Vanraj Mini-Tractors - Is Small Beautiful

ASIAN CASE RESEARCH JOURNAL, VOL.
12, ISSUE 2, 141160 (2008)
ACRJ
Vanraj Mini-Tractors:
The author is a doctoral can-
Is Small Beautiful?
by INDIAN INST OF MANAGEMENT KOZHIKODE on 07/15/17. For personal use only.
didate in marketing at the In-

stitute of Rural Management
Asian Case Res. J. 2008.12:141-160. Downloaded from www.worldscientific.com
Anand (IRMA). He would

like to express his gratitude We are almost ready for the commercial production of
to J. H. Trivedi, J. D. Patel, 10 horsepower Vanraj mini-tractors, said Jagdip Trivedi,
and Pragnesh Patel for their
unstinted support and co- proudly showing the Central Motor Vehicle Rules (CMVR)
operation in data collection. compliance certication from the Central Farm Machinery
He would like to thank Pro-
fessor Debiprasa Mishra for Testing and Training Institute at Budhni in Madhya Pradesh.
his guidance throughout the
case writing and Professor
CMVR certication permits commercial sales and registration
Arvind Gupta for his helpful of vehicles with the Regional Transport Ofces (RTOs) in
inputs to the teaching note.
The intention of this case is India. Trivedi had sent registration circular to all district
to portray the dilemma faced RTOs in the states of Gujarat, Madhya Pradesh, Maharashtra,
by the decision maker and not
to judge correct or incorrect and Uttar Pradesh, as he was planning to roll out this
handling of the situation. wonder machine soon. Trivedi was one of the three partners
Please address all correspon- in M/s Pramal Farmatics Pvt. Ltd., which was ready to
dence to Pratik Modi, Doc- manufacture and market 10 horsepower (HP) mini-tractors
toral Researcher, Quarter No:
C28, IRMA Campus, In- under the brand name Vanraj.
stitute of Rural Management,
Anand (IRMA), Anand
My immediate concern is to select the most appro-
388 001, Gujarat, India. E-mail: priate market segment for Vanraj. We are a small-scale
pratikmodi_78@yahoo.com.
industry and we have to be extremely productive in our
marketing efforts, said Trivedi. A study conducted by some
management students under the guidance of Trivedi identied
four market segments for the Vanraj tractors: small and
marginal farmers, large farmers, industries, and horticulture
farmers. Marginal and small farmers were large in numbers
but no big player currently served this segment. The level
of farm mechanization was extremely low in the segment
as these farmers continued subsistence farming using
bullocks for tilling and other agricultural operations. Large
2008 by World Scientic Publishing Co.
00103.indd 141 2/17/2009 10:47:44 AM

142 ACRJ
farmersa, though small in number, were a lucrative market

segment. They were relatively better off and had higher
level of farm mechanization. All the big players in the tractor
market were focused on serving this market segment. Vanraj
10 HP mini-tractor, with a few modications, could also be
used in material handling operations in industries, airports,
and municipal corporations. Area under horticulture farming
was increasing, especially in Gujarat and Maharashtra (see
Annex 1 for area under horticulture farming). Southern and
central parts of Gujarat had a high concentration of orchard
owners and horticulture farmers. Similarly, Maharashtra

also had a few concentrated pockets of horticulture farming.

Generally, horticulture farmers had large landholdings, and
thus formed market niche within the market segment of
large farmers.
On average, Gujarat, Madhya Pradesh, Maharashtra,
and Uttar Pradesh accounted for annual sales of 17345,
28443, 15288, and 54392 units of big tractorsb, respectively.
However, no big company in India ever tried to explore the
potential of less than 20 HP mini-tractors that many experts
opined were ideal for marginal and small farmersc. Trivedi
was convinced that Vanraj mini-tractor was the product
that small and marginal farmers in India needed. It will
prove to be a boon for small farmers as Vanraj addresses
most of their problems, which no other big tractor does,
said Trivedi. Statistics favored his arguments. The level of
farm mechanization in India was quite low, especially the
large number of small and marginal farmers that accounted
for 82% of the total landholdings did not own tractors (see
Annex 2 for state-wise number of operational holdings by
major-size groups).
aFarmers with more than 4 hectares of landholding are referred to as large farmers
throughout this case.
bMore than 30-horsepower tractors are referred to as big tractors and less than 20-
horsepower tractors are referred to as mini-tractors throughout this case.

