Tractor Companies Reduce Production due to Sales Downfall

Tractor Companies Reduce Production due to Sales Downfall

Drought situations in Maharashtra and Tamilnadu has slowed down the sale of tractors this year, causing reduced production by companies.

2019 seems to be a tough year for Indian tractor industry as the sever heat wave has caused drought or drought like situation in many states. This has caused low demand of tractors from most of the states.

Mahindra has already announced that it will observe no production days for around 13 days for all its segments, same is expected from other players like Escorts in the market.

“Monsoon situation is a worry though in the last few days it has been picking up speed. The reservoir levels are very low and drought is acute. In Maharashtra the market is down by 30-50% and in Tamil Nadu it is down by 20-30% already.,” said Shenu Agarwal, chief executive, agri machinery & emerging business, Escorts Limited.

These markets together comprise just under 10% of the tractor industry and it is thanks to high-growth markets like Madhya Pradesh that the industry has been able to
counter their sales drop. As far as dealer inventory goes, he said, Escorts has brought it down to between 21-25 days in the last few years.

“However in February and March some extra tractors were kept in our depot to cater to the April Navratra which turned out to be a damp squib,” said Agarwal. “As a result
our inventory was more than we would like to keep and in April, May and June we cut production to reduce our depot inventory,” he added. Currently the inventory levels
for the tractor industry is around 5 weeks or 35 days.

“Based on the current trend , markets where demand has slowed we have optimised our stock but in markets with positive demand we have mobilized our resources and
inventory,” said Raman Mittal, ED, Sonalika Group.

“Things are not that bad right now (as in 2001-02) and most of the production correction has already been done,” said Agarwal.

“Based on the current trend , markets where demand has slowed we have optimised our stock but in markets with positive demand we have mobilized our resources and
inventory,” said Raman Mittal, ED, Sonalika Group.
“Things are not that bad right now (as in 2001-02) and most of the production correction has already been done,” said Agarwal.

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