2. Rights, preferences and restrictions attached to the equity shares :-

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts, if any, in proportion to the number of equity shares held.

(iii) outstanding term loan - 3 of Rs. 2,281 lakhs (previous year Rs. 3,531 lakhs), carrying variable interest rate of 3 months T bill rate 1.72% for disbursements upto 30 April 2023 and 3 months T bill rate 1.97% for disbursements from 1 May 2023 onwards, repayable in quarterly instalments commencing from 1 April 2024 and ending on 1 January 2028. The lender has first charge on movable fixed assets of the Company, giving a minimum cover of 1.25 times of the loan amount (excluding those movable fixed assets which are exclusively charged to other lenders).

(iv) outstanding term loan - 4 of Rs. 670 lakhs (previous year Rs. 1,334 lakhs), carrying variable interest rate of 1 year MCLR 0.10%, repayable in quarterly instalments commencing from 31 March 2025 and ending on 31 March 2027. The lender has exclusive charge on the fixed assets of the Company which are created through this term loan specifically. The lender also has negative lien on fixed assets of the Company (excluding fixed assets exclusively charged for this loan).

(v) outstanding term loan - 5 of Rs. 3,201 lakhs (previous year Rs. 3,200 lakhs), carrying variable interest rate of based on Repo rate ranging 7.25% to 8.25% (previous year 8.25% to 8.50%), repayable in quarterly instalments commencing from 30 September 2025 and ending on 30 June 2028. The lender has first exclusive charge on the fixed assets of the Company being funded from the term loan of Axis bank. The lender also has negative lien on fixed assets of the Company (excluding fixed assets exclusively charged for this loan).

(vi) outstanding working capital term loan of Nil (previous year Rs. 1,000 lakhs), carrying variable interest rate of 1 month MCLR without spread at 8.35%, repayable in ten quarterly instalments commencing from 20 August 2025 and ending on 20 November 2027. The lender has equitable mortgage (first and exclusive) of Industrial Unit (Land and Building) located at village Asron, Shahid Bhagat Singh Nagar, Punjab.

(vii) outstanding term loans for vehicles Rs. 112.53 lakhs (previous year Rs. 158.54 lakhs), carrying fixed interest rate ranging from 8.75% to 9.50% per annum (previous year 8.75% to 9.50% per annum), repayable in monthly instalments commencing from 10 April 2023 and ending on 5 March 2029. The lender has exclusive charge on vehicle financed by such loan.

(viii) outstanding term loans for vehicles Rs. 123.54 lakhs (previous year Rs. 104.31 lakhs), carrying floating interest rate (Repo rate Spread) presently ranging from 8.50% to 8.85% (previous year 8.80% to 8.85%), repayable in monthly instalments commencing from 15 August 2024 and ending on 15 March 2030. The lender has exclusive charge on vehicle financed by such loan.

(i) The cash credit limits sanctioned by the bankers are secured by a parri passu charge on the Company's current assets. These carry floating interest rate ranging from 8.50% to 9.20% per annum during 2025-26 (previous year 9.10% to 9.25% per annum).

(ii) Other loans from banks - secured represents working capital demand loan taken from various banks, secured by parri passu charge or first pari-passu charge on current assets of the Company. These carry an interest rate ranging from 6.40% to 8.55% per annum (previous year 7.85% to 8.58% per annum).

(iii) Other loans from banks - unsecured represents working capital demand loan, working capital loan and credit card facility taken from various banks. These loans carry an interest rate ranging from 6.80% to 7.53% per annum (previous year 7.97% to 8.22% per annum).

* The Company has borrowings from banks on the basis of security of current assets and quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.

During the year, the Company recognised revenue of Rs. 3,270.54 lakhs (previous year Rs. 2,042.20 lakhs) and adjusted Rs. 95.62 lakhs (previous year Rs. 67.82 lakhs), relating to advance from customers, against dealer claims. Further, Rs. 358.85 lakhs (previous year Rs. 341.61 lakhs) was recognised from revenue received in advance included within contract liabilities at the beginning of the year. The closing balance of contract liabilities as at the year end, comprising revenue received in advance and advances from customers, will be recognised as revenue over a period of one to three years.

(i) contingencies pertaining to arbitration award received by the company amounting to Rs. 1,152.44 lakhs. In September 2010, the Company had initiated arbitration proceedings against the Delhi Metro Railway Corporation (DMRC) seeking compensation for losses due to cancellation of a contract. The Company had won an arbitral award in August 2014 allowing claims of Rs. 1,152.44 lakhs which was challenged by DMRC before Hon'ble High Court of Delhi ('High Court'). During the year ended 31 March 2024, the Company had filed an Execution Petition before High Court for enforcement of Arbitration Award and High Court directed the release of the said amount to the Company, subject to satisfaction of the Registrar General on submission of security. The amount of Rs. 1,152.44 lakhs was released to the Company on 30 March 2024, upon furnishing bank guarantee. The management is expecting a favorable outcome based on the evaluation of the case. As the case filed by DMRC is presently sub-judice and bank guarantee had been furnished, the management recorded a provision for contingencies of Rs. 1,152.44 lakhs in the financial statements during the year ended 31 March 2024.

