AFFLUENCE

Operations

Your Company   registered   a turnover of Rs.123,214.79 lakhs during the year under review which is lower by 4.92% as compared to the turnover of Rs. 129,585.61 lakhs in the previous year. During the year under review, your Company sold 9,134 Light Commercial Vehicles (LCV’s) and 2,978 Heavy Commercial Vehicles (HCV’s) as compared  to 10,484 LCV’s & 3,493 HCV’s in the previous year. During the year under review, the overall Commercial Vehicle Industry (3.5 Tonne to 49 Tonne) was down by 22% and HCV Industry (25 Tonne to 49 Tonne) was down by 31% as compared to previous year.

 Your Company has about 57 operational dealerships throughout the country for its medium and heavy commercial vehicle business.

The loss for the year before Depreciation, Amortisation and Taxation was Rs. 28,274.22 lakhs and loss after tax for the year was Rs. 36,513.68 lakhs.

Current Year

During the Current year, your Company inter-alia plans to introduce new variants in the HCV and LCV segments and also expand the dealer network to support the increased sales plan. These would augur well for your Company’s growing potential.

Termination of Joint Venture Agreement with International Truck and Engine Mauritius Holding Limited.

Mahindra & Mahindra Limited (M&M) and International Truck and Engine Mauritius Holding Limited (IMH) had entered into a Share Purchase Agreement dated 4th  January 2013 whereby M&M had agreed to purchase 39,24,53,500 Equity Shares of Rs. 10/- each of the Company held by IMH and its affiliates aggregating to approximately 49% of the Equity Capital of the Company.

Accordingly, on 11th February 2013, M&M purchased 39,24,53,500 Equity Shares of Rs.10/- each of the Company held by IMH and its affiliates.

After the aforesaid purchase of Shares by M&M from IMH, IMH ceased to be a shareholder of the Company and the Company became wholly owned subsidiary of M&M. Further, the Joint Venture Agreement entered into between M&M and IMH was terminated.

Articles of Association

Pursuant to the termination of the Joint Venture Agreement between Mahindra & Mahindra  Limited  and  International Truck and Engine Mauritius Holding Limited, the Articles of Association of the Company was altered asclauses of the Joint Venture Agreement required to be removed from the Articles of Association of the Company. The new set of Articles of Association was adopted by the members of the Company at an Extra Ordinary General Meeting of the Company held on 11th February 2013.

Dividend

In view of the losses, your Directors do not recommend any dividend for the year under review.

Change of name

The Board of Directors of the Company, at its meeting held on  26th   April 2013, have approved  the change  of name of the Company  from ‘Mahindra  Navistar Automotives Limited’ to ‘Mahindra Trucks and Buses Limited’ subject to the approval of the members of the Company and the Registrar of Companies, Maharashtra.

Board Meetings

The Board Meetings are conducted at least once every quarter to inter alia review the performance, the financial status and matters relating to the operations of the Company. Four Board Meetings were held during the last financial year. These were well attended.

Directors and Composition of the Board

Dr. Pawan Goenka and Mr. Nalin Mehta retire by rotation and being eligible offer themselves for re-appointment.

Mr. Eric Tech and Mr. Phil Christman were appointed as Alternate Directors of the Company for Mr. A. J. Cederoth and Mr. Troy Clarke respectively at the Board Meeting held on 2nd August 2012.

The nominations of Mr. Deepak Kapur and Mr. Ramin Younessi as Directors of the Company were withdrawn by International Truck and Engine Mauritius Holding Limited (IMH) effective from 30th January 2013.

Effective from 30th January 2013, Mr. Phil Christman vacated the office as an Alternate Director to Mr. Troy Clark pursuant to letter received from IMH withdrawing his nomination. Subsequently, Mr. James Mahlo was appointed as an Alternate Director to Mr.  Troy Clarke at the Board  Meeting  held  on 30th January 2013.

