Mahindra & Mahindra 144A

The mileage in the city is 18.4, which means less expense and more discussion.

I didn't think so much.

Because where other people's thinking ends, it starts from there. New Mahindra Vero, beyond thought.

Namibia is just absolutely fantastic. This has been the best experience for me.

We knew that we would have never been able to do this on our own. They make that impossible, possible.

Swaraj is not just a tractor company, it is the future of the country's agriculture. This is hope. This is faith. This is enthusiasm. This is the thought of change. Which every farmer wants to see in his field. For every future, I am ready today. My new Swaraj.

Something should just be done remotely.

I couldn't agree more. It's called Adrenox, boss.

As a leader, you need to look at the big picture.

Oh, I do, boss. Every day. The XUV700. Fully loaded AX7 at a celebratory price of Rs.

19.49 lakh.

Unlimited Love Bookings open on 14th February

Welcome to a journey where adventure reigns supreme. Meet the Mahindra Scorpio N, the ultimate adventure SUV, engineered to dominate the wild and crafted for the thrill seekers. We're heading into Namibia, a land that tests the spirit of exploration, where the Atlantic's roar meets desert silence. the Skeleton Coast awaits. A land of contrasts with dunes that whisper tales of ancient wrecks and horizons that beckon with mysteries untold. Join us as we take the Scorpio in on an expedition through one of Mother Nature's most daunting landscapes.

We're now entering the lunar landscape. Switch to 4i, watch my line, watch the guy in front of you, and let the vehicle go.

Well for me, the exciting part was the stretch from Swakopmund to Hentes Bay where I had to switch from four high to four low with just a push of the button. That made it an easy task and the Scorpio N has got that feature that makes it stand out from the competition.

All of us were quite blown away by the Penta League suspension on this vehicle. When we went into the Langstrand dunes, none of the vehicles ever bottomed out and it really just makes you feel like a professional dune pilot.

As the sun sets on this place the locals call the land God made in anger, we reflect on a land of stark contrasts and relentless beauty. We dared to explore, to discover, and with our trusted Mahindra Scorpio ends, we conquered every challenge it threw at us. It is no wonder it won the Adventure SUV of the Year award in South Africa. Kalapunawa Mahindra.

School is the second home of children. And taking care of this home is not easy for a principal. With education, children's comfort, their safety, the smallest of things is my priority. Similarly, choosing a school bus was also a very big decision. Parents' peace of mind, management's trust, and budget have to be taken along. That's why sometimes you have to become a firm. After all, someone is giving me the responsibility of their children, not the budget. But in all these years, I have understood one thing. If you make the right decision, then the principal gets the most love.

Choose Mahindra Cruzeo School Buses. This is a strong tubular structure, anti-lock braking, anti-roll bar, parabolic suspension, IMAX, wider seats, and best-in-class mileage. Safe for kids and the smartest choice for everyone else. Mahindra Cruzeo School Bus.

It's the future. A game-changer. The beginning of a revolution. It's here to electrify your business. and multiply your profits. Introducing Mahindra Zeo, the zero emission option. It's 765 kilogram payload engineered to carry more in fewer trips. With a peak power of 30 kilowatts, it delivers the attitude to conquer every path. With a range of 160 kilometers, you get the confidence to go further than ever before. Get a 100km range in just 60 minutes with Fast Charging, meaning more trips, more profits. A fast network of 10,000 plus charging stations across the country makes every charge worry-free. The Nemo Driver App gives you full control over your business. The new Mahindra Zeal. Electrify your business.

Very warm welcome to the Q3 Analyst Meet of Mahindra and Mahindra Limited. For the main presentation today, we have with us our Group CEO and MD, Dr. Anish Shah, ED and CEO of our Auto and Farm business, Mr. Rajesh Jayjorikar, and our Group CFO, Mr. Amarjyoti Barua. We will take your questions at the end of the presentation. As a reminder, this meeting is being recorded. For the purpose of completeness, I do wish to read this out. Next one. Certain statements in this meeting with regard to our future growth projects are forward-looking statements which involve a number of risks and uncertainties that can cause the actual results to differ materially from those in such forward-looking statements. With that, I now hand over to Dr. Anisha for his opening remarks. Thank you.

