I teased out the auto industry leader who's with us and he's very much in the studio with us. Anish Shah, MD CEO of Mahindra & Mahindra. Anish, great to have you with us here. Thank you very much.
Pleasure being here as always.
You made the trek. It's a short trek, but you made it, so grateful.
Lots of rain today. It's always good.
How, what's been the feedback? Today is the day the Navratri festive period starts. GST cuts are effective. You're one of the leaders in the auto space, Anish, especially in the premium SUV segments. So, you announced the cut earlier, right? I mean, you passed it on. You didn't wait for this Monday. So overall, how's it adding up? How's it shaping up? Numbers would be great or a feel would be great.
So the feel is very positive, obviously. And yes, you're right. We did pass the cuts on starting September 6th itself. We saw this as a major positive from the government, and I'm going to focus more on the macro aspect because to me that is the most important part of this. Yes, we will see greater demand through the festival period. We will see greater demand going forward as well just because of the price elasticity curve. But from a macro standpoint, the part that is most interesting from our standpoint is that this is a major change in sentiment as well. And one of the steps that we see that will take India to an 8 to 10% GDP growth annually for the next 20 years is what we believe.
Wow. And there are a number of steps that have been taken before. These are all building blocks, and this is one of those building blocks, but an important one. And our investments are focused today based on what we see of India's growth and the path towards what has been outlined as a very ambitious target of Viksit Bharat. But that's one that I do feel is highly achievable, and this is a proof point that takes us towards that. So GST cut is the third of the measures, right? You had the income tax cut. I mean, the Reserve Bank has been, hopefully there's more easing coming, and of course now you've got GST cuts as well. You're saying this is, and the finance minister alluded to this as well, that we've done enough and now the private sector should start, I mean there should be no constraints. I think that was the phrase that was used to kind of go out invest, and you have been in that sense.
We have quadrupled capacity, so we are playing our part on that front. Growth, growth solves most problems, right? In that sense, Anish, you think this sets the stage for a durable recovery in growth on the consumption side, and of course in turn creating the need for more capacities as well. This clearly sets the stage because it is a significant step forward. It's not just about the reduction in rates, it's also about simplification.
And that's one thing that's going to help tremendously.
So, Anish, hi, welcome to the show. Good to see you in the studio. Just narrowing in however on a little bit on the near term, because you said that you passed on the rate cuts on the 6th of September. It's the 22nd of September. What has demand been like in these couple of days?
So it's a Shradh period. So typically demand is lower in the Shradh period in any case. And overall it's been positive. If you had to compare it on a like-to-like basis, I'd say definitely positive. But also remember that our vehicles have been selling like hot cakes for a long time, right? So we, at the start of this year, we had promised mid to high teens growth in SUVs. Last year we grew 20% in SUVs. So we have been growing really well.
Do you think it can exceed your guidance because of this?
We feel we can, but new guidance will have to wait till our next analyst meeting, by which time we will get a better sense of where things are going. But it is clearly positive. A price reduction will enhance demand, and from that standpoint it is positive.
Well, good to have you in the studio. Everyone's quite optimistic that we are bracing for practically one of the best 30 to 45 days because all the factors are aligning together, right? The end of Shradh period, one month ahead of Diwali, you have the GST rationalization, income tax cuts. What more do you want? Perfect time. Do you think we are bracing for the best 30 days possibly in the history?
As I look at it, I tell our businesses every period should be the best ever because that's the possible. This is going to be better than the previous best. So it has to be better than the previous best and next it has to be better than this one. We had some of our businesses talking about best ever quarter, and I said we should not say that because every quarter has to be the best ever quarter.
Okay. And what about y'all already cut prices immediately and pushed it on to the customer. So they were lucky from September 6th as you said. So you don't have any problem with regard to the inventory or any hiccups on that front?
No hiccups on that front. I think that's all planned. Yes, some effort went into it, but we are in good shape at this point.
Let's talk about it segment-wise then. On tractors itself, there has been some rationalization with regard to GST, but as is, tractor demand was reasonably strong. Every time we speak, you talked about how you're gaining market share, you're growing better than the Indian industry, and the feedback was that on ground, demand is pretty okay. So how does this change things then?
This will again further enhance demand because you've got a reduction in price. But that's also the reason why I look for this as more a long-term play rather than a short-term play. Indeed, it's much more than what will happen in the next 45 days or the next quarter or the next year. This is something that in a sense is a fundamental reset, and that allows for customers to get goods at a cheaper price. It allows for a simplification in the entire process which is very important for all companies, and that's going to stand India in very good stead. Yes, I can't take away the short-term gains. There will be benefits that accrue to everyone in the short term, but in some ways I think the long term is more important than the short term.
You made a very, very good point, Mr. Shah, because before Prashant, the need of the government was to push forth some kind of consumption boost, and that's been done. There were some rough edges as well on the GST front which are gradually getting ironed out, and I think the path ahead is clearly pointing to much better times.
Absolutely. Anish, I'm not setting you up for giving us a number or something. 1st of October, should we expect when you post numbers for the month of September, should it be a...
Again, I'm not getting into numbers month over month because there are multiple factors that come in. Shradh days this year are different from those days last year and so on. So multiple factors come in, but as I would look at it overall, it is a positive trend.
