Mahindra & Mahindra 144A

to everyone who has joined in to us in person as well as virtually, and a very warm welcome to the quarter one analyst meet of Mahindra and Mahindra Limited. We have with us today our Group CEO and MD, Dr. Anish Shah, ED and CEO of our auto and farm business, Mr. Rajesh Jejurikar, and our Group CFO, Mr. Amar Jyoti Barua. We will be taking your questions at the end of this presentation. As a reminder, this meeting is being recorded. For the purpose of completeness, I want to read out this statement. Certain statements... Certain statements in this meeting with regard to our future growth prospects are forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. With that, I now invite Dr. Shah for his opening remarks.

Thank you, Divya. And good evening, everyone. Good afternoon as well to folks who joined online. And we have a quarter again with a strong operating performance, which is a common theme. We hope to keep it that way. So let's start with the key messages for this quarter. Auto and Farm continue to be on track with their operating performance. Market share gains being a key theme this quarter. SUV up 130 basis points. LCV up 160 basis points. Tractors up 180 basis points. Margin expansions is the second big theme for the quarter, reasonably substantial, resulting in auto profit after tax up 35%, farm up 4% in a tough market. Mahindra Finance is finally unlocking its potential. We're starting to see that in the numbers now. This is something we've talked about for a while. We've talked about the turnaround that we started probably one year, one and a half to one year, nine months ago. We talked about the three year turnaround. We started to see the impact on asset quality. We were down at 3.4% at the start of this year. A marginal increase of 3.6, which is the first quarter increase that typically happens. Beyond that, assets up 23% and profit up 37%, also helped by lower credit costs. And this is something that is on the back of a good quarter loss here for Mahindra Finance as well, and therefore is putting this business very solidly on track now. TechM, the turnaround has commenced. Q1 is on the right track. And this is one where we will look for a lot more over the next three years and be able to hopefully deliver on the tech front as well. As a result, consolidated profit is up 20%. This does exclude two one-time gains that were in our numbers last year in the first quarter, specifically KG Mobility, which was over 400 crores, as well as the sale of MCIE. So those are two that we have excluded in comparing numbers just from an operating standpoint. And ROE is at 19.4%. So that is the overall message as we look a little deeper into the numbers. Revenue up 10% and profit is at 3,283 crores, up 20% excluding the one-time gains that we had last year. The key drivers of PAT, auto and farm together grew 18%. And beyond the market share gains that we spoke about, capacity is up 3x in the last four years. And that is enabling us to be a little more aggressive in the market now and also gain operating leverage, which is helping in terms of margins. And that's something that we will continue to see benefits from. The TechM and Mahindra Finance front margins is a key focus for TechM and while you see a 23% gain from the last year first quarter, TechM's last year first quarter was weaker and therefore we are looking more at the longer term gains that we need to get from TechM. Mahindra Finance was a solid quarter overall. Growth gems up 34%. Here, as I mentioned before, the profit number is not the primary focus for us because it is the actions that are going in to build each of these businesses up 5x. So while we are happy with the 34% profit gain, it's easier for me to say this is not a big focus when this is a good number rather than when this is not a very good number. So it's one that I will consistently maintain. It's more the growth that we're really looking for in these businesses right now. Focusing on auto and farm to start with, auto we continue to be the number one player in SUVs. Volume is up 24%. We had talked about mid to high teen growth at the start of this year as a commitment for F25 or as an expectation rather for F25. We are at 24% to start the first quarter. Capacity we spoke about, margins are up 180 basis points. So that's been a pretty significant jump in auto margins. And as a result, PAT is at 1,330 crore. Ahead of tractors, tractors comes in fairly close at 1,238 crores. And the domestic industry outlook is improving. Rajesh will talk about that. Some moderation in international markets, but strong execution, not just on market share, but also on margin, up 100 basis points here. And farm machinery revenue is up 34%. Still a little lower growth than I'd like it to be, while it's a good number. This is one area where we still feel we can get more growth, just given the potential we have in this business. Mahindra Finance, we talked about asset quality and asset growth. Beyond that, technology is starting to deliver results. On a number of fronts, we've got 100% of the branches now under central processing, which helps tighter controls as well. Also, a number of efforts on improving customer experience through technology. And there's, again, more to be done there, but good wins so far in terms of where we are. And therefore, profit after tax, Mahindra Finance in this quarter is just very slightly shy of 500 crores. It's a good mark to reach for us, and we close the quarter at 497. TechM, the new organization is focused on service delivery. Demand outlook is still mixed, but the quarter shows some recovery from last year, and we will continue on this path of recovery as we go forward. Logistics execution is better than it has been before and we feel a lot better about where we are. The express business did have a loss but the management team has promised to turn around and a break even by end of the current quarter that we are in and that's something that is on track at this point in time and as that comes in the Growth in 3PL last mile will help and logistics will start getting back on track as a business overall. So that's the weaker spot for us right now. Hospitality continues to be a strong spot, 90% occupancy. Membership's growing, 300,000 members now. Average unit realization is up 31%. So good story there. Real estate continues to grow at a very rapid pace. aided by an aggressive approach by the team. A lot of changes made there in terms of how the team is approaching the marketplace as well as the overall market buoyancy. So a combination of that resulting in a 3x increase in pre-sales and GDP acquired is 68% higher than last year. So as a result, consistent delivery on commitments is something we continually talk about. We are at 19.4%. And yes, the bar is still at 18, not going up to 19. We'll continue to sort of fluctuate around that. given the results overall, slightly lower than first year because first quarter last year included the one-timers as I spoke about. But again, we feel pretty good that we will be on track to deliver 15% to 20% growth on a longer-term basis on EPS. So with that, I would invite Rajesh to come up and talk about more details on the auto and farm business. Rajesh?

