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Mahindra & Mahindra Financial Services Ltd.

BSE: 532720 Sector: Financials
NSE: M&MFIN ISIN Code: INE774D01024
BSE 00:00 | 18 Sep 133.20 -2.90
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OPEN

137.40

HIGH

138.00

LOW

132.60

NSE 00:00 | 18 Sep 133.25 -2.85
(-2.09%)
OPEN

137.20

HIGH

138.30

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OPEN 137.40
PREVIOUS CLOSE 136.10
VOLUME 172467
52-Week high 245.75
52-Week low 76.47
P/E 16.63
Mkt Cap.(Rs cr) 16,458
Buy Price 133.20
Buy Qty 200.00
Sell Price 133.20
Sell Qty 50.00
OPEN 137.40
CLOSE 136.10
VOLUME 172467
52-Week high 245.75
52-Week low 76.47
P/E 16.63
Mkt Cap.(Rs cr) 16,458
Buy Price 133.20
Buy Qty 200.00
Sell Price 133.20
Sell Qty 50.00

Mahindra & Mahindra Financial Services Ltd. (M&MFIN) - Director Report

Company director report

Toa

The Members of

Mahindra & Mahindra Financial Services Limited

Your Directors are pleased to present their Thirtieth Report togetherwith the audited financial statements of your Company for the Financial Year ended 31stMarch 2020.

The performance highlights and summarised financial results of theCompany are given below:

PERFORMANCE HIGHLIGHTS

• Consolidated income for the year increased by 15% to Rs.11996.5 Crores as compared to Rs. 10430.9 Crores in 2018-19;

• Consolidated income from operations for the year was Rs.11883.0 Crores as compared to Rs. 10371.7 Crores in 2018-19 a growth of 15%;

• Consolidated profit before tax for the year was Rs. 1602.0Crores as compared to Rs. 2840.8 Crores in 2018-19;

• Consolidated profit after tax and non-controlling interest forthe year was Rs. 1075.1 Crores as compared to Rs. 18273 Crores in 2018-19.

FINANCIAL RESULTS

Rs. in Crores

Consolidated

Standalone

March 2020 March 2019 March 2020 March 2019
Total Income 11996.5 10430.9 10245.1 8809.8
Less: Finance Costs 5390.6 4432.3 4828.7 3944.6
Expenditure 4902.9 3129.3 3954.3 2422.6
Depreciation Amortization and Impairment 146.9 75.5 118.3 60.2
Total Expenses 10440.4 7637.1 8901.3 6427.4
Profit before share of Profit of Associates and Tax 1556.1 2793.8 1343.8 2382.4
Share of Profit of Associates 45.9 47.0 - -
Profit Before Tax 1602.0 2840.8 1343.8 2382.4
Less: Tax expense
Current tax (including (Excess) / Short Provision for Income Tax of earlier years) 646.1 711.4 556.9 576.8
Deferred tax (129.9) 262.1 (119.5) 248.5
Profit for the year 1085.8 1867.3 906.4 1557.1
Less: Profit for the year attributable to Non-controlling interests 10.7 40.0 - -
Profit for the Year attributable to Owners of the Company 1075.1 1827.3 906.4 1557.1
Balance of profit brought forward from for earlier years 3957.3 3282.5 3834.0 3193.1
Other Comprehensive Income/(Loss) (14.7) (9.5) (11.3) (8.6)
Transfers to Debenture Redemption Reserve - (146.7) - (146.7)
Transfers from Debenture Redemption Reserve 223.7 - 223.7 -
Balance available for appropriation 5241.4 4953.6 4952.8 4594.9
Less: Appropriations
Dividend paid on Equity Shares (including tax thereon) 484.2 296.6 477.9 293.8
Transfers to General Reserves - 155.7 - 155.7
Transfers to Statutory Reserves 222.8 385.2 181.3 311.4
Add / Less: Other Adjustments:
Gross obligation at fair value to acquire non-controlling interest 43.6 (158.8) - -
Balance profit carried forward to balance sheet 4578.0 3957.3 4293.6 3834.0

TRANSFER TO RESERVES

The Company proposes to transfer an amount of Rs. 181.3 Crores to theStatutory Reserve. An amount of Rs. 4293.6 Crores is proposed to be retained in theStatement of Profit and Loss.

DIVIDEND

With a view to conserve capital given the challenging situation causedby outbreak of the COVID-19 pandemic the Board of Directors has not recommended anydividend on Equity Shares of the Company for the Financial Year ended 31st March 2020.

DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy containing the requirementsprescribed in Regulation 43A of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 is appended as “AnnexureI” and forms part of this Annual Report.

The Dividend Distribution Policy can also be accessed on the Company'swebsite at the web-link: https:// mahindrafinance.com/discover-mahindra-finance/policies.

During the year an amount of Rs. 782488 being the unclaimed/unpaiddividend of the Company for the Financial Year ended 31st March 2012 was transferred inSeptember 2019 to the Investor Education and Protection Fund Authority.

OPERATIONS

The year under review has been one of the most challenging years foryour Company. The year started with the Lok Sabha elections in April - May 2019 followedby extreme weather conditions with floods on the one hand and drought in certain regionson the other. Overall the rainfall was normal in most States and saw increasing waterlevels foreboding well for rural cash flows especially for the Rabi crop in March 2020.

The year continued to witness sustained good collection efficienciesmonth after month as there was a continuous deployment of existing assets though thedemand for new vehicles was subdued. Even in these times of lower market volumes yourCompany was able to increase its penetration in most vehicle and customer segments andalso maintained collection efficiencies by continuously engaging with customers.

Your Company remains a significant financier to its customers insemi-urban and rural geographies by providing a wide range of easy and affordable productsand services. Your Company expanded vide its channel connect with leading car dealers andyet again emerged as a major financier for Maruti vehicles in semi-urban and rural Indiaduring this fiscal. Your Company has retained its leadership position in financing theMahindra range of vehicles and tractors in addition to extending its lending to vehiclesof other leading Original Equipment Manufacturers (OEMs) and also continued to be thepreferred financier for Hyundai Renault and Nissan range of vehicles.

During the year under review the total value of assets financed wasRs. 42388.2 Crores as against Rs. 46210.3 Crores during the corresponding period lastyear a decline of 8.3% over the same period in the previous year. While the Company hasgained market share in many of the product lines however in view of declining sales ofvehicles tractors etc. the disbursements have been lower. The outbreak of COVID-19pandemic has resulted in further slowdown in economic activities across the country whicheven otherwise was on a slow pace. The impact of the pandemic led to closure of all theCompany's branch offices business and recovery touch points and completely halted thefield operations from the last week of March 2020. As an organization your Company hasbeen strictly adhering to social distancing norms and lockdown announcements in accordancewith the directives issued by the Central State Government and Local AdministrationGuidelines.

SME LENDING

The SME lending faced significant head winds during the year due to theweak economic environment and in particular the slowdown in the auto segment. The lockdownin March caused significant disruption in business and consequently the AUM as of March2020 declined by 2% in comparison to March 2019. To counter the effects of the slowdownyour Company focused on strengthening its systems to reduce risk and enhance customercentricity. The Company developed a robust early warning system (EWS) and forged tie-upswith few fintechs to strengthen its credit assessment capabilities and monitor thecustomers better. Your Company also strengthened its product offerings and broadened itstie-ups with more OEMs. It is expected that with these measures your Company would beable to grow its book significantly once the economic activity picks up.

Network Expansion

Your Company has an extensive pan-India distribution network with 1322offices spanning across 27 States and 7 Union Territories as of 31st March 2020 which isone of the largest amongst Non-Banking Financial Companies. Your Company's widespreadoffice network reduces its reliance on any one region in the country and allows it toapply best practices developed in one region to other regions. The geographicdiversification also mitigates some of the regional climatic and cyclical risks such asheavy monsoons or droughts. In addition the Company's extensive office network benefitsfrom a de-centralized approval system which allows each office to grow its businessorganically as well as leverage its customer relationships by offering distribution ofinsurance products and mutual funds. Your Company services multiple products through eachof its offices which reduces operating costs and improves total sales. Your Companybelieves that the challenges inherent in developing an effective office network in ruraland semiurban areas have facilitated in catering to the diverse financial requirements ofits customers by identifying and understanding the needs and aspirations of the people.

Getting future ready through Digital Technologyand Analytics

Digital

Your Company has an enhanced on-line and in-mobile presence to providea superior digital experience to its customers. Employees customers and partners arebeing enabled digitally for all their needs and substantial progress has been made in thisdirection. Today the entire lending process is digitally enabled which has facilitatedthe EMI collections being received through Digital and on-line means. Your Company and itssubsidiaries have embraced digital in performing different activities like customeracquisition offering Fixed Deposits Mutual Funds and Insurance products.

Technology

Information technology has enabled the automation and digitisation ofprocesses across the organisation empowers employees with the workflows and knowledge forefficiency and controls and engenders business products analytical models anddecision-making. The Company's digital channels of multi-lingual website mobile app andcontact centre too are increasingly popular with the customers. Your Company hassuccessfully leveraged enterprise technology platforms such as enterprise service buscustomer relationship management mobile application management datalake and businessintelligence.

Analytics

Your Company's presence for more than 25 years in the rural andsemi-urban markets working with several profiles gives them a huge advantage applyingAnalytics and Artificial Intelligence (AI) on the data and the data base leading tocustomized product designed delivered with speed and personalized offerings with lowerrisks. Your Company has launched its proprietary algorithms to offer faster loan approvalsat dynamic interest rates to low risk customers which shall help in gaining market shareimproving portfolio quality and profitability. Customer acquisition retention crossselling and collections will be substantially enhanced with the combined IntegratedActivation of Digital Analytics and Technology.

