Escorts Tractor Company to Prosper with Good Rain.
Due to two years of drought there was amidst lower farm income, Escorts tractor-maker took efforts to plug gaps in its product portfolio. As this year's monsoon advances, this makes the company ready to take advantage of a turnaround in demand. Due to the government's initiatives to revive demand, its construction division is set to gain.
A capacity of 1 lakh tractors per annum has installed by Escorts, so by selling tractors it earns 80% revenue. On non-agricultural activities, around one-third of the income of a tractor owner depends. The company launched multi-purpose anti-lift tractors (ALTs) to deal with this requirement. These tractors now contribute 10% to total sales volume.
The company has started selling tractors that deliver higher power and those which deliver better mileage, separately to help customers identify tractors that suit their requirements.
Due to these initiatives, the company's market share in Financial Year 2016 inched up 1.2% year-on-year to 10.9% in the 30-45 HP segment, where growth rate is higher than the industry average. Analysts expect these steps will help the company to grow its volume with a compounded average of 14% between FY16 and FY18.
To improve profitability, Escorts plans to bring down the proportion of raw materials in sales from 72% in Financial Year 2015. The company will be among the direct beneficiaries of an above average monsoon.