Voting Advisory

Mahindra and Mahindra Limited

ISIN Code: INE101A01026 BSE/NSE: 500520/M&M - EQ Index: SENSEX/CNX Nifty

Meeting Type: Court Convened Meeting Meeting date: 7 February 2012 Meeting Time: 03:00 pm

Proxy deadline: Saturday, 4th February 2012 by 3:00 pm Notice date: 6th January 2012

Meeting Venue: Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg (New Marine Lines), Mumbai – 400 020.

EXECUTIVE SUMMARY

Management IIAS Sl.No Ord/Spl* Description of resolution Recommendation Recommendation Considering and approving, with or without modification(s), the Scheme of Arrangement between Mahindra Automobile Distributor Pvt. 1 Spl. Ltd (MADPL) and Mahindra and Mahindra Ltd FOR FOR (M&M) which provides for the demerger of the Automotive Business of the MADPL and transfer and vesting thereof into M&M * Ord/Spl: Ordinary/Special resolution

IIAS Recommends: FOR

Rationale for the Merger

MADPL was a joint venture between Renault s.a.s., France (“Renault”) and M&M. After exit of Renault from the joint venture, M&M assumed complete control over the activities of MADPL. Renault will continue to supply components and sub-assemblies to MADPL at re-negotiated prices and support the product in India.

M&M is already dealing in all segments of automobile industry e.g. passenger vehicles, commercial vehicles, light commercial vehicles and three-wheelers. The Verito brand (earlier Logan) of vehicles is a perfect suit in the product portfolio of M&M. The demerger of automotive business of MADPL into M&M will provide better flexibility in the manufacturing and supply chain. The demerger will enable both the companies to achieve and fulfil their objectives more effectively and economically. M&M’s existing management expertise and quality system will enhance the performance of this business.

The proposed demerger of the automotive business will enable MADPL to streamline its operations by being focused on the spares business so as to enhance its profitability and to rationalize its management, businesses and finances.

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Financial Profile (Consolidated) Price performance

Particulars (In Rs. billion) FY09 FY10 FY11 Turnover 150 206 259 Growth Y/Y 13.2% 37.5% 25.7% EBIDTA 14 32 39 Growth Y/Y -17.8% 136.4% 19.7% EBIDTA margin 9.2% 15.8% 15.0% PAT 8.7 20.9 26.6 Growth Y/Y -21.3% 140.6% 27.5% PAT margin 5.8% 10.1% 10.3% Gross Cash Accruals 11.6 24.6 30.8 ROCE 9.3% 19.5% 20.9% ROE 16.5% 26.7% 25.8% Net worth 52.6 78.3 103.1 Market Capitalization(full): Rs.413 bn (CMP: 672.85) on 31/01/12

Source: Company filings, IIAS research Source: IIAS research

Above 1% public shareholding in Mahindra & Mahindra Limited Sl. No. of shares % of Total No. of Name of the Shareholder No (mn) Shares 1 Life Insurance Corporation of India 81.0 13.2 2 ICICI Prudential Life Insurance Company Ltd 21.5 3.5 3 Golboot Holdings Ltd 18.8 3.1 4 General Insurance Corporation of India 9.1 1.5 5 Government of Singapore 7.3 1.2 6 New India Assurance Company Ltd 7.2 1.2 HSBC Global Investment Fund A/c 7 6.4 1.0 HSBC Global Investment Fund Mauritius Ltd Total 151.4 24.7

Source: BSE

Change in shareholding pattern Shareholding Patter as on 30th Sept 2011

Year Promoter DII FII Others Sep-11 26.9% 22.1% 28.2% 22.8% Jun-11 26.6% 24.2% 25.2% 24.1% Mar-11 26.5% 25.2% 24.4% 23.9% Mar-10 27.8% 26.3% 24.7% 21.3% Mar-09 31.3% 27.3% 25.8% 15.6% Mar-08 24.6% 28.7% 27.6% 19.1% Mar-07 24.6% 22.8% 34.8% 17.8% Mar-06 22.8% 21.5% 34.3% 20.8% Source: BSE

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1 

Financials of MADPL (Pre-merger)

Rs. in millions FY09-10 FY10-11 Rs. in millions FY09-10 FY10-11 Capital 1,993 3,742 Net Income 3,083 5,188 Reserves 1,025 1,023 EBIDTA -348 155 Networth 3,017 4,765 Interest 381 343 Secured Loans 3,095 3,095 PBT -752 -208 Net Fixed Assets 294 325 PAT -815 -208 Profit / (Loss) A/c -6,621 -6,830 No of vehicles sold 6,332 11,912

