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Transmitter Letter.
A Project in response to the given subject.
Overview and ration analysis of Millat Tractor Limited
In this regard i visited Lahore Stock Exchange and Millat Tractors Limited, Collected some
material from internet and analyzed it to present to you our findings about the current
standings of MLT with respect to its financial position and history of its shares, after each
check point we have also suggested our opinions on points which need attention. Here its
necessary to mention that we consider MLT as an entity by itself.

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Acknowledgment Letter.
I would Like to say thanks to following personnels and sources without the help of
which/whom I would not have been able to complete my project.

1. University Of central Punjab.

Prof: Waqas Zaki
My Co Friend
2. Lahore Stock Exchange.
Record Center
3. Millat Tractor Limited.
G.M(Production) Muhammad Ameer Khan (MLT)
D.G.M (Production) Ahsan Imran
4. Internet sources.
Google Search,earth,images
www.millat.com.pk

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Table Of Contents.
1. TRANSMITTER LETTER................................................................................1
2. ACKNOWLEDGMENT LETTER....................................................................2

3. HISTORY OF MILLAT TRACTOR...................................................................4

History..................................................................................................................4

4. MILLAT PROFILE...............................................................................................6
5. MISSION STATMENT.........................................................................................6
6. VISSION STATMENT..........................................................................................6
7. ORGNIZATIONAL STRUCTURE.....................................................................7
Management........................................................................................................ 8

8. HIRARCHY OF MILLAT TRACTOR...............................................................8

Managment.......................................................................................................... 9

9. PORTFOLIO.......................................................................................................10
Partners.............................................................................................................. 10

10. RATIO ANALYSIS..............................................................................................11

Types of Ratios...................................................................................................11

11. LIQUIDITY RATIO............................................................................................11

12. CURRENT RATIO..............................................................................................12
13. QUICK RATIO....................................................................................................13
14. OPRATING CASH FLOW.................................................................................14
15. ACTIVITY RATIO..............................................................................................15
Receivable Turnover. .........................................................................................16
Payable Turnover. ..............................................................................................17
Working Capital Turnover. .................................................................................18
Fixed Assets Turnover. .......................................................................................19
Total Assets Turnover. .......................................................................................20
16. LEVERAGE RATIO...........................................................................................21
Debt to Equity Ratio. . .......................................................................................22
Debt Ratio. . ......................................................................................................23
Interest Coverage Ratio. . ..................................................................................24
Long Term Debt to Equity Ratio. .......................................................................25
17. PROFITABILITY RATION...............................................................................26
Debt To Equity Ratio. . ......................................................................................27
Debt Ratio. ........................................................................................................ 28
Interest Coverage Ratio. ....................................................................................28
Long Term Debt To Equity Ratio. ......................................................................28

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18. SHAREHOLDER RATIO..................................................................................29

Dividend Payout Ratio...........................................................................................29
Preferred Dividend Coverage Ratio.......................................................................30
19. TREND ANALYSIS.......................................................................................31-35
20. STOCK CHART.............................................................................................35-38
21. INVESTMENTS.............................................................................................39-42
22. FINANCIAL DETATL........................................................................................43
23. REFRENCES.......................................................................................................49

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History of Millat Tractors Limited.

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.
The company was nationalized under Economic Reforms Order in 1972 and started
assembling and marketing 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
Companys 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 for parts which
required high precision and investment. 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 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 consolidate 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.

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After successful takeover, MTL also acquired the management control of Bolan Castings
Limited (a Public Limited Company specializing in intricate automotive castings) in
partnership with employees of the company, in 1993. The company has been the regular
recipient 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.

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Millat Tractors Profile.

