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Operator: Good afternoon, everyone, and a very warm welcome to the Quarter 2 Analyst Meet of Mahindra & Mahindra Limited. For the main presentation today, we have with us our Group CEO and MD, Dr. Anish Shah; ED and CEO of Auto and Farm business, Mr. Rajesh Jejurikar; and our Group CFO, Mr. Amarjyoti Barua. Once the presentation concludes, we will start with the Q&A session. Just a reminder, this meeting is being recorded. For the purpose of completeness, I wish to read this out. Certain statements in this meeting with regard to our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. With that, I now hand over to Dr. Shah for opening remarks.
Anish Shah: Thank you, Divya. Good afternoon, everyone. Just before this at the press meet, I started by saying that I'm delighted to announce results for this quarter. And as many of you know me well through many, many quarters, I don't think you've heard the word delighted from me so far as yet. It's always been good, steady performance. We are doing well. We are on track. But this one is different, because we've seen all our businesses come together. And take in the challenges of the quarter, it wasn't an easy quarter overall. But despite that, I would give a lot of credit to our teams across businesses. And therefore, you also see a simplified version of a key messages page, because sometimes when the numbers say what they have to, you don't need to say much beyond that. And what you see is a strong performance across businesses with Farm profits up 54%, with Auto at 14%, but impacted by the GST transition, because a number of vehicles were not delivered from September 8 onwards, or rather delivery was postponed to October. And 14% generally is a very good number, but in the context of our overall numbers, we feel that it could be higher, and that's again because of the transition. Mahindra Finance delivers. We've been talking about Mahindra Finance for some time, and we'll give more details on that. But I look at this as sort of the end of Phase 1 in terms of what we had to deliver for Mahindra Finance and a very strong quarter with 45% operating profit growth. TechM, on track, profits up 35%. This does include exclusion of a one-off gain from land sale last year, and that is, therefore, an operating number of 35%. Growth Gems are accelerating. As you heard before, I typically don't talk much about profits for Growth Gems, because we are looking at investing in these businesses and growing them multiples and therefore, we will look at profits for a few years down the road, not today. But despite that, we've got a good outcome for Growth Gems right now. And on balance, consolidated profit is up 28%. Accounting for three one-offs, first is gain from land sale last year. Second is gain from PLI this year in this -- what was recorded in this quarter, but for prior quarters. And therefore, we've countered the prior quarters' part obviously as a one-off and are not taking that gain into account. And third is the tax payment on SML Isuzu transaction of about INR 217 crores. So, those are the three that we've taken out. And therefore, we want to show the operating profit numbers, which is up 28%. ROE annualized is up 19%. With my standard caveat, which is, please do not expect 19% going forward, it will always be in the range of 18% and could be slightly higher or below that. Consolidated numbers, revenue up 22% year-over-year. Year-to-date, up 22% as well. So, it's not just a quarter. It is performance for the year. Profit operating up 28% for the quarter, 29% year-to-date. And therefore, I want to go back to the reason for the word delighted is, this time we've got all our businesses really contributing in a very meaningful way. It's not just the numbers, it's the quality of the numbers behind all our businesses contributing that delivers that outcome. Drivers of consolidated PAT. Auto and Farm up 28%. Tractor volume, strong at 32%. Auto volumes, given the transition, a little lower at 13%. You'll see a steady margin expansion, completion of the SML acquisition. And that has driven again a very strong outcome for the Auto and Farm businesses. TechM and Mahindra Finance, both businesses that are on a track to meet peer averages and then over time, exceed peer averages. I think Mahindra Finance has completed that first phase, as I mentioned. And what you see here, again, is great results for both businesses. And Growth Gems, where we've got a 5x growth challenge, what you see is 22% increase, a one-off here, which is not a one-off we captured in our overall numbers. There was a onetime tax impact, which we've just basically shown for the Growth Gems only, and because our overall numbers are smaller. But real estate is strong. Aero has continued strong wins. The Airbus helicopter fuselage, that we will supply globally, is a big win for the Aero structures business and Accelo has continued growth momentum. Auto, a little more details on the Auto business. Revenue up 25%. As you've heard from us before, there will be a mismatch between revenue and profit growth for a few reasons, and Rajesh will cover that in more detail as well. SUV penetration from an electric standpoint is 8.7%, up 90 basis points sequentially quarter-on-quarter. And export momentum is strong. This is a growth vector for us, and we are seeing a 40% growth in exports. And hopefully, we continue to see that be a meaningful growth vector as we go forward. Market share, this is a remarkable number, up 390 basis points from a revenue standpoint year-over-year for the same quarter, literally 4 percentage points of market share gain. LCV market share, despite it being 50% plus, has increased as well by 100 basis points to 53.2%. And that has resulted in the profit numbers that we've talked about. Farm, just outstanding execution on the ground. Premium segment growth, albeit from a small base. Operational execution driving both profits and cash. You'll see the cash numbers a little later as -- presents them. And we've completed the sale of SAMPO in Finland. We continue to maintain that discipline. And what we've always said is where we need to exit a business, we will. And this is what we've done with SAMPO. And market share up 50 basis points. Farm revenue starting to deliver the potential that we've been talking about for some time, up 30%. INR 330 crores of revenue for the quarter is starting to move towards profitable -- is profitable now as well. And therefore, you see again the remarkable number of profit after tax growth of 54% for the Farm business. As you think about achieving full potential, Mahindra Finance is one where, I look at this as a breakout quarter. We've talked earlier about improving asset quality, about tighter controls and technology and data being a key part of the business. All of that is done. Asset quality is maintained steadily at less than 4.5% for GNPA. It's at less than 4%, in fact, for this quarter. Controls, a lot of work has been done, and the business has a much stronger set of controls now. We are looking to pivot to growth. Because we've got technology and data also largely in place with the UDAAN stack that we've talked about in the past going live and very strong adoption across our teams for UDAAN, which is effectively creating a whole new system architecture, a much better customer experience and a much easier process that will result in not just customer delight, but also lower costs as we go forward. And that digital transformation is done. We also see a NIM improvement this time of 47 basis points. AUM growth of 13%. This is despite not really focusing on growth for the last couple of years, but we will, as I said earlier, pivot to growth now. And