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C M Y K RED HERRING PROSPECTUS Please read Section 60B of the Companies Act, 1956 Dated February 8, 2006 100% Book Built Issue MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED (Originally incorporated as Maxi Motors Financial Services Limited on January 1, 1991 under the Companies Act, 1956 as a public limited company and the name was changed to Mahindra & Mahindra Financial Services Limited on November 3, 1992). Registered Office: Gateway Building, Apollo Bunder, Mumbai 400 001, Maharashtra, India Tel: 91 22 2202 1031; Fax: 91 22 2287 5485 Corporate Office: Sadhana House, 2nd Floor, Behind Mahindra Towers, 570, P. B. Marg, Worli, Mumbai 400 018, Maharashtra, India Tel: 91 22 5652 6000; Fax: 91 22 2497 2741 E-mail: [email protected]; Website: www.mahindrafinance.com Contact Person: Mr. V Ravi; Tel: 91 22 5652 6000 Public Issue of 20,000,000 Equity Shares of Rs. 10 each for cash at a price of Rs. [] per Equity Share aggregating Rs. [] million, comprising a Fresh Issue of 10,000,000 Equity Shares of Rs. 10 each by Mahindra & Mahindra Financial Services Limited (“Mahindra Finance”, the “Company” or the “Issuer”) and an Offer for Sale of 10,000,000 Equity Shares of Rs. 10 each by Mahindra & Mahindra Limited (“M&M”) and certain other shareholders of the Company (together with M&M the “Selling Shareholders”). The Fresh Issue and the Offer for Sale are jointly referred to herein as the Issue (“the Issue”). The Issue will constitute 23.26% of the fully diluted post issue paid-up capital of the Company. PRICE BAND: RS. 170 TO RS. 200 PER EQUITY SHARE OF FACE VALUE Rs. 10 ISSUE PRICE IS 17 TIMES THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND 20 TIMES THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND In case of revision in the Price Band, the Bidding/ Issue Period will be extended for three additional days after revision of the Price Band subject to the Bidding/ Issue Period not exceeding 10 days. Any revision in the Price Band and the revised Bidding/ Issue Period, if applicable, will be widely disseminated by notification to the National Stock Exchange of India Limited (“NSE”) and The Bombay Stock Exchange Limited (“BSE”), by issuing a press release, and also by indicating the change on the website of the Book Running Lead Managers (“BRLMs”), and at the terminals of the Syndicate Members. In terms of Rule 19(2)(b) of the Securities Contract Regulation Rules, 1957, this being an Issue for less than 25% of the post Issue capital, the Issue is being made through the 100% Book Building Process wherein 60% of the Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers out of which, 5% will be available for allocation to mutual funds registered with Securities and Exchange Board of India (“SEBI”) and the remaining QIB portion shall be available for allocation to the QIB bidders including mutual funds, subject to valid Bids being received at or above the Issue Price. Further, atleast 10% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and atleast 30% of the Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. RISK IN RELATION TO FIRST ISSUE This being the first public issue of the Equity Shares, there has been no formal market for the Equity Shares. The face value of the Equity Shares is Rs. 10 and the Issue Price is [·] times of the face value. The Issue Price (as determined by the Company and the Selling Shareholders in consultation with the BRLMs, on the basis of assessment of market demand for the Equity Shares by way of Book Building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/ or sustained trading in the Equity Shares of the Company nor regarding the price at which the Equity Shares will be traded after listing. We have not opted for the grading of this Issue from a credit rating agency. GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Company and the Issue including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the SEBI, nor does SEBI guarantee the accuracy or adequacy of this Red Herring Prospectus. Specific attention of the investors is invited to the section titled “Risk Factors” on page xi of this Red Herring Prospectus. COMPANY’S ABSOLUTE RESPONSIBILITY The Company having made all reasonable inquiries, accept responsibility for and confirm that this Red Herring Prospectus contains all information with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares offered through this Red Herring Prospectus are proposed to be listed on the NSE and the BSE. We have received in-principle approval from the BSE and the NSE for the listing of our Equity Shares pursuant to letters dated January 24, 2006. NSE shall be the Designated Stock Exchange. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE KOTAK MAHINDRA CAPITAL ABN AMRO SECURITIES (INDIA) KARVY COMPUTERSHARE PRIVATE LIMITED COMPANY LIMITED PRIVATE LIMITED Karvy House, 46, Avenue 4, Bakhtawar, 3rd Floor, 229, Nariman Point 81, Sakhar Bhavan, Nariman Point Street no. 1, Banjara Hills, Mumbai 400 021, India Mumbai 400 021, India Hyderabad – 500 034, India Tel: 91 22 5634 1100 Tel: 91 22 5638 6184 Tel.: 91 40 2343 1546/49 Fax: 91 22 2284 0492 Fax: 91 22 5639 6910 Fax.: 91 40 2343 1551 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.kotak.com Website: www.abnamroindia.com Website: www.karvy.com ISSUE PROGRAMME BID / ISSUE OPENS ON : FEBRUARY 21, 2006 BID / ISSUE CLOSES ON : FEBRUARY 24, 2006 C M Y K TABLE OF CONTENTS SECTION I: DEFINITIONS AND ABBREVIATIONS ............................................................................................................................ i PRESENTATION OF FINANCIALS AND USE OF MARKET DATA ............................................................................................ ix SECTION II: RISK FACTORS ............................................................................................................................................................. x FORWARD-LOOKING STATEMENTS ........................................................................................................................................... x RISK FACTORS ............................................................................................................................................................................ xi SECTION III: INTRODUCTION ........................................................................................................................................................... 1 SUMMARY OF OUR BUSINESS ................................................................................................................................................... 1 THE ISSUE .................................................................................................................................................................................... 4 SUMMARY FINANCIAL INFORMATION ........................................................................................................................................ 5 GENERAL INFORMATION ............................................................................................................................................................ 7 CAPITAL STRUCTURE ................................................................................................................................................................ 16 OBJECTS OF THE ISSUE .......................................................................................................................................................... 23 BASIS FOR ISSUE PRICE .......................................................................................................................................................... 25 STATEMENT OF TAX BENEFITS ................................................................................................................................................ 27 SECTION IV: ABOUT US ................................................................................................................................................................. 36 OUR INDUSTRY .......................................................................................................................................................................... 36 OUR BUSINESS .........................................................................................................................................................................

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