Mahindra & Mahindra 144A

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. Once the presentation concludes, we will start with the Q&A session. I would just like to read this disclaimer. 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 materially from those in such forward-looking statements. With that, I now hand over to Dr. Shah for the group overview.

Hi, good evening everyone. And for those joining online, good afternoon, good morning, depending on where you are. Pleasure having you here today to discuss our results. As you've seen a quarter marked by various uncertainties across the world, translating into a number of challenges in India. But despite that, happy to say that our team has actually delivered some very strong results and across multiple businesses. So the key messages for this quarter are consolidated profit up 34%, ROE at 23%, auto and farm resilience in a strong quarter, Despite commodity price impact of 400 to 500 basis points, auto profits up 21%, farm up 15%. Rajesh will talk more about the margins as well. Some impact on that, but not as much as could have been the case. A lot of good actions taken by the team. Mahindra Finance & Tech, Mahindra on a very strong journey now. We've been talking about both saying that they have been turning around. They're on a good track. What you can see from results is we can show proof around the turnaround now. Mahindra Finance has had two or three very good quarters. This time profits up 78% and driven by a lot of things that we wanted to have in place, especially around asset quality, a lot of work done on technology and data. And we started to see results being delivered. tech Mahindra up 28% again a very strong quarter on track for all the commitments that the business has made and our growth gems we've been talking about them they're starting to deliver meaningful results profits up 3x for growth gems so as we look at all of these businesses together we got multiple growth engines delivering value in tough times As we look at the overall results, revenue up 28%, PAT is up 34%, and the key drivers, the summary of a few points I said earlier, growth gems driven by real estate, XLO and logistics, Mahindra Finance driven by NIMS driven by asset quality and growth. The growth part is new. We talked about pivoting to growth last quarter and that pivot to growth is starting to drive asset under management being higher as well as maintaining GS3 at a reasonable level. tech Mahindra driven by margin expansion EBIT margins up to 14.4% and the promise has been to get to 15% by the end of this fiscal year on track for that auto volumes offset by commodity prices farm volume again offset by commodities in Turkey and investments we had again on sale from CIE that have contributed to investments so overall as we look across everything we do Very, very strong numbers. Let's look at each business, and this time we've added an element of future growth drivers. So not just talking about what's happened for performance, but also what are we seeing for this business going forward. And as we look at auto, well, Rajesh will cover the detail. The key highlights are SEV volume up 15%, despite some challenges from a production standpoint. Penetration for electric is at 12% now, and that's a fairly significant number on a good track there. Inflation I talked about. But more exciting is the future growth drivers. The new IQ platform will start delivering models fairly soon, and we will have a number of new models coming out from there. That gives us a much stronger foothold into a segment we really haven't played in in a big way. accelerating EV volume growth and for that we will need more capacity because as you know we are strapped for capacity right now and there is a plan to double capacity from where we stand today and Rajesh will walk through details of what that means when in terms of specific questions that you may have so I'm fairly hopeful we can answer all your specific questions on what capacity comes on board at what point in time over the next few years Mahindra Finance The growth pivot is very clear now. So AUM and disbursement growth is what you see as driving performance in Q1, along with the credit discipline and NIM expansion. As we look forward, continuing on the same path that we've been talking about, technology and data fixed, asset quality in good place, need to continue maintaining that. diversification have started need to accelerate diversification into mortgage and SME and add more from a fee-based income standpoint so that's going to build a very strong stable business with good returns and something that will add significant value as you go forward so that's the part that Mahindra Finance is on at this point tech Mahindra performance driven by large deal wins by margin expansion and free cash flow as a result is up 94% continued focus on large deals geographically we're diversifying and looking at reducing the margin gap we will come out with the next phase for tech Mahindra as we close this phase that we talked about which is by end of F27 we get to 15% EBIT margin and then we talk about the next phase as we go from there but the one thing I would say for these businesses as well as for the next few I'm going to talk about an underlying theme is very strong execution across that's one underlying thing that we've got and that's what's being able to deliver good results let's talk about some of the growth gems real estate this quarter has added 5600 crores of GDB up 60% pre-sales number 925 crores up to X. A number of OCs were delivered ahead of schedule, not something that happens very often and therefore strong execution here again. As you look at the future, GDP is up at 50,000 crores now from 8,000 crores only three years ago. This is a fuel for future growth. And that has been acquired already. So the future growth is going to be driven by what we already have in place. This includes multiple large projects that will be multi-use. 5,000 crore to 10,000 to 12,000 crore projects. And that also gives us certainty as we look into the horizon. And we're looking at expanding our industrial portfolio. So we're going to start seeing life spaces really move to the next gear and start accelerating. logistics has gone from reverse gear to a positive gear now logistics was a business that wasn't doing very well we talked about it execution was poor and this has been turned around very well Mahindra 144A business level it's a 25 crore positive profit and this is the highest ever quarterly profit for this business coming out of a turnaround not just through the turnaround obviously but even before that I usually don't like highest ever because I expect every business to be highest ever every quarter so which is why we say why use this term but in this case it's worth using because it's a business coming out of turnaround and therefore we wanted to portray that future growth drivers growing logistics in India e-commerce QCOM penetration is going to be much higher express business is turning around well That's a drag even today, but that's a drag that we hope to eliminate and Heather start contributing. And then very strong operational efficiencies that the business is driving at this point. So logistics is now coming back into territory that will start really creating a lot of value, which is the path we wanted when we changed management there and brought the business to a much different trajectory. truck and bus you saw the combination yesterday of SML and our truck and bus division and this only enhances the competitiveness it creates more synergies for us it allows us to do a lot of things in a business that is double its size now and it continues a strong trajectory we've seen in truck and bus from three or four years ago I remember questions from three or four years ago which is why do we have this business and I remember acknowledging saying look you're probably right let's decide whether we want this business or not let's see if the business can execute if they cannot we will exit but the business executed really well and as we now brought SML on board we feel even more confident that we can create very meaningful value in this business going forward and that's what you're seeing the combination also very positive from an SML standpoint very positive from an M&M standpoint as well because it is going to be a creative and the synergies that we get will add to it even further so from from that perspective we're looking at this as a big step forward Aerostructures we've talked about earlier, we're sharing some numbers now. $1.2 billion of accumulated contract wins, half of them in the last year alone at $600 million. Business that has continued deal wins, has a growing presence in what we call the shell and skins panel industry. and accelerating industrialization. The key to this business is very high quality. It's been recognized as among the top quality players and therefore OEMs are giving this a lot more business and want to continue down that path. This is a business where we will move up the aero value chain as a result of the quality. We've got two large deals with Airbus recently where we're the single source globally for the fuselage for two helicopters, which is a very, very big deal. And that again is a testament to the quality this business can drive. and this is a business we will look at making a potential acquisition globally based on the strength of this business and what the OEM partner customers that we have want us to do and it's going to be something that we will look at them to underwrite as we go forward in terms of making sure that this business can give us the returns that we would want so these are some of the businesses that we have Again, driven by strong execution, but more than that now, potential that is being realized. So we're starting to see some of that potential in numbers, which is where we want to be. Let's come back to AI. We spoke about it for the first time last quarter, though we've been doing work on this for a while. And you remember this page from last quarter, our aspiration is to be a tech leader in every industry. In some industries, we can say we are there. In some industries, we need more work. We talked about deploy, transform and invent with four impact areas, quality, experience, reach and efficiency with real outcomes for revenue, cost and customer satisfaction. We also talked about transform and for each of these four areas what are businesses like auto and farm doing and finance and we gave a few high level view in terms of here are kinds of things that we're working on for this quarter we now want to go deeper and give you specifics about some of those examples we're not going to talk about all the transform projects but we picked four in auto and four in finance and here are some specifics paint.ai This is making a significant impact on the paint shop in terms of one, creating a better vehicle that looks nicer in terms of reducing the paint that's used and helping us reduce the rework required as well, which effectively is more capacity. Service.ai for auto, 2,600 workshop assistants are using AI today to help Make it easier for the customer, give them faster solutions, be able to reduce the turnaround time in the workshop and therefore again create more capacity in the workshop. Reach.ai, we've had 91,000 test drives done entirely by AI. or getting customers to the test drive. AI is not doing the test drives as yet. We'll get there at some point in time. But we've got 91,000 customers to come for a test drive, leveraging the AI communication that has been done with the customer. And this is business we would not have got otherwise. So this is direct addition to revenue as a result of that. Simulation in the fun world of product development. This is one specific example where there's lots of simulations done to look at drag coefficient. It's something that really becomes the centerpiece for product development in many ways. Each simulation would typically take an average of 10 hours. With AI, we can do that in two minutes. And think about the speed of product development as a result. Our goal is to cut down the product development timeline. And this is one example. There are many others that the team's working on to be able to do that and to be able to create better products as a result as well. On the finance side, Samurai is our model for loan file processing. 65% of our loan files today are processed by AI, 65%. service request 5 lakh plus service request fulfilled through AI cross sell 30% lower cost of acquisition through the AI orchestrated channel that we have for cross sell now and voice.ai is something we're using in Mahindra Finance and across multiple businesses in multiple solutions around collections sales and other areas so here are some real numbers on what we are achieving in some of the projects that we showcase and as we go through the next few quarters we'll provide more information around what we're doing on AI on a broader basis as well this is driven by a very strong foundation we have 50 forward deployed engineers and AI experts that are working with our businesses we have 19 proprietary models that we have built for AI for specific applications that are giving us very meaningful results and these are applications that are built on GPUs we have so we don't need to pay for tokens for this which is even better we don't have to worry about the cost of tokens on these applications we have 1900 of our leaders and teams trained in RM.AI Academy and 15 transformation projects that we are driving through. These are large-scale transformation projects, a number of other smaller projects as well, along with a group AI governance council, business governance council. So a lot of focus on security and governance from an AI standpoint as well. So these are a large number of activities that we're doing in AI with this foundation. And we, based on various conversations, feel there are multiple areas we're leading in this space, and we continue to be able to drive this and see results from it. That's the most important part. We're seeing meaningful results from AI at this point in time. The one other thing I'll mention here is beyond the foundation, AI is really being driven by process owners. And I know some of you have been to a chocolate plant. If you go there again, you will have people on the shop floor tell you about how they're using AI and ideas that they've come up with to use AI as well to create better processes. So this is one area where process owners are the ones that are really driving this transformation. And that's the power of AI. And that's the power of being able to really leverage AI. chart you're familiar with a number that you're not familiar with is 23% which is for ROE and I will stay with my standard approach which is our target is 18% so we will go slightly up and above 18% but 23% is higher than what we expected as well so we are not resetting expectations we will stay with 18% as a target there on growth we continue to grow faster we are at 34% growth in EPS at this point in time so 48 rupees EPS and consistent delivery from that perspective we will share some thoughts on What are some of the factors driving this performance? But I'll hold off on that at this point in time. I'm going to invite Rajesh up to talk about auto and farm, and then Amar will come up to talk about numbers, and I'll come back to talk about some aspects of performance that we're driving.