Thank you, Divya. And good afternoon, everyone. It's a pleasure to be back again with all of you. And what you will see today is, in many ways, consistent performance as we look at our auto and farm business to start with, both from a growth and a margin standpoint. Auto volume up 16%. SUV market share up 200 basis points to 23% from a revenue standpoint. Farm volume up 20%. Market share up 240 basis points at 44.2% right now. Just what I call very strong operating performance. Operating excellence is what we've been focused on, and the team has really driven that well, including in margins, something we've been discussing over a while. Auto margin up at 9.7, farm margin at 18.1. But not just auto and farm. As we look across Mahindra Finance and TechM, as well as our growth gems, They're all performing at a very good level. Tech-M turnaround's on track. EBIT's on the margin recovery path. The continued focus on margin expansion that we've outlined. Mahindra Finance PAT is up 47%, assets under management up 19%, and GS3 still under the 4% threshold, even in a tough economic environment. So overall, these businesses have all done very well, resulting in a net number of a 20% growth in profit after tax on a consolidated basis. And coincidentally, we get 2020 this time with year-to-date growth also being up 20% for profit after tax. Quick snapshot, revenue up 17% for the quarter, 13% year-to-date, profit up 20% and 20%. Key drivers, auto and farm up 16%, TechM and Mahindra Finance up 1.9 times and 47% respectively, and growth gems up 33%. We'll talk more about them in the question and answer session. And Rajesh will talk more about auto and farm. But the key things I want to highlight here in addition to what I said is the LCV market share, which is at 51.9%, again, up significantly at 230 basis points. And on the farm side, some challenges in the international businesses driven by some of the macrofactors there. And farm revenue up 12%, lower than what we'd like, but still on a positive trajectory. We're going to stop talking about turnaround now. We're now moving towards achieving full potential. Both businesses, TechM and Mahindra Finance, are on a good track. And for Mahindra Finance, the key I want to highlight here in addition to what I've said is profit after tax for the quarter is 918 crores. There was a release of provision that has helped this number. That release of provision was based on the model approach that is followed because the last part of the COVID pandemic years got out of the model. And as that happened, you got a provision release, which again is consistent with what we said earlier is in Mahindra Finance, we've seen higher GS3 numbers at times, but all of it is recovered back and credit costs have stayed stable over time. So that's something that is reflected here again, as we take out the effect of the COVID years, and the model gives us a provision release as a result. Tech Mahindra has seen key New Deal win in telecom and green shoots in BFSI and healthcare as we look at expansion beyond telecom and a good margin recovery path. Good performance on that account. And then Growth Gem, logistics, a large quick commerce partnership. Yes, we still have some challenges at Express that we are addressing, but a lot of focus there on service and cost improvement. Hospitality sees an 84% occupancy rate. Average unit realization at an increase of 37%. And we are starting to expand and therefore have a greater momentum on new inventory. Real estate, I will highlight the land acquisition in , which is about a 37-acre plot, a 12,000-crore GDV. And this is something, in addition to other wins that the business has had, has put the business very much on a very strong momentum and one that is looking at significant growth in the coming years. And that's something that we will see Lifespaces really taking on a new trajectory. So with all of this consistent delivery on our commitments as a group, ROE stays around 18%. I've always mentioned that it will be plus minus, so that is something that we managed to stay at that level. Second is on EPS, we've talked about a 15% to 20% growth in EPS from F21 onwards. I think we are well ahead of that at this point in time. and we hope to stay consistent in terms of growth in EPS as well. With that, let me invite Rajesh up for a deeper dive on auto and farm.

