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

Government budgets on infrastructure and rural development is likely to benet commercial demand. Further, the demand for mechanisation is also growing as shortage of agricultural labour will lead to increase in labour cost. Several enabling factors supporting industry growth, like, institutional credit, consolidation of farm holdings by FPOs, etc. have shown a positive trend in the last few years. Increase in leasing of land from 10% in early 2000s to 17% in 2018-19 and Government subsidy for mechanisation will support the growth of the sector. An increasing trend of more farmers taking technical advice in agriculture, also reects the growth of progressive farmers. However, the past trends of the tractor industry depict a picture of strong cyclicality. Every 3-4 years growth in the industry is followed with a drop or slow-down. On an average, in the last 10 years, industry saw a growth of 5- 6% annually and monsoon plays a critical role in dening the cyclical nature of the industry and therefore remains a keymonitorable. High international commodity prices and logistic disruptions may aggravate input costs leading to ination. However, a normal monsoon outlook and water reservoir level better than the previous year and 10-year average will be positives for the farming sector. As the macroeconomic tailwinds mostly remain intact for the rural economy, including the normal monsoon forecast, the expectation of a strong Kharif harvest, and improved rural income, bodes very well for the upcoming Kharif season and will support continued growth for the tractor industry. The Central Government has set higher target for agriculture production during Kharif season on account of normal monsoon prediction and surplus seeds and fertilizer availability as per requirement. Factors that will signicantly impact demand for automobiles in F23 are: Supply shortage of semiconductors Policies by the Government to boost consumption Agg r e s s i v e Gov e r nmen t pu s h f o r infrastructure led growth Increase in cost of ownership due to commodity price and fuel price increase Tractor and Farm Equipment Business The mid to long term outlook for the Indian tractor industry is positive. The industry is seeing an upswing with harvesting of crops underway and expectations of a bumper crop this rabi season. Acreage of summer crop which is sown between Rabi and Kharif season has crossed last year's level which is also promising for the farmer community. Several initiatives taken by the Government are driving higher rural incomes. Example: Higher diversication towards high value crops, expansion of non-farm income opportunities, etc. In addition, increase in allocation of STRATEGY Automotive Sector The Company is committed to build SUV brand reputation for its Authenticity and Sophistication. Launch of XUV700 and Thar has been indelibly associated with core pillars of Capability, Performance, Safety, Technology and Sophistication. MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2021-22 123