Thanks, Anish, and good to see all of you and welcome to those who are on the virtual format as well. I'll start with FES. I'll run quickly through the slides so we have enough time for Q&A. I guess most of you have picked up what's on the slides already. So our tractor volumes were up mainly because we gained market share. The market had a slight degrowth, but it was a good gain in market share to get to 44.7. Of course, our quarter one market shares are always higher than the rest of the year. But on that base, we've had a good growth. This kind of reflects the fact that our quarter one market shares are usually higher as well. The question on what's the future, we clearly see some green shoots. One is improving terms of trade for farmers. We've been seeing that. But in quarter one, seen a more dramatic improvement with output prices going up, MSPs improving, input inflation not being so high. So that's a favorable factor. Monsoons have been good in July in most parts of the country, especially west and south, which was really bad last year. We would see a good effect of that in the second half. Much higher spending by the government in the rural area and that's known to be a good driver of growth for tractor. And of course some part of Navratra will come in the second half of this year compared to last year. The farm machinery business has had a good growth as well in the quarter and we did about 265 crores. Anish covered this, so 5% growth in PBIT on the consolidated and flattish revenue. The margins you can see, you know, we've got to 19.7% as the core tractor margin, something we've been, you know, wanting to get to over the last few quarters. You know, so we can talk a little bit more if you like in the Q&A on what enabled this, but this was something that we were very, very focused on wanting to get to this year at, you know, close to the 19-20% core tractor margin. And you can see that, you know, we've managed this curve of being able to deliver margins in a pretty kind of narrow band over long periods of time, irrespective of what's happening to industry. On the automotive business, we grew SUVs 24%, pickups, the industry was flat again, and we gained shares. So we gained some volume there, but the industry was flat. And you can see we gained 1.6 share points on LCVs. This is the second, we were number two for eight quarters on volume. Given our average price point, we think that's a very good performance and a continued strong performance by way of revenue market share. This is a recap slide which we've used in the previous meetings. The reason we're putting it up here is we've now taken our capacity up several times from where we were two and a half, three years back. The reason we've been doing that is, of course, that we fully leverage the opportunity in front. But also, more importantly, we bring down the waiting period for customers. And when we aspire to bring down waiting period to customers, clearly the concept of booking is an antithesis to that. In a way, we're going to retire this slide after today. And hopefully, we continue to grow without having to show what are our booking numbers, because bookings of this kind really mean that we're not able to give customers enough vehicles at a reasonable delivery time. But this is what first July was. And since the month is not over, we don't have a first August to share. But we did have a very healthy increase in bookings in XUV700 during the month, up from the previous month by more than 40-45%. So that is still yesterday. Question many of you want answered, so we'll try and answer that here and maybe more in the Q&A because I think you probably want a little bit more. So we took the 700, exquisite 700 price up from launch, which is over three years, by 3.8 lakhs to 4 lakhs. This was a function of commodity prices, uh premiums that we were paying for importing chips which we had to we have a large number of chips so we were paying premium so that was all getting built into the cost uh so we have taken very aggressive price increases capacity has gone up in the meanwhile so 300 we started at three and a half thousand we went to six now we are at ten as we shared in the february meeting you know one of the key challenges that we had on xuv700 as we were thinking about growth is to create accessible price point. And in February, we had kind of called out that we will take a series of actions to make the brand more accessible so that we can grow. A very large percentage of the brand volume was coming at the high end, which was good till we were at a certain volume. But once you want to go beyond that volume and you want to grow being a larger brand than 6,000 a month, then average price point of 25 lakhs X showroom or 23 lakhs X showroom with on-road crossing 30 starts becoming a barrier for segments. So the first initiative we took was to introduce a new version called AX5 Select, which came with panoramic sunroof and so on. at a more reasonable price point way below 20 and we did feel that we at least in the short run need to run a promotion which we branded as a third anniversary offer to kind of make the two higher versions as as more accessible as well we think this is not going to have a financial impact or significant financial impact because it will we will get operating leverage through higher volumes And many of our costs have come down, including chips, but also work that we've done on value engineering. So that's where we are on why we did this. I spoke about the LCVs, the LCV market share we gained again in quarter one. Last mile mobility, the penetration of electric three-wheelers continues to grow. It was close to 20% in quarter one, which is a very good sign. And we have been saying that we believe that this category will probably be the fastest to penetrate because it gives clearly visible benefits to the customer. We had a PBIT growth of 45% on auto and a revenue growth of 16%. The standalone margin came at 9.5%. With that, I'll hand over to Amar. Thanks.

Thank you, Rajesh. So just to sum up everything that you heard today, I'll start off with this page that you've seen before, but just again, highlight the key points. We tend to focus a lot on the pattern and that's great, but I do want to call out the very strong revenue performance as well. Auto was up 16% within this 10% growth. Farm was flat in an environment where the domestic market is kind of flattish as well. So they've grown domestically, gained share. International is where there's some pressure, and that's something that is mostly coming from the US and some of Europe. And then within this, you continue to see the growth that is coming in through the asset growth in Mahindra Finance. Also very important to highlight that 8 out of 10 growth gems had very strong growth in line with our expectations. And the two that didn't were also as part of our plan, like for example, Susten, which has sold off its assets to the Invit, so doesn't see much revenue growth year over year. I'll spend a little bit of time on the PAT because I think it's very important that we address some of the other income conversations that happen all the time. And we don't provide guidance. So this is not a guidance on the number. This is a way for you to think about other income. For us, other income is basically the income we earn on the surplus funds that we have. and mark to market on any investments that we have. That's primarily what goes into other income. There's very little that happens outside of that. Last year, we had 405 crores of KG Mobility mark to market gain as the stock got listed. this year that number actually turned to a negative so that's a significant swing but you'll see we don't call out the negative because it's not material in the m m scheme of things but the gain last year was significant 405 is way above our materiality threshold so that's how we always look at this and when you think about how to think about other income unless you hear of something that we are doing either in terms of stocks, share sale, which is also intimated to the SE, or significant variation in some holding, you should not typically have a lot of movement in this account outside of mark-to-market, which frankly, even we can't estimate. That really depends on share price or valuation on a day. The other thing that we are calling out here is the stake sale that we had in MCIE. That actually comes through the investment in associates and JVs and was part of that number. That was around 358 crores. So that's what makes up the 763. That again is not something that you'll see every year or every quarter. It is a one-off and that's how you should think about it. Dividend income is something that will come in periodically and you know the cycle that we follow for dividend income. That's something that will come in through the investment line item. So excluding that, up 20%, again, tremendous performance. You heard from Rajesh on auto margins, on farm margins. And then I should also call out very strong performance from Mahindra Finance, up 37% in income. And TechM, while very, very early, is showing some signs of recovery. So 23% up. We'll have to see how that goes. Growth Gems were up 34%. within this number as well. This lays out what I just talked about. And I call this page our strategy in action because you'll recall Anish keeps talking about capitalizing on market leadership. So you still see auto and farm delivering a lot of margin improvement year over year. And then the unlocking the full potential is where you are starting to see some of the strength of the strategy. So hopefully with time we can see that number, at least that services number growing even faster. Finally, I need to call out the very strong performance on the standalone side, both in auto and farm. You saw the margin performance. Volume was up 11%, margins up 23%. And that's primarily coming on the back of the significant improvement in PBIT, 9.5% in the case of auto and 18.5% in the case of farm. So I'll wrap up here, and we'll take some questions.

Just wait a minute for the setup. So we'll begin with the Q&A round now. Vinegarette.

Thank you. Congratulations for a very strong quarter one. I'll stick to two questions, both on the auto side. First is billings versus bookings. Our booking number remains quite healthy at around 50,000, but the billing number has not moved up. Any sort of guidance that you would see? When do we see that moving up? Secondly, we called out in February about XUV700 price action, and then we finally saw that. Any other part of the portfolio where you feel there is opportunity or need to do something similar at some stage? So these two. Thanks.

