STUDY OF DEALERS SATISFACTION AND BRAND PERCEPTION OF MAJOR TRACTOR BRANDS IN SAURASHTRA AND CENTRAL GUJARAT BY RENISH SOJITRA

Transcription

1 STUDY OF DEALERS SATISFACTION AND BRAND PERCEPTION OF MAJOR TRACTOR BRANDS IN SAURASHTRA AND CENTRAL GUJARAT BY RENISH SOJITRA B. Tech (Agricultural Engineering) INTERNATIONAL AGRI-BUSINESS MANAGEMENT INSTITUTE ANAND AGRICULTURAL UNIVERSITY ANAND JUNE 2016

2 STUDY OF DEALERS SATISFACTION AND BRAND PERCEPTION OF MAJOR TRACTOR BRANDS IN SAURASHTRA AND CENTRAL GUJARAT A PROJECT REPORT Submitted by RENISH SOJITRA Reg. No.: In partial fulfilment for the award of the degree of MASTER OF BUSINESS ADMINISTRATION (INTERNATIONAL AGRIBUSINESS) UNDER THE GUIDANCE OF DR. SHAKTIRANJAN PANIGRAHY (Assistant Professor) INTERNATIONAL AGRI-BUSINESS MANAGEMENT INSTITUTE ANAND AGRICULTURAL UNIVERSITY ANAND JUNE 2016

3 INTERNATIONAL AGRI-BUSINESS MANAGEMENT INSTITUTE ANAND AGRICULTURAL UNIVERSITY ANAND CERTIFICATE This is to certify that the project report entitled STUDY OF DEALERS SATISFACTION AND BRAND PERCEPTION OF MAJOR TRACTOR BRANDS IN SAURASHTRA AND CENTRAL GUJARAT of M.B.A. (International Agribusiness) embodies research work carried out by RENISH SOJITRA under my guidance and supervision, and that no part of this project work has been submitted for any other degree. The assistance, guidance, and help received during the course of investigation have been fully acknowledged. Place: IABMI, Anand Date: (Dr. Shaktiranjan Panigrahy) Advisor

4 DECLARATION I hereby declare that the project entitled STUDY OF DEALERS SATISFACTION AND BRAND PERCEPTION OF MAJOR TRACTOR BRANDS IN SAURASHTRA AND CENTRAL GUJARAT submitted for the M.B.A. (International Agribusiness) degree is my original work and this has not formed the basis for the award of any degree, associate ship or other similar titles. Place: IABMI, Anand Name: Renish Sojitra Date: Reg. No:

5 Acknowledgement I take this opportunity to express my heartfelt thanks to my guide Ms. Vandana Kori, Mahindra & Mahindra Ltd, Ahmedabad, her inspiring guidance, unvarying encouragement and moral support throughout the course of my study. It gives great pleasure to express sincere thanks to Dr. S. R. Panigrahy, Assistant professor, International Agribusiness Management Institute, Anand Agricultural University, Anand for his guidance as my minor guide and profound support during my course work. I pay my due respect to Dr. Y. C. Zala, Principal & Dean, International Agribusiness Management Institute, Anand Agricultural University, Anand, for providing necessary facilities and support during entire course time. I also like to present my sincere thanks to Dr. R. S. Pundir, Associate Professor, International Agribusiness Management Institute, for providing the necessities in completing my research work and active support at all times during my course tenure. I also like to present my solemn thanks to Dr. Ritambhara Singh, Assistant Professor International Agribusiness Management Institute, for his support during the entire course tenure.

6 At last but not least, I think that the words are insufficient to express deep sense of feelings and respect towards my parents, without their encouragement, blessings and benediction it would not be possible to me to me complete this course. Their patience and sacrifice always have been the vital source of inspiration for me. Place : Anand Renish Sojitra Date :

7 Study of dealers satisfaction and brand perception of major tractor brands in Saurashtra and Central Gujarat Name of Student Advisor Renish Sojitra Dr. Shaktiranjan Panigrahy Assistant Professor INTERNATIONAL AGRI-BUSINESS MANAGEMENT INSTITUTE ANAND AGRICULTURAL UNIVERSITY ANAND ABSTRACT Mechanization has an important role in Indian agriculture. There are direct as well as indirect effects of agricultural machinery and implements on productivity through better use of other inputs, more efficient and timely completion of agricultural operations and increase in cropping intensity. Tractor industry is one of the most capital intensive industries in agricultural machinery industry. The project entitled study of dealer s satisfaction and brand perception of major tractor brands in Saurashtra and Central Gujarat was part of a project of Mahindra & Mahindra Ltd. It was taken up with three basic objectives of studying customer and dealer s perception towards the major tractor brands, dealer s satisfaction level on various parameters and to study the market dynamics of tractor industry in Saurashtra and Central Gujarat. The study has covered two Zones of Gujarat consisting of 6 districts and 24 villages. Both primary as well as secondary data were used to achieve the stipulated objectives of the study. Primary data were collected with the help of Schedule. The study revealed that, for the attribute Powerful, Mahindra got highest score and was ranked 1 by customers followed by Tafe and John Deere respectively. i

8 On the basis of Fuel efficiency, Tafe got the highest score and was ranked 1 by customers followed by Mahindra. On the basis of Less Maintenance Cost, Tafe was ranked no. 1 followed by Mahindra and Sonalika. On the basis of Compatible with Rotavator Mahindra got the highest score and ranked 1 by customers followed by Eicher. Further on the basis of Engine Capacity, Mahindra got the highest and was ranked 1, followed by Tafe. For the attribute Price, Tafe got the highest Score and was ranked 1 by customers followed by Mahindra and Escorts. On the basis of Resale value of tractor in the market, Tafe got the highest score and ranked 1 by customers followed by Mahindra. On the basis of Spare parts availability Mahindra got the highest score followed by Tafe. As far as after sales service was concerned among all the brands customers ranked Mahindra, Tafe and Sonalika as 1 st, 2 nd and 3 rd respectively. In the study dealers were literate and about 50% dealers had more than 12 years of experience in tractor industry and about 70% dealers sold more than 100 tractors per annum. Further, dealers in Saurashtra and Central Gujarat reported almost 40% sales of Tractor were in Exchange and 32% dealers reported 71 to 80 number of sales in Exchange. As Credit period was rated very poor across all the brands except Mahindra and John Deere dealers got the credit period of 15 to 30 days without any interest against the bank guarantee. Overall, dealers were not satisfied on this parameter as they expects companies to give the interest free credit period for at least 1 month. Satisfaction level on Delivery in Prime Season and Incentive & Support got the overall highest rating. Market dynamics of the particular tractor brand on 35 HP categories; it was found that price difference was varied within Rupees five lakhs to Rupees five lakhs fifty thousands in the study area. In individual product categories dealers were also varied from 16 to 34 in the study area. At the end, both customers and dealers ranked Mahindra and Tafe on the top of the tractor brands. ii

9 LIST OF CONTENT SR. NO. PARTICULAR PG. NO. ABSTRACT I LIST OF CONTENT III LIST OF TABLE VI LIST OF FIGURE VII NOMENCLATURE X I INTRODUCTION Background Of The Study Industry Profile Evolution of Tractor Industry Tractor Market in India - Focus on less than 20 HP and more than 50 HP segment Indian tractor industry- growth drivers Indian tractor industry region wise performance Indian tractor industry hp wise performance Major players in the tractor industry Company Profile Overview Group businesses Global presence of mahindra tractors Product portfolio New Innovation in Tractor Industry Objectives 18 II REVIEW OF LITERATURE 19 iii

10 III RESEARCH METHODOLOGY Area Source of the data Primary data Secondary data Sampling plan Sampling method Sampling unit Sample size Research instrumet Analytical tools Garett s ranking technique: Likert scale technique Scope of the study Limitations of the study 26 IV RESULTS AND DISCUSSION Classification of Farmers on basis of Land Holding Age Group of the Respondents Education level of Respondents Income Level of Respondents Month of Purchase Mode of Purchase Mode of Purchase in Saurashtra Region Gujarat Mode of Purchase in Central Gujarat Mode of Purchase Cash/Credit Brand Perception on the basis of following Attributes 36 iv

