Indian Institute of Management Indore

Case Analysis:
Vanraj Mini Tractors Is Small Beautiful?
Under the Guidance of: Prof. Pratik Modi Submitted By: Group 3 Abhinav Raj | Amit Pant | Bhavya Negi | Ishu Kumar

Vanraj Mini Tractor

Innovation by Bhanjibhai Nanjibhai Mathukia of kalawad village Made by a junk jeep powered by 10HP engine Spotted by GIAN & SRISTI In oct, 2004 three technopreneurs acquired the technology and floated M/s Pramal Farmatics to manufacture Vanraj It has a payload capacity of 1 to 2 tonnes Can serve the agricultural needs as well as transportation & industrial requirements

Advantages of Vanraj

Affordability it is ranged around 1.9 lacs with a comparable life span as that of high capacity tractors Lower cost of operation because of low engine size it consumes less fuel per hour Ease of repair and maintenance single piece casting with simple design makes vanraj easy to maintain and repair

Advantages of Vanraj

Smaller wheelbase it makes vanraj easily maneuverable and it can reach small corner where big tractors can manage Adjustable Wheelbase It is the first tractor that can be converted into three wheel drive which is useful in different types of crops

Power take off(PTO) Point its engine can be used as a power generator

Advantages over the mini tractors

Vanraj had competition with 3 other brands of 10HP tractors i.e. Field Marshal, Trishul and captain These were assembled tractors and costs around 1.7 lacs as compared to 1.9 lacs Handling of vibration and shocks Power take off point Three wheel convertible

Tractor Industry

It started in 1962, with licensed capacity of 11000 tractors Since then it has grown to 2.5lakh unit per year by 2004-05 India have huge potential market as currently we have 8 tractors per 1000 hectares of land

Most competitive industry with 12 major national brands and 4 major international brands
Despite the robust growth in recent years, major player are still operating with 50% capacity utilization

Market Segmentation

The market was segmented according to engine horsepower < 20 horsepower was considered as mini-tractor segment and contributes to only 1 % 20 to 30 HP represents small tractors which contributes to 26% of market

31 to 40 HP was the largest segment with 55% market share

41 to 50 HP were large tractors with 15% market share

Factors affecting demand

Heavily dependent on agriculture Level of agricultural production and Minimum support price(MSP) causes an effect on tractor sales Ease of availing the tractor finance is also one of most important criteria Apart from this the purchase decision was based on the HP, design, price, fuel efficiency and ease of maintenance

Problem

Which would the most appropriate target market and strategy for Vanraj?

Suggestions

Vanraj should be targeted towards the small and marginal farmers segment
High HP tractors remain underutilized so low HP tractor will be preferred Small and medium farmers segment have wide base Less competition

Vanraj will serve many purpose for small and medium farmers
Lower selling price will lessen the default rate

THANK YOU