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Q4 2013 Earnings Call Transcript
Transcript Call Date 05/30/2013

Bharat Doshi - Executive Director & Group CFO: Good evening friends. It's a pleasure to meet you on this occasion of the annual results as well as the quarterly results, which were approved by the M&M Board earlier this afternoon.

I don't want to get into specifics of the results, because Parthasarathy here, whom you all know, is going to make the presentation and after that we will have Dr. Pawan Goenka on the Auto & Farm sector supported by his team.

We have the relevant Presidents and business heads of various businesses of the Group present here, so if anyone has questions beyond Auto & Farm sector also feel free to ask and the right person will give you the reply. After that there will be still time because after the presentations are over and there will be question and answer, there will be time to interact with senior management of the company. So, Partha, would you like to start on the results?

V.S. Parthasarathy - Group CIO, EVP – Group M&A, Finance and Accounts: Yes, just a minute. Now we can go live, right? With the technical glitch out of the way, let me extend a very warm welcome to all of you for the analyst meet for the year F 2013 and Q4. Let me start today by talking about three things. The three-speed economies, how did we fare and the financial in a little more detail.

First, the three-speed economies as coined by Christine Lagarde. What (he) talks about is that after a long struggle, U.S. is on the path to recovery and growth. Another developed economy, Japan, is trying to get to growth path through inflation mechanism. On the other hand, Europe is contracting. There is lot of talk about Europe – euro as a currency going to go away. We hope not, but there is a lot of uncertainty in that field.

The third part of the angle is the emerging markets, which itself is growing at varied speeds, and the currency and the GDP growths are varying in all these economy. India is slated to go between 5.6% to 6.7% in the next year and China around 7% kind of growth. So, varying levels of speed at which these economies are going. Within that, our story continues of lack of policy action and therefore lot of investment slowdown which we saw.

Luckily, with the some policy action that we saw in the recent past, there has been a lot of optimism and some financial market at least has seen positive momentum. However, more action is required in this front. So, it is almost like I soap opera, where we say there is action, inaction, reaction and waiting policy action. In the year, F 2014, we will all wait and watch this area to see how things span.

Coming to this, this proves to be a double-edged sword for us. On one hand, the export to the developed market becomes a little bit more problematic. However, on the other hand, the inter cooperation within the region, intra region cooperation becomes a very prominent action. Currency cooperation and MFN, FTS is becoming the talk of the day and this will give us benefits even as the export becomes a little bit challenging. Also, because of the various liquidity benefits that we are getting, we will – because of U.S., Europe all quantitative easing taking place, money will be available at much cheaper rates to Indian good corporates and investment to India may see the upswing.

Now, just before I go, I thought I will for a brief moment define Mahindra Group. It consists of ten business; sectors as it's shown here, 18 sectors. Basically from these sectors have come car to plane, crop to construction, soil to solar, farm to finance, and motherland care to mother care. So, various businesses that we are in.

We have transformed. We have transformed by setting new standards for our vehicles. We have transformed by helping pharma sow better seeds for tomorrow and get to a Farm-Tech Prosperity. We have helped get IT solutions versus IT service in the past, and soar greater heights and reach a higher plane with green vehicles, green energy and green homes, and create some magical moments along the way; and last but not least, redefine rural financing. So – and our shareholders who have been through with us on this, this shows the about 1% shareholding on the right, and on the left it shows that FIIs, NRIs have 44% shareholding, insurance companies are 14%, individuals are 15%, and the balance is with the promoters.

(How we faired)? Our Q4, the growth on the top line INR11,342 crores is a growth of 10%. EBITDA grew at 31% from INR1,092 crores to INR1,435 crores, and our PAT grew 6% from INR911 crores to INR963 crores. So you’ll wonder why when EBITDA has grown so much, PAT has not grown.

Last year, in Q4 we merged a company (of our) 100% subsidiary MADPL into M&M; actually it was demerged into M&M. So in this case, we got a benefit, one-time benefit of INR256 crores because of tax and other profit agreements from that transaction.

This year also we have a one-time benefit of INR91 crores because of sale of Mahindra Holiday shares. If you were to knockoff INR256 crores from last year and INR91 crores from this year, what you will have is that the profit growth will be 33%.

So, if I were to kind of summarize revenue 10%, EBITDA 31%, and PAT 33% growth for Q4. If you had to look at it for a full year, our revenue grew 25% to INR43,655 crores. EBITDA grew higher at 28% to INR5,329 crores and PAT grew 21% to 3,634, but then I apply the same change that I applied to Q4, and then the profit actual is 29% on an operating basis. So again, 25% revenue growth on a full year, 28% EBITDA growth and 29% PAT growth.

So, what happens over a five-year period is one thing that I looked at, so if you look at the figures for five years, the revenue grows at 30% CAGR, the PAT grew at 43% CAGR and EBITDA grew at 47% CAGR from 8.8% to 13.9%. So not only is it a one-year phenomenon or the last five years that's been the kind of growth that we are seeing.

On a consolidated basis, while I’ll share results in consolidated later, just to give you a broad perspective even in consolidated basis, we've grown revenue at 27% and profit at 31% group as a whole and EBITDA grew 24% during the period.

This has resulted in an EPS being INR61.6 from 2001 figure of INR2.7 and I looked at that value creation in terms of what the share price has done over a period of time and have picked up in year 21. So normally I wanted to look at 20, but I said 21 is shagun, so let's look at 21 years; Western, it’s also a full house, so I have looked at 21 years. So while Sensex grew at CAGR of 7.3% over this period, we grew at CAGR of 18.1%, and if I had INR1 invested then it would be INR32.8 today. So I said, okay, let me look at it over a period of 11 years. So the CAGR of Sensex is 16.6 year and we grew as at a CAGR of 36.3% over the same period a multiple up 30.2% and five years we grew at a CAGR up 20% much ahead of Sensex. I had also given gold for comparison and the same logic applies for gold as well. So if I were to say that whether it is medium, long or very long time. There has been value creation on a sustained basis.

Just to give another perspective, this is our investment in listed companies. We invested about INR3, 600 crores in listed companies and the value of the investment today in terms of market time as of 31st, March is INR17, 600 crores, again a huge value creation that has happened in our investments.

We have unlocked shareholders values since 2010 – 2005 by listing Tech Mahindra, Mahindra Finance and MHRA and also disinvesting to enable the listing process. We also received INR1, 000 crore dividend from our subsidiary companies and incorporate M&M they have taken action of giving a bonus share in 2005 and stock split in 2001, therefore enabling more value creation.

Not only is the P&L good, now I'll move on to the balance sheet where the debt equity ratio from 0.81 in 2009 has come down to as low as 0.3 in 2013 and gearing is at 0.76 showing a very enough flexible and strong balance sheet and to quote CRISIL, it says healthy financial profile supported by considerable financial flexibility arising from market value of investments, which I showed to you.

Therefore, we can say we are being a marathon runner with prudent capital allocation, supporting growth with strategic acquisition, maintaining a very strong credit rating and delivering long-term shareholder value.

So what drives us is a question which (indiscernible) are asking and we say that it's a good strategy, supported by not just execution but also full belief in that strategy by each and every one and having the tenacity and patience for it to bear fruit, and that is our mantra for our success in long-term and enabling the long-term returns.

So just some milestones of finance and accounts. I think Pavan and his team will share much more details on the – what happened on the Auto and Tractor side. We have leveraged the benefits of a Group to bring to bear on all our group companies and therefore, had lot of benefits flowing in not just to M&M, but also to the group companies by fund raising, debt restructuring and so on and harnessing the latest technology in the F&A function to enable them.

I'm very happy to share that some of our CFOs have been recognized – CFO of (AS Auto), Mr. Ajay Choksey has been recognized as the Best CFO; Similarly Mr. Chandrashekar has been recognized as the CFO for Best Treasury Management; Durgashankar as the CFO for mergers and acquisition; and also your company was recognized as the Best Company – Best CFO of the Year award.

Coming to financials in little more detail. Our gross turnover, as I said, is INR11,342 crores, a growth of 9.8%. The PBIT at INR1,309 crores is 33% growth and I talked about PAT, but just let me talk to you about the OPM. OPM moved from 12% last year to 14.4% this year, a growth of 2.4%. It's a big shift that happened in Q4. I talked about the adjusted PAT, so I will not repeat it. If you look at the full year, again, the other figures you have seen, so I'm not going to again repeat it, but OPM on a full year basis went up from 13.2% to 13.9%, a 0.7% increase.

On the balance sheet, I just wanted to show you that our long-term funds have remained more or less same as last year, and the assets have been more or less in line with our revenue growth, making sure that the balance sheet is strong. The one item which you'll ask questions, so let me take it up front. Investments have grown from INR9,500 crores to INR10,900 crores, an increase of about INR1,300 crores, INR1,400 crores.

AFS Sector has invested INR700 crores in its group companies; two wheelers, 350 and the balance have gone to many of the companies which is expanding. So that's the broad investment where we have spent.

