SML Mahindra Ltd - 505192 - Announcement under Regulation 30 (LODR)-Earnings Call Transcript
SML Mahindra Limited Trucks & Buses
Regd. Office & Works: Village Asron, Distt. Shahid Bhagat Singh Nagar (Nawanshahar) Punjab – 144533
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SML/SEC/2026-27-010 24th April, 2026
Dy. General Manager- Corporate Relationship Department BSE Limited P.J Towers, Dalal Street Fort, Mumbai-400 001 Scrip Code: 505192
The Secretary, National Stock Exchange of India Ltd. Exchange Plaza, 5th Floor, Plot no. C/1, G Block Bandra- Kurla Complex Bandra (E), Mumbai – 400 051 Symbol: SMLMAH
Sub: Transcript of the Press/Analyst/ Institutional Investor Call
This is in continuation of our letter dated 15th April, 2026 providing advance intimation of the SML Mahindra Limited Press / Analyst / Institutional Investor Call scheduled and held on 20th April, 2026 at 5:30 P.M. (IST), and our letters dated 20th April, 2026 submitting a copy of the Presentation and Audio-video recording for the said call.
We hereby submit the Transcript of the aforesaid Conference Call, which is also available on the Company’s Link: https://smlmahindra.com/storage/uploads/finance_reports/public_notice/1777044759- SML%20Mahindra%20Limited%20-%20Press%20and%20Analyst%20Meet%20- %20Q4%20F26F.pdf.
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Please note that only publicly available documents were referred to during the discussion and that no unpublished price sensitive information was shared during the Earnings Call.
You are requested to kindly take the same on record and treat it as compliance with the applicable provisions of the Listing Regulations.
Yours sincerely,
For SML MAHINDRA LIMITED (Formerly SML ISUZU LIMITED)
(PARVESH MADAN) Company Secretary & Compliance Officer pmadan@smlmahindra.com ACS-31266
SML Mahindra Limited (Formerly SML Isuzu Limited) Corporate Office: 1st Floor, T-7 Tech Park, C-119, Industrial Area Phase-7, SAS Nagar (Mohali) – 160055 (Punjab), Telephone 0172 - 2647700-02 CIN No. L50101PB1983PLC005516 Website: www.smlmahindra.com
SML MAHINDRA LIMITED
Press/Analyst/Institutional Investor Conference Call
Q4 FY 2026
20th April 2026, 5:30 PM
MANAGEMENT:
MR. VINOD KUMAR SAHAY
Executive Chairman – SML Mahindra Limited
Chairman - Mahindra Advanced Technologies
President – Aerospace, Trucks, Buses & CE (Mahindra Group)
MR. AMARJYOTI BARUA
Group CFO - Mahindra & Mahindra Limited
MS. MANASWINI GOEL
CFO - Aerospace, Advanced Technologies, Trucks & Buses (Mahindra Group)
Moderator – Ms. Divya Gulati
1
Amarjyoti Barua
Good evening. First of all, thank you to all of you for making the time to join this call.
This is the first call for SML Mahindra since the acquisition. It's been eight months.
We just thought it would be a good time to introduce you to all the things that have
happened since. On my right is Vinod Sahay, who is the Executive Chairman for SML
and is also the President for Aero Advanced Technologies and Trucks and Buses
within the Mahindra Group. Also on his right is Manaswani Goyal, who is Sector CFO.
As you know, I am Amarjyoti Barua. I'm the Mahindra Group CFO. The idea today is
to walk you through all that has happened in the last eight months and also the
performance of the company. We will start with a presentation. Hopefully all of you
can see it, and I'll turn it over to Vinod. And the three of us will attempt to answer all
your questions once we are done with the presentation.
Vinod Kumar Sahay
Good evening, friends. We just quickly take you through a brief presentation and the
key highlights for the year FY 2026 and also quarter four.
