Automobile Assembler: MILLAT TRACTORS LIMITED - Year Ended 30-06-2006

This leading industrial concern has made a history of achieving a series of milestones by harnessing the power of technology.
This small write up has not been able to map fully its achievements nevertheless its dynamic website as well as beautiful Annul Report 2006 provides enough details to gauge the company's potentials.
During the year under review the company recorded its best turnover because of improved sales volume as well as better gross profit margin.
The company's long term debts were minimal. However, selling, administrative and general expenses were on the higher side following the trail of volume sales increase. The company's profit works out to Earning Per Share at Rs 46.78 which is higher by Rs 17.72 per share as against Rs 29.06 per share of last year. It has gratifying record of steady stream of dividends as evidenced from its six years financial statistics. For the year under review the company announced cash dividend at 200% plus bonus stock dividend at 20%. At present the MTL share is trading at Rs 286 per share which is nearly 29 times of the par value end shows immense confidence of shareholders in the entity. It has a robust financial backbone.
Millat Tractors Limited is manufacturing Massey Ferguson (MF) tractors under licensing agreement with AGCO Limited UK, diesel engines in technical collaboration with Perkins Ltd UK, Diesel Generating sets and Prime Movers using Perkins Engines. Forklift Trucks under license with Anhui Heli Company Ltd, China and a range of agricultural elements.
The company's product spread encompasses the length and breadth of the country with MF tractor population around 300,000 units giving it a market share of more than 50%.
It is a public limited company incorporated in the province of Punjab having its registration office and plant situated at Sheikhupura Road District Sheikhupura, Punjab. Its regional offices are located at Karachi, Multan Cantt., Islamabad and Sukkur. It has network of dealers throughout Pakistan and Afghanistan.
Millat Tractors Ltd (MTL) is listed on all three stock exchanges of the country and was established in 1964. Its assembly plant was set up in 1967 to assemble tractors in semi-knocked down (SKD) condition.
The company was nationalised under Economic Reforms Order in 1972 and started assembling marketing tractors on behalf of public sector's Pakistan Tractor Corporation (PTC) which was formed by the Government for import of tractors in SKD condition. In 1980, the government decided on indigenisation of the tractors and entrusted the task to PTC.
PTC transferred the role of indigenisation to MTL in 1981. The company soon surpassed the deletion targets set by the government and took a giant step towards self-reliance within one year by setting up the first engine assembly plant. The company developed in-house machining facilities of intricate components.
In 1992, the company was privatised. The employees joined hands and took over the management by winning an open bid. On a single shift basis the production. Capacity of MTL plant has been rated at 15,000 tractors per year. During FY 2005-06 the company produced 24,238 tractors.
In the following year in 1993 MTL acquired the management control of Bolan Castings Ltd (a public limited company specializing in intricate automobile castings).
In 1993, its subsidiary company Millat Equipment Limited was incorporated for commercial vehicle production but production has not started.
The company also acquired the plant of Rex Baren Batteries having a capacity to produce 60,000 automobile batteries per annum, by submitting highest bid to the Corporate Industrial Restructuring Corporation.
For that, a new company titled Millat Industrial Products (Pvt) Ltd has been formed.
The company has also started exploring multiple application of engines and tractors in areas other than farming sectors.
Mass production of generating 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 these products are made by using Perkins engines and according to the company, these have been well accepted in the market.
MTL is an ISO 9002 certified company for its Assembly Plants and Material Testing and Gauge Control Laboratories. Today this company has become one of the leading engineering concerns in Pakistan's automobile sector.
During the financial year 2005-06, the company generated sales at Rs 9.737 billion as compared to Rs 8.326 billion posted in the preceding year 2004-05, registering 16.95% growth over preceding year's and sales figure is the historic best. Higher volumes sales, enabled the company to earn a pretax profit of Rs 1.075 billion as against Rs 0.700 billion in 2004-05. Gross profit margin slightly improved and finance cost were minimal as there were no long term debts.

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Performance Statistics                          (Million Rupees)

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30th June                                       2006        2005

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Share Capital-Paid-up:                        156.18      120.14

Reserves & Surplus:                         2,174.58    1,816.44

Shareholders Equity:                        2,330.76    1,936.58

Unrealised Gain on

 Revaluation of Investment:                    62.58       38.55

Security Deposits:                              9.08        8.88

Deferred Revenue:                             208.40      159.43

Deferred Tax Liability:                         2.28           -

Accumulated Compensated Absences:              23.58       14.84

Current Liabilities:                        4,816.86    4,164.52

Fixed Assets:                                 279.21      238.78

Intangible Assets:                              8.26           -

Investment Property:                          255.71           -

L.T. Investments:                             274.42      230.83

L.T. Loans:                                     4.46        4.40

Deferred Tax Asset:                                -        0.83

Current Assets:                             6,631.48    5,847.96

Total Assets:                               7,453.54    6,322.80

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Sales, Profit & Pay Out

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Sales-Net:                                  9,737.38    8,326.23

Gross Profit:                               1,167.35      927.36

Research & Development (Cost):               (10.66)           -

Operating Profit:                             938.96      712.65

Other Operating Income:                       265.06       62.67

Finance (Cost):                               (3.05)      (2.55)

(Depreciation):                              (29.96)     (35.07)

Profit Before Taxation:                     1,074.60      700.20

Profit After Taxation:                        730.58      453.86

Bonus (%):                                        20          30

Dividend Per Share:                            20.00       15.00

Earnings Per Share (Rs):                       46.78       29.06

Share Price (Rs) on 27/11/2006:               286.00           -

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Financial Ratios

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Price Earning Ratio:                            6.11           -

Book Value Per Share:                         149.23      161.19

Price/Book value Ratio:                         1.92           -

Debt/Equity Ratio:                             0:100       0:100

Current Ratio:                                  1.38        1.40

Assets Turn Over Ratio:                         1.31        1.32

Days Receivables:                                  6           6

Days Inventory:                                   97         114

Gross Profit Margin (%):                       11.99       11.14

Net Profit Margin (%):                          7.50        5.45

R.O.A. (%):                                     9.80        7.18

R.O.C.E (%):                                   27.71       21.03

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Capacity & Production (Units: Tractors)

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Plant Capacity (Single Shift):                15,000      15,000

Actual Production:                            24,238      22,358

Capacity Utilization (%):                     161.59       49.05

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