Confident industry will grow at 15% on back of rains: M&M

Good monsoon this year has boosted confidence of everyone. Rajesh Jejurikar, Chief Executive- Tractor and Farm Mechanisation at Mahindra and Mahindra (M&M) is confident that industry will grow at 15 percent in FY17 versus 10 percent projected earlier.In an interview to CNBC-TV18's Sonia Shenoy, he said, "When we gave the first guidance and that time we were talking about 10 percent, we didn’t know what exactly was going to happen with the rains. As we have seen the monsoon set in and do well with a good spread across the country, we have confidence that the industry should grow at 15 percent right now".Jejurikar also expects M&M to do better than the industry, "We definitely won't grow at a rate lesser than the industry growth. Let us hope that we do better than the industry", he further mentioned.Below is the verbatim transcript of Rajesh Jejurikar's interview to Sonia Shenoy on CNBC-TV18.Q: What is your outlook on the industry's growth going ahead?A: When we gave the first guidance and that time we were talking about 10 percent, we didn’t know what exactly was going to happen with the rains. As we have seen the monsoon set in and do well with a good spread across the country, we have confidence that the industry should grow at 15 percent right now.Q: You spoke about 15 percent industry growth, so for Mahindra itself, can we look at maybe 200,000-250,000 by the end of FY17?A: For the tractor business in India -- we definitely won't grow at a rate lesser than the industry growth. So let us take that as given. Then let us hope that we do better than the industry.Q: So even if you take a conservative rate of 10 percent post that, that would be 270,000-280,000 by FY18, is that a reasonable estimate?A: I am sure you have a good ability to forecast. So we will let you stay with your projections. A lot will depend on what kind of cash flows come in post the harvesting and how much farmer prosperity moves along those lines.I am intentionally using the word farmer prosperity and not farmer income because farmer prosperity is a combination of what kind of price they get out of the produce that they make. It is not just how much they produce but what price they get for it.If the price is good, that is when they make money.Q: How are the prices right now?A: Minimum support prices (MSPs) have gone about 5-7 percent this year. So that is what it is now. We have to see what happens when the harvest come in.Q: How much is generally the lag time between the harvest coming in and farmer incomes growing?A: Two-three months after the harvest starts. So basically, November-December is when you will see how good the cash flow is.Q: So it is safe to assume that we will see better sales for the industry as a whole, as we enter into the fag end of the calendar year?A: This year, yes, we expect it. One is base effect, the second is the carryover out of what looks like a good season. So this year season looks good. The rains have been well spread and there is no reason to believe that sales won't be good this year and that is the reason we have upped our forecast for the industry to 15 percent.Watch accompanying videos for more...