Just to recap on 26th April 2025, we announced the deal of Mahindra taking over earlier Promoter stake of Sumitomo and Isuzu and on 1st August 2025, we completed
the transaction and acquired 58.96% of controlling stake in SML Isuzu. The same day
the Board of Directors and key leadership of SML was reconstituted. We immediately
kicked off the synergy and integration projects, which I'll talk briefly and update you
on where we are on some of the key ones. And on 8th October, which was one of the
SPA conditions, we renamed the Company from SML Isuzu to SML Mahindra, we, as
you know, we have just completed eight months into this transaction since we came
in, and in eight months, in the record 8 months after takeover, we have already
managed to integrate the business. SML Mahindra is operating like any other
Mahindra Group Company as we speak. And we have also completed the SPA
conditions as we are speaking and kicked off several synergy and integration projects
from the long-term perspective of taking SML to its true potential.
Next slide.
2
During the Global Investor Day in November 2025, we had set announced our
aspiration that In Mahindra, trucks and buses businesses, both brands combined, we
aspire to be top three in India's ILCV trucks and buses segment, intermediate and
light commercial vehicle buses and trucks segment with focus play in HCVs.
Next slide.
Now coming to the key highlights of the year we just closed.
We have outgrown the industry. We grew at 17% in the industry versus industry
growth of 13%. Our revenue was up 18%. PAT was up 31% in the year. And our rating
went two notches up from AA minus to AA plus.
Our experience since August 2025 reconfirms our rationale for the acquisition. The
Company is in good shape and poised for future growth. The integration is going as
per plan and ensures we are on track. Supply chain, we are well in control of and
managing even the current crisis, the team is managing quite well. And the
organization, we already set up the joint leadership for both the businesses put
together at the senior most level.
Next slide.
So, this is briefly, I wanted to talk and I will spend some time on this slide. Some of
you would recall that the same slide we had presented during the Global Investor Day
also, and here we are talking about the brief update on that. One by one, we'll go
against each of the six key pillars of our integration strategy which we are working
on.
Starting with the products, we have already completed the roadmap for the
integrated product and aggregate strategy plan and the work has commenced. We
are targeting the best uptime and the lowest TCO in the industry. Many of our
products already have that and going forward, we will continue to be the leader in
these segments. Connected vehicle is another big play. Mahindra IMAX is something
which is well proven. SML also has an in-house technology lever, which we are going
3
to adopt both and integrate to harness the best of both. Our both technology vehicles
are already capable of the technology of digital prognosis and analytics with which
we are not only driving lower cost of maintenance and higher uptime but also looking
at proactive efforts to be able to reach out to customers faster and hence overcome
the network challenges which comes with the Challenger brand. Integrated DMS is
another area where we have kicked off, where both teams already have their
DMS and it's working quite well. But going forward, not only we are integrating the
DMS, but we are already also incorporating AI and ML-based capabilities in the DMS
to be able to do proactive pipeline management and guidance to the sales team. All
these are marked in green because in all of this, we are not saying it is completed,
but we are ahead of the plan which we have made, and they are going quite well. As
far as brand strategy is concerned, the reason we are marked yellow is that anything
which is customer facing, anything which is our partner facing because they're
independent network for both the brands and anything which is related to
employees, we are taking more time because this needs to be well thought through.
Both the brands have their own strength, and they will continue and they stand for
quite different things in the market. Mostly they don't cannibalise each other. They
have independent network. And hence they are continuing. Going forward, we will
continue to evaluate which brand can play a higher role in which segment. But that's
something which we will go very, very slowly. As we speak, the strategy is very clear
that when it comes to customers, he or she would continue to have the choice of
choosing between the two brands which stand independently for their own strength.
When it comes to network, it's another big area which we talked about. Both brands
are challenger brand and hence after sales service becomes a very important aspect
of the milestone which has to be covered to be coming to the consideration set of
the customers. Independently, both brands had roughly around 300 touch points.
Both put together become 600. In the first phase, we have already identified 150
service networks of both brands who will be providing additional service capability to
the other brand. And out of 150 such setups, 70 have already been operational, and
another 80 will be operational by the end of this quarter. So independently, both the
brands' network will go up to 450, then the figure of 300, which was 8 months back.
So that's related to service network. On sales, as I said, we'll be going carefully
because there are many cities, there are many districts where we have network of
both the dealerships and we don't want to disturb that. There are investments which
our partners have done. More than that, we are working towards the strategy of
Cross-badging the products which SML does not have, which Mahindra has, or vice
4
versa, can be made through cross-badging strategy, and that is what we are working
towards, and that's also part of the integrated product strategy which I talked about.
