Professional Documents
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The Major export markets for Indian tractor industry are USA and China (80% - USA).
Adequately penetrated in volume terms but under penetrated in Horse Power (HP) terms.
Expectation by 2010: Domestic sales - 350,000 units p.a. and Exports - 60,000 units p.a.
Credit availability, fuel costs and monsoons are the largest purchasing influencers.
The tractor markets of Karnataka, Maharashtra, Tamil Nadu, and Gujarat are growing
50%.
The share of high HP segment (>40 HP) tractors in the total sales (including exports) has
1945 to 1960
War surplus tractors and bulldozers were imported for land reclamation and cultivation in
mid 1940's. In 1947 central and state tractor organizations were set up to develop and promote
the supply and use of tractors in agriculture and up to 1960, the demand was met entirely
through imports. There were 8,500 tractors in use in 1951, 20,000 in 1955 and 37,000 by 1960.
1961 to 1970
Local production began in 1961 with five manufacturers producing a total of 880 units per
year. By 1965 this had increased to over 5000 units per year and the total in use had risen to
over 52,000. By 1970 annual production had exceeded 20,000 units with over 146,000 units
working in the country.
1971 to 1980
Six new manufacturers were established during this period although three companies
(Kirloskar Tractors, Harsha Tractors and Pittie Tractors) did not survive. Escorts Ltd. began
local manufacture of Ford tractors in 1971 in collaboration with Ford, UK and total production
climbed steadily to 33,000 in 1975 reaching 71,000 by 1980. Credit facilities for farmers
continued to improve and the tractor market expanded rapidly with the total in use passing the
half million mark by 1980.
1981 to 1990
A further five manufacturers began production during this period but only one of these
survived in the increasingly competitive market place. Annual production exceeded 75,000
units by 1985 and reached 140,000 in 1990 when the total in use was about 1.2 million. Then
India - a net importer up to the mid-seventies - became an exporter in the 1980s mainly to
countries in Africa.
1991 to 1997
Since 1992, it has not been necessary to obtain an industrial license for tractor
manufacture in India. By 1997 annual production exceeded 255,000 units and the national
tractor population had passed the two million mark. India now emerged as one of the world
leaders in wheeled tractor production.
1999 to Present
Facing market saturation in the traditional markets of the North West (Punjab, Haryana,
and eastern Uttar Pradesh) tractors sales began a slow and slight decline. By 2002 sales went
below 200,000. Manufacturers scrambled to push into eastern and southern India markets in an
attempt to reverse the decline, and began exploring the potential for overseas markets. Sales
remained in a slump, and added to the market saturation problems also came increased
problems of "prestige" loan defaults, where farmers who were not financially able took tractors
in moves to increase their families prestige. There is also reported increased misuse of these
loans for buying either lifestyle goods, or for social functions. Government and private banks
have both tightened their lending for this sector adding to the industry and farmers woes. By
2004 a slight uptick in sales once again due to stronger and national and to some extent
international markets. But by 2006 sales once again were down to 216,000 and now in 2007-08
have slid further to just over 200,000.
Eicher
In 1949, Eicher Good Earth was set up in India with technical collaboration with Gebr.
Eicher of Germany imported and sold about 1500 tractors in India. In April 24, 1959 Eicher
came out with the first locally assembled tractor from its Faridabad factory and in a period
from 1965-1974 became the first fully manufactured (100% indigenization) tractor in India. In
December, 1987 Eicher Tractors went public and in June, 2005 Eicher Motors Limited sold
Eicher Tractors & Engines to a subsidiary of TAFE called TAFE Motors and Tractors Limited.
Eicher also produced tractors under the Euro Power and Eicher Valtra brands under license
from Valtra, an AGCO brand.
HMT Tractors
HMT is a large public sector unit and began manufacturing Agricultural Tractors in 1972
under the HMT brand name with technology acquired from Zetor of the Czech Republic. It
manufactures its tractors in Pinjore, Mohali in a large factory that also manufactures machinetools, and Hyderabad It has a capacity of 20,000 tractors per annum. In the Machine-tool
company is a large foundry. It produces tractors in a range from 25 HP to 75 HP. For a short
time, HMT exported tractors to the USA under the Zebra brand, which were marketed by Zetor
distributors and dealers there. The company is controlled by the Ministry of Heavy industry
that provides, on a monthly basis to the public its financial performance.
John Deere
In 2000, John Deere set up production in a joint venture with Larsen and Toubro Ltd in
Sanaswadi, in a rural area near Pune, Maharashtra. It was known as L&T John Deere Private
Ltd, and manufactured tractors under the L&T - John Deere name for sale in India, and under
the John Deere name for worldwide sales.