Rajesh? Thanks. So, the first question is around billing versus booking. When we look at booking, there's a cycle of conversion, and that does take time based on the season or based on what... Can you hear it? You can hear? Okay. So June, I think, was a time which was slow for a lot of people on converting for multiple reasons, heat waves, so on and so forth. So you had bookings, but customers were not actually coming in to showrooms even though they were on a booking list to get into conversion and hence retail and then you don't want to end up billing beyond a point. Also when you are doing a variant transition like we were in 7W introducing AX5 select, then you go to down stock some other ones which is likely to cannibalize, so you kind of also look at making sure that you are not holding stocks of wrong variants when you are trying to introduce a variant with a different price point. The third factor that we've been working on carefully is what we do with the three doors, because needless to say, there will be some cannibalization. And we have to be very calibrated in the way we build that in. because it won't stay at the same level as it was, and we expect the total volume to go up, but it's very unlikely, and we're doing 6,000 of three-door a month, that it will stay at that level, and then we will add five-door as well. So again, you know, moderating what we're going to do with three-door, we don't fully know what is the level of cannibalization that may happen. So, you know, also we're being careful a little bit on how to think about THAR, So there are multiple such factors, but I think one of the reasons was overall June conversions were low, even on existing bookings. So then you get into, if that happens, then your dealer stop has gone up a few days, so you want to correct that and try and stabilize that, so you start moderating billing. So it's a combination of multiple things. Does that answer the question? No. Yeah, I think the honest answer to that is after Thar 5 door, we start billing because till then we are going to see a little bit of pressure on Thar 3 door because existing prospects are into a wait and watch as well. So everyone wants to see what this is before deciding which of the two. So there is a little bit of wait and watch. So it's going to take a month or two for that to stabilize. The second question was around will we do more such pricing. We will do it only where we really feel it is needed from a right long-term strategy. So what we've done in the case of 700 below is not a knee-jerk reaction. It's been thought through, planned over months, you know, financial impact studied and on the balance we believe that it is the right thing to do to drive growth, make the brand more accessible. Like I said in the presentation, it was becoming expensive for getting volume because there's too much perception of the average price of the product being more than 30 lakhs on road. That's not a place we wanted to be. So there was a strategic reason to change the price perception around the brand. So wherever if there is a need for taking a strategic call on a portfolio, in a way that we are able to you know look at the need around price perception growth uh margins uh then we would kind of do that trade-off but we we're not really believers in kind of okay let's run lots of discounts to get a current one billing going i mean this is not what this is about it was a it was a thought through planned intervention which we feel was needed for long-term growth of the brand and business just to add to that uh this was

in a sense signaled in February saying we're going to start thinking of this consistent with our approach to it because as the cost comes down the operating leverage goes up it was the right action to take as well even as our margins are going up so on balance we really don't expect much of a financial impact as a result of this because of the other balancing factors yes Kabir

So my first question is on demand environment itself. We had set a target of mid to high teens growth. How do you feel about demand right now? Do you see that things are slower and you need to take effort to drive growth faster? Because we've seen some price reductions by you and the competition and industry is seeing very tepid growth now. you might need to drive too hard to drive growth. So just your thoughts on that first.

You know you've been around Kapil for a long time tracking the auto industry and you know Anish was asking me this also in a different context earlier and I was saying of course the demand in the environment has been tepid but why is that not affecting 3XO? I mean why is there it's in the heart of the most competitive segment but we're seeing huge momentum there, right? It's also freshness, what you're doing new, you know, how strong is the value proposition, so on. So, I think it's a function of many things, right. So, right now we have that advantage with 3XO, we will have that advantage with Thar 5 door. But when a product is 3 years, 4 years old, there is going to be a little bit of a fatigue and then you've got to make the right interventions. But overall, let's say the buoyancy as an industry, clearly, I think that's not there. We've got to be honest about that. Then it's a question of what is each individual brand and player's approach to thinking about growth versus profit and so on and so forth. So we would be inclined to drive growth, and which is why we stay with the mid to high teens as the objective for the year. with 3XO still, you know, ramping up, with 5Door, Thar coming in, and with what we're doing on other brands, we think we'll easily get to mid to high teens. We see, and anyway, we have started the quarter one with 24% growth. So if you're going to end the year with mid to high teens, then we already have the right first three months to work out from.

And second question is on ASPs and margins. This quarter, when we compare to Q4, the auto ASP has come down. There will be a mixed impact, but is there, like, how should we think about it when we are building this forward? Do you see further drop in average selling prices? Looking at, you know, on positive side, you'll have the FIDO coming in. On negative side, you'll have a price cut and maybe higher volumes of 3XO. And similarly, you know, margins, we have seen a good improvement in both the segments. So what is the outlook there? What were the factors that supported margin expansion this time?

Yeah, so the quarter-on-quarter average selling price, fundamentally two, three things. One is that we had a very low share of XUV300 on Q4 because we were phasing it out. And then we have a, I mean, just as a comparison from XUV300, which was a ramped-down share, in our mix to enhance significantly enhance share in quarter one obviously there's some effect of that when you're comparing q4 to q1 so it's not a like to like comparison because xuv300 itself was significantly ramped down in the overall so that raised the average selling price there is some minor effect of xuv400 where the quarter four number was higher and that set a much higher average selling price so that's a second factor. I don't think it's too early to count the effect of either the x5 select on the mix or whatever, because that was just coming in towards the later part of the quarter. So I don't think that's really significantly baked in. But we have been seeing, you know, over quarter one, the overall ratio of AX7, AX7L was 70-75% and quarter one that was, you know, by June we had come to 50-55%. So we already... Started seeing some of that in June and you see some of that in the quarter on quarter margin. So what, you know, the large corrections we've actually taken are in AX7, AX7L, which is now clearly, you know, as you would interact and find out from the market, what this is doing is enabling people to come back to AX7, AX7L. Because, you know, you're creating accessibility perception with AX5, but when they come into the showroom, AX7 is a wow proposition. So, you're already seeing a huge move to AX7 and hopefully with time to AX7L. So, we'll come back to a better AX7, AX7L makes, which will actually elevate margin and average selling price both. That's the first part of your question, I think. The second part was, what did we do to get the margins on the tractor side?

The margins and also the outlook, if you can talk about the various factors which you are seeing from your vantage point right now.

