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Heavy monsoon rains give boost to Indian agriculture suppliers

By RJ Whitehead , 06-Sep-2016

© iStock
© iStock

Plentiful monsoons this year are behind an expected 15-45% surge in sales and profits for Indian agro-based businesses over the remainder of 2016. 

According to a report by Assocham, the apex industry body, good rains have prompted a rise in rural demand from companies involved in irrigation, farm equipment, seed developers and food processing businesses.

Firms such as Mahindra & Mahindra, Rallis India and Jain Irrigation will benefit immensely from a sizeable improvement in rural demand for farm inputs, the report said.

With the monsoon being the lifeline of the Indian economy, it is no surprise that good rains would bring good fortune not only to the companies engaged in the farm-related sectors but also the entire macro picture,” Assocham’s president, Sunil Kanoria, said at the launch of the paper.

Buoyed by a good monsoon, the number of tractors sold by Mahindra & Mahindra is expected to rise by 15% over the remainder of the fiscal year, the report found.

Other leading tractor and farm equipment firms, including Escorts and VST Tillers Tractors, are also expected to do well both in income and net earnings, it said.

Similarly, Tata Group subsidiary Rallis India is expected to see over 33% in improved sales during the monsoon months, while Coromandel International will be likely to report sales growth of almost 20%.

A positive monsoon for the year 2016 is projected to put the irrigation business in good shape. A growth of 17-18% is expected in the sales during the monsoon season as well as the lean season,” the report said.

Improved rains have come as a relief a year after the worst monsoon since 2009. Last year, the critical southwest monsoon ended with a rain shortfall of 14%, leading to fears of drought in at least a third of India’s growing areas.

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