Environment & Alternate Fuels In line with government initiatives to reduce pollution and tighten emission norms, Mahindra is actively developing electric mobility solutions and alternative fuel technologies. We are closely tracking developments around CAFÉ 3 norms to ensure compliance with the same. Commodity Prices In FY25, commodity prices showed a mixed trend due to global growth uncertainty, trade wars, and weak manufacturing activity. Agricultural prices were influenced by robust rabi production and erratic weather patterns in some regions. Policy uncertainty, supply build-up, and a potential economic slowdown could influence commodity price trends in the future. Mahindra remains committed to cost optimisation through value engineering, supplier negotiations, long-term price contracts, and addresses price volatility through commodity risk management framework, alongside robust hedging practices approved by the Board. Monsoon A normal monsoon is vital for rural economy, especially the tractor business, and even the automotive business to some extent. Disruptions caused by untimely or uneven rainfall can adversely affect rural demand, highlighting the dependency of these markets on stable agricultural conditions. India Meteorological Department (IMD), in its first long range forecast, has indicated above normal seasonal rainfall across the country during monsoon season (June to September 2025), at > 104% of the Long Period Average (LPA). Most parts of the country are expected to experience above-normal rainfall, which bodes well for Kharif harvesting. Indication of both El Niño-Southern Oscillation (ENSO) and Indian Ocean Dipole (IOD) conditions being neutral during the monsoon season, further supports favourable monsoon prospects. Furthermore, based on earlier trends, uneven monsoon conditions have a relatively limited impact on our sales. This resilience can be attributed to our operating leverage, competitive Minimum Support Prices (MSP), and favourable credit facilities available to farmers, which collectively provide robust support to our operations. Geopolitical Tensions and Trade Wars Economic slowdown risks arise from US policy uncertainty, trade tensions, and shifting geopolitical dynamics, leading to commodity price volatility, supply issues and higher costs, affecting expansion decisions. The Company is well-positioned to mitigate these risks with a well-diversified supplier base, long-term price agreements, and a comprehensive commodity and foreign exchange risk management strategy. Slowdown in International Farm Markets For FY25, Mahindra has faced a demand slowdown in its key international farm markets, including the USA, parts of Western Europe, Japan and Brazil. In temporary slowdown markets like the USA, the focus is on revamping supply chain and enhancing product offerings. In structurally declining markets such as Japan (industry contraction) and Finland (affected by geopolitical tensions), we plan pivoting strategically to mitigate losses. We have implemented robust systems, processes, and review mechanisms to identify, monitor and mitigate risks, while proactively exploring emerging opportunities. Rise To Create Value | 31 MAHINDRA & MAHINDRA LTD.
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