homeauto NewsM&M will ramp up capacity banking on these factors that are likely to boost tractor sales
M&M will ramp up capacity banking on these factors that are likely to boost tractor sales
Speaking to CNBC-TV18, Rajesh Jejurikar, Executive Director of auto & farm sectors at Mahindra & Mahindra, said the company has not been successful in passing on full commodity price rise to consumers
If one looks at Mahindra and Mahindra's tractor sales for August 2022, they will see a rise of merely a percent over August 2021. But that contrasts with a year-on-year fall in the preceding months — 14 percent in July and 13 percent in June.
Rajesh Jejurikar, executive director of auto and farm sectors at Mahindra & Mahindra, told CNBC-TV18 that things are finally looking up, and the tractor industry was witnessing several tailwinds in the last two months.
The automaker is so bullish on the positive drivers that Jejurikar said the firm would ramp up production. “In November, we are planning to put out a capacity ramp up plan that we will execute over the next 12 to 18 months. That will give a stronger perspective on how we are adding capacities,” he said.
But what's fuelling this confidence?
“One is that monsoon has been, by and large, very good except for eastern states, which are seeing a deficit," Jejurikar said. "The second positive driver is government spending in rural India, which had been very slow for the past few months or so, has started kicking in."
“Thirdly, prices in mandis are higher than they have been in the past. We have been talking about a negative terms of trade to the farmer in the last few months, and we see that reversing as well. So, as we get into the festival season, we would look at it with optimism,” he said.
When the automaker announced August sales, M&M President of Farm Equipment Sector Hemant Sikka also said the company was preparing for strong tractor demand in the festive season.
Mahindra & Mahindra's stocks hit 52-week highs after recording a 93 percent growth in overall August sales versus a double-digit fall in preceding months.
Read Here:
Jejurikar said that they should end the full year with a 3-5 percent growth.
On inventory building, he said, “Navaratri starts on September 26, and that is the peak selling season. This time, we get Dussehra and Diwali both in October. It is common to build inventory at this time, because the customer is no longer waiting. You have to have inventory on the ground to manage the demand.”
He said demand was very strong also in the commercial vehicle space.
The company's margin has been impacted by rising commodity prices like most other automakers and firms in other sectors. And Jejurikar feels it would take time for the effect of cooling commodity prices to show up in the accounts. "We would hope to see some effect of that come on in the second half of the year,” he said, adding the company has not been successful in passing on full commodity price rise to consumers.
First Published: Sept 7, 2022 12:55 PM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
PM Modi's Patna visit: From serving langar to historic roadshow
May 13, 2024 5:13 PM
Shehnai by Ustad Bismillah Khan's kin, ode to Kashi's celebrities: PM Modi's roadshow to showcase Varanasi's grandeur
May 13, 2024 11:03 AM