BOARD'S REPORT

DEAR SHAREHOLDERS

Your Directors present their Report together with the audited financial statements of your Company for the year ended 31st March, 2016.

The fact that India's economic recovery remained on course throughout the Financial Year 2015-16, despite an extremely weak and volatile global operational environment, is impressive and bears testimony to the policy repair that has been wrought since the near crisis experienced in May 2013. Aided by subdued oil and metal prices and supported by positive policy actions, the country's key macroeconomic indicators -inflation, fiscal deficits and current account balances - have witnessed a remarkable turnaround and consolidated further through the year. The string of financial storms that hit global markets in 2015, engendered by uncertainty surrounding US monetary policy actions, rising risks of a hard-landing in China and the unfolding economic and geopolitical crises in Europe and the Middle East, resulted in portfolio flows to India, and other emerging markets, turning negative this fiscal. However, consolidating macros, coupled with a steady improvement in policy and regulatory environment, led to a 28% increase in foreign direct investment flows to the country, providing it with a much needed buffer. Thus, even as portfolio flows reversed, the surge in FDI inflows allowed the central bank to grow international reserves by close to $20 billion by year end, strengthening the economy's ability to absorb future external shocks without de-stabilizing.

Growth momentum, however, remained disappointingly modest and patchy through most of the year. With external demand remaining sluggish, rural incomes battered by four consecutively weak cropping seasons and domestic private investments constrained by excess capacities and rising balance sheet stress, urban consumption and public capital expenditures were virtually the only sources of demand that picked up pace this fiscal. Economic activity, as a consequence, remained far feebler through 2015-16 than was anticipated at the start of the year.

However, even amidst this scenario, your Company recorded an increase of 6.23% in net income at Rs. 41,739 crores in the year under review as against Rs. 39,293 crores in the previous year.

The Profit for the year before Depreciation, Finance Costs, Exceptional items and Taxation recorded an increase of 8.02% at Rs. 5,425 crores as against Rs. 5,022 crores in the previous year. Profit after tax declined by 4.64% at Rs. 3,167 crores as against Rs. 3,321 crores in the previous year.

Your Company continues with its rigorous cost restructuring exercises and efficiency improvements which have resulted in significant savings through continued focus on cost controls and process efficiencies thereby enabling the Company to maintain profitable growth in the current economic scenario.

No material changes and commitments have occurred after the closure of the Financial Year 2015-16 till the date of this Report, which would affect the financial position of your Company.

Performance Review

Automotive Division:

Your Company's Automotive Sector recorded total sales of 4,94,096 vehicles (4,37,911 four-wheelers and 56,185 three-wheelers) as against a total of 4,64,850 vehicles (4,05,446 four wheelers and 59,404 three-wheelers) in the previous year, registering a growth of 6.3% in vehicle sales.

On the domestic sales front, your Company sold a total of 4,58,065 vehicles as compared to 4,34,654 vehicles in the previous year registering a growth of 5.4%.

In the Passenger Vehicle segment, your Company sold 2,36,307 vehicles [including 2,22,324 Utility Vehicles (UVs), 10,588 Vans and 3,395 Cars] which is a growth of 5.5% over the previous year's volume of 2,23,968 vehicles [including 2,06,837 UVs, 13,947 Vans and 3,184 Cars].

In the commercial vehicle segment, your Company sold 1,66,783 vehicles [including 27,834 vehicles < 2T GVW, 1,26,819 vehicles between 2-3.5T GVW, 6,425 LCVs in the LCV > 3.5T segment and 5,705 HCVs (Heavy Commercial Vehicles)] registering a growth of 8.4% over the previous year's volume of 1,53,922 commercial vehicles [including 15,255 vehicles < 2T GVW, 1,29,755 vehicles between 2-3.5T GVW, 5,413 LCVs in the LCV > 3.5T segment and 3,499 HCVs].

In the three-wheeler segment, your Company sold 54,975 three-wheelers registering a decline of 3.2% over the previous year's volume of 56,764 three-wheelers.

A key highlight for the year under review was the launch of fourteen new products by your Company. These product launches were across product categories and have helped strengthen your Company's presence across industry segments.

For the year under review, the Indian automotive industry (except 2W) grew 7.1% and all segments of the industry except LCV < 2T and 3W Goods) posted growth. This growth is much more broad-based as compared to the patchy growth in the Financial Year 2014-15, where many segments continued to be in the negative after the low of Financial Year 2013-14. In Financial Year 2015-16, the Passenger vehicle segment reported a growth of 7.2% which was largely driven by new launches -both in Car and UV segments. The commercial vehicle segment grew 11.5% after three consecutive years of decline. Within the commercial vehicles, the < 3.5T GVW segment continued to face difficult times due to slowdown in Agri incomes and finance availability.

Your Company's UV sales volume grew by 7.5%, and your Company continued leadership of the domestic UV market by posting a market share of 37.9%. During this year, Bolero retained the title of India's largest selling SUV for the 10th consecutive year, and the XUV500 continued to be the customer's choice in the premium UV segment with over 36,000 sales in the year.

The highlight for the year under review was the launch of two all new UVs, the TUV300 and KUV100 in the compact UV segment. Launched in September, 2015, the TUV300 is inspired by the design of a battle tank that lends it a tough, bold and stylish, 'true-blue SUV' character. Despite the tough appearance of a true blue SUV on the outside, the TUV300 is stylish and extremely comfortable on the inside and comes loaded with a host of technology and safety features. The KUV100 which was launched in January, 2016, is designed to appeal to the cool and trendy, with its Aggressive Design with Imposing SUV Stance. Powered by the all new mFALCON family of petrol and diesel engines, the KUV100 marks Mahindra's entry into the petrol space. Driven by the new launches, the UV volume growth for your Company in the second half of the Financial Year 2015-16 was 19.7% as against decline of 5.5% in the first half of the Financial Year 2015-16.

In the LCV < 2T segment, your Company launched the all new small commercial vehicle Jeeto. Jeeto is the first ever product in its category with a modular range of eight mini-trucks to cater to the varied needs of the sub 1 tonne load segment customers. On back of success of Jeeto, your Company's market share for this segment stood at 23.9% as against 11.6% in the previous year.

In the PIK-UP segment of commercial vehicles (LCV 2 to 3.5T), your Company maintained its leadership position with a market share of 69.1%. In January, 2016, your Company launched Imperio, the premium, aspirational PIK-UP.

In February, 2016, your Company launched Blazo series heavy commercial trucks with Fuelsmart technology. The Blazo series of trucks are backed by a guarantee of superior mileage and a 48 hours service guarantee.

During the year under review, your Company posted the highest ever export volume of 36,031 vehicles as against previous year export of 30,196 vehicles, a growth of 19.3%. Your Company continued to grow its presence in the neighbouring markets of Sri Lanka, Nepal, Bangladesh and Bhutan, where volumes grew by 29%. With continued efforts of building brand in key markets like South Africa and Chile, your Company reported a volume growth of 5% and 20% respectively.

Spare parts sales for the year stood at Rs. 1,772.8 crores (including Exports of Rs. 111.5 crores) as compared to Rs. 1,569.5 crores (including Exports of Rs. 104.0 crores) in the previous year, registering a growth of 12.9%.

Farm Division:

Your Company's Farm Division (including Swaraj Division) recorded sales of 2,14,173 tractors as against 2,34,766 tractors sold in the previous year, recording a decline of 8.8%.

