Business – India;Tractor Industry

Malabika Sarkar,Shweta Bhanot

Picture this: A bright and sunny day at a village in Punjab. Farmers are gathering at an empty plot of land demarcated by
colourful flags and banners. No, it is not an election rally, but a consumer contact programme organised by a tractor
manufacturer for the potential buyers. Free demonstrations and test drives are offered with a smile, while the trained field
staff showcases its prowess in engaging farmers with a well-orchestrated product spiel and with details of the financing
options available, if they choose to buy a tractor from its wide range.
At Rs 14,000 crore, India has the world’s largest tractor market, with a total sales volume of 3,04,000 units in 2008-09, up
from 1,60,000 tractors in 2003. Comparatively young by world standards, it has expanded at a spectacular pace in the last
four decades. In the last six years itself, the tractor market has grown 89%. The industry is expected to grow between 5%
and 8% in financial year 2009-10.
And such consumer events are not one-offs. They are regular and an integral part of the marketing strategy of tractor
manufacturers.
A tractor is among the three most important investments made by a farmer in his lifetime, with a marriage in the family
and a house being the others. Ironically, India has less than 10% tractor ownership. At the same time, the usage is as high
as 35%. Which means, a large number of farmers use tractors on rent. Little wonder that tractor marketers, big and small,
are trying out all the tricks in their books to woo potential buyers.
Interestingly, Indian tractors are the cheapest in the world . By some estimates, the cost of a tractor produced in India is as
much as the cost of its gear box in a developed country. The scope for exports, therefore, is tremendous.
Back to India, the tractor market is broadly classified into four segments—machines with less than 30 hp (horsepower),
the 30-40 hp, the 40-50 hp and the 50 hp-plus segments.
India has been predominantly a 30-40 hp market. Of the total number of tractors sold last year, an overwhelming 2 lakh
were in the less than 40 hp segment and the remaining in the 40 hp-plus segment. The industry estimates that the 40 hp-
plus segment will come to represent 38% (1,10,000 units) of the industry by 2015.
Indeed, the whole industry is at the threshold of a revolution, says Gopal Krishna, head, marketing and exports, Same
Deutz-Fahr Group (SDF). He says that more sophisticated and powerful tractors are making their way into the market.
This is courtesy a large exodus of farmers into urban areas, which in turn makes labour scare and costly in rural areas.
“The dependence on machines is increasing everyday. With leasing gaining in importance—because the future is
expected to lie in co-operative farming—powerful tractors of over 50 hp will be in great demand,” he observes. This is
also driven by a growing demand for tractors from the infrastructure sector.
Anjani Kumar Choudhari, president farm equipment sector and group management board member, Mahindra & Mahindra
(M&M), is equally upbeat. “We see the fastest growth in the 50-plus hp segment and plan to introduce tractors in this
range,” he says. “We have tractors up to 75 hp. Also, we are modernising and improving our range of 30-40 hp tractors,
and working on launching sub-30 hp tractors which offer good value for money.”
M&M sold 92,000 units last year in the domestic market and exported 8,000.
The small and marginal farmers who own less than 5 acre of land and comprise 82% of the total farming households in
the country, have a minuscule 1% tractor ownership. Yet this is not the segment marketers and financiers are pinning their
hopes on. The reason is obvious: Co-operative farming is the way to the future. Overall, the industry not particularly
hopeful about the performance of the below-30 hp segment, and expects it to remain at the current levels with no
appreciable increase in demand except from the non-mechanised and semi-mechanised states. The growth in this segment
will largely depend on the availability of credit to farmers with lower land holdings.
Tractor manufacturers, aware of the vast and diverse nature of demand, are putting a lot of effort in getting the spadework
right. Regular surveys of the villages to find out the farmers’ land holdings and setting up large distribution networks with
a web of touch points are among the first things a manufacturer has to get right if he hopes to make a dent in the market.
For instance, Escorts’ agri machinery group has a distribution networks comprising over 1,500 dealerships and 800 retail
service outlets, apart from 29 marketing offices spread across the country. This is supported by a field force of over 300
employees.
One also needs to be constantly on one’s toes to make a mark. Says AK Srivastava, general marketing manager, HMT,
“We have adopted a no-frills, grassroots approach comprising field demos at doorstep, direct interaction of our trained
field staff with potential customers and participation in rural fairs and exhibitions.”
In addition, manufacturers try to identify the farmers who have purchased tractors three to five years ago and are looking
to replace them with new ones. “Around 70% of the tractors in the country are believed to be reaching the replacement
stage,” says SDF group’s Krishna.
M&M, a leader in the market with a share of around 42%, is not willing to give the low hp segment a go by. It is field
testing an 18 hp Chinese tractor from its Mahindra China Tractor Company (MCTC) range. Escorts is also hedging its
bets. Rohtash Mal, executive director and CEO, agri machinery group, Escorts, says, “For us, the sub-30 hp segment is no
less interesting.” But he is unwilling to discuss his company’s plans for the segment in any detail.
Typically, tractors are used for farming operations for about four-six months in a year and the rest of the time, it is used
for transportation and other applications. “Today, tractors are used at construction sites, airports and large infrastructure
projects such as the metro rail,” says Mal.
Considering their importance, there is much consultation and ground work that goes into buying a tractor. Factors such as
reliability of the machine, after-sales service, financing options and resale value remain at top of a farmer’s consideration
set. Mind you, you can also land a desirable bride if you have a handsome machine parked at your doorstep, but that’s
purely incidental. Price, interestingly, is not the main consideration for a farmer, explains LD Mittal, chairman, Sonalika
Groups. “Before making up his mind, the farmer consults his fellow villagers who are using tractors and their feedback
becomes a guiding factor for him,” he says.
At present, credit availability is the big issue facing the industry. The year 2008-09 started well with commodity prices
going up, a lot of high minimum support prices and big credit waiver announced by the government. But the global
meltdown dampened the general economic sentiment despite a third consecutive good monsoon last year. Banks clamped
down on credit, and since 85% of the tractors are bought on loan, making credit available at affordable interest rates will
be key to category growth, say observers.
A REPORT
ON
31st August, 2010
ANALYSIS OF
TRACTOR INDUSTRY
IN INDIA
Submitted to Prof. Dr.Utpal Chattopadhyay as a part of

