MAHINDRA & MAHINDRA GROUP

Mahindra & Mahindra Ltd (M&M) is an India-based company. The company operates in
nine segments: automotive segment comprises of sales of automobiles, spare parts and related
services; farm equipment segment comprises of sales of tractors, spare parts and related
services; information technology (IT) services comprises of services rendered for IT and
telecom; financial services comprise of services relating to financing, leasing and hire
purchase of automobiles and tractors; steel trading and processing comprises of trading and
processing of steel; infrastructure comprise of operating of commercial complexes, project
management and development; hospitality segment comprises of sale of timeshare; Systech
segment comprises of automotive components and other related products and services, and its
others segment comprise of logistics, after-market, two wheelers and investment.

Consolidated Financial Position

As on 31March, 2019 the Group for the purpose of consolidation comprised of the flagship
holding company Mahindra & Mahindra Limited, 177 Subsidiaries, 25 Joint Ventures and 35
Associates.

The Group's net revenue and other income is Rs. 105,806 crores in the current year as
compared to Rs. 93,896 crores in the previous year. The profit before exceptional items and
tax for the current year is Rs. 7,280 crores as compared to Rs. 6,590 crores in the previous
year. The consolidated Group Profit for the year after exceptional items and tax and after
deducting non-controlling interest (NCI) is Rs. 5,315 crores as compared to Rs. 7,510 crores
in the previous year.

Tech Mahindra Limited, (TML)the company's Flagship Company in the IT Sector, has
reported a consolidated operating revenue of Rs. 34,742 crores in the current year as
compared to Rs. 30,773 crores in the previous year, an increase of 13%. Its consolidated
profit after tax after non-controlling interests is Rs. 4,298 crores as compared to Rs. 3,800
crores in the previous year, a growth of 13%.

The Group's Finance company, Mahindra & Mahindra Financial Services Limited (Mahindra
Finance), reported a total consolidated operating income of Rs. 10,372 crores during the

1
current year as compared to Rs. 7,884 crores last year, a growth of 32%. The consolidated
profit after tax after non-controlling interests for the year is Rs. 1,827 crores as compared to
Rs. 1,185 crores in the previous year, a growth of 54%. Mahindra Finance customer base has
crossed 6 million customers.

Mahindra Finance currently has a network of over 1,300 offices and Total Assets under
Management of Rs. 74,576 crores as on 31March, 2019 as against Rs. 58,730 crores as on
31March, 2018, a growth of 27%.

Mahindra Lifespace Developers Limited (MLDL), the Group's subsidiary in the business of
real estate and infrastructure registered a consolidated operating income of Rs. 593 crores as
compared to Rs. 566 crores in the previous year. The consolidated profit after tax after non-
controlling interests for the year is Rs. 120 crores as compared to Rs. 101 crores in the
previous year.

Mahindra Holidays & Resorts India Limited, the Group's subsidiary in the business of time
share registered a consolidated operating income of Rs.2,239 crores as compared to Rs. 2,317
crores in the previous year. The consolidated profit after tax after non-controlling interests for
the year is Rs. 60 cores as compared to Rs. 132 crores.

Mahindra Logistics Limited (MLL), the Group's subsidiary in the business of Logistics
registered a consolidated operating income of Rs. 3,851 crores as compared to Rs. 3,416
crores in the previous year, a growth of 13%. The consolidated profit after tax after non-
controlling interests for the year is Rs. 86 crores as compared to Rs. 64 crores in the previous
year, a growth of 34%.

Ssyangyong Motor Company, the Korean Subsidiary of the company has reported operating
revenue of Rs. 24,184 crores in the current fiscal year as compared to Rs. 20,410 crores in the
previous year. The loss for the year is Rs. 345 crores as compared to loss of Rs. 498 crores in
the previous year.

2
Results of Operations

The net sales and income from operations of the Company increased by 10.2% as compared
to the previous year mainly driven by performance of the Auto business.

The Government of India introduced the Goods and Services Tax (GST) with effect from 1
July 2017. GST is collected on behalf of the Government and no economic benefit flows to
the entity and hence Income from Operations under GST regime is presented excluding GST
as per Ind AS 18 'Revenue'. However, Income from Operations under pre-GST regime
included Excise Duty which is now subsumed in GST. Consequently, the figures for the year
ended 31March 2019 are not comparable with the previous period presented in the above
table.

Other income during the Financial Year 2018-19 at Rs. 1,689 crores is higher than Rs. 1,036
crores earned in the previous year mainly on account of higher dividend income during 2018-
19 as compared to 2017-18.

3
 Financial Ratios

The Return on Net Worth marginally drops from 15.4% in the previous year to 14.8% in the
current year on the base of a modest profit growth amidst challenging business environment
encountered during the year.

Financial Highlights

4
From the above analysis it gives us a clear picture that the income of the company is on a
high note. Also, it is evidently clear from the annual report of Mahindra & Mahindra that the
number of sales in the automobile sector has created a new record. With increase in sales and
the betterment in the performance of the company the share price analysis of the firm is also
quite good.

