Bhartendu Kapoor of Mahindra & Mahindra expects tractor sales to grow by 12-14 percent in FY14. He is also confident of maintaining the dominant market share.
Mahindra & Mahindra’s market share in the tractor segment has risen to 41.5 percent, says Bhartendu Kapoor, Mahindra & Mahindra. The good monsoon will also help to spur sales further, he says.
He expects to see 12-14 percent growth in tractor sales in FY14. In terms of volume growth, Kapoor says if the industry grows around 10-12 percent, it should grow at 12-14 percent.
Though the company has registered 37 percent sales growth in this month – a little better than the industry - he doesn't believe it is sustainable. However, he is confident of maintaining the dominant market share.
Below is the verbatim transcript of Bharatendu Kapoor's interview on CNBC-TV18
Q: This 33 percent sales growth that you have seen in this month, is it on par with the industry or have you gained some market share as well?
A: The growth is 37 percent just to give the correct figure in perspective. We believe it is a little better than the growth that has happened for the industry in the month of September.
Q: Where does the market share on the tractors side stand for Mahindra & Mahindra (M&M) and how has it changed in the last few months?
A: We are around 41.5 percent and in this year in the first half of the year we have gained close to about 0.8 percent market share.
Q: Your exports have dipped a fair bit. They have come down by 39 percent. Any particular reasons why exports have fallen in September? Is that an aberration? Will it correct going forward or is weakness in exports a trend that you expect will continue?
A: I will not be able to comment much on the export side, but let me give you a perspective on that. It largely appears to be a month's trend, because it depends upon the neighbouring countries and also the tractors that we export to Mahindra USA (MUSA). It appears to be a month which is good.
Q: You have seen healthy growth over the last couple of months. What is the FY14 target like now in terms of tractor sales?
A: I would not like to share the target with you, but we are looking at an annualised growth of around 12-14 percent.
Q: Will the festive season spill onto the month of October as well? Will this kind of run rate continue for the next one or two months? You have got a festive season plus monsoons as well have been fairly good?
A: That is right. People are trying to pick up the product during the festive season, but in tractor industry more than festive season it is the monsoons that you talk about. We have seen that on the onset of positive sentiments because of monsoons, the reservoirs are full, the kharif crop sowing is more than 1,000 lakh hectors which is almost 6 percent up vis-à-vis last year. The prices of the crops declared by the government are pretty good and on top of it there are host of financiers who are financing the tractors and funds are available to prospective buyers and that is also leading to growth.
Q: Can we see this 37 percent growth that you have seen in September continue in October as well?
A: The pace of growth may not be 37 percent. It may taper down as season ends. This is the beginning of the kharif seasons so it may continue for about one-one and half months, may not be at the same rate.
Q: You said 41.5 percent market share. Going forward can you eat up some more market share? Is there an internal target that you have in terms of achieving a market share?
A: We do not have an internal target on the market share. We should be dominating this industry with huge margin. So there is no market share target as such, but we have a volume growth target which we have set for ourselves.
Q: What would your volume growth target be for FY14?
A: If industry grows around 10-12 percent, our growth should be around 12-14 percent. It should be little better than the industry.
Q: On the inventory side how does the situation currently stand for M&M?
A: We are prepared for the season. It is quite okay on the dealers' side. There are healthy stocks, around 50 days kind of dealer stock which is considered to be very, very healthy stock and we do not see any supply constraints if demand continues.