reporting currency: USD Exchange Rate INR 66.35/1 USD

3. Share capital 16.54 68.50 0.05 3.65

4. Reserves & surplus 80.89 6.32 (1.93) 27.91

5. Total assets 215.71 134.77 7.40 47.24

6. Total Liabilities 215.71 134.77 7.40 47.24

7. Investments – 0.47* – –

8. Turnover 194.93 61.82 0.75 37.67

9. Profit before taxation 8.12 6.00 0.53 0.37

10. Provision for taxation 2.63 (0.54) 0.11 –

11. Profit after taxation 5.49 6.54 0.42 0.37

12. Proposed Dividend 1.16 – – –

13. % of shareholding 61% 51% 100% 90%

Names of subsidiaries which are yet to commence operations

1. Mahindra Electrical Steel Private Limited

Names of subsidiaries which have been liquidated or sold during the year- Nil

*comprises investment of current nature

Part “B”: Associates and Joint Ventures - NIL


Bharat Doshi Zhooben Bhiwandiwala Sumit Issar Percy Mahernosh

Chairman Executive Vice-Chairman Managing Director Chief Financial Officer

Romali M. Malvankar

Company Secretary

Mumbai, April 27, 2016

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13

ANNEXURE II TO THE DIRECTORS’ REPORTANNUAL REPORT ON CSR ACTIVITIES OF MAHINDRA INTERTRADE LIMITED

(1) A brief outline of the Company’s CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programmes:

The objective of the Company’s CSR policy is to–

• PromoteaunifiedandstrategicapproachtoCSRbyincorporatingunderthe‘RiseforGood’umbrellathediverserange of its philanthropic initiatives and causes to work for thereby ensuring high social impact.

• Encourage employees to participate actively in the company’s CSR activities and give back to society in anorganized manner through the employee volunteering programme called ESOPs (Employee Social Options).

The Company has pledged to contribute 2% of its average net profits during the three immediately preceding financial years towards CSR initiatives to meet the needs of the local communities where it operates.

Our commitment to CSR will be manifested by investing resources in the following thrust areas:

1. Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care, sanitation, including contribution to the Swach Bharat Kosh set up by the Central Government for the promotion of sanitation and making available safe drinking water;

2. Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled, and livelihood enhancement projects;

3. Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres, and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;

4. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining the quality of soil, air and water, including contribution to the Clean Ganga Fund set up by the Central Government for rejuvenation of river Ganga;

5. Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up of public libraries; promotion and development of traditional arts and handicrafts;

6. Measures for the benefit of armed forces veterans, war widows and their dependents;

7. Training to promote rural sports, nationally recognized sports, paraolympic sports and Olympic sports;

8. Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;

9. Contribution or funds provided to technology incubators located within academic institutions which are approved by the Central Government;

10. Rural development projects;

11. Slum area development.

The Corporate Social Responsibility Committee (CSR Committee) of the Company shall be responsible for monitoring implementation of the CSR Policy. CSR Committee shall approve and recommend to the Board projects or programmes to be undertaken, the modalities of execution, and implementation schedule thereof.

(2) The Composition of the CSR Committee: Mr. Zhooben Bhiwandiwala (Chairman), Mr. Sudhir Mankad (Member) and Mr. Sumit Issar (Member)

(3) Average net profit of the company for last three financial years: Rs. 9220.89 lakhs

(4) Prescribed CSR Expenditure (2% of the amount as in Item 3 above): Rs. 184.42 lakhs

(5) Details of CSR spend during the financial year.

(a) Total amount spent for the financial year: Rs. 192.28 lakhs

(b) Amount unspent, if any: - Nil

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14

(c) Manner in which the amount was spent during the financial year is detailed below:

Sr. No. Particulars (1) (2) (3) (4) (5) (6) (7) (8) (9)

(1) CSR project or activity identified

Construction of Junior College at Takwe village

Construction of Classrooms at ZP School, Jambhul village

Construction of Community hall for women/sr. citizens at Sudumbare village

Need base assessment survey Kanhe, Takwe & Jambhul

Construction of additional classrooms (1st floor) at ZP School, Gonde village

Garden equipment in Anganwadi compound at Gonde village

Distribution of school bags, note books, stationery, etc. in ZP schools of Morambi and Kushegaon villages (adivasi regions)

Tree Plantation in plant

K-Yan (e learning center at ZP school, Gonde village)

(2) Sector in which the project is covered

Education Education Health, Environment & Infra

Education Education Environment Education Environment Education

(3) Amount outlay (budget project or programme wise Rs. 18,55,000 Rs. 14,91,000 Rs. 25,00,000 – Rs. 28,00,000 Rs. 2,50,000 Rs. 1,20,000 Rs. 1,00,000 Rs. 1,50,000

(4) Projects or programme

(1) Local area or other

(2) Specify the state and district where projects or programs were undertaken

(1) Local

(2) Kanhe district, Maharashtra

(1) Local


(1) Local


(1) Local


(1) Local

(2) Nashik district, Maharashtra

(1) Local


(1) Local


(1) Local


(1) Local


(5) Amount spent on the project or programme Sub Heads;

(1) Direct expenditure on projects or programmes

(2) Overheads

(1) Rs. 12,64,826 (2) 0

(1) Rs. 19,82,058

(2) 0

(1) Rs. 16,98,649 (2) 0

(1) Rs. 25,000 (2) 0

(1) Rs. 27,37,195 (2) 0

(1) Rs. 2,49,778 (2) 0

(1) Rs. 1,13,100 (2) 0

(1) Rs. 7,800 (2) 0

(1) Rs. 1,58,445 (2) 0

(6) Cumulative expenditure up to the reporting period

Same as above Same as above Same as above Same as above Same as above Same as above Same as above Same as above Same as above

(7) Amount Spent direct or through implementing agency

Direct Direct Direct Direct Direct Direct Direct Direct Direct

Sr. No. Particulars (10) (11) (12) (13) (14) (15) (16) (17) TOTAL


Exhibition programme for school kids

Tree Plantation Eye checkup plus Distribution of glasses

K-yan (e learning center)

Renovation of classroom for The Door Step School, Sewri, Mumbai

Renovation of Laboratory at Maratha High School, Worli

Renovation plus flooring of 3 classrooms at Baba Saheb Gawade High school, Worli

Contribution to KCMET for education of the under-privileged girl child under the Nanhi Kali project

–


Education Environment Health Education Education Education Education Education –

(3) Amount outlay (budget project or programme wise

– Rs. 1,00,000 – – Rs. 5,00,000 Rs. 5,00,000 – Rs. 7,59,600 Rs. 1,03,66,000

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15

Sr. No. Particulars (10) (11) (12) (13) (14) (15) (16) (17) TOTAL



(2) Specify the state and district where projects or programs was undertaken

(1) Local

(2) Vadodara district, Maharashtra

(1) Local


(1) Local


(1) Local


(1) Local

(2) Mumbai district, Maharashtra

(1) Local


(1) Local


(1) Others

(2) Maharashtra and contiguous states

–

(5) Amount spent on the project or programmeSub Heads;1. Direct expenditure on projects or programmes2. Overheads

(1) Rs. 1,51,260 (2) 0

(1) Rs. 1,49,820

(2) 0

(1) Rs. 44,564

(2) 0

(1) Rs. 3,79,200 (2) 0

(1) Rs. 2,08,366

(2) 0

(1) Rs. 3,58,283

(2) 0

(1) Rs. 4,75,763

(2) 0

(1) Rs. 92,19,600

(2) 0

(1) Rs. 1,92,23,707 (2) 0

(6) Cumulative expenditure up to the reporting period

Same as above Same as above Same as above Same as above Same as above Same as above Same as above Same as above –

(7) Amount Spent direct or through implementing agency

Direct Direct Direct Direct Direct Direct Direct Implementing agency – KCMET*

–

* Details of implementing agency: KCMET- The K. C. Mahindra Education Trust - founded by Late K. C. Mahindra in 1953 promotes literacy and higher learning in the country. Since its inception, the trust has promoted education by way of scholarships and grants to deserving and needy students. The Trust has facilitated social and economic development through creating a literate, enlightened and empowered population. The Trust is registered as a public Charitable Trust under the Bombay Public Trusts Act, 1950 and has its office at Cecil Court, Mahakavi Bhushan Marg, Mumbai - 400001.

6. The company has duly spent 2% of the average net profit of the last three financial years or any part thereof on CSR - related activities.

7. Members of the CSR committee confirm that implementation and monitoring of the CSR policy of your Company is in compliance with the relevant provisions of the Companies Act, 2013.


Bharat Doshi Zhooben Bhiwandiwala

Chairman Chairman CSR Committee


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16

ANNEXURE III TO THE DIRECTORS’ REPORT

POLICY ON APPOINTMENT/REMOVAL OF DIRECTORS AND SENIOR MANAGEMENT

DEFINITIONS

The definitions of some of the key terms used in this Policy are given below.

“Board” means Board of Directors of the Company.

“Company” means Mahindra Intertrade Limited (MIL).

“Committee(s)” means Committees of the Board for the time being in force.

“Employee” means employee of the Company whether employed in India or outside India including employees in the Senior Management team of the Company.

“HR’ means the Human Resource department of the Company.

“Key Managerial Personnel” (KMP) refers to key managerial personnel as defined under the Companies Act, 2013 and includes:

(i) Managing Director (MD) or Chief Executive Officer (CEO) or Manager or Whole time Director (WTD)

(ii) Chief Financial Officer (CFO), and

(iii) Company Secretary (CS).

“Nomination and Remuneration Committee” (NRC) means Nomination and Remuneration Committee of Board of Directors of the Company for the time being in force.

“Senior Management” means personnel of the Company who are members of its core management team excluding Board of Directors comprising all members of management one level below the executive directors, including functional heads.

I. APPOINTMENT OF DIRECTORS

• NRC reviews and assesses Board composition and recommends the appointment of new directors. In evaluating the suitability of an individual Board member, NRC shall take into account the following criteria regarding qualifications, positive attributes and independence of a director as applicable:

1) All Board appointments will be based on merit, in the context of skills, experience, independence and knowledge required for the Board as a whole to be effective.

2) Ability of the candidate to devote sufficient time and attention to professional obligations as an Independent Director for balanced decision making.

3) Adherence to the Code of Conduct and ensuring the highest level of corporate governance, in letter and in spirit, by Directors.

• Based on NRC’s recommendation, the Board will evaluate the candidate(s) and decide on the selection of the appropriate member. The Board, through the Managing Director, will interact with the new member to obtain his/her consent for joining the Board. Upon receipt of the consent, the new director will be co-opted by the Board in accordance with the applicable provisions of the Companies Act 2013 and Rules made thereunder.

REMOVAL OF DIRECTORS

If a director is disqualified as per any applicable Act, or rules and regulations thereunder, or due to non-adherence to the applicable policies of the company, NRC may recommend to the Board, with reasons recorded in writing, removal of a director subject to compliance of the applicable statutory provisions.

SENIOR MANAGEMENT PERSONNEL

NRC shall identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down above.

For administrative convenience, senior management personnel will be appointed or promoted and removed/ relieved with the authority of the Managing Director based on business needs and suitability of the candidate.

Managing Director shall report details of such appointments to NRC at least twice in a year.

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17

II. SUCCESSION PLANNING:

Purpose

The Talent Management Policy sets out the approach to the development and management of talent in the Company to ensure implementation of the strategic business plans of the Company.

Board:

Successors for Independent Directors shall be identified by the NRC at least one quarter before expiry of the scheduled term. In case of separation of Independent Directors due to resignation or otherwise, successor(s) will be appointed at the earliest but not later than the immediate next Board meeting or three months from the date of such vacancy, whichever is later.

Successors for Executive Director(s) shall be identified by the NRC from Senior Management or through external sources as the Board may deem fit.

The Board may also decide at its discretion not to fill a vacancy on the Board.

Senior Management Personnel:

The Company’s succession planning program aims to identify high growth potential individuals, and groom them in order to maintain a robust talent pipeline.

The Company has a process of identifying individuals with high potential and having abilities to hold critical positions. Successors are mapped for such positions in order to ensure talent readiness.

The Company participates in the Mahindra Group’s Talent Management process which is driven by a collaborative network of Talent Councils across the Group’s various Sectors.

POLICY FOR REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

Purpose

This Policy sets out the approach to Compensation of Directors, Key Managerial Personnel and other employees in Mahindra Intertrade Limited (MIL).

Policy Statement

Our compensation philosophy strives to attract and retain high performers by compensating them at levels that are broadly comparable with the median of the comparator basket while differentiating people on the basis of performance, potential and criticality for achieving competitive advantage in business.

In order to effectively implement this, our compensation structure is developed through external benchmarking as appropriate, with relevant players across the industry we operate in.

NON-EXECUTIVE INCLUDING INDEPENDENT DIRECTORS:

The Nomination and Remuneration Committee (NRC) shall decide the basis for determining the compensation, both fixed and variable, to Non-Executive Directors, including Independent Directors, whether as commission or otherwise. NRC shall take into consideration various factors such as director’s participation in Board and Committee meetings during the year, other responsibilities undertaken such as membership or Chairmanship of committees, time spent in carrying out their duties, role and functions as envisaged in Schedule IV of the Companies Act 2013 and such other factors as the NRC may deem fit for determining compensation.

The Board shall determine compensation to Non-Executive Directors within the overall limits specified in the Shareholders’ resolution.

Executive Directors:

The remuneration to Managing Director and Executive Director(s) shall be recommended by NRC to the Board. Remuneration will consist of both fixed compensation and variable compensation and shall be paid as salary, commission, performance bonus, stock options (where applicable), perquisites and fringe benefits as approved by the Board and within the overall limits specified in the Shareholders’ resolution. While fixed compensation is determined at the time of their appointment, variable compensation will be determined annually by NRC based on their performance.

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18

Key Managerial Personnel (KMPs)

The terms of remuneration of the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and the Company Secretary (CS) shall be determined either by any Director or such other person as may be authorised by the Board.

The above remuneration shall be competitively benchmarked for similar positions in the industry and aligned with their qualifications, experience, and responsibilities. Pursuant to the provisions of section 203 of the Companies Act 2013, the Board shall approve remuneration of the above KMPs at the time of their appointment.

The remuneration to directors, KMPs and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

Employees

We follow a position and level based approach for compensation benchmarking with companies in the steel/ steel service centre and related engineering industries.

We have a CTC (Cost to Company) concept which includes a fixed component (guaranteed pay) and a variable component (performance pay). The percentage of the variable component increases with increasing hierarchy levels as employees at higher positions have a greater impact and influence on the company’s overall business result. CTC is reviewed once every year and the compensation strategy for positioning of individuals takes into consideration the following elements:

• Performance

• Potential

• Criticality

Remuneration for new employees other than KMPs and senior management will be decided by HR, and approved by the Managing Director, based on factors such as relevant job experience, last compensation drawn, skill-set of the selected candidate, internal equity and related parameters.

The Company may also grant Stock Appreciation Rights to Employees and Directors (other than Independent Directors) in accordance with the Stock Appreciation Rights Scheme of the Company and subject to compliance of the applicable statutes and regulations.


Bharat Doshi

Chairman


Book 1.indb 18 11/25/2016 2:45:44 PM



19

ANNEXURE IV TO THE DIRECTORS’ REPORT

Form No. MR-3

SECRETARIAL AUDIT REPORTFOR THE FINANCIAL YEAR ENDED 31ST MARCH 2016

[Pursuant to Section 204(1) of the Companies Act, 2013 and the rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,The Members,Mahindra Intertrade LimitedMahindra Towers,P. K. Kurne Chowk, Worli,Mumbai – 400 018

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Mahindra Intertrade Limited (hereinafter called “the Company”). Secretarial audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Company’s books, papers, minutes books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officer, agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2016, complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the company for the financial year ended on 31st March, 2016 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowing;

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (during the year under review not applicable to the Company)

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; (during the year under review not applicable to the Company)

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (during the year under review not applicable to the Company);

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations,2014 (during the year under review not applicable to the company)

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (during the year under review not applicable to the Company);

(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (during the year under review not applicable to the Company)

(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (during the year under review not applicable to the Company); and

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20

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 (during the year under review not applicable to the Company);

We have examined compliance with the applicable clauses of the following:

a) Secretarial Standards issued by the Institute of Company Secretaries of India;

b) Listing Agreement entered with National Stock Exchange of India Limited and BSE Limited for the period from 1st April 2015 to 30th November, 2015 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the period from 1st December 2015 to 31st March 2016 (during the year under review not applicable to the company);

During the period under review the Company has complied with the provisions of Act, Rules, Regulations, Guidelines etc.

As represented by the Company, there is/are no sector specific laws applicable to the Company.

We further report that:

The Board of Directors of the Company is duly constituted with proper balance of the Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

All decisions of the Board are carried through unanimously. As per the records provided by the Company, none of the member of the Board dissented on any resolution passed at the meeting of the Board and any of its committee.

We further report that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

We further report that during the audit period there was following specific events/actions having a major bearing on the Company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, etc.:-

1. Investment in the Mahindra Electrical Steel Private Limited, Wholly Owned Subsidiary of the Company – The Company has proposed to make a further investment of an amount not exceeding Rs. 25,00,000/- (Rupees Twenty Five Lacs Only) in Mahindra Electrical Steel Private Limited, Wholly Owned Subsidiary of the Company, by subscribing to the equity shares on right issue or otherwise.

For Mehta & Mehta,Company Secretaries(ICSI Unique Code P1996MH007500)

Dipti MehtaPartnerFCS No : 3667CP No. : 3202

Place : Mumbai

Date : 27th April, 2016

Note: This report is to be read with our letter of even date which is annexed as ‘ANNEXURE A’ and forms an integral part of this report.

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21

ANNEXURE ATo,The Members,Mahindra Intertrade LimitedMahindra Towers,P. K. Kurne Chowk, Worli,Mumbai – 400 018

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4. Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

5. The compliance of the provisions of corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.

6. The secretarial audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

For Mehta & Mehta,Company Secretaries,(ICSI Unique Code P1996MH007500)

Dipti MehtaPartnerFCS No : 3667CP No. : 3202

Place : Mumbai

Date : 27th April, 2016

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22

ANNEXURE V TO THE DIRECTORS’ REPORTForm No. AOC.2

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto

(Pursuant to clause (h) of Sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

1. Details of contracts or arrangements or transactions not at arm’s length basis:

Sr. No.

Name(s) of the related party and nature of relationship

Nature of contracts/

arrangements/ transactions

Duration of the contracts/arrangements/

transactions

Salient terms of the contracts or

arrangements or

transactions including the value, if any

Justification for entering

into such contracts or

arrangements or

transactions

Date(s) of approval by

the Board

Amount paid as

advances, if any:

Date on which the special

resolution was passed in general

meeting as required under first proviso to

Section 188– – – – – – – – –

2. Details of material contracts or arrangement or transactions at arm’s length basis:

Sr. No.


Nature of contracts/

arrangements/transactions

Duration of the contracts/arrangements/

transactions

Salient terms of the contracts or arrangements or

transactions including the value, if any

Date(s) of approval by the

Board, if any

Amount paid as advances,

if any

1 Mahindra and Mahindra Limited

Sale of processed steel

Annual/Recurring

1. Sale of CR/HR Steel.

2. Payment terms - immediate (payment is generally received in 10 days).

3. Total value for transaction Rs. 169.68 crores

Not Applicable (Refer Note)

Nil

*Note: All these transactions are at arm’s length and are in the ordinary course of business. Accordingly, Board approval is not required as per proviso to sub section (1) of Section 188 of the Companies Act, 2013. Approval of Audit Committee was taken in the meeting held on May 6, 2015, July 20, 2015 and October 27, 2015.


Bharat DoshiChairman


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23

ANNEXURE VI TO THE DIRECTORS’ REPORT

Form No. MGT-9

Extract of Annual Return as on the financial year ended on 31st March, 2016 [Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies

(Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

i. Corporate Identification Number (CIN) U51900MH1978PLC020222

ii. Registration Date 20th March, 1978

iii. Name of the Company Mahindra Intertrade Limited

iv. Category/Sub-Category of the Company Company Limited by shares/Indian Non-Government Company

v. Address of the Registered office and contact details

Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai – 400018

Tel.: +91-22-24935185/86 Fax: +91-22-24951236Contact: [email protected]

vi. Whether listed company Yes/No No

vii. Name, Address and Contact details of Registrar and Transfer Agent, if any

Sharepro Services (India) Pvt. Ltd.13 AB Samhita Warehousing Complex,2nd Floor, Sakinaka Telephone Exchange Lane,Off Andheri-Kurla Road, Sakinaka,Andheri (E), Mumbai – 400 072Tel.: +91-22-67720300/400 Fax: +91-22-28591568Email: [email protected]

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY: All the business activities contributing 10% or more of the total turnover of the Company:

Sr. No.

Name and Description of main products/services

NIC Code of the Product/service

% to total turnover of the company

1 Processing of Steel 24105 100

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:

Sr. No.

Name and Address of the company

CIN/GLN Holding/ Subsidiary/Associate

% of shares

held

Applicable Section

1 Mahindra and Mahindra Limited

L65990MH1945PLC004558 Ultimate Holding Company

100.00 2(46)

2 Mahindra Vehicle Manufacturers Ltd. (w.e.f. 18th January, 2016)

U34100MH2007PLC171151 Holding Company 100.00 2(46)

3 Mahindra Steel Service Centre Limited

U27100MH1993PLC070416 Subsidiary Company 61.00 2(87)(ii)

4 Mahindra Electrical Steel Private Limited

U27100MH2009PTC193205 Subsidiary Company 100.00 2(87)(ii)

5 Mahindra Auto Steel Private Limited

U27100MH2013PTC250979 Subsidiary Company 51.00 2(87)(ii)

6 Mahindra MiddleEast Electrical Steel Service Centre (FZC)

N.A. Subsidiary Company 90.00 2(87)(ii)

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24

IV. SHARE HOLDING PATTERN (Equity Share Capital Break-up as percentage of Total Equity)

i) Category-wise Share Holding

Category of Shareholders

No. of Shares held at the beginning of the year

No. of Shares held at the end of the year

% Change during

the year Demat Physical Total % of

Total Shares

Demat Physical Total % of Total

SharesA. Promoters(1) Indiana) Individual/HUF – – – – – – – – –b) Central Govt – – – – – – – – –c) State Govt(s) – – – – – – – – –d) Bodies Corp. 12,100,000 15,000,007 27,100,007 100 27,100,000 7 27,100,007 100 –e) Banks/FI – – – – – – – – –f) Any Other... – – – – – – – – –Sub-total (A)(1): 12,100,000 15,000,007 27,100,007 100 27,100,000 7 27,100,007 100 –(2) Foreigna) NRIs-Individuals – – – – – – – – –b) Other-Individuals – – – – – – – – –c) Bodies Corp. – – – – – – – – –d) Banks/FI – – – – – – – – –e) Any Other... – – – – – – – – –Sub-total (A)(2): – – – – – – – – –Total shareholding of Promoter (A)=(A)(1)+(A)(2) 12,100,000 15,000,007 27,100,007 100 27,100,000 7 27,100,007 100 –B. Public

Shareholding1. Institutionsa) Mutual Funds – – – – – – – – –b) Banks/FI – – – – – – – – –c) Central Govt – – – – – – – – –d) State Govt(s) – – – – – – – – –e) Venture Capital

Funds – – – – – – – – –f) Insurance

Companies – – – – – – – – –g) FIIs – – – – – – – – –h) Foreign Venture

Capital Funds – – – – – – – – –i) Others (specify) – – – – – – – – –Sub-total (B)(1): – – – – – – – – –2. Non-Institutionsa) Bodies Corp. i) Indian – – – – – – – – –ii) Overseas – – – – – – – – –b) Individualsi) Individual

shareholders holding nominal share capital upto Rs. 1 lakh

– – – – – – – – –

ii) Individual shareholders holding nominal share capital in excess of Rs. 1 lakh

– – – – – – – – –

c) Others (specify)Sub-total (B)(2): – – – – – – – – –Total Public Shareholding (B)=(B)(1)+(B)(2) – – – – – – – – –C. Shares held by

Custodian for GDRs & ADRs – – – – – – – – –

Grand Total (A+B+C) 12,100,000 15,000,007 27,100,007 100 27,100,000 7 27,100,007 100 –

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25

(ii) Shareholding of Promoters

Sr. No.

Shareholder’s Name Shareholding at the beginning of the year

Shareholding at the end of the year

% change during the

yearNo. of Shares

% of total Shares of the

company

% of Shares Pledged/

encumbered to total shares

No. of Shares


company



1. Mahindra & Mahindra Limited 27,100,000 100.00 – 0 0.00 – 100.00

2. *Mahindra & Mahindra Ltd. Jt. With Mr. Bharat Doshi 1 – – 0 0.00 – 0.00

3. *Mahindra & Mahindra Ltd. Jt. With Mr. Narayan Shankar 1 – – 0 0.00 – 0.00

4. *Mahindra & Mahindra Ltd. Jt. with Mr. Zhooben Bhiwandiwala 1 – – 0 0.00 – 0.00

5. *Mahindra & Mahindra Ltd. Jt. with Mr. P. N. Shah 1 – – 0 0.00 – 0.00

6. *Mahindra & Mahindra Ltd. Jt. with Mr. Harsh Kumar 1 – – 0 0.00 – 0.00

7. *Mahindra & Mahindra Ltd. Jt. with Ms. Jyoti Walunj 1 – – 0 0.00 – 0.00

8. Mahindra Holdings Limited 1 – – 0 0.00 – 0.00

9. Mahindra Vehicle Manufacturers Ltd. (Demat) – – – 27,100,000 100.00 – 100.00

10. #Mahindra Vehicle Manufacturers Ltd. Jt with Mr. Vijay Arora – – – 1 – – 0.00

11. #Mahindra Vehicle Manufacturers Ltd. Jt with Mr. Narayan Shankar – – – 1 – – 0.00

12. #Mahindra Vehicle Manufacturers Ltd. Jt with Mr. Zhooben Bhiwandiwala – – – 1 – – 0.00

13. #Mahindra Vehicle Manufacturers Ltd. Jt with Mr. P N Shah – – – 1 – – 0.00

14. #Mahindra Vehicle Manufacturers Ltd. Jt with Mr. Sumit Issar – – – 1 – – 0.00

15. #Mahindra Vehicle Manufacturers Ltd. Jt with Mr. Percy Mahernosh – – – 1 – – 0.00

16. Mahindra Vehicle Manufacturers Ltd. (physical) – – – 1 – – 0.00Total – – – 27,100,007 100 – 100

* Held as a nominees of Mahindra & Mahindra Limited to comply with the statutory provisions in respect of minimum number of members.# Held as a nominees of Mahindra Vehicle Manufacturers Ltd. to comply with the Statutory Provisions in respect of minimum number of

members.

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26

(iii) Change in Promoters’ Shareholding

Sr. No.


Cumulative Shareholding during the year

No. of shares % of total shares of the

company


company1. Mahindra and Mahindra Ltd.

At the beginning of the year 27,100,007 100.00 0 0Decrease on account of transfer of Shares to Mahindra Vehicle Manufacturers Ltd. (27,100,007) (100.00) 0 0At the end of the year – – – –

Sr. No.




company


company2. Mahindra Vehicle Manufacturers Ltd.

At the beginning of the year 0 0 0 0Increase on account of transfer of Shares from Mahindra and Mahindra Ltd. 27,100,007 100.00 27,100,007 100.00At the end of the year 0 0 27,100,007 100.00

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

Sr. No.

For Each of the Top Ten Shareholder’s Shareholding at the beginning of the year



company


company1. At the beginning of the year – – – –

Date wise Increase/Decrease in Promoters Shareholding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity/etc.) – – – –At the end of the year – – – –

(v) Shareholding of Directors and Key Managerial Personnel:

Sr. No.

Name of the Director Shareholding at the beginning of the year



Company


Company1. Mr. Zhooben Bhiwandiwala (holding jointly

with Mahindra & Mahindra Ltd.)At the beginning of the year 1 – 1 –Decrease on account of transfer of Share to Mr. Zhooben Bhiwandiwala (holding jointly with Mahindra vehicle Manufactures Ltd.) (1) – – –At the end of the year 0 – 0 –

2. Mr. P N Shah (holding jointly with Mahindra & Mahindra Ltd.)At the beginning of the year 1 – 1 –Decrease on account of transfer of Share to Mr. P. N. Shah (holding jointly with Mahindra vehicle Manufactures Ltd.) (1) – – –At the end of the year 0 – 0 –

Book 1.indb 26 11/25/2016 2:45:45 PM



27

Sr. No.

Name of the Director Shareholding at the beginning of the year



Company


Company3. Mr. Harsh Kumar (holding jointly with Mahindra

& Mahindra Ltd.)At the beginning of the year 1 – 1 –Decrease on account of transfer of Share to Mr. Sumit Issar (holding jointly with Mahindra vehicle Manufactures Ltd.) (1) – – –At the end of the year 0 – 0 –

4. Ms. Jyoti Walunj (holding jointly with Mahindra & Mahindra Ltd.)At the beginning of the year 1 – 1 –Decrease on account of transfer of Share to Mr. Percy Mahernosh (holding jointly with Mahindra vehicle Manufactures Ltd.) (1) – – –At the end of the year 0 – 0 –

5. Mr. Bharat Doshi (holding jointly with Mahindra & Mahindra Ltd.)At the beginning of the year 1 – 1 –Decrease on account of transfer of Share to Mr. Vijay Arora (holding jointly with Mahindra Vehicle Manufactures Ltd.) (1) – – –At the end of the year 0 – 0 –

6. Mr. Zhooben Bhiwandiwala (holding jointly with Mahindra vehicle Manufactures Ltd.)At the beginning of the year 0 – 0 –Increase on account of transfer of Share from Mr. Zhooben Bhiwandiwala (holding jointly with Mahindra and Mahindra Ltd.) 1 – 1 –At the end of the year 1 – 1 –

7. Mr. P. N. Shah (holding jointly with Mahindra vehicle Manufactures Ltd.)At the beginning of the year 0 – 0 –Increase on account of transfer of Share from Mr. P. N. Shah (holding jointly with Mahindra and Mahindra Ltd.) 1 – 1 –At the end of the year 1 – 1 –

8. Mr. Percy Mahernosh (holding jointly Mahindra Vehicle Manufacturers Ltd.)At the beginning of the year 0 – 0 –Increase on account of transfer of Share from Ms. Jyoti Walunj (holding jointly with Mahindra and Mahindra Ltd.) 1 – 1 –At the end of the year 1 – 1 –

9. Mr. Sumit Issar (holding jointly Mahindra Vehicle Manufacturers Ltd.)At the beginning of the year 0 – 0 –Increase on account of transfer of Share from Mr. Harsh Kumar (holding jointly with Mahindra and Mahindra Ltd.) 1 – 1 –At the end of the year 1 – 1 –

10. Mr. Vijay Arora (holding jointly with Mahindra Vehicle Manufacturers Ltd.)At the beginning of the year 0 – 0 –Increase on account of transfer of Share from Mr. Bharat Doshi (holding jointly with Mahindra and Mahindra Ltd.) 1 – 1 –At the end of the year 1 – 1 –

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28

V. INDEBTEDNESS: Indebtedness of the Company including interest outstanding/accrued but not due for payment

(Rs. in crores)

Particulars Secured Loans excluding

deposits

Unsecured Loans

Deposits Total Indebtedness

Indebtedness at the beginning of the financial year

i) Principal Amount – 0.05 – 0.05

ii) Interest due but not paid – – – –

iii) Interest accrued but not due – – – –

Total (i+ii+iii) – 0.05 – 0.05

Change in indebtedness during the financial year

• Addition – 0.04 – 0.04

• Reduction – – – –

Net Change – – – –

Indebtedness at the end of the financial year



iii) Interest accrued but not due – – – –

Total (i+ii+iii) – 0.09 – 0.09

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:(Rs. in Lakhs)

Sr. No.

Particulars of Remuneration Name of MD/WTD/Manager Total Amount

Mr. Harsh Kumar (ceased

to be Managing Director w.e.f.

1st October, 2015)

Mr. Zhooben Bhiwandiwala

(Vice-Chairman)

Mr. Sumit Issar (Managing

Director from 1st October, 2015)

1. Gross salary

a) Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961 81.85 – 22.31 104.16

b) Value of perquisites under Section 17(2) of the Income-tax Act, 1961 4.28 – 1.24 5.52

c) Profits in lieu of salary under Section 17(3) of the Income-tax Act, 1961 – – – –

2. Stock Option – – – –

3. Sweat Equity – – – –

4. Commission

– as % of profit 21.52 48.15 – 69.67

– others, specify... – – – –

5. Others, please specify SARs

SARs – – 20.85 20.85

Contribution to funds 1.95 – 0.85 2.80

Total (A) 109.60 48.15 45.25 203.00

Ceiling as per the Act – – – 1065.00

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29

B. Remuneration to other directors:(Rs. in Lakhs)

Sr. No.

Particulars of Remuneration Name of Directors Total Amount

Mr. Bharat Doshi

Mr. Parag Shah

Mr. Sudhir Mankad

Dr. Punita Kumar Sinha

1. Independent Directors

• Feeforattendingboard/committeemeetings – – 3.50 3.60 7.10

• Commission – – 6.00 6.00 12.00

• Others, please specify – – – – –

Total (1) – – 9.50 9.60 19.10

2. Other Non-Executive Directors

• Fee for attending board/committee meetings 2.50 – – – 2.50

• Commission 12.00 9.63 – – 21.63

• Others, please specify – – – – –

Total (2) 14.50 9.63 – – 24.13

Total (B)=(1+2) 14.50 9.63 9.50 9.60 43.23

Total Managerial Remuneration – – – – 246.23

Overall Ceiling as per the Act – – – – 1065.00

C. Remuneration to Key Managerial Personnel Other than MD/Manager/WTD(Rs. in Lakhs)

Sr. No.

Particulars of Remuneration Company Secretary

CFO Total Amount

Mr. Abhishek Juvekar

(upto January 13, 2016)

Ms. Romali Malvankar

(w.e.f January 18, 2016)

Ms. Jyoti Walunj

(upto August 1, 2015)

Mr. Percy Mahernosh

(w.e.f. August 1, 2015)

1. Gross salary

a) Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961 – 23.70 71.30 95.00

b) Value of perquisites under Section 17(2) of the Income-tax Act, 1961 – 0.11 2.45 2.56

c) Profits in lieu of salary under Section 17(3) of the Income-tax Act, 1961 – – – –

2. Stock option – – – –


4. Commission – – – –

– as % of profit – – – –

– others, specify... – – – –

5. Others, please specify – – – – –

Fees (allocation of expenses by Mahindra & Mahindra Limited) 5.00 – – 5.00

Contribution to funds – 1.56 5.39 6.95

Total 5.00 25.37 79.14 109.51

Book 1.indb 29 11/25/2016 2:45:45 PM



30

VII. PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES:

Type Section of the Companies Act.

Brief Description

Details of Penalty/

Punishment/ Compounding fees imposed

Authority [RD/ NCLT/

COURT]

Appeal made, if any (give

Details)

A. COMPANY

Penalty – – – – –

Punishment – – – – –

Compounding – – – – –

B. DIRECTORS




C. OTHER OFFICERS IN DEFAULT







Book 1.indb 30 11/25/2016 2:45:45 PM



31

ANNEXURE VII TO THE DIRECTORS’ REPORTPARTICULARS AS PER THE COMPANIES (ACCOUNTS) RULES, 2014

A. CONSERVATION OF ENERGY

(a) the steps taken or impact on conservation of energy: In processing of steel, the primary plant operation is not power intensive. However, normal precautions are taken by the Company to minimize power consumption.

(b) the steps taken by the company for utilizing alternate sources of energy: Nil

(c) the capital investment on energy conservation equipments: Nil

B. TECHNOLOGY ABSORPTION

i) the efforts made towards technology absorption: None

ii) the benefits derived like product improvement, cost reduction, product development or import substitution- Your Company gives stress to indigenization. Import substitution efforts have saved Rs. 48.71 Lakhs during the year.

iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) –

(a) the details of technology imported: Nil

(b) the year of import: Nil

(c) whether the technology been fully absorbed: Nil

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

iv) the expenditure incurred on Research and Development: Nil

C. FOREIGN EXCHANGE EARNINGS AND OUTGO: (in terms of actual inflow and outflow)

Total Foreign Exchange Earned and Used:

(Rs. in crores)

For the Financial Year For the Financial Year ended 31st March 2016 ended 31st March 2015

Total Foreign Exchange Earned 13.78 11.41

Total Foreign Exchange Used 325.66 271.44




Book 1.indb 31 11/25/2016 2:45:45 PM



32

independent auditors’ report TO THE MEMBERS OF MAHINDRA INTERTRADE LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of MAHINDRA INTERTRADE LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards prescribed under Section 133 of the Act, as applicable.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder and the Order under Section 143(11) of the Act.

We conducted our audit of the financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016, and its profit and its cash flows for the year ended on that date.

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33

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards prescribed under Section 133 of the Act, as applicable.

(e) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.

(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 25.1(i) to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.

For DELOITTE HASKINS & SELLSChartered Accountants

Firm’s Registration No. 117365W

Uday M. NeogiPartner

(Membership No. 30235)


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34

ANNEXURE “A” TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date to the members of Mahindra Intertrade Limited on the financial statements for the year ended 31st March, 2016)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Mahindra Intertrade Limited (“the Company”) as of 31st March, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.


Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Book 1.indb 34 11/25/2016 2:45:45 PM



35

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.


(Firm’s Registration No. 117365W)

Uday M. Neogi(Partner)


Mumbai, , 27th April, 2016

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36

ANNEXURE B TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date to the members of Mahindra Intertrade Limited on the financial statements for the year ended 31st March, 2016)

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets.

(b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and the records examined by us and based on the examination of registered sale deeds provided to us, we report that, the title deeds, of land and building which are freehold, are held in the name of the Company as at the balance sheet date. In respect of the immovable property of land which has been taken on lease and the building constructed thereon by the Company, disclosed as fixed assets in the financial statements, the lease agreement is in the name of the Company, where the Company is the lessee in the agreement.

(ii) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

(iv) The Company has not granted any loans, made investments or provide guarantees and hence reporting under clause (iv) of the CARO 2016 is not applicable.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Amendment Rules, 2014 prescribed by the Central Government under Sub-section (1) of Section 148 of the Companies Act, 2013 and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees’ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, cess and other material statutory dues applicable to it with the appropriate authorities.

(b) No undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues were in arrears as at 31st March, 2016 for a period of more than six months from the date they became payable.

(c) Details of dues of Sales Tax and Value Added Tax which have not been deposited as on 31st March, 2016 on account of disputes are given below:

Name of Statute Nature of DuesForum where

Dispute is Pending

Period to which the Amount

Relates

Amount Involved (Rs.)

(in crores)

Amount Unpaid (Rs.)

(in crores)

The Maharashtra Value Added Tax 2002

VAT The Joint Commissioner of

Sales Tax (Appeal) V

2010-2011 & 2011-2012

2.65 2.60

The Central Sales Tax Act 1956 (Maharashtra)

CST The Joint Commissioner of

Sales Tax (Appeal) V

2010-2011 & 2011-2012

0.10 0.10

Book 1.indb 36 11/25/2016 2:45:45 PM



37

Name of Statute Nature of DuesForum where

Dispute is Pending

Period to which the Amount

Relates

Amount Involved (Rs.)

(in crores)

Amount Unpaid (Rs.)

(in crores)

The Gujarat Value Added Tax 2003

VAT The Joint Commissioner of Commercial Tax

[Appeals]

2010-2011 .01 *

The Central Sales Tax Act 1956 (Gujarat)

CST The Joint Commissioner of Commercial Tax

[Appeals]

2010-2011 1.15 .25

* Represents amount less than Rs. 50,000

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to banks. The Company has not issued any debentures.

(ix) The Company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause (ix) of the CARO 2016 Order is not applicable.

(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Sections 188 and 177 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of CARO 2016 Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with him and hence provisions of Section 192 of the Companies Act, 2013 are not applicable.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.





