Millat Tractors

Introduction

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

The company was nationalized under Economic Reforms Order in 1972 and started assembling tractors on behalf of Pakistan Tractor Corporation (PTC) which was formed by the Government for import of tractors in SKD condition. In 1980 the Government decided on indigenization of the tractors and entrusted this task to PTC.

PTC transferred this role of indigenization in 1981 to MTL. This was the turning point in 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 surprising the deletion targets set by the Government. Just in one year’s time, the company took a giant step towards self-reliance by setting up the first engine assembly plant in Pakistan.

The Company made a strategic decision right in the beginning to bring those manufacturing facilities in-house for which capabilities did not exist in the country and designed for parts which required high precision and investment. Therefore, in 1984, sophisticated manufacturing facilities for the machining of complex components were set up. These were previously not available in Pakistan. Currently, critical components like Engine Blocks, Sump, Transmission Case, Axle Housing, Hydraulic Lift Cover, Front Axle Support and Centre Housing are all being machined most successfully in-house at MTL from locally sourced castings.

At MTL, we firmly believe that producing to International quality standards is the key to our continued success and growth, and our quality control department converts this belief into reality. In 1992, the company was privatized. The employees joined hands and took over the management by winning an open bid.

To maintain its leadership role in tractor manufacturing in the country, MTL continues to look toward future, to identify and exploit new opportunities and to combine existing ones. The 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 basis, 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.

After successful takeover, MTL also acquired the management. The company has been the regular receiver of the Corporate Excellence Award of Management Association of Pakistan and the Top Companies Award of 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.

Achievements

1964: Company was established

1972: Company nationalized

1973: Licensing and transfer of technology agreement with MF, U.K.

1973: Licensing and transfer of technology agreement with Perkins, U.K.

1982: Installation of engine assembly plant.

1984: Installation of machining plant

1990: Perkins distributor agreement

1992: Installation on new tractors assembly plant

1993: Bolan castings limited buy out

1994: Mass production- Generating sets

1994: Millat equipment limited established

1998: ISO 9002 certification achieved

2000: licensing agreement-Heli Forklift trucks (China)

2002: Quality management system upgraded to ISO 9001:2000

2002: Millat industrial products limited established

Millat Group Vision

Millat is a global group of companies, recognized for a range of quality products with innovative design capabilities.

Mission Statement

Millat to be market leader in agricultural tractors and machinery, building Company’s image through innovation and competitiveness, grow by expanding market and investing into group companies, ensuring satisfaction to customers and stakeholders and to fulfill social obligations.

Structure of organization

The structure of MTL can be easily understood with the help of a diagram as given below

Chairman

Chairman is the person who works as a custodian in MTL. He observes all the activities of all the departments. He is accountable to the shareholders. And is managing the whole organization

Board of Directors

This board has 10 members in total one is chairman who is heading board each departmental head is present here along with two representatives of shareholders. This board gives chairman their opinion of various departmental and organizational matters

Chief Executive

Chief executive or C.E.O. manages all the departments except for Administration department. D.G.M. of Administration who is called D.G.M. (H.R.) is directly answering to chairman and board. C.E.O. is responsible for the working of organization as an entity in perfect manner and at its highest efficiency. He is also responsible of any kind of ethical and departmental issues that have a tendency to effect the organization.

Departmental Heads

5 departmental heads are answering to C.E.O. They are responsible for their respective departments and working there. They are assigned goals and tasks by C.E.O. which they fulfill by their team.

Managerial Heads

S.M. is managerial heads who are responsible for their own sections and group. Then they are commanding their Managers, who give work to Deputy Managers. And so on as described in the diagram.

Worker Staff

Worker staff comes with supervisors. They have a number of workers under them whom they dictate how to achieve the assigned goals. As this is an assembly organization, hence different parts which are coming from vendors or suppliers are assembled here. Each group of worker led by their respective supervisor is assigned a different work goal. They are answering the junior executives and so on.

Strategic planning

Is a process that involves describing the organizations destination assessing barriers that stand in the way of that destination and selecting approaches for moving toward goals? The main goal of strategic planning is to allocate resources in a way that provides organization with a competitive advantage.

Environmental analysis

Internal analysis

Organizational structure

The structure is good because they have effective communication and fast.

Organizational culture

Culture of MTL is encouraging for development and can communicate with Assistant manager and Manager. They can take part in development. They have right of innovation.

Size

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.

Politics

There are politics in organization also have a union. If some one working on heavy work t hey can go easier work by the commitment of supervisor.

Process

o Customer goes to dealer and tells the problem.

o Dealers replace the parts from his inventory and afterwards fill the claims form and take the collective defective parts to the Millat Tractors Limited.

o MTL inspects the part and then either replaces part to the dealer or credits the balance to dealer’s accounts.

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

o Customers go to dealer and tell the problem.

o 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.

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

External analysis

Economic:

The Millat tractor is affected by inflation due to this the spare parts prices increase, per unit cost increases. And heavy taxes affected the business of MTL, by this MTL has increase the price of per unit.

Political:

There is lot of effect of politically in our country. Every day there is change in tax law and also excises duty. Also MTL facing Zardari tax.MTL pays 15 thousand for each tractor.

Social:

Socially there is no any problem with the business of MTL. Every thing is going smoothly. MTL give funds for Hospitals and charitable trusts as and where requested by them. The Company has been sponsoring Golf Tournaments at the national level.

Technology:

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 conditional ties. 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.