The overall disbursement stood at Rs. 42388.2 Crores as compared toRs. 46210.3 Crores in the previous year. Total Income grew by 16% at Rs. 10245.1 Croresfor the year ended 31st March 2020 as compared to Rs. 8809.8 Crores for the previousyear. Profit Before Tax (PBT) declined by 44% at Rs. 1343.8 Crores as compared to Rs.2382.4 Crores for the previous year. Profit After Tax (PAT) declined by 42% at Rs. 906.4Crores as compared to Rs. 1557.1 Crores in the previous year.

During the year under review the Assets Under Management stood at Rs.77160 Crores as at 31st March 2020 as against Rs. 68948 Crores as at 31st March 2019a growth of 12%.

There has been no change in the nature of business of the Companyduring the year under review.

DISTRIBUTION OF MUTUAL FUND PRODUCTS

During the year under review the activity of distribution of MutualFund Products (MFP) was carried out across 163 branches covering 24 States.

As on 31st March 2020 the amount of Assets Under Managementoutstanding through the Company's Distribution Services on MFP aggregate of institutionaland retail segment was Rs. 1384.93 Crores and the number of clients stood at 60628.

MORATORIUM OF LOANS

In accordance with the Board approved Moratorium Policy read with theRBI Guidelines on the COVID-19 Regulatory Package announced on 27th March 2020 and 17thApril 2020 your Company has granted a moratorium of three months on the payment of allinstallments and/ or interest as applicable falling due between 1st March 2020 and 31stMay 2020 to all eligible customers.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the applicable provisions of the Master Directionissued by the Reserve Bank of India and the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 a detailed analysisof the Company's performance is discussed in the Management Discussion and AnalysisReport which forms part of this Annual Report.

CORPORATE GOVERNANCE

Your Company practices a culture that is built on core values andethical governance practices. Your Company is committed to transparency in all itsdealings and places high emphasis on business ethics.

In accordance with the applicable provisions of the Master Directionissued by the Reserve Bank of India and the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 a Report on CorporateGovernance along with a Certificate from Messrs. KSR & Co. Company Secretaries LLPregarding compliance with the conditions of Corporate Governance as stipulated inRegulations 17 to 27 clauses (b) to (i) of sub-regulation (2) of Regulation 46 andparagraphs C D and E of Schedule V of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of the AnnualReport.

SHARE CAPITAL

The issued subscribed and paid-up Equity Share Capital as on 31stMarch 2020 was Rs. 123.55 Crores comprising of 617764960 Equity Shares of the facevalue of Rs. 2 each fully paid-up.

There was no change in the Share Capital during the year under review.

During the year the Company has not issued any sweat equity shares orequity shares with differential voting rights.

As on 31st March 2020 none of the Directors of the Company holdsinstruments convertible into Equity Shares of the Company.

STOCK OPTIONS

During the year under review no Options were granted to EligibleEmployees under the Mahindra & Mahindra Financial Services Limited Employees' StockOption Scheme-2010 ("2010 Scheme”). The Company does not have any scheme to fundits employees to purchase the shares of the Company. No employee has been issued stockoptions during the year equal to or exceeding 1% of the issued capital of the Company atthe time of grant.

The 2010 Scheme of the Company is in compliance with the Securities andExchange Board of India (Share Based Employee Benefits) Regulations 2014 (“SBEBRegulations”) and there were no material changes made to the said Scheme. ACertificate from Messrs. B S R & Co. LLP Chartered Accountants Statutory Auditors ofthe Company pursuant to Regulation 13 of the SBEB Regulations would be available forinspection by the Members through electronic mode.

Voting rights on the Shares issued to employees under the aforesaidScheme are either exercised by them directly or through their appointed proxy.

The details of the Employees' Stock Options and the Company'sEmployees' Stock Option Trust as required under the SBEB Regulations read with SEBICircular CIR/ CFD/ POLICY CELL/2/2015 dated 16th June 2015 have been uploaded on theCompany's website and can be accessed at the web-link: https://mahindrafinance.com/investor-zone/financial-information#Financialresults.

ECONOMY

Global and Domestic Growth

The global economic activity has been slow paced but differentiatedacross geographies. For Calendar Year (CY) 2020 the global growth is at 2.9% withadvanced economies having growth of 1.7% while emerging and developed economies havinggrowth of 3.7% with India's growth at 4.2%. With the onset of the COVID-19 pandemic in the1st quarter of CY 2020 there is a high and rising human cost worldwide.

Financial markets have become extremely volatile from January onwardsdue to the outbreak of the pandemic. Panic sell-offs have resulted in wealth destructionacross advanced and emerging economies. US dollar is the only safe haven in a highlyuncertain outlook. On crude disagreement on production cuts has led to supply scale-upsand a price war resulting in price being under pressure.

Outlook

This health crisis never seen before is having a severe impact oneconomic activity. This has resulted in a negative growth outlook for the world economy at-3.0% and 5.8% respectively in Calendar Year (CY) 2020 and CY 2021. This shall plunge theeconomy into the worst recession since the Great Depression far worse than GlobalFinancial Crises. Emerging market growth is expected at -1.0% and 6.6% respectively in CY2020 and CY 2021. India's growth at 1.9% and 74% in the coming years is amongst the mostresilient economies on account of its dependence on agriculture and consumption.

The growth in CY 2021 assumes fading of the pandemic by the second halfof 2020 containment activity can then be gradually unwounded and economy normalizingthereafter. The coming year shall however continue to be a year of uncertainty and shallbe dependent upon government policies and global financial market conditions. Effectivepolicies to contain impact of pandemic may cause short term toll on economic activity butshall be an investment for long term human and economic health.

Domestic Economy

Few data releases on domestic development are available but many ofthem are disjointed to allow a comprehensive assessment of the state of economy. Thecontinuing resilience of agriculture and allied activities on the back of recordproduction with higher buffer stock will auger well. The acreage under Kharif sowing ismuch higher than previous year despite the lockdown. The India Metrological Department(IMD) anticipates rainfall at 100 percent of the long period average.

During the year under review headline Consumer Price Index (CPI)inflation had moved up to 76% in January 2020 highest since July 2014. It has thereafterdeclined sharply on the back of food inflation coming down and CPI inflation for March2020 was at 5.9% based on partial information. It is expected that inflation may recedeeven further except for any supply disruptions and settle well below the 4% mark by thesecond half of FY 2021.

In its 7th bi-monthly monetary policy Reserve Bank of India continuingwith its measures to alleviate financial stress announced additional measures to provideliquidity support which apart from reducing the policy rates and injecting liquidity alsopermitted providing moratorium by financial institutions to its customers.

Finance

The NBFC sector continued to experience liquidity problems in thefinancial year 2019-20 with the spreads over the G-Sec also continuing to widen for thesector. The risk-appetite further weakened in the third quarter of FY 2020 due touncertainties caused by CoronaVirus (COVID-19). This led to funding primarily beingavailable to companies having strong parentage brand and business model robust corporategovernance and conservative ALM. Your Company continued to focus on managing cashefficiently and ensured that it had adequate levels of liquidity apart from back-up linesof credit to support business requirement and near term liability maturity.

During the year under review the Reserve Bank of India("RBI”) held seven Bi-monthly Monetary Policy Committee ("MPC”)meetings. The Policy Repo rates under the Liquidity Adjustment Facility ("LAF”)was at 6.25% at the beginning of the year. Out of the 7 MPC meetings held during the yearthe Policy rates were reduced in 5 of those and remained unchanged in the balance two.This led to a cumulative reduction of 185 basis points during the financial year with thePolicy Repo rate finally closing at 4.40%. The initial reduction in policy rates were withan accommodative stance to maintain a balance between growth and inflation while asharper 75 basis points cut in March 2020 was primarily to mitigate the impact of COVID-19on the economy.

At the start of the fiscal year (April 2019) 10-year G-Sec benchmarkyields (726% Government Stock 2029) was trading at 735% levels which after a slew of cutsled to a fall in G-Sec rates and it closed the year at 6.52%. The shorter duration paperof around 3 years has seen a much higher reduction in yields coinciding with the Long TermReverse Repo Operation (LTRO). With further announcement and policy measures beingannounced the expectation of further rate cuts and reduction in yield is anticipated aswe wade through the pandemic.

During the third quarter of the year under review a new 10-yearbenchmark (6.45% GS 2029) was introduced in October 2019. Its yield continues to fall andclosed the year at 6.14%. During the year the INR depreciated sharply by 9% from INR69.17 to INR 75.39 per USD demonstrating flight to safety towards safe-haven.

Your Company has been identified as a "Large Corporate” underthe framework provided by the Securities and Exchange Board of India and accordingly hasensured that more than 25% of its incremental borrowings during the year was by way ofissuance of Debt securities.

During the year under review your Company continued with its diversemethods of sourcing funds in addition to regular borrowings like Secured and UnsecuredDebentures Term Loans Fixed Deposits Commercial Papers etc. and maintained prudentialAsset Liability match throughout the year. Your Company sourced long-term debentures andloans from banks and other institutions at attractive rates. Your Company continues toexpand its borrowing profile by tapping into new lenders and geographies.

During the year your Company has successfully completed 10 (ten)securitisation transactions aggregating to Rs. 7721.60 Crores and raised upwards of USD200 million through External Commercial Borrowings.

• Private Placement Issues of Non-ConvertibleDebentures

During the year under review your Company issued Secured/UnsecuredRedeemable Non-Convertible Debentures including Secured Redeemable Principal ProtectedNon-Convertible Market Linked Debentures ("NCDs”) and raised an amountaggregating to Rs. 495780 Crores on a private placement basis in various tranches.

Details of all the above-mentioned issues were provided to the Board ona periodic basis.

As specified in the respective offer documents the funds raised fromNCDs were utilised for the purpose of financing repayment of dues of other financialinstitutions/Banks or for long-term working capital.