In the Financial Year 2015-16, the Indian tractor industry declined by 10.4%. The domestic tractor industry recorded sales of 4,93,497 tractors as compared to 5,50,963 tractors in the previous year. This was the second consecutive year of steep decline, with the Financial Year 2014-15 decline being 13.1%. As a result of decline in these two consecutive years, the industry volume for Financial Year 2015-16 was 22.1% below the all-time high of Financial Year 2013-14. The key reason behind this decline is, two successive years of deficient monsoon, which have impacted the crop production and rural sentiment at large.

Your Company's sales in the domestic market stood at 2,02,628 tractors as compared to 2,21,020 tractors in the previous year, recording a decline of 8.3%. Your Company continues to be the market leader with a 40.9% market share with a gain of 0.9%. With a vision to offer class leading tractors to the Indian farmer, your Company in the first week of April, 2016 launched Mahindra YUVO, a new age, superior technology, range of tractors in the 30-45 HP category. The advanced technology of the YUVO range helps serve the diverse needs of farmers - from land preparation to harvesting as well as post-harvesting requirements, helps them do more, faster and better.

During the year under review, your Company exported 11,545 tractors which is a decline of 16.0% over the previous year. While the exports grew to the neighbouring countries, the slowdown in the African market due to the oil crisis, impacted the overall export volumes.

Beyond tractors, your Company has presence in crop care solutions and distribution of seeds. The focus of this business is to provide quality inputs and help improve farm productivity. In Financial Year 2015-16 this business saw a growth of 13.3% in terms of revenue.

In the power generation space, under the Mahindra Powerol Brand, your Company continues to be amongst the leaders in the industry. Your Company earned a revenue of Rs. 1,109.9 crores in the current financial year as against Rs. 955.5 crores in the previous year, recording a growth of 16.4%. Along with the revenue growth, your Company has improved its presence in the retail segment and made good progress in the 'Energy Management Solutions' space.

Spare parts sales for the year stood at Rs. 540.3 crores (including Exports of Rs. 34.8 crores) as compared to Rs. 526.3 crores (including Exports of Rs. 48.8 crores) in the previous year, registering growth of 2.7%.

Current Year's review

During the period 1st April, 2016 to 29th May, 2016, 60,027 vehicles were produced as against 65,086 vehicles and 57,668 vehicles were despatched as against 59,956 vehicles during the corresponding period in the last year. During the same period 44,730 tractors were produced and 44,778 tractors dispatched as against 38,382 tractors produced and 38,175 tractors despatched during the corresponding period in the previous year.

Recent data indicators suggest that the country is likely to experience a stronger, more broad-based economic recovery in Financial Year 2016-17. For one, infrastructural activity, particularly in the power and road sectors, registered a smart pick up in the last quarter of Financial Year 2015-16 indicating that the Government's focused policy efforts in this space are finally beginning to bear fruit. Rising bitumen production, cement dispatches and freight rates attest to the same. Second, growth in domestic sales of motor cycles and tractors have now turned positive suggesting that the rural economy may now be stabilizing, albeit at a low level. With a robust monsoon season predicted for 2016, rural demand will, in all likelihood, pick up pace in the coming quarters. Finally, with both infrastructural activity and consumption demand gaining strength, Balance Sheet stresses in the Corporate Sector are likely to wane, setting the stage for a revival in domestic private sector investments by year end.

Thus, even as we remain alert to the downside risks emanating from a challenging global environment and domestic banking distress including Brexit, the Company's outlook on the economy is upbeat and it stands ready to harness the business opportunities that stronger growth will present.

Finance

The world is in a churn and uncertainty and subdued global economic activity were the key themes for Financial Year 2015-16. US economy showed signs of steady recovery with improvement seen in consumer spending and labour market, which led to the US Federal Reserve to announce an interest rate hike of 0.25% in December, 2015, the first rate hike in nine years. The US Federal Reserve was also caught in the churn as the slow growth rate across geographies has led to it stalling any further rate hikes. Other major advanced economies such as the Eurozone and Japan struggled to revive growth and continued with their quantitative easing. As a first, both Eurozone and Japan resorted to the unorthodox measure of adopting negative interest rate policy in order to kick-start consumption and pull their respective economies out of deflation. As advanced economies struggled, even the emerging economies were hit by the fall in energy and other commodity prices. Slowdown of growth in China (the slowest pace in 25 years) and resultant measures taken by the Chinese authorities, fueled volatility in financial markets across the world. In addition, both in case of Brazil and Russia, their economic outlook has deteriorated more rapidly than expected. In case of Africa, the region still has a lot of potential for economic expansion in the medium to long run, mainly due to its demographic dividend but several political and institutional constraints offer significant uncertainty. Amidst all the churn across the globe, India was one of the few bright spots in the world, which benefitted from lower energy prices. The latest World Economic Outlook by IMF projects the world economy to grow at an increasingly fragile pace due to global asset market volatility, loss of growth momentum in the advanced economies and continuing headwinds for emerging market economies.

Financial Year 2015-16 was full of surprises for the currency markets. The sudden currency devaluation by China, talks  about Grexit, prospects of interest rate hikes by US Fed and falling oil prices kept the currency markets volatile. Indian Rupee displayed relative outperformance as compared to other emerging market currencies. While the global slowdown continued to weigh on exports, which declined 16% and were at a 5-year low, the Government's commitment towards fiscal prudence and progressive economic policies, led to surge of Foreign Direct investment ("FDI"). FDI in Financial Year 2015-16 touched a record high of USD 56 billion. The Reserve Bank of India ("RBI") through various measures augmented its forex reserves to counter any volatility in outflows amidst slowing growth in China and prospects that the Federal Reserve will consider raising US interest rates.

With the CPI inflation firmly in control, RBI reduced repo rate by cumulative of 75 bps in the first half of the financial year. RBI continued to nudge Banks to ensure that effective transmission of rate cut in the system takes place. Both the Government and RBI took several measures such as reduction in small savings rates, refinements in the liquidity management framework and the introduction of the marginal cost of funds based lending rate to improve transmission and magnify the effects of the current policy rate cut in the economy.

Your Company continued to focus on managing cash efficiently and ensured that it had adequate liquidity and back up lines of credit. During the course of the year, your Company availed Export finance amounting to Rs. 315 crores under the interest equalisation Scheme of Government of India. During the year, your Company repaid Rs. 1,298.41 crores of borrowings from internal accruals. The Company's Bankers continue to rate your Company as a prime customer and extend facilities/services at prime rates. Your Company follows a prudent financial policy and aims not to exceed an optimum financial gearing at any time. The Company's total Debt to Equity Ratio was 0.13 as at 31st March, 2016.

Your Company has been rated by CRISIL Limited ("CRISIL"), ICRA Limited ("ICRA"), India Ratings and Research Private Limited ("India Ratings") and Credit Analysis & Research Limited ("CARE") for its Banking facilities under Basel II norms. All have re-affirmed the highest credit rating for your Company's Short Term facilities. For Long Term facilities and Non-Convertible Debenture ("NCD") programme, CRISIL and ICRA have re-affirmed their credit ratings of CRISIL AAA/ Stable and [ICRA]AAA (stable) respectively. Further, CARE has also re-affirmed the ratings of the Company's long-term Bank facilities at CARE AAA. India Ratings and Research (Ind-Ra, a Fitch Group Company) has also re-affirmed Long-Term Issuer Rating of 'IND AAA' with a Stable outlook to your Company.