Mumbai, , 27th April, 2016

Book 1.indb 37 11/25/2016 2:45:45 PM



38

Balance Sheet as at 31 March, 2016Rs. in Crores

Particulars NotesAs at 31 March,

2016As at 31 March,

2015A EQUITY AND LIABILITIES1 Shareholders’ fund

(a) Share capital ................................................................... 3 16.60 16.60(b) Reserves and surplus ...................................................... 4 419.49 380.50

436.09 397.102 Non current liabilities

(a) Deferred tax liabilities (net) ............................................ 30 2.80 3.58(b) Long-term provisions ...................................................... 5 3.61 2.32

6.41 5.903 Current liabilities

(a) Short-term borrowings .................................................... 6 0.09 0.05(b) Trade payables ................................................................ 7 – total outstanding dues of micro enterprises and small

enterprises; and ........................................................... – – – total outstanding dues of creditors other than micro

enterprises and small enterprises ................................. 124.38 122.40(c) Other current liabilities .................................................. 8 9.62 10.78(d) Short-term provisions ...................................................... 9 27.78 21.79

161.87 155.02 Total ......................................................... 604.37 558.02

B ASSETS

1 Non current assets(a) Fixed assets (i) Tangible assets ........................................................ 10 41.30 44.98 (ii) Intangible assets ...................................................... 0.05 0.07 (iii) Capital work-in-progress ......................................... 11.70 –

53.05 45.05(b) Non-current investments ................................................. 11 88.78 90.43(c) Long-term loans and advances ...................................... 12 2.81 3.00

144.64 138.482 Current assets

(a) Current investments ........................................................ 13 35.57 11.00(b) Inventories ...................................................................... 14 183.20 160.75(c) Trade receivables ............................................................ 15 172.62 205.23(d) Cash and cash equivalents ............................................. 16 58.56 33.30(e) Short-term loans and advances ....................................... 17 8.29 8.71(f) Other current assets ........................................................ 18 1.49 0.55

459.73 419.54 Total ......................................................... 604.37 558.02

See accompanying notes forming part of the financial statements

Bharat Doshi ChairmanZhooben Bhiwandiwala Executive Vice-ChairmanSumit Issar Managing Director

Rajeev Dubey }Sudhir MankadP. N. Shah DirectorsParag ShahDr Punita Kumar Sinha

Percy Mahernosh Chief Financial Officer

Romali Malvankar Company SecretaryPlace: Mumbai Date: 27 April, 2016

In terms of our report attached

For Deloitte Haskins & SellsChartered Accountants

Uday M. Neogi Partner

Place: Mumbai Date: 27 April, 2016

Book 1.indb 38 11/25/2016 2:45:45 PM



39

Statement of Profit and Loss for the year ended 31 March, 2016Rs. in Crores

Particulars NotesFor the year ended

31 March, 2016For the year ended

31 March, 2015

1 Revenue from operations (gross) .......................................... 19 1,101.59 1,286.42Less: Excise duty .................................................................. (91.14) (92.90)

Revenue from operations (net) ............................................. 1,010.45 1,193.52

2 Other income ....................................................................... 20 8.58 20.17

3 Total revenue (1+2) ............................................................. 1,019.03 1,213.69

4 EXPENDITURE:

(a) Cost of materials consumed ......................................... 21(a) 783.73 989.76

(b) Purchases of stock-in-trade (traded goods) .................... 21(b) 83.21 76.09

(c) Changes in inventories of finished goods, work-in-progress and stock-in-trade .............................. 21(c) 6.97 (13.40)

(d) Employee benefits expense ........................................... 22 15.45 12.90

(e) Finance costs ................................................................ 23 1.36 1.72

(f) Depreciation and amortisation expense ....................... 10 4.88 5.10

(g) Other expenses ............................................................. 24 28.41 31.28

Total expenses ...................................................................... 924.01 1,103.45

5 Profit before tax (3-4) .......................................................... 95.02 110.24

6 Tax expense: (a) Current tax expense ...................................................... 33.00 38.46(b) Short provision for tax relating to earlier year’s ............ 0.42 –(c) Deferred tax.................................................................. 30 (0.78) (0.39)

Net tax expenses .................................................................. 32.64 38.07

7 Profit after tax (5-6) ............................................................ 62.38 72.17

8 Earnings per equity share (of Rs. 10 each): 29Basic/Diluted (Rs.) ................................................................ 37.58 43.47










Book 1.indb 39 11/25/2016 2:45:46 PM



40

Cash flow statement for the year ended 31 March, 2016Rs. in Crores

ParticularsFor the year ended


31 March, 2015

A. CASH FLOW FROM OPERATING ACTIVITIESProfit before tax for the year ......................................................... 95.02 110.24Adjustments for:Depreciation and Amortisation ..................................................... 4.88 5.10Interest income.............................................................................. (3.78) (3.48)

Dividend income .......................................................................... (4.74) (6.76)

Finance costs ................................................................................. 1.36 1.72Liabilities written back .................................................................. (0.04) –

Net unrealised exchange (gain)/loss .............................................. (0.32) 0.11Net gain on sale of current investments ........................................ (0.02) (0.75)

Profit on sale of assets ................................................................... * (9.18)

(2.66) (13.24)Operating Profit before Working Capital Changes ....................... 92.36 97.00Changes in working capital:Adjustments for (increase)/decrease in operating assets/liabilities:Trade receivables, loans and advances and other assets .............. 32.53 (8.53)Inventories ..................................................................................... (22.45) (33.30)

Trade payables, other liabilities and provisions ............................. 2.09 (88.62)

12.17 (130.45)

Cash Generated from Operations ................................................. 104.53 (33.45)Net income tax (paid) ................................................................... (31.52) (40.52)

NET CASH FLOW FROM OPERATING ACTIVITIES ..................... 73.01 (73.98)

B. CASH FLOW FROM/(USED IN) INVESTING ACTIVITIES

Capital Expenditure on fixed assets, including capital advances ... (12.07) (0.85)

Proceeds from sale of fixed assets (net) ......................................... 0.09 22.45Inter corporate deposits placed .................................................... – (0.89)

Inter corporate deposits refunded .................................................. 0.17 0.77Current investments not considered as Cash and cash equivalents– Purchased .............................................................................. (1,967.62) (1,984.95)

– Proceeds from sale .................................................................. 1,943.07 1,980.70Purchase of non current investments– Subsidiaries/Joint Ventures ....................................................... – (34.92)Proceeds from redemption of investment in debentures ............... 1.65 –Interest received– Subsidiaries/Joint Ventures ....................................................... 0.03 0.02– Others ..................................................................................... 2.82 3.42Dividend received– Subsidiaries/Joint Ventures ....................................................... 4.15 3.47– Others ..................................................................................... 2.61 4.23

Book 1.indb 40 11/25/2016 2:45:46 PM



41

Rs. in Crores



31 March, 2015Dividend received

– Subsidiaries/Joint Ventures ....................................................... 2.90 4.15

– Others ..................................................................................... 1.84 2.61

NET CASH FLOW USED IN INVESTING ACTIVITIES .................. (27.12) (7.49)

C. CASH FLOW USED IN FINANCING ACTIVITIES

Finance Costs ............................................................................... (1.24) (1.72)

Dividends paid .............................................................................. (16.60) (16.60)

Tax on dividend ............................................................................ (2.79) (2.82)

NET CASH FLOW USED IN FINANCING ACTIVITIES ................. (20.63) (21.14)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) ........................................................................................ 25.26 (102.60)

Cash and cash equivalents at the beginning of the year (refer note 16) ..................................................................................... 33.30 135.90 Cash and cash equivalents at the end of the year (refer note 16)... 58.56 33.30

25.26 (102.60)

Reconciliation of Cash and cash equivalents with the Balance Sheet:Cash and cash equivalents as per Balance Sheet (refer note 16)Component of cash and cash equivalentsCash on hand .............................................................................. ** ** with banks: in current accounts ................................................... 4.75 6.30 in deposit account .................................................... 53.81 27.00

58.56 33.30

* Represents Rs. 14,130.** Represents Rs. 40,122 (2015: Rs. 20,214).

Note: The above Cash Flow Statement has been prepared under the ‘indirect method’ as set out in Accounting Standard 3 ‘Cash Flow Statement’.









Book 1.indb 41 11/25/2016 2:45:46 PM



42

Notes forming part of the financial statements

1. Corporate information:

Mahindra Intertrade Limited is a public limited company incorporated on 21 May, 1998 under the Companies Act, 1956. The Company’s main activity is steel processing and it has service centres at Nashik and Vadodara. The Company processes automotive and electrical steel.

2. Significant Accounting Policies followed by the Company: 2.1 Basis of accounting and preparation of financial statements: The financial statements of the Company have been prepared in accordance with the Generally Accepted

Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (The Act). The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

All assets and liabilities are classified as current if it is expected to realise or settle within 12 months after the Balance Sheet date.

2.2 Use of estimates: The preparation of the financial statements in conformity with Indian GAAP requires the Management to make

estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates, are recognized in the periods in which the results are known/materialize.

2.3 Inventories: Inventories are stated at cost or net realizable value, whichever is lower. Cost is arrived at on a weighted average

method and includes, where appropriate, manufacturing overheads and excise duty. 2.4 Cash and cash equivalents (for purposes of Cash Flow Statement): Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with

an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

2.5 Cash flow statement: Cash flows are reported using the indirect method, whereby profit/ (loss) before extraordinary items and tax is

adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

2.6 Fixed Assets: (a) Fixed Assets are stated at cost less accumulated depreciation/amortization. The cost of fixed assets comprises

its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses. Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are included in the cost of asset upto the date the asset is ready for its intended use.

(b) (i) Leasehold land is amortised over the period of lease. (ii) Depreciation on tangible fixed assets has been provided on straight-line method as per the useful life

prescribed in Schedule II to the Companies Act, 2013, except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under, taking into account the estimated usage of the asset in case of Motor Vehicle and based on technical advice in case of Blanking line.

Motor Vehicles: 5 years Blanking Line (Nashik): 20 years (c) Goodwill arising on acquisition of business is being amortised equally over a period of ten years. 2.7 Revenue Recognition: Sale of products are recognized, when the significant risks and rewards of ownership are transferred to the Buyer.

Sales include excise duty, but excludes sales tax and value added tax. Sales of services are recognised when services are rendered.

Book 1.indb 42 11/25/2016 2:45:46 PM



43

2.8 Other Income: Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is

established. 2.9 Foreign Currency Transactions: Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. All foreign

currency monetary items outstanding at the year end (excluding long term liability) are translated at the relevant rates of exchange prevailing at the year end. Exchange differences arising on settlement/restatement of foreign currency monetary assets & liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss. In respect of forward exchange contracts, the premium or discount arising at the inception of such a contract is amortized as expense or income over the life of the contract.

Exchange differences relating to long term foreign currency monetary items, to the extent they are used for financing and acquisition of fixed assets are added to or subtracted from the cost of depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets.

2.10 Investments: Long term Investments are valued at cost less provision, if any, for decline other than temporary, in value of such

investments. Current investments are valued at the lower of cost and fair value, determined by category of investment. 2.11 Employee Benefits: i) Defined Contribution Plan: Company’s contributions paid/payable during the year to the provident fund, superannuation fund, employee

state insurance corporation and labour welfare fund are recognized in the Statement of Profit and Loss based on the amount of contribution required to be made and when services are rendered by the employees.

ii) Defined Benefit Plan/Long Term Compensated Absences: Company’s liability towards gratuity, compensated absence and post retirement medical benefit schemes

are determined by an independent actuary using the projected unit credit method at each Balance Sheet date. Past service cost are recognised on a straight line basis over the average period until the benefits become vested. Actuarial gains and losses are recognised immediately in the statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation, as reduced by the fair value of Scheme assets.

2.12 Taxes on Income: Tax expense comprises current and deferred tax. Current Tax is determined as either (i) the amount of tax payable in

respect of taxable income after considering usual allowances and disallowances under the Income-tax Act, 1961 or (ii) Minimum Alternate Tax for the year. Credit in respect of Minimum Alternate Tax paid is recognised only if there is convincing evidence of realisation of the same.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability

2.13 Earnings per share: Basic earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of

extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. 2.14 Provisions and contingencies: A provision is recognised when the Company has a present obligation as a result of past events and it is

probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.

Book 1.indb 43 11/25/2016 2:45:46 PM



44

2.15 Stock Appreciation Rights (SARs):

The compensation cost of SARs granted to employees is accounted by the Company using the intrinsic value method. The fair value of the equity shares is based on valuation obtained from an independent valuer. Difference between market value and face value of the equity shares, being the intrinsic value, is recognised as compensation cost over the vesting period.

Note 3 Share capital:As at 31 March, 2016 As at 31 March, 2015

Particulars Number of Shares

Rs. in Crores

Number of Shares

Rs. in Crores

(a) AuthorisedEquity shares of Rs. 10 each......................................... 28,000,000 28.00 28,000,000 28.00 Cumulative redeemable preference shares of Rs. 100 each ............................................................... 1,875,000 18.75 1,875,000 18.75

29,875,000 46.75 29,875,000 46.75 (b) Issued

Equity shares of Rs. 10 each......................................... 27,100,007 27.10 27,100,007 27.10

(c) Subscribed and fully paid upEquity shares of Rs. 10 each......................................... 12,100,007 12.10 12,100,007 12.10

(d) Subscribed but not fully paid up

Equity shares of Rs. 10 each, Rs. 7 not paid up ............ 15,000,000 4.50 15,000,000 4.50

27,100,007 16.60 27,100,007 16.60

(i) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period

Particulars Opening Balance Fresh issue Buy back

Closing Balance

Equity shares of Rs. 10 eachYear ended 31 March, 2016 (Subscribed and fully paid up)Number of shares ......................................................... 12,100,007 – – 12,100,007 Amount (Rs. in crores) .................................................. 12.10 – – 12.10 Year ended 31 March, 2015 (Subscribed and fully paid up)Number of shares ......................................................... 12,100,007 – – 12,100,007 Amount (Rs. in crores) .................................................. 12.10 – – 12.10 Year ended 31 March, 2016 (Subscribed but not fully paid up)Number of shares ......................................................... 15,000,000 – – 15,000,000 Amount (Rs. in crores) .................................................. 4.50 – – 4.50 Year ended 31 March, 2015 (Subscribed but not fully paid up)Number of shares ......................................................... 15,000,000 – – 15,000,000 Amount (Rs. in crores) .................................................. 4.50 – – 4.50

(ii) The Company has not allotted any equity shares for consideration other than cash, bonus shares, nor have any shares been bought back during the period of five years immediately preceding the Balance Sheet date.

Terms/rights attached to equity shares

The Company has only one class of equity share having a par value of Rs. 10/- per share. Each shareholder has the following voting rights (i) On a show of hands: one vote for a member present in person or being a company present by a representative duly authorised or by proxy who is not himself a member shall have one vote. and (ii) On a poll: one vote for each equity share registered in the name of the member or company present by a representative duly authorised. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend. In the event of winding up, the liquidator may, with the sanction of a special resolution of the Company and any other sanction required by the Act, divide amongst the members, in specie or kind, the whole or any part of the assets of the company, whether they shall consist of property of the same kind or not.

Book 1.indb 44 11/25/2016 2:45:46 PM



45

(iii) Details of shares held by the holding company

Particulars As at 31 March, 2016 As at 31 March, 2015 Mahindra Vehicle Manufacturers Limited (including 6 equity shares held jointly with its nominees) ............. 27,100,007 –Mahindra and Mahindra Limited (including 6 equity shares held jointly with its nominees) ........................ – 27,100,006

(iv) Details of shares held by each shareholder holding more than 5% shares

As at 31 March, 2016 As at 31 March, 2015Particulars Number of

shares% of

holdingNumber of

shares% of

holdingMahindra Vehicle Manufacturers Limited (including 6 equity shares held jointly with its nominees) ............ 27,100,007 100% – –Mahindra and Mahindra Limited (including 6 equity shares held jointly with its nominees) ....................... – – 27,100,006 99.999%

Note 4 Reserves and surplus:Rs. in Crores

ParticularsAs at 31 March,

2016As at 31 March,

2015(a) Capital redemption reserve ...................................................................... 18.75 18.75 (b) General Reserve

Opening balance ................................................................................... 52.87 45.65Add: Transferred from surplus in the statement of profit and loss ........... – 7.22

Closing balance ..................................................................................... 52.87 52.87(c) Surplus in the statement of profit and loss

Opening balance ...................................................................................... 308.88 264.01Less: FY 2015: Depreciation on transition to Schedule II of the Companies

Act, 2013 on tangible fixed assets with nil remaining useful life (Net of deferred tax of Rs. 0.05 crore) (Refer Note 25.3) ............................ – 0.10

Add: Profit for the year ............................................................................. 62.38 72.17Reversal of tax on dividend paid for 2014-15 ................................... 0.59 –

Less: Transferred to General Reserve ......................................................... – 7.22Proposed dividend (Rs. 12 per share [FY 2015 Rs. 10] on fully paid & Rs. 3.60 [FY 2015 Rs. 3] per share on partly paid) ........................... 19.92 16.60Tax on dividend ............................................................................... 4.06 3.38

Closing balance ..................................................................................... 347.87 308.88

419.49 380.50

Note 5 Long-term provisions:Rs. in Crores


2016As at 31 March,

2015Provision for Employee benefits:(i) Provision for gratuity (refer note 26) ................................................... 0.40 –(ii) Provision for compensated absences ................................................. 2.64 2.09 (iii) Provision for post retirement medical benefits (refer note 26) ........... 0.26 0.12 (iv) Provision for other employee benefits (refer note 32) ........................ 0.31 0.11

3.61 2.32

Book 1.indb 45 11/25/2016 2:45:46 PM



46

Note 6 Short-term borrowings:Rs. in Crores


2016As at 31 March,

2015Unsecured:Book overdrawn balance ................................................................ 0.09 0.05

0.09 0.05

Note 7 Trade payables:Rs. in Crores


2016As at 31 March,

2015Trade payables:(a) Acceptances ..................................................................................... 47.51 43.96(b) Other than acceptances – total outstanding dues of micro enterprises and small enterprises;

and ............................................................................................... – – – total outstanding dues of creditors other than micro enterprises and

small enterprises ........................................................................... 76.87 78.44

124.38 122.40

Note 8 Other current liabilities: Rs. in Crores


2016As at 31 March,

2015(a) Other payables:

(i) Statutory remittances (contribution to provident fund and employee state insurance corporation, withholding taxes, service tax, etc.) ... 1.06 0.46

(ii) Value added tax payable .............................................................. 4.97 7.03(iii) Payables on purchase of fixed assets .................................................. 1.04 0.15(iv) Advance from customers .............................................................. 1.85 2.40(v) Dealer deposit ............................................................................. 0.70 0.74

9.62 10.78

Note 9 Short-term provisions:Rs. in Crores


2016As at 31 March,

2015(a) Provision for employee benefits:

(i) Provision for compensated absences ......................................... 0.48 0.62(ii) Provision for post retirement medical benefit (refer note 26) ..... 0.02 0.01(iii) Provision for other employee benefits (refer note 32) .................. 0.78 0.61

(b) Provision – Others:(i) Provision for taxation (net of payments) ....................................... 2.52 0.57(ii) Provision for proposed equity dividend ..................................... 19.92 16.60(iii) Provision for tax on proposed dividend ...................................... 4.06 3.38

27.78 21.79

Book 1.indb 46 11/25/2016 2:45:46 PM



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Book 1.indb 47 11/25/2016 2:45:46 PM



48

Note 11 Non current investments:

Rs. in Crores


2016As at 31 March,

2015(a) Investment in equity shares (Non trade and fully paid-up unless

otherwise specified)Unquoted (at cost unless otherwise specified):500 Ordinary shares of Rs. 1,000 each fully paid up in Seekar Fashions Private Limited ........................................................................................ 0.05 0.05Less: Provision for decline, other than temporary, in the value ............. 0.05 0.05

– –Nil (March 2015 : 1 Nos) Ordinary Share of Rs. 10 each fully paid up in Mahindra Holdings Limited ............................................................. – *

(b) Investment in equity shares (Trade and fully paid-up unless otherwise specified)Unquoted (at cost unless otherwise specified):In subsidiary companies: 900 Equity shares of USD 550 each in Mahindra Middle East Electrical Steel Service Centre (FZC), Sharjah ** ................................................. 2.25 2.25 50,000 Equity shares of Rs. 10 each in Mahindra Electrical Steel Private Limited ........................................................................................................ 0.05 0.05 10,089,257 Equity shares of Rs. 10 each in Mahindra Steel Service Centre Limited ** ................................................................................ 42.45 42.45 3,49,35,000 (2015: 3,49,35,000) Equity shares of Rs. 10 each in Mahindra Auto Steel Private Limited *** .............................................. 34.93 34.93

79.68 79.68(c) Investment in Debentures (trade and fully paid-up unless otherwise

specified)Unquoted (at cost unless otherwise specified):In subsidiary company:91,000 nos (March 2015: 107,500 nos) 0.25% Optionally Convertible Unsecured Debentures of Rs. 1,000 each in Mahindra Electrical Steel Private Limited *** ...................................................................................... 9.10 10.75

88.78 90.43

* Amount less than Rs. 1,000. ** Which is also a Joint venture.*** During the year the issuer has exercised call option to redeem 16,500 debentures.

Note 12 Long term loans and advances:Rs. in Crores


2016As at 31 March,

2015 Unsecured, considered good(a) Security deposits ................................................................................... 0.14 0.15(b) Loans and advances to related party (Refer note 1 below) ..................... – 0.17(c) Other Loans and advances (i) Advance income tax (net of provisions) ................................................. 2.44 2.50 (ii) Surplus of plan assets over obligation – gratuity (refer note 26) ........ – 0.18 (iii) Other deposits ................................................................................ 0.23 –

2.81 3.00

Note 1: Includes Inter corporate deposits to related party:Rs. in Crores


2016As at 31 March,

2015Mahindra Electrical Steel Private Limited ........................................... – 0.17

Book 1.indb 48 11/25/2016 2:45:46 PM



49

Note 13 Current investments:Rs. in Crores


2016As at 31 March,

2015Unquoted investments in Mutual funds (At lower of cost and fair value):

(a) Nil (2015: 72,758.685) units of Rs. 1,000 each in Taurus Liquid Fund – Existing Plan-Super Institutional Growth .............................. – 11.00

(b) 1,938,191.086 (2015 : Nil) units of Rs. 10 each JM High Liquidity – Growth ..................................................................................................... 8.00 –

(c) 32,268.582 (2015 : Nil) units of Rs. 1,000 each Kotak Floater – ST – Reg – Growth .................................................................................................. 8.00 –

(d) 43,568.341 (2015 : Nil) units of Rs. 1,000 each IDFC Cash Fund – Reg – Growth ..................................................................................................... 8.00 –

(e) 61,845.469 (2015 : Nil) units of Rs. 100 each Birla Sun Life Cash Plus – Reg – Growth ........................................................................................... 1.50 –

(f) 3,867,374.770 (2015 : Nil) units of Rs. 10 each HDFC Floating Rate Income Fund – STF – Growth .................................................................. 10.07 –

35.57 11.00

Note 14 Inventories:Rs. in Crores

ParticularsAs at

31 March, 2016As at

31 March, 2015(at lower of cost and net realisable value)

(a) Raw materials [refer note 21(a)] ...................................................... 102.89 94.24Goods in transit .............................................................................. 51.67 31.08

154.56 125.32

(b) Work-in-Progress [refer note 21(c)] ................................................. 2.12 12.28(c) Finished goods [refer note 21(c)] .................................................... 15.20 16.22(d) Stock in trade [refer note 21(c)] ...................................................... 10.51 6.30(e) Stores and spares ............................................................................ 0.81 0.63

183.20 160.75

Note 15 Trade receivables:Rs. in Crores


2016As at 31 March,

2015(a) Trade receivables outstanding for a period exceeding six months

from the date they are due for paymentUnsecured, considered good .......................................................... 0.06 0.04Doubtful ........................................................................................ 1.63 1.63

1.69 1.67Less: provision for doubtful trade receivables ................................. (1.63) (1.63)

0.06 0.04

(b) Other Trade receivablesUnsecured, considered good .......................................................... 172.56 205.19

172.62 205.23

Book 1.indb 49 11/25/2016 2:45:46 PM



50

Note 16 Cash and cash equivalents:

Rs. in Crores


2016As at 31 March,

2015(a) Cash on hand ................................................................................. * *

(b) Balances with banks

(i) In current account ...................................................................... 4.75 6.30

(ii) In deposit account ..................................................................... 53.81 27.00

58.56 33.30

* Represents Rs. 40,122 (2015: Rs. 20,214).

Note 17 Short term loans and advances:

Rs. in Crores


2016As at 31 March,

2015Unsecured, considered good

(a) Deposits to related party ................................................................. – 0.02

(b) Prepaid expenses ............................................................................ 0.03 0.02

(c) Deferred CENVAT credit ................................................................. 0.91 0.03

(d) Balances with government authorities:

(i) CENVAT credit receivable .................................................... 0.33 0.57

(ii) Value added tax credit receivable ......................................... 2.49 3.11

(iii) Service tax credit receivable ................................................. 2.94 2.78

5.76 6.46

(e) Other loans and advances:

(i) Advances to suppliers ........................................................... 0.13 0.58

(ii) Refund receivable from custom authorities ........................... 1.30 1.48

(iii) Others .................................................................................. 0.16 0.12

1.59 2.18

8.29 8.71

Note 18 Other current assets:

Rs. in Crores

ParticularsAs at

31 March, 2016As at

31 March, 2015

(a) Interest accrued on Fixed Deposits .................................................. 1.46 0.52

(b) Interest accrued on investment ........................................................ 0.02 0.03

(c) Export benefits licences ................................................................... 0.01 –

1.49 0.55

Book 1.indb 50 11/25/2016 2:45:46 PM



51

Note 19 Revenue from operations:Rs. in Crores

Particulars For the year ended 31 March, 2016

For the year ended 31 March, 2015

Revenue from –(a) Sale of products (Refer Note (i) below) .............................................. 1,068.03 1,243.51(b) Sale of services (Refer Note (ii) below) .............................................. 5.57 5.89(c) Other operating revenues (Refer Note (iii) below) ............................. 27.99 37.02

1,101.59 1,286.42Less: Excise duty ............................................................................... 91.14 92.90

1,010.45 1,193.52

Rs. in CroresNote Particulars For the year ended


31 March, 2015(i) Sale of products comprises:

Manufactured goods- Steel products ................................................................................ 977.45 1,160.72Traded goods

- Steel products ................................................................................ 90.58 82.79

Total - Sale of products ..................................................................... 1,068.03 1,243.51

(ii) Sale of services comprises:- Job work processing ...................................................................... 0.52 0.52- Installation/repairs ......................................................................... 0.13 0.35- Management fees .......................................................................... 4.92 5.02

Total - Sale of services ...................................................................... 5.57 5.89

(iii) Other operating revenues comprise:- Scrap sales ..................................................................................... 17.89 25.57- Commission income ...................................................................... 6.13 6.93- Insurance claim ............................................................................. 0.17 0.22- Cash discount ................................................................................ 3.67 4.00- Other Operating income ............................................................... 0.13 0.30

Total – Other operating revenues ...................................................... 27.99 37.02

1,101.59 1,286.42

Note 20 Other income:

Rs. in CroresParticulars For the year ended


31 March, 2015(a) Interest income:

Interest on inter-corporate deposits .................................................... * 0.02

Interest on debentures ....................................................................... 0.02 0.03

Interest of Fixed Deposits ................................................................... 3.75 3.38

On others .......................................................................................... 0.01 0.05

(b) Dividend income:(i) from long-term investments in subsidiaries ................................... 2.90 4.15

(ii) from current investments ............................................................. 1.84 2.61

Book 1.indb 51 11/25/2016 2:45:46 PM



52



31 March, 2015(c) Other:

- Liabilities no longer required written back ...................................... 0.04 –

- Gain on sale of current investments, net ......................................... 0.02 0.75

- Gain on sale of fixed assets, net ...................................................... ** 9.18

8.58 20.17

* Represent Rs. 14,130.** Represent Rs. 38,513 gain on sale of Fixed assets.

Note 21(a) Cost of materials consumed:Rs. in Crores



Opening Stock .................................................................................. 125.32 105.81Add: Purchases [includes processing charges Rs. 12.45 crores

(2015 Rs. 16.97 crores) ........................................................... 812.97 1,009.27

938.29 1,115.08Less: Closing Stock ........................................................................... 154.56 125.32

783.73 989.76

Rs. in CroresFor the year ended


31 March, 2015Details of Raw materials consumedSteel ................................................................................................. 783.73 989.76

Rs. in Crores



Details of closing stock of Raw materialsSteel ................................................................................................. 154.56 125.32

Note 21(b) Purchase of stock in trade:Rs. in Crores



Traded goods : Steel products .......................................................... 83.21 76.09

Note 21(c) Changes in inventories of finished goods, work-in-progress and stock in trade:



31 March, 2015

Inventories at the end of the year: Finished goods ................................................................................. 15.20 16.22Work-in-Progress ............................................................................. 2.12 12.28Stock in trade ................................................................................... 10.51 6.30

27.83 34.80

Book 1.indb 52 11/25/2016 2:45:47 PM



53



31 March, 2015

Inventories at the beginning of the year: Finished goods ................................................................................ 16.22 11.41Work-in-Progress ............................................................................. 12.28 6.59Stock in trade .................................................................................. 6.30 3.40

34.80 21.40

(Increase)/Decrease in Stock ............................................................ 6.97 (13.40)

Details of closing stock of Finished goods, work-in-progress and stock in trade:Rs. in Crores



Finished goodsSteel products .................................................................................. 15.20 16.22Work-in-ProgressSteel products .................................................................................. 2.12 12.28Stock-in-tradeSteel products .................................................................................. 10.51 6.30

27.83 34.80

Note 22 Employee benefits expense:Rs. in Crores



(a) Salaries, wages, bonus, etc .............................................................. 12.08 10.47(b) Stock Appreciation Rights expense (refer note 32) ............................ 1.26 0.81(c) Contribution to Provident and other funds (refer note 26) ................ 0.51 0.46(d) Gratuity expense (refer note 26) ....................................................... 0.40 0.32(e) Post retirement medical benefit expense (refer note 26) ................... 0.21 0.02(f) Staff welfare ...................................................................................... 0.99 0.82

15.45 12.90

Note 23 Finance costs:Rs. in Crores



(a) Usance Interest ................................................................................. 0.82 1.07(b) Interest on income tax ...................................................................... 0.13 0.26(c) Other finance cost ............................................................................ 0.41 0.39

1.36 1.72

Note 24 Other expenses:



31 March, 2015(a) Stores consumed .............................................................................. 0.41 0.29(b) Power and fuel ................................................................................. 0.90 0.88(c) Rent including lease rentals .............................................................. 2.58 2.29

Book 1.indb 53 11/25/2016 2:45:47 PM



54



31 March, 2015(d) Rates and taxes ................................................................................. 0.33 0.32(e) Excise duty (refer note 33) ................................................................ (0.18) 0.67(f) Insurance ......................................................................................... 0.38 0.77(g) Repairs and maintenance

- Buildings ...................................................................................... 0.04 0.03- Machinery .................................................................................... 0.22 0.17- Others .......................................................................................... 0.99 1.01

(h) Freight outward ................................................................................ 10.40 11.90(i) Auditors’ remuneration (refer note below)......................................... 0.25 0.18(j) Directors’ fees .................................................................................. 0.10 0.07(k) Commission to Non whole time Directors ........................................ 0.39 0.26(l) Loss on foreign exchange transactions and translations ..................... 1.92 4.81(m) Expenditure on CSR activities ........................................................... 1.92 1.87(n) Miscellaneous expenses ................................................................... 7.76 5.76

28.41 31.28

Note:Rs. in Crores



31 March, 2015Payment to auditors:To Statutory auditors-

(a) For audit ........................................................................................... 0.21 0.18(b) For other services.............................................................................. 0.04 –(c) Reimbursement of expenses ............................................................. # #

0.25 0.18 # Represents out of pocket expenses Rs. 34,236 (F 2015 : Rs. 36,469).

Note 25 Additional information to the financial statements:

25.1 Contingent liabilities and commitments (to the extent not provided for): Rs. in Crores

Particulars As at 31 March, 2016

As at 31 March, 2015

(i) Claims against the Company not acknowledged as debts: Taxation demand for various assessment years, which is being contested by the Company ............................................................... 1.63 0.55Demand for Maharashtra Value Added Tax, (MVAT), Gujarat Value Added Tax (GST), Central Sales Tax (CST) (Maharashtra and Gujarat) for the financial year 2010-2011, MVAT and GST, 2011-12 against which appeals have been filed with the appellate authority......................................................... ............................................. 3.91 3.54

(ii) Commitments Estimated amount of contracts remaining to be executed on capital account and not provided for Other commitments (Refer Note below) .............................................................................................. 1.39 –Total ................................................................................................. 6.93 4.09

Note : The Company has given comfort letter to its wholly owned subsidiary Mahindra Electrical Steel Private Limited (MESPL)to provide such financial support as may be required by MESPL from time to time to meet its financial obligations atleast till 31st March 2017.

25.2 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006:

The identification of vendors as a “Supplier” under the Micro, Small and Medium Enterprises Development Act, 2006 (The Act) has been done on the basis of the information to the extent provided by the vendors to the Company. This has been relied upon by the auditors.

Book 1.indb 54 11/25/2016 2:45:47 PM



55

25.3 Pursuant to the enactment of the Companies Act 2013 (the ‘Act’), the Company has, effective 1st April 2014, reviewed and revised the estimated useful life of its fixed assets, in accordance with the provisions of Schedule II to the Act. The carrying amount of the assets as on that date have been depreciated over the remaining useful life of the assets as per Schedule II of the Companies Act, 2013. Consequently, depreciation for the year 2104-15 is lower by Rs. 0.69 Crore. Further, an amount of Rs. 0.10 Crore (net of deferred tax of Rs. 0.05 Crore) has been recognized in the Surplus in the statement of profit and loss for the year 2014-15, where the remaining useful life of such assets is Nil as at 1st April, 2014 in line with the provisions of Schedule II to the Companies Act, 2013.

25.4 Derivative Instruments:

The Company has entered into Forward Exchange Contracts (being a derivative instrument), which are not intended for trading or speculative purposes, but for hedge purposes.

(i) The following are the outstanding Forward Exchange Contracts entered into by the Company:

Particulars Year CurrencyAmt. in FC in Crores Buy/Sell Cross currency

Payable on account of Import of Fixed Assets

31 March 2016 EURO 0.01 Buy Rupees31 March 2015 EURO – Buy Rupees

Payable on account of Import of Raw Material

31 March 2016 USD 0.53 Buy Rupees31 March 2015 USD 0.42 Buy Rupees

(ii) The year end foreign currency exposures that have not been hedged by a derivatives instrument or otherwise are given below.

As at 31 March, 2016 As at 31 March, 2015

Particulars CurrencyAmt. in FC

in Crores Rs. in Crores

Amt. in FC in Crores

Rs. in Crores

Payable on account of Import of Raw Material ...........USD 0.74 49.58 0.60 37.84

EURO – – # 0.05

Receivable on account of commission and services rendered ....................................................................

GBP – – ## *USD 0.01 0.71 0.01 0.44

# Represents amount EURO 7831.68.## Represents amount GBP 361.72.* Represents amount Rs. 33,141.

25.5 Value of imports calculated on CIF basis:Rs. in Crores



Raw materials .................................................................................. 317.16 272.44Capital asset .................................................................................... 7.39 –

25.6 Expenditure in foreign currency:Rs. in Crores



Repairs and maintenance-Others ..................................................... 0.02 –Miscellaneous expenses .................................................................. 0.27 0.16Interest ............................................................................................ 0.82 1.07Others* ............................................................................................ – *

* Represents amount Rs. 5,583.

Book 1.indb 55 11/25/2016 2:45:47 PM



56

25.7 Details of consumption of imported and indigenous raw material: Particulars For the year ended


31 March, 2015Rs. in Crores % Rs. in Crores %

Raw MaterialImport ........................................................................................ 288.01 37 251.05 25Indigenous .................................................................................. 495.72 63 738.71 75 783.73 100 989.76 100

25.8 Earnings in foreign exchange:Rs. in Crores



Export of goods on FOB basis .......................................................... 4.83 –Commission .................................................................................... 6.13 6.93Dividend ......................................................................................... 1.89 3.60Services rendered ............................................................................ 0.93 0.88

Note 26 Employee benefit plans:Following are the relevant disclosures in pursuance of Accounting Standard 15 on “Employee Benefits”.

(i) The Company has recognized, in the Statement of Profit and Loss for the year, an amount of Rs. 0.51 crore (2015: Rs. 0.46 crore) as expenses under defined contribution plans.

Rs. in CroresBenefit (Contribution to) 2016 2015Provident Fund ........................................................................................... 0.28 0.28Pension Fund .............................................................................................. 0.13 0.10Superannuation Fund ................................................................................. 0.10 0.08Total ........................................................................................................... 0.51 0.46

(ii) The Company operates defined benefit plans as follows: a. Funded – Post Retirement Gratuity b. Unfunded – Post Retirement Medical Benefits a. Details of funded and unfunded defined benefit obligations in respect of gratuity and postretirement medical benefits are as

follows:Rs. in Crores



Particulars

Gratuity

Post-retirement medical benefits Gratuity

Post-retirement medical benefits

Components of employer expenseCurrent service cost ................................................................ 0.17 * 0.15 *Interest cost ............................................................................ 0.17 0.01 0.15 0.01Expected return on plan assets ................................................ (0.16) – (0.13) –Actuarial losses/(gains) ............................................................ 0.22 0.20 0.15 0.01Total expense recognised in the Statement of Profit and Loss ........ 0.40 0.21 0.32 0.02Actual contribution and benefit payments for yearActual benefit payments ......................................................... 0.18 (0.02) 0.05 (*)Net asset/(liability) recognised in the Balance SheetPresent value of defined benefit obligation ............................. 2.49 0.28 2.11 0.13Fair value of plan assets .......................................................... (2.09) – (2.29) –Effect of the limit in Para 59(b) ................................................ – – * –Net asset/(liability) recognised in the Balance Sheet 0.40 (0.28) (0.18) (0.13)

Book 1.indb 56 11/25/2016 2:45:47 PM



57

Rs. in CroresFor the year ended


31 March, 2015Particulars

Gratuity

Post-retirement medical benefits Gratuity

Post-retirement medical benefits

Change in defined benefit obligations (DBO) during the yearPresent value of DBO at beginning of the year....................... 2.11 0.13 1.70 0.11Current service cost ............................................................... 0.17 * 0.15 *Interest cost ........................................................................... 0.17 0.01 0.15 0.01Actuarial (gains)/losses ........................................................... 0.24 0.20 0.20 0.01Liabilities settle on divestiture ................................................ (0.02) (0.04) (0.04) *Benefits paid ......................................................................... (0.18) (0.02) (0.05) *Present value of DBO at the end of the year ......................... 2.49 0.28 2.11 0.13Change in fair value of assets during the yearPlan assets at beginning of the year ........................................ 2.29 – 1.81 –Expected return on plan assets ................................................ 0.16 – 0.13 –Actuarial gain/(loss) ................................................................ 0.02 – 0.05 –Benefits paid ........................................................................... (0.18) (0.02) (0.05) (*)Contributions by Employer .................................................... – 0.02 0.35 *Asset Acquired on Acquisition/(Distributed on Divestiture) ..... (0.20) – – –Plan assets at the end of the year ............................................ 2.09 – 2.29 –Expected Employers Contribution next year .......................... 0.05 0.02 0.05 *Actuarial assumptionsDiscount rate .......................................................................... 8.00% 8.00% 8.05% 8.05%Expected return on plan assets ................................................ 7.5% – 7.5% –Salary escalation ..................................................................... 10% – 10% –Attrition .................................................................................. 8% 8% 8% 8%Medical cost inflation ............................................................. – 7% – 7%Mortality tables ....................................................................... Indian

assured lives mortality

(2006-08) Ult table

Indian assured lives mortality

(2006-08) Ult table

Indian assured lives

mortality (2006-08) Ult table

Indian assured lives mortality

(2006-08) Ult table

Rs. in CroresEffect of 1% point change in the assumed medical inflation rate

31 March, 2016 31 March, 2015Increase by

1%Decrease by

1%Increase by

1%Decrease by

1%Effect on the aggregate service and interest cost of Post Employment Medical Benefits ................................................. * (*) * (*)Effect on the accumulated Post Employment Medical Benefits obligations ............................................................................... 0.03 (0.03) 0.01 (0.01)

(iii) Experience adjustment for gratuity

Rs. in Crores2016 2015 2014 2013 2012

Defined Benefit obligation .......................................... 2.49 2.11 1.70 1.52 1.30Fair value of Plan Assets .............................................. 2.09 2.29 1.81 1.70 1.59Effect of the limit in Para 59(b) .................................... 0.01 0.02(Deficit)/surplus .......................................................... (0.40) 0.18 0.11 0.17 0.27Experience Adjustment on plan assets ........................ 0.02 0.05 0.02 * 0.06Experience Adjustment on plan liabilities ................... 0.24 0.04 0.07 0.08 0.38

Due to absence of data provided by LIC, break-up of Plan assets (assets allocation) in insurer managed funds have not been furnished.

Book 1.indb 57 11/25/2016 2:45:47 PM



58

(iv) Experience Adjustments of Post-employment medical benefits

Rs. in Crores31.03.2016 31.03.2015 31.03.2014 31.03.2013 31.03.2012

Defined Benefit obligation ................................. 0.28 0.13 0.11 0.23 0.27Surplus/(Deficit) ................................................. (0.28) (0.13) (0.11) (0.23) (0.27)Experience adjustments on plan liabilities ......... 0.20 * (0.13) (0.07) *

(v) Basis used to determine discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at balance sheet date for the estimated term of the obligation.

(vi) Basis used to determine the expected rate of return:

Based on the average long term rate of return expected on investment of the fund, during the estimated term of obligation.

(vii) The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors.

Note: * Represents amount less than Rs. 1,00,000 (2015:Rs. 50,000)

Note 27 Segment Reporting:

The company has a single segment namely steel processing for the purpose of accounting standard 17 on segment reporting.

Note 28 Related party transactions:

Related party disclosures as required by AS-18 “Related Party Disclosures” are given below :

(A) List of Related Parties:

Ultimate Holding CompanyM & M Mahindra & Mahindra Limited (w.e.f. 18th January, 2016)

Holding CompanyM & M Mahindra & Mahindra Limited (Up to 17th January, 2016)MVML Mahindra Vehicle Manufacturers Limited (w.e.f. 18th January, 2016)

Subsidiary Companies MESPL Mahindra Electrical Steel Private Limited

Subsidiary Companies and Joint VenturesMMESS Mahindra MiddleEast Electrical Steel Service Centre (FZC)MSSCL Mahindra Steel Service Centre LimitedMASPL Mahindra Auto Steel Private Limited (which became a Joint Venture in the Previous Year)

Key Managerial PersonnelMr. Harsh Kumar, Managing Director (Up to 30th September, 2015)Mr. Sumit Issar, Managing Director (w.e.f. 1st October, 2015)Mr. Zhooben Bhiwandiwala, Executive DirectorOther parties with whom transactions have taken place during the yearFellow Subsidiaries:

MUSCO Mahindra Ugine Steel Company Limited (Up to 9th December, 2014)MLL Mahindra Logistics LimitedMHRIL Mahindra Holidays & Resorts India LimitedMRL Mahindra Retail Private LimitedMVML Mahindra Vehicle Manufacturers Limited (Up to 17th January, 2016)MBPO Mahindra Integrated Business Solutions Private Limited MSONAL Mahindra Sona LimitedNBS NBS International LimitedMSSPL Mahindra Sanyo Special Steel Private LimitedMFCWL Mahindra First Choice Wheels LimitedMECP Mahindra Engineering & Chemical Products Limited

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59

(B) Disclosure of transactions with other related parties during the year ended 31st March, 2016 and the status of outstanding balances as on 31st March, 2016:

Rs. in Crores(Receipt/income)/Expenditure/payment

(a) Particulars Ultimate Holding Company

Holding Company Subsidiary Company/Subsidiary

Companies and Joint Ventures

Fellow Subsidiaries

w.e.f. 18th

January, 2016

2015 Up to 17th January,

2016

w.e.f. 18th January,

2016

2015 2016 2015 2016 2015

Purchase of finished goods ............................ – – – – – 0.15 * – –Purchase of fixed assets ... – – 0.07 – 0.11 – – 0.03 –Sale of fixed assets ......... – – 0.03 – – – 22.35 – –Processing charges paid . – – – – – 12.49 16.97 – –Sale of finished goods ** .. 35.06 – 134.62 22.03 192.62 32.68 38.60 83.67 312.60Management Fees **...... – – – – – 4.92 5.02 – –Deputation of personnel to related parties ............ 0.05 – 0.14 – – 0.50 0.51 – –Deputation of personnel from related parties ........ 0.05 – 0.12 – 0.09 0.08 0.08 – –Other income ................ – – – – – 0.06 0.06 – –Other expenses .............. 0.68 – 1.84 – 2.26 0.99 0.76 0.06 0.24 Reimbursement received from parties ................... 0.01 – 0.05 – 0.17 0.19 0.27 – * Reimbursement made to parties ........................... 0.64 – 0.73 – 1.15 0.02 0.21 0.04 0.03 Interest received ............ – – – – – 0.02 0.04 – –Dividend received ......... – – – – – 2.90 4.15 – –Inter corporate deposits placed ........................... – – – – – – 1.69 – –Inter corporate deposits refunded by parties ........ – – – – – – 1.57 – –Other Deposits placed ... – – – – – – 0.03 – 0.02 Investment in Equity Shares ............................ – – – – – – 34.92 – –Redemption of Debentures .................... – – – – – 1.65 – – –Refund of Deposit .......... – – – – – 0.02 – – –Dividend on equity shares for the previous year paid during the current year ................... – – 16.60 – 16.60 – – – –

* Represents amount less than Rs. 1 lakh. ** excluding taxes.

