Mumbai, Dec 24 (PTI) VST Tillers Tractors, the country's largest manufacturer of power tillers meeting nearly two-thirds of demand, is expecting to close this fiscal with a record topline of Rs 1,000 crore on better sales of its cash-cow tillers and rising demand for its compact tractors.
The Bengaluru-headquartered company, part of the VST Group, closed the pandemic-hit FY21 with a record revenue of Rs 764.24 crore (thus far the highest was Rs 677.7 crore in FY17), up from Rs 543.7 crore in FY19.
This was achieved as the lockdowns did not affect the farming sector as much as it did the industry and on the back of a very good monsoon.
"Our core business of power tillers and compact tractors, which is gaining huge traction now, should get us an overall 30 per cent topline growth over the past year when we closed with Rs 764 crore," Antony Cherukara, chief executive at VST Tillers Tractors, told PTI.
The company will be touching the Rs 1,000-crore revenue mark this fiscal year on the back of around 30 per cent growth for tillers, he added.
VST, promoted by VST Motors as a joint venture with Mitsubishi Heavy Industries of Japan, has been manufacturing and selling its flagship VST Shakti-branded tillers for the past five decades.
It operates two plants -- at Malur and Hosur near Bengaluru, and a precision components unit in Mysuru. Its range of farm products include power tillers (VST Shakti, and tractors VST Mitsubishi and VST Shakti), rice transplanters, rower reapers, rotary tillers, power weeders, brush cutters, and hedge trimmers.
While the company booked a net income of Rs 105 crore last fiscal, Cherukara did not offer a profit forecast for this year.
The firm expects the demand for its tractors to grow much above the industry growth, which is in low single -digits, he said, adding it is eyeing recouping the last two months of nearly no sales due to the excessive rains through the rest of the year.
From a quarterly perspective, the last two months were pretty low primarily due to two reasons -- the floods in the southern states and the impact of the higher MSP yet to translate into cash flow to farmers.
"But our power tiller business has been growing even during this period. It has grown even last month, though by a small percentage. We feel going forward, with the reservoirs being full and the cash flow expected to get better and reaching the farmers hands, this should result in higher growth for tractors," Cherukara said.
While power tillers get them over 55 per cent of the revenue, tractors and spare parts business accounts for the rest.
Expectation of higher revenue is also based on the 4-5 per cent price hike it announced recently to cushion the commodity price spiral of over 8 per cent, he said, adding the balance is absorbed via better cost management to protect margins which normally averages at 15 per cent.
It has an annual capacity of 60,000 power tillers (against industry demand of around 50,000 units per annum) after a Rs 250-crore capacity expansion two years ago. For tractors, its annual installed capacity is 40,000 units.
While VST is the undisputed leader in power tillers segment with around 63 per cent market share, when it comes to tractors it is only 10 per cent in compact tractors. The company is yet to make a mark in the higher powered tractors of 45 and 49 HP, which it entered just two years ago.
The company is planning to nearly double its exports revenue from 5-6 per cent now to 10 per cent over the next three-four years, as it sees a large market opportunity for its compact tractors in Europe, Cherukara said.
Its shipments to Europe are growing by over 200 per cent, of course from a low base and this year it will be exporting more than 1,000 tractors, marketed as Fieldtrac, to France, Germany, Spain, Portugal, Belgium, and the Netherlands.
From last year, the company is also exporting tillers to these markets but the numbers are very small, he added. PTI BEN ABM