GST cut framing peaked Q2-Q3 then faded to 3 mentions by Q4.

Sir, EVs as well?

EV I spoke about in a fair amount . So the price point at which ... the price poin t/the fact that we are more than 4 meters , which means the gap between 5% GST and 40% GST is still quite significant, which is why we are able to price 9S almost like -to-like on-road as a 7XO. So a customer actually can choose without worrying about price between whether they want a 7XO ICE or a 9S EV. So in the segments in which we play, I don't think the GST arbitrage change is making any difference . B ut in this less than 4 met re it would , b ecause there it was 28 to 5 versus 18 to 5. So it is a much, much closer comparison now. So the price advantage relatively less than 4 met re kind of goes away. It 's still quite significant in the segments in which we play.

We are seeing a pretty steep commodity inflation, particularly precious metals. How do you see the impact of that as we look into next year? Do we have pricing power and hedging on the commodity side? And what was the impact in 3Q as well?

Sure. Let me address what is happening first , because it is difficult to predict what it will be. Today what we are seeing is, across almost every commodity, there is inflation. Precious metals lead the pack. Part of it is the same dynamics that is driving gold and silver. And part of it is supply issues, especially anything dependent on iron. So copper, aluminium etc. you are seeing. The iron-related products are likely to not see sustained increase because these seem to be more supply-related issues which will get solved. It's very difficult to say that for precious metals because there seems to be something more deep that is driving that. So we will see how it all plays out through next year. Right now , we did see the inflation in our numbers. The hedges have worked. But I want to emphasize that the hedges can only cover a certain portion because there isn't necessarily a market for steel, for example, for hedging. So we do get exposed to anything that might be happening there. The other thing also is our hedges take care of purchases beyond current quarter. So some of the gains we get when we get mark -to-market, is covering for purchases in the future. So you will see some volatility in commodity costs in the future and not a hedge offset. So I think so far very benign because we are getting the advantage of having a very robust hedging program , but in the future we will have to see how it all plays out. Overall , I think Rajesh has already mentioned there is a 1% price increase to take care of what is going to be the future impact of this commodity inflation, and then we'll see how it goes.

On the EVs are you seeing more cost inflation as well?

Just to answer your question on pricing power. I think there is headroom on price. It is just that we wouldn't want to push it unless we feel it is necessary. That's been our philosophy always to make sure we don't lose a sweet spot on the pricing. So we have taken 1% as Amar just said in January. And we will watch closely and see how the commodity is going. There is ability to take. The key thing is anticipating whether you need it based on a stable view on what will happen to commodity. We don't want to be knee -jerk. So sometimes you kind of say okay this is a short -term thing. Let's not push price up for something which is going to go up today and come down tomorrow. So then you are not reacting and that has sometimes a short -term effect. But fundamentally, if we know that the commodity trend is upward , then we will take prices to correct for that. It 's the judgment of whether it is just a short -term spike which should be ignored, o r is it something that we fundamentally need to take a price to cover for. It's that judgment which sometimes affects timing of a pricing decision.

Just wanted to hear your comments on EVs also. In terms of cost pressures, is it more over there, or should we expect that EV costs will still keep coming down?

Imports are going to be impacted because of the rupee. But I think there was an overhang on the rupee as well, which hopefully with the announcement around the US FTA, should. So our now view on the rupee is don't see a significant slide beyond where it is , right now. Let's see how it all progresses and that should help us ease some of the import pressure. But we mentioned this before Kapil, there is an aggressive localization program that the team is running. So that will eventually offset this pressure point.

First one is on CAFE. So there is now an expectation that after the industry has represented back to the government, the 113 grams coming down to 91 , might potentially be 113 grams coming down to close to 100 grams in April 2027. So just wanted to understand your thoughts around that. And if that's the case, our 25% sort of EV mix target for FY28, how much could that potentially come down by? Second question is just around the Tractor business. There is some expectation that over the next 12 to 18 months, there could be a recurrence of an El Nino scenario. So what your early thoughts are around that? Any offsets we have to potentially manage around that situation? And the last question is just around capital allocation Growth Gems. Growth Gems, I think we have put a lot of effort into those businesses over the last 4 to 5 years. Maybe the market at this stage doesn't fully appreciate the value in those businesses. But just related to that, we do have a couple of entities, Pininfarina and Erkunt, which might be rags on profitability of the overall group. So just your thoughts on, is there any potential restructuring possible in those entities?

