annual-report-FY2020

63 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2019-20 C. JOINT VENTURES, ACQUISITIONS AND OTHER MATTERS Mahindra First Choice Wheels Limited acquires 100% equity stake in Fifth Gear Ventures Limited During the year under review, Mahindra First Choice Wheels Limited (“MFCWL”), a board controlled subsidiary of Mahindra Holdings Limited (“MHL”), which is, in turn a wholly owned subsidiary of your Company, acquired 100% of the equity share capital of Fifth Gear Ventures Limited (“FGVL”), for a consideration of around Rs. 30.45 crores discharged by MFCWL by way of cash and shares of MFCWL aggregating around 0.75% of MFCWL’s fully diluted share capital. FGVL, is engaged in the business of maintaining and operating the website www.carandbike.com, an e-commerce market platform that facilitates sale and purchase of new and used vehicles and keeps its users updated with the latest information and reviews from automotive industry. This acquisition will help MFCWL expand its presence in the digital automotive space and seamlessly integrate the online and offline user experience. Merger of Mahindra Vehicle Manufacturers Limited with Mahindra & Mahindra Limited As mentioned in the previous Annual Report, the Board of Directors of the Company at its meeting held on 29 th May, 2019, subject to requisite approvals /consents, approved the Scheme of Merger by Absorption of Mahindra Vehicle Manufacturers Limited, a wholly owned subsidiary of the Company (“MVML”) with the Company and their respective shareholders (“Scheme”) under the provisions of Section 230 to 232 of the Companies Act, 2013. The Appointed Date of the Scheme is 1 st April, 2019 and the entire assets and liabilities of MVML would be transferred to and recorded by the Company at book values. The entire share capital of MVML is held by the Company. Upon the Scheme being effective, all shares (‘Preference and equity’) held by the Company in MVML shall stand cancelled, without any further act or deed and no consideration shall be issued on merger. The Scheme is subject to receipt of approvals from Directorate of Industries, Maharashtra Industrial Development Corporation, National Company Law Tribunal (‘NCLT’), Mumbai Bench and such other statutory / government authorities as may be directed by the NCLT. The Scheme has been filed with the Stock Exchanges and NCLT. Sale of shares of your Company by M&M Benefit Trust During the year under review, M&M Benefit Trust (‘the Trust’) which forms part of the Promoter Group of your Company, sold 1,92,00,000 equity shares (treasury stock) representing 1.54% of the total paid up equity share capital of the Company. The sale has been executed on the Stock Exchange(s), at a gross price of Rs. 648 per share. Following the sale, the shareholding of the Promoter and Promoter Group in your Company came down from 20.44% to 18.90% of the total paid up equity share capital of the Company. Scheme of Amalgamation between Mahindra Defence Naval Systems Limited and Mahindra Defence Systems Limited (Scheme) The National Company Law Tribunal has approved the Scheme vide its order dated 22 nd August, 2019. The Appointed Date of the Scheme is 1 st April, 2018 and the Scheme is Effective from 18 th September, 2019. Pursuant to the Scheme becoming effective, Mahindra Defence Naval Systems Limited ceased to be the subsidiary of Mahindra Defence Systems Limited and of the Company. Joint Venture with Ford Motor Company In October, 2019, your Company entered into definitive agreements with Ford Motor Company Inc., USA (“FMC”) to enable the formation of a joint venture wherein your Company and/or its subsidiary(ies) would hold a 51% equity share capital and FMC would hold the balance 49% stake. The joint venture company would be Mahindra Ford Automotive Private Limited (“MFAPL”), formerly known as ‘Ardour Automotive Private Limited’. As part of the transaction, MFAPL will acquire the existing automotive business of Ford India Private Limited (“FIPL”), a wholly owned subsidiary of FMC at an enterprise valuation of Rs. 1,925 crores. The Purchase Price to be paid by MFAPL to FIPL would be arrived at by deducting from the enterprise value, after making customary closing adjustments, the net debt that would be transferred to MFAPL. Based on the available estimates, the likely Purchase Price to be paid by MFAPL would be Rs. 1,289 crores, of which 51% i.e. Rs. 657 crores would be funded by your Company. In the aggregate, your Company is committed to fund, for acquiring a 51% stake in MFAPL and for the future operations of MFAPL, an amount not exceeding Rs. 1,400 crores.