M&M denies knowledge of potential emission penalties

Mahindra & Mahindra on Thursday clarified that it has no knowledge about any plans by the government to impose penalties on the company for allegedly missing emission targets, as reported by The Indian Express.

A media report published on Thursday morning said car makers including Hyundai, Kia, Mahindra, and Honda have higher than mandated fleet emission levels in the financial year 2023, which could mean penalties of around Rs 7,300 crore.

“Any reference in the News Article about Penalty imposed on the Company is factually incorrect. To the best of our knowledge, no such Penalty has been levied or is being considered,” the company said in an exchange filing.

CAFE, or Corporate Average Fuel Efficiency, norms are government-mandated standards that require automakers to meet specific fuel economy targets for their entire fleet of vehicles. CAFE 2 norms assessment period for 2022-23 was from April 1, 2022 to March 31, 2023. 

However, M&M noted that the Energy Conservation Act, 2001 was amended in December 2022 to include penalties for OEMs not complying with the norms and the amendment is effective from January 1, 2023.

“Applying the amended penalty under EC Act for the full period of FY2023 would mean the penalty is being applied retrospectively, which is incorrect…Hence, the Company doesn’t expect any material liability for FY2023,” the company added.

The news report had said M&M could face a penalty of Rs 1,788.4 crore while Hyundai and Kia could face penalties of Rs 2,837.8 crore and Rs 1,346.2 crore, respectively. Honda, Renault, Nissan, Skoda and Force Motor are the other carmakers mentioned in the report.