that has overall resulted in a very strong number of operational performance, 45% profit after tax growth for this quarter. Tech Mahindra, on track. Gains in BFSI, Manufacturing and Retail in a tough industry. Accelerated our AI effort have launched Orion. Margin progression is on track, it has been outlined by us as well. And therefore, we feel good about where this business is and again, reflected in some ways in the operational PAT number of 35% growth. As you look at our scalable Growth Gems. Logistics, with Hemant coming in has seen just a remarkable improvement across various parameters from an operational standpoint. We will start seeing the benefits of that from a financial standpoint as well, but that will take a little bit of time, not too long. But we're starting to see some very, very strong execution. And we see the first quarter for a positive gross margin for the Express business, white space reduction, which is excess warehouse space that we had has been reduced quite significantly, not at the level where we want it as yet, but still more work to be done on that. E-commerce segment growth, revenue is up 11%. EBITDA is up 70 basis points at 5% and putting the business on a very solid turnaround track that we'll start seeing more results for. Hospitality, occupancy hurt by some of the weather-related issues in this quarter. And that's been offset by average unit realization being much higher at 85%. We're starting to focus a lot more on quality and on the average unit realization as compared to just number of members. So, number of members, you will see 1% growth, but this is a key area for us. Some geopolitical headwinds for our Holiday Club business in Finland, but it's a business that's still profitable, a good asset overall, but it's one that we feel can do a lot more as we think about holidays going to the next level. Room inventory of 5% and on balance, what you'll see here is a good, strong business that delivers very well for its customers, has a potential to grow to a lot more. And we will come back with details on how we do that in not so distant future. Real estate on a very strong trajectory. You saw GDV last year being extremely strong. That trend continues this year as well. Last year, if you remember, we had the 37-acre land in Bhandup as part of our GDV and resulting in maybe somewhere around INR 18,000 crores. I don't have the exact number, but somewhere in that range. And this year is also on a very, very strong track. So, you're seeing this business be one that has broken out again the plan for GDV growth for -- of a presales growth rather, which is a key metric from a real estate standpoint for this decade is 14x, from what we had in fiscal '20 to what we planned for in fiscal '30. And the business is still looking at how do we grow faster than that. And that's really what we've seen here. The GDV that's required for the presales growth over the next 5 years is largely in place as well, which gives us confidence that the delivery is more based on execution now, not based on external market factors. And that's what you see in the launch pipeline. In addition to that, good realization from the IC business. So, residential presales up 89%. GDV acquired up 3x, still coming from a fairly good year last year. And that brings me to the slide that you've been very used to seeing. Consistent delivery on our commitments. ROE continues to be in the range of 18%. This quarter, it's 19.4% and EPS from the time we had committed 15% to 20% EPS growth, we've delivered a 35% EPS growth. So, all-in-all, very strong execution across businesses for us, and that's where the word delight comes from. And with that, Rajesh, over to you.
Rajesh Kajuria: Hi, everyone. Thanks, Anish. Just a quick look. You've seen a lot of this. I'm just going to zip through quickly. The volumes were up 32% for the quarter. Of course, we had the preponement of the Navratras. So, it's not completely like-to-like, but still a very robust growth and gain in market share of 50 basis points. The trend continues to be a strong trend with 44% market share in the first half of this year. 70 lakh tractors rolled out between the two brands, of course, over decades, but 45 lakhs for the Mahindra brand and 25 lakhs for the Swaraj brand. Both milestones got achieved between September and August this year. Farm Machinery business saw a very good quarter, INR 330 crores. Every month clocked INR 100 crores plus. So, it was a very, very strong quarter performance. And we are seeing good momentum now kicking in into the Farm Machinery business. The farm margins were very strong. Core PBIT for -- core tractor PBIT was upward of 20% to 20.6%, which is a very strong performance and something which makes us feel good about -- normally, quarter 2 is not a very strong profit quarter. It's quarter 1 and quarter 3. So, 20.6% in quarter 2 is a very strong margin performance. This is the chart we normally show you with respect to market growth, how we are able to keep a band of margin. And we've seen now consistently last three quarters of 20% plus core tractor margin. The PBIT growth has been 44%. This is consolidated with a INR 1,600 crores profit. On the Auto side, 7% growth, as Anish mentioned, impacted by complex logistic issues starting right from 15th August and then the GST announcement on 4th September, after which we completely stopped all ICE products. So, we then had a huge bundling towards the end. But as you saw, the October numbers kind of made up for the loss in September billing numbers. Very positive trend that we are beginning to see on LCVs finally. Quarter 2 saw 13% growth for us, and we gained some market share. So, as you'll see, when we come to the LCV chart, after many quarters of flattish volume, we're finally seeing growth in the segment. The volume dip in quarter 2 is a reflection of the transition of GST and the billing. So -- but overall, depending on whichever cut you look at it, we are in the mid- to high teens. So, if you look at April to September, April to October, only festival days, retail, we are in the mid- to high teens irrespective of the cut by way of how our SUV growth has happened. Revenue market share still continues to be #1, come down marginally from the previous quarter, because of the reasons that we spoke, but otherwise, a strong performance. We introduced the two new Boleros. They got delayed a little bit because of liquidation of the older versions as GST transition was happening. But the response has been very, very strong. All versions are priced below INR 10 lakhs, which is a great opportunity to create category. And with the changes that we've made, we ourselves are pleasantly surprised with the kind of response that the market has brought forth for both of these changes and both the new versions that are out there. The Thar 3-door with the ROXX interiors coming in, some minor exterior changes, also has got a very good response. And the benefits of all of these, because both of these were mid-cycle, in the middle of festival transitions, we will see the benefits of that as we move into the next quarters. We sold 30,000 electric SUVs totally cumulative till date. Very good feedback from customers, very good word of mouth, very good analytics that we now have on the kind of usage, how much of it is more than 1,000 kilometers per month usage, 20 days more per month, so on and so forth. We will put out this analytics. We were thinking of whether we should do it today, but then we said we'll reserve that for 26th November, which is the first anniversary. And we will put out a more comprehensive customer understanding with numbers. Because, these are all connected vehicles, and we have some really good analytics on how the