The Hindu Business Line : Tractor industry fortunes on the upswing

According to industry data, the industry grew by 42.56 per cent in the April-October 2004 period to 1,40,181 units from 98,327 units in the same period last year. In fact, the industry has already upped its growth forecast for the fiscal to 2,45,000 units and expects tractor sales this year to end with an overall growth of 28-30 per cent.

"The growth in the latter half of the year would be lesser due to a higher base last year. However, the situation is better than last year, which saw a growth of 10 per cent," a market analyst remarked.

In fact, the last few months have been so good that industry officials state that at this rate the industry might just reach the 2,70,000 units level in another two years.

"The major factors that have driven the industry this year have been easy availability of finance, good cash flow to the farmer, and also the fact that there had been pent up demand for the past 2-3 years. The inventory situation has also improved drastically," Mr R.C. Jain, President, Tractor Manufacturers Association (TMA) and Vice-Chairman, Eicher Group, said.

In fact, almost all the players present in the category saw a double-digit growth in sales, with Escorts and TAFE witnessing growth of upwards of 60 per cent in the period, according to TMA data released for the April-October 2004 period.

Interestingly, Escorts also displaced Punjab Tractors to emerge as the second largest tractor maker in the country after Mahindra and Mahindra, which was able to hold on to its leadership position.

"Escorts has been doing very well for the past few years. In fact, in the previous two years our focus was on decreasing our stock levels. In addition, our new products have also found substantial demand in the market. The company's exports too have seen significant growth. In fact, we expect to double our exports to 5,000 units this fiscal, with most of the overseas sales to the US market," Mr Rakesh Chopra, Business Head - Agri Machinery Group, Escorts Ltd, said.

Relatively new entrants in the tractor industry such as Sonalika Tractors and multinational companies such as New Holland India, L&T-John Deere and Same Deutz-Fahr too have been quickly able to garner a significant market share.

In the period under review, while Sonalika marginally increased its market share to 10.7 per cent, the market shares of L&T-John Deere and New Holland India stood at 5.6 per cent and 4.3 per cent respectively.