Unlocking capital is another big integration benefit whether it comes to sourcing or
aggregate synergy or manufacturing footprint. Just to give you an example, all of you
are aware that there is a ADAS regulation which has been announced which CV
industry has to get ready with and within the next 1 1/2 years. That itself is a
combined project which has been taken by both the companies put together, which
has led to significant saving both in the piece price for the component which
SML and Mahindra is going to source versus what would have been possible if it was
independent sourcing and a substantial reduction in the development cost also,
which we have brought down, brought in for SML.
The other part which comes is the sourcing lever. Some of the sourcing levers have
already been kicked in and SML will see the benefit of it in coming years. The
aggregate synergy I talked about, there is a technology piece which is coming on
account of the common talent pool which we talked about. While at the senior level,
the common talent has been announced on day one, whether it is myself as Executive
Chairman and the CEO and the CFO and Chief Operating Officer are common for both
the businesses.
Rest of the team are separate, but SML now gets the benefit of the larger talent pool
and the centre of excellence which Mahindra provides, including that of MRV. So for
example, ADAS, you know, we have huge amount of experience in MRV and Mahindra
Auto team, which has developed ADAS for all our Products and like XUV 7, starting
from XUV 7 and others, we are using the same talent capability to guide the
SML truck and bus product development team and our truck and bus product team
of Mahindra to be able to come up with the development faster and at a more
cost-effective situation than what otherwise would have been possible.
Culture and policy announcement is another area which a lot of work has happened,
whether it is in terms of commonizing SML policies with that of any other Mahindra
Group company, providing additional benefits, whether it is in terms of differentiated
talent management, with variable pay structure which Mahindra has, some of these
things have been introduced. Typical things like medical policy of SML employees
have been brought in line with the Mahindra medical policy. All of them, all of that
5
has gone down very, very well with SML employees who now are part of Mahindra
larger ecosystem and feel proud to be working with us together.
Next slide.
Now to just give you the highlights in terms of volume and market share for the full
year, our volume went up for cargo vehicles by 28% and passenger vehicle by 12%.
In terms of market share, we had a 20 basis point increase YOY in terms of cargo
vehicles and 80 basis point for passenger vehicles. So, passenger vehicles, which we
are SML Mahindra is already quite strong and it's already #3 player in ILCV segment.
We further went up by 80 basis point.
Next slide.
So, as I said earlier, revenues, we had an increase of 18%. However, we overperformed
in terms of bottom
line and PAT growth has been 31% for the year.
Coming to quarter four, the volume growth for cargo vehicle was 10% and passengers
16%. Market share, there is a minor blip, but I'll explain. The reason for that was that
we executed large number of institutional orders in quarter three itself as a
preparation for season of school buses in quarter four, where the large capacity gets
booked in quarter four. And hence, while for quarter four standalone, it is showing a
decline because last year the previous management had executed most part of the
institutional order in quarter four, which we instituted and delivered in quarter three
itself to free up the capacity for buses for quarter four, and hence while overall, we
have actually grown in market share, as you saw in the previous slide. Quarter 4 looks
a decline, but not a major concern. And passenger vehicles, we actually in quarter
four, because of being able to free up the capacity and use the quarter four peak
period to be able to drive bus business even higher, we outperformed the industry
and gained 170 basis point market share in quarter four for buses, which is a
stronghold of SML Mahindra.
Next slide.
So, as you can see, for quarter four, our revenue went up by 16%. Our PAT went up
by 2%. In quarter four, we had certain inflationary pressures, which we have passed
6
on some price increase in quarter one. And going forward, we will continue to try and
mitigate this situation.
Next slide.
So with that, thanks a lot for your patient agree and now we will be opening for
question and answers.
Divya, over to you.
Divya Gulati
Thanks Vinod. We'll now open the floor for questions. Please raise your hand on
Teams or press *5 on your phone to ask your question.
Divya Gulati
We'll take the first question from Nomura.
Kapil, please proceed.