Millat Tractors Limited (MTL) is an ISO 9002 certified company for its Assembly Plants
(Tractor Assembly, Engine Assembly, Industrial/Agricultural Products), Material Testing and
Gauge Control Laboratory. It is Pakistans leading engineering concern in the automobile
sector, that manufactures;

Tractors, under licensing agreement with Massey Ferguson, UK (AGCO, USA)

Diesel Engines

Diesel Generating Sets and Prime Movers

Forklift Trucks, under license from Anhui Heli Forklift Trucks China and

A range of Agricultural Implements.

The company is also dedicated to customize its Diesel Generating Sets and Prime Movers as
per requirements of its Customers.
The company has spread its products throughout the length and breadth of the country. Today
the number of MF tractors made by MTL exceeds 250,000 while the total number of tractors
in the country is approximately 500,000, giving it a market share of above 50%. In other
words every second tractor in Pakistan is MF. This achievement has been made possible only
through the Companys commitment to Quality, After Sale Service, Competitive Prices.
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 Companys 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.

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Structure of Organization.

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Hierarchy of Millat Tractor Limited.

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Management

Board Of
Directors

Sikandar
Mustafa
Khan
Chairman

Sikandar
Mustafa
Khan
Chairman

Laeeq
Uddin
Ansari
CEO

Laeeq
Uddin
Ansari
Chief
Executive
Latif Khalid
Hashmi

Sohail
Bashir Rana

Mian
Muhammad
Saleem

Rana
Muhammad
Saddique

Manzoor
Ahmad

S.M.
Tanveer
M.C.B
Nominee
Muhammad
Saleem
Company
Secretary

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Laeeq Uddin
Ansari
CEO

Group Advisory
Committee

Sikandar M.
Khan
Chairman
Latif Khalid
Hashmi
Sr. Executive
Director
Sohail
Bashir
Rana
Sr. Executive
Director
Mian M.
Saleem
Executive
Director

Laeeq Uddin Ansari

CEO

Shahid Shahbaz Toor

Director Technical
Javed Munir
Gen. Manager Finance & CFO
Ahsan Imran
Gen. Manager Production
Farogh Iqbal
Gen. Manager IT
Syed Muhammad Yaqub
Dy. Gen. Manager Marketing
Muhammad Aslam Khokhar
Gen. Manager(Coordination)

Nasim Sandhu
Dy. Gen. Manager Admn. & Purchase
Qasim Saeed
Dy. Gen. Manager IPD
Ashfaq Farooqi
Dy. Gen. Manager Quality Control
Athar Zubair
Dy. Gen. Manager Technical
Muhammad Akram
Dy. Gen. Manager Marketing
Mansoor Abbasi
Dy. Gen. Manager Manufacturing

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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

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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.

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Production Plant
There is only one production plant located in Lahore. Its working capacity 70-120 tractors per
day.
Product Line

Image

1. MF 240 (50 hp) Tractor

2. MF 260 Turbo (60 hp) Tractor

3. MF 375E (75 hp) Tractor

4. MF 385 (85 hp) Tractor

5. MF 385 4WD (85 hp) Tractor

6. Generating Sets (15-42 KVA)

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7. Prime Movers

8. 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

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Swot Analysis Of Millat Tractors.

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.
1. Good Will / Well Established Image
MTL has an excellent goodwill in the market and in stock exchange.
2. Market Share
A market share of 58%-60% proves to be a demanding strength of the Millat Tractors
Limited.
3. Repair Facility

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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 or Mailsi workshop as well.

4. 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.
5. Licenses And Technology
Licenses and technology from Massey Ferguson, UK gives Millat Tractors limited an extra
edge.
6. ISO 9002 Certification
Another, solid strength of Millat Tractors Limited is ISO 9002 certification for its engine
assembly, tractor assembly and laboratory.
7. AFTER SALE SERVICES
A good package of after sales service by Millat Tractor is another strength on its competitor
and provide the customer satisfaction.
8. Availability Of Parts
Millat tractors parts are readily available all over Pakistan that is another strength.
9. Network Of Dealers And Workshops
There are 69 tractor dealers, 46 spare parts dealers and 312 workshops all over Pakistan.
10.