vehicle is being used and profile of people and percentage of customers who've run so many kilometers per day, so many times in their ownership cycle. So, there's some really good analytics. We'll put that out in a comprehensive release on the 26th of November. The Batman edition has been a huge revelation and a huge learning for us. It just shows us what -- it actually came out of customers who -- when they started seeing the Black BE 6, started calling it the Batmobile. That's what gave us the idea to do the Batman edition. And then, we tied up with it. We announced it at 300. We saw the demand is going to be way more. So, we increased that to 999, which got sold in no time. So, we're in the process of completing the deliveries. And it's -- we'll talk more as we go forward, but we've learned a lot out of how to use special editions out of the Batman experience. The penetration in our portfolio is now 8.7%, which we think is a very good number at this stage of the launch with the two products that are out. This should strengthen further as we introduce and add more products into the portfolio. In the first half, we've been at revenue #1. In quarter 2, we were #2. We had a competitor who had a new product in. And you can see that there's a small gap, but we were in the quarter marginally below #1. This is the point I was making on LCV. You see a reasonably large period of time, which was flattish. And then, we've seen 69,600 volume in one quarter as a very positive turn in the segment. The auto margins are -- this is a stand-alone without contract manufacturing. The next chart will explain this as a format we put out. So, 10.3% is, we believe, a very strong performance. This is how it breaks up. So, what you see as reported is 9.2%, which is 10.3%, which is a stand-alone business. Contract manufacturing, we make INR 10 crores on the INR 2,900 crores. So, that drops it to 0.3%. And the weighted of that is 9.2%. So, we will continue to show it like this, so that you are able to see the operating auto performance without the contract manufacturing getting merged into that. We'd also said that you will see the end-to-end of the electric performance. And hence, you see Mahindra Electric as a company, which had an EBITDA of INR 173 crores in the quarter. This only reckons the PLI for that quarter. As Anish mentioned, the PLI that we got for quarter 4 of last year and quarter 1 of this year is treated as exceptional. So, this is only the quarter 2 PLI accrued, which takes the EBITDA to INR 173 crores. And we earned INR 29 crores as contract manufacturing. So, the end-to-end of that is INR 173 crores plus INR 29 crores, which is the INR 202 crores that you see up. Last Mile Mobility had a very good quarter, 42.3% market share. And as you can see, a very strong electric volume of 32,000. The Auto consolidated, you've seen this. Revenue grew 25%, PBIT grew 14%. Coming to the event on 26, 27th, so this is my closing couple of videos. We see a huge opportunity to build on the equity we have around racing. India has become much more conscious of racing. Two things that changed. One is the Netflix show on Formula racing. The second is the movie F1. Both of these have heightened awareness around racing. We had a really good season last year. We were #4 ahead of many strong pedigree brands. So, we do want to leverage this as we start the new racing season in December in Sao Paulo. So, we have a video which we've been running over the last couple of weeks, leading into the 26th event, where we will reveal some of the new livery and the prep going into the December races. So, the first video is really about that. This is on air for the last few days. [Presentation]
Rajesh Kajuria: So, this is one part of what's going to happen on 26th November in Bangalore. We've also started teasing the 9S, as we're now calling it. So, the first teaser was out yesterday, which I'll play for you now. [Presentation]
Rajesh Kajuria: And the second teaser is just getting out as we speak. [Presentation]
Rajesh Kajuria: So, thank you. With that, I'll hand over to Amar. We're excited about 26, 27 November.
Amarjyoti Barua: Thank you, Rajesh. So, you've seen this chart, but I just -- after the media interaction, I got a few questions. So, I just want to reiterate a few things about how we call out one-offs. We don't call out something we hadn't called out last year when we are doing a comparison to last year. If you look at our charts for last year, we had the INR 304 crores gain for land sales called out last year, because it was truly a one-off event and is not likely to repeat. And so, the intent of showing that again this year is to make sure you have an operational baseline to compare to. Similarly, if you see, even though there was a big PLI gain in the current year, it was offset by the tax -- one-time tax we paid on SML, which is why that is -- the net impact of that is the INR 14 crores that's called out. You will see exactly these numbers reflected next year when you see that. So, we are very consistent in this. I just want to reiterate that, because I got a lot of questions on it after the media interview. And even the criteria for calling out something as a one-off, it is not a sub INR 100 crores or even sub INR 200 crores, we would typically take something which is above INR 200 crores as even for consideration in our one-offs, okay? So, I just wanted to clarify that. This chart gives you the picture that Anish showed on one page. So, I just wanted to reiterate again the key messages there. You see the Auto growth, you see the phenomenal Farm growth. Even in Services, you can see the TechM and Mahindra Finance. And as he called out on his chart on Growth Gems, that Growth Gems and investment line item does include a onetime charge we took for Mahindra Holidays. Details of which you can see from their reports. It is a -- truly a one-time, and it is a tax catch-up that we had to do. And we have proactively done that in line with our very strong governance standards, okay? And you can see that reflected here the big contribution from Farm, but also very meaningful contribution from Auto and the Services franchise. Stand-alone results, exactly same principle. You'll see the INR 201 crores out of the INR 304 crores, INR 201 crores was land sale of what we used to call K land, which is what was reflected last year as well. So, we've called that out. And the INR 219 crores is the tax we had on the SML transaction, that is also called out. As I mentioned, again, it's one-off. So, 23% year-to-date growth in revenue, 31% year-to-date growth in profitability, excluding those two one-offs that we have called out, okay? So, clearly, very, very strong performance. This is a chart that most proud of. Because, I think this reflects a lot of effort from the teams. Because you've got to keep both in sync. You've got good profitability, but if you don't have good receivable management, payables, et cetera, you could get out of sync. And this is something which reflects the strength of the results you have seen in the first half. You can see we started the year at INR 27,000 crores. We have spent close to INR 2,500 crores on CapEx. We have done the right -- three rights issues that you're well familiar with. We've done the SML transaction, and we paid out dividends, yet the total cash balance has increased in the first half. So, it reflects very, very strong operational results of -- across the group, but a special call out also for the Auto and Farm team for what they have done on working capital management through, as Anish mentioned, some very trying circumstances that we have seen at least in the second quarter. Okay? So, I'll wrap up with that, and we'll take questions from here.
