Agricultural machinery market in india 2017 - Research On India

Agricultural Machinery Market – IndiaJuly 2017

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Agricultural Machinery Market in India 2017

Executive Summary

Market Overview

Drivers and Challenges

Government Initiatives

CompetitiveLandscape

• Globally, agricultural machinery market is projected to grow at a CAGR of ~x% to reach INR x bn by 2022 from INR x bn in 2015

• Indian agricultural machinery market is projected to grow at a CAGR of ~x% to reach INR x bn by 2022 from INR x bn in 2015

• Farm mechanization program in India aims to integrate the use of available human and animal farm power with mechanical sources of power for increasing the productivity

• Mahindra and Mahindra, Escorts, VST, and Force Motors are the major players in the agricultural machinery market in India

• The attractive subsidies given by the central and the state governments have also encouraged farmers to buy farm equipment

• Higher productivity and greater output are the two major factors driving farm mechanization

Drivers

• Improved Availability of Credit• Focusing on Productivity Through various Methods of

Mechanization • Low Penetration of Mechanization in India• Contract Farming

Challenges• Fragmentation of Land• High Cost of Agricultural Machines

Major Players

Escorts Ltd. Force Motors Ltd. Greaves Cotton Ltd. Mahindra and Mahindra Ltd.

Shivagrico Implements Ltd. VST Tillers Tractors Ltd. International Tractors Ltd. John Deere India Pvt. Ltd.

2

• National Mission on Agricultural Mechanization • Sub-Mission on Agricultural Mechanization• Agricultural Machinery Subsidy Scheme By Government of India• Tractor Subsidy Scheme By Government of India• Pradhan Mantri Krishi Sinchay Yojana• Implementation of GST

3

Socioeconomic Indicators

Market Overview

Market Influencers

Competitive Landscape

Recent Developments

Appendix

Trade Analysis

Market Trends



Socioeconomic Indicators

Total Population

4

Population Density

1,000

500

1,500

0

mn

2019 2020

X%

2010 201820172012 2013 2015 20162011 2014

0

100

200

300

400

500

2015 2016 2017 2018 2019 2020

X%

2010 2011 2013 20142012

Persons per sq. km


Market Definition & Structure

5

Market Definition • Agricultural machines refers to machineries that are used for the production of crops and agricultural livestock• Mechanization of farm indicates the use of machines for conducting agricultural operations by replacing the traditional methods which involve human and animal labor

xx

Heavy Engineering

xx xx xx

• xx

• xx

• xx

• xx


Key Facts – Agriculture Sector in India

6

• Farm power availability in India is estimated at x kw/ha

• x% of rural population is employed in agriculture and x% of households is dependent on it

• Agriculture and allied sectors contributes ~x% to GDP and x% of labour force

• Mechanization level in India is ~x%

xx

Present Scenario of Agriculture in India


Evolution of Agriculture in India

7

1950s: Stagnation in agriculture and low growth

xx

1960-’80: Pioneering work of agricultural scientists and efforts of farmers led to Green Revolution

xx

1980-2000: Expanding cereal production

Economic reforms introduced, which increased exports

xx

2000 onwards: 50% increase in seed subsidy

Additional financial assistance for horticulture crops

Schemes such as the Pradhan Mantri Krishi Sinchayee Yojanathat gives high priority to water security

xx

• In FY 1951, India produced ~50 mn tons of food grain which was not sufficient to meet the demand of the Indian population of 350 mn people This led to the import of food grains into India

• Agricultural land was characterized by low productivity with production of 580 kg/ha

• xx


Agriculture Employment Scenario

8

Particulars 1991 2001 2011 2020e 2050e

Country’s Population xx xx xx xx xx

Total Number of Workers xx xx xx xx xx

Workers’ Percentage of Population xx xx xx xx xx

Number of agricultural workers xx xx xx xx xx

Including: Cultivators xx xx xx xx xx

Including: Agricultural Laborers xx xx xx xx xx

Agricultural Workers’ percentage of Total Number of Workers

xx xx xx xx xx

Population Dynamics of Indian Agricultural Workers and Farm Labor Shortage


Types of Farming

9

Sl. No. Items Private Farming Co-operative Farming Contract Farming Corporate Farming

