Millat Tractors

HISTORY OF MILLAT TRACTORS

Millat tractors Limited (MTL) was established in 1964, to introduce and market Massey Ferguson (MF) Tractors in Pakistan. An assembly plant was set up in 1967 to assemble tractors imported in semi- knocked down (SKD) condition.

In 1972, the company was nationalized under Economic Reforms Orders and renamed as “Millat Tractors Limited” MTL started assembling and marketing tractors on behalf of Pakistan Tractor Corporation( PTC) which was formed by the Government for import of tractors in CKD condition. In 1980 and entrusted this task to PTC.

In 1981, PTC transferred this role indigenization to MTL. This was the turning point in the company’s history and it went about the task methodically and rapidly. The company’s history and it went about the task methodically and rapidly. The company undertook this new role with enthusiasm and in the spirit of national development and proved its engineering capabilities by surpassing the deletion targets set by the Government.

In 1982, MTL took a giant step towards self-reliance by setting u the first engine assembly plant in Pakistan. The company made strategic decision right in the beginning to bring those manufacturing facilities in house for which capabilities did no exist in the country and for parts which required high investment and precision. Therefore, in 1984, sophisticated manufacturing facilities for the machining of intricate components were set up. These were previously not available in Pakistan. Currently, critical components like engine block, hydraulic lift cover, front axle support and center housing are being machined successfully in house at MTL from local sourced castings.

At MTL we firmly believe that producing of international quality standards is the key to our continued success and growth and the quality control department converts this belief into reality.

In 1992,the company was privatized, and the employees joined hands and took over its management by winning an open bid.

To maintain its leadership role in tractor manufacturing in the country, MTL continues to look towards future, to identify and exploit new opportunities and t consolidate the existing ones. The new tractor Assembly Plant is part of this philosophy. This plant started its production in 1992. The establishment of this modern plant not only increased production capacity to 16000 tractors per year on a single shift basic, but also provided a quantum jump to the quality of the assembled tractors and pushed MTL into ranks of the major tractor manufacturing companies of the world.

In 1993, MTL acquired the management control of Bolan Castings Limited (a public limited company specializing in intricate automotive casting), in partnership with employees of the company.

The Company looks to the future with optimism and plans to broaden its customer base. Consequently the opportunities are being explored in multiplication of engines and tractors in areas other than the farming sector. Mass production of generation sets was started in 1994, while a 3 ton forklift Truck branded as Millat, based on TCM technology, was launched in the year 2002. Both of these products are mad by using Perkins engines and have been well accepted by the market.

In 2002, MTL established a wholly owned company named Millat Industrial Products (Pvt) Limited to manufacture quality automotive batteries.

There is a constant endeavor at all levels of the organization to better the company’s performance by offering upgraded ranger of its products and services. Our technological collaboration with AGCO Limited UK, Perkins Engines Limited UK, and M/s Anhui Heli Co. Ltd. China, has been of great help in updating technology levels and introducing new models.

The company has been the regular recipient of the Corporate Excellence Award of Management Association of Pakistan and the top Companies Award o Karachi Stock Exchange since early eighties. MTL’s Annual report has been acknowledged as the Best Annual Report by the institute of Chartered Secretaries and Admin Association of Pakistan for several years.

The employees of the company, continue to work with full zeal and motivation to further improve performance standards. We are confident that the company will keep marching forward in service of the nation and the valued customers.

INTRODUCTION OF MILLAT TRACTORS LIMITED

Millat Tractors Limited (MTL), an over Pak. Rs. 5.5 billion company, is ISO 9002 certified for its operations has been a regular recipient of “Top Company” and “Management Excellence” awards. The leading engineering concern in the automobile sector. MTL manufactures a range of Massey Ferguson (MF) tractors under technical collaboration with AGCO of USA (Massey Ferguson Ltd. U.K.) and diesel engines with the caterpillar USA(Perkins engines, U.K.), Diesel generating sets only. Recently, an agreement for technical collaboration has also been signed with. Anhui Heli of peoples republic of china for manufacturing of forklift trucks.

The company founded in 1964, the company was acquired by its employees in 1992 with 51% share holding. subsequently, the company also acquired Bolan casting Limited, one of the largest foundries in the country. Over the years, the company is maintaining a wide field network spread all over the country. Its tractor dealers are 69,46 spare parts dealers and 312 lone shops.

