Agricultural Equipment Industry

Presented by:
Bhanupriya Choyal
3/23/2014 1

3/23/2014 2
Objectives:
•To present the overview of Farm Machinery Industry
with the focus on Tractor Industry in India.
•To analyze the prevailing trends in the Tractor
Industry.
•To analyze the Growth drivers of the Industry.

• Agricultural Machinery industry plays an important role in the Indian economy as
the agriculture sector still contributes majorly to the country’s GDP.
•Share of the sector in overall GDP is declining. However, the sector remains
significant as it employs more than 50 percent of the country’s population.
•The agricultural equipment sector is a key sector that contributes to agricultural
growth and productivity.3/23/2014 3
12
13
14
15
16
17
2007-08 2008-09 2009-10 2010-11
Share of Agriculture sector in India’s GDP (%)
GDP %

0
20
40
60
80
100
120
140
2005-06 2006-07 2007-08 2010-09 2009-10 2013-14
$66Bn
$69Bn $72Bn $79Bn
$99.2Bn
$124Bn E
Overall World agriculture equipment market is likely to grow at a rate of 4.5%
and expected to reach about $124 Bn in 2014.
Indian Agriculture equipment market contributes around 10% of global
equipment market and is sized at $10 Bn
Over the last few years Indian agricultural equipment market has been widely
exposed to international trade.
Global majors like John Deere , New Holland & Same Deutz have already
made an entry in Indian market , whereas Indian players are looking for
alliances with foreign partners overseas.
Worldwide Agriculture Equipment Market
(2006-2014),USD billion
3/23/2014 4

Chronology of Farm Mechanization in India
Pre-Green
Revolution
Era(1947-
1965)
Green
Revolution
Era(1965-1975)
Post-Green
Revolution Era
(1975 onwards)
1. Farming by traditional
methods
2. Low productivity
(0.58 t/ha/yr)
3. Increase in production
was attributed to
increase in cultivated
area
4. Farm power
availability was about
0.27 kW/ha
5. Share of animal power
sources was 98 to 88%
1. High yielding variety
,fertilizer , chemical inputs
2. Productivity increased
(1.14 t/ha/yr)
3. Need for timeliness in farm
operations realized
4. Introduction of improved
farm machinery
5. Farm power availability was
about 0.47 kW/ha
6. Share of animal power
sources decreased from
88% in 1965 to 62% in 1975
1. Use of scientific methods in
cultivation of crops
2. Raise in the productivity
level 2.14 t/ha/yr
3. Increase in the availability
of farm power to 1.2 kW/ha
4. Reduction in the share of
animal power from 62% in
1975 to 24% in 1997
5. More
implement/equipment and
machinery put to use for all
the farm operations
3/23/2014 5

1. Tractors
2. Levellers
3. Ploughs
4. Dozers
5. Scrapers
1. Seed Drills
2. Seed cum
fertilizer Drill
3. Zero till drills
4. Transplanter
1. Shovel
/Plough
2. Harrow
3. Tiller
4. Sprayer
5. Duster
1. Harvester
2. Thresher
3. Digger
4. Reaper
5. Sheller
6. Sickle/
Dao
1. Seed
extractor
2. Dehusker
3. Huller/
Dehuller
4. Cleaner
5. Grader
6. Mill
7. Dryer
Land
development,
tillage, seed
bed
preparation
Sowing
and
planting
Weeding,
inter
cultivation,
plant
protection
Harvesting
and
threshing
Post
harvest
and agro
processing
India’s agricultural equipment industry has a diverse product portfolio :
3/23/2014 6

Technology Advancement over the years…….
Tractor
drawn
mould
board
plough
Tractor
mounted Disc
Harrow
Tractor
mounted
Seed drill
Animal
drawn
mould
board
plough
Blade
Harrow
Dibbling
Stick
3/23/2014 7

Animal
drawn
planter
Tractor driven
Planter
Animal
drawn
hoe
Power
Tiller
Paddy
harvester
Self
propelled
combine
harvester
3/23/2014 9

There is greater stress on mechanization of agriculture
There has been a sustained
increase in the adoption of
mechanization in an
attempt to ensure greater
return on investment (RoI)
and sustainability of
agriculture.
Use of power for agriculture(KW/Ha)
Source of power – percentage share over 4 decades
Ag worker Animal Tractor Power
tiller
Diesel
Engine
Electric
Motor
50
40
30
20
10
0
Mechanisation primarily
driven by increased use of
tractors, which is replacing
manual and animal labour.
3/23/2014 10

