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Force Motors closes tractor units, prioritizing core segments amidst declining tractor sales, aiming for sustained growth and profitability.
Pune-based Force Motors announced on Friday its decision to halt operations of its agricultural tractors business and related activities by March 31. This move is part of the company's strategy to streamline its product offerings and concentrate on its core segments.
Force Motors stated that it will now concentrate mainly on its core segments, including Shared Mobility Transportation, Last Mile Mobility, goods, and transportation, manufacturing of High Technology Critical Aggregates for Premium Luxury OEMs, and creation of Special Vehicles for Civil and Defence applications. As a result, the decision has been made to exit the Tractor Business from the company's product portfolio.
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According to an exchange filing by Force Motors, the sale of agricultural tractors contributed Rs 182.53 crore to the company's total revenue for the financial year ended March 31, 2023, accounting for 3.66% of the total revenue. The netblock of assets for the tractor unit was recorded at Rs 12.29 crore as of March 31, 2023.
Force Motors, recognized for its multi-seater passenger vehicles and Gurkha SUV, also manufactures engines for luxury carmakers such as BMW and Mercedes in India. The company's FY23 annual report reveals that around 48% of its revenue comes from vehicle sales, while approximately 36% of revenue is generated from contract engine manufacturing.
The decision to cease the tractor business operations coincides with a period of significant pressure on tractor sales. Mahindra and Mahindra, India’s largest tractor maker, recently revised its forecast for domestic tractor sales for FY24 due to economic challenges in rural areas. Force Motor’s move to focus on its core segments reflects its adaptability to changing market dynamics and strategic repositioning in response to evolving consumer needs.
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Force Motor’s decision to discontinue its tractor unit operations reflects a strategic shift towards core segments amidst challenging market conditions. With a focus on efficiency and profitability, the company aims to navigate through the evolving landscape while maintaining its commitment to meeting customer demands and driving sustainable growth.