Tractor industry sales likely to dip 5% due to agri activities slowdown

The tractor industry is likely to end the fiscal year with a 5 per cent decline in volumes over the previous year as tractor sales continue to slip owing to a slowdown in agricultural activities led by a delayed harvesting season as well as lower rabi sowing.

The market leader in tractors in India, Mahindra and Mahindra, felt that the year would end with around 900,000 units in sales compared to 945,000 units sold in 2022-23. M&M enjoys a 41.8 per cent share of India’s tractor market and it has managed to gain share from 41 per cent in Q3FY23 despite the market witnessing a slowdown.

For the April-January 2022-23 period, total domestic tractor sales stood at 760,000 units compared to 800,000 units in the same period of the previous fiscal.

Rajesh Jejurikar, Executive Director and Chief Executive Officer (Auto and Farm Sector), M&M told the media on Wednesday that the fourth quarter is likely to witness a 10 per cent decline in sales in the tractor industry. Southern states are not doing great in terms of tractor demand while the states like Punjab and Haryana are among the faster-growing states for tractor demand.

M&M’s consolidated farm revenues came in flat at Rs 8,600 crore in Q3FY24, and Profit After Tax (PAT) was down 4 per cent to Rs 898 crore for the farm business.

Hemant Sikka, President, Farm Equipment Sector, M&M said that volumes of 900,000 for the full year are not very bad as such, and that the outlook for FY25 is not very muted. “As of now the forecast is for normal monsoons, and if that happens then FY25 outlook would not be very grim. We grew 26 per cent as an industry in the previous year, and on that high base, 900,000 units is not a bad number,” Sikka told Business Standard.

The farm sentiments are negative as Government spending on agriculture and rural development remained weak in Q3FY24, and erratic temporal distribution of rainfall adversely impacted kharif output. Rabi sowing has seen slow progress, and Mandi arrivals from kharif season remained weak, indicating broad-based lower farm output.

M&M said that among the positive signs on farm profitability, higher mandi prices of key crops and declining farm input inflation positively impacted farm profitability. Farm wage growth during Jul-Oct’23 has been higher than non-farm wage growth indicating growth in farm income.

‘No plan to raise funds for EV arm’

Mahindra & Mahindra (M&M) on Wednesday said that they had no plans to raise any funding in their four-wheeler passenger electric vehicle subsidiary Mahindra Electric Automobile (MEAL). Anish Shah, managing director and chief executive officer (CEO), M&M said, “The auto business is on a great run. It is generating the cash needed to invest in the electric vehicle business (EV). We will invest more in the EV business in the coming times.”

MEAL is positioned well, he added, and needs no external investments for now. MEAL will launch its new vehicle on the born-electric vehicle platform in early 2025.

Last August Singapore-based investment firm Temasek Holdings had said it would invest Rs 1200 crore in MEAL at a valuation of $9.8 bn. Earlier, British International Investment (BII) had invested Rs 1925 crore in 2022 at a valuation of Rs 70,070 crore.