According to the rating firm, while uncertainty progresses to exist concerning the pandemic, the rural Agri synopsis that matters more for muscular tractor demand is supportive of growth.
|| Ria Syal
The domestic tractor market has rebounded solidly after primary setbacks due to the COVID-19 pandemic and the consequent lockdown measures; it spoke.
“We have revised growth estimates based on the favourable rural market conditions. However, one cannot tractor volumes plummeted significantly in March and April but have seen a strong recovery since the relaxation of lockdowns in May”, it added.
The agency announced there has been hardy growth in wholesale and retail sales overhead the past few months. It computed that the industry is supposed to have recorded a majestic around 72 percent growth in wholesale volumes and almost 27 percent jump in retail volumes on a y-o-y basis in August.
Overall, the tractor Industry has remained elastic to enforced lockdowns vis-a-vis other automotive shares, it announced.
ICRA Vice-President Shamsher Dewan said, “The strong revival in tractor volumes in August 2020 was aided by healthy rabi cash flows across regions and progress of monsoon (in line with forecasts).”
He replied that original equipment manufacturers (OEMs) have also been ramping up production levels to stock inventory forward of the festive season and are harnessing up for healthy sales for the rest of the year.
As per the report, healthy monsoon precipitation across regions to date, favourable Kharif crop outlook, aided by early sowing and seasonally eminent reservoir levels, among others, support tractor demand.
Besides satisfactory funding availability has also been supportive, it stated.
ICRA Assistant Vice-President Rohan Kanwar Gupta said, “We have revised growth estimates based on the favourable rural market conditions. However, one cannot rule out the downside risk emanating from spells of unfavourable rainfall and floods leading to crop damage and supply chain disruption.”
He added that based on the current circumstances, the credit outlook on the sector remains ‘Stable’.