Mahindra & Mahindra Limited (NSE: M&M) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
Unidentified Speaker
Anish Shah — Group CEO, Member of the Group Executive Board & Director
Rajesh Kajuria — Executive Director & Chief Executive Officer
Amarjyoti Barua — President & Group Chief Financial Officer
Analysts:
Unidentified Participant
Presentation:
operator
Looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward. Foreign. Welcome to the Quarter three analyst meet of Mahindra and Mahindra limited for the main presentation today we have with us our group CEO and MD Dr. Anish Shah, ED and CEO of our auto and farm business Mr. Ajesh Jijorikar and our group CFO Mr. Amarjyothi Barua. Once the presentation concludes we will begin with the Q and A session. For the purpose of completeness I wish to read this out. Certain statements in this meeting with regard to our future growth projects are forward looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward looking statements.
With that now I hand over to Dr. Shah for opening remarks.
Anish Shah — Group CEO, Member of the Group Executive Board & Director
Hi, good afternoon. It’s a pleasure being with you again. More so when our results are in very good shape. And let me start with talking about our key messages as we do every quarter and what you see again is a continued strong performance across businesses and you’re seeing contribution from all our businesses to delivering very Strong results. Operating PAT is up 66% reported PAT is up 47%. There are two factors that make the difference between these two numbers. One is labor code impact which I am sure you have seen across all companies and second is one time around Mahindra Finance where they had a reserve release last year in the same quarter.
As we take that out that increases the operating profit volume and margin growth very strong for both auto and farm. Volume up 23% for both businesses. Margins up 90 basis points for auto, 240 basis points for Farm. Farm did have some impairments internationally and that dragged down the overall number but domestic operating performance was up 64%. I want to highlight three what we call breakthrough performances. And while you will see some numbers on this page and the next page, the breakthrough performances are not because of the numbers. Microfinance is up 97% from an operating standpoint, down 9% from a reported standpoint.
Anish Shah — Group CEO, Member of the Group Executive Board & Director
But beyond the numbers there were three things that we were focused on for the past three years. Asset quality, controls and technology along with putting in place a very strong management team and that today is in very very good shape and you see the results for that. As a result, Mahindra Finance has announced in its Andes call two weeks ago that it will now pivot to growth and we will start seeing a much faster growth rate, more diversification and areas that we need to focus on now for the Last three years we were not talking about growth and focusing on asset quality controls and technology.
And that pivot is what creates a breakthrough for Mahindra finance. Right now LifeSpaces profits up 5x but I will again caveat it by saying that in real estate, as you well know, you will continue to see ups and downs based on occupation certificates coming in because that’s when you recognize the profit. But it’s breakthrough not just for the profit number, it’s breakthrough because we can now see products complete with the profitability we had planned for at the start of the project. We now see a much greater level of urgency in the business. The land acquisition is going very strong.
We’ve had an external investor, Mitsui Fudosan come in that was announced a couple of days ago. And the business, both from an IC and a residential standpoint, continues to be on a very strong track and you will continue to see that as we go forward. Logistics first profitable quarter after 11 quarters. But again more than the fact that it is the first profitable quarter is the execution that is being done is very strong. With Heman Sikha coming in and a few key leaders coming into the business as well. That’s really driving logistics in a very, very different way.
And it’s a business we expect a lot more from. So this is a good stepping stone. But the breakthrough is really driven by execution that the business has shown.
Anish Shah — Group CEO, Member of the Group Executive Board & Director
Now. We thought it will be useful to show where does that operating profit growth come from. And therefore on the left hand side what you see is operating profit. But let me first start with the bottom of the page which has three numbers. 66% operating profit growth 54% without the Mahindra Finance one time of reserve release last year and 47% after you take out the labor code impact as well. So those are the three numbers that we’re looking at and doesn’t matter which number you look at, it just is a very strong performance overall across businesses.
LifeSpace is up 5x from an operating standpoint. Logistics up 2x. Mahindra Finance 97% Auto 42% TechM 35% Farm 7% As I mentioned, driven more by the international impairments and investments up significantly because we had a CIE sale which is in the operating numbers which we pointed out on the right hand side here. So that’s really a map of where all the businesses are. Yes, there are some other businesses that have done very well but these were the main ones that were driving growth and therefore we put them on this page. Consolidated results up 26% for revenue up 54% excluding labor code 47% reported drivers from an auto standpoint.
Anish Shah — Group CEO, Member of the Group Executive Board & Director
While Rajesh will cover this in more detail, the key headlines are SUV volume up 26% continue to be number one there margin up 90 basis points. New product launches you’ve heard about have done very well. Besides revenue market share for SUVs our LCV share has gone up 10 basis points also at 51.9% now farm volume up from an exports 10.36% market share down slightly but in January we made that up for year to date as well. And farm Machinery revenue is up 45% so we’re starting to see much faster growth from a farm machinery standpoint.
Mahindra Finance assets under management up 12% despite not focusing on growth a whole lot, GS3 continues to be below 4. We continue to maintain 4 and a half as the benchmark we’ve said but for the last many quarters we’ve been below four and we’ve got a new ECL policy which is more in line with industry which will help the business as well and technology and controls you don’t see on this page. But that’s been a huge focus over the last three years and we’ve completed projects or are close to completion of certain projects there and that gives us a lot more comfort around the business overall.
