Farm equipment maker VST Tillers & Tractors is gearing up for new growth opportunity created by Atmanirbhar Bharat Mission and is entering new product segments.
The Chinese import restrictions announced by the government in power tiller segments have opened up a contract manufacturing opportunity for ₹567-crore VST Tillers to supply to companies dependent on China till now.
“There is an import restriction that the government has put on power tillers and definitely we stand to gain first in the market supply. Also, we are in talks with a few manufacturers to supply contract manufactured power tillers to them,” Antony Cherukara, Chief Executive Officer, VST Tillers & Tractors said in a recent communication to investors.
The import restrictions are expected to create a 15-20 per cent gap in the market in the near term and several players that are completely dependent on Chinese imports are in talks with VST. It is in final stages of firming up its supply deals. The market size for power tillers in India is estimated at about 50,000 units a year.
VST is the market leader in the power tiller segment with a market share of about 46 per cent. It has a full-fledged manufacturing unit for power tillers with zero import content. Its factory is running at 62 per cent utilisation level now and has enough capacity to spare.
The company is also seeing an opportunity in the power-weeder segment, which has been seeing exponential growth. It has tied up with French company Pubert for producing and selling power weeders (8HP and below) in India. The price will be in the range of ₹40,000-70,000.
The market size for weeders has grown from 25,000 units to 110,000 units in the past three years. The volume is projected to grow to 300,000 in the next 3-4 years.
There are several importers in the market and there is hardly any domestic manufacturers for weeders. Companies bring CKD or SKD from China and other neighbouring countries, assemble and sell in India.
VST has already started seed marketing its power weeders. It plans to start with SKD manufacturing initially and achieve full-fledged manufacturing in a gradual manner.
“The ultimate aim is to manufacture in India. It will be a completely Atmanirbhar product,” said Cherukara.
VST has also tied-up with Zetor Tractor of Czech Republic for higher HP tractors. Partners are contemplating launching higher HP tractors both in India and international markets.
A new plant for higher HP tractors is being set up at Hosur, Tamil Nadu. With a capacity of about 30,000 tractors a year, this new unit is expected to be operations by Q4 this fiscal.
Meanwhile, with bullish sentiments in the farm sector, the company expects its tractors to grow 10-15 per cent during this fiscal, while power tillers are expected to grow in the range of 15-20 per cent.