Minor Project Report On SALES AND DISTRIBUTION MANAGEMENT Completed In ESCORTS LIMITED Agri Machinery Group Submitted In Partial

Fulfillment Of the Requirement Of Bachelor of Business Administration

Supervisor K.sinha Assistant Professor BCIPS, Dwarka

Submitted By: Sumit Kumar ENR. No.: 00761201710 Batch : 2010-2013

Submitted To: Banarsidas Chandiwala Institute of Professional Studies, Dwarka, New Delhi (Affiliated to Guru Gobind Singh Indraprastha University)

ACKNOWLEDGEMENT
Exchange of ideas generates a new object, which helps a person to work in a better way. When a person is helped and co-operated by others, his heart is found to pay gratitude and commutative appreciation.

This report bears the imprint of many people. At the outset I would like to thank the Management of ESCORTS AGRI MACHINERY GROUP for the wholehearted cooperation and guidance extended by them, which made my summer project report possible.

I would be failing from my duty if I do not express my gratitude to all Faculty members, for all the encouragement and inspiration given to me during the preparation of project report and for their valuable teaching and guidance throughout.

Last but not the least I am indebted to office staff of the company for their assistance. To all those people and to those unmentioned my heartfelt thanks.

DECLERATION

I hereby declare that this Minor Project Report titled SALES AND DISTRIBUTION MANAGEMENT of the Escorts Agri Machinery Group (AMG) submitted by me to Banarsidas Chandiwala Institute of Professional Studies, Dwarka is a bonafide work undertaken during the period from __________ to ________ by me and has not been submitted to any other University or Institution for the award of any degree diploma / certificate or published any time before.

(Signature of the Student)

Date:

Name: Sumit Kumar Enroll. No.: 00761201710

TABLE OF CONTENTS

S.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Table of Content Objective of the Report Executive Summary Company Profile Theoretical Background AMG(Agri Machinery Group) Basics of Tractor Sales And Distribution Management Sales Strategies Escorts Sales Performance Comparison of Escorts with major players Limitations Recommendations Bibliography Annexure

P.No. 5 6 7-10 11-15 16-27 28-30 31-35 36-38 39-42 43-50 51-52 53-54 55-55 56-59

OBJECTIVE OF THE REPORT

It is well known fact that we remember 20% of what we hear, we remember 40% of what we see but we remember 75% of what we do. Undergoing B.B.A is the first step to visualize the ever-dynamic business world and my main objective while preparing the report is to explore the current management literature so as to develop an individual style and sharpen my skills in the area of leadership communication, decision making, motivation and conflict management. Preparing the report was to familiarize myself with the working of the sales & distribution department of Escort Agri Machinery Group (AMG). To present study in Escort Agri machinery group mainly focus on the following: Sales Management Distribution Management Sales raising strategies Sales & Distribution channels of the company

EXECUTIVE SUMMARY

If the development capital is what establishes a business, sales & development management is what keeps it going. One of the most common problem of every business is the selection of wrong channels and wrong strategy. What is important is not just the size of operating costs, but the management function of managing sales & distribution i.e., increasing sales volume & the flow of regular customers by selecting the most complimentary channel. Thus sales & distribution management is of prime importance. Escorts Ltd. is the holding company of the Escorts Group. Post restructuring, agri machinery or tractors have become the focus area of operations. Other businesses i.e. twowheelers, IT, Telecom, construction equipment, are controlled through subsidiaries and joint venture. Post hive off of its pistons business to a joint venture with a foreign collaborator, Escorts is focusing on its core competence of tractors. Escorts have strong hands in house engineering skills, a wide distribution/service network and brand franchise. The project is small attempt to study the sales & distribution management in Escorts Agri - Machinery group. Added to this fact that mechanization level in India is currently very low as compared to the world standards. This project report is based on financial data up to 2009-10 only.

COMPANYS PROFILE

ESCORTS SYMBOL

The Escorts symbol means more than a seen by eye. It has been prepared with certain objective in mind and is symbol in more than one way. It is a symbol of Technology. It is a hexagonal nut (in red) representing a geometric excellence. The symbol with its three meanings makes a rebus or image pun and is rendered in red, the color of energy and dynamism. Every time it is used, it represents the Escorts seal of quality and excellence. The Escorts logo allows an passageway through which new ideas can walk any time freely, giving Escorts the character to listen and absorb new and fresh thoughts. The philosophy behind Escorts and the e in the Escorts is enterprise. The hexagon is a symbol of productivity. Precision when interposed as a nut. It represents a craft man ship and mending productivity. The sprains super imposed on the hexagon represent the workers and the people of Escorts. This forms the letter E the first of Escorts a company even of more changing unveiling the future

MISSION

For an Enterprise business mission embodies of its effort, which acts as a light for continuous development & growth. 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.

