VST Tillers

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About the Company

VST Tillers Tractors Ltd. was established in the year 1967 by the VST Group of companies, a well-known century-old business house in South India. VST Tillers Tractors Limited is engaged in the manufacturing of power tiller and tractor. The Company operates through the manufacturing and trading of agriculture machinery segment. Its products include rice transplanter, power reaper, engines, precision/auto components and agriculture implements. The group built its reputation through retailing of petroleum products and distribution of Automobiles in Karnataka and Tamil Nadu. VST Tillers Tractors Ltd. was promoted by VST Motors as a joint venture with Mitsubishi Heavy Industries Ltd, Japan. The company is now the largest manufacturer of Power Tillers in India. From the time of its inception in 1967 by the founder Managing Director, Sri V.T. Velu, the company has been growing steadily. Today, the VST family holds 51% of the equity in the listed company that has recorded consistent growth and has given excellent returns to its shareholders. With the growth in business, the manufacturing facility for Power tillers has been retained at Whitefield Road, Bangalore and the Tractors have been shifted to Hosur in Tamil Nadu. The manufacturing of key components for the engine for both Power Tiller and Tractor takes place in the Precision Components Division located in Mysore.

Shareholding Pattern

  •  Promoter-53.99%
  •  Corporate-3.97%
  •  Public-24.13%
  •  FII-0.12%
  •  DII-8.55%
  •  Others-9.24%
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Key Milestones

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Industry Overview

Agriculture is a significant sector of the Indian economy and over 70% of the country depends on it as their major source of income. Farmers are adopting modern agricultural technologies to increase farm yield due to the increase in demand for food supply. The agricultural machinery market is predicted to grow at a CAGR of nearly 8% during the forecast period to reach INR 769.2 bn by FY 2022. The growth of India's agriculture sector has also boosted the agricultural machinery market in India. India is the largest tractor market in the world and the 41-50 HP is the largest selling segment. It accounted for 44% of the total tractor sales in FY 2015. Tractors and power tillers have played a vital role in the overall development of agriculture in the country. The sale of tractors increased from 0.35 mn units in FY07 to 0.57 mn units in FY16, witnessing a growth at a CAGR of 5.5%. Sale of tillers increased at a CAGR of 7.8% to 48,882 units over FY07-16.

Growth factors:

  • Government initiatives such as Kisan Credit Card, National Mission on Agricultural Mechanization (NMAM), and Tractor Subsidy Scheme have contributed to the growth of the machinery market.
  • Easy availability and access to low-cost credit is another reason for the growth in the market. This helps farmers invest in assets, obtain greater yield and income.
  • Strong governmental regulations on the availability of finance for agricultural mechanization tools, rural development and high irrigation potential will drive the agricultural farm machinery industry in India.
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Product Portfolio

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VST manufactures VST Shakti 130 DI Power Tiller with 13 HP engine and VST Shakti VWH 120 Power Tiller with 9 HP engine. sale of tillers increased at a CAGR of 7.8 % to 48,882 units over FY07-16.

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The VST-Shakti MT 180D Tractor with Rotary and EuroTrac -VST 180D Tractors have engine of 18.5 HP. The sale oftractors increased from0.35 million units in FY07 to 0.37 million units in FY16 with a growth of CAGR 5.5%.

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Offices & Dealers

VST Tillers Tractors Ltd. has a network of about 230 dealers and 300 vendors all over India. Most of them are associated with the company over several decades.

Manufacturing units:

  • Karnataka - Bengaluru - Head Office, Power Tillers   
  • Tamil Nadu – Hosur,  Tractors           
  • Karnataka – Mysuru, Precision / Auto Components


Some of the Dealers are:

  • Uttar Pradesh - Ghaziabad      
  • Bihar - Patna               
  • Assam - Guwahati     
  • West Bengal - Kolkata           
  • Odisha - Cuttack        
  • Andhra Pradesh - Anantapur
  • Andhra Pradesh - Ravulapalem         
  • Chhattisgarh - Bilaspur
  • Madhya Pradesh - Bhopal
  • Gujarat - Ganadevi
  • Maharashtra - Kolhapur
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Major Players

The agricultural machinery market is expected to see an increase in market consolidation, as a result of the intense, competitive landscape. Therefore, to stay competitive, the leading players are increasingly striving to provide innovative, cost-effective and high-quality services, to the consumers within this market.

The top 5 vendors in the market are:

  • Deere and Company
  • Mahindra & Mahindra
  • Sonalika
  • TAFE
  • VST

Other prominent vendors in the market include AGCO, Beri Udyog, CLAAS, CNH, Daedong, Escorts Group, Foton Lovol, Kubota, KUHN, LEMKEN, McCormick and SAME DEUTZ-FAHR.