PGDIE curriculum

Team Members
Pankaj Tadaskar (70)
Parasram Pariar (72)
Ramachandra Chikhalagi (83)
Ramesh Babu (84)
Sudhir Kumar (101)
Sunit Mhasade (105)

INDEX
1. INTRODUCTION............................................................................................................................... 3

2. HISTORY.......................................................................................................................................... 5

FOREIGN COLLABORATION................................................................................................................. 7

3. INDIAN TRACTOR MARKET OVERVIEW........................................................................................... 8

i)

INDUSTRY TRENDS BY REGIONS................................................................................................ 11 ii) INDUSTRY TRENDS BY

STATE.................................................................................................... 13 iii) REGION-WISE MARKET SHARE OF MAJOR

PLAYERS................................................................. 16 iv) INDUSTRY TRENDS BY TRACTOR HORSE POWER

(HP).............................................................. 17
4.MARKET CONCENTRATION........................................................................................................... 19

i)

MARKET CAPITALISATION IN TERMS OF VOLUME. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19

ii) MARKET CAPITALISATION IN TERMS OF TURN OVER............................................................... 20

 iii) MARKET CAPITALISATION IN TERMS OF SALES......................................................................... 20

5. TRACTOR INDUSTRY IN TERMS OF FINANCIALS............................................................................ 22

i)

P/E RATIO.................................................................................................................................. 22

ii) EARNINGS PER SHARE............................................................................................................... 22

iii) PAT (PROFIT AFTER TAX)........................................................................................................... 23 6.

EXPORTS........................................................................................................................................ 25 7. SOME LONG TERM DEMAND

DRIVERS FOR THE INDUSTRY......................................................... 26 8. FUTURE GROWTH IN TRACTOR

INDUSTRY................................................................................... 27 9.

REFERENCES.................................................................................................................................. 28

1. INTRODUCTION

Tractor industry plays an important part as agriculture sector has a major contribution to India’s GDP. Tractors are part of

agricultural machinery industry. Tractors came to India through imports and later on were indigenously manufactured with the

help of foreign collaborations. The manufacturing process started in 1961-62. Indian tractor industry is relatively young but

now has become the largest market worldwide.

Higher productivity and greater output are the two major contributions in farm mechanization. Tractors form an integral part of

farm mechanization and have a crucial role to play in increasing agricultural productivity. Tractor is a highly versatile piece of

machinery having a multitude of uses, used in agriculture both for land reclamation and for carrying out various crop cultivation

and also employed for carrying out various operations connected with raising the crops by attaching suitable implements and to

provide the necessary energy for performing various crop production operations involved in the production of agricultural crops.

