(q) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the
Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a
provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account
the risks and uncertainties surrounding the obligation. When provision is measured using the cash flow estimated to settle the present obligation,
its carrying amount is the present value of these cash flows (when the effect of the time value of money is material).
Provisions for the expected cost of warranty obligations are recognised at the time of sale of the relevant products, at the best estimate of the
expenditure required to settle the Company’s obligation. The provisions are reviewed at each Balance Sheet date and adjusted to reflect the current
best estimate.
(r) Leases
The Company as a lessee
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost.
The right-of-use assets are subsequently depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
In addition, the right-of-use asset is reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at amortised cost at the present value of the future lease payments, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, using the incremental borrowing rate.
It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s
estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will
exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is
recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or
less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis
over the lease term.
The Company as a lessor
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance
lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified
as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term.
(s) Business Combination
Business Combination under common control are accounted under “the pooling of interest method" i.e. in accordance with Appendix C in Ind AS 103
- Business combinations, at carrying amount of assets and liabilities acquired and any excess of consideration issued over the net assets acquired
is recognised as capital reserve on common control business combination.
(t) Non-current assets held for sale
Non-current assets or disposal groups are classified as held for sale if its carrying amount will be recovered principally through a sale transaction
rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying
value and fair value less costs to sell.
3. Recent accounting pronouncements
Ministry of Corporate Affairs (“MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards)
Rules as issued from time to time. During the year, the MCA has issued an amendment for removal of carve-out under Ind AS 1, Presentation of financial
statements relating to classification of liabilities subject to covenants breach which is applicable with effect from 1st April 2026. The Company has reviewed
the new pronouncements and based on its evaluation has determined that it does not have any significant impact in standalone financial statements.
Provision for employee benefits includes gratuity, provident fund, post retirement benefits, compensated absences, etc. (refer note 37)
Provision for warranties and service coupons relates to provision made in respect of sale of certain products and components, the estimated cost of
which is accrued at the time of sale. The products are generally covered under a free warranty period ranging from 1 to 15 years.
The Company has made provision towards environmental compensation for batteries deployed in the market through the sale of electric vehicles. This
provision has been calculated in accordance with the Guidelines for Environment Compensation (EC) under the Battery Waste Management Rules, 2022,
as amended.
Pillar Two Income Taxes
The OECD/G20 Inclusive Framework has introduced Pillar Two, which establishes a global minimum effective tax rate of 15% for multinational enterprise
groups with consolidated revenues exceeding EUR 750 million. The Pillar Two framework is implemented through the Income Inclusion Rule (IIR),
Undertaxed Profits Rule (UTPR) and Qualified Domestic Minimum Top up Tax (QDMTT) and is applicable from 1st January, 2024 or later, subject to
enactment in relevant jurisdictions.
Based on an assessment of consolidated revenues, the Group falls within the scope of Pillar Two. In accordance with the amendments to Ind AS 12 -
Income Taxes, the Group has applied the mandatory temporary exception from recognising and disclosing deferred tax assets and liabilities arising from
the implementation of the Pillar Two rules. Accordingly, no deferred tax assets or liabilities have been recognised in respect of Pillar Two. Any tax arising
under these rules will be recognised as current tax expense in the period in which the liability is incurred.
The Group operates across multiple tax jurisdictions with differing statutory tax rates and tax regimes, including incentives and exemptions, which may
result in effective tax rates being close to or below the minimum threshold in certain jurisdictions. The Group has performed a preliminary assessment
of its potential exposure and has evaluated the availability of QDMTT and transitional safe harbour provisions, where applicable.
As at the reporting date, no material Pillar Two top up tax liability has been recognised. The Group will continue to evaluate the impact of the GloBE
rules and will recognise any resulting tax obligations in future periods as the assessments are finalised and obligations crystallised.
