Will hike price by 1.5-2% in Nov: Escorts Agri Machinery

Tractor maker Escorts Agri Machinery, which has a market share of 11 percent, will announce a price hike of 1.5-2 percent this month on the back of soaring price of accessories like tyres.

Sameer Tandon, Chief of Sales, Service & Spares, Escorts Agri Machinery told CNBC-TV18 that the company expects its volumes to grow by 12-13 percent in this festive season. However, its volume growth could taper down to 8-10 percent once festive season is over. The company sold 9,209 tractors in domestic market in October 2013, registering a growth of 25% against 7,371 tractors in October 2012. Its overall sales in October 2013 have grew by 24.5 percentage standing at 9,307 tractors as against of 7,475 tractors in October 2012. Exports for the month of October 2013 stood at 98 tractors as that of 104 tractors in October 2012. Escorts was up more than 6 percent up in morning trade today. The stock has touched a 52-week high of Rs 118. Also Read: Escorts Q4 net profit increases two fold at Rs 43.63 cr Below is the edited transcript of Sameer Tandon’s interview with CNBC-TV18 Q: Want to talk about the guidance that the management had set out earlier when we spoke to them, they said that the volume growth for the next couple of quarters will be about 13-14 percent given the kind of good monsoons that we are seeing. Any update post that or do you still stick to this 13-14 percent volume growth and what will it hinge on? A: The festive seasons usually bring out little higher growth and that is what we have seen in September and October. This growth shoulder taper down a bit as we move further, so we could all expect 12-13 percent growth. Q: Could you tell us where the current market share of the company stands at and how it has changed? A: We are around 11 percent market share in the country today. We have been doing very well in the northern markets. It has been a strong market and we continue to do very well. The southern markets have started recovering in last few months because of very good monsoon. We have improved our positions there as well and we should start seeing more gains as we go forward. Q: In the quarter gone by your margin performance has also improved to around 7 percent versus 5.5 percent earlier. Can you give us any kind of indication on whether there are any price increases that Escorts plans to take and what kind of margin run rate do you think the company could sustain in the quarters to come? A: We will maintain our profitability as the market has been showing good upward trends. There has been inflation in terms of lot of accessories like tyres, so we would go in for a price increase of may be 1.5-2 percent in November. Q: What will this price increase do to your margins? Currently it is hovering around 7 percent, can you at least in the next two-three quarters scale it up to 10 percent? A: The market has been bullish and we need to watch it still for sometime. The season will end as this month ends. At this point of time, we would go in for price increases to recover inflation only.