Expect double digit tractor sales growth in Q1FY17: M&M

In its monthly sales report the company saw a 34 percent rise in domestic tractor sales to 13,931 units and the management further expects the revival on the industry in FY17,which will help boost its business.Below is the verbatim transcript of Rajesh Jejurikar’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18. Latha: Your own tractor sales have grown by 19.8, actually 20 percent in March, Escorts has reported 27 percent. Should we read this as a turnaround in rural demand? A: Just a slight correction, our domestic sales have grown 34 percent, so that is the like to like comparison. So, some of it is base effect some of it is start of seeing a more positive sentiments. It is too early to say that but we are hoping to see more positivity in the April to June quarter. Sonia: When you say positivity what would the trend look like? I mean on a base of almost 14,000 units that you are selling in the month of March in the domestic market what could the upside be over the next three to four months? A: We don’t normally give guideline of our coming quarter sales, but we would expect a double digit growth hopefully to continue in the coming quarter for the industry. However, that may not be necessarily for the full year but we would expect a double digit growth coming in the coming quarter. Latha: What are your FY16 total domestic sales? A: For us we have ended the year with little over 2,00,000 and that has been a year of de-growth of course as you know. Latha: Of how much? I am just trying to get the kind of swing you can expect? A: The industry had a minus 10 percent odd growth for the full year and ours was lesser than that. So, we gained some market share. Sonia: Can you give us some qualitative details on what exactly has led to this growth in tractor sales. Is there a significant improvement that you are seeing in rural demand and geographically which pockets are you seeing a pickup in? A: It is little early to reach a conclusion that yes there is a significant pick up in rural demand. As you know some states did get affected by the off seasonal rains that happened last month in March which was the Punjab, Haryana belt and parts of Uttar Pradesh did have the off seasonal rains. However, overall I think the expectation is due to two factors one is the monsoon is expected to be good. The tractor industry has seen two years of de-growth and so there is likely to be some pent up demand. Then as rural spending actually starts going up which will probably happen from the start of April and May that is when you will see the effect of better cash coming into the market and the hope of monsoons coming in as well.