2016 Rs. in Crores

2015 Rs. in Crores

(b) Transactions with Key Management Personnel:Managerial RemunerationMr. Harsh Kumar, Managing Director @ .......................................................... 1.05 2.22 Mr. Sumit Issar, Managing Director @ .............................................................. 0.25 – Mr. Zhooben Bhiwandiwala, Executive Director .............................................. 0.48 0.22

(c) Outstanding receivables as on 31st March:From Ultimate Holding Company .................................................................... 2.67 – From Holding Company .................................................................................. 3.01 1.43

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60

2016 Rs. in Crores

2015 Rs. in Crores

From Subsidiary Company/Subsidiary Companies and Joint Ventures (including Inter-corporate Deposits & Interest thereon) .......................................................... 11.78 29.35 From Fellow subsidiaries ...................................................................................... 0.01 2.74

(d) Outstanding payables as on 31st March:To Fellow Subsidiaries .......................................................................................... 0.11 0.11 To Key Managerial Personnel ................................................................................ 0.70 0.62 @ Excludes provision for gratuity, compensated absences and post retirement medical benefits, which is determined

on the basis of actuarial valuation done on overall basis for the Company.

(e) Disclosure of transactions between the Company and fellow subsidiaries and the status of outstanding balance as on 31st March, 2016:

(Rs. in Crores) Subsidiary Company/Subsidiary

Companies and Joint Ventures Fellow Subsidiaries MMESS MSSCL MESPL MASPL TOTAL MUSCO MLL MHRIL MRL MVML MBPO MSONAL NBS MSSPL MFCWL MECP TOTAL

Purchase of finished goods .... – – – 0.15 0.15 – – – – – – – – – – – –

(–) (*) (–) (–) (*) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Purchase of fixed assets .................. – – – – – – – – – – – – – – 0.03 – 0.03

(–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Sale of fixed assets .................. – – – – – – – – – – – – – – – – –

(–) (–) (–) (22.35) (22.35) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Processing charges paid ....... – 12.45 – 0.04 12.49 – – – – – – – – – – – –

(–) (16.97) (–) (–) (16.97) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Sale of finished goods ** ............. – 26.66 – 6.02 32.68 – – – – 83.67 – – – – – – 83.67

(–) (38.60) (–) (–) (38.60) (225.63) (–) (–) (–) (86.97) (–) (–) (–) (–) (–) (–) (312.60)Management Fees ** ................ 0.92 1.61 – 2.39 4.92 – – – – – – – – – – – –

(0.88) (1.64) (–) (2.50) (5.02) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Deputation of personnel to related parties ..... – 0.43 – 0.07 0.50 – – – – – – – – – – – –

(–) (0.41) (–) (0.10) (0.51) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Deputation of personnel from related parties ..... – 0.06 – 0.02 0.08 – – – – – – – – – – – –

(–) (0.08) (–) (–) (0.08) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Other income ..... – 0.06 – – 0.06 – – – – – – – – – – – –

(–) (0.06) (–) (–) (0.06) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Other expenses ... – 0.93 – 0.06 0.99 – 0.02 0.01 – – 0.01 0.01 0.01 – – – 0.06

(–) (0.76) (–) (–) (0.76) (0.06) (–) (0.15) (–) (–) (0.01) (*) (0.02) (–) (–) (–) (0.24)Reimbursement received from parties ................ 0.05 0.12 – 0.02 0.19 – – – * – – – – – – – –

(0.02) (0.24) (*) (0.01) (0.27) (–) (–) (–) (*) (–) (–) (–) (–) (–) (–) (–) (*) Reimbursement made to parties ... * 0.02 – – 0.02 – 0.03 – – – – – – – – 0.01 0.04

(–) (0.21) (–) (–) (0.21) (*) (0.02) (–) (–) (–) (–) (–) (–) (0.01) (–) (–) (0.03)Interest received ... – – 0.02 – 0.02 – – – – – – – – – – – –

(–) (–) (0.03) (0.01) (0.04) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Dividend Received ............ 1.89 1.01 – – 2.90 – – – – – – – – – – – –

(3.60) (0.55) (–) (–) (4.15) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Inter corporate deposits placed ... – – – – – – – – – – – – – – – – –

(–) (–) (0.12) (1.57) (1.69) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Inter corporate deposits refunded by parties ............ – – – – – – – – – – – – – – – – –

(–) (–) (–) (1.57) (1.57) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Other Deposits placed ................ – – – – – – – – – – – – – – – – –

(–) (0.03) (–) (–) (0.03) (0.02) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (0.02)Investment in Equity Shares ...... – – – – – – – – – – – – – – – – –

(–) (–) (–) (34.92) (34.92) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Redemption of Debentures ......... – – 1.65 – 1.65 – – – – – – – – – – – –

(–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)

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61

(Rs. in Crores) Subsidiary Company/Subsidiary

Companies and Joint Ventures Fellow Subsidiaries MMESS MSSCL MESPL MASPL TOTAL MUSCO MLL MHRIL MRL MVML MBPO MSONAL NBS MSSPL MFCWL MECP TOTAL

Refund of Deposit ............... – 0.02 – – 0.02 – – – – – – – – – – – –

(–) (0.01) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–) (–)Outstanding receivables (including Inter corporate deposit & interest thereon) ............. 0.50 2.10 9.12 0.06 11.78 – – – – – – – – – – 0.01 0.01

(0.22) (15.66) (10.94) (2.53) (29.35) (–) (–) (–) (–) (2.74) (–) (–) (–) (–) (–) (–) (2.74)Outstanding payables ............. – – – – – – 0.09 – 0.02 – * – * – – – 0.11

(–) (–) (–) (–) (–) (–) (0.07) (0.02) (0.02) (–) (*) (–) (–) (–) (–) (–) (0.11)

* Represents amount less than Rs. 1 lakh.** excluding taxes.

Note : Previous year’s figures are in brackets.

No amount has been written off/provided for or written back in respect of amounts receivable from or payable to the related parties.

Note 29 Earnings per share: Rs. in Crores

Particulars

For the year ended 31 March,

2016

For the year ended 31 March,

2015Basic/DilutedProfit after tax (Rs. in crores) (A) ................................................................................. 62.38 72.17 Weighted average number of shares – Basic (B) .......................................................... 16,600,007 16,600,007Earnings per share – Basic/Diluted (Rupees) (A/B) ...................................................... 37.58 43.47 Nominal value per share (Rs.) .................................................................................... 10 10

Note 30 Deferred tax (liability)/asset (net): Rs. in Crores

Particulars

As at 31 March,

2016

As at 31 March,

2015Tax effect of items constituting deferred tax liabilityOn difference between book balance and tax balance of fixed assets ........................

(4.94) (5.33)

(4.94) (5.33)Tax effect of items constituting deferred tax assetsOn provision for doubtful debts ................................................................................. 0.56 0.55 Stock Appreciation Rights .......................................................................................... 0.38 0.24 On provision for employee benefits .......................................................................... 1.20 0.96

2.14 1.75

Deferred Tax Liability (net) ........................................................................................ (2.80) (3.58)

Note 31 Interest in joint ventures:

(i) In Jointly Controlled Entities:Name of the Entity Country of

Incorporation% of

Ownership Interest

A. Mahindra MiddleEast Electrical Steel Service Centre FZC ........................ Sharjah, UAE 90%B. Mahindra Steel Service Centre Limited .................................................... India 61%C. Mahindra Auto Steel Private Limited ........................................................ India 51%

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62

ii) Interests in the assets, liabilities, income, expenses and contingent liabilities with respect to Jointly Controlled Entities:A. Mahindra MiddleEast Electrical Steel Service Centre FZC

Rs. in CroresAs at

31 March, 2016

As at 31 March,

2015I. ASSETS

1. Non current assets a) Property, plant and equipment .................................................................................. 19.52 21.00 2. Current Assets a) Inventories ................................................................................................................ 8.45 3.27 b) Trade and other receivables ...................................................................................... 7.72 9.53 c) Cash and cash equivalents ........................................................................................ 6.80 0.37 d) Asset held for sale ..................................................................................................... 0.01 0.10

II. LIABILITIES1. Non Current Liabilities .................................................................................................. 0.21 0.22 2. Current Liabilities.......................................................................................................... 13.91 4.01

III. INCOME1. Sale of goods and services ............................................................................................ 33.77 36.19 2. Other income ............................................................................................................... 0.13 0.11

IV. EXPENDITURE1. Cost of sales .................................................................................................................. 29.76 32.20 2. Administrative and General expenses............................................................................ 1.65 1.68 3. Distribution costs .......................................................................................................... 0.52 0.54 4. Finance cost .................................................................................................................. 0.17 0.37 5. Depreciation ................................................................................................................. 1.48 1.48

V. Contingent liabilities .......................................................................................................... 15.08 8.18

The information furnished above has been derived from the audited accounts of Mahindra MiddleEast Electrical Steel Service Centre FZC for the year ended 31 March, 2016 wherein amounts reported in Indian Rupees for the year ended 31 March, 2016 have been given by translating the figures reported in Dhs., at the rate of Rs. 18.08 = 1 Dhs.

B. Mahindra Steel Service Centre Limited Rs. in Crores

As at 31 March,

2016

As at 31 March,

2015

I. ASSETS1. Non current assets a) Fixed assets ............................................................................................................... 51.71 56.95 b) Long term loans and advances .................................................................................. 1.75 0.96 c) Other non-current assets ........................................................................................... 3.94 3.67 2. Current assets a) Inventories ................................................................................................................ 40.35 30.45 b) Trade receivables ...................................................................................................... 21.34 21.47 c) Cash and cash equivalents ........................................................................................ 2.72 0.44 d) Short term loans and advances.................................................................................. 8.40 12.65 e) Other Current Assets ................................................................................................. 1.36 0.73

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63

Rs. in CroresAs at

31 March, 2016

As at 31 March,

2015

II. LIABILITIES1. Non current liabilities a) Long term borrowings ............................................................................................... 4.28 7.88

b) Deferred tax liabilities (net) ....................................................................................... 6.09 6.48 c) Long term provision .................................................................................................. 0.63 0.44 2. Current liabilities a) Short term borrowings .............................................................................................. 14.46 2.17 b) Trade payables .......................................................................................................... 40.14 43.71 c) Other current liabilities ............................................................................................. 5.45 8.35 d) Short term provision ................................................................................................. 0.25 1.34

III. INCOME1. Revenue from operations (net) ...................................................................................... 118.86 91.92 2. Other income ............................................................................................................... 0.05 0.23

IV. EXPENDITURE1. Cost of sales .................................................................................................................. 91.27 63.31 2. Employee benefits expenses .......................................................................................... 5.38 4.54 3. Finance cost .................................................................................................................. 1.79 2.12 4. Depreciation ................................................................................................................. 5.93 5.93 5. Other expenses ............................................................................................................. 9.58 8.01

V. Contingent liabilities .......................................................................................................... 0.79 0.14

VI. Capital commitments ......................................................................................................... * 0.04 * Represent Rs. 26,230.

C. Mahindra Auto Steel Private LimitedRs. in Crores

As at 31 March,

2016

As at 31 March,

2015I. ASSETS

1. Non current assets a) Fixed assets ............................................................................................................... 48.40 40.10 b) Long term loans and advances .................................................................................. 0.75 0.46 2. Current assets a) Current investment ................................................................................................... 0.24 4.08 b) Cash and cash equivalents ........................................................................................ * 2.62 c) Short term loans and advances.................................................................................. 3.83 3.20 d) Other Current Assets ................................................................................................. 0.82 0.14

II. LIABILITIES1. Non current liabilities a) Long term borrowings ............................................................................................... 21.10 11.24 b) Long term provision .................................................................................................. 0.13 0.07 2. Current liabilities a) Trade payables .......................................................................................................... 4.14 0.01 b) Other current liabilities ............................................................................................. 3.06 4.22 c) Short term provision ................................................................................................. 0.03 0.01 d) Short trem borrowing ................................................................................................ 1.91 –

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64

Rs. in CroresAs at

31 March, 2016

As at 31 March,

2015

III. INCOME1. Revenue from operations (net) ...................................................................................... 31.40 – 2. Other income ............................................................................................................... 0.12 0.64

IV. EXPENDITURE1. Cost of sales .................................................................................................................. 23.28 – 2. Employee benefits expenses .......................................................................................... 0.64 – 3. Finance cost .................................................................................................................. 1.25 0.01 4. Depreciation ................................................................................................................. 1.64 – 5. Other expenses ............................................................................................................. 1.67 0.05

V. Capital commitments ......................................................................................................... – 4.36 * Represent Rs. 4,830.

Note 32. Stock Appreciation Rights:

The Company has granted Stock Appreciation Rights (“SARs”) to eligible employees in accordance with the Stock Appreciation Rights Scheme 2013 (SARS-2013) during the years ended 31st March 2013, 31st March 2014, 31st March, 2015 and 31st March 2016. Under the scheme, eligible employees are entitled to receive appreciation in value of equity shares over its face value on exercise of the SARs. The SARs may be exercised up to a period of three years from the date of vesting.

The compensation cost of SARs granted to employees is accounted by the Company using the intrinsic value method. The fair value of the equity shares is based on valuation obtained from an independent valuer. Difference between market value and face value of the equity shares, being the intrinsic value, has been recognised as compensation cost over the vesting period. The related expenses for SARs amounting to Rs. 1.26 crores (2015: Rs. 0.81 crores) has been recognised as employee cost.

Summary of SARs:SARs outstanding on 1st April 2015 357,277 SARs granted during the year 31,677 SARs exercised during the year 123,747 SARs outstanding on 31st March 2016 265,207 The fair value of SARs granted during the year is Rs. 84.51 per SARs.

Had the Company adopted fair value method as described in the Guidance note on Accounting for Employee Share - based Payments issued by the Institute of Chartered Accountants of India, the employee compensation cost would have been lower by Rs. 0.39 crore, profit after tax higher by Rs. 0.25 crore and the earnings per share would have been higher by Re. 0.15

The fair value has been calculated using the Black Scholes Options Pricing Model and the significant assumptions made in this regard are as follows:

Grant dated Grant dated28th January,

201628th January,

2015Risk free interest rate Annualised continuously

compounded rate on safe asset with same maturity

Expected volatility 15.94% 13.51%Expected dividend yield 7.04% 8.95%

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65

Note 33 Excise duty:

Excise duty disclosed under “Other Expenses” (Note 24) represents the difference between the excise duty on opening stock and closing stock of finished goods.

Note 34 Corporate social responsibilities (CSR):

The CSR obligation for the year as computed by the Company and relied upon by the auditors is Rs. 1.84 cr (FY 2015: Rs. 1.88). CSR amount spent during the year is Rs. 1.92 cr (FY 2015 : Rs. 1.87 cr).

Note 35 Previous year’s figures:

Previous year’s figures have been regrouped/reclassified wherever necessary to correspond with the current year’s classification/disclosure.




Romali Malvankar Company Secretary

Place : MumbaiDate : 27 April, 2016

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66

FORM AOC-I

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures

Part “A”: Subsidiaries

(Information in respect of each subsidiary to be presented with amounts in Rs. cr)

Sr. No. Sr. No. ---> 1 2 3 4Name of the subsidiary -----> Mahindra Steel

Service Centre Limited

Mahindra Auto Steel Private

Limited

Mahindra Electrical Steel Private Limited

Mahindra Middle East Electrical Steel Service Centre[FZC]

Sr. No. Particulars â 1 Reporting period for the

subsidiary concerned, if different from the holding company’s reporting period

31 March 2016

31 March 2016

31 March 2016

31 March 2016

2 Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries

INR INR INR Reporting currency: USD Exchange Rate

INR66.35/1USD3 Share capital 16.54 68.50 0.05 3.654 Reserves & surplus 80.89 6.32 (1.93) 27.915 Total assets 215.71 134.77 7.40 47.246 Total Liabilities 215.71 134.77 7.40 47.247 Investments – 0.47* – –8 Turnover 194.93 61.82 0.75 37.679 Profit before taxation 8.12 6.00 0.53 0.3710 Provision for taxation 2.63 (0.54) 0.11 –11 Profit after taxation 5.49 6.54 0.42 0.3712 Proposed Dividend 1.16 – – –13 % of shareholding 61% 51% 100% 90% Names of subsidiaries which are yet to commence operations1 Mahindra Electrical Steel Private

Limited

Names of subsidiaries which have been liquidated or sold during the year- Nil

* comprises investment of current nature

Part “B”: Associates and Joint Ventures

NIL



Zhooben Bhiwandiwala Executive Vice-Chairman

Sumit Issar Managing Director


Romali M. Malvankar Company SecretaryMumbai, April 27, 2016

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Please check thoroughly. Vakils will not be responsible for errors not noted on this proof. Datta

Mahindra MiddleEast Electrical Steel Service Centre (FZC)

67

Mahindra MiddleEast Electrical Steel Service

Center (FZC)

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Please check thoroughly. Vakils will not be responsible for errors not noted on this proof.Datta


68

Board of directors

Zhooben Bhiwandiwala

Harsh Kumar

K. Chandrasekar

Sumit Issar

Kazuhiro Koshikawa

auditors

KPMG, UAE

Bankers

Bank of Baroda

ICICI Bank Limited

Standard Chartered Bank

registered office

SAIF Zone, P3, 11/12, P.O. Box 8114, Sharjah, U.A.E

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69

Your Directors present their Twelfth Report, together with the Audited Financial Statements of your Company, for the year ended 31st March 2016.

FINANCIAL HIGHLIGHTS

(Amount in Million)

For the year ended March 31

2016 2015

USD INR USD INRTotal Income .............................................................. 5.65 376.59 6.08 403.02Profit before depreciation & interest .......................... 0.33 21.79 0.28 20.53Depreciation .............................................................. 0.25 16.39 0.25 16.43Profit before interest ................................................... 0.08 5.40 0.03 4.09Interest ....................................................................... 0.03 1.70 0.03 3.83Profit for the year ....................................................... 0.05 3.70 0.00 0.26 Balance of profit for earlier years ............................... 4.21 279.03 4.86 322.55Less: Dividend ............................................................ 0.33 21.90 0.66 43.79Balance carried to Balance Sheet ............................... 3.93 260.83 4.21 279.03

Dividend

For the year ended 31st March, 2016, your directors recommend a final dividend of USD 192.50 (INR 12,772) per share on 1,000 shares of the face value of USD 550 (INR 36,493) each, fully paid up, aggregating USD 1,92,500 (INR 1,27,72,380). The said dividend will be paid to those shareholders whose names appear in the Register of Members as on 21st April, 2016, the Record Date fixed for this purpose.

Operations

The total income of your Company for the year decreased to USD 5.65 million (INR 376.59 million) from USD 6.08 million (INR 380.71 million), a decrease of nearly 6%.

Profit for the year was USD 0.05 million (INR 3.70 million) as compared to USD 0.00 million (INR 0.25 million) in the previous year through improved cost efficiencies.

The transformer core line remained under-utilised during the year under review.

Outlook for the current year

The Company’s performance during the current year is expected to remain modest in line with the continuing general economic slowdown in the middleeast region.

Directors’ Responsibility Statement

Your directors state that:

(i) in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards have been followed;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year on 31st March, 2016 and of the profit of the Company for the financial year ended on that date;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors have prepared the annual accounts on a going concern basis;

(v) the Directors have devised proper systems to ensure compliance with the provisions of applicable laws and that such systems were adequate and operating effectively.

directors’ report

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70

Codes of Conduct

Your Company has adopted Codes of Conduct (‘Codes’) for its directors and senior management and employees. These Codes enunciate the underlying principles governing the conduct of the Company’s business and seek to reiterate the fundamental precept that good governance must and would always be an integral part of the Company’s ethos.

The Company has, for the year under review, received declarations under these Codes from members of the Board, and senior management and employees, affirming compliance with the respective Codes.

Auditors

M/s KPMG, UAE, Auditors of your Company, have expressed their willingness to accept re-appointment for the financial year ending on 31st March, 2017.

Members are requested to re-appoint Auditors for the current year and fix their remuneration.

ACKNOWLEDGEMENTS

Your Directors are pleased to take this opportunity to thank the bankers, customers, vendors, all the other stakeholders for their co-operation to the Company during the year under review.


Sumit Issar Director

Dubai, April 21, 2016

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71

independent auditors’ report

The Shareholders Mahindra MiddleEast Electrical Steel Service Centre (FZC)

Report on the financial statements We have audited the accompanying financial statements of Mahindra Middle East Electrical Steel Service Centre (FZC) (“the Company”), which comprise the statement of financial position as at 31st March 2016, statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of 31st March 2016, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Emphasis of a matterWithout qualifying our opinion above, as discussed in note 2(c) to the financial statements, we draw attention to the fact that the amounts presented in United Arab Emirates Dirham and Indian Rupees in the accompanying financial statements are supplementary information solely for the convenience of users. Such supplementary information does not form part of the audited financial statements. We have not audited this supplementary information and accordingly, we do not express an opinion on this supplementary information.

Report on other legal and regulatory requirementsWe further confirm that the financial statements comply, in all material respects, with the Implementing Regulations of Sharjah Airport International Free Zone Authority.

For KPMG Lower Gulf Limited

Muhammad Tariq Place: Sharjah Partner Date: 21st APR 2016 Registration No: 793

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72

Statement of financial position as at 31 March

Unaudited Supplementary information (refer note 2 (c))

Note 2016 2015 2016 2015

USD USD Dhs. Rs. Dhs. Rs.ASSETSProperty, plant and equipment ......................... 4 3,269,681 3,516,844 11,999,725

2,169,43,335 12,906,815 233,342,600

Non-current assets ............ 3,269,681 3,516,844 11,999,725 2,169,43,335 12,906,815 233,342,600

Inventories ...................... 5 1,415,718 547,177 5,195,686 93,932,889 2,008,139 36,305,194 Trade and other receivables ....................... 6 1,259,984 1,562,358 4,624,141 83,599,936 5,733,852 103,662,452 Prepayments .................... 7 34,199 34,017 125,509 2,269,104 124,844 2,257,028 Cash and bank balances ... 8 1,138,124 61,429 4,176,915 75,514,528 225,444 4,075,814 Asset held for sale ............. 9 2,262 16,349 8,300 150,084 60,000 1,084,756

Total current assets .......... 3,850,287 2,221,330 14,130,551 255,466,541 8,152,279 147,385,244

Total assets ..................... 7,119,968 5,738,174 26,130,276 472,409,876 21,059,094 380,727,844

EQUITYShare capital .................... 10 550,000 550,000 2,018,500 36,492,500 2,018,500 36,492,500 Retained earnings ............. 3,931,137 4,205,384 14,427,277 260,830,940 15,433,759 279,027,227 Statutory reserves ............. 275,063 275,063 1,009,481 18,250,430 1,009,481 18,250,430

Total equity ...................... 4,756,200 5,030,447 17,455,258 315,573,870 18,461,740 333,770,157

LIABILITIESEmployee benefits ............ 34,488 36,255 126,571 2,288,279 133,056 2,405,519

Non-current liabilities ...... 34,488 36,255 126,571 2,288,279 133,056 2,405,519

Trade and other payables ... 11 2,329,280 671,472 8,548,447 154,547,727 2,464,298 44,552,168

Total current liabilities ..... 2,329,280 671,472 8,548,447 154,547,727 2,464,298 44,552,168

Total liabilities ................. 2,363,768 707,727 8,675,018 156,836,006 2,597,354 46,957,687

Total equity and liabilities .......................... 7,119,968 5,738,174 26,130,276 472,409,876 21,059,094 380,727,844

The attached notes 1 to 22 are an integral part of these financial statements.

The independent auditors’ report is set out herein.

The Board of Directors has authorised the issue of these financial statements on 21 April 2016.

Sumit Issar

Directors

Kazuhiro Koshikawa

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73

Statement of profit or loss and other comprehensive income for the year ended 31 March

Unaudited Supplementary information (refer note 2 (c))

Note 2016 2015 2016 2015

USD USD Dhs. Rs. Dhs. Rs.

Revenue ....................... 12 5,655,242 6,059,827 20,754,737 375,225,307 22,239,565 402,069,522

Cost of sales ................. 13.1 (5,222,826) (5,632,343) (19,167,767) (346,534,505) (20,670,698) (373,705,958)

Gross profit .................. 432,416 427,484 1,586,970 28,690,802 1,568,867 28,363,564

Other income ............... 14 20,498 14,350 75,227 1,360,042 52,664 952,123

Selling and distribution expenses ....................... (87,260) (90,114) (320,245) (5,789,701) (330,717) (5,979,064)

Administrative and general expenses .......... 13.2 (284,352) (290,011) (1,043,571) (18,866,754) (1,064,340) (19,242,230)

Operating profit ........... 81,302 61,709 298,381 5,394,389 226,474 4,094,393

Finance income ............ 2,231 3,584 8,189 148,027 13,155 237,798

Finance cost ................. 15 (27,780) (61,332) (101,952) (1,843,203) (225,089) (4,069,379)

Net Finance costs ........ (25,549) (57,748) (93,763) (1,695,176) (211,934) (3,831,581)

Profit for the year ........ 55,753 3,961 204,618 3,699,213 14,540 262,812

Other comprehensive income ......................... – – – – – –

Total comprehensive income for the year ..... 55,753 3,961 204,618 3,699,213 14,540 262,812

The attached notes 1 to 22 are an integral part of these financial statements.

The independent auditors’ report is set out on pages 1 and 2.

The Board of Directors has authorised the issue of these financial statements on 21 April 2016.

Sumit Issar

Directors

Kazuhiro Koshikawa

Book 1.indb 73 11/25/2016 2:45:48 PM



74

Statement of cash flows for the year ended 31 MarchUnaudited Supplementary information (refer note 2 (c))

31 March 2016

31 March 2015

31 March 2016 31 March 2015

USD USD Dhs. Rs. Dhs. Rs.Cash flows from operating activities: Profit for the year ....................... 55,753 3,961 204,618 3,699,212 14,540 262,812 Adjustments for:Depreciation ............................. 247,163 247,687 907,090 16,399,265 909,012 16,434,032 Interest expenses ........................ 27,780 28,793 101,952 1,843,203 105,670 1,910,416 Interest income........................... (2,231) (3,584) (8,189) (148,027) (13,155) (237,798)Impairment loss on Asset held for sale ........................................... 14,087 8,174 51,700 934,672 30,000 542,345

342,552 285,031 1,257,171 22,728,325 1,046,067 18,911,807 Changes in:Inventories .................................. (868,541) 322,364 (3,187,547) (57,627,695) 1,183,076 21,388,851 Trade and other receivables ....... 302,402 811,989 1,109,814 20,064,373 2,979,998 53,875,471 Prepayments ............................... (182) (13,881) (665) (12,076) (50,944) (921,004)Trade and other payables ........... 1,646,310 (1,729,722) 6,041,953 109,232,669 (6,348,078) (114,767,055)Employee benefit expenses ........ (1,767) 15,424 (6,485) (117,240) 56,603 1,023,382 Net cash from/(used in) operating activities ...................... 1,420,774 (308,795) 5,214,241 94,268,356 (1,133,278) (20,488,548)Investing activities:Acquisition of property, plant and equipment ................................... – (25,613) – – (94,000) (1,699,423)Interest received ......................... 2,203 3,584 8,086 146,169 13,155 237,798 Net cash from/(used in) investing activities ..................................... 2,203 (22,029) 8,086 146,169 (80,845) (1,461,625)Financing activities:Interest paid ............................... (16,282) (38,455) (59,756) (1,080,311) (141,131) (2,551,489)Dividend paid ............................ (330,000) (660,000) (1,211,100) (21,895,500) (2,422,200) (43,791,000)Net cash used in financing activities ..................................... (346,282) (698,455) (1,270,856) (22,975,811) (2,563,331) (46,342,489)Net increase/(decrease) in cash and cash equivalents .................. 1,076,695 (1,029,279) 3,951,471 71,438,714 (3,777,454) (68,292,662)Cash and cash equivalents:Cash and cash equivalents at the beginning of the year # Refer Note 8 ........................................ 61,429 1,090,708 225,444 4,075,814 4,002,898 72,368,476 Cash and cash equivalents at the end of the year # Refer Note 8 ... 1,138,124 61,429 4,176,915 75,514,528 225,444 4,075,814 # Refer Note 8Reconciliation of cash and cash equivalents with statement of financial positionCash on hand ............................. 5,234 837 19,210 347,276 3,073 55,535 Bank balance in current accounts ..................................... 1,057,594 60,592 3,881,370 70,171,362 222,371 4,020,279 Fixed deposit account with banks (with original maturity of 3 months or less) ........................ 75,296 – 276,335 4,995,890 – –Total .............................................. 1,138,124 61,429 4,176,915 75,514,528 225,444 4,075,814

The attached notes 1 to 22 are an integral part of these financial statements.The independent auditors’ report is set out on pages 1 and 2.The Board of Directors has authorised the issue of these financial statements on 21 April 2016.

Sumit Issar

Directors

Kazuhiro Koshikawa

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75

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Book 1.indb 75 11/25/2016 2:45:49 PM



76

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

1. REPORTING ENTITY

Mahindra MiddleEast Electrical Steel Service Centre (FZC), was incorporated and licensed on 8 August 2004 at Sharjah Airport International Free Zone, Sharjah (FZ) with limited liability in the United Arab Emirates (UAE). Subsequently, the Company has entered into an agreement for subscription of capital by Nippon Steel & Sumitomo Metal Corporation (NSSMC), Japan to reorganise the Company and manage it as a FZC. Consequent upon the induction of NSSMC as a shareholder, the status changed from Free Zone Establishment (FZE) to Free Zone Company (FZC) with limited liability with effect from 28 November 2005. The Company is engaged in processing of steel coils and supply of slit coils and laminations. The shareholding pattern as of 31 March 2016 is as follows:

Shareholders Percentage

Mahindra Intertrade Limited ............................................................................................... 90%

Nippon Steel & Sumitomo Metal Corporation ....................................................................... 10%

The ultimate holding Company is Mahindra & Mahindra Limited.

2. BASIS OF PREPARATION

(a) Statement of compliance The financial statements have been prepared under the historical cost convention and comply

with International Financial Reporting Standards issued by the International Accounting Standards Board and the rules and regulations of the Sharjah Airport International Free Zone Authority (SAIF Zone). The financials statements were authorised for issue by the Board of Directors on 21 April 2016.

(b) Functional and presentation currency These financial statements are presented in United States Dollars (“USD”), which is the Company’s

functional currency.

(c) Convenience translation In addition to presenting the financial statements in USD, supplementary information in United

Arab Emirates Dirham (“Dhs”) and Indian Rupee (“Rs.”) has been prepared for the convenience of users of the financials statements.

All amounts (including previous year information) are translated from USD to Dhs. and Rs. at the closing exchange rate at 31 March 2016 based on average of the telegraphic transfer buying and selling rates quoted by the Mumbai Branch of State Bank of India of Dhs. 3.67 to USD 1 and Rs. 66.35 to USD 1 respectively.

(d) Use of estimates and judgements The preparation of financial statements requires management to make judgments, estimates and

assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed by management on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in every future period affected.

The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(i) Impairment losses on trade receivables The Company reviews its trade receivables to assess impairment at least on an annual basis.

The Company’s credit risk is primarily attributable to its trade receivables. In determining whether impairment losses should be reported in the profit or loss, the Company makes judgments as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows. Accordingly, an allowance for impairment

Book 1.indb 76 11/25/2016 2:45:49 PM



77

is made where there is an identified loss event or condition which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.

(ii) Provision for obsolete and expired inventory The Company reviews its inventory to assess loss on account of obsolescence and

expiry on a regular basis. In determining whether provision for obsolescence should be recorded in the profit or loss, the Company makes judgements as to whether there is any observable data indicating that there is any future saleability of the product and the net realisable value for such product. Accordingly, provision for impairment is made where the net realisable value is less than cost based on best estimates by the management. The provision for obsolescence of inventory is based on the aging and past movement of the inventory.

(iii) Estimated useful lives of property, plant and equipment The Company estimates the useful lives of property, plant and equipment based on the

period over which the assets are expected to be available for use. The estimated useful lives are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the assets. In addition, estimation of the useful lives of property, plant and equipment is based on collective assessment of industry practice, internal technical evaluation and on the historical experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances.

(e) Impairment losses on non-current assets The Company classifies certain non-current assets as assets held for sale and records the carrying

value of each asset at lower of its carrying value or its estimated fair value, less estimated costs. Impairment losses on initial classification as held-for-sale and subsequent losses on remeasurement is recognised in profit or loss.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Property, plant and equipment and depreciation

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset. When part of an item of property, plant and equipment have different useful lives, they are accounted for as separate item (major components) of property, plant and equipment.

Depreciation is calculated over the depreciable amount, which is the cost of an asset, less its residual value. Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives for the current and comparative periods are as follows:

Factory Building ........................................................................................................... 18 years

Plant and Machinery ................................................................................................... 20 years

Vehicles ......................................................................................................................... 5 years

Furniture and Fixtures .................................................................................................. 10 years

Office Equipment .......................................................................................................... 5 years

Computers ..................................................................................................................... 5 years

Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.

Book 1.indb 77 11/25/2016 2:45:49 PM



78

Property, plant and equipment having value less than or equal to USD 136 [(Dhs. 500) (Rs. 9,024) as on 31 March 2016] each, are fully depreciated in the year of acquisition. Depreciation methods, useful lives and residual values are re-assessed at the reporting date.

(b) Inventories

Inventories are measured at the lower of cost and net realizable value, after making due allowance for any obsolete or slow moving items. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Cost is determined as follows:

Raw materials

The cost of raw materials includes insurance, freight and other incidental charges incurred in acquiring the inventories and bringing them to their present location and condition. Valuation of the raw materials is determined on a weighted average cost basis.

Work in progress

The cost of work in progress includes cost of raw material and an appropriate share of production overheads based on normal operating capacity.

Finished goods

The cost of finished goods is arrived at on a weighted average cost basis and includes cost of direct materials and direct labour plus an appropriate share of production overheads based on normal operating capacity.

(c) Cash and cash equivalents

Cash and cash equivalents comprise of cash on hand and balance with banks in current accounts, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

(d) Revenue recognition

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.

Sale of services are recognised when services are rendered.

(e) Finance income and finance costs

Finance income comprises interest income. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expenses on borrowings and preshipment credit. Interest costs is recognised as it accrues in profit or loss, using the effective interest method.

(f) Foreign currency transactions and balances

Transactions in foreign currencies are translated to the functional currency (“USD”) at the exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss.

Book 1.indb 78 11/25/2016 2:45:49 PM



79

(g) Employee benefit

Provision for gratuity is made for amounts payable under the labour law in force in Sharjah Airport International Free Zone, Sharjah (FZ), applicable to the employees’ accumulated periods of service at the reporting date.

(h) Assets held for sale

Non-current assets are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Such assets are generally measured at lower of their carrying amount and fair value less cost to sale. Impairment losses on initial classification as held for sale and subsequent gain / losses on measurement are recognized in profit and loss. Once classified as held for sale intangible assets and property plant and equipment are no longer amortized or depreciated.

(i) Operating lease

Leases in terms of which the substantial risks and rewards of ownership remain with the lessor are classified as operating leases. Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease.

(j) Financial instruments

(i) Non-derivative financial assets

The Company initially recognizes loans and receivables and deposits on the date they are originated. All other financial assets are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in active markets. Such assets are recognized initially at fair value, plus any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured at amortized cost using the effective interest method, less any impairment losses.

Loans and receivables comprise trade and other receivables and cash and cash equivalents.

Cash and cash equivalents comprise cash and bank balances including fixed deposits with an original maturity of three months or less.

(ii) Non-derivative financial liabilities

Financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expired.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Non-derivative financial liabilities of the Company comprise trade and other payables and due to related parties.

Book 1.indb 79 11/25/2016 2:45:49 PM



80

Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.

(k) Impairment

Non-derivative financial assets

A financial asset is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy.

Financial assets measured at amortised cost

The Company considers evidence of impairment for receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are collectively assessed for impairment by grouping together with similar risk characteristics.

In assessing collective impairment, the Company uses relevant historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Losses are recognized in profit or loss.

Non-financial assets

The carrying amount of the Company’s non-financial assets, other than inventories, is reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).

An impairment loss is recognized if the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(l) Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be measured reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Book 1.indb 80 11/25/2016 2:45:49 PM



81

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Book 1.indb 81 11/25/2016 2:45:49 PM



82

Unaudited Supplementary information (refer note 2 (c))31 March 2016 31 March 2015 31 March 2016 31 March 2015

USD USD Dhs. Rs. Dhs. Rs.5. INVENTORIES

Raw materials and consumables ............ 1,059,538 407,797 3,888,506 70,300,346 1,496,615 27,057,331 Work in progress ...... 77,128 33,588 283,058 5,117,443 123,268 2,228,564 Finished goods ......... 279,052 105,792 1,024,122 18,515,100 388,256 7,019,299

1,415,718 547,177 5,195,686 93,932,889 2,008,139 36,305,194


USD USD Dhs. Rs. Dhs. Rs.STATEMENT OF PROFIT OR LOSSInventories recognised as an expense in cost of goods sold The above includes:– Inventories written

off ......................... 15,225 – 55,875 1,010,179 – –


USD USD Dhs. Rs. Dhs. Rs.6. TRADE AND OTHER

RECEIVABLESTrade receivables ........ 1,229,019 1,540,739 4,510,499 81,545,408 5,654,512 102,228,031 Due from a related party (refer note 11) ... 444 – 1,629 29,459 – –Deposits ..................... 21,970 21,619 80,630 1,457,710 79,340 1,434,421 Interest receivable ...... 28 – 103 1,858 – –Advance to suppliers .. 8,523 – 31,280 565,501 – – 1,259,984 1,562,358 4,624,141 83,599,936 5,733,852 103,662,452


USD USD Dhs. Rs. Dhs. Rs.7. PREPAYMENTS

Prepayments ............. 34,199 34,017 125,509 2,269,104 124,844 2,257,028 34,199 34,017 125,509 2,269,104 124,844 2,257,028


USD USD Dhs. Rs. Dhs. Rs.8. CASH AND BANK

BALANCESCash and cash equivalents Cash on hand ........... 5,234 837 19,210 347,276 3,073 55,535 Bank balance in current accounts....... 1,057,594 60,592 3,881,370 70,171,362 222,371 4,020,279 Fixed deposit account with banks (with original maturity of 3 months or less) ...... 75,296 – 276,335 4,995,890 – –

1,138,124 61,429 4,176,915 75,514,528 225,444 4,075,814

Book 1.indb 82 11/25/2016 2:45:49 PM



83


USD USD Dhs. Rs. Dhs. Rs.9. ASSETS HELD FOR

SALEProperty, plant and equipment ................ 2,262 16,349 8,300 150,084 60,000 1,084,756 2,262 16,349 8,300 150,084 60,000 1,084,756

Fair value measurementThe Company’s management is responsible for performing the valuation of fair value measurement included in the financial statement, including level 3 fair values.The valuation process and results for non recurring measurement are reviewed and approved by the Plant Head in the year in which the measurement occurs. All level 3 valuation results are discussed with the Board of Directors as part of its yearly review of the Company’s financial statements.


USD USD Dhs. Rs. Dhs. Rs.10. SHARE CAPITAL

Authorized, issued and paid :1,000 Shares of USD 550 (Dhs. 2,019) (Rs. 33,033) each 550,000 550,000 2,018,500 36,492,500 2,018,500 36,492,500[900 Shares of USD 550 (Dhs. 2,019) (Rs. 36,493) each held by Mahindra Intertrade Limited, which is a subsidiary of Mahindra & Mahindra Limited] [100 Shares of USD 550 (Dhs. 2,019) (Rs. 34,693) each held by Nippon Steel & Sumitomo Metal Corporation], Japan.

Share capital Ordinary Share 31 March 2016 31 March 2015

In issue at 1 April 2015 1,000 1,000In issue at 31 March 2016 1,000 1,000Terms/rights attached to equity sharesThe Company has only one class of equity share having a par value of USD 550 per share. Each shareholder is entitled to one vote per share at general meetings of the Company. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting.

Book 1.indb 83 11/25/2016 2:45:49 PM



84


USD USD Dhs. Rs. Dhs. Rs.11. TRADE AND OTHER

PAYABLES:Due to related party (refer note 11(i)) ....... 41,453 38,714 152,133 2,750,407 142,082 2,568,674Trade payables ......... 2,225,558 590,684 8,167,789 147,665,771 2,167,809 39,191,883Accrued expenses .... 43,876 37,680 161,022 2,911,173 138,282 2,500,068Trade payables ......... 2,310,887 667,078 8,480,944 153,327,351 2,448,173 44,260,625 Interest payable ........ 13,648 2,150 50,088 905,545 7,892 142,653 Other payables ......... 2,903 1,236 10,654 192,614 4,537 82,009 Advance from customers ................. 1,842 1,008 6,761 122,217 3,696 66,881 Other payables ........ 18,393 4,394 67,503 1,220,376 16,125 291,543

2,329,280 671,472 85,48,447 15,45,47,727 24,64,298 4,45,52,168 RELATED PARTIES Management’s policy is to conduct transactions with related parties on prices at mutually agreed terms.

List of related parties with whom the Company has transactions: Mahindra Intertrade Limited - Joint Venture Partner Mahindra Steel Service Centre Limited - Fellow subsidiary Mahindra & Mahindra Limited-Ultimate holding company Nippon Steel & Sumitomo Metal Corporation - Joint Venture Partner


USD USD Dhs. Rs. Dhs. Rs.Transactions with related partiesMahindra Intertrade Limited:Reimbursements made ......................... 7,927 3,586 29,093 525,956 13,162 237,931 Reimbursements Received ................... 581 – 2,133 38,549 – –Service charges paid* .. 142,069 142,710 521,393 9,426,278 523,746 9,468,809 Dividend paid ........... 297,000 594,000 1,089,990 19,705,950 2,179,980 39,411,900

Mahindra Steel Service Centre Limited:Reimbursements of expense ..................... 5,894 – 21,631 391,067 – –Purchase of spare part .. – 4,200 – – 15,414 278,670 Mahindra & Mahindra Limited: Reimbursements of expense ..................... 143 – 525 9,488 – –Professional fees ........ 1,156 2,676 4,243 76,701 9,821 177,553 Nippon Steel & Sumitomo Metal Corporation (formerly known as Nippon Steel Corporation):Dividend paid ........... 33,000 66,000 121,110 2,189,550 242,220 4,379,100* The managerial services are rendered by Joint Venture Partner - Mahindra Intertrade Limited and the same is

paid as service charges.