The Scheme

MADPL The company has accumulated losses of Rs. 6829.9 million as on 31.03.2011. The scheme proposes to 1. Write off Rs. 3731.6 million against paid up share capital (from the current Rs. 3741.6 million) 2. Write off Rs. 1023.1 million against the share premium account 3. Balance Rs. 1075.2 million will be adjusted against the General Reserves of M&M

M&M 1. Issue of 5917 shares of Face Value Rs. 5 each to Infina Finance Pvt. Ltd. (INFINA is majority-owned (50.01%) by the promoters of the Kotak group. The remaining shareholding is with Kotak Mahindra Capital Company (49.99%)). 2. M&M and Mahindra Holdings would not be given any equity in M&M for their holdings in MADPL 3. Rs. 1075.2 million of accumulated losses of MADPL which were not written off against its net worth will be adjusted against the General Reserves of M&M

Share Capital of the 2 companies Pre and Post Merger would be as below

Mahindra & Mahindra Pre-Merger Post-Merger Amount (Rs.) Amount (Rs.) Authorised Capital 1,20,00,00,000 Ordinary (Equity) Shares of Rs.5 each 6,25,00,00,000 6,25,00,00,000 and 25,00,000 Unclassified Shares of Rs.100 each Issued, Subscribed and Paid-up Capital 61,39,74,839 Ordinary (Equity) Shares of Rs. 5 each 3,06,98,74,195 3,06,99,03,780 fully paid-up

MADPL Pre-Merger Post-Merger Amount (Rs.) Amount (Rs.) Authorised Capital 40,00,00,000 Equity Shares of Rs.10 each 4,00,00,00,000 4,00,00,00,000 Issued, subscribed and fully paid-up 37,41,63,200 Equity Shares of Rs.10 each 3,74,16,32,000 1,00,00,000

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M&M Shareholding – PRE AND POST ARRAGEMENT’

No Pre Arrangement Post Arrangement 1 Promoter & Promoter Group 25.2% 25.2% 2 FIIs 26.4% 26.4% 3 Other Foreign & Non-Residents 10.3% 10.3% 4 Banks and DIIs 20.6% 20.6% 5 Others (including Infina Finance) 17.5% 17.5%

Sr. No MADPL - PRE AND POST ARRANGEMENT No. of Equity Shares of Rs.10 Shares in M&M Pre-arrangement Post-arrangement 1 Mahindra and Mahindra Limited 27,68,80,768 7,40,000 Nil 2 Mahindra Holdings Limited 7,85,74,272 2,10,000 Nil 3 Infina Finance Private Limited 1,87,08,160 50,000 5917

A snapshot of M&M’s 110 subsidiaries is given in Annex A.

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Annexure A: Subsidiaries of Mahindra & Mahindra Ltd.

% share Gross Name of the Subsidiary Country PAT holding Turnover 1 Mahindra Automotive Australia Pty. Limited 92.63% Australia 23.59 -3.72 2 Aerostaff Australia Pty. Limited 66.67% Australia 9.94 -3.54 3 Mahindra Aerospace Australia Pty. Limited 66.67% Australia 0.06 -0.03 4 Airvan Flight Services Pty. Limited 50.07% Australia - - 5 GA200 Pty. Limited 50.07% Australia - - 6 GA8 Airvan Pty. Limited 50.07% Australia - - 7 Gipp Aero International Pty. Limited 50.07% Australia - - 8 Gipp Aero Investments Pty. Limited 50.07% Australia * -0.08 9 Gippsaero Pty. Limited 50.07% Australia 41.27 -6.32 10 Nomad TC Pty. Limited 50.07% Australia - - 11 BAH Hotelanlagen AG 82.81% Austria 13.71 -1.05 12 Bristlecone Consulting Limited 79.94% Canada - -0.03 13 Bristlecone Limited 79.94% Caymans 0.03 -6.97 14 Mahindra (China) Tractor Company Limited 85.90% China 74.67 -14.69 15 Ssangyong (Yizheng) Auto Parts Manufacturing Company Limited 70.04% China - - 16 Ssangyong Motor (Shanghai) Company Limited 70.04% China - - 17 Mahindra Yueda (Yancheng) Tractor Company Limited 51.00% China 539.36 2.09 18 Mahindra Gears Cyprus Limited 79.94% Cyprus - -0.18 19 Mahindra Engineering GmbH 97.79% Germany 0.68 -3.08 20 Bristlecone GmbH 79.94% Germany 19.78 0.95 21 MHR Hotel Management GmbH 62.78% Germany 0.57 0.06 22 Falkenroth Umformtechnik GmbH 50.67% Germany 210.57 -2.8 23 Gesenkschmiede Schneider GmbH 50.67% Germany 654.15 25.22 24 JECO-Jellinghaus GmbH 50.67% Germany 255.21 3.1 25 Mahindra Forgings Europe AG 50.67% Germany 13.24 -6.85 26 Schöneweiss & Co. GmbH 50.67% Germany 474.92 -9.93 27 Mahindra Automobile Distributor Private Limited 100.00% India 607.17 -20.84 28 Mahindra BPO Services Private Limited 100.00% India - - 29 Mahindra EcoNova Private Limited 100.00% India - * 30 Mahindra Electrical Steel Limited 100.00% India - -0.02 31 Mahindra Engineering and Chemical Products Limited 100.00% India 1.68 -8.52 32 Mahindra EPC Services Private Limited 100.00% India 0.02 -0.22 33 Mahindra First Choice Services Limited 100.00% India 14.83 -10.58 34 Mahindra Holdings Limited 100.00% India 4.93 2.86 35 Mahindra Intertrade Limited 100.00% India 1,151.83 55.08 36 Mahindra Logistics Limited 100.00% India 1,095.11 -7.06 37 Mahindra Punjab Tractors Private Limited 100.00% India - * 38 Mahindra United Football Club Private Limited 100.00% India 1.67 0.11 39 Mahindra Vehicle Manufacturers Limited 100.00% India 1,302.14 26.42 40 NBS International Limited 100.00% India 127.47 0.35 1 February 2012 Mahindra & Mahindra Limited 5 | P a g e

