Posted On - 18 May 2021
As we know that, our country is facing a challenging situation because of the Covid-19 second wave, and every 3rd person is positive with the virus. This second wave of Covid-19 will hit the rural areas, and Tractor sales could be dropped down. In the 2nd half of the fiscal year can be picked up, Bharat Madan, CFO of Escorts Group, said that due to the second phase of this pandemic, it could be inferred that the decline in tractor sales in the short term might be possible. But after half a year, tractor sales can see an increase, according to the senior official of Escorts Group.
He added, "The second wave is affecting more in comparison to the first wave of Covid-19. There was minimal effect on the Tractor sales in the first wave, and this time spread drastically. It is currently affecting the rural areas, and the dealerships situated in urban areas are shut due to lockdown in states. This can affect, it's miles extra intense, and it's miles going to impact everyone."
Mr Madan answers a query on how the second wave of the pandemic would impact tractor sales.
He answers, "in the short term the Tractor sales would impact but in the coming second half the demand for the tractor arises like last time. He said, "we will get a good need for a tractor just after the lockdown. And as you know, the sowing season starts, and it is the best time for tractor manufacturers as the demand for tractor increases, but this sowing season is not for a good number of tractor manufacturers.
Just as the tractor had registered significant sales last financial year, he was asked, will it be seen this year as well? He said, "It does not seem so because the tractor market has set a different record last year, I do not think it will break this year." and with this, he added, "Keeping all the rural factors in mind, so far, all give positive signs, which will show some good sales till the middle of the year."
In 2019-20, the tractor registration was 5,55,315 units, and in 2020-21 the registration of the tractor is 6,44,779 units which clearly shows a hike by 16.11 per cent.
All data shows no change on the rural side. The main thing is when we get complete relief from all this pandemic situation and fully vaccinated. We pray for god that no third wave will come. Otherwise, we have to face the worst situation that is present.
Madan said, "currently we are exporting 500 plus tracorts per month. And this year we are looking for good digits, 6000-7000 units in comparison to 4000-4500 which we did the previous year."
Escorts Ltd pays attention towards exports, "Exports provide us with a platform where we improve with passing years. Currently, in the European market, we export maximum, where compact tractor sub-30 hp range is quite in demand. This provides us with a growth opportunity as it is the largest export selling model till now.
And on other global markets, the company is exporting tractors in the range of the 60 to 70 hp segment. For global footprint extension, we come with a joint venture with Kubota. We are playing to expand and export in the South East Asian market, Vietnam, Thailand, Myanmar and others. We have an idea to come to the American market like Brazil.
The next question is, what if the second wave of Covid-19 has an impact on Rs 100 crore investment plan to increase the capacity to 1.2 lakh units to 1.8 lakh units per annum?
There is no question of retreat. He said," We are expecting a good demand in numbers. This will happen and if we don't expand our production then we face short of capacity. This is the main reason we plan to expand and by August-September we have all the expanded capacity available. Along with this, the company plans a fresh investment that provides enough capacity for fulfilling the future market demand. This is the consecutive third year in which we have a good monsoon. He said, "Existing capacity is enough and can meet the demand for the next few years, which will help improve market share. The Escorts production unit is at Faridabad,, and the company's capacity expansion will also tell us that fresh investment is required.
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