Hi, good afternoon, good morning to people around the world who are online. I'll run through this quickly so we have enough time for Q&A. Starting with the farm business, we've grown our volumes by 20% in the quarter, market shares gone up 2.4 share points, which takes us to a very high level of 44.2 in the quarter, which is our highest ever quarter three market share. You see that in the trend line here, where market share has been continuously moving up to very healthy levels, very strong levels of around 44% right now. Of course, quarter three market share was higher than the YTD average. Farm machinery business has shown steady growth, reaching to a good absolute level of revenue right now at around 700 odd crores for the three-month, three-quarter period. We believe we have to do more in this business, but we've seen a growth of about 20% over this last couple of years. The consolidated revenue has grown by 11%. The PBIT has grown by 29% consolidated. And this is in spite, as Anish mentioned earlier, and Amar in the earlier meeting has also flagged out, and he'll build on that a little bit, of seeing slowdown in some of our international subsidiaries, more out of the economic factors in the countries in which we play. The farm margins and especially the co-tractor margin, which is domestic plus tractor exports from India, we've gone up to 19.5% margin, which is an improvement of 2.6 points over last year's same period. And the farm, including power all and farm machinery, is at 18.1%. This is a chart we often used in the past which kind of captures the fact that irrespective of which way the industry is moving we stay in a very narrow band of PBIT margin and of course we have got some benefit of the industry recovery and the volume upside leading to a 19.5% core tractor margin. We expect the industry in the quarter 4 to grow by over 15%, which will take the full year growth to possibly over 7%. There are several reasons driving this optimism. One is the reservoir levels, which are at a very good level, 16% above LPA. A good progress on the Rabi sowing, good growth on the Kharif crop. And the last two factors, the MSP and the overall terms of trade in the manner of speaking go together. So improving MSP has led to an output inflation more than the input inflation, which improves the sentiment as well. So overall, we are seeing strong signs of growth in the quarter 4. Of course, quarter 4 will get a couple of days of Navratri as well this time, which wasn't there last year in the same quarter. Coming to auto, the SUV volumes grew 20%. The LC volumes grew 7%. We gained market share. The less than 3.5 ton category saw low single digit growth. We grew faster than that because of gaining market share. Anish already covered the revenue market share growth and the volume market share growth but you see it in the chart here where revenue market share has been going up steadily and we continue to remain number two by way of volume market share as well in spite of significantly higher price points than everyone else. We got several Car of the Year awards. The IKOTI is a particularly prestigious one, auto car as well. IKOTI is, as you all know, a group of different auto journalists come together to decide the Indian Car of the Year. They don't have too many awards. They just have three or four categories. And it was very good to see the rocks get the Indian Car of the Year in that forum. We spoke about the LCV market share, which has shown a positive trend with time. The last mile mobility will continue to remain number one. The important point here is now the category penetration for electric to the total three-wheeler market is close to 25%. Just a few quarters back, that was nine. I remember last quarter talking about 20, and the quarter three is now 25. So, you know, the point that we were making earlier that when competition comes in, it does help the category overall grow. And we're seeing the category grow and we are seeing penetration of the category improve as well. So for a nascent category, competition does help drive category growth. The auto consolidated revenues grew 21%, the PBIT grew 31% and the auto standalone margin grew to 9.7% with an increase of 1.2 share points. Just going to take a couple of minutes to explain this and the next two slides. This is a question many of you have had and I'm sure you'll have follow up questions on this as we get into the Q&A. So we're going to see two things and we'll start bringing this out from quarter four which will be populated numbers. The auto standalone number will have two components and will show them to you separately. One is the effect of conversion cost. The conversion cost here is the manufacturing conversion cost plus the margin on the product development expenses that are incurred in M&M which Mahindra Electric pays for. So there are two transactions that are happening between M&M and Mahindra Electric which is different legal entity. The manufacturing part is the manufacturing is a contract manufacturing arrangement, not a toll manufacturing arrangement. So in a contract manufacturing arrangement, M&M is buying the material, converting the product and selling it to Mahindra Electric. the margin that is made is only on the conversion cost and not on the total cost of product. So we are going to see an impact of that because this is a high value transaction. So we will see an impact of that on the standalone numbers by way of margin and hence we will show you the numbers separately. So you will see the EV contract manufacturing quantum of money and the impact of that on percentage and the standalone in a way that you are able to compare for continuity without the effect of uh ev manufacturing yeah so this is one part of what we will start showing separately uh the second part of what we'll start showing separately is the bond electric end to end margin and you know there have been several questions in the past quarters on how you will see these numbers so we will this is how you will see the numbers uh you will see the Contact manufacturing charge, which we saw in the previous slide. So that becomes, let's call it A on the left side. You'll see the money that we make in Mahindra Electric at an EBITDA and a PBIT level. So again, you can see both of these and you'll see the sum total of that, which is the end-to-end margin in the bond electric business. So if there are more questions on this, we can clarify. Amar will add on this a little bit too. But I think this will be an important change that you'll start seeing from our quarter 4 results. We're not populating this right now because it's not material. The transactions are really starting from quarter 4, which is when the conversion charge and the revenue start kicking in. So this is more to kind of prepare you all for how these numbers will come out. Just a couple of slides on our strategy and reinforcing that on the electric SUV business. We have spoken over the last year and a half or two on how we were seeing our electric SUV strategy. We had said that we are not looking at selling this on economy or fuel saving and so on. We were selling this as a lifestyle SUV statement, what we may call objects of desire. based on three primary bases of differentiation. One is the design, the second is the HMI or the intuitive human machine interface that you would see and third is the high-tech features. Now, These are things that many of you have seen through November to January across the multiple events. We've strongly been able to establish the technology that's gone in. The design has been really appreciated and we've seen huge amount of buzz coming out of all the content that's put out starting from 26, 27 November, some before that too as the teasers came out. And we've had over 1.4 billion views. of the content that video content that we've that has come out from us and other people who've covered multiple parts of our event so there's been a huge amount of traction and gives us confidence that you know irrespective of the price points that we are at we should be able to do a starting initial volume of about 5000 a month for both the products together We have also put out the full price list with the schedule of which variants will start when with bookings opening on 14th Feb. I'll now kind of close by showing you the TV commercial which has gone on air a couple of days back.

Tujh ko joon mein Ho jao paagal Ho jao paagal Paagal Paagal Paagal Paagal Paagal Paagal Paagal Paagal

Unlimited Love. Bookings open on 14th February.

Okay, just to round out this presentation, I wanted to talk about some highlights from what Anish and Rajesh talked about. So on the consolidated revenue side, what I wanted to emphasize is auto grew at 21%, farm grew at 11%, and that 11 includes very strong growth in the domestic market and actually degrowth in the international markets. So that 11% is a blend of that. And then on the services side, Mahindra Finance had 17% and the growth gems had double digit growth as well. What you see on the profit side is a reflection of that. So auto profits did grow at 20%. Farm profits continued to grow at 11%. And the services franchise actually grew 33%. Now, when you look at the math of that and you look at the overall profitability, you're thinking, why doesn't it translate to more than 20%? The main reason for that is we had a mark-to-market impact this quarter from KG Mobility, the investment that we have in KG Mobility. As you're well aware of what is happening in Korea, there's a lot of moves there, movements there outside of anybody's control. And that caused the share price of KG Mobility to drop dramatically. So we've seen a significant increase impact because of that in the quarter. So that's why the profits are a bit muted by that amount. But the core organic profit growth across all the segments was very, very strong. You see that here, where you can see that, been emphasizing this for a while, that the services franchise is contributing pretty significantly to the overall profitability of the group. And you can see somewhat the impact of the mark to market in the growth gems and investment line. So that investment is what is causing the significant shift from 94 crores of profit to a negative three. Now, bear in mind, our mark-to-markets are allocated across the segment, so you're seeing some depression in the results of auto and farm as well because of the overall mark-to-market impact. On the standalone basis, you can see very strong results, 20% up in revenue and 19% up in profitability and you can also see on a YTT basis, 15% up across both revenue and profitability. Rajesh talked about this, but I know all of you are going to ask a lot of questions about this in the coming quarter. So I want to again emphasize what the change in reporting is going to be. Fundamentally, when you look at the 9.7% that you all track for PBIT for the auto division, it will have an element of the e-SUV contract manufacturing going forward. That we want to separate out so we can see the trajectory of the 9.7% as we go. That's the whole idea of this change. So what you will see on the left in the headline numbers is the consolidated number of the ESUV manufacturing as well as that 9.7% equivalent. And what we will be doing is separating those two out for you so that when you look at meal as a whole, You can add back the contract manufacturing part and get an idea of the profitability of the electric vehicles. You'll recall what we have said before, that the meal business is going to carry a huge load of depreciation, et cetera, so will be loss-making initially. But that's the intent, that you will have full visibility to how that trajectory is over time. through this change in the way we show you the numbers. And we'll be happy to take more questions on this as we go. The other thing that I did want to highlight, which is related to our farm business, we mentioned to you last quarter that we are evaluating the international operations of our farm business. We expect to complete that exercise in the fourth quarter. The way we are looking at it is we are looking at any market that has structural changes where the market is in a perpetual decline versus temporary changes in the market which could be driven by just what's happening around the world. And we are differentiating the way we look at actions across those two. So the sum total of that you will see in the fourth quarter come together in our financials. And we will at that time also very clearly demarcate any actions that we take on the farm international side. That's it. And we can take some questions.