Book 1.indb 84 11/25/2016 2:45:49 PM



85


USD USD Dhs. Rs. Dhs. Rs.Outstanding payableTo Mahindra Intertrade Limited ..... 35,559 36,038 130,496 2,359,340 132,261 2,391,121 To Mahindra Steel Service Centre Limited ..................... 5,894 – 21,631 391,067 – –To Mahindra & Mahindra Limited ..... – 2,676 – – 9,821 177,553 41,453 38,714 152,127 2,750,407 142,082 2,568,674


USD USD Dhs. Rs. Dhs. Rs.Outstanding ReceivableFrom Mahindra & Mahindra Limited ..... 444 – 1,629 29,459 – – 444 – 1,629 29,459 – –


USD USD Dhs. Rs. Dhs. Rs.12. REVENUE

Sales of goods ........... 5,584,599 5,978,773 20,495,478 370,538,144 21,942,097 396,691,589 Sales of services ........ 70,643 81,054 259,259 4,687,163 297,468 5,377,933

5,655,242 6,059,827 20,754,737 375,225,307 22,239,565 402,069,522

Book 1.indb 85 11/25/2016 2:45:49 PM



86


USD USD Dhs. Rs. Dhs. Rs.13. EXPENSES BY NATURE

Changes in inventories of finished goods and work in progress ........ (173,260) 137,266 (635,866) (11,495,801) 503,765 9,107,599 Raw materials and consumables used ..... 4,771,752 4,786,186 17,512,329 316,605,745 17,565,303 317,563,441 Employee benefit expenses .................... 268,168 328,014 984,175 17,792,947 1,203,810 21,763,729 Depreciation ............. 247,163 247,687 907,090 16,399,265 909,012 16,434,033 Rent ........................... 91,625 91,625 336,264 6,079,319 336,264 6,079,319 Other expenses ......... 24,635 49,659 90,409 1,634,532 182,249 3,294,874 Freight ....................... 87,260 90,114 320,245 5,789,701 330,717 5,979,064 Impairment loss on property, plant and equipment ................. 14,087 8,174 51,700 934,672 30,000 542,345 Travelling and conveyance ............... 11,692 4,720 42,908 775,764 17,322 313,172 Communication expenses .................... 9,630 15,164 35,342 638,951 55,653 1,006,131 Audit fees (includes out of pocket expenses) ...... 12,698 12,534 46,600 842,512 46,000 831,631 Repairs and maintenance .............. 13,969 20,143 51,266 926,843 73,923 1,336,488 Insurance ................... 12,215 15,949 44,829 810,465 58,532 1,058,216 Service charges ......... 142,088 142,720 521,464 9,427,539 523,783 9,469,472 Bank charges ............. 32,549 37,450 119,456 2,159,626 137,442 2,484,808 General expenses ...... 28,167 25,063 103,372 1,868,880 91,980 1,662,930

5,594,438 6,012,468 20,531,583 371,190,960 22,065,755 398,927,252


USD USD Dhs. Rs. Dhs. Rs.13.1. COST OF SALES

Changes in inventories of finished goods and work in progress ........ (173,260) 137,266 (635,866) (11,495,801) 503,765 9,107,599 Raw materials and consumables used ..... 4,771,752 4,786,186 17,512,329 316,605,745 17,565,303 317,563,441 Employee benefit expenses .................... 268,168 328,014 984,175 17,792,947 1,203,810 21,763,729 Depreciation on plant and machinery and building ..................... 239,906 239,593 880,456 15,917,763 879,307 15,896,996 Rent expenses ........... 91,625 91,625 336,264 6,079,319 336,264 6,079,319 Other expenses ......... 24,635 49,659 90,409 1,634,532 182,249 3,294,874

5,222,826 5,632,343 19,167,767 346,534,505 20,670,698 373,705,958

Book 1.indb 86 11/25/2016 2:45:50 PM



87


USD USD Dhs. Rs. Dhs. Rs.13.2. ADMINISTRATIVE

AND GENERAL EXPENSES

Impairment loss on property, plant and equipment ................. 14,087 8,174 51,700 934,672 30,000 542,345 Travelling and conveyance ............... 11,692 4,720 42,908 775,764 17,322 313,172 Communication expenses .................... 9,630 15,164 35,342 638,951 55,653 1,006,131 Audit fees (includes out of pocket expenses) .... 12,698 12,534 46,600 842,512 46,000 831,631 Repairs and maintenance .............. 13,969 20,143 51,266 926,843 73,923 1,336,488 Depreciation on others ........................ 7,257 8,094 26,634 481,502 29,705 537,037 Insurance ................... 12,215 15,949 44,829 810,465 58,532 1,058,216 Service charges ......... 142,088 142,720 521,464 9,427,539 523,783 9,469,472 Bank charges ............. 32,549 37,450 119,456 2,159,626 137,442 2,484,808 General expenses ...... 28,167 25,063 103,372 1,868,880 91,980 1,662,930

284,352 290,011 1,043,571 18,866,754 1,064,340 19,242,230


USD USD Dhs. Rs. Dhs. Rs.14. OTHER INCOME

Insurance claim received .................... 2,621 9,351 9,619 173,903 34,319 620,439 Other miscellaneous income ...................... 17,877 4,999 65,608 1,186,139 18,345 331,684

20,498 14,350 75,227 1,360,042 52,664 952,123


USD USD Dhs. Rs. Dhs. Rs.15. FINANCE COST

Interest expenses ....... 27,780 28,793 101,952 1,843,203 105,670 1,910,416 Exchange loss (net) .... – 32,539 – – 119,419 2,158,963

27,780 61,332 101,952 1,843,203 225,089 4,069,379


USD USD Dhs. Rs. Dhs. Rs.16. CONTINGENT

LIABILITIES AND COMMITMENTSLetters of credit ......... 2,524,727 1,369,381 9,265,748 167,515,636 5,025,630 90,858,429

2,524,727 1,369,381 9,265,748 167,515,636 5,025,630 90,858,429

Book 1.indb 87 11/25/2016 2:45:50 PM



88

17. STATUTORY RESERVE According to the articles of association of the Company, 10% of the net profit for each year is required to

be transferred to a statutory reserve. The management may resolve to discontinue such annual transfers when the reserve reaches 50% of the paid up share capital. The reserve is not available for distribution. No appropriations to the statutory reserve have been made out of current year profits (2016: Nil) as the statutory reserve has accumulated to 50% of the paid up share capital.

18. LEASES The Company has entered into operating lease arrangements for the custom built warehouse, the significant

terms and conditions of which are as under: The tenure of the lease agreement is generally for a period of 7 to 25 years, renewable thereafter for another

equal term. The future minimum lease payments under non-cancellable lease are as follow: – Less than one year: USD 85,220 (2015: USD 85,220) [2016: (Dhs. 312,757) (Rs. 5,654,347)]

[2015: (Dhs. 312,843) (Rs. 5,654,347)] – Between one and five years: USD 340,880 (2015: 340,880) [2016: (Dhs. 1,251,030)

(Rs. 22,617,388)] [2015: (Dhs. 1,251,030) (Rs. 22,617,388)] – Above five years: USD 766,980 (2015: 852,200) [2016: (Dhs. 2,814,817) (Rs. 50,899,123)]

[2015: (Dhs. 3,127,574) (Rs. 56,543,470)] During the year an amount of USD 85,220 (2015: USD 85,220) [2016: (Dhs. 312,757) (Rs. 5,654,347)]

[2015: (Dhs. 312,843) (Rs. 5,654,347)] was recognised as an expense in profit or loss in respect of operating leases.

19. FINANCIAL INSTRUMENTS Overview The Company has exposure to the following risks from its use of financial instruments: – Credit risk – Liquidity risk – Market risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital.

The Company’s Board of Directors have overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

Credit risk Credit risk is the risk of financial loss to the Company if counterparty to a financial instrument fails to meet

its contractual obligations. Credit risk is mainly attributable to cash at bank and trade and other receivables.

Trade receivables The exposure to credit risk on trade receivables is monitored on an ongoing basis by the management and

these are considered recoverable by the Company’s management. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk of the industry and country, in which customers operate, has less of an influence on credit risk.

Management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. Purchase limits are established for each customer, which represent the maximum open amount.

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade receivables. The collective loss allowance is determined taking into consideration the current economic factors.

Cash at bank The company’s cash is placed with national and international banks of good repute.

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Exposure to credit risk : The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure

to credit risk at the reporting date was:


USD USD Dhs. Rs. Dhs. Rs. Trade

receivables .. 1,229,019 1,540,739 4,510,499 81,545,408 5,654,512 102,228,031 Other

receivables ... 22,442 21,619 82,362 1,489,027 79,340 1,434,421 Cash at

banks ........... 1,132,890 60,592 4,157,705 75,167,252 222,371 4,020,279 2,384,351 1,622,950 8,750,566 158,201,687 5,956,223 107,682,731

The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:


USD USD Dhs. Rs. Dhs. Rs. Other GCC

countries ....... 1,229,019 1,540,739 4,510,499 81,545,408 5,654,512 102,228,031 1,229,019 1,540,739 4,510,499 81,545,408 5,654,512 102,228,031

The age of trade receivables at the reporting date was:


USD USD Dhs. Rs. Dhs. Rs. Not past due .. 857,619 1,061,673 3,147,463 56,903,018 3,896,339 70,442,004 Past due

0-180 days ... 368,965 478,850 1,354,100 24,480,828 1,757,380 31,771,695 Past due more

than 180 days ... 2,435 216 8,936 161,562 793 14,332 1,229,019 1,540,739 4,510,499 81,545,408 5,654,512 102,228,031

The allowance account in respect of trade receivables is used to record impairment losses unless the Company is satisfied that no recovery of the outstanding receivable is possible; at that point such amount is considered uncollectible and hence, written off.

Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.

Liquidity risk mainly relates to amounts due related parties, short term borrowings and trade and other payables. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risking damage to the Company’s reputation. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of letter of credit facilities.

The following are the contractual maturities of financial liabilities (including estimated interest payments).


USD USD Dhs. Rs. Dhs. Rs.Carrying amountTrade and other payables (Excluding advance) .................... 2,285,985 631,750 8,389,553 151,675,103 2,318,520 41,916,613 Dues to related parties ... 41,453 38,714 152,133 2,750,407 142,082 2,568,674

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90


USD USD Dhs. Rs. Dhs. Rs.

Contractual cash flowsTrade and other payables .................... 2,285,985 631,750 8,389,553 151,675,103 2,318,520 41,916,613 Dues to related parties . 41,453 38,714 152,133 2,750,407 142,082 2,568,674

6 months or lessTrade and other payables ..................... 2,285,985 631,750 8,389,553 151,675,103 2,318,520 41,916,613 Dues to related parties . 41,453 38,714 152,133 2,750,407 142,082 2,568,674

More than 6 monthsTrade and other payables ..................... – – – – – –Dues to related parties . – – – – – –

Market risk

Currency risk

Foreign exchange risk is limited since all significant transactions are either in USD or Dhs (which is currently fixed to USD).

Interest risk

The Company has placed fixed deposits / margin money in form of fixed deposits with banks at normal commercial rates.

Short term borrowings (Trust Receipts) carry interest at fixed rate linked to USD Libor.

Preshipment credit from foreign banks have been availed at fixed rate linked to USD Libor .

Fair value The fair values of the Company’s financial instruments approximate their carrying values.

Capital risk The Company manages its capital to ensure that it will be able to continue as a going concern while

maximising the return to the shareholders.

20. DIVIDEND The Board of Directors has declared and paid the final dividend for the year 2014-2015 at the rate of USD

330 (2014: USD 330) [2015: (Dhs. 1,211.10) (Rs. 21,895.50)] [2014: (Dhs. 1,211.10) (Rs. 21,895.50)] per share aggregating USD 330,000 (2014: USD 330,000) [2015: (Dhs. 1,211,100) (Rs. 21,895,500)] [2014: (Dhs. 1,211,100) (Rs. 21,895,500)] at its meeting held on 29 April 2015 which has been recognised as a distribution to its shareholders during the year ended 31 March 2016.

The Board of Directors has declared and paid an interim dividend for the year 2015-2016 NIL (2015: USD 330) [2016: (Dhs. NIL) (Rs. NIL)] [2015: (Dhs. 1,211.10) (Rs. 21,895.50)] aggregating USD NIL (2015: USD 330,000) [2016: (NIL) (Rs. NIL)] [2015: (Dhs. 1,211,100) (Rs. 21,895,500)]

The Board of Directors has declared the final dividend for the year 2015-2016 at the rate of USD 192.50 (2015: USD 330) [2016: (Dhs. 706.44) (Rs. 12,772.38)] [2015: (Dhs. 1,211.10) (Rs. 20,539.20)] per share aggregating USD 192.500 (2015: USD 330,000) [2016: (Dhs. 706,440) (Rs. 12,772,380)] [2015: (Dhs. 1,211,100) (Rs. 20,539,200)] at its meeting held on 21 April 2016 [2015: 24 April 2015] which has not been recognised as a distribution to its shareholders during the year 31 March 2016 [2015: 31 March 2015].

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21. NEW STANDARDS AND INTERPRETATIONS

New standard and interpretations not yet effective

A number of new standards, amendments to standards and interpretations are effective for the annual periods beginning after 1 April 2015, and have not been applied in preparing these financial statements.

(i) IFRS 9 Financial instruments (2010), IFRS 9 Financial instruments:

IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under IFRS 9 (2009), financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 (2010) introduces additions relating to financial liabilities. The IASB currently has an active project to make limited amendments to the classification and measurement requirements of IFRS 9 and add new requirements to address the impairment of financial assets and hedge accounting. IFRS 9 (2010 and 2009) are effective for annual periods beginning on or after 1 January 2018 with early adoption permitted.

(ii) IFRS 15 Revenue from Contracts with Customers:

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction contracts and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2017, with early adoption permitted.

(iii) IFRS 16 Leases:

On January 13, 2016, the International Accounting Standards Board issued the final version of IFRS 16, Leases. IFRS 16 will replace the existing leases Standard, IAS 17 Leases, and related Interpretations. The Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of comprehensive income. The Standard also contains enhanced disclosure requirements for lessees. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17.

The effective date for adoption of IFRS 16 is annual periods beginning on or after January 1, 2019, though early adoption is permitted for companies applying IFRS 15 Revenue from Contracts with Customers.

Management is in the process of assessing the impact of the new standards, amendments to standards on the financial statements of the Company.

22. PRIOR YEAR COMPARATIVES

Prior year’s figures have been regrouped and rearranged wherever necessary to conform to current year’s classification.

Sumit Issar

Directors

Kazuhiro Koshikawa

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Mahindra Steel Service Centre Limited

92

Please check thoroughly. Vakils will not be responsible for errors not noted on this proof.Pradeep

Mahindra Steel

Service Centre

Limited

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93

Please check thoroughly. Vakils will not be responsible for errors not noted on this proof. Pradeep

Board of directors

Rajeev DubeyChairman

Sumit IssarManaging Director

Vijay Arora

Yuta FuruhashiNominee of Metal One Corporation

Yoshihisa FujiwaraNominee of Metal One Corporation

Hajime KimuraAlternate Director to Mr. Yuta Furuhashi

P. R. BarpandeIndependent Director

Ajay MehtaIndependent Director

company secretaryBakul Sheth

chief financial officerJitendra Rahate

audit committee


P. R. Barpande

Ajay Mehta


P. R. BarpandeChairman

Rajeev Dubey

Ajay Mehta

Yoshihisa Fujiwara



Sumit Issar

P. R. Barpande

Yoshihisa Fujiwara

auditors


Tower 3, 27th – 32nd Floor, Indiabulls Finance Centre, Elphinstone (West), Mumbai - 400013, India.

Bankers

Axis Bank Limited

HDFC Bank Limited

registered office

Mahindra Towers, P. K. Kurne Chowk,

Worli, Mumbai - 400018, India.

CIN: U27100MH1993PLC070416

Tel. No.: +91 22 24935185/86

Fax: +91 22 24951236

Email: [email protected]

Website: mahindraintertrade.com

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Directors’ Report to the ShareholdersYour directors present their Twenty Third Report, together with the audited financial statements of your Company, for the year ended March 31, 2016.

FINANCIAL HIGHLIGHTS AND STATE OF COMPANY’S AFFAIRS(Rs in lakhs)

Year ended March 31

2016 2015Income 19,493.06 15,106.43

Profit before depreciation, interest and taxation ........................... 2,078.33 2,670.98

Less: Depreciation ....................................................................... 972.73 972.72

Profit before interest and taxation ................................................ 1,105.60 1,698.26

Less: Interest ................................................................................ 293.25 348.05

Profit before tax ........................................................................... 812.35 1,350.21

Less: Provision for taxation:

- Current tax ........................................................................ 327.00 453.00

- Deferred tax ...................................................................... (63.65) 143.45

Profit for the year after tax ........................................................... 549.00 753.76

Add: Balance of profit of earlier years .......................................... 3,483.75 2,957.76

Profit available for appropriation ................................................. 4,032.75 3,711.52

Depreciation on transition to Schedule II of the Companies Act, 2013 ........................................................ – 28.70

Less: Transfer to General Reserve ................................................. – –

Proposed dividend .............................................................. 115.78 165.40

Income-tax on proposed dividend ....................................... 23.57 33.67

Balance carried forward .............................................................. 3,893.40 3,483.75

Net Worth ................................................................................... 9,722.97 9,313.32

Your Company’s income for the year was Rs 19,493.06 lakhs against Rs 15,106.43 lakhs in the previous year. Profit after tax for the year was lower at Rs 549.00 lakhs against Rs 753.76 lakhs in the previous year, primarily due to lower Industrial Investment Promotion Assistance accounted during the year compared to last year (Rs 343.47 lakhs) and also due to the slowdown in automotive industry.

No material changes and commitments have occurred after the close of the year till the date of this Report which affect the financial position of your Company.

OPERATIONS

Demand from domestic auto industry was muted during the year resulting in subdued demand for processed steel from the Company’s auto vertical.

Demand from the transformer industry remained strong during the year resulting in better capacity utilization and margins for the Company’s power vertical.

The home appliance segment showed some improvement due to addition of new customers.

DIVIDEND

Your directors recommend a dividend of Re 0.70 per equity share on 1,65,39,759 equity shares of Rs 10 each for the year ended March 31, 2016 payable to those shareholders whose names appear on the Register of Members of the Company as on 24th June, 2016, being the record date fixed for the purpose. The dividend, including tax thereon, will absorb a sum of Rs 139.35 lakhs as against Rs 199.07 lakhs for the previous year.

directors’ report

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CURRENT YEAR

During the current year, your Company expects an improved demand in the auto and home appliance verticals, while sustaining performance in the electrical vertical.

HUMAN RESOURCES

Happy and enthused employees is one of the strategic goals of your Company as reflected in its employee engagement interventions. Your Company’s MCARES and Employee as Promoter Score (EPS) – metrics used by the Mahindra group to assess employee engagement – were a robust 4.57/5.00 and 73%, respectively, in the top league in the group.

As part of the Talent Development process, your Company continues to invest in premium learning opportunities to grooms its next generation of leaders.


Your Company is exposed to a variety of risks which may impact its operations. These risks are mitigated by using an integrated risk management approach which covers the full range of risks across verticals.

Your Company has formulated a risk management policy which addresses risks which, in the opinion of the Board, may threaten the existence of the Company.

INTERNAL FINANCIAL CONTROLS

Your Company has in place, adequate internal financial controls with reference to financial statements commensurate with the size, scale and complexity of its operations. During the year under review, such controls were tested and no reportable material weaknesses in the design or operation were observed.

CORPORATE SOCIAL RESPONSIBILITY POLICY

Your Board has approved a Corporate Social Responsibility policy in accordance with the relevant provisions of the Companies Act, 2013. The same may be accessed on the Company’s website: http://www.mahindraintertrade.com.

An Annual Report on Corporate Social Responsibility activities is attached as Annexure I and forms part of this Report.


Your Company has put in place a policy for prevention of sexual harassment. Your Company has also constituted an “Internal Complaints Committee” to which employees can address their complaints. During the year under review, no complaints were received by the said Committee.

POLICY FOR REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES AND CRITERIA FOR APPOINTMENT/REMOVAL OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

Your Board has, on the recommendation of the Nomination and Remuneration Committee, approved policies for the appointment/removal of directors and senior management personnel together with the criteria for determining qualifications, positive attributes and independence of directors, and policy for remuneration of directors, key managerial personnel and other employees.

These policies are provided as Annexure II and form part of this Report.

SHARE CAPITAL

As at March 31, 2016, the authorized equity share capital of your Company was Rs 17,00,00,000 divided into 1,70,00,000 equity shares of Rs 10 each and the paid up equity share capital was Rs 16,53,97,590, divided into 1,65,39,759 equity shares of Rs 10 each, fully paid up. There was no change in the share capital of your Company during the year.

CORPORATE GOVERNANCE

Constitution of the Board

The Board of your Company presently has seven directors. One of the directors, Mr. Yuta Furuhashi has his alternate director to represent him on the Board. The directors have wide experience in business related to steel, finance and general corporate management.

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Board Meetings

Four Board meetings were held during the year, i.e., on April 24, 2015, July 30, 2015, November 10, 2015 and February 2, 2016 for reviewing the operations and financial results of the Company. Senior executives of your Company attended Board meetings as invitees.

The details of attendance of the Directors at the Board meetings of the Company are as under.

Sr. No. Name of the Director Number of meetings attended

1 Mr. Rajeev Dubey 3

2 Mr. Harsh Kumar (up to September 30, 2015) 2

3 Mr. Sumit Issar 4

4 Mr. Daisuke Kadono (up to July 30, 2015) 0

5 Mr. Yuta Furuhashi 1

6 Mr. Nobuaki Takashi – Alternate Director to Mr. Daisuke Kadono (up to July 30, 2015)

1

7 Mr. Toyokazu Makino – Alternate Director to Mr. Yuta Furuhashi (Up to November 10, 2015)

2

8 Mr. P. R. Barpande 4

9 Mr. Ajay Mehta 4

10 Mr. Yoshihisa Fujiwara (w.e.f. July 30, 2015) 1

11 Mr. Toyokazu Makino – Alternate Director to Mr. Yoshihisa Fujiwara (w.e.f. November 10, 2015)

2

12 Mr. Vijay Arora (w.e.f. December 16, 2015) 1

13 Mr. Hajime Kimura – Alternate Director to Mr. Yuta Furuhashi (w.e.f. February 2, 2016)

1

The 22nd Annual General Meeting of the Company was held on July 30, 2015 and an Extraordinary General Meeting was held on July 30, 2015.

Shareholding

Mahindra Intertrade Limited (MIL), a subsidiary of Mahindra Vehicle Manufacturers Limited (MVML), holds 61% of the paid up equity share capital of your Company. The balance 39% is held by Metal One Corporation, Japan.

MVML is a wholly owned subsidiary of Mahindra & Mahindra Limited (M&M). Therefore, your Company is a direct subsidiary of MIL and an indirect subsidiary of MVML and M&M.

DIRECTORS

Mr. Daisuke Kadono (DIN: 06861397) resigned as director with effect from July 30, 2015 and consequently Mr. Nobuaki Takashi (DIN: 06625157) ceased to be his alternate director with effect from the said date.

Mr. Yoshihisa Fujiwara (DIN: 07181962) and Mr. Vijay Arora (DIN: 07347126) were appointed as additional directors with effect from July 30, 2015 and December 16, 2015, respectively. They hold office as directors up to the date of the forthcoming Annual General Meeting. Your Company has received notices from Mahindra Intertrade Limited, a member of the Company, signifying their intention to propose the candidatures of Mr. Fujiwara and Mr. Arora for appointment as directors at the forthcoming Annual General Meeting.

Mr. Harsh Kumar (DIN: 00082621) ceased to be the Managing Director and Director of the Company with effect from October 1, 2015.

Your Board thanks Mr. Kumar for his immense contribution to the growth of the Company and places on record its sincere appreciation of the services rendered by him during his tenure as Managing Director of the Company.

Mr. Sumit Issar (DIN: 06951249) was appointed as the Managing Director of the Company with effect from October 1, 2015.

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Mr. Toyokazu Makino (DIN: 06626817) resigned as alternate director to Mr. Yuta Furuhashi with effect from November 10, 2015. He was appointed as alternate director to Mr. Yoshihisa Fujiwara with effect from November 10, 2015 and ceased with effect from 25th April, 2016.

Mr. Hajime Kimura (DIN: 07233525) was appointed as alternate director to Mr. Yuta Furuhashi with effect from February 2, 2016.

Mr. Yuta Furuhashi will retire by rotation at the forthcoming Annual General Meeting, and being eligible, has offered himself for re-appointment.

Your Board places on record its appreciation of the services rendered by Mr. Daisuke Kadono during his tenure as director of your Company.

MEETINGS OF INDEPENDENT DIRECTORS

The Independent Directors of the Company met on November 10, 2015 and February 2, 2016 without the presence of the Chairman, Managing Director and other Non-Executive Directors, Chief Financial Officer, Company Secretary and any other management personnel. The meetings were conducted in an informal and flexible manner to enable the Independent Directors to discuss the matters pertaining to, inter alia, review of performance of Non-Independent Directors and assess the quality, quantity and timeliness of flow of information between the company management and the Board which is necessary for the Board to effectively and reasonably perform their duties.

EVALUATION OF PERFORMANCE OF DIRECTORS

The Nomination and Remuneration Committee carried out an evaluation of the performance of individual directors and the Board evaluated the performance of Independent Directors through a structured questionnaire process covering various aspects such as performance, attendance, et al.

The evaluation of the performance of the Non-independent Directors and of the Board as a whole was carried out by the Independent Directors. The evaluation of the performance of the Chairman of the Company was also carried out by the Independent Directors after taking into account the views of the Managing Director and other Non-executive Directors.


Pursuant to section 134(3)(c) of the Companies Act, 2013, your directors, based on a representation received from operating management, and after due enquiry, confirm that:

(a) In the preparation of annual accounts for the year ended March 31, 2016, the applicable accounting standards have been followed and there were no material departures in following these standards;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared annual accounts on a going concern basis; and,

(e) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating efficiently.

CODES OF CONDUCT

Your Company has adopted Codes of Conduct for Corporate Governance (‘the Codes’) for its directors, and senior management and employees of your Company. These Codes enunciate the underlying principles governing the conduct of the Company’s business and seek to reiterate the fundamental precept that good governance must and would always be an integral part of your Company’s ethos.

Your Company has, for the year under review, received declarations from its Board members, and from senior management and employees, affirming their compliance with the respective Codes.

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Audit Committee

The Audit Committee of the Board comprises of the following directors as its members. Mr. Rajeev Dubey – Chairman, Mr. P. R. Barpande, and, Mr. Ajay Mehta.

Four meetings of the Committee were held during the year, i.e., on April 24, 2015, July 30, 2015, November 10, 2015 and February 2, 2016.

The details of attendance of the members at the Audit Committee meetings of the Company are as under.

Sr. No. Name of the Member Number of meetings attended1 Mr. Rajeev Dubey 32 Mr. P. R. Barpande 43 Mr. Ajay Mehta 4


The Nomination and Remuneration Committee of the Board comprises of the following directors as its members. Mr. Rajeev Dubey, Mr. P. R. Barpande, – Chairman, Mr. Ajay Mehta, and, Mr. Yoshihisa Fujiwara.

Four meetings of the Committee were held during the year, i.e., on April 24, 2015, July 30, 2015, November 10, 2015 and February 2, 2016.

The details of attendance of the members at the Nomination and Remuneration Committee meetings of the Company are as under.

Sr. No. Name of the Member Number of meetings attended1 Mr. Rajeev Dubey 32 Mr. P. R. Barpande 43 Mr. Ajay Mehta 44 Mr. Yoshihisa Fujiwara (w.e.f. July 30, 2015) –5 Mr. Toyokazu Makino – Alternate member to Mr.

Yoshihisa Fujiwara (w.e.f. November 10, 2015)1

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee of the Board comprises of the following directors as its members. Mr. Rajeev Dubey – Chairman, Mr. P. R. Barpande, Mr. Sumit Issar, and, Mr. Yoshihisa Fujiwara.

Two meetings of the Committee were held during the year i.e. on April 24, 2015 and February 2, 2016.

The details of attendance of the members at the Corporate Social Responsibility Committee meetings of the Company are as under.

Sr. No. Name of the Member Number of meetings attended1 Mr. Rajeev Dubey 12 Mr. P. R. Barpande 23 Mr. Harsh Kumar (up to September 30, 2015) 14 Mr. Yoshihisa Fujiwara (w.e.f. July 30, 2015) –5 Mr. Sumit Issar (w.e.f. November 10, 2015) 16 Mr. Toyokazu Makino – Alternate Director to Mr.

Yoshihisa Fujiwara (w.e.f. November 10, 2015)1

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Pursuant to the provisions of section 2(51) and section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014, the following are the Key Managerial Personnel of the Company.

(1) Mr. Harsh Kumar, Managing Director (up to September 30, 2015).

(2) Mr. Sumit Issar, Managing Director (w.e.f. October 1, 2015).

(3) Mr. Bakul Sheth, Company Secretary.

(4) Mr. Jitendra Rahate, Chief Financial Officer.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from the Independent Directors of the Company confirming that they fulfill the criteria of Independence as prescribed under Sub-section 6 of section 149 of the Companies Act, 2013.

STATUTORY AUDITORS

Messrs. Deloitte Haskins & Sells, Chartered Accountants, Mumbai (Registration No. 117365W), will retire as statutory auditors of the Company at the conclusion of the forthcoming Annual General Meeting and have given their consent for re-appointment.

Members of the Company will be required to re-appoint statutory auditors to hold office from the conclusion of the forthcoming Annual General Meeting until the conclusion of the Annual General Meeting thereafter, and to fix their remuneration.

As required under the provisions of Sections 139 and 141 of the Companies Act, 2013, the Company has obtained a written certificate from the statutory auditors to the effect that their re-appointment, if made, would be in conformity with the limits specified in section 139 and that they satisfy the criteria mentioned in section 141 of the Companies Act, 2013.

The Auditors’ Report for the year ended March 31, 2016 does not contain any qualification, reservation or adverse remark.

COST AUDITORS

Messrs. Shilpa & Co., Cost Accountants, Nashik (Firm Registration No. 100558), were appointed as Cost Auditors on April 24, 2015 to conduct the audit of cost accounts of the Company for the financial year ending March 31, 2016. Their appointment was intimated to the Central Government vide Form CRA-2 which was filed on May 13, 2015. Remuneration of Cost Auditors was ratified by the shareholders at their Twenty Second Annual General Meeting held on July 30, 2015. The due date for filing the report of the Cost Auditors for the year ended March 31, 2016 is September 27, 2016.

For the year ended March 31, 2015, the due date for filing the report of the Cost Auditors was September, 27, 2015 which was extended up to 30th September, 2015. The same was filed on September 29, 2015.

The Board has, on recommendation of the Audit Committee, re-appointed on April 25, 2016, M/s. Shilpa & Co. as Cost Auditors, at a remuneration of Rs 1,15,500/- (excluding service tax, other levies and out of pocket expenses), to conduct the audit of cost accounts of the Company for the financial year ending March 31, 2017. The shareholders of the Company are required to ratify the said remuneration payable to the Cost Auditors.

As required under the provisions of Sections 139, 141 and 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the Company has obtained written confirmations from M/s. Shilpa & Co. to the effect that they are eligible for appointment as Cost Auditors and that they are an independent firm of Cost Accountants and have an arm’s length relationship with your Company.

STOCK APPRECIATION RIGHTS (SARs)

Your Company has formulated a Stock Appreciation Rights Scheme to reward its employees and to provide an opportunity to them to participate in the growth of the Company. Accordingly, 6,555 SARs were granted during the year to eligible employees by the Nomination and Remuneration Committee at its meeting held on February 2, 2016.


Your Company has not accepted deposits from the public or its employees during the year under review.

Particulars of loans given, investments made, and guarantees and securities provided pursuant to section 186 of the Companies Act, 2013 are given under the notes to the financial statements and the same form part of this Report.

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Your Company has not made any loans/advances which are required to be disclosed in the annual accounts of the Company pursuant to Regulation 34(3) and 53(f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 applicable to the ultimate parent company Mahindra & Mahindra Limited.


All transactions entered into by your Company with related parties during the year under review were in the ordinary course of business and at arm’s length.

Particulars of material contracts or arrangements or transactions with related parties, referred to under section 188(1) of the Companies Act, 2013, are furnished in Form No. AOC-2 as Annexure III and forms part of this Report.


Pursuant to section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as on March 31, 2016 is attached as Annexure IV and forms part of this Report.

SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE

Your Company subscribes to guidelines on safety, health and environment, and encourages involvement of all its employees in activities related to safety standards. Employees across facilities were trained in behavioural safety at work. Statutory requirements relating to environmental legislations, and environment protection, have been duly complied with by your Company.


Your Company believes in sustaining a green planet, and strives towards energy conservation.

The particulars relating to Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo, as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given as Annexure V to this Report.

GENERAL DISCLOSURE

Your directors state that no disclosure or reporting is required in respect of the following items during the year:

(a) Details relating to deposits covered under Chapter V of the Companies Act, 2013.

(b) Issue of equity shares with differential rights as to dividend, voting or otherwise.

(c) Issue of shares (including sweat equity shares) to employees of the Company under any ESOP scheme, etc.

(d) Particulars of employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the Company’s going concern status and operations in future.

For and on behalf of the Board of Directors of Mahindra Steel Service Centre Limited

Rajeev Dubey Chairman

Mumbai: April 25, 2016.

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ANNEXURE I TO THE DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2016

ANNUAL REPORT ON CSR ACTIVITIES

(1) A brief outline of the Company’s CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programmes.

Web-link: http://www.mahindraintertrade.com

The objective of the Company’s CSR policy is to–

• PromoteaunifiedandstrategicapproachtoCSRbyincorporatingunderthe‘RiseforGood’umbrellathe diverse range of its philanthropic initiatives, and causes to work for, thereby ensuring high social impact.

• EncourageemployeestoparticipateactivelyintheCompany’sCSRactivitiesandgivebacktosocietyin an organized manner through the employee volunteering programme called ESOPs (Employee Social Options).

The Company has pledged to contribute 2% of its average net profits earned during the three immediately preceding financial years towards CSR initiatives to meet the needs of the local communities where it operates.

Our commitment to CSR will be manifested by investing resources in the following thrust areas:

(i) Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation, including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation, and making available safe drinking water;

(ii) Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled, and livelihood enhancement projects;

(iii) Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres, and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;

(iv) Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining the quality of soil, air and water, including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga;

(v) Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up of public libraries; promotion and development of traditional arts and handicrafts;

(vi) Measures for the benefit of armed forces veterans, war widows and their dependents;

(vii) Training to promote rural sports, nationally recognized sports, paraolympic sports and Olympic sports;

(viii) Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;

(ix) Contribution or funds provided to technology incubators located within academic institutions which are approved by the Central Government;

(x) Rural development projects;

(xi) Slum area development.

The Corporate Social Responsibility Committee (CSR Committee) of the Company shall be responsible for monitoring implementation of the CSR Policy. CSR Committee shall approve and recommend to the Board projects or programmes to be undertaken, the modalities of execution, and implementation schedule thereof.

(2) The Composition of the CSR Committee is: Mr. Rajeev Dubey – Chairman, Mr. Sumit Issar, Mr. P. R. Barpande and Mr. Yoshihisa Fujiwara.

(3) Average net profit of the Company for last three financial years is Rs 762.15 lakhs.

(4) Prescribed CSR Expenditure (two per cent of the amount as in item 3 above) is Rs 15.24 lakhs.

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102


(5) Details of CSR spent during the financial year: (a) Total amount to be spent for the financial year: Rs 15.24 lakhs.

(b) Amount unspent, if any: Nil.

(c) Manner in which the amount spent during the financial year is detailed below:

Sr. No.

Particulars (1) (2) (3) (4) (5) Total


Tree plantation at Kanhe

K-Yan education program at Kanhe School

Tree plantation at Bhopal

Pond area beautification, Kanhe

Contribution to KCMET for education of the under-privileged girl child under the Nanhi Kali project


Environment Education Environment Environment Education



(2) Specify the state and district where projects or programs were undertaken

(1) Local

(2) Pune district, Maharashtra

(1) Local


(1) Local

(2) Raisen district, Bhopal

(1) Local


(1) Others

(2) Maharashtra and contiguous states

(4) Amount outlay (budget project or programme wise) (Rs)

50,000 1,50,000 50,000 – 7,59,600 10,09,600

(5) Amount spent on the project or programme

Sub Heads : (Rs)

(1) Direct expenditure on projects or programmes

(2) Overheads

(1) 48,647

(2) 0

(1) 1,41,905

(2) 0

(1) 50,400

(2) 0

(1) 5,52,015

(2) 0

(1) 7,59,600

(2) 0

(1) 15,52,567

(2) 0

(6) Cumulative expenditure up to the reporting period (Rs)

Same as above Same as above Same as above Same as above Same as above

(7) Amount spent direct or through implementing agency

Direct Direct Direct Direct Implementing agency – KCMET*

* Details of implementing agency: KCMET - The K. C. Mahindra Education Trust - founded by Late K. C. Mahindra in 1953 promotes literacy and higher learning in the country. Since its inception, the Trust has promoted education by way of scholarships and grants to deserving and needy students. The Trust has facilitated social and economic development through creating a literate, enlightened and empowered population. The Trust is registered as a Public Charitable Trust under the Bombay Public Trusts Act, 1950 and has its office at Cecil Court, Mahakavi Bhushan Marg, Mumbai - 400 001.

(6) The Company has duly spent two per cent of the average net profit of the last three financial years or any part thereof.

(7) Members of the CSR Committee confirm that the implementation and monitoring of CSR Policy of the Company is in compliance with the relevant provisions of the Companies Act, 2013.


Sumit Issar Rajeev Dubey Managing Director Chairman of CSR CommitteeMumbai, April 25, 2016.

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103


ANNEXURE II TO THE DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2016

POLICY ON APPOINTMENT OF DIRECTORS AND SENIOR MANAGEMENT

DEFINITIONS



“Company” means Mahindra Steel Service Centre Limited (MSSCL).



“HR” means the Human Resource department of the Company.


(i) Managing Director (MD) or Chief Executive Officer (CEO) or Manager or Whole time Director (WTD),



“Nomination and Remuneration Committee” (NRC) means Nomination and Remuneration Committee of Board of Directors of the Company for the time being in force.



• NRCreviewsandassessesBoardcompositionandrecommendstheappointmentofnewdirectors.Inevaluating the suitability of an individual Board member, NRC shall take into account the following criteria regarding qualifications, positive attributes and independence of a director as applicable:

1. All Board appointments will be based on merit, in the context of skills, experience, independence and knowledge required for the Board as a whole to be effective.

2. Ability of the candidate to devote sufficient time and attention to professional obligations as an Independent Director for balanced decision making.

3. Adherence to the Code of Conduct and ensuring the highest level of corporate governance, in letter and in spirit, by Directors.

• BasedonNRC’srecommendation,theBoardwillevaluatethecandidate(s)anddecideontheselectionof the appropriate member. The Board, through the Managing Director, will interact with the new member to obtain his/her consent for joining the Board. Upon receipt of the consent, the new director will be co-opted by the Board in accordance with the applicable provisions of the Companies Act, 2013 and Rules made thereunder.


If a director is disqualified as per any applicable Act, or rules and regulations thereunder, or due to non-adherence to the applicable policies of the Company, NRC may recommend to the Board, with reasons recorded in writing, removal of a director subject to compliance of the applicable statutory provisions.



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For administrative convenience, senior management personnel will be appointed or promoted and removed/relieved with the authority of the Managing Director based on business needs and suitability of the candidate.



Purpose:


Board:





The Company’s succession planning program aims to identify high growth individuals, and groom them in order to maintain a robust talent pipeline.

The Company has a process of identifying individuals with high potential and having ability to hold critical positions. Successors are mapped for such positions in order to ensure talent readiness.



Purpose

This Policy sets out the approach to Compensation of Directors, Key Managerial Personnel and other employees in Mahindra Steel Service Centre Limited (MSSCL).

Policy Statement




The Nomination and Remuneration Committee (NRC) shall decide the basis for determining the compensation, both fixed and variable, to Non Executive Directors, including Independent Directors, whether as commission or otherwise. NRC shall take into consideration various factors such as director’s participation in Board and Committee meetings during the year, other responsibilities undertaken such as membership or Chairmanship of committees, time spent in carrying out their duties, role and functions as envisaged in Schedule IV of the Companies Act, 2013 and such other factors as the NRC may deem fit for determining compensation.


Executive Directors

The remuneration to Managing Director and Executive Director(s) shall be recommended by NRC to the Board. Remuneration will consist of both fixed compensation and variable compensation and shall be paid as salary, commission, performance bonus, stock options (where applicable), perquisites and fringe benefits as approved by the Board and within the overall limits specified in the Shareholders’ resolution. While fixed compensation is determined at the time of their appointment, variable compensation will be determined annually by NRC based on their performance.

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105



The terms of remuneration of the Chief Financial Officer (CFO) shall be determined by the Audit Committee.

The terms of remuneration of the Company Secretary shall be determined either by any Director or such other person as may be authorised by the Board.

The above remuneration shall be competitively benchmarked for similar positions in the industry and aligned with their qualifications, experience, and responsibilities. Pursuant to the provisions of section 203 of the Companies Act, 2013, the Board shall approve remuneration of the above KMPs at the time of their appointment.

The remuneration to directors, KMPs and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.

Employees

We follow a position and level based approach for compensation benchmarking with companies in the steel/steel service centre and related engineering industries.

We have a CTC (Cost to Company) concept which includes a fixed component (guaranteed pay) and a variable component (performance pay). The percentage of the variable component increases with increasing hierarchy levels as employees at higher positions have a greater impact and influence on the Company’s overall business result. CTC is reviewed once every year and the compensation strategy for positioning of individuals takes into consideration the following elements:

• Performance• Potential• Criticality






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106


ANNEXURE III TO THE DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2016

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm’s length

transactions under third proviso thereto.

1. Details of contracts or arrangements or transactions not at arm’s length basis:

Sr. No.

Name(s) of the related parties and nature of relationship

Nature of contracts/ arrangements/ transactions

Duration of the contracts/ arrangements/ transactions

Salient terms of the contracts or arrangements or transactions including the value, if any

Justification for entering into such contracts or arrange-ments or transactions

Date(s) of approval by the Board

Amount paid as advances, if any

Date on which the special resolution was passed in general meeting as required under first proviso to section 188

Nil Nil Nil Nil Nil Nil Nil Nil


Sr. No.



Duration of the contracts/arrangements/transactions


Date(s) of approval by the Board, if any


1 Mahindra Intertrade Limited (MIL)

(Holding Company)

Availing or rendering any services

Annual/Recurring 1) Processing of CR/HR/CRGO steel on job work basis and material handling

2) Payment term: 25 days

3) Total value of transaction Rs 1,337.71 lakhs

Not applicable

(Refer Note)

Nil

2 Mahindra Intertrade Limited (MIL)

(Holding Company)

Purchase of goods or materials

Recurring 1) Purchase of CRNO/ CRGO steel at cost plus margin

2) Payment term:

(i) CRGO: 120 days

(ii) CRNO: 90 days


Not applicable

(Refer Note)

Nil

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107


Sr. No.







3 Metal One Corporation (Shareholder having 39% shareholding)


Recurring 1) Purchase of CRGO at market price

2) Payment term: 180 days Letter of Credit


Not applicable

(Refer Note)

Nil

* Note: All these transactions are at arm’s length and are in the ordinary course of business. Accordingly, Board approval is not required as per proviso to sub-section (1) of section 188 of the Companies Act, 2013. Approval of Audit Committee is taken in the meetings held on April 24, 2015, July 30, 2015, November 10, 2015 and February 2, 2016.




