Tractors

Summary
CRISIL Research projects
tractor industry sales (including
exports) to grow at a CAGR of

Annual Review

September 2010

7-9 per cent in volume terms

and reach a size of 6.4 lakh
units by 2014-15. Domestic
demand is projected to grow by
6-8 per cent by 2014-15
whereas exports are estimated
to grow by 16-19 per cent. In
value terms, the industry is
estimated to increase to about
Rs 320-330 billion by 2014-15
from Rs 200 billion in 2009-10.
Operating margins for tractor
manufacturers are estimated to
remain under pressure in 201011 and remain flat in 2011-12.

Contents
Part A: Domestic demand projected to grow by 6-8 per cent, exports by 16-19
per cent by 2014-15
Executive summary
Demand review & outlook All India
Competition and player dynamics
Profitability: Review & outlook

A-1
A-3
A-15
A-21

Part B: State of the industry

Industry overview
Cost review
Regulations
Player profiles

B-1
B-9
B-13
B-17

Part C: Industry statistics

Industry data: Sales, Market shares, Product mix, Capacity & Production
Financial profile

C-1
C-13

This document has been prepared by Prasanna Kanta, Hetal Gandhi and Manoj Mohta (Head of Research). For
any queries please get in touch with our client servicing desk. (clientservicing@crisil.com. Ph -022-33423561)

Opinion
Sections
Executive summary
1.0 Demand review and outlook All India
- Domestic Review and outlook
- Exports Review and outlook
2.0 Competition and player dynamics
- Mahindra & Mahindra Ltd
- Tractors and farm equipment Ltd (TAFE)
- Other players
3.0 Profitability: Review and outlook

A-1
A-3
A-3
A-10
A-15
A-17
A-18
A-18
A-21

Boxes
1.0 Demand review and outlook All India
01 Framework for demand analysis

A-4

Figures
1.0 Demand review and outlook All India
01
Volume sales and Agri GDP
02
Domestic sales growth vs agri credit growth
03
Minimum support prices for major crops (MSP)
04
Annual deviation from normal rainfall
05
Hp-wise breakup of total sales
06
Hp-wise breakup of domestic sales
07
Comparing tractor penetration across countries
08
Increasing tractor penetration in India
09
Annual growth in farm income
10
Regression of tractor population against Agricultural GDP
11
Exports volumes
12
Region-wise exports
13
Hp-wise breakup of exports
14
Tractor market size

A-5
A-6
A-7
A-7
A-8
A-8
A-8
A-8
A-9
A-10
A-11
A-11
A-12
A-12

Continued

CRISIL RESEARCH TRACTORS ANNUAL REVIEW

A-i

continued

Figures
2.0 Competition and player dynamics
01
02
03
04
05
06

Tractor companies - Market share in 2009-10

Herfindahl index
Mahindra & Mahindra tractors segment mix: 2009-10
Mahindra & Mahindra tractors segment mix: 2009-10
Escorts tractors segment mix: 2009-10
ITL tractors segment mix: 2009-10

3.0
01
02
03

A-15
A-16
A-18
A-18
A-19
A-19

Profitability: Review and outlook

Raw material breakup
Trend in prices of key raw materials
Operating margins

A-21
A-22
A-23

Tables
1.0
01
02
2.0
01
02
3.0
01
02
03
04
05

A-ii

Demand review and outlook All India

Growth in tractor volumes
Growth by region

A-3
A-11

Competition and player dynamics

Benchmark for Herfindahl index
Key success factors

A-16
A-17

Profitability: Review and outlook

Operating margins - PBIT
Movement in basic raw material cost
Expected movement in basic raw material cost
Net margins
Return on capital employed

A-23
A-23
A-24
A-25
A-25

CRISIL RESEARCH TRACTORS ANNUAL REVIEW

State
of the industry
201 2010
Sections
1.0 Industry overview
- Overview
- History of tractors in India
- Structural analysis of the tractor industry
- Penetration rate of tractors in India
- Segmentation of tractors
- Usage
- Agricultural usage
- Commercial usage
- Urban usage
2.0 Cost review
- Raw material cost
- Manpower cost
- Selling and marketing cost
- Power and fuel cost
- Other expenses
- Outlook
3.0 Regulations
- Introduction
- Fiscal regulations
- Environmental regulations
4.0 Player profiles
- Domestic players
- International players

B-1
B-1
B-1
B-2
B-3
B-3
B-4
B-4
B-5
B-6
B-9
B-9
B-10
B-10
B-11
B-11
B-11
B-13
B-13
B-14
B-14
B-17
B-17
B-32

Figures

1.0 Industry overview

01 Tractors industry growth over past four decades
02 Factors affecting the choice of tractors
3.0 Regulations
01 Farm credit disbursements and year-on-year growth

