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

COMPANY OVERVIEW RISE TO CREATE VALUE RISE TO BE FUTURE READY RISE FOR A MORE EQUAL WORLD CORPORATE INFORMATION STATUTORY REPORTS FINANCIAL STATEMENTS We have set up a dedicated new plant at Pithampur spread over 23 acres with a capacity to manufacture 1,200 combine harvesters and 3,300 rice transplanters per year. Our business is exposed to many internal and external risks and consequently, we have institutionalised robust systems and processes, along with appropriate review mechanisms to actively identify, monitor, manage and mitigate these risks. Risk factors that emerged in F22 include global shortage of specific commodities like semi-conductors, supply chain issues due to localised lockdowns and Russia-Ukraine conflict and increasing commodity prices. RISKS & OPPORTUNITIES Key Risks & Risk Mitigation Initiatives l Invest in new product development, technology upgrades, increasing channel reach, and focus on delivering customer centric products, services and build brand with an aim to remain competitive in the market. Competitive Intensity l The Company has successfully transitioned to BS6 phase 2 emission norms across all its portfolio products well in time. In its commitment to improve fuel eff iciency and reduce the overall carbon footprint (CAFÉ 2), the Company has adopted advanced combustion technologies and right product level electrif ication strategy. l The revised emission norms BS TREM IV for tractors, implemented from January 2023, are applicable to tractors over 50HP which is 7-8% of the overall industry volumes. We have realigned our product portfolio, through the launch of new products, along with upgrades of existing ones to meet the TREM IV norms. New Emission Norms l A comprehensive program for development of new products and technologies that will enable us to remain competitive in the market, cater to emerging customer expectations and to meet any legislative requirements. New Products and Technologies l Geared up and conf ident of meeting any new regulations introduced. New Regulation for Safety l Actively pursuing development of the Electric Vehicle (EV) market, products, and technology. Environment and Alternate Fuels l Remain focused on cost reduction through measures like VA/VE, negotiation with suppliers, long term price contracting, etc. l Continue to watch the market situation closely and focus on mitigating commodity price volatility through 'Commodity Risk Management'. Commodity Prices l Going into F24, the IMD in its f irst long range forecast for the monsoon season predicted SW Monsoon (June to Sept) to be normal at 96% of the LPA. However, with the concerns of EL Nino, there is possibility of either spatial or temporal distribution disruption. l Nevertheless, given that reservoir levels in April 2023 were 20% higher than average, and that there has been excess rainfall in pre-monsoon months, potential El-Nino impact is not expected to cause a major disruption. Monsoon l Have built adequate manufacturing capacity for the immediate future and are in the process of investing in additional capacity as part of our mid to long-term strategy. l Launched a new plant at Pithampur to manufacture farm equipments like rice transplanters, potato planters and harvesters. l Swaraj Division setting up a new manufacturing plant in Mohali to create additional capacity. Capacity In addition, there are risks like signif icant variations in monsoon and depletion in reservoir levels that wemust address on a year-on-year basis. 19