Mahindra & Mahindra 144A

Hi, good afternoon everyone, and a very warm welcome to the quarter four analyst meet of Mahindra and Mahindra Limited. For the main presentation today, we have with us our group CEO and MD, Dr. Anish Shah, CEO and ED of our auto and farm business, Mr. Rajesh Jayjorikar, and our group CFO, Mr. Amarjyoti Barua. We will be taking your questions at the end of the presentation. As a reminder, this meeting is being recorded. For the purpose of completeness, I wish to read this out. 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 the actual results to differ from those in these forward-looking statements. With that, I now hand over to Dr. Anish Shah for his opening remarks.

Good afternoon. It's a pleasure to be here with you, more so when we have some very strong results and a continued journey that we've had for many years in terms of execution. So let me start with the standard key messages. Auto and farm, as you continue to expect, very strong execution. both in terms of market share as well as margins. SCV volumes up 20%. A year ago, you'd asked us a question of what are you signing up for. At that point, we said mid to high teens. And it was a fairly ambitious target at that point, but we've managed to come in slightly higher than the mid to high teens target with 20% growth. As a result, market share is up 210 basis points to 22.5%. Auto margins are up 110 basis points as well. And farm, not to be left behind, basically said that, look, we are at 40% plus market share, but we are still going to grow. And therefore, we are at 43.3 now, up 170 basis points, not easy to do in the 40% category. And with that significant improvement in margins as well, up 210 basis points to 18.4%. And this, again, is... continuation of the conversations we've had over the last few years in terms of the fact that we will continue to focus on margins and on execution. Also want to point out that you will see some write-offs. These are largely for what we had identified as category B businesses. In particular, MAM Mitsubishi and SAMPO. So MAM in Japan and SAMPO in Finland. These were businesses which, as a reminder, had a good strategic benefit or a quantifiable strategic benefit, but not necessarily a profit trajectory. And we have gotten significant strategic benefits from these companies. We are now pivoting them to ensure that there isn't a profit drain from those businesses, and therefore the write-offs. So that's something that you will see in the numbers. Tech Mahindra and Mahindra Finance are on a strong trajectory. Both have laid out a path to first getting to market average and then going above their peers. And both are firmly on that path, techem on the path to margins. And Mahindra Finance has... accomplished a very important transformation of going from 7% to 8% GS3 or GNPAs on average or in normal times to less than 4.5%. At this point, it's actually less than 4%, but our target is to be less than 4.5% in normal times. And that is a very important transformation because it has been done while maintaining profitability at levels higher than we had expected. Because you would expect typically to have lower profitability as you're giving up some very good customers. who didn't have high credit losses but had high volatility, but the business has been able to do that well, is focused on controls and will get back to growth, even though growth has been reasonably strong for this year at a 17% increase in assets under management. And you see a very strong profit number here, up 33% on a standalone basis for Mahindra Finance. This is the first time that on a standalone basis, Mahindra Finance is greater than 2,000 crores of profit for the year, 2,300 plus, in fact, as compared to 1,900 and something, which was the highest ever so far. So on a good trajectory. And we will talk a little more about scalable growth gems today. and the momentum that we see in them, and why we feel good about these growth gems becoming significant contributors to us as we go forward. All in all, consolidated profit growth of 20%. This does exclude the mark-to-market from KG Mobility, which is SsangYong, shares that we had gotten as part of the exit. That has no operating impact, no cash flow impact, but we had a gain in F24 of 330 crores and a loss in F25 of 238 crores, which sort of offset each other, but from a percentage standpoint, we therefore took them out. On a reported basis, it's a 15% PAT increase. Excluding the KG Mobility mark-to-market, it's a 20%. And the real operating number is a 20% PAT increase. And ROE, we have maintained at 18%, despite a significant cash phase as well, which Amar will talk about. We have gotten to a much higher cash level than we were before. So at the headlines, consolidated results, 14% up in revenue, 20% up in profit after tax. Standalone, 17% increase in revenue, 17% higher from profit after tax standpoint. And now look at our businesses. We've talked about road gems, but we're getting a little finer in terms of how we look at our businesses now. We plotted them onto axis, competitor position, and scale. Auto and farm, very strong from a competitive position are high-scale businesses as well. Mahindra Finance and Tech-Am, scale businesses but not quite the competitive position we want them to be in because we want them to be higher than the peers and ideally near the top of the upper level. And then we look at the left-hand side where we've segregated our growth gems into what we call scalable and emerging. Scalable growth gems have a very clear competitive advantage. They've demonstrated that and therefore now have a target of $2 to $3 billion of valuation each by F30 in the next five years. Our emerging growth gems have something meaningful going for them, either in terms of products, in terms of service, in terms of what they do. But they really haven't demonstrated that market competitiveness as yet, or have done it to some extent. These are businesses that we want to get to a billion dollars of market valuation in the next five years, and then hopefully move them higher and get to a higher competitiveness, and then move them to the right in terms of scale as well. So this is how we're looking at our businesses. Over time, yes, we ideally want everyone to be in the top right segment. But if everything was there, we'd have nothing else to do. So this is part of the work that we have to do to get everyone there. So let's talk about each of these businesses. I'll cover the headlines for auto and farm, and Rajesh will cover everything else and give you a much broader perspective on these businesses. But auto, as you know, number one SUV player. Our electric vehicles are off to a very good start. And disciplined execution, that's one thing that you will see