Kapil
Yeah. First of all, congratulations, team. I think this has been a significant value
creation for the shareholders. So, I hope we continue doing well. My first question is
on the volumes. If you could just share the outlook for the industry growth
and how is the market share situation evolving? And second, if you could also talk
about what is the potential synergy benefit, we should expect? Is it more in the back
end or is it more in the front end? And where are we in this journey? How much have
we covered? Just that. Yeah, thanks
Vinod Kumar Sahay
So, Kapil, as you know, the CV industry last financial year is a tale of two cities. For the
first half, the industry was almost flat with just about 2% increase. But in second half,
post the GST reform, the industry grew quite well, almost 22%. Now within that, if you
analyse the growth actually was much higher in case of trucks, the cargo segment, as
we call it.
And there was growth, but it was lesser growth in passenger segment. As we speak,
as far as SML Mahindra is concerned, you know we are in the peak selling season,
7
quarter four and quarter one is the peak selling season for school buses, which is a
strong play of SML Mahindra.
What we are seeing today is, in spite of all the challenges which we have around so
far, we don't see any major concern as far as demand situation is concerned. How the
industry will play after quarter one is dependent upon multiple factors, especially in
view of the current geopolitical situation.
the likely talks about the diesel price increase. So my suggestion is that we wait for
some more time and then only once we see how things emerge in the next couple of
weeks or a month, including that of diesel price, because CVs are very, very sensitive
to diesel price increase. As of now, what we know for a fact is that when it comes to
cargo segment, the industry is sitting on a huge pent-up demand of replacement
cycle. The industry is also sitting up based on the economic growth, which was going
post-GST reform and the outlook of it. Many segments, many operators, many of our
customers were looking at fleet expansion. Same was the situation in because of
buses, though at a moderate level, but it was also going quite strong. How much of
that gets impacted or not based on the prevailing situation is something we should
wait for some more time. As far as your second question, integration is concerned, I
try to.
Amarjyoti Barua
I will just on that first part though, just add for everybody's benefit. Like everybody
else in the group, the SML Mahindra has also worked out multiple scenarios and has
an action plan for every scenario. So, we are not waiting for things to evolve. We have
a very clear plan of action depending on how things evolve, whether it is plus, minus,
it shouldn't matter we are prepared for it.
Vinod Kumar Sahay
Yeah, thank you.
Integration and synergy approach benefits Kapil are on both sides, back end as well
as front end. We are already seeing some early benefits on sourcing front. We are
working on a
lot of value engineering
ideas having compared both the
both the brands and their products and aggregates. There are opportunities on both
sides, especially on the SML side, in terms of bringing the cost efficiency on their
products. There are manufacturing related synergy which can bring down
8
The cost, as well as the Capex outlay, so that's another area we are working on.
Engineering related synergies are huge, because you know SML has limited
capabilities of engineering on key areas like engine development or ADAS or some
of those things, where with Mahindra access to MRV.
We are opening that to SML and SML teams are now closely working with Mahindra
engineers on truck and bus also on PTD side of MRV. Having said that, front-end
synergies are also there, but front-end synergy is something where we have to be
mindful of the fact that as we speak, the networks are independent. There are
independent dealers who have invested for both the brands. So that's one area where
we are treading carefully. Wherever there is, there are territories both where both the
both the brands don't have a presence, then it's obvious case that we will appoint a
common dealer which will now we have a higher probability of getting because both
brands put together is providing higher potential for looking at dealers in some of
this unrepresented territory. Our territories, like larger cities, where we have dealers
of both the brands, we don't intend touching that much, but of course the benefit
both will get in terms of the scale as well as the ability to Mahindra to drive home
some of the efficiencies.
Amarjyoti Barua
Kapil, I'd just like to add that the main thesis behind this acquisition was growth. We
are two challenger brands which have come together and ultimately the aim is to
become a top three player, as you heard Vinod say. And so, the maximum value
creation will happen from growth. And we believe very strongly that because of the
complementary nature of these two products of two big OEMs, we should be able to
drive significant growth, which is why we have set out the ambition we did. So clearly,
profitability will improve on a combined basis because of everything that Vinod
mentioned. But can't lose sight of the fact that the main reason for bringing these
two companies together was growth.