Revenue Break-up

Total quantity of products sold during 2016-17 = #35,925

Total revenue in year 2016-17= Rs. 6,95,12,03,751

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Break-up for Q2FY18-

Total revenue from tillers and tractors- Rs.186 crores

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Key Initiatives

  • This tractor would play in the niche segment competing with some of the well-known manufacturers.
  • The company will manufacture these tractors in a phased manner.
  • In the first batch, the fully imported tractors will be seeded into the market.
  • In phase two, the company will localize most of the components and will be assembling the tractors in India.
  • Launched two new tractor models in the market namely the VST Shakti VIRAAT plus and the 17 HP single cylinder tractor VST Shakti SAMRAAT. These two models will help to grow the volumes in 2017–2018
  • In phase three, the company will also localize the engine, and at that time the tractor will be fully indigenized.
  • In tiller, the company will be launching a new variant, and the pilot lots will be released in January
  • Pilot lots of improved variant of self -propelled power reaper will be released in December.
  • In tractors, the company is working on new product variants.
  • Increased allocation towards Sales promotion and marketing expenses and focus on creating more brand consciousness in the market

Competitive Advantages

  • The company entered into a technology transfer agreement with Kukje Machinery for the manufacture of 5025R series of Branson brand tractors of 47 HP.
  • Company launched the Samraat tractors and positioned its Viraat Plus which are going through volume production, both these models will help in gaining market share
  • Company is a market leader in case of tillers with a market share of 62% in first six months of FY18 compared to 61% in the same period last year.
  • The tractor volume growth is 22% for VST in the first six months compared to the compact industry growth of 14%
  • Company is a dominant player in the sub 20-HP segment with a growth rate of more than 15%.
  • Registered volume growth of 26% over last year in the compact segment while the industry growth was 1%.
  • The company entered into an agreement with MTD and gained exclusive rights to distribute and sell power weeders in the country.

Capex

  • The company plans to spend Rs.200 Crores additional investment in the next three to four year and have a five-year plan of over Rs.200 Crores
  • Internal accruals itself will suffice for the next three-four years of Rs.200 Crores of deployment on company’s internal capex
  • Out of the Rs.128 Crores company will spend, Rs.38 Crores to Rs.40 Crores would be towards infrastructure and rest would be towards product development
  • Investment in infrastructure and machines is for the Mysuru plant and new plant in Malur

Financial Summary

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Recent Concall Summaries of VST Tillers

Bajaj Corp

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Company Overview

Bajaj Corp Ltd is an Indian consumer goods company with major brands in Hair care category. Bajaj Corp is the second largest company in the Shishir Bajaj Group of companies. Bajaj Corp Ltd is the 2nd largest player in the overall hair oils segment with the Key brand - Bajaj Almond Drops Hair Oil. Its flagship brand, i.e. Almond Drops, is the Market leader with over 62% market share of the light hair oil market with Premium positioning and commands one of the highest per unit price in the industry. In 2013, it entered the skin care market by acquiring the nomarks brand which has also shown steady growth in recent years.

Bajaj Corp Shareholding Pattern
Bajaj Corp Organisation structure
Bajaj Corp Milestones

Business Overview

Bajaj Corp is mainly in the business of hair oil with around 97% of the total revenue coming from this segment. Within the hair oil segments it has five major brands Bajaj Almond Drops Hair Oil, Bajaj Amla Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Kailash Parbat Hair Oil, Bajaj Jasmine Hair Oil. Its Key brand – Bajaj Almond Drops Hair Oil, is the 2nd largest brand in the overall hair oils segment and is the market leader with 60.7% market share in terms of value in the LHO market (YTD Feb 17). It has premium positioning and commands one of the highest per unit prices in the industry. Manufacturing plants are located at Himachal Pradesh and Uttaranchal.

Geographical Reach

Bajaj Corp Geographical reach

They also have significant international presence as their personal care brands are available in more than 30 countries, with primary focus in SAARC, Gulf & Middle-East, ASEAN and African regions

There major source of revenue is from the hair oil segment which has the the revenue contribution of around 97%.
In 2013, it ventured in the skin care market by acquiring the Nomarks brand. It has shown steady growth in the recent years and acquired a market share of 6.9% in 2015-16. The brand includes various cosmetic products such as face wash, scrub, soap etc. The Bajaj Nomarks Cream is the market leader in the Anti Marks segment (as of March 2016, market share by volume).