Tractors are capital intensive, labour displaying used as a mode of transport, in electricity generation, in construction industry and

for haulage operation. It has now become an integral part of farm structure .The application of tractor for agricultural activities

which swept India during the last twenty years have erased the problem of farmers. Farm mechanization program in India aims to

integrate the use of available human and animal farm power with mechanical sources of power for increasing the productivity.
Indian tractor industry, comparatively young by world standards have expanded at a spectacular pace during last four decades.

Consequently it now occupies a place of ride in India's automobile industry. U.S.A., U.S.S.R. and only a few Western European

countries exceed the current production of tractors in India, but in terms of growth India's growth is unmatched even with

countries of long history of tractor manufacturing.

The spectacular achievement reflects the maturity and dynamism of tractor manufacturers and also the policies adopted by the

government to enable it to effectively meet the demand. The tractor industry in India has made a significant progress in terms of

production and capacity as well as indigenisation of technology. It is a typical sector where both imported technology and

indigenous developed technology have developed towards meeting the overall national requirements. The global spotlight on

tractors manufacturers certainly in terms of volume seems to be swinging away from the USA, UK and Western and Eastern

Europe towards India where growth in the number of producers and the total volume in recent years have been impressive. In

India tractor industry has played a vital role in the development.

India's gross cropped area is next only to United States of America and Russia and long with fragmented land holdings has

helped India to become the largest tractor market in the world. But it drops to eight position in terms of total tractor in use in the

country when compared to international figures, only 3% of total tractors used all over the world . It is to be noted that while the

overall automobile industry is facing recession the tractor industry is growing at 9%.About 20% of world tractor production is

carried out in our country only. The arable land in India is high as 12% of the total arable land in the world. Tractor market in India

is about Rs 6000 crore. On an average around 400000 tractors are produced and their sale is 260000.Uttar Pradesh is the

largest tractor market in our country. One out of every four tractor is being Purchased here. Indian tractor market has to be

viewed considering its position in the world with respect to key parameters as given below

2. HISTORY
1945 to 1960

War surplus tractors and bulldozers were imported for land reclamation and cultivation in mid 1940's. In 1947 central and state

tractor organizations were set up to develop and promote the supply and use of tractors in agriculture and up to 1960, the

demand was met entirely through imports. There were 8,500 tractors in use in 1951, 20,000 in 1955 and 37,000 by 1960.
1961 to 1970

Local production began in 1961 with five manufacturers producing a total of 880 units per year. By 1965 this had increased to

over 5000 units per year and the total in use had risen to over 52,000. By 1970 annual production had exceeded 20,000 units

with over 146,000 units working in the country.

1971 to 1980

Six new manufacturers were established during this period although three companies (Kirloskar Tractors, Harsha Tractors and

Pittie Tractors) did not survive. Escorts Ltd. began local manufacture of Ford tractors in 1971 in collaboration with Ford, UK

and total production climbed steadily to 33,000 in 1975 reaching 71,000 by 1980. Credit facilities for farmers continued to

improve and the tractor market expanded rapidly with the total in use passing the half million mark by 1980.
1981 to 1990

A further five manufacturers began production during this period but only one of these survived in the increasingly competitive

market place. Annual production exceeded 75,000 units by 1985 and reached 140,000 in 1990 when the total in use was

about 1.2 million. Then India - a net importer up to the mid-seventies - became an exporter in the 1980s mainly to countries in

Africa.

1991 to 1997

Since 1992, it has not been necessary to obtain an industrial license for tractor manufacture in India. By 1997 annual

production exceeded 255,000 units and the national tractor population had passed the two million mark. India now emerged as

one of the world leaders in wheeled tractor production.

1997 to 1999

Five new manufacturers have started production since 1997. In 1998 Bajaj Tempo, already well established in the motor

industry, began tractor production in Pune. In April of the same year New Holland Tractor (India) Ltd launched production of 70

hp tractors with matching equipment. The company is making a $US 75 million initial investment in a state of the art plant at
Greater Noida in Uttar Pradesh state with an initial capacity of 35000 units per year. Larsen and Toubro have established a

joint venture with John Deere, USA for the manufacture of 35-65 hp tractors at a plant in Pune, Maharashtra and Greeves Ltd

will produce Same tractors under similar arrangements with Same Deutz-Fahr of Italy. Looking to South American export

markets Mahindra and Mahindra are also developing a joint venture with Case for tractors in the 60-200 hp range. Total

annual production was forecast to reach 300,000 during the following year.
1999 to Present