On a lighter note, the time we take for presentations is inversely correlated with the level of performance of the business.

We can start with a Q&A session now.

Hello? OK. Thank you. So congratulations, another strong result. We saw further improvement in margins for the auto segment as well. I'll start with EVs because that's the big thing coming up. Rajesh, you've done quite a number of test rides now. So just one question is, what are the learnings? What are you seeing both from a product perspective, customer profile perspective, and any things that you think the company needs to sort of course correct in terms of customer education and all? So, this is one broad thing. I have some other questions on margins which I will ask later.

So, I am Kapil just going to walk through pre-26 November to where we are now. I am just breaking this into two parts. I just in my slides recapped how we were thinking about the category and you know we have been sharing that in this forum often that We strongly believe that right products create categories and the EV market is not really going to take off without right products coming in. We had also spoken about the fact that we want to launch these as highly aspirational wow offerings and electric by the way, which is really what we have done. Sorry, I'm taking two minutes just to recap the strategy because I think that's, in a way, some of the feedback will be, will connect back to what we had in mind and what other things we feel are working for us. And we'll go to your point on education and where, you know, what's the input of feedback that's coming in. So the way we were looking at it is we first have to get the customer emotionally connected to, yeah, I need to own this or I really want to own this and then start dealing with some of the barriers which come in the way. So when we think about the way we've been communicating and building the storyline starting from November, it's been about, a lot of it was about the aspiration, the desire, world beating, technology, pride of India, all of that. But there were two, three very important building blocks to breaking the barrier. One was a range of more than 500 kilometers in real world city. Now that is a very big barrier breaker because for most people in India you don't need to charge more than a week, very often not more than twice or thrice a month. Because, you know, 1500 kilometers is a fairly, you know, fairly large usage for most people in India. So suddenly the barrier that, you know, if that was a barrier that goes away. So this this was one part of the barrier breaking the second part of the barrier breaking was the battery warranty Which also is a big question in people's mind or what happens and you know, so on and so forth So these are two very important barriers that we kind of started taking on upfront starting from 26 27 November As we move through November December coming into Jan we one of the big things that we realized is that the positive inclination to own this overcame any question that most people around many parts of the country had on charging. Because at a range of 500 kilometers, if you had any kind of ability to charge in your building or in your office, which apart from some high rises in places like Mumbai, is actually a non-issue in many parts of the country. So actually the markets around the country really came in with a lot of positivity saying yeah this this is something that we want in phase one so we had a much more calibrated plan of how we wanted to roll this out uh you know where we were going to do only 20 cities and then add a few more uh and there were many who were in phase one were actually saying that you know can we come in phase three before november And right after the launch, we had all the phase three markets saying, no, we can't be in phase three. We need to be in phase one. And which is why we then by January took a call that we'll in a phase where 14th Feb, everything opens up. So basically bookings are opening up in 250 plus dealership outlets on 14th Feb. So this was one of the learnings that we got that you know this with the barrier broken and the hype on ownership of owning something which is international there is a huge amount of desire and excitement and the charging barrier is not that I don't want to undermine the importance of charging so don't get me wrong on that as we move to the next phases of growth charging infrastructure is going to become important and as we had said earlier the first lot of people who will come in will be multi-car owners. That's the segment that we're going behind. So again, that's playing out. The other, this is the first time we've launched two products together. So there's a learning out of that as well. We are seeing customers anecdotally say, you know, book two, book three, because you know, whatever, two in the family, one wants XCV, one wants B or a friend and whatever. So we are seeing this play out, which we haven't ever before, because we are basically launching one product at the time. The dynamics of launching two at the same time is actually leading to a multiplier effect. We may have had some doubts about is that the right thing? Will customers get confused? But the two segments are so different. that we are actually seeing a positive multiplier effect out of that. So overall, the experience has been positive and exciting so far. Of course, we have to see what that translates into when people actually go in on 14th and book. One of the things that we started for all prospects is charging audit because when you start delivering, people will need some kind of charger unless they already have a charger. So for prospects, we are already through charge.in connecting with our prospects to finish the charging audit so that, you know, by the time we come to delivery, we are able to get charging set up wherever they want for those who need it. So I don't know if that kind of covers everything that you had in mind, Kapil, or you want to probe anything else.