consistently across what we do. Or at least we strive to be consistent in what we do. There are times when some things may not be exactly right, but that's part of what we will fix. And you see the numbers as a result of that. On the farm side, new products, OJA has gone off to a very good start, giving us good market share in the U.S. and allowing us to get to other geographies as well. Margin increase, and we are sharpening our international focus with pivoting a couple of our Category B businesses. Again, you see the numbers there, extremely strong from a market share standpoint and a PIT standpoint as well. The PAT here is impacted by the write-offs. And therefore, you see that in single digits as compared to what would have been, which is much higher otherwise. Mahindra Finance talked about a 70% asset growth. GS3 is under a 4% threshold at this point instead of being at 4.5%, which is what we had planned for. We have deliberately had a slowdown in disbursements to focus on asset quality and to focus on controls. We will continue to focus on controls and then start pivoting back to growth as we go forward. You see a good GS3 number here and profits at the consolidated Mahindra finance level of 2,262 crores and the standalone Mahindra finance level of 2,300 crores plus because we had to do some cleanup in the rural housing finance business, which was disclosed as part of the Mahindra finance presentation a couple of weeks ago. Tech Mahindra, good deal wins, a good pipeline in consumer and BFSI, which is where it's expanding or diversifying. Momentum in Europe and Asia Pacific is very strong. A couple of very good leaders in both of those geographies. And focusing on its margin expansion part, which it has outlined. And here, again, you see some very strong numbers in terms of TCV, EBIT, and PAT as well. And that essentially puts this company on a good trajectory going forward. So we're going to share a little more detail on road gems. Many of you have had questions on this in the past, and we'll continue to add more details as we go forward. Let's look at six businesses today, starting with hospitality. In fiscal 20, room inventory was 3,700 rooms, or keys, as we call them. Today, it's 5,800. And the business is working on a plan to be 2 to 3x that in the next five years. We'll come back with the exact plan and how we're going to get there, maybe in a quarter or two at max. But that's the trajectory we're going down, which will give it a 5x growth in a decade. Ideally, we'd want faster growth in a shorter time frame, but we'll take 5x growth in a decade at this point. Logistics has struggled, and we've talked about that in the past, but this is a business which I've always believed has phenomenal potential and one that we're actually positioned very well in. With Hemant Sikka coming in to lead it now, one of our strongest leaders, we feel that this business will get on a very strong path going forward. And while we have a 3x number there as a placeholder right now, we shall give Hemant the time to come and see the business and then come back with the specific targets that he would set for the next five years. Real estate, these are targets that have been committed by the business and they've done that in their last analyst meeting. We've taken the liberty of rounding it up a little bit because they were at 670 crores of pre-sales going to 2,800 pre-sales. and going to 9,500, which we've taken the liberty of rounding up to 10,000. Because the pre-sales that they have committed to for the next five years, 70% to 80% of that land has been acquired already. So it's now pure execution. And as they go forward, they should hopefully be able to do more, but we shall not push them too hard on this. This is a good set of numbers of 14 times improvement over 10 years. And more than the numbers... What we really like is a very sharp focus on profitability of projects. And that's something that is done at a very granular level by project, by quarter. And in addition to profitability, the focus on customers, customer experience, ensuring any problems are resolved quickly. So all of those things are contributing to building a very, very strong business in live spaces. Susten, we've talked about before, this was the first business to come up with a 5X growth plan. It is on track. In fact, the business has committed to delivering this before fiscal 30. We are not changing the targets as yet because we shall wait for that execution and then look at increasing targets from there. Last Mile Mobility has been a fantastic story. From 14,000 vehicles a year, we're at 78,000 now, which is 5x already. And the plans to get to another two to three times from there, which will be a 10 to 15 time overall increase in targets or increase in this business over a decade. And that's something that's being reflected in its valuation as well, as we've seen from external partners coming in. This is also a space where we continue to be number one with the 40% plus market share in a very, very competitive market with some real heavyweights in there. So that's one that the team has done extremely well in driving and maintaining that momentum. And trucks and buses, we've talked about recently. The acquisition was a very good one, something that needed a lot of preparation on our side first to make sure the business is doing well, it is well-positioned, the leadership team is strong, and can then deliver on what we expected to deliver. and at a valuation which we felt was reasonable and good. So a combination of all of those things led us to that acquisition. As we've talked earlier, we continue to be very disciplined in terms of what we do and where we go. And that discipline is something that would be evident in this acquisition. And the results are something we will continue to track as we go forward. So with that, we come to my favorite chart, which we've updated every quarter. And we had made a commitment on 28th of May 2021 when we reported our fiscal 21 numbers. At that time, our reported numbers were 4% on ROE and 4%. 16.2 on EPS. And we had committed to 18% ROE and 15% to 20% EPS growth. So we have maintained the 18% faster than what we had committed. And we have grown ROE 63% on an annualized basis as compared to the 15% to 20% we had talked about. As I've always said, though, it shall not be a 63% promise going for the next few years as well. So please temper that in terms of the expectations. But we continue on a very strong path at this point. But more than the numbers, again, What we're very proud of is our team. We've got a very strong set of leaders, associates who helped us build this business, a very strong focus on execution, and that is a foundation that is helping us deliver what we do. With that, Rajesh, over to you.

