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Volumes in the Indian Tractor Industry this year are expected to expand by 5% to 7%, according to estimates prepared by rating major Icra in its latest release on Indian Tractor Industry.
Growth this year in the first two months has been robust. The industry grew by 31% in April followed by a healthy volume growth in May as well. Timely monsoon arrival in all parts of the country, new product launches and a healthy growth in the minimum support price is expected to boost sales.
"Growth estimates could be revised upwards, contingent on the timing and spatial distribution of 2013 monsoons, and its impact on the Kharif crop", said the Icra report.
Last year tractor volumes dipped by three% in India on account of large scale drought like conditions in several states, led by Maharashtra, one of India's biggest tractor markets. Sales of Mahindra Tractors, which has a market share of 40%, fell to 211,596 units, a decline of 4.5% last year as against 221,730 units posted in 2011-12.
Icra maintains a volume CAGR of 8-9% for the tractor Industry over the next five years as long term drivers continue to remain favourable. This is powered by Government of India (GOI) remaining committed towards rural development and agri-mechanisation; besides other factors like scarcity of farm labour, healthy credit availability, moderate penetration and shortening replacement cycle, continue to encourage demand for tractors.
Recent buoyancy in tractor sales is a result of festivals like Gudi Padwa and Navratra falling in April, instead of March in the previous year; positive sentiments in farming community from a near-normal monsoon forecast for the current year; besides build-up of channel inventory by some market participants.
Further, regions in South and West are also showing initial signs of turnaround, after witnessing flagging sales growth over the last five quarters, added the report.
