annual-report-FY2021

12 RE IGNI T ING VALUE CREAT ION Historically, the Mahindra Group has created shareholder value, consistently. After delivering an impressive annualised return of 31% from 2002 to 2018 (Aug 2018), Mahindra & Mahindra shares, however, saw a steep fall in returns in the next two years. The annualised return from August 2018 to March 2020 was -54%. This presented a challenge and we were determined to overcome it. We sprang into action to reboot, reinvent, and reignite value creation In the beginning of F21, the Group instituted a very tight capital allocation process with strict controls and clearly defined criteria. All loss-making international subsidiaries were grouped into three categories: Category A (had a clear path to profitability), Category B (had a quantifiable strategic impact), and Category C (had an unclear path to profitability that mandated an exit and initiation of an appropriate action plan for the same). As planned, the whole exercise was completed in one year. Following are the outcomes of the exercise: MOTOCYCLES Capital Allocation Update Entities with clear path to profitability A Quantifiable Strategic Impact B Unclear path to Profitability…Exit C MAGNA AG North America MFCS MANA AHINDRA AUTOMOTIVE NORTH AMERICA Post Restructuring Ÿ MAGNA (Mahindra USA Inc.), Peugeot Motocycles and Erkunt - each of these entities has developed a business plan that lays out a clear path to profitability. Mahindra Automotive North America and Automobili Pininfarina, after a fair amount of restructuring, straddle Category A and B. Ÿ Mitsubishi Mahindra Agricultural Machinery, Sampo Rosenlew and Hisarlar - these entities were added to Category B considering their importance to the farm equipment business in developing a strong farm machinery portfolio for domestic as well as international markets. Ÿ We have taken quite a few tough calls, starting from our Board's decision to stop investing in SsangYong in April 2021 to exiting GippsAero, Genze and Mahindra First Choice Services (MFCS). Consequent to this exercise, the profitability of global subsidiaries is expected to go up in the subsequent years resulting in lower investment requirement. COMPANY OVERVIEW SUPPORTING COMMUNITIES TO RISE PIVOTING TO GROWTH RISING THROUGH INNOVATIONS RISING WITH FOCUS ON ESG CORPORATE INFORMATION STATUTORY REPORTS FINANCIAL STATEMENTS