DIRECTORS’ REPORT

To,

The Members,

Mahindra CIE Automotive Limited

Your Directors present the 17th Annual Report of the Company together with the audited financial statements of your Company for the Financial Year (FY) ended 31st December, 2015

Financials

During the financial period under review your Company registered a total income of Rs. 12,087.1 Million for 9 months as against Rs. 16,624.8 Million for 12 months in the previous year and Profit before Interest, Depreciation, Exceptional items and tax of 1,059.0 Million as against Rs. 1,531.8 Million in the previous year.  

The net profit after tax for the current financial period stood at Rs. 308.5 Million as against a net profit of Rs. 776.7 Million over the previous year.

Dividend

Your Directors do not recommend any dividend for the Financial Year.

Transfer to Reserves

The Company has not transferred any amount of profits to reserves.

Change the Financial Year of the Company

During the Financial Year, the Hon’ble Company Law Board, New Delhi Bench, vide its order dated 15th October, 2015, allowed the Petition filed by the Company, pursuant to Section 2(41) of the Companies Act, 2013, for change in the Financial Year of the Company from 1st April to 31st March (Both days inclusive) to 1st January to 31st December (Both days inclusive) every year.

The Board of Directors at its meeting held on 21st October, 2015 took on record the said order confirming the change in Financial Year of the Company.

Pursuant to above, the previous Financial Year of the Company closed on 31st December, 2015 covering a period of nine (9) months commencing from 1st April, 2015.

All the subsequent Financial Years of the Company shall cover a period of twelve (12) months commencing from 1st January and closing on 31st December of every year (Both days inclusive).

B. OPERATIONAL HIGHLIGHTS

India

With M&M and Tata Motors being key customers, growth has been a challenge in the recent past. Your Company has focused on increasing Plant efficiency and developing value added components to mitigate the effect of low volumes. With the help of CIE, the different verticals of the India operations are developing new products, and customers.

Forgings - Germany + U.K.

A two phase strategy focused on a turnaround in profitability has been followed at Germany with phase 1 focusing on cost reduction and in phase 2 to improve profitability by optimising product - process - location combination. Accordingly as part of phase 2, it was decided to close the Jeco plant in February, 2015. The closure was completed with effect from 30th November 2015.

The parts produced at this plant are being shifted to the other plants within Germany. In addition there have been reductions in personnel at other plants that will lead to increased productivity in the medium term. These restructuring measures have involved a one time restructuring & redundancy costs of Euro 10.5 mn and will result in cost savings from current year.

Forgings - Spain + Lithuania

MCIE’s operations in Spain and Lithuania has been consistently profitable over the last few years and its EBITDA margins are in line with the consolidated margins of the CIE group worldwide. The strategic focus is to maintain profitability at these plants while growing with the market.

Gears - Italy

MCIE’s Gears operation in Italy has substantially improved its profitability mainly due to:

l A general increase in sales margins, as a result of careful analysis of the customer/product portfolio and the production process, carried out last year and

• The restructuring performed in previous years, which took full effect in 2015, allowing the Company to adapt its cost structure to current production needs.

Gears India

Gears India has significant dependence on the Indian tractor market which experienced another year of contraction. In order to improve profitability, the company restructured its operations resulting in cost saving. It also aimed at diversifying its customer base, focusing on exports which in CY15 amounted to 45% of sales.

C. CHANGES IN SHARE CAPITAL AND ISSUE OF SHARES

During the year ended 31st December, 2015, the Company has issued and allotted 359,786 equity shares of face value of Rs. 10/- each, pursuant to exercise of options under the Company’s Employee Stock Option Scheme.

Pursuant to the above, as on 31st December, 2015 the issued capital of the Company was increased to Rs. 3,233,369,930/- and subscribed and paid-up equity capital increased to Rs. 3,233,360,480/-.

Inter-se Transfer of shares by Promoter

On 30th December, 2015, Mahindra & Mahindra Ltd. (“M&M”) transferred its entire shareholding in the Company i.e. 6,52,71,407 equity shares aggregating to 20.19% of the paidup capital of the Company to Mahindra Vehicle Manufacturers Limited (“MVML”), which was an inter-se transfer of shares amongst qualifying persons.

