Escorts Group's Escorts Agri Machinery, which stands a distant third in India's tractor market dominated by Mahindra, is aiming to become a top seller in the big tractor segment of 50 HP and above in three years, and thereby emerge as the most profitable player.
The growth strategy adopted by the company runs in contrast to that of the Mahindra group that had increased the volume play by launching a much smaller tractor of 15 HP capacity last year. “Our focus is not on numbers but to increase our market share in the big tractor segment, which is also expanding," S Sridhar, chief executive officer of Escorts Agri Machinery, said here on Wednesday. The company recently launched 60-65 HP premium tractors under the Farmtrac brand.
Escorts is eying a market share of 25 per cent (currently 10 per cent) that effectively gives a market leader position. The segment, Sridhar said, offered a gross profit margin 2-3 times over that of mid and small tractors, therefore the company's ambition to become the most profitable tractor player in the country was also attainable. The enhanced brand image would also come from the high-end products.
Escorts sold 63,000 units (from Oct 2011 to Sep 2012), with a 12 per cent share in the overall market of 525,000 units sold in the country annually. The big tractor segment has a 15 per cent market share of which Escorts sales account for just about 10 per cent.
Sridhar said unlike the personal transport industry where small cars are the order of the day, the Indian agriculture sector was moving from small and medium size tractors to bigger ones. “It has moved to the present 15 per cent from just 3 per cent a few years ago. Its share will further increase to 23 per cent in 6-7 years,” he said. This, according to him, is fueled by the informal consolidation of land holdings where only a few people cultivate larger areas as more and more people opt for alternative livelihoods.
Besides its focus on the big tractor segment, the company has newly-launched Powertrac models with 10 per cent more power and fuel efficiency in 37,41, 45 HP categories in the mid size. It claims the new range is aimed to beat the competition in its own game, according to Shenu Agarwal, head, marketing at Escorts.
The Rs 3,000 crore- Escorts Agri Machinery, which operates its Faridabad plant at two thirds of the capacity, is betting big on the Powertrac range to make inroads in the South. Escorts is also coming up with an alternative technology in place of cage wheels the farmers from coastal Andhra use for puddling of paddy fields. These are expected to give the company a break-through in the southern market.