So the company has spread its products throughout the length and breath of the country.

Today the population of MF tractor made by MTL exceeds 250000 while the total member of tractors in the company is approximately 500,000. Every second tractor in Pakistan is a MF tractor.

This achievement has been made possible only through the company’s commitment to quality, after sale service and its human remorse development.

MANAGEMENT HIERARCHY AT MTL

Organization Hierarchy

At MTL, there is centralized decision making process. Documentation procedure is formal e.g. in case of providing after sale service (warranty / replacement) for defective parts the procedure is as follows:

 Customer goes to dealer and tells the problem.

 Dealers replace the parts from his inventory and afterwards fills the claims form and takes the collective defective parts to the Millat Tractors Limited.

 MTL inspects the part and then either replaces part to the dealer or credits the balance to dealers accounts.

For the extra ordinary problem or defect the claim procedure is different and as follows:

 Customers go to dealer and tells the problem.

 Dealer sends a notice to the Millat Tractors Limited and then a team from MTL visits the tractor and then decides whether to improve the claim or not.

 If the claim is accepted then the part is sent to the dealer for replenishment.

DEPARTMENT AT MTL

In order to have maximum efficiency, Millat Tractors Limited functions are very structured. The division of work and labor is done in a very designed manner and all the work requirements have been distributed properly among the various departments.

Every department fulfill its own requirements and done its own work. There are following department on Millat Tractor Limited.

 Human resource development and training department (HRD)

 Marketing department

 Administration department

 Finance department

 Auditing department

 EDP (electric data processing) department

A hierarchy exists in each department and the functions of the department flow in that particular cadre, whether they are flowing from top to bottom or from bottom to top. Some departments have further sub-departments as well, like marketing is the biggest department of MTL, so it has 7-sub departments. Similarly, sub departments exist in administration department.

MANAGING EMPLOYEES AT MTL

Total number of employees are 1000, among them 185 are executives, workers are 815, engineers are 74, qualified accountants are 8 and MBAs are 16.

Once it hires employees, it does not fire them because of hiring cost and image will hurt. MTL hires employees on basis of following factors.

 Nature of job

 What skills required to satisfy the job requirements.

 What market is paying to them.

In order to motivate the employees they offer reward system just like production bonus scheme and profit sharing planes.

There is also promotion system at MTL. Employees are promoted on the basis of job duration. They are not promoted before 5 years. But if employees show extraordinary performance then 1st their performance is classified into 3-categoreis such as A category, B category and C category then special increment is there in their salaries.

MTL follows knowledge base approach. According to it, it trains and educates the employees via different training programmes. So, MTL initiates different in-house and outside the house training programmes. In house training programmes include, employees do the different job (especially marketing personnel) related courses from Lums and IBA.MTL also sends employees abroad, human resource department also conduct seminars regarding production department. Through these seminars labor force is trained to reduce the rejection rate and to successful implement the TQM system. At MTL annual functions and parties are arranged and employees are given annual and weakly leaves (2- leaves in a weak) in order to reduce their boredom and frustration level. free lunch is provided to them., Free of cost medical facility is also given to them.

PRODUCTION PLANT

There is only one production plant located in Lahore. Its working capacity70-120 tractors per day.

PRODUCT LINES

 MF 240 (50 hp) Tractor

 MF 260 Turbo (60 hp) Tractor

 MF 375E (75 hp) Tractor

 MF 385 (85 hp) Tractor

 MF 385 4WD (85 hp) Tractor

 Generating Sets (15-42 KVA)

 Prime Movers

 Forklift Trucks (3-Ton Capacity)

 A range of agriculture implements.

STRATEGIC BUSINESS UNIT

 Among the above mention product generating sets forklifters and prime movers are generating high profits. These products have less market share but have the more opportunity for market growth. So on the basis of these qualities we can categories as the problem child.

 Local manufacture of agricultural implements erodes its profitability in agricultural implement. These products have the low growth market and low market share so we consider these products as dogs.

 Tractors are consider to be as the stars on the basis of high market share and high market growth.

HIERARCHY OF STRATEGIC INTENT

Vision

“Millat to be global group of companies, recognized for a range of quality products with innovative design capabilities”.Mission Statement

“To be market leader in agricultural tractors and machinery building company’s image through innovation and compositeness, grow by investing into group of companies, ensuring satisfaction to customers and stakeholders and to fulfill social obligation”.