32 Leases

The Company (lessee) leases a number of buildings, plant and equipment used in its operations. Leases of buildings and plant and equipment generally have lease terms between 2 to 9 years.The Company assesses at lease commencement whether it is reasonably certain to exercise the extension or termination option as per respective lease agreements. The weighted average incremental borrowing rate applied to lease liabilities is 8% per annum (previous year 8% per annum).

Segment information

The Company is primarily engaged in the business of manufacturing of commercial vehicles and related components which constitutes a single business segment and accordingly, the disclosures of Ind AS 108, “Operating Segments” are not required to be given. As defined in Ind AS 108, the Chief Operating Decision Maker (CODM), i.e. the Board of directors, evaluates the performance of the Company and allocates resources based on the analysis of the various performance indicators of the Company as a single unit.

35 The Company has established a comprehensive system for maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

4. The charge for gratuity and compensated absences, where applicable, in respect of the key managerial personnel, is not separately determinable as the remuneration is primarily reimbursed to the parent company.

5. Dividend paid to Sumitomo Corporation, Japan and Isuzu Motors Limited, Japan during the year ended 31 March 2026 pertains to financial year 2024-25.

6. In addition to Ind AS 24, Company has disclosed RPTs as per Companies Act, 2013 and SEBI LODR Regulations.

(ii) Defined benefit plan - Gratuity

The Company operates a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. Gratuity benefits valued are in accordance with the payment of Gratuity Act, 1972.

The above defined benefit plan exposes the Company to following risks:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary inflation risk:

Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The funds are managed by specialised team of Life Insurance Corporation of India.

f) Plan assets

The plan assets are maintained with Life Insurance Corporation of India Gratuity Scheme. The details of i nvestments maintained by Life Insurance Corporation of India and asset-liability matching strategies are not available with the Company and have not been disclosed.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same methods (present value of defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

38 Financial Instruments - Risk Management and Fair Values (A) Financial risk management

During the course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company’s business and operational / financial performance. These include market risk (including foreign currency risk, interest rate risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and has constituted Risk Management Committee to monitor mitigating actions taken by Management, minimize potential adverse effects and achieve greater predictability to earnings.

The Company has exposure to the following risk arising from financial instruments:

- Market risk (refer (I))

- Credit risk (refer (II)) and

- Liquidity risk (refer (III))

(I) Market risk

Market risk is the risk of any loss in future earnings, realisable fair values or future cash flows that may result from fluctuations in the pricing of a financial instrument. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future market changes cannot be normally predicted with reasonable accuracy. i. Foreign currency risk management:

The Company is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated and functional currency of the Company, i.e. Indian Rupee (Rs.). The currencies in which these transactions are primarily denominated are US Dollar and Euro. The Company's policy is to ensure that its net exposure is kept to an acceptable level which will not have material effect on the profits of the Company if there is any fluctuation in the currency rates.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period, as reported to management, are as follows:

- Sensitivity analysis:

A reasonably possible strengthening (weakening) of the Indian Rupee by 1% against below currencies at 31 March 2026 and 31 March 2025 would have increased / decreased the exposure in relation to financial instruments denominated in foreign currency and increased / decreased profit before tax and equity by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

ii. Interest rate risk management :

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

As at year end, financial liabilities (borrowings) of Rs. 27,794.77 lakhs (previous year Rs. 32,019.43 lakhs) were subject to variable interest rates.

- Sensitivity analysis:

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

The Company's certain long term loans taken from bank carries variable rate of interest, hence, it is subject to interest rate risk since carrying amount or the future cash flows will fluctuate because of a change in market interest rates.

(II) Credit risk :

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses both the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks. None of the financial instruments of the Company result in material concentrations of credit risks.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets as at 31 March 2026 and 31 March 2025.

The Company primarily has exposure from following types of customers:

- Dealers

- Government institutions

To manage trade receivables, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts, aging of such receivables and the country in which customers operate.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings.

Other financial assets measured at amortised cost: Other financial assets measured at amortized cost includes security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously and there were no indications that defaults in payment obligations would occur.

(III) Liquidity risk :

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company has obtained working capital borrowing limits of Rs. 55,000 lakhs (previous year Rs. 80,783.56 lakhs) from various banks to meet it's liquidity needs, out of which Rs. 21,626.97 lakhs (previous year Rs. 22,504.43 lakhs) has been utilised as at 31 March 2026.

40. The Ministry of Corporate Affairs (MCA) has prescribed a requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

The Company uses certain accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility. The audit trail (edit log) feature has operated throughout the year, except for certain tables relating to financial reporting and master data, where the same was enabled in a phased manner during the year. For the period during which the audit trail (edit log) facility was enabled and operated, the Company did not come across any instance of the audit trail feature being tampered with. Further, except for the period during which the audit trail was not enabled in the prior year, the audit trail has been preserved by the Company in accordance with the statutory requirements for record retention.