Our key ratios, we talked about OPM, ROCE goes up to – by about 190 basis points; interest coverage ratio goes up to 16% from 14%, again a 2 percentage point improvement; debt service ratio is high at 6.63. Earnings per share I talked to about INR61 as compared to INR51 last year and book value is at INR254 versus INR207 last year.

I just spent two minutes on the consolidated results. Overall again, our revenue grew by 17% in consolidated results to INR74,403. Here the one point is Tech Mahindra became associate during the year, so the revenue considers only for part of the year, the take-home revenue proportionately. EBITDA grew at 19%. Our PAT after MA grew at 31% and what it signifies is that while our group revenue went up by 17% and PAT by 31%. If we just look take away M&M plus MVML and just look at all the other group companies and say, what did they do that net revenue grew 10% and part of it is because of the apples and oranges of Tech Mahindra comparison, our profits before MA grew 195% and after the MA grew 80%. Showing clearly that group companies are bringing in value to the overall consolidated results.

Top four companies PAT earners, MMFSL at INR927 crores, 44% growth; MLDL, INR141 crores, 18% growth; TML at INR1288 crores, 18%; and MHRL, INR91 crores to the bottom line. In terms of segment, I wanted to take a time in terms of telling however, each of our segments done. Systech due to lot of pressure in Europe in terms of the operations, in terms of the market has seen a de-growth on the top line and consequently on the bottom line. The steel fading and processing 5% negative growth on the top line and 28% on the bottom line, and IT services de-grew 50% on the top line and de-grew 48% on the bottom line. However, the last one IT actually PAT grew as I should you on Tech Mahindra results. So this is more a technical adjustment which will go away from next year.

Farm equipment sector on the top line grew 4%, while the bottom line went down 5%. Others grew the top line by 15% and the bottom line went down by 15%.

On the other hand, hospitality sector revenue went up 13% and the PBIT, is the profit went up 7%. IDS, our infrastructure development sector the top line went up 5% and the bottom line went up 23%. Financial services, the top line went up 42% and the bottom line 35%, and the star performer for the year was automotive sector, which the top line went up 27% and the bottom line went up by a whopping 101% to INR2,330 crores.

So, I would say that the past and the last quarter and last year has been a challenging year, but we have done excellent performance in terms of what we have been able to do, but the future is a little uncertain with tough environments continuing. So all I can say is that we have a journey to cover and we loved having you and would love to have you with us on this continuing exciting journey, thank you. Now can I request Bharat.

Bharat Doshi - Executive Director & Group CFO: Thanks, Partha. As you all know that last year was very challenging year, both for automotive industry as well as tractor industry. Automotive industry had a marginal growth and tractor industry had a marginal de-growth. Within that inventory environment, Mahindra & Mahindra had fairly good results. I think in the Automotive side we had significant outperformance from the market and on the tractor side we were pretty much in line with the market.

What we will do is have three presentations, first, Pravin Shah will talk about the Automotive Division, which will cover up to our small commercial vehicles. Then Rajesh will talk about the farm tractor, as well as the mechanization business and then I'll come back and talk about some of the businesses that are outside the main business verticals just one slide each. Then we'll wrap up the presentation for the operations side of M&M Limited and some of the associate businesses. So, Pravin?

Pravin Shah - Chief Executive, Automotive Division: Good evening, friends. Once again, sorry for the technical hitches. I am going to share with you the F'13, the Automotive sector's performance and the highlights. To start with let me share with you that our journey over the last 10 years, we have grown by 20.5% whereas the industry has registered a growth of 13.5% which excludes of course the two-wheeler industry. Industry has gone through many ups and downs, especially in the recent years with many economic and political uncertainties.

Talking about the business environment of F'13, Partha did cover. F'13 was a very challenging year, GDP growth was around 5% with the high inflation and the interest rates playing a dampener. From 37% gap between the petrol and diesel in F'12, it shot up to 44% during May '12 which fuel the diesel vehicle demand. However, with the series of price changes which has happened, the gap has come down to 21%. These factors have contributed to the lackluster auto industry growth that we saw throughout F'13.

We saw passenger car sales dipped by 7% whereas the UV registered the highest ever growth of 52% which was fuelled by many new launches at an unbelievable prices. The three-wheeler sales grew by 5%, whereas the MHCV segment had a major de-growth by 23%.

In CV space, while the sub-2-ton segment dropped marginally by 1%, a big positive was the 2 to 3.5 ton, Pik-Up segment registering a growth of 73% year-on-year which certainly was a good thing in the – for this industry.

If you see this data points, M&M is among the top three OEMs, excluding the two-wheeler numbers, who grew at the impressive double-digit and in the personal vehicle segment M&M registered a 26% growth.

The F'13 was an unique year for the UV industry that's where we have the leadership position. The UV industry, as I mentioned earlier, did grew by 52%. We also saw offerings at various price points with increased competitive intensity with more and more players coming up with the UV offerings.

For example, compared to a decade back, in F'13, you have 40 products available to the customers against just 16 in 2002. We also see MNC OEMs entrenching into this segment. In the midst of all these changes, the UV tax of 3%, which was levied in the month of March through a finance budget has brought some setback.

Moving on in this context, I'm happy to say that the M&M, the Auto business for the first time surpassed the 0.5 million vehicle sales mark, growth coming from various segments. We grew at an impressive 17% year-on-year basis with the total sales of 563,000 plus vehicles.

In UV alone we grew more than 30% and in the Pik-Up segment, which I mentioned, grown by 73%. We had also grown by around 40%. So growth was fueled by many of the flagship products what we have it in our product portfolio. While there has been some negative growth in some of the segments, if you see over the last five years' performance, in almost all segments we have grown above the industry and continue to maintain our leadership position in our core segments of UV and the Pik-Up sales what one can see it here.

Last year, I talked about the Fantastic Four registering around 192,000 plus vehicle sales, which was contributed by the four products, which are here. The legacy continued in F'13 and together we registered and had a sale of 238,000 plus vehicles which represent 23% growth.

On our premium offering from the Ssangyong stable, the Rexton was received well and we have had the good booking. In the initial few months, the booking was more than 2,000. With the introduction of this product, I think we had the second highest selling premium SUV brand. Rexton bagged many awards from leading media houses, including the Premium SUV of the Year.

We have 6,000 cheetahs now on the road roaring just in 18 months since its launch. We did launch Quanto, an affordable SUV, which received good response and helped us to enter the new customer segment.

In the commercial segment also we have many launches; Maxximo Plus, which was one of the last launch which comes with one of the newest fuel smart technology first time in India.

We have received a very enthusiastic response from the market for the e2O with unprecedented enquiries and the car has been liked and appreciated by one and all. However, the sales numbers are below our expectations as the customers are adopting a wait-and-watch attitude to see that the experience of the first-movers.

Bolero, the number one SUV brand, contributed to our growth in the UV segment. It has crossed one lakh mark. In the second year – in two years in succession it is the fifth highest selling passenger vehicle in India.

With the launch of Rexton and Quanto, which I just talked about, we have established presence from sub 6 lakhs to 20 lakhs plus price points with wide range of offerings in our stable. Similar is the situation in the small commercial vehicle and LCV industry. Now, we have an offering from 1.5 lakhs to 6 lakhs with superior product portfolio which we have to offer.

Talking about our performance in the international markets; in the international markets, we grew 11%. We registered an impressive 40% growth in the first half of the year, with strong demand coming from South Africa, Chile, Nepal and some other markets. However, in the second half, we had de-grown primarily in the neighboring markets like the Sri Lanka, where there was an extra duty of – levy of extra duty of 100%, and political uncertainties, which prevailed in the Bangladesh has had an impact on our performance in the international market.

In F'13, Mahindra was rated the Best Budget Pickup by (indiscernible) magazine in South Africa. The other thing was Chile, one of the smallest country in the South and Central America, we did cross 5,000 mark and we have had the launch of XUV in the markets of Italy and Australia during the last year.

The growth was possible due to the various improvements that the sector has initiated and put that together. The first being the CIS, we were the most improved brand coming up from the 11th rank in 2011 to fifth rank in 2012. Similarly, both XUV and Bolero bagged 2012 in the TNS survey for the total customer satisfaction ranked one in the relevant segments. Along with the launch of the new products, we also have been expanding our sales and service touch points pan India to offer the services to the nearest point to our customers. To enhance the sales and service experience, we have many initiatives what one can see it here, they have been technologically also been enabled which helps us and differentiates us from rest others in the industry.

We add two new TVCs for XUV 500 and Scorpio, which are flexi products. We also created an extremely successful portfolio fill, which is Live Young, Live Free, showcasing our entire range of personal vehicles I'm sure most of you would have seen that.

From Desert Storm to the ASEAN rally and many other great escapes both outside India and within India, our adventure team is doing wonders in building our adventure equity along with our products.

