M&M to set up first tractor plant in decade in Mohali

Mahindra & Mahindra (M&M) is setting up a greenfield tractor plant in Mohali near Punjab.

Fueled by a strong domestic demand, the expansion is the first in a decade by the world’s largest tractor maker.

In 2012, the company had set up a facility at Zaheerabad in Telangana.

The demand for tractors in the world’s largest market has seen a sharp 44 per cent jump year-on-year in the first two months of 2022-23, after some moderation in growth in 2021-22.

M&M, which controls 40 per cent of the market, is leading the growth chart.

“We have grown faster than the industry in the last two months.

"To further our overall capacity, we are setting up a brand new greenfield plant in Punjab near Mohali.

"We are investing Rs 400-crore in this plant and the construction has been going on in full swing.

"We should be getting our first tractor out of this plant by the end of this year,” Hemant Sikka, president, tractor and farm equipment sector, M&M, told Business Standard.

The plant will be 35 kms from its existing unit of Swaraj Tractors.

In the first phase, it will have a capacity to make 30,000 tractors per annum.

Mahindra’s current tractor plants in Maharashtra, Gujarat, Haryana, and Telangana are running at 90 per cent capacity utilisation rate, leaving no room for further expansion, Sikka said.

While the new facility will only feed the domestic demand, the units in Zaheerabad and Nagpur will continue to address the export demand.

The move to invest in a new unit comes at a time when the company’s market share grew to 40 per cent in financial year 2021-22 (FY22) from 38.2 per cent YoY.

Its domestic sales for FY22 declined 2 per cent to 337,052 units in the same period.

M&M’s tractor sales for the first two months of FY23 increased 50 per cent to 73,558 units YoY.

A spike in minimum support prices of crops, the forecast of a good monsoon, and other positive indicators for the rural economy boosted the company’s tractor volumes in April and May much the same way it did for other manufacturers.

Sikka sounded confident of the road ahead for the tractor market in India.

He sees the company's newly launched models like the YUVO to see a 100 per cent growth YoY in the coming months.

He expects the tractor industry to end the financial year with a low single-digit growth.

The forecast may be revised upwards if the monsoon turns out to be good, he said.