Is the question couple both for tractors and auto? Yes, please. So on the tractor side, you know, we've been, when you come out of a downturn, so to say, you know, that's a period in which you're bringing every cost completely down. You cut all the extra expenses because we are, I mean, none of us liked the margins that we were doing over the last few quarters. Of course, we understand it was because of commodity inflation. the fact that the industry was not going but it's not a level of margin let's honestly say him and was feeling good about and we like i said in the presentation we did want to come to get our core tractor margin to you know reasonably to where we were, which was around 19 and a half, 20%. So we did get into trying to do a lot around cost. And then because we gained market share, we got a 5% volume increase. You straight away saw the benefit of managing cost well with a 5% volume. Increase in commodity was reasonably benign, which was helpful. I wouldn't say it had gone down, but it was reasonably benign, which helped. So that was on the tractor side. On the auto side, it was a little bit of commodity benefit, so we did get some of that. The benefit, if I may use that word, of some of the price increases we have taken got fully baked into the full quarter number, so you got to see a full quarter of that. So, I would broadly describe it as these two things which affected the auto margins. And the outlook? You know we don't share Outlook, Kapil, but I thought your question then finally got filtered to tell us the levers which got you there. Yes. So these were the levers.

Okay. No, I mean, we've had a price cut as well, right? So in light of that, do you see that you're passing on some of this margin or should we expect that putting everything together, margin should hold on?

We've answered and Anish reinforced that the decision that we've taken on 700 pricing, we believe will have a negligible effect on the financials over this quarter or the next. So we're not really factoring in that as a major driver of what will affect our margins. We have a certain assumption of what kind of volume growth we should be able to get with this kind of pricing. Hopefully that will play out. If that plays out, we are good. Or anywhere in that range. So overall I think we are comfortable. And we have also got the flexibility if it doesn't work out the way we want, we can always go back to pricing because it's announced as an anniversary promotion. So it's not a price drop. So we always have the option of going back to any price that we feel is the right price from November.

Thank you.

Raghu, I'll just come to you. We'll take a couple of questions online as well. Anish, this one is for you. Does Mahindra plan on venturing into any new segment in the PV business?

In the passenger vehicle business? Any new segment? I'm going to actually have Rajesh answer that question. Back to you, Rajesh.

I'm just wondering how to think about that question, because passenger vehicle itself is a segment. So the question will be on sedans. Yeah, so I think at this point of time, you know, we've been very focused that brand Mahindra will state as a pure SUV, authentic SUVs player. So at least with the brand Mahindra, we will not get into any other segment.

Raghu, please go ahead.

Thank you, sir. Congratulations on the strong numbers. Sir, first question was on the tractor demand side. So, Q1 we have started off with East, West and North regions doing well. Even Central has done well. South part which is declining but the monsoon progress in South region has been very good. So, assuming things improve in the South region and you also have that Navratra effect in second half, Could you say that full year 8-10% growth is possible in tractors? That is on domestic. Second, on the export side, we have done almost 50% growth in Q1 and OJA launch has helped. So, how do you see that sustenance of export at maybe this 1500-1800 per month kind of a level? So, whatever we have done last 3 months, is it sustainable?

I wish I could give you a very numeric answer to question one. But I think we'll wait two, three months to give you a more numeric answer. Right now, we would stay with the 5-odd percent growth rate. But based on the slide that I put out, there are several indications that things could be better than what we thought a month back. you know, we've, it's so early in the monsoons to kind of give a new outlook that we would just rather wait a couple of months before we change a formal outlook. But all the factors that you said, especially the rains in south, augur very well for a good second half. So I don't, I think it's a little premature to say whether that may be 8-9% for the year. But it does look like the second half will be good.

Just on that, if I… follow the cues from what the Fed governor or the RBI governor does, we'd say that, you know, we're still at 5%, but the arrow looks upward.

Yeah, yeah, and that is absolutely true. The point on export, I just maybe add a nuance or a perspective which may not be so apparent or obvious. So, in the US, we have three sources from which we get product supply, all under brand Mahindra Interactors. So, it used to be from Mahindra India. It was from our joint venture or partner company, Mitsubishi Mahindra AG from Japan and from a company in Korea as well. So, through OJA what we have done actually is we removed some of these other sources back into a Mahindra sale in a made in India format. So, all the growth that is coming from OJA is not necessarily extra growth in US. It is also a reallocation if I may use that word of supply chains from other countries. partners to Mahindra India. So as part of OJA, that's one of the things that we've done. So in a way, what I'm trying to kind of say is, there's a reasonable amount of sustainability, because it's not just, all of this is not leading into market share growth in North America. Some of it is substituting what we were buying from somewhere else, and that's getting routed through Mahindra India. Does that help you think about it? The US market, tractor market right now has actually had 8 months, 10 straight quarters of degrowth, the segment in which we play. So the market itself is a little strained at the moment in the less than 100 horsepower in North America. Part of that is the interest rates going up and I think maybe that's why Fed is on top of Anish's mind. So hopefully they'll correct their interest rates and that'll bring back some of the buying there in this segment.

Yeah, the green for us is the up arrow, the green for them is the down arrow.

Thanks for that. And over a period of time, the share of Swaraj has been going up in the tractor file. And with all the product actions you have done, how do you see Swaraj and Mahindra portfolios playing out in future?

You mean the mix between the two? You know, so we wear two hats when we talk to each team and each team aspires to be number one. So we let them play the game the way they want to and we're very happy if one of the brand goes ahead of the other. And that way, at least number one and number two are fighting really hard.

Either way you win.

either way we win as a total as long as we ensure that which is what we try to do that's the these are the only guardrails otherwise you know we do want them to fight and when Hemant talks to Swaraj team or I talk to the Swaraj team we will energize them to want to be number one we'll never tell them that you have to stay number two because there's another brand in our portfolio which is number one so as far as we are concerned both should fight to grow

On the last mile mobility, as per FI24 annual report, the margin is about mid-single digit, 4-5% EBITDA margin. Now that we have PLI certification for the products, how do you look at the profitability going forward and also the volumes have been increasing?

It's a difficult question to answer because of so much uncertainty in the regulatory environment, you know, with FAME 2 going away, EMPS coming in, FAME 3 coming back. In the process of that, the quantum of FAME 3 came, 2 came down, I mean, first came down because of the methodology and then came down through EMPS. uh part of that gets offset by pli uh every time the scheme changes you have to do a recertification and then we lose some money in the transition time because the dealer stocks or the pipeline stocks are not covered so that's the cost we need to incur so it's a little dynamic right now you know so at least our focus at this point of time is as long as we are making a reasonable amount of money but driving growth in ev penetration uh you know that's the objective right now because it's with the current you know dynamism if I may use the word on policy changes it's very hard to kind of pin and say okay this will be the margin at this point of time so I'm honest but uh the business has a good cost structure sale costs are coming down uh so you know hopefully our our brief to the business will be to try to grow EV penetration as quickly as possible and there's still large pockets many, many districts where EV penetration is close to nothing. This is a huge skew district-wise in the way penetration is happening.

