US farm equipment major John Deere is celebrating 25 years of its journey in India. In an interaction with Business Standard, Shailendra Jagtap, the firm's India Country Manager (Managing Director & CEO), dwells on its future roadmap and talks about pressing issues concerning the tractor markets and industry. Edited excerpts:
Do you see any slowdown in tractor sales in FY24 if El Nino impacts monsoon and causes rural distress?
We don’t foresee a slowdown as the current indicators of the rural economy are positive. The impact of climate change is challenging, but we feel it may not immediately impact and slow down the industry. The reservoirs are sufficient at this stage and with normal monsoons we can expect growth. This will go a long way in supporting the transition to technologically advanced farm machinery.
How has inflation impacted tractor prices? Has John Deere raised its prices or does it plan to, in future?
Commodity prices were volatile and did impact the industry significantly. But at the same time, we’re sensitive to what farmers can take as price escalation, and appropriately passed only that on to them.
So how has the market been this time? I mean has FY23 been as good as FY22 or has it been somewhat subdued given that FY22 was very good for all of you?
The market we are seeing is almost at the same level--or it may be 1-2 per cent down. It will be between 850,000-870,000 tractors in the year (domestic sales). Last year, it was between 870,000-900,000 tractors, so there is a minor dip.
Some experts say the bump in tractors sales during the past few years is due to demand from the construction sector. What is your take?
When we really look at it, this is what is happening in the agriculture market. Firstly, we have achieved record high food grain production. Our fruit and vegetable production has surpassed grain output. And in recent years, India is exporting a lot of food grains and fruits & vegetables.
Another factor is that reservoir capacity is full so water is available, and the government is also steadily increasing the MSPs.
Then, because of the use of technology in land preparation, and on the planting and spraying side, the input cost for the farmer is falling due to lower utilisation of pesticides and fertilisers. That is improving the farm's production and productivity. And with government support, the money available with the farmer is higher.
Some tractors are definitely getting into construction, but agriculture is still good enough to keep the demand for tractors elevated. We feel farming is the driving force though, of coure, construction is adding it.
John Deere has completed 25 years in India. How has the journey been so far?
John Deere is celebrating 25 years in India of our existence here. During the past 25 years, Deere has been serving customers in India and globally. In India, we are pioneers in bringing technologies that are critical to the farmer. These technologies are helping cultivators reduce input costs and improve farm productivity. We have bought in technologies like power steering, PowrReverser and MFWD, wet clutch and very recently, AutoTrac and then AC cab.
You are a major player in the 45-HP tractor segment. Is it still your forte?
See we do have tractors right from 28 horsepower to 75 horsepower for the Indian market. The 28- and 36-HP ones are predominantly being used in orchards. And we do have tractors right from 36 HP to 75 HP for agriculture application. But definitely, when we look at our strength, our products in the 45 HP and above space have had a higher level of acceptability.
So what is the share of 45 HP in your overall sales now?
Our total market share in India is 9-10 per cent. Definitely we are leaders in the 50 HP-plus segment. Our market share is much higher. In 41-50 HP too, our market share is in double digits. The 45 HP-plus tractors account for almost 50 per cent of our total sales. The government has implemented the emission norms for 50 HP and above, so the demand for 45-50 HP has gone up.
Can you throw some numbers on revenue growth and profit growth in FY23?
We don’t typically discuss revenues and profit. I won't be able to share the information. Only thing I can say is that we are healthy.