So with the advent of the viral marketing, it is important that we also keep the pace with the time. Apart from the digital platform growing stronger every year, enough though a fan base has increased as what one can see it here. So apart from our own group finance company, which has a nationwide strong presence, which has been further supplemented by arrangements with the International, with the Nationalized Banks, RRBs and Cooperative Banks, so as to provide our customer easy access, which is supplementing our own finance company.

While we do all this, we are also conscious about the – protecting our planet and the environment in which we operate. Our focus on energy and water conservation and the sustainable business model has earned us the GRI score of 86% and we won the National Energy Conservation Award seven years in a row.

Talking about some prestigious awards, which we received during the year; we did receive the Manufacturer of the Year, Car Marker of the Year, Excellence in Quality from the Asia Institute, National Energy Conservation and we're fortunate to receive many more awards.

On our financial performance for F'13 talking about the Automotive Sector, the segment revenue has grown by 33.8%, surely which is a matter of pride, looking at our – performance of others in the industry, we recorded a segment profit of INR3,118 crores, a whopping jump of 45.6% which is on account of the volume growth, which I just shared with you and the tight control on the cost.

Well, this is what was the performance for the Automotive Sector. Thank you.

Rajesh Jejurikar - Chief Executive - Tractor and Farm Mechanisation: Thanks, Pravin. Good evening all of you. I am happy to present the year for the Farm Equipment business, a business which has seen 30 years of leadership, it's a business where we can confidently say and we are the number one tractor company in the world by volume. So it's a disposition of strength that this business has and I'm happy to present the F'13 for you.

As a starting point, I have a slide here which captures the industry movement over the last 40 years and one thing that you can see clearly from this slide is the wide fluctuations in industry from year-to-year, but behind all of that, the point is that this industry has seen a 40-year CAGR of 8.2% and a last 10-year CAGR of 12.6%. So while there are years where the industry sees its highs and sees its lows, it is a very, very robust industry because over a very long period of time it has seen a very, very consistent growth rate and the last 10 years have been 12.6%.

F'13 has been one of the lows in that cyclical curve. It has been a year in which the industry de-grew 1.7%. In this year the Mahindra business which is the two brands Mahindra and Swaraj de-grew 4.5%, but we continue to dominate with a very, very high market share. Our market share combined for the year was 40.2%. We did lose a small amount of market share in the year of 1.2 percentage points, but it is a very, very strong dominant position.

F'13 has seen a very interesting dynamics in terms of the way the industry has moved. We have classified this map into three pockets, the red pocket is one where the industry – those states grew significantly lesser than the all India average. The grey patch is one where the industry grew significantly higher than the all India level and the yellow is where the industry grew at the all India level.

It is very interesting to see this because there are very large pockets of the country as you see going down from Gujarat to the south, where the industry has seen very high de-growth of 23%, 25%, and then there are pockets just about that, which is MP, Chhattisgarh, Rajasthan, which have all seen (19.40%), 19.3%, 19.6% kind of growths as you move upward. So it has been a very, very – so when we look at an average figure of 1.7%, it does not tell the whole story of what happened in the course of the year and this map actually brings out the diversity of the country very strongly and how the industry actually behaved so differently in different parts of the country in the same year.

For exports, we did a volume of 12,289 in F'13. Some of the de-growth obviously has been because the industry in the neighboring markets, which is Bangladesh, Sri Lanka et cetera, got affected just like India did and it did affect the export performance to that extent.

So I'd like to talk about some of the achievements that we had in the year F'13. Swaraj got the Deming Prize, the Mahindra brand had got that earlier and Swaraj now has achieved the same Deming Prize and hence indicating that all the best-in-class world class processes are in place even in the Swaraj business. As you know, that business was acquired through the Punjab Tractors route some years back.

Five of the plants, both Swaraj and Mahindra together got the TPM Consistency Award, which is just one step away from the highest level of TPM award, which again is a very, very good achievement and is a driver of productivity. We've got the Golden Peacock Award for quality.

When you look at all of this, it culminates in what you see here, which is both Swaraj and Mahindra are amongst the top two brands in the customer satisfaction index and have been for a while. All the efforts that have gone in by way of processes and quality have resulted along with the dealer processes in a very high level of customer satisfaction.

Customer satisfaction in this industry, probably more than in any other, is a driver of market share because the role of word-of-mouth and customer satisfaction in driving business is significant in this industry. In many ways one can see customer satisfaction as a lead indicator of what's likely to happen to the business as we go forward.

We also got the Green Manufacturing Challenger Trophy. The 2-millionth tractor was rolled down, again reflecting the kind of domination that we have had in this industry. The Zaheerabad plant was inaugurated in the month of March by the Chief Minister along with Mr. Mahindra and Dr. Goenka, reflecting in a way the confidence that we have about the growth of this industry in the future.

We have over the last few years instituted the Mahindra Samriddhi Agri Awards, a function which is done in Delhi. It reflects our commitment to driving Farm-Tech Prosperity, enabling the growth of agriculture and touching the lives of farmers.

Nine national and 19 regional runner ups were facilitated in Delhi in the third edition of the Samriddhi Awards this year. So all of this reflects in a certain business performance and the result for F '13 show that the PBIT percentage has been maintained under very difficult business conditions at a very robust level of 15.5%. The segment revenue grew 2.6%.

So, as we go ahead, and think about the future, one key parameter of looking at the future is the level of tractor penetration in India. In India the tractor penetration – and this is data of penetration per thousand hectors, it's at a level of 33. It's significantly lesser than many other countries. We believe that there is a continued long-term opportunity for industry growth and we would expect the robust growth of the past to continue in the future.

There are many other parameters which one can look at which drives not just tractors, but the overall area of mechanization. The farm size, the low productivity that we see, rising rural incomes, rising requirements of food are all indicators which we believe will drive farm mechanization.

The farm mechanization industry today we estimate at around INR3,500 crores. We think this industry will grow and we believe that we are now prepared to be able to leverage this opportunity and in fact enable the growth of the mechanization business. We are building specialization in land preparation and harvesting. We are doing work in four key crops and I'm just illustrating rice as an example, where we are working at various parts of the value chain, which is tillage, nursery growing, planting, crop management, where we have chosen not to participate through mechanization, harvesting and residual handling. So there is a consolidated plan that we're working on and we believe that this – the mechanization business is at an inflection point in the country, and we would see this industry grow. We are very well placed with our domination of the tractor business to leverage this opportunity.

How does F '14 look? April was off to a good start. The industry grew 38%. We gained 0.4 share points in April-over-April. We had spoken about an industry outlook for F'14 of around 6% to 8%. There is a possibility that the industry would grow better than that. There is positive news and we are seeing positive sentiments in the market, the combination of monsoons and the general improvement in farm incomes.

I'm going to talk about four things, which I believe are really represent the strengths of the Farm Equipment business. We believe we have a very strong brand. We have demonstrated our ability to get premiums. The Deming processes and the TPM processes have ensured that we now have over the last few years a very robust product quality. The customer satisfaction scores that I spoke about reflect the high level of customer centricity that we have in this business. We have very, very good reach. We have more than 1,250 dealers and 2.8 million customers.

Very strong processes are in place through the JQM route, Deming route, TPM route. Very good sales systems operating both in the Mahindra channel and the Swaraj channel and a very, very good process of cost management focusing on frugality, which enables the business to manage cost very well when there is an industry downturn.

We have highly engaged set of people who are very capable, we believe these are the four key drivers, which will enable us to continue to dominate the market and drive leadership. There are certain pockets where our share is low. We believe that that is also going to give us an opportunity to gain there and overall we look at F'14 with a reasonable amount of optimism because we think that industry will grow this year and we are well placed to leverage that growth.

I'd like to end by showing you the current advertising that's on. We are leveraging in advertising our number one position in the country. So can I have two AVs as we close, thank you.

Pawan Goenka - President – Automotive & Farm Equipment Sectors: So just one sentence summary of what Pravin and Rajesh have talked about. In case of automotive business, clearly, we have significantly outperformed the industry and that is that too excellent financial results. In case of tractor, our volume growth has been more or less in line with the industry which is overall de-growth, but we have managed to squeeze out slight increase in profit and maintain our profit margin, so that’s how we have ended the year and as Pravin and Rajesh have mentioned that coming into the year, the current year on the tractor side, even though we started off with volume growth estimate of the industry at 6% to 8%. Right now, the way, the month of April has gone and the May is looking, we do expect that the industry will do better than 6% to 8% that we had forecasted.

In case of automotive, the story actually is the reverse, whereas the SIAM forecast has already been reduced in the month of March from where we were in January and the year has even started slower than that. So, automotive industry would have even more difficult time this year than we have had in FY'13.

What I would do now, there are three or four businesses that have not been covered by Rajesh and Pravin that come under our automotive and farm equipment sector, which directly or indirectly have an impact on M&M Limited. We do have our senior colleagues here; Rajesh and Pravin have already presented. We have Ashok Sharma, who is in-charge of the Agri vertical and we have the three CFOs in AFS, Pradeep, Bharat Junior and Ajay who are present here.

