MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2023-24 440 (ii) Zoomcar, Inc. During the year, Zoomcar Inc, a joint venture of the Company, merged with Innovative International Acquisition Corp. (IOAC) and Others. Pursuant to the merger, IOAC has been renamed as Zoomcar Holdings, Inc. The Group received 14,29,566 shares (including the earnout shares) representing 1.26% shareholding of Zoomcar Holdings, Inc. on a fully diluted basis. Consequent to the merger, Zoomcar, Inc. has ceased to be a joint venture of the Company and investment in IOAC is classified as financial asset measured at FVTOCI. (iii) During the year, the Group has sold investments in CIE Automotive India Limited, Medwell Ventures Private Limited, Resson Aerospace Corporation (dissolved), Emergent Solren Private Limited, Transtech Logistics Private Limited, Sanyo Special Steel Manufacturing India Private Limited (classified as held for sale as at 31st March, 2023). Post stake sale, these entities have ceased to be associates/ joint ventures of the Company. Additionally, Mahindra Holdings Limited, a subsidiary of the Company, has sold 9.99% stake in Mahindra Susten Private Limited. 42. Compulsory Convertible Preference Shares (CCPS) issued by Mahindra Electric Automobile Limited (MEAL) and Mahindra Last Mile Mobility Limited (MLMML) (a) During the year ended 31st March, 2023, the Company formed a wholly owned subsidiary, Mahindra Electric Automobile Limited (MEAL) to undertake the four-wheel passenger electric business and transferred certain existing assets to MEAL for cash consideration of Rs. 796.42 crores. Further, in accordance with and subject to the terms and conditions stipulated in the Securities Subscription Agreement and Shareholders’ Agreement entered with British International Investment Plc (BII), wherein the Company and BII each agreed to invest Rs. 1,925.00 crores in MEAL in tranches, both the Company and BII have invested Rs. 1,200.00 crores each till 31st March, 2024. The investment by the Company is in Equity shares of MEAL whereas investment by BII is in Compulsory Convertible Preference Shares (CCPS) of MEAL. The total investment by the Company in MEAL amounted to Rs. 3,199.49 crores as at 31st March, 2024 (2023: Rs. 1,469.00 crores). During the year ended 31st March, 2024, in accordance with and subject to the terms and conditions stipulated in the amended and restated Securities Subscription Agreement and Shareholders’ Agreement entered with British International Investment Plc (BII) and Jongsong Investments Pte Ltd (“Temasek”) wherein the Temasek agreed to invest Rs. 1,200.00 crores in Compulsory Convertible Preference Shares (CCPS) of MEAL in one or more tranches, Temasek has invested Rs. 300.00 crores till 31st March, 2024. Unless agreed to, in writing, for an early conversion, each CCPS is compulsorily and automatically convertible into such number of equity shares as determined as per a pre-determined formula at the conversion date, as per terms and conditions of the agreement(s) entered between the Company, BII and Temasek. Since the CCPS is convertible into variable number of equity shares of MEAL, it has been classified as financial liability at fair value through profit or loss in the financial statements of MEAL and in the consolidated financial statements of the Company. Further, in accordance with the shareholders’ agreement, the Company shall take best efforts to provide BII and Temasek with a complete exit between 1st November, 2027 and 1st November, 2030 through certain exit options (or a combination thereof), as may be determined by the Company in its sole discretion. In case exit has not been provided to BII prior to 1st November, 2030, BII shall have the right upto 31st October, 2031 to require full exit to be provided by the Company or by its affiliates and/or a third party at the higher of fair market value and the amount invested by BII. In case exit has not been provided to Temasek prior to 1st November, 2030 Temasek shall have the right up to 31st October, 2031 to require full exit to be provided by the Company by way of share swap if the fair market value of the Temasek interest is higher than the amount invested by it. However, the Company shall have the right, at its sole discretion, to provide cash exit to Temasek at the higher of fair market value of the Temasek interest and the amount invested by it. Further, if the Fair market value of the Temasek interest is lower than its investment amount, neither the Company nor Temasek shall be obligated to undertake their respective obligations with respect to the Share swap. (b) During the year ended 31st March, 2024, the Company formed a wholly owned subsidiary, Mahindra Last Mile Mobility Limited (MLMML) and transferred identified assets and business pertaining to the Last Mile Mobility Business through Asset Transfer Agreement and Business Transfer Agreement for cash consideration of Rs. 846.94 crores. The total investment by the Company in MLMML amounted to Rs. 860.05 crores at 31st March, 2024. In accordance with and subject to the terms and conditions stipulated in the Securities Subscription Agreement and Shareholders’ Agreement entered with International Finance Corporation (IFC) wherein IFC agreed to invest Rs. 600.00 crores in Compulsory Convertible Preference Shares (CCPS) of MLMML in one or more tranches, IFC has invested Rs. 300.00 crores till 31st March, 2024. Further, in accordance with and subject to the terms and conditions stipulated in the amended and restated Securities Subscription Agreement and Shareholders’ Agreement entered with International Finance Corporation (IFC) and India-Japan Fund (“IJF”) wherein the IJF agreed to invest Rs. 400.00 crores in Compulsory Convertible Preference Shares (CCPS) of MLMML in one or more tranches, IJF has invested Rs. 200.00 crores till 31st March, 2024. Unless agreed to, in writing, for an early conversion, each CCPS is compulsorily convertible into such number of equity shares as determined as per a pre-determined formula at the conversion date, as per terms and conditions of the agreement(s) entered between the Company, IFC and IJF. Since the CCPS is convertible into variable number of equity shares of MLMML, it has been classified as financial liability at fair value through profit or loss in the financial statements of MLMML and in the consolidated financial statements of the Company. Further, in accordance with the shareholders’ agreement, the Company and MLMML shall take best efforts to provide IFC and IJF with a complete exit at fair value during the exit period, being the period between 5th and 7th anniversary from the date of IFC’s first investment, through certain exit options as may be determined by the Company in its sole discretion. If IFC continues to hold any equity security of MLMML after the expiry of the exit period, IFC shall have the right to require MLMML to complete an initial public offering subject to favourable market conditions. 41. Significant acquisitions and changes in ownership (Continued)
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