Just on the profile, is it the same Mahindra customers? Is it different customers?

Actually, I should have covered that. Again, what we are hearing right now is a very large proportion of people who never considered Mahindra. These are people who are in the, you know, in the 25 lakh, 30 lakh car bracket looking at luxury brands or owning a luxury brand. So it's a very different profile of customer than what we've handled or been used to. I mean, it's not like we haven't had that profile of customer at all in the last two or three years. Many of them have bought Thar as a second car or third car or whatever. But there's a very serious consideration of this as being a car they will use every day to work.

Great and best wishes for the launch. Thank you. On the profitability, I just want to understand few things. Firstly, on the pricing and costs, how should we expect them to evolve? Is this introductory pricing? Are you having projects here where more localization will take place and costs will keep falling through the next one or two years? where will the PLI be booked in which entity and then what are your breakeven levels, revenue breakeven levels or volume breakeven levels for EBIT or EBITDA?

Lots of questions. So, Should I repeat? Yeah, go one by one.

Okay. So, firstly pricing and cost.

Yeah. So, we, like in all our new products, we do work very aggressively on cost after we launch because you know at the time of launch the focus is more on quality stabilization whatever so and a desire to meet a timeline so we do work a lot on costs after we launch and we will do the same here and of course we will work on localization more aggressively What we have said on pricing is pricing at time of delivery, which after learning over multiple launches, we find that that's the best way to handle it rather than try to put a volume or whatever, because then we get uh locked into uh losing the flexibility of how we want to play it so right now it's basically price available at the time of applicable at the time of delivery which means that we have the flexibility to take a price up literally when we want we don't want to do that in a way that's not customer centric but if there is any external event which forces costs up uh we should not be locked into a situation of having committed a quantity We did debate whether we should put quantity on some versions or whatever, but we finally decided not to. So, its price is applicable at the time of delivery.

And then on the PLI, where will it be booked?

It will be booked finally in the meal books.

And the breakeven levels, what should we expect for EBIT or EBITDA as a combined entity?

Any thoughts there? So, I think two statements.

Amar, I don't know how much you want to talk on it, but… Yes, that's a tough one to… because it will depend a lot on various factors. And I think at this time, it's best to avoid. But as we get better insights, we'll get… Yeah, I just want to reinforce the one-point couple though that we've been making.

The percentage margin here is going to be lesser than ICE, which we've been repeating every time because of the denominator effect. Over a period of time, we do expect the…

Variable margin to be in absolute terms similar twice The question is just coming because you know a lot of the OEMs in India as well as globally They have talked about you know losses and sometimes very large losses coming through once they start launching EVs So just from that perspective if you could give us a couple we said this before we none of our vehicles on a per unit basis are selling at a loss and

a net margin base on the net variable margin basis what you are going to see like in any startup operations is a heavy burden of depreciation and that at an ebit level will drive certain losses but it's part of the business plan it was and i don't expect it to be outsized in any way the investment that is going into this is quite substantial as you can well imagine but at a per unit basis none of the vehicles have been priced or costed to lose money.

Sure. Thank you.

Rakesh, you want to go in?

Yeah, thanks. Kapil has covered the EV podcast extensively. Your tractor market share has been going up.

I think you all consolidated questions.

So what is driving the tractor market share? Because it is quite unusual from a long-term perspective that the tractor market share consistently goes up. So how is the inventory level and is the new Oza platform helping in that?

Yeah, so one is I think the whole refresh and the transformation that we did of Swaraj has gone through very well and very successfully. We also had in the past some specific product gaps in the Swaraj portfolio. So the last one and a half years, that's got filled up pretty well. We didn't have a product in the less than 30, a good product in the less than 30, 20 to 30 house per segment target came in there. There were few other hotspot gaps. So there was work on the product strategy done over the last 4-5 years on Swaraj. So that's playing out well. On the farm division side, again, Oja. So in the 20-30 hotspot segment between Target and Oja, we've gained 5 share points. And about 3.5% in the less than 30 hotspot category. So that's one driver of share. The UOTech and some of the other initiatives on the farm division side have done well. We are also now beginning to see a positivity on the farm division side out of the South and West markets picking up, which had a very long run of negative growth. So, you know, we're beginning to see that starting in quarter three, a positive geographic skew towards farm division. So I think it's a combination of both of those two. Your question on inventory, I had said that Mahindra brand tractors, we needed to do some correction. And we've been correcting our inventory over the last couple of quarters. We're by and large, by and large done. So there'll be almost no effect of

or does need to do any significant correction in quarter four we did some in quarter three as well so this share is in spite of that and i will just add to that that this is one area where i give a lot of credit to the team from an operating excellence standpoint we specify various bold targets we want our teams to take but in tractor market share We actually tell the team, we're not going to give you bold targets for increasing market share. And that's one that you should just, if you can do it through operating excellence on the ground, through products, through other things, then yes, please do it. But otherwise, do not go out of your way to increase market share. And the team has still been able to do very well on that front. So kudos to the team. Definitely.

And on the growth side, so third quarter had a very strong growth held by low base and for fourth quarter also you are expecting pretty solid growth. So you would be exiting this year on a strong growth. How much leg do you see this growth has going into next year or would you start getting concerned about the high base again?