Proposed

Vision : vision of Millat Tractors should be:

1. “To improve and maintain the leadership position”

2. “Millat Tractors Limited is dedicated to provide quality innovative products with the best package of guaranty and warranty for its customers when ever they are”

3. “To make Millat Tractors as leaders all the way”

4. we can here to better serve our customers with the best quality and diversified range of products providing best after sale service as well.

Proposed Mission Statement

Mission Statement of Millat tractor should be:

“ To retain and improve Millat Tractor good will, profit ability and market leadership by manufacturing the quality Tractors and machinery and making human capital more committed, productive and efficient.”

GOALS AND OBJECTIVES

Goals

 “Establish dealer’s network all over Pakistan to ensure the availability of their products”.

 “To completely satisfy the customers”

 “Manufactures farm equipment and other engineering goods that conform to the specified standards to enhance farm mechanization for achieving self-sufficiency in against agricultural products, saving of foreign exchange and developing technical and engineering capabilities in the country”.

 “Ensure customer satisfaction by providing quality products at competitive prices with the warranty coverage and ensuring after sale service.”

 “Constantly endeavor to be market leader in terms of market share and technology pace-setters in area of operations and to continuously improve efficiency and competitive strength”.

OBJECTIVES

 “By continuously improving performance, aim to generate earnings sufficient to ensure a secure future for the company and to produce and increase shareholders return”.

 “To enhance creativity and job satisfaction, provide employees opportunity for personal development”.

 “A company went to exercise a 50%-55% sale in coming fiscal year.”

But according to Millat tractors these objective vary from year to year.

TARGET SETTING AT MILLAT TRACTOR

Millat tractor limited held monthly and annual based meetings to set the targets. There are different types of targets just like, production related, import related, supply related, quality maintenance, delivery, finance, manpower related targets. proper budget is allocated to achieve these target. There are some factors which considered at the time of setting targets.

 What is the current sale level and what it was in past?

 What is company’s current profit level and what it was in past?

 What is the company’s current growth and what it was?

 Business success and failure.

 How many complaints company receive and among these how much it accept.

 Also consider how much time and cost it will take?

There are two-way communication in order to set the targets. In this communication session two parties are involve. Top management and middle management . These targets are split in different targets and spread them to make these targets operationalize. Again monthly meetings are held in order to check the performance of the employees towards the achievement of these targets. There is incentive scheme to motivate the employees to achieve these targets. There are production bonuses and cash rewards.

CASH REWARD / PROFIT SHEARING PLANE

22% of the company’s profits are shared among the employees.

PRODUCTION BOUNCES

Production standards are set, i.e. 28000 tractors / annum. On meeting and exceeding these targets they are given production bonuses. In order to meet the sales targets, MTL also give the incentives to dealers but considering these tractors that factors are

 That past performance(Low, medium and high performers).

 Financial cost of incentives scheme

 What was the result/output of the last incentive scheme.

After that MTL do the cost benefit analysis. If the targets are not achieved then they held the brain storming session. In this session front line field officer (regional officers) give the monthly reports, share the problems with the market executives.

INTERNAL PROBLEMS ANALYZED AT MILLAT TRACTORS LIMITED

Millat Tractors Limited is not facing any problem regarding finance but following problems are identified at Millat Tractors Limited

 Product development

 Demand Management

o Weak in aggressive marketing.

o Unsatisfied delivery procedure.

o Lack of proper survey (Market research).

 Delay in tractor delivery.

 No team work.

 Totally centralized decision making.

 Time consuming producedure .

 No customer dealing department in real meaning.

PRODUCT DEVELOPMENT (OPERATIONAL LEVEL PROBLEM)

On the basis of 58% - 60% market share, Millat Tractors Limited consider itself as a market leader but in order to retain and improve its market share by prevailing in overall Pakistan. Tractors market instead of its current market (upper Punjab and upper Sindh) through changing phrase

“We better know what customer requires”. As

“What actually customer wants”.

Its true that Millat Tractors Limited is producing new products (generating sets, fork lift trucks and prime movers) and modifying its available products (Tractors)but t should modify tractors by introducing those features which customer requires and create a sustainable competitive advantage.

Now the question arise, why people in lower Punjab prefer 480 model (Fiat Tractors) rather than models introduce by Millat Tractors?

