KARACHI: Alarming shortage of irrigation water this year has so far not affected the production and sales of tractors, with assemblers continuing their normal operations on back of brisk advance booking orders and robust sales.

“Water shortage is a big concern, however, its direct impact on our company’s production and sales is not measurable at this stage because there are many other variables which contribute towards our business performance,” CEO Al Ghazi Tractors Limited (AGTL), Shahid Hussain told Dawn on Monday.

There are reports of late sowing of crops, including cotton, due to water shortage. AGTL has planned major investment which include new assembly line for making advance range of models in the next two years, he said.

“We are making investments every year on balancing and modernisation. The current undertaking is on building up a state-of-the-art lab in the next two years at cost of Rs350 million,” he said. The new assembly line would boost production capacity to 30,000 units from 24,000 units last year besides creating direct jobs for 30-40 persons, Mr Shahid said.

Investments in agri technologies gathering momentum

To improve product quality at both incoming and assembly stages, a sophisticated lab is being set up at the plant to ensure receiving of quality components, he said.

Due to devaluation of the rupee against the dollar, AGTL had increased prices by two to three per cent in January 2018 while it is trying to absorb full impact of losing rupee value, he said. Mr Shahid said the tractor industry was hopeful that the 5pc GST would be abolished in Budget 2018-19 but this did not happen.

On arrival of imported tractors, he said, “These cannot compete with the price of locally produced tractors.”

AGTL provided 1,200-1,300 tractors under Sindh government’s tractor subsidy scheme last year. The company had produced 24,091 tractors in 2017 compared with 16,005 units in 2016. Tractors are also being exported to Afghanistan and some African countries

A leading Lahore-based tractor assembler said, “There is no immediate negative impact on our sales and production so far owing to shortage of irrigation water.” He claimed that the company has been witnessing record booking of farm machinery and this year would mark highest ever sales. “We have advance booking of two to three months,” he claimed.

He said water shortage maybe overcome in coming months with start of monsoon season and melting of ice.

Tractors are also being used in various China-Pakistan Economic Corridor infrastructure projects and in construction activities for haulage of various materials.

A leading tractor vendor and former Chairman Paapam Tariq Nazir told Dawn from Lahore that tractor assemblers have so far not intimated any cut in production of tractors and are procuring parts normally in view of better production and sales prospects this year as compared to last year.

According to BIPL Securities, tractors continued to post a growth of 27pc year-on-year (YoY) and 5pc month-on-month in April 18 amounting to 7,979 units on the back of improving farm economics, taking the 10MFY18 volumes to 60,239 units, up by 34pcYoY.

AGTL had renewed its Industrial Collaboration Agreement with CNHI to assemble and sell New Holland CNHI tractors. With the intention to contribute towards farmer community and for better crop yield, the company has brought in first of its kind New Holland Brand Combine Harvester into Pakistan for trial to contribute towards farmer community and better crop yield.

The company would explore in collaboration with CNH Industrial Italia the possibility of sale of imported New Holland Brand combine harvesters, balers and 95HP tractors.

Published in Dawn, May 16th, 2018