Fundamental of Cost Accounting

Name: Azan Mustafa

Course: ADP (AF/III)
Company: Millat Tractors Limited
Submitted to: Sir Zeeshan
Information:

Millat Tractors was initially started as Rana Tractors and Equipment Limited to
import and market Massey Ferguson tractors. In 1965, facilities were created in
Karachi to assemble tractors from semi-knocked-down kits. In 1967, operations
were shifted from Karachi to Lahore.

Millat Tractors is a Pakistani tractor manufacturer based in Lahore, Punjab,

Pakistan since 1964. It is the authorized assembler and manufacturer of Massey
Ferguson tractors in Pakistan.

The millat tractors limited was established in 1964. At that time the main goal of
this company was to introduce and market Massey Ferguson Tractors in Pakistan.
In 1967, an assembly plant was set up to assemble tractors in semi-knocked down
condition. In 1972 the company was nationalized and started assembling and
marketing tractors on the behalf of Pakistan tractor Corporation (PTC), formed by
the government of Pakistan to import the tractors in semi-knocked down
condition. Later in 1980 the government decided to manufacture the tractor in
Pakistan, so they put this responsibility on Pakistan Tractor Corporation (PTC).
PTC transferred this role to Millat tractors in 1981. It took only one year for millat
tractors limited (MTL) to manufacture their own tractors, by setting up the first
engine assembly plant in Pakistan. In 1984, the MTL set up a manufacturing
facilities for the machining of intricate components, which were not available in
Pakistan. In 1992, MTL was privatized through management buyout

History

Millat Tractors was initially started as Rana Tractors and Equipment Limited to
import and market Massey Ferguson tractors. In 1965, facilities were created in
Karachi to assemble tractors from semi-knocked-down kits. In 1967, operations
were shifted from Karachi to Lahore.
In 1972, under the Zulfiqar Ali Bhutto, the company was nationalized and started
assembling and marketing tractors on behalf of the Pakistan Tractor Corporation
(PTC).

In 1980, the Government decided on indigenization of the tractors and entrusted

this task to Pakistan Tractor Corporation. Pakistan Tractor Corporation transferred
this role of indigenization in 1981 to Millat Tractors Limited. In just one year, the
company took a giant step towards self-sufficiency by setting up the first engine
assembly plant in Pakistan. In 1984, sophisticated manufacturing facilities for the
machining of intricate components were set up. These were previously not
available in Pakistan. Currently, critical components like the engine block, sump,
transmission case, axle housing, hydraulic lift cover, front axle support and center
housing are all being machined successfully in-house at Millat Tractors from
locally sourced castings.

In 1992, the company was privatized, and Millat Tractors plant started its in-
house production. The establishment of this modern plant not only increased
production capacity to 16,000 tractors per year on a single-shift basis.

In the 2009-2010 financial year, production shot up to 42,000 tractors, the highest
sales of tractors ever in Pakistan for any company at the time.

During the fiscal year 2017-18, Millat Tractors Limited produced and sold over
42,500 tractors.
Products

Agricultural Tractors

Diesel Engines

Diesel Generating Sets and Prime Movers

Forklift Trucks, under license from Anhui Heli Forklift Trucks China

A wide range of Agricultural implements

Forbes list

Millat Tractors, as a company, is on the Forbes List of Asia’s 200 Best Under a
Billion (2018)
Mission Statement

“Millat to be market leader in agricultural tractors and machinery, building

Company’s image through innovation and competitiveness, grow by expanding
market and investing into group companies, ensuring satisfaction to customers
and stakeholders and to fulfil social obligations” (Millat Tractors).

Vision Statement

“Millat to be a global group of companies, recognized for a range of quality

products with innovative design capabilities” (Millat Tractors).

Business Core Values

“Our customers are our first priority

 Prosperity of our stakeholders

Corporate social responsibilities to enrich the lives of the community where we

operate

Recognition and reward for the talented and high performing employees

Excellence

Integrity in dealing” (Millat Tractors).

