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Chapter 2 – Introduction 2.1. About the organization 2.2. Form of ownership 2.3 Nature of Business

Chapter 2 Introduction

  • 2.1. About the organization

  • 2.2. Form of ownership

    • 2.3 Nature of Business

    • 2.4 Geographic Area

    • 2.1 About the Company

The Escorts Group, with Escorts Limited as its flagship company, is among India’s

leading corporations operating in the diverse field of agri machinery, construction & material handling equipment, automotive & railway ancillaries information technology and financial services. The group has 15 modern manufacturing facilities & an extensive marketing network spread across the country. The genesis of Escorts

goes back to 1944 when two brothers, Mr. H.P. Nanda and Mr. Yudi Nanda,

launched a small agency house, Escorts Agents Ltd., in Lahore. The company’s

principal activities were trading and representing leading overseas manufacturers for

the sale of their products in India. One of its dealerships was for the “Massey Ferguson” brand of tractors.

EL promoted Escorts Tractors Limited in 1969 as joint venture with Ford Motor Company of USA for the manufacturing of ‘Ford’ series of tractors. The tractors

manufactured were in the 45-50 HP range and ETL became the market leader in this

segment with a share of above 50%. Consequent to FMC’s disposal of tractors

operations to Ford New Holland, USA, Ford new Holland acquired the shares of FMC in ETL. Following an agreement in 1995 to end the joint venture association, EL acquired the entire stake of ford new Holland in August 1995, making escorts tractors ltd. a subsidiary of Escorts Ltd. Over the years, Escorts has sured ahead and evolved into one of India’s largest conglomerates. Till 1993-94, all these activities were being carried out in various divisions of EL. EL undertook a major restructuring exercise between 94-98 spinning off the divisions into separate companies. The restructuring exercise-comprised consolidation of the agrimachinery business by merger of ETL with EL and having off various divisions into separate companies. Bi wheeler division was spun off to Escorts Yamaha Motors Ltd., construction equipment division to Escorts construction equipment Ltd., telecommunication equipment division to Escorts communication Ltd., EL booked

gains of Rs. 2091 million over the four year period 1994-95 to 1997-98 though the sale of these the sale of these divisions. The main products of Escorts group currently comprise of agri-machinery, information technology, health care, financial services, railway components, auto components, construct ion and material handling equipment.

ESCORTS HISTORY- MAJOR MILESTIONES

1944.

Escorts started Escorts Agency Ltd. in Lahore.

1950

Established India first Farm Mechanization Institute at Azadpur. Later it was shifted to Kashipur

1958

Started import MF tractors from YUGOSLAVIA for marketing in India.

1960

A manufacturing plant was set up at Faridabad

1961

Acquired license to manufacture URSUS/ESCORTS tractors

1969

Signed a contract with Ford Motor Co. (USA) to manufacture Ford 3000 Model tractors. Established EIFM (Escorts Institute of Farm Mechanization) at Bangalore (India), the largest institute Asia & in the world

1971

Introduction of Ford Brand tractors.

1974

400 tractors were exported to Afghanistan.

Escorts Limited (EL) is the flagship company of one of India’s leading business

groups, the Escorts Group. The company was incorporated in 1944 and is today, a

leading manufacturer of Agri Machinery Products, Auto Suspension and Ancillary Products, Railway Equipment and Material Handling and Construction Equipment. The company is widely acknowledged as one of the pioneering agents of farm mechanization in the country and has been playing a pivotal role in the socioeconomic progress of the country for more than five decades. Escorts is known to be an ‘Indian multinational’ and has established technological and business collaborations with leading companies across the globe. Escorts AGRI MACHINERY GROUP (AMG) was set up in 1960 and they rolled out their batch of tractors in 1965 under the brand name of Escorts. Today its tractors are marketed under three brand names, viz. Escort, Powertrac and Farmtrac. Escorts Brand of tractors is symbolic of reliability and enjoys the confidence of the farming community for the last 40 years. Powe rtrac Brand of tractors is the most fuel-efficient tractor in their respective categories that offer excellent value for money and have helped the farmer improve their quality of life. Farmtrac Brand is the most powerful premium range of tractors that give

maximum productivity to the farmers. As far as figures go, the company has more than 1600 sales and service units, and footprints in over 40 countries. The management of Escorts takes great pride in their technological expertise which has seen the company introduce more than 45 different tractor variants within the 25 to 80 HP (Horsepower) ranges, over 16000

constructions and material handling equipment and become the world’s largest manufacturer of Pick-n-Carry cranes. The company’s in-house R&D (Research and Development) unit is spread over100,000sq. and has been recognized by the Department of Scientific and Industrial

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Research, Ministry of Science & Technology, Government of India for the period of

2008-2011.

