 "Robust tractor demand propels ancillary business")
Tractor ancillaries in the northern region, dominated by SMEs, are upbeat owing to robust demand for tractors in 2013-14, amid expectations that the industry will grow by 12-15 per cent for the second consecutive year. To meet this demand, manufacturers are considering increasing installed capacity as also improving technology by installing state-of-the art machinery.
Tractor sales in the domestic market witnessed over 20 per cent growth in 2013-14, mainly because of a good monsoon in key regions like the western and southern markets, coupled with increased demand from the farming community.
According to TMA (Tractor Manufacturers Association) data, domestic tractor sales totalled 634,151 units in 2013-14, compared to 526,912 units in 2012-13. However, exports fell marginally in 2013-14 to 62,677 units, from 62,890 units in 2012-13, according to TMA. In 2012-13 tractor volumes dipped by three per cent in India on account of large-scale drought-like conditions in several states, led by Maharashtra, one of India's biggest tractor markets.
Gurdeep Singh, director and CEO, GNA Group, told Business Standard, "The demand for tractors in the domestic market has propelled our growth also, as we have registered around 12-14 per cent growth in the last fiscal year. We have been able to use 100 per cent of our installed capacity and will take on a call on increasing capacity in the second quarter of the current fiscal to meet the demand by OEMs." His company supplies gear boxes, axles, shafts and gear shift levers to tractor manufacturers such as Mahindra & Mahindra, Sonalika and Tafe.
Ajay Sikka, managing director, Sharp Chucks and Machines Limited, said, "We have witnessed 30 per cent growth over the last year. In order to meet quality standards we are in the process of installing state-of-the-art machinery like a forging facility for OEM's. Enhancing technology helps SMEs to compete in the global market also, besides catering to the domestic market." His company supplies housing, trumpet housing, pistons and front wheel hubs to Mahindra & Mahindra, Escorts and Sonalika.
There are over 300 tractor parts manufacturers in the northern region. In order to cash in on the growing demand for tractors, some manufacturers - like Jalandhar-based Joshi Auto Industries - have diversified into auto parts, combines and tractor parts, since the increase in new tractor sales as well as demand in the replacement market has helped protect their bottomlines.
The increase in sales has also helped non-banking finance companies like Magma Fincorp, whose tractor financing grew by 26 per cent in 2013-14. Dhrubashish Bhattacharya, the company's vice president and national sales head - tractor finance, said the industry is provisionally expected to grow by 7-8 per cent in 2014-15, as against 20 per cent in 2013-14.
However, the actual projection will come only after the monsoon, which is expected to be disturbed owing to the El Nino effect. "Our projection is to grow our tractor financing by 32 per cent in FY15 over FY14," he said.
However, tractor industry officials expect a growth of 12-15 per cent in 2014-15. They said the southwest monsoon, which the Indian Metrological Department has said is likely to be below normal in 2014, may not have much effect on domestic sales of tractors, which are now not restricted to the farm sector alone but used as multipurpose tools. "They are deployed in the real estate sector and the infrastructure sector, so these sectors are expected to push sales," industry officials said.
Tractor sales in the domestic market witnessed over 20 per cent growth in 2013-14, mainly because of a good monsoon in key regions like the western and southern markets, coupled with increased demand from the farming community.
According to TMA (Tractor Manufacturers Association) data, domestic tractor sales totalled 634,151 units in 2013-14, compared to 526,912 units in 2012-13. However, exports fell marginally in 2013-14 to 62,677 units, from 62,890 units in 2012-13, according to TMA. In 2012-13 tractor volumes dipped by three per cent in India on account of large-scale drought-like conditions in several states, led by Maharashtra, one of India's biggest tractor markets.
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Gurdeep Singh, director and CEO, GNA Group, told Business Standard, "The demand for tractors in the domestic market has propelled our growth also, as we have registered around 12-14 per cent growth in the last fiscal year. We have been able to use 100 per cent of our installed capacity and will take on a call on increasing capacity in the second quarter of the current fiscal to meet the demand by OEMs." His company supplies gear boxes, axles, shafts and gear shift levers to tractor manufacturers such as Mahindra & Mahindra, Sonalika and Tafe.
Ajay Sikka, managing director, Sharp Chucks and Machines Limited, said, "We have witnessed 30 per cent growth over the last year. In order to meet quality standards we are in the process of installing state-of-the-art machinery like a forging facility for OEM's. Enhancing technology helps SMEs to compete in the global market also, besides catering to the domestic market." His company supplies housing, trumpet housing, pistons and front wheel hubs to Mahindra & Mahindra, Escorts and Sonalika.
There are over 300 tractor parts manufacturers in the northern region. In order to cash in on the growing demand for tractors, some manufacturers - like Jalandhar-based Joshi Auto Industries - have diversified into auto parts, combines and tractor parts, since the increase in new tractor sales as well as demand in the replacement market has helped protect their bottomlines.
The increase in sales has also helped non-banking finance companies like Magma Fincorp, whose tractor financing grew by 26 per cent in 2013-14. Dhrubashish Bhattacharya, the company's vice president and national sales head - tractor finance, said the industry is provisionally expected to grow by 7-8 per cent in 2014-15, as against 20 per cent in 2013-14.
However, the actual projection will come only after the monsoon, which is expected to be disturbed owing to the El Nino effect. "Our projection is to grow our tractor financing by 32 per cent in FY15 over FY14," he said.
However, tractor industry officials expect a growth of 12-15 per cent in 2014-15. They said the southwest monsoon, which the Indian Metrological Department has said is likely to be below normal in 2014, may not have much effect on domestic sales of tractors, which are now not restricted to the farm sector alone but used as multipurpose tools. "They are deployed in the real estate sector and the infrastructure sector, so these sectors are expected to push sales," industry officials said.