Effective from 11th February 2013, Mr. Eric Tech vacated the office as an Alternate Director to Mr. A. J. Cederoth pursuant to letter received from IMH withdrawing his nomination. Subsequently, Mr. Vishal Khairari was appointed as an Alternate Director to Mr. A. J. Cederoth at the adjourned Board Meeting held on 11th February 2013.

At the adjourned Board Meeting held on 11thFebruary 2013, in view of IMH ceasing to be a Shareholder of the Company, all nominee Directors of IMH namely Mr. A. J. Cederoth, Mr. Troy Clarke and Mr. Somu Sundaram resigned as Directors of the Company w.e.f. close of business hours of 11th February 2013.

Pursuant to  the  resignations  of  Mr.  A.  J.  Cederoth and Mr. Troy Clarke, the office of Alternate Directors appointed in their place i.e. Mr. Vishal Khairari and Mr. James Mahlo respectively, automatically stood vacated w.e.f. 11th February 2013.

Mr. Bharat Doshi resigned as Director of the Company w.e.f. 27th April 2013.

Your  Board  places  on  record  its  sincere  appreciation  for the  guidance  and  advice  rendered  by  Mr.  Bharat  Doshi, Mr. Deepak Kapur, Mr. Ramin Younessi, Mr. A. J. Cederoth, Mr. Troy Clarke, Mr. Somu Sundaram, Mr. Eric Tech, Mr. Phil Christman, Mr. Vishal Khairari and Mr. James Mahlo during their respective tenures as Directors of the Company.

Mr. Rajan Wadhera, Mr. Bharat Moossaddee and Mr. S. Durgashankar were appointed as Additional Directors of the Company at the Board Meeting held on 26th April 2013 and hold office up to the date of the ensuing Annual General Meeting.

The Company has received notices from its member under Section 257 of the Companies Act, 1956, signifying its intention to propose Mr. Rajan Wadhera, Mr. Bharat Moossaddee and Mr. S. Durgashankar as the candidates for the office of Director at the forthcoming Annual General Meeting.

The present  term  of  appointment  of  Mr.  Nalin Mehta  as Managing Director of the Company will expire on 31st  March 2014. The Board of Directors of your Company have approved, subject to the approval of the Shareholders of the Company, the reappointment of Mr. Nalin Mehta as Managing Director of the Company for a further period of 2 years i.e. from 1st April 2014 to 31st March 2016.

Composition of the Board

The Board presently  has 8 Directors. However, considering the resignation received from Mr. Bharat Doshi effective from 27th April 2013, your Board will have 7 Directors. The Directors have vast experience in matters related to engineering, manufacturing, finance and general corporate  management, which is of immense benefit to the Company.

Audit Committee

The Audit Committee presently comprises of Mr. S. Durgashankar, Dr. Pawan Kumar Goenka and Mr. Rajan Wadhera.

The Audit Committee met twice during the year under review.

Remuneration Committee

The Remuneration Committee presently comprises of Mr. Anand Mahindra and Dr. Pawan Kumar Goenka.

The Remuneration Committee met once during the year under review.

Directors’ Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors, based on the representation received from the Operating Management, and after due enquiry, confirm that:

(i)   in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii)  they have, in the selection of the accounting policies, consulted the Statutory Auditors and these policies have been applied consistently and reasonable and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the loss of the Company for the year ended on that date;

(iii) proper andsufficient care has beentaken for the maintenance of adequate  accounting  records in accordance with the provisions  of  the Companies  Act,1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

Codes of Conduct

The Board of Directors of the Company had adopted separate Codes of Conduct for Corporate Governance (“the Codes”) for its Directors, Senior Management Personnel and Employees enunciating the underlying principles governing the conduct of its business and seeking to reiterate the fundamental precept that good governance must and would always be an integral part of its ethos.

The Company has for the year under review, received declarations under the Codes from the Board Members, the Senior Management Personnel and Employees of the Company affirming compliance with the respective Codes.

Auditors

M/s. A. F. Ferguson & Co., Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have expressed their unwillingness for re- appointment at the forthcoming Annual General Meeting.