Operator: Okay. We can start with the Q&A. We'll take the first question from Kapil of Nomura.
Kapil Singh: Yes. Thank,s, Divya. Congratulations team, I think it was a really tough quarter. So, solid performance. My first question is on the GST cuts, if you could just share your thoughts on what is the impact across your portfolio. So, on the Automotive side, we have the 40% GST bracket and the 18% GST bracket. What are your thoughts on how the consumers are reacting? Because some of your peers have said that the industry growth may be around 6% going ahead with 10% growth in small cars and not so much effectively growth coming from SUVs. And then, some -- maybe you can share some thoughts on LCVs and Tractors also, if you feel with the GST cut there will be some impact on demand there as well. So, I'll leave it open for you to share the details across the portfolio.
Anish Shah: So, just a couple start with an overall view and then go to your question specifically, and we'll request Rajesh to answer that. Overall, I think this is a very, very good move by the government. Because for the longer term, it simplifies things as well as reduces GST. And there will be, in our view, fairly strong multiyear benefits from this move. In the shorter term, what we are seeing is the fact that the strong fundamentals of the economy were waiting for some stimulus to be able to translate that into optimism from an overall feeling standpoint, which is important as well. And we're seeing that happen right now. So, that's a shorter-term impact. And for this, I talk about across the economy, I'm not talking about Auto and Farm in particular. We operate in, as you know, in 70% of India's GDP. And we're seeing that across businesses right now as a very positive thing. So therefore, for both of those aspects, we think it's a very good step forward. Yes, little bit of pain in the short run, as we talked about, but that's fine. We'll take that any time for the benefits that we are seeing here. And with that, I'll request Rajesh to specifically answer your question.
Rajesh Kajuria: Yes. So, I'll -- Kapil, I'd like to walk through all the three segments, because it's important to understand each. So, in a way Tractors and LCV, I'm first taking as one bucket. Over the last 5 years, customers have seen unprecedented price increases. At least I have been -- if you go back many years, not seen this kind of a price increase in such a short period of time, huge commodity increases that happened starting 2020, more like 2021, regulation change that kicked in, especially with BS6 and then BS6.2 and multiple other regulatory costs that got added. So, customers have seen more than 25%, 30% cost increases. This was having, especially in the LCV segment, a major drag on ability to grow. Because the fleet owner or the vehicle owner was not able to pass on that on a freight cost charge to customer. So, it was creating a drag. So, I think this was much needed to as a fillip to boost demand. And it's not a small -- I mean, I don't think any OEM could have taken a 10%, 12% price correction. It was just way too much for anyone to do to, kind of, trigger upside in demand. So, as Anish said, I think this is a very significant move from overall approach to boosting growth in the economy. So, I think LCVs will -- and we've already seen that through the festival period, but we'll see a lot of the latent demand over many quarters, which didn't kick in, probably start to kick in. That is accompanied with positive mandi arrivals and many other things. But we've been talking about mandi arrivals for a while, but I think both these needed to have come together and that's happening now. So, that's a positive enabler. On the Tractor side, again, the same thing. It is very, very high cost increases on the Tractor commodity and other things. So, it's quite a substantial reduction again for the farmer. So, it is that along with the mood right now in rural, many enabling factors. So, both of these are clear category enabler. In both these segments, these are clear category enabler in place for the GST. Coming to passenger vehicles, which is everyone has their point of view on how this story will play out. Whichever way it plays out, it's going to play out for good. Now whether some subsegment gains more or less, time will tell. Every customer set is looking for something in particular to their life when they're making a purchase decision. So, when we think of what you were calling the 40% slab, so if you think of vehicles at the 40% slab, they actually start from interestingly from even as low as INR 10 lakhs. In fact, we had done an analytics of volumes that happen in different GST slabs earlier, connected to size and price. And you'll find in the 40% of -- earlier 48% slab. Vehicles as low as INR 7 lakhs is going up all the way to INR 50 lakhs or INR 60 lakhs or more. So, now for a customer who is in the INR 12 lakhs, INR 15 lakhs, INR 17 lakhs bracket, they're still paying 40% GST and they're at a certain budget. Now, they are able to move up the ladder of feature offering for the budget they already had. So, they are not first-time buyers who are going to come into the category or not based on a certain price. But what they choose to buy, they will -- they can upgrade based on a certain price. So, there may be customers who were till now not thinking about buying, let's say, a bigger SUV. But today can, because we've enabled it. And I just spoke about an example of, let's say, Bolero or Bolero Neo. If that product was INR 1.5 lakhs, INR 2 lakhs more, it may have excluded some set of customers. But today, when they've gone below INR 10 lakh, and hence, we are also able to get the on-road benefit, because, as you all know, most states have a differential road tax above INR 10 lakhs, you start getting the multiplier effect on on-road price. This, along with reducing interest rates, creates a compelling package for those who are in the mid end of the market to upgrade either from what they were buying earlier. And as some of our peers referring to that comment would say for those who are not thinking of buying a car earlier and are now thinking of buying a car. Right? So, you have a spectrum of buyers who are going to be reacting differently. For some people, it's a question of should I buy a car or not. And the size of the overall passenger vehicle market goes up, because more people have come in, over a period of time, they're going to upgrade. And while we may not get that customer into our portfolio today, they will be our customers for the future. So, I think at the end of the day, I'm sorry, I'm giving you a very long answer to your short question, but I think this is going to be good for everybody.
Kapil Singh: No, that was the intent. Actually, I wanted a more detailed answer. But can you cover EVs also within that answer? Is there an impact because the differential has changed?
Rajesh Kajuria: So far, we are not seeing that. I still think the EV propositions. Firstly, most of our EVs are in the big size and hence, play against the big SUVs, right? So, the gap still is 5 to 40. We were not in the 5 to 28 category. We were in the 5 to 48 category. So yes, the gap has come down, but 5 to 40 is still a very substantial gap.