MILLAT TRACTOR COMPANY BALANE SHEET

Assets
Fiscal year is July-June. All values PKR
Millions. 2020 2019 2018 2017 2016

Cash & Short Term Investments 2,101 1,052 8,267 9,515 3,949

Cash Only 805 850 516 758 2,476

Short-Term Investments 1,295 202 7,751 8,757 1,473

Fiscal year is July-June. All values PKR
Millions. 2020 2019 2018 2017 2016

Cash & Short Term Investments

99.72% -87.28% -13.11% 140.97% -
Growth

Cash & ST Investments / Total Assets 15.14% 7.67% 41.55% 47.34% 32.36%

Total Accounts Receivable 2,512 4,347 3,119 3,233 2,563

Accounts Receivables, Net 221 358 256 274 434

Accounts Receivables, Gross 255 395 290 311 437

Bad Debt/Doubtful Accounts (34) (37) (34) (38) (4)

Other Receivables 2,291 3,989 2,864 2,960 2,129

Accounts Receivable Growth -42.21% 39.35% -3.53% 26.18% -

Accounts Receivable Turnover 9.51 7.37 12.69 9.78 7.01

Inventories 5,166 4,610 5,922 4,928 3,581

Finished Goods 799 667 682 708 873

Work in Progress 236 244 375 250 221

Raw Materials 3,553 3,013 4,317 3,481 2,055

Progress Payments & Other 577 686 547 490 432

Other Current Assets 50 62 21 41 56

Prepaid Expenses 32 35 7 23 16

Miscellaneous Current Assets 18 27 14 18 39

Total Current Assets 9,829 10,071 17,328 17,717 10,148

Net Property, Plant & Equipment 1,693 1,821 1,751 1,728 1,509

Property, Plant & Equipment - Gross 3,958 3,984 3,757 3,592 3,260
Fiscal year is July-June. All values PKR
Millions. 2020 2019 2018 2017 2016

Buildings 791 748 727 721 457

Land & Improvements 159 159 159 159 159

Machinery & Equipment 1,966 1,960 1,809 1,651 1,588

Construction in Progress 34 31 86 146 271

Leases 3 3 3 3 3

Computer Software and Equipment 65 61 55 55 50

Transportation Equipment 392 433 432 411 363

Other Property, Plant & Equipment 534 589 487 446 370

Accumulated Depreciation 2,265 2,163 2,006 1,865 1,751

Buildings 400 355 317 291 276

Machinery & Equipment 1,273 1,213 1,141 1,087 1,030

Computer Software and Equipment 50 46 41 39 32

Transportation Equipment 220 220 216 185 174

Other Property, Plant & Equipment 319 326 289 260 236

Total Investments and Advances 2,050 1,343 696 489 390

Other Long-Term Investments 2,050 1,343 696 489 390

Long-Term Note Receivable 3 4 3 3 2

Intangible Assets 81 23 19 20 22

Net Goodwill 19 19 19 19 19

Net Other Intangibles 63 4 0 1 4

Fiscal year is July-June. All values PKR
Millions. 2020 2019 2018 2017 2016

Other Assets 38 253 23 65 -

Deferred Charges 25 231 16 57 -

Tangible Other Assets 12 21 7 7 -

Total Assets 13,874 13,708 19,894 20,098 12,201

Assets - Total - Growth 1.21% -31.10% -1.02% 64.73% -

Asset Turnover 1.73 - - - -

Return On Average Assets 14.47% - - - -

Liabilities & Shareholders' Equity

AL GHAZI TRACTOR LIMITED

HISTORY
Al Ghazi tractors were founded in 1983 and in 1991, Al-Futtaim Group of Dubai took over the
management control of Al-Ghazi Tractors by acquiring 50% of its shares. Its corporate head
office is located in Dera Ghazi Khan, Punjab, Pakistan.
Headquarters: Karachi, Pakistan
Parent: Al-Futtaim Group (50%); CNH Industrial ...
Products: Tractors
Area served: Pakistan
Al-Ghazi was the first automobile company in Pakistan to earn the ISO-9000 certification. With
yearly audits the company is now registered for ISO-9001:2000. In 2015, Al-Ghazi Tractors
reported net earnings of ₨1.59 billion (US$9.9 million) or ₨27.47 (17¢ US) per share for the
financial year, up 1.1% compared to ₨1.57 billion (US$9.8 million) or ₨27.17 (17¢ US) per
share it earned in 2014.
Al-Ghazi Tractors Limited (stock symbol is AGTL) is traded on the Pakistan Stock Exchange.
PROFILE
Date of Incorporation - June 26,1983