With the above rating affirmations, your Company continues to enjoy the highest level of rating from all major rating agencies at the same time.

The AAA ratings indicate highest degree of safety regarding timely servicing of financial obligations and is also a vote of confidence reposed in your Company's Management by the rating agencies. It is an acknowledgement of the strong credit profile of your Company over the years, resilience in earnings despite cyclical upturns/downturns, robust financial flexibility arising from the significant market value of its holdings and prudent management.

During the year, your Company obtained International Credit Rating from Moody's Investor Service ("Moody's") and Standard & Poor ("S&P"). Both the agencies assigned investment grade credit rating to the Company viz., Baa3 by Moody's and BBB- by S&P with a stable outlook. The rating reflects your Company's diversified business profile, leading market position in India, long track record of successful operations, strong corporate governance practices, financial flexibility and conservative financial policies.

With this your Company is now amongst a very few select Indian Corporates who enjoy investment grade rating. It may be relevant to note that India's sovereign rating also stands at Baa3 and BBB- by Moody's and S&P respectively.

Investor Relations (IR)

Your Company continuously strives for excellence in its Investor Relations ("IR") engagement with International and domestic investors through structured conference-calls and periodic investor/analyst interactions like individual Meetings, Tele­presence Meetings, participation in investor conferences, quarterly earnings calls and annual analyst meet with the Chairman & Managing Director, Executive Director and Business Heads. Your Company interacted with around 635 Indian and overseas investors and analysts (excluding quarterly earnings calls and specific event related calls) during the year.

Your Company always believes in leading from the front with emerging best practices in IR and building a relationship of mutual understanding with investor/analysts. In order to engage with investors beyond financial numbers, your Company also organises annual conference call with investors/  analysts on key Environment, Social and Corporate Governance (ESG) initiatives of the Company.

Your Company's IR function was voted as one of the top 2 companies under the category 'Best at Investor Relations in India' for the year in the 16th Annual survey conducted by Finance Asia magazine, Hong Kong. Finance Asia is a magazine founded in 1996 to cover investment banking, capital markets and strategic corporate finance in Asia Pacific and is owned by Haymarket Media, a publishing house based in UK.

Your Company ensures that critical information about the Company is available to all the investors by uploading all such information at the Company's website. Your Company has created a 'Group Investor Relations Council' to share best practices across all the listed group companies and learn from each other.

Dividend

Your Directors are pleased to recommend a dividend of Rs. 12 per Ordinary (Equity) Share of the face value of Rs. 5 each, payable to those Shareholders whose names appear in the Register of Members as on the Book Closure Date. The equity dividend outgo for the Financial Year 2015-16, inclusive of tax on distributed profits (after reducing the tax on distributed profits of Rs. 55.36 crores on the dividends receivable from the subsidiaries during the current Financial Year) would absorb a sum of Rs. 841.68 crores [as against Rs. 846.95 crores comprising the dividend of Rs. 12 per Ordinary (Equity) Share of the face value of Rs. 5 each and tax thereon paid for the previous year]. Further, the Board of your Company decided not to transfer any amount to the General Reserve for the year under review.

B. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with the Companies Act, 2013 and applicable Accounting Standards along with all relevant documents and the Auditors' Report form part of this Annual Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies, associates and joint ventures.

The Financial Statements as stated above are also available on the website of the Company and can be accessed at the Web-link: <http://www.mahindra.com/resources/investor-reports/> FY16/Annual Reports/Links-AnnualReport.zip

Subsidiary, Joint Venture and Associate Companies

The Mahindra Group Companies continue to contribute to the overall growth in revenues of your Company. Tech Mahindra Limited (TML), the Company's Flagship Company in the IT Sector, has reported a consolidated revenue of Rs. 26,494 crores in the current year as compared to Rs. 22,621 crores in the previous year, an increase of 17%. Its consolidated profit after tax is Rs. 3,118 crores as compared to Rs. 2,628 crores in the previous year, an increase of 19%.

The Group's finance company, Mahindra & Mahindra Financial Services Limited (Mahindra Finance), reported a total consolidated income of Rs. 6,554 crores during the current year as compared to Rs. 6,021 crores in the previous year, a growth of 9%. The consolidated profit after tax for the year is Rs. 772 crores as compared to Rs. 913 crores in the previous year.

Mahindra Lifespace Developers Limited (MLDL), the Group's subsidiary in the business of real estate and infrastructure registered a consolidated operating income of Rs. 826 crores as compared to Rs. 1,086 crores in the previous year. The consolidated profit after tax for the year is Rs. 93 crores as compared to Rs. 266 crores in the previous year.

Mahindra Holidays & Resorts India Limited, the Group's subsidiary in the business of timeshare registered a consolidated operating income of Rs. 1,599 crores as compared to Rs. 812 crores in the previous year, an increase of 97%. The consolidated profit after tax for the year is Rs. 99 crores as compared to Rs. 81 crores in the previous year, an increase of 22%.

Ssyangyong Motor Company (SYMC), the Korean subsidiary of the Company has reported consolidated revenues of Rs. 19,647 crores in the current fiscal year as compared to Rs. 18,466 crores in the previous year, a growth of 6%. The consolidated loss after tax for the year is Rs. 177 crores as compared to Rs. 715 crores in the previous year.

The consolidated group profit after tax after minority interest before exceptional items for the year is Rs. 3,206 crores as against Rs. 2,863 crores in the previous year - a growth of 12%. The consolidated profit after tax after minority interests and exceptional items for the year is Rs. 3,211 crores as against Rs. 3,137 crores in the previous year.

During the year under review, Divine Solren Private Limited, Neo Solren Private Limited, Mahindra Water Utilities Limited,

Holiday Club Resorts Oy, Holiday Club Sweden Ab Are, Ownership Services Ab, Holiday Club Canarias Investments S.L., Holiday Club Canarias Sales & Marketing S.L., Holiday Club Canarias Resort Management S.L., Saariselka Resort Oy, Kiinteisto Oy Jalomella, Kiinteisto Oy Outapalas, Kiinteisto Oy Ulkuvuoma, Holiday Club Rus LLC, Suomen Vapaa-aikakiinteistot Oy LKV, Kiinteisto Oy Himos Gardens, Himos Hillside Golf Oy, Kiinteisto Oy Himoksen Tahti 2, Sallan Tunturipalvelut Oy, Kiinteisto Oy Tunturinrivi, Kiinteisto Oy Pisterinniementie 2, Holiday Club Katinkullan Villas Oy, Kiinteisto Oy Vanha Ykkostii, Kiinteisto Oy Katinkullan Villas Parkki, Kiinteisto Oy Katinnurkka, Kiinteisto Oy Katinpalsta, Kiinteisto Oy Tenetinlahti, Kiinteisto Oy Mallosniemi, Holiday Club Golf Saimaa Oy, Kiinteisto Oy Rauhan Ranta 1, Kiinteisto Oy Rauhan Ranta 2, Kiinteisto Oy Rauhan Ranta 6, Kiinteisto Oy Rauhan Parkki, Saimaan Palvelukiinteistot Oy, Kiinteisto Oy Paviljongin Pysakointi, Kiinteisto Oy Tiurunniemi, Kiinteisto Oy Rauhan Liikekiinteistot 1, Saimaa Action Park Oy, Supermarket Capri Oy, Kiinteisto Oy Kylpylantorni 1, Kiinteisto Oy Lappeenrannan Saimaan Kreivi, Kiinteisto Oy Spa Lofts 2, Kiinteisto Oy Spa Lofts 3, Kiinteisto Oy Kulennoinen, Kiinteisto Oy Kuusamon Pulkkajarvi 1, Kongressi- ja Kylpylahotelli Caribia Oy, Caribia Service Oy, Ou Holiday Club Tallinn, Kiinteisto Oy Hakan Perusyhtio 79, HCR Management Oy, Finland, Marvel Solren Private Limited, Astra Solren Private Limited, Orizonte Business Solutions Limited, Airvan10 Pty Ltd., Holiday Club Sport and Spa AB (formerly known as Visionsbolaget 10088 AB), Gateway Housing Company Limited, Mahindra International UK Ltd., SY Auto Capital Co., Ltd., MachinePulse Tech Private Limited, Are Semesterby A, Are Semesterby B, Are Semesterby C, Are Semesterby D, Are Villas 1 Ab, Are Villas 2 Ab and Saimaa Gardens Arena Oy became subsidiaries of your Company.

