The Swaraj Division of tractor-major Mahindra & Mahindra is planning to increase the tractor manufacturing capacity by 10-15% at its Mohali unit in Punjab. The company is working on the modalities on capex plans. Besides catering to domestic market, it also caters to exports.
“Buoyed by the response from the domestic market, we are planning to increase the capacity by 10-15% in a year or two at our manufacturing facility in Mohali. We are working on the investment plans and very soon it will be finalised. Currently, the installed capacity at our unit is 1 lakh tractors per annum and we are utilising 100% capacity,” said Viren Popli, Chief Operating Officer, Swaraj Divison, Mahindra & Mahindra Ltd while talking to The Tribune.
Overall, Mahindra & Mahindra sold 88,101 tractors in the domestic market during April-July 2016, with a growth of 15% over April-July 2015. It had sold 73,423 tractors during April-July 2015. In Q1, the tractor major had a market share of 43.9%.
Expectations of good monsoon coupled with higher MSPs (minimum support price of crops) has steered the domestic tractor sales. Experts said the positive monsoon forecast, advance estimate of rabi crop production and the increase in MSP will boost agri income and positively impact the demand going forward.
On the outlook for the current year, he said, “We expect the industry will grow by 10-15% in the current fiscal year.” Viren said the domestic tractor market is predominantly dominated by small and medium horse-power (HP) tractors which vary from 15-50 HP range. According to him, around 95-97% of the tractors sold in the domestic market are in this category.
Besides positive sentiments, the increased application of tractors with equipment like rotavators, combine harvesters, laser leveller, happy seeder etc and for non-agricultural purposes, including haulage, has propelled the domestic tractor sales. He said the existing market for tractors is Punjab, Uttar Pradesh, Andhra Pradesh, Maharashtra and Karnataka, but the tractor industry is also witnessing demand from eastern and southern states.
According to data, 4,93,764 tractors were sold in the domestic market in 2015-16 as compared to 5,51,463 units in 2014-15. The sales were affected as agriculture demand and non-agriculture demand remained weak for the past two years.