The Company has received special notice from its member for appointment of M/s Deloitte Haskins and Sells, Chartered Accountants, Ahmedabad (Firm Regn. No.117365W) as Statutory Auditors of the Company pursuant to the provision of Section 225 of the Companies Act, 1956.

The Board of Directors of your Company, based on the recommendation of the Audit Committee, recommended the appointment of M/s Deloitte Haskins and Sells, Chartered Accountant, Ahmedabad as Statutory Auditors of the Company to hold office from the conclusion of 19th Annual General Meeting of the Company till the conclusion of 20th Annual General Meeting subject to the approval of the members of the Company. The Company has received letter from M/s Deloitte Haskins and Sells giving their consent to act as Auditors of the Company and have confirmed that they are eligible and qualified to be appointed as Auditors pursuant to the Sections 224(1B) and 226 of the Companies Act, 1956.

The members are required to appoint auditors for the current year and fix their remuneration

Cost Auditors

The Board of Directors of your Company have upon the recommendation of the Audit Committee appointed M/s. Dhananjay V. Joshi & Associates, Cost Accountants, to audit the  cost  accounts  of  the  Company  for  the  financial  year ending 31st March, 2013, subject to the approval of the Central Government.

The due date for filing the Cost Audit Report for the financial year ended 31st March 2013 is 27th September 2013.

As required under the provisions of Section 224(1B) read with Section 233(B)(2) of the Companies Act, 1956, the Company had  obtained  a  written  confirmation  from  M/s.  Dhananjay V. Joshi & Associates to the effect that they are eligible for appointment as Cost Auditors under Section 233B of the Companies Act,1956 and they are an independent  firm of Cost Accountants and have an arm’s length relationship with your Company.

Public Deposits and Loans/Advances

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

The Company has not made any loans/advances which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement with the parent company – Mahindra & Mahindra Limited.

Safety, Health and Environmental Performance

The Company’s commitment towards safety, health and environment is being continuously enhanced by its various initiatives on safety awareness, health surveys of employees, recycling of waste etc. The requirements relating to various environmental legislations and environment protection have been duly complied with by your Company.

Conservation of Energy and 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 217(1)(e)  of  the  Companies  Act,1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure I to this Report.

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and Rules framed thereunder

As required under Section 217(2A) of the Companies Act, 1956 and Rules thereunder, a statement containing particulars of the Company’s employees who were in receipt of remuneration of not less than Rs. 60,00,000 per annum during the year ended

31st March, 2013 or not less than Rs. 5,00,000 per month during any part of the said year is given in the Annexure II to this Report.

For and on behalf of the Board

Anand Mahindra

Chairman

Mumbai, 26th April, 2013

B.   TECHNOLOGY ABSORPTION

Research & Development

1. Areas in which R&D is carried out:

Development of new range of Medium & Heavy Commercial Vehicles under the Modular Packaging Concept  and improving  the Existing LCV Range of Vehicles & Buses.

2. Benefits derived as a result of the above efforts: Range of new Products developed  in  the Medium and  Heavy   Commercial   Vehicle   Range. Variant introductions and product upgrades on LCV.

3. Future plan of action:

Launch of New products/New  Variants as per business requirements.

4. Expenditure on R & D:

                                                                                                                                                   (Rs. In Lakhs)

a)   Capital                                                                                                                                      625.00

b)   Development Expenditure                                                                                                       693.77

c)   Revenue                                                                                                                                3,112.67

d)   Total                                                                                                                                    4,431.45

e)    Total R & D Expenditure as % of total turnover                                                                    3.60%

 5.  Technology absorption, adaptation and innovation:

 The Company has been granted the registration for the following innovation:  

In F13: 21 IPRs filed (1 in India, 1 International application, 1 design registration & 18 foreign patents)

6.     Imported Technology for the last 5 years: None

For and on behalf of the Board

Anand Mahindra

Chairman

Mumbai, 26th  April, 2013

For and on behalf of the Board

Anand G. Mahindra

Chairman

Mumbai, 26th  April, 2013