So I'll just talk about the Powerol business. Often there have been questions by many of you on how we're doing on Powerol business. Our Powerol business, as you know, is our engine business, which comes under FES in terms of reporting. Last year, we got back to INR1,000 crore revenue in Powerol. This had happened after three years, but the important thing is that during these three years, our business has totally changed from being largely telecom business, which is what it was 55% or so in FY'10 to a situation where telecom is only a small percentage of this business. We have 34% what we call retail; that is overall genset, 35% coming from service, and we have gotten into home UPS, some industrial applications and also export in a small way, and therefore this business is growing on the strength of diversifying into other areas in the energy business.

The second is agri business; agri business yet is very small for Mahindra & Mahindra. Last year – or for Mahindra & Mahindra Group, I should say. Last year, we had a revenue of INR343 crores, which as I said, is small, but the important point is that it is a significant growth that we have had over FY'12, about 46% growth and the business is now profitable overall. The business is broken up into three parts; the micro-irrigation system which is separate company EPC, which is about 47% of our agri business and the remaining half and half is fruits and vegetable, grapes, potatoes and the agri inputs crop care and seeds. We see tremendous potential in this business in future and a lot of areas where we will be looking to both organic and in organic growth.

Moving on to Mahindra Reva, Pravin touched upon that. We had a very successful launch of e20. As Pravin said that the initial off-take in volumes has been slow and it's partly because the customers have to kind of get used to this different way of driving, partly because of the pricing we had to do for lack of subsidy, but we are quite hopeful that the electric vehicles will catch on and we will get good volumes coming out of this product and future products that we will do in electric vehicle space.

Mahindra Navistar is a story where the whole industry in commercial vehicle segment is struggling. Last year was again another very bad year, a poor year for the industry with LCVs de-growing at 12% and medium and heavy commercial vehicles de-growing at 32%. In that at LCV we were roughly same as industry, 13 percentage growth in MCV. We did better than the industry but still a very small volume, only at about 3,000, markets raised about 2.5%. I think everybody in this commercial vehicle industry is waiting for the industry turnaround and see how the volumes pick up for large as well as newer and smaller players.

Ssangyong is a story, which is very positive right now. We have had good volume growth in the first quarter with volume growing 18.2% in January, February and March timeframe and this is against a stagnant industry in Korea. Therefore, markets in Korea has grown by almost 2 percentage point in the relevant segment. Revenue has grown up by 15.8% in this time and our PBT has become only KRW10 billion negative, which is about INR50 crore negative from about three times as much last year and the new products that we have launched have done quite well and we are right now working on future products for SsangYong. We have, as I had said or I should say SsangYong has, we gets confusing. SsangYong has plans for about KRW802, 000 billion of investment over the next three years, CapEx and as a current cash flow looks, we don't anticipate any need for further equity to be able to support the CapEx of KRW802, 000 billion, which is about INR8, 000 crores to INR10, 000 crores, $900 million.

So that's pretty much covers the performance of the operating part of M&M Limited and with that, I think we complete the presentations. Thank you.

Anand Mahindra - Chairman & Managing Director: I think my colleagues have made very, very competent and comprehensive presentation. So I think it would be hazardous for me to try and add another broad overview on top of this. I think that will definitely be greeted with glazed eyes at best and probably closed eyes at worse. So I'm not going to go there, but I will confine my comment to one single point and really a single point agenda, which I have and that is to calibrate, let's say, your expectations in the context of this very robust performance.

When I think of what Pawan and his team have done, the old magician, the escape artist Houdini comes to mind. You locked him up, you put him in chains, threw him into a pond and he found his way out. Really with the way Pravin talked about the challenges and Rajesh too, it was very difficult to envisage such a robust performance, if anybody had come predicted that we would do this well, I think they would have been greeted with a lot of skepticism.

So in a sense they have pulled off Houdini Act and I think the board acknowledged that very strongly today. The problem is that the act is getting tougher for Houdini. Once you escape from a certain number of chains, our grateful government comes in and adds some more shackles, which they did with the SUV tax.

At the same time, the economy hasn’t shown any strong signs of revival certainly as far as the automotive sector is concerned. We seem to be waiting like Godot for the interest rates to come down and revise the economy. Truck business is waiting for GDP to recover. So again, there is a wait and watch mode. I think somebody use that word, was it Pravin who said wait and watch. I completely agree with that.

I don’t think the Houdini quality that AFS has is gone away. I remain confident they will sustain these skills that they have. But even Houdini when you added shackle it takes a little longer to get out. You can’t expect them to get out at the same time. Now what that extra time and cost is for escaping these shackles I can’t quantify. In any case we give the forward-looking statements as you know. But I just do want to add my note of caution that this is going to be a very challenging year. I think the challenge is particularly in auto sector will increase.

The good news however is that the way in which we fought those challenges, I think with some very strong basics. Rajesh gave a very nice summary of the four strengths that he saw at FES as I think the extent to the entire Auto and Farm Equipment sector. I just like to zero-in on the fact that we have and we need a very strong brand. You, first of all, need to understand your own brand. As companies come in from abroad to compete with us, as other domestic companies improve their standards in terms of product, quality and performance then what you are left competing on and differentiating on is a very strong brand.

I think the opening slide of Pravin's talked about Live Young, Live Free, that was remarkably successful. I don't know how many of you saw it on the net. It got 4 million views; pretty much a record for an automotive ad here. I personally was inundated on social media with admiring comments about how that brand – how that ad had hit its target. I think they are doing something right there in understanding what Mahindra stands for and beginning to cater in a very strong sustainable way with its market segment. That I hope will be a great strength going forward.

Secondly, quality; if you look again at both the presentations and even in Rajesh's, no matter how good our results become, how global we become, how glamorous our brand might become, I don’t think we can ever afford to take the ball off quality. Frankly, that's a personal agenda for me. Wherever I get the opportunity, I take the chance of reminding Pawan and his team never take the eye off that ball. That's an entry ticket now, and frankly, it contributes to the brand's strength because of trust. Trust is what a brand is all about. I think there they have done a very good job, as evidenced by these awards that Rajesh alluded to and Pravin also talked about.

Finally, rapid product development. Market is very hungry, consumers are hungry, they are very impatient. They are getting younger, they are getting more savvy, they are getting more restless for new experiences. There, again, I think we have stepped up our game. It's getting tougher certainly given the hyper competition here. But I think with these skills that we have, I hope Houdini will do us proud again, but once again I should say a number of change in us have definitely gone up this year and one has to take that into account.

With that, Bharat, I’ll hand it over to you again.

Bharat Doshi - Executive Director & Group CFO: So friends, we’ll now take questions. I just wanted to point out that this event is being webcast and there are many people who are sending us queries. So what I will do is, first open it with the audience physically present here, but in between I will ask Pawan or Partha to also answer queries which have come from the webcast from people who are outside and not here. So anybody to start, please introduce yourself and then say your name, organization and then ask the question. No one? Then okay. Yes.

Transcript Call Date 05/30/2013

Pramod Kumar - IDFC: This is Pramod from IDFC. My first query pertains to the result. If you can just throw some light on certain housekeeping things like – in terms of employee expenses, there was a decline on a sequential basis. If you can just explain what led that. The second question pertains to your performance in the two-wheeler and the commercial vehicle business. You did mention about the volume numbers on CVs. It will be great if you can just share the broader numbers like revenue and how the PBT or the PAT losses moved on both the businesses and I'll come back with other questions.

V.S. Parthasarathy - Group CIO, EVP – Group M&A, Finance and Accounts: First, let me take that question on, your question was regarding – the first part was regarding employees expenses. I never want to comment on quarter-on-quarter and I have made this very, very clear every time we all sit together, however, let me compare versus year-on-year. There is a specific movement there. Last year when we did the Q4 and looked at our provident fund, our PF and went to the actuarial, he gave us a debit of INR15 crores, that you have to provide INR15 crores. That was because of the interest ruling and the earning that we're doing. This year we don't have to provide for anything. That basically means there is a movement of INR30 crores in the quarter; we reverse last year's INR15 crores, so it becomes negative INR15 crores versus positive INR15 crores last year, so movement of INR30 crores. That's one significant change that is there in Q4; otherwise everything is pretty well performance. Yes, so that's on that employee question.

Anoop Mathur - President – Two Wheeler Sector: The two-wheeler business as a whole actually had a tough year. I have to confess because the automotive section in general and two-wheeler in particular actually had a flat growth as you all know during the course of the year and we on our part also had our share of its impact. But I think the good news that I would like to share with you is that we have not allow that momentum or what we have set out to do in the two-wheeler to get impacted by what was going around in the environment. So in fact, you might have actually noticed that from the beginning of around this calendar year, we've actually come out with the series of new products, new models and new innovations into the marketplace and we are just about to actually launch our major motorcycle into the market. So I think while, yes, we've had the effect both internal and external on the last year's two-wheeler performance, we are extremely well poised now and we are looking forward to F'14 which is started on a positive note to a very heartening sort of comment. But I have to calibrate it in the context of the expectation in the environment itself, because the forecast whether by SIAM or by other experts is that it's not as if it’s going to be a heavy growth. The growth for the industry as a whole is not expected to be more than 6% or 7% depending on which side you are forecasting from. But we believe that for us the plan that we have laid out for ourselves based on new products and new product development actually give us a lot of hope and confidence that we would actually buck the trend hopefully and will certainly improve on our performance in F'14 quite significantly.