Pursuant to the SEBI (Substantial Acquisition of shares and Takeover) Regulations, 2011 and SEBI (Prohibition of Insider Trading) Regulations, 2015 necessary disclosure were submitted to stock exchanges.

With aforesaid transfer MVML has became a Promoter of the Company and M&M continue to be part of the Promoter Group of the Company.

There is no change in Promoter and Promoter Group shareholding in the Company post the above transfer and it stands at 74.79% of the paid-up equity capital of the Company as on 31st December, 2015.

Employees’ Stock Option Scheme

Employees’ Stock Option Scheme (ESOS-2007) was formulated by the Remuneration/Compensation committee of directors of the Company and was approved by the shareholders at the Annual General Meeting of the Company held on 25th July, 2007.

The Scheme has been effective from 26th October, 2007 and shall continue to be effective till terminated by Remuneration / Compensation Committee (now Nomination and Remuneration Committee).

The ESOS-2007 was amended vide special resolutions passed by the Shareholders in the 9th Annual General Meeting held on 29th July, 2008 and further amended by special resolutions passed by the Shareholders in the 12th Annual General Meeting held on 2nd August, 2011. Thereafter, the Board of Directors of the Company amended the ESOS-2007 on 12th December, 2014 for incorporating suitable clauses to grant the Options to the Eligible employees of MUSCO and MCL, pursuant to the Integrated Scheme and the Composites Scheme of Amalgamation.

During the year under review, the shareholders of the Company at 16th Annual General Meeting held on 15th September, 2015 approved by way special resolution Mahindra CIE Automotive Limited - Employees Stock Options Scheme 2015 (ESOS - 2015) and authorised Board to, grant, issue, offer and allot not exceeding 3,231,147 stock Options to employees, Directors of the Company, whether working in India or outside India, and the employees, directors (working in India or outside India) of the holding company(ies), and subsidiary company(ies), in India or out of India in accordance with the prevailing Regulations or other provisions of the law as may be applicable.

Voting rights on the shares issued to employees under ESOS are either exercised by the employees directly or through their appointed proxies.

During the year, no stock options have been granted by the Company under ESOS-2007. Further, the company has not been granted any options under ESOS-2015 as on 31st December, 2015.

The ESOS-2007 and ESOS-2015 are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014. The certificate issued by the Statutory Auditors of the Company to the effect that the Scheme has been implemented in accordance with the said Regulations and the resolution passed by the members will be placed before the shareholders at the ensuing Annual General Meeting.

The information that a Company is required to disclose, in relation to ESOS under the Companies Act, 2013, and the details of the ESOS being implemented, as specified by SEBI under Clause 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 is uploaded on the website of the Company at http://www.mahindracie.com/ investors/investor-relations/governance.html

The said information is also provided in the Note No. XXVII(3) of the Notes to Financial Statements.

D. SUBSIDIARY COMPANIES

At the beginning of the Financial Year the Company had 17 subsidiaries namely Mahindra Forgings International Limited, (Mauritius), Mahindra Forgings Global Limited, (Mauritius), Stokes Group Limited, (U.K.), Mahindra Gears & Transmissions Private Limited (India), Mahindra Gears Global Limited (Mauritius), CIE Galfor S.A., (Spain) Mahindra Forgings Europe AG (Germany), Jeco Jellinghaus GmbH (Germany), Stokes Forgings Ltd. (U.K.), Stokes Forgings Dudley Ltd. (U.K.), Gesenkschmiede Schneider, GmbH (Germany), Falkenroth Umformtechnik GmbH, (Germany), Schoneweiss & Co. GmbH, (Germany), Metalcastello S.p.A., (Italy) CIE Legazpi S.A., (Spain), UAB CIE LT Forge, (Lithuania) and Crest Geartech Private Limited, (India).

No subsidiaries were added or liquidated or sold during the Financial Year under review. Mahindra Gears & Transmissions Private Limited became wholly owned subsidiary of the Company. Stokes Forgings Limited and Stokes Forgings Dudley Limited are dormant companies. All other subsidiaries are operational except Crest Geartech Private Limited and Jeco Jellinghaus GmbH.

The performance and financial position of each of the subsidiaries included in the consolidated financial statement is given in the Management Discussion and Analysis Report attached to the

Board’s Report.

