M&M To Lift Up Tractor Rates By 1.5%

M&M To Lift Up Tractor Rates By 1.5%

Farm equipment giant Mahindra & Mahindra stated that it would lift up tractor rates by 1.5% shortly following spiraling input cost.

Mahindra & Mahindra Chief Executive, Tractor and Farm Mechanization Business, Bishwambhar Mishra stated, "We will raise price of our products (tractors) by 1.5% in a month or so."

Asserting that M&M has not been moving on the complete impact of increasing cost by absorbing big section of increase in cost, he said that there was now need to pass on some part of cost to users by lifting up tractor prices.

He signalized that only material cost for the company had gone up in the range of Rs 45,000 and Rs 50,000 per tractor during the past two years.

The company lifted tractor prices by Rs 5,500 per unit in June 2011.

When asked about prospect on tractor biz expansion, Mr. Mishra stated that the industry's expansion would be around 13% during the existing financial year, much lesser than what it was in 2010-11, owing to growing lending rates, less hike anticipated in Minimum Support Price of different crops and augmentation in labour cost.

"We think the growth of tractor's industry will remain 13% compared to 20% achieved in last fiscal," he said.

During April till August in current fiscal, tractor segment witnessed growth of 16.9%. "But we do not expect this growth momentum to continue in second half of current fiscal," he said.

The tractor industry grew by 20% in 2010-11 and 30% in 2009-10 while size of tractors was expected to be 5.35 lakh units in 2011.

When asked regarding M&M's growth projections, Mishra stated that the company would do better than the industry's total development.

At 02:48 p. m., the shares of the company dropped 0.7% to rule at Rs 777.50 in a weak Mumbai market.

The share price has seen a 52-week high of Rs 814.10 and a low of Rs 600 on BSE.

Current EPS & P/E ratio stood at 42.14 and 18.42 respectively.


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