In an interview with CNBC-TV18, Hemant Sikka, President-Farm Equipment Sector at Mahindra and Mahindra said that the correlation between El Nino and the tractor industry is not strong despite common beliefs.
He said, “The correlation between El Nino year and tractor industry growth is not very strong. In the last 25 years, there have been five cases of El Nino years and only in two cases out of these five years did we have a tractor industry degrowth which was in the years 2002 and 2015.”
Sikka even goes as far as to say that El Nino could be advantageous for the tractor industry, given its strong footing. He believes that the best time for El Nino to happen is now when the tractor industry is at its peak performance.
“In the years 2004 and 2009, which were again El Nino years, the tractor industry grew very well. So out of the five years that we have had in the last 25 years, the tractor industry degrowth was only in two years. So, whether the forecast for IMD stays like this or changes a little bit in the next couple of months, the point to be taken is that the correlation between tractor industry growth and El Nino is a weak correlation,” Sikka added.
Talking about the IMD monsoon forecast, Sikka said, “We are very happy that IMD has come up with a forecast of near normal monsoon. Normal monsoons characterize as the 50-year average, also happened in the last 50 years which is about 87 centimetres. So, it is expected that the monsoon will be between 96 percent and 104 percent of these 87 centimetres. So, if the monsoon is normal that would augur well for the industry.”
The India Meteorological Department (IMD) has forecast a normal monsoon this year. It said that there could be around 87 cm of rainfall during the four-month monsoon period, and it expects 96 percent of this during the season.
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