cFarmers are classied based on their landholding. Marginal farmers owned less than
1 hectare of land. Small farmers owned between 1 to 2 hectares of land. Semi-medium

farmers owned 2 to 4 hectares of land. Medium and large farmers owned more than
4 hectares of land.
00103.indd 142 2/17/2009 10:47:44 AM

VANRAJ MINI-TRACTORS 143
DEVELOPMENT OF VANRAJ MINI-TRACTOR
Vanraj 10 HP Mini-Tractor was an innovation from a small

farmer, Bhanjibhai Nanjibhai Mathukia of Kalawad village
in Junagath district of Gujarat. Bhanjibhai and his three
brothers had been sharing a tractor, which was not enough
to meet their individual farming requirements. He could
not use bullocks for long working hours as the village had
hilly terrain. Moreover, there was a constant fear of lions or
leopards from nearby Gir forest attacking his bullocks. He
got inspiration from the design of Chhakdo, a motorcycle

converted into a three-wheeler taxi for local transport in

and around Rajkotd town in Gujarat, and decided to make
a three-wheeler tractor himself. He bought a junk jeep and
mounted a 10 HP engine made in a local factory in Rajkot
town. The iterative process of innovation went on for a
few months during which he tried out many ideas and
incorporated many benets in the design of the tractor.
Later, this innovation was spotted and taken up for com-
mercialization by the Grassroots Innovations Augmentation
Network (GIAN) and the Society for Research and Initiatives
for Sustainable Technologies and Institutions (SRISTI).
GIAN and SRISTI are part of the Honey Bee Network set
up by Professor Anil Gupta of the Indian Institute of
Management, Ahmedabad (IIMA) with an objective to pro-
mote traditional knowledge and grassroots innovations.
The Student Organization for Managerial Assistance (SOMA),
which is a students-run group of IIMA for providing con-
sultancy services to NGOs and small businesses, conducted
the feasibility study for commercialization of the tractor.
The study factored in considerations such as soil tape and
small landholding size in the four states, and found the
mini-tractor commercially viable. GIAN brought funding
for the project from Technopreneur Promotion Program
(TePP) scheme of the Department of Scientic and Industrial
Research. They hired a reputed technical consultant to
improve the technology and National Institute of Design,
Ahmedabad to provide design inputs for improving the
aesthetics without changing its basic value propositions.
dRajkot is a town in Saurashtra region (south-west) of Gujarat.
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144 ACRJ
TECHNOLOGY PURCHASE AND REFINEMENT
Three technopreneurs: Jagdip Trivedi, Jayantibhai Patel,

and Pragnesh Patel, acquired the technology in October
2004 under the technology transfer agreement that gave
them exclusive rights to manufacture and market 10 HP
tractors in Gujarat, Madhya Pradesh, Maharashtra, and
Uttar Pradesh under the brand name Vanraje. They had
long years of technical and professional work experience
before oating a small-scale company, M/s Pramal
Farmatics (P) Ltd, with a paid-up capital of 1.25 million

rupees to manufacture and market the Vanraj brand of

mini-tractors. The companys facilities were set up in
the industrial estate of Vittal Udyognagarf, near Anand
town in central Gujarat region. The deal was valued at
10 million rupees. It incorporated an upfront transfer fees
of 0.3 million rupees, 2.25% sales linked royalty for 5 years
or on the rst 2500 tractors, whichever was earlier, and
exclusive dealership to the innovator for two districts in
Gujarat.
M/s Pramal Farmatics, with the help of a technical
consultant, further rened the technology to make it suitable
for commercial production and to comply with regulatory
requirements. Three prototypes were prepared which
underwent one and a half years of extensive eld trials in
farms. Feedback from the eld trials were used to plug-
in the lacunae in the technology until satisfactory results
were achieved. Finally, the tractor was ready for not only
agricultural but also transportation purposes. The tractor
had a hauling capacity of 2 tonnes of trailer load.
Vanraj 10 HP tractor was a versatile technology. It
required some modications before it could be used in the
material handling applications in industries, warehouses,
construction work, and airports. Municipal corporations
eVanraj refers to the lion and translates as The King of the Forest.
fUnder the Industrial Development Policy, specialized agencies of the sState
governments set up industrial estates with myriad basic facilities. The Gujarat
Industrial Development Corporation (GIDC) was the agency in the State of Gujarat.
The Vittal Udyognagar Industrial Estate was one such estate set up by the GIDC.
00103.indd 144 2/17/2009 10:47:44 AM

