2. Idea screening- This innovation was spotted by GIAN and SRISTI branches of the Honey Bee Network set up professor Anil Gupta of IIM-A. A student group of IIM-A, the Student Organization for Managerial Assistance (SOMA) conducted feasibility analysis for commercialization of the tractor. Owing to the factors like soil type and small landholding size in four states of Gujarat, MP, UP and Maharashtra, this model was considered commercially viable.
3. Later, a technical consultant and National Institute of Design, Ahmedabad was hired for improving technology and design respectively.
4. In 2004, this technology was acquired by three technopreneurs namely, Jagdip Trivedi, Jayantibhai Patel and Pragnesh Patel of M/s Pramal Farmatics (P) Ltd. under technology transfer agreement to manufacture and market 10 HP tractors in the 4 stated under the brand name “Vanraj” in a deal of 10 million rupees.
5. Product Development: The Company further refined the technology to make it suitable for commercial production and to comply with the regulatory requirements and three prototypes were developed.
6. Test Marketing: These prototypes underwent one and a half years of extensive field trials in farms. Feedback from the field trials were used to modify the technology until satisfactory results was achieved.
7.
8. The market testing will be of no use as it’s already known which segment of farmers will go for the product and in any case it has been already seen that which segment needs the Mini Tractor most.
9. However, the stage of concept testing was avoided in which the idea is taken to the target customers for their views about the concept of the product to understand the feasibility and shortcomings of the concept.
10. Also, Mr. Trivedi, one amongst the three partners of the company just assumed that the tractor can be easily targeted to biggest Small and Marginal Farmers’ segment but market analysis was not done.
11.
12. Cost of Goods Sold: Cost of production as calculated in Annexure 6 indicates that the capacity utilization of the company has been increasing every year by 5% which leads to actual increase in production from Rs. 300 Lakhs in 1st year to Rs. 480 lakhs in 7th year. There is an increase in COGS every year by Rs. 50 Lakhs approximately which is indeed a good indicator.
13. Profit after Interest & Tax (PAT): It is calculated after deducting the general & administrative expenses, interest and taxes. This gives the actual position of the company’s financial position as narrows down the profits of the company by a good margin. As per Annexure 7, Pramal Farmatics’ PBIT has been good for the initial years but it is not growing the way it should have been when it completely establishes itself in the market. The inference that can be drawn is that despite 10% increase in sales every year, the firm is not confident of similar returns in terms of profit.
14. Dividend: The Company expects a relatively good amount of dividend of Rs. 2.5 Lakh per annum which increases to Rs. 3.75 Lakh by the end of 7th year. This shows that company is intended to grow with a cautious mindset, not an aggressive outlook.
15. Net Cash Accrual: The net cash/profits in hand would be Rs. 7.12 Lakhs for the 1st year which increases at a decreasing rate for 5 years and then declines for the 6th year. This is not a healthy sign for any company and that too when you are just preparing the projected and not even the actual profitability statement.
18. The gross profit of the firm comes out to be 4% for 1st year and 3% for the 7th year which has been quite low. The company must work in the direction of increasing its Gross Profits by either increasing the price of Tractor or by strategising a plan to spend minimal amount on Cost of Production.
20. The net profit margin of Pramal Farmatics ranges from 1.2% to 1.3% throughout which is again quite low.
21. Therefore, inference can be drawn that Pramal Farmatics Pvt Ltd should look forward to increase its sales over the years and keep a good margin for itself to sustain in the market. They have made a good start but in order to sustain the momentum the above mentioned strategies need to be adopted.
