Agriculture Machineries Business in Bangladesh

Agriculture Machineries Business in Bangladesh

Focus on Benefits of using agrimachineries of ACI Motors

About ACI Limited:

ACI was established as the subsidiary of Imperial Chemical Industries (ICI) in the then East Pakistan in 1968. After independence the company has been incorporated in Bangladesh on the 24th of January 1973 as ICI Bangladesh Manufacturers Limited and also as Public Limited Company. This Company also obtained listing with Dhaka Stock Exchange on 28 December, 1976 and its first trading of shares took place on 9 March, 1994. Later on 5 May, 1992, ICI plc divested 70% of its shareholding to local management. Subsequently the company was registered in the name of Advanced Chemical Industries Limited. Listing with Chittagong Stock Exchange was made on 22 October 1995.

Vision of ACI Limited:

To enrich the quality of life of people through responsible application of knowledge, skills and technology. ACI is committed to the pursuit of excellence through world-class products, innovative processes and empowered employees to provide the highest level of satisfaction to its customers.

Mission of ACI Limited:

To achieve the vision ACI will:

• Try to attain a position of leadership in each category of its businesses.
• Attain a high level of productivity in all its operations through effective and efficient use of resources, adoption of appropriate technology and alignment with our core competencies.
• Develop its employees by encouraging empowerment and rewarding innovation.
• Promote an environment for learning and personal growth of its employees.
• Provide products and services of high and consistent quality, ensuring value for money to its customers.
• Encourage and assist in the qualitative improvement of the services of its suppliers and distributors.
• Establish harmonious relationship with the community and promote greater environmental responsibility within its sphere of influence.

Advanced Chemical Industries (ACI) Limited is one of the leading conglomerates in Bangladesh. The company has 3 Strategic Business Units (SBU’S):

Pharmaceuticals Consumer Brands & Commodity Products:- has following Subsidiaries

• ACI Salt Limited
• ACI Pure Flour Limited
• ACI Foods Limited

Agribusinesses: is the largest integrator in Agriculture and Livestock and Fisheries. It include following subsidiaries:–

• Crop Care Public Health
• Livestock & Fisheries
• Fertilizer
• Motors (Agri Machineries)
• Cropex
• Seeds

CC & PH supplies crop protection chemicals, Seed supplies Hybrid Rice, vegetable and Maize seeds, Fertilizer Supplies Micronutrient and Foiler fertilizer, Agrimachineries (ACI Motors) supplies Tractors, Power Tiller and Harvester and Animal Health supplies high quality Nutritional, Veterinary and Poultry medicines and vaccines Joint Ventures:

ACI Godrej Agrovet Private Limited

Tetley ACI (Bangladesh) Limited

Asian Consumer Care (Pvt) Limited

Main Part of the Report

ACI Motors Limited: ACI Motors start its operation from 6th November 2007 as a subsidiary of ACI Agribusiness with an objective to market high quality farm machineries like: Tractor, Power tiller diesel engine etc.

Mission of ACI Motors:

To provide complete farm mechanization solution to the farmers.

Specific objective of ACI Motors:

• To become the market leader in the tractor industry of Bangladesh by 2016
• To introduce new agricultural Machineries and related commodity for farmer

It has own sales and service center at Bogra, Comilla, Jessore, and Dinajpur by which ensure highest quality after sales service, repairs and spare parts. It also provides flexible credit facilities for farmers for better customer satisfaction and service. ACI Motors are planning to introduce light commercial vehicles like pickups and mini trucks to support farmers to carrying agricultural goods. Also, high quality diesel engines and pumps for irrigation purpose will be offered in the near future. This business shows considerable promise in contributing to the agricultural productivity of Bangladesh.

Product Profile of ACI Motors:

ACI Motors offers following product or agrimachineries to the farmers in order to provide them a better solution in cultivation.

1. Tractors:

 Brand Name: Sonalika.

Country of origin: India

Model Range: – DI-730, 735, 745, 750, 760

Here, 730,735, 745 etc indicates the Horse Power HP, The more the horse power the more the price will be.

Usages:

DI -730 and DI-735 is used only for carrying purpose by using trolley

DI-745, 750 and 760 models are used for agriculture cultivation and transportation both.

It is more encouraged for commercial usages, Rent service.