The Company is in compliance with the applicable guidelines issued bythe Reserve Bank of India as amended from time to time.

The Company has been regular in making payments of principal andinterest on all the NCDs issued by the Company on a private placement basis and throughpublic issue. There are no NCDs which have not been claimed by investors or not paid bythe Company after the date on which the NCDs became due for redemption.

• Rupee Denominated Medium Term Note (MTN)

During the year under review your Company had raised funds in theoverseas market amounting to Rs. 35000 lakhs (equivalent to USD 50 million) through issueof Rupee denominated USD settled Unlisted Secured Notes ("Masala Bonds") underExternal Commercial Borrowings accessed through automatic route. The net proceeds from theissue of these Masala Bonds were applied for the purpose of on-lending in accordance withthe directions issued by the RBI. The Rupee Denominated Medium Term Note (MTN) programmeof your Company is listed on the Singapore Exchange Securities Trading Limited.

INVESTOR RELATIONS

Your Company has been continuously interacting by participating eitherin-person meetings or through use of technology i.e. conference calls video-conferencingTelepresence meetings and endeavours to further improve its engagement with Domestic andInternational investors/ analysts. Your Company attended multiple investor meets organisedby reputed Global and Domestic Broking Houses during the year both in India and abroadto communicate details of its performance important regulatory and market developmentsand exchange of information. Quarterly and annual earnings calls are scheduled throughstructured conference calls to keep various stakeholders informed about the pastperformance and future outlook of the industry especially those having a bearing on theCompany. These interactions with institutional shareholders fund managers and analystsare based on generally available information that is accessible to the public on anon-discriminatory basis. Your Company uploads the transcript of the quarterly earningscalls on its website which can be accessed by existing and potential investors andlenders. With the ongoing pandemic your Company has lately been interacting only bytele-conference or through the use of video-conferencing applications.

Your Company believes in transparent communication and building arelationship of mutual understanding and trust. Your Company further ensures that criticalinformation about the Company is available to all the investors by hosting suchinformation on the Company's website.

CAPITAL ADEQUACY

As on 31st March 2020 the Capital to Risk Assets Ratio (CRAR) of yourCompany was 19.6% which is well above the minimum requirement of 15% CRAR prescribed bythe Reserve Bank of India.

Out of the above Tier I capital adequacy ratio stood at 15.4% and TierII capital adequacy ratio stood at 4.2% respectively.

RBI GUIDELINES

The Company continues to comply with all the applicable regulationsprescribed by the Reserve Bank of India (“RBI”) from time to time.

CREDIT RATING

Your Company believes that its credit rating and strong brand equityenables it to borrow funds at competitive rates. The credit rating details of the Companyas on 31st March 2020 were as follows:

* The ratings mentioned above were reaffirmed by the Rating Agenciesduring the Financial Year 2019-20. With the above rating affirmations your Companycontinues to enjoy the highest level of rating from all major rating agencies at the sametime.

ACHIEVEMENTS

Your Company won several awards and accolades during the year underreview. Select few awards/ recognition are enumerated hereunder:

Business & Marketing:

• Won the Indian Oil Logistics Award CV Financer of the Year 2019.

• Bagged the first position for Excellence in Cost Management -2018 in 16th National Awards for "Excellence in Cost Management - 2018” inBanking Financial Services and Insurance Category.

• Won the Marketing Award for "Best Customer Engagement”at ABP News - BFSI Awards 2019.

CSR & Sustainability:

• Won the Global Corporate Sustainability Award in the awardcategory: Reporting Emerging Market at Taipei Taiwan.

• Honoured with the IDF CSR Award 2019 for participation inResource Mobilization for Humanitarian Causes.

• Listed in the renowned FTSE4 Good Emerging Markets Index in thereporting year.

• Ranked 49th amongst Top 100 Indian companies for Sustainability& CSR under Responsible Business Rankings 2019 by Futurescape.

• Recognized as the only Financial Institute from India to be inthe DJSI Sustainability Index for Emerging Markets category for 7th year in a row.

• Won the 8th India CSR Awards - Recognition for Excellence inCorporate Social Responsibility for the category; Livelihood Creation: Project Hunnar.

Human Resources

• Ranked 25th among "India's Best Companies to Work For2020” by Great Place to Work Institute.

• Ranked 6th among "Best Large Workplaces in Asia 2020”by Great Place to Work Institute.

• Won the 'Best Employer Award' by Aon Best Employers-India 2019Programme.

• Recognized amongst the Best 50 People Capital Index (PCI)Companies 2019.

• Recognized among 'Best Companies in Career Management 2020' byGreat Place to Work Institute.

• Recognized among 'India's Best Workplaces in NBFC 2020' by GreatPlace to Work Institute.

• Recognized among 'India's 25 Best Workplaces in BFSI 2020' byGreat Place to Work Institute.

FIXED DEPOSITS AND LOANS/

ADVANCES

Your Company provides a wide range of Fixed Deposit schemes that caterto the investment needs of various classes of investors. These Deposits carry attractiveinterest rates with superior service enabled by robust processes and technology. In orderto tap rural and semiurban savings and reach out to the farthest customers your Companycontinues to expand its network and make its presence felt in the most remote areas of thecountry.

During the year CRISIL has reaffirmed a rating of 'CRISIL FAAA/Stable'for your Company's Fixed Deposits. This rating represents the highest degree of safetyregarding timely servicing of financial obligations and carries the lowest credit risk.Your Company's Deposits continue to be a preferred investment amongst the investors.

As on 31st March 2020 your Company has mobilised funds from FixedDeposits to the tune of Rs. 8853.95 Crores with an investor base of over 228565investors.

Your Company continues to serve the investors by introducing severalcustomer centric measures on an ongoing basis to further strengthen its processes in syncwith the requirements of the Fixed Deposit holders. The Company communicates variousintimations via SMS e-mails post etc. to its investors as well as sends reminderemails to clients whose TDS is likely to be deducted before any payout/ accrual. YourCompany also provides online renewal facility online generation of TDS certificates fromcustomer/broker portal and Seamless Investment process for employees.

During the year under review your Company has rolled out severalinitiatives aimed at offering a superior customer experience. Some key ones are:

• Call center activation;

• Activation of Toll free number exclusively for Fixed Depositinvestors;

• Welcome calls with Feedback survey;

• Extending Deposit acceptance module to channel partners throughdigital mode which enhances the transaction turn-around time and offers convenience to allstakeholders;

• Initiated the process of updating CKYC (Central Know YourCustomers) data for all existing depositors wherever the same is not updated.

As at 31st March 2020 7464 Deposits amounting to Rs. 767 Crores hadmatured for payment and remained unclaimed. The unclaimed Deposits have since reduced to6911 Deposits amounting to Rs. 6.69 Crores. There has been no default in repayment ofDeposits or payment of interest during the year.

Your Company being a Non-Banking Financial Company the disclosuresrequired as per Rule 8 (5) (v) and (vi) of the Companies (Accounts) Rules 2014 read withSections 73 and 74 of the Companies Act 2013 are not applicable to it.

The information pursuant to Clause 35(1) of Master DirectionDNBR.PD.002/03.10.119/ 2016-17 dated 25th August 2016 issued by the Reserve Bank of Indiaon Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank)Directions 2016 regarding unpaid/unclaimed public deposits as on 31st March 2020 isfurnished below:

i. total number of accounts of Public Deposits of the Company whichhave not been claimed by the depositors or not paid by the Company after the date on whichthe deposit became due for repayment: 7464.

ii. the total amounts due under such accounts remaining unclaimed orunpaid beyond the dates referred to in clause (i) as aforesaid: Rs. 76665649.

Depositors were intimated regarding the maturity of deposits with arequest to either renew or claim their Deposits. Your Company continues to send intimationletters/reminders every 3 months to all those Fixed Deposit holders whose Deposits havematured as well as to those whose Deposits remain unclaimed. Where the Deposit remainsunclaimed follow-up action is also initiated through the concerned agent or branch.

Pursuant to Section 125(2) (i) of the Companies Act 2013 read with theInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 ("the IEPF Rules”) as amended from time to time matured Depositsremaining unclaimed for a period of seven years from the date they became due for paymentare required to be transferred to the Investor Education and Protection Fund (IEPF)Authority established by the Central Government. Further interest accrued on the matureddeposits which remain unclaimed for a period of seven years from the date of payment willalso be transferred to the IEPF under Section 125(2) (k). The concerned depositor canclaim the Deposit and/or interest from the IEPF Authority by following the procedure laiddown in the IEPF Rules.

During the year an amount of Rs. 0.05 Crores has been transferred tothe IEPF Authority.

The Particulars of loans/advances etc. required to be disclosedpursuant to Regulation 34 read with paragraph A of Schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 are furnished separately.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS INSECURITIES

Pursuant to Section 186(11) of the Companies Act 2013 ("theAct”) the provisions of Section 186(4) of the Act requiring disclosure in theFinancial Statements of the full Particulars of the loans made and guarantees given orsecurities provided by a Non- Banking Financial Company in the ordinary course of itsbusiness and the purpose for which the loan or guarantee or security is proposed to beutilised by the recipient of the loan or guarantee or security are exempted fromdisclosure in the Annual Report.

Further pursuant to the provisions of Section 186 (4) of the Act thedetails of investments made by the Company are given in the Notes to the FinancialStatements.

SUSTAINABILITY INITIATIVES

From the outset Sustainability has been deeply embedded in theCompany's business model. At the heart of our organizational strategy is an inclusivebusiness model which enables the residents of semi-urban and rural India to access formalchannels of credit/finance helping them create long-term value. In line with the MahindraGroup's motto: 'Rise for Good' we are also gearing up to be future ready by makingsustainability and climate change an integral part of the business strategy & riskframework. Your Company has been enabling customers to meet their aspirations throughfinancial product offerings. It has helped people build their homes through affordablehome loan services provided by Mahindra Rural Housing Finance Limited secure their lifeand assets by insurance solutions of Mahindra Insurance Brokers Limited and offersinvestment options by Mahindra Asset Management Company Private Limited. By providing theright set of opportunities and prospects in the remote areas your Company has helpedcustomers to forge ahead. The Company lays strong emphasis on customer centricity with itscustomer base spread across more than 3.8 lakh villages in India with majority of thembelonging to the 'Earn and Pay' segment.