Kapil
Sure, sir. Thank you, very much and best wishes.
Divya Gulati
Thanks, Kapil. The second question we will take from Nuvama. This is Raghu. Please
proceed.
9
Raghu
Good evening. Congratulations on the strong FY 2026 performance and thank you
very much for this call. Firstly, sir, can you indicate, is there any plan or thought
process to merge both companies under one entity? Is there a plan to delist SML
sometime in the future? Secondly, you alluded that supply chain current crisis, the
team is managing well. Can you elaborate a bit whether it is relating to the shortages
in supplies or is there also cost increases and how you are, you know, facing this. And
lastly, you also spoke about ADAS regulation and if you can give some indications,
what are the efforts, what is the kind of cost impact here. Thank you.
Vinod Kumar Sahay
So, Raghu, as far as your question related to delisting of SML is concerned, the clear
answer to that is no. I think that was something which was clarified by Anish and
Rajesh the day we announced the deal itself.
Regarding your first question related to mergers and all, I would only say is that at
this moment we are working on long-term strategy as Amar said on various things
and just give us some more time and at the right time we'll come back and share with
you more on that.
Supply chain, because of this current geopolitical issue and the war going on, there
is a definite disruption which has happened and all of you have reported that. And
that's true for the automotive supply chain also. What, when I mentioned the team
has managed it well is we have not lost any vehicle production till quarter four in spite
of several challenges, whether it is related to availability of gas or whether it is related
to many other commodity availability, including aluminium, including polymers.
So that has been managed well. Our current focus is clearly to not lose production.
As far as inflationary pressure is concerned, that's real. Things like steel started
moving up even before war, but post that we have seen further increase in that.
Aluminium we have seen in phase, copper we have seen in phase, polymers we have
seen in phase. Gases are not available and many times it trades at a premium in the
market. So yes, there is a significant cost increase which has happened. We believe
most of them should be temporary. As soon as the thing starts becoming normal,
prices will cool off. But at this moment, we are definitely feeling that pressure. As far
as ADAS is concerned, it's a significant development. Cost and exact detail we will
share at the time of launch.
10
Raghu
Thank you, sir. Thank you very much and wishing all the best.
Amarjyoti Barua
Thank you, Raghu
Divya Gulati
Thanks, Raghu.
We'll take the next question from ET Auto. Kriti, please proceed.
Kriti
Congratulations on the result and the acquisition. And we can see that it is working
well. I just want to understand that as you mentioned about the market share going
down in cargo segment, and you talked about the growth aspects. I want to
understand, as you said, that West Asia pressure is ongoing. How do you see it in the
Q1 FY 2027? And in the long term, how do you see the industry's growth? Along with
this, what are the possible challenges? targets you are setting for this fiscal year, and
challenges that you see.
Vinod Kumar Sahay
So, Kriti, I mentioned that market share actually for the full year we grew both in cargo
segment as well as in buses. Quarter 4 decline had only to do with the fact that we
decided to pre-pone the
institutional orders which we already had and
executed most of it in quarter three. And hence, while for the full year we have gained
in cargo market share, quarter four shows a bit decline because in FY 2025, in quarter
four, most of the institutional orders of cargo was executed in quarter four. But the
benefit of
that
you
clearly
saw
is
that
in quarter
four,
for
the bus segment, which is the peak selling season, and there we gained 170 basis
points in just one quarter. So, we are very much in track with our long-term aspiration,
which was declared at the time of announcing the deal in April, that an FY31, we are
looking at a market share aspiration of 10 to 12% with both brands combined
presence, which right now is at 6 and we are very much planning and working towards
that. As far as industry outlook is concerned, I already answered that earlier, but let
me give you a
sense you asked about
the
long-term perspective.
