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INTRODUCTION

So far, Belarus, had been exporting 3,000-4,000 machines a year to Pakistan. But the annual
demand is more than 60,000 units. The local tractor industry, which claims to have achieved
92pc deletion, has a production capacity of 60,000 units, but its sales have come down to 40,000
units in the wake of the recent imposition of sales tax on tractors.
Currently 24 models are manufactured locally by two companies. They claim that their products
are cheaper than many foreign varieties. However, these are of poor quality and need an engine
overhaul after 100 hours of operations, says food security minister Sikandar Hayat Bosan, who
played a key role in convincing Belarus to set up an assembly plant in Pakistan.
It is because of quality concerns that Pakistani tractors lack export potential and only one
manufacturer exports its products (though not more than 500 units) to Afghanistan.
Belarus state-owned company Minsk Tractor Works (MTW) has informed the government that it
will start assembling tractors in Pakistan from next January. However, on the eve of the Belarus
presidents visit to Pakistan, a symbolic ribbon-cutting ceremony to mark the opening of the
assembly plant in Karachi was performed on May 28, and the first tractor, Belarus-510, rolled
off the assembly line.
Islamabad had hosted an investment forum on May 25 and Belarus and Pakistan inked contracts
worth $42m on the first day. The forum was attended by representatives of 25 companies from
Belarus and a large number of their Pakistani counterparts. The MTW eyes Pakistan as an
important market and it signed a contract worth $35m. The Eastern European country has offered
to supply Pakistans entire line of engineering products, from trucks to mining equipment and
harvesters.
To begin with, the MTW will assemble 500 tractors per annum, but as demand increases it will
enhance its production to more than 20,000 units. At the same time, the delivery of MTWs
finished machinery will continue. Initially, the company plans to cater to the Pakistani market but
it intends to use Pakistan as a hub for re-entry into the Middle East and North African markets. It
had strong trade ties with Iran, Libya and Syria but lost its Arabian markets after the Arab
Spring. It now wants a base in Pakistan to regain access to these lost markets.
The details of the project were finalised during the visit of Prime Minister Nawaz Sharif to the
eastern European country last month. The two nations had established diplomatic relations 20
years ago, but a breakthrough came only after the opening of the Belarusian embassy in
Islamabad last November. The bilateral trade was about $60m last year.
The Minsk company also manufactures heavy-duty trucks, buses, trolleybuses, road tractors and
semi-trailers for trucks and cranes. Belarus also plans to set up joint companies to manufacture
textile products and carpets from Pakistani raw materials.
Pakistan-made tractors are quite popular among middle-class farmers with at least 12.5 acres of
land because of their low cost. Besides, farmers are given a subsidy of Rs200,000 per tractor a
substantial amount for small farmers, in particular. On the other hand, the Belarusian tractors not
affordable for an average farmer, and only rich growers and landowners prefer to buy them.

Local farmers also resent that they are denied the full extent of subsidies. For instance, the Sindh
budget 2014-15 had sanctioned subsidies for 4,300 tractors, but they were provided for only
1,209 tractors. The Sindh and Punjab governments announce subsidies for a certain number of
tractors in their budgets every year but actually pay for a much lesser number. The most popular
instruments of mechanisation in the country are bulldozers, power rigs, tubewells and tractors
with cultivators, wheat threshers, sprayers and trailers. One finds an increasing trend of their use.
Various tractor schemes have helped farm mechanisation. Official statistics show that about 76pc
of big farmers now cultivate their land with tractors. And 20pc of the growers use a combination
of both tractors and draught animals.
But a recent study conducted by the University of Agriculture Faisalabad found that wheat
growers in large parts of Punjab use lesser-than-recommended numbers of machines, which
affects the crops yield. The same can be said about growers of major crops in parts of other
provinces as well.

BRIEF HISTORY

The company was incorporated as Rana Tractors and Equipment


Limited.

Initially Completely Built up Units were imported and sold in the


Country.

In 1965, facilities were created in Karachi to assemble tractors from


Semi Knocked Down kits.

In 1967, operations were shifted from Karachi to Lahore.

In 1972, under the Economic Reforms Order, the Company was


nationalized and re-named as Millat Tractors Limited.

In 1982, Engine Assembly Plant was inaugurated.

In 1984, Machining Division was inaugurated by the then President of


Pakistan.

In 1991, the Government announced the policy of Privatization and Millat


Group was formed to acquire 51% shares of the Company.

In 1992, the management control of the Company was handed over to


the Millat Group by the Prime Minister.

In 1992, a new Tractor Assembly Plant, with a production capacity of


16,000 tractors on single shift basis, was commissioned
Millat Group

In 1993, Millat Group acquired 51% shares in partnership with


employees of Bolan Castings Limited, disinvested by the Government.

In 1994, Millat Equipment Limited was incorporated to undertake new


projects like hi-tech automotive Gear manufacturing in Pakistan.

In 2002, a new Company Millat Industrial Products Limited, was formed


to manufacture vehicular, industrial and domestic batteries, cells and
components thereof.