Your Company commenced its journey towards reporting sustainabilityperformance in 2008-09 through Mahindra Group's Sustainability Report and in the year2012-13 the Company released its first standalone Sustainability Report. In FY 2018-19the Company released its Seventh Sustainability Report with the theme "Change isGood”. The report adheres to the Global Reporting Initiative's (GRI) Standards and isbased on Integrated Reporting framework. The report is externally assured by KPMG. TheContent index has been checked by GRI and carries the GRI logo. The Report expounds how'Change' has been a harbinger of possibilities and prompted the Company to transcend thevalue-creation abilities. It also showcases how the agile culture has enabled theOrganisation to believe 'Change is Good' and set further on the road to success.

This Report is hosted on the Company's website at the web-link: https://mahindrafinance.com/media/124177/mahindra_finance_sr_2019_final.pdf.

Your Company continued to focus on integrating Sustainability into thebusiness practices and on building awareness for different stakeholders by taking variousinitiatives to engage them. In FY 2018-19 your Company became the 1st Financial Companyin India to be committed towards call to action for Science Based Targets. The ScienceBased Targets initiative (SBTi) requires companies to publicly commit to setting carbonemission reduction targets that are in line with climate science. In the reporting yearthe Company's preliminary validation for carbon reduction target setting is complete. TheSBTi Team has also invited the Company for methodology development exercise for FinancialInstitutions.

Your Company was recognized for its Sustainability initiatives duringthe year under review by way of:

• Winning the Global Corporate Sustainability Award (GCSA) inTaipei Taiwan on 28th November 2019. The award category was Reporting (Emerging Market)for Sustainability Report 2017-18.

• Being ranked 49th amongst Top 100 Indian companies forSustainability & CSR under Responsible Business Rankings 2019 by Futurescape.

• Getting listed in the renowned FTSE4Good Emerging Markets Indexin the reporting year. FTSE4Good is an equity index series that is designed to facilitateinvestment in companies that meet globally recognised corporate responsibility standards.It is designed to measure the performance of companies demonstrating strong EnvironmentalSocial and Governance practices.

• Retaining the status of getting listed on the Dow JonesSustainability Index ("DJSI”)-2019 under the 'Emerging Market Trends' for theseventh consecutive year. Your Company was the only Company from amongst the DiversifiedFinancial Services Companies in India to have made it to this list. To be included in theDJSI companies are assessed and selected based on their long term Environmental Socialand Governance management plans and actions.

Your Company's approach has been to make its environmentaldisclosure transparent and accordingly it has been reporting disclosures and reports onits performance through the Carbon Disclosure Project (CDP) India since Financial Year2011-12. During the reporting year your Company attained CDP Performance Band - C meaningthat your Company is at "Awareness” band and also attained Band - A in theSupplier Engagement Rating.

Sensitising the employees to a novel concept such as Sustainability hasbeen one of the key initiatives of the Company for the Financial Year. Capacity buildingon Sustainability has been driven by Sustainability Courses on Coursera Platform andthrough Sustainability channel on Edcast. Both of these are global knowledge building/learning platforms.

During the year your Company made proactive efforts to reduce CO2emissions (carbon footprint) through Project "Mahindra Hariyali” by plantingmore than 1 lakh saplings throughout the country.

Your Company is gearing up to be future ready by making sustainabilityand climate change an integral part of its risk framework and taking measures to mitigateand manage them. Weather reports are assessed on a regular basis and aligned with businessoperations to protect the customers and minimize the risk impact. The outlook for thefuture has been positive and your Company is well equipped to enable its customers andcommunities to progress through its inclusive and sustainable business model.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report ("BRR”) of your Companyfor the year 2019-20 forms part of this Annual Report as required under Regulation 34(2)(f) of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and is appended as “Annexure II”.

Your Company is building an inclusive organisation by empowering allthe stakeholders and facilitating their contribution towards growth that is both holisticand long term. Through the inclusive business model your Company is endeavoring to caterto the bottom of the pyramid in the rural and semi-urban areas enabling them to earntheir livelihood through varied financial products and services. Your Company has alwaysbeen conscious of its role as a responsible corporate citizen. Through its wide network ofbranches with locally-recruited employees strong and lasting relationships with itsstakeholders large customer base vast experience and market knowledge your Company isproviding financial resources to underserviced regions of the country.

The BRR can also be accessed on the Company's website at theweb-link: https://mahindrafinance.com/discover- mahindra-finance/sustainability.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

With a vision to transform rural and semi-urban India into aself-reliant flourishing landscape your Company started its journey in 1991 and hasbecome one of the leading NBFCs with an employee base of over 21000 employees all overIndia. By supporting about 100 NGOs and implementing partners in the areas of Education& Livelihood Healthcare and Environment the Company strives to become an asset inthe communities where it operates.

Building on the momentum created last year through several educationand livelihood projects the Mahindra Finance Scholarship Program underwent a revamp andstarted the new version Mahindra Finance Saksham Scholarship for the children of thedriver community and the employees of Automobile dealers. In this year your Companyprovided scholarship to 2800 students studying from Grade 5th to 12th across Indiaorganised 19 visits to Municipal Schools through which 2482 students got benefitted. YourCompany continued financial support to run a vocational skill building center

i.e. Divyang Vikas Kendra for 250 People with Disability to enhancetheir employability and to provide them independent and sustainable source of income.Further your Company introduced Dhan Samvaad - Financial & Digital Literacy programempowering working population with the knowledge of sound financial practices to enablethem in managing their finances better by conducting workshops along with web-based mobileapplication on financial literacy. Reaffirming its commitment to the cause of educationyour Company continued its support to Nanhi Kali Program which has benefitted 9927underprivileged girl children from socially and economically marginalised families livingin urban rural and tribal parts of India. To promote inclusive growth of socially andeconomically disadvantaged youth your Company continued its support to Mahindra PrideSchool which skilled 2404 youth out of which 2120 have been absorbed in variousorganisations. Further Mahindra Pride Classrooms supported an additional 40-120 hours oftraining to 30143 final year students covering English speaking course Life SkillsAptitude Interview Group Discussion and Digital Literacy through Polytechnics and Arts& Science Colleges in 14 States.

Under Healthcare the three major initiatives implemented by yourCompany were nationwide Blood Donation Drives Sehat and Ambulance Donation with the aimof providing access to healthcare services to patients residing in remote and rural areas.

Your Company also organised cleanliness drives in the vicinity of itscorporate office and branch offices under the Swachh Bharat Abhiyan to create awarenessabout everyday sanitation practices as well as prevention of common diseases.

Your Company also contributes towards increasing the green coverthrough the Mahindra Hariyali project. Every year employees of the Company pan-Indiaplant trees in selected locations. Over 1 Lakh saplings were planted in this year.

Your Company also made a contribution to the PM CARES Fund to combatthe COVID-19 pandemic and extended support to flood affected victims in OdishaMaharashtra and Bihar.

Apart from the key thrust areas your Company contributed funds forother causes such as preservation and promotion of the fine arts & culture andconducted visits to orphanage homes differently abled homes homes for the elderly etc.to re-affirm its pledge to the society.

During the year under review your Company has spent Rs. 2797 Crorestowards Corporate Social Responsibility on CSR projects/programs. Your Company is incompliance with the statutory requirements in this regard.

Out of total contribution of Rs. 10 Crores made by the Company to thePM CARES Fund a contribution of Rs. 4.83 Crores has been allocated from the CSR spend ofFY 2019-20 and Rs. 5.17 Crores would be apportioned towards the CSR spend of the Companyfor FY 2020-21.

CSR COMMITTEE

During the year under review the CSR Committee comprised of Mr.Dhananjay Mungale (Chairman) Ms. Rama Bijapurkar Mr. Ramesh Iyer Mr. V. Ravi and Dr.Anish Shah. The Committee inter alia reviews and monitors the CSR activities.

Consequent upon the resignation of Dr. Anish Shah as a Member of theCommittee with effect from 16th May 2020 the Committee stands reconstituted effectivefrom 16th May 2020 as follows:

Name Category
Mr. Dhananjay Mungale - Chairman of the Committee (Independent Director)
Ms. Rama Bijapurkar - Independent Director
Mr. Ramesh Iyer - Vice-Chairman & Managing Director
Mr. V. Ravi - Executive Director & Chief Financial Officer

CSR POLICY

The CSR Policy of the Company duly amended is hosted on the Company'swebsite at the web-link: https:// mahindrafinance.com/rise-for-good/csr-overview and

a brief outline of the CSR Policy and the CSR initiatives undertaken bythe Company during the year as per Annexure prescribed in the Companies (Corporate SocialResponsibility Policy) Rules 2014 have been appended as “Annexure IN” tothis Report.

EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) ofSection 92 of the Companies Act 2013 read with Rule 12(1) of the Companies (Managementand Administration) Rules 2014 an extract of the Annual Return as at 31st March 2020 inForm No. MGT-9 is appended as “Annexure IV” and forms part of thisReport.

The Annual Return of the Company as at 31st March 2020 has been placedon the website of the Company and can be accessed at https://mahindrafinance.com/investor-zone/financial-information#Financialresults.

BOARD MEETINGS AND ANNUAL GENERAL MEETING

The calendar of the Board/Committee Meetings and the Annual GeneralMeeting is circulated to the Directors in advance to enable them to plan their schedulefor effective participation at the respective meetings. Additional Board Meetings areconvened by giving appropriate notice to address business exigencies. At times certaindecisions are taken by the Board/Committee through circular resolutions.

