With Punjab and Haryana facing drought like conditions, tractor sales in these agrarian states is expected to remain flat in current fiscal largely in view of rising input cost, tractor maker Mahindra and Mahindra said on Monday.
Both Punjab and Haryana contribute 11.5 per cent to the country's total tractor sales of 6.35 lakh units.
"Punjab and Haryana are not much dependent on monsoon as they are well-irrigated states. But delayed rains affect customers' sentiments. Moreover, the farmers' input cost goes up and profit gets squeezed from the crop which in turn affects their cash flow.
Last year, there was 7-8 per cent growth of tractors in Punjab and Haryana which can be flat this time or it may grow by 1 to 2 per cent," Mahindra & Mahindra, Farm Equipment Sector, Farm Division, Senior Vice President (Sales, Customer Care), Bharatendu Kapoor told reporters here on Monday.
Punjab and Haryana have witnessed patchy rains this monsoon so far with deficit remaining 65 per cent each in these two states.
Punjab and Haryana had sought special package of Rs 2,330 crore and Rs 4,829.25 crore, respectively from the Centre to deal with "weather driven" crisis.
However, the tractor major said except Punjab and Haryana, other parts of the country like Rajasthan, Gujarat have received rains, though they were delayed.
Kapoor said the country's tractor industry is projected to grow by 5-6 per cent in terms of sales volume this fiscal as against 12 per cent growth witnessed in previous financial year.
"Delayed rains have caused input cost to be higher in many parts that will affect tractor sales. During April till July this year, tractors volume degrew by 2 per cent," said Kapoor who was here in connection with the launch of 'Arjun NOVO' tractor.
"During April and July, there was a major impact. We were running our plants in the month of June and July for one shift only against three shifts. But in August we ramped up the production," he said expressing confidence that the industry would now be in growth mode.
Talking about new tractor, Kapoor said, "The new Arjun NOVO tractor can effectively do over 40 key farming applications. It has the precision hydraulics system for potato farming, high lift capacity of 2,200 kg for using heavy implements."
He said the market size of over 48 HP capacity of tractors in the country is one lakh units which is expected to grow by 20 per cent.