11 4.9 Educational Qualification of Dealers Experience of Dealers in Tractor Business Other Sources of Income Annual sale of the Tractor Tractors sold in Exchange scheme Cases of Credit Payment Dealer s Perception for Major Tractor Brands Rating for Satisfaction Level of Dealers on various Parameters Comparative analysis Penetration of Tractors In Saurashtra region of Gujarat In central gujarat region District wise Brand Penetration HP wise Segment Mix Market dynamics of tractor industry 62 V SUMMARY AND CONCLUSION 65 REFERENCES ANNEXURE XI XIII v

12 S.N LIST OF TABLES LIST OF TABLES Page No. 3.1 Area of Study Classification of Farmers on basis of Land Holding: (values in %) Age Group of the Respondents: Education level of Respondents: Income Level of Respondents: Brand Perceived by Customers on the basis of attribute Powerful in Saurashtra and Central Gujarat; Garrett s score 36 and Ranking Brand Perceived by Customers on the basis of attribute Fuel Efficient in Saurashtra and Central Gujarat; Garrett s score 37 and Ranking Brand Perceived by Customers on the basis of attribute Less Maintenance cost in Saurashtra and Central Gujarat; Garrett s 37 score and Ranking Brand Perceived by Customers on the basis of attribute Hydraulic System in Saurashtra and Central Gujarat; 38 Garrett s score and Ranking Brand Perceived by Customers on the basis of attribute Compatible with rotavator in Saurashtra and Central Gujarat; 39 Garrett s score and Ranking Brand Perceived by Customers on the basis of attribute Engine Capacity in Saurashtra and Central Gujarat; Garrett s 39 score and Ranking Brand Perceived by Customers on the basis of attribute Price in Saurashtra and Central Gujarat; Garrett s score and 40 Ranking Brand Perceived by Customers on the basis of attribute Dealers good behaviour in Saurashtra and Central Gujarat; Garrett s score and Ranking Brand Perceived by Customers on the basis of attribute Resale value in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brand Perceived by Customers on the basis of attribute Spare parts availability in Saurashtra and Central Gujarat; Garrett s score and Ranking. vi 41 42

13 Brand Perceived by Customers on the basis of attribute After sales service in Saurashtra and Central Gujarat; Garrett s 42 score and Ranking. 4.9 Educational Qualification of Dealers (Values in %) Experience of Dealers in Tractor Business: (values in %) Other Sources of Income: (value in %) Annual sale of the Tractor: (value in %) Tractors sold in Exchange scheme: (values in %) Cases of Credit Payment (value in %) Brands Perceived by Dealers on the basis of following attributes in Saurashtra and Central Gujarat; Overall Rating 49 and Cumulative point score Rating for Satisfaction Level of Dealers on various Parameters Comparative analysis of Customer s and Dealer s Perception Brand Penetration Rate (in %) HP wise Segmentation Mix for Saurashtra region Gujarat (values in %) HP wise Segmentation Mix for Central Gujarat Region Models in Major HP segments in study area Market dynamics of tractor industry 62 vii

14 LIST OF FIGURE S.N LIST OF FIGURE Page No Trend in Yearly Tractor Sales Volumes (Domestic + Export) Movement in HP-wise segment mix Major players in the tractor industry Classification of Farmers on basis of Land Holding Percentage wise distribution of Age Group Education level of Respondents Income Level of Respondents Main Seasons of Tractors Purchase: (values in %) Mode of Purchase in Saurashtra Region Gujarat Mode of Purchase in Central Gujarat (values in %) Mode of Purchase (Values in %) Educational Qualification of Dealers (values in %) Experience of Dealers in Tractor Business: (values in %) Other Sources of Incomes: (values in %) Annual Sales of Tractors: (values in %) Tractors sold in Exchange Scheme: (values in %) Cases of Credit Payment: (values in %) 48 viii

15 Penetration of Tractors Brand in Saurashtra region of Gujarat Penetration of Tractors Brand in Central Gujarat District wise Brand penetration (values in %) HP wise segment mix for Saurashtra region Gujarat HP wise Segmentation Mix for Central Gujarat Region ix

16 S.N Abbreviation Nomenclature NOMENCLATURE 1 AAU Anand Agricultural University 2 J&K Jammu and Kashmir 3 sq. mt. Meter Square 4 FY Financial Year 5 CAGR Compound Annual Growth Rate 6 Cr Crores 7 UK United Kingdom 8 NHM National Horticulture Mission 9 e.g. Example 10 etc. Etcetera 11 Ha Hectare 12 i.e. That is 13 viz. Which Means 14 Kg Kilogram 15 CO2 Carbon Di Oxide Gas 16 Ltd Limited 17 Pvt Private 18 MT Metric Tonne. 19 NGO Non-Government Organisations 20 hrs Hours 21 APMC Agriculture Produce Marketing Committee 22 NHB National Horticulture Board 23 M.P. Madhya Pradesh 24 A/C Account 25 NABARD National Bank For Agriculture And Rural Development 26 RBI Reserve Bank of India 27 US United States 28 et al. And Others 29 % Percentage xi

17 30 Rs. Rupees 31 > Less than 32 < More than 33 t Tonne 34 KVKs Krishi Vigyan Kendra 35 NPW Net Present Worth 36 BCR Benefit-Cost Ratio 37 IRR Internal Rate Of Return 38 Qtl Quintal 39 Fig. Figure 40 FYM Farm Yard Manure 41 NPV Net Present Value At the Rate 43 AUs Agricultural Universities xii

18 1. INTRODUCTION 1.1 Background of the study The study entitled Study of Dealer s Satisfaction and Brand Perception of Major Tractors Brands in Saurashtra and Central Gujarat is part of a project of Mahindra & Mahindra Ltd. The study has covered two Zones of Gujarat consisting of 6 districts and 12 talukas. Mahindra & Mahindra is interested to know customer s perception and satisfaction level of dealer s across all major tractor brands. 1.2 Industry profile Overview Although agriculture sector contributes less than 14 percent to the total GDP, It is critical to the economy as it supports more than 50 percent of the total workforce. In order to support the economic growth of around 9 percent which government was targeting to achieve as per 12 th five year plan, agriculture sector needs to grow at 4 percent per annum. The performance of the agriculture sector thus assumes great significance for the government. Agricultural machinery industry is an important segment of the agribusiness sector in India and plays a crucial role in furthering agricultural development. Tractor industry is one of the most capital intensive industries in agricultural machinery industry with more than half a dozen major players in the market at present (Kaur, 2004). The tractor penetration level in India is very low (20 tractors per ha.) as compare to the world standards. Also the penetration levels are not uniform throughout the country. While the northern region is now almost saturated in terms of new tractors sales, the southern region is still under penetrated. The medium horse 1

19 power category tractors, HP, are the most popular in the country and fastest growing segment. The Indian tractor industry is relatively young but the largest tractor industry in the world (accounting for 30% Global production). Industry characterized as medium HP tractors Industry because of the fragmented land holding in India. Since last decade industry had been growing (Y-o-Y) at the rate more than 15%. In FY14 Industry is growing (Y-o-Y) at the rate 18% & recorded decline in growth (Y-o-Y) at the rate 10% in FY15. Market size of the industry has reached to 6.26 lac units in FY15. There are currently 14 players in the industry. Mahindra & Mahindra is the leading player in the industry. Monsoon season is the key driver for sales of tractors. A series of good or bad monsoon can affect the sales. In recent years the industry has registered a good growth in sales, both domestic as well as exports. This is also partly because of the initiative of the government to boost up agriculture and agricultural machinery industry Evolution of Tractor Industry Inception Phase (1945 to 1965) Regulatory Phase (1965 to 1980) Development Phase (1980 to 1992) Liberalization Phase (1992 to 2002) Growth Phase (2002 onwards) 2

