Mahindra to raise tractor prices by 1.5%

Farmequipment major Mahindra & Mahindra would raise tractor prices by 1.5% soonin the wake of spiralling input cost. Assertingthat the company has not been passing on the full impact of rising cost byabsorbing major portion of rise in cost, there was a need to pass on someportion of cost to consumers by raising rates of tractors. The material cost for the company had risen in the rangeof Rs 45,000 and Rs 50,000 per tractor in last two years. Mahindra and Mahindra raised tractor rates by Rs 5,500per unit in the month of June this year.

Industry's growth is expected to be about 13% incurrent fiscal, as compared to 20% in last fiscal, on account of rising lendingrates, less hike expected in Minimum Support Price of various crops andincrease in labour cost. During April tillAugust in current fiscal, tractor segment witnessed growth of 16.9%. But, thecompany does not expect this growth momentum to continue in second half ofcurrent fiscal. The tractor industry grew by 20% in 2010-11 and 30% in 2009-10while size of tractors was expected to be 5.35 lakh units in current year.The company is expecting to perform better thanthe industry's overall growth.