Bharat Doshi - Executive Director & Group CFO: I just must clarify here that what is not in the public domain, I will not be sharing it here. So individual companies, which are non-listed their accounts are not yet in public domain and therefore exact numbers of that we will not share. We will talk about the trends. We will talk about what we see as a outlook not with – in the context of numbers, because I also have a query here from Govind, Jefferies from the web. Can you please comment on the two-wheeler and erstwhile M&A and profitability? Now we would not be providing that today. You will get the full balance sheet coming on the website as soon as that is in public domain, we can discuss that. But there was a second question, Pavan, from Govind, Jefferies. Why are we worried about 3% excise duty? Hasn't M&M demonstrated ability to grow in years with higher price hikes?

Pawan Goenka - President – Automotive & Farm Equipment Sectors: That's good one, (it pretends like) showing in us. It's not a concern so much about 3% excise duty; it's a concern about a level playing field. We are competing in a given market segment against products that are falling in different excise duties and there is a difference of as much as 6% in excise duty for the same product for the same market segment and in today's world to have a 6% difference in taxes is certainly creating a little pressure and little strain on us in terms of how do we manage that 6%, so that's the problem it's not so much about 3% excise duty.

Bharat Doshi - Executive Director & Group CFO: There are two more queries, which we will take from here and then I'll go back to the audience. There are two more queries, which had come from the web, I will pass it one to you. The second column is the organization and not the surname, my mistake in the first round.

Pawan Goenka - President – Automotive & Farm Equipment Sectors: And add to that 6%, 3% octroi that we pay in Nasik and 5% octroi that we pay in Mumbai, which other auto companies don't have to pay. The question is, what has driven this spike in FES realization this quarter? Does it mean what's in the quarter of April, May? Is that what it means, this quarter?

Bharat Doshi - Executive Director & Group CFO: (It is to-date).

Pawan Goenka - President – Automotive & Farm Equipment Sectors: Okay. What were the revenues in FES Powerol, Backhoe Loaders, et cetera, and pure tractor revenue? Rajesh, do you want to talk about what has driven April-May performance? I think what it must meaning is the volume. It is not the realization, because this quarter it will not be...

Bharat Doshi - Executive Director & Group CFO: We’ll move to other…

Pawan Goenka - President – Automotive & Farm Equipment Sectors: Why don't we just talk about volume growth of this quarter, April-May – or April?

Rajesh Jejurikar - Chief Executive - Tractor and Farm Mechanisation: We'll just talk about April since May numbers are not yet out. April has seen different things work positively. One has been a shift in the festivals, which normally happen in March to April, which is the Gudi Padwa, the Ugadi and so on or so forth. So that this year moved from March to April, so that has had some positive effect. There has been some extra money that happened because of the Rabi crop money coming in earlier. But overall our belief is that April was better because of anticipation of monsoon and a positive sentiment, which has driven the growth of the industry, but these are – if we remove the sentiment, these were the only two other factors that we could identify.

Bharat Doshi - Executive Director & Group CFO: The continuing question from Narayanan is about Powerol revenue and Backhoe Loader revenue. I have already talked about Powerol revenue in my presentation, Backhoe Loader was about INR300 crores last year, about INR300 crores.

Jamshed Dadabhoy - Citigroup: Jamshed of Citigroup. Do you need to increase CapEx to keep up the pace of growth seen in the last 18 months?

Bharat Doshi - Executive Director & Group CFO: We have been constantly investing in a business and neither have we slowed down at any point of time or have gone through aggressive either way. As Partha, I don't know if you mentioned the investment. Did you mention investment in your presentation? No. So our investment plan for three years that is FY'13, '14 and '15 is INR7,500 crore CapEx, a plan, INR7,500 crores for M&M and MVML combined and the investment plan is INR2,500 crores for this same three years. So we are planning 10,000 investment in the business for the Mahindra Group in M&M Limited plus MVML, including capacity, product, phase II expansion, everything.

Hitesh Goel - Kotak: My name is Hitesh from Kotak. I wanted to get a sense on tractor business on the dealer inventory side. How is the dealer inventories both in the tractor and automotive side. In this quarter have you seen any benefit from the raw material side, and how it is shaping up in terms of margins? So these two questions if you can?

Rajesh Jejurikar - Chief Executive - Tractor and Farm Mechanisation: The dealer inventories in tractor are by and large under control approximately 30 days of current level of volume and that's on the dealer inventory, our own inventory is completely under control within about 20, 25 days which is plant and warehouses. The overall material cost commodity outlook right now is benign and in some way favorable.

Pawan Goenka - President – Automotive & Farm Equipment Sectors: I want to add that there has been lot of questions in media and analyst also about inventory both for auto and tractor, Rajesh said that our total inventory is about seven weeks for tractor which is in line with what we would normally want to do. In auto our total inventory including dealer and our company inventory is about six weeks which again is in line with what we would normally want to do.

Vijay Chugh - BNP Paribas: It's Vijay from BNP. Mr. Mahindra you said that the challenges for FY'14 will possibly only see some increases. We'll also have the election dynamic play out, multiple state elections and the general election. Do you see that as a challenge for the auto and farming side or do you see that playing out differently? How would you see that?

Anand Mahindra - Chairman & Managing Director: There is a section of the investing community that believes elections are good for Mahindra; at least that's what I read. That warms my heart but I'm not sure. Every election is different. This country keeps changing; patterns keep changing, how they spend; how one spends on promotions, changes. I'm not saying we have come to an Obama kind of level of social media being the promotional way of winning elections. Of course vehicles are required, but I'm not sure if we plotted a correlation that we'd find real spike. So I would not hold great store by that. I certainly don't think they hurt, but definitely don't forget that when the elections in this very rowdy country of ours, it causes disruptions allover. Sometimes just the process of commerce gets interrupted. So I'm not a great believer in that theory, though as I said, I'm happy to be educated by the investment community; that supposed to be good for us.

Bharat Doshi - Executive Director & Group CFO: Now, I will move to the web question. Partha, you want to take some?

Nishant Vass - ICICI Securities: Nishant Vass, ICICI Securities. Question is about MVML top line EBITDA and PAT.

V.S. Parthasarathy - Group CIO, EVP – Group M&A, Finance and Accounts: I am not wanting to talk about top line because the revenues of MVML actually is feeding into M&M. So that's why we combine both and give the figures. However, just for the sake, so that get the figures, EBITDA this quarter Q4 is about INR145 crores and PAT is about INR73 crores. So you will get fair idea that this is the kind of thing that if you multiple it by four, you should get the full year numbers. So about INR450 crores in the full year EBITDA and about INR250 crores of PAT. So that's broadly the figures. When we load the figures, you can knock M&M plus MVML and standalone results out, you will get these figures, in any case. So that was the one question. The other one is on the average realization that keeps coming on FES. All I would like to say is it's a question of mix and also there have been price increases which have been taken during the year including in Q4 versus the material costs. So average realization price does go up because of that and that drives versus a 5% volume de-growth. We are saying about 3% to 4% revenue growth and the changes due to the volume mix increase and the price increase, which is contributing to this.

Nawaz Sarfaraz - IDBI Mutual Fund: About the tractor industry growth. In Q3 FY'13 I had talked about 4% to 6% growth in the tractor industry; in Q4 FY'13 I talked about 6% to 8% and today we are saying more than 6% to 8%. So where is this confidence coming from?

Pawan Goenka - President – Automotive & Farm Equipment Sectors: So a good thing that he is tracking what we are saying. Basically when we came into this year, we thought 6% to 8% is the number that we would see. April and May month, which is not out yet as Rajesh saying but is looking robust, surprised us in terms of what we have seen in growth. The primary factor that we can certainly put a finger on is the monsoon, expectation of good monsoon starting on time. In fact it has been preponed by two or three days I read this morning. So Kerala should start tomorrow or day after. So that's the primary factor that's coming in the confidence because of that. There are secondary factors also such as realization that is coming out of REIT that Rajesh mentioned a little bit of, of what's leading to that, but just like there was no strong reason why there should be a de-growth, so there have been a de-growth last year. There is no strong reason for a 10% growth if it comes to that. It is to some extent sentiment that the customers have of a good monsoon or a bad monsoon and that's what is leading to the situation. We probably will revise it again at the end of this quarter depending on what happens in the quarter. So it is very difficult to predict, frankly, what the industry will be. What we have to do as manufacturers is sort of look at all the sensitivities and keep ourselves ready for all the different scenarios that might come up of no growth, high growth, negative growth and try and get the best out of it.

