35 RISE TO CREATE VALUE | Risk Management Across its diverse businesses, Mahindra Group operates in an environment characterised by geopolitical shifts, supply chain pressures, macroeconomic variability, evolving consumer behaviour and rapid technological change. Our risk management approach combines strong governance, continuous monitoring and proactive mitigation, supported by disciplined capital allocation and operational excellence. Drawing on institutional learnings from the COVID era, the Group has embedded agility and resilience into the way it operates. As businesses strengthen their operating moats with sharper execution, Group-level governance, robust risk hedging and controllership provide stability through external shocks. This enables the Group to navigate uncertainty while proactively exploring and investing in emerging opportunities to drive sustained growth. External Environment The global operating environment is growing increasingly complex. Geopolitical conflicts, shifting trade relationships and evolving tariff regimes continue to inject uncertainty into supply chains and global commerce. Inflationary pressures remain sensitive to energy price volatility and currency movements, continuing to influence consumer affordability. India's domestic macroeconomic fundamentals remain well-anchored. In FY26, fiscal support measures and calibrated monetary policy actions improved liquidity and supported consumption-led growth. GST rationalisation across key consumption categories helped ease cost pressures and improve affordability. Going forward, India’s strong domestic demand, favourable demographics and sustained policy support are expected to support a resilient consumption outlook and enable sustainable economic growth. Rapid technological disruptions, particularly the pervasive adoption of digital and AI-driven capabilities, are reshaping competitive dynamics and consumer expectations. Against this backdrop, the Group's approach to risk management is proactive, structured and deeply integrated into strategic planning and capital allocation. Governance of Risk The Board of Directors sets the tone for risk governance at Mahindra Group, providing strategic oversight through a well-defined committee structure that ensures risks are identified, assessed and managed with rigour and accountability. The Risk Management Committee meets periodically to review the Group's enterprise risk framework, monitor the evolution of key risks and evaluate the adequacy of mitigation measures. The Audit Committee provides an additional and independent layer of oversight, with particular focus on the effectiveness of internal financial controls, compliance systems and the integrity of financial reporting. Together, these structures are reinforced by a robust internal audit function that conducts risk-based reviews across businesses and geographies, with findings reported directly to the Audit Committee. This multi-tiered governance architecture ensures that risk management is not a periodic exercise, but an ongoing discipline embedded in strategic decision-making at the highest level. Key Risks & Mitigations Geopolitical Tensions, Supply Chain Disruptions & Trade Tariffs Rising geopolitical volatility, supply chain fragility and changing tariff regimes have become structural realities. These factors can disrupt component availability and cost, increase logistics costs and affect production continuity. Mitigation: The Group takes several measures to de-risk its supply chain with real-time supply chain visibility across key parts and commodities. Localisation remains a strong driver of supply chain strategy. Planned buffers for critical components, diversifying the supplier base, optimising high-risk material usage and long-term supply contracts are the key pillars to secure the supply chain from geopolitical disruptions. Commodity Price Volatility & Forex Fluctuations Sharp movements in raw materials such as steel, aluminium, oil and oil-derived products, precious metals and global currencies can impact cost structures and margins. Mitigation: We continue to actively manage commodity and forex risks through robust hedging practices as defined by Board-approved commodity and forex risk management frameworks. Strategic supplier negotiations and long-term price agreements moderate input cost exposure, while continuous value engineering initiatives sustain cost competitiveness through economic cycles. RISK MANAGEMENT
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