M&M Tweaks Financial Reporting to Separate EV Performance

Mahindra & Mahindra (M&M) has announced a significant restructuring of its financial reporting framework to provide greater visibility into its electric vehicle operations, set to take effect from Q4 FY25. The new reporting structure will separate the company's EV manufacturing costs and margins across different business segments, offering investors and analysts deeper insights into the performance of its emerging electric vehicle business.

According to Rajesh Jejurikar, who spoke at M&M's Q3 FY25 results press conference, the company will now present its automotive financials in multiple distinct categories. The auto standalone results will be broken down to show both the overall figures and specific contract manufacturing arrangements for electric vehicles.

Under the new structure, M&M Limited will manufacture electric SUVs for Mahindra Electric, which will then distribute them to dealers. The auto standalone segment will only reflect margins on conversion costs rather than product margins. This arrangement aims to provide clarity on the actual manufacturing costs separate from the overall product economics.

"The effect of conversion cost sitting in M&M auto standalone is isolated from the rest of the business," Jejurikar explained during the conference. The company will also report end-to-end margins for electric vehicles, which will combine two components: the margin on conversion costs from auto standalone operations and the margin from product development expenses incurred by M&M.

Additionally, Mahindra Electric's standalone performance will be reported separately, with the company planning to provide a consolidated view of the total margins generated across both M&M and Mahindra Electric operations for the EV business.

The timing of this reporting restructure aligns with Mahindra's recent launch of its new electric SUV line-up, with bookings set to open on February 14th. While the Q3 FY25 results don't include significant EV revenues, the new reporting format will be fully implemented in Q4 FY25 when electric vehicle sales begin to materialize. It expects electric SUVs to generate monthly sales of approximately 5,000 units across two products initially.