ICRA pegs tractor industry growth for FY22 at 1-4 pc

Ratings agency ICRA expects a 1-4 per cent Y-o-Y growth in domestic tractor volumes in FY2022 amid an evolving COVID-19 situation.

Even as uncertainty with regards to evolution of pandemic exists, the underlying demand drivers for the industry remain intact, the agency said in its latest report.

Expectations of healthy rabi cash flows, continuation of various Government support programmes, healthy financing availability and a normal monsoon forecast, are likely to aid farm sentiments, it said further.

In addition to strong agriculture demand, haulage demand has improved significantly over the past few months, led by continued push of the Government on developing rural infrastructure; the same is likely to support industry volumes, said the report.

Giving more insights, Mr. Rohan Kanwar Gupta, Vice-President, ICRA, said, “Aided by healthy cash-flows across regions and monsoon performance, the tractor industry had seen a strong surge in wholesale volumes since the relaxation of lockdowns in previous fiscal, helping the industry volumes register a growth of 27 pc. Rural sentiment, which had been a beacon of hope in the first wave of the pandemic, was expected to continue to remain buoyant.”

However, he said, “With the sudden and severe onset of the second wave of the pandemic, the growth momentum of the industry has been impeded to an extent. In addition to state lockdowns impacting dealership operations across regions, rural sentiments have also been impacted by the spread of infections into the hinterlands in the current wave. However, unlike other automotive segments, there were no major production shutdowns taken by OEMs for tractors. With lockdowns being relaxed across most regions in June, the industry’s wholesale and retail volumes are expected to witness a marked improvement from this month onwards.”

ICRA had a forecast of 4-6 pc growth in volumes for FY2022; in view of the impact of the second wave, the same have been revised downwards to 1-4 per cent.