Tractors set for record sales, up 11% in 7 mths

The sale of tractors this year is all set to reach historic high, surpassing the previous record of 2,64,058 units in 1999-2000.

The rise in sales is triggered by a combination of factors-good monsoon, nearly 2.4 per cent growth in kharif production and a better rural credit support.

"The growth in tractor sale "� which depends on previous year's agricultural output and interest rate-might have a favourable impact on the FMCG sector as well," said Rashesh Shah, CEO & managing director, Edelweiss Capital.

According to him, this is indicative of the fact that the rural India in particular and the economy in general would be able to record better growth this year.

According to data published by the farm equipment makers, the Rs 6,500 crore industry recorded an 11.4 per cent growth in April-October 2005 to 1,43,852 units this year up from 1,29,133 units recorded in the first seven months of FY05.

In percentage term, the growth in the first half of the year (April-September) was even steeper 14.9 per cent (from 1,11,434 to 1,28,037). If the industry manages to keep the growth rate, it will end up selling 2,75,154 units in full year 2006.

Anjani Kumar Choudhari, president -farm equipment sector of Mahindra & Mahindra (M&M), said there was no indication that the 15 per cent growth rate achieved in the first half of the year would not be maintained in the second half. October was particularly good this year when M&M achieved sale of 11,000 plus units, a record by monthly numbers.

Experts said the sale of tractors reached its peak in 1999-2000. The upturn started in 1993-94 when the industry recorded sale of 1,37,385 units.

In the next six years, the sale graph moved northwards and reached the peak in 1999-2000 when multinationals started setting shops here. From 2000-01, the downturn started and in 2002-03 the sale went down to 1,60,056 units. It rose to 1,75,464 in 2003-04 and 2,26,000 in 2004-05.

According to Choudhari of M&M, the outlook of the industry looks good owning to good rabi prospects, continuous credit support, lower than normal foodgrain stocks and announcement of higher minimum support price.

The pecking order in the domestic industry is not changed in the year although the dominant players have consolidated their position.

M&M's market share has increased from 27 per cent to 32.8 per cent in April-October 2005. The Tafe-Eicher combined managed to have a 2 per cent growth in its market share to 23.6 per cent. Punjab Tractors (12 per cent) and Sonalika (11.2 per cent) lost their share marginally while Escorts lost its share by 7.7 per cent to 6.5 per cent.