Tech Mahindra on track with what it’s outlined in terms of its path for F27 and deal wins, margin expansion, all of that playing into that track that tech mind has outlined. Logistics we spoke about. Only thing I’ll add there is strong momentum in both auto and E commerce for logistics. Hospitality has given up whatever it has earned in India with an FX exposure with its Finland business and real estate is on a very strong path which I mentioned and this is a page that you’ve seen many many times now. Consistent delivery roe is up 20.1.
But before any question comes I will say what I always say. We are at 18. It may be slightly higher, slightly lower in any given quarter. So the new bar is not 20. We will continue with 18 plus minus a little bit and we’ll continue to drive growth and you see a very strong growth that’s been driven in this quarter and year to date as well. So far we are at I think 38% if I’ve got the exact number year to date growth from a profit standpoint. So I can tell you that’s higher than what we had expected at the.
operator
Start of the year as well. With that let me Invite Rajesh to take you through more details.
Rajesh Kajuria — Executive Director & Chief Executive Officer
Thanks. Hi everyone. I am going to run through this quickly. I am sure you have seen lot of these slides already. So I will be quick and give more time for Q and A. The SUV volume was up 26%. We have got to average Q2 and Q3 because Q3 Q2 had a lower GST. So even if we average it will be 17 18%. The very good news is seeing the revival of LCV segment which we were all wondering why it is not coming into growth. It finally has. The GST has helped. The replacement cycle has kicked in and we do see this sustaining for some period of time.
You see this Q3, Q2, Q3 which I just said I think the right way to do is to average it out. A lot of the Q some of the Q3 group south is the GST transition in Q2 which spilled over to Q3. But still we’ve seen very robust demand in Q3. We did get affected somewhat by the fact that we scaled down XUV700 in Q3 as we were preparing for 7XO. So that has had some effect on the mix and the revenue because literally a month, month and a half we had stopped billing new 7 double Os out in the last quarter.
You see revenue market share at 24 odd percent. We think that’s about the level we will be at. There was abnormal peak in Q1 and Q2. These numbers now in. Well the earlier also they included the EV numbers. We were just calling that out separately so that we’re not going to have a separate slide on EV on the same slide. You’ll see where we are doing, how we’re doing on market share in that quarter. And YTD which you see at the bottom seven XOs got very good response, very strong order pipeline and as some of you did mention customers, we’re back into this waiting period thing which is not always desirable but kind of also recognition of the fact that the product has got accepted very well.
Rajesh Kajuria — Executive Director & Chief Executive Officer
Big skew again to the top end in spite of very attractive lower end versions. Almost 70% plus is the top two versions which is in a way higher than what we thought, which is also good news. But that’s what is adding to the complexity on waiting period given that the SKU is higher than what we expected to the especially X7L version 41,000 plus ESUV sold which is really about 4,000amonth as an average. The interesting thing is the 32,000, 32,032.5 crore kilometers that the vehicle has run, which really implies 8,000 laps around the earth equivalent. Goes to show that the vehicles are not just nice parking products in the garages, but are being used a lot and are very mainstream in the way that customers have adopted usage of this, which is building that positive word of mouth and confidence.
We are seeing that translating into 9s, which I’ll come to in a minute. A lot of awards. We believe the most prestigious out of these is the EV, the green car of the year at the iCot, which is very, very robust. Jury of multiple auto handles coming together and they have only three awards, one of which is the EV Green Car of the year, which 9e got. The 9s has got very good feedback as well and response. We had mentioned in one of the earlier quarters that we expected north to do better with the EV portfolio with the 9s that’s happening.
That segment was looking for a more conventional shaped SUV which the 9s is balancing well. So it’s bringing all the goodness and tech associations of the earlier two products, but in a more conservative or conventional format and in seven seater. So we are seeing of course good response everywhere. But north is adding a new set of customers into the 9s. Kitty, we put out what products will come in the calendar and there have been questions around how much have you already launched and what is not. So we just put this slide to clarify that we had said three new ICE.
Three ICE SUVs in this year. The new nameplate out of that was 7xo. Two more refreshes will come over and above the Bolero and Bolero Neo. When we had said three, we are not counted Bolero and Bolero neo in the three. So we’ve done seven XO now Bolero, Bolero Neo and there’ll be two more refreshes in this calendar year on EVs. Both what we had spoken about are done for this calendar year. So there’s no new EV launch happening in this calendar year. LCVs, we had said two, we’ve just done Bolero camper and Bolero pickup and two more will happen in this calendar year.
Rajesh Kajuria — Executive Director & Chief Executive Officer
A quick slide on capacity. So we’re breaking this up into three phases so to say in the calendar 2026 we will work around debottlenecking some of the current capacity products where product capacity is running out. More specifically three XO and Bolero in Nasik plant, some of Scorpio N in Chakan plant. So all of these in thar a little bit so all of these are kind of out of capacity. We’ll aim by July August to add about 3 to 5,000 between these products per month. Over and above that 3,000 of EVs gets added with the 9S launch.
So in a way 6 to 7,000 additional capacities on these products get added in F27 on top of what we have in F26. Calendar year 2027 will see the addition of new capacity in Chakan for the new IQ platform. So one of the Vision S or Vision T which we will launch in 2027 will kick in the Nagpur facility which will come up by in calendar 2028 will have primarily the new IQ platform on the SUV side. Definitely Vision X which which is not going to come in Chakan. We will probably need more capacity than we are planning in Chakan for Vision S Vision T.
