Tractors

Escorts' first half sales moved up 29.22 per cent to Rs 655.3 crore despite having to take the burden of the loss of income from two divisions which were hived off. This was mainly due to contribution from the tractor division.

According to CMIE statistics, agricultural growth, which was only 0.1 per cent in 1995-96, rose to 5.8 per cent in 1996-97. Industrial growth had slumped from 11.8 per cent to 7.3 per cent in the same period. However, the situation has undergone a drastic change in 1997-98 with CMIE expecting overall agricultural production to rise only by 0.5 per cent.

The impact of this had to be felt on the tractor segment which is seen in the October-to-December sales figures. Overall sales growth is down from 15 per cent recorded in April to September, 1997, to 10.29 per cent in the third quarter of 1997-98. This has affected most of the players with sales growth at Escorts slowing to 7.65 per cent in the third quarter as against 15.8 per cent in the first half.

Mahindra and Mahindra (M&M), too, has suffered from the slowdown. In the first half, M&M escaped from the impact of flat vehicle sales aided by the 20 per cent growth in tractor sales. However, the third quarter has seen its sales grow by only 5.9 per cent to 15,607 vehicles. If the situation does not improve in the last quarter, performance will be affected as the utility vehicle segment continues to display flat growth.

Punjab Tractors stands out as an exception. Its sales growth slowed down only marginally from 22 per cent in the first half of 1997-98 to 20.53 per cent in the third quarter.