MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2021-22

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 and Geo Political crisis COVID impact continued into F22 - the second wave which hit India in Q1 F22 disrupted business because of its intensity. Global supply chain was affected, impacting logistics cost and lead time due to port congestions and container unavailability. Global automotive industry was badly affected due to semiconductor unavailability and as a result, the Company st lost signicant volumes in the 1 two quarters of F22. Countermeasures taken to mitigate the risk helped in nd increasing volumes in the 2 half of the year and efforts are continuing to de-risk the supply chain to meet the business demand. Q4 F22 saw another risk emanating due to the Russia- Ukraine conict which led to soaring commodity prices and impact on availability of material. The Company took aggressive steps to counter the problem to minimise the impact including the effect of fresh wave of COVID in China threating global supply chain. In F22, the Company initiated various countermeasures to minimise any short-term impact and mitigate any long-term impact on the Company. This included comprehensively looking at cost structures and optimising them, cash ow management, and sustained investment in newproducts. Company-wide initiatives to bring down costs and conserve cash yielded some very good results in F22 and are expected to deliver benefits in the future. Competitive Intensity Keeping in mind the high growth potential of the Indian automotive market, all OEMs, homegrown as well as MNCs, have presence across all vehicle segments. Today, multinational OEMs are deeply entrenched in the Indian market with local development centres, a strong local supplier base and good channel penetration. In the PV segment, the differentiation between cars and UVs is largely blurred. Industry has seen shift in demand from cars to UVs. This has led to a greater number of launches in UVs comparedwith cars. The LCV < 3.5T commercial vehicle segment, which is 61.8% of the CV goods industry, is witnessing increased competition with new and competitive launches from homegrown as well as MNC brands. With the aim to remain competitive in the market and sustain its leadership position, your Company continues to invest in new product development, technology upgradations and increasing channel reach, while focussing on delivering customer centric products, services and brand building. As of now, 51% of UV sales are from UVs less than 4m in length, while UVs as a share of PVs stand at 49% (was 12.6% in F11). Tax Regulations India has traditionally seen tax rate differential between small and large passenger vehicles. This differential is based on length of the vehicle, engine size and fuel type. While the agship products of your Company attract higher tax rates, your Company has strengthened the UV product portfolio attracting lower tax rates with products like XUV300, Bolero Neo, Bolero Power Plus and KUV100. New Emission Norms After BS-VI implementation in 2020, the Indian auto industry will nowbe 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) COMPANY OVERVIEW BOARD’S REPORT MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE BUSINESS RESPONSIBILITY REPORT STANDALONE ACCOUNTS CONSOLIDATED ACCOUNTS 120