1 Ownership xx xx xx xx

2 Risk Sharing xx xx xx xx

3 Ease of credit xx xx xx xx

4 Capital xx xx xx xx

5 Farm-firm flow xx xx xx xx

6 Access to the market xx xx xx xx

7 Use of Technology xx xx xx xx

8 Role of the Government xx xx xx xx

9 Sustainability of the farming xx xx xx xx

Types of Farming – Overview


Agriculture Value Chain

10

Value Chain Analysis

Land Development, Tillage, Seed Bed Preparation

Sowing and

Planting

Weeding, Inter

Cultivation, Plant

Protection

Harvesting and

Threshing

Post Harvest and Agro

Processing

• Clearing jungles

• xx

• Sowing seeds at the required dept, distance and seed rate

• Weed control• xx

• To separate grain straw , tubers without much loss

• xx

• Cleaning • xx

Tractors, tractor-driven devices and tillers are the main products of the organized market

• Tractors

• xx

• Drill• xx

• Shovel/Plough• xx

• Harvester• xx

• Seed Extractor• xx

Ob

jec

tive

Eq

uip

me

nt


Mechanization Level

11

Level of Mechanization by Crop Across the Value Chain (FY 2014)

Crop Seedbed PreparationSowing / Planting /

TransplantingWeed and Pest Control Harvesting

Paddy xx xx xx xx

Wheat xx xx xx xx

Potato xx xx xx xx

Cotton xx xx xx xx

Maize xx xx xx xx

Gram xx xx xx xx

Sorghum xx xx xx xx

Millets xx xx xx xx

Oilseeds xx xx xx xx

Sunflower xx xx xx xx

Fodder Crop xx xx xx xx

Vegetable Crop xx xx xx < xx

Horticulture Crop xx xx xx < xx


Market Overview – Global

12

Agricultural Machinery Market Size & Growth Forecast

0

5,000

10,000

15,000

20,000

FY 2019e FY 2021e

+x%

FY 2022eFY 2020eFY 2018eFY 2017eFY 2015 FY 2016

INR bn

• Globally, agricultural machinery market is projected to grow at a CAGR of ~x% to reach INR x bn by 2022 from INR x bn in 2015

Increasing demand for farm tractors and harvesting machinery will boost the overall agricultural machinery market

xx

Current Market Scenario


Market Overview – India

13

Agricultural Machinery Market Size & Growth Forecast

0

200

400

600

800

INR bn

FY 2021eFY 2020eFY 2019e

+x%

FY 2018eFY 2017eFY 2016FY 2015 FY 2022e

• Indian agricultural machinery market is projected to grow at a CAGR of ~x% to reach INR x bn by 2022 from INR x bn in 2015

• Major farm machinery used in India includes tractors, threshers and power tillers, among others

xx



Market Overview – India (Contd.)

14

Tractor and Power Tiller Market in India (FY 2010 to FY 2014)

• A large portion of the farming population of the country falls in the small and marginal segment

The market for power tillers is mainly in eastern and southern parts of India due to the availability of small land holdings per farmer and high cultivation of rice

• xx


0

100

200

300

400

500

INR bn

+x%

FY 2013FY 2011FY 2010 FY 2014FY 2012

Tractor Market

0

2

4

6

8 +x%

FY 2010 FY 2013FY 2011 FY 2012

INR bn

FY 2014

Power Tiller Market


Market Overview – India (Contd.)

15

Thresher and Rotavator Market in India (FY 2010 to FY 2014)

• The thresher market in India is highly unorganized and is commanded by large number of small and medium scale enterprises, which are located in Punjab, Haryana, Uttar Pradesh, Bihar, Madhya Pradesh, Gujarat, Maharashtra, and Andhra Pradesh

Agricultural machinery has made significant inroads in northern states of Punjab, Haryana, and Uttar Pradesh

• xx


0

5

10

15

INR bn

+x%

FY 2013FY 2011FY 2010 FY 2014FY 20120

5

10

15

20

+x%

FY 2010 FY 2013FY 2011 FY 2012

INR bn

FY 2014

Thresher Market Rotavator Market


Market Segmentation – India

16

Agricultural usage

Non Agricultural usage

• Demand for tractors is derived from both agricultural and non agricultural activities• x% usage of tractors in India is used for non agricultural purposes such as in sand

mines, brick kilns, road making, passenger and others• xx

In Lakh Units FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 CAGR FY 2011 - 2014 CAGR FY 2014 - 2016

<30 HP xx xx xx xx xx xx xx% - xx%

31 – 40 HP xx xx xx xx xx xx xx% - xx%

41 – 50 HP xx xx xx xx xx xx xx% - xx%

>=50 HP xx xx xx xx xx xx xx% xx%

Total xx xx xx xx xx xx xx% - xx%

Growth of Tractors

Agricultural and Non Agricultural Usage of Tractors


Market Segmentation – India (Contd.)