could also use it on narrow streets of cities and towns

for waste collection and disposal services. However, this
segment required changes in the overall strategy of M/s
Pramal Farmatics as the material-handling industry had
completely different industry structure and competitive
environment than that of the tractor industry. For example,
the material handling equipment required business-to-
business selling, whereas tractors were sold directly to
farmers.
ADVANTAGES OF VANRAJ
Advantage over Big Tractors
The biggest advantage of Vanraj was its affordable price

even for small farmers. Vanraj and other big tractors had
equal lifespan of 8 to 9 years, but Vanraj could perform
almost all the functions of a big tractor at lower costs (see
Annex 3 for farming operations and fuel consumption
gures). On average, Vanraj consumed only 1.5 litres of
dieselg per hour, whereas the big tractors consumed around
4 litres of diesel per hour. A small farmer taking two crops
a year would use this tractor, approximately, for at least 180
days a year. At the rate of 5 hours of work in a day, this
tractor would be utilized for about 900 to 1000 hours per
year, which could result in huge savings on diesel cost for
the farmers. Tractors between 30 and 50 HP capacity were
priced anywhere between 0.24 million to 0.4 million rupees
depending on the size, features, and brand of the tractor.
An average 35 HP tractor would cost around 0.25 million
rupees and an average 50 HP tractor would cost 0.35 million
rupees. Their lifetime service, repairs, and maintenance costs
would vary from 10% to 15% of the selling price.
Vanraj was a single piece casting tractor with simple
design that helped in easy repairs and maintenance (see
Annex 4 for technical specication). Even a local mechanic
could repair and service the tractor. Its lifetime service,
gDiesel costs around 40 rupees a litre in India.
00103.indd 145 2/17/2009 10:47:44 AM

146 ACRJ
repairs, and maintenance costs were estimated anywhere

between 10% and 15% of its selling price. Smaller wheelbase
and turning radius offered better maneuverability and
control in farming operations. Vanraj could reach small
corners of land inaccessible to big tractors, which made
it ideal for small farmers. Vanraj also had an adjustable
wheelbase that suited interculture operation in various
crops. Interculture operations are carried out to remove
weeds and create soil mulch that would conserve soil
moisture. When done manually, about 300 to 500 man-hours
are required to cover 1 hectare of land. Vanraj was the rst

tractor with three-wheel convertible feature for which M/s

Pramal Farmatics had applied for patent in the US. Three-
wheel convertibility is a useful option for farmers, especially
in interculture operation in cash crops such as cotton,
groundnut, sugarcane, banana, and other horticulture crops.
Vanraj could also be used for spraying pesticides, fertilizers,
and line marking in orchards. All the farming implements,
albeit of smaller size, could be used with Vanraj. M/s
Pramal Farmatics intended to manufacture and market
such small size farm implements as well. They had already
developed one such farming implement called rotavator
for mini-tractors, which was not available so far. Vanraj
was the rst mini-tractor with tested Power Take-Off (PTO)
point, which was an extremely useful feature in a tractor.
Power take-off point enables an alternate use of a tractors
engine as a power generator. Farmers could take-off power
from the tractor to run rotavator, thresher, water pump for
irrigation, oor mill, etc., from the PTO point.
Advantage over Other Mini-tractors
There were three other Gujarat based brands of 10 HP mini-

tractors: Field Marshal, Trishul, and Captain. These were
assembled tractors with chassis mounted engine, priced at
about 0.17 million rupees. By the very nature of its work,
a tractor bears a lot of vibrations and shocks in farms,
which might create problems such as loosening of fasteners,
misalignment of components, higher maintenance cost, and
00103.indd 146 2/17/2009 10:47:44 AM

greater chances of failure in assembled tractors. Vanraj was

costlier than these brands of mini-tractors, but it offered
better features. Vanraj was the rst mini-tractor with a tested
PTO point that had variable power take-off speed with gear
selection. It also had a three-wheel convertible feature.
A few companies used to import components of
mini-tractors from China. They would assemble and sold
them at about 0.1 million rupees in India. China had a very
large domestic market for small and mini-tractors. These
Chinese make mini-tractors worked well in cooler Chinese
environment; however, they would often break down due

to problems such as overheating, belt failure, clutch failure,

etc., in hostile Indian conditions. Vanraj was a geared tractor
that had worked well in trying conditions during the eld
tests.
Advantage over Bullocks
Vanraj could prove to be a viable option against bullocks. A