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Form No. MGT-9 Extract of Annual Return as on the financial year ended on March 31, 2016

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]


i CIN U27100MH1993PLC070416

ii Registration Date 15th January, 1993

iii Name of the Company MAHINDRA STEEL SERVICE CENTRE LIMITED

iv Category/Sub-Category of the Company Indian Non-Government Company Limited by shares

v Address of the Registered office and contact details:

Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai – 400018. Tel. No.: +91-22-24935185/86 Fax: +91-22-24951236 Email: [email protected]

vi Whether listed Company (Yes/No) No

vii Name, Address and Contact details of Registrar and Transfer Agent, if any

Sharepro Services (India) Private Limited, 13AB, Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange Lane, Off. Andheri-Kurla Road, Sakinaka, Andheri (East), Mumbai – 400072. Tel. No.: 91-22-67920300 Email: [email protected]

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10% or more of the total turnover of the company shall be stated:-

Sr. No.

Name and Description of Main Product/Services

NIC Code of the Product % to total turnover of the Company

1 Processing of hot-rolled and cold-rolled products of steel

24105 100%

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sr. No.

Name and Address of the Company

CIN/GLN Holding/ Subsidiary/ Associate

% of shares held

Applicable Section

1 Mahindra Intertrade Limited, Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai – 400018.

U51900MH1978PLC020222 Holding Company

61 2(87)(ii)

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

i. Category-wise Share HoldingCategory of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year % Change

during the year


Shares


SharesA. Promoters1. Indiana. Individual/HUF – – – – – – – – –

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109


Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year % Change during

the yearDemat Physical Total % of

Total Shares


Sharesb. Central Govt. – – – – – – – – –c. State Govt(s) – – – – – – – – –d. Bodies Corp. 1,00,89,250 7 1,00,89,257 61 1,00,89,250 7 1,00,89,257 61 Nile. Banks/FI – – – – – – – – –f. Any Other – – – – – – – – –Sub-total (A)(1): 1,00,89,250 7 1,00,89,257 61 1,00,89,250 7 1,00,89,257 61 Nil2. Foreigna. NRI-Individuals – – – – – – – – –b. Other-Individuals – – – – – – – – –c. Bodies Corporate – – – – – – – – –d. Banks/FI – – – – – – – – –e. Any Other – – – – – – – – –Sub-total (A)(2): – – – – – – – – –Total shareholding of Promoter (A) = (A)(1)+(A)(2)

1,00,89,250 7 1,00,89,257 61 1,00,89,250 7 1,00,89,257 61 Nil

B. Public Shareholding1. Institutions – – – – – – – – –a. Mutual Funds – – – – – – – – –b. Banks/FI – – – – – – – – –c. Cent. Govt. – – – – – – – – –d. State Govt(s) – – – – – – – – –e. Venture Capital Funds – – – – – – – – –f. Insurance Companies – – – – – – – – –g. FIIs – – – – – – – – –h. Foreign Venture Capital

Funds– – – – – – – – –

i. Others – – – – – – – – –Sub-total (B)(1): – – – – – – – – –2. Non-Institutions – – – – – – – – –a. Bodies Corp. – – – – – – – – – i. Indian – – – – – – – – – ii. Overseas 0 64,50,502 64,50,502 39 0 64,50,502 64,50,502 39 Nilb. Individuals – – – – – – – – – i. Individual


– – – – – – – – –

ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh

– – – – – – – – –

c. Others – – – – – – – – –Sub-total (B)(2): 0 64,50,502 64,50,502 39 0 64,50,502 64,50,502 39 Nil

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110


Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year % Change during


Total Shares


SharesTotal Public Shareholding (B)=(B)(1)+(B)(2)

0 64,50,502 64,50,502 39 0 64,50,502 64,50,502 39 Nil

C. Shares held by Custodian for GDRs & ADRs

– – – – – – – –

Grand Total (A+B+C) 1,00,89,250 64,50,509 1,65,39,759 100 1,00,89,250 64,50,509 1,65,39,759 100 Nil

ii. Shareholding of Promoters:

Sr. No.



% change in share-

holding during the

year

No. of Shares

% of total shares of the

company


encumbered to total

shares

No. of Shares

% of total shares of the

company


encumbered to total

shares1 Mahindra Intertrade

Limited1,00,89,257 61 0 1,00,89,257 61 0 0

Total 1,00,89,257 61 0 1,00,89,257 61 0 0

iii. Change in Promoters’ Shareholding: There is no change in the shareholding of the Promoter.

iv. Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

Sr. No.

Shareholding at the beginning of the year

Cumulative shareholding during the year

For each of the top 10 shareholders No. of shares

% of total shares of

the company

No. of shares


the company

At the beginning of the year 64,50,502 39 64,50,502 39

1 Metal One Corporation 64,50,502 39 64,50,502 39

At the end of the year 64,50,502 39 64,50,502 39

v. Shareholding of Directors and Key Managerial Personnel:

Sr. No.

For Each of the Directors and KMP Shareholding at the beginning of the year


Name of the Director/KMP No. of shares


the company

No. of shares


the company

At the beginning of the year 3 0.00 3 0.00

1 Mr. Rajeev Dubey (holding jointly with first holder Mahindra Intertrade Limited)

1 0.00 1 0.00

2 Mr. Harsh Kumar (holding jointly with first holder Mahindra Intertrade Limited)

1 0.00 1 0.00

3 Mr. Bakul Sheth (holding jointly with first holder Mahindra Intertrade Limited)

1 0.00 1 0.00

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111


Sr. No.



Name of the Director/KMP No. of shares


the company

No. of shares


the company

At the end of the year 4 0.00 4 0.001 Mr. Rajeev Dubey (holding jointly with first holder

Mahindra Intertrade Limited)1 0.00 1 0.00

2 Mr. Sumit Issar (holding jointly with first holder Mahindra Intertrade Limited)

1 0.00 1 0.00

3 Mr. Vijay Arora (holding jointly with first holder Mahindra Intertrade Limited)

1 0.00 1 0.00

4 Mr. Bakul Sheth (holding jointly with first holder Mahindra Intertrade Limited)

1 0.00 1 0.00

V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment.

(Rs in lakhs)

PARTICULARS SECURED LOANS

EXCLUDING DEPOSITS

UNSECURED LOANS

DEPOSITS TOTAL INDEBTEDNESS

Indebtedness at the beginning of the financial year on 1st April, 2015i. Principal Amount 2,259.07 510.51 – 2,769.58ii. Interest due but not paid – – – –iii. Interest accrued but not due 32.36 – – 32.36Total of (i+ii+iii) 2,291.43 510.51 – 2,801.94Change in Indebtedness during the financial year+Addition 13.40 6,000.00 – 6,013.40- Reduction (1,074.30) (4,049.10) – (5,123.40)Net change (1,060.90) 1,950.90 – 890.00Indebtedness at the end of the financial year on 31st March, 2016i. Principal Amount 1,199.47 2,461.41 – 3,660.88ii. Interest due but not paid – – – –iii. Interest accrued but not due 31.06 – – 31.06Total of (i+ii+iii) 1,230.53 2,461.41 – 3,691.94


A. Remuneration to Managing Director, Whole-Time Directors and/or Manager:

(Rs in lakhs)

Sr. No.


Mr. Harsh Kumar Managing Director (1st April, 2015 to

30th September, 2015)

Mr. Sumit Issar Managing Director

(1st October, 2015 to 31st March, 2016)

1 Gross Salary – –(a) Salary as per provisions contained in

section 17(1) of the Income Tax Act, 1961

– –

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112


Sr. No.


Mr. Harsh Kumar Managing Director (1st April, 2015 to

30th September, 2015)

Mr. Sumit Issar Managing Director

(1st October, 2015 to 31st March, 2016)

(b) Value of perquisites u/s 17(2) of the Income Tax Act, 1961

– – –

(c) Profits in lieu of salary under section 17(3) of the Income Tax Act, 1961

– – –

2 Stock Option – – –3 Sweat Equity – – –4 Commission

- as % of profit- others

– – –

5 Others – – –Total (A) – – –Ceiling as per the Act 5% of the net profit of the Company

B. Remuneration of other directors:

I. Independent Directors:(Rs in Lakhs)

Particulars of Remuneration Names of Directors Total AmountMr. P. R.

BarpandeMr. Ajay

MehtaFee for attending board/committee meetings 1.80 1.60 3.40Commission 3.00 3.00 6.00Others – – –Total (1) 4.80 4.60 9.40

II. Other Non-Executive Directors:(Rs in Lakhs)

Particulars of Remuneration

Names of Directors Total AmountRajeev

DubeyChairman

Daisuke Kadono

Director(up to

30th July, 2015)

Nobuaki Takashi

Alternate Director

(up to 30th July,

2015)

Vijay Arora

Director

Yuta Furuhashi

Director

Yoshihisa FujiwaraDirector

Hajime Kimura

Alternate Director

Toyokazu Makino

Alternate Director

Fee for attending Board/committee meetings – – – – – – – – –

Commission – – – – – – – – –

Others – – – – – – – – –

Total (2) – – – – – – – – –

Total B = (1+2) – – – – – – – – 9.40

Total Managerial Remuneration

– – – – – – – – 9.40

Ceiling as per the Act

1% of the Net profits of the Company

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113


C. Remuneration to Key Managerial Personnel other than MD/Manager/Whole-time Director:(Rs in Lakhs)

Sr. No.

Particulars of Remuneration Names of the KMP Total AmountMr.

Jitendra Rahate CFO

Mr. Bakul Sheth

Company Secretary

1 Gross Salary(a) Salary as per provisions contained in section 17(1) of the Income

Tax Act, 1961 28.30 – 28.30(b) Value of perquisites u/s 17(2) of the Income Tax Act, 1961 – – –(c) Profits in lieu of salary under section 17(3) of the Income Tax Act,

1961 – – –2 Stock Option – – –3 Sweat Equity – – –4 Commission

- as % of profit- others

– – –

5 Others – allocation of expenses by Mahindra & Mahindra Limited excluding service tax – 2.50 2.50Total (C) 28.30 2.50 30.80

VII. PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES (Under the Companies Act):

Type Section of the

Companies Act

Brief description

Details of penalty/

punishment/compounding fees imposed

Authority (RD/NCLT/

COURT)

Appeal made, if any

A. COMPANY




B. DIRECTORS











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114


ANNEXURE V TO THE DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2016PARTICULARS AS PER THE COMPANIES (ACCOUNTS) RULES, 2014

(A) CONSERVATION OF ENERGY

(i) the steps taken or impact on conservation of energy: Nil.

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

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

(B) TECHNOLOGY ABSORPTION

(i) the efforts made towards technology absorption: Nil.

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

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year):

(a) the details of technology imported: Nil.

(b) the year of import: Nil.

(c) whether the technology has been fully absorbed: Not applicable.

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

(iv) the expenditure incurred on Research and Development: Nil.

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO

Information on foreign exchange earnings and outgo is furnished below:

Rs in lakhs

Particulars Year ended March 31,

2016 2015

Foreign exchange earned 25.50 2.58

Foreign exchange outgo 10,594.25 7,528.37




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TO THE MEMBERS OF MAHINDRA STEEL SERVICE CENTRE LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of MAHINDRA STEEL SERVICE CENTRE LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsThe Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards prescribed under section 133 of the Act, as applicable.This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit.We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder and the Order under section 143(11) of the Act. We conducted our audit of the financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

OpinionIn our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements 1. As required by Section 143(3) of the Act, we report that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge

and belief were necessary for the purposes of our audit. (b) In our opinion, proper books of account as required by law have been kept by the Company so far as it

appears from our examination of those books. (c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this

Report are in agreement with the books of account.


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(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards prescribed under section 133 of the Act, as applicable.




i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements. – Refer Note 23 to the financial statements.



2. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of section 143(11) of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.

For DELOITTE HASKINS & SELLS Chartered Accountants




Place of Signature: MumbaiDate: 25th April, 2016

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(Referred to in paragraph 1 (f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date to the members of Mahindra Steel Service Centre Limited on the financial statements for the year ended 31st March, 2016)


We have audited the internal financial controls over financial reporting of Mahindra Steel Service Centre Limited (“the Company”) as of March 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.








A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future

anneXure “a” to the independent auditor’s report

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periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.





Place: MumbaiDate: 25th April, 2016

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(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date to the members of Mahindra Steel Service Centre Limited on the financial statements for the year ended 31st March, 2016)(i) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of

the fixed assets. (b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of

three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on physical verification.

(c) According to the information and explanations given to us and the records examined by us in respect of immovable property of land that has been taken on lease and buildings constructed thereon by the Company, disclosed as fixed asset in the financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement.



(iv) The Company has not granted any loans, made investments or provided guarantees and hence reporting under clause (iv) of the CARO 2016 is not applicable.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year.(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records

and Audit) Amendment Rules, 2014 prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund,

Employees’ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, cess and other material statutory dues applicable to it with the appropriate authorities.

(b) No undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues were in arrears as at 31st March, 2016 for a period of more than six months from the date they became payable.

(c) There are no dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and Cess which have not been deposited as on March 31, 2016 on account of disputes.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to banks and government.

(ix) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were raised.


(xi) In our opinion and according to the information and explanations given to us, the Company is not required to pay any managerial remuneration in respect of the “Managing Director” appointed under section 197 and other applicable provisions of the Companies Act, 2013, from time to time, as per the terms approved.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not applicable.(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with section

188 and 177 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of CARO 2016 Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with him and hence provisions of section 192 of the Companies Act, 2013 are not applicable.

(xvi) The Company is not required to be registered under Section 45-I of the Reserve Bank of India Act, 1934.




(Membership No. 30235)Place: MumbaiDate: 25th April, 2016

anneXure B to the independent auditor’s report

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Particulars Notes As at 31 March, 2016

Rs. in Lakhs


Rs. in LakhsA. EQUITY AND LIABILITIES1. Shareholders’ funds (a) Share capital .................................................... 3 1,653.98 1,653.98 (b) Reserves and surplus ........................................ 4 8,088.99 7,679.34

9,742.97 9,333.322. Non-current liabilities (a) Long-term borrowings ...................................... 5 701.15 1,291.17 (b) Deferred tax liabilities (Net) ............................. 34 998.52 1,062.17 (c) Long-term provisions ....................................... 6 103.94 72.36

1,803.61 2,425.703. Current liabilities (a) Short-term borrowings ..................................... 7 2,369.72 356.32 (b) Trade payables ................................................. 8 A) total outstanding dues of micro enterprises

and small enterprises ................................. – – B) total outstanding dues of creditors other than

micro enterprises and small enterprises ...... 6,580.03 7,263.28 (c) Other current liabilities .................................... 9 894.04 1,369.61 (d) Short-term provisions ....................................... 10 180.42 219.74

10,024.21 9,208.95 21,570.79 20,967.97

B. ASSETS1. Non-current assets (a) Fixed assets (i) Tangible assets ........................................... 11 8,476.44 9,335.37 (b) Long-term loans and advances ......................... 12A 287.14 156.85 (c) Other non-current assets .................................. 12B 646.53 601.73

9,410.11 10,093.95 2. Current assets (a) Inventories ....................................................... 13 6,615.43 4,991.01 (b) Trade receivables ............................................. 14 3,498.88 3,520.46 (c) Cash and cash equivalents ............................... 15 446.14 71.81 (d) Short-term loans and advances ......................... 16A 1,376.99 2,170.83 (e) Other Current Assets ....................................... 16B 223.24 119.91

12,160.68 10,874.02 21,570.79 20,967.97


In terms of our report attached For and on behalf of the Board of Directors

For Deloitte Haskins & SellsChartered AccountantsUday M. Neogi Bakul Sheth Rajeev Dubey ChairmanPartner Company Secretary Sumit Issar Managing Director

Vijay Arora

DirectorsP. R. Barpande

Ajay MehtaJitendra T. Rahate Yoshihisa Fujiwara

Chief Financial Officer

Place: Mumbai Place: MumbaiDate: 25 April, 2016 Date: 25 April, 2016

Balance Sheet as at 31 March, 2016

}

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Particulars Notes For the year ended

31 March, 2016

Rs. in Lakhs

For the year ended

31 March, 2015

Rs. in Lakhs Income

1 Revenue from operations (gross) .............................. 17 21,562.83 16,387.13

Less: Excise duty ...................................................... (2,077.79) (1,317.75)

Revenue from operations (net) ................................. 19,485.04 15,069.38

2 Other Income .......................................................... 18 8.02 37.05

3 Total Revenue (1+2) ................................................ 19,493.06 15,106.43

4 Expenses

(a) Cost of materials consumed .............................. 19 (a) 14,847.96 10,610.34

(b) Changes in Inventories of finished goods and work-in-progress ................................................. 19 (b) 115.23 (226.46)

(c) Employee benefits expense ............................... 20 881.24 713.01

(d) Finance cost ...................................................... 21 293.25 348.05

(e) Depreciation and amortisation expense ............ 11 972.73 972.72

(f) Other expenses ................................................. 22 1,570.30 1,338.56

Total expenses ......................................................... 18,680.71 13,756.22

5 Profit before tax (3-4) .............................................. 812.35 1,350.21

6 Tax expense

- Current tax ......................................................... 327.00 453.00

- Deferred tax ...................................................... 34 (63.65) 143.45

263.35 596.45

7 Profit for the year (5-6) ........................................... 549.00 753.76

8 Earnings per equity share (of Rs. 10 each): 35

(a) Basic/Diluted .................................................... 3.32 4.56


Statement of Profit and Loss for the year ended 31 March, 2016

}



Vijay Arora





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Cash Flow Statement for the year ended 31 March, 2016


Rs. in Lakhs


Rs. in Lakhs A. Cash flow from operating activities

Net Profit before tax ............................................................... 812.35 1,350.21

Adjustments for:

Depreciation and amortisation expense ................................. 972.73 972.72

Sundry advances written off ................................................... 28.62 –

Interest expense ..................................................................... 293.25 348.05

unrealised Loss on foreign exchange transactions and translations ........................................................................... 16.03 34.09

Interest income ...................................................................... (3.29) (11.12)

Dividend income ................................................................... (3.55) (24.96)

Bad debts and Advances written off ....................................... – 1.77

Liabilities no longer required written back ............................. (0.76) –

Profit on fixed assets sold ....................................................... (0.42) (0.97)

1,302.61 1,319.58

Operating profit before working capital changes .................... 2,114.96 2,669.79

Changes in working capital:

Adjustments for (increase)/decrease in operating assets/liabilities:

Inventories ............................................................................. (1,624.42) (2,210.39)

Trade and other receivables ................................................... 494.37 (1,058.80)

Trade payables and other liabilities ........................................ (558.95) 3,103.56

(1,689.00) (165.63)

Cash generated from operations ............................................. 425.96 2,504.16

Net income tax paid .............................................................. (312.99) (301.96)

Net cash flow from operating activities (A) ........................... 112.97 2,202.20

B. Cash flow from investing activities

Capital expenditure on fixed assets, including capital advances .... (161.66) (597.14)

Proceeds from sale of fixed assets .......................................... 31.89 9.84

Current investments not considered as Cash and cash equivalents

- Purchase of investment ................................................ (11,878.00) (22,121.00)

- Sale of investment ........................................................ 11,878.00 22,121.00

Interest received ..................................................................... 3.29 11.54

Dividend received ................................................................. 3.55 24.96

Net cash flow from/(used) in investing activities (B) ............. (122.93) (550.80)

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Rs. in Lakhs


Rs. in Lakhs C. Cash flow from financing activities

Repayment of long-term borrowings ..................................... (1,122.09) (2,248.71)

Proceeds from other short-term borrowings (net) ................... 2,000.00 357.20

Interest Paid .......................................................................... (294.55) (350.92)

Dividend paid ....................................................................... (165.40) (90.97)

Tax on Dividend ................................................................... (33.67) (15.46)

Dividend paid ........................................................................ – –

Net cash flow from/(used in) financing activities (C) ........... 384.29 (2,348.86)

Net increase in Cash and cash equivalents (A+B+C) ............ 374.33 (697.46)

Cash and cash equivalents at the beginning of the year ......... 71.81 769.27

Cash and cash equivalents at the end of the year .................. 446.14 71.81

Cash and cash equivalents as defined in AS 3 Cash Flow Statements (Refer Note 15) .................................... 446.14 71.81





Vijay Arora





Cash Flow Statement for the year ended 31 March, 2016

}

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Mahindra Steel Service Centre Limited is a public limited company incorporated on 15 January, 1993 under the Companies Act, 1956. The Company’s main activity is steel processing from the plants located at Kanhe and Bhopal. The Company processes automotive and electrical steel.

2. Significant Accounting Policies followed by the Company:

2.1 Basis of accounting and preparation of financial statements:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 and the relevent provisions of the Companies Act, 2013 (The Act). The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.


2.2 Use of estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates, are recognized in the periods in which the results are known/materialize.

2.3 Inventories:

Inventories are stated at cost and net realizable value, whichever is lower. Cost is arrived at on a weighted average method and includes, where appropriate, manufacturing overheads and excise duty.

2.4 Cash and cash equivalents (for purposes of Cash Flow Statement):

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

2.5 Cash flow statement:

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

2.6 Fixed Assets:

(a) Fixed Assets are stated at cost less accumulated depreciation/amortization. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses. Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are included in the cost of asset upto the date the asset is ready for its intended use.

(b) (i) Leasehold land is amortized over the period of the lease.

(ii) Depreciation on other fixed assets is calculated on Straight Line Method as per the useful life prescribed in Schedule II to the Companies Act, 2013, except in respect of vehicles where the life has been assessed as five years taking into account the estimated usage of such vehicles. (Refer note 24)


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2.7 Revenue Recognition:

Sales of products are recognized, when the significant risks and rewards of ownership are transferred to the Buyer. Sales include excise duty, but excludes sales tax and value added tax.

Sales of services are recognised when services are rendered.

2.8 Other Income:

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

2.9 Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. All foreign currency monetary items outstanding at the year end (excluding long term liability) are translated at the relevant rates of exchange prevailing at the year end. Exchange difference arising on settlement/restatement of foreign currency monetary assets & liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss. In respect of forward exchange contracts, the premium or discount arising at the inception of such a contract is amortized as expense or income over the life of the contract.


2.10 Investments:

Long term Investments are valued at cost less provision, if any, for decline other than temporary, in value of such investments. Current investments are valued at the lower of cost and fair value determined by category of investment.

2.11 Employee Benefits:

(i) Defined Contribution Plan:

Company’s contributions paid/payable during the year to the provident fund, superannuation fund, Employee State Insurance Scheme and labour welfare fund are recognized in the Statement of Profit and Loss based on the amount of contribution required to be made and when services are rendered by the employees.

(ii) Defined Benefit Plan/Long Term Compensated Absences:

Company’s liability towards gratuity, compensated absence and post retirement medical benefit schemes are determined by an independent actuary using the projected unit credit method at each balance sheet date. Past service cost are recognized on a straight-line basis over the average period until the benefits become vested. Actuarial gains and losses are recognized immediately in the statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation, as reduced by the fair value of scheme assets.

2.12 Provisions and contingencies:

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.


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2.13 Taxes on Income:

Tax expense comprises current and deferred tax. Current Tax is determined as either (i) the amount of tax payable in respect of taxable income after considering usual allowances and disallowances under the Income-tax Act, 1961 or (ii) Minimum Alternate Tax for the year. Credit in respect of Minimum Alternate Tax paid is recognised only if there is convincing evidence of realisation of the same. Deferred tax reflects the impact of current year timing differences between taxable income and accounting income and reversal of timing differences of the earlier years.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabosrbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

2.14 Earnings per share:

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.



Note 3 Share Capital

Particulars As at 31 March, 2016 As at 31 March, 2015Number of

Shares Rs. in Lakhs

Number of Shares

Rs. in Lakhs

(a) AuthorisedEquity shares of Rs. 10 each ................. 17,000,000 1,700.00 17,000,000 1,700.00

17,000,000 1,700.00 17,000,000 1,700.00 (b) Issued, Subscribed and fully paid up

Equity shares of Rs. 10 each ................. 16,539,759 1,653.98 16,539,759 1,653.98 16,539,759 1,653.98 16,539,759 1,653.98


Particulars Opening Balance

Fresh issue Buy back Closing Balance

Equity Shares of Rs. 10 eachYear ended 31st March, 2016Number of shares .................................. 16,539,759 – – 16,539,759 Amount (in Lakhs) ................................. 1,653.98 – – 1,653.98 Year ended 31st March, 2015Number of shares .................................. 16,539,759 – – 16,539,759 Amount (in Lakhs) ................................. 1,653.98 – – 1,653.98


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Terms/rights attached to equity shares

The Company has only one class of equity share having a par value of Rs. 10/- per share. Each shareholder has the following voting rights (i) On a show of hands: one vote for a member present in person and (ii) On a poll: one vote for each equity share registered in the name of the member. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend. In the event of winding up, the liquidator may, with the sanction of a special resolution of the Company and any other sanction required by the Act, divide amongst the members, in specie or kind, the whole or any part of the assets of the company, whether they shall consist of property of the same kind or not.

(iii) Details of shares held by the holding company



Mahindra Intertrade Limited, the holding Company (including 7 equity shares held jointly with its nominees) ..... 10,089,257 10,089,257

(iv) Details of shares held by each shareholder holding more than 5% shares

Particulars As at 31 March, 2016 As at 31 March, 2015Number

of shares% of

holdingNumber

of shares% of

holdingMahindra Intertrade Limited (including 7 equity shares held jointly with its nominees) .............................................. 10,089,257 61% 10,089,257 61%Metal One Corporation. ........................ 6,450,502 39% 6,450,502 39%

Note 4 Reserves and Surplus



Rs. in Lakhs Rs. in Lakhs (a) Capital Reserve ............................................................. 20.00 20.00 (b) Securities Premium Account 4,011.15 4,011.15 (c) General Reserve ............................................................ 164.44 164.44 (d) Surplus in the statement of profit and loss

Opening balance........................................................... 3,483.75 2,957.76 Less: FY 2015: Depreciation on transition to Schedule II of the Companies Act, 2013 on tangible fixed assets with nil remaining useful life (Net of deferred tax of Rs. 14.77 Lakhs) (Refer Note 24) .................................. – 28.70 Add: Profit for the year ................................................. 549.00 753.76 Less: Transferred to:Proposed dividend (Rs 0.70 per equity share [2015: Rs 1 per equity share]).......................................

115.78 165.40

Tax on dividend ............................................................ 23.57 33.67 Closing balance ............................................................ 3,893.40 3,483.75

8,088.99 7,679.34


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Note 5 Long-term borrowings



Rs. in Lakhs Rs. in Lakhs (a) Term loans from Banks [Refer note (i)] Secured ..................... 829.75 1,902.75

Less: Current maturities of long term debt (refer note 9) ........ (486.00) (1,073.00)343.75 829.75

(b) Deferred payment liabilities [Refer note (ii)] Unsecured .............................................................................. 125.22 150.56 Less: Current maturities of long term debt (refer note 9) ........ (31.87) (25.34)

93.35 125.22 (c) Interest free sales tax loan from SICOM [Refer note (iii)]

Unsecured 336.20 359.95 Less: Current maturities of long term debt (refer note 9) ........ (72.15) (23.75)

264.05 336.20 701.15 1,291.17

(i) (a) The Company has a term loan of Rs. 211 Lakhs (FY 2015: Rs. 811 Lakhs) under sanction extended by Axis Bank [interest payable at the rate of 10.25% p.a. (FY 2015: 10.90% p.a.) [payable monthly] linked to the base rate] which is secured by first pari passu charge on the movable fixed assets of the Company situated at Kanhe plant, Maharashtra and second charge over the present and future current assets of the Company. The repayment details are as follows:

Repayment DetailsAmount to be

repaid Rs. in Lakhs

Repayment Year

One installment of Rs. 125.00 Lakhs on 30 June 2016 ................................................................ 125.00 FY 2016-17One installment of Rs. 86.00 Lakhs on 30 September 2016 ..................................................... 86.00 FY 2016-17

(b) In the previous year the Company had a term loan of Rs. 198 Lakhs under sanction extended by YES Bank which was secured by first pari passu charge on movable fixed assets situated at Bhopal and Kanhe plant with a minimum cover of 1.25x and negative lien on the immovable fixed assets of Bhopal plant.

(c) The Company has a term loan of Rs. 618.75 Lakhs (FY 2015: Rs. 893.75 Lakhs) under sanction extended by HDFC Bank [interest payable at the rate of 10.10% p.a. (FY 2015: 10.80% p.a.) (payable monthly) linked to the base rate], secured by first pari passu charge on movable fixed assets situated at Kanhe plant. The repayment details are as follows:

Repayment DetailsAmount to be

repaid Rs. in Lakhs

Repayment Year

4 quarterly installments of Rs. 68.75 Lakhs each .......... 275.00 FY 2016-17

4 quarterly installments of Rs. 68.75 Lakhs each .......... 275.00 FY 2017-18

One installment of Rs. 68.75 Lakhs .............................. 68.75 FY 2018-19

(ii) The Company has received a Certificate of Entitlement from the Deputy Commissioner of Sales Tax, Maharashtra State, in terms of the Package Scheme of Incentives, 1993 of the Government of Maharashtra, consequent to which the Company has deferred the sales tax liability with effect from 1 May, 2002. The Sales Tax liability so deferred is Rs. 125.22 Lakhs as at 31 March, 2016 which is repayable as follows.


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129


Repayment Details of Sales Tax VAT liabilityAmount to be

repaid Rs. in Lakhs

Repayment Year

VAT liability of FY 2002-2003 to FY 2005-2006 ................. 31.87 30 April, 2016




VAT liability of FY 2005-2006 ............................................. 6.55 30 April, 2020

(iii) Interest Free SICOM Loan of Rs. 336.20 Lakhs is repayable as follows:

Loan payable as on

Amount Rs. in Lakhs

Loan payable as on

Amount Rs. in Lakhs

Loan payable as on

Amount Rs. in Lakhs

31 March, 2016 2.40 31 March, 2016 91.80 31 March, 2016 242.00

Repayment Details Repayment Details Repayment Details

25 February, 2017 0.80 25 September, 2016 22.95 25 July, 2016 48.40



– – 25 September, 2019 22.95 25 July, 2019 48.40

– – – – 25 July, 2020 48.40

Note 6 Long-term provisionsParticulars As at 31 March,

2016As at 31 March,

2015 Rs. in Lakhs Rs. in Lakhs

(a) Provision for employee benefits(i) Provision for compensated absences ............................... 90.03 67.94 (ii) Provision for post retirement medical benefit

(Refer note 30) ................................................................ 4.21 1.31 (iii) Provision for Stock Appreciation Rights .......................... 9.70 3.11

103.94 72.36

Note 7 Short-term borrowingsParticulars As at 31 March,

2016As at 31 March,

2015 Rs. in Lakhs Rs. in Lakhs

(a) Term loan from bank (Refer Note (i)Unsecured ........................................................................... 2,000.00 –

(b) Other loans and advances [Refer note (ii)]Secured ............................................................................... 369.72 356.32

2,369.72 356.32

(i) The Company has a short term loan of Rs. 2,000 Lakhs (FY 2015: Rs. Nil) under sanction extended by HDFC Bank [interest payable at the rate of 9.35% p.a.].

(ii) The Company has taken buyer’s credit for purchase of machinery of Rs. 369.72 Lakhs (FY 2015: Rs. 356.32 Lakhs) under sanction extended by HDFC Bank secured by first pari passu charge on the stock and book debts of the Company.

Interest payble on buyer’s credit is linked to USD LIBOR.


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Note 8 Trade PayablesParticulars As at 31 March,

2016As at 31 March,

2015Rs. in Lakhs Rs. in Lakhs

(a) Trade PayablesAcceptances ........................................................................... 3,178.78 4,894.58 Other than Acceptance – Micro and small enterprises .......... – –Other than Acceptance – Other than micro and small enterprises .............................................................................. 3,401.25 2,368.70

6,580.03 7,263.28

Note: There are no Micro and Small Enterprises, as defined in the Micro, Small, Medium Enterprises Development Act, 2006, to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified based on the information available with the Company. This has been relied upon by the auditors.

Note 9 Other current liabilities



Rs. in Lakhs Rs. in Lakhs (a) Current maturities of long-term debt [Refer note 5] ............... 590.02 1,122.09 (b) Interest accrued but not due on borrowings .......................... 31.06 32.36 (c) Other payables

(i) Statutory remittances (contribution to Provident Fund and Employee State Insurance Scheme, withholding taxes, service tax, etc.) ................................................... 30.68 22.17

(ii) Value Added Tax payable ................................................ 115.20 99.73 (iii) Payables on purchase of fixed assets ............................... 21.93 51.72 (iv) Advance from customers ................................................. 67.86 21.20 (v) Dealer deposit ................................................................. 17.67 9.92 (vi) Other current liabilities ................................................... 12.98 10.42 (vii) Other current liabilities ................................................... 6.64 –

894.04 1,369.61

Note 10 Short-term provisions



Rs. in Lakhs Rs. in Lakhs

(a) Employee benefits

(i) Provision for compensated absences ............................... 14.81 11.08

(ii) Provision for gratuity (net) [Refer note 30] ...................... 18.27 –

(b) Provision - Others

– Provision for proposed equity dividend .............................. 115.78 165.40

– Provision for tax on proposed dividend .............................. 23.57 33.67

– Provision for Stock Appreciation Rights .............................. 7.99 9.59

180.42 219.74


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Note 11 Fixed Assets

Tangible Assets

Gross Block Depreciation and amortisation expense Net Block

Balance as at

1 April, 2015

AdditionsDisposals/

Adjustments

Balance as at

31 March, 2016

Balance as at

1 April, 2015

For the year

Disposals / Adjustments

Transition adjustment

recorded against surplus balance in statement of profit and loss

account

Balance as at

31 March, 2016

Balance as at

31 March, 2016

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

Land – Leasehold ....... 69.46 – – 69.46 16.52 2.09 – – 18.61 50.85

(69.46) – – (69.46) (14.43) (2.09) – – (16.52) (52.94)

Buildings .................... 2,916.52 14.90 – 2,931.42 657.82 89.65 – – 747.47 2,183.95

(2,915.49) (1.03) – (2,916.52) (568.64) (89.18) – – (657.82) (2,258.70)

Plant and Equipment **..............

11,439.99 98.18 31.09 11,507.08 4,688.31 827.53 – – 5,515.84 5,991.24

(10,899.42) (621.82) (81.25) (11,439.99) (3,846.74) (816.93) (0.45) (25.09) (4,688.31) (6,751.68)

Electric Installation....... 344.83 5.87 – 350.70 161.05 27.52 – – 188.57 162.13

(344.83) – – (344.83) (130.41) (27.39) – (3.25) (161.05) (183.78)

Furniture and Fixtures .......................

64.90 – – 64.90 27.23 5.43 – – 32.66 32.24

(59.16) (5.74) – (64.90) (20.31) (5.34) – (1.58) (27.23) (37.67)

Vehicles ...................... 29.13 3.11 5.56 26.68 24.90 1.96 5.28 – 21.58 5.10

(41.27) – (12.14) (29.13) (32.69) (4.34) (12.13) – (24.90) (4.23)

Office Equipment ....... 57.90 4.64 – 62.54 36.22 7.68 – – 43.90 18.64

(56.36) (1.54) – (57.90) (8.53) (15.95) – (11.74) (36.22) (21.68)

Computers .................. 77.04 18.57 0.48 95.13 52.35 10.87 0.38 – 62.84 32.29

(68.44) (10.07) (1.47) (77.04) (40.49) (11.50) (1.45) (1.81) (52.35) (24.69)

Total ........................... 14,999.77 145.27 37.13 15,107.91 5,664.40 972.73 5.66 – 6,631.47 8,476.44

Previous year .............. (14,454.43) (640.20) (94.86) (14,999.77) (4,662.24) (972.72) (14.03) (43.47) (5,664.40) (9,335.37)

** Additions during the year include foreign exchange loss of Rs. 7.78 lakhs (net) [FY 2015: Rs. 21.69 lakhs (net)].

Note: Figures in bracket are in respect of the previous year.

Note 12A Long-term loans and advancesParticulars As at 31 March, 2016 As at 31 March, 2015

Rs. in Lakhs Rs. in Lakhs Unsecured, Considered Good

(a) Security deposits ............................................................ 23.38 23.38 (b) Other loans and advances

Advance income tax (Net of provisions) ........................ 263.76 130.63 (c) Surplus of plan assets over obligation - gratuity

(Refer note 31) ................................................................ – 2.84 287.14 156.85

Note 12B Other non-current assetsParticulars As at 31 March, 2016 As at 31 March, 2015

Rs. in Lakhs Rs. in Lakhs Unsecured, Considered GoodIndustrial Investment Promotion Assistance receivable (Refer note 38) ............................................................... 646.53 601.73

646.53 601.73


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Note 13 Inventories (at lower of cost and net realisable value)

Particulars As at 31 March, 2016 As at 31 March, 2015 Rs. in Lakhs Rs. in Lakhs

(a) Raw materials [refer note 19(a)] .................................... 2,815.05 2,902.59 Goods in transit ............................................................ 2,672.35 861.49

5,487.40 3,764.08 (b) Work in progress ........................................................... 381.38 342.91 (c) Finished goods [refer note 19(b)] .................................. 621.68 775.38 (d) Scrap ............................................................................. 48.24 31.27 (e) Stores and spares .......................................................... 76.73 77.37

6,615.43 4,991.01

Note 14 Trade receivablesParticulars As at 31 March, 2016 As at 31 March, 2015

Rs. in Lakhs Rs. in Lakhs (a) Trade receivables outstanding for a period exceeding

six months from the date they are due for paymentUnsecured, considered good ....................................... 40.56 3.60

(b) Other Trade receivablesUnsecured, considered good ....................................... 3,458.32 3,516.86

3,498.88 3,520.46

Note 15 Cash and cash equivalentsParticulars As at 31 March, 2016 As at 31 March, 2015

Rs. in Lakhs Rs. in Lakhs (a) Cash on hand ............................................................... 0.22 0.24 (b) Balances with banks

(i) In current accounts ............................................... 445.92 71.57 446.14 71.81

Of the above, the balances that meet the definition of cash and cash equivalents as per AS 3 Cash Flow Statements is ................................................. 446.14 71.81

Note 16A Short-term loans and advancesParticulars As at 31 March, 2016 As at 31 March, 2015

Rs. in Lakhs Rs. in Lakhs Other loans and advances Unsecured, considered good

(a) Advances to suppliers ................................................... 14.93 53.40 (b) Custom deposits ............................................................ 32.23 32.23 (c) Advance/Loans to employees ........................................ 3.72 7.94 (d) Prepaid expenses........................................................... 10.45 2.49 (e) Minimum Alternate Tax (MAT) credit entitlement .......... – 147.14 (f) Balances with government authorities ...........................

(i) CENVAT credit receivable ...................................... 767.92 1,432.53 (ii) Value Added Tax credit receivable ......................... 155.88 191.66 (iii) Service Tax credit receivable .................................. 308.67 222.53 (iv) Entry Tax receivable ............................................... 59.24 59.24

(g) Other loans and advances ............................................. 23.95 21.67 1,376.99 2,170.83

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Note 16B Other Current Assets Particulars As at 31 March, 2016 As at 31 March, 2015

Rs. in Lakhs Rs. in Lakhs Unsecured, considered goodIndustrial Investment Promotion Assistance receivable (Refer note 38) ............................................. 223.24 119.91

223.24 119.91

Note 17 Revenue from Operations



Rs. in Lakhs Rs. in Lakhs Revenue from -

(a) Sale of products [Refer Note (i) below] ............................ 18,696.54 12,917.86 (b) Sale of services [Refer Note (ii) below] ............................ 1,697.58 2,007.27 (c) Other operating revenues [Refer Note (iii) below] ........... 1,168.71 1,462.00

21,562.83 16,387.13

(d)Less: Excise duty ....................................................................... 2,077.79 1,317.75

19,485.04 15,069.38 Notes:

(i) Sale of products comprises: Manufactured goodsSteel products ............................................................... 18,696.54 12,917.86

(ii) Sale of services comprises:Steel processing............................................................. 1,697.58 2,007.27

(iii) Other operating revenues comprise: Scrap sales ............................................................. 773.00 718.21 Insurance claim ...................................................... 5.19 15.46 Cash discount ......................................................... 7.97 5.79 Industrial Investment Promotion Assistance

(Refer note 38) ....................................................... 378.17 721.64 Other operating income ......................................... 4.38 0.90

1,168.71 1,462.00

Note 18 Other Income



Rs. in Lakhs Rs. in Lakhs (a) Dividend income

Dividend from current investments (other than trade) .......................................................... 3.55 24.96

(b) Interest incomeInterest from banks ........................................................ – 1.09 Others ........................................................................... 3.29 10.03

(c) Liabilities no longer required written back .................................................................. 0.76 –

(d) Profit on sale of fixed assets .......................................... 0.42 0.97 8.02 37.05

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Note 19 (a) Cost of Material Consumed




Opening Stock .............................................................. 3,764.08 1,827.29

Add: Purchases .............................................................. 16,571.28 12,547.13

20,335.36 14,374.42

Less: Closing Stock ........................................................ (5,487.40) (3,764.08)

14,847.96 10,610.34

Details of raw materials consumed For the year ended 31 March, 2016



Steel .............................................................................. 14,847.96 10,610.34

Details of Closing Stock of raw materials For the year ended 31 March, 2016



Steel .............................................................................. 5,487.40 3,764.08

Note 19 (b) Changes in inventories of finished goods and work-in-progress




Inventories at the end of the year Finished goods ......... 621.68 775.38

Work-in-progress ........................................................... 381.38 342.91

Total .............................................................................. 1,003.06 1,118.29

Inventories at the beginning of the year Finished goods ... 775.38 347.57

Work-in-progress ........................................................... 342.91 544.26

Total .............................................................................. 1,118.29 891.83

Decrease/ (Increase) in Stock ........................................ 115.23 (226.46)

Details of inventory of finished goods at the end of the year As at 31 March, 2016 As at 31 March, 2015


Steel Products ............................................................... 621.68 775.38

Details of inventory of work-in-progress at the end of the year




Steel Products ............................................................... 381.38 342.91

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Note 20 Employee Benefit Expenses




(a) Salaries and wages ........................................................ 689.39 580.57

(b) Stock Appreciation Rights Scheme Expenses (Refer note 36) ............................................... 24.31 15.15

(c) Contribution to provident and other funds .................... 36.82 32.89

(d) Gratuity expense [Refer note 30(ii)(b)] ...................................... 21.11 11.49

(e) Post retirement medical benefit expense [Refer note 30(ii)(a)] ...................................................... 2.90 0.61

(f) Staff welfare .................................................................. 106.71 72.30

881.24 713.01

Note 21 Finance Cost




(a) Interest expense on

(i) Borrowings ............................................................. 231.11 289.03

(ii) Other

- Usance Interest .................................................... 60.76 58.82

- delayed/deferred payment of tax .......................... 1.38 0.20

293.25 348.05

Note 22 Other Expenses



Rs. in Lakhs Rs. in Lakhs (a) Stores consumed ........................................................... 63.80 49.78 (b) Power and fuel .............................................................. 201.94 239.11 (c) Rent including lease rentals .......................................... 6.91 5.66 (d) Rates and taxes ............................................................. 17.17 14.95 (e) (Decrease)/Increase of excise duty on inventory

(Refer note 35) .............................................................. (15.62) (61.93)(f) Insurance ....................................................................... 26.96 20.82 (g) Repairs and maintenance:

Buildings ................................................................ 29.39 14.02 Machinery .............................................................. 46.45 37.64 Others .................................................................... 103.72 174.39

(h) Software charges ........................................................... 22.77 25.70

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Rs. in Lakhs Rs. in Lakhs (i) Legal and professional charges ..................................... 77.22 57.48 (j) Freight outward ............................................................. 155.33 128.83 (k) Subcontracting, hire and service charges ...................... 328.95 349.71 (l) Auditors’ remuneration [Refer note (i) below] ............... 12.00 10.01

(m) Loss on foreign exchange transactions and translations 247.63 136.80 (n) Bad debts and advances written off .............................. – 1.77 (o) Sundry advances written off .......................................... 28.62 –(p) Expenditure on CSR activities ....................................... 15.53 11.80 (q) Miscellaneous expenses ................................................ 201.53 122.02

1,570.30 1,338.56

Note(i) Auditors’ remuneration For the year ended


31 March, 2015Rs. in Lakhs Rs. in Lakhs

Auditors’ remuneration includes payment to auditors -(a) As statutory auditor ....................................................... 8.00 7.00 (b) For certification work .................................................... 1.45 0.70 (c) For reimbursement of expenses ..................................... 0.05 0.06 (d) For Taxation work .......................................................... 2.50 2.25

12.00 10.01

Note 23 Contingent liabilities and commitments (to the extent not provided for)

Particulars As at 31 March, 2016 As at 31 March, 2015 Rs. in Lakhs Rs. in Lakhs

(i) Claims against the Company not acknowledged as debts:(a) Income Tax demand for AY 2011-12 ...................... 5.04 5.04 (b) Excise duty demand for October 2011 to

January 2013 .......................................................... 100.75 –(c) Custom Duty demand for the financial

year 2009-10 .......................................................... 11.42 11.42 (ii) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible assets........................................................ 0.43 6.67

(iii) Other money for which the Company is contingently liable(a) Corporate Guarantee given by the Company to M/s

SHV Energy Private Limited ................................... 12.00 12.00 (b) Bill discounted under Letter of Credit

by HDFC Bank ....................................................... – 6.27

Note 24 Pursuant to the enactment of the Companies Act 2013 (the ‘Act’), the Company had, effective 1st April 2014, reviewed and revised the estimated useful life of its fixed assets, in accordance with the provisions of Schedule II to the Act. The carrying amount of the assets as on that date have been depreciated over the remaining useful life of the assets as per Schedule II of the Companies Act, 2013. Consequently, depreciation for FY 2015 was higher by Rs. 177.42 Lakhs. Further, an amount of Rs. 28.70 Lakhs (net of deferred tax of Rs. 14.77 Lakhs) had been recognized in the Surplus in the statement of profit and loss, where the remaining useful life of such assets is Nil as at 1st April, 2014 in line with the provisions of Schedule II to the Companies Act, 2013.