The answer of this question is that the farmers of these areas mostly use rota-wheater which do not work well with the 240hP Model of MTL. it efficiently work with the 480 hP of Al-Ghazi Tractors. So in order to capture this market MTL should introduce those models of tractor which efficiently work with the rota-wheater.

DEMAND MANAGEMENT

Weak In Aggressive Marketing

Marketing personnel have a view in their minds that when any customer comes to the market to buy tractors knowing already what they have to buy either Fiat or MF, so there is no need of marketing. They do not realize that changing the minds of the customers is essential in order to survive in a market. Due to poor marketing, lack of interaction with the customers and incompetent marketing personnel, Millat Tractors Limited could not penetrate in Bahawalpur and other markets of lower Punjab as well. Millat tractor limited is enjoying as a market leader but it should be noted that FIAT has been gaining a lot of market share for some years. So there should be change in the marketing strategies and efforts should be invested in marketing.

UNSATISFIED DELIVERY PROCEDURE

Millat tractors limited is more relationship oriented than customer oriented. It shows the biasness and discriminatory behavior with their customers. Company is following the policy to deliver the product to those customers who are higher in status e.g. if customer has placed and order month ago and when MPA places an order now then MPA’s order is given priority and the tractor is soled to him ignoring the customer who is already waiting for delivery. This should be noticed by top management and amendments should be make in policy.

LACK OF PROPER SURVEY

There is no proper procedure being followed by MTL to find out following types of problems:

 What type of problems organization is facing? What problems are being faced by clients. Whether clients needs are changing or not? What are the reasons, Millat tractors is not capturing the

market share in lower Punjab, lower Sindh and other areas. Even they are providing a better package of after sales service?

 What MTL competitors are doing?

So market research is a better solution for all these problems.

DELAY TRACTOR DELIVERY

Proper Delivery

There is another problem regarding long delivery period and availability of tractors to be sold to the clients. Clients always face difficulty in getting the tractors on time.

No Team Work

At Millat Tractors Limited people do not work in a team. Every one is working for their on self interest. The top management should create an atmosphere in order to change the attitude of the employees so that better result can be obtained.

Centralized Decision Making

Basically all the decisions are made by higher authority regarding all the procedures in the office e.g. purchase, sales, production etc. all the decisions regarding employees are taken by the top management and they are not allowed to participate in any decision. Most of the time first line employees know better than middle and top level management.

Time Consuming Procedure

Every procedure takes a lot of time to be completed if anything required in office e.g. even smallest purchase have been made it takes a hell of time to complete the purchasing process. Another example is that if the company requires smallest equipment for office it takes a lot of time to get anapproval from head office e.g. if a printer is required in office.

NO CUSTOMER DEALING DEPARTMENT IN REAL MEANING

There is no customer dealing department to deal with the customers face by face. Every client or a new customer to comes to the office for obtaining the information or for purchase of any MTL products has to meet the marketing personnel. The marketing personnel only focus on the job they are assigned.

PREMATURE LAUNCH OF 260 TURBO (60 HP) TRACTOR

Early and premature launch of 260 model has created the problem for Millat Tractors Limited. This model is not well appreciated by the market. This problem again indicate the flaws of marketing department and lack of marketing research. Through the proper market research they could launch this model at appropriate time so, Millat Tractor is thinking to launch this model with some modification.

CORPORATE LEVEL STRATEGY

If we go by the text, then corporate strategy answers the question that “in what business the company should be in”

DIVERSIFICATION

Millat Tractors Limited involve in diversified business that have already been listed.

FORMS OF DIVERSIFICATION

MTL using following three forms of diversification

1) Vertical diversification

2) Horizontal (related) diversification

3) Global diversification

VERTICAL DIVERSIFICATION

MTL is involve in backward integration by producing gear boxes and rex barren batteries. It not only consumes these parts itself but also sell these to other customers as well.

HORIZONTAL DIVERSIFICATION

MTL has expanded its business by horizontal diversification through producing agriculture implements generating sets, fork lift trucks, prime movers and automobiles (Army Jeeps) as well. Their intention is to invest in that business when the risk is low in the sense of less competitive business and also acquire those business which the Govt. has disinvested.

GLOBAL DIVERSIFICATION

At global level, Millat Tractors Limited exports its products in form of CkD (Completely knock down) components which its foreign customer requiresso that import cost can be reduced. MTL imports its products to Malaysia,Bangladesh, Srilanka, Afghanistan, Keynia, (200 Tractors), Middle East,Sudan, and Nigeria. But Al-Ghazi is not in this position to export their products.