Diversification

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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.
11.

Experience

Another strength of MTL is that it has been established since 1964 so it has experience labor
force.
12.

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

2. 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.
3. Long Delivery Period
As compare to its competitors delivery time period of tractors delivery is long.
4. Diversion Of Concentration

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Due to diversified work at MTL, it might not able to fully concentrate on its primary
operations.
5. 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.
6. 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.
1. 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.
2. 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:

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1. 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.
2. 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

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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

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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.

Portfolio of Millat Tractor Limited.

Bolan Casting Ltd

Millat Equipment Ltd

Millat Industrial Product Ltd

Bolan Casting Ltd.

In 1993, the Company in collaboration with the employees of Bolan Casting
Limited acquired the management control of Bolan Casting Limited by
purchasing 51% of the Company shares offered by the government as part of
the process of privatization. BCL provides major casting for Automobile
Industries and also 50% of the Company requirement are met from it. Since
acquisition of the control by MTL, BCL has also performed very well and has been on a
growth pattern. After discharging all its financial liabilities, the Company has been declaring
very reasonable dividend for the share holders for the last three years.
Millat Equipment Ltd
Millat Equipment Limited was incorporated in 1993 as a wholly owned
subsidiary company of Millat Tractors Limited for Production of gears to be
used in tractors, cars and Commercial vehicles, the production has so for
been commenced and the company has declared profitability for the year
ended june 30,2007.
Millat Industrial Product Ltd.
The Company also acquired the plant of Rex Baren Batteries near Lahore,
having a capacity to produce 60,000 automotive batteries per annum, by
submitting highest bid to the Corporate Industrial Restructuring Corporation
(CIRC). A new Company titled Millat Industrial Products Ltd. was formed to
manufacture automotive batteries in this plant which has been successfully
put back into operation.

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Page | 24

Ratio Analysis of Millat Tractor Limited.

Here I will analysis different ration which are as follows.
1) Activity Ratio.
Receivable Turnover.
Payable Turnover.
Working Capital Turnover.
Fixed Assets Turnover.
Total Assets Turnover.
2) Liquidity ratios.
Current Ratio.
Quick Ratio/Acid Test Ratio.
Operating Cash Flow Ratio.
3) Leverage ratios.
Debt to Equity Ratio.
Debt Ratio.
Interest Coverage Ratio.
Long Term Debt to Equity Ratio.
4) Profitability Ratios.
Gross Margin Ratio.
Return on Sales Ratio.
Return on Assets Ratio.
Return on Total Equity Ratio.
5) Shareholders Ratios.
Dividend Payout Ratio.
Preferred Dividend Coverage Ratio.
1. Liquidity ratios.
A class of financial metrics that is used to determine a company's ability to pay off its shortterms debts obligations. Generally, the higher the value of the ratio, the larger the margin of
safety that the company possesses to cover short-term debts. Current Ratio.
Current Ratio.
Quick Ratio/Acid Test Ratio.
Operating Cash Flow Ratio.

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 Current Ratio.
A liquidity ratio that measures a company's ability to pay short-term obligations.
The Current Ratio formula is:

Yea
r

Current
Assets

200
8

6,179,581

200
9

5,679,157

201
0

10,737,359

Current
Liabilities

Current Ratio

4,146,004

1.49 times

3,328,902

1.70 times

7,587,912

1.41 times

2009.0

2010.0

Current Ratio
1.5

Current Ratio

0.5

2008.0

Interpretation:
2008. Millat Tractors had Rs. 1.49 of current assets for every Re. 1 of current liabilities.
2009. Millat Tractor had Rs. 1.7 of current assets for every Re. 1 of current liabilities.
2010. Millat Tractors had Rs. 1.41 of current assets for every Re. 1 of current liabilities.

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So we Can say that there is an excessive Assets in 2009 as compare to 2008 of 0.21
but in 2010 they reduce their current ration from 0.21 to 0.29.