In 1944 prior to the independence Escorts started as Escorts Agency Ltd. in Lahore. In 1965 the first batch of tractors from Escort Agri Machinery Group came out on the field with the brand name of Escort. Today more than 6 lakhs tractors of the company are toiling under the sun. Not only in India, the tractors of the company are also being exported to a no. of countries. Escorts has a wide range of tractors. The Head-Quartet of Escorts is in Faridabad. The tractors of the Escorts Ltd. are known worldwide because of its quality product. It has a wide range of tractors. It has three well accepted and powerful brands Escorts, Powertrac & Farmtrac. All the three brands of Escorts AMG have been designed in a manner that they complement each other in the market place. The Escorts Institute of Farm Mechanization (EIFM) is located in Bangalore (India). The main purpose of EIFM is to supply proper or needed

machinery in India for Farmer’s economics or wealth. This is known as Farm

Mechanization. Its purpose is to represent leadership of Escorts in agriculture arena leveraging the knowledge, product & service of AMG. Among all the agri Machinery companies Escorts become the first tractor manufacturing company in the world to win the TS 16949 Certification for quality.

Contribution of Agri Machinery Group

Contribution of Agri Machinery

Contribution of Agri Machinery Group Contribution of Agri Machinery Forms of Ownership In December 1959, Escorts

Forms of Ownership

In December 1959, Escorts agents ltd. was converted into a public limited company and was renamed as Escorts Limited (EL). In January 1960, EL decided to set up

manufacturing facilities for making tractors in India under the “Escorts” brand name

in the 25-40 Horsepower categories.

Nature of Business

The Escort group is among India’s leading engineering conglomerates operating in

the high growth sector of Agri-machinery, Construction & material handling equipments, Railway equipments and Auto components. Having pioneered farm mechanization in the country. Escorts has played a pivotal role in the agriculture growth of India for over Five decades and there Nature of business is Supplier, Manufacturer, Service Provider

Geographic Area

With regional offices all over India in States of Haryana, Uttaranchal, Delhi & Maharashtra Tractors Manufactured by escorts Ltd. are sold not only in India but in other countries also or over 41 countries of the GLOBAL MARKET, like USA CHILE SENEGAL TANZANIA GHANA SOUTH AFRICA SRILANKA POLAND

Chapter 3 Company Profile

  • 3.1 Organization Structure

  • 3.2 Vision & Mission

  • 3.3 Products & Services offered

  • 3.4 Distribution Network

  • 3.5 SWOT Analysis

  • 3.6 Competitor Information

  • 3.7 Market share & growth rate

  • 3.8 Key challenges

Vision and Mission

Through the power of Imagination in engineering we creates solution that helps our customers, be more productive.’’

Mission of ESCORTS is:

Engineering Changes through core competency for greater synergy reinforcing bonds with customers & establishing powerful symbiotic relationship with international allies, preparing global market. The company wants to make a lasting difference to its shareholders, its customers, its business associates, its employee and the country as a whole. The company also gives better quality and better technology

to customer and treats every customer as “special” to build respect for, and loyalty

to, Escorts.

Product & Services by Agri-Machinery Group

Escorts is one of the largest tractors manufactures of the country. It is one of the leading AMG & produces tractors in the 27-75 HP range. Its manufacturing capacity is 1.2 lacs per annum & has already sold tractors more than 1 million.

Tractor:-

A tractor is a self operating machine which provides traction for itself & power to

operate tools and other agricultural & non agricultural equipments attached to it. According to Oxford dictionary the word Tractor was first used in 1856 in England as a synonym with engine. The term Tractor appeared in an 1880 U.S.A. patent for track laying steam traction engine.

Traction:-

It is a Force in the direction of travel. Developed by the traction medium (Soil) & is transferred to the traction The engine developed power, at the end goes to the traction wheels which makes it able or allows it to move the tractor with or without load. The speed gets reduced, due to the slip that occurs during the movement of wheels. With increasing load the slippage also occurs. Use of good tyre tread increases the traction. By adding weight of case iron and water ballasting, the weight can be increased for good traction.