QUALITY POLICY

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.

Customer 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 happen.

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BACKGROUND AND BUSINESS

The Escorts Group, with Escorts Limited as its flagship company, is among Indias 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 companys 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. 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. 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 FMCs 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 Indias 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 agri-machinery business by merger of ETL with EL and having off various divisions into separate companies. Biwheeler 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, construction and material handling equipment.
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ESCORTS HISTORY- MAJOR MILESTIONES

1944 1948 1950 Escorts started Escorts Agency Ltd. in Lahore. Settled from mechanization by launching Escorts /agricultural Machines Ltd. Established India first Farm Mechanization Institute at Azadpur. Later it was shifted to Kashipur. 1958 1960 1961 1969 Started import MF tractors from YUGOSLAVIA for marketing in India. A manufacturing plant was set up at Faridabad. Acquired license to manufacture URSUS/ESCORTS tractors. 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 1974 1975 Introduction of Ford Brand tractors. 400 tractors were exported to Afghanistan. Turnover crossed the Rs. 200 million mark for ETL Profit after Tax was Rs. 8.7 Million. Declared a Dividend of 10% 1977 Commencement of Escorts Scientific Research Centre, known as knowledge Management Centre at Faridabad by developing its own engines for E27 & E37 tractors. 1979 1981-82 1984 1988 Turnover crossed the Rs. 50 crores mark. Development & Introduction of a three cylindrical engine for E355. 75000th tractor came out on the field. The annual turnover goes beyond Rs. 100 crores. A Dividend of 45% declared for 15 months. 1993 1995 1996 1998 Introduction of Ford 3620. Termination of tie up & ford turned into Farmtrac Separation of JV with FNH & introduction of Farmtrac. Introduction of powertrac.

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ESCORTS HISTROY-MAJOR MILESTIONES

Created a landmark by setting up of his first dealer network in early 60s to market tractors which it was to import. Escorts built a strong distributing network & has a strong battery of more than 1100 dealers for both Escort/Powertrac & Farmtrac spread all over the country.

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ORANISATION STRUCTURE ESCORTS GROUP

Chairman & Managing Director Sh. Rajan Nanda
Secretariat

Flagship

Operating Division

Escorts Limited Faridabad

Agri Machinery

Engineering

International Business

Corporate Center Faridabad

Escorts Research Center, Faridabad

Institute of Farm Mechanization, Bangalore

Personnel

Finance

Project

Escorts Heart Research Institute, New Delhi

Escorts Medical Center, Faridabad

Administration and Security

Law

Export and Communication

Associates Companies

Subsidiary Companies

Escorts Employees Welfare Trust Faridabad

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ORANISATION DIVISON ESCORTS LIMITED

Chairman & Managing Director Sh. Rajan Nanda Secretariat

Corporate Office Corporate Center, Faridabad

Registered Office New Delhi

Personnel

Finance

Project

Law

Administration and Security

Export and Communication

Agri Machinery Marketing Division

Automotive Ancillaries and Railway Equipment Division

Farmtrac Division

Escorts Tractor Division

Corporate Office (Line Duties)

Functional Units (Production & Operation)

Corporate Office (Line Duties)

Functional Units Production & Operation)

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AGRI MACHINERY GROUP

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INTRODUCTION

Escorts Limited (EL) is the flagship company of one of Indias 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 socio-economic 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. Powertrac 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 worlds largest manufacturer of Pick-n-Carry cranes.
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The companys in-house R&D (Research and Development) unit is spread over 100,000sq. and has been recognized by the Department of Scientific and Industrial 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 lacs 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 Farmers 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.

Business
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 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 companys total sales (sales from FY07-FY09). 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.
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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 companys 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 companys 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 worlds largest manufacturer of Pick-n- Carry cranes with that item generating more than 60% of the companys 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 companys bottom line arises from the equipment division, which is further divided into the railway equipment division and the auto equipment division. Traditionally both these segments havent contributed an awful lot to the companys 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
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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 companys 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.