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Note 25 Derivative Instruments

The Company has entered into Forward Exchange Contracts (being a derivative instrument), which are not intended for trading or speculative purposes, but for hedge purposes.

(i) The following are the outstanding Forward Exchange Contracts entered into by the Company:

Particulars Currency As at 31 March, 2016

(figures in Lakhs)


(figures in Lakhs)

Buy/Sell

Cross currency

Amount in Foreign Currency

Amount in Rs.


Amount in Rs.

Foreign currency loan (Import of Machinery) USD 5.64 369.72 5.67 356.32 Buy RupeesImport of machinery JPY – – 75.00 39.77 Buy RupeesImport of Raw Material USD 26.40 1,762.73 49.84 3,142.60 Buy Rupees

(ii) The year end foreign currency exposures that have not been hedged by a derivatives instrument or otherwise are given below.

Particulars Currency As at 31 March, 2016

(figures in Lakhs)


(figures in Lakhs)Payable on account of Amount

in Foreign Currency

Amount in Rs.


Amount in Rs.

Import of Raw Material .............................. USD 45.86 3,062.07 27.98 1,764.41

Note 26 Value of imports calculated on CIF basis




Plant and Machinery ..................................................... – 397.65

Spares ............................................................................ 3.70 27.90

Raw materials ................................................................ 10,288.58 6,928.34

Note 27 Details of consumption of imported and indigenous raw materials



Rs. in Lakhs % Rs. in Lakhs %

Import ........................................................................... 8,276.51 56 5,160.15 49

Indigenous ..................................................................... 6,571.45 44 5,450.19 51

14,847.96 100 10,610.34 100

Note 28 Earning in foreign exchange




Export of goods calculated on FOB basis .................... 25.50 2.58

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Note 29 Expenditure in foreign currency




Interest .......................................................................... 52.33 37.62

Service Charges ............................................................. 2.01 0.06

Loss on foreign exchange transactions and translations ............................................................ 247.63 136.80

Note 30 Employee Benefits:

Following are the relevant disclosures in pursuance of the Accounting Standard 15, “Employee Benefits”.

i) The Company has recognized, in the statement of profit and loss for the year, an amount of Rs. 36.64 Lakhs (2015 : Rs. 32.60 Lakhs) as expenses under defined contribution plans.

Benefit (Contribution to) For the year ended 31 March, 2016



Provident Fund .............................................................. 26.79 24.97

Pension Fund ................................................................. 9.84 7.63

Total 36.64 32.60

ii) The Company operates defined benefit plans as follows:

a. Unfunded - Post Retirement Medical Benefits

b. Funded - Post Retirement Gratuity

a. Details of unfunded defined benefit obligations in respect of Post Retirement Medical Benefits are as follows:




1. Reconciliation of opening and closing balances of obligation

a. Opening Obligation ....................................................... 1.31 0.75

b. Current Service Cost....................................................... 0.23 0.11

c. Interest Cost ................................................................... 0.12 0.08

d. Actuarial (gain)/loss ........................................................ 2.55 0.42

e. Liabilities assumed on transfer of employees ................. – (0.05)

f. Benefits paid .................................................................. – –

g. Closing Obligation ......................................................... 4.21 1.31

2. Expected employer’s contribution next year ......................... – –

3. Expense recognised in the year

a. Current Service Cost....................................................... 0.23 0.11

b. Interest Cost ................................................................... 0.12 0.08

c. Actuarial (gain)/loss ........................................................ 2.55 0.42

d. Expenses recognized in the year ................................................ 2.90 0.61

The expense is included in line item- Post retirement medical benefit expense in note 20.

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139






4. Assumptionsa. Discount rate .................................................................. 8.00% 8.05%b. Salary Growth Rate ........................................................ 10% 10%c. Annual Increase in Healthcare cost ............................... 7% 7%d. Normal retirement age ................................................... 60 years 60 yearse. Attrition rate ................................................................... 9% 9%f. Mortality ......................................................................... *Note *Note

* Note: Indian Assured Lives Mortality (2006-08)

5. Effect of one percentage point change in the assumed medical inflation rate

One percentage point increase in medical

inflation rates

One percentage point decrease in medical

inflation rates


2016 2015 2016 2015

Effect on the aggregate service and interest cost of Post Employment Medical Benefits ............................. 0.17 0.07 (0.14) (0.06)

Effect on the accumulated Post Employment Medical Benefit obligations ...................................................... 0.78 0.27 (0.65) (0.22)

6. Experience adjustments

Rs. in Lakhs

Particulars 2016 2015 2014 2013 2012

Defined Benefit obligation .............................. 4.21 1.31 0.75 2.05 2.05

Deficit ............................................................. (4.21) (1.31) (0.75) (2.05) (2.05)

Experience adjustments on plan liabilities ...... 2.52 0.22 (1.58) (0.59) 0.26

b. Details of Gratuity Plan are as follows:




1. Reconciliation of opening and closing balances of obligation:

a. Opening Obligation ........................................................ 101.18 83.72

b Current Service Cost........................................................ 12.21 9.72

c. Interest Cost .................................................................... 8.79 7.92

d. Actuarial (gain)/loss ......................................................... 9.97 4.62

e. Liabilities assumed on transfer of employees .................. – 0.09

f. Benefits paid ................................................................... (0.67) (4.89)

g. Closing Obligation .......................................................... 131.48 101.18

The defined benefit obligation is wholly funded by the company

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140






2. Change in Plan Assets (Reconciliation of opening & closing balances):

a. Opening fair value of plan assets .................................... 104.02 89.15

b. Expected return on plan assets ........................................ 7.67 6.50

c. Actuarial gain/(loss) ......................................................... 2.19 4.27

d. Contributions ................................................................... – 6.80

e. Asset received on transfer of employees ......................... – 2.19

f. Benefits paid ................................................................... (0.67) (4.89)

g. Closing fair value of plan assets ...................................... 113.21 104.02

3. Expected employer’s contribution next year: ......................... 10.00 5.00

4. Reconciliation of fair value of assets and obligations:

a. Fair value of plan assets as at the year end ..................... 113.21 104.02

b. Present value of obligation as at the year end .................. 131.48 101.18

c. Amount recognised in the balance sheet - (assets)/liabilities .......................................................................... 18.27 (2.84)

5. Expense recognised in the year:

a. Current service cost......................................................... 12.21 9.72

b. Interest cost ..................................................................... 8.79 7.92

c. Expected return on plan assets ........................................ (7.67) (6.50)

d. Actuarial (gain)/loss ......................................................... 7.78 0.35

e. Expenses recognized in the year ..................................... 21.11 11.49

6. Investment Details:

a. Insurer (LIC) Managed funds* .......................................... 100% 100%

7. Assumptions:

a. Discount rate (per annum) .............................................. 8.00% 8.05%

b. Estimated rate of return on plan assets (per annum) ...... 7.50% 7.50%

c. Salary Growth Rate (per annum) ..................................... 10% 10%

d. Mortality Rate** .............................................................. **Note **Note

**Note: Indian Assured Lives Mortality (2006-08)

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141




Rs. in Lakhs

Particulars 2016 2015 2014 2013 2012

Defined Benefit obligation ............................... 131.48 101.18 83.72 76.38 63.55

Fair Value of Plan Assets .................................. 113.21 104.02 89.15 81.87 66.03

Surplus ............................................................. (18.27) 2.84 5.43 5.49 2.48

Experience adjustments on plan assets ............. 2.19 4.27 1.02 0.23 0.48

Experience adjustments on plan liabilities ....... 9.42 (2.76) (0.87) 0.25 13.81

* Due to absence of data provided by LIC, break-up of Plan assets (assets allocation) in insurer managed funds have not been furnished.

Basis used to determine the discount rate:

The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligation.

Basis used to determine the expected rate of return:

Based on expectation of the average long term rate of return expected on investment of the fund, during the estimated term of obligation.

The estimates of future salary increases take into account inflation, seniority, promotion and the other relevant factors.

Note 31 Segment Reporting:

The company has a single segment namely steel processing for the purpose of Accounting Standard 17 on segment reporting.

Note 32 Related Party transactions:

Related party disclosures as required by AS-18 “Related Party Disclosures” are given below.

Ultimate Holding Company Mahindra & Mahindra Ltd.

Holding Company Mahindra Intertrade Limited

Key Management Personnel (KMP) Mr. Harsh Kumar (Managing Director) upto 30 September 2015

(Refer Note 37) Mr. Sumit Issar (Managing Director) from 1 October 2015

Other parties with whom transactions have taken place during the year.

(i) Fellow Subsidiaries

Mahindra MiddleEast Electrical Steel Service Centre (FZC) (MME)

Mahindra Auto Steel Private Limited (MASL)

Mahindra Integrated Business Solutions Pvt. Limited (MIBS)

Mahindra First Choice Services Limited (MFCSL)

Mahindra Ugine Steel Company Limited (MUSCO) (Upto 10 December 2014)

(ii) A Company having significant influence Metal One Corporation

Book 1.indb 141 11/25/2016 2:45:53 PM


142



(a)

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Book 1.indb 142 11/25/2016 2:45:53 PM


143



Note 33 Earnings per share:

Particulars As at 31 March, 2016 As at 31 March, 2015

Profit after tax (Rs. in Lakhs) (A) .................................. 549.00 753.76

Weighted average number of shares Basic (B) .............. 16,539,759 16,539,759

Earnings per share Basic/Diluted (Rupees) (A/B) .............. 3.32 4.56

Nominal value of equity share (Rupees) .......................... 10 10

Note 34 Deferred tax liabilities:

Particulars As at 31 March, 2016 Rs. in Lakhs

As at 31 March, 2015 Rs. in Lakhs

Tax effect of items constituting deferred tax liability

On difference between book balance and tax balance of fixed assets ................................................................ 1,040.41 1,093.78

1,040.41 1,093.78

Tax effect of items constituting deferred tax assets

Provision for Employee Benefits ................................... 41.89 31.61

41.89 31.61

Deferred Tax Liability (net) ............................................ 998.52 1,062.17

Note 35 Excise duty:

Excise duty disclosed under “Other Expenses” Note No 22 represents difference between the excise duty on opening stock and closing stock of finished goods.

Note 36 Stock Appreciation Rights:

The Company has granted Stock Appreciation Rights (“SARs”) to eligible employees in accordance with the Stock Appreciation Rights Scheme 2013 (SARs-2013) during the years ended 31st March 2013, 31st March 2014, 31st March 2015 and 31st March 2016. Under the scheme, eligible employees are entitled to receive appreciation in value of equity shares over its face value on exercise of the SARs. The SARs may be exercised up to a period of three years from the date of vesting.

The related expenses for SARs amounting to Rs. 24.31 lakhs (2015: Rs. 15.15 lakhs) have been recognised as employee cost.

Summary of SARs:

SARs outstanding on 1st April 2015 65,060

SARs granted during the year 6,555

SARs forfeited during the year –

SARs exercised during the year 21,840

SARs outstanding on 31st March 2016 49,775

The fair value of SARs granted during the year is Rs. 84.70 per SAR.

Book 1.indb 143 11/25/2016 2:45:53 PM


144


Had the Company adopted fair value method as described in the Guidance note on Accounting for Employee Share - based Payments issued by the Institute of Chartered Accountants of India, the employee compensation cost would have been lower by Rs. 7.15 lakhs, profit after tax higher by Rs. 4.79 lakhs and the earnings per share would have been higher by Re 0.03.

The fair value has been calculated using the Black Scholes Options Pricing Model and the significant assumptions made in this regard are as follows:

Grant dated 26th February, 2016

Grant dated 26th February, 2015

Risk free interest rate Annualised continuously compounded rate on safe asset with same maturity

Expected volatility 16.68% 13.51%

Expected dividend yield 7.04% 6.68%

Note 37 Managerial Remuneration:

The is not required to pay any managerial remuneration in respect of the “Managing Director” appointed under Section 197 and other applicable provisions of the Companies Act, 2013, from time to time, as per the terms approved.

Note 38 Industrial Investment Promotion Assistance:

In terms of Madhya Pradesh Industrial Investment Promotion Assistance Scheme, the Company in respect of Plant set up in an earlier year at Bhopal is entitled for Industrial Investment Promotion Assistance (IIPA) equivalent to 75% of amount deposited as VAT or CST during each of the 10 years ending March 2020. In the earlier years in view of uncertainty about the receipt of IIPA amount the Company had not recognised the amount receivable in the respective years beginning 2010-2011. Considering the sanction orders received for the year 2010-2011 during FY 2014 and for the year 2011-2012 during FY 2015, the Company had accrued IIPA of Rs. 721.64 Lakhs relating to the years 2012-2015 (including Rs. 453.28 Lakhs upto the year ended 31st March 2014) during FY 2015.

Note 39 Corporate Social Responsibility (CSR):

The CSR obligation for the year as computed by the Company and relied upon by the auditors is Rs. 15.24 Lakhs (FY 2015 Rs. 11.73 Lakhs). CSR amount spent during the year is Rs. 15.53 Lakhs (FY 2015 Rs. 11.80 Lakhs).

Note 40 Previous year’s figures



}

For and on behalf of the Board of Directors

Bakul Sheth Rajeev Dubey ChairmanCompany Secretary Sumit Issar Managing Director

Vijay Arora




Place: MumbaiDate: 25th April, 2016

Book 1.indb 144 11/25/2016 2:45:53 PM



145

Mahindra Electrical

Steel Private Limited

Book 1.indb 145 11/25/2016 2:45:53 PM



146

Board of directors

Rajeev Dubey

Sumit Issar

auditors


Tower 3, 27th - 32nd Floor, Indiabulls Finance Centre, Elphinstone (West), Mumbai - 400013, India

Bankers

HDFC Bank Limited

ICICI Bank Limited

registered office

Mahindra Towers, P. K. Kurne Chowk,

Worli, Mumbai - 400018, India

CIN: U27100MH2009PTC193205

Tel. No.: +91 22 24935185/86

Fax: +91 22 24951236

Book 1.indb 146 11/25/2016 2:45:53 PM



147

Your Directors present their Seventh Report, together with the Audited Financial Statements of your Company for the year ended 31st March, 2016.

(Amount in Rs.)

For the year ended 31st March

FINANCIAL HIGHLIGHTS AND STATE OF COMPANY’S AFFAIRS 2016 2015

Income .................................................................................................. 74,81,599 66,764

Profit/(Loss) before taxation .................................................................... 53,04,565 (25,99,491)

Less: Provision for taxation: ................................................................... 10,54,191 –

Profit/(Loss) for the year after tax ............................................................ 42,50,374 (25,99,491)

Balance brought forward from earlier years ........................................... (2,36,04,444) 2,10,04,953

Loss carried forward to balance sheet .................................................... 1,93,54,070 2,36,04,444

Net worth .............................................................................................. (1,88,54,070) (2,31,04,444)

No material changes and commitments have occurred after the close of the year till the date of this report which affect the financial position of your Company.

OPERATIONSYour Company is currently evaluating options for its project in Western India. During the year under review, your Company had sold its land at Naini at a profit. Your Company’s income for the year was Rs. 74.82 Lakhs as against Rs. 0.67 Lakhs in the previous year. The profit after tax for the year was Rs. 42.50 Lakhs as against a loss of Rs. 25.99 Lakhs in the previous year.

DIVIDENDYour directors do not recommend any dividend on equity shares for the year.

SHARE CAPITALThe authorised share capital of your Company as on 31st March, 2016 stood at Rs. 15 crores divided into 1,50,00,000 equity shares of Rs. 10/- each. The paid-up share capital of the Company as on 31st March, 2016 stood at Rs. 5 Lakhs divided into 50,000 equity shares of Rs. 10/- each.

ALLOTMENT OF SHARESOn 26th April, 2016 your Company allotted additional 2,50,000 Equity Shares of Rs. 10 each aggregating to Rs. 25 Lakhs and hence the paid-up share capital as on date of this Report stood at Rs. 30 Lakhs divided into 3 lakh equity shares of Rs. 10/- each.

BOARD OF DIRECTORS

COMPOSITION:Presently, the Board comprises of the following directors:

Director (DIN) DesignationMr. Rajeev Dubey (00104817) DirectorMr. Sumit Issar (06951249) Director

Mr. Harsh Kumar (DIN: 00082621) ceased to be the Director of your Company with effect from 1st October, 2015. The Board places on record its sincere appreciation for the guidance provided by Mr. Kumar during his tenure as Director of your Company.

Mr. Sumit Issar retires by rotation at the forthcoming Annual General Meeting, and being eligible, has offered himself for re-appointment.

The directors have immense experience in business related to trading, finance and general corporate management.

BOARD MEETINGS AND ANNUAL GENERAL MEETING OF THE COMPANY:The Board met four times during the year under review, i.e., on 30th April, 2015, 28th July, 2015, 23rd November, 2015 and 21st January, 2016. The gap between two consecutive Board Meetings did not exceed 120 days. The 6th Annual General Meeting of the Company was held on 28th July, 2015.

directors’ report

Book 1.indb 147 11/25/2016 2:45:53 PM



148

The attendance of the Directors at the Board Meetings of the Company were as under:

Name of the Director No. of Board Meetings attended #Mr. Harsh Kumar 2Mr. Sumit Issar 4Mr. Rajeev Dubey 3

# ceased to be Director of the company w.e.f. 1st October, 2015.


Pursuant to Section 134(3)(c) of the Companies Act, 2013, your directors, based on representation from operating management, and after due enquiry, confirm that:

(a) in the preparation of the annual accounts for the year ended 31st March, 2016 the applicable accounting standards have been followed;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year on 31st March, 2016 and of the loss of the Company for the financial year ended on that date;




CODE OF CONDUCT

Your Company has adopted Code of Conduct for its directors which enunciates the underlying principles governing the conduct of the Company’s business and seeks to reiterate the fundamental precept that good governance must and would always be an integral part of the Company’s ethos.

The Company has, for the year, received declarations from directors, affirming compliance with the Code.

STATUTORY AUDITORS

At the Fifth Annual General Meeting, M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai (ICAI registration number 117365W) were appointed as Statutory Auditors of your Company for a period of five years. They hold office from the conclusion of the Fifth Annual General Meeting till the conclusion of the Tenth Annual General Meeting.

Pursuant to the first proviso of Section 139(1) of Companies Act, 2013, members are requested to ratify the appointment of Statutory Auditors at the ensuing Annual General Meeting and fix their remuneration.

As required under the provisions of Sections 139 and 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, your Company has obtained a written consent and certificate from Statutory Auditors to the effect that their appointment, if ratified, would be in conformity with the conditions, limits and criteria specified therein.

Your directors confirm that the Auditors’ Report does not contain any qualification, reservation or adverse remark.


During the year under review, the Statutory Auditors, have not reported any instances of frauds committed in the Company by its officers or employees to the Board of Directors under Section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this report.

INTERNAL CONTROLS

Your Company has implemented a system of internal controls and monitoring procedures as well as internal financial controls on financial statements and the same is in the opinion of the Board, commensurate with the Company’s size. Your Company conducts reviews to assess the adequacy of these controls for its business.


Your Company has formulated a risk management policy to address risks which, in the opinion of the Board, may threaten the existence of the Company.

Book 1.indb 148 11/25/2016 2:45:53 PM



149


Your Company has not accepted any deposits from the public or its employees during the year under review. There were no deposits which are not in compliance with the requirements of Chapter V of Companies Act, 2013.

The Company has not granted any loans, provided any securities and not made any investments pursuant to Section 186 of the Companies Act, 2013 during the year under review. Your Company has not made any loans/advances and investment which are required to be disclosed in the annual accounts of the Company pursuant to Regulations 34(3) and 53(f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule V applicable to the ultimate Parent Company, Mahindra & Mahindra Limited.


There are no contracts or arrangements under Section 188(1) of the Companies Act, 2013 with related parties of the Company which require reporting. Details of the transactions with related parties as required to be reported in line with the applicable accounting standards may be referred to under notes to the financial statements.


Pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as on 31st March, 2016 is furnished as Annexure I and forms part of this report.

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

During the year under review, no complaints were received under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for prevention of sexual harassment.


Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, are furnished in Annexure II and forms part of this report.

GENERAL DISCLOSURE

Your directors state that no disclosure or reporting is required in respect of the following items as they were not applicable to your Company during the year:

a) provisions relating to CSR enumerated under Section 135 of the Companies Act, 2013.

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

c) Issue of shares (including sweat equity shares) to employees of the Company under any ESOP scheme, etc.

d) Particulars of employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

e) No significant or material orders were passed by regulators or courts or tribunals which impact the Company’s going concern status and operations in future.

ACKNOWLEDGEMENTS



Rajeev Dubey Director



Book 1.indb 149 11/25/2016 2:45:54 PM



150


Form No. MGT-9

Extract of Annual Return as on the financial year ended on 31st March, 2016[Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies



i. Corporate Identification Number (CIN) : U27100MH2009PTC193205

ii. Registration Date : June 10, 2009

iii. Name of the Company : Mahindra Electrical Steel Private Limited

iv. Category/Sub-Category of the Company : Company limited by shares/Indian Non-Government Company


: Mahindra Towers, P. K. Kurne Chowk,Worli, Mumbai - 400018Tel.: +91-22-24905623 Fax: +91-22-24951236Contact: [email protected]

vi. Whether listed company Yes/No : No


: N.A.

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY: All the business activities contributing 10% or more of the total turnover of the Company:

Sr. No.




1 – – –

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:

Sr. No.

Name and Address of the company

CIN/GLN Holding/ Subsidiary/Associate

% of shares

held

Applicable Section

1 Mahindra Intertrade Limited Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai - 400018


100 2(46)

2 Mahindra and Mahindra Limited Gateway Building, Apollo Bunder, Colaba, Mumbai - 400001


– 2(46)

IV. SHAREHOLDING PATTERN (Equity Share Capital break-up as percentage of total equity)

(i) Category-wise Share Holding

Category of Shareholders No. of Shares held at the beginning of the year


% Change

during the year


Shares


Shares

A. Promoters

(1) Indian

a) Individual/HUF – – – – – – – – –

b) Central Govt. – – – – – – – – –

Book 1.indb 150 11/25/2016 2:45:54 PM



151

Category of Shareholders No. of Shares held at the beginning of the year


% Change

during the year


Shares


Shares

c) State Govt(s) – – – – – – – – –

d) Bodies Corp. – 50,000 50,000 100 – 50,000 50,000 100 –

e) Banks/FI – – – – – – – – –

f) Any other – – – – – – – – –

Sub-total (A)(1): – 50,000 50,000 100 – 50,000 50,000 100 –

(2) Foreigna) NRIs-Individuals – – – – – – – – –b) Other-Individuals – – – – – – – – –c) Bodies Corp. – – – – – – – – –d) Banks/FI – – – – – – – – –e) Any other – – – – – – – – –Sub-total (A)(2): – – – – – – – – –Total shareholding of Promoter (A)=(A)(1)+(A)(2) – 50,000 50,000 100 – 50,000 50,000 100 –B. Public Shareholding1. Institutionsa) Mutual Funds – – – – – – – – –b) Banks/FI – – – – – – – – –c) Central Govt. – – – – – – – – –d) State Govt(s) – – – – – – – – –e) Venture Capital Funds – – – – – – – – –f) Insurance Companies – – – – – – – – –g) FIIs – – – – – – – – –h) Foreign Venture Capital

Funds – – – – – – – – –

i) Others (specify) – – – – – – – – –Sub-total (B)(1): – – – – – – – – –2. Non-Institutionsa) Bodies Corp.i) Indian – – – – – – – – –ii) Overseas – – – – – – – – –b) Individualsi) Individual shareholders

holding nominal share capital upto Rs. 1 Lakh

– – – – – – – – –

ii) Individual shareholders holding nominal share capital in excess of Rs. 1 Lakh

– – – – – – – – –

c) Others (specify)Sub-total (B)(2): – – – – – – – – –Total Public Shareholding (B)=(B)(1)+(B)(2) – – – – – – – – –

C. Shares held by custodian for GDRs & ADRs – – – – – – – – –

Grand Total (A+B+C) – 50,000 50,000 100 – 50,000 50,000 100 –

Book 1.indb 151 11/25/2016 2:45:54 PM



152

(ii) Shareholding of Promoters (equity):

Sr. No.



% change in Shareholding

during the year

No. of Shares


Company



No. of Shares


Company



1. Mahindra Intertrade Limited

49,994 100 – 49,994 100 – –

2. * Mr. Zhooben Bhiwandiwala (Nominee of Mahindra Intertrade Limited)

1 – – 1 – – –

3. * Mr. Harsh Kumar (Nominee of Mahindra Intertrade Limited)

1 – – 1 – – –

4. * Mr. Narayan Shankar (Nominee of Mahindra Intertrade Limited)

1 – – 1 – – –

5. * Mr. S Venkatraman (Nominee of Mahindra Intertrade Limited)

1 – – 1 – – –

6. * Mr. K. Chandrasekar (Nominee of Mahindra Intertrade Limited)

1 – – 1 – – –

7. * Ms. Jyoti Walunj (Nominee of Mahindra Intertrade Limited)

1 – – 1 – – –

Total 50,000 100 – 50,000 100 – –

* Held for Mahindra Intertrade Limited by its nominees to comply with the statutory provisions in respect of minimum numbers of member.


Sr. No.



1. Mahindra Intertrade Limited No. of Shares % of total Shares of the

Company

No. of Shares % of total Shares of the

Company

At the beginning of the year 50,000 100 50,000 100

Date wise Increase/Decrease in Promoters Shareholding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity/etc.)

– – – –

At the end of the year 50,000 100 50,000 100

Book 1.indb 152 11/25/2016 2:45:54 PM



153


Sr. No.

For Each of the Top Ten Shareholders Shareholding at the beginning of the year



Company


Company

1. At the beginning of the year – – – –

Date wise Increase/Decrease in Promoters Shareholding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity/etc.)

– – – –

At the end of the year – – – –


Sr. No.




Company


Company

1. At the beginning of the year – – – –

Date wise Increase/Decrease in Share holding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity

– – – –

At the end of the year – – – –

V. INDEBTEDNESS:

Indebtedness of the Company including interest outstanding/accrued but not due for payment:

(Rs. in Lakhs)

Particulars Secured Loans excluding deposits

Unsecured Loans

Deposits Total indebtedness


i) Principal Amount – 1,092.25 – 1,092.25


iii) Interest accrued but not due – 1.82 – 1.82

Total (i+ii+iii) – 1,094.07 – 1,094.07

Change in indebtedness during the financial year

• Addition – 15.00 – 15.00

• Reduction – (182.43) – (182.43)

Net Change – (167.43) – (167.43)





Total (i+ii+iii) – 926.64 – 926.64

Book 1.indb 153 11/25/2016 2:45:54 PM



154


A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

Sr. No.


1. Gross Salary(a) Salary as per provisions contained in Section 17(1) of the

Income Tax Act, 1961– – –

(b) Value of perquisites u/s 17(2) of the Income tax Act, 1961 – – –(c) Profits in lieu of salary under Section 17(3) of the Income

Tax Act, 1961– – –

2. Stock Option – – –3. Sweat Equity – – –4. Commission

- as % of profit – – –- others, specify – – –

5. Others, please specify (SAR’s) – – –Total (A) – – –Ceiling as per the Act – –

B. Remuneration to other directors:

Sr. No.


1. Independent Directors•Feeforattendingboard/committeemeetings – – –•Commission – – –•Others,pleasespecify – – –Total (1) – – –

2. Other Non–Executive Directors•Feesforattendingboard/committeemeetings – – –•Commission – – –•Others,pleasespecify – – –Total (2) – – –Total (B) = (1+2) – – –Total Managerial Remuneration – – –Overall Ceiling as per the Act – – –

C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD:

Sr. No.

Particulars of Remuneration Key Managerial Personnel

CEO Company Secretary

CFO Total Amount

1. Gross Salary

(a) Salary as per provisions contained in Section 17(1) of the Income Tax Act, 1961

– – – –

(b) Value of perquisites u/s 17(2) of the Income Tax Act, 1961 – – – –

(c) Profits in lieu of salary under Section 17(3) of the Income Tax Act, 1961

– – – –

2. Stock Option – – – –


4. Commission

- as % of profit – – – –

- others, specify – – – –

5. Others, please specify – – – –

Total – – – –

Book 1.indb 154 11/25/2016 2:45:54 PM



155


Type Section of the Companies Act

Brief Description

Details of Penalty/

Punishment/compounding fees imposed

Authority [RD/NCLT/

COURT]

Appeal made, if any (give details)

A. COMPANY




B. DIRECTORS












Book 1.indb 155 11/25/2016 2:45:54 PM



156

ANNEXURE II TO THE DIRECTORS’ REPORT

PARTICULARS AS PER RULE 8(3) THE COMPANIES (ACCOUNTS) RULES, 2014


(a) the steps taken or impact on conservation of energy: Nil




i) the efforts made towards technology absorption: Nil

ii) the benefits derived like product improvement, cost reduction, product development or import substitution: Nil

iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)) –






C. FOREIGN EXCHANGE EARNINGS AND OUTGO: (in terms of actual inflow and outflow)


(Amount in Rs.)

For the Financial Year Ended 31st March,

2016

For the Financial Year Ended 31st March,

2015

Total Foreign Exchange Earned Nil Nil

Total Foreign Exchange Used Nil Nil





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157

TO THE MEMBERS OF MAHINDRA ELECTRICAL STEEL PRIVATE LIMITED


We have audited the accompanying financial statements of MAHINDRA ELECTRICAL STEEL PRIVATE LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.










Opinion


Emphasis of Matter

We draw attention to Note 19 to the financial statements, as stated in the Note, although the accumulated losses as at the year end has wiped out the net worth of the Company, the financial statements have been prepared on a going concern basis for the reason stated therein.

Our opinion is not modified in respect of this matter.


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158



a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards prescribed under Section 133 of the Act, as applicable.

e) The going concern matter under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164(2) of the Act.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.

h) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financial position.






Uday M. Neogi

(Partner)



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159


(Referred to in paragraph 1 (g) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date to the members of Mahindra Electrical Steel Private Limited on the financial statements for the year ended 31st March, 2016)


We have audited the internal financial controls over financial reporting of Mahindra Electrical Steel Private Limited (“the Company”) as of 31st March, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.








A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

Book 1.indb 159 11/25/2016 2:45:54 PM



160

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.


Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.




(Membership No. 30235)Mumbai, 26th April, 2016

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161

ANNEXURE “B” TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date to the members of Mahindra Electrical Steel Private Limited on the financial statements for the year ended 31st March, 2016)

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed asset.

(b) The Company has not commenced any operations and has only leasehold land as its fixed asset, which have been verified by the Management during the year.

(c) According to the information and explanations given to us and the records examined by us, in respect of immovable properties of land that have been taken on lease and disclosed as fixed asset in the financial statements, the Offer-cum-Allotment letter is in the name of the Company, where the Company is the licensee in the letter. The License Agreement is yet to be executed.

(ii) The Company does not have any inventory and hence reporting under clause (ii) of the CARO 2016 is not applicable.


(iv) The Company has not granted any loans, made investments or provided guarantees and hence reporting under clause (iv) of the CARO 2016 is not applicable.


(vi) Having regard to the nature of the Company’s business/ activities, reporting under clause (vi) CARO 2016 is not applicable.

(vii) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has been regular in depositing undisputed statutory dues, including Income-tax and other material statutory dues applicable to it with the appropriate authorities and there were no undisputed amounts payable in respect of Income-tax and other material statutory dues in arrears as at 31st March, 2016 for a period of more than six months from the date they became payable.

(b) According to the records of the Company, there are no dues of Income-tax and other material statutory dues which have not been deposited as on 31st March, 2016 on account of disputes.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loan or borrowing to banks and dues to debenture holders.

(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause (ix) of the CARO 2016 Order is not applicable.


(xi) According to the information and explanations given to us, there is no amount payable as a managerial remuneration under the provisions of Section 197 to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not applicable.

Book 1.indb 161 11/25/2016 2:45:54 PM



162

(xiii) The provisions of Section 177 of the Companies Act, 2013 do not apply to the Company. In our opinion and according to the information and explanations given to us the Company is in compliance with the provision of Section 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of CARO 2016 is not applicable to the Company.





Uday M. Neogi

(Partner)



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163

Balance sheet as at 31 March, 2016

Particulars Note No.

As at 31 March, 2016 As at 31 March, 2015

Rupees RupeesA. EQUITY AND LIABILITIES

1. Shareholders’ funds (a) Share capital ............................................. 3 500,000 500,000 (b) Reserves and surplus ................................ 4 (19,354,070) (23,604,444)

(18,854,070) (23,104,444)

2. Non-current liabilities (a) Long-term borrowings .............................. 5 91,000,000 108,525,000

3. Current liabilities (a) Short-term borrowings .............................. 6 1,500,000 700,000 (b) Trade payables .......................................... 7 – total outstanding dues of micro

enterprises and small enterprises; and ... – – – total outstanding dues of creditors

other than micro enterprises and small enterprises ......................................... 206,305 130,266

(c) Other current liabilities ............................. 8 184,634 3,166,791

1,890,939 3,997,057

Total…………… 74,036,869 89,417,613

B. ASSETS

1. Non-current assets (a) Fixed assets (i) Tangible assets ................................... 9 73,310,132 74,085,744 (b) Long term loans & advances 10 16,000 –

73,326,132 74,085,744

2. Current assets (a) Cash and cash equivalents ........................ 11 710,737 2,897,418 (b) Other current assets .................................. 12 – 12,434,451

710,737 15,331,869

Total…………… 74,036,869 89,417,613



For Deloitte Haskins & Sells

Chartered Accountants

Uday M. Neogi

Partner

Sumit Issar

Rajeev Dubey } Directors

Place : Mumbai Date : 26 April, 2016


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164

Statement of profit and loss for the year ended 31 March, 2016

Particulars Note No.

For the Year ended For the Year ended

31 March, 2016 31 March, 2015

Rupees Rupees

1. Income

Other Income ........................................................... 13 7,481,599 66,764

7,481,599 66,764

2. Expenses

(a) Finance cost ...................................................... 14 234,912 347,559

(b) Amortisation expense ........................................ 9 775,612 991,307

(c) Other expenses .................................................. 15 1,166,510 1,327,389

Total Expenses ................................................................. 2,177,034 2,666,255

3. Profit/(Loss) before tax ............................................. 5,304,565 (2,599,491)

4. Tax expense:

(a) Current tax expense ............................................ 1,028,000 –

(b) Short provision for tax relating to an earlier year ...... 26,191 –

1,054,191 –

5. Profit/(Loss) for the year (3-4) .................................. 4,250,374 (2,599,491)

6. Earnings per share (of Rs. 10/- each): 18

Basic/Diluted ............................................................ 85.01 (51.99)





Uday M. Neogi

Partner

Sumit Issar




Book 1.indb 164 11/25/2016 2:45:54 PM



165

Cash flow statement for the year ended 31 March, 2016 Particulars For the Year ended

31 March, 2016For the Year ended

31 March, 2015Rupees Rupees Rupees Rupees

A. Cash flow from operating activities Profit/(Loss) before tax ................................. 5,304,565 (2,599,491) Adjustments for: Profit on sale of leasehold rights .................. (7,481,599) – Amortisation expense .................................. 775,612 991,307 Finance costs ............................................... 234,912 347,559

(6,471,075) 1,338,866 Operating loss before working capital changes ... (1,166,510) (1,260,625) Changes in working capital: Adjustment for increase/(decrease) in operating

liabilities Trade payables ............................................. 76,039 (61,034) Other current liabilities ................................ 4,242 1,609

80,281 (59,425) Cash generated from operations .................. (1,086,229) (1,320,050) Net income tax paid .................................... (1,070,191) – Net cash flow used in operating activities (A) ... (2,156,420) (1,320,050)B. Cash flow from investing activities Advance received towards transfer of

leasehold rights-Naini .................................. – 2,969,032 Balance proceeds from transfer of leasehold

rights-Naini ................................................. 16,947,018 – Net cash flow from investing activities (B) ... 16,947,018 2,969,032C. Cash flow from financing activities Redemption of debentures ........................... (16,500,000) – Proceeds from short term borrowings .......... 1,500,000 – Inter Corporate Deposits received ................ – 1,225,000 Repayment of Inter Corporate Deposit ......... (1,725,000) – Interest paid ................................................. (252,279) (348,130) Net cash flow from financing activities (C) .... (16,977,279) 876,870 Net (decrease)/increase in cash and cash

equivalents (A + B + C) ............................... (2,186,681) 2,525,852 Cash and cash equivalents at beginning of

the year ....................................................... 2,897,418 371,566 Cash and cash equivalents at end of the year .... 710,737 2,897,418

(2,186,681) 2,525,852 Reconciliation of Cash and cash equivalents

with the Balance Sheet: Cash and cash equivalents as per Balance

Sheet (Refer Note 11) ................................... 710,737 2,897,418





Uday M. Neogi

Partner

Sumit Issar




Book 1.indb 165 11/25/2016 2:45:55 PM



166


1 Corporate information:

Mahindra Electrical Steel Limited was incorporated in India on 10 June, 2009 as a Public Company with authorised share capital of Rs. 150,000,000. The Ministry of Corporate Affairs approved the change of name from Mahindra Electrical Steel Limited to Mahindra Electrical Steel Private Limited with effect from 13 January, 2012. The Company is a public Company by virtue of proviso to Section 2(71) of the Companies Act, 2013 (“the 2013 Act”) as it is a subsidiary of a public limited Company. The Company’s main object is to trade in or process non-ferrous/ferrous materials including various grades of steel.

2 Significant Accounting Policies followed by the Company

2.1 Basis of accounting:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the 2013 Act read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the 2013 Act. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.



The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates, are recognized in the periods in which the results are known/materialize.




Cash flows are reported using the indirect method, whereby profit/ (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

2.5 Fixed Assets:


(b) Leasehold land is amortized over the balance period of the lease.


Basic earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.

Book 1.indb 166 11/25/2016 2:45:55 PM



167

2.7 Taxes on income: Tax expense consists of current tax and deferred tax. Current tax is determined as either (i) the amount of

tax payable in respect of taxable income after considering usual allowances and disallowances under the Income-tax, 1961 or (ii) Minimum Alternate Tax for the year. Credit in respect of Minimum Alternate Tax paid is recognised only if there is convincing evidence of realisation of the same. Deferred tax reflects the impact of current year timing differences between taxable income and accounting income and reversal of timing differences of the earlier years.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

2.8 Provisions and contingencies: A provision is recognised when the Company has a present obligation as a result of past events and it is

probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.



Shares Rupees Number of

Shares Rupees(a) Authorised Equity Shares of Rs. 10 each ........................ 15,000,000 150,000,000 15,000,000 150,000,000

15,000,000 150,000,000 15,000,000 150,000,000

(b) Issued, subscribed and fully paid up Equity Shares of Rs. 10 each ........................ 50,000 500,000 50,000 500,000

50,000 500,000 50,000 500,000


Particulars Opening Balance Fresh issue Buy back

Closing Balance

Equity Shares of Rs. 10 each For the year ended 31 March, 2016 Number of shares ....................................... 50,000 – – 50,000 Amount (in Rupees) .................................... 500,000 – – 500,000 For the year ended 31 March, 2015 Number of shares ....................................... 50,000 – – 50,000 Amount (in Rupees) .................................... 500,000 – – 500,000

Book 1.indb 167 11/25/2016 2:45:55 PM



168


(iii) Terms and rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each shareholder has the following voting rights (i) On a show of hands: one vote for a member present in person and (ii) On a poll: in proportion to the share in paid-up equity share capital of the Company. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend. In the event of winding up, if the assets available for distribution are less/more than sufficient to repay the whole of the paid up share capital, the losses/excess shall be borne/distributed amongst the members in proportion to the capital at the commencement of the winding up, paid up or which ought to have been paid up on the shares held by them respectively.

