annual-report-FY2021

131 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2020-21 Your Company has successfully met the aggressive time and cost targets set during the development of BS-VI technologies. Your Company has successfully upgraded the product portfolio to BS-VI, and offers BS-VI compliant products at a competitive price. Your Company will continue to work on cost and value engineering for easing the pressure onmargins. After BS-VI implementation in 2020, the Indian auto industry will now be looking at the next tranche of emission norms to follow in quick succession, with CAFE 2 (Corporate Average Fuel Economy) and RDE (Real Driving Emissions) planned for 2022-23. Your company is working on various Powertrain and Vehicle level technologies such as friction reduction and electrication for further CO 2 improvement needed to achieve the emission targets. New Regulation for Safety Concerns over road safety are driving legislation and regulatory reforms. Any new legislation requires technology development and incurs costs, in turn impacting vehicle prices. Your Company is geared up and is condent of meeting any new regulations introduced. New Products and Technologies Your company has a comprehensive programme for development of new products and technologies which will enable it to remain competitive in themarket, cater to emerging customer expectations and to meet any legislative requirements. Environment and Alternate Fuels With concerns over air quality and the need to reduce dependence on fossil fuels, the Government is actively pursuing large scale adoption of EVs, especially for intracity uses in eet application. Your Company is a pioneer for Electric Vehicles in India and is actively pursuing development of the Electric Vehicle (EV) market, products and technology. Your Company also started operations of its latest manufacturing hub in Chakan, Pune which will supply EV components. Monsoon A normal monsoon is important for both agriculture as well as the rural economy at large. The tractor business in particular, and the automotive business to some degree, run the risk of a drop in demand, in case of a signicant variation in the monsoon. In addition, an untimely monsoon and uneven spread has the potential of adversely impacting the business. Going into F22, the two major weather forecasters of India predicted 'Normal Monsoon' between June to September. Spatial monsoon distribution forecast also suggests normal or above normal monsoon inmost parts of the country. Commodity Prices A surge in post-pandemic global demand coupled with severe supply side constraints resulted a sharp rise in commodity prices. This impacted the cost of various inputs used by the industry, including castings, forgings, steel sheets and precious metals. While there was a signicant impact of the same on material cost, your Company was able to limit the impact through concerted efforts towards cost reduction with various initiatives including VAVE activities. For F22, while your Company will take all steps to mitigate risks from the COVID-19 crisis, the increase in prices of certain commodities is likely to have an adverse impact on material cost in the rst half of the nancial year. However, the Company does expect prices of commodities to soften in the second half of the year with supply side constraints easing, limiting the impact. Your Company will continue to work on mitigating the inationary impacts through cost re-engineering and value engineering activities. Capacity Your Company has built adequate manufacturing capacity for the immediate future and is in the process of investing in additional capacity at Chakan Phase II in preparation for the mid to long term. This is expected to be operational in F22. Your Company is investing over INR 3,000 crore in its Electric Vehicle (EV) programme. On the supplier end, the Company is working closely with its key suppliers to minimise any supply constraints through proactive capacity planning and longer-term contracts. At the same time, opportunities for global sourcing are also being actively pursued. To prepare for future growth in Industry and keeping in mind the upcoming product and technology needs, the