![Rural Marketing<br />Case Study<br />Vanraj Mini -Tractors- Is Small Beautiful?<br />Group Members<br />Asim Katiyar (11)<br />Akrishta Ritu (03)<br />Ankit Shrivastava (07)<br />Dhiraj Bhagat (17)<br />Gunit Kaur (19)<br />Vibhuti Bahuguna (56)<br />Nilesh M Patani (31)<br />Submitted to:<br />Prof. Jeevan J Arakal <br />Q: What is the case situation, what are the key decisions that have to be taken by Mr. Jagdip Trivedi?<br />Case Situation<br />The case is about the mini tractor named Vanraj the situational analysis is done through 4c model of situation analysis. This model is given below<br />1609725-2540<br />1. Corporation/ Company<br />The Company named M/s Pramal Farmatics Pvt. Ltd owned by three technopreneurs Jagdip Trivedi, Jayanti Bhai Patel and Pragnesh Patel, manufacturing facilities situated near Anand Gujarat. Initially it was a material handling company. Which is now ready to manufacture and market the small 10 HP tractor under the brand name of ‘Vanraj’. Company got the certification of Central Motor Vehicle Rules (CMVR) from Central Farm Machinery Testing and Training Institute (Budhni, MP). Company had good technical and professional experience before entering in this business. <br />2. Competition: <br />It is mentioned that the company is entering in the new segment and this segment was not catered by any company so we can say that there was not any direct competition but it was in the very competitive Industry where various major players like Mahindra & Mahindra, TAFE, Punjab Tractors, Escorts and Sonalika were there. There were three mini tractor manufacturer but they were not the refined product that is why they are not direct competition.<br />3. Customers:<br />They are going to enter in the new segment which was not catered by any company as such that is why there is no clear defined customers but the usage and the design of the tractor has some implication about the customers they may be the Small and marginal farmers, horticulture farmers, material handling customers also. They have also identified the large farmers as segments.<br />4. Climate: <br />In this Model climate consist of four factors and they are Political, Economical, social and Technological. This case is not too much influenced with politics. ‘Vanraj’ as a tractor and as an innovation is supported by various groups and organisations from IIMA to NID but this was not too much of the political kind. When we talk about the Economical the company was the small scale industry and the customers identified were small and marginal, large and horticulturist etc. <br />Company got funding from the government wing for the technological refinement. Technology transfer value for the company was 10 million rupee beside this the company has paid-up capital around 1.25 million. The tractor price they were going to target was 0.18 million, discussing about the industry as a whole tractor industry’s growth rate 30% over the years the size of the market was nearly 6.5 billion. <br />Discussing the sociological factors the product was focused to cater small usage which was not tackled by the big tractors. Most of the consumers were small and marginal farmers. For the buying the tractor they consider the HP as the main factor but beside this there are other factors like it is a status symbol also it is the sign of prosperity also tractor purchase also has lot of other social significance.<br />Discussing about the technological aspect, we would consider that the marginal farmers are still dependent on the bullocks and other manual systems. Farm mechanisation has lot of value in terms of the upliftment of the poor and increasing the productivity. In tractor industry HP is the main criteria and most of the technological aspects are covered in this only.<br />Key decisions that have to be taken<br />The most important decision that has to be taken by the head honcho is the question of the market segment, which they are going to cater, is it the small and marginal farmer or is it the horticulture segment or the material handling segments, beside this which one is profitable one and for how much time.<br />They also pegged the price of the Vanraj at 0.19 million which is very conservative kind of estimate whether this is going to sustain or not.<br />Q: What are the various segmentation criteria for Tractor Usage in India? Which do you think is the most important method?<br />In segmentation firm divides its customers in groups on the basis of similar characteristics & needs. Through this the firm can roll out a product suiting the segment. Segmentation criteria that Pramal Farmatics Pvt. Ltd. followed were on the following basis:<br />Demographic segmentation:<br />On the basis of land holdings:<br />Small & marginal farmers: In this category the level of mechanisation is low and they used bullocks for tilling and agricultural operations. Moreover they had small land for farming and the Vanraj tractor was focussing this segment as its target.<br />Large farmers: This section was catered by all the big players as they have large area for farming and the farms were highly mechanised. They usually preferred tractors having HP more than 20.<br />On the basis of type of occupation:<br />Industry: Industry wise they are divided into small scale firm, national, and multinational players. <br />Horticulture: This segment of cultivation requires specific design which would facilitate the cultivation process. It requires intercultural operations like removing weeds and creation of soil. These functions could be well performed by tractors having “three wheel convertible features” which is observed in Vanraj tractors.<br />Geographical/ Segmentation based on Topography of soil:<br />North India: The regions like Punjab, Uttar Pradesh, and Haryana were dominant in tractor sales. As the soil is alluvial they require tractors with less HP. <br />South and West India: In the regions like Gujarat, Maharashtra and Madhya Pradesh the soil is harder type- Laterite and black soil where more HP tractors are required.<br />Product segmentation (Engine horse power)<br />Mini tractor: The tractors which are having less than 20 HP are considered to be the mini tractors and Vanraj being one of them.<br />Small tractor: Tractors having horsepower between 21 and 30 HP are considered as small tractors. <br />Medium tractor: Tractors having horse power between 31 and 40 HP were included in this section.<br />Large tractor: Tractors having horse power more than 50 HP were included in this section.<br />The best method for the segmentation is demographic precisely on the basis of size of land holding. The segmentation on the basis of land holdings is important as’<br />This segment is not served by big players, as they are interested in more margins.<br />In this segment about 82% of the people do not have tractors, thus having more scope for future.<br />Land holdings are smaller, for small farmers it is 0.4 hac & for marginal farmers it is 1.4 hac. Thus they need a tractor which is not bigger in size.<br />The Vanraj tractors are of 10 HP and hence it would be best suitable for small and marginal farmers due to its low cost and lesser fuel consumption with more utility and less maintenance.<br />This is a broad segment which is linked with other segmentations too. The small & marginal farmers prefer mini tractor than large tractor. <br />Q: Describe the product development process of Vanraj Tractors? How does this process differ from a text – book product development process?<br />,[object Object]](https://image.slidesharecdn.com/vanrajminitractorcasestudy-110402152215-phpapp01/85/vanraj-mini-tractor-case-study-1-320.jpg)