Amarjyoti Barua: Sure. And can I just add one thing, which is a fringe benefit of this is the simplification on the working capital side for the Farm business is pretty significant. I don't know whether that was as obvious earlier. That is a business which used to have a 12, 18, 28 kind of structure, right? And now it's far simpler for the team to manage and working capital will be better managed as a result and should free up some as well. It's a big benefit.
Kapil Singh: Yes. Sir, second question is on the CAFE norms. We saw some changes in the draft, particularly, I was a bit surprised to see lower credits for EVs than what was originally being proposed. Where are you placed on this? What is the EV penetration required now? Is this draft final? Do you need hybrids in your portfolio as well as you move forward? And also, if you can share some color on festive bookings since your portfolio is under transition, probably if you can share some numbers there would be helpful.
Anish Shah: I'll just start again by saying that we don't believe the draft is final. There are a number of inputs that have been sent after that across the industry and SIAM also has sent or is sending a set of inputs on that. And our sense is the government will look at all of those before finalizing it.
Rajesh Kajuria: So the fundamental word draft means it's not final, and we treat it as such. So, we -- there is a process of dialogue and discussion, which is on, which was the purpose of the draft. And that process is right now under discussion. In either case, as we've said, we will be ready to do what we need to do manage customer expectations and part of that is managing CAFE norms. I think the journey on CAFE is a while away. We feel comfortable that with what is likely to be an outcome, not necessarily the current draft and its process, we will be able to have enough EV in our portfolio along with any other fuel types that are needed to be able to meet the CAFE norm. So, that's the direction towards which we are working. But the draft is far from final.
Kapil Singh: And sir, on the festive?
Rajesh Kajuria: On the festive, I, in a way indicated that, Kapil, while I was presenting. So, there are multiple ways to cut it and everybody is cutting it in the data in different ways. There isn't any one simple way to look at it. So actually, we have eight cuts of whichever way you want to look at it. The reason I'm saying that is, this time, the first 7 days of Navratri were way better, because the period before Navratri, customers were not really buying at all. Compared to normally, pre-Navratri, you had Shraddh, but South was buying, who were not so much into the Shraddh mindset. Right? So, it's just very hard to compare anything. So, we're just looking at basically April to October as a period or quarter 2 as a period or we've also looked at only September, October. So, whichever way we look at it, we are mid- to high teens on our retails as a number. So, we are in line with what we've been thinking should be the offtake. I'm not getting into first day of Navratri to last day of Diwali, because this time demand has spilled over beyond last day of Diwali as well as we've all seen, when you look at Vahan. So, I don't think there's any one right way to cut it, and we've cut it multiple ways, but we feel overall comfortable. Given the limitations that were there of having the right product mix, because of dispatch delays and all of that. So given all of that, I think we feel comfortable about the way demand works. Not specifically reacting to bookings right now, because actually booking numbers are very, very healthy. Now it's just hard to say what of that is going to convert and we've decided not to get into sharing bookings. But booking momentum has been much stronger than retail momentum.
Operator: Nitin, please proceed.
Nitin Arora: Just on this consumer behavior, what you talked about, people might want to upgrade, because it's not like income is increasing. It's like the price is reducing part. How do you see that mix of -- because 1.5-liter diesel becomes very attractive, especially for the mid-SUVs versus a petrol when we look at the price bracket? And some of your competitors, especially Koreans are talking about a lot of bookings coming in the diesel in the midsize, and we have that very strong product there. So any transition, any consumer behavior you have seen a change where you see because the product is very well accepted, some market share gain can happen there, how consumer is behaving to that part, diesel versus petrol, especially in that particular segment? And second question to Anish, sir, I think as an investor, I -- 2023, I asked you a lot of questions about RBL.
Anish Shah: We should have placed bets as to how soon that RBL question is going to come in.
Nitin Arora: Finally, it's a very big strategy investor is there. How are you thinking about now? You already owns, I think, 60% of the bank. So just any input from your side? How you're now you're thinking about that part? So, those are the two questions.
Anish Shah: So I'll start with that as a shorter answer, because as we said earlier, one of the key reasons was a treasury investment as well. We saw significant value there. And that has played out. So, if we just see the gains, it's probably more than 50%. I don't know the exact number. But for us, it is in a sense, a validation of what we had seen. And it's one that we will continue to look at as the treasury investment, make decisions on that basis from a treasury standpoint. In the previous session, with the press, I was joking and saying, someone should just do an analysis of how much timeshare this gets versus the really impact on M&M. And you'll see a huge inverse correlation from that standpoint, because everyone loves this question. So, that -- it's a good one to ask. Rajesh?
Rajesh Kajuria: Your question is primarily around diesel, petrol?
Nitin Arora: Diesel and petrol. [indiscernible]
Rajesh Kajuria: Yes. So I'll just quickly walk through different parts of our portfolio. So, 3XO is primarily a petrol offering now more than 75%, 80% is petrol. We're not seeing -- at this point, at least, I have no input that there is a shift there towards diesel. There is a lot of shift there by way of which version becomes attractive, because as prices come down, a different version becomes attractive than what was so before the price change. So, in 3XO at least, I have not so far picked up that there's more diesel demand, because of a price drop. Though it's an interesting input, and we'll watch it on 3XO, but at least, so far, I don't have that input. On the rest of our portfolio, diesel is in the region of 70% to 75%. 25%, 30% is the gasoline. It varies from product to product. Diesel can be a compelling proposition now, because of the price drop and that puts us at a competitive advantage, clearly. So, in following up on Kapil's earlier question, different people are going to get different things out of the GST rate cut. I was earlier focusing on the ability to upgrade vertically, but an interesting perspective could be gasoline diesel as well, which will give us a competitive strength. But it's something, honestly, we'll not -- at least, we've not picked up yet, and it's some -- and thanks for sharing that. We'll watch for that more carefully.
Operator: Raghu, please go ahead.
Raghunandhan N. L.: Congrats on the results. Sir, firstly, on the LCV side, festive season, at least Vahan shows a very strong double-digit growth. And how do you see the full year outlook? And within LCD, for your customer set, would there be a sense on for how much of the customers would the GST be a pass-through and for how many of them would the GST reduction will actually be a benefit when they are purchasing the product?