Subsequent to the year end, Trringo.com Limited and Mahindra West Africa Limited became subsidiaries of your Company.

During the year under review, Mahindra Business & Consulting Services Private Limited, Kiinteisto Oy Lappeenrannan Saimaan Kreivi, Saariselka Resort Oy, Himos Hillside Golf Oy, Kiinteisto Oy Pisterinniementie 2, Holiday Club Katinkullan Villas Oy, Kiinteisto Oy Katinpalsta, Saimaan Palvelukiinteistot Oy, Kiinteisto Oy Paviljongin Pysakointi, Kiinteisto Oy Hakan Perusyhtio 79, Kiinteisto Oy Rauhan Ranta 6, Kiinteisto Oy Rauhan Parkki, Ou Holiday Club Tallinn, Swaraj Automotives Limited, Divine Heritage Hotels Private Limited, Competent Hotels Private Limited, Holiday on Hills Resorts Private Limited, Kiinteisto Oy

Jalomella, Kiinteisto Oy Outapalas, Kiinteisto Oy Ulkuvuoma, Kiinteisto Oy Kulennoinen, Kongressi- ja Kylpylahotelli Caribia Oy, Saimaa Action Park Oy, Holiday Club Golf Saimaa Oy, Sallan Tunturipalvelut Oy and Kiinteisto Oy Katinkullan Villas Parkki ceased to be subsidiaries of your Company.

During the year under review, Mriyalguda Farm Solution Limited has changed its name to Mahindra eMarket Limited, Mahindra EPC Services Private Limited has changed its name to Mahindra Susten Private Limited, Mahindra Offgrid Services Private Limited has changed its name to Mahindra Renewables Private Limited, Mega One Stop Farm Services Limited has changed its name to Orizonte Business Solutions Limited, Mahindra Shubhlabh Services Limited has changed its name to Mahindra Agri Solutions Limited, Mahindra Punjab Tractors Private Limited has changed its name to Auto Digitech Private Limited and Mahindra Racing s.r.l. has changed its name to Mahindra Racing S.P.A.

During the year under review, Mahindra Heavy Engines Private Limited, Mahindra Reva Electric Vehicles Private Limited and Mahindra Namaste Private Limited were converted into Public Limited companies and accordingly, their names were changed to Mahindra Heavy Engines Limited, Mahindra Reva Electric Vehicles Limited and Mahindra Namaste Limited respectively.

During the year under review, Mitsubishi Mahindra Agricultural Machinery Co. Ltd., became a Joint Venture of your Company.

A Report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the Consolidated Financial Statement is provided in Form AOC-1 and forms part of this Annual Report.

The Policy for determining material subsidiaries as approved by the Board is uploaded on the Company's website and can be accessed at the Web-link: <http://www.mahindra.com/resources/> investor-reports/FY16/Annual Reports/Links-AnnualReport.zip

C. JOINT VENTURES, ACQUISITIONS AND  OTHER MATTERS

Consolidation of Agri Business under Mahindra Agri Solutions Limited (MASL)

The Agri Business of your Company had reached a critical mass. In order to enable the organization to focus on the Agri business, your Company entered into a Business Transfer Agreement to transfer its Agri business to Mahindra Agri

Solutions Limited ("MASL", earlier known as Mahindra Shubhlabh Services Limited) for an aggregate cash consideration of Rs. 260.06 crores. MASL became a wholly owned subsidiary of the Company during the year under review. MASL would provide an opportunity to fully leverage the potential that this business offers and thus function as an end to end provider in the Agri value chain. Post this consolidation, MASL would house the businesses viz. Crop Care, Seeds, Pulses, Dairy, Edible Oil, Seed Potato (held through a joint venture company named Mahindra HZPC Private Limited), Fruits (in MASL and through a joint venture company named Mahindra Univeg Private Limited). The micro irrigation business, EPC Industrie Limited, shall continue to remain a direct subsidiary of the Company.

Acquisition of 35% stake in Sampo Rosenlew Oy, Finland

In line with the vision of the Farm Equipment Sector to become a global full line player in the agriculture machinery space and to deliver "Farm Tech Prosperity", your Company signed a definitive agreement on 31st March, 2016, for acquiring a 35% stake in Sampo Rosenlew Oy ("Sampo") for a consideration not exceeding Euro 18 million, subject to customary adjustments, on closing. The transaction is expected to close on or before 30th September, 2016. Sampo's main products are combine harvesters and forest harvesters with combine harvesters accounting for nearly 70% of its net sales. For the year ended September, 2015, Sampo had a stand-alone revenue of Euro 93 million. It is also a joint venture partner in a combine harvester company in Algeria which had revenues of Euro 45 million for the year ended December, 2015. Sampo has built significant business in its core markets of Europe, Eurasian countries and North Africa. Together with its existing strategy in the core markets, Sampo will also develop a new range of combine harvesters for developing markets and for specialty crops. Your Company and Sampo will jointly focus on the combine harvester business in Asia, Africa and Eurasian Economic Union countries.

Sale of your Company's 71.19% stake in Swaraj Automotives  Limited (SAL)

With an endeavour to divest its non-core investments, during the financial year under review, your Company sold of its entire holding of 17,06,925 shares in Swaraj Automotives Limited to b4S Solutions Private Limited at a per share price of Rs. 145.5 per share i.e. for an overall consideration of Rs. 24.8 crores.

Acquisition of controlling stake in Pininfarina S.p.A

On 14th December, 2015, your Company and Tech Mahindra Limited, an associate of your Company has signed an agreement to acquire a controlling stake in Pininfarina S.p.A ("Pininfarina"), a leading Italian automotive design and engineering services company which provides services to global automotive manufacturers such as Fiat, BMW, PSA and others apart from your Company.

As per the agreement, your Company and Tech Mahindra would purchase 76.06% of Pininfarina shares from Pincar S.r.L. for a consideration of Euro 25.3 million at a price of Euro 1.1 per share. This investment would be made by PF Holdings B.V., a Joint Venture Company ("JVCo"), held 60% by Tech Mahindra and 40% by your Company.

Subsequent to the aforesaid acquisition, the JVCo would launch an open offer to acquire the balance 23.94% of Pininfarina's stake held by public shareholders at Euro 1.1 per share.