So we’ll provide for that too and any other new products. We will also figure out which of the existing products need more capacity. We will have to work the cannibalization equation of new products over current products. We may add something at the Igatpuri new land that we are taking or we may add it in Nagpur. So that’s something that we will work out by way of how to split and prepare for additional capacities on existing products. So Nagpur Greenfield and other more questions. We can talk a little bit more about what will happen in Nagpur Greenfield LCVs.
I’m not repeating, I already spoken. Auto margins have been very robust and you see the 10.4% here without contract manufacturing. But this chart gives you a better feel of the same thing which is the auto stand alone without contract manufacturing is 10.4 which is what you saw on the previous slide. 10 crore is what we made on the contract manufacturing in M and M and the standalone as reported is 9.5 which of course comes down because there’s a big element of contract manufacturing on the EVs as we’ve started doing. We made 175 crores end to end in meal as a company.
Rajesh Kajuria — Executive Director & Chief Executive Officer
The EBITDA was 149. 27 of that was in M and M And the total as you see on this chart is 175 crores. The PLI status is up here. So 9e we have all variants approved 9s. The top two packs are approved already. The balance are under approval and should come in by quarter one and B6 should come in by quarter one again all variants. So basically by quarter one we should have all variants. All variants. All products with PLI approval trucks and buses. A quick look. We had a strong growth. We also look at the YTD market share.
We increased somewhat and both together at 6% last mile mobility. We continue our leadership. An exciting new launch happening tomorrow in Hyderabad and do watch for that. We believe it will be a game changer. Some really very exciting breakthrough new design and I think it will transform the penetration even more. We already are at 30% penetration. Just quick look at the auto consolidated numbers. You’ve already seen that so I’m skipping this.
Rajesh Kajuria — Executive Director & Chief Executive Officer
Farm. The volumes grew 23% in the quarter. We lost some market share. A lot of it was due to swaraj tatters, completely running out of stock and that’s got recovered in January as well. So we are now at 44.1. So that’s what you see here. The farm machinery Anish spoke about. We’ve seen very good turnaround last few months. We’ve crossed 100 crores literally every month as an average. So it is a very strong momentum now that we’re beginning to see the core tractor margin here, which is really the important parameter is at 21.2 very good improvement over the like to like quarters but also very close to our best performance.
This gives you the volatility of industry growth versus how the margins move in a band depending on the operating leverage. Anish has covered this. So again very strong standalone performance. We had to take impairments on a couple of subsidiaries which we can talk about which is what is showing a PBIT negative 7 and a PAT plus 7. With that I’ll hand over to Amar. Thank you.
Amarjyoti Barua — President & Group Chief Financial Officer
Thank you. Rajesh, Just a recap of everything you heard. Won’t repeat what has already been said but do want to take a second to highlight that this is the first time the group has crossed 50,000 crores in top line and that’s a big, big milestone for us as a group. What just wanted to point out within the consolidated result there is a 220 crore impact of labour code. This is our share. The gross amount across group companies was 565 crores. This is the waterfall that I usually show to show the contribution of each of the pieces.
You can see here the impairments were exactly offset or very close to being offset by the CIE gain. So just calling that out very clearly so that you can see that the operating performance was not helped necessarily by the CIE gain. It was offset by the one time impairments we took. We took impairments in two entities. One is our Japan entity and we took also an Impairment in our Turkey Foundry business, both of which the MAM Japan one we have talked about in the past. This is just continuing the restructuring in that business. Foundry is new and was impacted by the hyperinflation in Turkey.
I do want to highlight growth gems grew 3x year over year and that’s a very big deal for us. And then from the standalone side the impact you all follow this. The impact of labor code is around 73 in the 3931 that you see. And then we’ve talked about the revenue growth outside of this. The only thing I’d like to highlight we don’t show the page but I do want to highlight the cash performance has been again very strong across the group. So we continue to keep growing our cash which will be deployed towards future growth as we find new avenues.
And from an outlook standpoint, I mean we continue to see the strength in the portfolio so hopefully should allow us to close the year very strong.
Amarjyoti Barua — President & Group Chief Financial Officer
Okay. With that we can transition to questions. Just wait for the setup to complete start then. Anish. Yeah Kapil, please start.
Questions and Answers:
Rajesh Kajuria
Okay, thanks. First of all sir, I would like to congratulate you because this was a fairly all strong all round performance so across the group companies. So really heartening to see that that even the group companies are now contributing solidly. I’ll start off with the auto sector. Just Rajesh sir, your outlook for next year for each of the segments, LCVs, tractors and autos and you know one of the concerns in mind is that because just GST cut has just happened. So is there an element of pent up that you are sensing here and how to think about next year’s growth for each of these segments and within autos, you know various sub segments including EVs and compact SUVs.
How are you seeing the demand momentum over there? And also if you can give some clarity on the capacity for FY27 and FY28 in terms of numbers, is it possible to share what will be the available capacity?
Rajesh Kajuria
So yeah, that’s the first question. Yeah. So couple outlook we’ll share like we normally do in May and we’ll not give a specific number on outlook but we’ll try and maybe answer your question two and question three together which is you know the impact of GST overall, how we’re seeing seeing in which segments has it really made a difference. And that I think connects with your question on you know the demand outlook at a qualitative level on EVs and subcompacts and LCVs. And so on. So firstly, the biggest impact of GST will always be in commercial segments because it fundamentally. Or a price reduction because it fundamentally improves cost of ownership and improves viability.
