annual-report-FY2020

57 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2019-20 Dear Shareholders Your Directors present their Report together with the audited financial statements of your Company for the year ended 31 st March, 2020. A. FINANCIAL AND OPERATIONAL HIGHLIGHTS (Rs. in crores) Particulars 2020 2019 Revenue from Operations.............................. 45,488 53,614 Other Income................................................... 1,668 1,689 Profit before Depreciation, Finance Costs, Exceptional items and Taxation..................... 7,466 8,328 Less: Depreciation, Amortisation and Impairment Expenses............................. 2,223 1,860 Profit before Finance Costs, Exceptional items and Taxation.......................................... 5,243 6,468 Less: Finance Costs........................................... 113 113 Profit before Exceptional items and Taxation... 5,130 6,355 Add: Exceptional items................................... (2,014) (30) Profit before Taxation..................................... 3,116 6,325 Less: Tax Expense............................................. 1,785 1,529 Profit for the year........................................... 1,331 4,796 Balance of profit for earlier years................. 28,967 25,206 Less: Transfer to Debenture Redemption Reserve..................................................... — 14 Profits available for appropriation................ 30,298 29,988 Add: Other Comprehensive Income/(Loss)*.. (8) (9) Less: Dividend paid on Equity Shares............ 1,057 932 Less: Income-tax on Dividend paid................ 131 80 Balance carried forward................................. 29,102 28,967 * Remeasurement of (loss)/gain (net) on defined benefit plans, recognised as part of retained earnings. Economic activity remained largely subdued and tighter financial conditions impinged upon activity. The second advance estimates released in February, 2020 implied real GDP growth of 4.7% for the fourth quarter of the Financial Year 2020 within the annual estimate of 5% for the year as a whole. However, this is now at risk from the COVID-19 pandemic’s impact on the economy. High frequency indicators suggest that private final consumption expenditure has been hit hardest, even as gross fixed capital formation has been in contraction since the second quarter of the Board’s Report Financial Year 2020. On the supply side, the outlook for agriculture and allied activities appears to be the only silver lining, with foodgrains output at 292 million tonnes. Meanwhile, most of the service sector indicators in January-March, 2020 moderated or declined. Anecdotal evidence suggests that several services such as trade, tourism, airlines, the hospitality sector and construction have been further adversely impacted by the COVID-19. Due to overall slowdown in auto industry leading to lower sales during the Financial Year 2019-20 followed by abrupt closure of business activities from 25 th March, 2020 due to COVID-19 lockdown, your Company recorded a decrease of 15.2% in revenue from operations at Rs. 45,488 crores in the year under review as against Rs. 53,614 crores in the previous year. The Profit for the year before Depreciation, Finance Costs, Exceptional items and Taxation recorded a decrease of 10.4% at Rs. 7,466 crores as against Rs. 8,328 crores in the previous year. Profit after tax decreased by 72.3% at Rs. 1,331 crores as against Rs. 4,796 crores in the previous year. Your Company continues with its rigorous cost restructuring exercises and ef ciency improvements which have resulted in signi cant savings through continued focus on cost controls, process ef ciencies and product innovations that exceed customer expectations in all areas thereby enabling the Company to maintain pro table growth in the current economic scenario. Details of Material Changes from the end of the Financial Year till the date of this Report The rampant spread of COVID-19 outbreak, across borders and geographies, has severely impacted almost the whole world and triggered significant downside risks to the overall global economic outlook. Due to the lockdown announced by the Government of India from 25 th March, 2020, entire operations of the Company came to a halt. The lockdowns and restrictions imposed on various activities due to the pandemic have posed challenges to all the businesses of your Company and its Subsidiaries. Though it is difficult to predict any demand scenario for the immediate short term, the Company expects the Tractor demand to show good improvement on the back of several positive factors such as record