All the decisions and urgent matters approved by way of circularresolutions are placed and noted at the subsequent Board/Committee Meeting(s).

The Board of Directors met seven times during the year under review on24th April 2019 23rd July 2019 13th August 2019 23rd September 2019 22nd October2019 28th January 2020 and 5th March 2020. The requisite quorum was present for all theMeetings. The maximum time gap between any two Meetings was not more than one hundred andtwenty days. These Meetings were well attended. The 29th Annual General Meeting (AGM) ofthe Company was held on 23rd July 2019.

Detailed information on the Meetings of the Board its Committees andthe AGM is included in the Report on Corporate Governance which forms part of this AnnualReport.

MEETINGS OF INDEPENDENT DIRECTORS

The Independent Directors met twice during the year under review on21st August 2019 and 4th March 2020. The Meetings were conducted in an informal mannerwithout the presence of the Whole-time Directors the Non-Executive Non-IndependentDirectors or any other Management Personnel.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company has various Committees which have been constituted as apart of good corporate governance practices and the same are in compliance with therequirements of the relevant provisions of applicable laws and statutes.

During the year under review the Audit Committee comprised of Mr. C.B. Bhave as the Chairman and Mr. Dhananjay Mungale Ms. Rama Bijapurkar Mr. MilindSarwate Mr. Arvind V. Sonde Mr. V. S. Parthasarathy and Dr. Anish Shah as Members.

Mr. Arvind V. Sonde has been appointed as an Independent Director ofthe Company with effect from 9th December 2019 and was inducted as a Member of theCommittee with effect from 28th January 2020.

The recommendations of the Audit Committee were duly approved andaccepted by the Board during the year under review.

The other Committees of the Board are:

i) Nomination and Remuneration Committee

ii) Stakeholders Relationship Committee

iii) Corporate Social Responsibility Committee

iv) Risk Management Committee

v) Asset Liability Committee

vi) Committee for Strategic Investments

vii) IT Strategy Committee

The details with respect to the composition powers roles terms ofreference Meetings held and attendance of the Directors at such Meetings of the relevantCommittees are given in detail in the Report on Corporate Governance of the Company whichforms part of this Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointment/Re-appointment and Cessation of Directors

i) Appointment of Mr. Milind Sarwate as an Independent Director

As mentioned in the previous Annual Report Mr. Milind Sarwate wasappointed as an Independent Director of the Company with effect from 1st April 2019 for aterm of five consecutive years vide an Ordinary Resolution passed by means of a PostalBallot on 31st March 2019.

ii) Re-appointment of Mr. Dhananjay Mungale

Ms. Rama Bijapurkar and Mr. C. B. Bhave as Independent Directors for asecond term

Mr. Dhananjay Mungale and Ms. Rama Bijapurkar were re-appointed at the29th Annual General Meeting held on 23rd July 2019 as Independent Directors of theCompany for a second term of five consecutive years each commencing from 24th July 2019to 23rd July 2024 by passing a Special Resolution.

Based on the recommendation of the Nomination and RemunerationCommittee and on the proposal of the Board of Directors Mr. C. B. Bhave was re-appointedas an Independent Director of the Company for a second term of five consecutive yearscommencing from 3rd February 2020 to 2nd February 2025 by way of a Special Resolutionpassed by means of a Postal Ballot on 8th December 2019.

iii) Appointment of Mr. Arvind V. Sonde as an Independent Director

Pursuant to the recommendation of the Nomination and RemunerationCommittee and on the proposal of the Board of Directors Mr. Arvind V. Sonde was appointedas an Independent Director of the Company for a term of five consecutive years commencingfrom 9th December 2019 to 8th December 2024 vide an Ordinary Resolution passed by meansof a Postal Ballot on 8th December 2019.

iv) Retirement by rotation of Mr. V. S. Parthasarathy

Mr. V. S. Parthasarathy Non-Executive Non-Independent Directorretires by rotation at the forthcoming Annual General Meeting and being eligible offershimself for re-appointment.

Mr. V. S. Parthasarathy is not debarred or disqualified from holdingthe office of Director by virtue of any SEBI Order or any other such authority pursuantto circulars dated 20th June 2018 issued by BSE Limited and the National Stock Exchangeof India Limited pertaining to enforcement of SEBI Orders regarding appointment ofDirectors by the listed companies.

v) Completion of Tenure of Mr. V. Ravi as Executive Director &Chief Financial Officer

Mr. V. Ravi was appointed as a Whole-time Director of the Company underthe provisions of the Companies Act 2013 designated as "Executive Director &Chief Financial Officer” for a period of 5 (five) years with effect from 25th July2015 to 24th July 2020 by the Shareholders by means of a Postal Ballot on 16th June2016. Accordingly Mr. V. Ravi would cease to hold office as Executive Director &Chief Financial Officer of the Company upon completion of his tenure as approved by theShareholders and consequent to his retirement from the services of the Company.

Mr. V. Ravi has been associated with the Company since inception andhas had an illustrious career spanning over 34 years of service (of which 5 years were asan Executive Director). Mr. V. Ravi was part of the founding team of the Company and itssubsidiaries and joint venture(s). His vast experience in financial reporting andprocesses expertise in fiscal management and in streamlining various major functions likeFinance & Accounts Treasury and Information Technology was pivotal in growth anddiversification initiatives of the Company over a period of time.

The Board has placed on record its deep appreciation of Mr. V. Ravi'simmense contribution and valuable services during his long association with the Companyand acknowledged Mr. Ravi's outstanding experience and expertise in serving the Companyincluding the Group's Financial Services Sector companies.

Declaration by Directors

All the Directors of the Company have confirmed that they satisfy the"fit and proper” criteria as prescribed under Chapter XI of RBI Master DirectionNo. DNBR. PD. 008/ 03.10.119/2016-17 dated 1st September 2016 and that they are notdisqualified from being appointed/ continuing as Directors in terms of section 164(2) ofthe Companies Act 2013.

Declaration by Independent Directors

All the Independent Directors of the Company have given declarationsand confirmed that they meet the criteria of Independence as provided under Section 149(6)of the Companies Act 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and that they are not aware of any circumstanceor situation which exist or may be reasonably anticipated that could impair or impacttheir ability to discharge their duties with an objective independent judgment and withoutany external influence.

The Board of the Company after taking these declarations on record andacknowledging the veracity of the same concluded that the Independent Directors arepersons of integrity and possess the relevant proficiency expertise and experience toqualify as Independent Directors of the Company and are Independent of the Management ofthe Company

In accordance with the provisions of Section 150 of the Act read withthe applicable Rules made thereunder the Independent Directors of the Company haveregistered themselves in the data bank of Independent Directors maintained by the IndianInstitute of Corporate Affairs Manesar ["llCA"]. The Independent Directorsunless exempted are required to pass an online proficiency selfassessment test conductedby llCA within one year from the date of their registration in the llCA databank.

Pursuant to the above the Company has received Declarations ofcompliance under Rules 6(1) and 6(2) of the Companies (Appointment and Qualification ofDirectors) Rules 2014 from all the Independent Directors of the Company confirming thatthey have registered their names in the data bank of Independent Directors maintained withthe IICA.

The Independent Directors of the Company except Mr. Arvind V. Sondeare exempt from the requirement to undertake the online proficiency self-assessment test.Mr. Arvind V. Sonde has passed the online proficiency self-assessment test undertaken byhim.

Key Managerial Personnel

Mr. Ramesh Iyer Vice-Chairman & Managing Director Mr. V. RaviExecutive Director & Chief Financial Officer and Ms. Arnavaz M. Pardiwalla CompanySecretary of the Company have been designated as the Key Managerial Personnel of theCompany (KMP) pursuant to the provisions of Sections 2(51) and 203 of the Companies Act2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.

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

Directors' Responsibility Statement

Pursuant to the provisions of Section 134(5) of the Companies Act2013 ("the Act”) your Directors based on the representations received from theOperating Management and after due enquiry confirm that:

i. in the preparation of the annual accounts for financial year ended31st March 2020 the applicable accounting standards have been followed and there are nomaterial departures in adoption of these standards.

ii. they have in consultation with the Statutory Auditors selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at 31st March 2020 and of the profit of the Company for the year ended onthat date.

iii. they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

iv. they have prepared the annual accounts for financial year ended31st March 2020 on a going concern basis.

v. they have laid down adequate internal financial controls to befollowed by the Company and that such internal financial controls were operatingeffectively during the financial year ended 31st March 2020.

vi. they have devised proper systems to ensure compliance withprovisions of all applicable laws and that such systems were adequate and operatingeffectively during the financial year ended 31st March 2020.

Performance Evaluation of the Board

The Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("the Listing Regulations”) stipulatethe evaluation of the performance of the Board its Committees Individual Directors andthe Chairperson.

The Company has formulated a Policy for performance evaluation of theIndependent Directors the Board its Committees and other individual Directors whichincludes criteria for performance evaluation of the Non-Executive Directors and ExecutiveDirectors.

The evaluation framework for assessing the performance of Directorscomprises of various key areas such as attendance at Board and Committee Meetings qualityof contribution to Board discussions and decisions strategic insights or inputs regardingfuture growth of the Company and its performance ability to challenge views in aconstructive manner knowledge acquired with regard to the Company's business/ activitiesunderstanding of industry and global trends etc.

The evaluation involves self-evaluation by the Board Member andsubsequent assessment by the Board of Directors. A member of the Board will notparticipate in the discussion of his/her evaluation.

Pursuant to the provisions of the Companies Act 2013 and Regulation 17of the Listing Regulations the Board has carried out an annual evaluation of its ownperformance and that of its Committees as well as performance of the Directorsindividually (including Independent Directors).

