Punjab, Himachal buck the trend in tractor sales

Vijay C Roy

Tribune News Service

Chandigarh, December 30

Although tractor sales in the domestic market were marred by slowdown, uneven rain and lack of financing options, Punjab and Himachal Pradesh are among the five states which witnessed increase in tractor sales.

According to statistics by the Tractor and Mechanisation Association (TMA), the industry’s apex body, tractor sales contracted from 5,84,645 units in April-November 2018 to 5,19,282 units in April-November 2019. Nationally, tractor sales fell by an estimated over 11% year-on-year (y-o-y) during April-November FY19. In the Northern region, neighbouring Haryana also witnessed a negative growth and reported 1% decline in sales.

However, during the period, Punjab witnessed a growth of 4% while Himachal Pradesh registered an increase of 20% in sales. During the period, major tractor manufacturers such as Mahindra & Mahindra, Sonalika, Escorts and John Deere sold 15,851 units in the state as compared to 15,204 units during the corresponding period previous year. Similarly, in Himachal Pradesh, tractor makers sold 1,397 units as compared to 1,165 units a year ago.

Among the other states which witnessed a positive growth in sales are Chattisgarh (23%), Rajasthan (9.6%) and Madhya Pradesh (4%). Barring these five states, all other states reported negative sales during the period.

According to experts, many states were impacted by floods which affected the demand. In addition to this, the NBFC crisis also affected the financing of new tractors, thus affecting the sales.

“The rain was also uneven which impacted the kharif crop. The states, which were primarily dependent on rain for irrigation and witnessed a scantly rainfall, were affected and the states which witnessed good rain or good irrigation facilities saw a growth in sales,” said AS Mittal, vice-chairman, International Tractors Ltd., makers of Sonalika Tractors.

Research firm Icra says the year-on-year decline in sales is estimated at 7-9% in FY20, lower than the drop in the first half of the current fiscal.

Tractor makers are of the view that the current contraction has to be seen in the context of the fact that the tractor market saw three flat years of increase in sales before the current downturn hit.

The tractor manufacturers are bullish on the prospect of next fiscal year. With healthy reservoir levels due to the above normal monsoon and government’s push to agriculture and rural sector, they are expecting a good rabi output in coming months. This will generate a positive sentiment and drive the sale of tractors.

“We expect a good rabi production in the coming months which will generate a positive sentiment and drive growth in the next fiscal,” said a senior official working with a prominent manufacturer.

Besides improved irrigation facilities, the manufacturers are banking on infrastructure spending which leads to an increase in tractor demand as around 30% usage of tractors is non-agriculture based.