Nature and purpose of Reserves

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilized in accordance

with the provisions of the law.

Equities settled employees' benefits reserve

The Equities settled employees benefits reserve is used to recognize the grant date fair value of options issued

to employees under the MCIE Stock Options Scheme.

Capital reserve

Capital reserve is reserves generated on account of:

1. Merger under the Integrated Scheme of Amalgamation and the Composite Scheme of Amalgamation (Sections 391-395 of the Companies Act, 1956) for the merger of Mahindra Ugine Steel Company Limited (MUSCO), Mahindra Hinoday Industries Limited (MHIL), Mahindra Gears International Limited (MGIL), Mahindra Investment India Private Limited (MIIPL), Participaciones Internacionales Autometal Tres S.L. (PIA3) and Mahindra Composites Limited (MCL). The merger was approved by the Honorable High Court of Judicature at Bombay on October 31, 2014. The Schemes came into effect on December, 10, 2014, the day on which the order was delivered to the Registrar of Companies. The reserve is capital in nature and is not available for distribution as dividend.

2. Merger under the Scheme of Amalgamation (Sections 230-234 and other applicable provisions of the Companies Act, 2013) of Mahindra Gears and Transmission Private Limited, Mahindra Forging Global Limited, Mahindra Forging International Limited and Crest Geartech Private Ltd. The merger was approved

by the Honorable National Company Law Tribunal (NCLT) at Mumbai on December 13, 2017. The reserve is capital in nature and is not available for distribution as dividend.

General reserve

General reserve created by virtue of merger of Mahindra Stokes Holding Company Limited, Mahindra Forgings Overseas Limited and Mahindra Forgings Mauritius Limited into the Company vide High Court Order dated 27th December, 2007, is reserve available for distribution as dividend.

Capital redemption reserve

Capital redemption reserve is transferred by virtue of the merger referred to above, which was in the books of MUSCO and was created to redeem preference shares issued by MUSCO before merger. These shares have since been redeemed and this reserve is available for use as per the relevant provisions of Companies Act, 2013.

# Provision of g 262 million is towards an ongoing dispute with the Irrigation Department (Water Resource Department) in respect of levy of charge for use of water for the period July 1991 to May 2012 for an aggregate amount of g 587 million including penal charge of g 102 million and late fee charge of g 223 million. Presently the matter is being legally pursued. The Company has provided g 262 million towards arrears of water charges. Refer Note 30 Contingent liabilities and commitments.

a Provision of g 120 million (31 December, 2021: g 145 Million)has been recognised for Provident Fund liability basis Supreme Court judgement in 'Regional provident fund commissioner (ll) West Bengal vs Vivekananda Vidyamandir and Others' in accordance with Ind AS-37. The remaining amount pertains to provision against levy of cross subsidy charges and additional surcharge by Maharashtra State Electricity Distribution Company Limited during the year on account of power consumption from non-captive generating plant.

* This represents provisions made for probable liabilities payable to regulatory authorities. Above provisions are affected by various uncertainities and management has taken all efforts to make a best estimate. It is not practicable for the Company to estimate the accurate timing of cash outflows, if any, in respect of the above.

*The Finance Act, 2021 has introduced an amendment to section 32 of the Income Tax Act, 1961, whereby Goodwill of a business will not be considered as a depreciable asset and depreciation on goodwill will not be allowed as deductible expenditure effective April 1, 2020.

In accordance with the requirements of Ind AS 12 - Income Taxes, the Company has recognised tax expense amounting to ' 1,426 million as the outcome on the difference between Goodwill as per the books of account and its updated tax base of NIL resulting from the aforementioned amendment, in addition to the current tax expense debited to the statement of profit and loss. This deferred tax liability is not expected to be a cash outflow in the future and its reversal is deemed unlikely as the value of its associated goodwill is expected by value in use.

29. Employee benefits plans

(a) Defined Contribution plan

The Company's contribution to Provident Fund and other funds aggregating ^ 128 Million 147 Million) has been recognised in the statement of Profit or Loss under the head Employee Benefit expenses.

(b) Defined benefit plans

(i) Gratuity

The Company operates gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company's scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the Company gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.

(ii) Voluntary Retirement Scheme

Onetime expenses incurred towards voluntary retirement scheme are charged off in the statement of Profit and loss.(Refer Note 33)

(iii) Compensated absences

Company's liability towards leave encashment are determined using the Projected Unit Credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognised on straight line basis over the statement of Profit or loss as income or expense. Obligation is measured at the present value of estimated future cash flow using a discount 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.

(c) Risks

Through its defined benefit plans the Company is exposed to risks, the most significant of which are detailed below:

(i) Asset Volatility

The plan liabilities are calculated using a discount rate set with references to government bond yields; if plan assets under perform compared to the government bond's discount rate, this will create or increase a deficit.

(ii) Changes in Bond Yields

A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plans' bond holdings.