Outlook and Scope

Going by the numbers so far, the current fiscal (Escorts publishes its annual results every September) is already proving to be quite spectacular for Escorts and it would perhaps be fair to say that the best is yet to come. Volumes in the tractor industry have been growing at around 41% in the current year and historically, the period from April to September has been the best period for tractor sales, coinciding with the monsoons. A price increase of Rs.6000 per unit will also see the top line increase. To augment its already strong tractor sales, the company introduced two new tractors of high-horsepower range and intends to launch another 2-3 models during the next three months.

The company is also looking to increase its capacity utilization. In the first six months of the current fiscal, the company produced around 28000 units and intends to add another 34000 in the remaining time period. Next year will see the company revamp the production capacity to around the 80000 levels with a target of 90000 being set for the year after next. At the
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moment, tractors with three-cylinder diesel engines have the biggest market share and it will not be long before four cylinder diesel engine tractors, along with turbocharged engines and load-sensing technology and electronic-hydraulic hitch control become the norm.

The company is constantly tapping into its strong R&D (Research and Development) culture in order to be well-geared to meet the demand for products of this sort. To facilitate all this, the company is also looking at new assets, news investments and a third location.

Just recently Escorts secured an order worth Rs.185 crore from the government of the United Republic of Tanzania. As per the order Escorts is required to submit 1430 units of its premium range of powerful Farmtrac tractors.

There also seems to be a renewed focus on its railway and construction equipment business. According to Mr. Rajan Nanda, the Chairman of Escorts, good progress is being made on expanding the rolling stock of vestibules, couplers, shock absorbers and other components of the metro and mono rail categories. The modernization of the railways has led to a greater demand for Escorts railway products, where it has set a target of doubling its fiscal year 2009 railway segment revenue by 2012 (Revenue from the railway segment in Y09 was Rs.197.84 crore). Going forward they have plans to introduce 8 to 10 products over the next two years as planned in concurrence with the Indian Railways for their various programmes, including the development of a dedicated Freight corridor, EMUs, high speed trains and so on. As far as the construction equipment division is concerned, the company is looking to enhance its earth moving equipment manufacturing capabilities and product portfolio.

The construction equipment division saw the establishment of a state-of-the-art plant and the introduction of long tonnage cranes in the Pick- n-Carry category and compactors. Now the company is planning to introduce another 7-8 products over the next 18 months with the

focus on earth moving equipment. Traditionally the construction and railway equipment divisions have grown at a CAGR of 35% and Escorts is expecting this high growth rate to continue. All in all, the company is looking to pursue a multi-pronged strategy, with agrimachinery, infrastructure and the railways division as the core business verticals.
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ESCORTS PRODUCTS

Escorts E-325 Josh E-335 E-335P E-430 E-430XL E-435 E-440(6+2 & 8+2)PT E-440(6+2 & 8+2)XL E-450 E-450(8+2) PT E-450(8+2) XL

Farmtrac F T 30 F T 35 F T 45 F T 45Live PT F T 50DB F T 50 F T 60 F T 60DB F T 60Deluxe F T 60Live PT F T 70

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AGRI MACHINERY GROUP CONTRIBUTION

AMG contribution is Almost Half of the Total Revenues of Escort Group.

AMG

23% 56% 12% 9%

Auto Ancilliary Parts Railway Equipments Construction

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MODERNIZATION OF AGRI MACHINERY GROUP

Escorts Agri Machinery Group (AMG) has invested over US $7.5 million in state of the Art & Research and Development Center. Virtual prototypes of components and aggregate assemblies are made and assembled on computer workstations using 3D technology. Their performance is checked on computers using simulation techniques thus saving a lot of time for the end-user as well as lowering development costs. The R&D center uses advanced 3D modeling, analysis and simulation software for engines, transmission and vehicles. Physical prototypes are then extensively tested for performance, durability and reliability. Facilities include a high technology engine laboratory featuring fully computerized test-beds with on line control, data collection, and analysis. Escorts, which produces tractors in the 27-75 horse power range, has sold over six lakh tractors under brand names like Escort, Powertrac and Farmtrac. The company has invested Rs 400 crore in modernizing its production facilities to bring them at par with international standards while Rs 60 crore has been injected towards strengthening new product development programmes.

Awards & Accolades

Besides this in May 2001, Escorts got the ISO 9001 certification for new product introduction in quality standard ISO/TS 16949:2002 Certification for new product introduction in June 2004. It becomes the first tractor manufacturing company in the world to hold the TS certificate. Escorts wins Indian tractor industries largest ever order, awarded US$40 million order by Tanzania. To open two offices and set up service support in African market New Delhi, July 05, 2010.