hi good evening and good morning to everyone depending on where you are I'm gonna go a little faster because you would have already picked up some of this from the earlier presentation so I'll go a little faster on the farm equipment side we had an 18% volume growth a very strong market share we did lose on a sequential basis a little bit of share but sorry compared to last year same quarter but on a sequential basis it's a very strong quarter as well you can see that last year the 45.2 was a all-time high that we had on market share Farm machinery had a very strong robust growth again Its highest quarter that's a business now, which is getting into momentum and innovate connects with What we are seeing as increased level of mechanization in rural India Both on the tractor side and the adoption of farm machines This is a new chart and I'll spend a few minutes and we'll walk you through it there are three Columns literally. So column one is what you've been seeing in the past, which is what we call core tractors. Core tractors is basically domestic plus exports of the tractor business. What you're seeing in the middle is international subsidiaries. And what you see on the other side is others. The others are defined below, but mainly it's the farm machinery business, the power-all business, and the Indian subsidiaries like Swaraj Engines. So that's broadly the third column. All of that totals to what we also put out as farm consolidated. So these are the three columns which help you understand the margin structure better. So the 19.2 is the core tractor margin. You can see that we've taken a loss in international subs. A reasonably large amount of that is the impairment that we've taken on Arkoond Foundry and one more company. and the third one as you can see has seen a improvement in the margin percentage and the growth so all of that together gets us to a 14.2 percent farm consolidated margin The 19.2 here is the chart that you've been seeing, which carries over to the column 1 for the previous chart. So basically, we are now building on this to give you a disaggregated view of how farm consolidated breaks up into different subsegments. this is a chart we often show you more to kind of say that the band in which the tractor margins operate is 17 to 19 there are periods where we do 20 there are periods where we do 17 we've rarely gone below 17 except maybe one quarter and that is the ability of the business to manage either the up cycle that may happen for an industry or in spite of a down cycle or commodity cycles up or down. So irrespective of what is happening to these two key variables, we are able to manage margins mostly between 17 to 19%. These are the farm consolidated financials. You've already seen them. 9% PBIT growth after impairment, 12% before impairment, and a 15% PAT growth after impairment. I'll spend a few minutes on this because I think it's on the mind of quite a few people. the what is driving rural in spite of all the fears of El Nino and we've kind of tried to capture here the positive enablers right now in the rural market not to say that there are no negatives and I'll kind of call that out as I walk through this clearly we're seeing a farm labor shortage it's not a new phenomena but it's an accelerating trend we are seeing that labor is moving to industrial areas as they're getting paid better there is a lot of labor shortage in industrial areas specifically with small medium enterprises And that's coming out of the movement of farm labor. So as farm labor is earning more, they're seeing greater value in going and working in industrial enterprises, which is what is one of the factors driving mechanization right now in rural areas. So that's point one. Point two is the Rabi cash flows have been healthy. There has been an improvement in wheat procurement by about 19%. So that is strengthening the cash flows in the rural economy. The third is the deficit in rainfall was really bad as we were into June. It's come down significantly from then to what is now at a 15% deficit. If rains continue, then we may be at a reasonable level of deficit. Of course, this is different in different parts of the country. And we track that as well to see how that is impacting it. Because the rains have come in in most parts of the country, our feedback on the ground right now is the sentiment is actually not negative. The data indicates a lot of negativity. If you'll just look at the rainfall deficit, But because rains have actually come in, the sentiment is not negative. Reservoir levels are 7% below LPA but have recovered from where they were. There was a much greater deficit and it is lesser than the same period last year, but it was much worse a few weeks back. Kharif sewing has accelerated significantly after the rains have started over the last 3-4 weeks and at the moment the shortfall over last year is a little over 4% which is not too bad for this time of the year The government spending has gone up by 16%. The state governments too are putting in money. And that itself is an enabler for greater cash coming into the rural economy. So overall, we see many factors beyond the negatives that we may be hearing about El Nino, which makes us believe that the sentiment on the ground or the reality on the ground right now is not as bad. Of course, we need to see what happens to rainfall and other factors over the next two months. But at the moment, the rural market, and that's been playing out in the volumes that you've seen over the last three months and early signs of July as well, is reasonably okay. So that's on the farm business. auto business the SUV volumes grew we had said mid to high teens we had a 15% growth in SUVs in spite of some production issues especially in April and May and 20% growth in LCV which also had some production issues we continue to be revenue number one market share and a strong growth in market share sequentially on LCVs as well the This is just a chart which kind of shows you that last year Q1 was an exceptionally high revenue market share, but on a kind of linear line basis, we are by and large at the same level of 24-25%. The electric penetration Anish spoke about that was 12%, 9% for the industry, which some of you will remember the industry penetration for EV just a few quarters back was 2-2.5%. So the 2 has gone to 9, we were of course 0 6 quarters back, which now is for us 12%. And we continue to have a very strong performance on revenue market share. And we've sold 77,000 vehicles cumulative till now. And interestingly, the XCV9S is the single largest, even by volume selling EV across all passenger vehicles in spite of its price point, which has done very well. LCVs again strong performance on volumes and market share now I'll explain the same auto margin chart taking a column at a time so the first column is something that you are seeing for the first time what we are showing you here is auto plus LCV domestic plus exports okay so that's really in other words we can be called the core business which is without EVs the second column is the EVs ESUVs which has two components what happens in Mahindra Electric and the conversion cost that we earn in M&M so that comes into the second column the third column of others is listed below but is mainly trucks and buses and contract manufacturing that we are doing for last mile mobility and some other domestic subsidiaries and international subsidiaries plus the last mile mobility company. So all of that comes in column three. So if you look at column one, our margin at a PBIT level is 8.9 and that's What is also represented here is a trend. So it was 10.2, 10.8, and 8.9. Now, of course, we have lost margin compared to last year, and we can talk more about that in the Q&A, but we believe this is a reasonably good margin performance, which has been on the back of a very high commodity price increase, which we've seen over the last many months, but has got significantly escalated after February. This is a chart we've shown you in the past. So you basically see on the top Mahindra Electric as a company, contract manufacturing of EVs and end-to-end of EVs. So the 5.3% margin here that you saw is the same as in column 2 of the 3 column chart. So we made a 288 crores PBIT in the EV business end-to-end out of which 270 was in Mahindra Electric company. So this is the capacity planning chart. The chart has not changed fundamentally, but I'll just walk you through it. There's some updates. So I'm on the first row, which is the ICE SUV capacity. We had said by September we'll be at 60,000 per month, which we should be ready with by September, which is the end of first half. which said we'd be operationally ready for 8000 EVs which we should be ready by 8000 EVs for 8000 EVs of course there's an issue of mix because this one product out of the three which is doing disproportionately well but from a capacity readiness we are ready for 8000 that takes the total september capacity to 68000 By the end of the year, to the 60, we add 10,000, which is the capacity which will flow through into F28, which is really for the launch of the first of the new IQ platform products. Likewise, the eight becomes 12. I'm on the last column, second row. The eight becomes 12, which is really adding 4,000 of EV capacity for the new EV, which will get launched in F28. okay so 70 plus 12 you get 82 so basically by end of the year 64 and a half would have moved to 82 then we are adding 10,000 more in Chakan which will take 82 to 92 that's for the new IQ platform phase 2 so we would have 92 and then we add 20,000 per month which is 250,000 and 250,000 in two phases in Nagpur. The first phase of Nagpur should be ready first half of calendar 2029. So that's what you see in the first bullet point there which is 20,000 and then the second is few months later, 10-12 months later. So that's really the 2x capacity increase between now and F31 in multiple phases as you see it. we had 11% growth in the trucks and buses volume market share was at 7.8% market share is much higher for us in quarter one for this business because SML has a very strong bus queue and the bus market is really in quarter one so we see a much higher market share in quarter one than we see as an average for the year Last mile mobility had a very good quarter, very strong growth, total volume of 42,000, continue to be number one. And most interestingly, the L5 EV penetration now is 40%, which was about 27% same period last year. So significant acceleration in the EV penetration in this segment. The UDO has done very well and is enabling this kind of volume growth. These are the auto consolidated numbers so profit PBIT grew by 28% and PAT by 21%. Amar, thank you.