That's a very good story overall because industry penetration has gone from 0 to 20% in a very short time. And we feel that by 2030 it will be 100%. And by 2030 the industry will not need incentives. So PLI will end by then. And at that point in time with battery costs coming down, with scale coming in, So overall, Frame 2 has helped a lot and a lot of credit to the government for that. EMPS has helped. Frame 3 will be essential to continue that momentum because the price gap is fairly high and consumers are not going to be able to take the impact without Frame 3. Nor will the business be able to take the impact. And therefore, that's an important bridge that's required. But once we get to 2030, we're not going to need incentives beyond that.

Absolutely sir, given that the penetration is increasing so fast and sooner or later the ICE and EV margin gap should narrow and one of your competitors indicated that they look forward to making same margins in ICE and EV for three wheelers. So that is where I was coming in. in the next 2-3 years do you think it would be possible that the gap will be significantly narrowed and EV last mile mobility will be making double-digit margins?

As Rajesh said just given the flux in policy we are not completely sure of that but it's fair to say that by 2030 at least we will have back to normal what happens two or three years before that will I think depend on some of the policy and on the pace of change as well.

Yeah, hi. Rajesh, first question about Thar. You guys have had a hot hand on launches, but how do you think about Thar? Because something which is very unique, Thar 3-door has already done what it has done. Incrementally, do you see the Thar 4 as something which extension of Thar 3 or it can something which can open up a wider segment for you? Because we don't have a product like that. which can work for a family because Thar 3 door has limitations in terms of it can't carry 4 or 5 of them in comfort for long drives for example. Accessibility as you know to the back seat is a bit of a workout. So how should one see Thar 5 door?

Wider segment. Wider segment and how wide? I think you may want to wait for 15th August to hear how wide but it will be pretty wide.

So, in that sense we can expect a pretty tall price ladder so that the inter-level variance can even probably lure in the mid-60s.

I am not even going there.

I cannot wait for that. And second question on the pricing bit what you alluded to that once you hit the 30 lakh price mark it kind of becomes a bit for a family or anyone. So, how should one think about EVs in that context? Will we have the same hurdle for even EVs which you will launch because end of the day the customer will look at it as an EV as a substitute to his existing ICE or XUV or a Scorpio or anything, right? So, how should one look at EV pricing in the context of the point what you made?

I am glad you think that our EVs will sell at more than 30 lakhs, but we have not given any such indication.

Rajesh, with that kind of spec and 60 and 80 kilo-watt battery and our intention to make margins, help me there.

I think, Pramod, that is the conversation for 2025.

Fair enough and on the export side, because given the kind of success we've had in the market against pretty well-engineered global competitors, Why can't we think differently on the export side? Probably partner with some of our existing alliance partners. Anyway, is there anything which we can do? Because our products are quite complementary to some of the other global players. Like say, if you pick Volkswagen, some of the products can be very complementary to their portfolio in many emerging markets, for example. So is there something which you can think, which can widen our product reach on the export side?

So let's first just talk about it a little organically, and then of course, you know, in today's world, we have to explore every other alliance opportunity to, you know, get a win-win. But organically, we're already seeing very good traction in markets where we have a presence with our new products. So example, the response to XUV700, Scorpion in South Africa, or even now the 3XO is just getting to go to South Africa. Australia, New Zealand. So see some of the new markets we've gone to. We think the big disruptor will be when we do the global lifestyle pickup because there are not many people playing there and we have been strong in pickups in many markets around the world, but it was an aged aging product, the Scorpio pickup, the global pickup is going to take it to a totally different scale. So we do think that international will be a very big opportunity for us, but we'll do it in a very calibrated way and choose markets that really have a presence and then add slowly. I don't think we are planning to do, you know, one fine day, now let's go global kind of thing. If you have any ideas, do share with us. Yeah, we will keep that in mind.

And this is to Anish. Anish, there have been media articles talking about some of the global players looking for Indian alliance partners and also offloading equity. So how should one think about your approach to such moves or say offers, right, because The problem we would have as analysts is that if you take equity exposure to existing business, which is like loaded with legacy cost and subscale business. So if you can just help us understand from your capital allocation prism and the return focus, how should we think about it if something were to fructify?

I look at it the same way as you talked about one new area, which is the bar is very high. It has to make sense for us from a financial standpoint first. It has to be able to generate returns that will be outsize and we can define what outsize is relative to the industry. If all of that happens, then that's something we will look at. So that part continues to be maintained in everything we do. Thank you. Amar, anything you want to add to that?

I would just say that we got to bear in mind that We're not going to get into an alliance bringing no strength if there is ever a proposal. And our strength is the margins you saw, the cost point, the ability to get. So I think nobody is going to get into a business which is going to be dilutive. I think that's the point Anish is making. It's got to make sense for us.

Just take a couple of questions online. So this is from Gunjan at Bank of America. Can you talk about the moderation in the booking run rate across the UV models? She's particularly speaking about the Scorpio order book decline. And the second question is understanding the sustainability of the auto margins, particularly given that we're going ahead with the BEV launches. Particularly? Going ahead with the BEV launches, the sustainability of the margins. Okay.

So let me just take the second one very quickly, Gunjan. So we've said in the past that the percentage margin on BEVs will be lower because of the denominator effect. And we will call that out separately so you'll be able to see the BEV margin separately from ICE. Of course, we do keep margins low when we launch new products, but once we get to a steady state, we would expect the per-unit margin for BEV to be, by and large, the same as the equivalent ice. cannot be maintained. The denominators are totally different and we will, you know, we will hence call that out separately for you so you are able to see the effect of that and it is not lost in the mix. So, you know, this is something we are very conscious of and we will allow you to look at both separately in a way that you can form your own judgment on how each line is doing. But the percentages cannot be compared because of the denominator effect. On the booking question, I think I did cover that in some amount of detail, specifically around Scorpio. I think there was a time a few quarters back when customers were comfortable with putting in money, waiting. and so on and so I think that you know in an open market of the kind that is now I don't think customers are in the mindset of saying okay I want to book something which is going to come to me after two months or three months or five months or six months we have to get out of this booking mindset and try and get into being able to sell what we are able to because that's what customer is expecting today two years back there was a different mindset many brands were in shortage there was hence a desire to kind of say okay let me book and wait I don't think that is going to happen now in products which are two years and three years old. I mean, customers will want pretty soon, like if you walk in, we need it, or then we don't want to book. Whenever it's available, we'll come back in. So we will see some of that happening. But the rate of bookings by itself is good enough for the fresh bookings for us to maintain the retail and billing momentum that we're talking about to get to mid to high teens. So I think We've got to calibrate what is happening with the ambition that we've set out for this year, which is mid to high teens.

Just to add to that, capacity is a key factor there as well, because we've gone from 18 to 29 to 39 to 49,000 now. So, as we have taken capacity up, that also has increased the ability to be able to clear that out and therefore, we started to look at scenarios where we, you know, hopefully do not have too much of a booking pipeline and can increase capacity faster whenever that is required.

