Tractor Market Growth Expected to Boost by 15% in FY19

Monsoon is a key factor in the agricultural world. With a good monsoon prediction, the tractor industry has been experiencing a boosted growth this financial year and is expected to continue further. As per the tractor manufacturers, the industry is expected to clock an upwards growth of 15%. Companies are aggressively investing in R&D. Further, the increase in domestic demand of tractors is paving the way for less export and more domestic focus.

Rajesh Jejurikar, President – Farm Equipment Sector, M & M said, “All the factors are positive and government spending, especially on the infrastructure and development side, is driving growth in rural India”. Further, he added “A 3^rd normal expected monsoon prediction gives us a ray of hope and optimism. “Even though we have adequate capacity, supplier capacity is stretched and in view of this, we need to do a tactical prioritization between domestic production and exports to manage peak seasonal demand. The global revenue of the company in FY18 was recorded 37% of the total and we are expecting it to go enhance by about 50%in the next 2-3 years.” The 1^st quarter sales have been reported higher. M & M’s Q1 sales including domestic and exports has boosted up by 19% y-o-y i.e. 1,00,784 units.

Shenu Agrawal, CEO-agri machinery, Escorts said, “Talking about the last year, the tractor market went up to 7,10,000 units and this year Q1 is already blooming by 24%. We expect it to grow further by 15% and finally hit 8,20,000-8,30,000 units this year.” Talking about the Escorts domestic sales, it clocked 24,400 units in domestic sales in Q1, which is 42% up y-o-y. Further, Agarwal added, “Our capacity was 100,000 units and we achieved 80,000 units last year.”“We are expanding capacity to 150,000 units this year so that we are comfortable for even 30-40% growth.”

Rival Sonalika, one of the top tractor brands ended with its highest Q1 sales of 30,000 units – 20% higher. This way the tractor industry is experiencing a phenomenal growth every year as the individual brands are growing at a faster pace. Raman Mittal, ED, Sonalika group gave an overwhelming gesture by saying, “It has doubled itself from 4 lakh units in less than 7 years. It should cross million units quite soon.”

It is quite obviously visible that the tractor companies are aggressively investing in R&D. For example, Sonalika is investing around 450 crores on its new R & D facilityin Delhi-NCR as well as tooling, machining for its new product range this year. The company which accomplished 100,000 units in the last fiscal, is targeting 120,000+ units this year and 200,000 in less than just 5 years, said Mittal.As far as Escorts is concerned, it is targeting a market share of 15-16% by the end of 2022, which is 11% from now. At present, M&M – Swaraj is the no. 1 tractor brand followed by TAFE-Eicher, with Sonalika and Escorts at number 3 and 4 positions respectively.