The tractor industry on the one hand faces great challenge of the oncoming WTO regime. On the other, the demand of tractors is increasing at an accelerated pace.
The recent comprehensive agricultural package aimed at providing relief to the farmers, will definitely expand the size of the market for this industry.
The government's relief package for agriculture sector includes sharp reduction in interest/mark up on agriculture loan and duties/sales tax on the import of certain categories of tractors and agricultural implements.
These measures will boost the demand for tractors. The Economic Survey published recently has concluded that the growth in agriculture sector was low. Inevitably to improve the growth in this sector the government will take more such steps naturally this will expand the demand for tractors.
During the year under review, the company substantially improved profitability and productivity.
The price of its share has also gone up mostly because of its excellent dividend payouts and robust financial backbone.
Millat Tractors Limited is a public limited company. It was incorporated in the province of Punjab and listed on Karachi and Lahore Stock Exchanges. It was listed on Karachi Stock Exchange in 1965.
The share in the company is trading at a very high price. Today's closing rate of Millat Tractors Share is Rs 293 per share which is more than 20 times of the par value. During the last one year the price of the share appreciated by 99% from Rs 150.50 to Rs 300 per share. The price of the share has remained very high relative to the index of share market.
In 1994 the year-end price was Rs 99 although the share market index was quite low compared to today's index. During the last ten years, the 1998 year-end price was Rs 41. But one would never forget that the year was exceptionally difficult year when the country faced severe economic sanctions.
One of the most important factors in the rise of the price of its share, has been uninterrupted and very high dividend payout the highest payout was 160% for the year under review and the lower in 10 years was at 55% in 1994.
The company is engaged in assembly and manufacture agricultural and industrial tractors, implements and equipment's.
The annual production capacity of the plant has been rated at 15,000 tractors. During the year its output declined to 14,103 tractors from 14,652 tractors in the preceding year 2001-02.
However, it achieved 94% utilised capacity. The shortfall in the actual production is due to the non availability of CKD stocks imported from the principals.
Their principals AGCO, went through a massive restructuring during the year which resulted in inordinate delays of shipments of CKDs. Hence the production slowed down.
However the company maintained its leadership in the tractor industry by selling 14,215 tractors and achieving 53% market share.
Sales in terms of value increased by 2.8% to Rs 5260.79 million over the previous year's sales of Rs 5115.60 million. Gross profit increased by 22.3% to Rs 652.41 million over preceding year's figure of Rs 533.43 Gross profit margin was also higher.
The selling, administration and general expenses increased to Rs 194.9 million from 174.9 million. But the financial charges decreased by 47% due to better financial controls and cheaper borrowings.
The financial health of the company was robust as evidenced from the solvency, profitability and liquidity ratios.
The company posted profit before taxation at Rs 410.09 million (2001-02: Rs 297.97 million) and after tax profit, at Rs 265.77 million (2001-02: Rs 188.29 million) registering 37.6% and 41% increase respectively.
It is remarkable performance that its sales, gross profit and net profit were the record highest figures in its history.
The company provides a range of quality implements for improving utilisation and performance of tractors. In this connection, field demonstrations and displays in various agricultural exhibitions were carried out.
Although the sale activity of the implements is facing strong competition from the unorganised sector, the company has been able to generate substantial amount of sales at Rs 15 million as against Rs 11 million in the preceding year.
The company also sells Fork Lift Trucks.
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Performance Statistics (Million Rupees)
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30 June 2003 2002
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Share Capital-Paid-up: 80.00 80.09
Reserves & Profit: 1,112.13 974.67
Shareholders Equity: 1,192.22 1,054.76
Surplus on Revaluation
of Investment: 19.09 -
Accumulating Compensated Absences: 17.98 15.85
Deferred Taxation: 2.50 4.30
Current Liabilities: 1,385.48 1,235.33
Tangible Fixed Assets: 245.59 253.71
L.T Investments: 135.76 114.39
L.T Loans: 4.22 3.62
Current Assets: 2,231.70 1,938.52
Total Assets: 2,617.27 2,310.24
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Sales, Profit & Pay Out
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Sales-Net: 5,260.79 5,115.60
Gross Profit: 652.41 533.43
Operating Profit: 457.47 358.52
Other Income: 29.91 13.11
Financial (Charges): (34.15) (64.96)
(Depreciation): (33.10) (32.84)
Dividend Income From
Associated Companies: 15.33 14.89
Profit Before Taxation: 410.09 297.97
Profit After Taxation: 265.77 188.29
Dividend Cash @Rs 16/Share
(2000: @Rs13/Share): (128.15) 104.12
Earnings Per Share (Rs): 33.16 23.45
Share Price (Rs) Dated 08.06.2004: 293.00 -
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Financial Ratios
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Price/Earning Ratio: 8.84 -
Book Value Per Share: 149.03 131.84
Price/Book Value Ratio: 1.97 -
Debt/Equity Ratio: 0:100 0:100
Current Ratio: 1.61 1.57
Asset Turn Over Ratio: 2.01 2.21
Days Receivables: 10 6
Days Inventory: 64 72
Gross Profit Margin (%): 12.40 10.43
Net Profit Margin (%): 5.05 3.68
R.O.A. (%): 10.15 8.15
R.O.C.E. (%): 21.58 17.52
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A) Capacity & Production (Tractors)
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Capacity (Single Shift): 15,000 15,000
Actual Production: 14,103 14,652
Capacity Utilised (%): 94.02 97.68
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B) "The shortfall in the actual production is due to the non-availability of CKD stocks imported from principals."
COMPANY INFORMATION: Chairman & Chief Executive: Sikander Mustafa Khan; Director: Latif Khalid Hashmi; Company Secretary: Mian Muhammad Saleem; Registered Office & Plant: Sheikhupura Road Distt. Sheikhupura.
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