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Tractor ancillaries on high growth path

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The industry has grown by 9 per cent in April-August 2009.

located in and around have defied the downturn and are on a high growth path, at a time when all other industrial clusters in the region are going through difficult times.

Most small and medium enterprises (SMEs) catering to such tractor companies as Limited (ITL), Hoshiarpur; HMT Tractors Limited, Pinjore; and Mahindra & Mahindra Swaraj Division, Mohali (the former Punjab Tractors Limited, which M&M acquired over two years back) are planning to upgrade their operations.

Tractor manufacturers have put slack sales (caused by internal management problems and stagnant agricultural growth) behind them and bounced back in the past few months. The industry has grown by 9 per cent in April-August 2009, according to data compiled by the Tractor Manufacturers Association, said the Chairman and Managing Director of HMT Tractors, Pinjore, A V Kamath.

More than 200 SMEs located in Chandigarh, Mohali and Panchkula, which supply components to tractor manufacturers, are revamping their operations to meet the increasing orders of their mother units.

The spurt in demand for tractors is attributed largely to the revision in the minimum support prices of eagricultural crops, as well as more remunerative prices due to market forces. This has helped agriculturists to opt for greater farm mechanisation, triggering an increased demand for tractors.

The impact of the downturn and the delayed monsoon on the tractor industry has been minimal, according to Kamath, since tractors are now being increasingly put to non-agricultural uses in mines, airports and the infrastructure sector.

The Vice-Chairman of ITL, Hoshiarpur, A S Mittal, said he expected the company’s flagship brand Sonalika Tractors to grow 35 per cent over the previous year.

In anticipation of sluggish demand last year, the company had diversified into generator sets and construction equipment at the Hoshiarpur plant, Mittal added. But the good response from the agriculture sector in the past few months had encouraged them to move towards better utilisation of capacity. Sonalika has an annual capacity of 60,000 tractors.

Mittal said: “There has been a shortage of foodgrain worldwide. New pockets in the African continent, Iran, Iraq and Egypt have been developed for cultivation and farm mechanisation is indispensable for them. Due to the financial crunch, traditional suppliers from developed countries were not able to meet the requirements of these countries. This opened a new avenue for Indian players. So an increase in demand has come from the export market as well.”

He said they had told their vendors to ramp up capacities to match the increase in demand and that they were doing so. Swaraj Tractors’ vendors are also streamlining operations, after being told by the company to do so. The company has an annual capacity of 72,000 tractors.

One vendor said that Swaraj Tractors had advised its suppliers to limit the categories of components and increase volumes. The company plans to reduce delays in the delivery of consignments by encouraging vendors to focus on a few products rather than dividing their energies on a variety of components.

Those who are running tiny units have been advised to supply through tier-1 suppliers to reduce the inconvenience of dealing with a large number of vendors.

Ancillaries supplying HMT Tractors, which earlier complained about delayed payments, are also breathing easier now, on the ground that the payment cycle has been cut short.

The revival of the tractor industry has also been aided by the boom in construction activity (in sectors such as roads, bridges and irrigation projects) across India.

Kamath said that HMT Tractors intends to enter the agricultural implements sector in the near future: “The agricultural implements sector is controlled by the unorganised sector. We expect this sector to grow and are exploring avenues available for the manufacture of quality implements required for better sowing and harvesting operations.”

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