Yes, so you are absolutely right, the Growth Gems are still underappreciated. But that's fine . We continue to have them deliver more and more. And as we shared at Invest or day, the valuation of our Growth Gems as of 3 months ago was 56,000 crores. You're starting to see some of that in the numbers as well, because they started to deliver more profits. Yes, there are a few businesses , mo re so outside our Growth Gems, but some of the smaller businesses that haven't fully delivered to the potential. And we continue looking at that on a regular basis and culling them out as we need to. You saw that with Sampo a few quarters ago, where we exited Sampo. And we do have all our businesses in that watch in terms of what we need to do with them. We also announced Automobili Pininfarina that we were not continuing that forward, we merged that with Pininfarina. So that was , in a sense , another exit that we took. And Erkun t foundry is not strategic for us, which is where we 've taken an impairment this quarter as well. So we continue to look for what are the strategic options for us in that business. So that's one discipline that will continue and we will cull things out. But keeping that, I look at that as a separate question from the Growth Gems itself. The Growth Gems continue to deliver value . And the way we think about it is , there are a set of businesses that have scale and have a right to win. So, you've got that in SUVs, in LCVs, in Tractors, in Farm Machinery , there are a number of businesses that... Actually, farm machinery doesn't have scale as yet, it will get to scale. But you've got a few businesses with that scale and a right to win. Then there are a number of businesses that have a very strong right to win but don't have scale. And our focus is, how do you start driving scale in those businesses? And many of them are Growth Gems. And then we have some businesses where we feel we should have the right to win but we don't have a right to win as yet. And there we're looking at can we develop that right to win? If we can, we will scale it. If we cannot, we will exit it.

Anish, the 8 to 10% you are talking more real growth or nominal growth?

Real growth.

Sir, in your Davos interview you had talked about Last Mile Mobility listing, if you can talk about the timeline and strategy that would be helpful. Also, if you can share your thoughts on the benefits for Mahindra Group from the recent trade deals with Europe and US. And also, like last two years were remarkable for Tech Mahindra in terms of deal wins and margin expansion, how do you see the medium-term outlook. And finally on Mahindra Finance, now that the asset quality is better, how do you see the growth ahead?

That is a great set of questions overall. Let me start with the last two and Mahindra Finance in particular, and Tech. Then I will go to the EU FTA and continue with the first question. So, Mahindra Finance for the last three years we specifically had a view that the business has to get to a much stronger and consistent asset quality. If you look back over time and you look back even what I have said on Mahindra Finance in the past, we would go to 16.5% or 16% GNPA in every crisis, stay at 8% in normal terms. We would always say that we will get all of this back and we did, so it was always profitable but it was highly volatile. And that is something that we had to change because we did not like the volatility, it caused a lot of questions. You did not like the volatility either, and therefore we said that we have to bring it down to less than 4.5%. What that also does is it brings ROA down because higher risk, higher return. But the ROA has not come down as much as we had expected it to come down. So, it has come down to 1.9% or so right now. ROA at 1.9% does not worry us as much because our cross-sell ratio is the worst in the industry which I look at as an opportunity. So, as we cross-sell more, as we sell more insurance and other fee-based products, that is starting to come up and we will get that back to 2.4 to 2.5 after that as well, but have a very strong stable business. Tech M hasn't finished its first phases yet. Mahindra Finance has finished its first phase. The other aspect in Mahindra Finance is a very strong management team and you can see that in terms of what we have announced, we have got some really good leaders from top banks and in couple of cases top NBFCs as well. So that gives us a lot of comfort. Tech M we have got a very strong team, we have made the internal transition of the delivery organization, centralized it and that is working very well right now. It is on track to deliver what it has to in its first phase which ends by F27 and it has to get to a 15% EBIT margin. As it does that, then we will look at pivot to growth from that standpoint as well. On FTAs, I like the way you have phrased your question which is what are the benefits of the FTA. And actually, we see that as benefits because I will give a lot of credit to the government on this. They had a very, very fine balancing act because this was a big ask from the EU because of the unused capacity that they have. And the government had the balancing act not to protect us in any form, because I will come back to that protection part, but to ensure that manufacturing in India did not get a hit, that OEMs outside India continue to invest in India and continue to manufacture in India and that is what we told them, that is what we want. The benefits or opportunities come from the fact that we can send our cars to Europe at 2.5 times the quota that they have there, which is a great quota from our standpoint at 0% tax. Yes, their reduction was lower, their starting point was lower which is why it goes down to 0% but that opens up a significant opportunity for us and we can test the European market by manufacturing in India well and sending it there. We will also get a lower price for some of our components coming in because this FTA also allows for that. So today we pay 16.5% for electronics screens, we have a few other imports that we have that we have a higher price. That comes down as well. So, we see a lot of benefits from the EU FTA in particular. The US FTA actually was a surprise in many ways. It doesn't really give much to the US from an auto standpoint the way it is drafted right now at least what we have seen. We will wait for the details to come in but we don't expect any, we never expected any challenge from the US in any case. Europe was a bigger one in that sense.