Facing market saturation in the traditional markets of the north west (Punjab, Haryana, eastern Uttar Pradesh) tractors sales
began a slow and slight decline. By 2002 sales went below 200,000. Manufacturers scrambled to push into eastern and
southern India markets in an attempt to reverse the decline, and began exploring the potential for overseas markets. Sales
remained in a slump, and added to the market saturation problems also came increased problems of "prestige" loan defaults,
where farmers who were not financially able took tractors in moves to increase their family’s prestige. There are also reported
increased misuses of these loans for buying either lifestyle goods, or for social functions. Government and private banks have
both tightened their lending for this sector adding to the industry and farmers woes. By 2004 a slight uptick in sales once again
due to stronger and national and to some extent international markets. But by 2006 sales once again were down to 216,000
and now in 2007-08 have slid further to just over 200,000.

These factors apart, non-agricultural use of tractors (for haulage in construction and infrastructure projects) continued to
increase, benefiting tractor demand. Also, with infrastructure projects and rural employment schemes increasing employment
opportunities, availability of labour for agricultural activities continued to decline, persuading even farmers with medium-sized
land holdings to either rent or purchase tractors.
On a regional basis, the performance of the eastern, northern and western parts of the country was robust during 2009-10 in
terms of tractor demand, while that of the southern region was moderate. A strong growth in tractor volumes, albeit on a low
base, was witnessed in the eastern States, including Bihar, Orissa and Jharkhand, which had a good paddy crop. Tractor
volumes in the northern and western regions also reported strong growth during 2009-10, especially in the second half (H2) of
the year, benefiting from a low base (H2, 2008-09) and a satisfactorykharif crop in some States. The southern region reported
moderate performance in terms of tractor demand (growth of 11.9% in 2009-10), being impacted largely by the de-growth in
Andhra Pradesh (AP)—a key southern market— where rainfall was irregular in 2009-10. However, in Karnataka and Tamil
Nadu, higher MSPs for rice along with some revival of interest of public sector banks (PSBs) in tractor financing led to strong
tractor sales volumes.
Historically, tractor demand has been fairly volatile, being influenced by cyclical trends, availability of finance, and crop
patterns (monsoon). After four years of strong growth during 2003-07, the fiscal years 2007-08 and 2008-09 both reported a
marginal decline in tractor sales volumes, largely reflecting cyclical corrections. In addition to the cyclical dips, during H2,
2008-09, the industry also had to cope with the liquidity crunch, which pushed up interest rates, even as financiers resorted to
more stringent lending norms in the face of rising non-performing assets (NPAs). However, the situation improved during
2009-10 as credit availability improved on the strength of greater liquidity in the banking system. While tractor financing has
traditionally been done by PSBs, of late, private banks and non-banking finance companies (NBFCs), despite their higher
interest rates vis-à-vis the PSBs, have been able to increase their penetration of this market on the strength of faster loan
processing and use of more liberal credit norms.
Overall, with tractor demand being closely linked to agricultural output, growth in farm mechanisation and farmers’
remuneration, the long-term demand drivers for the industry remain robust. The currently low levels of tractor penetration in
India, strong Governmental focus on availability of finance for agriculture mechanization tools and on rural development,
increase in the use of tractors for non-agricultural purposes, and the growing emphasis on tractor exports augur well for the
industry.

A REPORT
ON
31st August, 2010

ANALYSIS OF
TRACTOR INDUSTRY
IN INDIA
Submitted to Prof. Dr.Utpal Chattopadhyay as a part of
PGDIE curriculum
Team Members
Pankaj Tadaskar (70)
Parasram Pariar (72)
Ramachandra Chikhalagi (83)
Ramesh Babu (84)
Sudhir Kumar (101)
Sunit Mhasade (105)

