Agricultural Equipment Industry

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Agricultural Equipment Industry

  1. 1. Presented by: Bhanupriya Choyal 3/23/2014 1
  2. 2. 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.
  3. 3. • 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 %
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. Animal drawn planter Tractor driven Planter Animal drawn hoe Power Tiller Paddy harvester Self propelled combine harvester 3/23/2014 9
  9. 9. 3/23/2014 1
  10. 10. 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
  11. 11. Source:www.ibef.org3/23/2014 11
  12. 12. 3/23/2014 12
  13. 13. 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
  14. 14. Tractor Industry in India 3/23/2014 14
  15. 15. 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
  16. 16. Market Information • Evolution of Market • Current Scenario & Trends • Market Growth Rate • Growth Drivers
  17. 17. 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)
  18. 18. Industry Tractor Industry- Sales Performance 3/23/2014 18 Source : CMIE Database , ICRA Estimates Trend in Yearly Tractor Sales Volume ( Domestic + Export)
  19. 19. 3/23/2014 19 Industry Tractor Industry- Sales Performance Trend in Monthly Tractor Sales Volumes (Domestic + Export) Source : CMIE Database , ICRA Estimates
  20. 20. Indian Tractor Industry-Region-wise Performance 3/23/2014 20 Source : CMIE Database , ICRA Estimates •Shift in Spotlight to Under-penetrated Markets
  21. 21. 3/23/2014 21 Indian Tractor Industry-Region-wise Performance Source : CMIE Database , ICRA Estimates
  22. 22. Indian Tractor Industry- HP-wise Performance 3/23/2014 22 •Sales to witness polarization towards high & low powered segments Source : CMIE Database , ICRA Estimates
  23. 23. Tractor Industry in India 3/23/2014 23 •Exports increase with addition of new destinations Trend in Tractor Exports from India Source : CMIE Database , ICRA Estimates
  24. 24. 3/23/2014 24 Tractor Industry in India-Competitive Landscape Source : CMIE Database , ICRA Estimates
  25. 25. 3/23/2014 25 Growth Drivers
  26. 26. Indian Tractor Industry- Growth Drivers 3/23/2014 26 Lower level of Tractor penetration –scope for further improvement Source: World Bank , Emkay Reseach
  27. 27. Tractor Industry in India 3/23/2014 27 Government support for agriculture and rural development: Indian Tractor Industry- Growth Drivers Trend in spend on Agriculture by GOI Source : CMIE Database , ICRA Estimates
  28. 28. 3/23/2014 28 Indian Tractor Industry- Growth Drivers 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)
  29. 29. Tractor Industry in India 3/23/2014 29 Indian Tractor Industry- Growth Drivers 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
  30. 30. Tractor Industry in India 3/23/2014 30 Indian Tractor Industry- Growth Drivers Increasing non-agricultural applications: Increasing use of tractors for haulage in infrastructure and construction projects
  31. 31. Tractor Industry in India 3/23/2014 31 Indian Tractor Industry- Growth Drivers 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
  32. 32. Market Players & Situation Analysis • Industry at a glance • Market size • Major Players and their share
  33. 33. Tractor Industry in India 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.
  34. 34. Tractor Industry in India - Major Players 3/23/2014 34
  35. 35. Tractor Industry in India 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.
  36. 36. Tractor Industry in India 3/23/2014 36 M & M TAFE Escorts ITL John Deere New Holland 22 17 22 21 44 40 Y-o-Y Growth(%)
  37. 37. 3/23/2014 37 Domestic & Foreign Collaborations of Tractor Manufacturers Price List of Different Categories Tractors
  38. 38. Tractor Industry in India 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
  39. 39. 3/23/2014 39

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