Thank you, Anish.

There are a few more slides in this deck than what was there in the morning deck. So in case you haven't seen them, we've just brought in more details, some of the things we have promised you that we will cover starting this quarter. So I'll go fast through what we've done in the morning. I'm sure you've read most of it, but keep time on the slides which are new. So the farm growth Anish has covered and I'm going to run through this very quickly. Strong gain in market share, especially in quarter 4. This is one of the best, I think the best quarter 4 market share and of course the highest for the year. This graph reflects the 43.3 which is the best market share we've ever had. Farm machinery, we wanted to grow faster and this is one of the things we haven't done as well as we would have liked to. But it's still a thousand crore milestone to cross and that places us well competitively. It makes us the second largest farm machinery player in the country. So it places us well. There are many actions we're going to take to accelerate the pace of growth from here. This has been, I'm sure many of you are wanting to understand more behind what made this happen. I think only Hemant has the answer, so before he moves to his new role, get it from him. So it's really been an amazing margin delivery, very good for the year, but also very, very strong for the quarter, where the quarter core tractor margin was as high as 20.8%. which is what you see on this chart. This is the farm consolidated numbers, very strong PBIT growth in the quarter of 25% and for the full year at 14%. I'm adding a few slides on understanding the global subsidiaries and what happened. So this we didn't do in the earlier session. So we've broken this into the three markets which are strategic. So you see Turkey, uh turkey we've lost some share in the second half but this is because we moved earlier to the tram phi equivalent the rest of the competition hasn't moved yet so we are right now in the last few months operating at higher prices than everyone else which is why we've lost some market share the industry saw a big negative growth of 26 percent during the course of this year there's also some hyperinflation losses that we've made but overall The business of tractors continues to be profitable in the year in spite of a negative industry growth. So Turkey is not a cause of concern. Brazil, you can see, it's profitable and we've grown market share consistently with time. It's a very competitive market. So it has all the top global players. The fact that we've been able to gain 8.5% in a very competitive market like Brazil is an indication of the product fit and the effort we've made with time to build the channel and the network. So we're very well positioned. Industry has grown 12% here. Magna is an interesting story. So you're seeing the industry down 13% this year, but it's been almost three years of industry degrowth. So we've seen volumes at an overall level in the 110, less than 110 horsepower segment come down. But what is interesting is the last quarter increase in market share. Now this is, we've basically ramped up our investments in marketing with the OJA series settling in. We had to reduce inventory of the earlier tractors that we were getting in which OJA was replacing. The less than 20 horsepower segment in US is 40% of the total volume of the industry less than 110 horsepower. In that segment, our market share was only 3%. So as you can see in the last quarter, and these are all retail market share numbers. In the US, it's not shipment. The retail data is available, which is what publishes retail market share. uh our segmental that is less than 20 horsepower market share for four months in a row has crossed 10 from three percent and that's what's pushed our overall market share up to 8.5 so what we are seeing in the us has been some losses this year uh that's because of a significant down cycle in the industry along with marketing expenses to launch the OJA in the last quarter. So sum total of all of these, these three businesses together had an aggregated loss of 104 crores, which is in the farm consolidated numbers. So we just wanted to give you a perspective of where the three countries or the three international subs which are strategic to us and the fact that we've lost money here, but we expect these to bounce back. Yeah, we can take more questions on these. The two companies which Anish spoke about, which is category B companies, in both of these we've got a lot of strategic value. The Oja series, which I spoke about just now in the US context, but also has helped us in the India context, a lot of that has come out of working with Mitsubishi in Japan and helping us develop the lightweight platform. So we've got a strategic value out of that. There are multiple headwinds there, mainly the downturn in the Japan market continues for all the segments. So, you know, there's a high domestic market dependence that continues to see a down cycle. Also, some of the products we were exporting from Japan to our U.S. business through OJA have moved to being made in India and are part of the India business. So that has put a... sort of pressure on the business. There's some of the write-downs, and Amar will talk a little more about that, in quarter four are on account of Japan. There are a series of actions we are taking to streamline and cut losses, and we expect that will take a few quarters by the time we completely streamline the MAM Japan business. On Sampo, again, we got a lot of strategic value, but there were headwinds. One critical one was business in the Russia region. It was an important part of harvest, but also forest machinery business, which we stopped doing business completely since the Russia-Ukraine war. So that had its effect. Oil prices impact Algeria, which is a big harvester market. So we have a joint venture with the Algerian government and have 80% actually share of harvester market in Algeria through that joint venture. But when oil prices are down, the harvester sales go down in Algeria and that affects Sampo. So these are two critical headwinds which have impacted Sampo. As you can see below here, this is the 654 crores of write-downs taken at the consolidated level. Amar will talk more on these. Several actions being taken in Sampo and we'll talk more about that. But most of the cleanup on Sampo by way of write-downs and impairments is done. There are some left in Japan, but the sample write downs are all done. Again, we can talk more about this in the Q&A. But we thought we'll spend some time so that you get a perspective on where we are on the five international subs in farm. This is a quick update on where we are in the commitments we had made. I think we're on good track for everything except the growth in international business. Like I said, most of the markets we operate in has seen a slowdown, including the South Asian countries, which have had its own set of challenges like Bangladesh. So that's affected our ability to grow in international. Apart from that, we are well on track for the commitments. Moving to auto, I'll run through this quickly except the few additional slides. So strong performance on SUV, you see that in the graphs here. uh market share gain consistently uh also strong performance on volume market share where we continue to be the number two suv volume player in spite of uh the kind of price points we operate at uh we you're familiar with the bookings uh we've delivered so far 6 300 vehicles to customers uh that's in a 40-day period We'll talk more about this, I'm sure, in the Q&A. A very good experience so far. A lot we've learned out of that as well. And we'll take that up in the questions as we talk. Interestingly, in quarter four, we have become, by revenue share, the number one suv electric suv and the number one electric passenger vehicle uh this is of course based on the volumes that we sold this is jato data uh but given that our average price points are much higher uh than everyone else we did say that you know our metric here is going to be revenue market share and in the first quarter we are number one on revenue market share uh you all are familiar we got the five star rating on bharatan cap again lcv very strong story we gained uh 2.9 share points in the full year and 4.8 share points in the quarter. This graph brings alive the volumes in the market share. The industries continue to be, we had a negative quarter again. For the full year it was, the CAGR has been minus 3. We've grown 4%, which reflects the gain in market share that we've had in this period of time, which has been 5%. So actually Vijay used the terminology of 3, 4 and 5, which is a nice way to remember it. Minus 3 industry growth, 4% growth for us and 5% gain in market share. So a lot has happened. Vero has been a good launch. It's helped us gain market share in South. South is a market where we were ahead but not at the national level of market share. We've gained about seven to eight share points in South over the last period of time, which is what has pushed the national average up. This is the auto standalone PBIT and you are familiar with the number of 9.5%. This is the chart we had said we will show you this time. So you are seeing this as we had promised. The auto standalone without BEVs is at 10%. So this is how it plays out. So auto standalone is the way you are seeing it. which is the revenue and PBIT of 2300, that's 10%, without the meal contract manufacturing. The second column is the contract manufacturing that we do for electric SUVs in Chakan plant and sold to meal. Because that's a revenue sale, since it's contract manufacturing, that revenue gets captured in M&M standalone. And what you see is the 6 crores conversion cost related party margin. It's only on the conversion cost, the margin, and not on the value of sale. So that's just 6 crores, which is a 0.3% margin business. When you put that together, it comes to 9.2%. So what you're seeing is a 0.8% margin correction, just on account of the fact that we're doing contract manufacturing for electric vehicles in our Chakan plant. We can spend more time explaining this. You've seen this format last time, but this is how the format looks filled up. The next one is meal as a company. So Meal as a company was EBITDA positive in its first quarter of operation. It made a 10 crore EBITDA profit without accruing any PLI. We decided to be conservative and wait for the technical certification to come and have not accrued any PLI. So it's 10 crores EBITDA. Of course, it is enabled by the mix that we have. As you all know that right now we are selling only the top pack versions. So the mix does have a positive role in this. When you add what you saw in the previous chart, which is the money that's made in contract manufacturing, so we said we'll give you an end-to-end view. So the money that gets made in meal, the money that gets made in M&M for manufacturing, together gives you what you see at the bottom, which is the end-to-end EV margin, which is 22 crores EBITDA. The balance that you see is the loss on account of depreciation, and hence there is a PBIT loss of 166 crores in the quarter, but it's an EBITDA positive standalone for meal, plus an EBITDA positive along with the money in contract manufacturing. Last mile mobility continues to grow and Anish has spoken about this. I'm going to run this through this fast. So what you see in quarter four is a 10% growth in profit. This includes the loss of mail. These are the commitments we had put out. They are primarily all green. International is on a good momentum and hopefully we should finish F26 with a 2x growth. A little bit on the product portfolio and the capacities. So this is a recap of the slide that we had put out, which spoke about the number of products we will launch by 2030. Out of these, six products have been launched. So you're familiar with them. Three plus these three. So six products have been launched out of that. What this then does is says that, OK, these are the products that will get launched by 2030. Of course, the pipeline doesn't stop and we have new ideas and they will move into execution. So we should have a larger pipeline which will update at the appropriate time. So there's a lot of excitement still to come our way on the product front. In the calendar year 2026, we expect three ICE products, two bond electric products and two LCVs in calendar year 2026. Out of those three, two are mid-cycle refreshes. On 15th of August, we'll talk about a new platform vision. It will be the set of products that will start coming out for 2027 on this platform. I'm not going to say more about it at this stage. We'll wait for 14th, 15th August. We'll talk about the platform and we'll show you some concepts that are going to come out from it. There is no launch of a new product on 15th August this time. This is a slide on capacity. While it has a granular breakup, the key points are the THAR capacity will move from 9 to 10.5, that's 1500 addition, or 9.5 to 11. The 3XO capacity moves up by 1500 to about 11. And we are going to create 1.2 lakhs of new capacity in Chakkan plant for the platform that I just spoke about. On top of that, we are planning a greenfield plant, which we have not decided the site of yet, which will prepare us for a whole new lot of products and be bottlenecking the capacity that we have on some of our current products. That will be F28 and beyond. So broadly, that is what I had. And with that, Amar, thank you.