Introduction of Tractors

Predates independence humans were used in place of Bullocks for showing & agricultural activities. After that Humans were replaced by Bullocks. With the passage of time the first Tractor with steam engine developed. In 1961 Escorts

started manufacturing tractors in collaboration with URSUS of Poland. After thatwith modernization & large competition in the market several ranges of tractors were developed to fulfill the needs of farmers.

WHY ESCORTS TRACTORS ARE BETTER CHOICE?

Escorts Tractors are considered as a better choice by the farmers they provide quality assurance to the farmers. Escorts AMG worked on the or uses the world best methodologies of BPR. Its different range of tractors has been developed from proven reliable design. It is even upgraded to meet the demands or requirements of the farmers for greater output & reliability. Escorts Tractors are also considered best because they are designed keeping in mind the demand or requirements or needs of the farmers for their welfare. Also Escorts got the award for its quality product.

WHY ESCORTS TRACTORS ARE BETTER CHOICE? Escorts Tractors are considered as a better choice by the

PRODUCT RANGES

WHY ESCORTS TRACTORS ARE BETTER CHOICE? Escorts Tractors are considered as a better choice by the

Escort

A Tradition of Trust

Powertrac

The super diesel Savers

Escort (A Tradition Of Trust) - Economy Range 27-35 HP Category

This was the very first range of tractors introduced by Escorts. The Escort range of tractors has a tradition of service & trust behind them as they give quality assurance.

They are the farmer’s friends. Powertrac (The Super Diesel Savers)- Value Range 34-55 HP

The Powertrac range of tractors is designed to give spectacular diesel economy i.e., a striking or very impressive performance. They are biggest friends for farmers as they can be used during rising diesel costs. This range of tractors are perfect for the entire Indian farming community & their prosperity as it takes or needs or uses less diesel compared to its other previous ranges.

Farmtrac (The World Champion) Premium Range 34-75 HP

In tractor technology, the Farmtrac range is the ultimate icon having a no. of features. This range provides a huge no. of features for scientific farming & other applications. It is a machine packed with powerful features for providing maximum efficiency. The top line of the company arises from four main verticals, namely: - the agricultural machinery segment, the material handling and construction equipment segment, the railway equipment segment and the auto suspension and ancillary products segment. The company also derives a minor source of income from its

stakes in various companies located in India and abroad. Examining the historical

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performances of all these segments, it is quite clear that the agricultural machinery segment is the major driver of revenue. Historically that segment has contributed around 72% of the company’s total sales (sales from FY11-FY12). This division of Escorts commenced operations in 1964 with the manufacturing of

tractors being the key activity. Currently the manufacturing of tractors takes place in their Faridabad plant which churns out on average, around 260 tractors a day, in two shifts. However this facility has a manufacturing capacity of 400 tractors a day, with that level being reached only during peak periods.

The Escorts’ brand of tractors is immensely popular amongst the farming folk in the

country, particularly in the northern territory. This statement is best exemplified by the fact that every third tractor in the country is an Escorts tractor. Principally Escorts offers three tractor brands namely: - Powertrac, Farmtrac and the eponymous Escort. The Powertrac brand is the utility and value-for-money tractors that functions on horsepower ranging from 34 to 55. The Farmtrac brand is the premium tractor that functions on horsepower ranging from 34 to 75 while the Escort tractor brand is the economy tractor that has twin-cylinder engines with horse power ranging from 25 to 35.Out of these three brands, the Farmtrac brand is the most popular, accounting for 50% of the company’s total sales. The Powertrac brand is not far behind, accounting for 48% of total tractor sales while the Escort brand only accounts for 2%. In addition to India, the company exports tractors and other farm equipment to more than 40 countries. Construction equipments serve as the second largest contributor

of Escorts’ sales, attributing for around 15% of the company’s total turnover. As part of this segment, the company manufactures and markets a diverse range of construction and material handling equipment such as cranes, loaders, vibratory rollers and forklifts. The company has managed to garner quite a reputation through this segment as it is the world’s largest manufacturer of Pick-n- Carry cranes with that item generating more than 60% of the company’s construction equipment sales. It also has a strong presence in the manufacturing of compactors which contributes another 25% of the total construction equipment sales. The remaining part of the company’s bottom line arises from the equipment division, which is further divided

