Mumbai: After three decades, India's second-largest tractor maker is building capacity again. Tractors and Farm Equipment Ltd will set up its fifth plant in a north Indian state, its first greenfield in 29 years, as it doubles down on exports after a breakout year, with revenue up 25% to ₹16,000 crore.
“We will be setting up a north India facility with about 60,000 tractors capacity, with the location still being decided,” said Mallika Srinivasan, chairperson and managing director of TAFE.
The mother and daughter are not just looking at Indian farmers. “We're confident of growing internationally, and that's why we're putting in capacity. Capacity is now going to come up fast, because it's giving us very good confidence in terms of both domestic and export demand,” Mallika added.
TAFE, which has a production capacity of 260,000 tractors across its four manufacturing plants, expects its fifth manufacturing facility to come up within 18 months, and will spend up to ₹1,250 crore, according to an executive.
The four existing facilities include its flagship plant in Chennai (set up in 1961), sites in Doddaballapur near Bengaluru (1981) and Kalladipatti near Madurai (1997), and the Bhopal plant added through its acquisition of Eicher's tractor business in 2005.
Rajasthan is a key manufacturing hub for the group. Through its subsidiary TAFE Motors, the company has partnered with German engine maker DEUTZ AG to produce up to 30,000 diesel and internal combustion engines annually at its Alwar plant. Having sold 2,14,000 tractors last year, TAFE expects the new facility to further bolster its market footprint across north India.
Driver of growth
The fresh capacity push follows a stellar financial performance for the company over the past year. “Certainly, revenue saw a boost, and last year was one of our best years,” said Mallika. “We had 24.8% growth domestically. We sold about 214,000 tractors. That took the revenue closer to ₹16,000 crore, if you look at all our group entities together, including TAFE and its subsidiaries across the plastics division and engineering plastics, which supply to the automotive industry.”
“A few different things came together to make it so,” explained TAFE vice chair Lakshmi Venu, as both mother and daughter spoke with Mint in a rare media interview on Friday. “One, the monsoon was good last year. The second is the government's move on the GST rate for the industry, which gave it a good fillip. Some state governments also rolled out farmer-friendly actions. So, with that change in GST, the monsoon, and some farmer-friendly policies, it unlocked that aspiration. So, you saw a large number of first-time buyers stepping in, showing a preference for upgrading to a more premium product.”
To prove a point during her regular field visits with dealers and customers, Lakshmi Venu said she likes to demonstrate that she can drive a straight furrow in a 65-HP tractor—championing a vision where the future Indian farmer can just as easily be a woman managing the land on her own terms.
Market share gains
The company expects revenue to grow 10% this fiscal year. “The fears of El Niño causing a very serious issue, I think those have died down. June was the driest we saw. But it didn't look as bad. With July and August rains actually catching up, we're doing pretty well. So overall, if you ask me today, maybe a bit difficult to call, but with a slight softening of the growth rate because of the high base, buoyed by the structural parameters that are in favour, I think we could end the year (FY27) somewhere around 10%,” said Mallika.
TAFE—which held an 18% market share in the first nine months of FY26, behind M&M’s 44%—has gained ground in the 41-50 HP tractor segment, Crisil wrote in a note dated 2 February. From less than a 50% share of this most popular power segment in FY20, TAFE’s share expanded to 63% by the end of FY25, Crisil noted. New Delhi’s decision to reduce GST from 12% to 5% in September last year made these compact-built tractors more attractive for farming, haulage, and construction.
This growth momentum comes despite broader industry projections indicating a near-term moderation in demand. Rating agency Crisil wrote in a note dated 18 March that tractor sales growth is projected to slow to 0-2% this year to 1.2 million units, due to “normalisation of domestic demand after the high base of this fiscal and the emerging El Niño weather pattern”.
"Rural sentiment remains strong: Tractor demand remained healthy, supported by higher MSP (minimum support price), kharif sowing progression and improving monsoon deficit," analysts at BOB Capital Market, the investment banking and financial services arm of Bank of Baroda, wrote in a note dated 19 August.
Rivalry and ownership
For now, Mahindra and Mahindra remains the largest player, having sold 534,507 units last year. In February, M&M also announced plans to set up an auto and tractor manufacturing facility in Nagpur with an investment of ₹15,000 crore over 10 years.
“Today, India is one of the largest producers of tractors,” said Mallika. “While it's one of the most competitive, there is a certain camaraderie in building opportunities for the industry as a whole. I think some of us also go back a little bit with some personal relationships that have been there among promoters, among promoter families, and also the individual culture of the organisations,” she added.
Beyond operational expansion, TAFE has also undergone a major corporate restructuring. At the privately held TAFE, another major development was the cash purchase of a 20% stake held by AGCO—a US-based manufacturer of brands such as Massey Ferguson and Fendt—for about $260 million ( ₹2,300 crore). The deal makes TAFE a wholly owned subsidiary of the Chennai-based Amalgamations Group.
"We have had a long and successful partnership with AGCO; it has lasted for 65 years, and I believe this entire arrangement is a win-win situation. We are still [AGCO's] largest single shareholder," said Mallika. “That is the main reason for the transaction—you can't deal with it bit by bit; you have to consider the whole thing as a single package. That is all I would like to add about it.”
On Friday, the 16.3% stake held by Mallika and TAFE in AGCO was worth $1.3 billion.
Financial statements of TAFE, founded by Mallika's grandfather, S. Anantharamakrishnan, are not filed with the ministry of corporate affairs, so its profitability is unknown. Currently debt-free, the company has no plans to raise capital through an initial public offering.