I have studied this business and feel that one should give a serious thought on owning this business at the right valuation.
I had a few questions on the business and they are as below.
1) Why is the tiller market in India only 56000 units, in spite of tillers being introduced in India in the 1970’s. In Japan the market of tillers is 6 million units and in China it is 1.9 Million units.
2) Why is no body wanting to enter the tiller business, has it got any barriers to entry ? There are only 3 players in India. VST – 50% share, Kamco ( state government of Kerala) – 25% and Chinese imports 25%.
3) Why is the average price of a tiller Rs 130000, is it the engine that is expensive? otherwise tiller’s body and other parts should not cost that much.
4) 80% of land holdings in India are small, this should drive the tiller sales. Why is the tiller market in India growing at only 10-12%. Shouldn’t it be growing at a much faster rate given that land holdings in India are small and fragmented.
If I am not wrong seniors at VP had meet the management earlier and visited their hosur plant. If the seniors are looking at meeting the management again to conduct a Q&A I would like to contribute. In addition if any of members have spoken to end users, distributors or people related to the agriculture sector please post your findings.
Regards,
Chetan Chhabria
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