INDEX
1. INTRODUCTION............................................................................................................................... 3
2. HISTORY.......................................................................................................................................... 5
FOREIGN COLLABORATION................................................................................................................. 7
3. INDIAN TRACTOR MARKET OVERVIEW........................................................................................... 8
i)INDUSTRY TRENDS BY REGIONS................................................................................................ 11
ii) INDUSTRY TRENDS BY STATE.................................................................................................... 13
iii) REGION-WISE MARKET SHARE OF MAJOR PLAYERS................................................................. 16
iv) INDUSTRY TRENDS BY TRACTOR HORSE POWER (HP).............................................................. 17
4.MARKET CONCENTRATION........................................................................................................... 19
i) MARKET CAPITALISATION IN TERMS OF VOLUME. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ii) MARKET CAPITALISATION IN TERMS OF TURN OVER............................................................... 20
iii) MARKET CAPITALISATION IN TERMS OF SALES......................................................................... 20
5. TRACTOR INDUSTRY IN TERMS OF FINANCIALS............................................................................ 22
i) P/E RATIO.................................................................................................................................. 22
ii) EARNINGS PER SHARE............................................................................................................... 22
iii) PAT (PROFIT AFTER TAX)........................................................................................................... 23
6. EXPORTS........................................................................................................................................ 25
7. SOME LONG TERM DEMAND DRIVERS FOR THE INDUSTRY......................................................... 26
8. FUTURE GROWTH IN TRACTOR INDUSTRY................................................................................... 27
9. REFERENCES.................................................................................................................................. 28
1. INTRODUCTION

Tractor industry plays an important part as agriculture sector has a major contribution to India’s GDP. Tractors are part of

agricultural machinery industry. Tractors came to India through imports and later on were indigenously manufactured with the

help of foreign collaborations. The manufacturing process started in 1961-62. Indian tractor industry is relatively young but

now has become the largest market worldwide.

Higher productivity and greater output are the two major contributions in farm mechanization. Tractors form an integral part of

farm mechanization and have a crucial role to play in increasing agricultural productivity. Tractor is a highly versatile piece of

machinery having a multitude of uses, used in agriculture both for land reclamation and for carrying out various crop cultivation

and also employed for carrying out various operations connected with raising the crops by attaching suitable implements and to

provide the necessary energy for performing various crop production operations involved in the production of agricultural crops.

Tractors are capital intensive, labour displaying used as a mode of transport, in electricity generation, in construction industry and

for haulage operation. It has now become an integral part of farm structure .The application of tractor for agricultural activities

which swept India during the last twenty years have erased the problem of farmers. Farm mechanization program in India aims to

integrate the use of available human and animal farm power with mechanical sources of power for increasing the productivity.

Indian tractor industry, comparatively young by world standards have expanded at a spectacular pace during last four decades.

Consequently it now occupies a place of ride in India's automobile industry. U.S.A., U.S.S.R. and only a few Western European

countries exceed the current production of tractors in India, but in terms of growth India's growth is unmatched even with

countries of long history of tractor manufacturing.

The tractor industry reported a compounded annual growth rate (CAGR) of over 20% in volume terms during the period 2003-
07. The long up-cycle in demand was supported by several factors, including excise duty exemptions on tractors (2004-05),
thrust on rural development, improved availability of finances for tractor purchase, and low interest rates.
The growth also came on a low base, with the preceding three fiscal years (2000-03) having witnessed a prolonged phase of
volume correction. The cyclical correction during 2000-03 had been aggravated by the build-up of channel inventory with the
major players having pushed aggressively for larger sales. In contrast to this phase of cyclical slowdown, the one that
happened during 2007-09 was less severe, with volumes declining by around 3%, despite the intermittent tightening of the
liquidity situation during H2, 2008-09.
The demand slowdown during H2, 2008-09 also impacted the profitability of the original equipment manufacturers (OEMs),
that is, the tractor manufacturers, because of the high price inventory they were carrying. However, the situation improved on
the cost structure front in H1 2009-10 with the softening of commodity prices preparing the ground for the industry to earn
higher profitability margins. The pickup in volumes also lowered the overhead expenses for the tractor manufacturers,
boosting their profitability. While the OEMs did not lower the listed sales price of tractors, the benefit of lower steel prices was
passed on to the end customers via discounts. This is an accepted practice in the industry; given that once prices are lowered
it is difficult to raise them subsequently. However, during H2 2009-10, the tractor majors increased the prices with the reversal
of commodity prices and the discounts have also come down.
Capacity utilisation in the tractor industry had hit a low during 2002-03, following large capacity additions and a volume slump.
After that, capacity utilisation improved steadily, but remained moderate at around 50% during 2008-09. In 2009-10, the tractor
volume growth has helped the OEMs improve their capacity utilizations; however, there is still excess capacity in the industry.
Thus, over the medium term, most tractor manufacturers would not need to make any significant capital investments in
building capacities.
As discussed, the domestic tractor industry has to cope with demand volatility on account of cyclical trends and the strong
linkages it has with agricultural production and monsoon rains. Many of the industry players have thus diversified into related
products, including generator engines and cranes, besides focusing more on exports, to gain some insulation against the
volatility in domestic tractor demand. As for tractor exports, while a major part of that currently goes to USA, the OEMs are
now exploring various other markets across Europe, Asia and Africa for future exports.
i) INDUSTRY TRENDS BY REGIONS