(iv) Details of shares held by the holding company



Number of shares Number of shares

Mahindra Intertrade Limited (Including 6 equity shares held jointly with its nominees) ............................................ 50,000 50,000

(v) Details of shares held by each shareholder holding more than 5% shares


Number of shares

% of holding

Number of shares

% of holding

Mahindra Intertrade Limited (Including 6 equity shares held jointly with its nominees) ................ 50,000 100% 50,000 100%




Rupees Rupees

(Deficit) in Statement of Profit and Loss

Opening balance ............................................................... (23,604,444) (21,004,953)

Add: Profit/(Loss) for the year.............................................. 4,250,374 (2,599,491)

Closing balance ................................................................. (19,354,070) (23,604,444)




Rupees Rupees

(i) 0.25% Optionally Convertible Unsecured Debentures of Rs. 1,000 each [Refer Note (i)] .......................................................... 91,000,000 107,500,000

(ii) Unsecured Inter Corporate Deposits [Refer Note (ii)] ........................................... – 1,025,000

91,000,000 108,525,000

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169

Note:

(i) The Company has issued 107,500 non transferable 0.25% Optionally Convertible Unsecured Debentures of Rs. 1,000 each to its Holding Company, Mahindra Intertrade Limited. During the year the issuer has exercised call option to redeem 16,500 debentures and for balance debentures the issuer/holder has agreed not to redeem the debentures at any time before 31 March, 2017 at face value plus interest for the completed year or convert debentures in full or part thereof into equity shares of the face value of Rs. 10 each issued at par equivalent to the face value of debentures plus interest for the completed year. However, no interest is payable for the fractional period if debentures are redeemed or converted before the completion of a year.

(ii) During the year 2014-15 the Company had borrowed unsecured intercorporate deposits of Rs. 1,025,000 carrying interest @ 8.50% from its Holding Company, Mahindra Intertrade Limited, The same has been repaid during current year.

Note 6 Short-term borrowingsParticulars As at 31 March,

2016 As at 31 March,

2015

Rupees Rupees

Unsecured:

Loan repayable on demand

From bank (Refer Note i) ......................................... 1,500,000 –

Inter Corporate Deposits .................................................. – 700,000

1,500,000 700,000

Note i: Rate of interest for unsecured borrowing is 10.50% p.a.

Note 7 Trade payablesParticulars As at 31 March,


2015

Rupees Rupees

Trade payables: (a) Trade payables

– total outstanding dues of micro enterprises and small enterprises; and ............................................ – –

– total outstanding dues of creditors other than micro enterprises and small enterprises ........................... 206,305 130,266

206,305 130,266

Note 8 Other Current LiabilitiesParticulars As at 31 March,


2015

Rupees Rupees

(a) Other payables:

(i) Interest accrued but not due ........................................ 164,204 181,571

(ii) Statutory remittances (Withholding Taxes) .................... 20,430 16,188

(iii) Advance received for sale of leasehold land-Naini (Refer Note 20) ............................................................ – 2,969,032

184,634 3,166,791

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170

Note 9 Fixed Assets

Tangible assets Gross Block Amortization Net Block

Balance as at 1 April, 2015 Addition

Disposal/adjustments

Balance as at 31 March,

2016Balance as at 1 April, 2015 For the year

Disposal/ adjustments


2016


2016

Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees

Land - Leasehold-Naini – – – – – – – – –

(Refer Note 20) (13,426,016) (–)(13,426,016) (–) (773,750) (217,815) (991,565) (–) (–)

Land - Leasehold-Dahej 76,624,494 – – 76,624,494 2,538,750 775,612 – 3,314,362 73,310,132

(76,624,494) (–) (–) (76,624,494) (1,765,258) (773,492) (–) (2,538,750) (74,085,744)

Total 76,624,494 – – 76,624,494 2,538,750 775,612 – 3,314,362 73,310,132

Previous year (90,050,510) (–)(13,426,016) (76,624,494) (2,539,008) (991,307) (991,565) (2,538,750) (74,085,744)

Note: figures in brackets are in respect of the previous year.

Note 10 Long term loans & advances



Rupees Rupees

Advance income tax (net of provision) ................................ 16,000 –

16,000 –

Note 11 Cash and cash equivalents



Rupees Rupees

Balances with banks:

In current accounts ............................................................. 710,737 2,897,418

710,737 2,897,418

Note 12 Other current assets



Rupees Rupees

Leasehold Land held for sale (Refer Note 20) ...................... – 12,434,451

– 12,434,451

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171

Note 13 Other income

Particulars For the Year ended 31 March, 2016

For the Year ended 31 March, 2015

Rupees Rupees

(a) Liabilities no longer required written back ................... – 66,764

(b) Profit on transfer of leasehold rights-Naini (Refer Note 20) ............................................................ 7,481,599 –

7,481,599 66,764

Note 14 Finance costs



Rupees Rupees

(a) Interest on borrowings ................................................. 14,195 –

(b) Interest on Inter Corporate Deposits ............................. 14,130 78,811

(c) Interest on Debentures ................................................. 197,158 268,748

(d) Interest on income tax ................................................. 9,429 –

234,912 347,559

Note 15 Other expenses



Rupees Rupees

(a) Lease rent ........................................................................... – 8,129

(b) Rates and taxes ................................................................... 906,493 1,009,702

(c) Travelling expenses ............................................................. 7,869 54,443

(d) Legal and professional ........................................................ 113,166 12,360

(e) Payment to auditors (Refer Note below) .............................. 125,950 112,922

(f) Security .............................................................................. 12,097 129,300

(g) Bank charges ...................................................................... 935 533

1,166,510 1,327,389

Note:



Rupees Rupees

Payment to auditors:

To statutory auditors

(i) For audit (including service tax) ................................... 125,950 112,360

(ii) Reimbursement of expenses ........................................ – 562

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172

Note 16 Micro, small and medium enterprises The identification of vendors as a “Supplier” under the Micro, Small and Medium Enterprises Development

Act, 2006 has been done on the basis of the information to the extent provided by the vendors to the Company. This has been relied upon by the auditors.

Note 17 Related Party Disclosures Related party disclosures as required by AS-18 “Related Party Disclosures” are given below.

(A) List of Related Parties:

Ultimate Holding Company Mahindra & Mahindra Limited Holding Company Mahindra Intertrade Limited (B) (a) Disclosure of transactions between the Company and related parties during the year ended

31 March, 2016:



Rupees Rupees (i) Ultimate Holding CompanyProfessional fees ................................................................ 85,853 –

(ii) Holding CompanyInter Corporate Deposits received ...................................... – 1,225,000Inter Corporate Deposits repaid ......................................... 1,725,000 –Redemption of debentures ................................................. 16,500,000 –Interest on Inter Corporate Deposits ................................... 14,130 78,811Interest on Debentures ....................................................... 197,158 268,748Reimbursement of expenses .............................................. – 48,455

(b) Outstanding payable:



Rupees Rupees Ultimate Holding Company ........................................ 78,355 –Holding Company ..................................................... 91,150,827 109,406,571

During the year, there is no amount written off or written back in respect of such parties.

Note 18 Earnings per share



Rupees Rupees Profit/(Loss) after tax (Rs.) (A) ........................................... 4,250,374 (2,599,491)Weighted average number of shares (B) ........................... 50,000 50,000 Earnings per share [Basic/Diluted] (Rs.) (A/B) ................... 85.01 (51.99)Nominal value of equity share (Rs.) ................................. 10.00 10.00

Note 19

As at March 31, 2016 the accumulated losses aggregating Rs. 19,354,070 has wiped out the net worth of the Company. Leasehold land has been taken by the Company at Dahej (Gujarat). The Company is currently evaluating options for its project. In view of the foregoing and on account of the continuing support from the holding company, the financial statements have been prepared on a going concern basis.

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173

Note 20 Leasehold land held for sale

The Company had entered into a Memorandum of Agreement dated 11 March, 2015, with a third party for surrendering its leasehold rights in the plot of land at Naini in favour of the said party, subject to U.P. State Industrial Development Corporation Limited (UPSIDC) granting the required permission. Accordingly the book value of land of Rs. 12,434,451 was shown as “Leasehold land held for sale” and the amount of Rs. 2,969,032 received was shown as “Advance received for sale of leasehold land-Naini” as at 31 March, 2015. During the year approval from UPSIDC has been received and accordingly leasehold rights were transferred to the said party and profit on transfer of leasehold rights of Rs. 7,481,599 has been recognised in the statement of profit and loss.




Sumit Issar

Rajeev Dubey

Place: MumbaiDate: 26 April, 2016

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Mahindra Auto Steel Private Limited

174

Mahindra Auto Steel

Private Limited

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175

Board of directors

Zhooben Bhiwandiwala Chairman

Rajeev Dubey

Sumit Issar

Kuo Yi-Jen

Hiroshi Tashiro

P. R. Barpande

Smita Mankad

company secretary

Romali Malvankar

chief financial officer

Percy Mahernosh

manager

Sanjay Somkumar

audit committee


P. R. Barpande

Smita Mankad



Kuo Yi-Jen

P. R. Barpande

Smita Mankad



Sumit Issar

Smita Mankad

auditors


Tower 3, 27th – 32nd Floor, Indiabulls Finance Centre, Elphinstone Mill Compound, Senapati Bapat Marg, Elphinstone (West), Mumbai - 400013, India.

Bankers

Kotak Mahindra Bank Limited

HDFC Bank Limited

registered office

Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai – 400018, India.CIN: U27100MH2013PTC250979Tel. No.: +91 22 24935185/86Fax: +91 22 24951236

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176

directors’ report

Your Directors present their third Report, together with the Audited Financial Statements of your Company for the year ended March 31, 2016.

FINANCIAL HIGHLIGHTS AND COMPANY’S STATE OF AFFAIRS(Rs. in Lakhs)

For the year ended March 31, 2016

For the period ended March 31, 2015

Income 6,181.74 124.92Profit/(Loss) before depreciation, interest and taxation 1,165.61 114.14Less: depreciation 321.32 –Profit/(Loss) before interest and taxation 844.29 114.14Less: interest 244.65 1.26Profit/(Loss) before tax 599.64 112.88Less : Provision for taxation:Current tax – 20.00Deferred tax (54.09) –

Profit/(Loss) for the year after tax 653.73 92.88Balance of profit of earlier years 20.13 (72.75)Profit available for appropriation 673.86 20.13Proposed dividend 34.25 –Income-tax on proposed dividend 6.97 –Balance carried to Balance Sheet 632.64 20.13Net Worth 7,482.64 6,870.13

No material changes and commitments have occurred after the close of the year till the date of this report which affect the financial position of your Company.

OPERATIONS

Your Company commenced production and commercial operations during the year under review from its plant at Chakan. The products were well received by the market. The company has earned an income of Rs. 6181.74 Lakhs as against Rs. 124.92 Lakhs in the previous year. The profit before tax for the year was Rs. 599.64 Lakhs as against Rs. 112.88 Lakhs in the previous year.

DIVIDEND

Your Directors recommend a dividend @ 0.5% on its 6,85,00,000 fully paid-up equity shares of Rs. 10 each, at Rs. 0.05 per equity share, aggregating Rs. 34.25 Lakhs.

If approved by the shareholders at the ensuing Annual General Meeting, the above equity dividend will be paid to those equity shareholders whose names appear on the Register of Members as on the record date fixed for this purpose, i.e. June 24, 2016, the date of the Annual General Meeting of the Company.

Equity dividend for the year together with income tax thereon, will absorb a sum of Rs. 41.22 Lakhs against Rs. NIL paid for the previous year.

HUMAN RESOURCE

Happy and enthused employees is one of the strategic goals of your Company as reflected in its employee engagement interventions.


Your Company has put in place a policy for prevention of sexual harassment. Your Company has also constituted an “Internal Complaints Committee” to which employees can address their complaints. During the year, no complaints were received by the said Committee.

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177

POLICY ON CRITERIA FOR APPOINTMENT/REMOVAL OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL AND POLICY ON REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In line with the principles of transparency and consistency and upon the recommendation of the Nomination and Remuneration Committee your Board had approved:

• Policyoncriteriafortheappointment/removalofDirectorsandSeniorManagementPersonnel,togetherwiththecriteria for determining qualifications, positive attributes and independence of directors and

• PolicyforremunerationofDirectors,KeyManagerialPersonnelandotherEmployees.

These policies are provided as Annexure I and forms part of this report.

INTERNAL CONTROLS

Your Company has implemented a system of internal controls and monitoring procedures as well as internal financial controls on financial statements and the same is, in the opinion of the Board, commensurate with the Company’s size and operations. Your Company regularly conducts reviews to assess the adequacy of these controls. Significant issues, if any, are brought to the attention of the Audit Committee. Statutory Auditors are invited to attend Audit Committee meetings.

RISK MANAGEMENT POLICYYour Company has formulated a risk management policy which addresses risks which, in the opinion of the Board, may threaten the existence of the Company.

SHARE CAPITAL

The authorised share capital of your Company as on March 31, 2016 stood at Rs. 76 crores divided into 7,60,00,000 equity shares of Rs. 10/- each.

The paid-up share capital of your Company as on March 31, 2016 stood at Rs. 68.50 crores divided into 6,85,00,000 equity shares of Rs. 10/- each.

BOARD OF DIRECTORS

Composition:

Presently, the Board comprises of the following Directors:

Director (DIN) Designation Executive/Non-Executive Director

Independent/ Non-Independent Director

#Mr. Zhooben Bhiwandiwala (00110373)

Chairman Non-Executive Director Non-Independent Director

Mr. Rajeev Dubey (00104817) Director Non-Executive Director Non-Independent Director

Mr. Hiroshi Tashiro (06868673) Director Non-Executive Director Non-Independent Director$Mr. Kuo Yi-Jen (06848718) Director Non-Executive Director Non-Independent Director

Mr. P. R. Barpande (00016214) Director Non-Executive Director Independent Director

Ms. Smita Mankad (02009838) Director Non-Executive Director Independent Director

Mr. Sumit Issar (06951249) Additional Director Non-Executive Director Non-Independent Director# Mr. Zhooben Bhiwandiwala, was appointed as the Chairman of the Board w.e.f January 21, 2016.

$ Mr. Kuo Yi-Jen ceased to be the Alternate Director of the Company w.e.f June 30, 2015, consequent upon the cessation of directorship of Mr. Wang Chia- Tang, w.e.f June 30, 2015.

Mr. Kuo Yi–Jen was appointed as an additional Director of the Company w.e.f July 3, 2015 and was appointed as the Director of the Company at the Annual General Meeting of the Company held on July 28, 2015.

Mr. Harsh Kumar (DIN: 00082621) ceased to be a Director with effect from October 1, 2015.

The Board places on record its sincere appreciation for the valuable guidance provided by Mr. Harsh Kumar and Mr. Wang Chia- Tang during their tenure as director of the Company.

Subsequently, Mr. Sumit Issar (DIN: 06951249) was appointed as an additional Director with effect from October 20, 2015

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178

The Company has received notice pursuant to Section 160 of the Companies Act, 2013, alongwith the necessary deposit, proposing the candidature of Mr. Sumit Issar, as the Director at the ensuing Annual General Meeting of the Company.

Mr. Zhooben Bhiwandiwala and Mr. Kuo Yi-Jen retire by rotation at the forthcoming Annual General Meeting and being eligible, have offered themselves for re-appointment.

All directors of your Company have given requisite declarations pursuant to Section 164 of the Companies Act, 2013 that they are not disqualified to be appointed as directors.

Mr. P. R. Barpande and Ms. Smita Mankad, Independent directors who in the opinion of the Board, are persons with integrity and possess relevant expertise and experience, have given declarations to the effect that they meet the criteria of independence as laid down under Section 149 of the Companies Act, 2013.

Your directors have wide experience in business related to trading, finance and general corporate management.

Board Meetings and Annual General Meeting:

The Board met five times during the year under review, i.e. on April 29, 2015, July 28, 2015, October 27, 2015, January 21, 2016 and March 18, 2016. The gap between two consecutive Board Meetings did not exceed 120 days. The 2nd Annual General Meeting of the Company was held on July 28, 2015.

The attendance of the Directors at the Board Meetings of the Company were as under:-

Name of the Director No. of Board Meetings attended

Mr. Zhooben Bhiwandiwala 4#Mr. Harsh Kumar 2$Mr. Sumit Issar 3

Mr. Rajeev Dubey 3

Mr. Hiroshi Tashiro 5

Mr. Kuo Yi-Jen 5

Ms. Smita Mankad 5

Mr. P. R. Barpande 5# ceased as the Director of the Company w.e.f October 1, 2015.

$ appointed as the Director of the Company w.e.f. October 20, 2015.

Meeting of Independent Directors

The Independent Directors of the Company met on December 7, 2015 without the presence of the Non-Executive Directors, the Chief Financial Officer, Company Secretary and any other Management Personnel. The Meeting was conducted in an informal and flexible manner to enable the Independent Directors to discuss matters pertaining to inter alia, review performance of Non-Independent Directors and the Board as a whole (taking into account the views of the Non-Executive Directors), assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Evaluation of performance:

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an annual evaluation of its own performance and that of its Committees as well as performance of the Directors individually. Feedback was sought by way of a structured questionnaire covering various aspects of the Board’s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance and the evaluation was carried out based on responses received from the Directors.

A separate exercise was carried out by the Nomination and Remuneration Committee of the Board to evaluate the performance of individual Directors. The performance evaluation of the Non-Independent Directors and the Board as a whole was carried out by the Independent Directors.

The Directors expressed their satisfaction with the evaluation process.

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179


Pursuant to Section 134(3)(c) of the Companies Act, 2013, your directors, based on representation from operating management and after due enquiry confirm that:

(a) in the preparation of the annual accounts for the year ended March 31, 2016 the applicable accounting standards have been followed;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year on March 31, 2016 and of the profit of the Company for the financial year ended on that date;




CODES OF CONDUCT

Your Company has adopted Codes of Conduct for its Directors, Senior Management Personnel and Employees (“the Codes”). These Codes enunciate the underlying principles governing the conduct of the Company’s business and seek to reiterate the fundamental precept that good governance must and always be an integral part of the Company’s ethos.

Your Company has for the year under review, received declarations from members of the Board, Senior Management Personnel and Employees affirming compliance with the respective Codes.


Audit Committee

Pursuant to Section 177 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, the Audit Committee of the Company comprised of the following:

Name of the Director Designation#Mr. Zhooben Bhiwandiwala Chairman

Mr. P. R. Barpande Member

Ms. Smita Mankad Member# Mr. Zhooben Bhiwandiwala was appointed as the Chairman of the Audit Committee w.e.f. January 21, 2016.

The Audit Committee met four times during year, i.e. on April 29, 2015, July 28, 2015, October 27, 2015 and January 21, 2016.

The attendance of the Directors at the Audit Committee Meetings of the Company were as under:-

Name of the Director No. of Audit Committee Meetings attended

Mr. Zhooben Bhiwandiwala 4

Ms. Smita Mankad 4

Mr. P. R. Barpande 4


Pursuant to Section 178 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, the Nomination and Remuneration Committee of the Company comprised of the following:


* Mr. Rajeev Dubey Chairman# Mr. Kuo Yi-Jen Member

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180


Mr. P. R. Barpande Member

Ms. Smita Mankad Member* Mr. Rajeev Dubey was appointed as the Chairman of the Nomination and Remuneration Committee w.e.f January 21, 2016.

# The Committee was reconstituted upon the appointment of Mr. Kuo Yi-Jen as an additional director of the company and cessation of directorship of Mr. Wang Chia Tang as the director of the Company w.e.f June 30, 2015.

The Nomination and Remuneration Committee met four times during year under review, i.e. on April 29, 2015, July 28, 2015, October 27, 2015 and January 21, 2016.

The attendance of the Directors at the Nomination and Remuneration Committee Meetings of the Company were as under:-

Name of the Director No. of Nomination and Remuneration Committee

Meetings attended

Mr. Rajeev Dubey 3

Mr. Kuo Yi-Jen 3

Ms. Smita Mankad 4

Mr. P. R. Barpande 4

Corporate Social Responsibility (CSR) Committee

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility) Rules, 2014, the Board at its Meeting held on April 27, 2016, constituted the CSR Committee of the Board comprising of the following directors:


Mr. Zhooben Bhiwandiwala Chairman

Mr. Sumit Issar Member

Ms. Smita Mankad Member


Pursuant to Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Key Managerial Personnel of your Company are as below:

Name of the Key Managerial Personnel Designation

Mr. Sanjay Somkumar (with effect from April 29, 2015) Manager# Ms. Jyoti Walunj (upto August 1, 2015) Chief Financial Officer

Mr. Percy Mahernosh (with effect from August 1, 2015) Chief Financial Officer$ Mr. Abhishek Juvekar (upto January 9, 2016) Company Secretary

Ms. Romali M. Malvankar (with effect from January 21, 2016) Company Secretary

# Ms. Jyoti Walunj ceased to be associated with the Company with effect from August 1, 2015, post her move to the Agri vertical at Mahindra and Mahindra Limited.

$ Mr. Abhishek Juvekar tendered his resignation as Company Secretary of the Company with effect from January 9, 2016.

STATUTORY AUDITORS

At the Second Annual General Meeting, the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, (ICAI registration number 117365W) was ratified as Statutory Auditors of your Company for a period of five years. They hold office up to the conclusion of Sixth Annual General Meeting.

Pursuant to the first proviso of Section 139(1) of Companies Act, 2013, members are requested to ratify the appointment of Statutory Auditors at the ensuing Annual General Meeting and fix their remuneration.

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181

As required under the provisions of Sections 139 and 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, your Company has obtained a written consent and certificate from Statutory Auditors to the effect that their appointment, if ratified, would be in conformity with the conditions, limits and criteria specified therein.

Your Directors confirm that the Auditors Report does not contain any qualification, reservation or adverse remark.

INTERNAL AUDITOR

Pursuant to Section 138 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, Mr. Mario Nazareth was appointed as the Internal Auditor of your Company for the year ended March 31, 2016. The Board at its meeting held on April, 27, 2016 re-appointed Mr. Mario Nazareth as the Internal Auditor of your Company for the year ending March 31, 2017.

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. Mehta & Mehta, a firm of Company Secretaries in practice, was appointed as the Secretarial Auditor of your Company for the financial year ended March 31, 2016.

A Secretarial Audit Report for the financial year ended March 31, 2016 issued by the Secretarial Auditor pursuant to the aforesaid provisions is provided as Annexure II and forms part of this report.

Your Directors confirm that the Secretarial Audit Report does not contain any qualification, reservation or adverse remark.


During the year under review, the Statutory Auditors and Secretarial Auditors have not reported any instances of frauds committed in the Company by its officers or employees to the Audit Committee under Section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this report.

STOCK APPRECIATION RIGHTS (SARS)

Your Company has formulated a Stock Appreciation Rights Scheme to reward its employees and to provide an opportunity to them to participate in the growth of the Company. Accordingly, 7037 SARs were granted by the Nomination and Remuneration Committee to eligible employees at its meeting held on January 21, 2016.


Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013, from the public, or its employees, during the year.

Your Company has not, whether directly or indirectly, given loans, made investments, and/or provided guarantees/securities which are required to be reported under Section 186 of the Companies Act, 2013.

Your Company has not made any loans/advances which are required to be disclosed in the annual accounts of the Company pursuant to Regulations 34(3) and 53(f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule V applicable to the ultimate Parent Company, Mahindra & Mahindra Limited.


All transactions entered into by your Company with its related parties during the year were in the ordinary course of business and at arm’s length.

Particulars of material contracts or arrangements or transactions with related parties referred to under Section 188(1) of the Companies Act, 2013 are furnished in Form AOC-2 as Annexure III and forms part of this report.


Pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as on March 31, 2016 is enclosed as Annexure IV and forms part of this report.


Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies Rule 8(3) of the Companies (Accounts) Rules, 2014, are provided in Annexure V and forms part of this report.

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182

DISCLOSURE OF PARTICULARS OF EMPLOYEES AS REQUIRED UNDER RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Being unlisted company, provisions of Rule 5 of the companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are not applicable to your company.

GENERAL DISCLOSURE

Your directors state that no disclosure or reporting is required in respect of the following items as they were not applicable to your Company during the year:

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

b) Issue of shares (including sweat equity shares) to employees of the Company under any ESOP scheme, etc.

c) provisions relating to CSR enumerated under Section 135 of the Companies Act, 2013.

d) No significant or material orders were passed by regulators or courts or tribunals which impact the Company’s going concern status and operations in future.

ACKNOWLEDGEMENTS






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183


POLICY ON APPOINTMENT OF DIRECTORS AND SENIOR MANAGEMENT

DEFINITIONS



“Company” means Mahindra Auto Steel Private Limited (MASPL).



“HR” means the Human Resource department of the Company.


(i) Managing Director (MD) or Chief Executive Officer (CEO) or Manager or Whole time Director (WTD).



“Nomination and Remuneration Committee” (NCR) means Nomination and Remuneration Committee of Board of Directors of the Company for the time being in force.



• NRC reviews and assesses Board composition and recommends the appointment of new directors. Inevaluating the suitability of an individual Board member, NRC shall take into account the following criteria regarding qualifications, positive attributes and independence of a director as applicable :

1) All Board appointments will be based on merit, in the context of skills, experience, independence and knowledge required for the Board as a whole to be effective.

2) Ability of the candidate to devote sufficient time and attention to professional obligations as an Independent Director for balanced decision making.

3) Adherence to the Code of Conduct and ensuring the highest level of corporate governance, in letter and in spirit, by Directors.

• BasedonNRC’srecommendation,theBoardwillevaluatethecandidate(s)anddecideontheselectionof the appropriate member. The Board, through any Member of the Board, will interact with the new member to obtain his/her consent for joining the Board. Upon receipt of the consent, the new director will be co-opted by the Board in accordance with the applicable provisions of the Companies Act, 2013 and Rules made thereunder.


If a director is disqualified as per any applicable Act, or rules and regulations thereunder, or due to non-adherence to the applicable policies of the company, NRC may recommend to the Board, with reasons recorded in writing, removal of a director subject to compliance of the applicable statutory provisions.



For administrative convenience, senior management personnel will be appointed or promoted and removed/relieved with the authority of the Managing Director based on business needs and suitability of the candidate.


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184


Purpose


Board:





The Company’s succession planning program aims to identify high growth individuals, and groom them in order to maintain a robust talent pipeline.

The Company has a process of identifying individuals with high potential and having abilities to hold critical positions. Successors are mapped for such positions in order to ensure talent readiness.



Purpose

This Policy sets out the approach to Compensation of Directors, Key Managerial Personnel and other employees in Mahindra Auto Steel Private Limited (MASPL).

Policy Statement




The Nomination and Remuneration Committee (NRC) shall decide the basis for determining the compensation, both fixed and variable, to Non Executive Directors, including Independent Directors, whether as commission or otherwise. NRC shall take into consideration various factors such as director’s participation in Board and Committee meetings during the year, other responsibilities undertaken such as membership or Chairmanship of committees, time spent in carrying out their duties, role and functions as envisaged in Schedule IV of the Companies Act 2013 and such other factors as the NRC may deem fit for determining compensation.


Executive Directors/Managing Director/Manager

The remuneration to Managing Director/Manager and Executive Director(s) shall be recommended by NRC to the Board. Remuneration will consist of both fixed compensation and variable compensation and shall be paid as salary, commission, performance bonus, stock options (where applicable) perquisites and fringe benefits as approved by the Board and within the overall limits specified in the Shareholders’ resolution. While fixed compensation is determined at the time of their appointment, variable compensation will be determined annually by NRC based on their performance.

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185


The terms of remuneration of the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and the Company Secretary (CS) shall be determined either by any Director or such other person as may be authorised by the Board.

The above remuneration shall be competitively benchmarked for similar positions in the industry and aligned with their qualifications, experience and responsibilities. Pursuant to the provisions of Section 203 of the Companies Act 2013, the Board shall approve remuneration of the above KMPs at the time of their appointment.

The remuneration to directors, KMPs and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

Employees

We follow a position and level based approach for compensation benchmarking with companies in the steel/ steel service centre and related engineering industries.

We have a CTC (Cost to Company) concept which includes a fixed component (guaranteed pay) and a variable component (performance pay). The percentage of the variable component increases with increasing hierarchy levels as employees at higher positions have a greater impact and influence on the company’s overall business result. CTC is reviewed once every year and the compensation strategy for positioning of individuals takes into consideration the following elements:

• Performance

• Potential

• Criticality






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186

ANNEXURE II TO THE DIRECTORS’ REPORT

Form No. MR-3 SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2016[Pursuant to Section 204(1) of the Companies Act, 2013 and the Rule 9 of the Companies

(Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members, Mahindra Auto Steel Private Limited Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai – 400 018.

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Mahindra Auto Steel Private Limited (hereinafter called “the Company”). Secretarial audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing our opinion thereon.

Based on our verification of the Company’s books, papers, minutes books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officer, agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2016, complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on 31st March, 2016 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder (during the year under review not applicable to the Company);

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder (during the year under review not applicable to the Company);

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowing (during the year under review not applicable to the Company);

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-

a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (during the year under review not applicable to the Company);

b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015(during the year under review not applicable to the Company);

c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (during the year under review not applicable to the Company);

d. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and Securities and Exchange Board of India(Share Based Employee Benefits) Regulations, 2014 (during the year under review not applicable to the Company);

e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (during the year under review not applicable to the Company);

f. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client (during the year under review not applicable to the Company);

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187

g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (during the year under review not applicable to the Company); and

h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 (during the year under review not applicable to the Company);

We have examined compliance with the applicable clauses/ regulations of the following:

a) Secretarial Standards issued by the Institute of Company Secretaries of India;

b) Equity Listing Agreement and Debt Listing Agreement entered with National Stock Exchange of India Ltd. and BSE Ltd. and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (during the year under review not applicable to the Company)

During the period under review, the Company has complied with the provisions of Act, Rules, Regulations, Guidelines etc. mentioned above.

As represented by the Company, there is/are no sector specific laws applicable to the Company.

We further report that:

The Board of Directors of the Company is duly constituted with proper balance of the Executive Directors, Non-Executive Directors and Independent Directors.The changes in the composition of the Board of Director that took place during the period under review were carried out in compliance with the provision of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

All decisions of the Board are carried through unanimously. As per the records provided by the Company, none of the member of the Board dissented on any resolution passed at the meetings of the Board and any of its committee.

We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

We further report that during the audit period there were following specific events / actions having a major bearing on the Company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, etc. which are: -

1. The Articles of Association of the Company were altered on April 29, 2015 in accordance with the Joint Venture Agreement dated 15th November, 2013, between Mahindra Intertrade Limited, China Steel Global Trading Corporation, CSGT International Corporation and Mitsui & Co. (Asia Pacific) Pte. Ltd.

For Mehta & Mehta,Company Secretaries

(ICSI Unique Code P1996MH007500)

Dipti MehtaPartner

FCS No: 3667CP No.: 3202

Place : MumbaiDate : 27th April, 2016

Note: This report is to be read with our letter of even date which is annexed as ‘ANNEXURE A’ and forms an integral part of this report.

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188

ANNEXURE A

To,

The Members, Mahindra Auto Steel Private Limited Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai – 400 018.

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of the company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4. Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

5. The compliance of the provisions of corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.

6. The secretarial audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

For Mehta & Mehta,Company Secretaries

(ICSI Unique Code P1996MH007500)

Dipti MehtaPartner

FCS No: 3667CP No.: 3202

Place : MumbaiDate : 27th April, 2016

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189

ANNEXURE III TO THE DIRECTORS’ REPORT

FORM NO. AOC-2Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties

referred to in Sub-section (1) of Section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto

(Pursuant to clause (h) of Sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

1. Details of contracts or arrangements or transactions not at arm’s length basis: NIL

Sr. No.



Duration of the contracts/ arrangements/ transactions


Justification for entering into such contracts or arrangements or transactions

Date(s) of approval by the Board

Amount paid as advances, if any:

Date on which the special resolution was passed in general meeting as required under first proviso to Section 188

– – – – – – – – –


Sr. No.


Nature of contracts/arrangements/transactions





1 Mahindra Intertrade Limited (Holding Company)


Recurring 1) Purchase of CR/HR/Coated steel at cost plus margin

2) Total value of transaction: Rs. 601.67 lakhs

Not applicable (Refer Note)

Nil


Project management fees

Non-recurring 1) As per industry norms

2) Total transaction value: Rs. 214 lakhs


Nil

3 Mahindra Logistics Limited (Fellow Subsidiary)

Port charges for import of machinery and freight charges

Non-recurring 1) As per Industry norms

2) Total transaction value: Rs. 43.09 lakhs


Nil

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190

Sr. No.


Nature of contracts/arrangements/transactions





4 Mahindra & Mahindra Limited (Ultimate Holding Company)


Recurring 1) Sale of CR/HR Steel.

2) Payment terms – 15 days

3) Total value for transaction: Rs. 66.27 lakhs


Nil

5 Mahindra & Mahindra Limited (Ultimate Holding Company)

Purchase of fixed assets

Non-recurring 1) Fair market value



Nil

6 Mahindra Vehicle Manufacturers Limited (Intermediate Holding Company w.e.f. January 18, 2016) (Fellow subsidiary upto January 17, 2016)






Nil







Nil


Purchase for other support services

Recurring 1) Allocation of cost without any markup



Nil

Note: All these transactions are at arms length and are in the ordinary course of business. Accordingly, Board approval is not required as per the proviso to Sub section (1) of Section 188 of the Companies Act, 2013. Approval of Audit Committee has been taken in the meetings held April 29, 2015, July 28, 2015, October 27, 2015 and January 21, 2016.





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191


Form No. MGT-9 Extract of Annual Return as on the financial year ended on March 31, 2016[Pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies



i. Corporate Identification Number (CIN) : U27100MH2013PTC250979

ii. Registration Date : December 12, 2013

iii. Name of the Company : Mahindra Auto Steel Private Limited

iv. Category/Sub-Category of the Company : Company Limited by shares/Indian Non-Government Company


: Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai - 400018 Tel.: +91-22-24935185/86 Fax: +91-22-24951236 Contact: [email protected]

vi. Whether listed company Yes/No : No


: –

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:

All the business activities contributing 10% or more of the total turnover of the Company:

Sr. No.




1 Processing of Steel 24105 100

lll. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:

Sr. No. Name and Address of the Company CIN/GIN

Holding/Subsidiary/Associate

% of shares

heldApplicable

Section

1 Mahindra Intertrade Limited Mahindra Towers, P. K. Kurne Chowk, Worli, Mumbai – 400 018


51.00 2 (46)

2 Mahindra Vehicle Manufacturers Ltd. (w.e.f. 18th January, 2016)

U34100MH2007PLC171151 Intermediate Holding Company

– 2 (46)

3 Mahindra and Mahindra Limited Gateway Building, Apollo Bunder, Colaba, Mumbai – 400001


– 2 (46)

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192

IV. SHAREHOLDING PATTERN (Equity Share Capital Break-up as percentage of Total Equity)

(i) Category-wise Share Holding




% Change during


Total Shares


Shares

A. Promoters

(1) Indian – – – – – – – – –

a) Individual/HUF – – – – – – – – –

b) Central Govt. – – – – – – – – –

c) State Govt(s) – – – – – – – – –

d) Bodies Corp. – 3,49,35,000 3,49,35,000 51 – 3,49,35,000 3,49,35,000 51 –

e) Bank/FI – – – – – – – – –

f) Any Other – – – – – – – – –

Sub-Total (A)(1): – 3,49,35,000 3,49,35,000 51 – 3,49,35,000 3,49,35,000 51 –

(2) Foreign

a) NRI-Individuals – – – – – – – – –

b) Other Individuals – – – – – – – – –

c) Body Corp. – – – – – – – – –

d) Bank/FI – – – – – – – – –

e) Any Other – – – – – – – – –

Sub Total (A)(2): – – – – – – – – –

Total shareholding of Promoter (A) = (A)(1)+(A)(2)

– 3,49,35,000 3,49,35,000 51 – 3,49,35,000 3,49,35,000 51 –

B. Public Shareholding

1. Institutions

a) Mutual Funds – – – – – – – – –

b) Banks/FI – – – – – – – – –

c) Cent. Govt. – – – – – – – – –

d) State Govt(s) – – – – – – – – –

e) Venture Capital Funds – – – – – – – – –

f) Insurance Companies – – – – – – – – –

g) FIIs – – – – – – – – –

h) Foreign Venture Capital Funds – – – – – – – – –

i) Others (specify) – – – – – – – – –

Sub-Total (B)(1): – – – – – – – – –

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193




% Change during


Total Shares


Shares2. Non-Institutionsa) Body Corp. – – – – – – – – – i) Indian – – – – – – – – – ii) Overseas – 3,35,65,000 3,35,65,000 49 – 3,35,65,000 3,35,65,000 49 –b) Individuals – – – – – – – – –i. Individual


– – – – – – – – –

ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh

– – – – – – – – –

c) Others (specify) – – – – – – – – –Sub-Total (B)(2): – 3,35,65,000 3,35,65,000 49 – 3,35,65,000 3,35,65,000 49 –Total Public Shareholding (B)=(B)(1)+ (B)(2) – 3,35,65,000 3,35,65,000 49 – 3,35,65,000 3,35,65,000 49 –C. Shares held by

Custodian for GDRs & ADRs

– – – – – – – – –

Grand Total (A+B+C) – 6,85,00,000 6,85,00,000 100 – 6,85,00,000 6,85,00,000 100 –

(ii) Shareholding of Promoters

Sr. No.


Shareholding at the end of the year % change

in share-holding during

the year

No. of Shares

% of total

Shares of the

Company

% of Shares

Pledged/ encumbered

to total shares

No. of Shares

% of total

Shares of the

company



1 Mahindra Intertrade Limited 3,49,34,998 51 – 3,49,34,998 51 – –*Mr. Harsh Kumar (As Nominee of Mahindra Intertrade Limited)

1 – – 1 – – –

*Mr. Zhooben Bhiwandiwala (As Nominee of Mahindra Intertrade)

1 – – 1 – – –

Total 3,49,35,000 51 – 3,49,35,000 51 – –* Held for Mahindra Intertrade Limited by its nominees to comply with the statutory provisions in respect of minimum numbers of member.

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194


Sr. No.

Shareholders Name Shareholding at the beginning of the year


No. of shares % of total shares of the company


1 Mahindra Intertrade Limited (including 2 equity shares held through its nominees)

At the beginning of the year 3,49,35,000 51 3,49,35,000 51

Date wise Increase/Decrease in Promoters Share holding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity/etc.) – – – –

At the End of the year 3,49,35,000 51 3,49,35,000 51


Sr. No.

For Each of the Top Ten Shareholders Shareholding at the beginning of the year




1 CSGT International Corporation

At the beginning of the year 1,67,82,500 24.5 1,67,82,500 24.5

Date wise Increase/Decrease in Promoters Share holding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity /etc.)

– – – –

At the End of the year 1,67,82,500 24.5 1,67,82,500 24.5

2 Mitsui & Co. (Asia-Pacific) Pte. Ltd.

At the beginning of the year 1,67,82,500 24.5 1,67,82,500 24.5

Date wise Increase/Decrease in Promoters Share holding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity /etc.):

– – – –

At the End of the year 1,67,82,500 24.5 1,67,82,500 24.5

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195


Sr. No.




company


company

1 Mr. Harsh Kumar (As Nominee of Mahindra Intertrade Limited)

At the beginning of the year 1 – 1 –

Date wise Increase/Decrease in Share holding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity etc): – – – –

At the End of the year 1 – 1 –

2 Mr. Zhooben Bhiwandiwala (As Nominee of Mahindra Intertrade Limited)

At the beginning of the year 1 – 1 –

Date wise Increase/Decrease in Share holding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity etc): – – – –

At the End of the year 1 – 1 –

V. INDEBTEDNESS:

Indebtedness of the Company including interest outstanding/accrued but not due for payment

(Rs. in Crores)

Particulars Secured Loans

excluding deposits

Unsecured Loans

Deposits Total Indebtedness





Total (i+ii+iii) – 22.13 – 22.13

Change in Indebtedness during the financial year

• Addition – 25.38 – 25.38

• Reduction – (2.04) – (2.04)

Net change – 23.34 – 23.34





Total (i+ii+iii) – 45.47 – 45.47

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196


A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

(Rs. in Lakhs)

Sr. No.

Particulars of Remuneration Name of MD/WTD/Manager Total Amount Sanjay Somkumar

(Manager)

1. Gross Salary

a) Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961 18.69 18.69

b) Value of perquisites under Section 17(2) of the Income-tax Act, 1961 0.27 0.27

c) Profits in lieu of salary under Section 17(3) of the Income-tax Act, 1961 – –

2. Stock Option – –

3. Sweat Equity – –

4. Commission

– as % of Profit – –

– others, specify – –

5. Others, please specify

SARs 1.80 1.80

Contribution to Other Funds 0.94 0.94

Total (A) 21.70 21.70

Ceiling as per the Act As per Schedule V of the Companies Act, 2013

B. Remuneration of other directors:

(Rs. in Lakhs)

Sr. No.


1. Independent Directors Ms. Smita Mankad

Mr. P. R. Barpande

• Feeforattendingboard/committeemeetings 1.60 1.60 3.20

• Commission 2.75 2.75 5.50

• Others,pleasespecify – – –

Total (1) 4.35 4.35 8.70

2. Other Non-Executive Directors

• Feeforattendingboard/committeemeetings – – –

• Commission – – –

• Others,pleasespecify – – –

Total (2) – – –

Total (B)=(1+2) 4.35 4.35 8.70

Total Managerial Remuneration – – 30.40

Overall Ceiling as per the Act As per schedule V of the Companies Act, 2013

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197

C. Remuneration to Key Managerial Personnel other than MD/MANAGER/WTD

(Rs. in Lakhs)Sr. No.

Particulars of Remuneration Key Managerial PersonnelCEO Company

SecretaryCFO Total

Amount

–

Mr. Abhishek Juvekar (upto

January 9, 2016)

Ms. Romali Malvankar

(w.e.f. January 21,

2016)

Mr. Percy Mahernosh

(w.e.f August 1,

2015)

Ms. Jyoti Walunj

(upto August 1,

2015)

1. Gross Salary(a) Salary as per provisions contained

in Section 17(1) of the Income-tax Act, 1961 – – – – –

(b) Value of perquisites under Section 17(2) of the Income-tax Act, 1961 – – – – –

(c) Profits in lieu of salary under Section 17(3) of the Income-tax Act, 1961 – – – – –

2. Stock Option – – – – –3. Sweat Equity – – – – –4. Commission

– as % of Profit – – – – –– others, specify... – – – – –

5. Others, please specify - Fees (allocation of expenses by Mahindra and Mahindra Limited) – 3.00 – – 3.00Total – 3.00 – – 3.00


Type Section of the Companies Act

Brief Description

Details of Penalty/Punishment/

Compounding fees imposed

Authority (RD/NCLT/court)

Appeal made, if any (give

details)

A. COMPANYPenalty – – – – –Punishment – – – – –Compounding – – – – –B. DIRECTORSPenalty – – – – –Punishment – – – – –Compounding – – – – –C. OTHER OFFICERS IN DEFAULTPenalty – – – – –

Punishment – – – – –Compounding – – – – –





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198

ANNEXURE V TO THE DIRECTORS’ REPORT

PARTICULARS AS PER THE COMPANIES (ACCOUNTS) RULES, 2014


(a) the steps taken or impact on conservation of energy:

Electricity Panel room requires a level of temperature to be maintained and in normal course Air Conditioner needs to be run on 24x7 basis. Two controllers have been fitted to two heavy duty Air Conditioners, which help conserve electricity when required temperature is maintained.




i) the efforts made towards technology absorption: Nil

ii) the benefits derived like product improvement, cost reduction, product development or import substitution: Nil

iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) –






C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(in terms of actual inflow and outflow)


(Rs. in Lakhs)

For the Financial Year Ended

March 31, 2016

For the Financial Year Ended

March 31, 2015

Total Foreign Exchange Earned NIL NIL

Total Foreign Exchange Used 167.31 NIL





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199

independent auditor’s reportTO THE MEMBERS OF MAHINDRA AUTO STEEL PRIVATE LIMITED


We have audited the accompanying financial statements of MAHINDRA AUTO STEEL PRIVATE LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.










