Auto and farm equipment manufacturers are making hay. The market is ready for new technologies and over the last couple of years, there’s been a flood of new products.
by jayashree kini mendes
Super-efficiency of products, mainly owing to self-steering systems, is driving the business for auto and farm machinery. Say what you might, but just like the food business, auto and farm equipment business will always see brisk business.
Over the last couple of decades, India has advanced much in terms of auto components and farm equipment manufacturing. In terms of auto components, according to a report by Automotive Component Manufacturers Association of India (ACMA), the Indian auto components industry is expected to register a turnover of $100 billion by 2020, backed by strong exports ranging between $80-100 billion by 2026, from the current $11.2 billion.
The farm equipment sector, which mainly comprises tractors and implements for farming, is set to grow moderately between 6-7% in FY19, given the high base attained in the current fiscal, predicts ICRA.
“The government remains committed towards rural development and agri-mechanisation, a critical component in improving the state of agriculture in the country, coupled with other factors such as increasing rural wages and scarcity of farm labour are likely to aid growth in industry volumes over the long term,” says said Anupama Arora, VP & sector head, corporate sector ratings, ICRA Ratings.
Global autonomous farm equipment market share is anticipated to exceed 7.5 million units by 2024. Shifting trends towards usage of advanced systems, precision farming, adaptation of GNSS system and IoT implementation will drive the business growth during the forecast timeframe. Usage of tractors, drones and harvesters offering superior productivity and reducing labor intensive work will further support the industry growth.
Additionally, factors like expectation of good monsoon, improved rural sentiments and investment in infrastructure are leading to strong demand in commercial vehicle (CV) and tractor segments. Finally, the pick up in exports is on the back of improving global climate.
technology inclined
There are reasons that attribute to the rapid growth of this industry. This includes suppliers’ ability to manufacture at scale, a buoyant end-user market, adequate liquidity, and improved consumer sentiment.
Mergers & acquisitions and industry tie-ups are also helping auto and farm equipment makers to scale up on capabilities. Recently, Brakes India with JV partner ZF announced the successful production of the first electric park brake (EPB) system with a global OEM, marking the first launch of its kind for the Indian market. Manfred Meyer, global VP, braking engineering, ZF, says, “We were the first to market globally with our EPB system in 2001 which pioneered in Lancia, Audi, VW and more recently on the BMW X4 and BMW i8, Jeep Renagade, Honda Accord, Nissan Qashqai, Range Rover Evoque and more. We have now produced more than 90 million units and are the world leaders in this technology. With our vast experience and global footprint, we are ideally positioned to bring the performance and safety benefits of EPB to all vehicles in all the regions.”
But there are companies that are bringing in their own indigenous technology into equipment. Greaves Cotton, a leading engineering company that makes a range of engines and heavy equipment, is growing its presence in farm equipment and implements business with offer of a complete range of solutions. The company has launched a new power tiller, developed using its own R&D capabilities, under the brand name ‘The Bahubali’. It is priced in the range of Rs₹1.56 lakh and Rs 1.76 lakh and powered by a new 14HP engine. Nagesh Basavanhalli, MD & CEO, Greaves Cotton, says, “The company has the capacity to produce 6,000-7,000 units of power tillers and 10,000 units of other farm equipment and implements. All these are made at the Ranipet factory. Our product range includes six types of power tillers, six types of rotavators, and two types of power weeders. Our objective is to position ourselves as a complete solutions provider.” The company has been strengthening its dedicated R&D facility and state-of-the-art large farm equipment factory in Ranipet. It has also set up a testing and validation facility inside the factory and will also create capabilities for real-world usage pattern tests across various terrains.
Another company that has set new benchmarks in technology and productivity is Mahindra & Mahindra. The auto and farm equipment maker has a range of farm equipment and has added to its kitty the Novo 65HP and 75HP tractors. The Novo range of tractors is offered in both 2WD and 4WD versions in open station design. Rajesh Jejurikar, president, farm equipment sector, Mahindra & Mahindra, says, “Mahindra Novo has been developed through extensive research and insighting with farmers across 12 states. The development of Mahindra Novo involved a seeding phase where tractors were tested for performance in 37 applications across eight states for a cumulative 25,000 hours.”