Bajaj Corp Sales Mix by Value
Bajaj Corp Sales Mix 2

No Marks Acquisition


No Marks was acquired by Bajaj Corp in 2013. It is a skin care brand which Includes various cosmetic products such as face wash, scrub, soap etc. Since it’s acquisition it has shown steady growth acquiring a market share of 6.9%. It is the market leader in the cream segment with a market share of 15.5% and has No.2 position in the Face wash segment with a market share of 6.5%

They plan to use a communication strategy for Nomarks. The focus would be to use a chemist panel for distributing Nomarks Cream and using an integrated marketing campaign to improve consumer awareness and preference for the brand. They will be extending this strategy both in terms of communication and distribution in more states. On back of this and improved reach in international markets, they expect a reversal of sales trends on Nomarks in the first half of FY 18. They will majorly focus on the urban areas for the Nomarks cream.


Industry Structure

Bajaj Corp Industry Structure
Bajaj Corp Market Break up
Hair oil Market Volume

Product portfolio

Hair Care

Bajaj Corp Product portfolio

A premium perfumed hair oil containing almond oil and Vitamin E. It is the leading hair oil in the light hair oil segment with the market share of around 62%. This premium hair oil, enriched with sweet almond oil nourishes the scalp and keeps hair healthy and beautiful. It accounts for around 93% of their total revenue by value

Bajaj Corp market Share
Bajaj Amla Hair oil

Launched in February 2015, Bajaj Amla Hair Oil is a non-sticky hair oil. It is enriched with the goodness of Amla extract, Almond oil and Rosemary oil. These Ingredients of the oil are known to strengthen the hair, maintain natural hair colour and impart shine to the hair.

Kailash parbat


It is enriched with the goodness of Sandalwood oil, Almond oil and Ayurvedic Herbs. It provides a calm and relaxing effect thereby refreshes from stress, fatigue and tiredness.

Bajaj Brahmi Amla

It is one of the oldest Amla hair oil brands in India. It nourishes and conditions the hair making it both soft and strong.

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Bajaj Corp acquired the skin care brand in 2013. It Includes various cosmetic products such as face wash, scrub, soap etc. Since it’s acquisition it has shown steady growth acquiring a market share of 6.9%. It is the market leader in the cream segment with a market share of 15.5% and has No.2 position in the Face wash segment with a market share of 6.5%


Impact of Demonetization
Demonetization had a serious impact on the company, majorly in the third quarter. Overall turnover declined due to destocking. General trade and canteen stores were the worst affected. canteen store orders went down by 13.5%. Wholesale trade was also severely affected. Showed a decline of 30%. Wholesale coverage down by 1 lakh outlets. Modern Trade were majorly unaffected and showed a healthy growth of 27% in Q3. Urban offtakes recovered much faster than rural offtake. There was no effect on raw material price due to demonetization but production reduced and so raw material procurement came down

Key Focus Areas for Growth

Market share gains from other hair oil segments: Convert coconut hair oil users to light hair oil users through sampling, targeted advertising campaigns, product innovation and creating awareness about product differentiation including communicating the advantages of switching to lighter hair oils. Aim for a market share of 65% by the
year 2017-18

Focus on rural penetration: Tap the increase in disposable income of rural India and convert rural consumer from unbranded to branded products by providing them with an appropriate value proposition

Leverage existing strengths to introduce new products: The company has over the years created a strong distribution network across 3.6 mn. retail outlets which can be optimally utilized by introducing new products. Company intends to extend ‘Almond Drops’ platform developed by its Almond Drops Hair Oil brand to other personal care products to leverage on the strong connotation of Almonds with nutrition

Pursue inorganic Opportunities: Will seek inorganic growth opportunities in the FMCG and hair oil market as part of growth strategy, The inorganic growth opportunities will focus on targeting niche brands which can benefit from BCL’s strong distribution network so that they can be made pan India brands


Competitive advantage
Brand name- Bajaj Corp has created a great brand name, mainly for its hair care products. It is the market leader in most of the segments and is also able to charge a premium for it products. Its ability to charge a premium for its product can be huge advantage in the future due to the burgeoning middle class population of India.
 
Market Leader- Bajaj Corp is the market leader in the light hair oil Category with around 58% of the market share in terms of volume and 60.7% in terms of volume. This helps the company to dictate terms in the industry

Bajaj Corp Volume

Differentiated revenue lines- It has multiple category of products in the hair care segment, targeting various needs and price points. With its venture into skincare products it has further widened its scope.


International Exposure: Bajaj Corp Ltd. is constantly increasing its global footprints with focus on international business. Currently, they have presence in more than 30 countries. This geographical diversification could also work a huge advantage for the company in the long run.

Key Financials

Profit and Loss

Bajaj Corp Profit and Loss Statement

Balance Sheet

Bajaj Corp Balance sheet

Cash Flow

Bajaj Corp Cash flow

Ratio Analysis

Bajaj Corp Ratio Analysis

Bajaj Corp in Six Charts

Bajaj Corp Price movement charts

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