Feedback was sought by way of well-defined and structuredquestionnaires covering various aspects of the Board's functioning such as adequacy of thecomposition of the Board and its Committees Board culture areas of responsibilityexecution and performance of specific duties obligations and governance complianceoversight of Company's subsidiaries etc. and the evaluation was carried out based onresponses received from the Directors.

A separate exercise was carried out by the Nomination and RemunerationCommittee of the Board to evaluate the performance of individual Directors who wereevaluated on several parameters such as level of engagement and contribution independenceof judgment safeguarding the interest of the Company and its minority shareholders andknowledge acquired with regard to the Company's business/activities.

The performance evaluation of the Non-Independent Directors and theBoard as a whole was carried out by the Independent Directors. The performance evaluationof the Chairman of the Company was also carried out by the Independent Directors takinginto account the views of the Executive Directors and Non-Executive Directors.

The performance evaluation of the Independent Directors was carried outby the entire Board excluding the Director being evaluated. Qualitative comments andsuggestions of Directors were taken into consideration by the Chairman of the Board andthe Chairman of the Nomination and Remuneration Committee. The Directors have expressedtheir satisfaction with the evaluation process.

Familiarisation Programme for Independent Directors

The details of programmes for familiarisation of Independent Directorswith the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model of the Company and related mattersalong with details of number of programmes and number of hours spent by each of theIndependent Directors during the Financial Year 2019-20 in terms of the requirements ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 are available onthe website of the Company and can be accessed at the web-link: https://mahindrafinance.com/media/236819/familiarisation-programme-for-independent-directors-2019-20.pdf.

Policies on Appointment of Directors and Senior Management andRemuneration of Directors Key Managerial Personnel and Employees

i) Policy on Appointment of Directors and Senior Management andsuccession planning for orderly succession to the Board and the Senior Management

In accordance with the provisions of Section 134(3) (e) of theCompanies Act 2013 ("the Act”) read with Section 178(2) of the Act andRegulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 your Company has adopted a Policy on Appointment of Directors and Senior Managementand succession planning for orderly succession to the Board and the Senior Managementwhich inter alia includes the criteria for determining qualifications positiveattributes and independence of Directors identification of persons who are qualified tobecome Directors and who may be appointed in the Senior Management team successionplanning for Directors and Senior Management and the Talent Management framework of theCompany.

ii) Policy on Remuneration of Directors and theRemuneration Policy for Key Managerial Personnel and Employees of the Company

Your Company has also adopted the Policy on Remuneration of Directorsand the Remuneration Policy for Key Managerial Personnel and Employees of the Company inaccordance with the provisions of sub-section (4) of Section 178 of the Act.

The Policy on Remuneration of Directors as amended and theRemuneration Policy for Key Managerial Personnel and Employees of the Company are appendedas “Annexure V-A” and “Annexure V-B” respectively andform part of this Report.

The criteria for determining qualifications positive attributes andindependence of a Director and the Remuneration Policies for Directors Key ManagerialPersonnel and other employees have been discussed in detail in the Report on CorporateGovernance.

AUDITORS

Statutory Auditors

Messrs. B S R & Co. LLP Chartered Accountants (ICAI FirmRegistration No.101248W/W-100022) were appointed as Statutory Auditors of the Company atthe Twenty-seventh Annual General Meeting ("AGM”) to hold office for a period offive consecutive years commencing from the conclusion of the 27th AGM held on 24th July2017 till the conclusion of the 32nd AGM of the Company to be held in the year 2022.

The Statutory Auditors have given a confirmation to the effect thatthey are eligible to continue with their appointment and that they have not beendisqualified in any manner from continuing as Statutory Auditors. The remuneration payableto the Statutory Auditors shall be determined by the Board of Directors based on therecommendation of the Audit Committee.

The Report given by the Auditors on the Financial Statements of theCompany for the Financial Year 201920 is a part of the Annual Report. The Report isunmodified and does not contain any qualification reservation adverse remark ordisclaimer.

The Statutory Auditors were present at the last AGM.

Secretarial Auditor

The Board of Directors of the Company has appointed Messrs. KSR &Co. Company Secretaries LLP to conduct the Secretarial Audit of the Company pursuant tothe provisions of Section 204 of the Companies Act 2013 and the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014. In accordance with the provisionsof sub-section (1) of Section 204 the Secretarial Audit Report for the Financial Year2019-20 is appended to this Report as “Annexure VI”.

The Secretarial Audit Report does not contain any qualificationreservation adverse remark or disclaimer.

Secretarial Audit of Material Unlisted IndianSubsidiary

Mahindra Rural Housing Finance Limited (“MRHFL') a materialsubsidiary of the Company undertakes Secretarial Audit every year under Section 204 of theCompanies Act 2013. The Secretarial Audit of MRHFL for the Financial Year 2019-20 wascarried out pursuant to Section 204 of the Companies Act 2013 and Regulation 24A of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The SecretarialAudit Report of MRHFL submitted by Messrs. KSR & Co. Company Secretaries LLP doesnot contain any qualification reservation or adverse remark or disclaimer. TheSecretarial Audit Report is appended as “Annexure VII” and forms part ofthis Report.

Cost Records and Cost Audit

Maintenance of cost records and requirement of cost audit as prescribedunder the provisions of Section 148(1) of the Companies Act 2013 are not applicable inrespect of the business activities carried out by the Company.

Reporting of Frauds by Auditors

During the year under review the Statutory Auditors and theSecretarial Auditor have not reported any instances of frauds committed in the Company byits Officers or Employees to the Audit Committee under Section 143(12) of the CompaniesAct 2013 details of which need to be mentioned in this Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITHRELATED PARTIES

All contracts/arrangements/transactions entered into by the Companyduring the Financial Year with related parties were in the ordinary course of business andon an arm's length basis. During the year under review your Company had not entered intoany contract/ arrangement/transaction with Related Parties which could be consideredmaterial in accordance with the Policy on Related Party Transactions. Pursuant to Section134

(3) (h) read with Rule 8 (2) of the Companies (Accounts) Rules 2014there are no transactions to be reported under Section 188 (1) of the Companies Act 2013.Accordingly the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act 2013 in Form AOC-2 is not applicable to the Company.

During the year under review the Board of Directors based on therecommendations of the Audit Committee amended the Policy on Related Party Transactionsin line with the amendment(s) made in the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and the same is uploaded on the Company's website at theweb-link: https://mahindrafinance.com/discover- mahindra-finance/policies.

Further details on the transactions with related parties are providedin the accompanying financial statements.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OFTHE COMPANY

The ongoing COVID-19 pandemic has increased the estimation uncertaintyin the preparation of the Financial Statements for the year ended 31st March 2020.

The Company has developed various accounting estimates in theseFinancial Statements based on forecasts of economic conditions which reflect expectationsand assumptions as at 31st March 2020 about future events that the Management believe arereasonable in the circumstances. There is a considerable degree of judgement involved inpreparing forecasts. The underlying assumptions are also subject to uncertainties whichare often outside the control of the Company. Accordingly actual economic conditions arelikely to be different from those forecast since anticipated events frequently do notoccur as expected and the effect of those differences may significantly impact accountingestimates included in these financial statements.

The significant accounting estimates impacted by these forecasts andassociated uncertainties are predominantly related to expected credit losses fair valuemeasurement and recoverable amount assessments of non-financial assets.

The spread of COVID-19 pandemic and the subsequent pan-India lockdownannounced by the Government of India are the events which have continued till the date ofthe announcement of financial results of the Company. The uncertainty on the restart ofthe Company's complete operations still prevails. Your Company has initiated the processof resuming operations in its branch offices located in the green and orange zonesidentified under the COVID-19 guidelines.

?then than the above mentioned situation affecting the Company thereis no material change and commitment that have occurred after the closure of the FinancialYear 2019-20 till the date of this Report which would affect the financial position ofyour Company.

RISK MANAGEMENT POLICY

Your Company has a comprehensive Risk Management Policy in place andhas laid down a well-defined risk management framework to identify assess and monitorrisks and strengthen controls to mitigate risks. Your Company has established proceduresto periodically place before the Risk Management Committee and the Board of Directors therisk assessment and minimisation procedures being followed by the Company and steps takenby it to mitigate these risks.

The Risk Management Policy inter alia includes identification thereinof elements of risk including Cyber Security and related risks as well as those riskswhich in the opinion of the Board may threaten the existence of the Company. The Riskmanagement process has been established across the Company and is designed to identifyassess and frame a response to threats that affect the achievement of its objectives.

Further it is embedded across all the major functions and revolvesaround the goals and objectives of the Company.

The development and implementation of Risk Management Policy adopted bythe Company is discussed in detail in the Management Discussion and Analysis chapterwhich forms part of this Annual Report.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Company promotes ethical behaviour in all its business activitiesand has established a vigil mechanism for its Directors Employees and Stakeholdersassociated with the Company to report their genuine concerns. The Vigil Mechanism asenvisaged in the Companies Act 2013 and the Rules prescribed thereunder and the ListingRegulations is implemented through the Whistle Blower Policy to provide for adequatesafeguards against victimisation of persons who use such mechanism and make provision fordirect access to the Chairperson of the Audit Committee.

As per the Whistle Blower Policy implemented by the Company theEmployees Directors customers dealers vendors suppliers or any Stakeholdersassociated with the Company are free to report illegal or unethical behaviour actual orsuspected fraud or violation of the Company's Codes of Conduct or Corporate GovernancePolicies or any improper activity to the Chairman of the Audit Committee of the Company orChairman of the Company or Convenor of the Corporate Governance Cell.

The Whistle Blower Policy provides for protected disclosure andprotection to the Whistle Blower. Under the Whistle Blower Policy the confidentiality ofthose reporting violation(s) is protected and they are not subject to any discriminatorypractices. Protected disclosures can also be made by sending an email at the designatedemail id: mmfsl_whistleblower@mahindra.com.