In 2005, Deere & Company acquired nearly all the remaining shares in this joint venture.
The new enterprise is known as John Deere Equipment Private Limited. The factory currently
produces tractors in of 35, 40, 42, 47, 50, 55 and 70 HP capacities for domestic markets and for
export to the USA, Mexico, Turkey, North and South Africa, and South East Asia. Pune factory
started to produce new 55 to 75 Hp 5003 series tractors for European market in 2008.
New Holland
New Holland Ag's entry into India was facilitated by FIAT's acquisition of Ford-New
Holland in 1991. By 1998 New Holland Ag. (India) completed the construction of a new plant
in Noida, near New Delhi, with a capacity of 5000 tractors in the 35 - 75 hp range. In 1999,
New Holland Ag.'s parent company FIAT bought 70% of holdings of Case Corporation
and
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network and the major companies have carved out different segments and geographies to
operate in. With the opening up of the Indian market and the removal of restrictions on imports
coupled with stagnating mature markets, the threat of new entrants, though moderate, is more
than it was in the past.
The industry is reasonably attractive with low buyer and supplier power, low threat of
substitutes and only moderate threat of entry and substitutes. Going forward, it can be safely
assumed that industry has entered into a mature phase which will result in a slowdown in the
demand from 20% CAGR (2002-06) to 5-7% over the next five years. Sales will be
characterized by a greater number of repeat customers and high replacement sales.
A low capacity utilization of 60-70%, limited new product introductions, technological
breakthroughs, and stiff competition from international players will result in greater
consolidation.
A spurt in the demand for LP tractors by golf courses, hotel & airlines industry may force
companies to concentrate on aesthetics, noise reduction, and comfort aspects. Increasing
prosperity in the rural areas leading to more haulage needs and large scale bio-mass cultivation
can propel firms to design a multipurpose vehicle to take care of farming, transportation, and
alternate power source needs.
Another observation is that high capacity utilization leads to better operating margins in
this industry and companies like International Tractor Limited have proved this.
The product offerings by the major players are largely homogenous. This means that
differentiation is possible only through a diversified portfolio or provision of better services
like wider distribution network and financial tie ups with banks.
COMPANY PROFILE
Mahindra Gujarat Tractor Limited (MGTL) is a subsidiary of Mahindra and Mahindra (M
and M).The Company was earlier operating as Gujarat Tractor Corporation Limited, promoted
by the Govt of Gujarat (GoG) in 1978. Mahindra and Mahindra acquired a majority stake
(60%) in Gujarat Tractor Corporation Limited when it was privatized in end 1999. Since then
the Company is managed by M and M though the GoG still retains 40% equity in the
Company.
The Company manufactures powerful fuel efficient tractors in a range from 30HP to 60HP
marketed under the "Shaktimaan" brand. MGTL is an ISO 9001:2000 company.
Mahindra Gujarat Tractor, acquired by Mahindra & Mahindra from the Government of
Gujarat in 1999, is the oldest running tractor unit in India. The Mahindra Group has a 60%
stake and the balance (40%) is with the state Government of Gujarat. Originally founded in as
Gujarat Tractors Ltd, in the India state of Gujarat in 1963 in cooperation with Motokov-Praha
(Zetor) of Czechoslovakia, , the tractors were based on the Zetor tractor design. Today, the
tractors are sold under the Shaktimaan brand in the 30-60 hp range.
MAHINDRA GROUP
The US $6 billion Mahindra Group is among the top 10 industrial houses in India.
Mahindra & Mahindra is the only Indian company among the top three tractor manufacturers
in the world. Mahindras Farm Equipment Sector has recently won the Japan Quality Medal,
the only tractor company worldwide to be bestowed this honour. It also holds the distinction of
being the only tractor company worldwide to win the Deming Prize. Mahindra is the market
leader in multi-utility vehicles in India. It made a milestone entry into the passenger car
segment with Logan
The Group has a leading presence in key sectors of the Indian economy, including the
financial services, trade and logistics, automotive components, information technology, and
infrastructure development. With over 62 years of manufacturing experience, the Mahindra
Group has built a strong base in technology, engineering, marketing and distribution which are
key to its evolution as a customer-centric organization. The Group employs over 50,000 people
and has several state-of-the-art facilities in India and overseas.