Okay, I'll just round out what you heard. Revenue up 14%. I'll just point out auto was up 19% on a consolidated basis here. Farm was up 6%, on which domestic was up 15%. So it's really the international markets which have brought down the revenue growth to single digit. For farm, Mahindra Finance was up 17%, and our growth gems were also collectively up double digits. So, a lot of strong momentum on the top line side that you saw in F25, which translated into very strong operating results. Of course, the margin rates are higher because we also got a lot of operating leverage across our businesses. So, Otto had a 25% growth in profitability year-over-year, farm had 30% growth in profitability year-over-year, and we continue to see very strong profit growth in Tech-M. As you know, that's not operating at full potential, there's a lot more to do, but it was up more than 80% year-over-year, and so was Mahindra Finance. In the quarter, we did take a charge in Mahindra Finance that they talked about in our rural housing business. On a standalone basis, Mahindra Finance is up 33%, but consolidated basis up 16% year over year on profitability as well. So very strong results there. This just shows the contribution. I'd like to point out, I'll spend a little bit of time on that 156 because there's a large impairment that we have taken in standalone, but the impact you see is 156 in console. So I just want to explain that a little bit. But I do want to focus on the last bucket, which is the services bucket. That's up to 150 crores. But do bear in mind, last year, we had a sustained flip of assets to the Invit, as well as Teco, as we sold the stake, et cetera. So that gain, once you take out, is still a substantial increase in growth gems here, over here, and services portfolio, largely on account of TechM and Invit. Mahindra Finance doing much better year over year. This is the standalone view, 17% revenue growth, 17% ex-KG mobility, 11% including KG mobility. This does carry the full impact of the impairment of 654 crores that Rajesh had spoken about. I'll spend a little bit of time more on the standalone than consolidated. You all know these numbers already for consolidated M&M up 20% in profitability, 150-odd crore impact because of the impairment. So not material for us to call out, which is why we haven't called out. This number, though, which is the standalone result of 2437 impact, carries a 654 crore impact because of the impairment. Now, what is that walk from 654 in standalone to the 156 you see in consolidated? What happens is when we consolidate the investment made into subsidiaries, it gets knocked off against the equity in those subsidiaries. So the only thing you carry in consolidated are their profits or losses. So what 156 versus 654 effectively denotes is the losses that we have already taken on those subsidiaries in our consolidated books over time. So that's why the impact in consolidated is much smaller than what we do in standalone. In standalone, we have basically written off a big chunk of our investment in those entities, given the pivot we are doing in both those businesses that Rajesh spoke about. So hopefully that's clear, but if there are more questions, I can answer that. So on a standalone basis, pretty material, which is why we are calling out that on an operating results standpoint, the business did deliver a 55% growth in profits in the quarter, led primarily by auto and very strong results from farm, as you would have seen. Anish alluded to this. Close to 10,000 crores of cash generated during the year, something we are extremely proud of. It shows that the operating results that you saw in prior pages are all translating into cash as well, which is always a great sign. So there's not a lot of non-operating income as such, which is driving that. This 10,000 crores now takes us up to 28,000 crores at an M&M level standalone plus meal plus lmm level this is not the group view of course and gives us a lot of ability to invest in some of our growth businesses you are aware of the two or three investments we are doing you are aware of sml you are aware of the rights issues for some of our subsidiary companies so there will be some reduction in this cash but the cash generation on a quarterly basis also is pretty significant so we hope to deliver much more cash in the coming year as well, in F26 as well. So with that, we'll wrap up here and I'm sure there's a lot of questions that we can take.

We'll just proceed with the Q&A session. Vinay, please go ahead. That's Vinay from Morgan Stanley.

Just wait for the mic.

Hi team, congratulations on a good set of numbers. My question is on the electric vehicle side, in particular focusing on mix and margins. As we know when we started EVs, we had a very strong mix, something that you alluded to in your opening comment also. As time is passing by, how do you see that mix changing and will it have an impact on margins? Secondly, on margins, from our understanding, generally we see that electric vehicles tend to have lower operating leverage than ICE vehicles, given there's a very large component that is outsourced, and this company is also sitting within Mahindra, so maybe it's already getting some of the fixed cost benefits. So if you could do some breakdown into gross margins and variable margins for EVs, or fixed costs, so that we can build a trajectory about what are the key milestones to track on EVs in terms of margin improvement.

Yeah, thanks, Vinay. So on the mix, to give you an insight, the mix that we have on current deliveries, sorry, on current bookings is still very skewed to the top end, which is pack three, more than 75%. We believe that the mix will start changing when we put out display and test drive vehicles of pack two and pack one. while inquiries are good on pack one and pack two they don't get converted right now into bookings because people do want to see the vehicles before they book so the current booking momentum is still very skewed to pack three which means that for some period of time a large amount of the volumes that we sell will be will have a mix similar to this obviously not identical to this because right now we are selling only pack three So the quarter four sales and the quarter one sales, I think all of quarter one is pack three only. So the current mix will continue for what we saw last quarter and what will happen this quarter. To start growing volumes we will have to have a reasonable mix in pack 1 and pack 2 because otherwise we will saturate at a price point which you will not be able to sustain high volumes at this price point. So we will have to start getting at least 25-30% of our volumes from pack 2 and pack 1. We have lots of learnings out of the current process which will lead us to re-variant a little bit and we are working on that. For example, there is a very large segment of people who will want 79 kWh in lower packs. Now, this has been very different than the assumption in which we went that 79 kWh will give only in the top end and everything else will be 59 kWh. This is because there is a segment of people for whom range is really important. And they will value range over many of the other features that we are offering. So we will have to re-variant and create some new variants which are 79 kilowatt hour with lesser other tech so that consumers get the 450, 500, 500 plus range which we are promising. That's a big, big differentiation. Nobody else has 79 kilowatt hour range. And a 79 kilowatt hour, which is giving the kind of range that customers are beginning to experience, is a big selling point because it breaks range anxiety, which was otherwise a barrier. So there are some things like this which we will adapt and work on. But that's the question on the mix at this point of time. On operating leverage, basically, all the effect on, firstly, the benefit of, because they're in the same plant in Chakram, there is an automatic operating leverage benefit that comes out of being in the same plant. The paint shop and a lot of the utilities are common. Manpower is fungible between shops, so we can move people around depending on on how production is ramping up for individual models in that plant. So that's a huge benefit we have of not running a separate plant where you don't have fungibility. The fixed cost sitting in the meal organization... are very limited very very low manpower there it's mainly the sales teams all manufacturing fixed costs are sitting in what you saw as the conversion cost so all the benefits of operating leverage that come in on that cost will and it will be actualized so while there is a conversion cost as and estimate it will get actualized at the end of the year, it will actualize to the actual utilization of resources or cost in the plant. Does that answer your question on operating leverage and fixed cost?

Just to sort of understand then, what should we try to sort of build a margin rising from here on? Will it be localization then or will it be pricing or more scale? How do you think about that?

so uh i i think the the biggest variable i think will be the mix uh of packs and that honestly we have to play see how that plays out so on the one hand we do think that the mix has to move to pack two and pack one uh otherwise we're not going to get volumes only factory but you never know i mean you know we 700 completely surprised us after even three years or four years of launch we are at 75 plus of top two variants So, I mean, we never know. You may be surprised. But at this point of time, we are assuming that we need at least 25% of the other two packs. So I think mix will be one big variable. The sell prices are indexed, so any benefit that is happening out of sell prices being moderated downward around the world, which is what is happening, does translate back to us, so we are indexed on that. That's an important factor from a cost, material cost. I don't think the fixed cost is going to be a big variable in this equation for the reason that I told you, because it's all within the Chakan plant. I would think the two key things to track will be the sell price movement around the world, which will come in with a one-quarter lag, and the mix. Right now, unless the other packs pick up, we would be wary about taking a price increase in a hurry. We will take some price increases soon, but nothing planned immediately.