pair of bullocks, on average, costs around 25,000 to 30,000
rupees. However, bullocks require tending by a person
for their fodder, cleaning, and shed maintenance work
throughout the year, even during seasons when bullocks
were not in use. A pair of bullocks consumes fodder worth
15,000 to 20,000 rupees annually. Bullocks can be used
for agricultural activities after they reach 3 years of age.
They have useful life span of around 8 to 10 years after
which they are sold off to slaughterhouses, or remain with
owner farmers as liabilities. Over and above its functional
superiority and versatility of a tractor, it also offers a lot
more convenience to farmers.
TRACTORIZATION IN INDIA
India had the third largest gross cropped area after

the US and Russia, but unlike in the latter two countries,
agricultural landholdings were highly fragmented in India.
Manual labor, subsistence farming, and consequent low
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148 ACRJ
productivity characterized Indian agriculture. Nevertheless,

Indian farmers were quick to realize the importance of
tractorization as India reached the mark of 1 million tractors
in the year 1989, and 2.5 million tractors in the year 2000.
Farm mechanization played an important role in raising the
total agricultural production, productivity, and protability.
India reached foodgrains production gure of 212 million
tonnes in the year 2001 02 from being a food decit nation
in the 1960s. By 2020, the requirement for foodgrains is
expected to be around 325 million tonnes from the ever
decreasing per capita of arable land. Greater agricultural

productivity and farm mechanization are necessary to reach

that level of production.
Farm mechanization had a positive impact on
farmers as it improved their economic conditions and re-
duced drudgery. Researchh showed that tractorization did
not create unemployment in India because the tractors
replaced the bullock power and not human labor. It was
believed that land fragmentation and consequently smaller
farm size would render tractors uneconomical for the Indian
farmers, but the same research also concluded that the size
of landholding did not inhibit the use of tractors. Instead,
the non-use of tractors was on account of the inavailability
of the right kind of tractors that matched farmers needs.
Average land holding in Indian agriculture had declined
from 2.30 hectares in 197171 to 1.57 hectares in 199091,
but the horsepower in tractors continued to increase. Big
tractors were not viable for small and marginal farmers with
average landholding size of 0.4 hectare and 1.4 hectares,
respectively.
Farm mechanization was faster in northern India than
in any other parts of the country. Historically, Punjab, Uttar
Pradesh, and Haryana accounted for a dominant share of
the total tractor sales in India. The soil type in these states
was alluvial, and thus required lower horsepower tractor for
tilling and other farming activities. Southern and western
Indian states, including Gujarat, Maharashtra, and Madhya
hMaggu, A. (1982), Tractorization in India: Dispelling some myths, Vikalpa 7(1):

4552.
00103.indd 148 2/17/2009 10:47:44 AM

Pradesh, had harder soil types laterite and black soil

which required higher horsepower tractors. Tractor densities
in western and southern India were gradually increasing,
and future sales volumes were expected to come from these
states.
INDUSTRY OVERVIEW
Tractor manufacturing in India started in 1961 with

aggregate annual licensed capacity to manufacture 11,000

tractors. Tractor industry had since grown to 0.25 million

units in the years 200405. It registered a blistering growth
of nearly 30% over the previous years, 200304. India
emerged as the worlds largest market for tractors, and
the Indian tractor industry emerged as the second largest
manufacturer of tractors in the world. Currently, the size
of the Indian tractor industry was estimated at 6.5 billion
rupees. India contributed about 30%, the largest in the
world, to the global tractor production which was estimated
at 0.8 million units per annum. The growth potential was
still immense as India had only eight tractors per thousand
hectares of land, whereas the world average was 19 tractors
per thousand hectares of land. Industry experts believed
that with the increase in the total irrigated area, demand
for tractors would shoot up dramatically. India was also
emerging as a major destination for components outsourcing
and an export hub for Indian and multinational tractor
companies.
The tractor industry was one of the most com-
petitive industries in India. It comprised 12 major national
players, 4 major multinationals, a few major assemblers of
Chinese-made tractors, and numerous small-scale rms who
manufactured or assembled the small tractors to suit local
requirements. None of the big players, national or multi-
national, revealed their interest in mini-tractor segment. The
top ve players M&M, TAFE, Punjab Tractors, Sonalika,
and Escorts together accounted for 85% of the total
market. Recently, Tractor And Farm Equipment (TAFE)
acquired Eicher to get a better footing in the 20 to 30 HP
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150 ACRJ
segment. TAFE was strong in south India, whereas Eicher