Also the GST cut will drive GDP growth we believe to be much higher. And the economic prosperity of the country will go up, which also helps commercial applications and commercial usages both. So it’s two factors kicking in when we look at commercial segments. When I’m saying commercial, I’m counting LCV, bigger CVs and tractors. They all are following a similar paradigm, which is significantly better viability for the user out of a lower, a significantly lower price. I mean 10% is a big change in price for that segment in LCVs, roughly it leads to 4 to 5% higher profit improvement for an operator.
So it’s not insignificant at all. So we believe this is a fundamental shift and this will lead to a cycle of increased demand. And it’s not a one or two month thing which is just a pent up because there was no, it’s not a pent up. It was pent up in LCVS to the extent that the replacement cycle had not kicked in. And we believe that was because of COVID where usage had got delayed or reduced over one or two year period. And as soon as. So there was a replacement cycle delay of a year or two.
And GST I think provided that impetus and we saw growth kicking in together. So I think the commercial segments will gain the most. What’s happening in the other segments in which we play is actually we think enabling higher version variant usage. We don’t think fundamentally a Demand for an XUV7XO or Scorpion is going up because of GST drop. And that may have been momentary if it did in the festival period at all. But the demand momentum continues even as we got into December and January. So it wasn’t just festive and it wasn’t just one month there.
Rajesh Kajuria
What we are seeing is a much better move up the ladder because customers have a price point on which they’re operating and then suddenly they can get more in that price point. So it can either lead to a lower model customer moving up to a higher model or a lower variant customer moving up to a higher variant. So both of these will play out. I’m not sure it will increase the total size of the industry, but it will probably change the nature of the mix for an individual player or certain models which fall in the consideration set.
Right. So with the 7xO pricing that we have, where we are operating, have reasonably good options between 13.5 and 15 and a half or 16 4.6 meter product actually competes like to like with the 4.2, 4.3 meter product, which was not the case earlier. Right. So there would be 4.3 meter customers who may look for a 4.6, 4.7 product. So I think some of that will be helped by gst. The entry car, you know, has of course picked up with GST in a very significant way, which I’m sure is a function of the fact that it’s become more affordable and hence more accessible to many people.
Whether that is pent up or that is going to sustain, I don’t have a point of view on right now. And hence what we would have to watch out for as we get into F27 is what will be the mix of small car to big cars and how will each sub segment grow? I think it’s a little premature to reach a conclusion on how this mix will play out. I think each segment will grow by itself, itself, but which will grow faster and which will grow a little slower. And hence the mix and the relative impact of that on market share is something that we’ll have to watch for.
We’ve seen very robust growth in all our 10 lakh product. So Bolero, Boleronio, everything is below 10 lakhs now on X showroom. The GST cut helped that. So three XO, Bolero, Bolero, Neo, all have got very, very strong demand capacity for 20 EVs as well. EV has spoke about in a fair amount of this thing. So the price point at which the.
Rajesh Kajuria
Price point slash the fact that we. Are more than 4 meters which means the gap between 5% GST and 40% GST 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 7 XO ICE or a 9 SEV. So in the segments in which we play, I don’t think the GST arbitrage change is making any difference. But in this less than 4 meter it would because there it was 28 to 5 versus 18 to 5. So it’s a much, much closer comparison now.
So the price advantage relatively less than 4 meter kind of goes away. It’s still quite significant in the segments in which we play capacity. Just to again clarify what I had on the slide, we’ll probably add this year 5 to 6,000 by July August in ice over what we have right now. Another three odd in EVs. So 7 to 8 F27 we would add in ice another 7 to 8000. At least that will come from Chakan in calendar 2027 that’s for the new IQ platform. And then in 2028, depending on how quickly we are able to get actual possession of the land and productionize it, we would probably add in year one at least 8, 10,000 more.
It will ramp up to 500,000 over a period of time. But in year one it will probably be 10 12,000 a year long. Answer. Sorry.
Unidentified Participant
No thanks. I think it, it’s really helpful. Amar. Just want to you know we’re seeing a pretty steep commodity inflation, particularly precious good metals. How, 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?
Amarjyoti Barua
Sure. So let me address what is happening first and because it’s 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’re seeing, you know 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’ll 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, example for hedging. Right. 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, we are getting the advantage of having a very robust hedging program. But in the future we’ll 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 some of this commodity inflation and then we will see.
Unidentified Participant
How it goes on the EVs. Are you seeing more cost in place.
Unidentified Speaker
Answer your question on pricing power. Yeah, I think there’s headroom on price. It’s just that we don’t want to, we wouldn’t want to push it unless it we feel it’s 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’ll watch closely and see how the commodity is going. There’s 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’re not reacting and that has sometimes a short term effect. But fundamentally if you know that the commodity trend is upward then we will take prices to come correct for that. It’s the judgment of whether it is just a short term spike which should be ignored or is it something that we fundamentally need to take a price to cover for. That’s the, it’s is that judgment which sometimes affects timing of a pricing decision. Yeah. So we have the pricing power whether we use it or not.
Unidentified Speaker
Yes. You don’t want to. I mean the simplest thing is to say okay let’s keep taking which is something we want to avoid.
Unidentified Participant
Just wanted to hear your comments on EVs also, you know, in terms of cost pressures, is it more over there or should we expect that EV costs will still keep coming down?
Rajesh Kajuria
Imports are going to be impacted because of the rupee. Right. But I think there was an overhang on the rupee as well which hopefully with the announcement around the US ft. So our now view on the rupees 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’s an aggressive localization program that the team is running. So that will eventually offset this pressure point.