5
Earnings per share (EPS) is calculated as a company's profit divided by the outstanding
shares of its common stock. The resulting number serves as an indicator of a company's
profitability.
EPS is one of the many indicators you could use to pick stocks. Comparing EPS in absolute
terms may not have much meaning to investors because ordinary shareholders do not have
direct access to the earnings. Instead, investors will compare EPS with the share price of the
stock to determine the value of earnings and how investors feel about future growth.

The debt-to-equity ratio shows the proportions of equity and debt a company is using to

finance its assets and it signals the extent to which shareholder’s equity can fulfill obligations
to creditors, in the event a business declines.

A low debt-to-equity ratio indicates a lower amount of financing by debt via lenders, versus
funding through equity via shareholders.
The value of the ratio being less than 1 indicates that the company is solvent enough to pay
off its liabilities when the situation arises.

6
The ratio is used to evaluate a company’s financial leverage. The D/E ratio is an important
metric used in corporate finance. It is a measure of the degree to which a company is
financing its operations through debt versus wholly-owned funds. More specifically, it
reflects the ability of shareholder equity to cover all outstanding debts in the event of a
business downturn.

7
Conclusion

Financial Year 2018-19 started on a strong note, however cracks began to appear towards the
second half of the year as the global expansion - while persisting overall - became more
divergent. Business activity softened on account of trade tensions between the United States
and China, ambiguity on Brexit and tightening of financial conditions amidst policy
uncertainty. Global GDP which grew at a multi-year high of 3.8% in 2017, dropped to 3.6%
in 2018 and is expected to taper down to 3.3% in 2019 as per IMF estimates.

The growth momentum in US remained strong amid strong employment generation and
consumption growth, however the global headwinds have made the Federal Reserve pause on
its interest rate hike path. Euro area economy lost more momentum than expected as
consumer and business confidence weakened across all major economies causing the
European Central Bank to remain accommodative for longer than expected.

Crude oil prices saw huge volatility during the financial year reflecting supply influences,
including US policy on Iranian oil exports and fears of softening global demand.

Emerging market economies had a turbulent year as they contended with rising US interest
rates, strengthening dollar, trade tensions and volatile crude prices. Countries with weaker
fundamentals and homegrown problems such as Argentina and Turkey were the hardest hit.
China’s economic growth rate which has been in a secular decline was the most affected by
trade uncertainties. To ease the pressure on the economy and prevent a dramatic slowdown,
Chinese officials steadily increased stimulus and also sought to control its burgeoning debt
levels.

On the domestic front, while India remained one of the global outperformers in terms of
growth, the momentum showed moderation in the second half. Consumer Price inflation
declined sharply since mid-2018 driven by the sustained fall in food inflation, with the full
year inflation printing at 3.4% against

8
RBI’s target of 4%. RBI which raised policy rates by 50 bps in the first half of the year in
response to the impact of Fed rate hikes, felt confident to give a 25 bps cut towards the end of
the year supported by benign inflation and slowing growth.

The Indian rupee too came under sustained pressure during the first half due to higher crude
oil prices and foreign portfolio outflows touching an all-time high of 74.48 in October, 2018.
However, in the later part of the financial year, moderation in international crude oil prices, a
dovish US Fed policy stance, buoyed appetite for emerging market assets led to an
appreciation bias with Rupee closing the year at 69.20.

The financial markets went through a challenging year as nonbanking financial companies
(NBFCs) suffered liquidity issues, raising concerns of systemic risk and liquidity across the
entire financial system.

Systemic Liquidity was under pressure throughout the year leading the RBI to inject a total
liquidity of Rs.2.98 lakh crore in the market in 2018-19. Due to credit concerns coupled with
tight liquidity, the transmission of RBI rate cuts is yet to be seen.

M&M continued to focus on managing cash efficiently and ensured that it had adequate
liquidity and back up lines of credit. During the year, the company availed short term trade
finance, including factoring of receivables. As on 31st March, 2019, Rs. 448.54 crores of
short-term trade finance, including receivables factored, was outstanding. During the year, it
repaid Rs. 151.54 crores of long-term borrowings from internal accruals.

M&M Bankers continue to rate it as a prime customer and extend facilities/services at prime
rates. It follows a prudent financial policy and aims not to exceed an optimum financial
gearing at any time. The Company’s total Debt to Equity Ratio was 0.08 as at 31st March,
2019.

For Long Term facilities and Non-Convertible Debenture(“NCD”) programme, CRISIL,

ICRA and India Ratings have re-affirmed their credit ratings of CRISIL AAA/Stable,
[ICRA]AAA (stable) and IND AAA/Stable for the respective facilities rated by them. With
the above rating affirmations, it continues to enjoy the highest level of rating from all major
rating agencies at the same time.

9
The AAA ratings indicate highest degree of safety regarding timely servicing of financial
obligations and is also a vote of confidence reposed in company’s management by the rating
agencies. It is an acknowledgement of the strong credit profile of the company over the years,
resilience in earnings despite cyclical upturns/downturns, robust financial flexibility arising
from the significant market value of its holdings and prudent management.

Share Price Analysis

10
11