had strong presence in north India. As a result, TAFE
became the second largest player in the market displacing
Punjab Tractors. Mahindra & Mahindra was the market
leader with 26.5% market share and strong presence in
western India. It had earned the distinction of being the
fourth largest tractor company in the world, and enjoyed
4% market share in the US. Despite the robust industry
growth in recent years, many big players suffered from low
capacity utilization at about 50%. It had created downward
pressure on their margins leading to an increased rivalry

in the market. Raw material cost of steel, which was a key

component, had gone up in recent times but manufacturers
could not increase the prices of tractors in the buyers market.
Many companies had introduced promotional schemes
such as exchange of old tractors, longer credit period, credit
sales etc., to clear up inventories.
MARKET SEGMENTS
Traditionally, tractor companies had used engine horsepower

as basis for segmenting the market and designing their
product portfolio. Horsepower was central to the new
product development process. Broadly, the tractor market
had ve segments. Less than 20 horsepower was considered
mini-tractor segment, which contributed less than 1% to
the total tractor sales in India. Only recently, HMT, one of
the large tractor manufacturers in India, had expressed its
desire to enter mini-tractor segment with 1820 HP tractor
priced at around 0.18 to 0.2 million rupees. Tractors between
21 and 30 HP represented the small tractor segment, which
contributed 26% to the total tractor sales. Less than 30 HP
tractors received government subsidy of 30,000 rupees
per tractor under the program to modernize agriculture.
Eicher was the biggest beneciary of the scheme, as a
dominant portion of its total sales came from this segment.
The market segment for medium sized tractors between
31 and 40 HP was the largest. It contributed 55% to the total
tractor sales in India. Large tractors between 41 and 50 HP
00103.indd 150 2/17/2009 10:47:44 AM

accounted for 15% share in the total sales. Big farmers of

Punjab and Haryana were the main buyers in this segment.
Punjab Tractors and HMT dominated the high-end market
segment (more than 50 HP tractors), which accounted for
just 4.5% of the total tractor sales in India. Multinationals
such as New Holland, John Deere, and Renault focused
mainly on this high-end market segment, which was also the
fastest growing (see Annex 5 for segment-wise growth rate
and distribution of sales). On average, tractors in the US and
in European countries had more than 100 HP capacity.
DRIVERS OF TRACTOR DEMAND
Commercialization of agriculture required a higher level

of farm mechanization. The fortune of the tractor industry
was heavily dependent on agriculture. Thus, tractor sales
were affected by all the factors that had a bearing on
agriculture. The Indian agriculture was largely dependent
on good monsoon, and the tractor sales would take a severe
beating during a drought period. The level of agricultural
production and Minimum Support Price (MSP) declared
by the Government inuenced rural prosperity, and con-
sequently, tractor sales.
Horsepower was one of the most important con-
siderations in tractor purchase. A farmer considered other
factors such as, price, fuel efciency, availability of spares,
easy maintenance, and tractors compatibility with various
farming implements when purchasing a tractor. However,
it would be wrong to assume that farmers used tractors
only for agricultural purposes. Tractors were used for rural
transportation and hauling of agricultural produce to the
markets. Tractors were a symbol of power, masculinity,
prosperity, and a sign of having arrived for the Indian
farmers.
The ease in availing the tractor nance was the most
important factor for the spurt in tractor sales in recent years.
A small farmer with as little as 3 acres of land could avail
tractor nance from banks, which led to not only increased
tractor demand but also a higher default rate on such loans.
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152 ACRJ
The retail nancing of tractors was a lucrative business

opportunity for many banks, and they were forthcoming
in nancing tractor sales. The Government considered such
loans as part of the banks obligation to provide credit to the
priority sector, and renanced them at cheaper rates. Nearly
90% of the tractors were sold on credit. Many studies had
reported gross underutilization of tractors in India, even
below their break-even points, leading to a higher default
rate. Higher horsepower tractors required more hours of
usage per year than lower horsepower tractors to achieve
break-even. A studyi reported that tractors were grossly

