Millat Tractors’ Sale Up 64% in FY24
Staff Report:
Millat Tractors (MTL)’s sales rose 64% to 30,620 units, capturing a 66% market share in financial year 2024.
MTL’s export sales grew by 66%, reaching 2,761 units in FY24 compared to 1,659 units in FY23. PAT rose owing to higher other income, mainly because of exchange gain and decreased finance costs.
Millat Tractors (MTL) conducted its corporate briefing session, where the management discussed the financial performance and the future outlook of the company.Millat Tractors Earnings Surge 65% in FY24
MTL has received an allocation of 5,800 tractors (61.05% of the scheme’s total) under the Punjab Green Tractor Scheme, with deliveries scheduled for this quarter and possibly extending into January.
The increase in the sales tax rate on tractors from 10% to 14%, enacted through SRO 1643(I)/2024, is expected to shift the company out of the refund regime, easing its working capital management. Cash flow is also anticipated to improve as the materialization of the Green Tractor Scheme has boosted demand, reducing previously piled-up tractor inventories.
The recent slowdown was attributed to (1) lack of clarity on sales tax refunds from the FBR, (2) liquidity issues among farmers reducing demand, and (3) delays in the Green Tractor Scheme, on which many farmers were dependent.
Tractor sales increased by 47% YoY to 45,494 units in FY24, primarily driven by a recovery in construction activities post-floods, supportive government policies, and the Kissan package, which boosted demand.
MTL’s sales rose 64% to 30,620 units, capturing a 66% market share. MTL’s export sales grew by 66%, reaching 2,761 units in FY24 compared to 1,659 units in FY23. PAT rose owing to higher other income, mainly because of exchange gain and decreased finance costs.
The management highlighted that ease of doing business and the settlement of the sales tax refund issue have remained key hurdles to growth in recent months. MTL’s sales tax refund claims totaled Rs6.28bn as of June 30, 2024, including Rs299.31mn for FY24 (pertaining to export sales). As per management, these refund claims have now risen to around Rs8bn.
The final order on the merger of MTL and Millat Equipment Limited (MEL) is pending in the Court, with reports from SECP and CCP awaited. Dividends are expected to resume soon.
MTL assembles Massey Ferguson (MF) brand tractors, ranging from 50 HP to 85 HP, for local and export markets and has introduced Deluxe variants.
The company also operates an Industrial Production Division (IPD), a unit dealing with power generators, forklifts, and prime movers.
To meet spare parts demand, MTL established a dedicated business unit that sells spare parts, oils, batteries, filters, and more. The parts segment operates through 73 dealers, 89 main dealers, and 587 workshops across Pakistan, achieving sales of Rs. 2,415mn in FY24.