Date of Commencement of Operations - September 1, 1983

Date of Take Over by Al-Futtaim - December 8, 1991

Start of Production at Dera Ghazi Khan Plant - February 20, 1984

Plant: - April 1, 1985

Auxiliary Plant - July, 2006

Main Plant : Dera Ghazi Khan

Sheet Metal Plant

Tax Advisors

Ernst & Young Ford Rhodes Sidat Hyder - Karachi

Naveed Zafar Ashfaq Jaffery & Co. Chartered Accountants - Karachi

Share Registrar: M/s Famco Associates (Pvt) Ltd

Production Capacity - 30,000+ Tractors per annum in a single shift

Total Land Area - 90 Acres

Employees - 360

Offices

Head Office - Tractor House, 102-B, 16th East Street, DHA Phase I, Off. Korangi Road,
Karachi. Pakistan
Plant - Dera Ghazi Khan

Marketing Centres - Lahore, Multan, Sukkur, Islamabad

Legal Advisors - Saiduddin & Co. - Karachi

Registration No: 0010508

NTN No: 0709507-4

Auditors
A.F. Ferguson & Co. Chartered Accountants Karachi

Products
Al-Ghazi produced a wide range of models which include:

 New Holland Dabung 85

 New Holland 480S
 New Holland 640S
 New Holland Ghazi
 New Holland 55-56 (55 horsepower)
 New Holland 60-56
 New Holland 70-56 (4WD) (70 horsepower)
 New Holland Brand Combine Harvester
Al Ghazi also produces generators and farming equipment.
PLANT
The real hub operational activity in AGTL is its magnificent plant at Dera Ghazi Khan – a
hallmark of engineering dynamics. In technical collaboration with CNH – Case New Holland –
the largest manu8facturer of agricultural tractors in the world, AGTL draws from the huge pool
of information and technology available with the principals at a global level. Technology of
production functions is therefore continuously updated.

Operating with company focus on lean management and eliminating all activities which don’t
add value, the plant’s mission is to ensure production of highest quality tractors in conformance
with New Holland specifications.

With disciplined focus on all quality management systems, we are committed to remaining on
par with best international practices, quality standards, performance requirements, and product
specifications of CNH and to achieve evolution through continual improvement for ultimate
customer satisfaction.
The plant with its fully integrated assembly line laid out on a conveyor system feeder lines for
engines, hydraulic lift control, sheet metal parts and transmission assembly has been
manufacturing quality tractors since 1984.

It is the state of the art unit which has a capacity to produce 30,000 tractors per annum in a single
shift. The plant operates on high efficiency with negligible waste. From receipt of materials at
the plant to the production of tractors and distribution, all operations are systemized on BaaN
ERP.

AGTL was the first automobile company in Pakistan to qualify for ISO-9002. Documentation is
a pre-requisite for this certification. We have now achieved the ISO registration valid till
2016.The Generator Assembly Line now set up can produce around 2,000 generators a year in a
single shift. An impressive assembly line based on commercial engineering has also been set up
in UAE to assemble generators under the name and style of GENCOR. The project will assemble
generators with sub-assemblies supplied by AGTL.

Employing the most dedicated workforce that produces the most cost effective quality tractors,
AGTL plant is proud of the Company receiving the International Crown Quality Award from
BID International as well as the Platinum Technology Award for Quality and Best Trade Name
from Association Otherways.The plant will rise to the commitment made by the Company to the
charter on Quality adhering to the Seven Principles of the QC 100 Total Quality Management
Model of BID.

