VST Tillers and Tractors limited

Monarch Tractors, the US-based company with which VST Tillers has a technical supplier partnership (& strategic investment), is set to commence commercial production this month. With the support from global majors CNH Industrial & Foxconn, if Monarch scales this up in a big way, a potentially promising opportunity for VST Tillers?

• CNH Industrial, one of the largest manufacturers of tractors globally, has recently entered into a multi-year licensing agreement for electrification technology with Monarch Tractors. Monarch is leveraging CNH Industrial’s sector expertise in product, brand, distribution, and supply chain strength and has started generating revenue through this licensing agreement (even before manufacturing their first tractor).

• Like VST Tillers, CNH also has a stake in Monarch Tractors. Further, CNH has shown clear intent to grow in India and are particularly looking at the product segments where VST has recently entered. Given the VST brand equity, distribution network and idle capacity, could it be an acquisition target for CNH Industrial?

• Foxconn will contract manufacture electric tractors for Monarch. They’re looking at high volumes – tens of thousands of tractors.

• President of Monarch Tractors, Mark Schwager, was the head of the Tesla Gigafactory.

• Manufacturing talent on the shopfloor: “There are 600 spectacular manufacturing professionals all with the GM (General Motors) automotive background.”

• Last month, Monarch delivered its first tractor to Constellation Brands, a Fortune 500 company. This will be followed by shipment to other large MNCs.

• In terms of pricing of Monarch Tractors, Founder Praveen Penmetsa says: “The new bill that has passed has support for electric farm equipment and our tractor qualifies. It’s going to make it very cost competitive, with the diesel tractors.” According to the company, Monarch Tractors have all the features of a regular tractor as well as being electric, driver optional, data driven. The shortage of farm labour in the US could benefit this company.