Unidentified Participant
Thank you.
Unidentified Participant
Chandru. Let’s go ahead.
Unidentified Participant
Hi, thanks for taking my questions. First one is on cafe. So there’s 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 F28, 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 sort of capital allocation. Growth Gems. Growth Gems. I think we’ve put a lot of effort into those businesses over the last four to five years. Maybe the market at this stage doesn’t fully appreciate the value in those businesses. But just related to that, we do have couple of entities, Pininfarina and Kunt, which might be rags on profitability of the overall group. So just your thoughts on is there any potential restructuring possible in those entities?
Unidentified Participant
You want to take that first?
Unidentified Participant
Yes.
Rajesh Kajuria
So you’re 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 Investor day, the valuation of our Growth gems as of three 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 more 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 terms of.
Rajesh Kajuria
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 Urkund Foundry is not strategic for us and 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 call 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 machine doesn’t have scale as yet. It will get to scale, but you 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 our 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 are looking at can we develop that right to win? If we can, we will scale it. If we cannot, we will exit it.
Unidentified Participant
Okay, let me take the question on which there is no answer.
Rajesh Kajuria
Which is cafe. Of course, we are all, as an industry body, working regular with the government on what we think should be the right and fair way to construct a policy around emission norms. So there is a fair amount of industry engagement with the government on this and the government is not rushing into announcing something and are capturing all the views. The overall view of SIAM is to stay with the recommendation which was made in, I think, December 2024. There’s discussion around that. So you gave a number of 25%. I don’t know. That 25% that we had put out as was our own target was not linked to what is needed by CAP and norm.
We believe that most likely what will be needed by capnom will be much lower than our own internal target. The difficult thing, of course, is if ICE continues to grow at a very, very robust pace, then what will be the ratios between ICE and ev? And that’s really what, you know, part of the discussion is that you don’t want to really stop growth of the economy or of the ICE portfolio. And the government needs to construct in it in a way which is reasonable for both industry and climate. And I, I think there’s good listening around that.
So let’s wait. I think it’s. So we’re not too far away from getting a very clear view on what they will do. But it’s maybe like, I think we should have something out in a couple of months. So there’s a lot of industry engagement with multiple government stakeholders. You know, in the tractor industry, often you’ll ask about projections and often I’ve said we have no ability to project it. As recently as two months back, we said it will be low double digits and this year is going to end at twice that, literally so low double digits.
If you say 11 or 12, we are going to end this year at 24. So really, you know, even the, the ability to forecast next three months is not there. I wouldn’t worry about, you know, what’s going to happen in October or November. It’s too early to worry about that. We will go into next year feeling optimistic and positive but keeping in mind that we are on a very high base. But because this year is going to end at 24% growth which no one expected. Right? So if we say example next year is x percent growth earlier we were saying it is x percent growth for F27 on a 10 or 11% growth this year which itself we thought is good.
Now the point is if this year is not 10 or 11% but it’s 24% which is what it’s likely to be then we have to have a reasonable assumption of on that base what kind of growth is going to kick in next next year. Multiple things in the country we believe are very enabling and reservoir levels is one key enabler. Even if when monsoons are not good. So whatever we read about El Nino effect is likely to happen after the first round of rain. So most people say that that effect may kick in in August or September.
So if you had a good flush of rains then your first round of kharif sowing has happened. Reservoir levels are good which anyway we are going to open F27 with good reservoir levels. Government spending in rural and agricultural sectors both has been robust which is also key driver of tractor growth. So and favorable terms of farmer trade. So you know there are multiple enabling factors. So let’s wait and watch. I know many of you are picking up signals that tractor demand may be under stress. I think we have to see that relative to the fact that this year will be a 24% industry growth.
And overall we think right now there are the enablers are much more than the disenablers. At least that’s the way we are going in and which is why we are triggering capacity expansion and all of that For Tractor Mahindra tractors in Nagpur, which is where we already have a base on the greenfield plus us we’ll also look at something more on Swaraj. So we are preparing for the longer term growth trend which we spoke about on investor day of about 9% CAGR. The economy is accelerating and it’s driven.
Rajesh Kajuria
By some of the actions taken last year. But even more so from the foundation elements that have been laid and we continue to believe that the industry will accelerate. I’ve gone on record sales saying we would look at an 8 to 10% growth over the next 20 years just given all the key factors that drive the Economy, demographics, the infrastructure that’s being. Built, the government reforms.
Rajesh Kajuria
And then you see last year’s actions around tax, around gst, around the rate cut. So you see various different actions have to come in. So we feel that there’s a very strong tailwind that will position India very well and that will benefit more multiple industries in India.
Unidentified Participant
The 8 to 10%, you’re talking more real growth or nominal growth?
Anish Shah
Real growth. Thank you. Can I just add one perspective because this is why we always encourage all of you to look at consolidated. All of these impairments are not just accounting. There are some tough decisions that have been taken by the Farm leadership. And so we do do foresee international not to be such a big drag next year. Right. And I think that is something when you think about FARM at a consolidated level, there is also that constructive view that you should take because you know there is some really tough decisions that the team has taken.
Rajesh Kajuria
Yeah. And I’ll emphasize two points. One, on what Amar said, I’m coming. Back to you question around the growth numbers.