17

Player-Wise Segmentation of 6 Major Players in the Tractor Industry (FY 2014 – FY 2016)

FY 2015 FY 2016FY 2014

• In domestic tractor market of <x HP segment, Mahindra and Mahindra is the market leader with ~x% market share in FY 2016

• VST’s market share has been increasing considerably year after year

xx

Mahindra and Mahindra Ltd. TAFE VSTEscorts International Tractors Ltd.Force Motors


Market Segmentation – India (Contd.)

18

Tractor Sales by Segment (FY 2011 and FY 2015)

FY 2015FY 2011

• Higher productivity and greater output are the two major factors driving farm mechanization

• The tractor industry in India has seen a strong volume growth in the last few years backed by strong domestic demand and initiation of exports

• xx

31-40 hp>50 hp 41-50 hp <30 hp


Geographic Segmentation

19

Gujarat West Bengal

Maharashtra

Madhya Pradesh

Uttar Pradesh

Punjab

Haryana

Key Agriculture States and Their Contributions

Assam

Karnataka

• Punjab and Haryana were the key states of Green Revolution

• xx

• xx

• xx

• xx

• xx

• xx

• xx

• xx


Geographic Segmentation (Contd.)

20

• The manufacturers of agriculture machinery in India comprises village artisans, tiny units, small scale industries to State Agro Industrial Development Corporations and organized tractor, engine and processing equipment industries

Village craftsmen and small scale industries fabricate traditional hand tools and bullock drawn carts

xx

Geographical Segmentation – Based on Availability of Agricultural Machinery Manufacturers

- Large Availability of Manufactures

- Medium Availability of Manufacturers

- Deficient Availability in Manufacturers


Geographic Segmentation (Contd.)

21

Segmentation – Based on Type of Manufacturers in India

• Diesel engines, electric motors, irrigation pumps, sprayers and dusters, land development machinery, tractors, power tillers, post harvest and processing machinery and dairy machinery are produced by medium scale and large scale industries

• Marketing of the agriculture machinery is done through their network of dealerships• xx

Organized Farm Machinery Industries

• Tiny and small scale industries provide improved agricultural machinery, such as ploughs, cultivators, disc ploughs and harrows, seed grills, planters, plant protection equipment, reaper harvesters, combine harvesters, threshers, cleaners, graders, mills, crushers, oil expellers, diesel engines, irrigation pumps, dairy machinery and others

• Small scale industries produce bulk of agriculture machinery• xx

Tiny and Small Scale Industries

• Village artisans are sources of supply, repair and maintenance of hand tools• These tools include spade, sickle, local ploughs, sowing devices, yokes, leveller, grinding wheels, hand mills, hand operated milk churning

tools, sieves, wooden storage structures, bullock carts, manual water lifting devices and others• xx

Village Level Craftsmen


PESTEL Analysis

22

Political

• The government policies regarding land, irrigation, marketing, trade and others have direct impact on agriculture• xx

Economic

• Agriculture contributes 17% to country’s Gross Value Added (GVA) xx

Social

• Efficiency in agriculture depends on the possession and size of land holding of farmers xx


Export – HS Code 8432

23

Export (Value)

0

2,000

4,000

6,000

INR mn

+x%

FY 2017FY 2016FY 2015FY 2014

Others

Bangladesh

Thailand

Myanmar

Sri Lanka

Algeria

USA

Algeria

Bangladesh

Myanmar

Nepal

USA

Sri Lanka

Others

Country-Wise Segmentation (Value-Wise)

FY 2016 FY 2017

HS Code 8432 refers to Agricultural, Horticultural / Forestry Machinery for Soil Preparation / Cultivation; Lawn / Sports – Ground Rollers


Trade Analysis

24

Farm Machinery Trade – Tractor Trade (Units)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Units

FY 2014FY 2013FY 2012FY 2011FY 2010FY 2009

• India is the largest tractor market in the world

• Not only does it produce tractors domestically but it also exports them to other countries

• xx

ImportExport


Market Drivers

25

Increase in Credit Flow for Farmers

• Credit acts as a catalyst to accelerate the development of the farm and non farm sector which includes rural industrialization, business and service sector of theeconomy