Srinivas Rao - Deutsche Bank: Srinivas, Deutsche Bank. The first question is, you have talked a lot over the last couple of years about group synergies. I want to ask Mr. Mahindra as to how much is internal economy of the group. In the sense, for example, when I look at Systech and this I hold just as an example because we have some data, Systech doesn't seem to be selling as much as you would expect to Mahindra Group Companies as it probably should if it was best-in-class. I have looked at some other, your annual reports over the years, the internal intra-company transactions are quite low. Of course, it's good for us, but the key question is where does the Group synergies reflect in financials ultimately.

Anand Mahindra - Chairman & Managing Director: That's a very good question. Although I suspect you sound as if Hemant put you up to asking this question. So that you could get more business from Pawan, this is one of his normal refrains with Pawan. I would say that we don't look at success or synergy resulting in a metric of increased internal trade between these, it's not like we want to build the Eurozone equivalent. I agree that might at first blush sound like that. I almost look down on that, I think that almost sounds like nepotism. Nepotism is the current villain of the day as you know. So we are not really looking at that kind of outcome. The synergies we look at are certainly very strong, but they result in things which I almost call back office synergies. For example, if across two-wheelers, trucks, auto, tractor, you get procurement scale, you get greater penetration and share of mind and therefore share of cost reduction from particular suppliers. That's an enormous synergy in an industry, mobility industries where your material cost range from 65% to 75% try and imagine when you get greater share of mind with suppliers, what that can do for us. That's one of the biggest synergies, R&D synergies. If you – I think we've gone out with the bike that we are going to be launching soon is out on the web what the features are. There are some first-in-class features that we are going to be showing and we've come out with. Those came because the person heading R&D actually came from automotive sector. He brought things which were features of four-wheeled vehicles. Those to me are far more important synergies, synergies in technologies, synergies in procurement, synergies across the group even in things like logistics, even in things like HR. How do you account for the value of having created an ecosystem that attracts the best people in the industry? Because they know that when they can come in than you can build a career within the group, they have to quantify that, but take a look at our attrition or take a look at the number of people who come back to our group will stay within the group. Rajesh mentioned people at the end of his – at the – in the slide of what the four strength were, that's not to be undermined, the strength of people in a group. Think of the question of credit, what is our credit rating, what is our ability to access low cost finance in a high interest cost environment here. So these are the kinds of things, which to my mind are far more important, far more valuable, not easy to quantify and isolate, but that's the way we do it. I would be very worried if we attempted to call synergies something where groups are mandated to buy from each other. If they all do well and you saw from Partha's presentation, most of our companies are doing extremely well. When you look at that, they are doing well without needing that nepotism, without needing any mandated selling between and I'm sure that we mandated any kind of selling within the companies, you people would be the first to scream and rightfully so.

V.S. Parthasarathy - Group CIO, EVP – Group M&A, Finance and Accounts: Just to add one thing, there are some – I mean what you said is probably the heart of it, but there are some things which are very obvious so need not be stated, but the sake of formalcy, if we look at Mahindra Finance, you know what kind of synergy that Auto & Farm equipment derive out it. These are very obvious one, so probably you also take it for that. Second one is, look at the Indian companies within Systech and that would be the second kind of thing that you can talk about. And talk about what the treasury can do across operations in terms of concepts that you can talk about. So, then varying levels direct – indirect but very specific, and then things like talent which cannot be measured at all. Hemant?

Hemant Luthra - President – Systech Sector: On a lighter note I just thought I'd add to that. Not too long ago when I sat in the analyst conference here and there were questions about why Tech Mahindra was so heavily dependent on BT for revenue, and therefore how it would affect valuation. In fact, Anand has challenged us and said in Systech that try and make sure that not more than 50% of your turnover comes from Mahindra and told Pawan probably the same thing that in any vertical not more than 50% of the revenue or the purchases should come from Systech companies. What has that resulted is in making us sharper smarter and if you look at the results which have been published of Mahindra Forgings and leave out what happened in Europe as is exception. Because we have had to compete with Bharat Forge for Pawan's business, because we have had to compete with everybody else for Pawan's business, our profitability has improved from INR40 crores odd of EBITDA last year to INR69 crore this year which has been published. So I think this just made us sharper and smarter and at the end of the day if we have more customers and a wider customer base, I think it will affect the valuation of Systech and give Pawan more flexibility and confidence to buy from us.

Sonal Gupta - UBS: This is Sonal Gupta from UBS. Just a couple of questions on the Auto business. I mean in terms of the medium-term because you laid out in your presentation that you cover most of the price points in SUV side and even in your interviews you've mentioned that you more or less cover the whole space to a large extent, barring probably you're looking at another small SUV. So I just want to understand from a medium-term perspective, how do you look at this pace? Are you still focused on SUV or do you think that you need to step out of this pace going to cars as well? I mean what's the plan in terms of, say, next three to five years?

Pravin Shah - Chief Executive, Automotive Division: I shared with you in my presentation actually the various price points at which we address the UV segment. I think we placed some 5 lakhs to 20 lakhs. As what we see it last year was an extraordinary year where the UV industry has grown unprecedently by 52% plus. Certainly, we do expect the similar type of growth. Having said that, the industry projection by SIAM is somewhere in the region of 11% to 13%, or 10% to 12%, in that range. With the product portfolio what we have and the various new products and the – we have in plan, we are very (pulse) to actually to continue to have our leadership in this segment and I would also like to say that in spite of the new entrants which came in into industry and expanded the pie, which is what was reflected in 52%, in spite of that, we have had growth of around 31%. I think no means actually the 31% growth for a brand which is a leader is a small growth percentage. Looking at all this, actually I think we would continue to give focus to the segment in which we operate and the product portfolio what we have and what numbers we will add into this – the new products what we will add into this, I think, gives us the reasonably good growth prospects. It doesn't require us to look here or there. If we concentrate on that with the other enablers, surely that gives us a right to continue to grow at a percentage which would you all guys will appreciate and will also help us to maintain our leadership.

Bharat Doshi - Executive Director & Group CFO: Now, I'm moving to some web questions and we'll come back.

Ashwin Patil - LKP Securities: Ashwin Patil of LKP Securities. (indiscernible) Zaheerabad plant, when do you start commercial production, which we have started and how do you ramp up to the full capacity expected to get completed?

Rajesh Jejurikar - Chief Executive - Tractor and Farm Mechanisation: So commercial production started this month. We are in the process of ramping up. Over the next few months we should ramp up running it at one full shift. This capacity has been set up keeping in mind that the industry will grow over the next three to five years at a 10% CAGR, and over that period of time at that growth rate we see a full two shift or three shift utilization, but the plan right now is to run this plant at one shift. We get significant advantages by virtue of being in the South to cater to markets in the South. So there is a significant cost advantage of operating a plant for us in the South as well. Pawan, do you want to add?

Nishant Vass - ICICI Securities: About the new product launches in the automotive space and price segment that we want to focus on?

Pawan Goenka - President – Automotive & Farm Equipment Sectors: In terms of launches, Pravin, if I could just say that we have three new platforms that we are working on and you would start to see launches coming out of this three new platforms starting the first or the last quarter of financial year '15. These are brand new platforms. In the meantime between now and then we have several variance and facelifts that we’ll be launching. We already launched two this year. We’ll be launching one more next week, which is the Vibe and then we have several more happening during the year and then continuing on to FY '14, FY '15 before we come to the new product launches towards the end of the next year that's where we are. Anything else you want to add on the product launches?

Pawan Goenka - President – Automotive & Farm Equipment Sectors: No.

Nishant Vass - ICICI Securities: How do you think about medium term product planning for UVs in the context of diesel, petrol price narrowing and the diesel portfolio that is already laddered with from INR6 lakhs to INR20 lakhs what are the wide spaces that will now be targeted. So advantage I have is I can always decide to pass on the more difficult questions to Pravin and answer these even.

Pawan Goenka - President – Automotive & Farm Equipment Sectors: So, Pravin, do you want to take this on? I think this is not an easy one to answer, because it's required a lot of discussing, but anyways you can.

Pravin Shah - Chief Executive, Automotive Division: I think I would like to just say that actually the segment in which we operate primarily if you look around the world actually, they require more talk, more power I think diesel is at the heart of the segment actually. In our country we are placed at the stage actually where the petrol and the diesel prices keep changing for a variety of reasons and I don't want to touch on that, but having said that, the product portfolio what we have, diesel which is at the core of this UV segment where we are the market leader. Having said that, as I had also explained about the – at one stage where the difference was 42% in a span of less than a year, it came down to half to 21%. Surely we have to look at the possible options how things will span out. I think, and Pawan if I may say that actually in the – we have plans actually in terms of six engine options which are going to come in the course of the next two to three years, which does have petrol as an option and surely we are also – if that's the trend going to be emerging going forward, surely, we will be having the option also for our products with the gasoline. So that's what actually I would like to answer.