Last Mile, sir?

Yes, on Last Mile we did talk in Davos that we would look at an IPO next year and that is more around where the business is, where its trajectory is. It is competing fiercely in the market and doing very well. And we just feel that an IPO will just help unlock that value for their business, it is the right time for it and that is what we will do. It is not for monetization in any form because we are not worried about the cash aspect of it but it is just something that helps proclaim victory in that space which is why we do it. So that is, it really shouldn't change anything from the economic view of the group.

To Rajesh sir and also to Vijay sir, on the tractor side, how do you see the contribution of the subsidy led sales in the current year. And how do you see that subsidy led momentum continuing for next year?

I will take that, Raghu, and of course, Divya had prepared us for this question coming from many of you. So, mainly the subsidy was Maharashtra and Maharashtra saw huge growth in industry thanks to the subsidy. Roughly 35,000 extra numbers of tractors have got sold on account of the one subsidy which was very successful. There were three subsidy schemes in Maharashtra so without getting into the granular details of each subsidy scheme. So roughly 35,000 extra tractors in F26 over F25 on account of the one major thing which we don't expect will continue. But then that is the number in perspective. From looking at just that state of Maharashtra, obviously the state will not get growth but normally some other state will do something or there will be key drivers. If you see the previous year, Chhattisgarh had a huge growth just like Maharashtra is having this year. So, there will always be one or two other states which compensate for something else, we live in that hope. And certainly, Maharashtra will be flattish after such a heavy growth, I think it was 90% growth or something in Maharashtra, 68% whatever.

So, Rajesh, with you. I think I just want to hear your thoughts on the EV business scale up. Now that it's been a year, we've had the portfolio in place and the fact that we have these three models which will be there in CY26, there is nothing incrementally new coming. So, a couple of things that I am trying to get your thoughts on --- one, how do we think about the ramp up of the volumes with these three models? And are these three models enough in context of the CAFE emission norms if they were to kick in from April '27 onwards. And you know just going back to the supply chain bit, that this is a lot different from the ICE supply chain. Having, you know, sort of produced these models for almost a year what are the challenges that we see, you know, we see particularly memory chips is something that I keep hearing from my colleagues is a big issue. So, some thoughts on the supply chain how sorted are we now for the next stage of ramp up on this business?