The Company has long-term investments in subsidiaries, associates and joint ventures which are measured at cost less impairment or at fair value through
profit or loss. The management assesses the performance of these entities including the future projections, relevant economic and market conditions in
which they operate to identify if there is any indicator of impairment in the carrying value of the investments. In case indicators of impairment exist, the
impairment loss is measured by estimating the recoverable amounts based on the higher of (i) 'fair value less cost of disposal' determined using market
price information, where available, and (ii) 'value-in-use' estimates determined using discounted cash flow projections or such other valuation models,
where available. The recoverable amount estimates are based on judgments, estimates, assumptions and market data as on reporting date and ignore
subsequent changes in the economic and market conditions.
During the year ended 31st March 2026, the performance of certain subsidiaries along with capital allocation decisions, coupled with the relevant
economic and market indicators resulted in indicators of impairment in respect of certain entities. Accordingly, the Company determined the recoverable
amounts of these entities and recorded a provision of Rs. 668.37 crores (2025: Rs.735.66 crores) for the year ended 31st March 2026.
On November 21, 2025, the Government of India notified the four Labour Codes - the Code on Wages, 2019, the Industrial Relations Code, 2020, the
Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 (collectively “new Labour Codes") - consolidating
29 existing labour laws.
Accordingly, the Company has recognised the incremental impact on retiral benefits aggregating to Rs. 98.19 crores and presented the same under
“Exceptional items" in the statement of Profit and loss for the year ended 31st March, 2026. The Company continues to monitor developments on the
Rules to be notified by regulatory authorities, including clarifications/ additional guidance from authorities and will continue to assess the accounting
implications, basis such developments/ guidance.
37. Employee Benefits
(a) General description of defined benefit plans:
(i) Gratuity
The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per
the Code on Social Security, 2020 or the Company scheme applicable to the employees. The benefit vests upon completion of 5 years of
continuous service except in case of Fixed term employment, where the benefit vests upon completion of one year of continuous service.
Once vested, gratuity is payable to the 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 group gratuity scheme administered by the Life
Insurance Corporation of India through its Gratuity Trust Fund.
(ii) Post - retirement medical
The Company provides post retirement medical cover to select grade of employees to cover the retiring employee and their spouse upto a
specified age through mediclaim policy on which the premiums are paid by the Company. The eligibility of the employee for the benefit as well
as the amount of medical cover purchased is determined by the grade of the employee at the time of retirement.
(iii) Post - retirement housing allowance
The Company operates a post retirement benefit scheme for a certain grade of employees in which a monthly allowance determined on the
basis of the last drawn basic salary at the time of retirement, is paid to the retiring employee in lieu of housing.
(b) Risk exposure
Though its defined benefit plans the Company is exposed to a number of 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 underperform compared to this
yield, this will create or increase a deficit. The defined benefit plans may hold equity type assets, which may carry volatility and associated risk.
(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 plan’s investment in debt instruments.
(iii) Inflation risk
The present value of some of the defined benefit plan obligations are calculated with reference to the future salaries of plan participants.
As such, an increase in the salary of the plan participants will increase the plan’s liability. The post retirement medical benefit obligation is
sensitive to medical inflation and accordingly, an increase in medical inflation rate would increase the plan’s liability.
The Company has recognised an obligation of Rs. 148.76 crores (2025: Rs. 78.27 crores) on account of both, the interest rate guarantee and
remeasurment based on actuarial valuation.
The plan assets have been primarily invested in government securities and corporate bonds.
The Company’s contribution to Provident fund and Superannuation fund aggregating Rs. 236.34 crores (2025 : Rs. 211.65 crores) has been
recognised in profit or loss under 'Employee benefits expense’.
The weighted average duration of the defined benefit obligation is 8.61 years (2025 : 8.76 years).
The Company expects to contribute Rs. 147.04 crores to the Provident fund for the year ending 31st March, 2027.
38. Employee Stock Option Plan
The Company has setup Mahindra & Mahindra Employees Stock Option Trust (M&M ESOP Trust) and allotted certain ordinary shares which it holds for
the benefit of the employees and issues them to the eligible employees as per the recommendations of the Nomination and Remuneration Committee
(NRC).
Mahindra and Mahindra Limited Employees Stock Option Scheme - 2010 ("2010 Scheme"):
The Company has granted options at an exercise price of Rs. 5.00 which vests in 2 to 5 instalments ranging from 12 to 84 months from the date of
grant. The exercise period of the options ranges from 1 year to 6 years from the date of vesting. Number of vested options exercisable is subject to a
minimum of 50 or number of options vested, whichever is lower.