Thank you, Rajesh. So we've talked a lot about the PAT performance. I'm going to focus a little bit on the revenue performance. Just want to highlight outside of the auto 32% that you heard and farm 15%, Mahindra Finance had a very strong revenue quarter as well. And we had Growth Gems grow 39%. And when you consider what we have been saying that the growth gems are going to help drive the diversification of the group and help drive a lot of the future growth, that 39% far outpaces everything else. And so that momentum should help us tremendously in the years to come. the other thing that I want to highlight in terms of the PAT performance Rajesh spoke a lot about the inflation but if you think about it with a 400-450 bps pressure in auto and 300 plus bps pressure in farm to come out with the 160, 70 bps reduction in auto is remarkable, happened because the team proactively took actions on pricing and also took a lot of actions on operating costs, right? So that continues that mentality of kind of being ahead of emerging risks has really helped the business come through this. And as we look towards the future as well, unless commodity prices significantly deteriorate, We expect that auto should be able to now get better from here on, right? Farm will continue to have some pressure because of what we saw in steel and rubber. Steel is up now 24% and rubber's up, you know, for a 30%, 53% from the beginning of the year, calendar year, right? So it's pretty remarkable the kind of... And both of these cannot be hedged. So... This is a chart which showcases what we've talked about, that every engine in our federation is right now firing and you see remarkable performance from each of the pieces and contributing significantly to the growth impact. Even if you take out the CIE gain, it's a 22% increase year over year.

So as I mentioned, I wanted to come back and share some reflections on what are some of the key factors driving performance because we are starting to see a few things we had planned for play out well. And what is that set of factors that we also call the Mahindra way now that are driving performance across multiple businesses. It starts with purpose. It's about values that enable us to lead with purpose. Integrity, quality, care. That covers customers, that covers our associates, that covers the broader communities. And that is a very important element for us. Because that is what enables trust. And trust is a very powerful factor for us across multiple businesses. Life Spaces businesses can price 15% higher in the market with very strong competitors because of trust. We've been able to close joint development partners in one particular case for a 12,000 crore GDB opportunity because a partner said, I'm just going to work with Mahindra. I don't care what other people give me. Across businesses, that's a very important factor for us. Talent. Everything that we've done is driven by talent. And the ability to attract talent, the ability to have our best talent go into areas of highest opportunity is something that's unique to us as a group. And that's driving results across multiple businesses. Technology. We talked about AI, but it's not just AI. It's across multiple different areas. And the ability for each group business to benefit from the experts we have across the group in technology to see best practices somewhere else, adopt them, is turning out to be a very powerful thing for us. Because technology is central to almost everything that happens. Logistics is building a very strong business with technology as a backbone. Because if you have that, a customer's not going to go anywhere else. Not just logistics, that's something we're seeing across multiple businesses. And then with that, it's behaviors that drive meaningful outcomes. We're a large company that wants to operate and often operates like a startup. It's about collaboration, agility, being bold. And this is the reason why you see some of these results that you'd look at and say, how can this be consistently delivered over such a long time? And it's a combination of these things that create the synergies for growth and the synergies for resilience across our businesses. So I wanted to share some of those thoughts with you. And what we're going to do today for question and answer is different from what we've done because we're actually going to have multiple leaders up here on stage as all their businesses have contributed. And I want to go back to this chart that Amar presented. If you just look at the numbers here of the contribution of multiple businesses, you see very significant numbers. GrowthGem year over year is almost equal to TechM. And TechM has done well. and you see Mahindra Finance has 213 greater than Farm and Farm has also done well in a tough cycle so that is why we're going to have a number of leaders come up on stage and a format we will use going forward as well so you can hear from some of those leaders directly and yourself be able to assess the quality of talent that we have so with that we're going to have a large number of chairs and take up all the space that's available here

just give us a minute to complete the setup Chandru one minute and share.

as promised we've taken up the entire stage now and what we're going to do is I would just want each of our leaders to just spend a minute giving you a highlight of what they've done and then we open it up for questions and answers after that so with that why don't we start with you we'll just go around in this order