And for EBIT margin, obviously the volume, because depreciation is going to go over longer.

Great. I will come back in the queue.

Thanks. Kapil, please proceed.

Thanks. Just a follow-up on the margins for EVs. Are all the costs capitalized? Depreciation, etc., are fully factored in?

Depreciation on the two products that we've launched are fully captured in now, in the quarter. Starting fourth quarter. Yes, starting fourth quarter.

I think it's all driven by SOP of vehicles. So there is more cost which is getting capitalized and it will get depreciated when the next product gets launched and all that.

And just as the volumes rise right from here, what impact does it bring on the cost per unit? Is there economies of scale benefits also that we should expect?

I think, Kapil, maybe Anish answered that. I think the biggest benefit you'll see in absorption of depreciation, that's the biggest benefit that the volume scale-up will impact because the depreciation is happening, full depreciation is happening up front. So we are fully depreciating the programs as we are launching them. or capitalizing it so the depreciation effect is fully in for the products we want.

In addition also, in terms of what we've done for ice, typically a year or two into it, some element of re-engineering to reduce the cost. Yes.

My question was on that line. yeah so there are there are cost reduction programs underway on both the products that we've launched like we do in any ice products thanks anisha yeah i did that yeah so that that will have a positive impact as well okay and just uh one question is overall you know on demand side for the industry we hear typically you know industry body as well as some of the other leading oems talking about very low growth this year right And we're talking about 15 to 20, not really 15 to 20, but mid to high teens kind of growth. So just how are you thinking about that from M&M's perspective? Not only for next year, but when I see the capacity expansion plan, I see that Capacity is probably growing at somewhere around 15% CAGR as well for next few years. So if you could give some insights on how do you see or where do you see that demand coming from? I know you can't talk about products, but generally as a direction, if you can give us some color.

Yeah. So Kapil, I wouldn't read capacity expansion one-on-one with growth. And the reason I'm saying that is there are some products out of the new products that are going to come which will replace some of the existing products. So it's not that all new capacity will be incremental. by way of new volume additions. Some capacities are going to be on a completely new product which is expected to replace, say, a current product in the portfolio. Or the current product in portfolio will drop its volume significantly and be cannibalized by a new product. So I wouldn't read capacity increase automatically matching volume increase. That being said, we do see that India is at a very early stage of inflection point on vehicle penetration. Vehicle penetration in India is still in the region of 10-12%, way below what any international market is. So for an economy of our size and scale, and especially with road infrastructure building, our view is that vehicle penetration in India will move up significantly from here, and we should be well poised to leverage that growth story. So I think we're very optimistic about the way the market is growing, but I wouldn't necessarily add what you see as a capacity number and equate that to a volume number.

And for the current year, what are your thoughts? Like, you know, are you expecting the ICE portfolio also to keep growing? And is it that SUVs are growing much faster and that's why you're expecting much higher growth in the industry also?

Yeah, I mean, just one more addition.

Like, if you can give some color, are you seeing cannibalization between EVs and ICE as well?

You know, surprisingly not. We were actually expecting more cannibalization than what we are seeing at the moment. It's much lesser than what we would have expected. So it's a very low level of cannibalization at this point of time. At least in the first wave, many customers who were buying the electric were non-Mahindra customers. owners and I'm sure you'll pick that up anecdotally I mean it's a very different target group that's coming in and they were not people who are buying Mahindra or even ever considering a Mahindra if I may you know stretch the argument to that to say that The reason we are optimistic on growth for the full year is two things. Thar Rocks was not there for six months of last year. You will have a 12-month volume this year, so we have to keep that at the back of our mind. 3XO was not there for first two months, so you have 12 months of 3XO, whereas you had 10 months of 3XO last year. And neither of these were replacement products. So when we did not have 3XO, we did not sell 3OO in that period of time either because we had phased it out. So these are two factors that you have to keep in when you are thinking about how we think about growth. And because the EVs are getting in a completely different target group, we believe that a lot of the EV volume will be additional incremental without cannibalization. So these are some of the things that we are keeping at the back of our mind. We are also seeing that three-door is on a very strong momentum. It has not slowed down with rocks coming. They're just appealing to two totally different segments. So we see that continue as well. So, I mean, we're putting all of this together in our best wisdom. We believe that, yes, we will do better than the market.

I was just going to add exports also are starting to, because of the new products, not necessarily because South Africa, Australia, very strong momentum in those markets now.

Sure.

It's the strength of the product portfolio that's driving it. And similar to your question, last year also when we said mid to high teens, there was a question, are you sure, because the market seems to be at a much lower level, And as this year we feel that the product portfolio and its strength will help us grow faster than market in F26 as well.

Sure, best wishes for that.

Pramod, I'll just come back to you. Pramod, one question we'll take online. This is from Chandramouli at Goldman. Question on farm and another one on auto. On the farm, the question is, you have delivered a strong farm margin in a seasonally weak quarter for the tractors. Is there any one-off margin benefit or does this set stage for a new base of margin potential in the farm business? The second question for Otto is that for the ICE SUV launch for 26, is this going to be a five-seater or a seven-seater?

OK. On the first question, I said we should ask Hemant quickly before he changes his role in an hour or so from now. But jokes aside, there's no one time. We are delighted by the 20.8% margin, but there's no one time in that. It's all real correction. The critical thing is the level of competitive intensity that we would expect starting this season from competition. And if that level of intensity is very high, then we may need to respond to make sure that we don't lose market share. We will not do anything irrational and we are very mindful of managing margins. But we did not have as much competitive intensity in quarter four relative to what we've seen in some quarters in the past. So if the same environment continues, then yes, but we would expect a higher level of competitive intensity. On the second question on is there a five-seater or not, I'm first trying to count what we are launching. um vijay you want to help me there are five six no no comments no no five six yeah no there's no five six

to show promote please proceed uh thanks a lot for the opportunity and uh i think a great set of numbers great sort of execution uh but on the ev side if you can just help us understand with the initial deliveries uh the starting legals what's been the big learning and how quickly can we incorporate those learning into the products what we're executing or the variants what we're executing i'm just trying to understand will there be sustained efforts to kind of keep improving the product, fix this, or we kind of reach a stage we are quite comfortable over the software niggles and now, because we haven't seen any mechanical failures or hardware failure, which I think is a good thing. But on the niggle side, how far away from reaching a steady state and how quickly or how much can we incorporate all of this into an execution of the new products or the new variant in what you're doing? Just talking about the learning curve here as to how it's been so far and how you look at it going forward.

