Good monsoons bring cheer to tractor manufacturers

As monsoons have set in early this year, tractor sales are likely to get a boost from the positive sentiments.

Already, signs of growth have been seen in the first two months of the fiscal, and industry insiders feel if the monsoons remain normal this year, tractor sales might clock an 8-10 per cent growth over last year.

What's more, states like Gujarat, which have seen a de-growth in tractor sales in the last two years owing to bad monsoons, are likely to bounce back. Tractor sales had dipped by around 10-12 per cent last fiscal in the state, selling just over 50,000 units, informed industry sources.

However, this year the kharif sowing has already started on a robust note in Gujarat, with cotton sowing recording a 107 per cent year on year growth during June 1 to June 17 this season. Sowing activity is expected to further pick up during July.

Sameer Tandon, head of sales, services and spare parts, Escorts Agri Machinery said, "Gujarat did not receive good rains during the last two years, and the industry volumes had dipped in the state. Now that this year monsoons are on time, it seems that sales in Gujarat would also pick up compared to the previous years. As for overall industry growth, Tandon feels, with good monsoons, the industry should grow in the range of 8-10 per cent this fiscal.

He further added that states like Madhya Pradesh, Chhattisgarh and Rajasthan which had shown tremendous growth in tractor sales last year, almost touching 50 per cent growth, are likely to lead sales this fiscal too. "This was due to a low base of farm mechanisation in these states. As the penetration of tractors grew, the growth rates look very robust," he explained. Tandon expects together Madhya Pradesh and Chhattisgarh could surpass tractor sales in Uttar Pradesh which is big market with volumes of around 100,000 units per year. "Madhya Pradesh and Chhattisgarh combined could touch volumes of 115,000 units this year," he said.

According to data from the Tractor Manufacturers' Association of India, tractor sales grew 30.19 per cent in April and nearly 21 per cent in May. This is getting considered as the first signs of revival by the industry which actually de-grew by 2 per cent during 2012-13. Leading tractor manufacturer Mahindra & Mahindra (M&M) recorded strong growth numbers during the first two months of the fiscal; its domestic tractor sales clocked a 38 per cent growth to 22,196 units while exports grew by 34 per cent to 1,006 units during April. In May, domestic sales were up 24.7 per cent to 22471 units while exports were up 15.8 per cent to 1155 units.

A senior official of M&M said, "Overall market sentiments look positive about the rains. If the monsoons continue to be good, we expect strong growth in tractor sales this year." Another tractor manufacturer Sonalika Tractors too has posted sales growth of over 35 per cent in the first two months of the fiscal, and expects the trend to continue if monsoons remain normal.

Analysts, however, cautioned that while the growth numbers for the first two months are good, they are actually higher compared to a very low base last year. How the overall year would shape up would depend on how good the monsoons are.