D. INTERNAL FINANCIAL CONTROLS

The Corporate Governance Policies guide the conduct of affairs of your Company and clearly delineates the roles, responsibilities and authorities at each level of its governance structure and key functionaries involved in governance. The Code of Conduct for Senior Management and Employees of your Company ("the Code of Conduct") commits Management to financial and accounting policies, systems and processes. The Corporate Governance Policies and the Code of Conduct stand widely communicated across your Company at all times.

Your Company's Financial Statements are prepared on the basis of the Significant Accounting Policies that are carefully selected by Management and approved by the Audit Committee and the Board. These Accounting policies are reviewed and updated from time to time.

Your Company uses SAP ERP Systems as a business enabler and also to maintain its Books of Account. The transactional controls built into the SAP ERP systems ensure appropriate segregation of duties, appropriate level of approval mechanisms and maintenance of supporting records. The Information Management Policy reinforces the control environment. The systems, Standard Operating Procedures and controls are reviewed by Management. These systems and  controls are audited by Internal Audit and their findings and recommendations are reviewed by the Audit Committee which ensures the implementation.

Your Company has in place adequate internal financial controls with reference to the Financial Statements commensurate with the size, scale and complexity of its operations. Such controls have been assessed during the year under review taking into consideration the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by The Institute of Chartered Accountants of India. Based on the results of such assessments carried out by Management, no reportable material weakness or significant deficiencies in the design or operation of internal financial controls was observed. Nonetheless your Company recognizes that any internal control framework, no matter how well designed, has inherent limitations and accordingly, regular audits and review processes ensure that such systems are reinforced on an ongoing basis.

Indian Accounting Standards (IND AS) - IFRS Converged Standard

Your Company would adopt Indian Accounting Standards ("Ind AS") for the accounting periods beginning on 1st April, 2016 pursuant to Ministry of Corporate Affairs Notification dated 16th February, 2015 notifying the Companies (Indian Accounting Standard) Rules, 2015.

E. MANAGEMENT DISCUSSION AND ANALYSIS  REPORT

A detailed analysis of your Company's performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

F. CONTRACTS OR ARRANGEMENTS WITH  RELATED PARTIES

All Related Party Transactions entered during the year were in the Ordinary Course of Business and on Arms Length basis. During the year under review, your Company had entered into Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, with Mahindra Vehicle Manufacturers Limited, a wholly owned subsidiary of your Company. These transactions too were in the Ordinary Course of Business of your Company and were at Arms Length Basis, details of which, as required to be provided under section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure I and forms part of this Annual Report.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website and can be accessed at the Web-link: <http://www.mahindra.com/resources/> investor-reports/FY16/Annual Reports/Links-AnnualReport.zip

G. AUDITORS

Statutory Auditors and Auditors' Report

Messrs Deloitte Haskins & Sells, Chartered Accountants (ICAI Registration No. 117364W) were re-appointed as the Statutory Auditors of the Company to hold office from the conclusion of the 68th Annual General Meeting (AGM) held on 8th August, 2014 until the conclusion of the third consecutive AGM of the Company to be held in the year 2017 (subject to ratification of their appointment by the Members at every AGM held after the AGM held on 8th August, 2014).

As required under the provisions of section 139(1) of the Companies Act, 2013, the Company has received a written consent from Messrs Deloitte Haskins & Sells, Chartered Accountants to their appointment and a Certificate, to the effect that their appointment, if made, would be in accordance with the Companies Act, 2013 and the Rules framed thereunder and that they satisfy the criteria provided in section 141 of the Companies Act, 2013.

The Members are requested to ratify the appointment of the Statutory Auditors as aforesaid and fix their remuneration.

The Auditors' Report is unmodified i.e. it does not contain any qualification, reservation or adverse remark.

Secretarial Auditor

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice Number: 6029) to undertake the Secretarial Audit of the Company.

The Company has annexed to this Board Report as Annexure II, a Secretarial Audit Report given by the Secretarial Auditor.

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

Cost Auditors

The Board had appointed Messrs N. I. Mehta & Co., Cost Accountants (Firm Registration Number 000023), as Cost Auditor for conducting the audit of cost records of the Company for the Financial Year 2015-16.

The Board of Directors on the recommendation of the Audit Committee, appointed Messrs D. C. Dave & Co., Cost Accountants (Firm Registration Number 000611), as the Cost Auditors of the Company for the Financial Year 2016-17 under section 148 of the Companies Act, 2013. Messrs D. C. Dave & Co. have confirmed that their appointment is within the limits of section 141 (3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) and proviso to section 148(3) read with section 141(4) of the Companies Act, 2013.

The Audit Committee has also received a Certificate from the Cost Auditors certifying their independence and arms length relationship with the Company.

As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a Resolution seeking Members' ratification for the remuneration payable to Messrs D. C. Dave & Co., Cost Auditors is included in the Notice convening the Annual General Meeting.

Reporting of Frauds by Auditors

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

H. PARTICULARS OF LOANS, GUARANTEES,

INVESTMENTS AND SECURITIES

Particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security are provided in Note Nos. 42, 13A and 13B to the Financial Statements.

I. PUBLIC DEPOSITS AND LOANS/ADVANCES

Your Company had discontinued its Fixed Deposit Scheme for 36 months with effect from the close of office hours on 31st January, 2014 and has also discontinued acceptance of Fixed Deposits with effect from 1st April, 2014.

Out of the previously accepted total of 2,417 deposits of Rs. 2,233.37 lakhs from the public and shareholders as at 31st March, 2016, 185 deposits amounting to Rs. 96.55 lakhs, had matured and had not been claimed as at the end of the Financial Year. Since then, 67 of these deposits of the value of Rs. 47.81 lakhs have been claimed.

There was no default in repayment of deposits or payment of interest thereon during the year under review. There are no deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013.

The particulars of loans/advances, etc., required to be disclosed in the Annual Accounts of the Company pursuant to Para A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are furnished separately.

J. EMPLOYEES

Key Managerial Personnel (KMP)

The following have been designated as the Key Managerial Personnel of the Company pursuant to sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel)  Rules, 2014:

(a) Mr. Anand G. Mahindra - Chairman & Managing Director

(b) Dr. Pawan Goenka - Executive Director & Group President (Auto and Farm Sector)

(c) Mr. V S Parthasarathy - Group CFO, Group CIO & President (Group Finance and M&A)

(d) Mr. Narayan Shankar - Company Secretary

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

Employees' Stock Option Scheme

During the year under review, on the recommendation of the Governance, Nomination and Remuneration Committee of your Company, the Trustees of Mahindra & Mahindra Employees' Stock Option Trust have granted Stock Options to employees  under the Mahindra & Mahindra Limited Employees Stock Option Scheme 2010. No Stock Options have been granted to employees under the Mahindra & Mahindra Limited Employees Stock Option Scheme 2000.

The Company has in force the following Schemes which get covered under the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations"):

1. Mahindra & Mahindra Limited Employees Stock Option Scheme - 2000 (2000 Scheme)

2. Mahindra & Mahindra Limited Employees Stock Option Scheme - 2010 (2010 Scheme)

3. M&M Employees Welfare Fund No. 1

4. M&M Employees Welfare Fund No. 2

5. M&M Employees Welfare Fund No. 3

There are no material changes made to the above Schemes and these Schemes are in compliance with the SBEB Regulations. Your Company's Auditors, Messrs Deloitte Haskins & Sells, have certified that the Company's above-mentioned Schemes have been implemented in accordance with the SBEB Regulations, and the Resolutions passed by the Members for the 2000 Scheme and the 2010 Scheme.