MEANS OF DIVERSIFICATION

There are two sources which are used by MTL to diversify its business.

 Internal development

 Acquisition

INTERNAL DEVELOPMENT

Through internal development, Millat Tractors Limited has started producing the other products such as gear boxes, agricultural implements, generating sets, fork lift trucks, prime movers and automobiles(army jeeps).

ACQUISITION

Rex Barren batteries

Millat tractors limited, the producer of Massey Ferguson brand of tractors have acquired the assets of rex barren batteries limited for Rs. 13.55m, by making the highest bid at the auctioneers.

The assets of rex barren, located in Kasur included land measuring 16 kanals 18 marlas with the covered area of 22,750 sq.ft and machinery / equipment capable of producing 60,000 batteries of different sizes.

BOLAN CASTINGS

In 1993, the company in collaboration with the employees of Bolan Castings Limited acquired the management control of Bolan Castings Limited by purchasing 51% of the company shares offered by the Govt. as a part of process of privatization. The management control of BCL was taken over after successfully submitting the highest bid of Rs. 24.55 per share in open bidding. BCL provides major castings for automobile industry and also 50% of the company requirement are met from it. Since acquisition of control by MTL, BCL has also performed very well and has been a growth pattern.

BUSINESS LEVEL STRATEGY

Business level strategies determine how the company should compete in each of its business. These are specific to business.

Millat tractors limited consider itself as a market leader on the basis of its 58%-60% market share and quality products. Millat tractors main competitor is Al-Ghazi tractors limited. There is intense competition among them.

DIFFERENTIATION

Being a market leader, MTL differentiate its products by offering a best after sales service & warranty maintenance package. The warranty package is as follows.

 Under 1- year warranty or 1200 H of running whichever comes first, parts are replaced free of cost.

 It renders free services and provides free filter on tractors with the 30h/ traveling.

Other facilities provided by MTL but not by its competitors are as follows

 If the farmers have purchased tractors from Lahore it can be repaired from any work shop which are present allover Pakistan

 MTL dealers do not require identity card when customer came here to sell the product.

 For MTL initiates after sale service programmes such as free work shops, free repair and maintenance programme and doorstep programmes.

 MTL has training school for dealers, technical colleges and general people.

Here main source of promotion and marketing of their products is distinctive package of after sale service.

RECOMMENDED STRATEGIES

Company should acquire other related business as well in order to offset the risk. It should acquire those business where the competition in order to achieve the major portion of profitability and which has the potential for sale and growth.

MTL should also acquire the Govt. or Private agencies for consultancy to remove weaknesses and solve the problems.

Another way to reduce the problems and weakness is that it should do the strategic alliance with Al-Ghazi Tractors.

OPERATIONAL LEVEL STRATEGIES

TOTAL QUALITY MANAGEMENT

Among the 2-dominant strategies for the operation management i.e. CPR and TQM.

At MTL, TQM is used to improve and maintain the tractors quality. Here their basic purpose is to minimize the errors rate and make it zero level. So this is the only way to transfer best quality to the customer. There are quality control systems and quality control circles. There is a proper procedure to maintain and improve the quality from purchasing raw material to supply tractors to customers.

MTL believes on continuous improvement. Here the changes are revolutionary rather than evolutionary. So on the basis of these, they are using single looped learning model

COMPETITIVE ENVIRONMENT

Among the 5-forces of competitive environment, it gives more importance to rivalry among existing firms. There is intense competition among MTL and Al-Ghazi Tractors i.e. the thing which they want to avoid. On number 2nd, new entrant is also creating a threat for them.

MTL mostly uses a blend of offensive and defensive tactics. it uses proactive approach when it is going to launch a new model or after sale service. It uses a reactive Tactic when Al-Ghazi Tractors Limited take initiator of price was then in this situation, it also has to reduce little bit price and little bit consider the competitors pricing straregy.its competitors (AGTL) prices are lower because of 2-reason. First is , it is located in tax free zone and next it has been switched over fromItalic technology to Turkish technology which has reduced per unit cost. But Alghazi has also make the delivery procedure more prompt.

SWOT ANALYSIS

The swot analysis consist of analyzing the organizational strength and weaknesses, and its opportunities and threats which are related to external environment. it helps to identify a strategic niche that the organization might exploit. Here is a swot analysis of Millat Tractors Limited.