Quick Ratio/Acid Test Ratio.

An indicator of a company's short-term liquidity. The quick ratio measures a
company's ability to meet its short-term obligations with its most liquid assets. The
higher the quick ratio, the better the position of the company.
Calculated by:

Yea
r

Current
Assets inventories

200
8

6,179,5811749952

200
9

5,679,1572189055

201
0

10,737,3592634441

Quick Ratio / Acid

Test Ratio

4,146,004

1.06

3,328,902

1.04

7,587,912

1.06

Current
Liabilities

Quick Ratio / Acid Test Ratio

Interpretation:

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2008. Millat Tractors had Rs. 1.06 Quick Asset for every Re. 1 of current liabilities.
2009. Millat Tractor had Rs. 1.04 Quick Assets for every Re. 1 of current liabilities.
2010. Millat Tractors had Rs. 1.06 Quick Assets for every Re. 1 of current liabilities.
So we Can say that there is no such chang in quick ration in tree years..

Operating Cash Flow Ratio.

A measure of how well current liabilities are covered by the cash flow generated from a
company's operations.
Formula:

Yea
r

Cash Flow
From
Oprations

200
8

1,087,892

200
9

(51,938)

201
0

4,265,110

Current
Liabilities

OCF Ratio

4,146,004

0.26

3,328,902

-0.015

7,587,912

0.56

Operating Cash Flow Ratio

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Interpretation:
2008. Millat Tractors had Rs. 0.26 OCF Ratio.
2009. Millat Tractor had Rs. -0.015 OCF Ratio.
2010. Millat Tractors had Rs. 0.56 OCF Ratio.
So we Can say that operating cash flow ratio fall in 2009.

2. Activity Ratio.
Accounting ratios that measure a firm's ability to convert different accounts within their
balance sheets into cash or sales.
Receivable Turnover.
Payable Turnover.
Working Capital Turnover.
Fixed Assets Turnover.
Total Assets Turnover.
Receivable Turnover.
An accounting measure used to quantify a firm's effectiveness in extending credit
as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how
efficiently a firm uses its assets.
Formula:

Average
Account
Receivable

Account Receivable
Turnover

1,387,929

8.12

16,091,730

1,363,833

11.7

22,461,249

2,771,592

8.10

Yea
r

Net Credit
Sale

200
8

11,272,385

200
9
201
0

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Account Receivable Turnover

Interpretation:
2008. Millat Tractors had Rs. 8.12 time account receivables.
2009. Millat Tractor had Rs. 11.7 times account receivables.
2010. Millat Tractors had Rs. 8.1 times account receivables.
So we Can say that there is a gradual increase in account receivables in 2009 as
compare to 2008 and 2010 respectively.

Payable Turnover.
A short-term liquidity measure used to quantify the rate at which a company pays off
its suppliers. Accounts payable turnover ratio is calculated by taking the total
purchases made from suppliers and dividing it by the average accounts payable
amount during the same period.
Formula:

Yea
r

Net Credit
purchases

200
8

9,768,510

200
9

13,609,170

Average
Account
Payable

Account Payable
Turnover

3,936,330

2.48

3,140,201

4.33

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201
0

18,528,176

7,513,070

2.46

Account Payable Turnover

Interpretation:
2008. Millat Tractors had Rs. 2.48 time account Payables.
2009. Millat Tractor had Rs. 4.33time account Payables.
2010. Millat Tractors had Rs. 2.46 times account Payables.
So we Can say that there is a gradual increase in account Payables
compare to 2008 and 2010 respectively.

in 2009 as

Working Capital Turnover.