The Whistle Blower Policy has been appropriately communicated withinthe Company and is available on the website of your Company at the web-link: https://mahindrafinance.com/media/125151/whistle- blower-policy.pdf.

No personnel have been denied access to the Audit Committee.

SUBSIDIARIES JOINT VENTURE AND ASSOCIATES

The Company's Subsidiaries Joint Venture and Associates continue tocontribute to the overall growth in revenues and overall performance of your Company.

A Report on the performance and financial position of each of thesubsidiaries and the associate companies included in the Consolidated Financial Statementsand their contribution to the overall performance of the Company is provided in FormAOC-1 as Annexure A to the Consolidated Financial Statements and forms part of thisAnnual Report.

Your Company has formulated a Policy for determining 'Material'Subsidiaries as defined in Regulation 16 of the Listing Regulations. This Policy has beenhosted on the website of the Company and can be accessed through the web-link: https://mahindrafinance.com/investor-zone/corporate-governance#Policies.

SUBSIDIARIES

Mahindra Insurance Brokers Limited

During the year under review Mahindra Insurance Brokers Limited(MIBL) the subsidiary in the business of Direct and Re-insurance Broking servicedapproximately 2.23 million insurance cases with a total of 2233711 cases for both Lifeand Non-Life Retail business. The customized Life insurance cover "Mahindra LoanSuraksha” (MLS) decreased from 813742 lives covered with a Sum Assured of Rs.27765 Crores in the Financial Year 2018-19 to 684186 lives covered with a Sum Assuredof Rs. 25391 Crores in the Financial Year 2019-20. A substantial portion of MLS continuesto be covered in the rural markets.

MIBL achieved a growth of 7% in Gross Premium facilitated for theCorporate and Retail business lines increasing from Rs. 2265.10 Crores in the FinancialYean 2018-19 to Rs. 2431.89 Crores in the Financial Year 2019-20. The Total Incomeincreased by 4% from Rs. 323.36 Crores in the Financial Year 2018-19 to Rs. 336.89 Croresin the Financial Year 2019-20. The Profit before Tax decreased by 28% from Rs. 102.89Crores to Rs. 73.90 Crores and the Profit after Tax decreased by 25% from Rs. 71.49 Croresto Rs. 53.36 Crores during the same period.

MIBL has been able to reach the benefit of insurance to over 3 lakhvillages across India.

Mahindra Rural Housing Finance Limited

Mahindra Rural Housing Finance Limited (MRHFL) the Company'ssubsidiary in the business of providing loans for purchase renovation construction ofhouses to individuals in the rural and semi-urban areas of the country registered a totalincome of Rs. 15276 Crores as compared to Rs. 1383.9 Crores for the previous yearregistering a growth of 10.4%. Profit before tax was 43.9% lower at Rs. 205.6 Crores ascompared to Rs.366.2 Crores for the previous year. Profit after tax was 40.7% lower at Rs.148.6 Crores as compared to Rs. 250.5 Crores for the previous year.

During the year under review MRHFL disbursed loans aggregating to Rs.1876.4 Crores as against Rs. 2581.1 Crores in the previous year.

MRHFL continued its focus on serving customers in rural India. Majorityof the loans disbursed were to customers in villages with an average annual householdincome of less than Rs.1.97 lakhs. During the year under consideration MRHFL disbursedhome loans to around 95523 households (in addition to around 950375 existing householdsas on 31st March 2019). MRHFL has been expanding its geographical presence to provideaffordable services for rural households.

During the year under review operations of MRHFL were strengthened inthe States of Maharashtra Gujarat Rajasthan Tamil Nadu Andhra Pradesh TelanganaChhattisgarh Kerala Karnataka Madhya Pradesh Uttar Pradesh Uttarakhand Bihar andOdisha.

Mahindra Asset Management Company Private Limited

Mahindra Asset Management Company Private Limited (MAMCPL) asubsidiary of the Company acts as an Investment Manager for the schemes of Mahindra MutualFund. As on 31st March 2020 MAMCPL was acting as the Investment Manager for thirteenschemes.

The Average Assets under Management in these thirteen schemes were Rs.4771 Crores in March 2020 as compared to Rs. 4871 Crores in March 2019. Of these assetsRs. 1616 Crores were in equity schemes in March 2020 as compared to Rs. 1449 Crores inMarch 2019. MAMCPL has empaneled more than 14200 distributors and opened 190330investor accounts in these schemes recording a rise of more than 19%.

During the year under consideration the total income of MAMCPL was Rs.17 Crores as compared to Rs. 28.1 Crores for the previous year. The reduction in income ismainly due to the change in the accounting treatment of certain items of Scheme relatedexpenses consequent upon the change in the SEBI Regulations in this regard with effectfrom October 2018. The operations for the year under consideration have resulted in a lossof Rs. 379 Crores as against a loss of Rs. 39.5 Crores during the previous year.

Mahindra Trustee Company Private Limited

Mahindra Trustee Company Private Limited (MTCPL) your Company'ssubsidiary acts as the Trustee to Mahindra Mutual Fund.

During the year MTCPL earned trusteeship fees of Rs. 20.9 lakhs andother income of Rs. 1 lakh as compared to Rs. 23.5 lakhs and Rs. 1.1 lakh respectivelyfor the previous year. The total expenses for the year were Rs. 23.7 lakhs as against Rs.25.3 lakhs in the previous year. MTCPL recorded a loss of Rs. 1.8 lakh for the year underreview as against a loss of Rs. 0.8 lakh in the previous year.

Equity Infusion by Manulife Investment Management(Singapore) Pte. Limited

Manulife Investment Management (Singapore) Pte. Limited (formerly knownas Manulife Asset Management (Singapore) Pte. Limited) ("Manulife") has acquireda 49% stake in MAMCPL and MTCPL on 29th April 2020 pursuant to the execution of theShare Subscription Agreement and Shareholders' Agreement by and amongst the CompanyMAMCPL MTCPL and Manulife on 21st June 2019. Consequently the shareholding of theCompany in MAMCPL and MTCPL has come down from 100% to 51% respectively and accordinglyMAMCPL and MTCPL have ceased to be wholly-owned subsidiaries of the Company but continueto remain the Company's subsidiaries.

Mahindra Finance CSR Foundation

Mahindra Finance CSR Foundation has been incorporated on 2nd April2019 as a wholly-owned subsidiary of the Company registered under Section 8 of theCompanies Act 2013 to promote and support CSR projects and activities.

JOINT VENTURE

Mahindra Finance USA LLC.

The joint venture company's disbursement registered a growth of 2.3% toUSD 772.22 Million for the year ended 31st March 2020 as compared to USD 755.11 Millionfor the previous year.

Total Income grew by 1.69 % to USD 68.84 Million for the year ended31st March 2020 as compared to USD 6768 Million for the previous year. Profit before taxwas 1.55 % lower at USD 18.06 Million as compared to USD 18.34 Million for the previousyear. Profit after tax was 5.84% lower to USD 13.18 Million as compared to USD 13.95Million in the previous year.

Names of Companies which have become or ceased to be SubsidiariesJoint Ventures or Associate Companies during the year

Pursuant to the execution of the Share Subscription Share Purchase andShareholders' Agreement by the Company with Ideal Finance Limited (Sri Lanka)("Ideal Finance”) and its existing Shareholders on 28th February 2020 theCompany has acquired 55639098 Equity Shares of Ideal Finance aggregating to 38.20% ofthe paid-up share capital of Ideal Finance.

Accordingly Ideal Finance has become an Associate of your Companypursuant to Section 2(6) of the Companies Act 2013.

During the year under review no company has ceased to be a SubsidiaryJoint Venture or Associate of your Company.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company its subsidiariesassociates and joint venture for the Financial Year 2019-20 prepared in accordance withthe relevant provisions of the Companies Act 2013 and applicable Indian AccountingStandards along with all relevant documents and the Auditors' Report form part ofthis Annual Report.

The Consolidated Financial Statements presented by the Company includethe financial results of its subsidiary companies associates and joint venture.

Pursuant to the provisions of Section 136 of the Companies Act 2013the Financial Statements of the Company Consolidated Financial Statements along withrelevant documents and separate annual accounts in respect of each of the subsidiaries areavailable on the website of the Company and can be accessed at the web-link: https://mahindrafinance.com/investor-zone/financial-information#Financialresults.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS ORCOURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY'S OPERATIONSIN FUTURE

There are no significant and material orders passed by the regulatorsor courts or tribunals that would impact the going concern status of the Company and itsfuture operations.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITHREFERENCE TO THE FINANCIAL STATEMENTS

Your Company has in place adequate internal financial controls withreference to the Financial Statements commensurate with the size scale and complexity ofits operations.

Your Company uses various industry standard systems to enable empowerand engender businesses and also to maintain its Books of Account. The transactionalcontrols built into these systems ensure appropriate segregation of duties theappropriate level of approval mechanisms and maintenance of supporting records. Thesystems Standard Operating Procedures and controls are reviewed by Management. Thesesystems and controls are audited by Internal Audit and their findings and recommendationsare reviewed by the Audit Committee and the IT Strategy Committee which ensures theimplementation.

Your Company's Internal Financial Controls were deployed throughInternal Control - Integrated Framework (2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO) that addresses material risks in yourCompany's operations and financial reporting objectives. Such controls have beenassessed during the year under review taking into consideration the essential componentsof internal controls stated in the Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting issued by The Institute of Chartered Accountants of India. Therisk control matrices are reviewed on a yearly basis and control measures are tested anddocumented on a quarterly basis. Based on the results of such assessments carried out byManagement no reportable material weakness or significant deficiencies in the design oroperation of internal financial controls was observed.