Further, as required under Section 129(3) of the Companies Act, 2013 read with the Rules, a statement containing the salient features of the financial statement of the subsidiaries in prescribed form AOC-1 is attached to the Financial Statements.

The Consolidated Financial Statements of the Company and its subsidiaries, as required under Section 134(1) of the Act, prepared in accordance with Accounting Standard AS 21 forms a part of the Annual Report.

In accordance with Section 136 of the Act, the separate accounts in respect of each of the Subsidiaries are uploaded on the website of the Company and copies of the same shall be provided to shareholders of the Company on receipt of request for such copies.

E. MANAGEMENT DISCUSSION AND ANALYSIS

Management discussion and analysis of financial condition and results of operations along-with performance and financial position of each of the subsidiaries is provided in the Management Discussion and Analysis Report which forms part of the Annual Report.

F. BOARD OF DIRECTORS AND COMMITTEES

Directors

The Board, on recommendation of Nomination and Remuneration Committee, appointed Mr. Shriprakash Shukla (DIN: 00007418) as an Additional Director with effect from 1st April, 2015 who was confirmed as Director at the Annual General Meeting held on 15th September, 2015. Mr. Hemant Luthra was appointed as an Executive Director of the Company with effect from 1st April, 2015.

Mr. Hemant Luthra and Mr. Jesus Maria Herrera Barandiaran Directors on the Board, are liable to retire by rotation at the ensuing general meeting, pursuant provisions of Section 152 of the Act and the Articles of Association of the Company and offered themselves for re-appointment.

Detailed profile of the Directors seeking re-appointment along with other details as may be required are provided in the Corporate Governance Report which forms part of the Annual Report.

The Company has received declarations from each of the Independent Directors confirming that they meet the criteria of Independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 and also in the Regulation 16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

Meetings of Board of Directors

The calendar of the Board/ Committee Meetings and the Annual General Meeting are circulated to the Directors in advance to enable them to plan their schedule for effective participation at the respective meetings. Additional Board Meetings are convened by giving appropriate notice to address business exigencies. At times certain decisions are taken by the Board/ Committee through circular resolutions.

The Board of Directors of the Company met three times during the Financial Year (covering a nine months period) ended 31st December, 2015, viz.11th May, 2015; 27th July, 2015 and 21st October, 2015. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Listing Regulations.

Details of attendance of meetings of the Board, its Committees and the AGM are included in the Report on Corporate Governance, which forms part of this Annual Report. Meeting of Independent Directors

The Independent Directors met once during the Financial Year under review. The Meeting was conducted in an informal manner without the presence of the Non-Independent Directors and members of management.

Performance Evaluation of the Board

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance, the performance of individual directors as well as the evaluation of the working of its Committees.

The Company has formulated a Policy for performance evaluation of the Board as a whole, Individual Directors, Committees which also includes feedback to the Chairman.

A questionnaire, based on criteria approved by the Nomination and Remuneration Committee, for evaluation of performance of Board, Committees of Board and Individual director was prepared. The Board on recommendation of the Nomination and Remuneration Committee, approved to obtain the feedback of all the Directors on the said Questionnaire through electronic platform. An Independent Agency was appointed to provide the electronic platform. Web link of the electronic platform along with username and passwords of respective board members for accessing such platform was forwarded by the Independent Agency.

The Board Members provided their feedback on the standard questionnaire through the electronic platform. The members were also able to give qualitative feedback apart from the standard questionnaire.

The reports of feedback received from all Directors on performance evaluation of individual directors were shared with respective Directors and Chairman of the Nomination Committee. Nomination and Remuneration Committee evaluated the performance of all individual directors based on the feedback so received.

