Mahindra & Mahindra refutes reports of penalty for emission norms violations

Mahindra & Mahindra has denied claims that it faces penalties for failing to meet emission norms during the financial year 2022-23. In a statement to stock exchanges, the automaker clarified that no penalties have been imposed and that it does not expect any material financial liability.

The company was responding to a report by The Indian Express, which alleged that eight carmakers, including Mahindra, Hyundai, Kia, and Honda, exceeded fleet emission limits. The report suggested penalties for these companies could total ₹7,300 crore.

Mahindra dismissed the claims, stating, “Any reference in the news article about penalty imposed on the company is factually incorrect.”

The controversy is linked to compliance with the Corporate Average Fuel Efficiency (CAFE) norms regulating vehicle emissions. According to Mahindra, the assessment period for FY2023 was from April 1, 2022, to March 31, 2023.

What did company say?

The company explained that the Energy Conservation Act (EC Act) was amended in December 2022 to include penalties for failing to meet CAFE norms. However, this amendment took effect on January 1, 2023. Applying these penalties retroactively to the entire financial year, Mahindra argued, would be improper.

“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 clarified.

The CAFE norms, introduced in 2017 under the Energy Conservation Act, aim to reduce carbon dioxide (CO2) emissions and curb oil dependency. These standards set limits on average CO2 emissions for vehicles sold in a financial year, based on their weight.

The second phase of CAFE norms came into effect in FY2023, lowering permissible emissions to 113 grams per kilometer from the earlier 130 g/km. Non-compliance can result in steep penalties, pressuring manufacturers to adopt fuel-efficient technologies.

The Bureau of Energy Efficiency (BEE), under the Ministry of Power, monitors compliance with these norms.

For now, the company’s statement seeks to quash speculation of any immediate financial impact stemming from the emission norm assessments.