20 Inception Phase (1945 to 1965) Indian Tractor Industry developed in 1945 to 1960 because of the War surplus tractors and bulldozers were imported for land reclamation and cultivation in mid 1940's. In 1947 Central and State Tractor Organizations were set up to develop and promote the supply and use of tractors in agriculture and up to 1960, the demand was met entirely through imports. In 1951 there were 8,500 tractors in use, 20,000 in 1955 and 37,000 by Local production began with five manufacturers in 1961 producing a total of 880 units per year. Eicher, Gujarat Tractors, TAFE, Escorts, M&M are the major tractor manufacturers Regulatory Phase (1965 to 1980) During 1965 this had increased to over 5000 units per year and the total in use had risen to over In the year 1970 annual production had exceeded units with over units working in the country. From 1971 to 1980 six new manufacturers were well established during this period although three companies (Kirloskar Tractors, Harsha Tractors and Pittie Tractors) did not survive. Credit facilities for farmers continued to improve and the tractor market expanded rapidly with the total in use passing the half million mark by Development Phase (1980 to 1992) Annual production exceeded units by 1985 and reached in 1990 when the total in use was about 1.2 million. Then India - a net importer up to the midseventies - became an exporter in the 80's mainly to countries in Africa between 1991 to

21 Liberalization Phase (1992 to 2002) Since 1992 it has not been necessary to obtain an industrial license for tractor manufacture in India. By 1997 annual production exceeded units. Five new manufacturers have already started production since In 1998 Bajaj Tempo, already well-established in the motor industry, began tractor production in Pune. Growth Phase (2002 onwards): But since the last decade, tractor industry has been growing at CAGR of 15% Tractor Market in India - Focus on less than 20 HP and more than 50 HP segment Indian tractor market has undergone sluggish growth in the year 2015 due to various factors like abnormal rainfall with uneven spread and timing, and week agricultural sentiments. This uncertainty has caused reduction in Kharif and Rabi crop by 4-7% in turn affecting the Indian tractor industry. Adoption of tractors in India is very low when compared to global standards. Furthermore, adoption is not uniform throughout the country. Northern states are more or less saturated with most new sales being replacement demand, while the penetration in Southern states is quite low. The market in some of the Southern states had been growing steadily at a CAGR of 20 plus percent. From previous year trends, we can analyze that demand for < 20HP and >50HP tractors is increasing with a CAGR of 9% and 6% respectively. The sum of both < 20HP and >50HP constitute for around 10% of total tractor market share. In spite of domestic market being weak, the demand from the outside countries like Srilanka, Indonesia, Bangladesh has kept the Indian tractor market steady. The poor performance of sub-segments like HP and 40-50HP tractors is reflecting the slow growth in Tractor industry. 4

22 Due to high market competitiveness, many players have introduced new products with different features to attract the market and expand geographically. M&M, VST, TAFE, Sonalika, Escorts and Captain Tractors are main players in <20HP and >50HP segment. Recently M&M introduced two new tractor of 60HP (960FE) and 15HP (Swaraj717) to the market. Companies like VST are increasing the manufacturing capacity to meet increasing demand of <20HP tractors. Competition in <20HP is gearing up where other major players like Escorts and Sonalika are planning to enter this sub-segment Trend in Yearly Tractor Sales Volumes (Domestic + Export) Tractor industry has witnessed sharp contraction in FY15, after seeing robust performance during previous years. Farm incomes have been negatively impacted by decline in output of major crops and softening crop prices with lower procurements by government on account of adequate buffer reserves of major food grains during FY15. Some of the cyclical factors that have contributed to healthy demand side economics are good south-west monsoons supporting farm output, strong rural liquidity sustained by higher minimum support price (MSP) for crops and double digit food inflation, besides adequate credit availability. Structural drivers like scarcity of farm labour in light of alternate employment opportunities, steady replacement demand and growing non-agricultural use of tractors have also supported tractor volumes. In addition, long-term drivers of the industry such as low tractor penetration, increasing budgetary allocation towards the rural sector and government support for farm mechanization remain favourable. 5

23 Tractor sales(domestic + Export) % 29% 30% 28% 24% 25% 21% 20% 16% 17% 18% 15% 12% 10% 5% -2% 0% 0% -3% -5% -10% -10% -15% FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Tractor Sales Y-o-Y growth Source: CMIE Database, ICRA Estimates Fig : Trend in Yearly Tractor Sales Volumes (Domestic + Export) INDIAN TRACTOR INDUSTRY- GROWTH DRIVERS Government support for agriculture and rural development: Long-term driver for tractor industry GoI has consistently increased its budget outlay for agriculture and allied activities and also increased its allocations for schemes like Rashtriya Krishi Vikas Yojana (RKVY) to boost farm output and improve labour productivity Buoyancy in rural income supports tractor growth; earnings could come under pressure in the short term: Improvement in rural liquidity on the back of increase in minimum support prices (MSP) offered by the government and high food inflation has continued in the current fiscal, as evident from the charts below. (Department of Agricultural and Cooperation) 6

24 Institutional Credit flow to agricultural sector There exists a strong correlation between farm mechanisation and availability of agricredit. While scheduled commercial banks are mandated by the Reserve Bank of India (RBI) to meet a target of 18% of their net banking credit for the agricultural sector, growth is driven by increased lending by non-banking finance companies, especially in the southern states. Institutional credit to the farm sector has increased at a CAGR of 19.9% from FY06 to Rs. 4, 46,779 crore in FY11 and expected to cross Rs. 5, 00,000 crore in FY12. Apart from increase in the magnitude of credit availability, the sector has also benefited from introduction of innovative credit delivery schemes such as the Kisan Credit Cards (KCC). However, the availability of credit has not been uniform throughout the country. Better finance penetration in Punjab, Haryana and Uttar Pradesh has led to higher farm mechanisation in these states Tractor penetration increases; scope for further improvement India s current tractor penetration is estimated at ~20 tractors per 1000 hectares of agricultural land. While this is close to the averages in some countries, the statistic belies the fact most of the land holdings in India are smaller than those in foreign countries. Also penetration numbers vary widely across states, with states like Punjab, Haryana or Western UP enjoying significantly higher penetration compared to the rest of the country. Some regions like Eastern Uttar Pradesh, West Bengal, Orissa, Madhya Pradesh, Karnataka and Andhra Pradesh have relatively low penetration levels. Also, there exists headroom for growth of smaller HP tractors among small and marginal farmers. Further, even if tractor density was to remain constant, demand in the industry is expected to remain sound on account of shortening tractor replacement cycle. 7

25 Monsoons among the factors supporting tractor industry growth: The timing, spatial distribution and magnitude of rainfall under the South-West monsoon are some variables that influence the Kharif crop output, and in-turn have a bearing on the domestic tractor market. While it is intuitive to correlate a good monsoon year with strong tractor sales, with reducing dependence of on rain-fed farming, the impact of monsoons on tractor industry is reducing. Although the shift from rain-fed agriculture to irrigated farming has been gradual (~50% of cultivated area in India is still dependent on rains), the percentage of area under irrigation is particularly high in states such as the Punjab (98% under irrigation), Haryana (88.5%), Uttar Pradesh (74.9%) and Bihar (63.1%), which have amongst the largest population of tractors in the country. (CMIE Database; ICRA Research) Scarcity of farm Labour Alternate employment opportunities following urban migration and other Government- run schemes such as the National Rural Employment Guarantee Act (NREGA) have necessitated greater farm mechanisation Increasing non-agricultural application Tractors are replacing bullock carts and labour as the cost of ownership of a 15-hp tractor is lower than the cost of owning two bullocks to pull a cart and renting a tractor is more lucrative than owning a tractor. A tractor works much faster than bullocks, which helps the farmer to crop land twice a year. Only 29% of farmers cultivate two crops a year on their farms, which explains India s low farm output. Tractors are being extensively used in rural areas as transport and for construction work (Singh, 2000). 8