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Business Units:
Agri Machinery 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.

Railway Equipment Division The Railway Equipment Division of Escorts is leading railway equipment manufactures of the country for over three decades. It provides a wide range of products including air & electro pneumatic breaking systems, couplers, shock absorbers, composite brake blocks, rail fastening systems & vulcanized rubber components.

Auto Suspension Products Division (ASPD)-

It manufactures & supplies shock

absorbers & front forks to all original equipment Manufacturers of passenger cars, commercial vehicles, scooters & motorcycles. The division has an all India distribution network exceeding stockists/substockists more than 500 and 10,000 retailers to cater to the aftermarket.

Subsidiary Companies Escorts also provides & manufactures Construction & Material Handling Equipments to contractors & constructors. Escorts Limited has a wholly owned subsidiary i.e. ECEL (Escorts Construction Equipment Limited). It manufacturers & markets a diverse range of equipment like cranes, loaders, vibratory rollers & forklifts.

Farmtrac North America Incorporation, USA- FNAI in the USA is a joint venture between Escorts Ltd. through its subsidiary Escorts Agri Machinery Incorporation. Escorts Ltd. has now acquired a majority equity holding in the company. Escorts tractors have a network of 200 dealers through which its tractors are being marketed in 22 states in the USA. Its major segment in the USA covers 35-75 HP with two-wheel and four wheel drives.

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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 KENYA SOUTH AFRICA SRILANKA POLAND AUSTRALIA NEW ZELAND NEPAL BANGLADESH VIETNAM THAILAND MALAYSIA

Farmtrac Tractor Europe Spoolka. ZO.O Escorts Agri Machinery Inc, US which is a wholly owned subsidiary of Escorts Ltd. has acquired 100 per cent equity in the Polish company, Farmtrac tractors Europe Sp. Zo.o (FTES), which was earlier known by the name of Pol-Mot Escorts Spoolka. Zo.o. FTES has a wide distribution network having 56 dealers in Poland and 10 distributors across Central European markets such as Ireland, Belgium, Demark, Slovenia, Croatia, Serbia, etc.

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Escorts AMG : National Sales & Service Grid Escorts AMG has a wide National sales & Service Network constituting of 1212 Dealers, Sub-Dealers, Distributors & Stockists. Its more than 200 sales offices are strategically located across the country. Tractor sales to over 41 countries of the globe.

Share Holding Pattern (March 2010)

39%

46%
Promoters Public FIIs

14% 1%

Others

BASICS OF TRACTOR
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What is Tractor?

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 that with modernization & large competition in the market several ranges of tractors were developed to fulfill the needs of farmers.

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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.

PRODUCT RANGE

Escort A Tradition of Trust

Powertrac The super diesel Savers

Farmtrac The World Champion

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 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 farmers 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.

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SALES AND DISTRIBUTION MANAGEMENT

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INTRODUCTION

Sales refer to the exchange of goods or services for an amount of money or its equivalent in kind. Selling helps an organization to achieve its business goals. Thus, managing sales in an organization is an important activity. A sales manager needs to ensure that the salespeople are motivated continuously so that the organization is able to attain its goals the way it wants. The sales team or the sales manager must monitor the continuous changes taking place in the external environment regarding competitors, customers, government and other regulatory agencies, advances in technology, and industry trends. This provides the sales personnel with vital information regarding trends in organizational sales, product development, and budgets. By offering the management vital inputs pertaining to such information, the sales team helps the management to develop plans regarding sales, production, and design according to the situation. Over the years, substantial changes have taken place in the selling environment, leading to changes in the sales function. The trends that have shaped the sales function include shorter product life cycles, longer and more complex sales cycles, reduced customer loyalty, intense competition among manufacturing firms, rising customer expectations, increasing buyer expertise, electronic revolution in communications, and the entry of women into the sales force. The third element in marketing mix is to find out appropriate ways through which goods are to be made available to the markets. It is a management function and a decision in the matter is required to be taken before the commercial production is undertaken. The entire function of getting goods into the hands of the consumer is often referred to as distribution. Importance of Sales Management Importance of sales management is vital for any commercial organization. Expanding business is not possible without increasing sales volumes, and the goal of an effective sales

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management is to organize sales team work in such a way that ensures a growing flow of regular customers and increasing amount of sales.