Competitors:

MTL has faced a very strong competition not only in tractors but in agriculture implements as well. In tractors the major competitor is Al-Ghazi 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.

Customers:

Farmers are the biggest customer of tractors. Which they used in agriculture sector. Factories are also used tractor to take their laguage from one place to another place.

Suppliers:

Iran. England and china is the supplier of the parts by tractor. There are some local companies of Pakistan which are also providing spare parts of tractor.

SWOT Analyses

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.

Good Will / Well Established Image:

MTL has an excellent goodwill in the market and it is the oldest company of Pakistan.

Market Share:

A market share of 80%-85% 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 of Pakistan. 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 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 strength on its competitor and provides the customer satisfaction.

Availability of Parts:

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

Network of Dealers and Workshops:

There are 69 tractor dealers, 146 spare parts dealers and 412 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

Job stationary:

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

Long Delivery Period:

As compare to its competitor’s delivery time period of tractors delivery is long it takes 5 to 6 month to delivery.

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, no special advertisement.

Long Procedures of Decision Making:

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

Opportunities:

Expansion in Automobiles equipments, Fork Lifts Trucks and Generating sets of barring and batteries. Due to changing needs of country, MTL has the opportunity to make power machine along with manufacturing tractors and diversifying its business.

High yields of Crops and rates:

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

E-Commerce:

MTL can establish B2B e-commerce application with its dealers, spare parts and workshops. This will help them to make true “Management information system”

THREATS

Political Instability:

The major threat 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 makes policies by considering their favorites. Now a days there is zardari tax. The MTL per unit pays 1500 to zardari.

Strong Competition:

MTL has faced 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.

Organization’s Strategic plan

Strategic plan

Vision:

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

Mission:

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

Purpose Statement:

Purpose of the company to provide total satisfaction to the customers. The employees of the company ably supported by our engineers continue to work with full vigor to further enhance products, performance and reliability.

Goals and objectives:

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

ii. To completely satisfy the customers.

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

iv. Constantly attempt 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.

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

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

vii. 15% increase the sale in 2011.”

Strategies

After the making of goals and object they constantly compute is our sufficient goals are going too achieved? They constantly review.

i. Communicate constantly vision and mission and goals statements.

ii. After making goals then MTL make targets on daily basis.

iii. Check on daily basis either it is going on right direction.

iv. Critical review all departments are consistent in their jobs, top quality, innovative and customer satisfaction.

v. If any difficulties are there they arrange training sessions.

vi. MTL give rewards who participate in development

Industry trend:

Millat Group is Pakistan's leading engineering concern in automobile sector and has a history that spans almost half a century.Millat Group has played a pivotal role in transfer of technology and transformation of a fledging local light,engineering sector into a robust, vibrant, quality conscious Auto Vending Industry.

Today, with the Grace of God Almighty, all targets for local indigenization as fixed by the Engineering Development Board have not only been achieved rather exceeded with the co-operation of vendor base presently comprising of more than 250 Industrial units both small and large organizations, supplying tractor components.

These vendors have not only been helpful to the local tractor industry but are vital for the entire automobile sector and even to the Defense Industry of Pakistan.

The performance of the Company during the financial year 2010-11 has been recognized countrywide and internationally as well.

The Karachi stock exchange has listed Company's name in the top 10 companies of country.Whereas Internationally, Forbes Global Magazine has included the name of Millat Tractors Limited in Asia's Best 200 under a Billion $ Companies.

Market trend:

Millat Tractors Limited assembles, manufactures, and sells agricultural tractors, implements, and multi application products. The company also offers diesel engines, diesel generating sets, prime movers, and forklift trucks. In addition, it provides a range of agricultural implements, such as various types of ploughs, farm trailers, lawn mowers, jib cranes, and agricultural loaders. Further, the company, through its subsidiary, Millat Industrial Products Limited, manufactures and sells vehicle, industrial, and domestic batteries, cells, and components. It sells its products through a network of dealers. The company was founded in 1964 and is headquartered in Lahore, Pakistan.

New business opportunities:

Already discussed in SWOT.

Economic trend:

"The biggest opportunity that we have right now is to radically change people's awareness of the purpose of capital markets.

"The overall direction in which a nation’s economy is moving. Most business managers needed to be aware of the prevailing direction of the economic trend for the product market and countries in which they operate in order to make more accurate and effective plans for their company.

Millat is facing very poor economic condition because Pakistan’s inflation and interest rate is very high that badly effect on its business.

Culture of millat:

Millat made a impressive culture in his company. Their customers remain satisfied ever both external and internal that is good sign for a business culture. They increase the salary package with a good percentage. They are active in social responsibilities. Having good respect for employees and there is no union in company.

Business Value:

In management, business value is an informal term that includes all forms of value that determine the health and well-being of the firm in the long-run.

Millets, a grain that has nutritional value, offers economic security to human beings and represents fodder security for animals, can provide solutions to the challenge of meeting food security globally.

Even in diversified agro climatic situations, millets can be grown economically in all seasons. It can be grown using the available organic fertilizers, with little or no requirement for chemical fertilizers.

Millets also supports the biodiversity of crops, which is the need of the day to achieve food security. Earlier, the practice of mixed, inter and relay cropping of oilseeds and pulse crops such as red gram, horse gram, cowpea and niger was common practice. Millets offer rural families multiple forms of security in terms of food nutrition, fuel, and fodder for animals and to some extent as a fuel source for them. As millets can sustain higher heat regimes, drought and excess moisture, it is also projected as a suitable crop for climate change.