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

planned for 2022-23. Your Company is working on various Powertrain and Vehicle level technologies such as friction reduction and electrication for further CO2 improvement needed to achieve the emission targets. India remains a medium to high HP market for tractors, with more than 90 per cent of the sales coming from <50 HP categories. The revised emission norms for >50HP tractors, were initially slated to be implemented from October 2020. At rst, it was deferred by one year to October 2021, subsequently by another six months to March 2022 in the wake of coronavirus pandemic and again by another 6 months to October 2022. Latest deferment is due to increase in tractor prices which may add to the farm communities woes in the face of the current rising ination. However, the transition to new emission norms in the tractor industry is unlikely to be a major disruptor as it would apply only to vehicles with engine capacity higher than 50 HP, impacting around 10 per cent of the overall industry volumes. 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 F23, the Indian Meteorological Department (IMD) in its rst long range forecast for the monsoon season predicted SW Monsoon (June to September) to be normal at 99% of the LPA (Long Period Average). However, with the outlook of IOD (Indian Ocean Dipole) conditions tilting towards negative by September, there is a risk of high volatility inmonthly distribution. Reservoir level Reservoir levels in April, 2022 were 28% higher than average. Adequate water in reservoirs coupled with narrowing decit in pre-monsoon rains, helped signicant progress in summer acreage. By end of April 2022, 70 lakh hectares were sown (up 7%YoY). However, the heat wave since mid-March, damaged standing crops. Wheat production that was estimated to reach a record high as nd per 2 AE is likely to decrease by 11-12% YoY with the reported damage. Commodity Prices A surge in post-pandemic global demand, outbreak of Russia-Ukraine war; coupled with severe supply side constraints resulted in 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 reductionwith various initiatives including VAVE activities. MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2021-22 121