Source:www.ibef.org3/23/2014 11

Tractor Industry in India
Overview
• Introduction
• Historical Background
Market Information
• Evolution of Market
• Current Scenario & Trends
• Market Growth Rate
• Growth Drivers
Market Players & Situation Analysis
• Industry at a glance
• Market size
• Major Players and their share
Conclusion
3/23/2014 13

3/23/2014 14

History of Evolution
1868 – Introduction of Farm tractors with steam
engine.
Most popular steam tractor was the Garrett4CD.
In 1907 - Henry Ford produced first gasoline powered
tractor “automotive plow”.
Later , an Irish engineer named Harry Ferguson’s
designed a hydraulic system for carrying implements.
3/23/2014 15

Market Information
• Evolution of Market
• Current Scenario & Trends
• Market Growth Rate
• Growth Drivers

Inception Phase (1945 to 1965)
Development Phase(1980 to 1992)
Regulatory Phase (1965 to 1980)
Liberalization Phase(1992 to 2002)
3/23/2014 17
Growth Phase(2002 onwards)

Industry Tractor Industry- Sales Performance
3/23/2014 18
Source : CMIE Database , ICRA Estimates
Trend in Yearly Tractor Sales Volume ( Domestic + Export)

3/23/2014 19
Industry Tractor Industry- Sales Performance
Trend in Monthly Tractor Sales Volumes (Domestic + Export)

Indian Tractor Industry-Region-wise Performance
3/23/2014 20
•Shift in Spotlight to Under-penetrated Markets

3/23/2014 21
Indian Tractor Industry-Region-wise Performance

Indian Tractor Industry- HP-wise Performance
3/23/2014 22
•Sales to witness polarization towards high & low powered segments

3/23/2014 23
•Exports increase with addition of new destinations
Trend in Tractor Exports from India

3/23/2014 24
Tractor Industry in India-Competitive Landscape

Indian Tractor Industry- Growth Drivers
3/23/2014 26
Lower level of Tractor penetration –scope for
further improvement
Source: World Bank , Emkay Reseach

3/23/2014 27
Government support for agriculture and rural development:
Trend in spend on Agriculture by GOI

3/23/2014 28
Improved Credit Environment
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000
2007
2008
2009
2010
2011
60,270
78,381
103,875
130,830
157,698
2,140
5,560
8,556
13,343
15,029
Private Banks(INR Cr) PSB(INR Cr)

3/23/2014 29
Scarcity of farm labour : Alternate employment opportunities following
urban migration and other Government-run schemes such as the National Rural
Employment Guarantee Act (NREGA) have necessitated greater farm mechanisation.
MGNREGA - rising employment and wages

3/23/2014 30
Increasing non-agricultural applications:
Increasing use of tractors for haulage in infrastructure and construction projects

3/23/2014 31
Strong replacement demand :
Roughly 40% of domestic demand is from the replacement
market. The average life-cycle of a tractor has reduced to ~8-9
years from ~11-12 years.
Export Sales
Addition of new export destinations and increased offerings
by domestic manufacturers in the higher HP segment has
spurred export growth in FY11 and 9mFY12.
Monsoons among the factors supporting
tractor industry growth

Market Players & Situation Analysis
• Industry at a glance
• Market size
• Major Players and their share

3/23/2014 33
•The Indian tractor industry is relatively young but the largest tractor
industry in the world (accounting for 30% of Global production).
•Industry characterized as medium HP Tractor Industry because of the
fragmented land holding in India.
•Since last decade industry had been growing (Y-o-Y)@ more than
15%.
•In last two years Industry is growing (Y-o-Y) @ 28% & 24% in FY10
and FY11 respectively.
•Market size of the industry has reached to 5.5 lac units in FY11, with
industry growing at a robust pace in the past two years.

Tractor Industry in India - Major Players
3/23/2014 34

3/23/2014 35
Share of Major Players
M & M
40%
TAFE
23%
Escorts
10%
ITL
9%
John Deere
9%
New Holland
6%
Others
3%
Share (%)
Indian Tractor industry has 13
national and few regional
participants. The market share
is however, concentrated
amongst the top five
manufacturers, accounting for
over 90% of total volumes.

3/23/2014 36
M & M TAFE
Escorts ITL
John
Deere
New
Holland
22
17
22 21
44
40
Y-o-Y Growth(%)

3/23/2014 37
Domestic & Foreign Collaborations of Tractor
Manufacturers
Price List of Different Categories Tractors

3/23/2014 38
REFERENCES
•www.icra.in
•www.cmie.com
•www.ibef.in
•www.zinnov.com
•http://agricoop.nic.in
•www.ficci.com
•www.emkayglobal.com

Agricultural Equipment Industry

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