Rajesh Kajuria
There was a point in time which you seen we would put impairments as one time items. You saw from the pages today, impairment was not a one time item. It was operating profit or it brings the operating profit down. And that’s a mindset we are using right now to say that wherever we invest we need to get the results from there. And as a management team we take accountability for that. To say that is the result we will drive and therefore it is in our operating profit number not as a one time item that look at as an impairment, but to Amar’s point that improves performance going forward.
And yes, there are some actions that will not work, that will always happen, but we find ways to offset that. But as we have done this, it improves performance going forward. Second, I will come back to the growth point and expand a little on what I said. India has grown six and a half percent real terms for the last 30 years. And with what we see today, with the kind of infrastructure that’s put in both physical and digital, the kind of government spending on capex, the reforms that have been put in place and more that are coming, the focus of the government on making it easier to do business, we’re not completely there as yet, but there’s a lot of conversation that takes place.
Often we are part of those conversations to say here’s what needs to be done and there’s a lot of room for the government to listen to it and start taking action for it. The demographic factor that we have, we are at 28.8 years median age. China and the US are at 38, Japan’s at 48. So we have a lot of these benefits that we are starting to see that come together as one to start the economy growing faster. So which is where we say that it should be 8 to 10% and from a real basis with all these actions that have been taken, this is not a we hope for actions in future and it will happen.
This is the result of actions that have been taken already.
Unidentified Participant
Thank you.
operator
Go with Raghu then Gunjan will come to you.
Unidentified Participant
And Rakesh, thank you sir for the opportunity. Congratulations on strong numbers. Firstly to Anish sir. Sir, in your Davos interview you had 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 you know 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?
Rajesh Kajuria
All right, that’s a great set of questions overall. So let me start with the last two and Mahindra Finance in particular and tech and then I’ll go to the EUFT and continue 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’ve said on mines of finance in the past, we would go to 16 and a half percent or 16%. GNPAs 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 didn’t like the volatility it caused. A lot of questions. You didn’t like the volatility either and therefore we said that we have to bring it down to less than four and a half percent. What that also does is it brings ROA down because higher risk, higher return. But the ROA hasn’t come down as much as we had expected expected it to come down.
So it’s come down to 1.9% or so right now. The last few quarters have been less than 4% from a JNP standpoint and we’ve cut out a number of customers that caused earn and pay. And if you go back to even many years, every time during a crisis, our CEO at that time, Ramesh would talk about the earn and pay segment and say the earn and pay segment has been impacted and they will come back and pay later because they’re not earning right now, they’re not paying. But that segment we’re not lending to anymore and therefore you’ve got that coming down.
ROA at 1.9 doesn’t worry us as much because our cross sell ratio is a worsened industry which I look 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’ll get that back to 2.2 to 2.5 after that as well. But have a very strong, stable business. The other aspect we needed in that stability was controls because we did at times go two steps forward and come one step back. Something happens in Izwal, something happens somewhere else. It’s out of our control.
But can we have a business with very strong controls where we can start picking this up and centralize a lot of the processing, put in a lot of technology that’s good for customers as well. In some cases our customers have to sign 76 times to get a loan. I’m not exaggerating on this one. And with technology now that has been put in Project Udan that got put in, it’s one digital signature and that’s it. So it’s taken away a lot of the processing away from it which then improves cost. OPEX ratios. We haven’t talked about a whole lot as yet but a lot of cost will come out of the system as technology has been put in.
So as we look at our OPEX ratio, as we look at our loss ratios coming down, our credit losses have always been stable. A GS3 will be even better. The business is on a very strong track and now we have pivoted to growth, we will grow responsibly. We’re not going to grow even at the levels we could right now because we’re going to continue to maintain this discipline that we have. So therefore we see Mahindra Finance on a very strong track at this point in time. TechM hasn’t finished its first phases yet. Mahindra Finance FINISHES first PHASE the other aspect in Wehindra Finance is a very strong management team.
And you can see that in terms.
Rajesh Kajuria
Of what we’ve announced, we’ve got some. Really good leaders from top banks and in a couple of cases top NBFCs as well, so that gives us a lot of comfort. TechM, we’ve got a very strong team. We made the internal transition of the delivery organization, centralized it, and that’s working very well. Right now it’s 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. So that’s on the tech and story on FTAs.
I like the way you phrase 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’ll 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’s what we told them. That’s what we want. We want more car breakers to come here, we want more competition, we want a bigger market here. Because the more scale that we have to manage manufacturing in India, the better it is for us. We will get a better ecosystem, we’ll be more competitive, and we can make an India for the world in a much better way. That’s why China is very competitive. China capacity today is 50 million units a year. Roughly half is unused. India capacity is 5 million units a year. That’s where China was 20 years ago.
Europe is at 23 million units a year. But Europe also has 10, 11 million unused capacity. Volkswagen alone has unused capacity. That’s half of the India market. 2.2 million is Volkswagen’s unused capacity. So as you look at all of these things, the fine balancing act was to make sure that we open up the industry, we reduce tariffs. At the same time, we encourage all of the European makers to continue making in India. And I think they’ve done that really well. We can go through some of the details. You’ve seen most of it already coming to the part around protection and competition for us.
Take any of the European models. Any model that’s going to be successful in India is in India. Now, if you look at the math behind it, whether it’s a Renault Duster or whether it’s a Stellantis Jeep or whether it’s any other vehicle, can they make it in eu, ship it, take the cost for shipping, take the cost of inventory for four months and do it cheaper than they can manufacture in India.