26 Strong replacement demand Roughly more than 40% of domestic demand is from the replacement market. The replacement cycle of tractors has shrunk to 8-10 years from years earlier, driven by an increase in the use of tractors: Tractors are rented out for agricultural work and used in construction activity. A shorter replacement cycle will be crucial to boost tractor volume growth Export Sales Addition of new export destinations and increased offering by domestic manufacturers in the higher HP segment has spurred export growth in FY11 and FY INDIAN TRACTOR INDUSTRY REGION WISE PERFORMANCE Shift in Spotlight to under penetrated Markets In the current fiscal, most regions have exhibited sluggishness with sales growth in the negative territory unlike slowdown witnessed in FY13 where it was mainly western and southern regions that exhibited sharp decline in volumes. In FY15, Central region had been most severely hit with Madhya Pradesh registering a volume de-growth of 25% (Y-o-Y) owing to high base (27% CAGR growth during FY10- FY14) and negative sentiments on account of debilitating demand drivers, especially the crop failures/ damages. High irrigation penetration in Northern region limited the volume decline despite lowest rainfall precipitation in the region during FY15. Eastern and western market registered 10% and 4% decline respectively with major contraction in Bihar and Maharashtra markets during FY15. South, however, de-grew only by moderate 7% during FY15 mainly because of the relatively better monsoons in Karnataka which saw volumes grow by 10% during FY15 even as AP and TN 9

27 markets saw declines of 16% and 18% respectively during the same period owing to sombre demand sentiments. (CMIE Database; ICRA Research) INDIAN TRACTOR INDUSTRY HP WISE PERFORMANCE % 11.50% 12.30% 9.70% 31% 34% 43.25% 44% HP >50 HP >50 Source: CMIE Database, ICRA Estimates Fig 1.2.5: Movement in HP-wise segment mix Accounting for over 75% of tractor industry volumes, performance of HP and HP sub segments together has a significant bearing on the overall volumes of the tractor industry. Consequently, with sluggish volumes in these two segments, the overall industry volume growth was also dragged down during the last two quarters. Though the HP segment grew by 15% Y-o-Y and HP segment grew by 27% during FY14, growth faltered during 2015 with these two segments posting a decline of 7% Y-o-Y and 15% Y-o-Y respectively. However, despite relatively sharp declines in the HP and HP sub segments, these two categories continue to constitute bulk of the tractor market mainly driven by larger addressable market, suitability of applications (agri and haulage) and relatively better affordability of the 10

28 mix. We expect the mix to remain largely unaffected over the month timeframe though improving mechanization and increasing exports from India are likely to aid in enhancing the volume share of sub 30 HP and >51 HP tractors respectively over a longer horizon Major players in the tractor industry 120% 100% 80% 60% 40% 4% 4% 4% 3% 6% 3% 3% 4% 5% 14% 11% 6% 11% 11% 6% 10% 5.50% 7% 8.00% 5.50% 5.50% 6.50% 6% 4.50% 6.50% 7.50% 7% 6% 6% 9.50% 10% 8.50% 8% 9% 9.50% 28% 24% 24.50% 25% 24.50% 28.50% 25.50% 20% 38% 40% 44% 42% 40.50% 35.50% 37.50% 0% Mahindra Tafe+Eicher Sonalika John Deere New Holland Escorts Others SOURCE: CMIE Databse, ICRA Research Table Major players in the tractor industry As per the data, the market share of Mahindra accounts for 37.50% of the total market share in , followed by Tafe + Eicher that is 25.50%, Sonalika has market share of 9.50%, Escorts account around 10% and rest of the major players like John Deere, New Holland and other were share the remaining market share. 11

29 1.3. COMPANY PROFILE MAHINDRA & MAHINDRA LIMITED OVERVIEW Was founded in 1945 as a steel trading company and in 1947, the Group entered auto manufacturing to bring in the iconic Willy s Jeep (under license) on to Indian roads. The founders, K.C and J.C. Mahindra, believed that introducing new modes of transportation held the key to India s prosperity, so one of their first goals was to build durable, rugged vehicles that could handle the rough Indian terrain. In the 1950s and 60s, the Group diversified into businesses like Steel, Tractors, and more. Over time the Group consolidated its position in Automobiles, Tractors and Steel and entered promising sectors like IT, Hospitality, Financial Services, Components, Aerospace and Logistics, led by the goal of providing products and services that support prosperity. Today the Group is a $16.9 billion global corporation employing more than 200,000 people across the globe. The Group s flagship company, Mahindra & Mahindra, is a leader in the tractor and utility vehicle space. The Mahindra Group focuses on enabling people to rise through solutions that power mobility, drive rural prosperity, enhance urban lifestyles and increase business efficiency. A USD 16.9 billion multinational group based in Mumbai, India, Mahindra provides employment opportunities to over 200,000 people in over 100 countries. Mahindra operates in the key industries that drive economic growth, enjoying a leadership position in tractors, utility vehicles, information technology, financial services and vacation ownership. In addition, Mahindra enjoys a strong presence in the agribusiness, aerospace, components, consulting services, defence, energy, industrial 12

30 equipment, logistics, real estate, retail, steel, commercial vehicles and two wheeler industries. In 2015, Mahindra & Mahindra was recognized as the Best Company for CSR in India in a study by the Economic Times. In 2014, Mahindra featured on the Forbes Global 2000, a comprehensive listing of the world s largest, most powerful public companies, as measured by revenue, profit, assets and market value. The Mahindra Group also received the Financial Times Boldness in Business Award in the Emerging Markets category in Vision Indians are second to none in the world. The founders of our nation and of our company passionately believed this. We will prove them right by believing in ourselves and by making M & M Ltd. Known worldwide for the quality of its products and services. Goals and Objective To provide highly technological innovative product. Plan to open 30 outlet pan in India by next 4 year. To make the production system even more efficient. To usher prosperity; for its customers, dealers, employees, society and stakeholders. To be the market leader in all power segment of tractor. 13

31 GROUP BUSINESSES MAHINDRA FARM EQUIPMENT Financial Year saw completion of 32 years of Mahindra leadership in the domestic tractor market, with a market share of 40%. During the financial year, the tractor industry faced severe headwinds. In line with this, for the period under review, your Company sold 234,766 tractors (domestic plus export) under the Mahindra and Swaraj brands, as against 268,487 tractors sold in the previous year, a decline of 12.6%. Continuing with its focus on the customer and new product development, in August 2014, your Company launched the Arjun NOVO in the > 50 HP tractor segment, developed on a new platform at Mahindra Research Valley (MRV). The Arjun NOVO is currently available in 50 and 57 HP variants and is a class leading product with several first-of-its-kind features, making it an apt choice for the evolved, knowledgeable and technology savvy farmer. The Arjun NOVO has been received very well in the high HP markets of Andhra Pradesh, Maharashtra and Chhattisgarh. 14

32 In addition to the Arjun NOVO, your Company also launched upgraded versions of existing models, with the objective of strengthening its product portfolio. MAHINDRA AFTERMARKET Empowers used-car and service buyers by offering total transparency and world-class service levels at affordable pricing. MAHINDRA AUTOMOTIVE Challenges conventions to build award-winning vehicles that deliver unmatched quality and value for money. MAHINDRA DEFENCE Equips security forces with a range of armoured vehicles and defence systems that enable them to better protect the public. MAHINDRA FINANCIAL SERVICES Helps change the face of rural India by helping Indians finance their dreams. MAHINDRA HOSPITALITY Rethinks the vacation paradigm by making premium holiday experiences accessible to more people. MAHINDRA IT Enables global businesses to become more productive through sustainable Information, Communication and Technology services. MAHINDRA PARTNERS Incubates new ventures and provides growth capital to bring our stakeholders diversified products and services. 15

33 MAHINDRA REAL ESTATE Develops healthier, greener, more productive work and living spaces for people on the Rise. MAHINDRA SYSTECH Provides full service Art to Part solutions to original equipment manufacturers in the automotive and non-automotive space by integrating design, manufacturing and sourcing capabilities. MAHINDRA TWO WHEELERS Offers customers stylish and powerful scooters and motorcycles GLOBAL PRESENCE OF MAHINDRA TRACTORS Angola MOROCCO Algeria China D. R. Congo Mozambique Macedonia Nepal Egypt Nigeria Serbia Sri Lanka Ghana Tanzania Turkey Philippines Kenya Tchad IRAQ Bolivia Malawi Tunisia Australia Brazil Mali Uganda Bangladesh Chile Myanmar Indonesia Combodia Peru Uruguay USA 16

