The Hindu : Business : TAFE bets on exports, new product sales

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Friday, Sep 28, 2007
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TAFE bets on exports, new product sales

K. T. Jagannathan

Agco to source new generation sub-60 hp tractors from the company

Forecasts moderate growth for the current year
New products drive domestic volume

Mallika Srinivasan

CHENNAI: Tractors and Farm Equipment Ltd. (TAFE), an Amalgamation Group company, is laying much store by exports and new product sales to ensure a growth that is above the industry level.

The tractor industry is expected to register a moderate five per cent growth this year, riding mainly on the back of a sharper export growth. Sales numbers for April-July suggest a four per cent drop in domestic volume growth. However, exports have shown a sharp 10 per cent growth in the same period. The moderate growth forecast for the current year comes in the wake of an over 20 per cent growth in the last three years.

Mallika Srinivasan, Director of TAFE, however, was confident that the domestic scene would improve in the coming months. The tightness vis-À-vis the availability of finance had proved a contributory factor for the negative growth in the domestic sales up to July this year. With private players (financing firms) slowly returning to the market, she sensed a gradual easing of pressure on retail tractor finance. A better monsoon and expectations of a demand pick-up in its wake in the coming festival season had also contributed to the optimism, she said. “At the moment, export is driving the growth of the tractor industry,” Ms. Mallika Srinivasan said.

In an interaction with this correspondent, she said TAFE’s exports stood at $55 million in 2006-07. “We will double it in two-to-three years,” she added. In this context, she pointed out that TAFE had penned a long-term relationship with its long-time equity partner Agco to export `Made in India’ Massey Ferguson brand of tractors to the North American markets. Agco, which owns the Massey Ferguson brand, has a 24 per cent stake in TAFE. Agco had been sourcing older generation sub-60 hp tractors from European nations. “It has now decided to procure the new generation sub-60 hp tractor from us,” she said. These tractors were also fitted with Simpson engines, she pointed out.

Ms. Mallika Srinivasan said since 2002-03, TAFE had introduced over two dozen variants. “In fact, new products are driving our domestic volume,” she added. In 2002-03, about 40 per cent of domestic number for TAFE came from sale of new products. This percentage had gone up to 63 per cent now.

In the case of Eicher Tractor, which it had acquired sometime ago, the new products formed 39 per cent of its total domestic sales in 2005-06. This had gone up to 60 per cent now, she said.

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