We're not putting a number out yet for next year. We'll do that in May. But we see next year in a positive momentum. It is a little early to put out an exact number of where that will be and a lot of that depends on where you finally end up closing this year. As we know that, you know, in tractors there is that variability that happens even in the last two months of the year. So the industry size does change and your numbers do change. Especially since we will see the Navratra festival come in in the last three days of March. So you may see a positivity or not so much positivity and that will have a final effect on what we close this year. So it's a little premature to put out a growth for next year without actually closing this year. So we think the right thing to do is to announce that in May. But all the factors that I had outlined in my presentation on things which have enabled the industry to grow, we think are going to play out into next year as well.

One final question on the LCV side, especially the lower tonnage LCV, that hasn't seen a recovery. So what's holding back the LCV segment when you already are seeing the tractor to do so well for the last quarter or so?

Yeah, Rakesh, honestly, I think we said this last time, we are struggling with interpreting this. So why is tractor picking up? And LCVs, even in the 2 to 3.5 ton, it's a very small single digit growth. So, it's a little, I mean, we are struggling to deal with that. So, we kind of, we had looked at Monday deliveries of fruits and vegetables. We spoke about that last time. That has improved overall. So, overall Monday deliveries are up. the fruits and vegetables which are big driver of LCV usage is now good. There was some loss of that during the monsoons, but that had recovered by the time we came to September, October. So right now, all the economic reasons should have us seeing a much healthier growth it's on a low base relative because it's been a while that we've seen a flattish industry so if you have any insight you would love to hear it but we are struggling with understanding why we are not seeing more growth than what we are at the moment for the industry do you worry there is some slippage in demand going to cargo segments of three-wheelers or There's very little interplay between, let's just take the two extreme ends, which is two to three and a half and three wheelers is almost no interplay. That customer is a very different customer than, there could be something between less than two ton and three wheelers. But even that is not, that is because a lot of the... Three-wheeler is still not stand operator. It is captive and a lot of you know, the LCV2 less than two ton is has a big MLO component. So there are two totally different segments. So we have no good reason why it's not going except to hope that it will. There's no reason why it shouldn't. Got it. Thanks a lot.

Thanks. Thanks. Gunjan, I'll just come back to you. One question online. Anish, this is from Rohit Gandhi of ITAMC. Any major impact that we are expecting due to the tax savings in the middle class disposable income for our group overall?

That will benefit demand overall. And we will see greatest stimulus in demand. So yes, we do see positivity across many of our businesses. In addition, the rate cut helps as well. So I think these are positive steps that address some of the short-term blips that we were seeing.

Thank you. Gunjan, please go ahead.

Just a couple of questions. I think while Kapil comprehensively covered the EV part, I just had two clarifications. One, when you say profitability per vehicle is similar, is that factoring the PLI benefit or it's X of that?

That would factor the PLI benefit because it's the PLI that's really enabling us to build competitive products here.

And over time as the cost competitiveness, whereas we should expect the margin profile from a mid to long term sort of stay in terms of per vehicle, similar to what it is in ICE. And the other one, Rajiv?

That is required from a return on investment standpoint, so that's something that's important as well.

And the other one that I had on the EV business was now that you have some sense of the customer profile and you indicated that a lot of it is non-M&M and people who have looked at luxury cars, how should we think about the balance between the ICE and the EV growth? While EVs are new, they're going to be additive on growth, but is there some sense that you can give us how should we think about the growth on the ICE portfolio?

Yeah, I think it's a little early, Gunjan, for that because you will have different, an evolution of different sets of customers with time, right? So obviously when you're launching two new products, it's a new category creation, you're going to get the early adopters and innovators who come in to a category, but after two quarters or three quarters, We will have to have more mainstream, you know, let's call it ICE buyers who will have to buy an EV. As we've shared earlier in the past too, we are not worried about the cannibalization because we don't want to second-guess the customer. We want the customer to have choice between whether they buy our ICE or our EVs, which is why consciously we are keeping the showrooms selling the EVs and the ICE the same. If you are wanting to avoid cannibalization, the first thing you would say is let's not sell the EVs out of the same showroom. But we are actually comfortable doing that because we feel customer must have the choice at this stage of the evolution of the category. There will be customers who haven't yet decided whether they want ICE or EV. When they go to check out either one of them, they would want to check out the other at the same place rather than go to another place. So, in our mindset right now, we don't want to second-guess the customer, so we deal with the cannibalization as we go along. The idea is to be, you know, and today we have, I mean, we do have cannibalization as we've said vertically. So, there could be, you know, Scorpio N customer who may be looking at a classic sometimes, there may be a three-door customer who look at a rocks or the other way around. So we do have, you know, potential cannibalization even within our portfolio given that we are a pure SUV player. So we have to be prepared for cannibalization and as long as directionally we know that on a net unit basis It is not going to matter whether a customer buys a BEV or ICE. We don't want to try to second guess the customer. So, you know, we don't want to overanalyze the cannibalization. And we will learn with every quarter what's happening because, you know, the profile of customer will keep evolving. It's not like forever for the next three years only luxury car buyers are going to come into the segment. We will have mainstream ICE buyers coming in as well.

