Logistics

Positive rural sentiment outweighed Covid impact: Hemant Sikka

G Balachandar Chennai | Updated on December 24, 2020 Published on December 24, 2020

Hemant Sikka, President, Farm Equipment Sector, Mahindra & Mahindra

Being the tractor market leader with more than 41 per cent market share in the domestic market, Mahindra & Mahindra has benefitted from the robust demand for tractor sales in the post-lockdown period. In line with the industry trends, the company reported a 7 per cent increase in its tractor sales at 232,111 units during the April-November 2020 period. The company is bullish on growth prospects as it expects the government’s focus on rural growth and outlay under Atmanirbhar Bharat 3.0 to provide further fillip. Hemant Sikka, President, Farm Equipment Sector, Mahindra & Mahindra, spoke to BusinessLine on market growth and trends. Edited excerpts:

How would you describe the performance of the domestic tractor industry in 2020?

The tractor industry has been on a very strong growth trajectory since May, after briefly facing headwinds in the month of April due to lockdown. These were on account of several positive factors. These factors continue to stay positive, also resulting in a very good festive season. In spite of sporadic localised lockdowns across States, positive rural sentiments have significantly outweighed the disruptive ones resulting in a whopping tractor industry growth.

What were the key drivers of tractor recovery and growth?

Bumper rabi and kharif crop harvest coupled with the timely procurement of crops ensured seamless circulation of money in the rural economy. Government spending on agriculture and rural development and the MNREGA outlay this year has been increased. While we are seeing bumper and record crop output, the price realisation for the farmer is also very good. Between June and September, the monsoons were also higher. It is worthy to note that this year, we have had the third highest cumulative rainfall in 25 years. It was also the first time since 1960 that we had back-to-back above average monsoons. Good monsoons have also led to high reservoir levels. As a result, the rabi sowing is also expected to be very good. Overall, bountiful rainfalls in the June-August period, increase in sowing area under kharif crops, robust procurement mechanisms across States and timely cash flows into the hands of farmers have led to buoyant sentiments in the rural hinterland.

Did tractor industry provide the much-needed respite with its early recovery in post-lockdown period?

Surely, Bharat has shown the way to India to manage un- lockdown. The rural economy has bounced back much faster than the urban economy. We sold 4,500 tractors in the domestic market during April 2020, our lowest ever April tractor sales, as we were in middle of total lockdown. The lockdown initially did impact the farm business, with dealers partially open for only a few days. Classified as an essential activity, the tractors industry was among a handful of industries to have opened up while the rest of the country was still under lockdown. In fact, the tractor industry saw an unprecedented growth. This gave much-needed business to parts suppliers and financiers in those very challenging times of post lockdown. The government also took a lot of proactive actions to support the agri activities on the ground.

What were some of the key government measures that supported growth in tractors?

Financial initiatives like the early deployment of PM-KISAN, hiking of MGNREGA wages, purchasing at MSP and revised interest rate of 4 per cent for repayment of Kisan Credit Cards helped in improving sentiments. Digital initiatives like the Kisan Rath mobile app, which facilitates in transportation, and the Swamitva Yojana — which will provide an integrated property validation solution for rural India — have facilitated in availability of loans and insurance. The initial days of the lockdown saw reverse migration, mobility and workplace restrictions leading to operational disruptions especially in manufacturing, logistics and supply chain. However, the government’s quick response of declaring agriculture as an essential service meant tractor industry could recover faster than some of the other industries.

It is gathered that tractor purchase is a more attractive proposition now due to its use for multiple applications. What are your views?

The non-farming proportion out of total tractor industry is around 30 per cent till FY20 majorly in construction, haulage and sand-mining activities. This has been higher in states such as Bihar, Jharkhand, Chhattisgarh and a few pockets of Rajasthan where mineral and stone mining is higher. Further, in the off season, farmers lease their tractors for construction work which has helped in the increase usage of tractors. The use of tractors in non-farm applications has been further aided by government push for rural infrastructure and construction activities under different initiatives.

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Published on December 24, 2020
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