Your Company recognises Internal Financial Controls cannot provideabsolute assurance of achieving financial operational and compliance reporting objectivesbecause of its inherent limitations. Also projections of any evaluation of the InternalFinancial Controls to future periods are subject to the risk that the Internal FinancialControl may become inadequate because of changes in conditions on that the degree ofcompliance with the policies on procedures may deteriorate. Accordingly regular auditsand review processes ensure that such systems are reinforced on an ongoing basis.

COMPLIANCE WITH THE PROVISIONS OF SECRETARIALSTANDARD - 1 AND SECRETARIAL STANDARD - 2

The Directors have devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems are adequate and operating effectively.

The applicable Secretarial Standards i.e. SS-1 and SS-2 relating to'Meetings of the Board of Directors' and 'General Meetings' respectively have been dulycomplied by your Company.

PARTICULARS OF REMUNERATION AND RELATED DISCLOSURES

Disclosures with respect to the remuneration of Directors KeyManagerial Personnel and Employees as required under Section 197(12) of the Companies Act2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are as under:

Sr. Disclosure Requirement No.

Disclosure Details

Name of Director/ KMP Designation Ratio of the remuneration of each Director to median remuneration of employees
1. Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the Financial Year 2019-20. Mr. Dhananjay Mungale Chairman (Independent Director] 11.13X
Mr. C. B. Bhave Independent Director 8.75X
Ms. Rama Bijapurkar Independent Director 8.36X
Mr. Milind Sarwate ** Independent Director 8.70X
Mr. Arvind V. Sonde *** Independent Director 2.25X
Mr. V. S. Parthasarathy Non-Executive Director NIL*
Dr. Anish Shah Non-Executive Director NIL*
Mr. Ramesh Iyer Vice-Chairman & Managing Director 185.82X
Mr. V. Ravi Executive Director & Chief Financial Officer 95.61X
Ms. Arnavaz M. Pardiwalla Company Secretary & Compliance Officer 29.08X

* Mr. V. S. Parthasarathy and Dr. Anish Shah do not receive anyremuneration from the Company.

** Appointed as an Independent Director of the Company w.e.f. 1stApril 2019.

*** Appointed as an Independent Director of the Company w.e.f. 9thDecember 2019.

Disclosure Requirement

Disclosure Details

Name of Director/ KMP Designation % increase in Remuneration
2. Percentage increase in Remuneration of each Director Chief Financial Officer and Company Secretary during the Financial Year 2019-20. Mr. Dhananjay Mungale Chairman (Independent Director] 7.67
Mr. C. B. Bhave Independent Director 6.92
Ms. Rama Bijapurkar Independent Director 12.60
Mr. Milind Sarwate ** Independent Director N.A.
Mr. Arvind V. Sonde *** Independent Director N.A.
Mr. V. S. Parthasarathy Non-Executive Director NIL*
Dr. Anish Shah Non-Executive Director NIL*
Mr. Ramesh Iyer Vice-Chairman & Managing Director -8.35
Mr. V. Ravi Executive Director & Chief Financial Officer 19.78
Ms. Arnavaz M. Pardiwalla Company Secretary & Compliance Officer 28.73

* Mr. V. S. Parthasarathy and Dr. Anish Shah do not receive anyremuneration from the Company.

** Appointed as an Independent Director of the Company w.e.f. 1stApril 2019.

*** Appointed as an Independent Director of the Company w.e.f. 9thDecember 2019.

3. Percentage increase in the median 19.97% considering employees whowere in employment for the whole of the Remuneration of employees in the Financial Year2018-19 and Financial Year 2019-20.

Financial Year 2019-20

4. Number of Permanent employees on the rolls of the Company as on 31st March 2020 21862
5. Average percentile increase already made in the salaries of employees other than the Managerial Personnel in the last Financial Year i.e. 2019-20 and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. For employees other than Managerial Personnel who were in employment for the whole of the Financial Year 2018-19 and Financial Year 2019-20 the average increase is 20.24%.
Justification: The remuneration of the Vice-Chairman & Managing Director and Executive Director & Chief Financial Officer is decided based on the individual performance inflation prevailing industry trends and benchmarks. The remuneration of eligible Non-Executive Directors consists of commission and sitting fees. While deciding the remuneration various factors such as Director's participation in Board and Committee Meetings during the year other responsibilities undertaken such as Membership or Chairmanship/ Chairpersonship of Committees etc. were taken into consideration.
The increment given to each individual employee is based on the employees' potential experience as also their performance and contribution to the Company's progress over a period of time and also benchmarked against a comparator basket of relevant companies in India.
6. Affirmation that the remuneration is as per the Remuneration Policy of the Company. The remuneration paid/payable is as per the Policy on Remuneration of Directors and Remuneration Policy for Key Managerial Personnel and Employees of the Company.

Notes:

1) The remuneration calculated is as per Section 2(78) of the CompaniesAct 2013 and includes the perquisite value of Stock Options of the Company exercisedduring the year.

2) The calculations are based on Employees who were on the rolls of theCompany for the whole of the Financial Year 2018-19 and Financial Year 2019-20.

Mr. Ramesh Iyer Vice-Chairman & Managing Director and Mr. V. RaviExecutive Director & Chief Financial Officer of the Company do not receive anyremuneration or commission from its Holding Company. However Mr. Iyer has been grantedstock options under the Employees' Stock Option Scheme of the Holding Company Mahindra& Mahindra Limited. Mr. Iyer has exercised 1650 Stock Options of the Holding Companyduring the year which were granted in the earlier year(s).

During the year under review Mr. Ramesh Iyer and Mr. V. Ravi havereceived remuneration from the Company's subsidiary Mahindra Insurance Brokers Limitedin form of Employees' Phantom Stock Options amounting to Rs. 9900240 and Rs.990024 respectively.

Mr. Ramesh Iyer and Mr. V. Ravi have not exercised ESOPs of MahindraRural Housing Finance Limited the subsidiary company during the year which were grantedin the earlier year(s).

The Company had 21 employees who were in receipt of remuneration of notless than Rs.10200000 during the year ended 31st March 2020 or not less than Rs.850000 per month during any part of the year.

Details of employee remuneration as required under provisions ofSection 197 (12) of the Companies Act 2013 read with Rule 5 (2) and 5 (3) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are available on yourCompany's website and can be accessed at the web-link: https://mahindrafinance.com/investor-zone/financial-information#Financialresults.

Any Member interested in obtaining a copy of the same may write to theCompany Secretary at the investor Email Id: investorhelpline_mmfsl@mahindra.com.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013

The Company is an equal opportunity employer and is committed toensuring that the work environment at all its locations is conducive to fair safe andharmonious relations between employees. It strongly believes in upholding the dignity ofall its employees irrespective of their gender or seniority. Discrimination andharassment of any type are strictly prohibited.

The Company has in place an appropriate Policy in accordance with theprovisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 (“POSH Act”) to prevent sexual harassment of itsemployees.

All employees (permanent contractual temporary and trainees) arecovered under this Policy. The Policy has been widely communicated internally and isplaced on the Company's intranet portal. The Company ensures that no employee isdisadvantaged by way of gender discrimination.

The Company has complied with the provisions relating to theconstitution of Internal Complaints Committee (ICC) under the POSH Act to redresscomplaints received regarding sexual harassment.

The Company has an online e-learning module for employees coveringtopics pertaining to POSH awareness reconciliation before filing POSH complaintconsequences of filing false complaint(s) etc. Training on POSH is an integrated part ofinduction to new joinees.

The following is a summary of Sexual Harassment complaint(s) receivedand disposed off during the year 2019-20 pursuant to the POSH Act and Rules framedthereunder:

a) Number of complaint(s) of Sexual Harassment received during the year- Nil

b) Number of complaint(s) disposed off during the year - Nil

c) Number of cases pending for more than 90 days - Nil

d) Number of workshops/awareness programme against sexual harassmentcarried out - One workshop was conducted under the "Speak-up” campaign for theemployees.

e) Nature of action taken by the employer or District Officer -NotApplicable.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE EARNINGS AND OUTGO

The Particulars in respect of conservation of energy technologyabsorption and foreign exchange earnings and outgo as required under sub-section (3) (m)of Section 134 of the Companies Act 2013 read with Rule (8)(3) of the Companies(Accounts) Rules 2014 are given as under :

(A) Conservation of Energy

(i) The steps taken or impact on conservation of energy:

The operations of your Company are not energy intensive. Howeveradequate measures have been initiated to reduce energy consumption.

Select few steps are listed:

a) Replacement of conventional lighting with Light Emitting Diode (LED)lighting:

The Company has installed LED lighting in Regional Offices of theCompany during the year under review and the same has been monitored in terms ofelectrical consumption and expenses.

b) Replacement of old air-conditioning with updated version of machineswith R-410A gas which helps in reducing Ozone depletion.

c) Reduction in water and energy consumption and recycling of wastepaper generation at various locations.

(ii) The steps taken by the Company for utilising alternate sources ofenergy: Nil.

(iii) The capital investment on energy conservation equipments: Nil.

(B) Technology Absorption

(i) The efforts made towards technology absorption: Not Applicable.

(ii) The benefits derived like product improvement cost reductionproduct development or import substitution: Not Applicable.

(iii) In case of imported technology (imported during the last threeyears reckoned from the beginning of the Financial Year): Not Applicable.

(a) Details of Technology Imported;

(b) Year of Import;

(c) Whether the Technology has been fully absorbed;

(d) if not fully absorbed areas where absorption has not taken placeand the reasons thereof.

(iv) Your Company has not incurred any expenditure on Research andDevelopment during the year under review.

(C) Foreign Exchange Earnings and Outgo

The information on foreign exchange outgo is furnished in the Notes tothe Accounts. There were no foreign exchange earnings during the year.

For and on behalf of the Board
Dhananjay Mungale
Chairman
Place : Mumbai
Date : 15th May 2020