Price range:

Model Price    Taka

DI-730            5,50,000

DI-735            6,20,000

DI-745            7,05,000

DI-750            7,75,000

DI-760            9,30,000

2. Rotavator:

Brand Name: SICMA

Country of Origin: Italy

Usages: It is used to cultivate land with Sonalika cultivation tractor.

Price: 2, 20,000 Taka.

3. Power Tiller:

Brand Name: Bull Power

Manufacturing Country: China

Price: 85,000 Taka

Usages:

To cultivate the land and Carrying goods.

It is suitable both for personal and commercial cultivation

4. Combine Harvester Refreshed:

Brand name: Deadong

Country of origin: South Korea

Price: 600000 Taka

5. Rice Transpalnter Refreshed:

Brand Name: Daedong

Country of origin: South Korea

Price: 200000 Taka

Basically this machine can put the rice plant into the soil within a very short time. This is a 4 row based walking type machine

6. Rice Cutter:

Brand Name: Bull Power

Manufacturing country: China

Price: 15,000 Taka

7. Diesel Engine:

Brand Name: Bull power

Manufacturing country: China

Price Range: 10000 to 40000 depend on horse power.

8. Spray Machines: Imported from China and Korea.

Usages: To spray Pesticides in the farm land.

Price range: 1800 to 5000

Target customer of ACI Motors Products or Machineries:

An ACI motor has targeted different class or group pf people for their different product or machineries. Science the price of tractor, power tiller combine harvester and Rice transplanter is quite and it is quite hard for an individual farmer to buy. For this reason ACI motors have targeted specific group of people. Like:–

• Solvent farmers in a specific village who has quite a good amount land or under which lots of small farmers works.
• Businessman who want to invest money in new sector.
• People who return from different foreign country and want to do a profitable business.
• Different NGO’S who work with farmers like:Asha, Dipsikha BRAC etc
• Delears of ACI Seed, Fertilizer (especially for Power tiller, Rice cutter, Diesel engine and sprayer)

However, price of Rice cutter, Diesel engine and sprayer is affordable to individual farmer. So, for selling these products individual farmers are also targeted by ACI Motors.

Introduction of the Project:

The Ministry of Agriculture, Bangladesh has undertaken a project to encourage farmers to buy and use different types of agricultural machineries according to their needs. For this reason, the govt. will give 25% subsidy on their different types of power tiller, tractor and others machineries. In this project, farmers will have the full freedom to choose their desired brand. This project will be implemented by the Department of Agriculture Extension (DAE). In total it is a project of 150 core taka and the government subsidy will be around 120-core taka. 25 districts has targeted for this project. Thana Agriculture Officer and Thana Agriculture Engineer have given the responsibility for the proper implementation of this project. Government will provide subsidy on 5000 tractors, 22000 power tiller and 20 Combine Harvester.

Opportunity for ACI Motors:

This government project has given a very good opportunity to ACI Motors to attract many new customers towards their product. Therefore, to grab this opportunity ACI Motors have to make some strategy to influence farmers towards their products.

Persons to be motivated:

In Bangladesh, the level of knowledge of farmers about different types of agricultural equipment and their using method is low. So, two types of staff of DAE will influence their purchase of agricultural equipment. They are–

• Upzila Block supervisors
• Upzila Agriculture Engineer

Block Supervisors:

I think in this project, for a number of reasons Block supervisors have to be motivated first. The reasons are given below:

1. Block Supervisors have personal contact with the farmers.
2. They are involved in assisting farmers to identify their problems and possible solutions to them.
3. Through the Block Supervisors, extension programs of DAE is implemented and communicated to the farmers.
4. Block Supervisors work in a participatory style with farmers groups of all types. it means that they has a very sound idea about farmers financial capability and needs.
5. Block Supervisors plays an important role in providing ideas for suitable extension activities for farmers during Thana Planning Workshop.
6. They assist farmers to develop new technologies and they discuss with farmers about new technologies.

