Changes needed in Agriculture Equipment Future Imperatives Presented by – Rohtash Mal, President – Tractor Manufacturers Association, India Member CII National Committee on Rural Development, India ED & CEO Escorts Ltd
“ Emerging India” A Fast Growing Market
India is set to become 3 rd Largest Economy by 2014 (%) Population growth is slowing Literacy is rising GDP Ranking – PPP 4 th , Nominal 11 th Agriculture growth draws highest attention from Government of India to take the overall GDP growth in double digit figure. 1.0 3.5 6.0 8.9 GDP - 28 years of high growth 0 2 4 6 8 10 1900-1950 1950-1980 1980-2002 2002-2009 1.0 2.2 2.1 1.8 1.5 0 0.5 1.0 1.5 2.0 2.5 1901-1950 1951-1980 1981-1990 1991-2000 2001-2010 (%) 17 52 65 80 0 20 40 60 80 100 1950 1990 2000 2010 (proj) (%)
India has a Vibrant Private Space
100 Indian Companies have market cap of over US$ 1bn
1,000 Indian Companies have received foreign institutional investment
125 Fortune 500 companies have R&D bases in India
390 Fortune 500 companies have outsourced software development to India
2% bad loans in Indian banks
80% credit goes to private sector
“ Indian Agriculture” Snap Shot and Potential
INDIAN AGRICULTURE STRENGTH
Highest Arable Land - 47% of total land against Avg. 11 % in the world
Round the Year Cultivation - 20 Agro-climatic regions and 46 Soil types suited for round the year cultivation
Ranks first in production of Pulses, Tea, Jute and allied fibers
Second largest producer of Wheat, Rice, Groundnut, Fruits and Vegetables, Sugarcane & Third largest producer of Mustard, Potatoes, Cotton lint, etc.
102.8 Million Farmers, over 7.5% owns > 4 ha. Avg farm land size <2 ha,
Bottom of the Pyramid country, Tractor HP category ranges from 25 HP to 65 HP. Majority falls between 35 – 45 HP category Average Land Holding and Number of Farmers
Key Drivers for the Agricultural Equipment Industry: The Agricultural Equipment market is driven by several factors GOVT. INVESTING 244 Mil $ PER DAY IN RURAL DEVELOPMENT
Potential Exists in Improving Farm Power per Hectare Source : World Bank Despite India is Largest Tractor Producer HP / Ha is low. West Germany Italy UK France Poland Korea USA Turkey Brazil Russia Pakistan India
Credit Squeeze Credit Squeeze, Drought and Stock Correction Credit Squeeze & Drought CAGR 1974-79 : 15% 1980-85 : 1% 1986-91 : 13% 1992-97 : 11% 1998-03 : -9% 2004-09 : 10% Largest Tractor Market in World, Set to cross 500,000 tractors a year mark, Upsurge in demand to continue Indian Tractor Industry Trend
Source: Sinocast China Business Daily, 01/04/2006 United States [2.4%, 95%] Western Europe [3.9%, 95%] Former Soviet Union [14.4%, 80%] Argentina [9.4%, 75%] India [52%,30%] China [64.9%, 38%] Africa [60%, 20%] ( ) Figures indicate population engaged in Agriculture & level of farm mechanization Agriculture: Engaged Population & Farm Mechanization Huge Gap in Mechanization levels Brazil [14.8%, 75%]
Mechanization Potential Across Ag Value Chain Tillage& Seedbed Preparation Sowing/ Planting Fertiliser Application Irrigation Harvesting Post Harvesting Inter Cultivation Plant Protection Crop Cycle Rice Horticulture Sugarcane Potato Maize etc Grains Horticulture Sugarcane Potato Maize etc Straw/stalks Forage All Crops All Crops Storage Trash Management All Crops All Crops Crop Care Mechanisation High Low
Huge Potential in Tillage and Seeding & Planting Global Scenario Current Indian Practice Right size and price are imperative for leveraging the potential
Enormous Scope Exists in Plant Protection Mechanisation Global Scenario Current Indian Practice Appropriate technology shall give the first mover advantage
Grain Harvesters in India are limited to few crops and Geography Global Scenario Current Indian Practice Small but efficient harvester for all crops needed
Shortage in Farm Labour Pushing Mechanization in Harvesting Solutions Global Scenario Current Indian Practice Sugarcane & Cotton harvesting is high priority Agenda
Vast Potential is opening up in Hay Forage and Trash Management Global Scenario Current Indian Practice Emerging market for Baler, Chopper and Silage equipment
Key To Success In Indian Market Right sizing of technology & Adoptability
Why Adaptability is so Paramount in Indian Context? Some case stories
Suzuki Motor / Maruti
Some Success Stories Localisation Is All Very Well But these are the true road warriors
Success in India …what made it happen?
…… .. and the list goes on.
Failures in India… why ?
Long haul market, ‘hang in there’
Not for the faint-hearted
Under-investing as bad as over-investing
Demands strategy complexity –folks and strokes
What India means today-Rx An amazing opportunity to Fail….. Or Succeed
Build costs in tandem with revenues
Needs international fundamental questions-not solutions
Exist on Earth and Mars concurrently in terms of market and technology practices
What India means today-Rx An amazing opportunity to succeed …… ..…or to fail
Indian Economy is growing on a sustainable model.
Agriculture growth is a Top Priority Agenda with Indian Govt.
Abundant potential in farm productivity and mechanization exist.
Adoptability for Right size, technology and Price is key to success.
“ ESCORTS GROUP” Strive to propel change in the Indian Farming Landscape by leveraging its expertise build over 50 years’ experience in India & Global markets.
Escorts Businesses Agri. Machinery Group
Escort is a Technology Driven, Customer Focused Company with a world class Research and Development Center.
Has global footprint spread across 20 countries
Escorts is the first tractor manufacturer in the world which has been awarded TS 16949 Certification.