So we'll briefly talk about the two businesses which came on the slide. So on SML Mahindra, the big announcement which happened yesterday poised makes us very well poised for harnessing the full potential of what this industry promises. It's an industry with a very high revenue pool, very high profit pool. Of course, we have a mixed bag of products. We, by the way, in quarter two, we became number two player in LCV-ICV bus segment of less than 12 tons. We used to be number three with a very thin margin. We hope to sustain and increase it. We are amongst the leaders when it comes to LCV trucks. ICV trucks, we have a limited range. We are doing well. and heavy trucks is a long haul which we are continuing to commit and with the two teams coming together not just from the network and product point of view but also a lot of synergy from the cost and value engineering we have already started working and now the company becoming one with both the brands and its product. It promises a lot of potential to harness both on revenue and the profit side. On aerospace, Anish talked about it. We are very well-voiced for future growth, both organically and inorganically. organically we are getting a lot of business coming our way because this is an industry where your reputation counts over everything else and reputation gets built over a period of time based on your quality and time and the cost of the delivery which you do and as Anish said we are rated amongst the top 5 globally in terms of our quality and business excellence performance and because of which lot of businesses are coming our way we are in the process also trying to go up the value chain we started with detailed parts player and now going towards sub-assemblies and making tool fuselages so from a manufacturer of a Inorganic is another opportunity we are looking at.

So thank you. Vinod Sahay runs our aerospace advanced technology and truck and bus business. All have seen significant growth in his time at the helm. And with that, Hemant Sikka, CEO for logistics.

Yes, on logistics, we have put a lot of focus on operational execution. As a result, we took several actions. The significant one I will call out was the work that we did on white space reduction. same time last year we had 16 lakh square feet of white space as I speak we have only 2 lakh square feet of white space available and that also we should be able to sell it by September that was a big drag on our number so that is out and mind you none of these white space has been surrendered it is all sold so these are all now revenue generating assets for us apart from that a lot of focus on our customers we are winning a lot of large deals uh very good growth on manufacturing and e-com site uh this month itself we have uh uh startup uh done on three very large e-com sites across the country so that focus on customer continues uh and with that in quarter three of last year after 11 straight quarters of losses we uh got a little bit small profit in quarter three but quarter four and quarter one again have been very strong and we see that this kind of momentum will continue going ahead one of the big levers which anish called out was our express logistics turnaround which is the revigo company We have cut down the losses significantly in the last one year. However, still it's a drag on our business. But we are very confident now that our EBITDA positive is just around the corner. I won't give you a month, but it is just around the corner. And that should then lead us to a PAT positive number at some point in time very soon. This kind of effort will obviously bring goodness in our financials. Apart from that, there is a lot of focus on, again, winning new businesses and that effort, both in terms of consumer, pharma, telecom, manufacturing and e-com will continue. Thank you.

Thank you, Hemant. Vijay Nakra, CEO of Pharm.

Rajesh has covered quite a bit in detail, so I don't want to repeat what he's covered, but strong performance in quarter one, despite the headwinds that we've had because of the war and commodity prices. Actually, I'm actually delighted that we are having this conversation at the end of the month when we've seen favorable monsoon turnaround in the last two weeks so the sentiment on the ground is definitely a lot more positive as we are moving into quarter two but no doubt there are challenges still in front of us internationally also we've had some headwinds but in our code markets we've performed very well so yeah with that we'll be happy to answer questions as we move forward Amit Sinha CEO Lifespaces

So I think I just highlight four things that are shaping our performance and aspiration. Number one is stick to the guns on strategy and what we will do and what we will not do. What that means is focus on a few cities for residential Mumbai, Pune, Bangalore. We get a lot of land parcel requests, come to Indore, come to Hyderabad, come to Delhi. But, you know, I think for us to scale, I think we stick to the guns. it also means what we will not do like affordable segment has been has not done well for us so we decided to exit that and we continue to focus on doing mid premium and premium segment The second is for us to secure a strong future for this business, it was important to lock in some key land deals. We were always looking for the right deals. And over the last three years, we have scaled that pipeline, which is locked in, in terms of greenfield, in terms of joint development, in terms of society redevelopment roughly 50,000 crore of deals. And those deals have gone through a very rigorous process so that we have more upside in those deals rather than downside. Third is a focus towards customer experience, premiumization, making sure that customers want our product, they come in because of our brand, but they should stay there because of the experience they have. and i think that has been a key part of our effort over the last few months we we got a lot of ocs as anish covered 3000 apartments we have delivered 1500 apartments till till a few days ago and 99 percent apartments have been zero snag apartment to the customer that means customers are accepting those apartments as is that means we've been able to do a good job in terms of quality side And then finally, making sure our execution stays on course. This is a business where price gets locked upfront and the costs get covered over the next five years. So how do we ensure delivery of our projects as per the original plan? I think Ambar covered a lot about the cost escalation, et cetera. We factored a lot of it, and we always have some surprises. So we want to make sure that whenever we execute, we are very prudent about cost escalations surprises our ic business helps us quite well it complements the residential business and these four things have been quite good for us and we'll continue to have this these shape the journey for us in the in the future years will swami ceo otto

so the auto team delivered a resilient Kota performance following on an exceptional Q1 F26 performance of 22.7% growth the Q1 F27 the team delivered 14.9% growth on SUVs and 20% growth on LCVs all the three verticals are really doing well the ICE SUV the EV SUV the LCV they're really doing well the ICE SUV and EV put together putting 0.9% in the EV SUV space we have grown 77% compared to last year a combined XEV brand it is 16 and of in the quarter volume 16 and of thousand it's and as Rajesh pointed out XEV9S is the largest selling SUV despite of it high selling price the revenue of auto 32% growth and with a PAT of 21% growth The resilient performance continues for the coming quarters in spite of pressures on margins as you have heard from all the presenters. The festive season is going to be pick one for us. As you have seen, the capacity increase is happening from 64.5 to 68. It will happen end of H1. This is very crucial for us to upcoming quarters. All the best for the auto team. and wish you all the best.

Raul Ribello, Mahindra Finance, CEO. Thank you. Pleasure to be here at this forum. So in our business, we look at consistency being the real hallmark of directionally moving well and consistency in growth, margins and risk. When we reflect on the last two quarters, actually that's played out quite well. Starting with risk, and Anish alluded to it, in risk we look at stability in the GS2, GS3, and that's come in, I think, in a very formidable manner. For example, in our GS2 plus GS3, for the last seven quarters, now we have been below 10%. And if I just look at last Q1 versus this Q1, GS2, which is 30 plus, early risk, that's 100 bps lower than last Q1. So that's on risk. We think we have covered fairground there. On margins, we had dropped significantly to NIMS of 6.5, and now we have climbed back to a good 7.3. and overall ROAs which was quite a loser we were below 2 and now is respectively in a respectful range come to about 2.4 finally growth Anish has tasked us now to pivoting back to growth and I think off late on that metric also both the wheels business and the non wheels business the wheels business we benefit from a lot of gentlemen on this on the forum here we feed off the auto CV tractor business so the wheels business has been growing well at just 20% in that vicinity but what's really encouraging is the non wheels business which grew at 79% which is the mortgage business the SMA business and the PL business so yeah we are starting to see a good balance between the growth margin risk we keep balancing between all the three it's been progressing well and it's early in the year Q1 and we have some curveballs which we have seen with fuel prices etc so we have to monitor the portfolio well and just make sure that We're on the path to being in a steady balancing between these, the growth risk margin equation.

Thank you. Thank you all. With that, we open up for questions.

We can begin with Chandru or Coleman. Kapil, I'll come to you. Chandru, just get the mic there.