Yeah. As I mentioned last time, Pramod, we've learned a lot on customer usage even as we went through the test drives. uh one of the one of the calls i'm just taking an example uh and you know which had spoken about that in one of the media interactions as well uh we we kind of felt that uh customers tend to the cars really fast and powerful and for those of you driven it i think many of you drove it on the track but we found people just getting into race mode even in the city or as soon as they get and you know there's a lot of in crazy driving on this car. So we decided to introduce two things even before we were launching. One was what we called a default mode. So the default mode is what you get your car with. That simulates the driving cycle of a XUV700. So now when you get your BEV, you actually get the driving cycle of an XUV700. Then you can pick your three other modes if you want. Now, we decided that this was something that we must do starting from day one of deliveries. We also added a voice message to say that this is a very powerful vehicle, drive it responsibly, something to that effect. I'm just taking an example of a learning that we got out of what we were seeing happening on test drives, dealer test drives, people just driving at 140. And because we have the ability to see all the data on cloud, we could actually see test drive vehicles being driven at 140. And we said that this is not a behavior that we want to encourage. And we created a complete new mode called a default mode. And we decided that all the vehicles which were at stockyards or even in dealerships waiting for delivery, we needed to upgrade the software. Now this process tended to get more complicated than we thought because of multiple levels of flashing and we learned a lot out of the fact that the internet speed as claimed in each location where you're doing a software update has nothing to do with the declared speed. And when you're doing a software update, and if that's taking, say, two hours, and the speed drops of the internet, the whole process would start again. So there were a lot of learnings on doing things of this kind, which was something we wanted to do before we actually delivered the first lot of vehicles. So we missed customer dates, because until this was not done, we were finding, because it was festival time, Navratra, when we started doing our deliveries leading into GoDepart was a lot of pressure from customers. Customers were, dealers were pressuring dealers to give vehicles to them, which were not completely updated. And we then started, we put a stop to that process and then we started missing dates to customers. There was a lot of learning that we got through that. But even as customers are driving vehicles, there are learnings coming on things that we need to improve. And we will keep updating the product as we learn out of it. But like you said, fundamentally, the product is really doing very well. There are no glitches is not the word. Using software updates smartly to enhance customer experience is really what we would want to do. And we would do that on an ongoing basis. For example, we did not have Apple CarPlay in place. That's now ready. uh we will be going in for uh updates on apple car play on all the vehicles whether they're android or uh apple customers so that's one intervention that will happen now so uh we we are continuously working on feedback and we'll try to keep updating the product but fundamentally we have a set of very happy customers talking about feedback adas being on throughout is i think is a big

issue I see on the social media especially on the internet forum as in so hope that will be also because a lot of customers in India it's not an ideal condition in many traffic as in congested streets so hope that's taken care of second question on the yeah go on Second question is on the localization and the PLI timelines because I understand we wouldn't be PLI, what do you say, certified at this point of time. So where are we in that journey? Where do we see the localization by the time the audit gets over or when it comes through? And what could be, if you can financially quantify the impact or what it could be because you're taking more and more share of the pool of the EVs which are getting sold. And there's a fixed pool. And if you get a good start, if the product keeps continuing to have a good trend with localization, the benefits can be meaningful. So if you can just help us understand that bit, it will be really helpful. Thank you.

Yeah, so on XEV90, we had applied for PLI. It meets the norms. We had the option of whether we could take a chance and accrue it in the quarter which just went by. We felt that it's better to be cautious about accrual at this stage given it's the first PLI application and the process is that you need a technical certification that can come. You can accrue it without the technical certification. But we've taken a call to be cautious about it and accrue that when we get the technical certification. It seems that we will get it. It's just that we want to wait for that technical certification to come before we start accruing it. When we accrue it, we will accrue it for the total volume, right? For everything we have sold from day one. So in whichever quarter we accrue it, it will be a cumulative accrual for the whole volume that's sold. It's probably going to be the certificate should come by quarter two, I think. We would expect that to come by quarter two.

Quantification, let's wait on it because it's sensitive and we'll have to see what the government actually approves. It's meaningful. Yes, of course.

Jai, please proceed.

Thanks for taking my question and congrats on a great set of numbers. My first question is on BEVs. If you see globally, some of the OEMs who've got a sustainable lead on BEVs have certain USPs going for them. Some of it is, of course, vertical backward integration for some OEMs. Some of it is superior software experience. As we see Bahindra's portfolio in the next three years, what do you think would be your differentiation versus the other OEMs coming in India that will give you a sustainable lead, especially with your aspiration of going global as well in the next one or two years maybe?

yeah uh i'll probably break that up into two two three points so one point uh is a couple of points are reinforcing what we've said uh pre-launch we said that we want to create an aspirational value uh at accessible prices for a segment uh that was to be driven by the design that we have in you know right now As vehicles get getting on the road, the design story is actually really beginning to play out because the product really has an amazing presence on road and whoever sees both the products on road, the more the vehicles come on road, the more it's going to create desirability and aspirational value. That's the feedback we're getting as people are seeing vehicles on road. The second is some of the features that we have are not even available in top end luxury cars. and you know the kind of music the auto park assist are some really really great features that our products have which are available in very high-end luxury parts so that's the second part the third is you know just the ev driving experience the quietness of the vehicle the refinement all of that makes for a very good experience so these are three Things on the product side, I want to add two other points. The advantage that we have of leveraging current assets, that was in a way some of the questions that were coming in earlier. One is the fact that we are not setting up a separate factory entirely to do this. So we have the benefit of leveraging existing manufacturing assets. The second is we have the benefit of leveraging existing dealer network. So from a dealer network viability point of view, the dealer gets viability by way of additional throughput without disproportionate additional investment. It's not going to be easy for any global player to come and create a network of 300 outlets overnight at the kind of price points that they come in with. We are able to reach the smallest towns because we have a well-established dealer network there and get volumes in Tier 2 and Tier 3 towns, but you can't create at that price point a network in a Tier 2 and Tier 3 town which is going to be viable on an ongoing basis. So there are significant incumbent benefits that we have, and I think that itself creates a set of moat and a competitive advantage for us.

Yeah, I'll underline that part because there are multiple benefits that create a much greater value for the customer. And product is a very important part of it today. So if you look at all of those aspects from product to distribution to the value that they see in a very high quality vehicle, that's in some ways a motive we shall have for some time at least.

Also, this journey of software in a vehicle and software-defined vehicle is relatively new and we've seen globally that a lot of legacy OEMs have not really been successful in that and they've actually invested in many of the startups to get their expertise. Are you all open to such opportunities and are you all actively looking to kind of strengthen this part of your business?

Yes, so we've worked with multiple. Firstly, we've set up a team of our own, about 200-300 people who work exclusively on this. But we've leveraged multiple partnerships. There are different ways to leverage partnerships. A partnership can be a supplier relationship. A partnership can be an investment in a startup. And there are multiple other people like in Israel who have the right technologies, who have already done that before. Then our role becomes integration. But a lot of the software that has gone in is actually the IPs are owned by us, the battery management system, all of that we've done. internally but using outsourced software capability but we I think Pramod had this question the last time all of these IPs are something that you know are with us so it's a you know I think often when we reflect on this we believe that we have a unique advantage of not being so well entrenched an auto player like some of the big big players in the western world are So we were a learning organization without so much of legacy capability and system that we can't adapt. And neither are we so new that we don't understand automotive. So I think we were in a unique sweet spot of having good automotive knowledge, but enough humility to say, you know, we've got to learn from whoever we can and do this better.

