Section A:
Multiple schemes of arrangement effected during the year Mahindra & Mahindra Ltd. (31-03-2014)
Scheme 1
From Notes to Accounts Pursuant to the Scheme of Arrangement (‘The Scheme’) between Mahindra Trucks and Buses Limited (MTBL), a subsidiary of the Company, and the Company, as sanctioned by the Honourable High Court of Bombay vide its order dated 7th March 2014, the entire assets and liabilities, duties and obligations of the Trucks Business of MTBL was transferred to and vested in the Company, from 1st April, 2013 (the appointed date). The scheme became effective on 30th March, 2014.
The accounting of this arrangement was done as per the scheme approved by the Honourable High court of Bombay and the same has been given effect to in the financial statements as under:
(a) The assets and liabilities of the Trucks Business of MTBL were recorded in the books of the Company at their book values.
(b) MTBL reorganised its Equity Share Capital and Securities Premium account by writing off it’s accumulated losses and the excess of assets over liabilities given up, first against Securities Premium Account and the Balance against the reorganisation of Share Capital by reducing the face value and paid up value of the Equity Share Capital of Rs. 10 each to Rs. 0.20.
(c) Consequent to the transfer of Trucks Business, the Company reorganised its investment cost in MTBL in proportion to the net worth of the remaining business of MTBL and the net worth of the Trucks Business leading to a reduction in investment value of Rs. 819.79 crore.
(d) The excess of the reduction in investment value over the assets taken over amounting to Rs. 565.85 crore was debited to General Reserve.
The result for the year ended 31st March, 2014 also include a tax benefit of Rs. 297.78 crore arising from the carry forward unabsorbed past losses (including unabsorbed depreciation) and deferred tax positions of the Trucks business of MTBL.
The current year figures are therefore not strictly comparable with that of the previous year.
Scheme 2
From Notes to Accounts
The Board of Directors of the Company during the year approved entering into a transaction in the Auto Components business with CIE Automotive S.A., Spain (CIE). The transaction is to be completed in parts.
The first part involving the following has been completed during the year:
(a) The Company transferred its entire shareholding in Mahindra Gears & Transmissions Private Limited at a fair value determined by an independent valuer to its wholly-owned subsidiary Mahindra Investments (India) Private Limited (MIPL). The excess of Rs. 23.62 crore over the cost has not been recognised in these results having regard to the principles of prudence and the substance of this transaction, and will be dealt with on completion of the related parts.
(b) The Company sold 99.4% of its holdings in Mahindra CIE Automotive Limited (MCIE) (formerly known as Mahindra Forgings Limited) and 100% of its holdings in both Mahindra Composites Limited (MCL) and Mahindra Hinoday Industries Limited (MHIL) to one of the subsidiaries of CIE at a price that is lower than the carrying value of these investments by Rs. 147.76 crore, which amount has been debited to the Investment Fluctuation Reserve (IFR). IFR is expected to be credited, having regard to the substance of the transaction, with an amount not less than the amount debited above, when the second part of the transaction, described below, takes place.
(c) Consequently MHIL, Mahindra Forgings International Limited, Mahindra Forgings Europe AG, Gesenkschmiede Schneider GmbH, JECOJellinghaus GmbH, Falkenroth Umformtechnik GmbH, Stokes Group Limited, Stokes Forgings Dudley Limited, Stokes Forgings Limited, Mahindra Forgings Global Limited, Schoneweiss & Co. GmbH ceased to be subsidiaries of the Company. MCL ceased to be an associate of the Company.
MCIE ceased to be a subsidiary and became an associate of the Company.
(d) The Company acquired a 13.5% stake in CIE through its wholly owned subsidiary Mahindra Overseas Investment Company (Mauritius) Limited (MOICML), making it an associate of the Company, in view of its contractual representation on the Board of CIE.
(e) Completion of open offer by CIE through its subsidiary in both MCIE and MCL.
The second part of the transaction involves the merger of Mahindra Ugine Steel Company Limited, Mahindra Gears International Limited and Mahindra Investments (India) Private Limited, and MHIL, MCL and a CIE subsidiary with MCIE effective 1st October, 2013 through Schemes of Arrangement u/s. 391 to 394 of the Companies Act, 1956. On completion of both parts above:
(a) CIE will hold approximately 53% in MCIE;
(b) The Company will hold 20.04% in MCIE; and
(c) The Company, through its wholly owned subsidiary MOICML, will hold 13.5% in CIE.
