M&M to pursue engineering actions to address rare earth shortage: CFO

Mahindra & Mahindra plans to manage rare earth magnet supplies through alternative sourcing channels for the next nine months and will pursue 'engineering efforts' to address the raw material shortage situation amid growing product portfolio, according to a senior company executive.

The imposition of export restrictions by China on key rare earth magnets has resulted in supply chain bottlenecks, impacting the user industries, including the auto and electronics sectors.

The magnets are essential components across sectors like automobiles, household appliances, and renewable energy. 

"Basis, all the actions we have taken, FY26 is more or less managed. We have to now work on some medium and long term actions," Mahindra & Mahindra (M&M) Group Chief Financial Officer Amarjyoti Barua told PTI in an interaction.

The company has taken steps to build inventory through alternative sources to take care of the problem, he stated.

"It has panned out well for us so far and we do not foresee any major risk for the next nine months," Barua said.

"But considering the growth plans we have, we have to think about a much bigger play than what the tactical plays we have done, and that is going to require a lot more engineering effort," he added.

The company's engineers are working on various solutions to work out a solution, Barua said.

Last week, Maruti Suzuki stated that its engineers are working to mitigate the rare earth magnet shortage issue, noting that there has been no impact on its production so far. 

Hyundai Motor India has also stated that it is not facing any production issues due to the shortage of rare earth magnets.

In June, rating agency Icra had stated that inventories of rare-earth magnets used in critical automotive components, particularly electric vehicle (EV) traction motors and power steering systems, could run dry by mid-July this year. Crisil, another rating agency, had also flagged it as a significant risk to automotive supply chains.

The magnets in question, neodymium-iron-boron, are known for their strength and efficiency, used for high-performance automotive applications such as traction motors in electric vehicles and power steering in both electric vehicles and internal combustion engine vehicles.