For 18 months, tractor factories were working on a single or 1.5 shift basis at best because of demand slowdown. With numbers picking up, factories now are moving to two or three shifts to hit 100% capacity utilization. The capacity is currently 9.5 lakh units on a two shift basis, but we can also go to three shifts if the demand holds up. Read The Article
There are no indications about CAPEX; however, OEMs like Sonalika, Escorts, and Mahindra are increasing shifts and clearing supply chain snags to hit 100% utilization both for domestic and export markets. Rather than demand, OEMs face the issue due to the volatility in the supply chain because of COVID.
Further, the country has seen 6% higher Kharif sowing in the last season. Better storage in the major water reservoirs is seen as a boost for the upcoming rabi crop-sowing which began in mid-October. Hence, we will have a second consecutive bumper year for agriculture. Therefore, agriculture tractor production will see growth in the next two-three quarters. PSR