34 PRODUCT PORTFOLIO TRACTOR DIVISION (popular models) Sr. No. HP Range Model No. of Cylinder HP series Mahindra Yuvraj HP Mahindra 475 DI 4 39 HP Mahindra 575 DI 4 50 HP Mahindra 595 DI 4 50 HP Mahindra 275 DI 3 30 HP Mahindra 255 DI 2 25 HP Mahindra 605 DI DLx 4 55 HP Mahindra 555 DI DLx 4 50 HP Mahindra 395 DI 3 30 HP Mahindra 605 MAT 4 50 HP Arjun Novo 605DI-i Arjun Novo 605DI-PS 4 57 HP 4 52 P 17

35 1.3.5 New Innovation in Tractor Industry- Mahindra Arjun Novo 605 Di-ps Arjun Novo 605 Di-ps is a 52 HP technologically advanced tractor which can handle 40 farming applications which include puddling, harvesting, reaping and haulage amongst others. Arjun Novo is loaded with feature such as lift capacity of KG, advanced synchromesh 15F + 3R transmission and longest service interval of 400 hours. Its high lift capacity hydraulics system, makes it suitable for numerous farming and haulage operations. An ergonomically designed operation station, low maintenance and best in class fuel efficiency in the category are some of the key highlight of this technologically advanced tractor. 1.4 OBJECTIVES 1. To study the Customers and Dealers perception towards the major tractor Brands. 2. To assess the Dealers satisfaction level on various parameters. 3. To study the market dynamics in Tractor industry. 18

36 REVIEW OF LITERATURE Grisso and Morgan (1987) concluded the study on what Information Helps a Farmer Purchase a Tractor? the result of this survey indicate that nearly all the farmers and ranchers(97%) used two or more sources as an aid in their tractor purchase decision ; most used several sources to gather information. As illustrated in Fig. 1, the four sources used by over half the farmers/ranches were: (a) talking with equipment dealers, (b) neighbours, friends or relatives, and (c) advertising literature. Almost 40% of those who used one or more sources also used the power rating information to match or select implements for their tractor. Other sources used by a smaller percentage of farmers were the implement and tractor magazine. Gandhi and Patel (1997) observed that there is both a replacement as well new demand for tractor. The demand for tractors in India is dictated by several factors like, monsoons, availability of irrigation and credit, farmers disposable incomes, cropping patterns, and the minimum support price for farm produce. The major factors in the demand for tractors in India have been found to be gross irrigated area (cropping intensity), real price of tractor, demand for tractors in the previous year, and area under high yielding varieties (Gandhi and Patel, 1997) besides land holding and credit availability. Sharma and Grover (1998) revealed that in Punjab demand for tractor is guided by the cropping intensity, cultivated area, and credit availability along with demand for tractors in the previous year and social consideration which determine demand for tractors. Most of these are agronomic and agro-economic factors. 19

37 Singh and Sidhu, (1990); observed in their study on Punjab Agriculture - Investment in Tractors that transport of people and material alone takes away 60% of a tractors life and only 40% is spent on the field. The overall utilisation of available operational tractor capacity varies directly with farm size. However, over 40% of available tractor capacity remains utilised. Murthy (1999) observed that an average farmers finds work for his tractor for less than 400 hours in a year as against the norm of 1000 hours recommended by bankers to recover the fixed investment cost. Further, out of these 400 hours, less than 300 hours are devoted to marketing of produce and purchase of inputs, customs hiring and social activities. Raghuram (2000) ICRA stated in his study that the tractor market segment can be in terms of the power configuration. In India there are five categories based on the engine horsepower (HP) under 20 HP, HP, HP,41-50 HP and over 51 HP of these five sub segment within the industry, more than 55% of the total sales were accounted for the HP segment in In recent months, changes seem to be taking place. Demand for higher HP tractors is expected to increase with choices shifting to high powered tractors since they can be used for a variety of purposes. Now the farmers have moved into higher HP tractors. Balishter et al. (2000) found in their study that tillage, threshing and transportation of sugarcane were the major operations for which tractor was utilized which together accounted for about 88 per cent of the tractor use. About 41 per cent for tillage, 25 per cent for threshing and 22 per cent for transportation of farm produce. The overall per hour total cost of tractor operation was Rs.102. Size wise it was about Rs.85 for 25 HP tractor, Rs.100 for 35 HP tractor andrs.126 for tractor above 35 HP. 20

38 Singh and Singh (1976) observed in their study that the level of energy use per hectare was higher on the tractor operated farms ( HP hours) than on the bullock operated farms ( HP hours). The mechanical energy use in land preparation constituted a significant part of total energy use on the tractor operated farms ( HP hours). The mechanical energy use constituted and per cent of the total energy use on the tractor operated and bullock operated farms respectively. The tractor operated farms did not make matching reduction in animal and manual energy through use of mechanical energy in tillage operations. But, the high doses of fertilizer application had helped the tractor operated farms to achieve higher yields than that on the bullock operated farms. Singh (2004) concluded that the horsepower of the tractor was the major consideration in purchase of tractor followed by fuel efficiency and after sales service in that order. But in Punjab, there were other factors like file cooling, no. of cylinders, colour and appearance, hydraulics changes, double clutch, powerful lift, special gear, and work with rotavator. In fact, there are special feature which are required in a maturated market like Punjab. Another major factors which emerged across analysis of companies was market value or resale value of the tractor. Farmers/buyers look for multiple aspects in tractor while making a purchase. Therefore, it is not just the horse power but other feature as well as resale value which are equally important. 21

39 3. RESEARCH METHODOLOGY 3.1. AREA The area covered for the study was two zones of Gujarat state i.e. Saurashtra and Central Gujarat. In these two zones, 6 districts with 2 talukas from each sampled district were selected purposely, Further out of each taluka, 2 villages were selected purposely; 5 customers from each village were selected as per convenience. Further 50 dealers from these 8 districts were selected as per convenience. Together, a total of 120 customers and 50 dealers were selected for the sample study. Table 3.1: Area of Study Region District Taluka Villages Total Jetpur Mota Gundala 5 customers from each Rajkot Nani Parabdi village; i.e. 20 customers Upleta Samadhiyala Saurashtra Talgana Junagadh Jalansar 5 customers from each Junagadh Majevadi village; i.e. 20 customers Keshod Handla Mangalpur Muli Pandavara 5 customers from each Surendranagar Ramparda village; i.e. 20 customers Halvad Ladhala Jegadva Anand Navali 5 customers from each Anand Napad village; i.e. 20 customers Borasad Vahera Ras Nadiad Bamroli 5 customers from each Central Kheda Dantali village; i.e. 20 customers Gujarat Mehamdabad Kanij Nenpur Vadodara Virod 5 customers from each Vadodara Sherkhi village; i.e. 20 customers Dabhoi Bhalodra Sanor Total 24*5=120 22

40 3.2. SOURCE OF THE DATA Primary as well as secondary data were collected to meet the stipulated objectives of the study Primary Data Primary data were collected from the Customers and Dealers with the help of Structured Schedule. Customers are selected by multistage sampling method in which 3 districts were selected from each region Saurashtra and Central Gujarat. Further from each selected district 2 talukas were selected as per convenience and from each taluka 2 villages were selected randomly. Further each selected villages 5 customers were selected as per convenience. Dealers were selected as per convenience from the study area Secondary Data Secondary data were collected from Literature, Annual Reports, and from the Websites SAMPLING PLAN Sampling Method The sampling method was non probability sampling under which Convenience sampling was used for selection of dealers and multistage sampling was used for selection of customers Sampling Unit To study the given objectives, each farmers and dealers were selected as the sample unit and data were collected from them accordingly Sample Size A sample of 120 customers and 50 dealers were selected and data have been collected.. 23