FINANCIAL POSITION
Following is the unaudited condensed interim financial statements for the
quarter and nine months ended March 31, 2016 and review of operations.
During the nine months ended March 31, 2016, the Company managed to
achieve a sales volume of 13,482 tractors as compared to 19,967 tractors in
the corresponding period of last financial year registering a decrease of 33%.
The net sales value for the nine months was Rs. 11,081 million against Rs.
15,909 million in the same period last year showing decrease of 30% .Net
profit Rs. 1,054 million after tax was earned during the nine months
translating into EPS of 23.79 compared to EPS of 40.31 for the corresponding
period for last financial year resulting in decrease of 42 %.
The agriculture sector is passing through depression which has also affected
the tractor industry resulting in lowest sales in last five years. In order to
improve the profitability various measures have been adopted for reduction
of costs which also included the step of moving from double to single shift.
The delay in payment of pending due refunds and imposition of additional
taxes on import and inputs by FBR are also affecting the tractor industry
which is now left to struggle for its survival on its own. Farmers need to be
supported and for the difficult years Sales tax may be reduced instead of
subsidy for a few.
Looking ahead, with the severe drop in sales and increased cost, Millat
Tractor is eyeing the global market for their products. Millat Products with
Made in Pakistan tag have been launched under MF-300 series from the
platform of their principalAGCO which materialized the long term export
desire.

HR ANALYSIS
GROUP MANAGEMENT
Mr. Sikandar Mustafa Khan (Chairman)

Mr. Sikandar Mustafa Khan qualified as a Mechanical Engineer from NED University of Engineering & Technology, Karachi in 1967. H

Diploma from the University of New-Castle Upon Tyne, U.K.(1969) and Masters Degree & Diploma in Production Engineering (DIC) f

Science and Technology, London University (1970), He also attended several management courses locally and abroad, including Inte

Management Program (1983) at International Management Institute, Geneva, Switzerland and Leadership Development Program at C

Leadership (Colorada Springs), U.S.A. In addition he participated in the Financial Management Course (1989) at Pakistan Staff Colle

Management Control Course (1990) and the Strategy for Business in Developing Countries Program(1993) at LUMS. Mr. Khan is ser

Companies of both Public and Private Sector Companies including the Board of Habib Bank Limited, the largest private sector Bank o

experience in the Automotive and Engineering Industry and has been associated with it since 1972. He was the Vice President of Lah

& Industry (LCCI) for the period October 1997 to September 1998. Mr. Khan was appointed as Managing Director/Chief Executive Off

Limited (MTL) in October 1985 and was elected Chairman of the Board in 1991. In pursuance of the Privatization Policy of the Govern
his team for the Employee Buy-out of MTL. He is also the Chairman of Millat Group Companies including two associated companies;
Millat Equipment Limited and Millat Industrial Products Limited as a subsidiary of Millat Tractors Limited.

Mr. Latif Khalid Hashmi (Director)


Mr. Latif Khalid Hashmi did his Masters in Commerce from Hailey College of Commerce Lahore in 1968 and qualified as a Chartered

the Institute of Chartered Accountant of Pakistan. He joined National Fertilizer Corporation in 1975 and served as the Head of Finance

Limited and Paksaudi Fertilizers Limited for about 14 years. He joined Millat Tractors Limited in 1988 as the Head of Finance and also

Marketing, Technical, Administration and as Deputy Managing Director for several years. He was appointed Chief Executive of Millat T
-2006. He also served as Chief Executive of Bolan Castings Limited during 1997-2004.

Mr. Sohail Bashir Rana(Director)

Mr.Sohail Bashir Rana is a qualified Mechanical Engineer (1970) from Engineering University, Lahore with over 45 years experience i

Pakistan and abroad. He has attended several management courses locally and abroad including Management Programmes at Ashri

of Management Sciences (LUMS) and various Technical, Finance and Marketing courses in UK, UAE and Italy. He is a Fellow Membe

Engineers (Pakistan) and Institution of Mechanical Engineers (Pakistan), Member of American Society of Mechanical Engineers, Mem

Engineers (USA). He has been associated with Millat Tractors in various capacities over the past 36 years heading Technical, Market

Departments and as Deputy Managing Director before being appointed Chief Executive of Millat Tractors Ltd, in 2006. Sohail was the

Millat Equipment Ltd a Millat Group Company from 1993 to 2005. This unit is producing highly precise gears, transmission comp

for Massey Ferguson tractors. He is Director on Board of Millat Tractors Ltd, Bolan Castings Ltd, Millat Equipment Ltd, Millat Industria

Managing Director of UAE based TIPEG INTERTRADE DMCC Ltd. Sohail is currently the Chairman of the Pakistan Automotive Manu
(PAMA).

Mr. Laeeq Uddin Ansari(Director) Laeeq Uddin Ansari is a Mechanical Engineer from University of Engineering & Technology, Lahor

experience in the automobile sector in Pakistan. He attended number of local & foreign training programs, seminars and conferences

Limited in 1983 and has since been associated with the Company in various capacities. He headed production, quality control, techni
departments of the Company; He also remained CEO of the Company till early 2012.

Mian Muhammad Saleem(Director & Company Secretary) Mr. Saleem is associated with the Company since 1967. He is a Commer

Member of the Institute of Cost & Management Accountants of Pakistan. He attended number of local and foreign training programme

conferences. He headed finance, marketing and administration departments of the Company. He is also holding the position of Comp
and is fully conversant with corporate laws. He was elected as director in 1992 and holding this position since then.