Vignana Jyothi Institute of Management Page 1 INTRODUCTION: The Mahindra Group is a large industrial conglomerate in India, with operations in the automotive, farm equipment, financial services, trade and logistics, automotive components, after-market, IT and infrastructure sectors. It is considered to be one of the most reputable Indian industrial houses, with the market leadership in utility vehicles as well as tractors in India. The Mahindra Group has a global presence with operations on every continent except Antarctica. Its headquarters are located at Mahindra Towers in Mumbai. Mahindra & Mohammed was originally incorporated in 1945 by KC Mahindra and Ghulam Mohammad in Ludhiana, Punjab as a manufacturer under license of the famous Willys Jeep. Following the Partition of India in 1947, Ghulam Mohammad left the company and emigrated to Pakistan, becoming the first finance minister of the new state. In 1948, KC Mahindra changed the name to Mahindra & Mahindra, and building on his expertise in the steel industry began trading steel with UK suppliers. By 1956, the company was listed on the Bombay Stock Exchange, and by 1969 the company had entered the world market as an exporter of utility vehicles and spare parts. Due to the restrictions of the License Raj, Mahindra & Mahindra like many Indian companies was forced to expand into other businesses, creating a tractor division in 1982 and a tech division in 1986. It has continued to diversify its operations ever since through both joint ventures and Greenfield investments. By 1994 the structure of the group had become so bloated and the group so diverse that a fundamental reorganization of the company was undertaken, dividing the group into six Strategic Business Units: Automotive; Farm Equipment; Infrastructure; Trade and Financial Services; Information Technology and Automotive Components. The new Managing Director Anand Mahindra followed this reorganization with a new logo in 2000 and the successful launch of the Mahindra Scorpio in 2002. In conjunction with an overhaul in production and manufacturing methods these changes did much to make the company more competitive, and since then the reputation and revenues of the group have risen noticeably. The US-based Reputation Institute recently ranked Mahindra among the top 10 Indian companies in its 'Global 200: The World's Best Corporate Reputations' list. As of 2007 it
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8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.
The Mahindra Group is a large industrial conglomerate in India, with operations in the
automotive, farm equipment, financial services, trade and logistics, automotive components,after-market, IT and infrastructure sectors. It is considered to be one of the most reputable Indian
industrial houses, with the market leadership in utility vehicles as well as tractors in India. The
Mahindra Group has a global presence with operations on every continent except Antarctica. Its
headquarters are located at Mahindra Towers in Mumbai.
Mahindra & Mohammed was originally incorporated in 1945 by KC Mahindra and
Ghulam Mohammad in Ludhiana, Punjab as a manufacturer under license of the famous Willys
Jeep. Following the Partition of India in 1947, Ghulam Mohammad left the company and
emigrated to Pakistan, becoming the first finance minister of the new state. In 1948, KC
Mahindra changed the name to Mahindra & Mahindra, and building on his expertise in the steel
industry began trading steel with UK suppliers. By 1956, the company was listed on the Bombay
Stock Exchange, and by 1969 the company had entered the world market as an exporter of utility
vehicles and spare parts. Due to the restrictions of the License Raj, Mahindra & Mahindra like
many Indian companies was forced to expand into other businesses, creating a tractor division in
1982 and a tech division in 1986. It has continued to diversify its operations ever since through both joint ventures and Greenfield investments. By 1994 the structure of the group had become
so bloated and the group so diverse that a fundamental reorganization of the company was
undertaken, dividing the group into six Strategic Business Units: Automotive; Farm Equipment;
Infrastructure; Trade and Financial Services; Information Technology and Automotive
Components.
The new Managing Director Anand Mahindra followed this reorganization with a new
logo in 2000 and the successful launch of the Mahindra Scorpio in 2002. In conjunction with an
overhaul in production and manufacturing methods these changes did much to make the
company more competitive, and since then the reputation and revenues of the group have risen
noticeably. The US-based Reputation Institute recently ranked Mahindra among the top 10
Indian companies in its 'Global 200: The World's Best Corporate Reputations' list. As of 2007 it
8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.
The accounting policy used by the Mahindra and Mahindra is GAAP. The accounts have
been prepared to comply in all the material aspects with
a) Applicable accounting principles in India.
b) The Accounting Standards issued by the Institute of Chartered Accountants of
India, as applicable.
c) Relevant provisions of the Companies Act, 1956.
2. Use of Estimates:
The preparation of financial statements requires the management to make
estimates and assumptions considered in the reported amount of assets and liabilities
(including contingent liabilities) as on the date of financial statements and the reported
income and expenses during the reporting period. Management believes that the estimates
used in the Preparation of the financial statements are prudent and reasonable. Actual
results could differ from these estimates. Any revision to accounting estimates is
recognized prospectively in current and future periods.
3. Basis of Accounting:
The Company follows the accrual method of accounting for its income and
expenditure except delayed payment charges, fee based income and Interest on Trade
advance, which on account of uncertainty of ultimate collection are accounted on receipt
basis. Also in accordance with the guidelines issued by the companies Act 1956.Theaccrual basis of accounting as started earlier is considered to be most scientific basis of
accounting. So the companies Act 1956 with the effect from 15th June, 1988 requiring all
the companies to maintain their account on accrual basis of accounting so that fairest
possible periodic net income and the financial position may be reported to the public.
8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.
Fixed asset, also known as property, plant, and equipment, is a term used in
accountancy for assets and property, which cannot easily be converted into cash within 1 year or one accounting cycle whichever is longer.
In most cases, only tangible assets are referred to as fixed. Fixed assets are stated at cost
of acquisition, including any attributable for bringing the asset to its working condition for its
intended use, less accumulated depreciation.