Let's just get the memory chip thing out of the way. It's not an EV thing, the memory chip, right? It's going into everything. It's in infotainment systems and multiple other parts of every ICE and EV car. So, a memory chip shortage has no isolated effect on EV, it has an effect on the whole portfolio because literally every part of our every product or variant of ours has something like an infotainment system which needs a memory chip. So, memory chip is something that is a supply chain risk/price sensitive thing because shortage obviously is driving premiums in memory chip. So, memory chip is something which is a watch out across the portfolio right now. That's the new rare, rare earth, let's call it that, right. So, every quarter we have one such thing which will take disproportionate energy, at the moment that is memory chips. So, that's not an EV thing. I'm just wanting to get that out of the way because yes, it's a watch out and it's something that we are taking all the mitigating actions to build inventory so on and so forth which we have done in, you know, all other previous such kind of at risk to supply parts and memory chip is certainly one. But I just want to call out that that is, I am isolating that from EV, that is a memory chip shortage will affect the whole portfolio significantly.

Are you covered for it?

We are covered for it in the short run. We are buying in market, we are paying premium and we have a set of mitigating actions. We are covered in the short run but it's almost like going back to semiconductors of COVID. I mean, that's, the risk could be, could be quite severe. We have the learnings now out of, you know, having handled some of those discontinuities or disruptions. So, we are probably better equipped to deal with it and that's what we are doing proactively. So, memory chip is one, we are covered for now. The EV business scale up for the year F27 is based on the three models which we said. The model some of you got to see, you know, and we had kind of put visuals of that out in the Banbury 2022 event is what we have codenamed BO7, it probably won't be launched with that name. So, BO7 will come in, in some part of calendar 2027. That we believe will be a very big volume driver on top of what we are doing with our current three products. So, that is we are expecting as a 2027 launch. The 3 products we are expecting will be in the volume range right now in this calendar room between 7 to 8,000 a month, which is the kind of number that we have put out when we launched the 9S. So, I am just reinforcing the number that we put out as our projection for 2027, roughly 80 plus thousand a year. We feel comfortable based on, you know, the response that we have got to 9S, that that's a number which is achievable. The CAFE question I have already answered Raghu, by way of saying that there is no real answer. So, I just stay with that same position. I think right now all we can do is try to do the best in each segment without worrying about ratios. There is no separate supply chain related disruption that we are seeing on EVs compared to ICE. So, you know, I just want to clarify that actually the rest of the supply chain sales and all of that on EV has actually been very seamless. So, we actually don't have EV specific supply chain disruption at all.

Rajesh, my question was on 7XO. So, pretty solid initial demand in terms of booking and for the top two variants, specifically you called out 70% of the demand is for that. If we go back 4-5 years when 700 was launched, we had a similar situation, pretty solid demand. More skewed towards higher variant, maybe less than what we are seeing with 7XO. And then as the demand stabilizes, we start seeing that the product started being seen as a premium product priced above 20-25 lakh. And that makes it difficult to sustain strong volume and you had to take price action at that time as well. How are you going to mitigate a similar repeat of a risk that once the demand stabilizes for the premium product, it doesn't get restricted to a smaller price point, but the entire price point from 13 to 25 lakh is addressed.

Okay. Rakesh, great question. So, learning out of that, what we have done in 7XO, we actually discontinued what we were calling the MX series. So, just to go back to the 700, we used to have the MX series and the AX series. AX was AdrenoX based, which was a connected car. And MX did not have the connectivity and the AdrenoX interfaces, which were well priced. But for a customer who was coming into 700 kind of tech mindset, didn't want to look at MX as an option at all while that was well priced. So, the few corrections we made in the way we've constructed the variant lineup on 7XO is completely discontinued MX. So, we now start with AX. So, the lowest entry version of 7XO comes with AdrenoX and is a connected car. We have three screens right from AX. So, the entry variant has three screens. So, there are some of these things which are very key part of the value proposition of the product we didn't have in 700 in the lower versions. And which is why, you know, when later on as demand for the higher end started going down, customers were not willing to, they didn't find the lower end versions attractive enough because the brands stood for a certain tech value proposition and the lower end were not offering that. This we've taken care of this time, you know. So, we basically, the key part, so DaVinci suspension or the AdrenoX connectivity or the three screens are there right from the entry variant of AX. So, it'll be far easier for us to leverage AX/ AX3 to drive volumes than what we were able to do with 700, where basically MX was not getting any traction at all.