Rajesh Kajuria: Just to be clear on the second part of the question, you're talking about where they are able to get a GST set off, which is a company buying, right? That's the point. Yes. So, the second one is, let me just try and get that out of the way. For pickups, we have very reasonably large market operation buying, which are individuals are not buying in companies or small aggregators of three, four, five vehicles, who I don't think will be getting the GST tradeoff. Nal, do you want to -- you have a different take. 60% are market MLOs or whatever. So, it's a fairly large chunk, which retains the benefit. On the first question, everyone will have a different view on it. I'm sticking my neck out and saying that it's -- I think we'll -- the outlook will be a double-digit growth for the year. I think, if this momentum continues, which means not just the price impact, but there isn't too much of destruction because the late -- in crops, because of the late rains and mandi arrivals continue to be good and robust. So, the rest of the economic parameters play out the way they have played out in the last 2, 3 months, along with the rate cut. I think we'll end up the year at double digit, but some may argue that it will be high single digits. But at least, I would stick my neck out to say that, I would expect to see low double-digit growth for the category.
Raghunandhan N. L.: And also on the Tractor side, now you are seeing a low double-digit growth for the full year. So, how are you seeing the mix between North and other regions, because other regions seem to be growing at a much faster pace. And also recently, there are some concerns in terms of like on the rain side, unseasonal rain side, cyclone side, anything we should read into it? So, that was the part.
Rajesh Kajuria: Yes. So Maharashtra, Karnataka, in particular, have seen really strong growth this year. UP is -- UP and Rajasthan has not been all that bad, they are high single digits. So, there have been, I think, from what I remember, the 8%, 9% range. So in a way, from a market share weighting point of view, that's -- weighing point of view, that's good for, that's positive for us. These are very strong markets for both Mahindra and Swaraj, Maharashtra, Karnataka, Telangana, Andhra and so on. So, now whether this will continue, I think my sense it will continue, because some of these states were on a very low base. And including for the second half of this year. So, I would expect that this mix is not changing too much for the balance part of the year. The effect of rains, we are trying to assess. I have actually struggled to see in the past a correlation between significant off seasonal range. So often, we get this happening also in Feb, March. It's not very directly correlated to Tractor sales, it's kind of my intuitive judgment on this. But in this particular case, we need to wait and watch and see what's happening and how much damage -- the fact that there has been damage at this stage is uncommon. Normally, you get a little bit more of that in the Feb, March period, when you get the early rains and you get damage, which I have not seen too much of impact of that. Hopefully, this is not going to have too much. We are not factoring in a slowdown because of the delayed rain, which has just happened.
Raghunandhan N. L.: I mean, it's delightful result. Just two, three concerns, I wanted your thoughts on that. One is that Nexperia, would it have an impact on production in Q3 or Q4. Second, on the SES refund. And third, commodity prices, precious metal has been going up.
Rajesh Kajuria: Second was?
Raghunandhan N. L.: SESZ refund.
Rajesh Kajuria: Dealer SES?
Raghunandhan N. L.: Dealer SES.
Rajesh Kajuria: Yes. So, on the first one, we have a reasonably high confidence that quarter 3 is under -- fairly covered. We believe that the situation will ease out by quarter 4. If not, I'm sure you've been tracking Nexperia closely. It's a very low-value commodity kind of chip, so roughly $0.20. So, it's not hard to substitute. It's not like the semiconductor issue that was there through COVID, which were all very specialized and very hard to replace and needed extensive validation. These are more commodity-type chips. So, it's a question of finding substitutes, which -- for which we need a few weeks. We have, over the last 3, 4 weeks, already solved for many, many existing parts, which now gives us comfort that by and large this quarter is covered. Hopefully, by the time we come towards the end of November, we would have covered, with options, most of our portfolio. There is -- there are multiple stakeholders hoping to resolve this issue. It has impacted Europe OEMs quite significantly, and there's a lot of work happening between a couple of countries in Europe with China to unlock this problem. So, I don't think, as of now, we do treat it as an extreme risk and hence, extreme caution by way of mitigation. So, I hopefully, this should not be an issue. But that being said, we have to be very watchful. On the SES issue, we're just treating it right now as an issue dealers have to solve for it, sub-judice, as you all know, the FARDA has gone to the government. I mean, gone to the Supreme Court, arguing for why it can't be unilaterally discontinue. There is a valid -- they believe they have a valid case and we'll see how that plays out in court. Our view will be to wait and watch that out. In any case, it's a it's a dealer liability in the books of the dealer. Whatever we had to take by way of cost that we've incurred related to SES, we've built it in quarter 2. So, we are not carrying anything in our books over. But of course, this is a dealer point of view. Can you repeat the third question?
Raghunandhan N. L.: On Material inflation, on precious metals.
Rajesh Kajuria: So, precious metals had gone up. It started easing off a little bit as we all know, over the last week or 10 days. That's something that we need to watch for. Each of these are volatilities that come out of nowhere. So, we'll watch for that, is all I can say. I mean, this is all part of managing life today. You don't know what's coming at you from where.
Anish Shah: Just if you don't mind me adding something on that. I just want you to although feel good that the team does have a very strong focus on this and we do hedge everything. So, there was a good anticipation by the strategic sourcing team. The precious metals will see some pressure. We have taken a hedge position from January to now, on average, three precious metals have gone up between 60% to 80%. So you're absolutely right. But we are not as exposed to this phase, because we have taken hedges. We've taken the offsetting gains for the expense that we have seen. But if, of course, the trend continues, then the hedging costs will go up and that will impact.
Operator: I'll now just take a few questions online. This is from Arvind Sharma of Citi. Amar, the question is, where would PLI reflect in the stand-alone numbers? And what is the broad amount? Also, how much of it accrues to XEV 9 and BE 6?
Amarjyoti Barua: So PLI actually doesn't come up in the stand-alone results because it goes into MEAL books. It is reflected as a revenue item. And the total amount for the quarter was around INR 460 crores, of which INR 150 crores pertain to INR 463 crores exactly, INR 150 crores pertains to -- INR 151 crores pertains to the quarter, and INR 312 crores pertains to prior period. That's what we have called out effectively. The tax impact of -- tax affected amount of that is what we have called out in our results. And it all is for the 9e, it's -- the 6 has not yet qualified for PLI.