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% share Gross Name of the Subsidiary Country PAT holding Turnover 41 Retail Initiative Holdings Limited 100.00% India - * 42 Mahindra Engineering Services Limited 97.79% India 140.72 10.44 43 Mahindra Conveyor Systems Private Limited 91.50% India 60.78 7.69 44 Mahindra Retail Private Limited 89.51% India 51.44 -60.21 45 Mahindra Holidays and Resorts India Limited 83.71% India 534.16 102.76 46 Mahindra Hotels and Residences India Limited 83.71% India - -0.01 47 Mahindra Shubhlabh Services Limited 83.05% India 27.88 -8.16 48 Mahindra Two Wheelers Limited 80.00% India 572.03 -169.22 49 Bristlecone India Limited 79.94% India 113.42 1.59 50 Defence Land Systems India Private Limited 74.00% India 40.31 -0.65 51 Mahindra Aerospace Private Limited 66.67% India 1.19 -3.56 52 Mahindra Aerostructures Private Limited 66.67% India - -1.9 53 Mahindra Hinoday Industries Limited 64.95% India 403.36 -7.44 54 Mahindra Steel Service Centre Limited 61.00% India 81.24 1.78 55 Mahindra Gujarat Tractor Limited 60.00% India 87.38 3.91 56 Mahindra & Mahindra Financial Services Limited 56.85% India 2,012.58 463.11 57 Mahindra Business & Consulting Services Private Limited 56.85% India 59.95 0.54 58 Mahindra Insurance Brokers Limited 56.85% India 51.77 21.77 59 Mahindra Reva Electric Vehicles Private Limited 56.33% India 27.7 -24.93 60 Mahindra First Choice Wheels Limited 54.83% India 121.79 -6.13 61 Mahindra Consulting Engineers Limited 54.16% India 10.21 1.66 62 Mahindra Gears & Transmissions Private Limited 53.34% India 96.97 0.71 63 Anthurium Developers Limited 51.05% India - -0.01 64 Industrial Township (Maharashtra) Limited 51.05% India 0.02 * 65 Knowledge Township Limited 51.05% India * -0.01 66 Mahindra Infrastructure Developers Limited 51.05% India 0.37 0.16 67 Mahindra Lifespace Developers Limited 51.05% India 492.18 103.05 68 Mahindra World City (Maharashtra) Limited 51.05% India * -1.03 69 Raigad Industrial & Business Park Limited 51.05% India - -0.01 70 Watsonia Developers Limited 51.05% India - -0.01 71 Crest Geartech Private Limited 51.00% India 13.03 0.7 72 Mahindra Navistar Automotives Limited 51.00% India 784.29 -186.3 73 Mahindra Navistar Engines Private Limited 51.00% India 51.64 -50.37 74 Mahindra Ugine Steel Company Limited 50.69% India 1,466.45 -5.97 75 Mahindra Forgings Limited 50.67% India 394.8 -3.18 76 Mahindra Rural Housing Finance Limited 49.74% India 49.33 8.86 77 Mahindra Integrated Township Limited 48.42% India 0.08 -5.69 78 Mahindra World City Developers Limited 42.18% India 70.49 22.75 79 Mahindra World City (Jaipur) Limited 37.78% India 42.63 0.94 80 Mahindra Bebanco Developers Limited 35.73% India - -0.05 81 Mahindra Residential Developers Limited 24.69% India 23.19 1.94