So this initial skew of demand towards higher variant, you don't see that as a risk that in the mind of customers, it's fixed that 7XO probably is a premium car. Eventually, we would start seeing a more diversified demand across portfolio. Will we have to drop price again? Or maybe introduce some other brand at a lower price point?

Yeah, you know, this risk is there because if you keep selling the top end version only then the brand starts getting associated at the, whatever, 20-22 lakh price point. We've just introduced the Roxx, a special version on Roxx called Roxx Star, a star edition which is actually the AX7, which is at I think 16.5 or 9 or 8 or something, 16.8 lakhs, which actually achieves this objective. So, we had kept that option open and when we launched Roxx that there is a slot in between which was the AX7 equivalent slot which we didn't use. And we have the ability to bring that in at a time when, you know, then that allows, when needed to pick up volume at a price point of 17 odd lakhs. So, there are things like that we could do with 7XO as well. To your point on should we have another product, that is something that we, I'm sure, will talk about as we talk about our product portfolio and share more with you as we go along.

Just one clarification on your tractor capacity, how is it positioning, and for the next year plan?

Yeah, it's tight honestly because we are not prepared for 25% growth this year. So, we are scrambling to put capacity in more by way of Swaraj than farm division. Swaraj - we have a plan 3 and that we are ramping up. We had some capacity constraints at our engine facility which is Swaraj Engines. That capacity expansion was already approved and that I think comes on way now between March and June. So, it was basically June which we are trying to prepone and get done by March. So, because there was a little bit of a timing gap in that capacity coming in place, so Swaraj was constrained by engine availability from Swaraj Engine which is the primary or the only supplier to Swaraj tractors. But that I think we will overcome. But like I said, we are adding 100,000 in Nagpur greenfield for Mahindra branded tractors plus looking at what we need to do for Swaraj which should cover us for F27.

To Amar sir, if you can talk about farm subsidiaries, there was this non-cash write-offs this quarter. So, next quarter onwards we should expect a normalized performance?

So, for some of the subsidiaries where we have decided to restructure, there are rules around what you can recognize and can't recognize. So, we have done whatever is the maximum possible under the rules and there will be some trailing costs after. So, there will be costs but not of the magnitude that you saw today. So, there will be trailing costs and then there will be losses till the time the complete restructuring has been completed. So, at least for this year, don't expect any dramatic changes. Next year towards the second half, you should see the change in trajectory.

I had a question. What is your global ambition in EVs? And second is, what is the key to increasing margins in the automotive business because your scale is going up, your volumes, your market share, your acceptance is very strong. Then how do you increase the margins there?

Yeah, on EV global, we had already spoken about the way we are approaching this. So, we will look at, like we had said, for the EVs, the right-hand drive markets first, so which is Australia, New Zealand and maybe potentially UK. Anish just spoke about the EU opportunity, so at an appropriate time we will go into left-hand drive markets in Europe potentially, but only after testing and being confident that it is an acceptable and a successful value proposition in the right-hand drive market. So, we do not want to globalize recklessly. We have said that we will do it in a very calibrated way, see the response that we get in right-hand drive markets, maybe Australia, New Zealand first and then UK. So that is where we are on EV, it will be very watchful and calibrated. On margins on auto, you know, our approach has always been, and we just had some questions around how we are pricing and so on, but is to make sure that we drive margin improvement not because the customer is willing to pay for more, so we should just keep increasing prices. It should come out of staying focused on volume, ensuring the brands continue to have a strong value proposition while working on our cost structure. So, we are very, very careful and calibrated in price increases that we take. We want to keep the positioning vis-à-vis customers, price positioning vis-à-vis customers intact so the brands continue to have momentum, and then work on costs. And that, as you have seen with time, we have the best in industry peer margins right now. That comes out of, or in spite, if I may use that word, of being very competitively priced with every launch that we do and even with our existing products. So, you know, it is really the balancing between how to get margins by being very well priced and managing costs well.