How Block supervisors can be motivated: Block supervisors can be motivated by following ways:-

Campaigning program:

We can arrange a campaigning program for Block Supervisors. We can make a list of the upzilla block Supervisors, and then we will select supervisors according to their connection with farmers. After that, selected Block Supervisors will be invited in the Campaigning program. Here, all the expenses of Block supervisors like; – travel, accommodation and other expenses will be beard by ACI Motors. In this event, we try to convey following information to them: –

Information about ACI motors:

 In this stage, we will convey details information of our ACI Motors. We will tell following things:-

• Product profile of ACI Motors
• Unique features of the products and after sell service system of ACI
• Motors that can keep ACI Motors ahead of the competitors.
• We will demonstrate how the unique features of our ‘Bull power power tiller”, “Sonalika tractor”, Bull power rice cutter “and others agricultural machineries of ACI Motors can add a greater value to the farmers comparing the competitors.
• We can also demonstrate some tips on how to maintain and repair agricultural equipment so that they can communicate it to the farmers. we can also put this demonstration into a video CD and give it to the supervisors.
• We can provide some gifts to the Block Supervisors like calendar, dairy, pen, bags etc. incorporated with the logo of ACI Motors.
• In this campaign, we will request to the block supervisors to send the profile of financially sound farmers of their region to them.
• Finally, there will be a question answer session.

Commission on Sonalika tractor Sales:

Money is the most effective motivational tools. As, our Sonalika tractor is an expensive product, so, to sell Sonalika tractor we can offer some commission on the selling of per tractor to the block supervisors. Like we can offer 3% commission on the selling amount of per Sonalika tractor. I think, by this approach we will get better effort from the block supervisors.

Agricultural engineer:

Agriculture engineers need to be motivated because they are involved in discovering new technologies and they hold a huge knowledge about agricultural machineries. So, their recommendation will have a great impact on the purchase pattern of the farmers.

Ways of motivating Agriculture Engineers:

There is 1 Agriculture Engineer in 1 upzilla. We can take the following approach to motivate them:-

• Campaigning program:- will be same as the campaigning program for “Block Supervisors” By maintaining a sound relationship with them, communicate with them regularly.
• By attending the training session organized by the Agriculture Engineers.

We can also offer sales commission to them but in this case we have to do it secretly and very carefully science the post of Agriculture engineer is a very prestigious position.

Customers (farmers):

Farmers will be our prime concern for motivation science in this project the government has given full freedom to the farmers in choosing brands. ACI Motors is a new company in the Agricultural Machineries business and in this sector there are some established competitors like Chittagong Builders and Machinery LTD (SIFANG brand), The Metal Private Ltd (TAFEE tractor). This agri machinery sector is highly performance oriented and customers depends more on Known brand than the new brand. So, initiate purchase will require lots of promotional efforts. We have to promote our brand in a way that our product can reach the Brand Recalling level.

Ways of influencing customers: we can influence or attract customers by implementing following strategies:-

Give Advertisement in Radio and TV:

TV and Radio can be a very effective source for us. Most of the farmers have radio and they listen to the radio at their time of their field work as well as in their leisure time also. Cost of giving advertisement in radio is not very costly. Overall advertisement in radio will help a lot to ACI Motors to communicate their branded product. On the other hand, advertisement in television will give the opportunity of demonstrating the product benefit and it will last in the memory of customers for a long time. I think with this step we will be able to get a competitive advantage over our competitors because no other competitor is using this two communication media. If ACI Motors is using these two media then for this project they should increase the telecast rate.

Make district wise campaign:

After giving regular TV and radio advertisement and collecting information about the financially capable farmers, we can arrange a district wise campaigning program for our targeted farmers. In this campaigning along with the demonstration of our product unique features; we will also show a short video of the opinion of our satisfied customers of that district. For example:- if we organize a campaigning in Jessore district then we can show a short video of our satisfied customers of that district. Here, the full address of those customers will be showed.

We have to demonstrate our product benefit in a way that keeps us ahead against our competitor.

District wise training session: we can also arrange a district wise open learning session where our mechanical expert will demonstrate farmers how to use, maintain and repair different types of Agricultural machineries properly. I think it will create a positive image in the mind of our targeted and potential customers.

At present ACI Motors is using different promotional items like: Poster, Banner, Festoon, Leaflet, Sticker, T-Shirt, and Wall Clock. Here, especially for this project of government we have to increase the distribution of these promotional items and we have to ensure that these promotional items reach to our potential customers.