A measurement comparing the depletion of working capital to the generation of sales
over a given period. This provides some useful information as to how effectively a
company is using its working capital to generate sales.
Formula:

Working Capital = Current Assets Current Liabilities

Years
2008
2009
2010
Yea

Current Assets
6,179,581
5,679,157
10,737,359
Sales

Current Liabilities
4,146,004
3,328,902
7,587,912

Working Capital

Working Capital
2,033,577
2,350,255
3,149,447

Working Capital

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Turnover

200
8

11,272,385

2,033,577

5.54

200
9

16,091,730

2,350,255

6.84

201
0

22,461,249

3,149,447

7.13

Working Capital Turnover

Interpretation:
2008. Millat Tractors had Rs. 5.54 time working Capital.
2009. Millat Tractor had Rs. 6.84 time Working Capital.
2010. Millat Tractors had Rs. 7.13 time Working Capital.
So we Can say that there is a gradual increase in account Payables from 2008 to
2010 respectively.

Fixed-Asset Turnover Ratio.

Page | 32

A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a
company's ability to generate net sales from fixed-asset investments - specifically property,
plant and equipment (PP&E) - net of depreciation. A higher fixed-asset turnover ratio shows
that the company has been more effective in using the investment in fixed assets to generate
revenues.
The fixed-asset turnover ratio is calculated as:

Yea
r

Net Sales

Working Capital
Turnover

200
8

11,272,385

1,174,507

9.5

200
9

16,091,730

1,231,991

13.0

201
0

22,461,249

1,435,960

15.6

Total Fixed
Assets

Fixed-Asset Turnover Ratio

Interpretation:
2008. Millat Tractors had Rs. 9.5 Fixed-Asset Turnover.
2009. Millat Tractor had Rs. 13.0 Times Fixed-Asset Turnover.
2010. Millat Tractors had Rs. 15.6 Times Fixed Asset Turnover.
So we can say that there is a gradual increase in Ratio from 2008 to 2010
respectively.

Page | 33

 Total Assets Turnover.

The amount of sales generated for every dollar's worth of assets. It is calculated by dividing
sales in dollars by assets in dollars.
Formula:

Yea
r

Net Sales

Working Capital
Turnover

200
8

11,272,385

7,446,129

1.51

200
9

16,091,730

6,990,827

2.30

201
0

22,461,249

12,173,319

1.84

Total Assets

Total Asset Turnover Ratio

1.5

Total Asset Turnover Ratio

0.5

2008.0

2009.0

2010.0

Interpretation:
2008. Millat Tractors had Rs. 1.51 Total Asset Turnover.
2009. Millat Tractor had Rs. 2.3 Total Asset Turnover.
2010. Millat Tractors had Rs. 1.84 Total Asset Turnover.
So we can say that there is a gradual increase in Ratio from 2008 to 2009 by
1.51 to 2.3 after that it decreases from 2.3 to 1.84 in 2010 respectively.

Page | 34

3. Leverage Ratios.
Any ratio used to calculate the financial leverage of a company to get an idea of the
company's methods of financing or to measure its ability to meet financial obligations.
There are several different ratios, but the main factors looked at include debt, equity,
assets and interest expenses.
Debt to Equity Ratio.
Debt Ratio.
Interest Coverage Ratio.
Long Term Debt to Equity Ratio.

Debt to Equity Ratio.

A measure of a company's financial leverage calculated by dividing its total liabilities
by stockholders' equity. It indicates what proportion of equity and debt the company is
using to finance its assets.
Formula:

Yea
r

Total
Liabilities

Equity

Debt to Equity
Ratio

200
8

4,298,077

3,130,841

1.37

200
9

3,431,881

3,527,908

0.97

201
0

7,606,725

4,519,911

1.68

Page | 35

Debt to Equity Ratio

Interpretation:
2008. Millat Tractors had Rs. 1.37 Times Debt To Equity.
2009. Millat Tractor had Rs. 0.97 Times Debt To Equity.
2010. Millat Tractors had Rs. 1.68 Times Debt To Equity.
So we can say that there is a gradual Decrease in Debt To Equity Ratio from 2008 to
2009 by 1.37 to 0.97 after that it Increases from 0.97 to 1.68 in 2010 respectively.

