RISK AND CONCERNS

Automotive and Farm Equipment Sectors

The Company's business is exposed to many internal and external risks and it has consequently put in
place robust systems and processes, along with appropriate review mechanisms to actively monitor,
manage and mitigate these risks.

Competitive Intensity
Keeping in mind the high growth potential of the Indian automotive market, all OEMs, homegrown as
well as MNCs, have presence across all vehicle segments. Today, multinational OEMs are now deeply
entrenched in the Indian market with local development centres, a strong local supplier base and good
channeL penetration.
In the Passenger Vehicle Segment (PV), the differentiation between Cars and UV has largely blurred.
There is great demand for compact UVs with car LiKe features. As of now, 45% of UV sales are from UVs
less than 4m length while UVs as a share of PVs stand at 28% (was 14% in 2012 ). The competitive
intensity in the segment will only increase. The LCV < 3.5T Commercial Vehicle Segment (CV), which is
55% of the CV Goods industry, where your Company is the market leader. However, there is increased
competition with new and competitive launches from homegrown as well as MNC brands.

The medium and heavy commercial vehicle segment, has two dominant domestic players and in the
recent past, has witnessed new entrants including MNC brands. However, the new entrants have seen
limited success owing to the strong on ground presence of current market leaders and deep-rooted
brand bonding.

Tax Regulations

India has traditionally seen tac rate differential between small and large passenger vehicles. This
differential is based on length of vehicle, engine size and fuel type. The differential tax rates are a
deterrent to the customer for buying large and luxury vehicles. This differential in tax rates gets carried
forward under the GST regime implemented in July, 2017.

While the flagship products of the Company attract higher tax rates, the Company is continuously
working on strengthening the portfolio of vehicles that attract lower tax rates.

Downside Risk
● Strong launches from competitors like Maruti Suzuki, Hyundai Motors and Ford can grab the
market share from M&M.
● Poor monsoon can impact the overall earnings growth (47% EBIT contribution from tractors
segment).
● Lower growth and profitability of subsidiary companies can limit upsidegrowth.