Tractors Summary CRISIL Research projects tractor industry sales (including exports) to grow at a CAGR of 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 2010-11 and remain flat in 2011-12. Annual Review September 2010 Contents Part A: Domestic demand projected to grow by 6-8 per cent, exports by 16-19 per cent by 2014-15 Executive summary A-1 Demand review & outlook All India A-3 Competition and player dynamics A-15 Profitability: Review & outlook A-21 Part B: State of the industry Industry overview B-1 Cost review B-9 Regulations B-13 Player profiles B-17 Part C: Industry statistics Industry data: Sales, Market shares, Product mix, Capacity & Production C-1 Financial profile 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 A-1 1.0 Demand review and outlook All India A-3 - Domestic Review and outlook A-3 - Exports Review and outlook A-10 2.0 Competition and player dynamics A-15 - Mahindra & Mahindra Ltd A-17 - Tractors and farm equipment Ltd (TAFE) A-18 - Other players A-18 3.0 Profitability: Review and outlook A-21 Boxes 1.0 Demand review and outlook All India 01 Framework for demand analysis A-4 1.0 Demand review and outlook All India 01 Volume sales and Agri GDP A-5 02 Domestic sales growth vs agri credit growth A-6 03 Minimum support prices for major crops (MSP) A-7 04 Annual deviation from normal rainfall A-7 05 Hp-wise breakup of total sales A-8 06 Hp-wise breakup of domestic sales A-8 07 Comparing tractor penetration across countries A-8 08 Increasing tractor penetration in India A-8 09 Annual growth in farm income A-9 10 Regression of tractor population against Agricultural GDP A-10 11 Exports volumes A-11 12 Region-wise exports A-11 13 Hp-wise breakup of exports A-12 14 Tractor market size A-12 Continued A-i
continued 2.0 Competition and player dynamics 01 Tractor companies - Market share in 2009-10 A-15 02 Herfindahl index A-16 03 Mahindra & Mahindra tractors segment mix: 2009-10 A-18 04 Mahindra & Mahindra tractors segment mix: 2009-10 A-18 05 Escorts tractors segment mix: 2009-10 A-19 06 ITL tractors segment mix: 2009-10 A-19 3.0 Profitability: Review and outlook 01 Raw material breakup A-21 02 Trend in prices of key raw materials A-22 03 Operating margins A-23 1.0 Demand review and outlook All India 01 Growth in tractor volumes A-3 02 Growth by region A-11 2.0 Competition and player dynamics 01 Benchmark for Herfindahl index A-16 02 Key success factors A-17 3.0 Profitability: Review and outlook 01 Operating margins - PBIT A-23 02 Movement in basic raw material cost A-23 03 Expected movement in basic raw material cost A-24 04 Net margins A-25 05 Return on capital employed A-25 A-ii
State 201 2010 of the industry Sections 1.0 Industry overview B-1 - Overview B-1 - History of tractors in India B-1 - Structural analysis of the tractor industry B-2 - Penetration rate of tractors in India B-3 - Segmentation of tractors B-3 - Usage B-4 - Agricultural usage B-4 - Commercial usage B-5 - Urban usage B-6 2.0 Cost review B-9 - Raw material cost B-9 - Manpower cost B-10 - Selling and marketing cost B-10 - Power and fuel cost B-11 - Other expenses B-11 - Outlook B-11 3.0 Regulations B-13 - Introduction B-13 - Fiscal regulations B-14 - Environmental regulations B-14 4.0 Player profiles B-17 - Domestic players B-17 - International players B-32 1.0 Industry overview 01 Tractors industry growth over past four decades B-2 02 Factors affecting the choice of tractors B-7 3.0 Regulations 01 Farm credit disbursements and year-on-year growth B-13 Continued B-i