DISTRIBUTION CHANNELS A Channel of Distribution (sometimes called a marketing channel) is a group of individuals and organisations that direct the flow of products from producers to customers. In its broadest sense this function includes transportation as well as the middlemen who handle the goods and help to transfer title to the goods. The term channel of distribution is used to denote the middlemen engaged in moving goods form place of production to the used to denote the middlemen engaged in moving goods form place of production to the place of consumption. This is risky. This is in fact is a 'channel' through which goods are made to move as smoothly as possible to the desired places. In other words, the route through which goods move from the place of production to the place of consumption is termed as 'channel of distribution'.

Channels of distribution are the means employed by manufacturers and sellers to get their products to market and into the hands of users. Channels are management tools used to move goods form production to consumption, they are means by which title to goods is transferred from sellers to buyers. The process of transferring title is not so simple especially in present day markets that are characterized by heterogeneity on both the demand and the supply sides. This means that there is a wide variety of goods produced for sale, while on the other side, there are highly varied and complex desires of consumers. In addition to having a strong sales function companies should also minimise their Selling & Distribution Overheads as these can be minimised, companies should also have efficient distribution channels to make the products available to the end consumer. Management of distribution channels involves efficient channel design, conflict management and implementation of sophisticated channel information systems which will enhance the process of making the products available to the end consumer in a timely manner.
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Thus, Sales and Distribution Management provides an overview of the sales and distribution function. It discusses various aspects of the sales function ranging from various sales organization structures to the role of the sales manager in improving sales by hiring, training, motivating and leading the sales force. It also provides the distribution function and discusses logistics and channel management.

IMPORTANCE OF DISTRIBUTION CHANNEL

As we know that a channel of distribution is a group of individuals and organisations that direct the flow of products from producers to customers. A channel of distribution performs a no of functions: Transfer of title of the goods involved Physical movement from the point of production to the point of consumption Storage functions Communication of information concerning the availability, characteristics and price of the goods in transit, inventory and on purchase Marketing creates various utilities to the products. Most of these utilities are, in fact, created by performing the functions of physical distribution promptly and efficiently. The importance of these functions varies depending upon the nature of the goods themselves. Thus, the company or organisation must find a correct distribution channel for its product. It is always said that an organisation must find a right product for its customer instead of finding a right customer for its product.

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ESCORTS CHANNEL SELECTION PROCESS

Identify Target Market

Determine Consumer Buying Habits

Locate Potential Customers

Pinpoint Channel Alternatives

Evaluate Channel Alternatives

Select Channel Members

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SALES STRATEGIES

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Strategies Strategy means a proposed plan of action or scheme to be implemented. To survive in a competitive changing business environment effective strategies are needed to be formulated and implemented, some of which adopted by Escorts are as follows: To boost its already strong tractor sales, the company introduced two new tractors of high-horsepower range and intends to launch another 2-3 models during the next three months. The company is also looking to increase its capacity utilization. Launches SEVA CHAKRA enhanced and timely service at farmers doorstep. Launches all-India TOLL-FREE CUSTOMER-CARE HELPLINE to provide convenience to its customers, which helps the customers a lot in solving their problems and getting information. Escort recently launched a unique insurance program HUMRAKSHAK to provide security and happiness in which the company provides a personal insurance of up to Rs. 7 lacs on the purchase of any of the Escort, Powertrac or Farmtrac tractors brands. The company is setting its International Presence in the market. A Government delegation from Ivory Coast visited Escorts and signed the Letter of Intent, awarding the dealership for catering to the sales and service for Farmtrac range of tractors, implements and spare parts to Escorts. In order to maximize its sales the company keeps on organizing various training programmes for its personnel which provides the company a ready work force for its various operations and helps in improving the sales performance of the company like: ECEL provided training to 25 operators who would be handling the compactors produced by ECEL that will be used in developing a modern and international level road network in the south-eastern country of Africa. The company organized a Mega Service Camp for Crane Operators to train customers on safe usage of Pick-n-Carry Cranes, in Hyderabad. Operators were given training on air cleaner elements, cleaning and service tips on maintaining machines. ECEL has now decided to conduct one training camp every quarter in each dealer territory.
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The companys new PT429, a 27 HP 2 cylinder offering, which has been specifically designed for the needs of the farmer in UP, is proving to be a runaway success with sales of over 200units for the period April-June 2010. Available at an desirable price of Rs 3, 21,199, PT 429, comes with a fuel efficient engine which is suitable for cultivation at higher speeds resulting in higher agri productivity.