Kapil, can you pass the mic just behind you?

hi good evening and thank you for taking my questions i have three questions i'll ask them all at once first one is just on the battery electric vehicle business so it's good to see that now 12% of the vehicle mix is battery electric vehicles and making not over 10% EBITDA margin so just wanted to clarify what is the PLI in the current EBITDA slash EBIT margin contribution from PLI and just with that just want to understand is there any discussion around PLI 2.0 and whether this might be extended beyond FY28 second question is on the tractor business so just want to understand I remember in FY24 when we had a rainfall shortfall there was a lot of destocking in the back half of the year so just want to understand where we are on channel inventory as well as in terms of horsepower mix in a typical you know in the past have we seen improvement in tractor horsepower mix that's i think a strategy which we had laid out at the investor day in november last year And the last one is just on Mahindra Finance. So I think most of Mahindra Finance on the wheels business is new vehicle sales. But over a period of time, is there a strategy to do more used vehicles where the yields might be much, much higher? I'll just quickly pause there.

So I'll just take the PLI question and then have Rajesh cover everything else and then let Rahul cover the last question. In terms of whether the subsidy continues or not, the objective of PLI has been to transition to EVs and ensure that we can maintain reasonable price parity with ICE. And that has been done very well so far. With scale coming in, What you've seen in the numbers is the ability for us to be able to reduce cost and therefore get higher margins as well. not as much as ICE right now, but that will start happening. So our expectation would be that as we start showing higher margins with scale, PLI should reduce. That is part of how it should go because we would not want to make super normal profits based on subsidies. And that's a conversation we have with government as well to say that that's only the fair thing to do. In terms of specific timelines, we don't have an answer on that as yet. That will depend on how the industry moves as well.

but we'll have more clarity on that in the next maybe 6 to 12 months we still have some time to go on this one yeah Chandru on the specifics of how much PL I don't think we want to share the absolute amount right now but one reassurance we can give is that we were EBITDA positive without PLA so we're not losing money without PLA at a cash level so that I just want to reinforce that part that the we are EBITDA positive without PLA right now so that's that's on the PLA Anish answered the second part of the PLA question on the tractor you had two questions that was the only auto EV question right On the tractor, there was one question related to the inventory and you were relating that to 2024. and the horsepower mix and the horsepower mix so on the on the channel inventory uh you know i think this question had come up earlier as well on why we are seeing lesser volatility on industry growth in tractors and a few quarters back i kind of reflected on that to say that i think there's much more discipline today by all oems which means that when there is a down cycle the extent of down stocking that we need to do on channel is much lesser between our two brands we would be by and large in line with norms actually Swaraj is below norm because they had some supply issues in the quarter but in the region of 30 to 40 days which we think is fine and not much destocking needs to be done at this point of time you want to take the horse park question

on the horsepower mix we can clearly see a shift towards higher horsepower rajesh spoke about mechanization so we are seeing that if you look at the first quarter of this year already six i mean close to 69 70 percent of you know the horse part mix has now moved towards 40 to 50 horse part a lot of that is being driven also by the kind of implements that the farmers have started seeing adoption towards whether you talk about cedars whether you talk about balers some of these higher value higher horse part drawing implements are you know is what they are looking at and also i think post gst They are able to sort of buy a product with a higher horsepower for a price that they would have paid for a lower horsepower earlier. So I think all of these have helped move the mix towards about 70% for the 40 to 50 horsepower range.

on the question on the composition of the used vehicle business so when I just look back eight quarters that number from a disbursement how was between 15 to 19 percent of our incremental disbursements last quarter was at 16 we did slide down a bit because post GST actually we were ourselves getting firmed up to the new residual value right because the GST prices caused a huge shift in the residual value so we were ourselves being a little conservative in the last two quarters but from now on we will see us going up that scale the 16 to 19 that I talked about and see if you look at on the leaderboard we are always between number two and three in use car we're number one in use tractor in use CV we're not a very big player but these two are big categories for us and you're right it's margin accretive so it is an important business it's not small in any capacity and we'll see this business grow in the times to come

just if I could clarify what the farm implement revenue was for the quarter 350 or 60 crores 70 crores in the quarter that was on the slide thanks and all the best thanks Chandru Kapil please proceed

Yeah, first of all, thanks for getting the entire leadership team here. It's great to meet all of you. And I have a question which is relevant probably for everyone. So Anish, you've talked about building AI-based competencies. What I would like to understand is, You know, these same AI models are available to everyone, right? So where will the differentiation come from? And if some of the business leaders can also share their experiences as you're building these things, you know, where do you think we can differentiate because, you know, technically, you know, same things can be built by everyone, right?

So first couple, I'm glad there's value in this, but this is not the entire leadership team. This is just a few folks. We still have other leaders, and we will bring them on board as well. We just ran out of space on the stage, so we've kept it at this level so far. On AI, I'll just take a quick answer to that, and then we'll have some of our leaders come in. We are building many of these models as proprietary models. So if you look at simulation for product development, and I'll ask Bailu to talk about that, that is something that's built proprietary. Almost everything that I spoke about is something that our teams have built. And it's a process owners that are coming in and saying, this is how we should build these things. So that to me is the biggest difference in AI. It is a process owners that have to be a part of it and have to build it in a way that makes sense for their process. Then we give one example around welding in Chakan which we hadn't put up there there are 300 welding guns in Chakan welding quality is done from a destructive standpoint so every month typically you take the car apart you take each model and take it apart now there are 20,000 welds done every hour in Chakan Every single one can be validated with AI that this is a proper weld. That's a welding model that has been built by our team operating there. So our AI engineers are the ones working with each of the businesses to be able to deliver that. So let me have Velu come in for that. Let me have Rahul talk about some of the minds of finance work that's being done. And then we can go to other leaders, but we may go to other questions first and then come back to it.

The one key difference is that the AI model is an intelligence AI. So you feed in 20 years of your simulation data into it. Then it becomes a different AI. And that AI is known only to you and it is possessed by you. So that's the differentiator.

Yeah, I think what's contextual to us is because we're such a distributed business, right? 3.8 lakh villages, so many dialects. There was a lot of unstructured data sitting in our system, which was never harnessed before. And today we are using the power of vernacular bots, et cetera, to even acquire customers at a much lower cost. And Anish talked about our proprietary Samurai, which is the wordplay on Samurai.ai, which is basically helping us to cut down TAT by almost 40%. The time it took to basically process a loan because we're able to piece together a lot of these unstructured data and the time to yes and time to money is now significantly shrunk. We have many more examples but I'm sure they will be clear.

It's not a very hi-fi use case of AI but I'm just stating this because you can find very simple use cases. And we've recently started experimenting with this in the farm business and we call it sentiment.ai. So we've come up with a very simple tool where we can connect with our field force and that's where the power of FD, SD, both divisions, a very large channel presence across the country and feed on the ground. So through AI, we are able to collect sentiment on the ground in that village at that pocket, and we can use layers of AI and data to collate that to see where there are patterns, where there are discrepancies that are coming up, and that can feed into a lot of work that we do on the ground to proactively act. It's a very simple use case. Good.