The Mahindra Group has ambitious global aspirations and has a presence on five
continents. Mahindra products are today available on every continent except Antarctica. M&M
has one tractor manufacturing plant in China, three assembly plants in the United States and
one at Brisbane, Australia. It has made strategic acquisitions across the globe including Stokes
Forgings (UK), Jeco Holding AG (Germany) and Schoneweiss & Co GmbH (Germany). Its
global subsidiaries include Mahindra Europe Srl. based in Italy, Mahindra USA Inc. and
Mahindra South Africa.
M&M has entered into partnerships with international companies like Renault SA, France,
and International Truck and Engine Corporation, USA. Forbes has ranked the Mahindra Group
in its Top 200 list of the Worlds Most Reputable Companies and in the Top 10 list of Most
Reputable Indian companies. Mahindra has recently been honoured with the Bombay Chamber
Good Corporate Citizen Award for 2006-07.
OVER VIEW
Mahindra embarked on its journey in 1945 by assembling the Willys Jeep in India and is
now a US $7.1 billion Indian multinational. It employs over 1,00,000 people across the globe
and enjoys a leadership position in utility vehicles, tractors and information technology, with a
NAME
1.
DESIGNATION
2.
Director
4.
Director
5.
M. M. Murugappan
Director
6.
3.
Executive Director
8.
Narayanan Vaghul
Director
9.
Director
10.
R. K. Kulkarni
Director
11.
Director
Nominee of LIC
The Mahindra Group established Mahindra Agribusiness in 2000, with an equity stake
from International Finance Corporation (IFC, Washington). Mahindra Shubhlabh integrates the
agriculture and food chain from agri inputs right through to modern retail outlets. In 2008,
Mahindra Shubhlabh was Indias leading exporter of fresh grapes to the European Union.
The company's business is to establish fresh produce supply chains and directly engage in
the production & marketing of seed and seed potato. In addition, Mahindra Shubhlabh also
markets Crop Care products. Mahindra Shubhlabh engages with farmers in the production of
export quality grapes, pomegranates and apples aimed at delivery to domestic and overseas
markets including those in Europe, West and South Asia.
Within the Crop Care and Seeds area, Mahindra Shubhlabh has taken a direct initiative in
launching its brand of wheat, maize, sunflower and a range of vegetable seeds and agro
chemicals. In addition, the company has acquired land in Pune to set up a Research &
Development facility for seeds and saplings. Mahindra Shubhlabh is the first Indian corporate
to be awarded a EUREPGAP certificate as 'Primary Marketing Organization' for grapes. The
company is also GLOBALGAP & TNC Certified.
The company is working on a contract-farming model with farmers in Nashik and Sangli
in Maharashtra on table grapes (seedless Thomson variety for export) where it is intensively
involved with the growers, providing them with high quality agri inputs and expertise in
cultivation. Its core competency is pre and post harvest management and supply chain
solutions which ensure that the grapes are transported across continents in a controlled climate,
so that their garden freshness is retained till they hit mall shelves across Europe. The company
is also the only one in this business to map processes to ensure excellence in quality. Also,
Mahindra Agribusiness uses environmentally friendly pesticides approved by the World Health
Organisation during the course of cultivation.
Year 2005 was the first export season wherein Mahindra Agribusiness exported six
containers to Europe. In Year 2006, during the period from February to April, thirty containers
were exported - a five fold increase. The grapes fetched a premium of 10-15% due to their
superior quality on arrival.
The company has entered into an exclusive supply agreement with a prominent European
importer through which it supplies to huge retail chains in Europe. Besides grapes the company
is exploring exports of 15-16 containers of pomegranates to Europe in the current year.
Operations
During the year under review, your Company sold 2159 Tractors as compared to 2156
Tractors sold in the previous year.Further,during the year, your Company exported 384 tractors
as compared to 229 tractors in the previous year registering a significant growth of 67 % over
last year.
Even as the total volume virtually remained same, your Company achieved significant
improvement in its financial performance. The Profit before interest and tax for the year was
Rs. 4.53 Crores as compared to Rs 0.37 Crores in the previous year. The Profit
after tax for the year was Rs. 3.02 Crores as against loss after tax of Rs. 1.39 Crores in the
previous year. This was achieved by continuous focus on cost reduction across the organization
resulting in improved margins at operating level as well as Profit after tax level. In the course
of the year, your Company achieved a remarkable improvement in the product quality,
productivity and also implemented various low cost initiatives in all areas including
that of product awareness and branding.
In the current year, your Company plans to continue its focus on greater cost effectiveness
as well as enhancing volumes by further improving dealer network and also by focusing on
major
states in the domestic market. Similarly your Company plans to strengthen its presence in the
overseas market by offering value for money products.