Yeah, and as I have said in the past, Gunjan, you know, when this change is happening, we do have to get back into marketing and, you know, I mean, we do see, for example, Scorpio Classic, we never thought would do the level that it was doing after we launched the Scorpio N. But today, Scorpio plus Scorpio Classic is amongst the, as a portfolio amongst top 10 brands. across any price point. And, you know, the franchise volume is more than 12-13,000. So, it is a very large franchise. It's doing very well. But it's not now, I don't think right now we are expecting customers to come in and say, we want to book a Scorpio Classic. I mean, let's not forget it's a 22-year-old product.

Please go ahead.

Hi, Vikram from Quantum Advisors. My question is whenever you see any kind of downturn or lack of buoyancy in the auto sector, The buyers tend to down trade. So are we seeing such a trend that although your numbers or volumes are still going pretty strong, are people still going for the top variant or are we seeing a trend where they are slowly going down for the slightly lower variant?

It's a good question and I think 700 case is actually the best way to explain this because At a certain stage in the environment, customers will start feeling uncomfortable about certain price points and then we start trading down. And sometimes the right action is to still keep them at the top at a reasonable price rather than let them trade down and reduce the overall weighted margin on the portfolio. So I think these are calls that we would have to take. But I think as a direction and an approach, what you're saying is what we do tend to see that.

My second and last question is all these cost reduction measures which have ensured you are able to take some sort of a cut in XUV 700 and still maintain the margins, but those measures should be applicable for all the models, right? I mean, it can't be model specific. So any reading that we can have that such a

such an action will continue or anything that you want to explain on that front so just taking one very specific example to explain why it is not applicable to all models the number of chips that we have on xuv700 i think it's 230 or 250 or something on a bolero that may be like 20. So, the same benefit is not available on all the products. Different products have totally different levels of technology and not all costs have come down. are benign, but they have not come down. So, the benefit that we got on XUV700 is because we were paying a huge premium to get chips to be able to produce. 700 has a very large number of chips, so it got a disproportionate share of the benefit of that. That does not go through to all the products. So, I am just taking this as one example that not everything The cost reduction doesn't equally apply everywhere. The second thing is, of course, we run our business as a portfolio. So there are areas where we'll say that, OK, we don't mind trading off a little bit of margin for growth. And there are areas where we'll say, no, we don't want to do that. We want to keep the margin. and be moderate about the growth. The decision is based on our understanding of what is the price, the volume sensitivity to any price action. So in some products that may be high and some products that may not be so high. So you may not do anything, the same thing across all parts of your portfolio. Does that kind of answer your question?

I just come back to you just a couple of questions more. On the farm segment, this question is from Ampit. Why did FES realization decline 8% quarter on quarter? Is it that we had any one-off item in quarter four? And the second question is that do we see any upside to the 5% growth for FI25 considering the favorable factors?

I think the second one we have discussed, so I am not responding to that. On the quarter on quarter, it is a function of state and model mix. So, you know, when the state and model mix changes, quarter one is very different from quarter four. And, you know, the HOSPAR category, as those of you track, the business is very different in different parts of the country. So, the model mix and the geography mix both together have contributed to that. It is not due to pricing.

My question is regarding a MHCV business. So in the current quarter we had a market share of approximately 2%. Where do we see this business 5 years from now? What market share are we targeting and what's the plan to grow this business? If you could share if there are any product launches in this space?

Yeah, so we measure our market share on the segments in which we play, which is roughly 80% of the total. So in that 80% of the total, just going back to three, two and a half, three years back, we were at about 2.5% market share, which actually has gone up to 3.9 in that 80% of the segment. In this particular quarter, the balance 20% has had a disproportionately high growth. The segment in which we don't play, the segment in which we play has been actually minus 1, which is 80% of the industry. And the other, I think the other 20% has had like some 50-60% growth, which is what has taken the average industry growth up. So in the 80% of the industry we have seen our market share move up from 2.5 to 3.9 which used to be 5 in 2019. So really the direction and we have a good portfolio. We now have ICV portfolio and our products are well established and regarded. So we'd like to see the 3.9 get back to 5 and then the 5 to 7 over a 3 to 4 year period. So if you kind of think about 3 odd percent being 3 and a half thousand crores revenue, which is roughly what we do in the trucks business. As we get to 7-8% market share, it can actually be a 10,000 crore portfolio. At our current level of business, we have now reached cash breakeven. The profit pool in the industry is really strong. So once we get to a scale volume beyond where we are, we think this will be a very profitable business. So we are now very invested in it and we would like to see it as a key lever to growth.

A few questions online, Anish and Rajesh. The first one is investment in the EV subsidiary of NMM. So what is the valuation that we are seeing for our EV subsidiary? That's the first question. Second, we also mentioned we are open to acquisitions in the farm machinery segment. So is the 5000 crore budget that we have allocated for farm includes this acquisition? And the third, one to two years back, we have increased our stake in Swaraj Engines. What is the plan there for the company?

So I'll cover the third part first, which is Swaraj Engines, we increased share because our partner at that time, Pirloskar, wanted to exit. And it was a business we, in fact, obviously have a lot of faith in and therefore we bought the stake. There's no further plan on that. It was more for the exit and that gave us a controlling stake of 51% in the business. As it turns out, it was a wise investment. On the first question, Paril. Can I just repeat you?

The EV subsidiary, the valuation.

Was it for LMM?

Because you said EV subsidiary and then you… No, this was the EV subsidiary, the MEA.

Okay, so… This is AutoEV. Okay. So, we have two subsidiaries on the EV side. One is the Last Mile Mobility and the other is one for electric SUVs. The electric SUVs is called Acheronium Meal, which is Mahindra Electric Automotive Limited. We have two investors there, BI and then Tamasek. We had a valuation at the upper end of 9 billion dollars when the investment has come in. That conversion will happen post-launching products in 2027, so that basically valuation conversion is predetermined based on how the year 2027 goes, based on certain milestones. On the last mile mobility, it's 6000 crores plus, and we have two investors there, IFC and NIIF's Japan fund, and together they brought in about 1000 crores. I don't know if that answers the question.

Yeah, and there's a question on acquisitions and farm machinery. Is it a part of the 5000 plan budget?

No. The 5000 is primarily CAPEX for the farm business, which is regular CAPEX. Remember, this is a three-year cycle and the business does generate, as we mentioned during the CAPEX plans, we don't specifically call out any inorganic in our investment profile. That's always over and above.

Thank you for taking my question.

My first question was, Rajesh, you talked about that the buoyancy in the market hasn't been that great now, but last three, four years have been perfect for the demand environment. and it clubbed really well with your product launches as well. So you had both the benefit of the buoyancy of the market as well as product launches and the products also were fantastically paid. But how do you move from here on the next level of your growth when the buoyancy is going to be relatively lower, bulk of your product launches especially in the price points where the demand is going to be higher is not going to be there from your side. possibly most of the launches would be happening at the price point above 20 lakh. So beyond FY25, how do we see this growth momentum sustaining? What drives that?