Agricultural Machineries business in Bangladesh:

Agriculture Machineries Industry or business is not new in Bangladesh. This Business was started in 1962 with Deep tube well and Power Tiller by Pakistan Agriculture Development Corporation. After the independence of Bangladesh, This sector goes under the Ministry of Agriculture, Bangladesh and Bangladesh Agriculture Research Institute (BARI) and Department of Agriculture Extension (DAE) wings are the main supervisors or monitor of this sector. For the irrigation of the land water pump concept was introduced in 1974. Uses of power tiller diesel engine become popular during the beginning of 1982 with the investment of self interested people. The Chittagong Builders is one of them. After that by the withdrawal of import duty on agrimachineries in 1984, privatization of this sector gets more speed. Tractor was first introduced in Bangladesh in 1985 by The Metal Pvt Limited. But it started to get popularity from 1999.At present Total Tractor using population in our country is 20000. Agricultural Engineers of Bangladesh Agriculture Research Institution is working on the development of new technologies and its uses in Bangladesh for the betterment of our farmer and our agriculture sector. Up to now this institution successfully introduced many modern agrimachineries to the farmers like:- High Speed Rotary Tiller, Crop cutting Machine, Hand and Power operated corn Harvesting machine, Potato withdrawal Machine , Mango Picking and grading machine etc. This institution along with farmers also provides training to different companies on manufacturing, operating and maintenance of these machines.

Competitors of ACI Motors:

At present in Bangladesh competition in the agriculture machineries business is quite intense. As, ACI Motors started its journey in 2007; for this reason they are facing very tough competition from some companies who are operating their business in this sector for many years. At, present 20-25 large medium and small companies are actively operating their business in this sectors. But, the main competitors of ACI motors especially in the Tractor power tiller and Diesel engine sector are:-

• The Metal Private Limited
• Karnafuli Private Ltd
• The Alim Industries Ltd
• Chittagong Builders and Machineries Ltd:- In the sector power tiller and diesel engine.

The Metal Private Ltd: This Company is considered on e of the pioneer of modern mechanized cultivation in Bangladesh established in 1987. This company first introduced Tractor in our country. They are the sole distributor of Indian TAFE brand tractor. At present this company is the market leader in the tractor sector of Bangladesh. Here, it should be mentioned that TAFFE Tractor is also holding number 1 position in India. Up to now they have sold 9000 units different model of TAFE Tractor. TAFE brand has a very good reputation in our country and this company has a very strong network all over Bangladesh.

karnafuli Private Ltd : Established in 1989 and this company is the sole distributor of Indian Mahindra tractors in Bangladesh. At present this Mahindra brand is holding number 2 position in the tractor industry of Bangladesh. Mahindra is also a leading brand in India. In India their position is number 2.

Chittagong Builders Ltd: Established in 1988 and this company is called the king of Power tiller and diesel engine sector of Bangladesh. A Chittagong Builders and Machineries is the sole distributor of Chinese “Syfeng” brand power tiller and Diesel engine. Power tiller and Diesel engine of ‘Syfeng brand has a very good or in other words unbreakable reputation in the market .For this reason ,the sales volume of Chittagong builders is also very high comparing to others.

Selling System of ACI motors:

Although the users of ACI motors products are huge but the target group of ACI motors is not that much big especially for Tractor combine harvester and rice transplanter. So, 1 to 1 selling strategy is used by ACI motors. ACI motors have s 6 show room at 6 divisions in Bangladesh for distributing and selling their machineries. ACI motor has showroom in:-

• Comilla
• Dinajpur
• Jessore
• Bogra
• Rangpur
• Sylhet

For identifying prospect, motivating them, projecting year to year sales ACI Motor has Territory Manger in each division, marketing officer and more than 100 sales officers all over Bangladesh For selling power Tiller to the final customers ACI Motors has 300 dealers all over Bangladesh. Basically dealers are the targeted customers of ACI Motors. And for identifying new dealers, monitoring dealers and maintaining a sound relationship there is a separate team of Marketing and sales officer in every region headed by the 3 area Managers.

Selling procedure of Sonalika Tractor:

Different models of Sonalika tractor is sold by 25%to 30% down payment of the total amount of the tractor. Rest of the amount is collected by 24 installments within 2 years with adding service charge from the customers. At the time of selling the tractor is registered on the name of ACI motors so that the company can take the tractor from customer if he failed to pay his installment. After completing the installment customers can register this tractor on his own name at his own cost.