Debt Ratio.
A ratio that indicates what proportion of debt a company has relative to its assets. The
measure gives an idea to the leverage of the company along with the potential risks the
company faces in terms of its debt-load.
Formula:

Yea
r

Total
liability

200
8

4,298,077

200
9

3,431,881

201
0

7,606,725

Total Assets

Debt Ratio

7,446,129

0.57

6,990,827

0.49

12,173,319

0.62

Page | 36

Debt Ratio

Interpretation:
2008. Millat Tractors had Rs. 0.57 Times Debt Ratio.
2009. Millat Tractor had Rs. 0.49 Times Debt Ratio.
2010. Millat Tractors had Rs. 0.62 Times Debt Ratio.
So we can say that there is a gradual Decrease in Debt Ratio from 2008 to 2009
by 0.57 to 0.49 after that it Increases from 0.49 to 0.62 in 2010 respectively.

Interest Coverage Ratio.

A ratio used to determine how easily a company can pay interest on outstanding debt.
The interest coverage ratio is calculated by dividing a company's earnings before
interest and taxes (EBIT) of one period by the company's interest expenses of the
same period:
Formula:

Yea
r

EBIT

200
8

1,142,928

200
9

1,866,153

Interest
Expense

Interest Coverage Ratio

332,186

3.44

572,103

3.26

Page | 37

201
0

3,634,001

1,163,419

3.12

Interest Coverage Ratio

Interpretation:
2008. Millat Tractors had Rs. 3.44 Times Interest Coverage Ratio.
2009. Millat Tractor had Rs. 3.62 Times Interest Coverage Ratio.
2010. Millat Tractors had Rs. 3.12 Times Interest Coverage Ratio.
So we can say that there is a gradual Decrease in Times Interest Coverage Ratio from
2009 to 2010 by 3.62 to 3.12 respectively.

Long Term Debt to Equity Ratio.

A measurement of a company's financial leverage, calculated as the company's debt
divided by its total capital. Debt includes all short-term and long-term obligations.
Total capital includes the company's debt and shareholders' equity, which includes
common stock, preferred stock, minority interest and net debt.
Calculated as:

Yea
r

Long term
debt

200
8

200
9

Long Term Debt to

Equity Ratio

3,130,841

3,527,908

Shareholders
Equity

Page | 38

201
0

4,519,911

Long Term Debt to Equity Ratio

Interpretation:
2008. Millat Tractors had no long term debts.
2009. Millat Tractors had no long term debts.
2010. Millat Tractors had no long term debts.
So we can say that there is no long term debt available in Millat tractor.

4. Profitability Ratios.
A class of financial metrics that are used to assess a business's ability to generate earnings
as compared to its expenses and other relevant costs incurred during a specific period of
time. For most of these ratios, having a higher value relative to a competitor's ratio or the
same ratio from a previous period is indicative that the company is doing well.

Gross Margin Ratio.

Return on Sales Ratio.
Return on Assets Ratio.
Return on Total Equity Ratio.

Gross Profit Margin Ratio.

Indicates what the company's pricing policy is and what the true mark-up margins are.

Page | 39

Gross Profit Margin

Ratio

11,272,385

1.85

16,091,730

0.15

22,461,249

0.17

Yea
r

RevenueCGS

200
8

1,503,875

200
9

2,502,796

201
0

3,933,073

Revenue

Gross Profit Margin Ratio

Interpretation:
2008. Millat Tractors had Rs. 1.85 Time Gross Profit Margin Ratio.
2009. Millat Tractor had Rs. 0.15 Time Gross Profit Margin Ratio.
2010. Millat Tractors had Rs. 0.17 Time Gross Profit Margin Ratio.
So we can say that there is a gradual Decrease in G ross Profit Margin Ratio. from 2008
to 2010 respectively.