The Company’s capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is
done through a mix of either equity and/or preference and/or convertible and/or combination of short term/long term debt as may be appropriate.
The Company determines the amount of capital required on the basis of its product, capital expenditure, operations and strategic investment plans. The
same is funded through a combination of capital sources be it either equity and/or preference and/or convertible and/or combination of short term/long
term debt as may be appropriate.
The capital structure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio of the Company.
Net Debt and Equity is given in the table below :
40. Financial instruments
Financial Risk Management Framework
In the course of its business, the Company is exposed to certain financial risks namely credit risk, interest risk, currency risk & liquidity risk. The Company's
primary focus is to achieve better predictability of financial markets and seek to minimize potential adverse effects on its financial performance.
The financial risks are managed in accordance with the Company's risk management policy which has been approved by its Board of Directors.
(a) Market Risk Management
Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates etc. could affect the Company's income or the
value of its holdings of financial instruments including cash flow. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while maximising the return.
(i) Currency Risk
The Company's exposure to currency risk relates primarily to the Company's operating activities including anticipated sales, purchases and
borrowings where the transactions are denominated in a currency other than the Company's functional currency.
The Company's foreign currency exposures are managed in accordance with its Foreign Exchange Risk Management Policy which has been
approved by its Board of Directors. The Company hedges its foreign currency risk mainly by way of forward covers. Other derivative instruments
may be used if deemed appropriate.
The carrying amounts of the Company's foreign currency exposure at the end of the reporting period are as follows :
40. Financial instruments (contd.)
(b) Credit risk management (contd.)
(ii) Trade Receivables
The Company applies the simplified approach to provide for expected credit losses prescribed by Ind AS 109, which permits the use of the
lifetime expected loss provision for all trade receivables. The Company has computed expected credit losses based on a provision matrix which
uses historical credit loss experience of the Company. The Company has taken dealer deposits, bank guarantees etc. which are considered as
collateral and these are considered in determination of expected credit losses, where applicable.
(iii) The Company has agreed to compensate a portion of potential losses arising from sale of repossession of certain products by the financers
of end consumers. The exposure of the Company to such losses is contractually capped at both an individual loan and portfolio level. The
gross loans by third party financiers associated with such arrangements as at 31st March, 2026 was Rs. 1,767.74 crores ( 2025: Rs. 1,795.65
crores). Based on historical experience and portfolio assessment, the Company has carried a provision of Rs. 33.41 crores (2025: Rs. 35.39
crores) in respect of expected exposure on the portfolio.
(c) Liquidity risk management
(i) Maturity profile of non-derivative financial liabilities
The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment
periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
Company can be required to pay and includes both interest and principal cash flows.
(b) Credit risk management
Credit Risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company
has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating
the risk of financial loss from defaults. The Company’s exposure are continuously monitored.
(i) Financial Guarantees
I n addition, the Company is exposed to credit risk in relation to financial guarantees given to banks. The Company’s maximum exposure in this
respect is the maximum amount, the Company would have to pay, if the guarantee is called on. The amount recognised in Balance Sheet as
other financial liabilities and maximum exposure details are as given below:
(d) Offsetting of balances
The Company has not offset financial assets and financial liabilities.
(e) Collaterals
The Company has also availed working capital facilities and other non-fund based facilities viz. bank guarantees and letters of credit, which are
secured by hypothecation of certain current assets.
44. Segment information
Operating Segments
The Company is both an operating company, primarily having operations in the Automotive and Farm Equipment segments and a holding company with
a portfolio of investments in subsidiaries, associates and joint ventures.
As part of the group strategy and vision, the Company is focused on operational efficiencies and synergies and driving value creation through partnerships,
mergers and acquisitions in order to generate periodic returns from these portfolio of investments/businesses. The CODM (Chief Operating Decision
Maker) of the Company therefore manages investments/businesses, allocates capital and measures performance under three key verticals, namely
Automotive, Farm Equipment and Services.
The Company in its standalone financial statement has reported five segments, namely Automotive, Farm Equipment, Auto Investments, Farm Investments
and Investments in Industrial Businesses and Consumer Services.