Information as required under the SBEB Regulations read  with SEBI Circular CIR/CFD/POLICY CELL/2/2015 dated  16th June, 2015 have been uploaded on the Company's website and can be accessed at the Web-link: <http://www.mahindra>. com/resources/investorreports/FY16/Annual Reports/Links-AnnualReport.zip

Particulars of Employees and related disclosures

The Company had 484 employees who were in receipt of remuneration of not less than Rs. 60,00,000 during the year ended 31st March, 2016 or not less than Rs. 5,00,000 per month during any part of the year.

Disclosures with respect to the remuneration of Directors, KMPs and employees as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure III to this Report.

Details of employee remuneration as required under provisions of section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available at the Registered Office of the Company during working hours,

21 days before the Annual General Meeting and shall be made available to any Shareholder on request. Such details are also available on your Company's website and can be accessed at the Web-link: <http://www.mahindra.com/resources/investor->reports/FY16/Annual Reports/Links-AnnualReport.zip

Industrial Relations

The year under review has witnessed a very positive Industrial Relations Scenario across all manufacturing locations for the Automotive and Farm Equipment Sectors.

The Company's focus continues towards propagating proactive and employee centric practices. The Transformational Work Culture initiative which aims to create an engaged workforce and an innovative, productive and competitive shop-floor ecosystem, continues to grow in strength. The Transformational Work Culture Committee (TWCC) continually engages with long-term strategic initiatives which range from anticipated Labour Law reforms to 'Swachh Bharat Abhiyaan'. Some examples of the programs put in place are Rise for Associates, Industrial Relations Skills for Frontline Officers, Cultural Diagnostics Projects, e-Compliance and Code of Conduct for Associates.

In order to develop skills and foster togetherness at the workplace, multiple training and engagement programs were rolled out. These training programs covered a wide range of topics, including Positive Attitude, Stress Management, Creativity, Team Effectiveness, Safety and Environment, Quality Tools, Total Productive Maintenance, Dexterity, skill building programs and Technical Training. The Mahindra Skill Excellence Initiative is a holistic approach to enhance the skill and capabilities of shop-floor employees and the participation from associates across manufacturing facilities has increased from 1,800 of last year to 2,300 this year. The initiative brought laurels to the Company and the Nation by registering 7th rank at World Skill Competition held at Brazil last year.

During the year under review your Company's shop floor associates generated about 17.5 ideas per person towards resolving quality concerns, reducing cost, ensuring safety and improving productivity, resulting into whopping cost saving of Rs. 26 crores cumulative for 2 years.

Significant emphasis has also been put on creating awareness about health and wellness of employees through annual medical check-ups, medical software, health awareness activities and introduction of diet food.

Proactive and employee-centric shop floor practices, a focus on transparent communication of business goals, an effective concern resolution mechanism, and the firm belief that employees are the most valuable assets of the Company, are the cornerstone of the Company's employee relations approach. An 'open door policy' and constant dialogue to create win-win situations, have helped the Company to build trust and harmony. The Industrial Relations scenario continued to be largely positive across all the Mahindra Automotive and Tractor Manufacturing locations. Bonus settlements were reached amicably at all locations. All this resulted in zero production loss in the Financial Year 2015-16 and helped create a peaceful, healthy and collaborative work environment.

Safety, Occupational Health and Environment

The Safety & Occupational Health of its employees is embedded as part of the organisational core values of the Company. The Safety, Occupational Health & Environmental Policy (SH&E Policy), inter alia, covers and ensures safety of public, employees, plant and equipment, ensures compliance on a monthly basis by developing e-compliance systems and imparts training through e-learning modules on Safety, Sustainability & Prevention of Sexual Harassment to all its employees.

Your Company has a well-established SH&E Policy in line with the National Safety, Occupational Health & Environmental Policy. The Company Policy has been further drilled down, through the Policy for Automotive and Farm Sectors, followed by the respective Plant Policy. Each Plant has displayed and communicated the SH&E Policy to all its stakeholders. Objectives and targets derived from the new amended SH&E Policy are supported by focussed management programs, safety i4, safety Kaizens and mistake proofing projects. Your Company demonstrates a strong leadership commitment towards Safety, Occupational Health and Environment and as a part of the same, multiple measures and actions are implemented with the thorough competency training programs i.e. Working on height, Gas cutting and welding, Forklift driving in line to reduce operational risk by implementing adequate precautionary measures. Safety Observation Tours, Plant Officers observations, safety ideas through i4, focused safety Kaizens and mistake proofing projects i.e. Poka Yoke's were undertaken during the year under review.

At each Plant location, annual events are organised and commemorated like Road Safety Week, National Safety Day/ Week and Fire Service Day, Safety Audits/Inspections, etc.

Safety Culture building is demonstrated in your Company through Safety Crusade, Levers of Excellence and Waste to Wealth programs in the Manufacturing domain. Safety, Occupational Health awareness training with benchmarks on overall Safety and Occupational Health performance are conducted. All stakeholders are covered as per the training calendar through e-learning modules. Statutory safety Risk audits of its facilities are periodically carried out by absorbing all new amended legal requirements. Internally developed e-module for Health recording on regular internal and external medical and occupational check-up of your Company's employees, associates and health-friendly sustainable activities are promoted as part of this Policy.

Your Company's Plants continued their commitment to improve the wellbeing of its employees and contract workmen by establishing Health and Wellness Goals by organising physical fitness activities like Yoga, Zumba, Occupational Health Examination Camps, Blood Donation Camps, medical check­ups, consultation and counselling. Further, World Health Day, World Heart Day, World Kidney Day and World Diabetes Day are celebrated including Health Audits/Inspection along with Way 2 Wellness sessions covering topics i.e. "Healthy Heart", Diabetes, etc.

Various path breaking projects have been implemented by your Company like renewable energy management programs in the areas of Air Pollution Management, Water and Waste Water Management, Solid Waste Management and new techniques to grow Go Green Developments have been undertaken.

World Environment Day, World Earth Day, World Water Day and Energy Conservation Week and Water Conservation Week are also observed on an annual basis. Through stakeholders' engagement and employees' involvement, your Company demonstrates its road map with benchmarks and revised targets on the fundamentals of triple bottom line i.e. Planet, People and Profit.

Certifications/Recertification’s

All Plants of the Automotive Division have been recertified with standard for ISO 14001: 2004 & OHSAS 18001: 2007. Your Company's commitment to environment stems from the Mahindra Group's abiding concern for engagement with various stakeholders and Society at large. Sustainability Reporting System of adopting GRI, G3 to G4 Guidelines framework for your Company's Safety, Health & Environmental initiatives, monthly reviewed objectives and targets in operations review, helps in continually improving emissions, ambient air quality, reducing water pollution, recycling water consumption and minimising waste from its processes. Its nature of operations have a low environmental impact due to the implementation of the Environment Management System wherein a healthy work environment is provided to its employees and environment friendly businesses are conducted. Besides, to bring cross cultural sensitivity of the Company's business associates, promotional activity towards increasing the awareness on Green Supply Chain Management in the vendor community and support by conducting suppliers risk assessment have also progressed.