STRENGTH

Millat tractors limited is strong organization as for as its competitor is concerned. Basically the activities the firm does well or the resources it has or it controls are referred to as its strength.

Following are the strengths of MTL.

GOOD WILL / WELL ESTABLISHED IMAGE

MTL has an excellent goodwill in the market and in stock exchange.

MARKET SHARE

A market share of 58%-60% proves to be a demanding strength of the Millat Tractors Limited.

REPAIR FACILITY

MF tractors can be repair from any workshop located in any area ofPakistan. There is no specification, regarding repair maintenance of tractors such as if the customer has purchased tractor from Lahore, he can repair it from D.G. Khan or Mailsi workshop as well.

DELIVERY THROUGH DEALERS AND DIRECT CASH BASIS

MTL has strength over their competitors . it delivers tractors through dealers and direct cash basis delivery is also made. But Al-Ghazi tractor makes delivery just through dealers.

LICENSES AND TECHNOLOGY

Licenses and technology from Massey Ferguson, UK gives Millat Tractors limited an extra edge.

ISO 9002 CERTIFICATION

Another, solid strength of Millat Tractors Limited is ISO 9002 certification for its engine assembly, tractor assembly and laboratory.

AFTER SALE SERVICES

A good package of after sales service by Millat Tractor is another strength on its competitor and provide the customer satisfaction.

AVAILABILITY OF PARTS

Millat tractors parts are readily available all over Pakistan that is another strength.

NETWORK OF DEALERS AND WORKSHOPS

There are 69 tractor dealers, 46 spare parts dealers and 312 workshops all over Pakistan.

DIVERSIFICATION

Millat tractors limited has diversified its business by producing agricultural implements, generating sets, fork lifters, rex barren batteries and now working on the automobiles business as well.

EXPERIENCE

Another strength of MTL is that it has been established since 1964 so it has experience labor force.

PRICE EARNING RATIO

MTL enjoys a higher percentage in stock exchange due to higher price earning ratio.

WEAKNESSES

Weakness are the activities the firm does not do well or the resources it does not fully utilized or the resources it needs but does not have. Though Millat Tractors Limited in a successful organization but it has following weaknesses.

JOB STATICNESS

There is lack of job rotation in MTL which has created the staticness and reduce the productivity and efficiency of the employees.

INDISPENSABILITY

High market share another strength has mad Millat Tractors to think that they are leaders so they do not put its efforts to those areas which are weak and need its attention.

LONG DELIVERY PERIOD

As compare to its competitors delivery time period of tractors delivery is long.

DIVERSION OF CONCENTRATION

Due to diversified work at MTL, it might not able to fully concentrate on its primary operations.

NON SPECIALIZED PEOPLE AT FRONT DESKS

The marketing department has good workers but they are not good at public dealing and less interaction with the customers.

LONG PROCEDURES OF DECISION MAKING

There are long decision making procedure. Not quick decision are taken so these long procedures are time consuming.

OPPORTUNITIES

Opportunities are positive external environmental factors. They have following opportunities for Millat Tractors Limited.

Expansion In Automobiles, Implements, Fork Lifts Trucks And Generating Sets, REX barren batteries & Bolan casting.

Due to changing needs of country, MTL has the opportunity to make power machine along with manufacturing tractors and diversifying its business.

CROP HIGH YIELDS AND RATES

If the crop yield is high and the farmers are going to get good price for it so this wills increase the demand of the tractors.

E-COMMERCE

MTL can established B2B e-commerce application with its dealers, spare parts and workshops. This will help them to make true “MANAGEMENT INFORMATION SYSTEM”

THREATS

Threats are negative external environmental factors. The external factors, which can be prove negative for Millat Tractors are as following:

POLITICAL INSTABILITY

The major threats which is faced by MTL is the instable political environment. A policy being carried out by one government is changed by next coming up government. Such as “Awami Tractor Scheme” and “Green Tractors Loaning Scheme”. Every government shows biasness and make policies by considering their favorites.

STRONG LOCAL COMPETITION

MTL has face a very strong competition not only in tractors but in agriculture implements as well. In tractors the major competitor is Al-Gahzi Tractors Limited and in agricultural implements all the local manufacturers are its competitors .AGTL has achieved a major portion of the market share so rapidly by

reducing per unit cost of tractor by switching from Italy (FIAT) technology to Turkish technology (TUMOSAN) and by managing its delivery period.