So actually when we launched a lot of these new products, there wasn't that much buoyancy in the market. It was, buoyancy was low, supply chain was bad, but it wasn't that buoyancy was high. Buoyancy actually came in much, much later, not in the time when we were launching these. First, at least the first two of them, I mean when we launched Thar, it was possibly the worst time in the world to launch. Anything new, everything was shut down. We were making nothing. We were literally selling nothing. So we launched Thar in a very difficult environment. When we launched XUV700, we couldn't even take all the media for the launch. It was still, you know, we were still in COVID and we didn't want more than 30-40 people together. We took very little of our team. So, you know, it wasn't easy circumstances in which we launched this. So, you know, of course, we did, the market did get into buoyancy subsequently as well. So, you know, I think it's a series of interventions that we have to do as marketeers and and you know product creators to make sure the market stays excited with what we bring to the table that's part of what our job is and we'll keep trying to do better at that so that we don't let the mood of the market spoil our momentum the other part is the uniqueness of products helps tremendously because the following that therefore scorpio bolero athar is something that is

very different from a standard product. The XCV700 stands out in terms of quality even today versus any of the other competitors in the field, even versus a couple of segments or a segment or two higher than that. So these are some of the things that just give a lot of strength to the product in terms of the demand that we will see.

Thanks for that. My second question was your performance on the margin side have been quite phenomenal as you consistently have been delivering strongly on that. Then what is holding you back from giving a margin guidance on that side? Do you want to keep some flexibility in your hand in terms of how do you price the products? Or do you think it's partly driven by commodity and which is difficult to predict and that's why you don't want to convey any band at least on the margin side?

I guess it's definitely both. Maybe a third and a fourth reason as well. But definitely these two would be on our mind.

When there's a high level of predictability, it's easier to have a stake in the ground and saying here's what it is. Otherwise, it has to be managed carefully. And as Rajesh said, various factors are going to managing it. uh and that's the reason why in general we stay away from predictions overall we had done that at one point in time where we had said margins will go up 300 basis points over this time period but based on where we are right now our basic approach is look let's just operate strong have a strong operating performance for our businesses and uh That means that we will manage margins well. Sometimes there's a favorable set of things that comes in place which is commodity cost in other areas as well. The cost actions will continue to happen. It happens on every product based on whether the life cycle of the product is. So all of these things come together to give that result.

I think, Rakesh, it's a continuous trade-off in our mind between how do we manage growth and and we don't want to, which was I think your first point, we don't want to get locked into a situation where because we've said we're going to do this margin, we don't take the right actions that we need to take in the market, either be it marketing investment or a promotion or the right product or a variant at the right price, which ultimately will lead to margins coming down because if we don't do the right thing, we may get a good quarter, but ultimately that's not the right thing for the business. So we do want to make sure we're doing the right thing so that we get sustainable growth in business volumes and in margins. and for which sometimes you got to take some short term action so that you don't lose the momentum of what you are trying to get to.

Can I just add one thing here, what we avoid is giving quarterly views because then you just get into the short term mentality, right? But if you think about how the business has been operating, they have always been showing you an F19 number, which is kind of aspiration one. So every quarter you have been seeing that the team is working. The point that we don't want to get into is it's going to happen in this quarter. Because then that gets into short-term decisions which are not what we want to do. You want to create long-term sustainable businesses. The goalpost in some ways is out there because of that reason.

Is there any guardrail you would keep in mind that we should from outside be aware of on the profitability or how would you take price actions, decisions? I think I want to build on Amar's point to try and respond to this which is there may be times that we will

trade off a quarter for the long term. So when we did a 3XO launch, I mean this was a quarter of a 3XO launch, it was a big launch and when we launched it everyone kind of said how did you guys get this price, you are going to bleed. But we had a series of things that we had in mind, we haven't taken a price increase since launch and we will decide on the right time to take a price increase, we don't want to upset the momentum. We are getting a really, really good target segment coming in and we don't want to upset the momentum. So we will then take actions based on the way some of these things play out. Like if we are going to launch the new Thar rocks now, We have to promote it adequately and we will take all the actions that we need to promote it. We are juggling and trading off some other things to make sure that we stay at a reasonable level of profit and margin in line with what your expectations are.

Thanks a lot.

My question was on hybrids we saw some regulatory action during the last quarter. So there are two parts of the question. One, did you observe any impact on Myndra and Myndra and relevant segments after the tax on hybrids was reduced? The second and more important question is from a regulator point of view, is there still some uncertainty on how the policy direction is moving or is there a rethink as some of the media articles at that time were quoting or do you feel there is enough certainty on driving bad penetration in the country?

Let me take the first part of the question, Anish. Maybe you want to comment on the second. No, we've not seen any significant impact post this because Basically, the break-even point, even after the new registration tax, needs a customer to run about 120,000 kilometers over three years, which is not that common for most personal segment users. So even now, with the premium that you pay post the road tax registration going away, and we'll have to see where that ends up in UP right now. I mean, that's a discussion that's on. As some of you know, it was prompted by a customer case, which where the court ruled that the government needed to do that. We'll see what's the reaction. Finally, we don't know, or the government. But it's not going to be that easy to drive that because of exactly this. It is still a 2 to 3 lakh price premium, though they're not necessarily like-to-like model. But the break-even is about 100,000, 120,000 kilometers to run to recover the extra premium. So at least so far, we are not seeing any impact on our ICE portfolio because of that.

And then to answer the other parts of your question Kapil, EV addresses a couple of very important things from a government perspective. First is on pollution because EV takes out emissions completely and especially in cities that becomes a very important part. Yes, there's an argument sometimes that if you're going to charge EVs with fossil fuel based electricity then are you still keeping the same pollution? Two points to that. First is India is moving very rapidly to renewable energy and by 2030 we're going to be at 50% renewable energy so that takes it down significantly. The numbers we've seen is a car in its lifetime, an ice car, an average ice car will have 35 tons of carbon that's generated. And EV, similarly, will have 27,000 tons of carbon that's generated. So there is some saving. Not a significant saving if you are powering EV with ice generated or with fossil fuel generated electricity. If you go from fossil fuel to renewable energy, then the total carbon footprint of a vehicle is going to go down to 7 tonnes. So that's a very significant difference that you start seeing. So first it really meets and also the vehicle emissions generate pollution in city centres. Generating energy somewhere far away from a city center doesn't generate pollution there. So that's one big policy goal that the government achieves. The second is lowering the fuel import bill and savings of foreign currency in that sense. So these are the two big savings which is why governments around the world have been incentivizing EVs and not hybrids. At this point, we don't see any indication of a policy change. But if consumers want hybrid, if the technology develops further than where it is right now, it's something that we can be a fast follower and move in fairly quickly. We also have a set of vehicles that are, again, fairly unique. So if you're looking at the 3XO, yes, it will compete with hybrids in future if the consumer wants a hybrid in future. If you look at a Thar or a Scorpio, and for example, not necessarily as much. So there it's going to be a different set of requirements, which is where we will have time on our hands to be able to react to it if that scenario changes. And we may not need that much time. So I'll just leave it there at this point. Thank you.

