Tractor sales will pick up by March: Pawan Goenka

Says a good Rabi season will lead to rise in farm income

Mahindra and Mahindra (M&M), which saw its tractor sales fall by 33%in November, expects demand revival only in March. 

“I expect sales to remain flat for the next three months and pick up only in March,” said Pawan Goenka, executive director and president of farm and automotive sector, M&M.

The company’s domestic sales fell 36% in November to 14,207 units, from 22,343 units in November 2013. Total tractor sales were down 34% to 15,333 units, as against 23,119 units for the same period last year. 

“Harvest from Kharif crops has been much lower for the season, which impacted the sales of tractors,” Goenka said.

He added that delayed paddy crop, low prices of sugarcane and cotton saw farm income taking a dip. Input costs also went up, resulting in low demand for tractors.

The company sells M&M and Swaraj brand of tractors in the country. 

“This is not only the case for us, the whole tractor industry is facing a slowdown,” he said.

M&M has a domestic market share of 40%.

According to a recent report by Crisil, tractor sales will decline almost 3 to 4% in 2014-15 following a strong growth of 20% in the last financial year due to below normal and erratic monsoon.

However, Goenka is optimistic about the scenario changing by March. “A good Rabi crop season will see simultaneous rise in farm income, which will boost the sales of tractors within the next three months.,” he said. 

He added that the company's new launch Arjun Novo has seen good response.

Goenka, however, added that the Indian tractor industry will reach saturation level by 2023, which will result only in replacement demand.

"After 2023, the (tractor) market should saturate and therefore we'll only see replacement demand and probably growth would come to half of that," he said.