India’s third largest tractor maker Escorts plans to develop a low-cost tractor to challenge Mahindra & Mahindra’s Yuvraj.

The company is mulling to build a sub 25 horsepower tractor to target small-time farmers that own less than 5 acres of land under cultivation. These farmers constitute 70% of India’s agriculture sector.

“We are deliberating (to build a low-cost tractor). All I can say is that an announcement in this regard is expected in the near future,” joint managing director Nikhil Nanda Escorts told Financial Chronicle. He declined to give any more details about the product.

The firm currently sells tractors in the 25-100 horsepower range and has a market share of 15%. Mahindra & Mahindra launched India’s lowest priced tractor, the 15 horsepower Yuvraj about two months ago at a price tag of Rs 175,000 (about $3,800).

On Monday, Escorts said its annual net profit rose 53% to Rs 137.5 crore. Net sales of the company grew 27% to Rs 2,745 crore. It sold 32% more tractors in the October-September financial year at 60,086 units.

“We are constantly aligning our products with emerging applications, to provide greater thrust for value-added farm mechanised solutions. The railway division is diversifying from the traditional rolling stock products to meet the emerging technology needs for faster trains and the dedicated freight corridor project. We are looking at green field projects in the auto component and railway space through technology alliances,” CMD Escorts Rajan Nanda said in a statement on the annual performance.

Besides, the company will start exploring newer overseas markets including Africa this financial year. “We are talking to two companies for starting an assembly unit in Africa. We are looking at augmenting retail sales in the neighbouring markets such as Bangladesh and Sri Lanka,” company joint managing director said.

The firm launched six tractors last financial year and Nanda said the company would continue to develop new tractors in future.