Maharashtra State Electricity Distribution Company Limited (MSEDCL) has levied the Cross Subsidy Surcharge (CSS) and Additional Surcharge levied (ASC) on the units of power consumed by the Company from two Captive Generating Plant (CGP) Units of Sai Wardha Power Generation Limited (SWPGL) as a captive consumer. The Hon'ble Maharashtra Electricity Regulatory Commission (MERC) vide its separate orders dated October 22, 2020 and October 29, 2020 has rejected the captive status of the said two CGP units of SWPGL for the year 2016-17 and the year 2017-18 respectively. MSEDCL has raised supplementary invoices of ' 208 million (including interest) for the year 2016-17 and of ' 263 million (including interest) for the year 2017-18 towards alleged Cross Subsidy Surcharge and Additional Surcharge applicable for non-captive power consumption. The Company has challenged the impugned orders before Hon'ble Appellate Authority of Electricity (APTEL). Hon'ble APTEL vide its Order dated November 26, 2021 (APTEL Order) set aside the Orders of MERC and remanded the matter to MERC for fresh determination of captive status based on the opinion expressed in the APTEL Order. MERC vide its Order dated 16th March, 2022 (MERC Remand Order) held Unit 3 and Unit 4 of Sai Wardha Power Generating Limited as captive generating plant for FY 2016-17 and FY 2017-18. MERC further held that 24.73 MUs and 53.53 MUs for FY 2016-17 and FY 2017-18 respectively were injected from the non-captive units and thus unscheduled power. Hence, the Distribution Licensees were directed to treat this unscheduled power in accordance with the applicable provisions of the Electricity Act, 2003 and the relevant Rules and Regulations. However, DISCOMs have filed an appeal against the APTEL Order before Hon'ble Supreme Court of India which is sub-judice. The Company has also filed appeal against the MERC Remand Order for limited issue of the units which were held as Unscheduled Power. Both the appeals are sub-judice.

The Hon'ble Maharashtra Electricity Regulatory Commission vide its dated February 09, 2018 in Case No.77 of 2015 for FY 2014-15 and order dated March 19, 2018 in Case No.159 of 2016 for FY 2015-16 (Original MERC Order) had upheld the captive status of the units of SWGPL for those years. However, it had treated the units supplied by SWGPL from other two non-CGP units of SWGPL, as non-contracted power for 2015-16. MSEDCL has accordingly raised a supplementary bill of ' 33 million for the year 2015-16 towards the units supplied by SWGPL from non-CGP units. Thereafter MERC had in its review order, allowed review of the said MERC orders and held that the captive status of SWPGL be redetermined for FY 2014-15 and FY 2015-16. APTEL vide the APTEL Order set aside the Review Order and upheld the Original MERC Orders holding SWPGL as captive for these two years as well. However, DISCOMs have filed an appeal against the APTEL Order before Hon'ble Supreme Court of India which is sub-judice. The Company is also contesting the issue of non-CGP units of 2015-16.

36. Employee Stock Option Scheme (ESOS 2007)

The Company instituted the Employees Stock Options Scheme 2007 (ESOS 2007) plan for employees in pursuance of a special resolution passed by the shareholders approving the scheme on July 25, 2007, amended by special resolution dated July 29, 2008, August 02, 2011 and pursuant to the Integrated scheme of Amalgamation and Composite Scheme of Amalgamation in terms of High Court dated October 13, 2014. Further, the company instituted the Employees Stock Options Scheme 2015 (ESOS 2015) plan for employees in pursuance of a special resolution passed by the shareholders approving the scheme on September 15, 2015.

Pursuant to the schemes, the Company has granted options to eligible employees at various exercise prices per equity share of ^10 each. Under the terms of scheme, the vesting period will be spread equally over 4 years (ESOS 2007) and 3 years (ESOS 2015). Options will vest at 25% (ESOS 2007) and 33% (ESOS 2015) from the grant date. When exercisable, each option is convertible into one equity share of the Company.

38. Additional disclosures required by schedule III

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company do not have any transactions with companies struck off under section 248 of the Companies. Act, 2013.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.

(v) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(vi) The Company does not have any investments through more than two layer of investment companies as per section 2(87)(d) and section 186 of Companies Act, 2013.

(vii) The Company has not revalued any of its Property, Plant and Equipment (including Right-of-Use Assets) during the year.

(viii) The Company is not declared as willful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India.

39. The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including

foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

40. The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding

Party) with the understanding (whether recorded in writing or otherwise) that the Group shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

41. The following table summarises the transactions with the companies struck off under section 248 of the

Companies Act, 2013 or section 560 of Companies Act, 1956 for the year ended / as at December 31, 2022:

42. The Board of Directors of company at their meeting held on February 22, 2023 recommended final dividend of g 2.5 per Equity Share of g 10 each fully paid up for finacial year 2022 (g 2.50 per Equity Share of g 10 each fully paid up for finacial year 2021)

43. Secured Loan with only bank of Baroda for non fund base Rs.110 million. The quarterly returns or statements filed by the Company for working capital limits with Bank of Baroda banks are in agreement with the books of account of the Company except for statements filed for quarters ended March 31, 2021/ June, 2021/ September, 21/ December, 21/March, 22/ June, 22 and September, 22 where differences were noted between the amount as per books of account for respective quarters and amount as reported in the quarterly statements. The differences are due to some of the items where not taken while reporting to banks due to grouping mismatch. The differences were in case of Payables with respect to period March, 21/ June, 21/ September, 21/ December, 21/ March, 22/ Jun,22/ September, 22 are 944 million/ 1379 million/ 1032 million/ 1605 million/ 652 million /682 million and 941 million. For Receivables with respect to period March, 21/ June, 21/ September, 21/ December, 21/ March, 22 differences are 12 million/ 229 million/ 126 million/ 349 million/ 103 million and for Inventory with respect to period September 21 and December 21 differences are 39 million and 92 million respectively. These statements were subsequently rectified and submitted to the respective banks.

44. The previous year's financial statements were audited by a firm other than B S R & Co. LLP.

45. Previous period figures have been regrouped/reclassified, wherever necessary to conform to the recent changes in Schedule Ill of the Companies Act, 2013.