Return on Sales Ratio.

A ratio widely used to evaluate a company's operational efficiency. ROS is also
known as a firm's "operating profit margin".
It is calculated using this formula:
Yea
r

NIBIT

200
8

1,142,928

/
/

Sale

11,272,385

Return on Sales Ratio

0.101

Page | 40

200
9

1,866,153

16,091,730

0.11

201
0

3,634,001

22,461,249

0.161

Return on Sales Ratio

Interpretation:
2008. Millat Tractors had Rs. 0.101 Time Return on sale Ratio.
2009. Millat Tractor had Rs. 0.11 Time Return on sale Ratio.
2010. Millat Tractors had Rs. 0.161 Time Return on sale Ratio.

So we can say that there is a gradual increase in Return on sale Ratio. From 2008 to
2010 respectively.

Return on Total Equity Ratio.

A measure of a company's financial leverage calculated by dividing its total liabilities
by stockholders' equity. It indicates what proportion of equity and debt the company is
using to finance its assets.

Yea
r

Total
Liabilities

200
8

4,298,077

200
9

3,431,881

Shareholder
Equity

Return on Equity Ratio

3,130,841

1.37

3,527,908

0.97

Page | 41

201
0

7,606,725

4,519,911

1.68

Return on Total Equity Ratio

Interpretation:
2008. Millat Tractors had Rs. 1.37 Time Return on Total Equity Ratio.
2009. Millat Tractor had Rs. 0.97 Time Return on Total Equity Ratio.
2010. Millat Tractors had Rs. 1.68 Time Return on Total Equity Ratio.
So we can say that there is a gradual decrease in Return on sale Ratio. From 2008 to
2009 then an increase from 2009 to 2010 respectively.

5. Shareholders Ratios.
A ratio used to help determine how much shareholders would receive in the event of a
company-wide liquidation. The ratio, expressed as a percentage, is calculated by dividing
total shareholders' equity by total assets of the firm, and it represents the amount of assets
on which shareholders have a residual claim.
Dividend Payout Ratio.
Preferred Dividend Coverage Ratio.
Dividend Payout Ratio.
The percentage of earnings paid to shareholders in dividends.
Calculated as:

Page | 42

Yea
r

Yearly
dividend
per share

200
8

32.50

200
9

201
0

65.00

Dividend Payout
Ratio

34.51

0.94

43.72

0.11

83.83

0.77

Earnings Per
Share

Dividend Payout Ratio

Interpretation:
2008. Millat Tractors had Rs. 0.94 Time Dividend Payout Ratio.
2009. Millat Tractor had Rs. 0.11 Time Dividend payout Ratio.
2010. Millat Tractors had Rs. 0.77 Time Dividend Payout Ratio.
So we can say that there is a gradual decrease in Dividend payout Ratio. From 2008 to
2009 then an increase from 2009 to 2010 respectively.

Preferred Dividend Coverage Ratio.

Page | 43

A coverage ratio that measures a company's ability to pay off its required preferred
dividend payments. A healthy company will have a high coverage ratio, indicating
that it has little difficulty in paying off its preferred dividend requirements.
Formula:

Preferred Dividend
Coverage Ratio

459,179

1.76

834,093

1.55

1,440801

1.71

Yea
r

Net income

200
8

810,742

200
9

1,294,050

201
0

2,470,582

Dividend
Payment

Preferred Dividend Coverage Ratio

Interpretation:
2008. Millat Tractors had Rs. 1.76 Time Preferred Dividend Coverage Ratio.
2009. Millat Tractor had Rs. 1.55 Time Preferred Dividend Coverage Ratio.
2010. Millat Tractors had Rs. 1.71 Time Preferred Dividend Coverage Ratio.
So we can say that there is a gradual decrease in Preferred Dividend Coverage Ratio
From 2008 to 2009 then an increase from 2009 to 2010 respectively.