Yeah.

so there are a couple of questions on the auto sector as well firstly you know because you have been slightly capacity constrained so would like to know in terms of inquiry or booking growth what kind of growth are you experiencing and if you were to cut the data by powertrains diesel petrol and EVs where you know what is what is the kind of growth you are experiencing are is there any significant difference uh that you're observing out there and similarly if you were to cut the data by um gst you know like 40 gst bracket and 18 gst bracket is there a significant difference in the inquiry growth you really want to know everything about

I think it's a very, let's call it, information that we won't want to share because it kind of gives an indication of what is actually, you know, where demand momentum is. But we'll try and give you an overall sense rather than the level of detail. So I'll start and then hand over to Velu. we have seen very strong demand momentum urban and rural both we are seeing some kind of a shift to diesel of course you know there is a segmental shift to CNG in especially the lower GST product category less than four meter that's happened very fast over the last few months as the move as one part of the segment has moved to EV there's another part which is moving to CNG as the fuel prices and the fuel crisis has kicked in but also there are people who have looked at diesel because fuel efficiency has become you know that much more salient in a way so you're kind of seeing some of some of this play out on the fuel mix right now i think all our brands are on very strong very strong momentum and and growth uh evs in particular uh and especially 9s value you want to add

As you said we said EV is 77% growth and if you see overall industry above 4 meter and below 4 meter you can see wherever there is a new products there is an equal growth that has come above 4 meter and below 4 meter I'm not sure it is segmentized rather than it is whether it is a refreshers and new launches and every segment is growing that's what I assume

Lastly, just on the electric vehicle business, how should we think about the profitability path X of PLI? Is it going to be pricing led from here or most of it is going to be through cost efficiencies and what are you doing over there?

I think Kabir, it will be a combination of both. You'll remember that when we were launching EVs, you all thought we'll never make money. So, you know, we've come a long way since there in the last six quarters to now at least talk about what is the sustainability of the profit that we are making versus will you ever make money in this business? I think what is... The value of reaching an inflection point on penetration is that a very strong word of mouth starts building where customers who are EV users start talking about how much money they're saving. Once the proof of money being saved becomes real, and not notional then the acquisition price becomes less relevant because you have a very tangible yes with this kind of a usage situation i can say five lakhs in three years if this is my driving situation or one and a half lakhs a year or whatever in a different driving situation or whatever then the ability of price to go up is something that customer is able to tangibly see the value that that's creating right but when the category adoption is low then the customer is not able to anticipate what are the other barriers so really what is happening as EV penetration is going up and better quality cars are coming in this customer is confident on reliability more confident on range charging infrastructure is building up so the barriers are disappearing & the real savings are tangible at that point of time we expect price sensitivity to be much lesser & that's why the inflection point probably will be after 20-25% EV penetration & that's really the journey that you know the government also has in mind as Anish said that you get EV penetration to 20-25% then there's enough word of mouth & enough customers who are talking positively then the price equation need not be parity or close to parity today we are Our EVs are at close to parity twice. I mean, there's very little on-road difference between a 9S and a 7XO. So, once your savings are visible and tangible on all fronts, then a reasonable premium of 5-7% is possible. Meanwhile, there's a lot of work going on to continue localizing and bringing costs down. and as scale builds then it's even more remunerative for the supply ecosystem to pass on the benefits of scale so today most of them have are operating at well quoted us on subscale because there was complete uncertainty on how EV will pick up in the country when you know this this was done in 22 23 24 or more like the VOBs were done or the orders were awarded in the year 22, where there was really no EV penetration in the country. Today, it's a very different scenario of scale. So, you know, we would expect the cost curve to kick in as well on multiple technologies that we have deployed, you know, which are being optimized from an engineering point of view, but also from a scale point of view. So I think both of these will kick in in the next 12 to 18 months.

I want to add two more things actually. One, I'll emphasize the scale part because we're effectively doing 9x in ICE as compared to EV right now. So even for that small 1x, we've got a reasonable level of profitability today without PLI. So the minute you start scaling that up, that's going to start giving benefits. The second aspect is today the platform has also been developed for a very small number of vehicles. The beauty of the EV platform, the Inglo platform that we've developed, is that it can be used across multiple top heads. And therefore the capex that goes into developing it also is lower. So that also enhances profitability. So these are factors that come in. If I go back to the point that Rajesh also made on consumers willing to pay more, over the years you've seen that for diesel consumers have paid more. because the cost of diesel is lower than the cost of petrol and you've got higher fuel efficiency. So you're willing to pay that much more for diesel. EV, we didn't start with that. We didn't say that you will save petrol or diesel cost. There is a significant saving in that. So there will be some ability to drive price as well from that standpoint. So all of these factors give us the confidence that we will be at par. It's not going to really make as much of a difference on ICE versus EV. Thank you so much. If it wasn't, we wouldn't be pushing EV so hard. We'd be pushing ICE harder.

Thanks, Bini. Raghu, I'll come back to you. Akash, you had questions from Nomura. I'll just come back to you.

Hi, Akash. I cover the real estate space at Nomura. Thank you everyone for taking my question. My question is with Amit sir. I have two questions. One is bottom-up, one is top-down. From a bottom-up strategy, I want to understand the vision that Mahindra Lifespace has over the next five years. Obviously, we are growing very fast, but how do we see Mahindra Lifespace after five years? That's my first question. The second question is top-down. Where does the company fit in the group strategy? Where does Mahindra Lifespace fit in the overall group strategy? So these are my two questions. Thank you. How much time you have?

I'll let Anish answer the second question. I knew that was coming here. I think let me just give you a short answer and then you can give a longer answer. So I think For Mahindra Lifespaces, the first step is to be relevant. I think we have a 32 year legacy. We started in 1994, but our scale does not reflect that. And I think for us, the first goal is to be relevant in the market. And to be relevant, we just don't want to chase growth, right? We want to chase profitable, good growth, right? and that's why when we codified our strategy three years ago it was to say what is relevance mean in the market and how should we actually achieve that and we codified that we want to be a 10,000 crore company pre-sales by FY30 and in simple terms that will be 14 times what we were in FY20 so it's a FY30 to FY20 is a large amplifier in terms of the growth where we want to get the growth from is mostly from residential sector which has been something we have played for a long time but we also started to play in industrial side so we wanted to codify where we want to play and within that we said we'll go for depth over breadth we'll go deeper in a few markets and each market that we play we want to be top five top three so mumbai punya bangalore are the three key cities we are We are consolidating our presence. And that's very counterintuitive because when you're trying to grow, you'll say that let's play in as many frontiers as we can. But we have defined our frontiers to be just three cities. These three cities make 55% of the overall national volume in terms of the unit sales, value-wise it's slightly more. and our goal is to be as deeper as possible we look at our presence in terms of relative market share rms so it doesn't matter for us market share what matters is how big you are compared to the biggest player so if i have 0.5 market share in mumbai loda has five percent so i'm one tenth i want to reduce the gap to as little as possible and that's why we will go for deepening our strategy The second part, I think I've covered that, is premiumization not playing in the affordable segment. And I think Mahindra Brand Strengths, we are inspired by what our team has done. We want to reflect same kind of customer trust and delivery in our apartments and our products. and then execution choice of how we deliver those experience in terms of the purchase in terms of waiting in terms of possession everything needs to be in line with what a premium brand can deliver just like you know what Mahindra brand stands for so i think to come back to your question i think we want to be relevant and to get to be relevant there are many things we have to get it right some of them are uh some of them we have gotten right so far but it's a business where one mistake can you know detail the profits of many other uh projects that you're doing well so we want to make it very very um very very careful deliberate in our ways of growing

hopefully you got some and maybe we can talk more of yeah to fit in the group of business needs three things high quality products the customers say i want this product we ideally want to reach a place where each of you would ask when is the mind the light spaces property coming to the area i like because i'm going to wait for that to come and that's where i'm going to buy and today we can say with confidence we're starting to build products of that level of quality the second is scale The business has to have meaningful scale and the third is profitability. There are profit standards we have. We need to be able to maintain ROE. We will give leeway to the businesses to grow. We have a long-term view as well. And given the portfolio we have, we will take a long-term view for some businesses and we'll say, it's fine. You can build profitability over five years or 10 years. In Vinod's case, you might build it over 10 or 15 years as well. In aerospace, it will require that time period, but it's a very profitable and solid business at that point with a very strong moat around it that no one can really come into. so these are the kinds of businesses we like with that light spaces fits very well because of the products they have right now because of the scale that has been achieved so far and the path that's going for scale 50,000 GDB if you compare it with the large players as well they're in a very good position right now and we will continue to grow at a much faster rate than most others and it's a very profitable business we're monitoring it very very closely as you've seen from some of the things that Amit has shared in the past understood thank you so much thank you Raghu

Thank you sir for the opportunity and thank you so much for sharing the breakdown of auto and the farm profits. My first question Amar sir, basically a temporary transient problem is the commodity part so on the commodity in Q2 you know how do you see the impact coming through in auto and farm and the price hikes which has been taken in auto which is around 2% in July and in farm which is maybe 15,000 in August so would that be able to cover the commodity impact how do you see the impact in terms of protecting the margins and also because of the price hikes how Is there any thought process how customers will accept it?