Operator: Okay. Next question, this is Pramod of UBS. Rajesh sir, there are three questions. Can you please share a full year guidance for SUV, LCV and Tractors? Second question, PLI by which year do you expect PLI incentives to fade for the EVs? And the third question, can you share any EV booking trend post the GST cut on the ICE vehicles?
Rajesh Kajuria: Just to clarify the last question, EV booking trends or ICE?
Operator: EV. Because GST has been cut on ICE vehicles, so has it impacted the EV booking?
Rajesh Kajuria: Yes. So, on SUV for us, Pramod, we stay with mid- to high teens, which was what we said at the beginning of the year. We're not changing that. We believe mid-to-high itself was an aggressive outlook that we had put out, and we stay with that number. For LCV, we think it will be -- I just answered that, in a way to say, we think it will be low double digits for the full year. For Tractors, we had said in the region of 5% to 7%, I think at the beginning of the year, which we are now seeing as low double digits. So, we are upping the Tractor industry outlook from 6% to -- 5% to 7% to maybe like 10% to 12% kind of thing, so low double digits. PLI, it goes on till F '28. And we expect that will continue till then, if not longer, but hopefully, it should continue till then. The claims against PLI there's enough funds left. So, it should comfortably last us till '28.
Operator: And there was one on impact on EVs.
Rajesh Kajuria: Yes, the EV, it's too early to say right now, Pramod. But as you can see, even through the festival period, the overall EV segment has continued to grow rapidly with the new products coming in from competitors, the segment has continued to remain strong. And we believe that will continue, because as I mentioned, especially in the segment in which we play and some of the new products have come in, the gap between 5 and 40 is still very substantial. Of course, it has come down from 5 to 48 to 5 to 40. But 5 to 40 is still a very large gap, and we don't see that deteriorating. There have been one-off issues in Haryana, we are waiting for the EV policy to get affected, which affects the NCR region, because you have Gurgaon as part of that. So there has been an uncertainty on that. UP went through a few days of old policy to new policy. So some of the state level, things are also kind of getting clarified, which also makes a difference to on-road price. So, it's not just the GST. It's you to see it as a combination. So, the new UP policy, the benefit is only on EV and not on hybrid, which was there earlier from what came in, in October. So overall, too early to say if there is an effect, but we don't see that really having an effect on EV demand.
Operator: Anish, there's a question, it stays you had expressed strong confidence that India will achieve 8% to 10% annual GDP growth. Can you please elaborate on impact of the revised GST and other government incentives and initiatives on the M&M businesses other than Auto and Farm?
Anish Shah: So, not revising my 8% to 10% estimate. As I said earlier, the foundation is strong. The sentiment change with this is what we are seeing play out. And that's why we felt that the economy will grow at 8% to 10% for the next few years. M&M results as you've seen a fairly strong in this current quarter. And I can't say much for future quarters, but we will promise to deliver what is in our control and deal with things that are outside our control the best we can.
Operator: There's another question there that, any further right issue capital investment planned in any of the listed or other subsidiaries in the near future?
Anish Shah: There are no rights issues planned in the near future. Capital investments will be made in all businesses as we need them as part of our growth plans.
Operator: Next question, this is from Chandra of Goldman. The first question there is BEV's PAC1 and PAC2. Can you please discuss how PAC1 and PAC2 mix is progressing after deliveries have commenced earlier this year? Can you also share some color on the drivers that can help raise our BEV mix towards the targeted range of CAFE 3 vis-a-vis the 8% to 10% BEV mix today?
Rajesh Kajuria: PAC1 continues to be sub 10%, which is what we would desire by way of delivery. PAC2, we wanted PAC2 to be a significant PAC, because it creates the right price point, which is why we had introduced a PAC2 79, which is doing well. Right now, PAC2s are roughly 35%, 40% of each of the products. So PAC1 is sub-10%, then 35%, 40% and 50% to 60% is PAC3. Broadly that's the mix on -- to meet CAFE 3 percentage, it's going to depend on multiple things once we see the final policy get play out, whether it's going to be MIDC, WLTC cycle, whether tail pipe emissions on the WLTP cycle will be treated as zero or not. So, the percentages vary a lot. But we have new products coming in. So, the 8-odd percent penetration that has been achieved has been within 5 to 6 months of launch of being in the market with only two of our products, and there's a portfolio of products that will come. So, when we are talking about CAFE 3, we are talking about roughly 2 years away. So, we have a substantial time to get to whatever is the needed percentage from where we are today.
Operator: There's another question, which says, we saw a decline in the monthly numbers for SML, last month, and a strong bounce back for the month of October. Were there any production bottlenecks or any process refinements? What was the reason for the decline in the month of September?
Rajesh Kajuria: I think some of it was the transition issues around GST and getting the vehicles out, but nothing more to be read into that. Of course, the SML does very well when school bus season kicks in. So, we do see a big increase in market share in the quarters or months where school bus buying happens. They are very strong as we know, in the bus segment.
Operator: Okay. This is from Gunjan at BofA. Some of these are taken. So, I'll take the ones which are not there. One, it's Tractors, solid momentum. Can you give more color on underlying trends supporting this euphoria, sustainability of this, an update on TREM 5 regulations. And the second question, how should we see the margin for MEAL trending ahead?
