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Informist, Thursday, Nov. 7, 2024

--M&M: Expect Oct-Mar farm sector sales to be better than in first half 

--M&M: Expect tractor sales to rise 13-15% in Oct-Mar 

--M&M: Expect tractor sales to rise 13-15% in Oct-Mar 

--M&M: Tractor exports hit due to decline in demand from US, Turkey 

--M&M raises FY25 tractor sales growth forecast to 6-6.8% from 5% 

By Darshan Nakhwa and Akshay Johnson

MUMBAI – Mahindra & Mahindra Ltd. on Thursday raised its tractor sales growth forecast at industry level to 6.0-6.8% for 2024-25 (Apr-Mar), from the earlier forecast of 5.0% growth. The company's management expects tractor sales to be better in Oct-Mar compared to the first half of the ongoing financial year due to a revival in rural demand on account of above average rainfall.

M&M has seen a good revival in rural markets on the back of above average rainfall across most parts of the country, Rajesh Jejurikar, the company's executive director and chief executive officer of auto and farm divisions, said in a press conference on Thursday. This, coupled with strong terms of trade for farmers and the resumption of government spending from August, in rural areas and in agriculture, have been key enablers of the rural economy and the tractor market in particular. So for the second half of the year, the company expects tractor industry growth to be between 13% and 15%, he said.

Between April and October, the company sold a total of 280,302 tractors, a growth of 10% on year. During this period, while the company's domestic sales were up 9%, its exports were up 30%. In comparison, its peer Escorts Kubota Ltd. sold a total of 72,016 tractors during Apr-Oct, up only 2.7% on year, but its exports fell 29.1% in the same period to 2,459 units.

"We're showing very strong, consistent performance in the (tractor) marketplace. Some of it is coming out of what we've done with OJA, which has added market share in the segments in which we were weak, which is up to 20 horsepower and then the 20 to 30 horsepower as well," Jejurikar said. 

For Jul-Sept, M&M's standalone profit before interest and taxes for the farm equipment business was INR 11.36 billion, up 20% on year, while the profit before interest and tax margin was 17.5%, up by 150 bps. Its farm equipment business revenue was INR 64.97 billion, up 10% on year. The company also achieved the highest-ever Jul-Sept market share in tractors at 42.5%.

On the tractor exports front, the company's management said it continued to face challenges in the US and Turkey. The US market has seen a huge decline in the less than 100 horsepower tractor category. From a level of three years back, when the market was about 300,000 plus on an annual basis, to now about 180,000 units. The decline could be attributed to higher interest rates and political uncertainty. However, the company expects the market to make a comeback soon, and believes there's a strong business opportunity there, Jejurikar said.  End

Edited by Ashish Shirke

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