Anand Mahindra - Chairman & Managing Director: To add something to those answers. It was a very interesting question, just to repeat that what Jamshed said was – he used the word how do you think about medium term product planning in the context of diesel petrol prices, so he was not necessarily presuming you move away. He was just recognizing the challenge in the environment and a diesel portfolio that's already laddered from 6 to 20 and what are the wide spaces. The first thing is that in the Automobile business when we talk about medium term planning, by definition you cannot talk about a new product. So by definition, the cycle of product development for new products is a longer term planning. You can't do medium term, so again the answer to the question is that in the medium term what you do are refreshes, what you do are tweaks, what you do are sometimes creating variance, engine options. And I dare say that if you look at our track record, we have shown great competence in doing just that, in creating refreshes on time, constantly reviving the products, creating variance to target markets, and I believe that markets are going to get increasingly segmented and focused, very fractured markets, very specific niches and needs. One of the key competencies required was going to be how do we take our product range and adapt them to these dynamic market and evolving niches. I think they’ve shown an ability to do that. One of your recent launches was the Xylo with the mHawk showing you how we can take a product and tweak it for a segment, and I believe the response has been positive. So that I think is one of the ways to answer him, that we will be able to find the white spaces even in this apparently dense ladder that we’ve created.

Pravin Shah - Chief Executive, Automotive Division: Just to add that actually not that we don't have any petrol product. We do have petrol engine, which we've been exporting to some of the markets.

Viraj Kacharia - SIMPL: (Viraj Kacharia of SIMPL). It's been close to two years of acquisition of EPC industry. How has your experience been? The management has indicated at various places and various interviews of its intention to grow the agri business, led by EPC, Shubh Labh and Samriddhi Initiatives. Can you spend a few minutes talking about the verticals and what their thoughts are on the same?

Pawan Goenka - President – Automotive & Farm Equipment Sectors: I've covered some of it in my presentation. The question actually came before the presentation. So I've covered some of it, maybe you just want to add to it.

Ashok Sharma - Chief Executive - Auto & Farm Strategy, Agri and Allied Business: So it's now two years since we acquired EPC, and the last two years we almost doubled our turnover in EPC. For us the experience has been very good, because our vision is to impact Farm-Tech Prosperity, and micro-irrigation is one technology which is really helping the farmers to get better yield, better productivity. In relation to EPC, we are also focusing on the other parts of the agri value chain, agri inputs and you would be aware, we are the largest exporter of grapes and we have very ambitious plans to grow our food business. So in terms of the growth we see a huge opportunity in the agri space and clearly micro irrigation would lead that growth, given the fact that penetration on micro irrigation is only 5% to 6% in our country and the yields grow by 25% to 30% by using micro irrigation. So there are very strong fundamentals for this industry.

Unidentified Analyst: Just one more question, could you just talk about what is your medium term strategy in terms of exports on the auto side, I mean clearly that could be a major growth driver for you if you have any plans there?

Pawan Goenka - President – Automotive & Farm Equipment Sectors: On the Auto side, we have right now a good presence in Chile in South Africa and in neighboring countries Sri Lanka, Bangladesh and Nepal. Last year has been little difficult in the second half, especially in the neighboring countries with both Sri Lanka and Bangladesh markets going down. As we look the medium terms, two to four-year time frame, what we do expect to see is that South Africa will continue to do well for us, our product is now well established – the brand is well established and it is really all about a brand being known in the market and we have done a reasonable spend on developing a brand in south African market. Same thing is true for Chile. Chile has grown very rapidly in the last two three years for us and continue to do well and we have now a reasonable market share, obviously nothing like in India, but we are starting to appear in the map of sort of auto industry of Chile and therefore we expect Chile to continue to do well. Sri Lanka right now is suffering because of the duty that were imposed by the Sri Lankan government last year which affected Indian manufacturers more than others and specifically Mahindra more than some of the other ones even within India. We are hoping that we'll be launching some new product in the second half of this year that will be able to take care of the new duty – disadvantage that we have in Sri Lanka. Bangladesh is primarily a matter of the current situation in Bangladesh where the whole industry has slowed down because of the internal problems that they are facing. Nepal is doing well. So these are the existing markets, good markets for us which we will expect to continue to do well with some ups and downs that will happen. The new market that is emerging for us, the most important one is Brazil, where we now have a strong distributor, a plan that was already in place which has been expanded now in Central Brazil and we have now started with aggressive CKD plan for Brazil and setting up the distribution channel in Brazil by the new distributor that we have. In this market, we also have a strong presence of SsangYong and also in Chile, SsangYong has a very strong presence. So, therefore, in both of these markets SsangYong and Mahindra both will have a reasonable presence. So Brazil is the most important market in terms of new market growth for us in the coming years. We are also looking at some of the (ASEAN) markets. I don't want to name them right now, but one or two countries where we see some specific opportunities for us to grow and we would probably start selling in this market towards the end of this financial year and then if this market performs well then we would get an opportunity to grow in that segment. So in medium-term this is what we're looking at. In addition to Russia which we have talked about, where it may not happen in what I would define two to three years, maybe more than four years or so, Russia market is very big market but not an easy market for us to get in. We are looking at some tie-up with distributor who is currently distributing our SsangYong products and working with him to see whether we are able to launch just half of our products in that market and more specifically the new products that we are working on, which I said will get started around middle of FY'16.

Srinivas Rao - Deutsche Bank: Sir, Srinivas here again. Sorry one question.

Bharat Doshi - Executive Director & Group CFO: I will come back to you. Let the two questions come first.

Unidentified Analyst: I have two questions. One related to your automotive business. Keeping aside tractors, how do you plan to expand your spare parts business which is much more profitable over the longer term what you have – from the level that you have now? The second question, as an auto manufacturer you may not like it. In the metro cities, in the Tier 1 cities, given the traffic congestions that we are facing, do you see a possibility of the government putting a congestion tax or population tax some kind of in that measure since you are part of CM as well? Over the longer term is that a possibility?

Ashok Sharma - Chief Executive - Auto & Farm Strategy, Agri and Allied Business: So, you are absolutely right. There is clearly lot of potential in improving our spares turnover. Now we have got a very focused strategy, where we are looking at increasing our reach, bundling our products and also we are trying to promote the whole concept of genuine spares and trying to increase our brand equity by connecting with the mechanics. So very largely responsible for promoting genuine spares. With this four-pronged strategy and the thrust from our overall brand (leads) to increase our spares business quite considerably. So, there are clear plans and in the near future we expect a lot of growth coming from this segment.

Pravin Shah - Chief Executive, Automotive Division: Just to add to what Ashok said, actually I think if I may just say, the data actually in F'13, the tunnel expansion both in sales and service was in the region of 40%. So that's what is also going to enable actually. Our reach is increasing and that’s what will help us enable us in terms of penetrating the spare parts also. I wouldn’t rule out the government putting any taxes.

Aditya Makharia - JPMorgan: This is Aditya from JPMorgan. Just wanted to know your progress in Ssangyong of late has been extremely strong. So what is being driving this and how do we see sales moving ahead?

Anand Mahindra - Chairman & Managing Director: Progress in China on the tractor?

Aditya Makharia - JPMorgan: Sorry, Ssangyong.

Anand Mahindra - Chairman & Managing Director: Well, I think there is no sort of magic in some sense. It is just (student) business. Basically Ssangyong, even when we acquired Ssangyong, we knew that it was a company with good potential, good people, good product and it just was running into trouble for various reasons and we thought that if we were to come in and help the company first to get financial stability, second then to invest money in new products, improve on its sort of people resources, build the brand, did all the thing that we had talked about at the time of acquisition, and then there is no reason why this company should not turnaround. So all that we have done is help the local management of Ssangyong and as you know that we have put mostly local Korean management in Ssangyong with few expats. We just helped the Ssangyong management to put all of these things in place slowly but surely. We also brought in a little bit of performance culture. We did some PMS work that we have put in Mahindra here in India, and so I took that to Korea. But in most cases we did this on a pool basis and not something that we’ve sort of forced down in SsangYong. So you must do it because that's Mahindra way, because it was very important for us to make sure that the people in SsangYong see it as a benefit coming to the Company. So I think what you’re seeing now after two years of Mahindra ownership is a result of these things which as I said earlier prudent business, automotive business that we put in place coming in and giving some results in terms of volume growth, in terms of financial performance improving, though not yet breakeven, but even the products that we have launched up to now are all sort of variance and differences. We have not yet launched a new product, which have been started after Mahindra equities and of SsangYong and the first of those products we expect to launch in the first quarter of 2015 and that's when we see a step change happen or a step jump happening in the volume performance of SsangYong. Till that point, we’ll keep seeing incremental increase, but not the step change that we are hoping for. Also the synergy benefit that has come between Mahindra and SsangYong, the biggest one of those as Anand said earlier, same thing that applies within Mahindra Group also applies within Mahindra & Mahindra also applies between Mahindra and SsangYong in purchasing and there has been a tremendous benefit actually to both sites, Mahindra as well as SsangYong in terms of reducing their material cost and getting a better gross margin and also in terms of product development in fact, the new engine project that you already have started Mahindra team and SsangYong team have worked together to bring that engine out and same thing is going to be happening on the new product that you have started, one lead by Mahindra and one lead by SsangYong. So this is just again there is no specific magic, lots of little things that have been done to bring the business on a good wicket.

