MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2022-23

The tractor business in particular, and the automotive business to some degree, run the risk of a drop in demand, in case of a signif icant variation in the monsoon. In addition, an untimely monsoon and uneven spread has the potential of adversely impacting the business. POTENTIAL EL-NINO IMPACT Going into F24, the Indian Meteorological Department (IMD) in its long range forecast for the monsoon season predicted South-West Monsoon (June to September) to be normal at 96% of the LPA (Long Period Average). However, with the concerns of El-Nino there is possibility of either spatial or temporal distribution disruption. Nevertheless, given that reservoir levels in May, 2023 were 23% higher than average, and that there has been excess rainfall in pre- monsoon months, the potential El-Nino impact is not expected to cause amajor disruption. CAPACITY In the Automotive Segment, your Company has increased capacity of SUVs from 28,000 in F22 exit to 39,000 by end of F23 to cater to continued robust demand for new launches and clear existing bookings and reduce waiting period for the new launches. In the Farm Equipment Sector, your Company has built adequate manufacturing capacity for the immediate future and is in the process of investing in additional capacity as part of its mid to long- term strategy. We reached a number of milestones in F23. Mahindra's Tractor factories in Zaheerabad and Rudrapur produced the st st 3,00,001 and 8,00,001 tractors respectively, while the Rudrapur th facility also produced its 9,50,000 gearbox. As it prepares to open its newmanufacturing facility in Mohali, Swaraj Tractors produced its two millionth tractor. A further 17.41% stake of Swaraj Engines Limited (SEL) was acquired by your Company from Kirloskar Industries Limited (KIL). As a result, we now own 52.13% of SEL, making SEL a subsidiary of the Company. During the year, we also launched our f irst exclusive farm machinery (non-tractor) plant in the industrial city of Pithampur, Madhya Pradesh, enabling the Company to manufacture durable, high-quality, affordable and accessible 'Made in India, for India' farm machinery, marketed in both the Mahindra and Swaraj brands. COMMODITY PRICES Commodity prices in F23 were volatile. In the f irst quarter, steel prices rose sharply due to supply concerns caused by Russia-Ukraine conflict. However, from June 2022 onwards, prices softened on account of easing supply concerns and weak economic outlook due to interest rate increases by major Central Banks. Additionally, there was pressure on Indian steel prices due to levy of export duties on key rawmaterials and products. Subsequently fromDecember 2022 onwards, prices f irmed up due to expectations of demand growth driven by withdrawal of Zero-COVID policy by the Chinese Government and removal of export duties by the Indian Government. Your Company stayed focussed on cost reduction through measures like VA/VE, negotiation with suppliers, long-term price contracting, etc. Your Company continues to watch the market situation closely and continues to focus on mitigating commodity price volatility through "Commodity Risk Management". Production Milestones Zaheerabad Factory 3,00,001 Rudrapur Factory 8,00,001 Swaraj Tractors Factory 20,00,000 126