annual-report-FY2021

143 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2020-21 Employee Bene ts Expense The employee benets expense or personnel cost as a percentage of revenue is at similar levels as previous year. Other Expenses Other expenses as a percentage of revenue has decreased from 11.4% in the previous year to 9.0% in the current year mainly on account of stricter cost control measures adopted by the Company. Depreciation, Amortisation and Impairment Expense Depreciation, amortisation and impairment expenses as a percentage of revenue shows an increase over the previous year. This is mainly on account of higher depreciation and amortisation charge related to new products launched during Financial Year 2021. Finance Costs The interest expense as a percentage of revenue has increased from 0.2% in the previous year to 0.8% in the current year mainly due to new borrowings in current year. Exceptional Items Exceptional items in the current and previous year comprise of prot earned on sale of certain long term investments partly offset by impairment of certain investments and other exposures in subsidiaries, associates and joint ventures considering the performance of these companies and their future projections. Tax Expense The provision for current tax and deferred tax for the year st ended 31 March, 2021, as a percentage to prot before tax (after exceptional items) is lower than the previous year mainly on account of net impact of Rs. 599 crores having been recognised in prot or loss on account of expensing of MAT credit balance offset by tax credit on The key nancial ratios of the Company are given as below: Debtors Turnover (times) Inventory Turnover (times) Interest Coverage Ratio (times) Current Ratio (times) Debt Equity Ratio (times) Operating Prot Margin (%) Net Prot Margin (%) Return on Net Worth (%) Particulars 26.96 13.05 9.07 1.34 0.22 14.4% 0.6% 0.8% 14.86 10.79 25.07 1.38 0.09 12.7% 2.9% 3.7% 2020 2021 M&M Explanations for variation of 25%or more in Key Financial Ratios: Debtors Turnover: The debtors turnover ratio improved to 26.96 in FY 2020-21 as against 14.86 in the previous year primarily due to better collection efforts and signicant improvements in the credit management process across divisions. Interest Coverage Ratio: The interest coverage ratio declined to 9.07 in FY 2020-21 as against 25.07 in the previous year primarily due to increase in nance cost resulting fromadditional borrowings during the year. Debt Equity Ratio: Debt Equity ratio increased to 0.22 in FY 2020-21 as against 0.09 in the previous year due to additional borrowings taken during the year. Net Profit margin: The net prot margin (after exceptional items) fell to 0.6% in FY 2020-21 as against 2.9% in the previous year primarily due to impairment losses on investments and other exposures, lower gain on sale of long term investment and partly offset by lower tax expenses for the year. Return on Net Worth: The Return on Average Net Worth has dropped from 3.7% in the previous year to 0.8% in the current year mainly on account of modest prot growth amidst challenging business environment encountered during the year and higher impairment losses on investments and other exposures. account of restatement of net deferred tax liabilities as the Company opted for new lower tax regime in the year st ended 31 March, 2020.