The Hindu : Business : TAFE trains focus on retail sales

Online edition of India's National Newspaper
Saturday, Jul 24, 2004

Business

Business

TAFE trains focus on retail sales

By K. T. Jagannathan

CHENNAI, JULY 23. Tractors and Farm Equipment (TAFE) will continue to stay focussed on retail segment by constantly monitoring deliveries from dealers to customers, asserts its director, Mallika Srinivasan. In an interaction with The Hindu, Ms. Mallika Srinivasan said TAFE had re-jigged its business gameplan in the light of the downturn that the industry had witnessed in the recent past, caused due to an assortment of factors ranging from poor monsoon to cutthroat competition.

Change of tactics

<167,3p,1>She said the re-worked strategy primarily had focus on three areas — improving retail sales, ensuring dealer viability and beefing up the financial health of the company.

The re-writing of the business focus, she claimed, had indeed helped to keep in good stead all the related links in the sale of a tractor. This change of tactics, she said, helped to trigger a pull in demand from customer-end. More often than not, companies try to create demand by pushing vehicles to dealers, much to the chagrin of the latter.

The retail focus had twin beneficial fall-outs. For one, the dealers were rid of the fears of overstocking (caused by unwanted dumping from vehicle makers) and consequent worries about making avoidable additional margin money on uncalled for supplies. For another, the demand-pull by customers enabled TAFE to tighten credit to dealers, releasing adequate funds to the organisation in the bargain

In fact, this re-orientation in focus had come in handy to help TAFE re-price its tractors closer to the customer expectation in the wake of the removal of excise in the recent Budget. In the absence of corresponding duty exemptions on inputs, tractor makers had cut prices by three to four percentage points (around Rs. 4500 to Rs. 7000, depending on the model) post-Budget 2004. Customers were expecting a reduction of Rs. 35,000-40,000, though.

Ms. Mallika Srinivasan said the re-jig in focus had seen TAFE reporting a 52 per cent rise in sales (to dealers) in the first quarter of this year, though on a lower base. She said things had been looking up since October last for the industry after an extended period of negative growth. Even during the period of trough, TAFE, she said, had kept investing in research and development. Though monsoon predictions were mixed, she sounded optimistic about the growth prospects for the industry this year. The farm thrust of the new UPA Government at the Centre and signals emanating from the National Bank for Agriculture and Rural Development (Nabard) on interest rates all bode well, she said.

On new launches, Ms. Mallika Srinivasan said TAFE had unleashed three new tractors since January this year. It proposed to launch at least couple of more by the year-end.

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