Page | 44

Trend Analysis.
An aspect of technical analysis that tries to predict the future movement of a stock based on
past data. Trend analysis is based on the idea that what has happened in the past gives traders
an idea of what will happen in the future.
There are three main types of trends:
1. Short
2. Intermediate
3. Long-Term
Trend Analysis of Millat Tractor limited.
Here I had applied different functions for trend analysis of Millat tractor.

Page | 45

Activity Ratio.
Liquidity ratios.
Leverage ratios.
Profitability Ratios.

Trend Analysis of Activity Ratio.

Trend Analysis of Activity Ratio

Interpretation:
Activity ratio falls from 2008 to 2009 as shown in above graph and then it increases from
2009 t0 2010.

Trend Analysis of Liquidity ratios

Page | 46

Trend Analysis of Liquidity ratios

Interpretation:
Liquidity Ratio shows +ve relation in above graph. It means companys liquidity ratio is in
good position.

Trend Analysis of Leverage ratios.

Trend Analysis of Leverage ratios

Interpretation:
Trend analysis of leverage ratio shows in above graph is that leverage ratio fals in 2009 and
then it increases in 2010.and it shows +ve relation.

Page | 47

 Trend Analysis of Profitability Ratios.

Trend Analysis of Profitability Ratios

Interpretation:
Trend analysis of Profitability ratio shows in above graph is that Profitability ratio falls in
2009 and then it increases in 2010.and it shows +ve relation.
Trend Analysis of Shareholders Ratios.

Trend Analysis of Shareholders Ratios

Page | 48

Interpretation:
Trend analysis of Shareholders ratio shows in above graph is that share holders ratio
increases in 2009 and then it fals in 2010.and it shows +ve relation.
Millat Tractors Stock Chart.
Millat tractors Limited is a Pakistan-based company engaged in the assembly and
manufacture of agriculture tractor, implements and multi-application product.
Millat industrial products limited is the companys 64.09% - owned subsidiary, which is
engaged in manufacturing vehicles, industrial and domestic batteries, cells and components,
During the fiscal year ended June 30,2010, the company delivered 40,410 tractors. In fiscal
2010, it produced 40,178 tractors.

Officers in Millat Tractor.

Chairman
(Sikander
Mustafa Khan)

Officers

Director ,
CEO
(Laeeq Uddin
Ansari)
GM, Chief
finacial
Officer
(Javed Munir)
Secretary
(Mian
Muhammad
Saleem)

Page | 49

Key Data.
Ticker
2010 Sales
Major Industry
Country
Currency
Fiscal year ends
Employees
Exchanges
Share type
Market Capitalization
Total Share
Outstanding
Closely Held Shares

MILT
22,461,249,000
Machinery & Equipment
Pakistani
Pakistani Rupees
June
468
KHR
Ordinary
18,919,408
36,605,408
N/A

Stock Chart
Blew the graph shows the variation in price of share and dividend paid in earning
per share

Stock Price (4/29/2011): 516.85

Recent Stock Performance
1 week -2.3%
4 weeks -2.5%
13 weeks -5.0%

Page | 50

52 weeks -26.9%

Most Recent Qtr

Last 12 Months

Earning/ Dividends (as 9/30/2010)

Earning
16.29
72.63

Dividends
32.50
67.50

Ratio Analysis
Price / Earnings Ratio 7.12
Dividend Yield
13.06%
Price / Sale Ratio
0.84
Payout Ratio
92.94%
Price / Book Ratio
4.18
% Held by insiders N/A

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.

Page | 51

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.

Page | 52

References.
5.

University Of central Punjab.

Prof: Waqas Zaki
My Co Friend
6. Lahore Stock Exchange.
Record Center
7. Millat Tractor Limited.
G.M(Production) Muhammad Ameer Khan (MLT)
D.G.M (Production) Ahsan Imran
8. Internet sources.
Google Search, earth, images
www.millat.com.pk

Page | 53