Anand Mahindra - Chairman & Managing Director: Just wanted to add something which I shared with the Board earlier and may also address your query about what's driving this. It's a very interesting demographic or lifestyle change that's happening in Korea, because lot of their growth is coming in the domestic market. They are the best performers in the domestic market in terms of growth of volume and share, it's very interesting thing. Earlier on the Korean culture – at least the culture of Korean youth was very much like the Japanese culture, all work no play, purely bent on getting ahead. As you know very well, Korea has changed, now the image of Korean Psy and Gangnam Style, not just some back office of people working round the clock. What's happening is that camping and weekend activities have suddenly boomed in Korea and guess who had the right products at the right time in the market and Ssangyong had come out with something called the Korando Sports, which as Pawan pointed out was a refresh. It was a new styling on top of an old platform, but the way they advertised it also was targeted to this youth and in fact, the advertising was about campaign and I think it's caught – sort of hot button in Korea right now and then the new product Turismo which has come out as an 11-seater, a very good looking 11-seater and again the advertising is about family friends getting together and going out for weekend, so I think they've got on to a movement very well and I think that's what gives me optimism that that sale spot will continue.

Pawan Goenka - President – Automotive & Farm Equipment Sectors: Just to further include that point of UV, SUV pickup segment in Korea, also has been higher than the passenger car segment just like in India, not as bigger gap as we saw in India, but yet significant difference between growths of these segments which are Ssangyong segments compared to passenger car segment. We also have put in fairly aggressive investment plan in place, all these products that have come out – have come out because we did put in very aggressive investments in place, already invested some KRW350 billion or so and as I talked about earlier we have plans to invest KRW800 billion to KRW1,000 billion over the next three years.

Chirag Shah - Axis Capital: Chirag here from Axis Capital. First I have question on your results, if you look at your segmented result on Automotive on consolidated side and if I compare with the standalone including MVML results, we see a reduction in loss over there, over – on from last year to this year. So can you just indicate what has contributed less in this loss? Is it (indiscernible) SsangYong or even the existing other businesses have been reducing their losses?

Hemant Luthra - President – Systech Sector: In terms that you're right. Yeah, first is that there is a contribution from group companies I've made in my presentation also that the contribution from group companies have increased tremendously. If you see the growth in the profits there, its 90%, yeah, net that is a profit from all the group companies if you put together except M&M and MVML if you keep aside. Second is you're also right that the major portion, the big one is SsangYong, and that has improved performance by 29%, 41%whichever way you look at it and that is a significant contributor. We're not the only contributor, there are many other companies which have done much better than last year and that cumulative of that total is the performance that you see. Then today we may not talk individual companies, but it's a question of brief amount of time when we will put up all companies results and you will be to see on a company level. Segment wise we'll anyway put up the results soon.

Chirag Shah - Axis Capital: Second question was on your XUV 500 and Quanto. Can you shed some light, because off late we have seen some drop in volumes happening over there? So can we shed some light on that – your thoughts on how to bring it back?

Pravin Shah - Chief Executive, Automotive Division: XUV, I think as I just mentioned, it has an impact because of the 3% tax, what we have seen. This is one of the reason. Apart from that actually it's more than 18 months old product as of now. There are various actions and activities which are in place actually. As you know actually for the first time the product had some technical issues. We have done the official recall, we being the first Indian OEM actually who had gone into a recall process, which is quite commonly followed process by most of the other OSS brands. So we have done the building confidence in the customers. We have had certain problems on the product, all those issues are behind. With that – with the other actions actually which are in place, we are hopeful that we will bounce back and what we have temporarily seen the 3% tax impact going forward surely actually once the price or the price increase get accepted, surely it will have a momentum going forward. In terms of Quanto, actually the Quanto was a product which was launched and have had created the – altogether a new segment and that segment is nothing but the car and as all of you know actually what the car industry is going through currently, I think that's what is an impact which is reflected on Quanto. Having said that, we have certain plans in place, which I won’t be able to share with that, but we expect that the segment for which this product was created with the actions what we would have in place, surely we expect the volumes going up forward in the few – in the next few months.

Chirag Shah - Axis Capital: There is one more question I had on Ssangyong. If you can help us understand, how does the residual value or resale value of our Ssangyong products have been moving over last two years vis-a-vis when you compare to your peers over there?

Pawan Goenka - President – Automotive & Farm Equipment Sectors: I do not have the data available offline. So, I won’t be able to answer that question.

Mahantesh Sabarad - Fortune Equity Brokers: This is Mahantesh here from Fortune. Continuing on Ssangyong, I just wanted to understand, is there an embargo on sales in China because of issues with its erstwhile owner? Correct me if I am wrong here; embargo on sales in China from Ssangyong, what’s the market outlook? Because that’s one of the best growing markets in the world and we don’t have any color on Ssangyong sales globally. Actually it would be helpful if every month communicate that you have where you list your sales of automobiles and tractors sent out also include Ssangyong sales it would really help us.

Pawan Goenka - President – Automotive & Farm Equipment Sectors: We do release the Ssangyong results, though not at the same time as we released the Mahindra & Mahindra results. Roma, when do we do that, Ssangyong results come out when? One week later. So, we do release Ssangyong results one week later. There is no embargo what so ever on Ssangyong selling in China. There is no restriction that we have because of the past SAI’s relationship. We are selling in China, though not in at numbers that we would have like to see up to now. We have a distributor who is selling Ssangyong products and we have had good improvement during this year, but still it’s in hundreds not in thousands. And you are right that China is a very important and significant market for Ssangyong products and we do expect to see in fact if you have asked me the same question about mid-term plan for Ssangyong international operation. I would have put China as a very important market for Ssangyong where we expect to see some growth happening in the mid-term. Right now, the most important market for Ssangyong in export is Russia where we have the maximum overall exports happening. China, China hopefully someday will become of very decent size in terms of export volumes.

Mahantesh Sabarad - Fortune Equity Brokers: Secondly, you have talked in the past about common engine development with Ssangyong wherein you mentioned three new engines and today we heard six new options on those engines. Can you tell us what are these engines meant, if you can elaborate in terms of engine capacity or liters or what kind of segmentation. Will it be cars, will it be high-end SUVs, will it be the current range of mid-end SUVs.

Pawan Goenka - President – Automotive & Farm Equipment Sectors: I cannot give any further information on this engines, from what we have already talked about just to repeat so that everybody is in the same phase. We are working on engine platform, which are jointly being developed by Mahindra and Ssangyong, which will have six engines coming out of it. Three for primary use of Mahindra and three for primary use of Ssangyong, though both Mahindra and Ssangyong will use the other three also. They are both diesel as well as gasoline power engine. Beyond that I cannot say much more except for the fact that the new product, the first new product that Ssangyong will launch, which I mentioned will be in the first quarter of 2015 calendar year, would have one of these engines in it.

Mahantesh Sabarad - Fortune Equity Brokers: If I may ask you, will it be a sub-1-litre engine one of them?

Pawan Goenka - President – Automotive & Farm Equipment Sectors: I cannot understand any more about the engine capacity at this point of time.

Bharat Doshi - Executive Director & Group CFO: Friends, no more questions now. We will have time for interaction, otherwise we will lose that. There is a benefit in that too. I just wanted to end this session by saying that this was a really challenging year, because in the past we have had situations where auto has a challenge and tractor does very well, and tractor has a challenge some time, but auto does well. Here the auto industry and tractor industry both faced challenge in the same year, and Mahindra showed its resilience, and as Anand described at the Houdini act. But it was the resilience of Mahindra to be able to outperform the industry in the Auto segment substantially. These analyst sessions, I must make a comment, that we look at it as a good exchange. It's not only about our clarifying some of the issues to you, but it is also about us getting insights from you as to the – from the type of questions you asked, and it was a rewarding session. Welcome for tea and snacks outside. Thank you.

Pawan Goenka - President – Automotive & Farm Equipment Sectors: Bharat, could I say something in addition?

Bharat Doshi - Executive Director & Group CFO: Yeah.

Pawan Goenka - President – Automotive & Farm Equipment Sectors: I'm not sure if I'm authorized to talk about this, but as you'd have probably already seen that Bharat has decided to step down as an Executive Director of the Company, and this therefore is perhaps the last Analyst Meet that he is chairing. Though, he's going to be continuing as a Non-Executive Director on the Board. So I just would like to formerly in this forum thank Bharat for all the insights that he has brought to this Analyst Meet, and the way he's been able to present to all of you on what we have been doing, how the company has been performing. Of course, he is going to be around, but he will be stepping down as Executive Director of the Company. So, thank you, Bharat.