continued 4.0 Player profiles 01 M&M - total sales and share in the domestic industry B-17 02 M&M - region-wise share in domestic industry sales B-19 03 M&M - segment-wise sales mix B-19 04 PTL - total sales and share in the domestic industry B-20 05 PTL - region-wise share in domestic industry sales B-21 06 PTL - segment-wise sales mix (2007-08) B-21 07 TAFE - total sales and share in the domestic industry B-22 08 TAFE - region-wise share in domestic industry sales B-22 09 TAFE - segment-wise sales mix B-23 10 Escorts - total sales and share in domestic industry sales B-23 11 Escorts - region-wise share in domestic industry sales B-24 12 Escorts - segment-wise sales mix B-25 13 ITL - total sales and share in domestic industry sales B-25 14 ITL - region-wise share in domestic industry sales B-26 15 ITL - segment-wise sales mix B-26 16 New Holland India - total sales and share in domestic industry B-27 17 New Holland India - region-wise share in domestic industry B-28 18 New Holland India - segment-wise sales mix (2008-09) B-28 19 New Holland India - export share B-28 20 John Deere - total sales and share in domestic industry B-29 21 John Deere - region-wise share in total industry sales B-30 22 John Deere - segment-wise sales mix (2008-09) B-30 23 John Deere - export share B-31 24 Deere & Co - revenue mix for 2009 B-33 25 CNH Global NV - revenue mix for 2009 B-35 26 CNH - region-wise tractors sales in revenue terms B-35 27 AGCO - revenue mix for 2009 B-36 28 AGCO - region-wise sales in revenue B-36 29 SAME-DEUTZ-FAHR - product/trademark-wise sales mix for 2009 B-38 1.0 Industry overview 01 Segmental growth and proportion in domestic sales B-4 02 Tractors - Horsepower output for various farm inputs B-5 continued B-ii
continued 2.0 Cost review 01 Cost structure of major tractor players B-9 02 Players' operating profit margins B-9 03 Raw material cost as a percentage of net sales B-10 04 Trend in prices of major raw materials B-10 05 Labour cost as a percentage of net sales B-10 06 Selling and marketing cost as a percentage of net sales B-11 07 Power and fuel as a percentage to net sales B-11 08 Other overheads as percentage of net sales B-11 09 Outlook B-11 3.0 Regulations 01 Tractors - excise tariffs B-14 02 Tractors - customs tariffs B-14 03 Emission standards for tractors B-15 4.0 Player profiles 01 M&M - business profile B-17 02 PTL - business profile B-20 03 TAFE - business profile B-21 04 Escorts - business profile B-23 05 ITL - business profile B-25 06 New Holland India - business profile B-27 07 John Deere - business profile B-29 08 Deere & Co Ltd - financial summary B-32 09 CNH Global NV - financial summary B-34 10 AGCO - financial summary B-36 11 SAME DEUTZ-FAHR - financial summary B-37 B-iii
Industry statistics Sections 1.0 Industry data: Sales, Market shares, Product mix, Capacity & Production C-1 2.0 Financial profile C-13 1.0 Industry data: Sales, Market shares, Product mix, Capacity & Production 01 Tractors - Region-wise company-wise sales C-1 02 Tractors - Region-wise company-wise market shares C-3 03 Tractor industry sales C-5 04 Tractors - Segment-wise company-wise domestic sales C-5 05 Tractors - Segment-wise company-wise domestic market shares C-7 06 Tractors - Company-wise segment-wise total sales C-8 07 Tractors - Company-wise segment-wise shares C-10 08 Tractors - Player-wise capacity C-11 09 Tractors - Player-wise production C-11 10 Tractors - Player-wise capacity utilisation C-12 2.0 Financial profile 01 Mahindra & Mahindra Ltd - Financial performance C-13 02 Tractors & Farm Equipment Ltd - Financial performance C-14 03 Escorts Ltd - Financial performance C-15 04 International Tractors Ltd - Financial performance C-15 05 HMT Ltd - Financial performance C-16 06 VST Tillers Tractors Ltd - Financial performance C-16 C-i