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into the railway equipment division and the auto equipment division. Traditionally

both these segments haven’t contributed an awful lot to the company’s total turnover

(approximately around 8% over the last three years). Escorts is one of the oldest suppliers of high-tech equipment to the Indian railways, having commenced that relationship in 1970. The products of the railway equipment division are also exported to over 15 countries worldwide. As far as the auto equipment division is concerned the company has quite a strong presence in the country with an aftermarket of 300 dealers, 1000 retailers and 20000 workshops/garages. The company is considered to be a pioneer in the manufacture of automotive shock absorbers, having produced that product for two wheelers and four-wheelers since 1966. Its auto division too is quite efficient with a manufacturing capacity of

5000000 units per annum. The company also follows a well-balanced market mix of its auto manufacturing parts, with 60% accounting for domestic sales while 40%

accounts for exports. The company’s commitment to research and development is best exemplified through the “Escorts Institution of Farm Mechanization”, a

research institution located in Bangalore, and set up with the objective of enhancing

the agricultural productivity and quality of life in rural India. Through this institution, the company is constantly striving to develop farmer friendly and fuel efficient products.

Ecorts Popular Tractor Models

Farmtrac 65EPI

Farmtrac Champion Farmtrac 45 Farmtrac 70 Farmtrac 60 Farmtrac Hero

Services Offered

The company makes its every effort for continuously improving and for meeting the ever -rising expectation of its customers at the lower cost. The company tries to fulfill the need of its customer, both internal and external with the highest degree of commitment thereby creating a quality organization geared to ensure total customer satisfaction and the continuous health and prosperity of the business.

Custome r Orientation: To fulfill the requirement of the internal and external customer of the company.

Process Orientation: To optimize and harmonize interrelated process rather than individual function.

Preventive Behavior: To prevent the mistake to happy the customer

SWOT Analysis

STRENGTH

WEAKNESS

Good contacts / successful networking.

High work pressure due to less Number of Workforce

Positive Attitude,Self

Lack of work Experience

Discipline Good relationship with customers Successful marketing strategies Reputation for innovation

The time duration could not provide sufficient opportunity to study every detail of Sales and Distribution management of the company

OPPORTUNITY

THREAT

Golden time for experience of Market.

Pull and down competition. Competitors with better job

Competitors have a similar

Strong Network. Loyal customers

hunting skill.

product

Competitors have launched a new advertising campaign

Competitor Information MARKET SHARE OF MAJOR PLAYERS

The market shares of the top four players in the Indian tractor industry did not change

The market shares of the top four players in the Indian tractor industry did not change much during 2009-10 in comparison with 2008-09. M&M remained the market leader with around 41.1% market share, followed by TAFE with a market share of around 22%, Escorts with around 12.1%, and International Tractors (ITL) with around 8.9%. M&M remains particularly strong in the southern region (50.4% market share during 2009-10). However, L&T John Deere (LT-JD) was able to increase its market share in the region by around 250 bps in 2009-10, mainly at the expense of M&M and Escorts. In the western region too, LT-JD performed well in 2009-10, increasing its market share by 190 bps, even as TAFE lost market share by around 90 bps there. In the northern region, where M&M has been traditionally weak, the company increased its market share by 140 bps during 2009-10, even as ITL and Escorts lost market shares by around 90 bps and 60 bps respectively, there. In the eastern region, M&M was able to raise its market share by around 140 bps in 2009-10 at the expense of Escorts and TAFE.

Top 2 Competitors of Escort Agri-Machinery Group. Mahindra & Mahindra (M&M) Tafe Mahindra & Mahindra

Mahindra & Mahindra’s Farm Equipment Sector (FES), a part of the U.S. $14.4

billion Mahindra Group, maintained its leadership position in the tractor industry in FY 2011 - 2012. Domestic sales in FY2011-2012 stood at 221730 units, as against 201785 units during FY2010-2011, having registered a growth of 10%. Total tractor sales (domestic + exports) in the financial year stood at 235452 units, as against

