Mahindra & Mahindra Denies Reports of Penalty for Violating Emission Norms

In a statement to stock exchanges, the automaker clarified that no penalties have been imposed and emphasised that it does not anticipate any significant financial liability.

The company's response came after a report by The Indian Express suggested that Mahindra, along with other carmakers like Hyundai, Kia, and Honda, exceeded fleet emission limits.

The article claimed that the total penalties for these companies could amount to Rs 7,300 crore.

Mahindra swiftly denied these allegations, asserting, “Any reference in the news article about a penalty imposed on the company is factually incorrect.”

The controversy revolves around compliance with the Corporate Average Fuel Efficiency (CAFE) norms, which regulate vehicle emissions.

Mahindra explained that the assessment period for FY2023 covered April 1, 2022, to March 31, 2023.

In December 2022, the Energy Conservation Act (EC Act) was amended to include penalties for non-compliance with CAFE norms.

However, these penalties only took effect on January 1, 2023. Mahindra argued that applying these penalties retroactively to the entire financial year would be unjust.

“Applying the amended penalty under the 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,” Mahindra explained.

The CAFE norms, which were introduced in 2017 under the Energy Conservation Act, aim to reduce CO2 emissions and decrease oil dependency.

These standards set limits on average CO2 emissions for vehicles sold within a financial year, depending on their weight.

The second phase of CAFE norms, effective from FY2023, reduced permissible emissions to 113 grams per kilometre, down from 130 g/km.

Manufacturers who fail to comply face significant penalties, which encourages the adoption of fuel-efficient technologies.

Compliance with these norms is monitored by the Bureau of Energy Efficiency (BEE), under the Ministry of Power.

With its statement, Mahindra sought to dispel concerns about any immediate financial impact arising from the emission norm assessments.