The Chennai-based Tractors and Farm Equipment (Tafe) is looking at expanding its spares and services portfolio to other leading tractor brands.
"We started the Tafe authorised service and parts (TASP) initiative recently and now we are thinking whether to extend this to other brands as well," Mallika Srinivasan, director (operations), said.
"As of now, revenues from sales of spares and service is not substantial. The percentage contribution to total revenue coming from this division should go up in the future," she said.
The Rs 842 crore company, which has predominantly been a strong player in Rajasthan and Gujarat, has in the last year been able to corner a substantial share in UP, which is dominated by Mahindra & Mahindra and Punjab Tractors with a market share of 24-25 per cent.
"We were having a 2 per cent market share in UP at the retail level, but we should be able to close this year with 15 per cent. The UP market should ideally become the number one market for us in the next couple of years," Mallika said.
Tafe, Mallika said, expects to protect its margins this financial year and sell in the ballpark of about 30,000 units. "Our whole industry has fallen a victim to the system of advancing which has seen tractor manufacturer's push stock right up to the customer," she said.
The accent this year for Tafe, she said, had been to ensure that inventories across levels were controlled and holding costs reduced considerably.
In fiscal 2000, riding on the general boom in the economy, Tafe was able to clock business of Rs 1,133 crore and post a profit before tax (PBT) of Rs 84 crore and profit after tax (PAT) of Rs 56.01 crore.
In fiscal 2001, the company posted a substantially reduced turnover of Rs 842.34 crore, PBT of Rs 35 crore and PAT of Rs 24.68 crore.
If the company is able to protect its margins this fiscal it would be one of the few tractor companies to be able to do so, as all the others have fallen victims to a combination of over capacities, poor offtake and dismal inventory management.
Tafe, Mallika said, has now ensured that the system of advancing be kept to a minimum, while the company focused on selling and building market and brand share at the retail level.
The company is also slated to come out with its latest offering, the 'Samrat', and would be offering the sportily designed tractor to farmers in the markets western UP, Gujarat, and Rajasthan.
Samrat has been a Rs 50 crore development effort, which also involved the Warwick School of Design.