The company has also introduced a special scheme for customers in Uttar Pradesh which entitles new customers of PT 429 to assured gifts and freebies. Not only this, customers can also participate in lucky draws which is an effective sales raising strategy and win prizes ranging from a watch to motorbike and even a brand new car.

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Escorts Sales Performances

On July 2004 Escorts 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 21.2% increase in sales in the first quarter of fiscal 2009-10 ending December 31, 2009 on January 15, 2010. Escorts Limited for the quarter ended June30, 2010, reported a profit of Rs. 45.84 crore which is a106% increase over Rs. 22.2 crore registered for the corresponding period of last fiscal. Net sales rose to Rs. 582 crore in the previous year. The Profit Before Tax (PBT) stands at Rs. 68.4 crore for the quarter, as against a profit of Rs. 41.4 crore in the corresponding period. EBITDA before exceptional items went up by 24 per cent from Rs 63.1 crore to Rs.78.3. Escorts Limited follows an October-September fiscal year. During the quarter, Escorts Limited registered Tractor sales of 17,917 units, a 39% increase over 12, 889 units. The sales performance is a result of aggressive marketing backed by an efficient sales and marketing team. The tractor industry grew by 34% during the period October 09 to June 10. During the same period Escorts sales grew by 43%. During the quarter, Escorts launched its new tractor models Powertrac 429 (PT429), a 27 HP - 2 cylinders offering to bring the best solution to farmers to provide maximum productivity. Besides this, the Construction Equipment Business of the company recently introduced its backhoe loader DIGMAX, as part of its strategy to expand its product portfolio to address larger share of the construction equipment market. 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 a growth path that spans a wider canvas of economic activity across agriculture and infrastructure sector.

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DECISION AREAS
CREDIT POLICIES The credit policy of a firm provides the framework to determine whether or not to extend credit to a customer and also how much credit to extend. It has two broad dimensions, the first is credit standard and second is the credit analysis. Credit standards represent the basic criteria for the extension of credit to customers. The trade- off with reference to credit standards covers collection costs, average collection period, level of bad debts losses and level of sales. With a relaxed credit standard the collection costs, bad debts expenses and sales goes up and in reverse case vice-versa happens. The second aspect of credit policy is credit analysis. It begins with obtaining credit information of the customers and ends up with the analysis of the obtained credit information. Information can be collected either internally or externally. Internal source of credit information is derived from the records of the firm. The analysis of credit information should cover both qualitative as well as quantitative aspects. The quantitative aspect is based on the available financial statements whereas qualitative aspects cover the quality of management.

CREDIT TERMS The second decision area in accounts receivable management is the credit terms. After the credit standard have been establish and the credit worthiness of the customers is assessed, the management of a firm must determine the terms and conditions on which trade credit will be made available. Credit terms have three components: credit period, cash discount and cash discount period. Credit period is the duration of time for which trade credit is extended whereas cash discount is the amount by which the over the due amount will be reduced thus benefiting the customer. The credit terms like the credit standard affect the profitability as well as the cost of the firm therefore a firm should determine the credit terms on the basis of cost-benefit trade-off.
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COLLECTION POLICIES The collection policies refer to the procedures followed to collect account receivable when after expiry of the credit period they become due. This policy covers two aspects: first is the degree of effort to collect the overdue and second is the type of collection efforts. Escort Limited has a zero debt credit policy. However it is giving the following facilities to its dealers to promote the sales, as liberal credit policy has a direct impact on sales.

CHANNEL FINANCE FACILITIES The company arranges these facilities with various bankers for the company dealers to support their cash needs. The goods are sold on credit against hundis. Hundis can be drawn for 50 or 75 or 90 days subject to qualifying criteria of bank.

CREDIT FACILITIES Escort provides thirty days interest free credit to the dealers. For this in respect of all hundis the company bears 30 days interest and the remaining cost of interest, delayed payment charges are borne by the dealers.

PENALTY ON BOUNCING OF HUNDIES / CHEQUES Bouncing of hundis/ cheques drawn in favor of the company is viewed very strongly and usually following actions are taken. Tractor supplies are suspended and restored only after all dues are cleared. All charges debited by the bank such as collection charges, penal interest are debited to the dealer. The bank extending channel financing policy have clearly stated that if a dealer has two or more bouncing he will be black listed and his limit will be withdrawn
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with immediate effect. Company also makes sales to such dealers only against letter of credit or demand draft.

CASH DISCOUNT ON EARLY PAYMENT Cash discount of 1% is payable on tractors dispatched against funds available in the form of letter of credit or demand draft. Interest is charged/ paid at 12% per annum on outstanding/ credit balance early payment incentive.