Just sticking with auto again, I think two things on the non-EV business. One was on the margin side. We did have the unveil of the EVs in quarter three. Just wanted to understand when I look at this 9.7% EBIT margin, there is a one-off that you want to call out on account of that unveil or an extra spend. And if you could also share sort of price hikes that we may have taken on the portfolio in quarter three.

Yeah, so the 9.7 does not have it because it's not in the auto-consolidated. That's in the standalone. So the marketing spend that we've incurred in quarter three is reflected in the auto-consolidated because that's done in meal. Which is 8.6. which is 8.6 so that has the impact of a little little bit of depreciation and the marketing spend plus the manpower cost of the field team and all of that which was all costs in in quarter three so that's reflected in the auto consolidated number not in this 9.7 percent given that that's a separate company um what's the next point pricing any price hikes price hikes basically ytd auto ytd december which was about 0.7 and then we have taken another 0.8 in january

Okay. Lastly, I think just wanted to understand the ice capacity de-bottlenecking, particularly for 3XO and ROCS. I think clearly if you can share, I think that slide which used to share how the per month run rate for each of the models is going in terms of demand versus capacity, we don't have it anymore. It will be good to know where the demand run rate for 3XO and ROCS is running and what are we doing to de-bottleneck capacity on those two models?

Yeah, so 3XO, we have a capacity of about 9,000. Firstly, we are constrained by the mix of gasoline and diesel because we had estimated about 65-70% to be gasoline and balance to be diesel. The demand for gasoline is higher than 60%, close to 80-85%. So we have some gasoline capacity constraint right now. So that's something that we are working on that we'll solve soon. We are working on increasing the total 900,000 by a couple of thousand because it's going to be within the same infrastructure. That will take another three to four months. So that's some de-bottlenecking. We are also seeing a very strong demand from South Africa. 3XO, we launched there a few months back. Right now the run rate is almost 700 a month. So we have a part of what we're producing we are also prioritizing because that's a new market. We're getting a very good response there. So there is a constraint on total numbers and South Africa is all gasoline, there's no diesel. So that's kind of part of the thing. So we are able to do maybe a couple of thousand more in the next three to four months, about nine. And on rocks, when we launched, we said we have about 9,000 capacity with some level of fungibility between three-door and five-door. What we've just been able to achieve is we've got now complete fungibility. So if we want, we can make all the volume of rocks and no volume of three-door or… I don't think we can do the other way around. But we are seeing a very good demand for three-door as well. We had gotten into discounts just when we launched ROX to protect the cannibalization. But we have almost pulled off all of those discounts and the demand still continues to be very good for three-door. We will prioritize rocks in a relative context because the waiting list is long. So again there we will try and increase a couple of thousand. So basically we have a maximum upside of 1500 to 2000 on each of these within the current infrastructure.

Within next 3-4 months on rocks as well?

That's correct. Let's say by June-July. That's broadly what we are working towards.

Thank you.

Thank you so much. Pramod, I'll just come to you. Couple of questions. Amar, this is on PLI. This is from Jinesh Gandhi at Ambed. 104 crore of PLI for LMM. Was it accounted for in this quarter or in FI24? And whether it is on console or standalone basis? That's the first question. Second question is from Chandramouli at Goldman. What is the time frame that you think is realistic for meal to start getting PLI benefits for M&M to start getting PLI benefits or BE6 and 9?

So on the LMM, it's actually the impact is seen in the console books and it was not accrued in one quarter and received in one quarter. It was accrued and we've been talking about this because we have very specific milestones that need to be met before you can accrue the PLI. So once the milestone was met, we were accruing the PLI and the Was all F24? Yes. So that was going to be the second part of the response. So most of it was accrued in F24 and we've received all of it. 100% of what we accrued has been received. And as far as meal is concerned, again, we'll have to go through when we hit those milestones. That's when we'll start accruing. So there's no firm timeline because it will depend on us being able to. And most of just to be sure it's not very vague. There is a specific audit that needs to happen for us to be able to feel good that the PLI benefit is accruable. So that's why it's difficult to do. And in the case of meal, it's a bit more complicated than LMM because there are also supplier certifications that are required before you can get majority of the audit completed and the amount accrued.

Pramod, please go ahead.

Yeah, back from here. Rajesh, question on the EV bid because you really got a great thing going, very exciting design. Dealers are raving about the feedback. But how do we manage the ramp up along with the quality gates? Because we've seen some of the other players in the industry who had a great start but stumbled on quality and it's kind of been a big blowback in terms of customer cancellation, market share loss. So given the kind of exciting products and prospect to have, what are we doing on the quality ramp side or quality gate side to ensure that all the electronics, the understanding of the chemistry, the BMS, everything, it kind of adds up very nicely for a very good experience for the consumer. Just sounding a bit cautious, but I think delivering it that is extremely critical for sustainable demand. So just forgive me for that if I'm sounding a bit cautious, but I just want to hear your thoughts on that.

We totally echo your cautiousness and that's why we are being very mindful of not trying to ramp this up. too fast. We started 90 in December, we started B in January and last month we sold less than 2000 which is mainly for dealer displays and test drives and we are going to ramp up slowly. So we are going much lesser than our capacity. so we are very mindful of uh promote the we know it's a very high-tech product and uh new technology for us it's a very very good manufacturing facility that we have with very good automation and We spent a lot of effort on validation and robustness. That being said, a fast ramp up is detrimental and we will not do anything to trade that off. So if we have a doubt and we don't sell 5000 and we sell 3000, that's fine. We will not trade off the number for the quality.