Implementation of Safety, Occupational Health & Environment Management System Standard (SHEMS) has been re-enforced by way of a re-certification process towards the Company's commitment of Safety, Occupational Health and Environment to the highest levels. OHSAS 18001: 2007 & EMS ISO 14001: 2004 is the existing best practice. The SHEMS aims to eliminate or minimise risk and environmental impact as well as impact on employees and other stakeholders who may be exposed to Occupational health and Safety risks and environmental impact associated with its activities. Though Sustainable development is percolated across the Division as well as in Sectors through horizontal deployment by sharing of industries internal as well as external best practices, Senior Management is also involved in sharing and investigation of internal as well as external injuries by a forum called Safety® Plant. Senior Management also monitors Plant Safety performance through weekly theme based safety reviews, monthly reviews of Sector Safety performance and quarterly reviews of President's balance score card in the field of Safety, Occupational Health & Environment by achieving targets and improving year on year performance.

K. BOARD & COMMITTEES

Directors

As mentioned in the previous Annual Report, Mr. Bharat Doshi desired to relinquish his position as a Director, and accordingly ceased to be a Director of your Company with effect from the conclusion of the 69th Annual General Meeting held on  7th August, 2015.

Mr. S. B. Mainak retires by rotation and, being eligible, offers himself for re-appointment at the 70th Annual General Meeting of the Company scheduled to be held on 10th August, 2016.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 Governance, 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 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.

The details of programs for familiarisation of the Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, number of programs and number of hours spent by each Independent Director in terms of the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are available on the Company's website and can be accessed at the Web-link: <http://www.mahindra.com/resources/investor-reports/FY16/> Annual Reports/Links-AnnualReport.zip

In line with the principles of transparency and consistency, your Company has adopted the following Policies which, inter alia, include criteria for determining qualifications, positive attributes and independence of a Director:

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

(b) Policy for remuneration of the Directors, Key Managerial Personnel and other employees.

The Policies mentioned at (a) and (b) above are attached as Annexure IV-A and IV-B respectively and form part of this Report.

Directors' Responsibility Statement

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

(a) in the preparation of the annual accounts for the Financial Year ended 31st March, 2016, the applicable accounting standards have been followed;

(b) they had in consultation with Statutory Auditors, selected accounting policies and applied them consistently, and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 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 irregularities;

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

(e) they have laid down adequate Internal Financial Controls to be followed by the Company and such Internal Financial Controls were operating effectively during the Financial Year ended 31st March, 2016;

(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively throughout the Financial Year ended 31st March, 2016.

Board Meetings and Annual General Meeting

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year 1st April, 2015 to 31st March, 2016, six Board Meetings were held on: 29th May, 2015, 7th August, 2015, 6th November, 2015, 21st December, 2015, 12th February, 2016 and 29th March, 2016. The 69th Annual

General Meeting (AGM) of the Company was held on  7th August, 2015.

Meetings of Independent Directors

The Independent Directors of your Company meet before the Board Meetings without the presence of the Chairman & Managing Director or Executive Director or other Non-Independent Directors or Chief Financial Officer or any other Management Personnel.

These Meetings are 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), review the performance of the Company, 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.

Five Meetings of Independent Directors were held during the year and these meetings were well attended.

Audit Committee

The Committee comprises of four Directors viz. Mr. Deepak S. Parekh (Chairman of the Committee), Mr. Nadir B. Godrej, Mr. M. M. Murugappan and Mr. R. K. Kulkarni. All the Members of the Committee are Independent Directors and possess strong accounting and financial management knowledge. The Company Secretary of the Company is the Secretary of the Committee.

All the recommendations of the Audit Committee were accepted by the Board.

L. GOVERNANCE

Corporate Governance

Your Company has a rich legacy of ethical governance practices many of which were implemented by the Company, even before they were mandated by law. Your Company is committed to transparency in all its dealings and places high emphasis on business ethics. A Report on Corporate Governance along with a Certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure  Requirements) Regulations, 2015 forms part of the Annual Report.

During the year under review, your Company has been conferred the coveted Golden Peacock Award for Excellence in Corporate Governance by the Institute of Directors (IOD) and the National Award for Excellence in Corporate Governance by the Institute of Company Secretaries of India. Both these Awards validate your Company's 'Best-in-class' corporate governance practices and reflect on its transparent and ethical dealings with stakeholders across the entire value chain.

Vigil Mechanism

The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is implemented through the Company's Whistle Blower Policy to enable the Directors, employees and all stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee.

Whistle Blower Policy of your Company (revised in December, 2015) is available on the Company's website and can be accessed at the Web-link: <http://www.mahindra.com/resources/> investor-reports/FY16/Annual Reports/Links-AnnualReport.zip

Further details are available in the Report on Corporate Governance that forms part of this Annual Report.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral.

During the year under review, 4 complaints with allegations of sexual harassment were filed, all of which were disposed-off as per the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)  Act, 2013.

Business Responsibility Report

The 'Business Responsibility Report' (BRR) of your Company for the year 2015-16 forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,  2015.

Your Company strongly believes that sustainable and inclusive growth is possible by using the levers of environmental and social responsibility while setting aspirational targets and improving economic performance to ensure business continuity and rapid growth. Your Company is committed to leverage 'Alternative Thinking' to build competitive advantage in achieving high shareholder returns through customer centricity, innovation, good governance and inclusive human development while being sensitive to the environment.

Risk Management

Your Company has a well-defined risk management framework in place. The risk management framework works at various levels across the enterprise. These levels form the strategic defence cover of the Company's risk management. The Company has a robust Organisational structure for managing and reporting on risks.

Your Company has constituted a Risk Management Committee of the Board which is authorised to monitor and review risk management plan and risk certificate. The Committee is also empowered, inter alia, to review and recommend to the Board the modifications to the Risk Management Policy. Further, the Board has constituted a Corporate Risk Council comprising the Senior Executives of the Company. The terms of reference of the Council comprises review of risks and Risk Management Policy on periodic intervals.

Your Company has developed and implemented a Risk Management Policy which is approved by the Board. The Risk Management Policy, inter alia, includes identification therein of elements of risk, including those which in the opinion of the Board may threaten the existence of the Company. Risk management process has been established across the Company and is designed to identify, assess and frame a response to threats that affect the achievement of its objectives. Further, it is embedded across all the major functions and revolves around the goals and objectives of the organisation.

M. CORPORATE SOCIAL RESPONSIBILITY AND

RELATED MATTERS

Corporate Social Responsibility (CSR)

Your Company's Corporate Social Responsibility (CSR) efforts in the last financial year have been concentrated on initiatives which contribute to nation building, and have in fact been identified as priorities in the national agenda. As per the Company's CSR Policy, it continues to focus its CSR efforts within the constituencies of girls, youth and farmers by innovatively supporting them through programs designed in the domains of education, health and environment, while harnessing the power of technology.

