Escorts is widening its operations in the agricultural sector – by exploring emerging businesses and beefing up the export footprint — to de-risk the business from the cyclical nature of the tractor industry.
The company is looking to grow new businesses such as complete crop solutions, engines and SHIP (Sprayers, Harvesters, Implements and Planters) to mitigate the impact of core business’ cyclicality.
It is also planning to enter more markets for stronger export growth. While the company owns a factory in Poland, it exports tractors from India to Latin America, Africa, Europe, the US and the SAARC countries.
“We have steadily expanded our geographic footprint, registering robust growth in overall exports. We are identifying opportunities beyond the 62 countries we operate in. We are devising sharper export strategies, bearing in mind the requirements of different markets in terms of technology demands and consumption patterns,” Nikhil Nanda, Chairman & Managing Director of Escorts Group, said in the company’s latest annual report.
Its crop solutions offer farmers a bouquet of technologies and equipment, available on a ‘pay-per-use’ rent-based farming model that promises to improve the yield by 25-30 per cent.
“Under the SHIP initiative, we are introducing several implements that have been developed in partnership with various leaders in this segment. These smart implements ensure that our customers have access to high-end machines that make their daily tasks easier and faster, he said.
The ₹5,016-crore company is focussed on a three-pronged strategy to grow its domestic tractor market share that includes plugging portfolio gaps in the regional strongholds, gaining significance in weaker markets and developing region-specific solutions to enter opportunity markets.
In 2017-18, the company managed to increase its market share in three categories. Its share in 31-40 HP tractor segment grew to 14.5 per cent from 12.6 per cent in 2016-17. In above-50 HP category, its share grew to 7.9 per cent from 6.9 per cent.
Also in sub-30 HP segment, share moved northwards from 2.1 per cent to 3.5 per cent. But in 41-50 HP range, its share fell to 10.4 per cent from 11.7 per cent.
Gaining market share
During the first quarter of this fiscal too, the company gained market share across all major states.
“Our market share in the main market (North and Central India) is up by 200 basis points and in opportunity market (South and West), it went up 90 basis points, resulting in overall domestic market share at 10.7 per cent as against 9.7 per cent in previous fiscal same quarter,” Bharat Madan, Group Chief Financial Officer, said during the company’s June quarter conference call.