41 3.4. RESEARCH INSTRUMET Considering the nature of the study as well as for obtaining authentic information from the respondents, information was collected through structured schedule ANALYTICAL TOOLS To meet the objectives of the study Tabular analysis, Graphical presentations, Garrett s Ranking Technique and Likert scale were employed as analytical tools Garett s Ranking Technique: First stage: Ranking given by 120 respondents for each attribute were analyzed. Second stage: Thus, ranks assigned by the individual respondents were converted into percent position value by using the formula. Per cent position= 100(Rij-0.5)/Nj Where, Rij stands for rank given for i th factor by the j th individual. Nj stands for numbers of factors ranked by j th individual. Third stage: for each percent position scores were obtained with reference to Garrett s ranking conversation Table and each percent position value was converted into scores by reference to Garrett s Table. Fourth stage: Summation of these scores for each factor was worked out for the numbers of respondents who ranked for each factor. Mean scores were calculated by dividing the total score by the numbers of respondents. Fifth stage: overall ranking was obtained by assigning ranks 1, 2, 3 and 4 in the descending order of the mean score. 24

42 Likert Scale Technique First stage: Rating on scale of 1 to 5 (5-Very Satisfied, 4-Satisfied, 3-Neutral, 2- Dissatisfied, 1-Very Dissatisfied) were given by respondents for each attribute were analyzed. Second stage: Summation of these rating for each factor was worked out for the numbers of respondents who ranked for each factor. Overall rating were calculated by dividing the total rating by the numbers of respondents. Third stage: overall ranking was obtained by assigning ranks 1, 2, 3 and 4 in the descending order of the overall rating SCOPE OF THE STUDY The findings of the study will be useful in long way for organization to take strategic decisions for expanding the business and evaluating the current situation. Further, it will be useful in analysing Customers perception towards major tractor brands so that the company can develop the suitable marketing strategies to pool more customers. Customer level and dealer level analysis is carried out to know the perception towards major brands and market structure; key competitors and their product in preferred HP segment in the Saurashtra and Central Gujarat; it will help organization to develop the suitable promotional activities to promote brand by analysing the customers perception and competitors strategy. 25

43 3.7. LIMITATIONS OF THE STUDY Selected sample may not represent actual population. Analysis is purely based on the responses of the respondents. Respondents may have given biased responses. The study is confined to Saurashtra and Central region of the Gujarat state, hence the results may not be generalized. 26

44 4. RESULTS & DISCUSSION The project entitled study of dealer s satisfaction and brand perception of major tractor brands in Saurashtra and Central Gujarat has been carried out within the line of objectives and research methodology. Customers and dealers were asked several questions as per the structured schedule. The survey work was completely area specific. The result were analysed mainly with respect to the response of the respondents. The response of the respondents were observed and noted down. The results so observed has been incorporated in this chapter Classification of Farmers on basis of Land Holding Table 4.1. Classification of Farmers on basis of Land Holding: (values in %) Land Holding Respondents Percentage (%) Marginal Small Medium Large Total At the aggregate level, data from the surveyed region stated that 34% of the total farmers were Medium farmers, 28% were small farmers and around 25% and 13% farmers were large and marginal farmers respectively. Though small and marginal farmers (nearly 41%) were also having tractors yet these farmers used their tractors for hiring out, haulage, transportation for making the tractor purchase economically viable and use of the tractor around 600 to 1100 per annum was more than even the large and medium farmers. 27

45 25% 13% 28% 34% Marginal Small Medium Large Fig 4.1: Classification of Farmers on basis of Land Holding 4.2. Age Group of the Respondents Table 4.2. Age Group of the Respondents: Age Group(in Years) Respondents Respondents in % Below > Total In the surveyed region of Saurashtra and Central Gujarat, mostly 45% of the customers were found in the age group of years and22% of the customers were of the age group years. Further about 19% of the customers were found in the 28

46 age group of years, while only 3% and 4% customers belonged to age group below 21 years and above 65 years respectively. 4% 3% 19% 29% 45% Below >65 Fig 4.2. Percentage wise distribution of Age Group 4.3 Education level of Respondents Table 4.3: Education level of Respondents: Education Level Respondents Respondents in % Illiterate 4 3 Below S.S.C S.S.C H.S.C Graduation Total Out of total sample surveyed, about 46% customers attained below S.S.C level education, 25% and 12% attained metric level and higher secondary level education 29

47 Respondents resp., and 14% attained graduation. About 3% of the customers did not have any formal education. Above data signifies that education were poorly infiltrated in the study area of respondents were not asking for education for their growth and livelihood. Table 4.3 shows the data and Fig. 4.3 shows the same diagrammatically Illiterate Below S.S.C S.S.C H.S.C Graduation Fig 4.3: Education level of Respondents 30

48 4.4. Income Level of Respondents Table 4.4. Income Level of Respondents: Income Level (in Rs.) Respondents Respondents in % lakh lakh lakh > 5 lakh 5 4 Total The several sources were taken into consideration to determine the income of the farmers. These were Agriculture, Livestock, and other sources of income. Accordingly income of the farmers was determined. From Fig. 4.4, 46% of the respondents after calculation having income in the slab of 2-5 lakh and 38% of the respondent s income fall into the slab of 1-2 lakh. 4% 12% 46% 38% 50 k - 1 lakh 1-2 lakh 2-5 lakh > 5 lakh Fig.4.4. Income Level of Respondents 31

49 4.5. Month of Purchase January February 2% 2% 16% 5% 4% 4% 2% 5% March April May 18% 15% June July August 7% 8% 12% September October November December Didn't Response Fig. 4.5 Main Seasons of Tractors Purchase: (values in %) Main time period of Tractors sales depend on sowing and harvesting season of crops in the area. Farmers mainly had bought tractor before sowing or harvesting season of the major crops. Besides, the sowing and harvesting season, festival season from Navaratri to Diwali was also a main season in the tractor industry and recorded a good figure of total sales. From the above figure, it can be inferred that around 15% of the customers bought the tractor in the January-February-March-April period, some 32% bought the tractor in the May-June-July and around 27% customers bought tractor August-September- October-December and 16% of the total customer didn t respond as some of them have forgotten the detail of their purchase. 32

50 4.6. Mode of Purchase Mode of Purchase in Saurashtra Region Gujarat 43% 45% 40% 32% 35% 30% 25% 25% 20% 15% 10% 5% 0% New Tractor w/o Exchange New Tractor in Exchange Second hand Tractor Fig : Mode of Purchase in Saurashtra Region Gujarat Fig. shows that around 25% of the customers had purchased their new tractor without any exchange, some 43% of the customers had purchased tractor to replace their previous tractor with the new one and the rest 32% of the customers had bought the second hand tractors. It may be a good signal for tractor industry that about 68% of customers were asking for new tractors with or without exchange in Saurashtra region. 33

51 4.6.2 Mode of Purchase in Central Gujarat 60% 54% 50% 40% 30% 22% 24% 20% 10% 0% New Tractor w/o Exchange New Tractor in Exchange Second hand Tractor Fig Mode of Purchase in Central Gujarat (values in %) Fig. shows that around 22% of the customers had purchased their new tractor without any exchange, some 54% of the customers had purchased tractor to replace their previous tractor with the new one and the rest 32% of the customers had bought the second hand tractors. 34

52 4.7. Mode of Purchase Cash/Credit 20% 80% Cash Credit Fig. 4.7.: Mode of Purchase (values in %) As be seen from Fig. 4.7, that around 80% of total customers have taken advances/ loans from various sources for making tractors purchase. This finding is in line with the finding of ICRA s Report on Indian Tractor Industry 2011 which stated that increased institutional credit flow to agricultural sector may be the major growth driver of the tractor industry. 35

53 4.8. Brand Perception on the basis of following Attributes Table Brand Perceived by Customers on the basis of attribute Powerful in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika john Deere New Holland Customers were asked to rank given parameters which they think (in descending order) for the perception of major tractor s brands. The rank was converted to Garrett s score using Garrett s ranking technique. At the aggregate level it was found that for the attribute Powerful, Mahindra got highest Garrett s score (59.71) and was ranked 1 by customers followed by Tafe (57.25), John Deere (56.82), Sonalika (52.45), New Holland (48.92) and Swaraj (44.08) in that order. Only few customers gave the ranking to Eicher (40.76) and Escorts (40.17) and that is why these brands got the lowest scores. 36

