Tractor sales seen up 9% in 2003-04

Domestic tractor sales in India are likely to grow by nine per cent in the year ended March 31, 2004, after three consecutive years of declines.

As per estimates, the total sales during 2003-04 are expected to touch 188,000 units from 172,000 units sold in the previous year. During April-February 2003-04, sales went up 7.8 per cent to 165,000 units from 153,000 in the same period last year.

According to the Tractor Manufacturers' Association (TMA), the sales may reach 200,000 units during 2004-05 and 225,000 units during 2005-06 unless the country experiences a poor rainfall.

According to TMA president R C Jain, "This year has been good for tractor makers as higher sales have also brought down the huge inventories they had previously."

"With the figures of March yet to come in, tractor sales should be touching 188,000 units this fiscal," said Jain.

He said the growth has helped tractor makers reduce inventories and correct their receivables, one of the industry's prime concerns.

India is the world's largest tractor market followed by the US and China.

The local market comprises 12 big companies, including market leader Mahindra & Mahindra, Punjab Tractors, Tractors and Farm Equipment, Escorts, International Tractors and Eicher.

Foreign players such as John Deere, Same Deutz-Fahr, New Holland and Renault Agriculture also operate through wholly owned subsidiaries or joint ventures with Indian firms.

Jain said abundant rains last year, leading to increased agricultural production and higher agri-gross domestic product contribution have driven the industry towards the growth path.

"The good rabi crop and expectations of a better kharif harvest will certainly help sales. On top of that, the sentiment has been good. Farmers have more cash in their hand. The availability of finance has also increased and interest rates have come down," he said.

Tractor makers have entered into agreements with banks to provide long-term finance to farmers at low interest rates this fiscal.

During April-February 2003-04, tractors having up to 30 horse power (hw) engines recorded a 16 per cent growth.

The mid-segment comprising tractors with 31-40 hp engines suffered a seven per cent drop but the above 40 hp segment posted a 17 per cent rise.

The mid-range segment constitutes a 60 per cent share of the total tractors sold in the country.

Tractor makers, especially foreign firms, have also started using the country as a sourcing base for tractors and components due to the low-cost and good quality available here.

"This year, over 15,500 tractors will be exported. Although the amount is small as compared with the domestic sales, it is still a quantum jump over the 8,000 units exported last year," Jain said.