India growth story is here to stay, and all of us know that and CV industry is very
11
directly linked to the GDP growth of India, especially the manufacturing GDP and the
mining GDP. And we believe if India continues to grow, which it will, the long-term
outlook of the industry is very positive. India is one of the four large markets of
commercial vehicles across the world. China,
India, Western Europe, and
North America are the four. And amongst these four, China and India are the only
ones which are growing, and India is hence a very large opportunity. In the 3 1/2
tonne plus segment with Mahindra Truck and versus segment last year, the whole
industry revenue pool was 125,000 crores, 1.25 lakh crores, and we have got 6 to 7
percent market share out of that. And hence, our headroom for growth, both in terms
of volume market share, revenue pool and profit pool, is significant. And that's what
we are after.
Kriti
Sir, could you give a number for that if possible? Like how much are you estimating?
Vinod Kumar Sahay
See, in the Global Investor Day, we did mention that around FY31, we are talking
targeting 15,000 crores.
Kriti
Okay, and my last question to you is, are you also planning to apply for this electric
bus standards that are ongoing?
Vinod Kumar Sahay
So, Kriti, right now we our electric bus is under development and in this financial year
itself, we'll be launching that. Post that, we will evaluate every opportunity on the
merit of its commercial viability and returns and we will take the appropriate call, just
to repeat towards the in this financial year itself, we are going to launch our first EV
bus and we will enter into this segment.
Kriti
Okay, thank you, sir.
Divya Gulati
The next question is from LIC Mutual Fund. Mahesh, please proceed.
12
Mahesh, you need to unmute yourself.
No Response
Okay, we will come back to Mahesh. We can take the next question. This is from Auto
Car Professional. Shahkar
Shahkar
Hello!
So, actually, a part of my question has already been answered. I wanted to understand
more about your EV plans, since you will be launching sometime in FY27. If you can
just explain, you know, what sizes of buses you are Looking to get into the
applications and, you know, the market potential, et cetera, et cetera, that would
provide some.
Vinod Kumar Sahay
I would suggest just wait for some time because launch is not in next quarter or so.
So, closer to the launch, we will share more details as what we do in most of our
product strategy, product launches in the group.
Shahkar
Sure, thank you.
Divya Gulati
The next question is from BOFA - Gunjan, go ahead.
Gunjan
Thanks for taking my questions. I just had a couple of follow-ups. Firstly, I think you
did mention that you know with the outlook you read, sort of give us a better idea
when some of these situations will settled. I want to hear from you that it's been a
month of uncertainty. Is there anything in terms of deferment of demand or, you
know, a little bit of impact that you're seeing in terms of conversations with your
customer base and is, you know, the reason I ask that is, you know, while there's no
production hit but there was some sort of moderation that we noted in the month of
March in terms of the industry volume growth. So just trying to understand, is it the
phase of uncertainty that's driving deferment of demand or is there anything else that
we should keep in mind?
13
Vinod Kumar Sahay
So, Gunjan, as I mentioned that we are in the peak of school bus season and thankfully
we are not seeing any deferment or any slowdown. Our plans for quarter one, as we
speak largely, is similar to what we had otherwise planned. But I must say situation is
something which can change very drastically. People are talking about, I mean, diesel
price increase in coming weeks. We don't know whether it will happen, not happen.
We don't know to what extent it would or not. And as I mentioned earlier, that is one
factor which does seem to have temporarily impact, may have in past we have seen.
I've been in this industry for almost three decades and I know that in past it has had
moderate impact temporarily. But what is very very strong is the tailwind which we
are facing. Post-GST reform, you saw the industry which was flat just catapult into
22 percent growth. If I give you some figures, within that, ICV trucks had 42 percent
growth, LCV trucks had 20 percent, MCV trucks has 28 percent, and ILCV was at 8
percent growth. All of these were flat to neutral in H1. So, there is a strong inherent
demand which is there. How much of that will be temporarily impacted because of
this situation? It's actually may be prudent to wait for a couple of weeks, how things
emerge, what decision Government takes, but as we speak, our plans seems to be not
impacted by the demand concern.
But, as Amar said, we have prepared for various scenarios as any other Mahindra
Group companies, and as it enforced, our counter measures will be in place very soon.
Gunjan
Got it. No, that's good to hear. My second question is on the commodity cost
inflation, which you mentioned that, you know, had some impact in this quarter as
well. And, you know, the way it looks like there's probably more to go in next quarter
given the lag effects. Can you talk a little bit about what is the sort of cost inflation
that we saw in this quarter as a headwind? And how should we think about it going
into quarter one and what sort of pricing action has been taken to offset that?