• Credit helps farmers to invest in creating assets which will further help to generate output and income through the use of modern science, technology andmodern methods of business management xx

Improved Availability of Credit

0

5,000

10,000

15,000

20,000

INR bn

+x%

11th Five Year Plan (2007-2012)

10th Five Year Plan (2002-2007)

9th Five Year Plan( 1997-2002)

Increase in Annual Average Disbursement

0

2,000

4,000

6,000

8,000

INR bn

FY 12

+x%

FY 11FY 10 FY 13


Market Challenges

26

• The overall land holding in India is fragmented

• In order to ensure livelihood security of marginal and small farmers, it is important to focus on technological needs and infrastructure

• xx

Fragmentation of Land

0

50

100

150

200

FY 2001 FY 2011FY 2006

mn ha

Area of Landholdings

Marginal Small LargeSemi-Medium Medium



27

National Mission on Agricultural Mechanization (NMAM)

• Establishment of farm machinery banks for custom hiring

• Establishment of hi-tech and high productive equipment centres

• xxOther Interventions

• It was introduced by Department of Agriculture, Cooperation and Farmers Welfare to restructure and categorize all Agriculture Development Schemes in the 12th plan

It aims at promotion and strengthening of agricultural mechanization through training, testing, and demonstration

xxObjective


Market Trends

28

Custom Hiring in Agriculture Machinery

• To provide various farm machinery to small and marginal farmers

• To offset the adverse economies of scale due to high cost of individual ownership

• xx

Objective

• Custom hiring is an evolving concept in India and holds immense potential to change the farm mechanization landscape of India

Custom hiring promotes establishment of agricultural machinery banks for hiring by way of providing financial assistance to self help group of farmers

xx

Definition

• Sub Mission on Agricultural Mechanization (SMAM) provides financial assistance to establish agricultural machinery banks for custom hiring for appropriate place and crops

It promotes mechanization in districts with low availability of farm power

xx

Farm Machinery

Banks

Agricultural Machinery Market in India 2017 29

List of Major Players

Name Website

Company 1

Company 2

Company 3

Company 4

Company 5

Company 6

Company 7

Company 8

Company 9

Company 10

Competition


Company Information

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Business Description

• xx

Public: Domestic Company – Company A

Products and Services

Category Products/Services

xx xx

xx xx

xx xx

xx xx

Key People

Name Designation

Person 1 Chief Executive Officer

Person 2 Chief Operating Officer

Person 3 Head – Operations

Person 4 Chief Marketing Officer


Key RatiosFinancial Snapshot

Key Financial Performance Indicators

Indicators Value

Market Capitalization (INR mn)

Total Enterprise Value (INR mn)

EPS (INR)

PE Ratio (Absolute)

Particulars 2013 2014 2015 2016

Profitability Ratios

Gross Margin %

Net Income Margin %

EBITDA Margin %

EBITA Margin %

EBIT Margin %

Return on Assets %

Return on Capital %

Return on Equity %

Return on Common Equity %

Liquidity Ratios

Current Ratio

Quick Ratio

Leverage Ratios

Total Debt/Equity

Total Debt/Capital

Interest Coverage

Efficiency Ratios

Total Asset Turnover

Fixed Asset Turnover

Accounts Receivable Turnover

Inventory Turnover

Net Profit / LossTotal Income

x

z

x

c

d

e

a

b

c

d

e

f0

y

FY 2016FY 2015FY 2014FY 2012

Public: Domestic Company – Company A (Contd.)


Key Business Segments Key Geographic Segments

0%

20%

40%

60%

80%

100%

FY 2015FY 2014FY 2013 FY 2016

Segment 3Segment 2Segment 1

0%

20%

40%

60%

80%

100%

2016FY 2015FY 2014FY 2013

Country 1 Country 2

Public: Domestic Company – Company A (Contd.)


Company Information

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Business Description

• xx

Private: Domestic Company – Company B

Products and Services

Category Products/Services

xx xx

xx xx

xx xx

xx xx

Key People

Name Designation

Person 1 Chief Executive Officer

Person 2 Chief Operating Officer

Person 3 Head – Operations

Person 4 Chief Marketing Officer


Recent Developments

34

Date Category Description Impact

Feb 22, 2017 Collaborations & Partnerships Low

Feb 01, 2017 Product Launch Low

Dec 19, 2016 Regulatory High

Dec 15, 2016 Regulatory Medium

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