Production Schedules At Sonalika Did Not Witness A Significant Impact Due To The Outbreak Of COVID-19.
In a conversation with Siddharth Shankar from BWBusinessworld, Mr. Raman Mittal, Executive Director, Sonalika Group talks about the growth of the Tractor Industry during the lockdown, New Product Lines, Supply chain and production schedules, and the road ahead. Excerpts -
The tractor industry has been performing well despite the Covid-19 pandemic hitting the world economies hard. How has been your performance this year both in tractors as well as implements?
Sonalika is one of India’s leading tractor manufacturer and the No.1 Exports brand from India. We have been spearheading innovation in the Agri ecosystem with our widest tractor portfolio in 20-120 HP and 70+ implements to boost farm mechanization in the country. Our strategy is to offer customized farming solutions specific to the needs of the farmers as per their crop and geography therefore it is appreciated by over 11 lakh farmers across 130 countries.
Our tractor business has outperformed the industry growth month after month and clocked our highest ever H1 sales with 63,561 tractors (Recorded highest ever domestic growth of 80% in Aug & highest market share of 15.4% in June, highest ever monthly sale in Sept’20 with 17,704 tractors sales & 51.4% domestic growth during the pre-season time). Further, we created a historical milestone of delivering 19,000 Tractors in Oct’20, making it our highest ever retail at the beginning of the festive season.
Our Agro Solutions business clocked 26,530 implements sales in H1 and crossed our entire last year FY’20 implement sales in just six months. We registered a whopping 135% growth in September’20 to sell 6,400 units and outperformed industry growth of est. 30%. The volumes increased significantly to our record-breaking 10,018 implements sales in October’20.
With our strong Pan India and global presence, we are fully geared up to further strengthen our growth performance across tractors and implements in this festive season while continuing to surpass industry growth.
Can you throw some light on factors that have led to such phenomenal growth?
Monsoon plays a critical role along with the output of the crops. Current rabi production of pulses is estimated to be 15.11 MT as compared to 15.02 MT last season and an increase in Minimum Support Prices in the range of Rs. 50 – Rs. 1975 per quintal across 6 Rabi crops, has led to increased disposable income at farmer’s end. Rains have also made a surprising revisit in various parts of the country that has increased the reservoirs holding more water than almost 10 years on average. This has created a platform for healthy agriculture activities during the rest of this year.
As a company, our phenomenal growth rides the dominant strategy to introduce new tractors at regular intervals. Our tractors and implements have been very well accepted and appreciated for their technology and consistent performance and that is also reflected in our growth trajectory during the pandemic times. Our customized tractor portfolio range is well suited for various applications (Land preparation to Harvesting) and crops (Potato special, Orchard special, Paddy, Wheat, etc) across the length and breadth of the country as well as abroad and is driving our phenomenal growth.
What about the latest additions to your product portfolio. Has the pandemic changed the way you approach markets?
When the entire country was facing lockdown issues, we were well prepared to meet the needs of farmers with four new advanced tractor series. We had launched the Sikander series two years back that has been very well received by the farmers and now contributes 75-80% in sales within a span of 2 years of its launch. Our recently launched premium tractor series includes Sikandar DLX, the upgraded series of our flagship brand Sikander, for its 10 Deluxe Khoobiyan and a unique blend of style coupled with superior performance & comfort; Tiger series known for its European design and best-in-class performance; the customized tractors series viz Mahabali and Chattrapati that are designed to meet regional farming requirements in Telangana and Maharashtra respectively. Collectively, the four next-generation tractor models are expected to contribute close to 20-25% of our overall sales and thus contribute significantly to leading the farm mechanization drive in the country. We are the leaders in more than 50 HP segments and now are targeting to achieve a leadership position in more than 40HP segment as well.
Did you also face problems in production & supply schedules due to the lockdown?
Our world’s No.1 vertically integrated tractor manufacturing plant at Hoshiarpur, which is powered by robotics & automation, is also fully equipped to develop the majority of the components in-house, thus production schedules at Sonalika did not witness a significant impact due to the outbreak of Covid-19.
In fact, we had reached 80% utilization in the fourth week of May itself and currently operating at 100% levels in two shifts. External conducive factors clubbed with our healthy national brand presence, a well-organized supply chain, strong dealer network (1,100+), and depots (24), we are well-positioned to capitalize on the positive sentiments. Moreover, our entire supply chain in tech-enabled, thus we have a complete end to end supply chain management solution in-house. All our 24 depots spread across the states are inter-connected enabling us to keep a track of the tractor delivered on a real-time basis and we manage our production as per the consumption. This has helped us to maintain an optimum level of stocks across our depots and dealerships.
What is the current level of farm mechanization in the country? Has the pandemic triggered a phase of farm mechanization?
The global farm machinery market has reached a valuation of USD 200 billion in FY19 and is expected to grow at a CAGR of 9% till FY25. Today farm mechanization penetration in India stands at an average of 45% for the entire crop cycle (From seedbed preparation to Harvesting) and farmers are majorly oriented towards application-based farming like puddling, mulching, baler application, orchards, horticulture, etc, so there is a huge potential for increasing farm mechanization in the country.
Sonalika, as a farm mechanization expert, offers over 1000+ customized tractor models with a wide range of 70+ implements to address various stages of the crop cycle ranging from land preparation to post-harvesting operations. The range includes Full Cage Wheel for Puddling application in states like West Bengal, Madhya Pradesh & Andhra Pradesh; Potato Planter & Rotavator for wheat-growing states such as Punjab, Haryana, Uttar Pradesh; Sprayer for Orchard farming in Maharashtra.
Farm mechanization has been increasingly sought after in the country even from pre-pandemic times. Farmers have been continuously upgrading their techniques to enable them to increase the output from their respective farmlands. Moreover, the lockdowns due to the pandemic led to a huge movement of labor, thereby leading to labor shortage across regions and thus pushing demand for implements. I would say the pandemic has further fuelled Indian farmer’s progress towards farm mechanization.
Your viewpoint on the delay in implementing new BS IV/V non-road regulations for the tractor industry? What is happening at the plant level?
Sonalika Tractor is the no.1 Export brand from India with a presence in 130+ countries across the globe and has over 1.25 lakh customers in markets outside India. Sonalika is known for introducing the 120 HP tractors to global buyers and we were the pioneer to introduce world-class technologies like CRDi engines in tractors that comply with the stringent international norms. Since we have been exporting to various markets like Europe, where emissions norms are higher than the ones currently applicable in India, so we already carry the expertise of developing BS IV/V non-road regulation-compliant products.
As new emission norms will be based on sophisticated technologies, I feel the transition should happen in a phased manner. The time period will allow manufacturers to streamline their supply chains and also educate the mechanics and farmers about the newer technology, so as to empower them to handle minor problems. We would also have to educate customers about the overall benefits of new technology that will increase the cost of ownership by around 20% in the 50HP segment and above tractors, a segment that accounts for 13 to 15% of the industry sales.