Opinion




(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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200

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards prescribed under Section 133 of the Act, as applicable.




i. The Company does not have any pending litigations which would impact its financial position.








Mumbai, 27 April, 2016

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201


(Referred to in paragraph 1 (f) under ‘Report on Other Legal and Regulatory Requirements’ of our report of even date to the members of Mahindra Auto Steel Private Limited on the financial statements for the year ended 31st March, 2016)


We have audited the internal financial controls over financial reporting of Mahindra Auto Steel Private Limited (“the Company”) as of 31st March, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial ControlsThe Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s ResponsibilityOur responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.



Meaning of Internal Financial Controls Over Financial ReportingA company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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202

Inherent Limitations of Internal Financial Controls Over Financial ReportingBecause of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OpinionIn our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.






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203

ANNEXURE “B” TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date to the members of Mahindra Auto Steel Private Limited on the financial statements for the year ended 31st March, 2016)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us in respect of immovable property of land that has been taken on lease and buildings constructed thereon by the Company, disclosed as fixed asset in the financial statements, the lease agreement is in the name of the Company, where the Company is the lessee in the agreement.


(iii) The Company has not granted any loans, secured or unsecured, to companies or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

(iv) The Company has not granted any loans, made investments or provided guarantees and hence reporting under clause (iv) of the Order is not applicable.


(vi) The maintenance of cost records has not been specified by the Central Government under Section 148(1) of the Companies Act, 2013.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has been regular in depositing undisputed statutory dues, including Provident Fund, Income-tax, Sales Tax, Service Tax, Excise Duty, Value Added Tax, cess and other material statutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Income-tax, Sales Tax, Service Tax, Excise Duty, Value Added Tax, cess and other material statutory dues in arrears as at 31st March, 2016 for a period of more than six months from the date they became payable.

(c) There are no dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Value Added Tax as on 31st March, 2016 on account of disputes.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to banks. The Company has not issued any debentures.

(ix) In our opinion and according to the information and explanations given to us, money raised by way of term loans have been applied by the Company during the year for the purposes for which they were raised.


(xi) In our opinion and according to the information and explanations given to us, the Company has paid managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable.

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204

(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 188 and 177 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of the Order is not applicable to the Company.



For DELOITTE HASKINS & SELLS

Chartered Accountants(Firm’s Registration No. 117365W)




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205

Balance Sheet as at 31 March, 2016

Particulars Note No.As at

31 March, 2016As at

31 March, 2015

Amount (Rs.) Amount (Rs.)

A EQUITY AND LIABILITIES

1 Shareholders’ Funds(a) Share capital ............................................................... 3 685,000,000 685,000,000(b) Reserves and surplus ................................................... 4 63,264,244 2,012,664

748,264,244 687,012,6642 Non-current liabilities

(a) Long-term borrowings ................................................. 5 413,684,411 220,391,989(b) Long-term provisions .................................................. 6 2,469,809 1,393,962

416,154,220 221,785,9513 Current liabilities

(a) Short-term borrowings ................................................... 7 37,497,905 –(b) Trade payables 8 (i) Total outstanding dues of micro enterprises and

small enterprises .................................................. – – (ii) Total outstanding dues of creditors other than

micro enterprises and small enterprises ............... 81,161,907 271,529(c) Other current liabilities ............................................... 9 59,941,204 82,771,494(d) Short-term provisions .................................................. 10 4,723,549 247,961

183,324,565 83,290,984

TOTAL ............................................................................... 1,347,743,029 992,089,599

B ASSETS1 Non-current assets

(a) Fixed Assets (i) Tangible assets ..................................................... 11 949,054,919 228,800,096 (ii) Capital work-in-progress ...................................... – 557,451,578

949,054,919 786,251,674(b) Deferred tax assets (net) .............................................. 35 5,408,858 –(c) Long-term loans and advances ................................... 12 14,803,114 8,983,296

969,266,891 795,234,9702 Current assets

(a) Current investments .................................................... 13 4,700,000 80,000,000(b) Inventories .................................................................. 14 156,784,899 –(c) Trade receivables ........................................................ 15 125,695,377 – (d) Cash and cash equivalents .......................................... 16 9,480 51,338,491(e) Short-term loans and advances ................................... 17 75,133,207 62,797,988(f) Other current assets .................................................... 18 16,153,175 2,718,150

378,476,138 196,854,629

TOTAL 1,347,743,029 992,089,599


In terms of our report attached For and on behalf of the Board of DirectorsFor Deloitte Haskins & SellsChartered Accountants Percy Mahernosh Zhooben Bhiwandiwala } DirectorsChief Financial Officer Rajeev Dubey

Sumit IssarP. R. Barpande

Uday M. Neogi Romali MalvankarPartner Company Secretary


Book 1.indb 205 11/25/2016 2:45:57 PM



206






Statement of Profit and Loss for the Year Ended 31 March, 2016

ParticularsNote No.

For the year ended

31 March, 2016

For the year ended

31 March, 2015


1 Revenue from operations (gross) ....................................... 19 694,266,193 –

Less: Excise duty ...................... (78,490,512) –

Revenue from operations (net) .... 615,775,681 – 2 Other Income ........................... 20 2,398,705 12,491,587

3 Total revenue (1+2) ................. 618,174,386 12,491,5874 Expenses

(a) Cost of materials consumed 21(a) 508,081,871 – (b) Changes in inventories of

finished goods ..................... 21(b) (51,645,764) – (c) Employee benefits expense.... 22 12,483,363 –(d) Finance costs ....................... 23 24,464,710 125,831(e) Depreciation and

amortisation expense .......... 11 32,770,173 2,453,600Less: Capitalised ....................... (638,424) 32,131,749 (2,453,600) –

(f) Other expenses ................... 24 32,693,485 1,077,836

Total Expenses .......................... 558,209,414 1,203,667

5 Profit before tax (3-4) ............... 59,964,972 11,287,920

6 Tax expense(a) Current tax expense ............. 11,953,000 2,000,000(b) Less: MAT credit .................. (11,953,000) –

(c) Net current tax ..................... – 2,000,000(d) Deferred tax ......................... 35 (5,408,858) –

Net tax expense ........................ (5,408,858) 2,000,000

7 Profit after tax (5-6) ................. 65,373,830 9,287,920

8 Earnings per equity share (of Rs. 10/- each) ...................... 34Basic/Diluted ............................ 0.95 0.22

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207

Cash Flow Statement for the Year Ended 31 March, 2016

Particulars

For the year ended

31 March, 2016

For the period ended

31 March, 2015Amount (Rs.) Amount (Rs.)

A. Cash flow from operating activities

Profit before tax for the year ................................................................ 59,964,972 11,287,920Adjustments for: Depreciation and amortisation expense ........................................ 32,131,749 – Share issue expenses ..................................................................... – 684,900 Finance costs ................................................................................. 24,464,710 125,831 Interest income .............................................................................. (181,849) (6,257,758) Dividend income .......................................................................... (2,065,582) (6,233,829) Gain on sale of current investments .............................................. (151,274) –

Operating profit/(loss) before working capital changes ........................ 114,162,726 (392,935)Changes in working capital: Adjustment for (increase)/decrease in operating assets/liabilitiesInventories ............................................................................................ (156,784,899) –Trade receivables .................................................................................. (125,695,377) – Loans and advances and other current assets ............................... (13,721,683) (65,885,208) Trade payables and other current liabilities ................................... 103,059,462 (1,166,519) Long term and short term provisions ............................................. 1,310,146 –

Cash generated from operations .................................................... (77,669,625) (67,444,662) Income tax paid ............................................................................ (12,034,961) (1,940,776)

Net cash flow used in operating activities (A) .................................... (89,704,586) (69,385,438)

B. Cash flow used in investing activities

Capital expenditure on fixed assets, including capital advances .......... (235,208,963) (715,981,024)Current investments not considered as Cash and cash equivalents:– Purchased ...................................................................................... (1,739,100,000) (3,800,100,000)– Proceeds from sale ........................................................................ 1,814,551,275 3,720,100,000Interest received ................................................................................... 509,178 5,930,429Dividend received ................................................................................ 2,065,582 6,233,829

Net cash flow used in investing activities (B) ..................................... (157,182,928) (783,816,767)

C. Cash flow from financing activities

Proceeds from issue of equity shares ................................................... – 684,900,000Proceeds from long term borrowings ................................................... 179,726,604 220,391,989Proceeds from short term borrowings .................................................. 37,497,905 – Inter corporate deposits taken .............................................................. – 15,749,315Inter corporate deposits repaid ............................................................. – (15,749,315)Share issue expenses ............................................................................ – (684,900)Finance costs ........................................................................................ (21,666,006) (125,831)

Net cash flow from financing activities (C)......................................... 195,558,503 904,481,258

Net (decrease)/increase in cash and cash equivalents (A + B + C) .... (51,329,011) 51,279,053

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208

Particulars

For the year ended

31 March, 2016

For the period ended

31 March, 2015Amount (Rs.) Amount (Rs.)

Cash and cash equivalents at beginning of the year (Refer note 16) ...... 51,338,491 59,438

Cash and cash equivalents at end of the year (Refer note 16) ............. 9,480 51,338,491

(51,329,011) 51,279,053

Reconciliation of Cash and cash equivalents with the Balance Sheet:

Cash and cash equivalents as per Balance Sheet (Refer note 16) ........ – –

Component of cash and cash equivalents

Cash on hand ....................................................................................... 2,523 –

with banks: In current accounts ........................................................... 6,957 1,338,491

In deposit accounts ........................................................... – 50,000,000

9,480 51,338,491







Book 1.indb 208 11/25/2016 2:45:57 PM



209



Mahindra Auto Steel Private Limited (“the Company”) is incorporated in India on 12 December, 2013 with authorised share capital of Rs. 760,000,000. The Company is a public company by virtue of proviso to Section 2(71) of the Companies Act, 2013 (‘the 2013 Act”) as it is a subsidiary of a public limited company. The Company’s main object is manufacturing, processing and trading of non-ferrous/ferrous material including various grades of steel. The Company has commenced it’s manufacturing operations from 15 July, 2015.

2. Significant Accounting Policies followed by the Company

2.1 Basis of accounting and preparation of financial statements:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the 2013 Act. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.



The preparation of the financial statements in conformity with the Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates, are recognized in the periods in which the results are known/materialize.

2.3 Inventories:

Inventories are stated at cost or net realizable value, whichever is lower. Cost is arrived at on a weighted average method and includes, where appropriate cost of purchase, manufacturing overheads and excise duty.




Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

2.6 Fixed Assets:


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210

(b) (i) Leasehold land is amortized over the period of the lease.

(ii) Depreciation on other fixed assets is calculated on Straight Line Method as per the useful life prescribed in Schedule II to the Companies Act, 2013, except in respect of vehicles where the life has been assessed as five years and Blanking line (plant and equipment) where the life has been assessed as twenty years, based on technical advice taking into account the nature of asset, the estimated usage and operating condition of the asset.

Capital work-in-progress:

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

2.7 Revenue Recognition:

Sale of products are recognized, when the significant risks and rewards of ownership are transferred to the Buyer. Sales include excise duty, but excludes sales tax and value added tax.

Sales of services are recognised when services are rendered.

2.8 Other Income:

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

2.9 Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. All foreign currency monetary items outstanding at the year end (excluding long term liability) are translated at the relevant rates of exchange prevailing at the year end. Exchange differences arising on settlement/restatement of foreign currency monetary assets & liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss. In respect of forward exchange contracts, the premium or discount arising at the inception of such a contract is amortized as expense or income over the life of the contract.


2.10 Investments:

Long term Investments are valued at cost less provision, if any, for decline other than temporary, in value of such investments. Current investments are valued at the lower of cost and fair value, determined by category of investment.

2.11 Employee Benefits:

(i) Defined Contribution Plan:

Company’s contributions paid/payable during the year to the provident fund, superannuation fund, Employee State Insurance Scheme and labour welfare fund are recognized in the Statement of Profit and Loss based on the amount of contribution required to be made and when services are rendered by the employees.

(ii) Defined Benefit Plan/Long Term Compensated Absences:

Company’s liability towards gratuity, compensated absence and post retirement medical benefit schemes are determined by independent actuary using the projected unit credit method at each balance sheet date. Past service cost are recognized on a straight-line basis over the average period until the benefits become vested. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation as reduced by the fair value of scheme assets.

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211


Basic earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.

2.13 Taxes on income:

Tax expense consists of current tax and deferred tax. Current tax is determined as either (i) the amount of tax payable in respect of taxable income after considering usual allowances and disallowances under the Income-tax, 1961 or (ii) Minimum Alternate Tax for the year. Credit in respect of Minimum Alternate Tax paid is recognised only if there is convincing evidence of realisation of the same. Deferred tax reflects the impact of current year timing differences between taxable income and accounting income and reversal of timing differences of the earlier years.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

2.14 Provisions and contingencies:

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.



2.16 Derivative contracts:

The Company enters into derivative contracts in the nature of foreign currency swaps, currency options, forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions in foreign currency. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign currency transactions and translations.



Shares Amount

(Rs.) Number of

Shares Amount

(Rs.) (a) Authorised

Equity Shares of Rs. 10 each ................. 76,000,000 760,000,000 76,000,000 760,000,000

76,000,000 760,000,000 76,000,000 760,000,000

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212


Shares Amount

(Rs.) Number of

Shares Amount

(Rs.)

(b) Issued, subscribed and fully paid upEquity Shares of Rs. 10 each ................ 68,500,000 685,000,000 68,500,000 685,000,000

68,500,000 685,000,000 68,500,000 685,000,000

(i) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period:

ParticularsOpening Balance

Fresh issue

Buy back

Closing Balance

Equity Shares of Rs. 10 each Year ended 31 March, 2016

Number of shares ......................................... 68,500,000 – – 68,500,000Amount (Rs.) ................................................. 685,000,000 – – 685,000,000 Year ended 31 March, 2015Number of shares ......................................... 10,000 68,490,000 – 68,500,000Amount (Rs.) ................................................. 100,000 684,900,000 – 685,000,000

(ii) The Company has not alloted any equity shares for consideration other than cash, bonus shares, nor have any shares been bought back since its incorporation (i.e. 12 December, 2013).

Terms and rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each shareholder has the following voting rights (i) On a show of hands: one vote for a member present in person and (ii) On a poll: in proportion to the share in paid-up equity share capital of the Company. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend. In the event of winding up, if the assets available for distribution are less/more than sufficient to repay the whole of the paid up share capital, the losses/excess shall be borne/distributed amongst the members in proportion to the capital at the commencement of the winding up, paid up or which ought to have been paid up on the shares held by them respectively.

(iii) Details of shares held by the holding company:

ParticularsAs at

31 March, 2016As at

31 March, 2015Number of Shares Number of Shares

Mahindra Intertrade Limited (Including 2 equity shares held jointly with its nominees) .............. 34,935,000 34,935,000

(iv) Details of shares held by each shareholder holding more than 5% shares:


Number of Shares

% of holding

Number of Shares

% of holding

Mahindra Intertrade Limited (Including 2 equity shares held jointly with its nominees) ............. 34,935,000 51.00% 34,935,000 51.00%

CSGT International Corporation .......... 16,782,500 24.50% 16,782,500 24.50%

Mitsui & Co. (Asia Pacific) Pte Ltd ........ 16,782,500 24.50% 16,782,500 24.50%

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213


ParticularsAs at

31 March, 2016As at

31 March, 2015 Amount (Rs.) Amount (Rs.)

Surplus/(Deficit) in Statement of Profit and LossOpening balance ........................................................................... 2,012,664 (7,275,256)Add: Profit for the year .................................................................. 65,373,830 9,287,920Less: Proposed dividend (Rs. 0.05 per equity share [2015: Nil]) ..... 3,425,000 –Less: Tax on dividend ..................................................................... 697,250 –

Closing balance 63,264,244 2,012,664


ParticularsAs at

31 March, 2016As at


Unsecured(a) Term loans from banks

Rupee term loan (Refer Note i and iii) 150,000,000 –(b) Other loans and advances

Buyers credits (Refer Note ii and iii) 263,684,411 220,391,989

413,684,411 220,391,989

Note i: The Company has taken Rupee term loan of Rs. 150,000,000 (2015 : Rs. Nil) for capital expenditure at chakan plant from HDFC Bank Limited. The term loan is repayable in 16 quaterly installments commencing from June 2018 at the interest rate of 0.50% plus HDFC bank base rate (as at 31 March, 2016 9.80%).

FY 2018 FY 2019 FY 2020 FY 2021

Q1 3,750,000 7,500,000 11,250,000 15,000,000

Q2 3,750,000 7,500,000 11,250,000 15,000,000

Q3 3,750,000 7,500,000 11,250,000 15,000,000

Q4 3,750,000 7,500,000 11,250,000 15,000,000

15,000,000 30,000,000 45,000,000 60,000,000

Note ii: The Company has taken buyer’s credit of Rs. 233,358,274 (2015 : Rs. 220,391,989) for machinery imported under sanction of LUT extended by HDFC Bank Limited. Interest payable at the rate of 8.10%.

The Company has taken buyer’s credit of Rs. 30,326,137 (2015 : Nil) for machinery imported under sanction of LUT extended by HDFC Bank Limited. Interest payable at the rate of 8.60%.

The buyers credit may be refinanced by Rupee Term Loan after 3 years, which will be repaid as follows:

FY 2020 FY 2021 FY 2022 FY 2023

Q1 7,500,000 15,000,000 22,500,000 30,000,000

Q2 7,500,000 15,000,000 22,500,000 30,000,000

Q3 7,500,000 15,000,000 22,500,000 23,684,411

Q4 7,500,000 15,000,000 22,500,000 –

30,000,000 60,000,000 90,000,000 83,684,411

Note iii: To be secured by first pari passu charge on the moveable fixed assets of the Company, present and future. Further, the Company has agreed to negative lien on other fixed assets in favour of HDFC Bank Limited.

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214

Note 6 Long-term provisions

ParticularsAs at

31 March, 2016As at


(a) Provision for employee benefits:

(i) Provision for compensated absences ............................... 1,222,454 741,206

(ii) Provision for gratuity (net) ............................................... 853,997 590,649

(iii) Provision for post retirement medical benefits ................. 59,899 8,087

(iv) Provision for stock appreciation rights ............................. 333,459 54,020

2,469,809 1,393,962

Note 7 Short term borrowings

ParticularsAs at

31 March, 2016As at


Unsecured:

Loan repayable on demand from Banks ......................................... 37,497,905 –

37,497,905 –

Note 8 Trade Payables

ParticularsAs at

31 March, 2016As at


Trade Payables:(a) Total outstanding dues of micro enterprises and small

enterprises (Refer note 26) ...................................................... – –(b) Total outstanding dues of creditors other than micro

enterprises and small enterprises ............................................ 81,161,907 271,529

81,161,907 271,529

Note 9 Other Current Liabilities

ParticularsAs at

31 March, 2016As at


(a) Interest accrued but not due on borrowings ............................ 3,519,458 921,754(b) Other payables – (i) Statutory remittances (contribution to provident fund

and employee states insurance corporation, withholding taxes, excise duty, service tax, etc. .................................. 654,631 4,213,947

(ii) Value added tax payable ................................................. 50,385,350 – (iii) Payables on purchase of fixed assets................................ 4,757,714 52,354,793 (iv) Advance from customers ................................................. 324,051 – (v) Payable to the Holding Company:

Project management fees/expenses incurred on behalf of the Company .................................................................. – 25,281,000

(vi) Others deposits received ................................................. 300,000 –

59,941,204 82,771,494

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215

Note 10 Short-term provisions

ParticularsAs at

31 March, 2016As at


(a) Provision for employee benefits:

(i) Provision for compensated absences ............................... 180,678 105,116

(ii) Provision for gratuity (net) ............................................... – 33,606

(iii) Provision for stock appreciation rights ............................. 242,359 50,015

(b) Provision – Others:

(i) Provision for tax (net of advance tax Rs. 13,975,737 (2015 : Rs. 1,940,776) .................................................... 178,262 59,224

(ii) Provision for proposed equity dividend ........................... 3,425,000 –

(iii) Provision for tax on proposed dividend ........................... 697,250 –

4,723,549 247,961

Note 11 Fixed Assets

Amount (Rs.)

Tangible Assets

Gross Block Accumulated depreciation and amortisation Net Block

Balance as at

1 April, 2015 Additions Disposals

Balance as at

31 March, 2016

Balance as at 1 April,

2015

Depreciation/amortisation

expense for the year

(Refer note 1) Disposals

Balance as at

31 March, 2016

Balance as at

31 March, 2016

Land – Leasehold 230,908,302 15,727,226 – 246,635,528 2,427,155 2,786,430 – 5,213,585 241,421,943

(–) (230,908,302) (–) (230,908,302) (–) (2,427,155) (–) (2,427,155) (228,481,147)Buildings – 210,189,328 – 210,189,328 – 5,585,850 – 5,585,850 204,603,478

(–) (–) (–) (–) (–) (–) (–) (–) (–)

Electrical Installations – 20,036,940 – 20,036,940 – 1,357,423 – 1,357,423 18,679,517

(–) (–) (–) (–) (–) (–) (–) (–) (–)Plant and Equipment* – 499,775,236 – 499,775,236 – 22,230,216 – 22,230,216 477,545,020

(–) (–) (–) (–) (–) (–) (–) (–) (–)Furniture and Fixtures – 1,759,685 – 1,759,685 – 112,048 – 112,048 1,647,637

(–) (–) (–) (–) (–) (–) (–) (–) (–)Vehicles 325,000 2,971,237 – 3,296,237 25,659 395,726 – 421,385 2,874,852

(–) (325,000) (–) (325,000) (–) (25,659) (–) (25,659) (299,341)Office Equipment – 1,518,943 – 1,518,943 – 163,452 – 163,452 1,355,491

(–) (–) (–) (–) (–) (–) (–) (–) (–)Computers 20,394 1,046,401 – 1,066,795 786 139,028 – 139,814 926,981

(–) (20,394) (–) (20,394) (–) (786) (–) (786) (19,608)Total 231,253,696 753,024,996 – 984,278,692 2,453,600 32,770,173 – 35,223,773 949,054,919Previous year (–) (231,253,696) (–) (231,253,696) (–) (2,453,600) (–) (2,453,600) (228,800,096)

Note 1 : Includes depreciation/amortisation expense for the year Rs. 638,424/- (March 2015 : Rs. 2,453,600/-) which is capitalised.

*Note 2: Additions to the gross block of Plant and equipment includes foreign exchange gain of Rs. 1,363,033.

Note 3: Figures in brackets are in respect of the previous year.

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216

Note 12 Long-term loans and advances

ParticularsAs at

31 March, 2016As at

31 March, 2015


Unsecured, considered good

(a) Capital advances – related parties ........................................... – 2,457,851

– others ...................................................... – 4,865,259

– 7,323,110

(b) Security deposits ..................................................................... 2,395,430 1,023,030

(c) Prepaid expenses .................................................................... 454,684 637,156

(d) MAT credit entitlement ........................................................... 11,953,000 –

14,803,114 8,983,296

Note 13 Current investments

ParticularsAs at

31 March, 2016As at

31 March, 2015


At lower of cost and fair valueInvestment in mutual fund (Unquoted)

(a) 113,893.84 (2015: Nil) units of Rs. 10 each in JM High Liquidity Fund-Growth ........................................................... 4,700,000 –

(b) Nil (2015: 52,915.407) units of Rs. 1,000 each in Taurus Liquid Fund-Existing Plan-Super Institutional-Growth ............ – 80,000,000

4,700,000 80,000,000

Note 14 Inventories

ParticularsAs at

31 March, 2016As at

31 March, 2015


(at lower of cost and net realisable value)

(a) Raw materials [refer note 21(a)] .............................................. 102,132,715 –

(b) Finished goods [refer note 21(b)] ............................................ 51,645,764 –

(c) Stores and spares .................................................................... 3,006,420 –

156,784,899 –

Note 15 Trade receivables

ParticularsAs at

31 March, 2016As at

31 March, 2015


Outstanding for a period not exceeding six months from the date they are due for payment

Unsecured, considered good .................................................. 125,695,377 –

125,695,377 –

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217

Note 16 Cash and cash equivalents

ParticularsAs at

31 March, 2016As at


(a) Cash on hand ......................................................................... 2,523 – (b) Balances with banks: (i) In current accounts ......................................................... 6,957 1,338,491 (ii) In term deposit accounts ................................................. – 50,000,000

9,480 51,338,491

Of the above, the balances that meet the definition of cash and cash equivalents as per AS 3 Cash Flow Statement is 9,480 51,338,491

Note 17 Short-term loans and advances

ParticularsAs at

31 March, 2016As at


Unsecured, considered good(a) Prepaid expenses .................................................................... 1,051,092 630,425(b) Deferred CENVAT credit ......................................................... 28,460,012 21,233,894(c) Balances with government authorities: (i) CENVAT credit receivable ............................................... 33,706,244 36,265,900 (ii) VAT credit receivable ...................................................... 2,656,464 2,656,895 (iii) Service Tax credit receivable ............................................. 9,257,395 1,672,555(d) Other loans and advances: – Advances to employee .................................................... 2,000 10,000 – Recoverable from related parties ..................................... – 328,319

75,133,207 62,797,988

Note 18 Other current assets

ParticularsAs at

31 March, 2016As at


(a) Interest accrued but not due on term deposits ......................... – 327,329(b) Defined contribution plan assets receivable in respect of

employees transferred to the company .................................... 804,928 608,393(c) Exchange difference recoverable under currency swap ........... 15,348,247 1,782,428

16,153,175 2,718,150

Note 19 Revenue from operations

Particulars

For the year ended

31 March, 2016

For the year ended


Revenue from –(a) Sale of products (Refer Note (i) below) .................................... 677,344,347 –(b) Sale of services (Refer Note (ii) below) .................................... 1,302,940 –(c) Other operating revenues (Refer Note (iii) below) ................... 15,618,906 –

694,266,193 –Less: Excise duty ............................................................................ (78,490,512) –

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218

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 2015 Amount (Rs.) Amount (Rs.) 615,775,681 –

(i) Sale of products comprises: Manufactured goods – Steel products .......................................................... 677,344,347 – (ii) Sale of services comprises: – Job work processing ................................................. 1,302,940 – (ii) Other operating revenues comprise: – Scrap sales ............................................................... 15,618,906 –

Note 20 Other income

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 2015


(a) Interest income: Interest of Fixed Deposits ........................................................ 181,849 6,257,758

(b) Dividend income: From current investments ........................................................ 2,065,582 6,233,829

(c) Other: Gain on sale of current investments ........................................ 151,274 –

2,398,705 12,491,587

Note 21(a) Cost of materials consumed

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 2015


Opening Stock ............................................................................... – –Add: Purchases .............................................................................. 610,214,586 –

610,214,586 –Less: Closing Stock ........................................................................ 102,132,715 –

508,081,871 –

Details of Raw materials consumed

For the year ended

31 March, 2016

For the year ended

31 March, 2015


Steel .............................................................................................. 508,081,871 –

Details of closing stock of Raw materials

For the year ended

31 March, 2016

For the year ended

31 March, 2015


Steel .............................................................................................. 102,132,715 –

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219

Note 21(b) Changes in inventories of finished goods

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 2015

Amount (Rs.) Amount (Rs.) Inventories at the end of the year: Finished goods .............................................................................. 51,645,764 –Inventories at the beginning of the year:Finished goods .............................................................................. – –

(Increase) in Stock ......................................................................... (51,645,764) –

Details of closing stock of Finished goods

For the year ended

31 March, 2016

For the year ended

31 March, 2015

Amount (Rs.) Amount (Rs.) Finished goodsSteel products ................................................................................ 51,645,764 –

Note 22 Employee Benefits Expense

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 2015

Amount (Rs.) Amount (Rs.) (a) Salaries and wages ................................................................. 12,018,648 5,744,644(b) Stock appreciation rights scheme expenses (Refer note 37) ..... 1,584,891 104,035(c) Contribution to provident and other funds .............................. 394,001 105,232(d) Gratuity expense [Refer note 31(ii)(b)] .................................... 336,088 22,859(e) Post retirement medical benefit expense

[Refer note 31(ii)(a)] ................................................................ 37,117 1,090(f) Staff walfare ............................................................................ 852,704 –

15,223,449 5,977,860 Less: Capitalised ..................................................................... (2,740,086) (5,977,860)

12,483,363 –

Note 23 Finance costs

Particulars

For the year ended

31 March, 2016

For the year ended


(a) Interest on : (i) Borrowings ..................................................................... 29,015,996 1,047,585 (ii) Others ............................................................................ Interest on income tax .................................................... 201,000 –(b) Other finance cost .................................................................. 341,616 –

29,558,612 1,047,585 Less: Capitalised ..................................................................... (5,093,902) (921,754)

24,464,710 125,831

Book 1.indb 219 11/25/2016 2:45:58 PM



220

Note 24 Other expenses

Particulars

For the year ended

31 March, 2016

For the year ended


(a) Stores and spares consumed ................................................... 521,942 –(b) Power and fuel ....................................................................... 4,164,255 –(c) Rates and taxes ....................................................................... 844,183 4,398,472(d) Excise duty (Refer note 36) ..................................................... 7,635,144 –(e) Insurance ................................................................................ 743,637 22,504(f) Repairs and maintenance – Machinery ...................................................................... 206,248 – – Others ............................................................................ 352,615 –(g) Freight outward ...................................................................... 3,779,825 –(h) Management fees ................................................................... 2,486,112 –(i) Payment to auditors [Refer note (i) below] .............................. 535,000 112,360(j) Directors' fees ........................................................................ 321,000 –(k) Commission to Non whole time Directors .............................. 550,000 –(l) Loss on foreign exchange transactions and translations ........... 1,510,970 29,528,002(m) Printing and stationery ............................................................ 353,267 15,124(n) Legal and professional ............................................................ 3,250,843 477,977(o) Travelling expenses ................................................................. 421,226 1,218,597(p) Share issue expenses .............................................................. – 684,900(q) Bank charges .......................................................................... 37,284 30,008(r) Miscellaneous expenses ......................................................... 8,887,315 103,266

36,600,866 36,591,210 Less- Capitalised ..................................................................... (3,907,381) (35,513,374)

32,693,485 1,077,836

Note (i)

Particulars

For the year ended

31 March, 2016

For the year ended


Auditors’ remuneration includes payment to auditors (current year - excluding service tax)As statutory auditor ........................................................................ 500,000 112,360For certification work ..................................................................... 35,000 –

535,000 112,360

Note 25 Commitments (to the extent not provided for)

ParticularsAs at

31 March, 2016As at


Commitments:Estimated amount of contracts remaining to be executed on capital account and not provided for ........................................................ – 85,555,549

Book 1.indb 220 11/25/2016 2:45:58 PM



221

Note 26 Micro small and medium enterprises

The identification of vendors as a “Supplier” under the Micro, Small and Medium Enterprises Development Act, 2006 has been done on the basis of the information to the extent provided by the vendors to the Company. This has been relied upon by the auditors.

Note 27 Derivative Instruments

The Company has entered into Foreign Exchange Contracts (being a derivative instrument), which are not intended for trading or speculative purposes, but for hedge purposes.

(i) The following are the outstanding Foreign Exchange Contracts entered into by the Company:

Particulars Currency

As at 31 March, 2016 As at 31 March, 2015Amount

in Foreign Currency Amount (Rs)

Amount in Foreign Currency Amount (Rs)

Forward contract (payable on purchase of fixed assets) EURO – – 411,365 28,145,593Currency exchange/interest rate swap (import of machinery) USD 3,949,145 263,684,421 3,494,957 220,391,991

(ii) The year end foreign currency exposures that have not been hedged by a derivatives instrument or otherwise are given below:

Particulars

Payable on account of Currency

As at 31 March, 2016 As at 31 March, 2015Amount

in Foreign Currency

Amount (Rs)

Amount in Foreign Currency Amount (Rs)

Plant and Machinery USD – – 14,600 920,676Spares parts EURO 2,910 220,502 – –

Note 28 Value of imports calculated on CIF basis

Particulars

For the year ended

31 March, 2016

For the year ended


Machinery ..................................................................................... – 311,353,002Spares ............................................................................................ 220,502 –Raw materials ................................................................................ 793,083 –

Note 29 Expenditure in foreign currency

Particulars

For the year ended

31 March, 2016

For the year ended


Installation charges on imported machinery .................................. 15,718,150 –

Note 30 Details of consumption of imported and indigenous raw materials and spares

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 2015 Amount (Rs.) % Amount (Rs.) %

(a) Raw material Import ................................................... 793,083 0.20 – – Indigenous ............................................. 507,288,788 99.80 – –

508,081,87 100.00 – –

Book 1.indb 221 11/25/2016 2:45:58 PM



222

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 2015 Amount (Rs.) % Amount (Rs.) %

(b) Spares Import ................................................... 220,502 42.25 – – Indigenous ............................................. 301,441 57.75 – –

521,942 100.00 – –

Note 31 Employee Benefits Following are the relevant disclosures in pursuance of the Accounting Standard 15, “Employee Benefits”.

i) The Company has recognized, in statement of profit and loss for the year, an amount of Rs. 394,001 (2015: Rs. 105,232) pertaining to defined contribution plans.

Benefit (Contribution to)

For the year ended

31 March, 2016

For the year ended


Provident Fund .............................................................................. 238,505 59,955Pension Fund ................................................................................. 155,496 45,277Total .............................................................................................. 394,001 105,232

ii) The Company operates defined benefit plans as follows:

a. Unfunded – Post Retirement Medical Benefits

b. Funded (2015 : Unfunded) – Post Retirement Gratuity

a. Details of unfunded defined benefit obligations in respect of Post Retirement Medical Benefits are as follows:

Particulars

For the year ended

31 March, 2016

For the year ended


1. Reconciliation of opening and closing balances of obligation a. Opening obligation ......................................................... 8,087 – b. Current service cost ........................................................ 1,779 550 c. Interest cost .................................................................... 794 203 d. Actuarial loss .................................................................. 34,544 337 e. Benefits paid ................................................................... – – f. Liabilities assumed on acquisition ................................... 14,695 6,997 g. Closing obligation ........................................................... 59,899 8,0872. Expected employer’s contribution next year ........................... – –3. Expense recognised in the year a. Current service cost ........................................................ 1,779 550 b. Interest cost .................................................................... 794 203 c. Actuarial loss .................................................................. 34,544 337 d. Expenses recognized in the year ..................................... 37,117 1,0904. Assumptions a. Discount rate .................................................................. 8.00% 8.05% b. Annual increase in healthcare cost ................................. 7% 7% c. Normal retirement age .................................................... 60 60 d. Attrition rate.................................................................... 8% 8% e. Mortality ......................................................................... *Note *Note

* Note: Indian Assured Lives Mortality (2006-08)

Book 1.indb 222 11/25/2016 2:45:58 PM



223

5. Effect of one percentage point change in the assumed medical inflation rate

One percentage point increase in medical

inflation rates

One percentage point decrease in medical

inflation rates2016 2015 2016 2015

Effect on the aggregate service and interest cost of post employment medical benefits ............. 3,241 665 (2,616) (516)

Effect on the accumulated post employment medical benefit obligations ............................. 12,601 2,151 (10,173) (1,655)


Particulars

For the year ended

31 March, 2016

For the year ended


Defined benefit obligation ...................................................... 59,899 8,087 Deficit .................................................................................... (59,899) (8,087) Experience adjustments on plan liabilities .............................. 33,988 337

b. Details of Gratuity Plan are as follows:

Particulars

For the year ended

31 March, 2016

For the year ended


1. Reconciliation of opening and closing balances of obligation: a. Opening obligation ......................................................... 624,255 – b. Current service cost ........................................................ 167,933 38,788 c. Interest cost .................................................................... 80,059 17,178 d. Actuarial losses/(gain) ..................................................... 88,096 (33,107) e. Benefits paid ................................................................... – – f. Liabilities assumed on acquisition ................................... 181,840 601,396 g. Closing obligation ........................................................... 1,142,183 624,2552. Reconciliation of opening and closing balances of plan assets: a. Opening fair value of plan assets .................................... – – b. Expected return on plan assets ........................................ – – c. Actuarial (loss)/gain ........................................................ – – d. Benefits paid ................................................................... – – e. Contribution by employer ............................................... 288,186 – f. Closing fair value of plan assets ...................................... 288,186 –3. Expected employer’s contribution next year: .......................... 88,103 33,6064. Reconciliation of fair value of assets and obligations: a. Present value of funded (2015: Unfunded) obligation as

at the year end ................................................................ 1,142,183 624,255 b. Fair value of plan assets as at the year end ...................... 288,186 – c. Amount recognised in the balance sheet – (assets)/liabilities .. 853,997 624,2555. Expense recognised in the year: a. Current service cost ........................................................ 167,933 38,788 b. Interest cost .................................................................... 80,059 17,178 c. Actuarial (gain)/loss ........................................................ 88,096 (33,107) d. Expenses recognized in the year ..................................... 336,088 22,8596. Investment details: a. Insurer (LIC) Managed funds* .......................................... 100% –

Book 1.indb 223 11/25/2016 2:45:58 PM



224

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 20157. Assumptions: a. Discount rate (per annum) .............................................. 8.00% 8.05% b. Estimated rate of return on plan assets (per annum) ......... 7.50% 7.50% c. Salary Growth Rate (per annum) ..................................... 10% 10% d. Normal retirement age .................................................... 60 60 e. Attrition rate.................................................................... 8% 8% f. Mortality Rate** .............................................................. **Note **Note

**Note: Indian Assured Lives Mortality (2006-08)


Particulars

For the year ended

31 March, 2016

For the year ended


Defined benefit obligation 1,142,183 624,255 Deficit 1,142,183 624,255 Experience adjustments on plan liabilities (88,096) 33,107

*Due to absence of data provided by LIC, break-up of Plan assets (assets allocation) in insurer managed funds have not been furnished.

The discount rate is based on the prevailing market yields of Indian government securities as at balance sheet date for the estimated term of the obligation.

Basis used to determine the expected rate of return: Based on expectation of the average long term rate of return on investment of the fund, during the estimated term

of obligation. The estimates of future salary increases take into account inflation, seniority, promotion and the other relevant

factors.

Note 32 Segment Reporting The company has a single segment namely steel processing for the purpose of Accounting Standard 17 on

segment reporting.

Note 33 Related Party Disclosures

Related party disclosures as required by Accounting Standard - 18 “Related Party Disclosures” are given below.

(A) List of Related Parties: Ultimate Holding Company Mahindra & Mahindra Limited (M&M) Intermediate Holding Company Mahindra Vehicle Manufacturers Limited (MVML) w.e.f. 18 January, 2016 Holding Company Mahindra Intertrade Limited (MIL) Other parties with whom transactions have taken place during the year (i) Fellow Subsidiaries Mahindra Logistics Limited (MLL) Mahindra Integrated Business Solutions Private Limited (MIBS) Mahindra Holidays & Resorts India Limited (MHRIL) Mahindra Steel Service Centre Limited (MSSCL) Mahindra First Choice Services Limited (MFCSL) Mahindra Vehicle Manufacturers Limited (MVML) upto 17 January, 2016 (ii) Companies having significant influence CSGT International Corparation (CSGT) Mitsui & Co. (Asis Pacific) Pte Ltd (Mitsui) (iii) Key Management Personnel (KMP) Mr. Sanjay Somkumar, Manager w.e.f. 29 April, 2015

Book 1.indb 224 11/25/2016 2:45:58 PM



225

(B)

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Book 1.indb 225 11/25/2016 2:45:58 PM



226

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Book 1.indb 226 11/25/2016 2:45:58 PM



227

Outstanding receivable:31 March,

201631 March,

2015From Ultimate Holding Company .................................................. – 663,641From Intermediate Holding Company ............................................ 8,131,329 –From Holding Company ................................................................ – 23,872From Fellow Subsidiaries ............................................................... – 2,098,657

Outstanding payable:31 March,

201631 March,

2015To Ultimate Holding Company (excludes equity share capital) ...... 166,060 170,405To Holding Company (excludes equity share capital) ..................... 569,696 25,281,000To Fellow Subsidiaries ................................................................... 913,980 11,195

Note 34 Earnings per share

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 2015


Profit after tax (Rs.) (A) 65,373,830 9,287,920

Weighted average number of shares (B) 68,500,000 42,317,835

Earnings per share [Basic/Diluted] (Rs.) (A/B) 0.95 0.22

Nominal value of equity share (Rs.) 10.00 10.00

Note 35 Deferred tax assets/liabilities

Particulars

For the year ended

31 March, 2016

For the year ended

31 March, 2015


Tax effect of items constituting deferred tax liability

On difference between book balance and tax balance of fixed assets 56,265,473 –

56,265,473 –

Tax effect of items constituting deferred tax assets

On unabsorbed depreciation 60,717,870 –

On stock Appreciation Rights 190,382 –

On provision for employee benefits 766,079 –

61,674,331 –

Deferred Tax Assets (net) 5,408,858 –

Note 36 Excise duty

Excise duty disclosed under “Other Expenses” Note No. 24 represents excise duty on closing stock of finished goods.

Book 1.indb 227 11/25/2016 2:45:58 PM



228

Note 37 Stock Appreciation Rights

The Company has granted Stock Appreciation Rights (“SARs”) to eligible employees in accordance with the Stock Appreciation Rights Scheme 2015 (SARS-2015) during the year ended 31st March, 2015 and 31st March, 2016 which are outstanding as on that date. Under the scheme, eligible employees are entitled to receive appreciation in value of equity shares over its face value on exercise of the SARs. The SARs may be exercised up to a period of three years from the date of vesting.

The related expenses for SARs amounting to Rs. 1,584,891 (2015: Rs. 104,035) have been recognised as employee cost in the Statement of Profit and Loss.

Summary of SARs:

SARs outstanding on 1st April, 2015 17,531

SARs granted during the year 7,037

SARs forfeited during the year –

SARs exercised during the year 4,913

SARs outstanding on 31st March, 2016 19,655

The fair value of SARs granted during the year is Rs. 84.70 per SAR.

Had the Company adopted fair value method as described in the Guidance note on Accounting for Employee Share – based Payments issued by the Institute of Chartered Accountants of India, the employee compensation cost would have been lower by Rs. 570,196, profit after tax higher by Rs. 453,939 and the earnings per share would have been higher by Rs. 0.01.

The fair value has been calculated using the Black Scholes Option Pricing Model and the significant assumptions made in this regard are as follows:

Grant dated 26th February,

2016

Grant dated 18th February,

2015

Risk free interest rateZero coupon

yieldZero coupon

yield

Expected volatility 16.68% 13.51%

Expected dividend yield 7.04% 6.68%




Percy Mahernosh Zhooben Bhiwandiwala } DirectorsChief Financial Officer Rajeev DubeySumit IssarP. R. Barpande



Book 1.indb 228 11/25/2016 2:45:58 PM

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