With its factories running to the brim, Tractors and Farm Equipment Ltd. (TAFE), is now scrambling to expand capacity.
“We’re pretty tight [on capacity] with our factories running at over 100% and are now looking at significant capacity addition,” said Mallika Srinivasan, Chairman & CEO, adding, “We’re losing business because we’re full.”
The tractor major is in the process of increasing its production capacity by an additional 50,000 units spread across its Bengaluru and Bhopal plants which produce the Massey Ferguson and Eicher brands, respectively. It has planned to invest ₹250 crore in the current financial year for this purpose.
TAFE, flagship of the Chennai-based Amalgamations group, currently has capacity to churn out 1,58,000 tractors per annum.
In an interview with The Hindu here on Tuesday, Ms. Srinivasan spoke on a number of issues ranging from the status of the tractor industry, problem areas in the economy and the company’s efforts to provide an accelerated knowledge-sharing platform to improve the ecosystem around the farming community.
She said that the East was slowly emerging as the new hotspot for tractor sales. “Bihar, West Bengal, Jharkhand and Assam are top growing markets for tractors,’’ she said. These States were making significant strides in terms of infrastructure growth which was rubbing off on the tractor industry.
According to Ms. Srinivasan, the growth is being driven by factors beyond those related to agriculture per se, including easier availability of finance now. A number of development initiatives from the Centre and steps taken by the States were behind the rising demand for tractors, she added.
Exuding a sense of optimism on prospects for the tractor industry, the TAFE chairman said that most indicators on the agricultural front were good. In this context, she pointed to higher allocations to agriculture by both the Centre and States in their budgets. Between 2016-17 and 2018-19, allocations by 21 major States had risen 47% while the Centre’s had gone up by 9%.
Hails MSP
Welcoming the integrated focus of many a scheme announced by the Centre, she said the rise in MSP (minimum support price) “gives a good feel and set the right sentiment.’’ Nevertheless, she felt that the market prices were still lower than MSP. She was hopeful that the government would buy more farm products.
Ms. Srinivasan is confident that the tractor industry could see a 10%-12% growth in the current financial year.