underutilized in India, but their utilization seemed to

increase with the farm size. Farmers were renting out their
tractors for farm and non-farm activities to increase capacity
utilization and earn extra income. The tractor hiring charges
varied from 200 rupees to 300 rupees per hour but the cost
of diesel was borne by the owner of the tractor. Such custom
work accounted for more than half of the total utilization of
the tractor. Earning potential in custom hiring of tractors
was also driving farmers to purchase higher horsepower
tractors.
THE DILEMMA
Trivedi believed that small and marginal farmers were the

most appropriate target market for Vanraj, where it could
present an alternative to bullocks. However, the other two
partners were not fully convinced. They wanted Trivedi to
give an elaborate thought to the issue before targeting any
particular market segment. M/s Pramal Farmatics planned
to sell Vanraj at 0.19 million rupees or less, almost half
the price of a big tractor, provided they outsource certain
components in bulk and derived economies of scale. Given
the market potential, as portrayed by Trivedi, it seemed that
the company had kept conservative estimates of sales and
revenue growth (see Annex 6 for the cost of production and
Annex 7 for the projected prot and loss account).
iBalishterand N. P. Singh (1997), Economics of tractor use in agriculture,
Productivity 38 (3).
00103.indd 152 2/17/2009 10:47:44 AM

Trivedi was condent, There are at least two million

small and marginal farmers in Gujarat, let alone the other
three states where I can sell. I am offering the farmers a
product that is affordable, fuel efcient, and meets all their
needs. Vanrajs competition is with bullocks, and farmers
will nd Vanraj cheaper than using bullocks. He chuckled,
and with a twinkle in his eyes said, You must have heard
that saying, small is beautiful. Isnt it? His last sentence
echoed the perennial conundrum between small is
beautiful and the bigger the better.
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154 ACRJ
Annex 1. Area under Horticulture Farming
States Area (in 000 ha) under Fruits Area (in 000 ha) under Vegetables
199192 200102 199192 200102
Maharashtra 256.1 582.8 241.1 402.4
Gujarat 84.5 149.0 114.6 232.2
Uttar Pradesh 303.2 288.3 576.7 777.9
Madhya Pradesh 64.7 46.6 176.4 136.4
Source: H. P. Singh, Prem Nath, O. P. Dutta, and M. Sudha (2004), Horticulture Development, State of the Indian Farmer: A
millennium study, vol. 11.
Annex 2. State-wise Number of Operational Holdings by Major-size Groups

(gures in 000)
States Marginal Farmers Small Farmers Large Farmers

Gujarat 1034 1058 1692
Madhya Pradesh 3878 2312 3413
Maharashtra 4266 3176 3211
Uttar Pradesh 16237 3135 2156
Source: Agricultural Census Division, Ministry of Agriculture, New Delhi.
00103.indd 154 2/17/2009 10:47:44 AM

Annex 3. Agricultural Operations and Fuel Consumption
Operation Average Coverage Average Diesel

Consumption
Deep plough 7 hrs for one acre 2 litres/hr
(with one big blade)
Opening furrow in the eld 2 hrs for one acre 1.5 litres/hr
(plough with three blades)
Interculturing 1 hr for one acre 1 litre/hr
(cultivator with 7 tine)
Harrowing (with heavy blade) 2 hrs for one acre 1 litre/hr

Harrowing (with light blade) 1 hr for one acre 0.75 litre/hr

Sowing operation 1 hr for one acre 0.75 litre/hr
(with automatic seed cum fertilizer drill 5 pieces)
Transportation 0.5 litre/hr
(with 2 tonnes load on road)
Rotavator 5 hrs for one acre 2 litres/hrs
Water centrifugal pump (2.5 2.5)
Thrasher
Generator set (5 KVA)
Source: Information provided by M/s Pramal Farmatics Pvt. Ltd.
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156 ACRJ
Annex 4. Technical Specications of Vanraj
Weight of Tractor
Without Standard Ballast: 1000 kg

With Standard Ballast: 1240 kg
Tractor Dimensions
Length: 2350 mm
Width: 975 mm
Height: 1805 mm
Ground Clearance: 200 mm
Wheel Base: 1625 mm
Engine
Maker: FieldMarshal
Type: Four stroke direct injection
Horse Power: 9.5 HP
Bore/Stroke: 85/110 mm
No. of Cylinders: One
Capacity: 625 CC
Cooling System: Air cooled
Air Cleaner: Oil bath type with pre-cleaner
Fuel Equipment: Plunger type fuel pump
Fuel Consumption: approximately 1.5 litres per hour
Hydraulic System
Method to Drive Hydraulic Pump: Drive through gears

