36 Integrated Annual Report 2025-26 Consumer Sentiment Consumer sentiment is closely tied to macro economic conditions, inflationary pressures and interest rate fluctuations. Mitigation: We constantly monitor evolving consumer preferences and adapt our strategies to align with market demand. Our strong portfolio of premium, feature-rich SUVs aligns well with evolving consumer preferences. EV Adoption & Infrastructure Readiness EV penetration may face headwinds if charging infrastructure expands slowly or if customers remain concerned about range, battery life and long-term reliability. Mitigation: Mahindra's comprehensive EV roadmap combines product strength, technology leadership and infrastructure investments. A 79 kWh battery pack delivering approximately 500 km of real-world range, and DC fast charging that enables 20% to 80% charge in approximately 20 minutes, address range anxiety directly. The business is expanding highway and corridor charging through its open-source Charge_iN platform with a commitment to deploy 1,000 fast-charging points along major corridors by 2027. An industry-leading lifetime high-voltage battery warranty for the first registered private owner further reinforces customer confidence. EV penetration within our SUV portfolio reached 9.6% in Q4 FY26. We are closely tracking developments around CAFÉ 3 norms to ensure compliance with the same. Rural Economy and Linkage to Monsoon Tractor demand and rural sentiment are seen to be linked to monsoon performance. India is expected to receive below-normal southwest monsoon rainfall in FY27, with precipitation projected at 90-92% of the Long Period Average, according to the India Meteorological Department’s (IMD) long-range forecast due to the El Niño effect. Mitigation: The Indian farm ecosystem is becoming more resilient to monsoons with each passing year. This is driven by increase in non-farm incomes (especially construction), government support for farmers, increased penetration of horticulture and improved farm mechanisation. Historically, our tractor business has shown stability during uneven monsoon years and the cycles tend to be less pronounced with each passing year. For FY27, strong rural cashflows, good reservoir levels, higher Minimum Support Prices and favourable credit availability for farmers, collectively provide a meaningful buffer against weather-related volatility. The farm business is also proficient at adjusting its production and costs to ensure it delivers consistent results through cycles. The rapid growth of some of its sub-segments like Powerol, which are less dependent on rural economy, gives the business further leverage in earnings. Capital Allocation Misallocation of capital across competing priorities may result in suboptimal results. Mitigation: Mahindra Group maintains robust capital allocation discipline ensuring resources are directed towards core, high-return opportunities for long-term value creation. Investment decisions are evaluated rigorously against a strong right to win, ability to execute and a meaningful potential to scale and achieve market-leading returns. All capital allocation decisions are evaluated at a board level through a sub-committee set up for this purpose called the Committee for Strategic Investments. In FY26, in line with the capital allocation framework, we acquired SML to strengthen our commercial vehicle presence. The other end of the spectrum were exits from structurally weak farm international businesses — Sampo in Finland, Erkunt Foundry in Turkey and agriculture machinery business in Japan. Capacity Constraints Rapid demand growth in SUVs and tractors may outpace production, straining existing manufacturing capacity if expansion is delayed. Mitigation: The auto business has laid out a structured capacity build‐out plan that includes debottlenecking existing plants during FY27, NU_IQ capacity to be operational in phases by FY28 and establishing a new greenfield facility in Nagpur. The farm business is also enhancing capacity. Once fully operational, the Nagpur facility will have an annual production capacity of over 5 lakh vehicles and 1 lakh tractors, making it Mahindra’s largest integrated manufacturing footprint in the country. A strong balance sheet ensures sufficient capital to fund these expansions and pursue disciplined cash deployment for capacity expansion.
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