54 Table Brand Perceived by Customers on the basis of attribute Fuel Efficient in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe 68 1 Eicher Escorts Sonalika john Deere New Holland On the basis of Fuel efficiency, Tafe got the highest Garrett s score (68) and was ranked 1 by customers followed by Mahindra (58.9), Swaraj (52.7) Sonalika (52.05), Escorts (49.25), Eicher (45.7) in that order. John Deere and New Holland were ranked poorly as customers perceives that these higher HP models consumes more fuel. Table Brand Perceived by Customers on the basis of attribute Less Maintenance cost in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika john Deere New Holland

55 On the basis of Less Maintenance Cost, Tafe was ranked no. 1 (Garrett s score-68.75) followed by Mahindra (58.8), Swaraj (53.85), Eicher (47.65), Escorts (42.85) and Sonalika (43.55). Further John Deere and New Holland is ranked poorly as the spare parts are expensive than the other brands. Table Brand Perceived by Customers on the basis of attribute Hydraulic System in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe Eicher 48 5 Escorts Sonalika john Deere New Holland On the basis of Hydraulic System Mahindra got the highest Garrett s score of and ranked 1 by customers followed by John Deere (56.5), New Holland (49.95) and in that order, 38

56 Table Brand Perceived by Customers on the basis of attribute Compatible with rotavator in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika john Deere New Holland On the basis of Compatible with Rotavator Mahindra got the highest Garrett s score of 58.7 and ranked 1 by customers followed by Eicher (58.4), John Deere (55.4), Sonalika (52.8) and in that order, Table Brand Perceived by Customers on the basis of attribute Engine Capacity in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika john Deere New Holland

57 Further on the basis of Engine Capacity, Mahindra got the highest Garrett s score and was ranked 1, followed by Tafe (60.0), Sonalika (52.6), John Deere (49.7), Eicher (46.9) and in that order. Table Brand Perceived by Customers on the basis of attribute Price in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika john Deere New Holland For the attribute Price, Tafe got highest Garrett s score (66.5) and was ranked 1 by customers followed by Mahindra (61.8), Escorts (54.9) and in that order. Further, Eicher (47.5) and New Holland (38.5) were ranked at the 6 th and 7 th position respectively. John Deere (31.7) is perceived by customers as expensive brand. 40

58 Table Brand Perceived by Customers on the basis of attribute Dealers good behaviour in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika john Deere New Holland On the basis of attribute Dealers good behaviour, Mahindra got the highest Garrett s score (61.9) and ranked 1 by customers followed by Tafe (58.7), Sonalika (49.6), Escorts (49.1) and in that order Table Brand Perceived by Customers on the basis of attribute Resale value in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika john Deere New Holland

59 On the basis of Resale value of tractor in the market, Tafe got the highest Garrett s score (59.8) and ranked 1 by customers followed by Mahindra (58.8), Sonalika (49.7), Swaraj (48.8) and in that order. Table Brand Perceived by Customers on the basis of attribute Spare parts availability in Saurashtra and Central Gujarat Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika john Deere New Holland On the basis of Spare parts availability Mahindra got the highest score of 62.8 followed by Tafe (60.8), Sonalika (51.9), Eicher (50.8) and in that order. Table Brand Perceived by Customers on the basis of attribute After sales service in Saurashtra and Central Gujarat; Garrett s score and Ranking. Brands Garrett's score Ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika john Deere New Holland

60 On the basis of After Sales Service Mahindra got the highest score of 61.3 followed by Tafe (59.3), Sonalika (49.8) and Escorts (48.5) and in that order Educational Qualification of Dealers Table 4.9 Educational Qualification of Dealers (Values in %) Educational Level No. of Dealers Dealers in % Below Metric 3 6 Metric 4 8 H.S.C Graduation Post-Graduation 9 18 Total The above Fig. revealed that about 6% of Dealers attained Below Metric level education, 8% attained Metric level education, 12% dealers attained higher secondary education, 56% attained graduation and 18% attained Post Graduation level education. 18% 6% 8% 12% 56% Below Metric Metric H.S.C. Graduation Post Graduation Fig. 4.9 Educational Qualification of Dealers (values in %) 43

61 4.10 Experience of Dealers in Tractor Business Table 4.10 Experience of Dealers in Tractor Business: (values in %) Experience in Years No. of Dealers Dealers in % 1 to to to to above Total As can be seen from above table that about 10% dealers had 1-2 years of experience, 6% had 3-5 years, 28% dealers had 6-12 years and 42% dealers had experience of years while only 14% dealers have experience of more than 18 years. 14% 10% 6% 42% 28% 1 to 2 yrs 3 to 5 yrs 6 to 12 yrs 12 to 18 yrs above 18 yrs Fig 4.10 Experience of Dealers in Tractor Business: (values in %) 44

62 4.11. Other Sources of Income Table 4.11 Other Sources of Income: (value in %) Other Sources of Income No. of Dealers Dealers in % Farming Business None Total In Saurashtra and Central Gujarat, about 42% dealers didn t have any other sources of income than the present tractor Dealership, 20% dealers had other Business and 38% dealers had Farming as a source of income apart from tractor Dealership. 42% 20% 38% Farming Business None Fig 4.11 Other Sources of Incomes: (values in %) 45

63 4.12. Annual sale of the Tractor Table 4.12 Annual sale of the Tractor: (value in %) Tractor's Sale Respondents in % < Above Total The above Fig. shows that about 8% dealers sold less than 50 and 24% dealers sold 50 to 100 tractors, 18% dealers sold 101 to 150 tractors per year and 16% dealers sold 151 to 200 tractors per annum. Further 24% dealers sold tractors per annum and about 10% dealers sold more than 300 tractors per year. 25% 24% 24% 20% 18% 16% 15% 10% 8% 10% 5% 0% < Above 300 Fig. 4.12: Annual Sales of Tractors: (values in %) 46

64 4.13. Tractors sold in Exchange scheme Table 4.13 Tractors sold in Exchange scheme: (values in %) Tractor Sold in Exchange No. of Dealers (In %) Dealers in % < > Total As can be seen from the Fig. that all the dealers in Saurashtra and Central Gujarat reported almost more than 40% sales of Tractor in Exchange and 32% dealers reported 71 to 80 sales in Exchange. It may be due to saturated market condition of tractor industry in current days in study area. 35% 32% 30% 25% 20% 15% 16% 18% 24% 10% 8% 5% 0% < > 80 2% Fig Tractors sold in Exchange Scheme: (values in %) 47

65 4.14 Cases of Credit Payment Table 4.14 Cases of Credit Payment (value in %) Credit Payment (in %) No. of Dealers in % Dealers < > Total About 24% dealers reported cases of the credit payment (tractor s purchases were financed by Banks), 6% revealed that more than 90% cases of credit. Nearly, 38% reported 71-80% and 14% in 61-70% cases of credit respectively. 18% less than 60% cases of credit payment. The mode of giving credit on sale was so high may be due to linkages of financial institution with tractor industries in the study area. 6% 18% 24% 14% 38% < > 90 Fig Cases of Credit Payment: (values in %) 48

66 4.15 Dealer s Perception for Major Tractor Brands Table 4.15 Brands Perceived by Dealers on the basis of following attributes in Saurashtra and Central Gujarat; Overall Rating and Cumulative point score. Brands Powerful Fuel Less Hydraulic Compatible with Company Efficient Maintenance System Rotavator Support Cost Ranking Ranking Ranking Ranking Ranking Mahindra Swaraj Tafe Eicher Escorts Sonalika John Deere New Holland At the aggregate level, for the attribute powerful, John Deere got highest score (198) and average rank given by dealers is 3.96 followed by Mahindra (188), Tafe (175), Eicher and New Holland got scores of 172 and average rank is 3.44, Sonalika (162), Escorts (160), Swaraj (155) and in that order. On the basis of Fuel Efficiency, Tafe got the highest score (194) and average ranking is 3.88 followed by Mahindra (166) and average Ranking is 3.32, Swaraj (158), both 49

