M&M tractor woes – Swaraj Engines could face pressure

M&M tractor woes

Mahindra & Mahindra announced no-production days in its tractor plants at Rudrapur and Jaipur.

This is their statement to the exchange.

Mahindra & Mahindra Ltd has informed BSE that the Company, as part of aligning its production with sales requirements, would be observing No Production Days at the Company’s Tractor Plants located at Jaipur for five days and Rudrapur for two days during the period March 24, 2013 to March 31, 2013.

The Management does not envisage any adverse impact on availability of tractors in the market due to adequacy of tractor stocks to serve the market requirements.

This is what Business Standard says,

Mumbai-based market leader Mahindra & Mahindra with a share of 41 per cent in the domestic market led the fall in sales at 16,402 units, a drop of nine per cent in January as compared to 17,950 units sold in the same month last year.

Interestingly, as M&M is curtailing production at two plants, they have also inaugurated a tractor plant at Zaheerabad, Andhra Pradesh.

How is Swaraj Engines affected?

Swaraj Engines’ tractor engine output is sold to M&M. If M&M has reduced demand in the tractor market, Swaraj Engines will be affected in turn.

I had talked about a possible slowdown in M&M tractor sales in an earlier article which gave a Swaraj Engines stock update. You can also read a stock research note on Swaraj Engines.

 

Conclusion

I still feel that Swaraj Engines is a fine company with good financial parameters as I had also mentioned earlier. As it goes lower, it might give you attractive entry levels if you are a patient investor.

 

Recommended reading

M&M inaugurates new plant in Zaheerabad, Andhra Pradesh – Moneycontrol

Costly lending, drought to hit tractor demand – BS

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