Similarly, Swaraj Tractors, a part of the Mahindra Group, has launched an all new tractor platform in the high power category, ranging from 60HP to 75HP. Tractors based on this platform will be introduced over a period of time, beginning with the launch of the Swaraj 963FE. The Swaraj 963 FE is best suited for a range of applications starting from land preparation to post harvest operations. It is highly compatible with rotary tillers, MB plough, TMCH, potato planter, dozers, balers, banana mulchers, etc. The Swaraj 963 FE will be available in both 2- and 4-wheel drive options, catering to the diverse requirements of its wide farmer base.
why r&d matters
A Japanese company, Terra Motors, too has been making waves in India. Established in April 2010, the idea was to help in improving the quality of air by producing electric vehicles in Asia. The company designs electric vehicles, specifically 2- and 3-wheelers. Speaking of some of the exhaustive manufacturing processes, Akihiro Ueda, MD, Terra Motors, says, “We follow the Japanese manufacturing practices such as SOP, QC tool, Poka yoke, Kanban, etc. Besides this, we also look at Genba Genbustu Genjitsu principle for plant job. At the shop-floor, tools such as zig, instrument, testing facility has been designed and made ourselves. It helps our quality control, productivity, and also reduced manufacturing asset cost.”
However, India’s manufacturing sector is still not operating at its true potential. Compared to China, India needs to boost its competitiveness for exports. So tie-ups and global expansions become necessary.
Chennai-based Tractors and Farm Equipment (TAFE), third largest tractor manufacturer by volume in the world, acquired the renowned Serbian tractor and agriculture equipment brand IMT – Industrija Masina i Traktora. IMT is a pioneer in farm mechanisation and tractor technology with a wide range of implements and tractors suitable for cultivating agricultural land, vineyards and orchards and used for infrastructure applications. The implements range includes ploughs, trailers, maize planters, seed drills, cultivators and loader forklifts. Well known for its indigenous R&D, IMT has in its portfolio a range of tractors between 35hp and 210hp. TAFE will support its local partner with supply of components and aggregates for the roll-out of IMT tractors in Serbia and allied markets.
Innovations are another policy that auto and farm equipment manufacturers deploy to gain traction. Tata Motors has consistently created new categories, bringing in the most advanced technologies, across passenger and commercial vehicles, putting innovations from Tata Motors on a global map. Its state-of-the-art R&D centres and design studios are located in Pune, South Korea, Italy and the UK, and work together to develop advanced technologies. It houses Asia’s first anechoic chamber, India’s first full vehicle crash test facility and India’s only full climate test facility. To further strengthen our leadership, Tata Motors has introduced a brand new next generation diesel engine family, TURBOTRONN.
Volkswagen India’s president & MD Dr Andreas Lauermann says, “My first instinct was to understand the people and their choices. India is one of the most competitive markets in the world. Unlike in other countries, the experience of selling a car here is different. A thorough market study is what one must do if you have to localise.” As of now, 80% of the content for three of Volkswagen cars is made in India. The company still imports the engines and transmissions, which are then assembled at the Chakan plant in Pune. The idea is to manufacture the powertrains at Pune which will then push the localisation to 90%. “Though we have a strong supplier base here, we have to weigh the additional parameters of choosing suppliers with capabilities of engineering so that they can develop a new product and also be a partner for the bigger systems. Since we also export cars from India, we have to consider the supplier base carefully for all our models,” he adds.
In the agricultural market, the growth in gross value added in FY18 is projected to moderate from previous years’ levels, partly on account of decline in crop yields, and an uneven monsoon precipitation. Despite this, the tractor industry’s volume growth has showed no signs of slowing down, with favourable crop cycles, on the back of two consecutive near normal monsoons, leading to an improvement in farm cash flows. Additionally, increased haulage demand from usage of tractors in construction activities, as investments in infrastructure creation picked up across country, coupled with various government’s support programmes, has supported demand to an extent.
While there continues to exist variations in growth across regions, a majority of the regions have recorded a moderate to healthy growth in volumes, helping the industry volumes touch a new peak (on pan-India basis) in the current fiscal. The government’s continued thrust on promoting rural development and farmer welfare in the Union Budget continues to augur well for the farm sector, with the budget laying significant emphasis on the government’s endeavour to double the farmers’ income by FY22.