There is finally some good news from the countryside. Tractor manufacturers have notched up their highest-ever sales in 2017-18. At 7.11 lakh units, sales are significantly higher than the 5.83 lakh units recorded in 2016-17. The 22 per cent rise exceeded even the most bullish estimate of 18 per cent growth.
Nearly all the major tractor-makers reported record growth, which ensured that the pecking order among them, in terms of market share, remained more or less intact.
Mahindra & Mahindra, the country’s top tractor manufacturer, reported a 22 per cent increase in domestic sales at 3.01 lakh units. The domestic sales of TAFE, India’s second-largest tractor maker, rose 16 per cent to about 1.36 lakh units. Sonalika Tractors also recorded a 22 per cent growth at 1 lakh units for FY18. Escorts managed industry-topping growth of 25 per cent in its domestic tractor volumes at 78,446 units.
Multiple factors have contributed to this strong performance. “The major drivers of growth in the industry during the year were the farm loan waiver, subsidy support for tractor purchase by several States, good crop output on the back of a good monsoon and the availability of retail finance (particularly from private players),” said TR Kesavan, President, Tractor and Mechanisation Association (TMA), and President and COO, TAFE.
“Of the 7.11 lakh units sold, close to 5.5 lakh units are reported to have happened with lending support from private players. Public funding institutions extended funding support for about 60,000-65,000 units, while the rest was through cash purchases. Demand was good across the country with the major contributions coming from Uttar Pradesh, Maharashtra and Tamil Nadu,” he said.
“The big unexpected growth was in Uttar Pradesh, which saw a whopping increase of 34 per cent at 1.14 lakh units, while the Maharashtra market reported a growth of 40 per cent at about 73,000 units amid the issue of farmer suicides,” he said.
The 41-50 HP segment, which grew by 18 per cent (3.35 lakh units), continues to account for a significant 47 per cent share of total sales. The other major category is the 31-40 HP segment, which grew 26 per cent (2.55 lakh units), and which accounted for 36 per cent of the domestic market, according to a report from ICICI Securities.
Analysts are confident that the current fiscal will also see double-digit growth, but are unsure if the industry can better last year’s performance.