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COMPARISON OF ESCORTS WITH MAJOR PLAYERS

Tractors Overview From a small beginning in the 1960s when a few thousand tractors were produced, India is now one of the largest producers of tractors in the world along with the US and the CIS countries. The green revolution of the late sixties and increasing recourse to scientific cultivation has resulted in substantial increase in the demand for tractors. From a production of 2,000 tractors in FY71, the volume sales of the industry reached 254,439 units in FY99 valued at approximately Rs 50 billion. A series of good monsoons over the last seven years and the governments increasing support to agriculture credit has translated into strong demand for tractors over the last four years. Between FY92 and FY99, sales have grown at an annual compound growth rate of 8.44 per cent. Industry Structure The tractor industry of India is oligopolistic. Six key players Mahindra & Mahindra Ltd. (M&M), Tractors And Farm Equipment Ltd. (TAFE), Escorts Ltd. (EL), Punjab Tractors Limited (PTL), Eicher Ltd., and Hindustan Machine Tools Ltd. (HMT) rules over the market while a couple of players in the unorganized sector, specialize in used tractors. Nine companies manufacture tractors in the country in the product range, from less than 20 to 60 hp. Sales are, however, concentrated in the 20-50 hp segment owing to the small size of land holdings in the country. Mahindra and Mahindra is the leader in the industry with a market share of 27 per cent. All the nine companies have had a presence in the industry for more than two decades and have assimilated technology from their collaborators. Product differentiation is minimal in the industry which has resulted in market shares being fairly evenly distributed among the nine manufacturers.

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Performance of different tractor segments: Range Sales (nos.) % of Total Sales Market Leader Second 21-30 HP 57,915 22.7 Eicher, 34% M&M, 30% 31-40 HP 146,742 57.4 M&M, 26% TAFE, 26% 41-50 HP 146,742 15.7 Escorts, 46% M&M, 35%

It is clear from the above that in the 21-30HP range Eicher remained the market leader accounting for 34% market share followed by M&M with 30% market share. In the 31-40HP range M&M is the leader with 26% market share and TAFE followed it by 26% market share whereas in the 41-50HP range Escorts remained the leader with 46% market share and M&M followed it by 35% share. The existing players and the new entrants are now looking at capacity expansion in the medium and higher HP segments since these are the ones with the highest growth potential.

MARKET SHARE OF TRACTOR INDUSTRY

For the year 2009-10

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Chart Title
FORD NEW HOLLAND 7% OTHERS 1% EICHER 7% ESCORTS 14%

L&T 8% FML 2% SONALIKA 9% MAHINDRA & MAHINDRA 28%

HMT 1%

TAFE 15%

PTL 8%

TRACTOR INDUSTRY PERFORMANCE

COMPANY ESCORT 2005-06 11138 2006-07 23200 2007-08 20950

FARMTRAC

18287

32800

26900

TOTAL(ESCORT + FARMTRAC)

29425

56000

47850

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MAHINDRA & MAHINDRA PTL TAFE EICHER HMT SONALIKA BTL(FML) L&T FORD NEW HOLLAND

85028 31396

102500 30010 52400 27700

98700 28040 53400 25450 4770 30920 4820 28530 23250 4520

7900 32017 4464 19951 13214 8450

6500 36200 5050 19720 19400 7195

TOTAL INDUSTRY

302435

362675

350300

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INDUSTRY TRENDS BY STATE

The market shares of the top four players 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%. Punjab, Uttar Pradesh and Haryana were the first States to benefit from the Green Revolution and hence have traditionally accounted for most of the tractor sales. However, given the high penetration of tractors in these Northern States, the geographical concentration of tractor sales is gradually shifting to the Western and Southern States of the country. States like Gujarat, Andhra Pradesh and Madhya Pradesh have reported significant increases in tractor volumes over the past three years.

State wise Tractor Sales

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2005-06 UP 2006-07 AP MP Raj 2007-08 MS Bih 2008-09 Har Others 2009-10 5.00% 3.40% 5.80% 9.50% 8.10% 7.70% 15.00% 5.70% 3.40% 7.70% 9.80% 5.20% 10.10% 13.70% 6.90% 4.60% 8.50% 8.50% 7.20% 12.70% 12.10% 6.60% 6.20% 7.30% 7.50% 9.60% 11.20% 15.50% 7.10% 7.20% 8.50% 7.90% 8.30% 8.50% 18.90% 45.40% 44.50% 39.60% 36.10% 33.50%

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REGION-WISE MARKET SHARE OF MAJOR PLAYERS

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 200910). 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 (market share down by 140 bps) and Escorts (down by 140 bps). 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.

