annual-report-FY2021

129 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2020-21 OPPORTUNITIES AND THREATS Automotive Sector The auto industry is an engine of economic growth. The industry contributes to 6.4% of India's GDP, almost 35% of manufacturing GDP, 15% of GST revenues, and provides 37million direct and indirect jobs. F21 was a difcult year for the industry and F22 will continue to be so - due to lockdowns and uncertainties arising from the COVID-19 pandemic. The intensity of the secondwave of COVID-19 infections in India had come as a surprise, and the total number of cases exceeded the previous peak (September 2020) by over 3 times. The Government will need to work closely with the industry to put the industry back onto a growth path. If the pandemic and lockdowns continue, the industry is likely to face a shortage of supply and softening of demand again. Over the years, the industry has made signicant investments towards the indigenisation of technologies in the conventional vehicles space - meeting BS-VI in 3 years is an example. To reduce dependence on oil imports, the industry is exploring options of alternate fuels like CNG, LNG, Ethanol, etc. The industry is also investing in next generation technologies like Electric Vehicles. With an objective to improve air quality, the Government is actively pursuing the plan for electrication of the vehicle eet and has announced the FAME II (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles) policy. From F22, the Government has decided to implement a Scrappage Policy. Ÿ reducing old unfit vehicles Ÿ achieve a reduction in vehicular air pollutants to fulfil India's climate commitment Ÿ improve road and vehicular safety Ÿ achieve better fuel efficiency Ÿ formalise the currently informal vehicle scrapping industry Ÿ boost availability of low-cost rawmaterials The Government has approved the introduction of the Production-Linked Incentive (PLI) Scheme in 10 key sectors for enhancing India's manufacturing capabilities and enhancing exports aimed towards Atmanirbhar Bharat. INR 57,042 crore have been allocated for the automobiles and auto components manufacturing sector. Farm Equipment Sector To drive sustainable growth in the agriculture sector, strong government focus on its development is required, including increased adoption of mechanisation and modern agricultural practices, and rural development at large. India, with its large base of small and marginal farmers, has several regions with low penetration of farm mechanisation. With increasing labour cost and labour scarc i ty, greater adopt ion of var ious forms of mechanisation is the way forward. In this scenario, the market for tractors and other farm equipment is expected to grow in the long term. Allied Businesses The rising demand for power backup solutions and infrastructure development will create opportunities in the power generation and infrastructure equipment space. This is an opportunity for the Company to grow its offerings in power solutions and construction equipment. RISKS AND CONCERNS Automotive and Farm Equipment Sectors The Company's business is exposed to many internal and external risks and it has consequently put in place robust systems and processes, along with appropriate review mechanisms to actively monitor, manage and mitigate these risks. COVID-19 Pandemic F21 was impacted by the COVID-19 pandemic disrupting the global economy and supply chains. In India, F21 began with complete lock-down and zero economic activity in one of the strictest measure taken by the Government to contain the spread of the pandemic. The objective of the scrappage policy