Good monsoon and buoyant farm sentiments are likely to push tractor sales ahead of the upcoming rabi season.
According to Munish Kumar, Senior Vice-President, Sales and Marketing, Sonalika International Tractors Ltd, August to October is likely to be the peak sales months this time.
Typically, rabi season sowing is expected to start from November with cropping being completed by March. Accordingly, the company is expecting a 36 per cent growth in sales during these months to 34,000 units, as against 25,000 units sold in the same period last fiscal.
Sonalika, with a 12.5 per cent market share, is the third largest tractor-maker in the country after Mahindra and Mahindra and Tafe. Its tractor offerings vary between 20 HP and 120 HP.
“Ideally, sowing for the next season should begin around October –November. Good monsoon and infrastructure boom should see an upward movement in tractor sales,” he told BusinessLine.
In August, the company registered a 31 per cent growth and sold 4,887 tractors vis-à-vis 3,730 tractors sold in the same period last year. For the full year, the company expects an over 40 per cent jump in domestic sales to 1 lakh units, this fiscal. It had sold 70,000 units in FY17. Exports, which currently account for 15 per cent of its sales, are likely to grow to 15,000 units, a 25 per cent jump over last fiscal. Turnover (from domestic sales) is expected to be in the tune of ₹10,000 crore. GST impact Kumar pointed out that the company’s margins may take a 2-3 per cent hit with the implementation of GST. Previously, the VAT rate was around 5 per cent, which has now been hiked to 18 per cent under the new indirect tax regime. Despite the increase in the tax rates, the company will not pass on the cost to customers, he said.
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This report on the North America and Europe Farm Tractor market provides analysis for the period 2014–2024, wherein 2015 is the base year and the period from 2016 to 2024 is the forecast period. Data for 2014 has been included as historical information. The report covers all the prevalent trends and technologies playing a vital role in the growth of the farm tractor market over the forecast period in both the regions. The report also highlights various drivers, restraints, and opportunities expected to influence the market growth during the forecast period till 2024.According to the May 2017 United States and Canada Tractor and Combine reports recently published by the Association of Equipment Manufacturers (AEM), unit sales of 2WD farm tractors in the U.S. increased by 7.8 percent compared to May 2016. /p>
Looking to the challenges, we will conclude that monsoon dependence is one of major challenge faced by tractor industry. Although many predictions from Indian meteorological Department are proving to be true, changes in monsoon and lack of irrigation affects tractor industry in India. Credit availability to farmers for farm mechanization is one of great challenge for tractor industry. However, Indian government and bank loans are helping for buying new or used tractors.In the 2017-18 union budget, the government increased budget allocation for agriculture and farmer welfare by 15.31 per cent, meaning an increase in purchasing power of rural India which could potentially increase demand of tractors. Finance Minister Arun Jaitley had announced an allocation of Rs 51,026 crore for the year 2017-18 from Rs 45,250 crore in the last budget.
International Tractors Ltd, the makers of Sonalika brand of farm equipment and India’s third largest tractor maker by volume, is in talks with a Chinese tractor maker to form a joint venture for a plant it is putting up in Shandong province, a top company official said. Work on the China unit has already started and it is expected to commence production in the first half of calendar year 2017, said Gaurav Saxena, head of international tractor business at Sonalika International. By 2020, the unit will have a capacity to make 5,000 tractors every year.The Hoshiarpur, Punjab-based firm has tapped into the exports market in an attempt to survive the cyclical nature of the tractor industry in the domestic market. In the first eight months of the current fiscal, Sonalika International shipped 8,121 units abroad, up 20% from a year ago, said Saxena.
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