I would just add that a lot of credit to our leaders and associates in the auto business that have helped create this. It's not easy to do, and if you had asked this question four years ago, at that point we would have said, wait and see, we shall hope we'll get to the right place. Today we have gotten to a place where they've delivered very strong vehicles. I think I would just give a lot of credit to the entire team in auto that's really driven this.

absolutely i think that's showing in the product just lastly on the tractors uh growth the outlook for f526 i think you didn't mention on a very high uh high single digit if i'm not wrong uh for the industry six for the industry okay that's right and this is uh for the industry not market share gains would be on top of that if at all

Thanks for wording it exactly. But I must be very clear. I have said this before, and you will hear me say this again. We do not go after market share. Our focus is execution. If execution results in higher market share, we will get it. If someone wants to act irrationally, let them act irrationally. We do not go after market share.

Thanks and all the best.

Thanks, Jay. Gunjan, I'll just come back to you, Gunjan and Nitish. One more question online. Can you throw light on performance of the emerging growth gems, Aero, XLO, and CLPL, and how we are going to unlock value there? And just one more question, is there any other acquisition or merger opportunity that is expected in the near future?

So the growth gems first, we started today with the scalable growth gems because we see a much clearer path based on execution that they have achieved already or based on the potential as well as the customer value proposition that is in place. The three that were mentioned here also have a very strong part. Exelo is one of the strongest operating businesses we have. The plants that they have in place, the say-do ratio is very high in terms of them delivering what they have said, and it is one of the larger growth gems. So at this point, What we're working through is the ambition for XLO and what else will it get into and how can it grow in multiples rather than 10 or 15% every year. Once that is done, you will see it on the scalable growth gem path much sooner. And we have a lot of aspiration as well as a lot of confidence in that business. Aerostructures I've talked about earlier, the business has done exceedingly well in delivering a very high quality. As we hear from some of our OEM customers who are obviously the largest makers of aircraft in the world, they've often positioned us in the same breath as companies that are literally a thousand times our size in terms of delivery of quality. And that positions this business very well because our OEM customers want us to do more with them. Now, this is a business that takes time to grow because every new order we get often will take a year or two before revenue starts coming in because you need to have that set up from a safety standpoint and a quality standpoint and so on. But we recently won some strong orders that we have announced publicly as well. And it positioned this business for very strong growth. So this is, I would say, the next one that's going to come up again in scalable growth gems as a business that is very well positioned can do a lot and will be a long-term business for us at a much bigger scale than it is today, possibly even a 10 or 15-time scale than there will be. CLPL has some very promising products. It has won product awards in the last few months and some very significant ones that will translate into revenue in the marketplace over the next few months, and that's going to put that business on a stronger track. So just the fact that we didn't have details on them today should not mean that we have less confidence in the businesses. I think we have a lot of confidence in these businesses as well. And we feel that they will be able to grow and do very well. And we will share more on them as that happens.

And there was a second question on any M&A.

Inorganic, as we've said, we have a very high bar for it. We continue to look at things. We've been saying that for the last three years. The reason SML happened was because the business is very well positioned. It's done a lot to improve itself. It has strong leaders in place. It meets the four criteria that we've laid out as well for acquisitions, which is it must deliver scale. It must deliver market-building, beating returns. It must have a very strong customer value proposition as well that we can deliver and a strong ability to execute. So these are the four things that the business met, and therefore we went ahead. Also, it was an acquisition at a reasonable valuation and one that we feel can bring us meaningful growth. So if we see similar characteristics in other businesses we are in, we will do those acquisitions. And therefore, we will continue to be on the lookout, but it has to match all of those characteristics.

Thanks. Gunjan, please proceed.

My question again is on EV business. Now that we have a few months of learning curve and customer feedback, if you can talk a little bit about the booking momentum, inquiries that you're seeing, what is the customer profile? Is there still a reach sort of an issue that we're still available in larger cities, not yet available in smaller cities? So how should I think about the volume progression for the business? And if there is any update to the emission regulation in discussions with the government, how do we think about the EV mix in that context?

Yeah, thanks, Gunjan. So the geographic, we've opened up all critical markets, as we had said, Tier 1, Tier 2, even Tier 3. So I don't think there's a geographic set of towns that will open up. One of the things we haven't yet done which we'll do in the next few days is we haven't yet got into sharing committed delivery dates with customers who are in the waiting but at this point of time we would expect the average waiting period to be about four months based on what we have. We have built in a Process learning out of previous launches, we alluded to that the last time, which we call validating KYC. So every booking that we have, we do a know your customer database validation to make sure that the booking is genuine. So that's the process we've learned over the last two launches based on some of the feedback from earlier launches. So this is a process which is in place in the electric vehicles as well. The booking momentum continues to be very steady and very strong, the new booking momentum. There is a cancellation rate on day one bookings as has happened with previous launches, especially because of waiting time and here there is an uncertainty of waiting time. The reason we did not want to commit waiting time is we did want to wait a little bit to see how production ramp up was stabilizing. And as we now have got confidence in our per day production rate, we will be putting out committed dates to customers. So there is a little bit of uncertainty amongst people who had booked because we haven't given dates. But the average waiting time is going to be about four months would be my guess as an average right now. The few learnings to your question, one is this is a business which we don't want to be rash in ramping up for two reasons. One is there is a lot of product complexity. We are learning new technologies as we ramp up and so are our suppliers. So we have to be very cautious in the way we ramp up production. But over the last 40 days, we've also learned that we need to be as cautious on the delivery process with customers. And it is way, way, way more complex than what we thought or what we are used to in the ICE world. It takes minimum two hours to do a delivery to a customer, minimum. And even often that's not enough. We need to follow up. People to go back home. There are apps which have to be installed. The apps have to be installed on multiple phones in the family. All of this takes time and resource. You know, so while we may have had three or four people who are experts at our dealership, In the big dealerships, the delivery momentum is way more than what we have the bandwidth to give a really good experience to the customer. So we've actually decided to slow down the pace of deliveries through April and May to make sure that we are not compromising on the experience to the customer. Because this profile of customer, the experience is so important. One app is not properly installed on, say, the spouse's phone. It is a major irritant. And I'm not exaggerating this. And of course, Anish was one of those customers.

The spouse's phone is very important.

We were not able to manage it as day one experience delivery. So we've learned out of that. Multiple such learnings. So we've kind of said that any delivery experience has to be minimum two to three hours. We've developed tutorials, videos, so on and so forth. And we find all of that is not enough. The tutorials are not fully seen. The video is not fully seen. And then people get into a how do you get the best out of your car kind of thing. so the learning is that we have to ramp this up slowly you know as i mentioned to few people uh customers don't give us a appointment to you know align on the charging installation well in advance of the delivery you know then the delivery is happening at a certain day charger is not ready uh because you know everything is not closed because So all of these things are things we've got to, you know, streamline fully. And so the ramp up on the front end is as important as the ramp up on the back end. And, you know, we would rather give ourselves two or three months to, you know, build this capability and rhythm rather than be in the mindset of let's get the numbers out. I mean, that's not a priority at the moment. The priority is to do this well.

Cafe norms or anything?

