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Farmers’ demand for guaranteed MSP unlikely to have significant impact on tractor industry: M&M

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Mahindra & Mahindra Ltd on Wednesday said the ongoing farmers’ protest demanding a guaranteed Minimum Support Prices (MSP), among others, is unlikely to have any “significant impact” on tractor sales volumes. The company said the tractor industry is expected to see a 5 per cent volume decline this fiscal.

Earlier in the day, Mahindra & Mahindra reported a 34 per cent increase in consolidated Profit After Tax (PAT) to Rs 2,658 crore for the third quarter of this fiscal, driven by robust sales across verticals.

The company’s tractor sales during the quarter declined 4.1 per cent to 1.01 lakh units due to the previous year’s high base and a weaker monsoon, while the industry volume was down 4.9 per cent.

The company increased its tractor market share by 80 bps to 41.8 per cent in the December quarter even as the tractor industry contracted on the back of last year’s high base, weather vagaries, and lower reservoir levels.

“I don’t see the farmer protest having any significant impact on the (tractor) industry growth,” M&M Executive Director & CEO (Auto and Farm Sector) Rajesh Jejurikar said during the post-earnings media briefing here.

Farmers’ protest had happened last year in the Haryana-Punjab region, which has been one of the fastest growing states (in terms of tractor sales) this year, he said, adding that even in 2020-21 there was a protest. “This year we expect the tractor industry to be more negative than what we had thought, based on what we have seen in the last few months,” said Jejurikar. “So, we would expect the tractor industry to be at around – 5 per cent for the full fiscal,” he said.

For the March quarter, it would be more negative than that, around -10 per cent, he said.

Jejurikar said the real stress the industry has seen is Maharashtra downwards — Maharashtra, Andhra Pradesh, Telangana, and Karnataka markets.

“Two-three things are going to drive rural sentiment upward. One is the news of a good monsoon (which turns sentiment positive) and two the reservoir levels will hopefully come back to an average or a little bit better than that,” he added.

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