India's largest tractor manufacturer raises industry growth guidance, confident of maintaining market share

Mahindra & Mahindra, India's largest manufacturer of tractors by value and volume, expects the country's tractor industry to grow at a rate of over 5 percent in the current financial year, from the earlier projection of 3-5 percent.

The company's farm equipment business reported the highest ever monthly tractor sales in September, selling 47,100 units, a growth of 21 percent compared to September 2021. Exports were also the highest ever.

In a conversation with CNBC-TV18, Hemant Sikka, head of M&M's farm equipment business, said that sentiment across rural areas remains positive due to good monsoon rains in most parts of the country.

Including the business of the Swaraj tractors, Mahindra's tractor division increased its market share by 0.6 percent so far this year to 38.9 percent, compared to 38.3 percent during the same period last year. Sikka is confident that the company will maintain its market share in excess of 40 percent going forward.

Mahindra & Mahindra had recently acquired the 17 percent stake of Kirloskar Engineering in Swaraj Engines for Rs 296 crore, thereby increasing its market share in the company to 52 percent and making Swaraj Engines its subsidiary.

The company recently launched its range of advanced tractor range called YuvoTech Plus, which, according to Sikka, has been received very well by the farmers. "The capacities are falling short to feed that market, and we are tripling our capacity on this particular model," he said.

Despite the record sales, the Federation of Automobiles Dealers Association or FADA disclosed that retail tractor sales declined 1.5 percent in September.

Sikka said that he would not read much into monthly data as what has fallen short in September would be more than made up for in October.

Central banks across the globe are aggressively hiking interest rates to combat rising inflation. The Reserve Bank of India has also hiked interest rates four times in a row. Although Sikka is currently seeing no let-up in demand, he says that if rates keep rising, the company will closely monitor the impact of the same.

Better placed on inventory this year. Have healthy stock in our channel

Very difficult to pass on entire input costs increases to consumers

There are some more price increases that the industry will have to take for the rest of the year

A combination of price hikes and commodity prices cooling off will help margin recovery