MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2021-22

Expenditure The total expenditure during the year as a percentage of revenue is 92.4% as compared to 90.6% in the previous year. The increase is mainly attributable to higher material costs in FY22. Material cost The material cost as a percentage of revenue has increased from 67.6% in the previous year to 73.7% in the current year mainly on account of elevated levels of inputs costs and supply side challenges witnessed during FY22. Employee bene ts expense The personnel cost as a percentage of revenue from Operations has decreased from 7.3% in the previous year to 5.7% in the current year mainly due to the higher revenue base in the current year. Other expenses Other expenses as a percentage of revenue from Operations have decreased from 9.5% in the previous year to 8.3% in the current year mainly on account of stringent cost control measures adopted by the Company coupledwith higher revenue base in the current year. Depreciation, amortisation and impairment expense Depreciation, amortisation and impairment expenses as a percentage of revenue shows decrease over the previous year mainly due to higher revenue base in current year. Finance costs The interest expense as a percentage of revenue has decreased from 0.9% in the previous year to 0.4% in the current year mainly on account of repayment of borrowings in current year and higher interest capitalisation. Exceptional Items Exceptional items in the current and previous year comprises of prot earned on sale of certain long-term investments partly offset by impairment of certain investments in subsidiaries, associates and joint ventures. Tax expense The provision for current tax and deferred tax for the year st ended 31 March, 2022, as a percentage to prot before tax (before exceptional items) is lower than the previous year mainly on account of higher dividend income in FY2021-22 as compared to FY2020-21. 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 21.5 7.9 17.6 1.4 0.17 12.3% 8.6% 13.4% 17.1 6.8 12.7 1.3 0.22 15.6% 2.2% 3.0% FY2021 FY2022 M&M Explanations for variation of 25%or more in Key Financial Ratios: Debtors Turnover: The debtor's turnover ratio improved to 21.5 in FY 2021-22 as against 17.1 in the previous year primarily due to better collection efforts and signicant improvements in credit management process across divisions. Interest Coverage Ratio: The interest coverage ratio is healthier at 17.6 in FY 2021-22 as against 12.7 in the previous year primarily due to decrease in nance cost resulting from repayment of borrowings during the year. Net Profit margin: The net prot margin (after exceptional items) improved to 8.6% in FY 2021-22 as against 2.2% in the previous year primarily on account of increase in operation performance, lower impairment losses on investments, higher gain on sale of long-term investment, lower tax expenses for the year. Return on Net Worth: The Return on Average Net Worth has improved from 3.0% in the previous year to 13.4% in the current year on the base of higher prot for the year. MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2021-22 135