Your Company has an ongoing vibrant CSR program, of which some of the notable ongoing investments in education are Project Nanhi Kali, which supports the education of underprivileged girls, Mahindra Pride Schools, which provide livelihood training to youth from socially and economically disadvantaged communities, and a variety of scholarship programs, which range from providing opportunities to youth from low income group families to undergo diploma courses at vocational education institutes, to allowing meritorious students to pursue their post graduate studies at reputed universities overseas. Your Company has also helped set up a premier Engineering institution 'Mahindra Ecole Centrale' (MEC) in Hyderabad, in partnership with Ecole Centrale, Paris and the Jawaharlal Nehru Technological University, Hyderabad. In the area of public health, your Company sponsored Lifeline Express trains, through which medical care and treatment was provided to communities who do not have access to any medical facilities. Your Company also contributes to the environment by adding green cover through planting of over a million trees every year through Project Hariyali. Further, your Company has helped support small and marginal farmers by training them in effective farming practices including soil health, crop planning, creating model farms with bio-dynamic farming practices, thereby increasing crop productivity, through the Wardha Family Farming Project, Krishi Mitra and Integrated Watershed Development Project. Your Company supported the Prime Minister's Swachh Bharat Swachh Vidyalaya program by constructing 4,340 toilets primarily for girls in Government Schools in Financial Year 2014-15, which the Company is maintaining for a period of 12 months, and in addition, built another 1,170 toilets in Financial Year 2015-16. Your Company is also building 8 blocks of public toilets in Delhi through a Confederation of Indian Industries initiative. In addition, your Company has a strong community of employees who volunteer through the ESOPs (Employee Social Options) platform.

CSR Policy

The Corporate Social Responsibility Committee had formulated and recommended to the Board, a Corporate Social Responsibility Policy ("CSR Policy") which was subsequently adopted by it and is being implemented by the Company. The CSR Policy including a brief overview of the projects or programs proposed to be undertaken can be accessed at the Company's website through the Web-link: <http://www.mahindra.com/resources/investor-reports/FY16/> Annual Reports/Links-AnnualReport.zip

CSR Committee

The CSR Committee comprises of Dr. Vishakha N. Desai (Chairperson), Mr. Anand G. Mahindra, Mr. R. K. Kulkarni, Dr. Pawan Goenka and Mr. Vikram Singh Mehta. The Committee, inter alia, monitors the CSR activities.

During the year under review, your Company spent Rs. 85.90 crores on CSR activities. The amount equal to 2% of the average net profit for the past three financial years required to be spent on CSR activities was Rs. 84.95 crores. The detailed Annual Report on the CSR activities undertaken by your Company in Financial Year 2016, is annexed herewith marked as Annexure V.

Sustainability Initiatives

During the year under review, the 8th Sustainability Report for the year 2014-15 was released and like earlier seven years this Report was also externally assured by KPMG with GRI checked application level A+.

Your Company retained the focus on the Environmental, Social and Governance (ESG) parameters, on its journey towards "Sustainability" in the year under review by consolidating the initiatives of the previous years and initiating fresh ones. The Enterprise Risks framework was reviewed to include climate change risks to the business. The bio-diversity assessments have been initiated to further the actions on the India Business and Bio-diversity Initiative (IBBI).

Mr. Anand Mahindra, Chairman and Managing Director of your Company was invited on the Global Leadership Panel on Carbon Pricing convened by World Bank Group President Jim Yong Kim and IMF Managing Director Christine Lagarde.

This panel comprising of five heads of state and five CEOs, ("global ambassadors" for Carbon pricing and climate action) will assemble virtually to catalyze action towards putting an effective price on Carbon at the national and local level, and in businesses.

Your Company is the first Indian Company to sign the new initiative called EP 100 to increase energy productivity which is developed and administered by The Climate Group. EP 100 is a global campaign to encourage the world's most influential businesses to commit to doubling their energy productivity -which means getting more economic output from each unit of energy input.

During the year under review, your Company signed Memorandum of Understanding with Institute of Sustainable Communities to create a Training Centre on Environment, Health and Safety for suppliers to the Company and also to other Original Equipment Manufacturers (OEMs).

The Sustainability performance for your Company for the Financial Year 2015-16 will be elaborated in detail in the GRI Report which is under preparation and will be ready for release shortly.

Your Company was recognized for its consistent performance on the ESG dimensions during the year under review, by way of:

• Receiving Sustainable Plus Platinum Label for Financial  Year 2015 from CII-CESD;

• Receiving 'Excellence in Sustainable Supply Chain Award 2015' in the CII-ITC Sustainability Awards;

• Ranking first in CSR in 'The Best Companies for CSR' study conducted by The Economic Times (Futurescape and IIM Udaipur);

• Receiving 'Golden Peacock Award for Risk Management' from the Institute of Directors;

• Retaining the status of getting listed on the Dow Jones Sustainability Index - 2015 under the 'Emerging Market Index' for the consecutive third year with improvement in percentile scores;

• Retaining its position in the top 10 in the India 200 Carbon Disclosure Leadership Index 2015;

• The Mahindra Group Sustainability Report was shortlisted amongst the finalists of Asia Sustainability Reporting Awards by CSR Works.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information pertaining to conservation of energy, technology absorption, 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 is furnished in Annexure VI and is attached to this Report.

N. SECRETARIAL

Share Capital

The issued, subscribed and paid-up Share Capital of the Company stood at Rs. 310.55 crores as at 31st March, 2016 comprising of 62,10,92,384 Ordinary (Equity) Shares of Rs. 5 each fully paid-up. There was no change in Share Capital during the year under review.

Extract of Annual Return

Pursuant to section 134(3)(a) and 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 in Form No. MGT-9 is attached herewith as Annexure VII and forms part of this Report.

Amendment to the Articles of Association of the Company

At the Sixty-Ninth Annual General Meeting held on 7th August, 2015, based on the approval of the Members, the Company adopted new Articles of Association which had been streamlined and aligned with the Companies Act, 2013 and Rules made there under.

Appointment of M/s. Karvy Computershare Private Limited ("Karvy") as the Registrar & Share Transfer Agent of your Company

The Securities and Exchange Board of India ("SEBI") had vide its Ex-Parte Ad Interim Order No. WTM/RKA/MIRSD2/41/2016 dated 22nd March, 2016, inter alia, advised clients of Sharepro Services (India) Private Limited ("Sharepro") to carry out/ switchover their activities related to registrar to an issue and share transfer agent, either in-house or through another registrar to an issue and share transfer agent registered  with SEBI.

In view of the above, the Board of Directors of your Company at its Meeting held on 30th May, 2016, decided to appoint Messrs Karvy Computershare Private Limited, as the Registrar & Share Transfer Agents with effect from 13th June, 2016. Accordingly, a Resolution seeking your consent for keeping the Register and Index of Members and Returns at the office of Messrs Karvy Computershare Private Limited is included in the Notice convening the Annual General Meeting.

Your Company is committed to protecting the interests of its Shareholders and has taken necessary steps as per the provisions of law for the same.

GENERAL

The Chairman & Managing Director of the Company did not receive any remuneration or commission from any of the subsidiary of your Company. The Whole Time Director of the Company did not receive any commission from any of its subsidiaries and has not exercised ESOPs of subsidiaries of the Company during the year, which were granted in the earlier year(s).

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

1. I ssue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of Shares (Including Sweat Equity Shares) to employees of the Company under any Scheme save and except ESOS referred to in this Report.

3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company's operation in future.

4. Voting rights which are not directly exercised by the employees in respect of shares for the subscription / purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3) (c) of the Companies Act, 2013).

For and on behalf of the Board

ANAND G. MAHINDRA

Chairman & Managing Director

Place : Mumbai,

date : 30th May, 2016