The Hindu Business Line : Tractor makers turn sceptical on monsoon unpredictability

WITH the dry spell in several major States adding to the farmer's cup of woes, industries such as tractors and two-wheelers have revised their outlook for the year. The fortunes of both the industries, particularly tractors, are heavily dependant on rural income.

"We were expecting this to be a much better year for the tractor industry and were targeting a growth of about 20 per cent to 2,25,000 units this year, as against 1,90,000 units last fiscal. This, however, is unlikely now, with a part of the country, which accounts for a significant amount of sales, affected by lack of rains. There may still be a little growth this year for the industry, primarily on account of the strong growth in the first quarter and also the price reductions passed on to the farmer due to the excise benefits for the tractor industry announced in this year's Union Budget," Mr R.C. Jain, President, Tractor Manufacturers Association (TMA) and Vice-Chairman, Eicher Group, said.

Analysts point out that if the monsoon situation continues like this, there may be no growth for the tractor industry in the second half of the year.

According to Mr Rakesh Chopra, Business Head, Agri-machinery Group, Escorts Ltd, the truant rains have already caused substantial damage. "The outlook for the tractor industry has been revised back to 200,000 units as was the expectation in the beginning of the year. With the good performance in the first quarter, the industry was expecting upwards of 225,000 units this year. Incidentally, the areas most affected (namely Punjab, Haryana, Western UP, Rajasthan, Gujarat, and Maharashtra) account for about 35-40 per cent of total tractor sales. However, we expect some growth to happen," he said.

The impact on sales though, if there is no turnaround in the weather in the next few days, will be seen in the next major season for the industry, the September-November period.

The negative impact poor monsoons has on rural incomes is worrying the two-wheeler industry as well, as rural sales contribute to about 50-55 per cent of total two wheeler sales in the country.

Though industry officials say that it is too early to quantify what the impact on sales would be, they say that there is most likely to be a slowdown in growth.

"The impact of inadequate rainfall in major States would only be reflected in November-December. There may be an impact on secondary sales for the industry if the situation continues," Mr Ravi Sud, Vice-President (Finance), Hero Honda, said.

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