Yes, thanks. Cafe norms, I think it's status quo. Exactly the same negotiation that is going on between SIAM and the government and multiple ministries continues. So there's no greater clarity than we had. One more. Yeah, yeah. SIAM has one view, which it did last time. But there is no closure yet on what we are finally going with. So our guess is if it does happen in 2027, about 25% of our portfolio will need to be EVs to meet the CAFE norm that are under discussion. Roughly, that's the number.

very quickly when I look at the production capacity there is seven and a half EV capacity three is what we are roughly producing right now is it all flexible you know basis the customer choice we are seeing now you know not just the battery packs but there are a lot of spec changes that we're seeing so is the production capacity that flexible at the supplier end as well that you can ramp up the pack you want or the variant you want

Yeah, that's a great question, Gunjan. So firstly, we've operationalized 5000 a month, as we said, and not operationalized the seven and a half, because that was the first phase of, if you recall what we said, the last time we met that we'll go at the rate of 5000 per month in the initial phase of ramp up. uh pre the launch we had skewed capacities much more to be 6 than 90 because our assumption was that that will get a more of a demand but as we started the test days we could see that You know the we were tending more to 90 than B and that roughly that number right now is I think 60 40 60 in favor of 90 So we we've triggered we triggered starting in November or December the increase in specific 90 parts to reach that level So by I think June or July we would be ready with the right mix of 90 based on the big based on the fact that we triggered that five six months back the battery pack is identical between the two products and you know whether 79 kilowatt hour or 59 kilowatt hour is fungible because it's just modules that go into the same pack so we have on the battery capacity side it's completely fungible between 79 and 59 We also have now following a supply chain process where we've identified what is unique and what is common between all the packs. And then so we are not ordering by variants now, we are ordering by exclusive parts versus common parts. And we are following a process by which we are building inventory on exclusive parts so that there can be variability and the common parts anyways is safe it will get consumed irrespective of the pack that we produce but like I said the real proof of what the mix will be is when we get the pack two and pack one out in the dealerships for people to see and drive and then we'll know and see what level we are stabilizing at.

Sir, Anitich, please proceed.

Good evening. Thanks for taking my question. Actually, I need to go back to the IC portfolio. XUV700, where do you see that product in its life cycle and what do you need to do, let's say, this year, next year, beyond pricing actions on that product?

You know, every product goes through its recycle or enhancement and so will they set the appropriate time.

Any more details you can share?

I think that's as much as I can stretch myself.

It continues to do well right now. It continues to be a good demand for it. It's well positioned in the marketplace versus its competitors also.

Yeah, I don't doubt that. It's just that you want to take your actions before the aging happens or after the aging happens.

Yeah, actions are underway.

Going back to EVs, How confident are you on the supply chain especially because it seems generally a lot of supply chain is linked to China. There are already restrictions around rare earth metals etc. So how do you think that dependence is for you and how can that be mitigated?

I'll just maybe clarify on the rare metal thing because, you know, it's maybe not, the interpretation of that is not as clear. So the intention of restricting rare metal is directly linked to end use. I'm talking about India. I'm not talking about the rare metal between China and US. That's a different dimension. So for India, they're basically wanting to restrict end use to not allowing it to go into guns and weaponry. That's the categorization. So basically there are two sets of interpretations. One is any part that has a rare metal in it made in China, there's no restriction on today. Any part that is a pure rare metal, which then needs a certification of end use. So there are two categories. There are a bunch of parts which have rare metal already in them. In China, there's no restriction on the export. If a rare metal is getting exported standalone for adding on any other country in the world, like we have some parts from China which go to Hungary, as a tier 3 to a tier 2 supplier. I'm just taking Hungary as an example. Then the supplier in Hungary who is buying the rare metal from China, this is not in India specifically, I'm taking a European example, has to get an end-use certification done. With an end-use certification which says that that rare metal is not going to guns or weaponry, there's no problem in exporting it. Now what is not clear at the moment is the process that has to be followed to get this end-use certification. So the intention is not to stop rare metal usage in automotive industry or any other related industries related to an end-use. Right now we are well covered by way of inventory on each of these components and hopefully by that time this issue of how to get end-use certification in the few parts which are not will get clarified. So that's on the rare metal. I hope that answers the rare metal question.

Just one more. On the tractor side, so for a very long time, we didn't see market shares changing too much. And what are you executing right over the last few years to gain this market share? And how much more can this right execution continue? Thanks.

I think you came on the last word. You want your answer?

Yeah.

I would just say that there is not one thing that we have done because if it was one thing we would have done many years back. So there are several small things that we have done right from some product gaps that we had, right from some channel interventions, certain improvements in our manufacturing and processes quality. And getting better understanding of our customers. So I would say 5-6 things that we have done together which is kind of helping us do much better. It's not one thing, it's not easily comparable by our competition. So I think we have built something which will sustain.

I'll just add a couple of things to what Hemant said. So on the product side, we were weak in the, so to say, lightweight horticulture segment. We didn't have products there. And we had shared that. So Swaraj did the target. The Mahindra brand did Oja. Collectively they have added in that less than 30 hotspot segment 5 share points. So that has been one factor that has been an addition. The whole relaunch of Swaraj and Naya Swaraj with an enhanced product bringing in the Mahendra Dhoni as the brand ambassador. Mahendra Dhoni was, we don't generally believe in brand ambassadors, but because he was a Swaraj customer and owning a Swaraj in his farm in Ranchi, you know, we kind of brought Swaraj Dhoni in as an authentic brand ambassador who is a user of the product. I think Swaraj brand needed a youthful modernity dimension to it. So, you know, with the sheet metal change, Upgradation of the product and the marketing around Dhoni added a lot of Philip to the Swaraj a few important actions on the Mahindra brand side was around the You the UVO brand which got refreshed and made mainstream mainstream and more affordable created a set of products. Some of the Mahindra products in that mid-horsepower segment were not best suited for agri-applications because they didn't have the right backup torque. But correcting the price point through cost interventions The Yuvraj range created accessibility and growth. So there were, like Hemant said, multiple actions on product, channel, and all of that which helped this happen. So it's not a swing one month. We've seen that over eight, ten quarters because there's been multiple initiatives which have led to that.

Just one last question. This is from Raghu of Nuwama. First, on LMM, can you share the broad revenue and profitability for LMM? And second, on traptors, for F26, which regions are we expecting to do better? And does doing better in south and west mean more market share for us?

LMM was profitable in F25. Revenue was in the region of 3,000 crore plus, right? Yes. It was in the region of 3,000 crore plus, and it was profitable. I think the profit number you'll get in the annual report. Correct. So we'll wait for that. On the region's cues, the South and Maharashtra continue to be favorable by way of industry growth as we get into F26. Chhattisgarh was a huge outlier for the last 12 to 18 months. That state grew some 35%. Maharashtra turned around, which was very good for us in F25. South and West, typically, we have a much stronger competitive position as FES, both Mahindra and Swaraj brands, and a positive growth in those will have a positive weighted effect on the market share.

Great. Thank you very much. On behalf of M&M, I would like to thank all of you, and please have a great evening, and please join us for snacks in the joining room. Thank you.