The report of the feedback received from all the Directors on performance evaluation of Board and Committees of Board were shared with the Chairman of the Company. The Board on the basis of feedback so received evaluated performance of its own and Committees of Board. Performance Evaluation of the Chairman of the Company was carried out by the Independent Directors of the Company, taking into account feedback of all the Directors including the Executive and Non-executive Directors. Familiarisation Programme for Independent Directors The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are given in the Report on Corporate Governance. The familiarisation programme and other disclosures as specified under regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available on the website of the Company at the link: http://www.mahindracie.com/investors/ investor-relations/governance.html

Policy on Appointment and Remuneration

In accordance with the provisions of Section 134(3)(e) of the Companies Act, 2013 (“the Act”) read with Section 178(2) of the Act and the Listing Regulations, the Company has formulated following policies which inter alia, includes the criteria for determining qualifications, positive attributes and independence of Directors.

i. A policy on Appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management,  

ii. A policy on remuneration of Directors, Key Managerial Personnel and other employees of the Company.

The extract of the above policies are annexed as Annexure VII & VIII respectively and forms part of this Report.

Committees of the Board

Your Company has duly constituted the Committees required under the Companies Act, 2013 read with applicable Rules made there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board of Directors of the Company has formed an Audit Committee which consist of the Independent Directors namely Mr. Daljit Mirchandani as the Chairman, Mr. Jose Sabino Velasco Ibanez, Mr. Manoj Maheshwari and Mr. Dhananjay Mungale. All the recommendations of the Audit Committee were accepted by the Board during the financial 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) Allotment Committee

The details with respect to the composition, powers, roles, terms of reference, Meetings held and attendance of the members at such Meetings of the relevant Committees are provided in the Report on Corporate Governance of the Company which forms part of this Annual Report.

Directors’ Responsibility Statement

Pursuant to Sub-Section (5) of Section 134 of the Companies Act, 2013, your Directors, based on the representation received from the Operating Management, and after due enquiry, confirm that :

(a) in the preparation of the annual accounts for the Financial Year ended 31st December 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the Financial Year ended 31st December 2015 and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts for the Financial Year ended 31st December 2015 on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

G. GOVERNANCE

Report on Corporate Governance

Your Company’s philosophy on Corporate Governance sets the goal of achieving the highest level of transparency, accountability in all its dealings with the stakeholders, employees and the government. The practice of responsible governance has enabled your Company to achieve sustainable growth, while meeting the aspirations of its stakeholder’s and societal expectations. A report on Corporate Governance along with a Certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under the Listing Regulations forms part of the Annual Report. Vigil Mechanism / Whistle Blower Policy

The Company promotes ethical behaviour in all its business activities and has established a vigil mechanism for Directors and Employees to report their genuine concerns.

Your Company has formulated a policy “Whistle Blower Policy/ (Vigil) Mechanism” pursuant to Section 177 of the Companies Act, 2014 read with Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which provides a mechanism for employees, directors and other stakeholders of the Company to report concerns about unethical behavior, actual or suspected fraud or violation of the company’s code of conduct or ethics policy. This mechanism also provide for adequate safeguards against victimization of director(s) / employee(s) / other stakeholders who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The detail of such Policy is explained in the Corporate Governance Report and has been uploaded on the website of the Company. http://www.mahindracie.com/investors/ investor-relations/governance.html

Risk Management Framework

In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Framework and the Audit Committee of the Board as well as the Board reviews the same periodically. Your Company has also established procedures to periodically place before the Board, the risk assessment and minimisation procedures being followed by the Company and steps taken by it to mitigate the Risks. Brief of the Policy and important element of risk which may threaten the existence of the Company are provided in the Management Discussion and Analysis Report.

Other Policies under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 In accordance with the provisions of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed Policy for determination of Materiality for disclosure of events or information. The same has been hosted on the website of the Company at the link: http:// www.mahindracie.com/images/pdf/resources/Governance/ policy-on-criteria-for-determining-materiality-of-events.pdf Further the Company has also framed i) Policy for preservation of documents ii) Archival Policy for disclosures hosted on the website beyond period of five years. Internal financial controls

Your Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. Review of the internal financial controls environment of the Company was undertaken during the previous year which covered verification of entity level control, process level control and IT controls, identification, assessment and definition of key business processes and analysis of risk control matrices, etc. During the period under review, effectiveness of internal financial controls was evaluated. Reasonable Financial Controls are operative for all the business activities of the Company and no material weakness in the design or operation of any control was observed. The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Your Company has always believed in providing a safe and harassment free workplace for every individual working and endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company has put in place a ‘policy on Sexual Harassment’ with aim to redress sexual harassment instances, to create mechanism on redressal of such issues at workplace and sensitizes employees on how to report such offences to the committee or to a senior executive.

