Infra boom spurs tractor sales

Large-scale investments by the construction industry are an opportunity for component makers, say experts.

The 200-odd tractor ancillaries in the region, a majority of them in the Small and Medium Enterprises (SME) sector, are getting fresh orders with the recent spurt in infrastructure activity. This is because, a tractor's operating cost is much lower than other earth digging machines.

These units supply components to tractor manufacturers like Punjab Tractors Ltd (Mohali), HMT Tractors (Pinjore), International Tractors Ltd (Hoshiarpur) and Indo Farm Tractors (Baddi)

The chairman and managing director of HMT Tractors, Pinjore, AV Kamath, told Business Standard that the market for tractors for non-farm applications such as roads and construction was essentially dependent on the prospects of the relevant industry.

The large-scale investments planned by the construction industry are expected to translate into an opportunity for the tractor industry. The demand from the sector would essentially be for high horse power tractors since the field applications would need attachment of a variety of implements such as front-end dozers and rear-end loaders. While the power generated and fuel efficiency would be the basic attribute of the tractor, a large part of the efficiency would depend on the implement also.

He added that HMT's 65 horse power (HP) Tractor, HMT 6522 was already popular with the construction industry given its power and capacity. "An exclusive assembly line for higher HP tractors is being established to leverage the market opportunities and we expect to double the production of these tractors."

Speaking to Business Standard, LR Yadav, vice-president sales, International Tractors Ltd (maker of Sonalika brand tractors) said "It is true that the construction sector has led to an increase in tractor sale-especially the high -powered ones. During the period (April-July) the sale of tractors in the construction sector has grown by 15 per cent to 20 per cent, but in the same period sales in agricultural sector dwindled by 2 per cent."

Still, as the base market in the farm sector is much larger, there would still be a decline of 5 per cent in sales as compared to the last fiscal. This is because the sales in farm sector are expected to be dip by 2 per cent, even though non-farm sector sales will increase by 15 per cent to 20 per cent. The decline would have would have been even higher if the construction sector was also stagnant. The boom in the construction sector has pushed the sales of high-powered tractors like 45 HP, 50 HP, 60 HP, 75 HP etc.

Deepak Mahendru, vice-president, marketing, Indo Farm tractors said, "It is beyond doubt that the construction sector has given a relief to the manufacturers, who were facing problems due to a stagnating agriculture sector. We expect that in the near future the boom in infrastructure sector would further increase our sales."

"The revival of the construction sector has given a fillip to the tractor component manufacturers.The stagnation in the primary sector has affected tractor sales in the recent past as the farm sector is the the main contributor to tractor sales, but the ongoing infrastructure projects in various states have given a ray of hope to the ancillary units. It is expected that in the coming years, the infrastructure boom will push the sales of tractors," says CB Goel, former president, Haryana Chamber of Commerce & Industry.