The customer question, I'll really leave it to Rajesh and Velu to answer. We tried to give a framework in the media conversation, so I'll just lay that out for you all as well. We did see around 450 bps of pressure on auto margins because of the commodity inflation. The team has taken, like you rightly pointed out, around 1.5% earlier and 2.7% on average towards the mid of July. So that will help offset some of it. And then there are other operating actions that have taken. The commodity prices since those decisions have again started going up. So we'll have to keep managing through that. The pricing decision is going to be the teams because they do a very good job of managing the right balance between demand and pricing and you can't have too high prices either. So that the team will manage. But as a framework right now, we are expecting that Q1 in auto was a low point and it should improve from here that's how we are thinking about this farm is a little different because farm does have a completely unhedgeable steel and rubber inflation and while there has been price increase it it is not going to be sufficient given the prices have escalated even further since those increases so some temporary blip is likely in um in farm and how long that extends will depend a lot on how how long this rally in prices continues in these two items in particular yeah uh so i will just build on what amar said uh take auto first so

sequentially if there's no further dramatic change in commodities from where we are we think we should be able to maintain slash slightly improve the operating profit margin between Q1 and Q2 we have consciously taken what we may call a slightly aggressive price increase we normally are more conservative but really the thinking was it's very disruptive to customers if you're taking price increases too often you know because that completely unsettles the whole prospecting process Kapil was talking about inquiries and bookings and you know prospecting does you know from first inquiry to conversion does take a few weeks and then you know by the customer you've given a quotation to customer by the time they're ready to buy you have a different price it is very unsettling so we kind of took a conscious call that let's not kind of keep doing this incrementally with all the uncertainty and we took a conscious call to do a 2.7% average increase at the back of our mind we also had that and we have mentioned this last quarter that we had a headroom coming out of GST coming down so the prices still continue to be below what they were in September October last year so that that is what has given headroom which gives us kind of confidence that we can navigate this but it's something to be watched closely and of course the new prices are just getting in but so far we're not seeing any significant impact that it is having on demand so hopefully we should be able to see this through but we thought that is probably better than taking some price increase now and then having to take one more just before the season which would have probably caused more disruption I think the tractor side as Amar said is a little more complicated for 2-3 reasons we also have a season shift so this year as you all know festival has moved to 11th October whereas last year quarter 2 you had a peak volume in Q2 Navratri had already started in Q2 but overall I think as we get into Q3 we are hoping that there will be some softening on commodities plus we also get into season up cycle which will help tractors certainly so tractor situation is different than the auto situation. Will you want to add anything on auto?

Overall I would say that we are On balance, cautiously optimistic as well. If you look at all the challenges we've seen over the last three months, and if you'd asked me three or four months ago saying, with all these challenges, would you declare these kinds of results? I'd probably look at the person asking and saying, really, that's super optimistic. But the team's delivered that. And given that, given the price increase that have been taken, it's not a small price increase, 1.5 plus 2.7. with farm we are better off today than we had even thought of where we would be so all of those things I think put us in a much better position and therefore I'd say cautiously optimistic I think we should be able to idly maintain margins potentially improve them and that's something that we're we'll see how that goes in the next quarter but at this point in time we feel pretty good

Thank you, sir. And the results show that. And if I can take the, quickly on the group side, Rahul sir, if you can speak about, you know, moving towards the non-wheels business and diversifying over the medium term, and also how you see that ROA of 2.5% or possibly higher, how do you go towards that? And if I can add my last question, Vinod sir you have the exciting businesses so on the aerospace side obviously you have a strong order book of 1.2 billion how do you see the ramp up of the orders into revenues and how do you see the pipeline ahead thank you

Yeah, so see the lending book is now touching about 1,50,000 crores. We mentioned that in the lending business, it's always good to be diversified. So for us today, of that close to 1,50,000, 83% is wheels and the remaining 17 is non-wheels, right? In that 17, it's largely mod gauges, SME and some PL. Just to mention quickly, we benefit also now with, if you're buying a property somewhere around, please think of us, we give home loans too. So in the diversified business, we wanted to first clean up some of those businesses. If you see the housing finance company, the NPA is now, the GS3 is below two and a half. So we have set that business in order before growing. It's grown now by 130% in the last quarter. So the lending business non-whales is starting to grow well after we've cleaned up some of the past baggage. and the MSME business the way we think about the franchise is we are still a very very heavy Bharat player and the adjacencies for the Bharat customer besides mobility included livelihood assets so housing made sense even for the entrepreneurs in Bharat you know micro small enterprise loans made sense so we are chosen diversification within our adjacency and in our mind we will very well trend towards that 70-30 we've said by 2031 70% of the book will still be mobility 30 will be non-bills and we're targeting a 3 lakh crore book by 2031 on ROA first goal is to be between 2.2 to 2.5 we're already now we're at a higher range now at 2.4 but that's the range 2.2 to 2.5 if you're at that range then we'll be able to keep up to the group aspirations of ROE you know the group is much higher at now 20% ROE our first state of ROE was 15% if you looked at last quarter's performance with the 2.4 ROE we're very close to the 15% ROE okay very quickly just to give you the perspective

Our order book has grown quite healthy as Anish said in last two years, especially last year. And if you compare the aerostructure industry globally, our order book from order book standpoint we are actually a much bigger player than our revenue right now because in this industry it takes couple of years to industrialize in fact the largest player in aero structure business right now would be sitting at order book of 4 to 4.5 so from order book perspective we are getting there pretty fast what happens in this industry is that because of the reliability criteria is very very high and a part which we make you know the aircrafts fly for almost 40 years even once in service a successful aircraft 747s are still flying some of them so the aerostructure part which we build has to last for that period i mean no one changes aerostructure part unless there is a slight accident in the on the ground because if it happens in the air then nothing is left to repair so there is a quality standard is very high it normally takes us two to three years to industrialize during the global investor day we had given an aspiration target that organic organic and inorganic put together we want to grow the business by almost 30 times in a decade out of which organic was 10 times i can assure you we will grow faster than that and we'll share more numbers as we come closer to that

just going back to the auto margins in the past we've talked about hedging aluminium precious metals and they've been quite volatile so when you look at q1 was the company was it a hedging gain or a hedging loss it was a loss how sizable was that

It was around 85 bps impact on auto margins. On a QoQ basis. Yeah.

And secondly, when I add up the comments, we are talking about 450 basis point of commodity headwind in Q1. We are saying that we've taken 2.7% price hike, yet margins will be neutral-ish, which means almost a 650 to 700 basis point of commodity headwind. Is that understanding correct? That's the level of headwind we are facing on the auto side?

