As the second wave of COVID-19 pandemic hits rural areas, tractor sales are expected to be impacted in the short term. Farm equipment major Escorts Ltd expects sales to pick up in the second half of the fiscal.
Bharat Madan, Escorts Ltd Group CFO, told PTI that unlike in the first phase of COVID-19 where the impact was not at all there in the rural market, this time it is all very spread out. “It is impacting not only the urban area, but channel partners and dealerships are also closed because of lockdown in states. Clearly, this will have an impact, it is more severe and it is going to have an impact on everyone.”
Madan believes there will be a short-term impact. “Q1 will definitely bear the major brunt of this but in the second half we should see demand coming back like last time, we had a good pent-up demand after lockdown,” he said. “While sowing season is yet to start and this time it looks like the sowing season may not really be that sort of good numbers. But I think the next season and H2 will make up.”
Asked if the high growth of the last fiscal could be repeated, he replied in the negative saying that doesn’t look likely at all because the base itself has gone up so high now because the industry touched a new peak last year. “All the rural factors are still positive on the agriculture side and this will give a mid-single digit sort of growth over last year,” he said. “Overall, it still looks positive because nothing has changed on the ground in the rural side. Sentiments are all good as of now. It is a question of how soon we can tide over this issue and then people can get a relief and they get vaccinated.” However, Madan said we have to keep our fingers crossed that there is no third wave, which is more severe than what we have seen.
In regards to exports, he said Escorts is doing 500 plus tractor exports every month. “So this year we are looking at a good number 6,000-7,000 units as against 4,000-4,500 we did last year.” Madan highlighted that exports is one area that the company keeps on improving. “This time the maximum exports are happening to European market, where smaller tractors of sub-30 hp segment are doing extremely well. It is the largest selling model in exports now, and that has really contributed to the good growth.”