Output of Hydraulic Pump: 14 cc/rev (14 LPM @ 1000 rpm)
Method to Operate 3 Point Linkage: Internal cylinder with arm operation
00103.indd 156 2/17/2009 10:47:44 AM

Transmission
Clutch: Single dry friction plate

Gear Box: 6 Forward2 Reverse
Foot Brakes: Dry disc type mechanical brake
Parking Brake: Mechanical pawl arrangement
Steering: Gear rocker shaft
Minimum Turning Radius with Brake: 2700 mm
Minimum Turning Radius without Brake: 3500 mm
Road Speed (in kmph)
Gear High Low

1st 11.4 3.95
2nd 23.6 8.20
3rd 36 12.46
Reverse 9.6 3.32
Power Take Off (P.T.O.)
Hi Selection RPM @ 2600 RPM: 994 RPM

Lo Selection RPM @ 2600 RPM: 347 RPM
PTO Power @ 2600 RPM: 7 HP (5.3 KW)
Tyres
Front Tyres: 5.20 146 ply

Rear Tyres: 8.00 184 ply
Electricals
Battery: 12 V75 AH
Starter Motor: 12 V Solenoid operated
Alternator: 12 V Inbuilt voltage regulator
Lights: 12 V
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158 ACRJ
Oil Capacities
Diesel Tank: 20 litres

Engine Sump: 1.8 litres
Main Gear Box and Differential: 30 litres
Steering Box: 500 ml
Air Cleaner: 150 ml
Trailer
Pay Load: 1 ton (can carry up to 2 tonnes on road)

Single Axle Trailer Size: 8 ft x 5 ft x 1 ft
Tyre Size: 6.00 x 166 ply
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Annex 5. Segment-wise Growth Rate and Distribution of Sales

(gures for growth in 19992000 over 199899)
Category Segment Segment-wise

Growth Rate Sales Distribution
(in %) (in %)
< 20 HP 0.37 0.5
2130 HP 15.22 25
3140 HP 2.90 55
4150 HP 5.88 15
> 50 HP 17.88 4.5

Source: Business Today, September 21, 2000, page 42.
Annex 6. Cost of Production (Rs. in Lakhs)
Sr. 1st 2nd 3rd 4th 5th 6th 7th

Description
No. Year Year Year Year Year Year Year
1 Installed Capacity 600 600 600 600 600 600 600
2 Capacity Utilization 50% 55% 60% 65% 70% 75% 80%
3 Actual Production 300 330 360 390 420 450 480
Raw Material Cost Per
4 465.00 511.50 558.00 604.50 651.00 697.50 744.00
Tractor @ Rs.155,000/-
5 Salary and Wages 5.04 6.00 7.20 7.92 8.76 9.60 10.80
6 Electricity 1.20 1.44 1.80 2.04 2.40 2.64 3.00
7 Consumables 0.60 0.60 0.60 0.72 0.72 0.84 0.96
Total 471.84 519.54 567.60 615.18 662.88 710.58 758.76
00103.indd 159 2/17/2009 10:47:44 AM

160 ACRJ
Annex 7. Projected Protability Statement (Rs. in Lakhs)
Sr. 1st 2nd 3rd 4th 5th 6th 7th

Item
No. Year Year Year Year Year Year Year
1 Sales Realization 570.00 627.00 684.00 741.00 798.00 855.00 912.00

Less Sales Commission
2 75.00 82.50 90.00 97.50 105.00 112.50 120.00
@ 25000/-
3 Net Sales Realization 495.00 544.50 594.00 643.50 693.00 742.50 792.00
4 Cost of Production 471.84 519.54 567.60 615.18 662.88 710.58 758.76
5 Gross Margin 23.16 24.96 26.40 28.32 30.12 31.92 33.24

