‘Huge potential for farm mechanisation in India’

Restarting Economy

CLAAS — a Rs 33,000-crore German manufacturer of agricultural machinery — is optimistic on farm mechanisation in India. The Indian arm of the Group has a manufacturing facility at Morinda (Punjab) for combine harvesters. While talking to Vijay C Roy, Mrityunjaya Singh, Managing Director of the Indian unit, said the potential of mechanisation in the harvesting sector is huge and it is bound to bounce back post-Covid. Excerpts:

The disruption occurred at a time when it seems to be a peak season for you? How Covid has hit your operations?

It has hit 20% of our annual forecast (revenue) as of now. Our financial year is from October to September. Given that there would be normal monsoons and that Covid remains under certain level of control, the impact will not be above 20%.

Currently, the capacity utilisation is around 30%. We are sustaining on inventory. But the future looks bleak if the government doesn’t allow opening up of ancillaries — Mrityunjaya Singh, Managing Director, Claas Agricultural Machinery Pvt Ltd

What is the potential of farm mechanisation in India and how Covid has played a spoilsport?

In normal times, if you split the country into North and South geographically, then wheat and paddy put together in northern areas have around 50% mechanisation in the harvesting sector. There is a room of another 50%. In the southern areas, you have more of paddy-growing belts. In those areas, the mechanisation is 75% and there is an opportunity for the rest 25%. In case of maize, it is less than 10%. So there is a huge potential. Similar is the case of pulses and lentils. I am only talking about these four crops and only harvesting machines. There is a lot of scope for other ancillaries as well. The pandemic has hit not only the demand but supply also, as the entire supply chain has been disrupted.

What steps are you taking to overcome the current crisis?

We were not completely shut. Around 70% of our dealers across the country are supplying parts to farmers. Our helpline acted like a call centre where our field staff were operating through phone and guiding the operators to fix the machines besides assisting the farmers.

When did you restart operations? What are the challenges ahead?

We restarted operations on March 27. Currently, the capacity utilisation is around 30%. The biggest challenge is closure of essential suppliers and ancillaries. We are sustaining on the inventory. But the future looks bleak if the government doesn’t allow opening up of the ancillaries.

When do you foresee the revival of demand for harvesters?

Going by the current situation, there is no clarity. Two factors will drive the demand — normalisation of current situation by July and normal monsoon.

What are your projections for the farm mechanisation sector for the current year?

Annually, 6,000 harvesters and 1,500 combine harvesters are sold in the country. We anticipate 20% degrowth.

What kind of stimulus package are you expecting from the government?

Farmers have taken a big hit due to the Covid. They need support to buy machines. The government has various methods of subsidies to buy machinery directly. Many of the state governments have stopped it. I am of the view that they should be given subsidy directly.

What are the lessons learnt from this pandemic?

Firstly, the whole concept of physical exhibitions will be completely changed because of the pandemic. Also, the concept of market promotion will see a big change. The focus might shift to digital promotion. With workforce operating from home, the corporates will also think on optimum utilisation of real estate space.