For the 13th month in a row, tractor exports stay above 10,000 levels; Q1 exports grew 32%
June proved to be a strong month for the tractor industry as production surpassed the one lakh mark after a gap of eight months, exports hit a historic high and domestic sales grew month-on-month.
In June, domestic tractor sales stood at 94,477 units compared to 81,940 units in May, an increase of 15 per cent, according to the data provided by Tractor and Mechanisation Association (TMA). Higher crop prices resulting in better cash flow in the hands of farmers are reported to have spurred an increase in demand for tractors.
However, volumes in June were down 14 per cent compared with June 2021 sales of 110,399 units. High base effect is cited as a factor for the decline as June 2021 had record tractor sales due to pent-up demand after the easing of the second-wave lockdown.
“The decline of 14 per cent YoY in wholesale volumes was largely on account of the high base (a result of muted sales in May 2021 as the lockdowns during the second wave). On a sequential basis, volumes grew 15 per cent, supported by healthy rabi procurement and price realisation. Industry volumes are expected to remain healthy, supported by expectations of stable farm cash flows,” Shamsher Dewan, Senior Vice-President & Group Head – Corporate Ratings, Icra Ltd, told BusinessLine.
While domestic tractor volumes are improving, export of ‘Made in India’ tractors continue to zoom and total shipments during June hit a record high of 12,849 units. The previous high was in September 2021 when tractor exports stood at 12,690 units. Also, for the 13 th month in a row, tractor exports remain at 10,000 plus levels.
Driven by an increase in domestic demand and robust export orders, the tractor industry’s total production during June also hit high levels and stood at 103,563 units. It has surpassed the one lakh mark after a gap of eight months.
For the quarter ended June 30, 2022, total domestic tractor sales rose 16 per cent to about 2.66 lakh units compared to 2.29 lakh units in Q1 of the previous fiscal. Exports recorded a 32 per cent growth at 35,146 units compared to 26,660 units. Total production during Q1 of this fiscal stood at 2.84 lakh units as against 2.48 lakh units in the second-wave hit June 2021 quarter.
Industry representatives and analysts say the IMD has forecast a fourth consecutive normal monsoon, which if materialises, would be a big positive for the industry.
“The pan-India precipitation was below normal at 92 per cent of Long Period Average (LPA) in June 2022; the precipitation was also highly uneven across regions. With July being a key month for Kharif sowing, healthy precipitation remains critical,” said Dewan.
Published on July 11, 2022