6 Overhead Expenses 3.96 4.32 4.80 5.28 5.76 6.36 7.20

Sales Expense
7 1.44 1.80 2.16 2.40 2.64 3.00 3.30
(e.g. training etc.)
Pre Operative and Conti.
8 1.40 1.40 1.40 1.40 1.40 0.00 0.00
Expn.
9 Contribution 16.36 17.44 18.04 19.24 20.32 22.56 22.74
10 Depreciation 1.43 1.36 1.31 1.26 1.22 1.19 1.16
11 Prot before In. and Tax 14.93 16.08 16.73 17.98 19.10 21.37 21.58
12 Interest 4.80 4.56 4.32 4.08 3.84 3.60 3.48
13 Prot before Tax 10.13 11.52 12.41 13.90 15.26 17.77 18.10
14 Income Tax @ 33% 3.34 3.80 4.10 4.59 5.04 5.86 5.97
15 Prot after Tax 6.79 7.72 8.31 9.31 10.22 11.91 12.13
16 Dividend 2.50 2.50 2.50 3.12 3.12 3.75 3.75
17 Prot after Dividend 4.29 5.22 5.81 6.19 7.10 8.16 8.38
18 Add: Depreciation 1.43 1.36 1.31 1.26 1.22 1.19 1.16
Pre Operative and Conti.
19 1.40 1.40 1.40 1.40 1.40
Expn. Written Off
20 Net Cash Accrual 7.12 7.98 8.52 8.85 9.72 9.35 9.54
00103.indd 160 2/17/2009 10:47:44 AM

Vanraj Mini-Tractors - Is Small Beautiful

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Vanraj Mini-Tractors - Is Small Beautiful

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ASIAN CASE RESEARCH JOURNAL, VOL.

12, ISSUE 2, 141160 (2008)

didate in marketing at the In-

Anand (IRMA). He would

2008 by World Scientic Publishing Co.

00103.indd 141 2/17/2009 10:47:44 AM

farmersa, though small in number, were a lucrative market

owners and horticulture farmers. Similarly, Maharashtra

also had a few concentrated pockets of horticulture farming.

horsepower tractors are referred to as mini-tractors throughout this case.

1 hectare of land. Small farmers owned between 1 to 2 hectares of land. Semi-medium

00103.indd 142 2/17/2009 10:47:44 AM

DEVELOPMENT OF VANRAJ MINI-TRACTOR

Vanraj 10 HP Mini-Tractor was an innovation from a small

got inspiration from the design of Chhakdo, a motorcycle

converted into a three-wheeler taxi for local transport in

00103.indd 143 2/17/2009 10:47:44 AM

TECHNOLOGY PURCHASE AND REFINEMENT

Three technopreneurs: Jagdip Trivedi, Jayantibhai Patel,

Farmatics (P) Ltd, with a paid-up capital of 1.25 million

rupees to manufacture and market the Vanraj brand of

00103.indd 144 2/17/2009 10:47:44 AM

could also use it on narrow streets of cities and towns

Advantage over Big Tractors

The biggest advantage of Vanraj was its affordable price

gDiesel costs around 40 rupees a litre in India.

00103.indd 145 2/17/2009 10:47:44 AM

repairs, and maintenance costs were estimated anywhere

are required to cover 1 hectare of land. Vanraj was the rst

tractor with three-wheel convertible feature for which M/s

Advantage over Other Mini-tractors

There were three other Gujarat based brands of 10 HP mini-

00103.indd 146 2/17/2009 10:47:44 AM

greater chances of failure in assembled tractors. Vanraj was

environment; however, they would often break down due

to problems such as overheating, belt failure, clutch failure,

Advantage over Bullocks

Vanraj could prove to be a viable option against bullocks. A

India had the third largest gross cropped area after

00103.indd 147 2/17/2009 10:47:44 AM

productivity characterized Indian agriculture. Nevertheless,

decreasing per capita of arable land. Greater agricultural

productivity and farm mechanization are necessary to reach

hMaggu, A. (1982), Tractorization in India: Dispelling some myths, Vikalpa 7(1):

00103.indd 148 2/17/2009 10:47:44 AM

Pradesh, had harder soil types laterite and black soil

Tractor manufacturing in India started in 1961 with

aggregate annual licensed capacity to manufacture 11,000

tractors. Tractor industry had since grown to 0.25 million

00103.indd 149 2/17/2009 10:47:44 AM

segment. TAFE was strong in south India, whereas Eicher

pressure on their margins leading to an increased rivalry

in the market. Raw material cost of steel, which was a key

Traditionally, tractor companies had used engine horsepower

00103.indd 150 2/17/2009 10:47:44 AM

accounted for 15% share in the total sales. Big farmers of

DRIVERS OF TRACTOR DEMAND

Commercialization of agriculture required a higher level

00103.indd 151 2/17/2009 10:47:44 AM

The retail nancing of tractors was a lucrative business

break-even. A studyi reported that tractors were grossly

underutilized in India, but their utilization seemed to

Trivedi believed that small and marginal farmers were the