Mahindra sees tractor sales losing steam in fiscal second half

A day after Mahindra & Mahindra reporting a 9.7 per cent spike in net income on higher tractor sales, the company said it expects farm equipment industry sales to fall below 25 per cent in the second half of the current fiscal year (FY14).

A better-than-expected monsoon helped the tractor industry to clock higher volumes of over 20 per cent in the first half of FY14 against a negative growth in the corresponding period last fiscal year (FY13).

The domestic tractor industry clocked a 24 per cent growth in the three months to September, while Mahindra's growth was a tad lower at 22.1 per cent during the period.

"It will be a big surprise if we see a 25 per cent growth happening in the next five months of this fiscal," Pawan Goenka, executive director and president of the automotive and farm equipment sectors at Mahindra & Mahindra, told reporters at a post-earnings interaction in Mumbai on Thursday.

Stating that most industry players expect growth to be around 10 per cent, he said, "If we get about 10 per cent in H2, then we will end up at around 18 per cent, which will be a good growth rate."

He, however, said that he did not expect a turnaround in the automotive space during the next two quarters.

During the fiscal first half, the company sold 23.82 per cent more tractors at 1,72,104 units than a year ago and also introduced five variants, said group chief financial officer V S Parthasarthy.

"We see the tractor industry volume growing 15-17 per cent in the fiscal."

Mr Goenka said the company plans to introduce more powerful tractors in the US, where it presently sells 100-HP tractors.

On the truck business, he said the segment remained a cause of concern for the company.

"The slowdown in this space has been the longest I have seen in recent past," he added.

The company is also designing its electric car e20 for the European market, Mr Goenka said, adding that the company would not launch an electric variant of its only car 'Verito' without a subsidy.

"If the government doesn't give a subsidy for electric cars, the company will start focusing more on export markets," he said.

He also said the company plans to introduce the e20 in Norway and Britain.