Sales to outperform industry; no price hikes foreseen: M&M

Mahindra and Mahindra (M&M) is confident of posting higher tractor sales than industry standards of 6-8 percent going forward in FY14. A good monsoon and hopes of better agricultural output will also boost tractor sales ahead, he told CNBC-TV18, says Bhartendu Kapoor, vice-president- sales, (M&M).

In an interview to CNBC-TV18, he adds that as prices of tractors had been increased earlier, there is no plan to hike it in the near-term, Kapoor says. Also, input costs have been stable for some time now. Also read: M&M total auto sales fall 21%, tractors up 12% in July Below is the edited transcript of his interview to CNBC-TV18. Q: The sales have been good, but pace of growth is not that exhilarating. Can you give us some details of how was the July performance? How it will look going forward? A: I think we have done very well. We are happy with the pace of growth that has happened. For us, it has been around 14 percent in the month of July, and year-on-year basis we have grown by 23 percent. It is little better than the growth that has happened in the industry. Going forward, we are looking at that on an annualised basis 6-8 percent of growth should happen for the industry and we aspire to do better than that. Q: But it drops to as much as 6-8 percent, are you referring to the full year sales when you say 6-8 percent? A: No, when I am saying 6-8 percent, I am talking about the industry. Q: Yes, but are you giving an estimate for the full year? A: Full year yes. Q: Okay, so chances are if you are going to do better than the industry you would be at 10 percent? A: We are aspiring higher than the industry, now whether it is 8 percent or 10 percent that the time will tell. But, we are expecting more than the industry. _PAGEBREAK_ Q: But that does mean that this 23 percent is an unusually high number and it will be difficult to maintain this pace? A: It may not be 23 percent, it maybe little lesser than that, what we had till cumulative July, it maybe little lesser than that. Q: For how long will the good numbers on account of monsoon last for Mahindra and Mahindra (M&M) that we will see the strong double digit upmoves; will they continue for the next 2-3 months this monsoon effect? A: It is not only the monsoon impact, which is helping the industry to grow. Monsoon definitely brings in the positive sentiment, nothing has changed as of now on the ground as far as the industry is concerned, and it is a positive sentiment. But what brings in is the better cash flow subsequently, better outlook for the Kharif crop subsequently. So, cash flow is going to be good and not only that the reservoirs are almost full now and that will help even in the second crop wherever the farmers were taking only single crop they will take second crop or the third crop in the same area. Q: What about price hikes? Is there a case for some price hikes in the tractor industry and what is your expectation. How margins only for the tractor business will pan out? A: I would not like to talk about the margins. But as far as the prices are concerned, there has not been a material cost increase. So, we had taken a price increase in the month of April by about Rs 2,300, even in the month of July. We have taken a moderated increase for about Rs 1,500 on select models. We will be able to hold onto these prices given the scenario that is today, our expectation on the material cost increase. _PAGEBREAK_ Q: Do you expect to do much better on exports because of the rupee depreciation? A: Rupee depreciation will help us in realising better value. But, I will not be able to comment on the overall numbers for exports because that is not my domain.