Tractor sales in India, the world's largest tractor market, declined 16.8 per cent to 1.98 lakh units during 2001-02, against 2.38 lakh units sold in 2000-01.
According to industry sources, the decline is owing to lower income among farmers following a surplus agricultural produce. Sales during the fiscal would have been much lower had manufacturers not inflated their billings by piling up stocks with dealers, the sources said.
Mahindra & Mahindra, the market leader, saw its sales drop sharply by over 26 per cent to 58,073 units against 79,143 units in 2000-01. The other major players, Punjab Tractors, Escorts, TAFE and Eicher, also saw a big sales decline during the year, resulting from a surplus agricultural produce which led to lower income for farmers.
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As per figures released by domestic manufacturers, industry sales in the wholesale market during March zoomed to 25,399 units, a 24-month high since sales touched 28,249 units in March 2000 (total sales during 1999-2000 were 2.6 lakh unit).
The sharp increase in March sales has come despite very low projections by top sources in leading companies, including M&M, Escorts and Eicher.
Analysts said it was "highly unlikely" that retail sales during March were as high, considering the poor demand from the rural sector.
"Several manufacturers continued to dump stocks onto dealers in March, in spite of the already high inventory levels. This could have been a bid to partly make up for the loss of volumes during the earlier months, and to dress-up their annual figures," they said.
"However, while the companies' profit and loss account might look better, the receivables in the balance sheet will give the true picture," an analyst at a leading brokerage firm said.
Industry sources estimate that, currently, the total inventory could be higher than 150 days, against around 30 days in the other automotive segments including passenger cars.
The Tractor Manufacturers' Association had earlier proposed that all the companies join hands to cut the inventories by half, but the proposal could not be implemented as leading tractor company from north India was not keen on it.