Farm machinery and construction equipment major Escorts Ltd is confident of clocking double-digit growth in tractor sales in 2021-22, having registered good volume in the first quarter, according to a senior company official.
Despite the uneven spread of monsoon in its strong markets of the north and east parts of the country, the company is confident that it will be able to continue its growth momentum.
However, it is expecting some slowdown as a result of an increase in commodity prices resulting in higher costs of tractors.
”We had good growth in the quarter one…the balance of the year obviously, some sort of slowness may come in…A lot will depend on how the monsoon distribution is,” Escorts Group Chief Financial Officer and Corporate Head Bharat Madan told PTI.
Escorts registered 42.9 percent growth in tractor sales at 25,935 units in the quarter ended June 2021 as against 18,150 units in the corresponding period last fiscal.
When asked if the company is confident of registering a double-digit growth, he said,” Yes, absolutely.” Elaborating further, he said,” As of now we’ve seen that good growth is coming up in the southern and western markets, the rainfall has been quite good but in our stronger market (north and east) monsoon is slightly slow.” Madan, who is slated to be elevated as Escorts Ltd President Finance and Group Chief Financial Officer and Corporate Head from April 1, 2022, further said,” If you see a good monsoon catching up again in the northern and eastern belt then we’ll see a good number and market will improve.” By September, he said there will be more clarity as to which regions are going to do better, where there has been good rainfall and will do better next season or how they’ll get impacted. One big concern for the tractor industry, he said is the rising commodity prices forcing tractor manufacturers to hike prices, which can have an impact on demand.
”It is going up every quarter. It’s giving us concern now…We have already taken three price increases in the last five months,” he said, adding that from farmers’ perspective these are steep increases which they had not anticipated.
On the COVID-19 impact, he said it is not much at present and the dealerships are also functioning.
However, Madan said,” The pandemic is again a hanging sword. We don’t know what will happen, looking at developed countries where third-fourth waves are happening.”