That's great to hear, Rajesh. And the second is extending the EV R&D work. Because we have reasonable amount of contribution from partners and third party vendors. But in terms of when you look at the longer term, what is the kind of capability you want to have in-house? Because hardware part is one of it. We will ramp it up over time. Any thoughts on software? because that's what is in a way globally playing out. The players who control the hardware and the software end-to-end are the ones who are really standing out, be it from China, be it from US, be it in even the tubular space in India on the electric side. So, what are your thoughts there on the longer term and how do you plan to kind of drive that? Any thoughts?

I know it's pretty… Just to make sure I understood your question is more on where is the ownership of the software?

Yeah, where are we today and where do you expect to be over the next few years?

All critical integrating software is owned by us. So the BMS software is ours, all the zonal architecture, ECU software, all of that is owned by us. There may be specific software, example, AutoPark. which comes from the supplier. So there will be subsystems, feature-based software, which is part of the supplier. But all the integration software, including BMS, is our software. We own it.

And when you say yours, it's within Mahinda standalone, not within the group like TechM has some capability there?

It's within Meal.

Meal. So that's very good to hear. Thanks a lot. Thank you.

Raghu?

Thank you. Thank you very much for showcasing the contract manufacturing and the meal part. I am sure it will help us a lot in understanding and appreciate the transparency. So just a question to understand that, for instance if conversion cost is say a million rupees per unit. And you will be taking a margin on that. And there will also be a margin which you will accrue on the product development expenditure. So any thoughts on what could be the range? How would the transfer pricing be determined?

There is an arm's length transfer pricing arrangement between the two. Specific percentage will become obvious as you look at the numbers. But just bear in mind what happens is M&M buys the material, does not charge anything on top of the material because that's not where M&M is adding value. M&M will do the work and that's the conversion cost on which there is a margin and similarly same with product development. So, as you see the numbers come through, it will become pretty clear, you know, because it's a very set arm's length transaction that we do.

I just want to clarify, Raghu, that the capital expenditure related to product in meal books that's not part of the transfer pricing this is the mainly the people and you know all the validation expenses related to that which comes in it's not the cap not the product development tooling capex all of that is a mean that's not part of the RPT

Government so far I don't think has come out with a guideline on cafe 3. Generally there is a couple of years of time that needs to be given to industry whenever they need to finalize something, come out with norms. Do you see a case where the cafe 3 can get delayed?

theoretically yes because there's so much discussion yet and there is no consensus on what exactly it should be there's a same view even within the government there are multiple views on what is the level of CO2 reduction that's expected which cycle of validation should be used so I think we are a while from closing in my understanding there's a lot of debate on the current proposals

And you touched upon the exports part. Last four months, auto exports, we have seen almost 80% growth. And you touched upon South Africa and 3XO doing well there. If you can share some thoughts on how you see the drivers of growth, because you have a great set of portfolio, how you can leverage that in various global markets?

Yeah, so... just to just to recap what we had said uh so we had said that uh our first phase of growth will come out of markets where we already have a presence south africa is one example australia new zealand is another chile it's a left-hand drive market is a third so our current portfolio products example 3xo now 700 uh scorpio n is what we are leveraging in markets where we already have a brand and a presence As we move into phase two, we've spoken about creating a global lifestyle pickup, which we had also displayed in Cape Town a year and a half back. So that will be one of the mainstays in ICE in LHD, left-hand drive and right-hand drive markets. We do have a strong presence in many markets with the pickup portfolio, which is a Scorpio pickup. we will now leverage this new pickup in single cab and double cab both. So that will be one of the key drivers of exports. And then, of course, what do we do with the electric origin SUVs and where all should we go is something that we are working out on. There's, of course, image attraction visible from the neighboring countries, but what should be the pace at which we should go to global markets with that. Again, there, as we've said in the past, we want to go to right-hand drive markets first, which would mean Australia and New Zealand kind of markets definitely could be one option. But whether we should open up UK is one of the things that because that's a good right-hand drive market. And then the next phase is to look at left-hand drive market. So we would want to globalize but in a calibrated way. Right now the phase we are in is leveraging existing markets with existing products.

Thanks for that. Just a last question. I mean, Data Motors had called out about financing issues for the first time buyer category in SCVs. So, how big would be, you know, this share of first time buyers in SCV?

You mean, what is the share of first time buyers? Vijay, help me, but I think it's fairly large.

Sir, you know, you have captive buyers and you have regular buyers.

Vijay, just take the mic because then those online can hear you.

First time buyers are typically market load operators because they are people who come into, they become self-employed entrepreneurs by buying a vehicle and putting it on a stand or attaching it to captive use. That even today in the market sits at about, depending on the less than two ton and two to three and a half ton, it is still in the region of 40 to 60%. So that's a very, very significant sense.

Is there any stress in terms of financial

financing issues for that category not really for our portfolio we can see that you know with the kind of share that we are sitting with we enjoy very very favorable ltv and also the interest rates for the customer so we are not seeing stress on that front and we don't have any captive financing yeah thank you sir

Great. Thank you. I think with that, we'll wind up this meeting. On behalf of M&M, thank you everyone for joining us today in person as well as online. Please join us for snacks and have a great evening. Thank you.