At a time when the automobile industry is continuing its de-growth, the tractor industry managed to report a positive growth in the first six months of the current fiscal, while Tractors and Farm Equipment Limited (TAFE), the country's second-largest tractor company, has managed to grow more than the industry and even managed to increase its market share. In an interview with TE Narasimhan, Mallika Srinivasan, chairman and chief executive officer of TAFE, said the company would continue to outperform the industry was planning to diversify into farm equipment, which will attract an investment of around Rs 100 crore. Besides, the company is planning to bring out a new product based on US-based AGCO Corporation’s platform. acquired Eicher’s tractor business and engines plant.
How was the first six months for the tractor industry and for TAFE?
Agriculture is the silver lining for the tractor sector. With the conditions favouring agriculture, we expect the season to see a reasonable growth and the entire growth this fiscal would be around 12 per cent. We also have some issues that are not letting us to extract the full potential. For example, in some areas, rain water is yet to be retrieved, which damage crops. There are other issues like what is happening (the Telangana issue) in Andhra Pradesh, which is one of the biggest agriculture belts.
From April to September 2013, while the industry grew by around 20.6 per cent, we grew by around 25 per cent .The Eicher brand was the fastest growing brand in the tractor industry in the country.
Every year, September acts as a build-up for the season and during this month alone, the industry grew by around 31 per cent, while we grew by 43 per cent. Due to this, our market share has gone up to 25-26 per cent. In September, it was around 26.6 per cent.
How did the exports perform?
While the domestic market boosted the growth, exports dropped by around 4.9 per cent for the industry. However, TAFE managed to report positive growth. In Q2, exports were better for the industry. Last year was a difficult one for exports. We were the top among the exporters and we had a balanced play. So, it was less risky. For the industry, the domestic market is looking good but exports are not so bright. For us, both are looking good.
Which segment drives the growth for the industry and for TAFE?
The 30-50 hp is at the heart of the market and it has been the growth driver. TAFE positions itself as a mass manufacturer of quality products. Good scale and quality will help to sustainable performance in the international market.
Will you continue to outperform the industry?
Of course. We expect to do better than the industry and we are upbeat because our products and brands have done well and also better than the market.
The original equipment manufacturers (OEMs) in car, two-wheelers, trucks and other segments have been saying that new products helped them to push the sales numbers? Is this the same for TAFE also?
The lifecycle of a product has become shorter and the customer is looking at economics, convenience and operational cost and the expectations are high. All our new products in both the brands have caught on with this. Surely, new products are a help to address the rising aspirations.
TAFE has a long association with one of the leading manufacturer of tractors in the world, AGCO. Would you look at launching new products on their platform?
The partnership was one-of-its-kind in the industry and it goes beyond 50 years. We are closely working together to leverage the strengths of both the organisations. We are working on a new product based on their platform for the international markets, and later it will be followed to India. The programme is expected to be rolled out in the next one year and some of the products are expected to be manufactured in India. Some of the international products will drive technology and quality into the domestic market going forward and we will have the first mover advantage through this partnership.
Would you look at manufacturing cabins for customers?
Soon we are coming out with new cabins for international markets. There is no real demand in the domestic market.
How are you going to capitalise the growing mechanisation in the agriculture sector?
This will be one of the focus for the company. We will launch a new product every quarter, which will be developed in-house. While the company has launched the Rotavator (rotary tiller) for both domestic and international markets last month, we look to launch products for planting, seeding,harvester, and for land preparation.
How much is the company planning to invest in the new business?
We plan to invest around Rs 100 crore in farm machinery in the next three years.