During the year there were no complaint of discrimination and harassment including sexual harassment received by the committee or by any of the senior executives.

H. EMPLOYEES

Key Managerial Personnel (KMP) Apart from the Managing Director and Executive Directors, Mr. Romesh Kaul, Chief Executive – Composites Division, Mr. Sanjay Joglekar, Chief Financial Officer, and Mr. Krishnan Shankar, Company Secretary and Head-Legal are the KMPs of the Company.

During the period under review there was no change in KMPs. Particulars of Employees

As required under Section 197(12) of the Act and Rule 5 of Companies (Appointment and Remuneration of Managerial Remuneration) Rules, 2014 the ratio of the remuneration of each director to the median remuneration of employees of the company and other details as prescribed therein are provided as Annexure V to this Report.

The Company has employees who were in receipt of remuneration not less than Rs. 60,00,000/- per annum during the year ended 31st December, 2015 or employee who were employed for a part of the Financial Year and were in receipt of remuneration of not less than Rs. 5,00,000/- per month during any part of the said year. Statement of Particulars of such employees is provided as Annexure VI to this report

The Companies do not have employees who were employed throughout the Financial Year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

Industrial Relations

Industrial Relations generally remained cordial and harmonious throughout the year.

The Management Discussion and Analysis Report give an overview of the developments in Human Resources/Industrial Relations during the year.

I. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security are given is provided in the note no. XI & XIV of the notes to the Financial Statements.

J. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the Financial Year were on an arm’s length basis and were in the ordinary course of business, accordingly, the disclosures pursuant to Section 134(3) (h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014, in Form AOC-2 is not applicable.

The Company has not made any loans and advances in the nature of loans to subsidiaries, associates or to firms/companies in which directors are interested. Hence disclosure pursuant to Regulation 34(3) read with Part A of Schedule V of the Listing Regulations is not required.

The Company has formulated an Policy on materiality of and dealing with Related Party Transactions and the same has been uploaded on the website of the Company at h t t p : / / w w w. m a h i n d r a c i e . c o m / i m a g e s / p d f / r e s o u r c e s / Governance/Policy_on_Related_Party_Transaction.pdf

K. PUBLIC DEPOSITS AND LOANS/ADVANCES

Your Company has not accepted any deposits from the public or its employees during the year under review.

L. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the Integrated Scheme and the Composites scheme Mahindra Ugine Steel Company Limited (MUSCO) and Mahindra Composites Limited (MCL) merged with the Company. Both MUSCO and MCL had unclaimed dividends which are transferred in the Books of the Company. Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of said unpaid and unclaimed amounts now lying with the Company on the website of the Company at http://www.mahindracie.com/ investors/downloads/documents.html#unclaimed-dividends Under the Companies Act, 1956, dividends that are unclaimed for a period of seven years are required to be transferred to the Investor Education and Protection Fund (IEPF) administered by the Central Government. Pursuant to the provisions of Section 205C of the Companies Act, 1956 and Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001 the Company had transferred following amounts to the IEPF in respect of the dividend declared for Financial Year ended on 31st March 2008, which remained unpaid or unclaimed for a period of seven years and due for payment.

i) Rs. 7,21,599/- in respect of the dividend declared by MUSCO (Transferor Company amalgamated with MCIE)

ii) Rs. 1,85,345/- in respect of the dividend declared by MCL (Transferor Company amalgamated with MCIE) No claim lies against the Company in respect of these dividends.

M. SUSTAINABILITY

Your Company’s vision on sustainability is “Continuously improve our capability by integrating environmental, social, and economic aspects in operations for creating better tomorrow than today”. In line with its vision the Company has identified and implemented various projects for reduction in waste, energy and GHG emissions, to achieve the targets set under its Sustainability Road map.

Awareness on sustainability

Awareness about the need and the ways to drive sustainable business practices among all stakeholders is key to perpetual growth. The Company continues its initiatives to generate this awareness among employees who are the most important internal stakeholders of the organisation. This awareness campaign was taken to the external stakeholders, suppliers and vendors.