Rajesh Kajuria
Unlikely. If that is the case, then how does it change competition for us? They will make as many cars as they can make for India. That’s what the price will be. What they would have done if the outcome had been different is if they were allowed to send everything from Europe, they could have said, I’ll shut down my India plant and I will manufacture in Europe and send it here, because I don’t have to shut down my European plant. In that case, some have announced shutdowns of European plants as well, which they have not been able to do right now.
But that’s where the FTA has been done very well, which will not allow them to do that, because they will need a presence in India to be able to succeed here. So that is our view on why the FTA has been done very well. The benefits or opportunities come from the fact that we can send our cars to Europe at two and a half times the quota that they have there, which is great quota from our standpoint, at 0% tax. Yes, their reduction was lower, their starting point was lower, and which is why it goes down to zero percent.
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 electronic 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’s drafted right now, at least what we seen.
We’ll wait for the details to come in, but we don’t expect any. We never expected any challenge from the us in any case.
Unidentified Participant
Europe was a bigger one in that sense. Last Mile, sir.
Rajesh Kajuria
Yes. On Last Mile, we did talk in Davos that we’d look at an IPO next year. And that’s 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’s the right time for it and that’s what we’ll do. It’s not for monetization. In any form because we’re not worried about the cash aspect of it. But it’s just something that helps proclaim victory in that space. Which is why we do it.
So that that’s. It really shouldn’t change anything from the. Economic view of the group.
Unidentified Participant
Thank you very much sir. 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?
Rajesh Kajuria
Yeah, I’ll take that Raku. And of course Divya had prepared us for this question coming from many of you. So. 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 are account of the one major thing which we don’t expect will continue. But then that’s 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’ll 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. So we live in that hope. And certainly Maharashtra will be flattish after such a heavy growth. 90% growth or something in Maharashtra. 6% state, whatever. Yeah, Yeah. So. So that’s, that is what it is. So that’s the 35,000 is the extra absolute number in an industry of 10,000 numbers.
10 lakh numbers.
Unidentified Participant
Thank you.
Rajesh Kajuria
All India Industry open that. I just add to that and also what Kapil asked earlier. We generally like steady growth numbers year over year because we look at outperforming in the market and even the auto industry if you look back over the last few years hasn’t really grown at rapid pace. And we’ve done very well in an industry that hasn’t grown at a very rapid pace. So for us the huge fluctuation where growth goes up so much and then in Maharashtra it will come down again is not ideal. Yes, we will like some short term numbers that come from, from it.
But our general preference is slow steady growth that comes in and we’ll over perform on that basis.
Unidentified Participant
Just a last question. I’ll come back to you. We’ll go With Gunjan.
Unidentified Participant
Okay, I’m going to keep it at 2. So Rajesh with you I think just want to hear your thoughts on the EV business scale up. Now that it’s been a year we’ve had a portfolio in PC Place and you know, the fact that we have these three models which will be there for the in CY26, there’s nothing incrementally new coming, right? So you know, couple of things that I’m trying to get your, you know, thoughts on. One, how do we think about the ramp up of the volumes with these, these three models and are these three models enough in context of the CAFE emission norms if they were to kick in from April, 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, you know, sort of produce these models for almost a year.
What are the challenges that you know, we are and you know, we see particularly, you know, memory chips is something that I keep hearing from my colleagues is a big, big issue. So some thoughts on the supply chain. How sorted are we now for the next stage of ramp up on this business?
Rajesh Kajuria
Okay, 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’re 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’m isolating that from ev, that is a memory chip shortage will affect the whole portfolio significantly.
Unidentified Participant
Are you covered for it?
Rajesh Kajuria
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. Yeah. 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 had codenamed B07. It probably won’t be launched with that name, will come in in some part of calendar 2027 that we believe will be a very big volume driver on top of what we we are doing with our current three products. So that is we are expecting as a 2027 launch. The three products we are expecting will be in the volume range right now in this calendar year between 7 to 8,000amonth, which is the kind of number that we have put out when we launch the 9s. So I’m 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’ve got to 9s. That that’s a number which is achievable. The cafe question I already answered Raghu by way of saying that there’s 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 ratio. That that to us is the best approach. While we as an industry are in touch with government, we’ve got to see how we grow the business and each subsegment individually, which is ice, to not curtail growth of ice, worrying about ratio and EV to maximize it, to leverage the opportunity that there is.
So that’s really the way we are thinking about it. There’s 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 cells and all of that on EV is actually been very seamless. So we actually don’t have EV specific supply chain disruption at all. Any, any supply chain disruption that is happening is based, is actually impacting ICE and EV both because we, we do now have very good and high technology even in the ice. So if there’s anything happening there, it’s happening here as well.
Unidentified Participant
Just to get the regulation out. Is BS7 something that is from a cost implication perspective going to be meaningful particularly on the diesel heavy portfolio? If you can share your thoughts. Yeah, no, I don’t think it was.
Rajesh Kajuria
I don’t think we lose here to help me with this. But it’s not going to be, I don’t think we’re going to have a penalty on diesel compared to gasoline on BS7. A lot of work has already been done on BS 6.2 so the incremental cost of doing diesel or gasoline may not be disproportionately high. We are right now working on being ready with BS7. We don’t, we’re not sure the timing but we are ready, we will be ready with BS7 and the cost is something we’ll have to save. See, I mean we, the whole industry did take BS6.
