36. 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 Payment of Gratuity Act or the Company 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 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.
(iv) Life expectancy
The present value of defined benefit plan obligation is calculated by reference to the best estimate of the mortality of plan participants, both during and after the employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.
43. 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;
The measurement of each segment's revenues, expenses, assets and liabilities is consistent with the accounting policies that are used in preparation of the financial statements. Segment result represents the profit before interest and tax without allocation of corporate income and expenses.
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, 2025 and 31st March, 2024 no revenues from transactions with a single external customer amount to 10% or more of the Company’s revenues from external customers.
44. 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. 3,037.91 crores (2024: Rs. 3,069.43 crores).
(ii) Other matters (excluding claims where amounts are not ascertainable): Rs. 345.29 crores (2024: Rs. 393.86 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. 2,616.82 crores (2024: Rs. 2,695.94 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. 564.88 crores (2024: Rs. 567.66 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 39 (b)(i)]
(B) Commitments:
(i) The estimated amount of contracts remaining to be executed on capital account and not provided is Rs. 2,255.83 crores (2024: Rs. 3,475.86 crores)
(ii) The Company has contractual obligations towards long-term material purchase commitments for Rs. 7,500.00 crores (2024: Rs. 11,240.00 crores)
(iii) Uncalled liability on partly paid equity shares of subsidiaries as at 31st March,2025 Rs. Nil (2024: Rs. 735.72 crores)
(iv) Other commitments Rs. 4.49 crores (2024: Rs. 6.45 crores)
45. 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. 748.33 crores (2024: Rs. 728.50 crores) [excluding depreciation and amortisation of Rs. 1,707.60 crores (2024: Rs. 1,456.74 crores)].
(ii) Development expenditure incurred during the year Rs. 1,562.41 crores (2024: Rs. 1,273.53 crores).
(iii) Capitalisation of assets Rs. 563.98 crores (2024: Rs. 363.18 crores).
(b) In other units:
(i) Expensed to Profit or Loss, including certain expenditure based on allocations made by the Company, aggregate Rs. 227.19 crores (2024: Rs. 192.19 crores) [excluding depreciation and amortisation of Rs. 84.34 crores (2024: Rs. 70.98 crores)] .
(ii) Development expenditure incurred during the year Rs. 171.01 crores (2024: Rs. 135.25 crores).
(iii) Capitalisation of assets Rs. 32.86 crores (2024: Rs. 30.99 crores).
(B) The Scheme of Merger by Absorption of Mahindra Heavy Engines Limited (MHEL) and Mahindra Two Wheelers Limited (MTWL) and Trringo.com Limited (TCL) with Mahindra and Mahindra Limited (“Transferee Company") and their respective Shareholders (“Scheme") has been approved by the Mumbai Bench of National Company Law Tribunal on 7th May, 2024 and the required approvals / consent of Department of Industries, Government of Maharashtra and Maharashtra Industrial Development Corporation were also received on 30th May, 2024 and 5th June, 2024 respectively. Consequently, upon completion of other required formalities on 6th June 2024, the Scheme has become effective from the Appointed date i.e. 1st April, 2023. The merger has been accounted under 'the pooling of interests method' i.e. in accordance with Appendix C of Ind AS 103 -Business Combinations, read with Ind AS 10 - Events after the Reporting Period and comparatives have been restated from the beginning of the previous year i.e. 1st April, 2023. Accordingly, the financial statements of MHEL, MTWL & TCL have been included in the standalone financial statement of the company for the previous year presented. The effect of merger on the amounts of Revenue and Profit reported in the previous year are as below.
46. 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) [SSA and SHA] , BII invested Rs. 1,850.00 crores as at 31st March, 2025 (2024: Rs. 1,200.00 crores) in 0.001% Compulsory Convertible Preference Shares (CCPS) of MEAL.
In accordance with and subject to the terms and conditions stipulated in the amended and restated Securities Subscription Agreement and Shareholders' Agreement entered with British International Investment Plc (BII) and Jongsong Investments Pte Ltd (“Temasek") [amended and restated SSA and SHA], Temasek invested Rs. 1,200.00 crores as at 31st March, 2025 (2024: Rs. 300.00 crores) in 0.001% Series A Compulsory Convertible Preference Shares (Series A CCPS) of MEAL.
Unless agreed to, in writing, for an early conversion, each CCPS and Series A CCPS is compulsorily and automatically convertible into such number of equity shares as determined as per a pre-determined formula at the conversion date, as per terms and conditions of the agreement(s) entered between the Company, BII and Temasek. 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. Further, 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 includes current and non-current investments including Fixed deposits, Mutual funds, Corporate deposits, Inter corporate deposits excluding investments in Equity instruments.
Explanation for change in the ratios by more than 25%:
Debt Equity Ratio (times): The debt equity ratio is at 0.02 in current year as against 0.03 in previous year primarily due to repayment of borrowings during the year.
b. Quarterly returns / statements filed by the Company with banks are in agreement with the books of accounts.
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