Safety, Health and Environment Performance Your Company has a Safety, Occupational Health and Environmental (SH&E) policy on occupational health, safety and environmental protection through which every employee is made responsible for the observance of the measures designed to prevent accidents, damage to occupational health and avoidable environmental pollutants.

Safety and Health

All our existing plants continued their EHSMS certification status through external assessment by renowned bodies like BureauVeritas, TUV Nord, TUV SUD and DNV. For further enhancement in the performance, near miss incident reporting system, property damage incident investigations and Behavioural based safety systems are being launched in each site in a phased manner. The new sites of ears-Chakan and Stampings- Zaheerabad shall complete their EHSMS certification by June 2016.

The safety Committee of each plant meets periodically to review the status of safety issues and reporting of accidents, if any. Your Company’s plant continues to improve their well being of all its personnel by organising Occupational Health Examination Camps, Periodic Health Check-ups etc.  

Environmental Initiatives

Since the last few years, your Company has been focusing external certifications for achieving world class environmental standards.

All plants of the Company except Zaheerabad Plant are certified for EHSMS certification using ISO 14001 and BS OHSAS 18001 standards. The OHSAS system aims to eliminate or minimise risk to employees and other interested parties who may be exposed to Occupational Safety risks in the Company. Sustainable development is promoted through sharing of best practices in the fields of Safety, Occupational Health & Environment.

The highlights of different initiatives taken by the Company at its various Plants for environment and sustainability are as under:

1. Water: On the whole, all plants have continued their efforts for water conservation. The major water consuming plants like Foundry, Paint shop in Stampings Rudrapur and Magnetic products division have taken good initiatives.

Due to such initiatives the Company have recycled about 70 thousand cubic meters of water in CY 15.

2. Energy: While each plant continued their focused programs for energy conservation, in view of the reduced overall production levels during the period, the specific energy consumption targets in most of the units could not be achieved. However in absolute terms, in CY 15, we have saved about 4.3 lac units of electricity. All the plant energy managers participated in the annual Energy conference of Mahindra group of companies and have learnt about the horizontal deployment possibilities from other plants. The plants are also exploring possibilities for using solar energy on a large scale in few Stampings locations. Heat recovery projects are being pursued at Magnetic products division and Forgings Heat treatment sections. Foundry and Forgings division participated in the annual contests by state level energy development agency and the Forgings division has won the award.

3. Waste management: Waste reduction efforts have been continued across all plants. Commendable efforts have been taken by Forgings, Foundry and Stampings for waste reduction. Magnetic products division and Composites- Mangaon are planning special focused initiatives in this area in CY 2016.

4. Green Supply Chain Management: Almost all the plants have continued their focused efforts in engaging their suppliers for sustainable supply chain development drive through planned interactions, training, audits, reviews and best practice sharing sessions.

5. EOHS Legal compliances: All the plants have robust systems for ongoing EHS legal compliance monitoring, evaluation and corrective actions. The fire NOC, fire hydrant systems development projects have been undertaken at Composites and Foundry divisions. Sewage treatment plants and ETP up-gradation work at Composites Mangaon site is being expedited.

6. GRI reporting on Sustainability: The Company is amongst the top 500 listed companies list on Stock Exchanges in India, Business responsibility reporting will become applicable from the annual reports of calendar year 2016 onwards.

Corporate Social Responsibility (CSR)

Your Company has constituted a CSR Committee in accordance with Section 135 of the Companies Act, 2013; it has developed and implemented the policy on Corporate Social Responsibility.

Further, your Company encourages its employees to participate in the Employee Social Options (ESOPs) program, to drive positive change in society, through Health checkup camps, tree plantation, vocational guidance to school children in the nearby schools etc.

During the year under review, the employees of your Company participated in various education and health related programs in local communities.

As part of its initiatives under CSR the Company has further undertaken projects in the areas of Rural Development, conservation of Natural Resources, Education, Skill Developments, Health and Environment. These projects are in accordance with Schedule VII of the Companies Act, 2013.

The Company was required to spend an amount of Rs. 10.40 Million (including Rs. 1.38 Million unspent amount of last year carried forward). During the year the Company has established a formal structure to drive CSR within organisation and is committed to discharging its social obligation. The CSR Thrust areas have been identified where the Company wish to create equity and also laid down guiding criteria for selecting projects which includes sustainability, social impact etc.