213653 units for the same period last year. Exports for financial year ended on March 31, 2012 stood at 13722 units, having registered a growth of 16%. For the month of March 2012, the total sales stood at 17405 units. Exports for the month registered an impressive growth of 33% at 1485 units the farm equipment division of Mahindra & Mahindra, builds and sources tractors that are sold worldwide across six continents. In 2010, Mahindra became the number one selling tractor in the world. Mahindra has a huge consumer base in India, China and America and a growing base in Australia. The company builds more tractors in India than any other manufacturer, and has the capacity to build 150,000 tractors a year. In 1963, M&M formed a joint venture with International Harvester to manufacture tractors carrying the Mahindra nameplate for the Indian market. Armed with engineering, tooling and manufacturing know-how gained from this relationship, M&M developed its first tractor, the B-275. Mahindra Tractors with sales of nearly 85,000 units annually is one of the largest tractor companies in the world, and is number one in sales in India - the largest tractor market in the world.

Tractors and Farm Equipment Limited (TAFE)

Tractors and Farm Equipment Limited (TAFE), a US $1.6 billion tractor major incorporated in 1960 at Chennai, India, is the third largest tractor manufacturer in the world and the second largest in India by volumes, with a 25% market share of the Indian tractor industry and a sale of approximately 150,000 tractors (domestic and international) annually. TAFE's partnership with AGCO Corporation and the Massey Ferguson brand for 52 years is an outstanding example of TAFE's commitment to its values of building long-term relationships with its stakeholders, through fair and ethical business practices. In the Indian market, TAFE has earned the trust of its customers through its wide range of products that are known for high quality and low cost of operation, backed by over 1000 strong distribution network that effectively supports its three tractor brands of Massey Ferguson, TAFE and Eicher. TAFE exports tractors in partnership with AGCO and independently, powering farms in over 82 countries including developed countries in Europe and the Americas. Besides tractors, TAFE and its subsidiaries have diverse business interests in areas such as farm machinery, diesel engines, batteries, transmission components, panel instruments, engineering plastics and hydraulic pumps and cylinders. From a small beginning with just one tractor model in 1961, TAFE today is recognized as a high quality mass manufacturer with an extensive product range to meet every farming need, innate engineering strengths, uncompromising focus on quality and an immense fund of experiential knowledge gained through designing,

developing, manufacturing and supporting tractors that are synonymous to reliability and ruggedness. TAFE's R&D facilities are centers of excellence, renowned for their innovative design and engineering expertise, and have been recognized by the Department of Scientific & Industrial Research, Ministry of Science and Technology, Government of India. Extensive research and testing ensures that TAFE's products and aggregates meet its exacting performance standards.

Growth Rate and Market Share

On July 2004 Escort s AMG (Agri Machinery Group) recorded a strong sales growth of 113 per cent. The Indian tractor industry, which grew 50.6 per cent during April-May 2004 helped Escorts garner over five per cent market share. Escorts Limited has registered a 20.80% increase in sales in the first quarter of fiscal 2009-10 ending December 31, 2009 on September, 2010.

Trend towards high HP Tractors The proportion of higher power (greater than 50 HP+) segment has shown increase in total industry volume share by 380 bps from 12.6% in 2007-08 to 16.4% in 2009-2010 to 18.2% in 2011-12. The Compa ny’s Reve nue of Rs 3,942.8 crore in 2009-2010 as against Rs 3,279.8 Crore in 2010-2011. The Tractors Volume Came down by 4.3 per cent to 60,673 in 2009-10 from 63,420 in 2010-2011. Tractors volumes on Full Year at 5,311 in FY12 as that of 6,244 in FY11.

This shows that the liquidity of the company has improved, interest costs have fallen substantially and the debt equity ratio is attractive. The company is consistently enhancing shareholder value through growth initiatives, fiscal prudence and innovative strategies. We are leveraging our ability to engineer technology to chart growth path that spans a wider canvas of economic activity across agriculture and infrastructure sector.

Market Share

Key Challenges Although every effort has been made to collect the relevant information through the sources

Key Challenges

Although every effort has been made to collect the relevant information through the sources available, still some relevant information could not be gathered.

Busy Schedule of Concerned Executives: The concerned executives were having very busy schedule because of which they were unwilling to give appointment. Time: The time duration could not provide sufficient opportunity to study every detail of Sales and Distribution management of the company. Unawareness: Executives were unaware of many terms related to study while asking to them. Confidential Information: As the company on account of confidential report has not disclosed some figures. Moreover, in some cases separate accounts of division are not separately maintained thereby, leading to restrictions in study