Bengaluru-headquartered VST Tillers Tractors, a manufacturer of power tillers, tractors and other farm equipment, has chalked out a future growth map with a turnover target of ₹3,000 crore by 2025 and a transition from power-tiller centric operations to a strong small farm mechanisation company. Antony Cherukara, Chief Executive Officer of the company spoke to BusinessLine about the agri equipment market and its strategic growth plans. Edited Excerpts:
How has been the demand for agri-equipment and tractors this fiscal?
So far, demand has been good. But two things will matter going forward. Firstly, in certain parts of the country, there is deficient rainfall which will definitely affect standing crops that have already been sown. States such as Gujarat and Odisha, some States in the northeast and north Maharashtra are largely affected due to the deficient rainfall. We will have to wait and see how it plays out because the monsoon is not yet over, the next two to three weeks are going to be critical. And the second big factor which I am looking forward to is the upcoming festival season. Last year, the festival season was hampered due to the pandemic. This year that is unlikely to happen as most experts are saying that the third wave will not be as severe as the second . So, the factor which is really going to play out for the industry is going to be the festival season. So, you will see a lot of festive buying this year, beginning with Ganesh Chaturthi and Diwali later. The next two to three months are going to be critical for the industry compared to last year. Meanwhile, we see that the minimum support price has been increased. I feel that MSP is going to play up in the next six months, hence cash flow to the farmer’s hand is likely to be better.
We gather that the company is transitioning to become a small farm mechanisation company. How are you planning to achieve this?
As part of our vision to achieve ₹3,000 crore revenue by 2025 we have adopted four key direct strategies. The transition from merely being a power tiller player to a small farm mechanisation player means that we are introducing power weeders, which start from 3 hp to 8 hp. Also, we are introducing a 9 hp power tiller again along with a lot of brush cutters, hand-held machines and multi-crop reapers. The entire range of farm mechanisation for small and marginal farmers is what we are looking at.
What is the rationale behind your deeper focus on the small farm mechansiation area?
India has a huge number of small and marginal farmers. We are betting big on this segment as we are seeing a lot of demand for smaller farm equipment, power weeders, brush cutters and chainsaws from across the country. Labourers are becoming scarce, and these small farmers are wanting to do it themselves, especially the ones who have two or three acre farms. Hence, there is a lot of demand for equipment, and we have been seeing exponential growth as the CAGR is estimated at 20-22 per cent. It is a highly unorganised segment. But I believe that going forward there will be a lot of consolidation.
What are the other three strategies to realise your vision?
The second strategy pertains to the tractor capacity. In small and compact tractors, we had an installed capacity of about 20,000. But we have added another 20,000 for higher hp. So, there is a capacity of about 40,000 units including the higher hp capacity. The prime focus is to ensure capacity utilisation. The third is to transform our parts and lubricant distribution business into a rural distribution business where we are looking at getting into certain durables like agri-pump sets and things like that for distribution purposes. Lastly, we had a precision component division for machining in Mysore, which we are transforming into a precision implements division. We are getting into the rotavators and sprayers. In these two, we see a lot of growth opportunities. Rotavator is a direct attachment to tractors and sprayers and go on almost all of our small and compact tractors, which are used in vineyards and orchards. So, these are the plans to get to the ₹3,000 crore revenue.
What is the progress on the tie-up with Zetor for high-end tractors?
Last year we launched our own brand in the higher hp space -- 45 hp and 50 hp tractors, and we sold about 1,000 numbers last year. And this year, we are continuing to do that while increasing our network. We are now looking to move forward with the product development agreement with Zetor. The product development is happening right now, and we are expecting to launch those products into the market during the next financial year. These products will come in the higher hp category. So, we will have two ranges, both value for money products and premium products from VST Zetor stable as well.
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