The biggest markets for the tractor industry include States like Uttar Pradesh (UP), Andhra Pradesh (AP), Madhya Pradesh
(MP), Rajasthan, and Maharashtra, which together accounted for around 50% of the total tractor sales in India during 2009-10.
The tractor industry witnessed a strong y-o-y growth of 28.3% during 2009-10, with most of the States reporting positive
growth during the year.
Trend in Tractor Sales across regions

The northern region remains the largest tractor market in India with sales of around 1,67,000 units as of 2009-10. This region
reported a growth rate of 35.7% in volume sales in 2009-10 over the previous fiscal, with the key contributors including UP,
Punjab, Haryana and Rajasthan. The northern region benefited from higher MSPs (for crops), limited availability of labour
(forcing higher mechanisation), and increasing non-agricultural use of tractors.
Additionally, increased infrastructure development activities (especially highways) led to appreciation in land values and use of
tractors for non-agricultural purposes. In some cases, farmers also received compensation for the Government’s acquisition of
select land patches (adjoining highways), which increased the availability of cash with them. Feedback from industry players
suggests cash purchases (including purchases using Kisan Credit Card) in some northern States increased to 35-40% of the
total tractor volumes in 2009-10 from 10- 15% in the past.
Trend in Tractor sales across States

Tractor volumes in UP grew by 42.7% during 2009-10, with H2, 2009-10 reporting particularly strong growth (around 51% y-o-
y) mainly on the back of high sugarcane prices for thekharif crop and improved irrigation facilities. In the case of Punjab,
tractor volumes remained strong for the fifth straight year in 2009-10 (y-o-y growth of 42%). In Rajasthan however, growth in
tractor volumes was relatively subdued in 2009-10 (around 24% y-o-y) as compared with the figure for the northern region as
a whole. Tractor sales in Rajasthan were especially low in H2, 2009-10 versus H1, 2009-10, due to lower kharif output on
account of deficient rains and inadequate financing availability.

In the eastern region, tractor volumes continued to report strong growth in 2009-10, albeit on a small base, and went up by
53.8% over 2008-09, being driven mainly by the higher MSPs announced for paddy. Within the region however, many
financiers remained reluctant to finance tractor purchases in some States like Bihar. Nevertheless, in Bihar, tractor volumes
grew 66% over 2008-09 to around 29,000 units in 2009-10, thereby accounting for over 50% of the total sales in the eastern
region. The Bihar market, where tractor penetration had been low historically, has shown sustained growth over the last few
years and become one of the important markets for the tractor industry. Overall, in the eastern region, growth in tractor
volumes is expected to moderate, going forward, as the benefit of a low base get diluted gradually.
The western region reported sales of around 92,000 tractor units during 2009-10—a growth rate of 35.7% over the previous
fiscal—benefiting particularly from the strong performance that Maharashtra, Gujarat and MP posted during H2, 2009-10 (55%
y-o-y growth over H2, 2008-09). The factors contributing to the strong growth in the region during H2, 2009-10 included a
benign base effect, higher crop prices (of sugarcane and cotton in Maharashtra, and of cereals and soyabean in MP), and
greater availability of retail finance.
The performance of the southern region in terms of tractor sales was relatively modest during 2009-10, with the growth rate
being around 11.9% over the previous fiscal. While most States in the region reported healthy growth, AP, which is the largest
tractor market in the south, de-grew by 10.4% in 2009-10.
ii)

INDUSTRY TRENDS BY STATE

Punjab, Uttar Pradesh and Haryana were the first States to benefit from the Green Revolution and hence have traditionally
accounted for most of the tractor sales. However, given the high penetration of tractors in these Northern States, the
geographical concentration of tractor sales is gradually shifting to the Western and Southern States of the country. States like
Gujarat, Andhra Pradesh and Madhya Pradesh have reported significant increases in tractor volumes over the past three
years. This trend is continuing in the current fiscal also, as the intensity of tractorisation in North India is quite high already.
Table 5 depicts the distribution of tractor sales in the country in the first quarter of the current fiscal vis-a-vis the like period
previous year.