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Monsoon dearth seen hitting sales 10-15%
BS Corporate Bureau in New Delhi | July 19, 2004 10:43 IST
With monsoon not showing up over vast tracts of the country, sectors heavily dependent on the rural consumer are bracing for a 10-15 per cent dip in sales.
The consumer durables industry, where the rural markets contribute 40 per cent of the total revenues, fears that if the current monsoon pattern continues, sales may fall well short of this years target of 9 million CTVs.
"In the first six months of the year, CTV sales were 4.2 million. And with the festive season coming, we were expecting sales to be close to five million. But that looks unlikely," said an industry source.
Last year 8.5 million CTVs were sold.
In June alone this year CTV sales went down by 16 per cent to 5,00,000 units compared with the same period last year.
"We had estimated a growth rate of 15 per cent this year for the tractor industry but with delayed monsoon, it could go down to about 8-10 per cent. The second quarter could be particularly bad with delayed rains hitting the topline of various tractor manufacturers," R C Jain, group vice-chairman Eicher and president of Tractor Manufacturers Association, said.
TMA had estimated a sales of 225,000 units for the full year which could come down to about 200,000 units.
Eicher had sold 16,775 units in 2003-04 but if drought like situation persists in northern India, the total tractor sales could come by 3-4 per cent, he said.
Meanwhile, Escorts Tractors added that there could be sharp decline of 10 per cent with monsoon arriving late.
"Last year we sold 25,500 tractors (wholesale) and this year we have set higher targets but that could come down," Rakesh Chopra, business head (agri machinery), Escorts, said.
The two-wheeler industry, which benefited due to the good monsoons last year is also likely to be hit hard. But most companies said it was too early to take a pessimistic view.
Housing loan offtake may also see a decline with delay in monsoon. "It could be a repeat of what happened in Rajasthan two years ago when fresh projects were blocked due to drought like situations. If the monsoons are delayed this year, then the loan offtake could reduce by 10-15 per cent particularly in the rural areas. We may not an immediate impact but slowdown could be perceptible one year down the line," Renu Karnad, executive director, HDFC said.
V Sridar, managing director, National Housing Bank added that even with government sprucing up funds for rural housing, the disbursement levels could go down with indications of delayed monsoons which could take a toll on rural income.
"The total disbursement by various housing finance institutions were Rs 43,000 crore (Rs 430 billion), of which rural disbursement was Rs 6,450 crore (Rs 64.5 billion). There could be disturbing decline in the offtake of loans if rains are further delayed," he said.
However, the industry chambers like Confederation of Indian Industry and Federation of Indian Chambers of Commerce and Industry are putting up a brave front and said that it is too early to call it a monsoon failure in northern India.
"The corporates are still bullish on demand pick up in the other parts of the country which would dilute the adverse impact of delaying rains," CII official said.
On a dry run