X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
India's agrarian economy benefits tractor sales - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 17, 2000

    India's agrarian economy benefits tractor sales

    The agriculture sector continues to be the mainstay of India's gross domestic product. Agriculture growth reported a robust growth of 7.6% in FY99. This has resulted in good crop and higher rural incomes. The tractor industry as a result continues to enjoy buoyant demand on the back of the growth in the agriculture sector. A slow down in agriculture does not mean significant drop in tractor volumes as easy credit is available for the purchase of tractors.

    India is the largest tractor market in the world with volumes at 0.26 m per annum. The total arable land in India is 1.68 m hectares with tractor density of 10 nos/1,000 hectares. The average density in Punjab and Haryana, the two mature markets for tractors are higher at 95 nos per 1,000 hectares. The tractor market continues to be concentrated in the North (contributes to 55% of total tractor sales in the country) due to better irrigation facilities.

    Tractor demand is highest in the 31-40 HP segment and this accounted for 58% of total demand in FY99. The 21-30 HP segment continues to grow steadily and this accounted for 23% of total tractor demand in FY99. This segment is likely to grow very fast due to the fiscal concessions provided by the government.

    Composition wise tractor demand
      FY95 FY96 FY97 FY98 FY99
    Upto 20 HP 1% 0% 0% 0% 0%
    21-30 HP 29% 22% 17% 19% 23%
    31-40 HP 51% 56% 61% 61% 58%
    41-50 HP 16% 19% 19% 17% 16%
    51 and above HP 3% 3% 4% 4% 4%

    The tractor industry had faced a slowdown in demand over the last two years and grew by only 2%, as compared to a 15% growth during FY95-FY98. This is showing signs of a pick up and grew by 3% during the first eleven months of FY2000. The long term potential for tractors continues to be bright as the agricultural sector is expected to continue to grow at 5%-6% per annum.

    Given the low tractor density, the Indian tractor industry has huge potential to grow as it will benefit from improved irrigation levels, higher usage of fertilisers and credit given by banks. The agricultural industry continues to get priority lending from banks and hence availability of credit to this sector is not difficult. Infact 80% of tractor sales in India are on credit from banks and financial institutions.

    Another factor in India which affects the demand for tractors is the procurement prices offered by the government and market price of farm products. This affects the ability of the farmers to buy tractors. Currently as the prices of agricultural commodities are administered and are lower as compared to global prices the expected decontrol of prices will increase the potential demand of the tractor market due to higher rural incomes.

     

     

    Equitymaster requests your view! Post a comment on "India's agrarian economy benefits tractor sales". Click here!

      
     

    More Views on News

    Tata Motors Ltd: Another Disappointing Quarter, Management fails to Perform! (Quarterly Results Update - Detailed)

    Aug 14, 2017

    Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.

    Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins! (Quarterly Results Update - Detailed)

    Aug 2, 2017

    GST realted cost impacts Margins, Management expects good year ahead.

    Hero Motocorp Ltd: Riding on the Scooters Growth, Maintains Margins! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Good Recovery in the Scooters market, expects pick up in exports too.

    Bajaj Auto Limited: Recovery in Exports but Domestic Disappoints! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    New Export Markets picking up, Management expects good recovery in domestic Three wheeler market.

    Bajaj Auto Limited: Finishes the Year with Headwinds. Poised for a Recovery Ahead? (Quarterly Results Update - Detailed)

    Jul 6, 2017

    Ends the year on a Flat note. Expects good recovery in the exports market.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE AUTO


    Aug 23, 2017 (Close)

    S&P BSE AUTO 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS