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Informist, Thursday, Jul. 30, 2026

 

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--M&M: Farm labour shortage is boosting mechanisation
--CONTEXT: Comments by mgmt of M&M in post-earnings press conference 
--M&M: Sentiment for farm ops is reasonably positive 
--M&M: Seeing inflation in aluminium, copper, steel, rubber 
--M&M: Labour shortage affected co's production in Q1 
--M&M: High commodity inflation affected farm division Q1 profitability 
--M&M: Will re-look at revising tractor sales guidance post monsoon 
--M&M: Intend to list last mile mobility division in 2nd half FY27 
--M&M: Auto exports strong, new pdts leading growth 

 

MUMBAI/NEW DELHI – Mahindra & Mahindra Ltd. expects the impact of commodity inflation to continue up to the December quarter, the automaker's management told a post-earnings press conference Thursday. The recent price hikes by the company do not take into account inflation in steel and rubber prices or the recent uptick in aluminium prices, according to the management.

 

"So some spillover is likely into Q2 because of that... we've got a balance with some pressure coming from steel prices and rubber still continuing into Q2 and possibly into Q3," Amarjyoti Barua, chief financial officer of the Mahindra group, said. For commodities that it can hedge, inflation was up 22% for aluminium till May-Jun, after which it came down, as per the management.

 

"So for most of this year, calendar year, we have seen significant inflation in aluminium. We saw 10% inflation in copper during the calendar year, much worse in the fiscal year time frame. And the increase in steel (prices) for the calendar year is now standing at close to 24%," the management said, adding that the inflation in rubber was 53%. "...for the fiscal year, we have now seen steel up 10% and rubber up 30%," Barua said. Overall, commodity inflation had a 450-basis-point impact on the company's automotive business, and the company implemented a price hike of around 4.2% in the reporting period.

 

The sharp inflationary pressure zapped the profitability of the company's farm equipment division. Under this division, M&M manufactures tractors, builds advanced farm machinery, and provides digital farming-as-a-service solutions. "...it is a very high level of commodity inflation which has affected the overall profits," said Rajesh Jejurikar, executive director and chief executive officer of M&M's automotive and farm sectors.

 

"Despite that (commodity pressure), at the net profit level, the farm business has also grown 15%," Jejurikar said. "So, that's a function of the volumes peaking to offset some of the margin pressures that exist right now. If commodity inflation eases, we'll start seeing that benefit coming in as well," he added. M&M's farm division faced a 350-bp impact due to rising prices of steel and rubber. However, this was offset by price increases and measures around operating costs.

 

M&M had previously guided for 5% growth for the tractor industry in FY27, despite forecasts of a weaker monsoon this year. "Last year, second half was on a high base post GST (cut)," Jejurikar said. "We are mindful that second half will not be as strong as the first half." After a weak start, the monsoon in India has improved, and the season's deficit has narrowed to around 15%. The company will revisit its guidance for the tractor industry sales growth after the monsoon ends.

 

"Sentiment on the ground, because rains have now come in large parts of the country, is also reasonably positive," Jejurikar said, adding that this is enabling tractor sales despite the forecasts.

 

M&M's tractor division is getting a fillip from increasing mechanisation at farms in India. "A lot (of this mechanisation) is being driven by farm labour shortage," Anish Shah, chief executive officer and managing director of the Mahindra Group, said. India's farms are facing labour shortages because of labour moving towards industrial areas, he said.

 

Labour shortage as a "trend" is benefitting M&M's farm division. However, in the June quarter, M&M's production activities were affected by labour shortages at its automotive plants. "At least 3-4 of our suppliers were impacted pretty badly by labour shortage (in Apr-Jun)," Jejurikar said. Production was impeded by gas shortage spurred by the war in West Asia, then by assembly elections in multiple states, among other issues. "We would have produced more if we didn't have significant shortages out of three or four key suppliers," he said.

 

Despite the two wars going on in different parts of the world, M&M said its automotive exports have been rather strong, primarily because of new product launches. The company is selling the Scorpio in Indonesia and the 3XO in South Africa, Australia, and New Zealand. "We are working on a global lifestyle pick-up, and that will go into some of these existing markets, plus we will also open some new markets," Jejurikar said.

 

The company is mulling launching its electric cars in select markets such as Australia and the UK, which are right-hand-drive markets. M&M did not disclose the timing of these launches as the feasibility of such a move is still being evaluated.  

 

M&M had previously announced plans to list its electric three-wheeler and last-mile mobility business Mahindra Last Mile Mobility in FY27. Shah confirmed that this plan is on track and that the company will list it in the second half of FY27.

 

The automaker disclosed its earnings for the June quarter during market hours. It reported a net profit of INR 36.85 billion on revenues of INR 419.59 billion. Its shares closed at INR 3,283.70 on the National Stock Exchange, up 2% from Wednesday. The company closed the session as the top gainer in the benchmark Nifty 50 index.  End

 

Reported by Anand JC and Astha Oriel

Edited by Rajeev Pai

 

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