The Company had indentified few projects on the parameters set by the CSR Committee and had been analyzing such projects on the basis of criteria so set. However, in view of the fact that the Financial Year is ending on 31st December, 2015 covering a period of 9 months the Company could not finalise the projects to be undertaken.

Various projects are under discussion in the area of Education and Skill Development viz-a-viz adoption of a school, skill development projects in association with ITI etc. The Company is also considering project in the area of Rural Development. While we are taking some time to define and articulate our internally generated CSR Projects better, seeking help from external experts as well and after incorporating the key suggestions of the Committee, we will have a significant number of Projects that will need a prolonged engagement from our side, in order to start seeing results. With this, we have enough opportunities to spend the money carried forward, for the chosen Projects.

The CSR Policy of the Company is hosted on the Company’s website at http://www.mahindracie.com/images/pdf/resources/ Governance/csr-policy-mcie.pdf and a brief outline of the CSR Policy and the CSR initiatives undertaken by the Company during the year as prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as “Annexure I”.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in Annexure IV to this Report.

N. EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3 (a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as at 31st December, 2015 forms part of this report as Annexure II.

O. AUDITORS

Statutory Auditors

Messrs. B. K. Khare & Co., Chartered Accountants, Mumbai (Firm Registration No. 105102W) the Statutory Auditors of the Company hold office till the conclusion of the forthcoming Annual General Meeting (AGM) and are eligible for re-appointment. Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with the Rules framed thereunder, the transition Period available under Companies Act 2013 and change in financial year of the Company, it is proposed to appoint Messrs. B. K. Khare & Co., as the Statutory Auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the next AGM. This will be their last term as Auditors of the Company. As required under the provisions of Section 139(1) of the Companies Act, 2013 the Company has received a written consent from Messrs. B. K. Khare & Co., Chartered Accountants to their re-appointment and a certificate, to the effect that their re-appointment, if made, would be in accordance with the Companies Act, 2013 and the Rules framed there under and that they satisfy the criteria provided in Section 141 of the Companies

Act, 2013 read with Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014 and that they are not disqualified for reappointment. The Auditors’ Report does not contain any qualification, reservation or adverse remark and notes thereto are self explanatory and does not require any explanations.

Secretarial Audit Report

The Board has appointed Mr. Sachin Bhagwat, (ACS No. 10189) Practicing Company Secretary, Pune as Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year 2015. Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and in accordance with the provisions of sub-section (1) of Section 204, the Secretarial Audit Report for the Financial Year ended 31st December, 2015 is appended to this Report as Annexure III.

The report does not contain any qualification, reservation or adverse remark and notes thereto are self explanatory and does not require any explanations.

Cost Audit Report

Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm Registration Number 000030) conducted the audit of Cost Accounting Records maintained by the Company for the Financial Year 2014 - 15 and submitted their report which has been filed with the Central Government, Ministry of Corporate Affairs, New Delhi.

The Board of Directors upon recommendation of the Audit Committee, appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by for Company for the Financial Year commencing from 1st April 2015 . The Cost Auditors shall forward their report to Board and the same shall be filed with the Central Government, Ministry of Corporate Affairs, New Delhi within the prescribed time.

The Board has re-appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by the Company for the Financial Year commencing from 1st January, 2016. As required under the provisions of Section 148 of the Act read with rules made thereunder, the Company has obtained a written confirmation from M/s. Dhananjay V. Joshi & Associates to the effect that they are eligible for reappointment as Cost Auditors under the said Section. The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arm’s length relationship with the Company.

As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is placed before the Members in the ensuing Annual General Meeting for their ratification.

P. SIGNIFICANT AND MATERIAL ORDERS PASSED BY

THE REGULATORS

During the Financial Year under review, no significant and material orders were passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

Acknowledgement

Your Directors wish to place on record their sincere appreciation to the Bankers of the Company, Company’s customers, vendors and investors for their continued support during the year.

The Directors also wish to place on record their appreciation for the dedication and contribution made by employees at all levels and look forward to their support in future as well.

For and on behalf of the Board

Hemant Luthra

Chairman

DIN: 00231420

Date : 22nd February 2016

Place : Mumbai