Rs 400 Cr investment by Swaraj Tractors in Punjab to boost auto ancillaries, employment

Rs 400 Cr investment by Swaraj Tractors in Punjab to boost auto ancillaries, employment

The Rising Panjab Bureau

Home to major tractor manufacturers such as Swaraj Tractors (Mahindra & Mahindra), Sonalika and Preet, Punjab has a reason to cheer as Swaraj Tractors, part of the Mahindra group is setting up new Greenfield tractor manufacturing facility at Humayunpur (District Mohali) in Punjab with an investment of Rs 400 crore. The development assumes significance as the expansion is the first in a decade by the world’s largest tractor maker in Punjab. 

Since, the Tractor manufacturers are highly dependent on ancillaries’ especially small and medium enterprises (SMEs) for components, so the expansion of big players is bound to percolate down to SMEs entities in this trade. It would not only lead to spurt in economic activity but also employment in the state.

With the new announcement by Swaraj Tractors the total installed capacity in the state would cross over four lakh tractors per annum. The tractor maker plans to produce 30,000 tractors per annum initially which is likely to be fully operational by 2023  Mohali in Punjab is home to Swaraj for over four decades with two existing manufacturing plants. It was in 2007, Mahindra Group acquired Swaraj Division formerly known as Punjab Tractors Ltd.   

It is certain that the setting up new unit owing to robust demand for tractors would give fillip to ancillaries also as it boost their sales. To meet this demand, manufacturers may consider increasing the installed capacity as also improving technology by installing state-of-the art machinery. 

The demand for tractors is growing unabated, and all players – big and small, including ancillaries – have benefitted. According to insiders, owing to robust demand, ancillaries located in Punjab are aggressively investing in automation to improve quality and increase volumes. Enhancing technology helps SMEs to compete in the global market also, besides catering to the domestic market.

Most small and medium enterprises (SMEs) catering to such tractor companies as International Tractors Limited (ITL), Hoshiarpur and  Mahindra & Mahindra Swaraj Division, Mohali are planning to upgrade their operations to meet the increasing orders of their mother units.

The total tractor sales (wholesale) in the FY’22 stood at 8,42,266 units with a 6.35% degrowth over 8,99,411 units sold in FY’21. In the current fiscal year, the tractor industry is likely to clock low to mid-single-digit growth. 

According to the IMD, major regions across the country will receive normal to above normal rainfall in September, this augurs well for the farm sector, volumes of tractors, and other farm equipments. This coupled with the festive season demand will help recover sales in the remaining month of the year.

Also, the effect of the RBI interest rate hike will trickle down to several sectors of the economy. However, the rate hike by the RBI is hardly going to have any impact on the tractor demand, but it can falter due to the rising inflation.  

Insiders mentioned that due to robust demand, the company plans to reduce delays in the delivery of consignments by encouraging vendors to focus on a few products rather than dividing their energies on a variety of components