MANAGEMENT 
Shahid Mahmood

GM Plant

Col (R) Syed Shahid Mahmood is a Mechanical Engineer by profession. Col Shahid brings with
him rich experience in Production Planning and Management, Technical evaluation and
Indigenous development of spare parts, Inspections and Human Resource Development gained in
over 28 years of service with the Army. He is presently the General Manager (Plant) at Dera
Ghazi Khan.

Tanvir Ahmad

GM Suppliers’  Quality Assurance

Mr. Tanvir Ahmad graduated in Mechanical Engineering from NED University of Engineering
and Technology in 1983 and completed the Master of Engineering in Industrial Engineering and
Management from Asian Institute of Technology in 1986. He has to his credit a rich experience,
local and international, in the fields of project management, operations management and supply
chain management. He is associated with the automobile industry since 1993.
Muhammad Saeed Mushtaq

GM Marketing

Mr. Saeed Mushtaq has dual qualification. He did Master in Business Administration from
LUMS as well as Master of Hons degree in Agriculture from University of Agriculture,
Faisalabad. He is also Six Sigma Green Belt Certified. Mr. Saeed served about 15 years with
Engro and has a diversified experience in the field of agriculture, supply chain, business
development and Sales & Marketing. Currently, he is serving as General Manager Marketing in
AGTL.

Model range
Year(s) Engine Misc
Model Horsepower Photo
Produced Type Notes
New Holland 480
55 hp (41 kW) Fiat
Special
New Holland 640
85 hp (63 kW)
Special
New Holland Ghazi 65 hp (48 kW)
Al-Ghazi-built New Holland Tractor Models

Year(s) of Engine Misc

Model Horsepower Photo
Production Type Notes

New Holland
55 hp (41 kW)
Fiat 480 built in
(was 48 hp Fiat
Special (Al- Pakistan
(36 kW))
Ghazi)

New Holland 75 hp (56 kW) Fiat built in

Fiat 640 (Al- (was 64 hp Pakistan
 Year(s) of Engine Misc
Model Horsepower Photo
Production Type Notes
Ghazi) (48 kW))

New Holland
75 hp (56 kW)
Fiat 640 built in
(was 64 hp Fiat
Special (Al- Pakistan
(48 kW))
Ghazi)

New Holland
built in
Fiat Ghazi 65 hp (48 kW) Fiat
Pakistan
(Al-Ghazi)

New Holland
built in
Fiat Kissan 55 hp (41 kW) Fiat
Pakistan
(Al-Ghazi)
Al-Ghazi-built New Holland Fiat Tractor Models

Year(s) of Engine Misc

Model Horsepower Photo
Production Type Notes
Fiat 300 (Al-
28 hp (21 kW)
Ghazi)
Fiat 480
Special (Al- 55 hp (41 kW) Fiat
Ghazi)

Fiat 640 (Al-

75 hp (56 kW) Fiat
Ghazi)

Fiat 640
Special (Al- 85 hp (63 kW) Fiat
Ghazi)
Fiat Ghazi
65 hp (48 kW) Fiat
(Al-Ghazi)

Al-Ghazi-built Fiat Tractor Models

Assets
Fiscal year is January-December. All
values PKR Millions. 2019 2018 2017 2016 2015

Cash & Short Term Investments 189 294 1,341 1,317 2,355

Cash Only 189 294 899 265 550

Short-Term Investments - - 442 1,052 1,805

Cash & Short Term Investments

-35.66% -78.07% 1.80% -44.09% -
Growth

Cash & ST Investments / Total Assets 3.45% 4.33% 22.79% 28.35% 36.77%

Total Accounts Receivable 895 1,870 1,089 1,148 1,109

Accounts Receivables, Net 10 57 12 280 28

Accounts Receivables, Gross 21 57 12 280 28

Bad Debt/Doubtful Accounts (11) - - - -

Other Receivables 886 1,814 1,077 869 1,081

Accounts Receivable Growth -52.13% 71.75% -5.17% 3.56% -

Accounts Receivable Turnover 15.63 10.34 17.33 10.54 8.69

Inventories 2,876 3,637 2,519 1,517 2,210

Finished Goods 659 830 169 334 425

Work in Progress 125 109 102 51 132

Raw Materials 1,972 2,538 2,012 1,023 1,558

Progress Payments & Other 120 160 235 109 95

Other Current Assets 355 151 214 6 115

Fiscal year is January-December. All
values PKR Millions. 2019 2018 2017 2016 2015