Pest Analysis

POLITICAL

In 1979, Zia government imply the ordinance for the automobile industry. According to this ordinance the formers are indicated to produced all the imported items at local level. MTL acted upon this ordinance in 1981. Uptill now all the government policies are in favour of farmers. Banazeer Government had introduced Awami Tractor scheme and Nawaz Shareef Government had introduced Green Tractor Scheme. According to this schemes prices of the tractors declined. MTL also gave the sacrifice by reducing the profit margins and on the other hand government reduced the taxes but this reduction was not so much supportive.

[Safety and Environmental Protection]

The Company has a separate Horticulture Department to make the environment pleasant, green and full of flowers. The Company has been participating since many years in the Horticultural and flower competitions arranged by Government and other institutions. The Company again won best performance awards in different competitions. To promote healthy environment within the Company and its surroundings, a major Tree Plantation Campaign was undertaken and over 2500 trees were planted.

However, the Company remains fully committed towards the requirements for safety and environmental protection. All the operations are continuously monitored to meet the requisite standards in these areas. The Company's operations continued under safe operating conditions and the past excellent record in this respect was maintained during the year. The safety committee closely monitors all activities to create awareness and education for the adoption of best safety practices.

Social Responsibility and Community work

Compliance with the spirit of laws, timely payment of all govt. Taxes and dues. Obligations, the Company continued to promote various welfare schemes, organizations and charitable institutions. The Company provides financial assistance for promoting education, health and social activities to schools,

Hospitals and charitable trusts as and where requested by them. The Company has been sponsoring Golf Tournaments at the national level and musical activities etc.

Technology

The Company produced 14,652 tractors as against 15,370 units of last year reflecting a decrease of 5 %. The production was in line with the requirements of the Marketing Department.

As part of the Company's policy of providing appropriate products to meet customers' requirements, two new models i.e. MF-260 Turbo (60 HP) and low cost option of higher HP MF-375E (75 HP) have been introduced in addition to the existing models MF-240 (50 HP), MF-385 (85 HP) and MF-385 4 Wheels Drive. We are now well placed in the market by offering a wide range of products meeting all pocket needs. This also places us in a comfortable position to meet future WTO conditionalties. We are confident that our current products quality will place us in a good position to compete globally. Encouraged by this acceptability we plan to continue with the concept of offering products suited to the market needs to further enhance our existing tractor range.

Future Outlook

Pakistan' agricultural sector will remain stagnant unless we optimize our farm power level through extensive use of agriculture, machinery and tractors. The

Company feels that the tractor market would remain at the same level in 2002-2003 as in the current year. MTL will strive to maintain its market share and play a positive role aimed at boosting the agricultural sector.

The Company expects that the tractor industry will grow further due to restructuring of ADBP recently being taking place, formation of politic Government in October, 2002 and Afghan potential i.e. participation of Pakistan in the rehabilitation of Afghanistan.

Habib Bank Ltd. and The Bank of Punjab are already extending tractor loans and improving their share in the tractor industry which shall reduce dependence on ADBP

Suggestions

We gave following suggestions for Millat Tractor Ltd. By acting upon these MTlL will not only profitable itself but also play an important role in the development of the economy.

1. Marketing is called s back bone of an organization. a poor marketing of a good product can disaster results while good marketing of bad product can make me rich other rights. There is a lot of room of improvement present in the marketing development regarding marketing research to identify where the problem (what is the reason of sales decline) & which section of an organization is weak dealing with the customer in this regard special improvement in booking section is required. The best way at booking section. The problem is due to the job of persons at booking section. To show the problem course covering the topic how to deal with the different people should be organized.

2. They should change their thinking that they will always remain leader of tractor industry but they should understand that every business has to face the decline stage as well in order to remain at maturity, it is necessary they should capture those markets in which they still did not penetrate & The competitor analysis thoroughly.

3. Another area which demand attention is that of job rotation. Employees are not so much productive, motivated and efficient because of their routine job.

4. They also are allowed the operational level employee in decision making process especially when the decision are taken about the labour force because most of the time they better know about what is beneficial and suits to them.

5. The delivery time period at MTL is 21-days arrangement should be made to decrease the delivery time so that service level can be improved.

Rabiyya Fisso: 003903311680835