Tractor industry ends H1 with strong growth on monsoon cheer

The tractor industry has continued the momentum it gained during the last fiscal and has ended the first half of the current fiscal with a strong double digit growth.

A good monsoon, healthy farm production and increasing use of tractors for non-farm applications have aided the growth in tractor sales.

Leading tractor makers such as Mahindra & Mahindra, Sonalika International Tractors Ltd and Escorts have reported strong volume growth during the first six month period.

With 52 per cent growth in September sales, top tractor maker M&M has ended the first half with total domestic sales of 1.58 lakh units as against 1.29 lakh units sold last year, registering an increase of 22 per cent.

Good monsoon and improved Kharif production along with positive sentiments through the festival season have contributed to the growth in Mahindra’s tractor sales.

Like M&M, Sonalika International Tractors Ltd also saw its tractor sales zoom in September registering 58 per cent growth. It has reported its highest-ever first half sales at about 50,000 units (including a few thousand units of exports), posting an increase of 24 per cent.

Raman Mittal, Executive Director, Sonalika ITL, told Business Line that revival of demand due to good monsoon in most parts of the country along with increasing use of tractors for non-agricultural segments in rural areas aided the strong growth in tractor sales.

Escorts recorded 32 per cent growth in September tractor sales at 7,664 units, while the total domestic volumes for April-September 2017 period grew by 18 per cent at 31,474 units.

For the second year in a row, the tractor industry hopes to end the current fiscal with strong growth as it expects robust demand for tractors to continue in the second half too.

The domestic tractor industry rebounded well in 2016-17 with 18 per cent growth in volumes at 5.8 lakh units as against 4.9 lakh units in the previous year.

Meanwhile, rating agency Crisil expects the total tractor sales to hit a record 6.5 lakh units this fiscal.

Besides a normal monsoon, fall in bank interest rates and farm loan waivers by several States are expected to spur growth in tractor sales. Also, lower tractor penetration of 20 per 1,000 hectares in the country also throws up enough headroom for growth.

States like Maharashtra, Uttar Pradesh and Punjab - which account for more than a quarter of the domestic tractor sales - have seen soaring tractor sales during the first half and these states have seen farm loan waivers.

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