As of today, because if you look at the June trend, there was a significant uptick after June. So there is a pressure from there, but there is also operating leverage that the team will get. So that's why we feel like it's the low point. And from here, we should be able to go up unless there's a significant increase in commodity prices.

okay so in a way so sequentially so i i wouldn't get to 600 700 i think the 450 400 to 500 is what we saw in q1 for most of q1 june some start coming down but a number of things did not come down in q1 as well so i'd sort of expect that part to continue um the price hike will help but we don't know what other things might come in so which is where we are right now so as I said we are cautiously optimistic at this point in time but I wouldn't say at this point that we would get to 600-700 overall impact offset by prices and secondly just on tractors could you help us give some framework that we had a hit in Q1 what was the commodity hit the incremental headwind is it similar to Q1 is it lesser than Q1

Rajesh has explained that one of the challenges we'll have in second quarter is the volume mix shifting from second to third quarter just when you look at year over year so that puts some incremental pressure and then as I mentioned you know today as of today steel is up almost 24% rubber is up you know 30% this is just for the year 53% since the beginning of the year so those are the impacts that we have to be able to absorb some price actions like Raghu mentioned have been taken let's see let's see through the quarter how it evolves it's a little bit difficult to in this kind of a dynamic environment to you know predict exactly where things are going to land

And lastly, just on electric vehicles, when we started on this journey, our ambition was, I remember, 12% to 15% sales to meet Cap A3 norms. And we are pretty much there now already. So when you look at F-28, F-29, will you then focus more on market share, trying to maintain that EV market share, or sort of rethink that, maybe focus on profitability? Because you're already hitting your targets on EVs.

right what we set out to do and what you need to do as per cafe let me take one part of that because the transition to ev is not just for cafe norms that is the right place to be that's a better product overall for the customer and as per the earlier discussion we can do that profitably as well And to your question on market share of profitability, my answer is both. We want higher market share in EVs, we want a higher market share in ICE and we want more profitability as well. Given the track record of this team, This is one thing that they've been able to deliver over time as well. So we're going to go all out to transition to EV as quickly as possible, continue as we build scale, we will build greater profitability with it as well. We'll ensure that profitability matches longer term for ICE and EV also, and shorter term hopefully subsidy helps us transition or bridge that. And as we deliver high quality vehicles, we want to take a, higher share of the overall market as well in both so that's the approach that we're taking right now and back to commodity at this point in time yes there is volatility right now prices come down very quickly as well and we saw you know aluminum literally in a space of 8 to 10 days come down 20% as well so if you believe the war is going to continue for the next six months then we may have bigger problems the whole economy the world economy will have bigger problems at that point in time But indications are not that that will happen. And given that, yes, we'll have some volatility for some time, but we feel pretty reasonable that things will settle down.

Thanks, Tim. Thanks, Puneet. Nishit, I'll just come to you. One online question I'll take. This is for Mahindra Logistics. You have highlighted LogiOne as a key differentiator. Can you elaborate how technology has improved productivity, pricing power, and customer retention?

The whole logistics space actually operates on the structure of tech. This is not an industry where you can throw people to solve a problem. It has to be done through tech. Logifram is a new platform that we have recently launched. We are right now showcasing it to our customers. We already have almost five customers who have raised their hands that we want to implement there as we implement and go through the journey with our customer we will be able to quantify the benefits for our customers in terms of productivity and lowering their cost and that gives us advantage with those customers so i i would say that it is a key backbone of our working but we will have to work with our customers to see what kind of benefits that that finally accrued on this

Nishit, please go ahead. Yeah, hi. Two questions. One, on the autos, on production side, where are we? Are the concerns behind? And if yes, then should we be operating at close to capacity that we have given that demand is strong and I'm assuming dealer inventory levels will be lower than normal? And secondly, just on the hedging side, Amar, there was a 85 pips loss. So is it fair to understand that 7.1% reported margin, so the underlying margin was around 8%, If we add back the hedging loss and if the hedging MTM doesn't come in the next quarter So basically that is the underlying margin we should look at and then plus minus the commodity and price increases Let's start with the first question.

I was hoping you want to take this That's a fair point that is a fair point The MTM this time was unfavorable and that did put pressure on the margins.

And that gives us a buffer as well for the next quarter, which is back to my earlier point there, which is why we worry a little less about this.

Yeah, but it depends on which way the commodities move, right? So what happened in last quarter was really the effect of the last 10 days when post-announcement of war stopping and some of the commodities crashed. So you had a disproportionate loss in 10 days. So this is really very hard to predict. and bake into anything so i would kind of suggest right now don't bake anything in because there's so much volatility uh as we saw in the last quarter we didn't see this coming this happened in the last 10 days uh very sharp drop in commodities which were hedged so there was a gain to them

so you know it's just very hard to predict so we we're hoping there will be an upside but uh it's hard to be taken yeah and as we were joking we like the loss in this case because it meant the commodity prices came down sharply so that's also the counterpoint here

On the production question, Nishit, you know, it is a volatile work environment right now. And it's very hard to say which supplier is getting disrupted when, you know. So, while these capacities include our own capacity plus supplier capacity, but we are dependent on multiple suppliers to meet their commitments. And that's not always happening. So, you know, while there is a stated capacity, There is a new black swan literally every other day. And the one of the past is not the same one every other day. And that's why it is a challenging environment to navigate. i i i was avoiding wanting to say this but we lost three days in july uh because of the rains uh we had you know very strong rains as all of you know in the city in all over maharashtra we lost at least two days of production because of flooding in all the plants right now you don't see that you can't predict that in uh over and above plant shutdown that we already had in july so you know these are all things which are, you know, the nature of the environment. Suppliers were impacted by that too. So, you know, it did allow us to build inventory as well. So, you're right from, you know, here's a number and this is the capacity that should come, but there are many things that are coming in between. All of you know that one very large supplier in South had a fire which caused disruption to us as well. I mean, we had a very critical part coming out of that supplier.

so one thing where would we be in the dealer inventory level on the auto side physical inventory is maybe like 15 days or something okay thank you we are above time one last question from your side hi this is big club good evening to everyone

so my question is on the slum rehab that we are seeing in mumbai lot of slum redevelopment lots of big names are entering into the slum redevelopment real estate players non-real estate players so you are also one of the big names so so uh what's your view on this will you see mahindra If they are successful in doing the slum redevelopment, a huge supply of real estate would be hitting the Mumbai market. then what would be the in a competitive positioning of the incumbent real estate players so this is me let me take that that's it real estate question so i just wanted to

I think in our strategy, I think slum redevelopment is something we had not prioritized as of now. But given the way the market is shaping, we'll start looking at some of those deals. Those are huge deals, right? And some of them have been awarded to some of the other larger peers. I think the risk and rewards financially as well as brand are very different from what we have done in the past. I think we are right now not looking at any of those deals but in future as the whole policy gets stabilized and there are there already actually we bet some of the decision makers policy decision maker they are very keen for Mahindra to participate I think we'll evaluate them at the right point of time and we'll see how it affects financially but also from a brand perspective we want to be very careful about that second part of your question I think about supply-demand I think we will look at that carefully I think I'll just give you one stat in Mumbai 60% of the apartments are either owned or people living with their families 40% are rented so 40 plus 30 if you're living with your family 70% of the apartments are potential target customers for us so there is a huge demand just in Mumbai and similar stat applies to many other cities given the kind of infrastructure coming in given the kind of job creation likely to happen Mahindra 144A such project takes a long, long time. So the supply doesn't come in one big jump. It takes a while and it gets easily absorbed by the sustained organic demand that exists in the market. So I think, and the competition is good. We'll find our own differentiation. We'll participate meaningfully.

Perfect. So with that, I just want to leave everyone with the thoughts that despite all the challenges and everything the team's outlined from commodity costs to supplier issues to plant issues, everything else, the teams delivered some very very strong results and that gives us confidence going forward and that's the reason why they say we feel good about the future in that sense yes challenges will come and that's part of life at this point in time but the resilience that's been built in is something that's very strong and we're sitting in a good place right now in terms of where we are so we look forward to the future cautiously optimistic is is where i would leave it at and would want to thank each of you for spending the time today with us. Thank you.

Thank you. Please join us for snacks in the joining room. Thanks.