Changes needed in Agriculture Equipment Future Imperatives

Presented by – Rohtash Mal,President – Tractor Manufacturers Association, IndiaMember CII National Committee on Rural Development, IndiaED & CEO Escorts Ltd

1

2

“Emerging India”

A Fast Growing Market

India is set to become 3rd Largest Economy by 2014

1.0

3.5

6.08.9

GDP - 28 years of high growth

02468

10

1900-1950 1950-1980 1980-2002 2002-2009

1.0

2.2 2.11.8

1.5

0

0.5

1.0

1.5

2.0

2.5

1901-1950 1951-1980 1981-1990 1991-2000 2001-2010

(%)

(%)

Population growth is slowing Literacy is rising

17

5265

80

020406080

100

1950 1990 2000 2010 (proj)

(%)

GDP Ranking – PPP 4th, Nominal 11th

Agriculture growth draws highest attention from Government of India to take the overall GDP growth in double digit figure.

India has a Vibrant Private Space

– 100 Indian Companies have market cap of over US$ 1bn – 1,000 Indian Companies have received foreign

institutional investment– 125 Fortune 500 companies have R&D bases in India– 390 Fortune 500 companies have outsourced software

development to India– 2% bad loans in Indian banks– 80% credit goes to private sector

4

5

“Indian Agriculture”

Snap Shot and Potential

INDIAN AGRICULTURE STRENGTH

• Highest Arable Land - 47% of total land against Avg. 11 % in the world

• Round the Year Cultivation - 20 Agro-climatic regions and 46 Soil types suited for round the year cultivation

• Ranks first in production of Pulses, Tea, Jute and allied fibers

• Second largest producer of Wheat, Rice, Groundnut, Fruits and Vegetables, Sugarcane & Third largest producer of Mustard, Potatoes, Cotton lint, etc.

• 102.8 Million Farmers, over 7.5% owns > 4 ha. Avg farm land size <2 ha,

6

Bottom of the Pyramid country, Tractor HP category ranges from 25 HP to 65 HP. Majority falls between 35 – 45 HP category

Average Land Holding and Number of Farmers

Key Drivers for the AgriculturalEquipment Industry:

The Agricultural Equipment market is driven by several factors

7GOVT. INVESTING 244 Mil $ PER DAY IN RURAL DEVELOPMENT

Potential Exists in Improving Farm Power per Hectare

Source : World Bank

WestGermany

Italy

UKFrance

Poland

Korea

USATurkey

BrazilRussia

Pakistan

India

Despite India is Largest Tractor Producer HP / Ha is low.

Source: Sinocast China Business Daily, 01/04/2006

United States [2.4%, 95%]

Western Europe [3.9%, 95%]

Former Soviet Union[14.4%, 80%]

Brazil [14.8%, 75%]

Argentina [9.4%, 75%]

India [52%,30%]

China [64.9%, 38%]

Africa[60%, 20%]

( ) Figures indicate population engaged in Agriculture & level of farm mechanization

Agriculture: Engaged Population & Farm Mechanization

Huge Gap in Mechanization levels10

Mechanization Potential Across Ag Value Chain

Tillage& Seedbed

Preparation

Sowing/ Planting

Fertiliser Application Irrigation Harvesting Post

Harvesting

Inter Cultivation

Plant Protection

CropCycle

RiceHorticulture

Sugarcane Potato

Maize etc

GrainsHorticultureSugarcane PotatoMaize etcStraw/stalksForage

All Crops

All Crops

StorageTrash Management

MechanisationHigh Low

All Crops

All Crops

Crop Care

11

Huge Potential in Tillage and Seeding & Planting

12

Global Scenario Current Indian Practice

12Right size and price are imperative for leveraging the potential

Enormous Scope Exists in Plant Protection Mechanisation

13

Global Scenario Current Indian Practice

13Appropriate technology shall give the first mover advantage

Grain Harvesters in India are limited to few crops and Geography

Global Scenario Current Indian Practice

14Small but efficient harvester for all crops needed

Shortage in Farm Labour Pushing Mechanization in Harvesting Solutions

15

Global Scenario Current Indian Practice

15Sugarcane & Cotton harvesting is high priority Agenda

Vast Potential is opening up in Hay Forage and Trash Management

16

Global Scenario Current Indian Practice

16

Emerging market for Baler, Chopper and Silage equipment

Key To Success In Indian Market

Right sizing of technology &

Adoptability

17

Why Adaptability is so Paramount in Indian

Context?

Some case stories

18

Long HaulersUnilever (HLL)BAT (ITC)Suzuki Motor / Maruti

Recent StartersHyundai Motor LGSamsungGE

Localisation Is All Very WellBut these are the true road warriors

Some Success Stories

19

Success in India …what made it happen?

20

General MotorsFordKelloggPepsiCokeEnronElectroluxWhirlpoolReebok/Nike/Adidas

…….. and the list goes on.

“Failures”

21

Failures in India… why ?

22

Long haul market, ‘hang in there’ Not for the faint-hearted Under-investing as bad as over-investing Demands strategy complexity –folks and strokes

An amazing opportunity to Fail….. Or Succeed

What India means today-Rx

23

Build costs in tandem with revenues Needs international fundamental questions-not

solutions Exist on Earth and Mars concurrently in terms of

market and technology practices

An amazing opportunity to succeed …… ..…or to fail

What India means today-Rx

24

Sum up

• Indian Economy is growing on a sustainable model.

• Agriculture growth is a Top Priority Agenda with Indian Govt.

• Abundant potential in farm productivity and mechanization exist.

• Adoptability for Right size, technology and Price is key to success.

25

“ESCORTS GROUP”

Strive to propel change in the Indian Farming Landscape by

leveraging its expertise build over 50 years’ experience in India &

Global markets.

Escorts Businesses

27

Escorts Businesses Agri. Machinery Group

• Escort is a Technology Driven, Customer Focused Company with a world class Research and Development Center.

• Has global footprint spread across 20 countries

• Escorts is the first tractor manufacturer in the world which has been awarded TS 16949 Certification.

28

Thank You!

Jai Kisan

29