Normal monsoon expected to lift revenue of agri pump makers by 8-10 pc: Report


PTI | Mumbai | Updated: 22-09-2022 21:55 IST | Created: 22-09-2022 21:00 IST
Normal monsoon expected to lift revenue of agri pump makers by 8-10 pc: Report
Representative image Image Credit: Pixabay
  • Country:
  • India

Agricultural pumps manufacturers are likely to witness 8-10 per cent growth in revenue in 2022-23 amid increasing rural electrification and positive farm sentiment triggered by normal monsoon and improved cash flows after a healthy rabi (winter) crops, according to a report.

The Rs 5,000-crore sector is dominated by conventional pumps (grid-connected and diesel pumps), which account for 92 per cent share, followed by solar pumps (8 per cent), Crisil Ratings said in a report.

''This fiscal, the sector's growth of 8-10 per cent will be largely volume-driven because of positive farm sentiment, better farm cash flows, increasing rural electrification and stable pump prices. Last fiscal, despite volumes declining on year by 6 per cent, the sector's revenue grew 17 per cent largely due to a steep rise in realisation, in keeping with higher input prices (mainly pig iron and mild steel),'' Crisil Ratings' Senior Director Anuj Sethi said.

Thanks to better demand, conventional pumps are expected to grow 7-8 per cent this fiscal despite facing some headwinds, while solar pumps will see 15 per cent growth, propelled by government incentives, the report said.

Erratic power supply remained a key hurdle for conventional pumps, as it impacts seamless water supply and, therefore, farm output, said the report.

In addition, new and free grid connections for pumps are being curtailed, it noted.

Besides, the Goods and Services Tax (GST) on conventional pumps has increased to 18 per cent from 12 per cent in the first quarter of this fiscal, which has made them costlier, it said.

''Solar pumps, despite being substantially costlier than conventional ones, are expected to benefit from the central government's Kusum Scheme, which provides significant incentives. Under this, farmers need to pay only 10 per cent of the cost of the pump -- which is almost the same as that of a conventional pump -- upfront, while the government subsidy and bank loan (under priority lending) will contribute the balance in a 60:30 ratio, respectively,'' Crisil Ratings' Associate Director Rajeswari Karthigeyan said.

However, the pace of monsoon in the second half of this fiscal and geopolitical risks affecting raw material prices, especially pig iron and mild steel, will bear watching in the road ahead, the report added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Give Feedback