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MARKET CONCENTRATION
Market concentration in tractors industry is fairly high with top two players, M&M (including Punjab Tractors) and TAFE accounting for 63 per cent of the market in 2007-08. Market concentration increased over the past 4 years due to the acquisition of Eicher tractors by TAFE in 2005-06 and PTLs acquisition by M&M in 2006-07.

MARKET CAPITALISATION IN TERMS OF VOLUME Market share of the major player

VS Esco Tiller rts PTL 0% 5% 9%

2005

Forc e 3%

Escor ts 3% PTL HMT 7% 16%

2006
Force 3% M& M 71%

VS Tiller 0%

Esco VS rts Tiller 4% 0% PTL HMT 6% 14%

2007 Forc
e 2%

HMT 24%

M& M 59%

M& M 74%

Esco rts 3% VS Forc PTL Tiller e 6% 0% 1%

2008

VS Tiller PTL 4% 1% Escor ts HMT 3% 16%

2009
Forc e 1%

Esco VS rts Tiller 4% 1% HMT 14%

2010
Forc e 1%

HMT 22%

M& M 68%

M& M 75%

M& M 80%

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As it seen from the above graph of market capitalisation, Mahindra and Mahindra has become the giant in tractor industry over the last few years and has captured the market upto 80% of the total segmental industry.

MARKET CAPITALISATION IN TERMS OF SALES With the acquisition of Eicher Motors tractor division, TAFE has emerged a strong number two in the industry with better product portfolio and distribution network (although overlapping may cause some loss of share). TAFEs share went up to 28 per cent after its acquisition of Eicher.

With a market share of 14 per cent and 10 per cent, respectively, Escorts and International Tractors, are expected to remain strong competitors in the medium-to-long term. International Tractors is expected to maintain its share as it would not be able to grow at higher than industry growth rate. Global players like John Deere and New Holland India are likely to provide strong competition to the other well established players in the coming years as they strengthen their Indian product portfolio and distribution network and remain major exporters. Smaller players like Force Motors, VST Tillers and HMT are likely to be marginalized further in the long run due to lack of diversified product portfolio, poor nation-wide distribution network and weakness in cost structure.

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SALES VALUE(In Crores)

4500 4000 3500 3000 2500 2000 1500 1000 500 0 Escorts ITL John Deer M&M TAFE 2005 2006 2007 2008 2009

COMPANYS FUTURE
The growing domestic demand for food gains and agri products promises a very good future for companys business. With exemption of excise duty on tractors and growing importance of agriculture sector in the growth of Indian economy India can become a major exporter of agri products and increased demand both domestic and export will call for increased yields. Tractors population today is concentrated in 10% of villages and even today 70% of the villages do not have tractor .Crisil infa has estimated an annual demand 3.0 lacks to 3.20 lakhs of tractors by 2007-08 vs. 2.4 lakhs in 2006-07. All these show great potential for growth in the industry and thus in the company.

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LIMITATIONS

52

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.

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RECOMMENDATIONS

54

Proper inventory plans should be made in order to reduce the carrying cost. New market strategies should be devised from time to time. This is because, even if the tractor is of good quality, the competitors may produce the same product with additional features and at lower prices.

Marketing network should be enhanced. Company should also produce more tractors of higher H.P. But new developments should be made continuously in order to survive in this competitive world.

Every effort should be made keeping in mind the needs of customer. A special team can be formulated if possible to study the market environment which will provide the sales personnel vital information about the needs and tastes of the customer.

The company should focus more on 21-30HP and 31-40HP range, where it lacks. A study may be conducted if required by experts to pinpoint reason behind Escorts high correction period of 95 days in 2007-08 against 50 days of Mahindra & Mahindra. It is due to quality of products, quality of customer and the segment of customers marketing effort, distribution pattern or other reasons.

More attention must be given to market forecasts can be made and the surplus of inventory is reduced to minimum

Company should not follow the competitors only. New products should be produced for the farmers having low income and small holdings.

Proper market survey should be carried out. The company should explore the export
market to study the present and prospective demand.

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BIBILOGRAPHY
WORLD WIDE WEB

www.escortsagri.com www.economictimes.com www.planware.com www.icraindia.com www.myiris.com

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