67 Sonalika and Eicher got the scores of 154 and in that order. Further John Deere got the lowest score of 128 and average ranking is On the basis of Less operational and Maintenance cost, Tafe got the highest score (168) and average ranking is 3.36 followed by Mahindra (162), Sonalika (157), Swaraj (154), Escorts (152), Eicher (146), John Deere (140) and New Holland (136). On the basis of Hydraulic system, John Deere got the highest score (194) and average ranking given by dealers is 3.88 followed by New Holland (184), Mahindra (174), Swaraj (170), Eicher (168), Sonalika (166) and in that order. Further, on the basis of compatibility with rotavator, John Deere got the highest score (187) and average ranking is 3.74 followed by Eicher (180), Mahindra (173), New Holland (170), Sonalika (167) and in that order. On the basis of company support, Mahindra got the highest score (204) and average ranking is 4.08 followed by Tafe (198) and Sonalika (195). 50

68 4.16 Rating for Satisfaction Level of Dealers on various Parameters Table 4.16 Rating for Satisfaction Level of Dealers on various Parameters No. of Respondents Overall Rank Parameter Rating Average Margin Credit Period Incentives & Support Company Behaviour Delivery in Prime Season Complaint Redressal Replacement of damaged product Capacity Building Programme Support in Promotion activities 51

69 As can be inferred from the Table, dealers rated the parameter of Credit period on a poor scale of 2.52 (Dissatisfied). Across all the companies dealers, only Mahindra s and John Deere s dealers got the credit period of 15 to 30 days without any interest against the bank guarantee. Tafe didn t give the credit period to its dealers; due to this reason Tafe s dealer rated 1 (very dissatisfied) on this parameter. Credit period given by companies to its dealers depend upon the experience of the dealers and their relation with the company, some of the dealers preferred to pay in advance as companies didn t give the cash discount to its dealers in case of credit payment and interest rates were also quite higher. Satisfaction level on Delivery in Prime season and Incentive & Support got the overall highest rating of 4.74 (Rank 1) and 4.64 (Rank 2). Though there was no fix price of tractor as dealers got the tractors from the company on Net Dealer Price and then sell it on M.R.P. Dealers reported that the average margin in each sale of tractor varied significantly as in today s competition, dealers offer discount to the customer to increase their sales and to complete the target given by company. On other parameters such as Company s Behaviour (4.42), Delivery in Prime Season (4.74), Complaint Redressal (3.52), Replacement of Damaged Products (4.00), Capacity Building Programme (4.04), and Support in Promotional activities (4.12); observed satisfaction level of dealers was high. 52

70 4.17 Comparative analysis Table 4.17 Comparative analysis of Customer s and Dealer s Perception Parameters Customer s Perception (Ranking) Dealer s Perception (Ranking) Mahindra Tafe Mahindra Tafe Powerful Fuel Efficiency Less Maintenance cost Hydraulic system Compatible with rotavator Price The table shows that according to the customer s as well as dealer s perception Mahindra brand is superior than Tafe for the parameters that are Powerful, Hydraulic system, and compatible with rotavator, while for the parameters like Fuel efficiency, price, and less Maintenance cost Tafe was superior than Mahindra. Further, it has been observed that parameters like fuel efficiency and less maintenance cost; the view of both customers and dealers were equal in the study area. 53

71 4.18 Penetration of Tractors In Saurashtra region of Gujarat New Holland, John Deere, 5% 6.67% Sonalika, 10% Mahindra, 30% Escorts, 8.33% Eicher, 8.33% Swaraj, 6.67% Tafe, 25% Fig Penetration of Tractors Brand in Saurashtra region of Gujarat At the aggregated level, Mahindra is the market leader in the Saurashtra Region of Gujarat (accounts for around 30% of the total market share) followed by Tafe (having market share of 25%). Sonalika is also having significant portion of the pie and accounts for around 10% of the market share. Mahindra and Tafe are more popular as most of the customers perceive that Tractors models of these companies i.e. Mahindra Bhoomiputra 275 DI (35HP) and 265 DI (30HP) and Tafe Ferguson DI 1035 (35 HP) consumes less fuel in the commercial activities as in haulage and in transportation work. Tafe s Tractor model Tafe Ferguson 1035 DI Mahashakti was more popular for better performance in farming activities. Other brand as Eicher (8.33%), Escorts (8.33%), New Holland (6.67%), Swaraj (6.67%) and John Deere (5%) were the minor players in the region. 54

72 New Holland and John Deere are having significant share in Surendranagar District. Eicher brands penetration was more in some talukas of the Rajkot District In Central Gujarat Region John Deere, 5% New Holland, 5% Sonalika, 8.33% Mahindra, 31.67% Escorts, 6.67% Eicher, 6.67% Swaraj, 10% Tafe, 21.67% Fig Penetration of Tractors Brand in Central Gujarat In Central Gujarat, Mahindra was the Market leader with share of around 32% followed by Tafe with market share of around 22% respectively. Swaraj was also having significant portion of the pie and accounts for around 10% of the market share. Other brand as Eicher (6.67%), Escorts (8.33%), Sonalika (8.33%), New Holland (5%), and John Deere (5%) were the minor players in the region. 55

73 District wise Brand Penetration Table Brand Penetration Rate (in %) District Mahindra Swaraj Tafe Eicher Escorts Sonalika John Deere New holland Surendranagar Rajkot Junagadh Anand Kheda Vadodara In Rajkot, Mahindra was the market leader with the market share of around 35% while Tafe was the major competitor of Mahindra with market share of 25 %. Further, Sonalika (10%) was also among the major player in the market. In Anand also, Mahindra was the market leader (35%) followed by Tafe (20%) and Sonalika (15%). In Surendranagar District, Mahindra and John deere were having market share of 30% and 10% respectively. New holland and Sonalika s share was also significant in the district. In Junagadh district, Tafe occupies highest market share of 40% followed by Mahindra (25%). Sonalika also had impressive market share of 10%. Tafe s penetration was more in Keshod Taluka of the district. In Kheda district, Mahindra (30%) and Tafe (20%) were the major players. Sonalika (10%) was also growing in the district. 56

74 Brand penetration in % In Vadodara district, Mahindra occupies highest market share of 30%, followed by Tafe 25% and Sonalika 10% respectively Mahindra Swaraj Tafe Eicher Escorts Sonalika John Deere New holland Surendranagar Rajkot Junagadh Anand Kheda Vadodara Fig District wise Brand penetration (values in %) 57

75 4.19. HP wise Segment Mix Table HP wise Segmentation Mix for Saurashtra region Gujarat (values in %) HP Respondents Respondents in % The tractor industry was witnessing polarization, with higher growth in the upper and lower HP segment. A farmer s choice of tractor size was typically a trade-off between the utility of the tractor (which includes haulage capacity requirement) and its price. Despite the higher prices, several factors had led to a structural shift in the industry towards higher powered tractors. The Indian tractor market has traditionally been market segments were concerned Saurashtra region of Gujarat is the medium HP market, with 35 HP tractors accounting for over 34% of industry volumes. Further around 24% fell into 39 HP segment and 20.5% of the volume fell into the HP respectively. 58

76 Respondents in % HP range Fig HP wise segment mix for Saurashtra region Gujarat Table HP wise Segmentation Mix for Central Gujarat Region HP Respondents Respondents in % The Indian tractor market had traditionally been a medium HP market (Raghuram, 2000) with HP tractors accounting for over 45% industry volumes. At the aggregate level Central zone of Gujarat was the medium HP (31-40) market because of the soft soil conditions. Here, 35 and 39 HP segment account for around 80 % of the total volumes. Further, around 12%, 3% and 2% of the volumes fell into HP, and HP range. 59

77 Respomdnts HP range Fig : HP wise Segmentation Mix for Central Gujarat Region Table Models in Major HP segments in study area Brand 30 HP HP 39 HP HP 45 HP HP Mahindra Bhoomiputra 265 DI Bhoomiputra 275 DI Bhoomiputra 475 New Swaraj 834 XM 735 FE Tafe 1035 DI Mahashakti 241 DI Mahashakti Eicher Eichers 333 Eicher 368 Eicher 485 Escorts FarmTrac 35 PowerTrac 439 Sonalika Sonalika 35 DI Sonalika 740 DI John Deere JD 5041, JD 5042 New NH Holland 3230 NX JD 5055 (55 HP) 60