Prepaid Expenses 5 6 7 5 76

Miscellaneous Current Assets 349 145 207 1 39

Total Current Assets 4,315 5,952 5,162 3,989 5,790

Net Property, Plant & Equipment 1,064 825 713 648 612

Property, Plant & Equipment - Gross 1,604 1,293 1,132 1,030 950

Buildings 433 301 441 229 401

Land & Improvements 4 4 4 4 4

Machinery & Equipment 420 382 347 340 326

Construction in Progress 227 118 73 39 2

Leases 261 260 82 260 82

Computer Software and Equipment 31 26 23 18 15

Transportation Equipment 140 129 105 90 75

Other Property, Plant & Equipment 87 72 57 50 46

Accumulated Depreciation 539 467 419 382 338

Buildings 93 84 91 70 71

Machinery & Equipment 272 249 227 206 184

Computer Software and Equipment 24 20 15 14 13

Transportation Equipment 80 56 52 53 47

Other Property, Plant & Equipment 39 32 27 23 19

Long-Term Note Receivable 2 1 1 2 0

Fiscal year is January-December. All
values PKR Millions. 2019 2018 2017 2016 2015

Intangible Assets 4 4 2 1 0

Net Other Intangibles 4 4 2 1 0

Other Assets 2 4 4 4 3

Tangible Other Assets 2 4 4 4 3

Total Assets 5,475 6,785 5,881 4,644 6,405

Assets - Total - Growth -19.31% 15.37% 26.64% -27.49% -

Asset Turnover 2.28 - - - -

Return On Average Assets 15.95% - - - -

Liabilities & Shareholders' Equity

COMPARISON
Information about New Holland V Massey Ferguson – Millat Vs Al Ghazi tractors is shared on
this page. In Pakistan New Holland and Massey Ferguson tractors are manufactured by Al Ghazi
Tractor and Millat Tractors Ltd. respectively. AGTL (AL Ghazi Tractors Ltd) manufacturing
plant is located at Sakhi Sarwar Road, DG Khan. MTL (Millat Tractors Limited) is
manufacturing their tractors at Sheikhupura Road, Lahore, both are the top tractor manufacturing
companies in Pakistan. Comparison between Millat vs Al Ghazi Tractors has been shared below.
New Holland V Massey Ferguson | Millat Vs Al Ghazi Tractors – Market
Share

MTL & AGTL New Holland V Massey Ferguson both are at the top manufacturing companies,
although Millat (Massey Ferguson) Tractors Company is the Market leader with share of above
60%. AGTL (New Holland) comes at second position with market share of 38%.

MF & NH both are trying to snatch more MS with introducing new market tactics. These include
quality improvements, marketing strategies and introducing new models with little amendments.
Market share of both vary area to area for example where there is more sugarcane crop there are
MF tractors. On the other hand if come to cotton and wheat crop belts there are NH tractors
dominant.
 New Holland (AGTL) Massey Ferguson (MTL)

Horse Horse
Model/Make Model/Make
Power Power
NH 480-S 55 HP MF 240 50 HP

NH 480-S MF 350 Plus

55 HP 50 HP
Power Steering Power Steering

NH GHAZI 65 HP MF 260 60 HP

MF 360
 GHAZI Disk Brake 65 HP 60 HP
Power Steering

NH 640 75 HP MF 375 75 HP

NH 640 Disc Brake 75 HP MF 385 85 HP

NH 640-S 85 HP MF 385 (4WD) 85 HP

NH 640-S Disc Brake 85 HP

NH Dabung 85 HP

NH 70-56 (4×4) 85 HP