The Company has reported the dividend, interest and other investment related income pertaining to the aforesaid investment segments as 'Income from
Investments related to subsidiaries, associates and joint ventures' as applicable. Similarly, loss pertaining to the aforesaid investment segments is reported
as 'Loss from Investments related to subsidiaries, associates and joint ventures'.
Description of each of the reportable segments for all periods presented, is as under:
a) Automotive:This segment comprises of sale of automobiles, two wheelers, spares, construction equipments and related services;
b) Farm Equipment:This segment comprises of sale of tractors, implements, spares, powerol and related services;
c) Auto Investments:This segment comprises of investments in automotive related subsidiaries, associates and joint ventures;
d) Farm Investments:This segment comprises of investments in farm equipment related subsidiaries, associates and joint ventures;
e) Industrial Businesses and Consumer Services' segment:This segment comprises of investments in other than automotive & farm related subsidiaries,
associates and joint ventures;
Domestic includes sales to customers located in India and service income accrued in India. Income from investment includes income from companies
incorporated in India.
Overseas includes sales and services rendered to customers located outside India. Income from investment includes income from companies incorporated
outside India.
Information about major customers
During the years ended 31st March, 2026 and 31st March, 2025 no revenues from transactions with a single external customer amount to 10% or more
of the Company’s revenues from external customers.
45. Contingent Liability & Commitments:
(A) Contingent Liability:
(a) Claims against the Company not acknowledged as debts comprise of:
(i) Excise Duty, Sales Tax and Service Tax claims disputed by the Company relating to issues of applicability and classification (before tax)
aggregating Rs. 3,134.02 crores (2025 : Rs. 3,037.91 crores).
(ii) Other matters (before tax) (excluding claims where amounts are not ascertainable) : Rs. 375.18 crores (2025 : Rs. 345.29 crores).
(b) Taxation matters:
(i) Demands against the Company not acknowledged as debts and not provided for, in respect of which the Company is in appeal and
exclusive of the effect of similar matters in respect of assessments remaining to be completed:
- Income-tax : Rs. 2,486.28 crores (2025 : Rs. 2,616.82 crores) net off MAT credit.
(ii) Items in respect of which the Company has succeeded in appeal, but the Income-tax Department is pursuing/likely to pursue in appeal/
reference and exclusive of the effect of similar matters in respect of assessments remaining to be completed:
- Income-tax matters : Rs. 566.59 crores (2025 : Rs. 564.88 crores).
(c) In respect of (a) & (b) above, it is not practicable for the Company to estimate the closure of these issues and the consequential timings of
cash flows, if any.
(d) Financial guarantee given on behalf of Subsidiaries/ Associates/ Joint Ventures companies [refer note 40 (b)(i)]
45. Contingent Liability & Commitments: (contd.)
(B) Commitments:
(i) The estimated amount of contracts remaining to be executed on capital account and not provided is Rs. 5,296.98 crores (2025 :
Rs. 2,255.83 crores)
(ii) The Company has contractual obligations towards long-term material purchase commitments for Rs. 10,527.89 crores (2025 : Rs.
7,500.00 crores)
(iii) Other commitments Rs. 3.36 crores (2025 : Rs. 4.49 crores)
46. Other information:
(A) Research and Development expenditure
(a) In recognised Research and Development units:
(i) Expensed to Profit or Loss, including certain expenditure based on allocations made by the Company, aggregate Rs. 771.62 crores
(2025 : Rs. 748.33 crores) [excluding depreciation and amortisation of Rs. 1,680.76 crores (2025 : Rs. 1,707.60 crores)].
(ii) Development expenditure incurred during the year Rs. 2,022.39 crores (2025 : Rs. 1,562.41 crores).
(iii) Capitalisation of assets Rs. 381.45 crores (2025 : Rs. 563.98 crores).
(b) In other units:
(i) Expensed to Profit or Loss, including certain expenditure based on allocations made by the Company, aggregate Rs. 232.33 crores
(2025 : Rs. 227.19 crores) [excluding depreciation and amortisation of Rs. 141.76 crores (2025 : Rs. 84.34 crores)] .