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% share Gross Name of the Subsidiary Country PAT holding Turnover 82 Mahindra Graphic Research Design S.r.l. 100.00% Italy 21.11 -4.32 83 Engines Engineering S.r.l. 97.79% Italy 39.16 -2.79 84 Mahindra Europe S.r.l. 80.00% Italy 73.62 0.28 85 Metalcastello S.p.A. 51.00% Italy 376.07 -39 86 EFF Engineering S.r.l. 49.88% Italy 2.79 -0.15 87 Heritage Bird (M) SDN. BHD. 83.71% Malaysia 1.2 -0.21 88 Bristlecone (Malaysia) SDN. BHD. 79.94% Malaysia 3.06 0.17 89 Mahindra Overseas Investment Company (Mauritius) Ltd 100.00% Mauritius 28.24 14.12 90 Mahindra Gears Global Limited 100.00% Mauritius - -0.97 91 Mahindra-BT Investment Company (Mauritius) Limited 57.00% Mauritius 0.03 -0.51 92 Mahindra Gears International Limited 53.34% Mauritius - -0.09 93 Mahindra Forgings Global Limited 50.67% Mauritius - -0.15 94 Mahindra Forgings International Limited 50.67% Mauritius 0.71 -4.35 95 Ssangyong European Parts Center B.V. 70.04% Netherlands - - 96 Mahindra Middleeast Electrical Steel Service Centre (FZC) 90.00% Sharjah 63.94 4.18 97 Bristlecone Singapore Pte. Limited 79.94% Singapore 4.27 -0.35 98 Mahindra & Mahindra South Africa (Proprietary) Limited 100.00% South Africa 177.62 12.3 99 Ssangyong Motor Company Limited 70.04% South Korea - - 100 Mahindra Emirates Vehicle Armouring FZ-LLC 51.00% UAE - -2.12 101 Mahindra Engineering Services (Europe) Limited 97.79% UK 8.93 0.87 102 Bristlecone UK Limited 79.94% UK 26.19 0.17 103 Jensand Limited 50.63% UK - - 104 Stokes Forgings Dudley Limited 50.63% UK - - 105 Stokes Forgings Limited 50.63% UK - - 106 Stokes Group Limited 50.63% UK 158.29 -8.3 107 Mahindra USA Inc. 100.00% USA 580.41 0.7 108 Mahindra Technologies Services Inc. 97.79% USA 14.84 -0.8 109 Mahindra Holidays and Resorts USA Inc. 83.71% USA * -0.18 110 Bristlecone Inc. 79.94% USA 119.79 -8.01

* denotes amounts less than Rs. 50,000

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Disclaimer

This document has been prepared by Institutional Investor Advisory Services India Limited (IIAS). IIAS is a full service Institutional Shareholder Advisory Service Company. The information contained herein is from publicly available data or other sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied on as such. IIAS shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for any Voting or investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arrive at an independent evaluation of the individual resolutions which may affect their investment in the securities of companies referred to in this document (including the merits and risks involved). The discussions or views expressed may not be suitable for all investors. This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject IIAS to any registration or licensing requirements within such jurisdiction. The distribution of this document in certain jurisdictions may be restricted by law, and persons in whose possession this document comes, should inform themselves about and observe, any such restrictions. The information given in this document is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without any prior notice. IIAS reserves the right to make modifications and alterations to this statement as may be required from time to time. However, IIAS is under no obligation to update or keep the information current. Nevertheless, IIAS is committed to providing independent and transparent recommendation to its client and would be happy to provide any information in response to specific client queries. Neither IIAS nor any of its affiliates, group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. . The disclosures of interest statements incorporated in this document are provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. IIAS generally prohibits its analysts, persons reporting to analysts and their dependents from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. The information provided in these reports remains, unless otherwise stated, the copyright of IIAS. All layout, design, original artwork, concepts and other Intellectual Properties, remains the property and copyright of IIAS and may not be used in any form or for any purpose whatsoever by any party without the express written permission of the copyright holders.

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