Vinod Kumar Sahay
So on in quarter four, we saw around 1.3 percent increase, which at annualised level
would be around 3.5 to 3.7 percent. Having said that, some part of this increase is
what I would believe would be short-term in nature because due to lack of availability,
certain prices have gone up or due to constrained supply chain, certain prices have
14
gone up and we are all indexed to the index of the particular commodity.
We have aligned SML sourcing largely to the Mahindra indexing system which we
have with our suppliers. So, as it goes has gone up, whenever it comes down, we'll
get the equal benefit. We have already taken a price increase starting from
15th of April, which for SML products, mostly it is around 2 percent and, in some
cases, we have taken 3 percent price increase. Going forward, it will be analysed and
we will see if we need to take more in coming quarters. But I'm very hopeful personally
that once things start becoming normal, many of this commodity which have seen
inflation because of the short term, supply is getting disrupted should pull off.
Gunjan
So just to get the number right, you said 1.3 percent. This is the percent margin hit
or headwind in quarter four and it is almost three. You mentioned number of three
something which is pending for quarter one. Did I catch that right?
Vinod Kumar Sahay
No, I mentioned that annualised impact of that would be around 3 1/2 percent.
of what already happened in quarter four.
Gunjan
Okay, and there's more to think in terms of quarter one as well, right? Because a lot
of these steel price revisions, etc. would have happened. Like just trying to understand
is there more headwind that we should bear in mind for next quarter.
Vinod Kumar Sahay
So, quarter one has seen some further increases in few commodities, but it's also
volatile. It is. There are commodities which are going up for a week and coming down
next week. So, difficult to say whether it will continuously continue like this. So, but
yes, short answer to your question is that we have seen in many commodities,
some increase beyond quarter four increases also.
Amarjyoti Barua
But we do have the price increases, which will also take hold. They'll take a little bit of
time, but they will take hold. And then the other thing is we do hedge our
commodities. So, there is going to be a counter impact of those hedges as we go
through. Of course, not enough to offset because steel, for example, we cannot
hedge. There is no option. But many of the others, there are hedges which come into
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play. So, we don't see as of today, unless the trend continues, this kind of inflation
continuing throughout F27. As I said, depends, of course, on how the situation in the
Middle East evolves.
Gunjan
And for now, I guess the price should largely cover up the headwinds.
Amarjyoti Barua
That is the right way to think about it, yes.
Gunjan
Okay, last question, a little bit, you know, zoomed out. I think clearly, it's also from a
policy perspective, your energy security, energy diversification becomes a pretty
pertinent theme. And when you look at your strategy, you know, you did mention
about the electric bus launch that happens this year. But anything that you can sort
of give us, how should we see the industry shift panning out? Is there increasingly
more, you know, from the government orders perspective, more, you know, more
shift likely towards the e-buses? Some colour from you in the sense that how should
we think out the industry shaping up with the current scenario.
Vinod Kumar Sahay
Gunjan, first of all, let me give you a larger perspective that when it comes to CV
industry, electric is not necessarily the only green technology we are talking about,
especially for heavy trucks, it's hydrogen and fuel cells, which will also play a big way
and not just electric. However, for city buses and smaller commercial vehicle or light
commercial vehicle, electric will be there. What we are seeing as of now, barring buses
which are
linked to STU purchase, state transport undertaking purchase.
So, as I said, barring STU purchasing buses, we are not seeing any private sector
player, whether it is for employee transport or school transport, buying electric buses.
There are multiple challenges related to the cost, the payback period, as well as
charging infrastructure. But as it starts improving, currently the industry share is less
than 1% of the segment which we are talking about, including in trucks, while smaller
commercial vehicle, not the segment where SML plays, are seeing some electric
vehicles in the less than 3 1/2 tonne capacity. But beyond that, even electric has not
kicked in cargo vehicle. Heavy trucks is seeing some segments moving in. My own
personal view is that heavy trucks largely will move towards hydrogen cells going
forward.
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We are, we are quiet, when it comes to our electric buses, we are mastering the
technology. You know, in Mahindra, we have very good capabilities of electric
vehicles.
