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Mahindra & Mahindra Ltd.

Farm Equipment Sector

26 October 2006
F07 H1: Market Update
‰ Monsoons: Normal

‰ Kharif Production: + 1.2 % vs. last year

‰ Higher MSPs announced

‰ Good Farm credit:


‰ 2005-06: Rs.1,16,370 Crs.

‰ 2006-07(est.): Rs.1,75,000 Crs.

‰ Bank NPAs increasing – slow down in disbursements


F07 H1 M&M: Financial Performance

Total Tractor sales (Nos.): 50923 +29 %

Total Revenue (Rs. Cr.): 1835.5 +42 %

PBIT (Rs. Cr.): 253 +82 %


Domestic Market
First Half Domestic Market Trend
180
160 37% 154
11%
Sales Nos. (x 1000)

140
45%
120 113
100 102
80
70 30%
60 37%
40 51% 47
36
20 26
17
0
F-04 F-05 F-06 F-07

Dom Industry M&M Dom Nos.


H1 Domestic Market Share Trend
JD
3 3 3 3
FNH 5 4 5 4
SONALIKA 11 11 12 11
7 6 6 4
OTHERS
13 15 7 14
ESCORTS
13
10
SWARAJ 15 14

24 23
23 22
TAFE + EIC

26 32 30
M&M 25

F04 H1 F05 H1 F06 H1 F07 H1*


* Industry Estimates
F07 H1 M&M: Domestic Performance

F07 H1 F06 H1 Change

Tractor Sales 46,843 36,109 30%

Market Share 30.3% 32.0% -1.7 pts

Growth with discipline

Dealer stock : 23 days, Outstanding : 23 days


Multi Utility Tractor

Shaan

Launched End Sep 06


Product Highlights
• Price Rs.2,94,500/-

• 23.5 HP engine

• 39.5 kmph - Max speed

• 750 Kg payload capacity

• Windscreen with wipers

• Powerful Halogen Headlamps

• Robust front grill

• Car-like down swept exhaust

• Car-like side fuel-inlet


Shaan
A True Multi-utility Tractor!
Shaan
A True Multi-utility Tractor!
Product Highlights

Integrated Instrument Panel Unique Glove Box

Side Shift Gears

Water Bottle Holder


Aerodynamic Bonnet Design
for a Clear Driving View

Side Fuel Inlet

Easy-Reach Controls
Overseas Operations
F07 H1 M&M: USA and China
• Mahindra USA:
• Market slow down

• Mahindra USA H1 volumes: - 7 %

• Mahindra USA H1 revenue: + 2 %

• New models from Mitsubishi being introduced

• Mahindra China:
• Slow down in < 30 hp category

• New models 30 and 35 hp under development

• Tractors in field test in USA and India


F07 H1 M&M: Rest of the World

• Africa : Contracts for assembly plants: Gambia,Tchad & Mali.

Single largest export order from Gambia

• Iran : Launch of operations; JV with ITMCo

• ANZ : Good response to Mahindra tractors

• Turkey : Tractors under testing

F06 full year volume achieved in first half of F07


F07 H1 M&M: Overseas Performance

F06 H1 F07 H1 Var


Industry Exports 15213 15261 0.3%

M & M Exports 3262 4080 25.1%


Outlook for Full Year
F07 Industry Outlook

‰ Water reservoir level :129% vs. 10 year average

‰ Good Rabi prospects due to good rains in (Aug-

Sept) & Wheat stocks ruling low

‰ Credit support to continue

‰ FCI foodgrains stocks down by 19% (Apr-Sep)

‰ Higher MSP announced


…. reasonable industry growth
F07 Industry Outlook

A concern area

‰ Increasing NPA pressure on banks in certain

states
Focus on Fundamentals
Improving productivity . . . .
Improving productivity
No. of Tractors / Employee
25

19
20 18

16

15
12

10
F-04 F-05 F-06 F07-H1
Improving productivity
Net sales Rs. Lacs / Employee

65 60.8

60 54.1
55
50
45 40.9

40
35 29.9

30
25
F-04 F-05 F-06 F07-H1
Improving productivity
Profit Rs. Lacs / Employee

8.4
8

7
6.1
6

5 4.2

4
2.7
3

2
F-04 F-05 F-06 F07-H1
Improving productivity
Fixed Asset Turnover
10.5
9 8.1
8
7
5.2
6
5 3.7
4
3
2
1
0
F-04 F-05 F-06 F07 - H1
Improving productivity
Overall Capital Turnover

5.1
5 4.4

4 3.4

3 2.3

1
F-04 F-05 F-06 F07-H1
M&M Farm Equipment Sector

…. well positioned for a


successful F’07