MONSOON The success of agriculture and the rural economy hinges on a normal monsoon. The Tractor and Automotive Sectors are particularly vulnerable to monsoon fluctuations, which can result in reduced demand. Unpredictable or uneven monsoon patterns pose a significant business risk. In addition, an untimely monsoon and uneven spread has the potential of adversely impacting the business. • Indian Meteorological Department (IMD) in its first long range forecast indicated, monsoon will be above normal, i.e., > 104% of Long Period Average (error margin of +/-5%) for the four-month long period of June to September. La Nina this season is weak and El Nino which normally disrupts Indian monsoon is ruled out. Neutral ElNino Southern Oscilliation conditions and neutral Indian Ocean Dipole conditions is likely to lead to normal to above normal monsoon this year. • As per IMD, spatial distribution is likely to be above normal in most parts of the country, apart from small pockets of southern and northeastern region, where below normal rainfall is possible. However, it will be key to watch out for the onset and temporal distribution of rainfall. • Early onset of monsoon and IMD's affirmation of above-normal rainfall is expected to boost rural sentiments. OUTLOOK - AUTOMOTIVE AND FARM SECTORS Mahindra’s Automotive and Farm sectors aim to sustain profitable growth, maintain domestic leadership, and expand globally. We remain focused on achieving cost leadership through targeted cost optimization, productivity gains, value engineering, efficient supply chain management, and synergies across group businesses. AUTOMOTIVE BUSINESS Automotive industry in India is one of the main pillars of the Indian economy and was christened as the ‘Sunrise Sector’ of the economy by the Ministry of Heavy Industries. Hon'ble Prime Minister unveiled Indian Auto Industry Vision @ 2047 mentioning Auto Industry is the engine of economic growth. The automotive industry is undergoing a transformative shift towards electric vehicles (EVs), driven by rising consumer demand for sustainable mobility, regulatory pressures to reduce carbon emissions, and advancements in battery technology. EV sales have surged globally, reshaping the automotive manufacturing landscape. The rise of Industry 4.0 is transforming automotive manufacturing. Technologies such as Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), and Robotics are enhancing production processes, improving productivity, reducing costs, and enabling greater flexibility. These digital advancements are not only optimizing manufacturing but also fostering new business models centered around smart factories and connected vehicles. Factors that will influence demand for automobiles in near future are: Policies like Production Linked Incentives (PLI), PM E-DRIVE, Voluntary Vehicle Modernization Program by the Government to boost consumption and promote EVs. Aggressive Government push for infrastructure-led growth. TRACTOR AND FARM EQUIPMENT BUSINESS The mid to long term outlook for the Indian tractor industry is positive. The industry is expected to see another positive year for tractors and farm machinery. Expectations of a normal monsoon, positivity in farm sentiments along with higher price realization of key crops is expected to boost industry growth. The Government of India’s budget further provided a fillip for growth of the agriculture, a key engine of India's future. The Government’s focus on infrastructure and rural development is likely to benefit commercial demand. Further, the demand for mechanisation is also growing on account of increase in labour cost owing to a shortage of agricultural labourers. Several enabling factors supporting industry growth like increasing cropping intensity, diversification, institutional credit, consolidation of farm holdings by Farmer Producer Organizations (FPOs), etc. have shown a positive trend in the last few years. The Government subsidy for mechanisation will increase mechanisation coverage amongst small farmers. An increasing trend of more farmers taking technical advice in agriculture also reflects the growth of progressive farmers. Rising global commodity prices and logistics disruptions could exacerbate input costs, fuelling inflationary pressures. Spatial distribution is likely to be above normal in most parts of the country, apart from small pockets of southern and northeastern region, where below normal rainfall is possible. However, it will be key to watch out for the onset and temporal distribution of rainfall. Management Discussion and Analysis | 149 MAHINDRA & MAHINDRA LTD.
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