The Hindu Business Line : Tractor sales grow despite banks clamp-down on funds

New Delhi, Sept. 25 The curbs on financing by banks and financial institutions have not prevented the domestic tractor industry - the segment most heavily dependent on financing - from treading on the growth path.

This is at a time when most other segments like passenger car and commercial vehicles have been under pressure constrained largely by the tight availability of finance and mounting commodity prices which compelled automobile companies for subsequent price hikes of their models.

Tractor companies are registering a healthy growth despite public sector banks going tough in approving tractor loans due to good monsoon and high farm commodity prices.

“Financing has been a problem. But for us, a majority of the tractors have been financed by Mahindra’s own financing arm. Even though our interest rates are marginally higher, since we don’t ask the land to be mortgaged and only the vehicle is asked as collateral, farmers find it an attractive option,” said Mr Gautam Nagwekar, Chief Financial Officer, M&M, Farm Equipment Sector.

In the case of Tractors and Farm Equipment (TAFE), which does not have its own financing arm, the company has opted for increasing tie-ups with financial institutions.

Currently, about more than 90 per cent of the tractors in the country are sold on finance compared to 70-80 per cent of passenger and two wheelers.

Escorts which saw a 13 per cent increase in its retail sales at 16,016 units during the period, however, reckons the impact of banks clamping down on finance may show in the period post July.

“Since banks started going slow since June, the real impact on sales due to unavailability of finance would show for July-September period,” said Mr Rohtash Mal, CEO, Escorts Agri Machinery Group.

International Tractors Ltd, which makes the Sonalika brand of tractors, attributes it to good monsoon and better farm commodity prices.

“Sales have been growing because of a good monsoon,” said Mr L.D. Mittal, President, Tractor Manufacturer’s Association and Chairman of Sonalika Group.

Companies also say that after a good monsoon and anticipation of the festive season during September-December also led the dealers to build stock at a sufficient level to meet the demand.

“Food prices have been at an all-time high. So farmers have benefited. Moreover, with the peak season for sales beginning from September onwards, dealers would have started building stocks at least from mid-July onwards or beginning August to meet the demand till December. So companies are pushing stocks to the dealers’ end,” explained Mr Rakesh Jinsi from New Holland Tractors.

Related Stories:
Tractor cos relying more on pvt banks, NBFCs to boost sales
Tractor makers see sales taking a knock

More Stories on : Credit Market | HCV/LCV/Tractors | Trends

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
With 5 days to go, rain deficit cut to 1%

IT cos may not dispute Lehman’s ‘cure amounts’

3G, WiMax auctions to be held simultaneously

No fear of commodity bubble: Barclays

HNIs in India up 23%: Study

New Zealand to quarantine Ranbaxy drugs

Pantaloon Retail India (Rs 274.20): Sell

Day Trading Guide

Rice output estimated higher at 83.25 mt

Reinsurance rates under pressure

Markets sense fall in kharif output in advance

Tractor sales grow despite banks clamp-down on funds

SAT declines to stop Emami’s open offer