I personally,
in my previous role, worked along with Velu for
they loaded the engineering and I and my team was doing all the sourcing for electric
components and systems. We are well aware of the technology, and we can move
very quickly. At this moment, from the point of view of technical capability and
development, we are there. When to put more Capex to launch the product is a
cautious call we will take based on the market evolution because we have our current
priority is that market on our side is so huge for a player like us, which is at a combined
play, 6 to 7 percent market share. Our current headroom which we want to capture is
this segment. We are not at 40, 45 percent market share where a 1% or 2% industry
looks of EVs looks very attractive to us right now. But we can move in very, very
quickly. There are some things which we are working on, including on aggregates as
well as powertrain strategy, which gives us capability. And at the moment, the industry
will be ripe enough, big enough will be there.
Gunjan
Got it. Thank you so much.
Divya Gulati
We can take one last question from Mahesh. (LIC Mutual Fund)
Mahesh
Yeah, so thank you so much for the opportunity. Sir, just wanted to understand your
product pipeline over the next two years. I mean, our parent, Mahindra, has launched
many innovative products in their own category, which are liked by the market. So,
are we going to use the capability of the Mahindra for launching our product pipeline
in terms of innovative products?
Vinod Kumar Sahay
The short answer is yes. Having said that, the segments are very different. There's a
vehicle engineering side for commercial vehicles or heavy trucking business, which is
independent because that requires a different set of development process and
motivation and testing validation process. Whereas for many electrical and electronic
technologies, things like ADAS, things like powertrain, there's a lot of centre of
excellence benefit which we draw from Velu team and MRV. I just gave an example
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of ADAS for an example. SML has, when we acquired the Company SML, SML previous
management had already started the process of developing a new engine, 4 valve
engine in diesel as well as CNG for a 3.8 litre engine. Standalone SML would take
more time in that, but we are working towards helping that team with the Mahindra
capability to do that. So, there are a number of examples where we'll work together.
But there are a lot of things which Truck and Bus team of SML and Mahindra do
independently. The larger product plan and pipeline is something which we will
discuss closer to the launch. We don't share those details much ahead of its time, but
there are a lot being worked to enhance the portfolio, to increase the market
participation of both the brands, as well as to increase the competitiveness of the
current products.
Amarjyoti Barua
I think, you had a couple of products that you've already launched in the last eight
months, right?
Vinod Kumar Sahay
So, I'll just give you an example. We launched three products in the last eight months.
One was advanced life care support ambulance, which is doing quite well. This SML
had displayed in the near Bharat mobility, but the launch we kicked off and we did a
couple of months back. It's gaining good traction. There is a new bus of 15 to 18
certain segment of Tamil Nadu maxi cab application where Mahindra branded buses
have been very strong and now SML has come with a higher power to weight ratio,
AC driven buses in the same capacity and both put together actually our combined
market share has gone up in that segment. There is a front overhang AC bus of Heroi
brand which has been introduced and that's gaining ground every day. But there are
a lot in pipeline as both standalone products of both brands as well as cross-badging.
As I said, the largest strategy is to one increase the play of SML Mahindra to get into
segments which they are not in. For example, ICV segment, there is a part of segment
in which SML participates because of its partnering limitation. And we are going to
take
them beyond
that
so
that
they have a
larger participation.
Same applies for LCV, ICV trucks and buses. So that's one part of the strategy. The
other part of the strategy is to make the current offerings refreshed with better
capabilities
and
better
operating
economics
and
better
TCO.
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Amarjyoti Barua
So, everybody, as we have mentioned, this was the last question we could take. We
are way over time. But what I just wanted to close out with is, first of all, thanks to all
of you for joining. Second, we do expect to have a much longer format in the July
meeting, which will also be closed to the AGM. So, we'll talk a lot more about go
forward strategy and some of the and answer some of the questions you have. For
now, we just wanted to thank you all for taking the time to join us today and look
forward to many such more interactions. Divya, back to you.
Divya Gulati
Thank you, Vinod, Amar, Manaswani, for the call. And thank you everyone for joining
us today. Have a great evening.
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