Rajesh Kajuria: So TREM 5, Gunjan, firstly, TMA is aligned has had meetings with the Agri Ministry. TMA has also met more to kind of put reality of implications or moving to a very high level of technology from a serviceability in the marketplace. So everyone understands that implementing TREM 5 in a country like ours where you -- farmers have to have service capability or very high-end technology may not be practical. So, there is an understanding that we need the right solution for rural India, so that serviceability for farmers is not constrained. Right now, there's a dialoguing on, which is the TMA proposal to move the 25 to 50-horsepower from 2026 to 2028. That's the TMA proposal. And for the less than 25 horsepower, the date was April '26. Again, there's a conversation on to postpone that as well. Both of these are under consideration. In the less than 25-horsepower the unit cost is not that high and the technology needed is also not that hard to service. But there is a conversation on between Tractor Manufacturers Association and the rest of the stakeholders on what the implications of transitioning to TREM 5 are. On what you're calling euphoria, it has been a strong festive season for Tractors across the board. GST is, of course, one factor, but many underlying factors were building up. We've been saying over the last few quarters that the rural economy has been on a path to strong recovery. The rains have helped, reservoir levels have improved. The government spending, which is a key indicator of Tractor buying, as we've shared in the past, has been strong. Farmer terms of trade have not deteriorated. Export of crops from India have grown, which adds to cash flow to farmers. So, multiple on-ground factors have favored Tractor buying. And the GST has really enabled that process of buying. So, I think part of your question was how sustainable is that. It's really hard to give an outlook for next year, but we just stay with our outlook for this year moving up from 5% to 7% industry growth to 10% to 12% industry growth.
Operator: There was another question on margin for MEAL.
Rajesh Kajuria: Margin for MEAL, yes. So, margin for MEAL is going to be a series of things that kick in, which is what is the right PAC mix and pricing to enable growth in the segment. We are at that stage where we are into category creation. So, we do want to make sure that we don't lose the overall objective of driving electric vehicle penetration by way of not doing the right things that are needed to make that happen. We do have BE 6, which will, hopefully, by April 2026 meet PLI as well. So multiple localization actions are in place, which will all get executed in a way by which hopefully by quarter 1 of next year, BE 6 will also meet PLI. So that will be one positive enabler. And there is, -- some of the localization benefits also flow through to current portfolio products that are there, which is the 9e as well. So, multiple actions. But we just want to say that the -- a few quarters back, we said we will -- we have a path by which we want to go. And I think just a positive EBITDA was a very good surprise for all of you. Now we are seeing a healthy EBITDA. And we don't want to lose sight of the fact that we want to create this category and have to play a role in driving volumes in this category because that is what will fundamentally ensure long-term returns and long-term margins. So, we don't want to trade off the ability to grow for driving short-term margins. That does not mean we are not taking all actions to keep costs under control, but we do want to make sure that we are driving the adoption of the category in the most appropriate way.
Operator: This is a question from BII. This is Adithya Banoth. Do you see any details on first buyer penetration for the 4-wheeler EVs? Any trends that you have noticed?
Rajesh Kajuria: Sorry, I didn't understand.
Operator: He's saying, details of first buyer.
Rajesh Kajuria: First buyer. Okay. When we say first buyer, is that -- do you mean first-time vehicle buyer? No, very, very few. What we do see is a very substantial portion of non-Mahindra, almost 85% of our BEV buyers have not owned Mahindra earlier. So, it's a completely new target group that we're getting in. Fairly large number of multiple car ownerships, but we don't really have too much of -- never bought a vehicle earlier in our portfolio. Very small.
Operator: This is from ICICI Prudential, Sakshat. He's asking, we had mentioned about three new ICE SUVs in calendar year 2026, two mid-cycle announcements and one new SUV, that was the composition we had mentioned. Does this include Bolero and Thar 3-door refresh, which we have launched recently? Can you share more details on these ICE launches in '26?
Rajesh Kajuria: Unfortunately, we can't share more details. The reason we don't share more details on ICE is just so that, it doesn't look like we're evading the question is, because it does affect buying of current portfolio of products wherever there's uncertainty in customers. So, we are very mindful of that being a Core part of our product that we don't announce any new ICE product too much in advance for the year that is coming. So, we wait and wait and watch as we go ahead, but we have a couple of -- three, four interesting things happening in 2026. Nal, is that number about right?
Operator: Yes. The question is also that the Bolero and the Thar 3-door refresh, was that a part of the three?
Rajesh Kajuria: No.
Operator: This is another question. Exports had a strong growth, both in SUV and Tractors. Which are the key markets showing high growth?
Rajesh Kajuria: Yes. So for us, Auto -- firstly, on Auto exports, we're seeing very good response to 3XO both in South Africa and Australia. That's really very, very good momentum there. The 7OO is also doing decently in both these markets. So Australia, South Africa become two very important parts of the export leg. The neighboring countries, which had kind of gotten to a little bit of a slowdown for multiple reasons, money availability, so on and so forth, have all begun to open up. So, Sri Lanka, Bangladesh, all of these, Nepal as well have all opened up. We've sent our first lot of EVs to Nepal. They are on the way in this quarter. So, it seems to be very good demand. That's organically got generated in Nepal for the EVs, probably spillover out of the India story. So, that's broadly what's happening on the Auto side. On the Tractor side, the neighboring countries, again, have opened up, which Bangladesh was having a lot of issues for a while availability of LC, so on Sri Lanka had slowed down. Nepal had slowed down. So, all of those have come back. Algeria, we've started doing business. And so, that's which again was shut for a long period of time, because of the government not allowing imports in without a certain license. Most India exports to Algeria had stopped for almost 1.5 years or 2 years, which have started. By and large, covered it.
Operator: Just taking this one last question. This is Amit of PhillipCapital. What is the company's strategy to grow the Farm implements business? And as this business is growing, how do we look at maintaining the margin in line with the Tractor margin?
Rajesh Kajuria: Yes. Firstly, I must say that right now, the margin is not in line with the Tractor margin. We're just starting to make some money. So, we have a path to go. The competitive pool has reasonable margins. So, as we evolve our volumes, the margins should be much better than what we are making now. So, the peers that we have in that segment do make a decent level of margin. Unfortunately, there's no formulaic solution to growing in Farm Machinery. It is really to get behind the product category and then work at it and grow. One of the segments in which we haven't so far been in the past done as well as the Harvesters, which goes under the Swaraj brand. We've roughly had 4%, 5% market share. We now have an enhanced improved product, which is beginning to do well. And that hopefully will help us drive overall growth of per unit value. The harvest is about 20-odd lakhs. So, that does play a key role in driving top line.
Operator: Great. Thank you, everyone. On behalf of M&M, I would like to thank you for joining us today. Please join us also for our Investor Day on 20th of November. It's a very exciting day ahead. And join us for snacks in the adjoining room. Thank you very much.