Anish Shah, Managing Director and CEO, Mahindra & Mahindra Ltd, talks about Q2FY22 numbers, semiconductor shortage and its impact, launch plans for FY22, electric vehicle segment, tractor business and demand situation and Group's performance among others during an exclusive chat with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: The company has posted good results across parameters for the September 2021 quarter, specifically, the revenue has grown by 15%. What were the key factors that you have seen a good jump in volumes? Also, how much did the pricing factor has worked out?

A: We are happy to report numbers this quarter, it has been a very strong performance across all our businesses. There have been challenges, supply chain shortages for auto, commodity prices at both involved auto and farm. But what we are happy about is the market share increase in tractors almost 2 percentage points, which is very significant, and that has really helped drive the revenue growth along with what is happening on the auto side. Because we have four blockbuster launches in a row now, we had the XUV300, the Bolero Neo and Thar and another 700. For 700, we have 70,000 bookings already and got the 50,000 in the first three hours and that is creating a lot of momentum for our businesses. A lot of this momentum will be seen in the future quarters but at least for now, as you said, revenue has been good and profits have been significantly higher as well. Margins have come down a bit due to commodity prices but as there as the price increases come in, we will start seeing some pull back on that at least. So, we will be optimistic about the run we are in.

Q: Auto industry is facing the issue of shortage of semiconductors for the last many months and it is a global phenomenon. How are you looking at the problem and dealing with it? How long do you think that the problem will be there?

A: Let's start with what caused the problem. There were two causes (i) COVID related disruptions and (ii) demand is greater than supply. COVID related disruptions caused the biggest problem, so, if we look at this quarter in particular, we lost 32,000 volume or units because of the semi-conductors. Largely because of one plant in Malaysia being shut down because of the COVID and that caused a much lower number of electronic control units (ECUs) coming in than what it would have been otherwise. Those problems we are hoping are behind us and that we get to a better place from the COVID-standpoint as we have in India and that continues and across the world as well. The second point is that demand has been a lot higher than the supply because a lot of things require semiconductors from cell phones to computers to tablets and everything else. There we see taking a little longer so, there would be some impact on it but a lot of semi-conductor supplies coming in as well. That will take six months to a year to come in and as it comes in, we will be back to normal. So, we do not, at this point expect the kind of disruptions, we had so far, we expect it to be a lot better but we do not expect normalcy for about a year or so. Just on the second part of your question, we have taken a number of actions with regard to looking at the weak not only for the Tier-I suppliers but also for Tier-II suppliers as well and looking at standardising some parts across all models.

Q: XUV700 has seen a stupendous response. What are your launch plans for FY22 particularly SUVs in the next 5 years on a larger scale?

A: XUV700 delivery has started, we have to deliver about 15,000 cars in the next two months or so and continue to ramp up from there. It is a wonderful car. It is something you must drive, it is just not about the technology in the car, but the ride, the handling, and everything that comes with it. This is a reason why we are seeing that kind of response, 70,000 bookings, which include 50,000 in three hours has broken many records in automotive not just in India but across the world. And that is the functional product. So, what we are happy about is that it is not about just one car, it is the Thar, the 300, the Bolero Neo and the next one is coming is the new Scorpio. So with that, we got four blockbuster launches in a row and we are hoping to make it five with Scorpio and that would put M&M back on the map in terms of core SUV.

Q: In the horizon of four to five years in SUVs, where will be your focus be and can you give some insight into it?

A: The big focus is going to be on the electric, we are looking at a number of new electric models, eight in particular over the next few years. I am getting back to taking the leadership position in the electric segment as well, as we have in the core SUV segment, we are looking to get back to number one. On the electric side as well we are looking at aggressive steps.

Q: During our last conversation you talked about your plans to bring IPOs for at least three unlisted businesses. Do you think that you are ready now to come up with one or two or three of these companies? What is the update on that plan?

A: A year ago, I had said three to five years, and at this point, I would say two to four years, so, we are still on track. We are looking at two years maybe sooner for the next IPO to come up.

Q: So, not in the near term?

A: No. I would not expect something in the next six months or the next year.

Q: You are the world's third-largest tractor company. What is the new growth catalyst and what kind of demand and growth are anticipating from the front?

A: Rural is still very buoyant and we do see a lot of demand in the rural areas. With the big opportunity in tractors or farm is actually on farm machinery. Farm machinery is a space in India, which is very small compared to what it is globally and we have talked about it before. Globally it is 2X the sale of tractors and in India, we sell Rs 2000 crore of tractors and we sell Rs 500 crores of farm machinery in India. So, there is a huge opportunity in that space and that is something that we are driving very hard now. We are getting in the product customizing for India, getting farmers to adopt that and that is what we feel will be the next push on the farm side.

Q: What is your outlook on the Group's performance because we are seeing a steady comeback, growth and numbers are looking strong? 

A: Lets we start with the numbers of this quarter first. On the consolidated side, including all the group companies excluding SsangYong and the issues we had in SsangYong in the past. Consolidated profit is up 9 times in terms of profits after extraordinary items. That is really driven by performance not only in auto and farm but also in Mahindra Finance - very strong quarter for it, for Tech Mahindra, a continued momentum was there, our holiday business has seen very strong momentum. Real estate has turned around extremely well and has reported a very strong quarter. Logistics has reported a strong quarter. So, we are seeing across all the listed entities and the unlisted entities as well. So, there has been a strong performance across the board. I cannot share the numbers as a projection for the year right now but all I can say is that we do see this momentum continuing across the companies.