(ii) Development expenditure incurred during the year Rs. 198.39 crores (2025 : Rs. 171.01 crores).
(iii) Capitalisation of assets Rs. 56.07 crores (2025 : Rs. 32.86 crores).
47. Compulsory Convertible Preference Shares (CCPS) issued by Mahindra Electric Automobile Limited (MEAL)
Mahindra Electric Automobile Limited (MEAL), a subsidiary of the Company is engaged in the business of four-wheel passenger electric vehicles.
In accordance with and subject to the terms and conditions stipulated in the Securities Subscription Agreement and Shareholders’ Agreement entered
with British International Investment Plc (BII) and Jongsong Investments Pte Ltd (“Thmasek"), BII and Temasek invested Rs. 1,850.00 crores and
Rs. 1,200.00 crores respectively in 0.001% Compulsory Convertible Preference Shares (CCPS) and 0.001% Series A Compulsory Convertible Preference
Shares (Series A CCPS) of MEAL respectively.
Since the CCPS and Series A CCPS are convertible into variable number of equity shares of MEAL, it has been classified as financial liability at fair value
through profit or loss in the financial statements of MEAL and in the consolidated financial statements of the Company as on 31st March, 2026.
MEAL, in its Board meeting dated 28th April, 2026 has approved the conversion of CCPS and Series A CCPS into equity shares of MEAL as per the
pre-determined formula and on 1st May, 2026, issued the equity shares against the said CCPS.
In accordance with the shareholders’ agreement, the Company shall take best efforts to provide BII and Temasek with a complete exit between
1st November, 2027 and 1st November, 2030 through certain exit options (or a combination thereof), as may be determined by the Company in its sole
discretion.
In case exit has not been provided to BII prior to 1st November, 2030, BII shall have the right upto 31st October, 2031 to require full exit to be provided
by the Company or by its affiliates and/or a third party at the higher of fair market value and the amount invested by BII.
In case exit has not been provided to Temasek prior to 1st November, 2030, Temasek shall have the right up to 31st October, 2031 to require full exit to
be provided by the Company by way of share swap if the fair market value of the Temasek interest is higher than the amount invested by it. However, the
Company shall have the right, at its sole discretion, to provide cash exit to Temasek at the higher of fair market value of the Temasek interest and the
amount invested by it. Further, if the Fair market value of the Temasek interest is lower than its investment amount, neither the Company nor Temasek
shall be obligated to undertake their respective obligations with respect to the Share swap.
Explanatory notes:
(i) Cost of materials consumed for the purpose of Inventory turnover ratio includes Purchases of stock-in-trade and Changes in inventories of
finished goods, stock-in-trade and work-in-progress.
(ii) Investments include current & non-current investments including Fixed deposits, Certificate of Deposits, corporate deposits, Mutual Funds,
Non-Convertible Debentures, Commercial Papers, Inter-corporate deposits excluding investments in Equity instruments and Preference shares.
Explanation for change in the ratios by more than 25%:
Debt Service Coverage Ratio (times) : The Debt Service Coverage Ratio is at 30.05 in current year as against 50.22 in previous year primarily due
to increase in principal repayment of long term borrowings due within one year.
b. Quarterly returns/statements filed by the Company with banks are in agreement with the books of accounts.
c. The Ministry of Environment, Forest and Climate Change has notified the Environment Protection (End-of-Life Vehicles) Rules, 2025 (“ELV Rules"),
which are effective from April 1, 2025. As per these rules, Extended Producer Responsibility (EPR) obligations are imposed on producers (“vehicle
manufacturers") for the scrapping of End-of-Life Vehicles and such obligations are to be fulfilled through the purchase of EPR certificates from
registered Vehicle Scrapping Facilities via a Centralised Online Portal. The implementation details and operational procedures of the ELV rules
including the modalities of the pricing mechanism for the EPR certificates are yet to be developed.
Consequently, the Company is currently unable to reliably estimate a range of possible outcomes and the potential impact of these rules. The
Company will continue to assess the ability to measure its obligations pursuant to the ELV Rules, as and when the aforesaid details of implementation
framework are available.
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