B-2
B-7

B-13
Continued

CRISIL RESEARCH TRACTORS ANNUAL REVIEW

B-i

continued

Figures
4.0 Player profiles
01
M&M - total sales and share in the domestic industry
02
M&M - region-wise share in domestic industry sales
03
M&M - segment-wise sales mix
04
PTL - total sales and share in the domestic industry
05
PTL - region-wise share in domestic industry sales
06
PTL - segment-wise sales mix (2007-08)
07
TAFE - total sales and share in the domestic industry
08
TAFE - region-wise share in domestic industry sales
09
TAFE - segment-wise sales mix
10
Escorts - total sales and share in domestic industry sales
11
Escorts - region-wise share in domestic industry sales
12
Escorts - segment-wise sales mix
13
ITL - total sales and share in domestic industry sales
14
ITL - region-wise share in domestic industry sales
15
ITL - segment-wise sales mix
16
New Holland India - total sales and share in domestic industry
17
New Holland India - region-wise share in domestic industry
18
New Holland India - segment-wise sales mix (2008-09)
19
New Holland India - export share
20
John Deere - total sales and share in domestic industry
21
John Deere - region-wise share in total industry sales
22
John Deere - segment-wise sales mix (2008-09)
23
John Deere - export share
24
Deere & Co - revenue mix for 2009
25
CNH Global NV - revenue mix for 2009
26
CNH - region-wise tractors sales in revenue terms
27
AGCO - revenue mix for 2009
28
AGCO - region-wise sales in revenue
29
SAME-DEUTZ-FAHR - product/trademark-wise sales mix for 2009

B-17
B-19
B-19
B-20
B-21
B-21
B-22
B-22
B-23
B-23
B-24
B-25
B-25
B-26
B-26
B-27
B-28
B-28
B-28
B-29
B-30
B-30
B-31
B-33
B-35
B-35
B-36
B-36
B-38

Tables
1.0 Industry overview
01
Segmental growth and proportion in domestic sales
02
Tractors - Horsepower output for various farm inputs

B-4
B-5

continued

B-ii

CRISIL RESEARCH TRACTORS ANNUAL REVIEW

continued

Tables
2.0 Cost review
01 Cost structure of major tractor players
02 Players' operating profit margins
03 Raw material cost as a percentage of net sales
04 Trend in prices of major raw materials
05 Labour cost as a percentage of net sales
06 Selling and marketing cost as a percentage of net sales
07 Power and fuel as a percentage to net sales
08 Other overheads as percentage of net sales
09 Outlook

B-9
B-9
B-10
B-10
B-10
B-11
B-11
B-11
B-11

3.0 Regulations
01
Tractors - excise tariffs
02
Tractors - customs tariffs
03
Emission standards for tractors

B-14
B-14
B-15

4.0 Player profiles

01
M&M - business profile
02
PTL - business profile
03
TAFE - business profile
04
Escorts - business profile
05
ITL - business profile
06
New Holland India - business profile
07
John Deere - business profile
08
Deere & Co Ltd - financial summary
09
CNH Global NV - financial summary
10
AGCO - financial summary
11
SAME DEUTZ-FAHR - financial summary

B-17
B-20
B-21
B-23
B-25
B-27
B-29
B-32
B-34
B-36
B-37

CRISIL RESEARCH TRACTORS ANNUAL REVIEW

B-iii

Industry statistics
Sections
1.0
2.0

Industry data: Sales, Market shares, Product mix, Capacity & Production
Financial profile

C-1
C-13

1.0
01
02
03
04
05
06
07
08
09
10

Industry data: Sales, Market shares, Product mix, Capacity & Production
Tractors - Region-wise company-wise sales
Tractors - Region-wise company-wise market shares
Tractor industry sales
Tractors - Segment-wise company-wise domestic sales
Tractors - Segment-wise company-wise domestic market shares
Tractors - Company-wise segment-wise total sales
Tractors - Company-wise segment-wise shares
Tractors - Player-wise capacity
Tractors - Player-wise production
Tractors - Player-wise capacity utilisation

C-1
C-3
C-5
C-5
C-7
C-8
C-10
C-11
C-11
C-12

2.0
01
02
03
04
05
06

Financial profile
Mahindra & Mahindra Ltd - Financial performance
Tractors & Farm Equipment Ltd - Financial performance
Escorts Ltd - Financial performance
International Tractors Ltd - Financial performance
HMT Ltd - Financial performance
VST Tillers Tractors Ltd - Financial performance

C-13
C-14
C-15
C-15
C-16
C-16

Tables

CRISIL RESEARCH TRACTORS ANNUAL REVIEW

C-i