Types of Fixed assets:
1. Intangible Assets: Assets that do not have a definite existence are called intangible assets.They have neither a physical form nor give their owner definite financial rights. The most
important intangible fixed asset is goodwill. Other intangible includes patents, copyrights and
trademarks.
2. Tangible assets: Assets that have a physical existence, or give the holders definite set of
financial rights are classified as tangible assets. Examples of tangible assets include land,
machinery, bank deposits and investments.
Observations:
y The net value of fixed assets has increased from Rs. 1814.15 Crores to Rs. 2567.60 Crore
due to the increase in Gross block.
y The fixed assets have not been physically verified by the management during the year but
the company has a system of verifying the fixed assets once in every three years.
y The inventory of the company has been physically verified by the management as at the
year-end.
y The financial position of the company became strong compared in 2009 compared to
2008.
8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.
In accounting, depreciation is a term used to describe any method of attributing the
historical or purchase cost of an asset across its useful life, roughly corresponding to
normal wear and tear It is of most use when dealing with assets of a short, fixed service life, and
which is an example of applying the matching principle per generally accepted accounting
principles.
Types to Calculate Depreciation
1. Straight line method:
Straight-line depreciation is the simplest and most-often-used technique, in which
the company estimates the salvage value of the asset at the end of the period during
which it will be used to generate revenues (useful life) and will expense a portion
of original cost in equal increments over that period. The salvage value is an estimate of
the value of the asset at the time it will be sold or disposed of; it may be zero or even
negative. Salvage value is also known as scrap value or residual value.
y Straight-Line Method:
Annual depriciation Expense = (Cost of Fixed Assets- Scrap Vaue)/ Life Time(years)
2. Accelerated Depreciation Methods :Accelerated depreciation methods such as
declining balance and sum of year¶s digits calculate depreciation by expensing a large
part of the cost at the beginning of the life of the fixed asset. These methods are further
classified into three:
i. Sum of the Years Digits - The first step is to sum the digits or numbers starting with the
life and going back to one. For example, an asset with a life of 5 would have a sum of digits as follows: 5+ 4+ 3 +2 + 1 = 15. To find the percentage for each year divide the
year's digit by the sum.
y Depreciation amount = (Cost ± residual value) * number of years of useful life left /sum
of digits of the years of life.
8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.
The following useful lives are used for depreciation and amortization:
Particulars Years
Technology-based intangible assets 3±15
Trademarks with definite lives 5±10
Marketing and customer related
intangible assets
5±10
Buildings 25±50
Machinery and equipment 3-10
Vehicles 4±5
Computer hardware and software 3-5
Rental equipment 3±12
The useful lives and residual values are reassessed annually.
Land, goodwill and trademarks with indefinite lives are not depreciated or amortized.
Observations:
The depreciation for the year ended March 31, 2009 is of Rs. 291.51 Cores where as in March31, 2008 is of Rs. 238.66 Crores due to capitalization of the Xylo related assets and the increase
in amortization of intangibles in the current year.
8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.
reserve, capital redemption reserve, special reserve, hedging reserve, foreign exchange
fluctuation reserve.
Observations:
y From the balance sheet it is observed that reserve and surplus of the company had
increased from Rs. 5921.70 Crores to Rs. 6763.29 Crores. It means the company is more
concern on future uncertainty.
y From the schedule it is observed that the company is focused on some particular reserve
like General Reserve and Debenture redemption Reserve.
y The company made a reserve in general reserve in 2008 was Rs 971.84 Crores and whichis increased by Rs 1047.71 Crores. It means the company is more focused on future
uncertainty.
y The company increased his Debenture Redemption Reserve from Rs. 975.17 Crore to Rs.
1050.81 Crore.It means the company thinks about his debenture holder because 2009-10
the company issued more debenture / bond.
8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.
y The capital work-in-progress (including capital advances) has
increased from Rs. 546.45 Crore to Rs. 646.73 Crore.
ii. INVESTMENTS:
y Investments are of Rs 4215.06 Crore in 2009 and Rs 5786.41 Crore in
2010. Investments have increased by a margin of Rs. 1571.35 Crore.
iii. DEFERRED TAX ASSET:
y Deferred tax assets have increased from 0 to Rs 18.27 Crore.
iv. NET CURRENT ASSETS:
y Net currents assets are the differences between current assets andcurrent liabilities.
y Sundry Debtors have increased from Rs 1004.88 Crore to Rs 1043.65
Crore implying an increase in loans and advances.
y Cash balances have increased by a huge margin from Rs. 861.23
Crore to Rs. 1574.43 Crore.
There is an overall increase in both current assets as well as current liabilities. Currentassets are of Rs. 1418.56 Crore and current liabilities are of Rs. 1557.75 Crore. Therefore, it
clearly states that there is a huge increase in current liabilities compared to current assets which
is resulting a decrease in net current assets of Rs 404.36 Crore in 2009 to Rs. 265.17 Crore in
2010.
8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.
Auditor¶s report is a document prepared by the auditors appointed to examine and certify
the accounting records and financial position of a firm. It must be filed every year by an
incorporated or registered firm along with audited financial statements.
OBSERVATIONS:
y The auditors of the company have audited the annual accounts, the consolidated
accounts, the accounting records and the administration of the Board of Directors and
the President Of Mahindra and Mahindra Limited for the year 2009.
y The auditor¶s report states that the audit is in accordance with the auditing standards
generally accepted in India. The audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
y The auditors of the company recommend to the Annual Meeting of shareholders that
the income statements and balance sheets of the Parent Company and the Group be
adopted, that the profit of the Parent Company be dealt with in accordance with the
proposal in the administration report and that the members of the Board of Directorsand the President be discharged from liability for the financial year.
8/6/2019 Accounts Final - Mahindra and Mahindra Ltd.