Unidentified Participant
Okay, got it. Just last question. Amar to you. I think on the meal if you can share what was the PLI that was you know, as a percentage that we are accruing on the subsidiary and with the all capacity that we’ve announced is there any change to The CapEx outlook versus what we had shared earlier or anything that you know we should think through?
Rajesh Kajuria
Capex will talk about in May because then we’ll give you, I mean there’s, it’s all in within what we had communicated earlier. We’re always anticipated there’ll be Greenfield and all of that is in there. But we’ll give you more on PLI we’ve been accruing 13% on wherever there is there is approval and as each of as Rajesh clearly laid out, I think this quarter there will be to the extent there is 9s we will have similar and then next quarter with. The BE6 we may not accrue or assume to accrue 13 as we go into Q1. Basically the way this works Kunjan, is it depends on which suppliers in the value chain also qualify for pli. So basically if nobody qualifies in that period then you can accrue the whole spread of 13. But if someone else then there’s a sharing. So it could range anywhere between 8 and 13 depending on which suppliers also qualify for PLI in your value chain. So we’ve been accruing 13 because nobody.
Rajesh Kajuria
Else has nobody else.
Unidentified Participant
So we have accrued the full 13. But as we get into Q1 we’ll have to see whether it’s 8 or 13 or whatever is the number. For example. LMM to Rajesh’s point is at a lower level because there are suppliers who qualify.
Unidentified Participant
Thank you. Rakesh. Hey. Hi. Thanks for taking my question. 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. We go back four, five years when 7700 was launched, we had a similar situation. Pretty solid demand, more skewed towards higher variant, maybe less than what we are seeing with 7x. And then as the demand stabilizes we start seeing that the product started being seen as a premium product priced above 2025 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 another address that once the demand stabilizes for the premium product it doesn’t gets restricted to a smaller price point but the entire price point from 13 to 25 lakh is addressed.
Rajesh Kajuria
Okay Rakesh, great question. So learning out of that, what we’ve done in 7x, so 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 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 7x so 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.
Rajesh Kajuria
Which were 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 brand stood for a certain tech value proposition. The lower end were not offering that. This we’ve taken care of this time, you know, so we Basically the key part. So Da Vinci suspension or the Adrenox connectivity or the three screens are there right from the entryway variant of ax. So it will 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 high 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 you would start seeing a more diverse demand across portfolio. Yeah.
Rajesh Kajuria
The question I’m trying to come to. Essentially is that 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 just introduced the Rocks, a special version on Rocks called Rockstar Star Edition which is actually the AX7 which is at I think 16.5 or 9, 8 or 8 or 16.8 lakhs which actually achieves this objective. So we had kept that option open in the when we launched Rocks that there is a slot in between which was the AX7 equivalent slot which we didn’t use and you 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 at that is something that we. I’m sure we’ll talk about as we talk about our product portfolio and share more with you as we go along.
Unidentified Participant
Okay. Just one clarification on your tractor capacity. How is it positioned and for the next year?
Rajesh Kajuria
Yeah, it’s. It’s tight honestly because we are not, we are not. We were not prepared for 25% growth this year. So we are scrambling to put capacity in more. More by way of Swaraj than farm division Swaraj. We have a plant three 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 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 F20. Sir.
Unidentified Participant
Thanks. Raghu, your last question. Thanks sir. To Amar sir, if you can talk about the farm subsidiaries there was this non cash write offs this quarter. So next quarter onwards we should expect a normalized performance.
Amarjyoti Barua
So for some of the subsidiaries where we have done 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. Right. So there will be cost 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 has been completed. So you’ll at least for this year don’t expect any dramatic changes next year towards the second half.
You should see the change in trajectory.
Unidentified Participant
Thank you. Great.
operator
We are running a bit over time so we will just close this. You have a question? Okay, Please proceed.
Unidentified Participant
Yeah, good afternoon. 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?
Rajesh Kajuria
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’ll go into left hand drive markets in Europe potentially but only after testing and being confident that it’s an acceptable and a successful, successful value proposition in the right hand drive market. So we don’t want to globalize recklessly. We have said that we will do it in a very calibrated way.
See the, the response that we get in right hand drive market, maybe Australia, New Zealand first and then uk. So that’s where we are on ev. It will be very watchful and calibrated.
Rajesh Kajuria
On. Margins on auto. You know the approach, our approach has always been and we just had some questions around, you know 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 price 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 Visa customers, price positioning vis a vis customers intact so the brands continue to have momentum and then work on costs.
And that as you’ve 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 product. So you know, it’s really the balancing between how to get margins by being very well priced and managing costs.
Unidentified Participant
Well sir, out of let’s say 50. 50 or thousand SUVs which you sell. Every month, how many of the customers. Are coming who are Mahindra customers in some way and how many are coming from other brands? If you can help us.
Rajesh Kajuria
Yeah. So you know we’ve shared this earlier for EVs where 80% of the customers that we got in last year were actually non Mahindra customers in the rest of the portfolio it depends based on product. So, for example 3xo which we do almost 9,10,000amonth is not, you know, are all new or first time buyers. They’re not really Mahindra customers. Bolero Bolero Neo will get a lot of Mahindra customers. XUV7XO is getting a lot of customers which are non Mahindra. So it really varies across product portfolio. I don’t want to give you a very broad one number because that will be not the right way to interpret it.
Unidentified Participant
Thank you.
operator
Great. With that we’ll close this meeting. Thank you so much everyone for joining us. Please join us for refreshments. It.