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

52 COMPANY OVERVIEW BOARD’S REPORT MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE BUSINESS RESPONSIBILITY REPORT STANDALONE ACCOUNTS CONSOLIDATED ACCOUNTS inputs, such as semi-conductors and chips, pose downside risks to the outlook. Yet, India remains relatively better positioned to weather these storms and is estimated to grow at 7.2% in the Financial Year 2023 – the fastest growth rate among peers and economies of its size. While fiscal and monetary policies were supportive of India’s growth recovery thus far, the Reserve Bank of India has begun the process of normalisation of monetary policy by raising the policy repo rate as well as the cash reserve ratio. However, an avowed fiscal policy focus on capital expenditure that has significantly higher multipliers than other forms of spending will fuel durable growth over the medium to long term. Importantly, forecasts of the fourth successive ‘normal’ Monsoon, higher vaccination coverage and seropositivity in the community provide higher margin of safety around growth in the year ahead. Finance Reeling under the jaws of an unprecedented Financial Year 2020-21, caused due to outbreak of COVID-19 severely impacting human lives, global trade and commerce, Financial Year 2021-22 saw the financial markets grappling with the Delta variant of COVID-19, choked supplies, escalating geo-political tensions, inflationary pressures, mounting commodity prices and volatility that came together as a perfect storm. Emerging economies experienced disruptive spillovers in terms of tightening financial market conditions, besides capital outflows and currency depreciations. Given these unsettled conditions, investors sporadically sought shelter of safe-haven assets alternating between phases of risk- on activity with every positive news being priced in. Consequently, financial markets were on the edge, like never before. Having said the above, the domestic economy experienced tremors from these developments. Economic activity, which gained slight traction in Q2:2021-22 (July-September) with the ebbing of the second wave experienced during Q1:2021-22 (April-June), has lost pace since Q3:2021-22 (October-December), exacerbated by the spread of the Omicron variant in Q4:2021-22 (January-March). Further, the beneficial effects of the rapid ebb of infections have, however, been overwhelmed by the geopolitical tensions towards the later part of the financial year. The fallout of the Russia-Ukraine conflict and retaliatory sanctions is already evident in the inflation prints. While India’s direct trade and financial exposures are modest, indirect spillovers from the slowing global economy, the sharp jump in commodity prices across the board and elevated risk aversion and uncertainty owing to geopolitical developments weigh heavily on the outlook. However, amidst this backdrop, the Bankers continue to rate your Company as a prime customer and extend facilities/services at prime rates. Your Company follows a prudent financial policy and aims not to exceed an optimum financial gearing at any time. The Company’s gross Debt to Equity Ratio is 0.17 as at 31 st March, 2022. During the year, your Company continued to focus on managing cash efficiently and ensured that it had adequate liquidity and back up lines of credit. During the year, your Company raised short term borrowings of Rs. 1,000 crores by issuing Commercial Papers. This ensured sufficient liquidity to manage the adverse effects of pandemic, if any. Further, during the year, your Company repaid Rs. 2,233.75 crores of the total borrowings (long term and short term). With a high liquidity level of Rs. 11,552.59 crores as at 31 st March, 2022, your Company is better placed to tide over the impact of the re-surge in COVID-19 cases on the business, if any. Further, your Company has been rated by CRISIL Limited (“CRISIL”), ICRA Limited (“ICRA”), India Ratings and Research Private Limited (“India Ratings”) and CARE Ratings Limited (“CARE”) for its Banking facilities. All have re-affirmed the highest credit rating for your Company’s Short Term facilities. For Long Term facilities and Non-Convertible Debentures, CRISIL, ICRA and India Ratings have re-affirmed their credit ratings of CRISIL AAA/Stable, [ICRA]AAA (stable) and IND AAA/Stable for the respective facilities rated by them. With the above rating affirmations, your Company continues to enjoy the highest level of rating from all major rating agencies at the same time. The AAA ratings indicate highest degree of safety regarding timely servicing of financial obligations and is also a vote of confidence reposed in your Company’s Management by the rating agencies. It is an acknowledgement of the strong credit profile of your Company over the years, resilience in earnings despite cyclical upturns/downturns, robust financial flexibility arising from the significant market value of its holdings and prudent management. Your Company is a “Large Corporate” as per the criteria under Securities and Exchange Board of India (“SEBI”) Operational Circular No. SEBI/HO/DDHS/P/CIR/2021/613 dated 10 th August, 2021. The Company has complied with the provisions of the said Circular and has made required disclosures in this regard.