Hi, this is from HSBC asset management. So just wanted to ask on the demand environment for the like commercial vehicles, the pickup space, and really, I mean, like, because that has been sluggish for an extended period of time. And now even for you, we're seeing decline in volume. So just want to understand what's happening there. And then related to the MCV space also wanted to understand, What are your plans on the CNG side in the LCD space as the CNG network is sort of increasing and we are seeing like in other categories CNG penetration is sort of picking up quite well, right? So, where are you in terms of your LCD portfolio CNG penetration?

I do not remember the exact number, but we have a good decent CNG penetration on our pickups. Rajiv, is it about 20 percent or? Yeah, about 10 to 15%. It depends a lot on what is the CNG price, you know, the arbitrage as demand moves very quickly up and down depending on exactly what's the environment there. But we have a fully ready portfolio of LCB pick up, CNG. The answer to the question why LCV industry is not growing at this point of time, honestly I am struggling with. What I am struggling to pick up right now is we are seeing tractor momentum. And if 65% of our pick-ups are in rural, why are we not yet seeing that segment pick-up? And maybe it will lag by a few months, but I mean, we would expect that with the pick-up in rural economy, the pick-up segment should, LCV 3.5 tons should improve, less than 3.5 tons should pick-up as an industry. We're not able to get the same level of granular understanding right now like we have picked-up in tractors on why this segment is... still lagging. Maybe it's, you know, May, June elections, weather, all of that, possibly that, let's wait and see. But by this time, we would expect to start seeing some growth, especially as rural spending will go up and infrastructure spending starts. So we should expect to see the segment grow, and it's not grown for a while, so I think almost 18, 20 months.

We have a couple of online questions for you. What is the effective tax rate for FI25? That's the first question. Second question, what is the PLI benefit? How do we account for the same in our books and what is the amount?

I understand, for 25 it's going to be roughly around 23% effective tax rate, could be 23-24%. On PLI what we do is we have this very detailed approach to how you account for what is accruable. that goes through an audit process at RN. It also goes through certain requirement checks from a body and basis that we make the accrual in our books. Now there is a very detailed SOP which has also been received. So I think pretty much everything that's on our books today, which is a relatively small amount, around 9,000 CR, should be very cashable as we make the claims to the government and receive the funds. And in terms of accounting, it's actually booked as a contra to COGS. So it allows you to see at a gross margin level what the impact is.

In a couple of questions from Chandramouli at Goldman, for the first quarter 25, M&M tractor wholesales were up mid-single digit at 6%, but the Vahan retail shows it at minus 10%. So how should we think about the same? Is there a high base effect in the retail picture? Are we missing anything? We see contrast in these numbers.

Yeah. Honestly, I'm not cross-tallied with Vahan. And Vahan, there is a lag in that. There's a fair bit of lag in tractors in Vahan, Telangana. I think a few other places don't get counted. But we've actually brought stock down in this quarter further. So we've actually not built any stock. So the implication is that we've delivered more than what we built.

Sure. Two more questions from Goldman. The first one is that can you share with us the current challenge stock in the domestic SUV business? The second one is there a particular reason why SUV 400 electric car volumes have moderated in quarter one?

Yeah. So, I mean, we're not going to give you an exact stock figure, but our current estimate is that we are about four to five days higher stock than our norm. So, we would want to bring the stock down more by improving the retail throughput, not necessarily by billing lesser, and that's what we are endeavouring to do. So, that's on the That's where we are on the stock management. And the second question was on 400. You know, we are preparing for a new range of electric vehicles coming in. Right now, we are directing 400 to some very specific segments like fleet and so on and so forth. But we have plans for later part of the year and then BEVs as we go into next year. So we are kind of also in the process of managing that transition.

Another question from Ambit Jinesh. What drove the coal tractor margins? How sustainable are they? By when do we expect the farm machinery business to turn profitable?

The margins in co-tractors, obviously quarter 1 and quarter 3 are always the volume quarters, so we cannot compare quarter 2 margins to quarter 1 margins, so there is a huge difference in operating leverage. So, the margins in tractors do go through seasonality based on the seasons, which is Q1 and Q3. So we can't expect the same margins to stay. But I think what we can take away out of this is the operating leverage will play back to a similar extent in Q3, which is when we should expect similar kind of margins, but not in Q2 and Q4. unless there is a huge volume of swing that happens compared to, so typically I think what one has to see is what is the margin improvement over previous quarter and right now when you see, I mean the previous year same quarter and right now what we see is a 1% improvement. There are some watch out signs here. For example, rubber prices have been going up. That commodity has a big effect on tractors because of tyre sizes. So, you know, commodity prices in tractors are sensitive to rubber. So that's a watch out at the moment. Farm machinery, we would expect a couple of years for us to start making money.

There's another question from . This is on tractors. How do you see financer NPA and repossessed vehicle inventory challenge to support tractor sales? In context of state election freebies trend, is there a risk on farm loans and in turn tractor sales?

I don't think we're seeing any increase in NPA or any risk thereof. And we have the same view from the Mahindra Finance side as well. And no, we don't see any repossession, significant repossession risk. And the election story is over, so there's no impact.

It was referred to state elections.

No, it's not. It doesn't have the same effect as the Lok Sabha.

Just a last couple of questions online. This is from Arvind at Citi. The recent price cuts, will they stay or could there be a reversal with a possible refresh in the XUV 700 portfolio?

I think, in a way, we've answered this. So I'm not going to repeat that. We don't have a refresh in the immediate short run. So if anyone is in the mindset that we've done this because the refresh is falling immediately, no, it's not a part of that. The reasons for doing it are what we spoke about.

And I'll take this last one. It's from JP Morgan. It's a question from him. Are you expecting any acceleration in the SUV retails due to price adjustments that you have made recently? Should we temper our volume vis-a-vis margin expectations, which I think we answered in a way, and any initial sense of how many bookings for the 3XO are coming from first-time buyers?

I think the 700 question is answered, so I'm not repeating that. On 3XO, roughly 25% first-time buyers, 20-25% Hatch, and just 10-15% Mahindra. So it's a totally new segment that we're attracting.

I think we are on time. On behalf of Mahindra and Mahendra, I would like to thank all of you who have joined us today in person as well as online. There are refreshments and we welcome everyone to join us. Thank you very much.

Thank you. Thank you.