41 (a) Capital management

The Company manages its capital to ensure that the Company will be able to continue as a going concern, while maximising the return to stakeholders through efficient allocation of capital towards expansion of business, optimisation of working capital requirements and deployment of surplus funds. The Company uses the operational cash flows and equity to meet its working capital requirements. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings. The Company is not subject to any externally imposed capital requirements.

Management of the Company reviews the capital structure of the Company on a regular basis and uses debt equity ratio to monitor the same. As part of this review, management of the Company considers risks associated with the movement in the working capital and capex needs.

43 Final Dividend

The Board of Directors at their meeting held on 20 April 2026, has considered and recommended a final dividend of Rs. 23.50 per equity share (previous year Rs.18 per equity share) of Rs. 10 each fully paid up amounting to Rs. 3,400.84 lakhs (previous year Rs. 2,604.90 lakhs) for the year ended 31 March 2026, subject to approval by the shareholders at the ensuing Annual General Meeting, and it has not been recognised as liability in these financial statements.

During the year ended 31 March 2026, the Company has paid a final dividend of Rs. 18 per equity share of Rs. 10 each fully paid up amounting to Rs. 2,604.90 lakhs in respect of previous year ended 31 March 2025, which was considered and recommended by the Board of Directors at their meeting held on 30 May 2025 and was subsequently approved by the shareholders at the Annual General Meeting, held on 26 September 2025.

44 On 26 April 2025, Sumitomo Corporation, Japan (Promoter shareholder) and Isuzu Motors Limited, Japan (Public shareholder) entered into Share Purchase Agreements with Mahindra & Mahindra Limited ("Acquirer"), whereby they agreed to sell 63,62,306 equity shares (representing 43.96% of the equity share capital of the Company) and 21,70,747 equity shares (representing 15.00% of the equity share capital of the Company) respectively, of face value of Rs.10/- each, at a price of Rs. 650/- per share.

Pursuant to the above, on 1 August 2025, Mahindra & Mahindra Limited acquired an aggregate of 58.96% of the equity share capital of the Company, in accordance with Regulation 22(2) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 2011. Accordingly, the Company has become a subsidiary of Mahindra & Mahindra Limited w.e.f. 1 August 2025.

Subsequent to the completion of the open offer, the shareholding of Mahindra & Mahindra Limited increased to 58.97% of the equity share capital of the Company.

45 The name of the Company has been changed from ‘SML Isuzu Limited’ to ‘SML Mahindra Limited’ with effect from 8 October, 2025, on issuance of a fresh certificate of incorporation by the Registrar of Companies, following the exit of Isuzu Motors Limited, Japan as a shareholder and to reflect the change in ownership.

46 During the previous year, the Company had received anonymous complaint alleging that some employees may have financial dealings with specific dealers. To investigate the matter, the Company, on the directions of Audit Committee, had appointed an external expert who submitted their report to the Audit Committee in the previous year. Thereafter, the Audit Committee appointed a sub-committee of two independent directors to look into all aspects and conclude the matter. Based on expert’s findings and the sub-committee's review, there is no evidence of financial impropriety or fraud against the Company. Accordingly, management believes that the matter does not

have any material impact on the accompanying financial statements and, consequently, no adjustment is required to be made to the financial statements for the year ended 31 March 2026.

47 The Ministry of Environment, Forest and Climate Change has notified the Environment Protection (End-of-Life Vehicles) Rules, 2025 ("ELV Rules"), which are effective from 1 April 2025. As per these rules, Extended Producer Responsibility (EPR) obligations are imposed on producers ("vehicle manufacturers") for the scrapping of End-of-Life Vehicles and such obligations are to be fulfilled through the purchase of EPR certificates from registered Vehicle Scrapping Facilities via a Centralised Online Portal. The implementation details and operational procedures of the ELV rules including the modalities of the pricing mechanism for the EPR certificates are yet to be developed.

Consequently, the Company is currently unable to reliably estimate a range of possible outcomes and the potential impact of these rules. The Company will continue to assess the ability to measure its obligations pursuant to the ELV Rules, as and when the aforesaid details of implementation framework are available.

48 On November 21,2025, the Government of India notified the four Labour Codes - the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 (collectively “new labour code”) - consolidating 29 existing labour laws.

In accordance with the new Labour Codes, the Company has currently estimated the incremental impact on retiral benefits to be Rs. 546.68 lakhs. The Company continues to monitor developments on the Rules to be notified by regulatory authorities, including clarifications / additional guidance from authorities and will continue to assess the accounting implications, basis such developments/ guidance.

51 (a) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other persons or entities, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(b) The Company has not received any funds from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(d) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(e) The creditors covered by Micro, Small and Medium Enterprises Development Act, 2006 ("the MSMED Act, 2006") have been identified on the basis of information available with the Company.

(f) The Company has no such layers as prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017. Hence, the said clause is not applicable to the Company.

(g) The Company has not been declared wilful defaulter by any bank or financial Institution or other lender.

(h) The Company did not have any balances or transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the year.

(i) No charges or satisfaction are yet to be registered with ROC beyond the statutory period.

(j) No proceeding have been initiated on or is pending against the Company for holding benami property under the Benami Transactions Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.