ACI Motors has agreement with Krishi Bank and Markentile Bank and Agrani Bank from which customer can take loan for buying tractor at a interest rate of 10% to 11 %

Customers Incentive:

ACI motor offer following incentive to their customers for purchasing their tractor:-

Cash discount: ACI motor offers Cash discount of 25000/= if down payment is more than 30%

Gift Item: TV or Freeze, Rain Coat, Wall Clock, Mobile Phone, Cap, T-Shirt etc

Selling procedure of Power tiller:

ACI Motor Sell its “Bull Power” Power tiller to the dealers both on cash and on credit. Credit limit for the dealers starts from 80,000 taka to up to 70, 00000 depending on the capability and reputation of the dealer. Like tractor power tiller customers also receive cash discount and gift items according to their performance of transaction with the company Selling procedure for Bull Power Rice Cutter and Daedong Combine harvester:

Cash selling is preferable for selling “Bull Power Rice Cutter” to the individual farmer. Because the retail price of this Rice cutter is only 14,500/= taka. But for the dealers this price comes down to 12,500/= taka as dealers. ACI Motors has a plan to attract present power tiller dealers of ACI Motors, Sonalika tractor customers and the dealers of ACI Seed and fertilizer to get the dealership of this Rice Cutter Machine.

On the other hand “Daedong Combine Harvester” is a recent product of ACI Motors. This machine is also new in Bangladesh. ACI Motors only sold one unit of this “Daedong Combine Harvester” at Maherpur area. And, it is sold by 50% down payment with 1 year installment. This customer also gets a cash discount of 30000 taka. ACI Motor has not sold any unit of Daedong Rice Transplanter. This technology is completely new in Bangladesh and ACI Motors first launched in 18 February.

Apart from selling to the individual customers and delears ACI Motor also sell their Machineries to different Government Organization through participating in the tender.

After Sell Service System Of ACI Motors:

In this Agriculture Machineries sector after sale service plays a vital role for building a company’s reputation. Because in our country knowledge level of farmers or users about using agriculture machineries is very low. For this reason ACI motors has build up a strong after sales services and spare parts department headed with the service Manager, Service Engineer, Service Coordination Executive, Senior and junior Mechanics. The main objective of this department is to retain customer satisfaction. The total permanent manpower of ACI Motor after sales service and spare parts department is 45. Apart from these, ACI Motors also have some contractual mechanics. This department also gives their Service Engineers and mechanics to participate in different training program organized by Bangladesh Agriculture Research Institution where they learn how to operate and manufacture different types of new and light agricultural machineries.

Apart from these Service and spare parts department of ACI Motor organized training program for their service engineers and mechanics to increase their product knowledge and efficiency. Training is given by the expert Indian Service engineer of sonalika tractor. After selling of agrimachineries to customers Service engineer or mechanics of this department provide practical training to the customers about how to drive tractor, power tiller, how to maintain it properly, what should do and what should not to do etc. A written Bengali manual is also given at that time.

For Tractor Service department of ACI Motors provide 1 year free servicing or free servicing for using up to 1500 hours which one appears first. Customers receive free tractor serving according to the following using hour slot:

• 1st service: after 50 hour
• 2nd service: after 250 hour
• 3rd service: 500 hour
• 4th service: 750 hour
• 5th service: 1000 hour
• 6th service: 1250 hour
• 7th service: 1500 hour

Warranty Policy for Sonalika Tractor

• Warranty up to 12 months or 1500 hours (whichever appears earlier).
• Welding, machining, transportation, labor charges will not covered under warranty.
• Electrical items like bulb, Switches and glasses do not come under warranty.
• Filters, oil, gasket, hose pipe, Nut & bolts, Clutch Lining, Brake lining Plastic materials, Chain & Pins, front & rear wheel bearing are not included in the warranty.
• Warranty is not applicable if tractor used in overload & poor maintenance

Uniqueness of ACI Motors after Sales service department:

Provide maximum free service: Free servicing facilities of Sonalika Tractor start after 50 hours where other companies start this facility after 300 hour.

Door to Door Service: It is a unique service providing system of ACI Motor after sell service department. In this system customers of ACI Motor give a call to the service engineer or service Coordination Executive of his region and told his problem. After that, Mechanic of that region will go to his house or mentioned place according to the promised schedule. Here, the customer does not have to take his machine or drive his machine to the showroom of his region.

Recommendation for ACI Motors:

Import DI-55 model of Agriculture Tractor Instead of DI-60: The present price of DI-60 model Sonalika agriculture tractor is 9, 30,000 taka which is not affordable for the customers. The price of Sonalika DI-55 will be 8,50,000 taka. For this reason I think that it will be better for ACI motors if they import DI-55 Model OF Tractor instead of DI-90.

Established a Sales and spare parts center in Dhaka: Competitors of ACI Motors like TAFEE and Mahindra has a sales and spare parts center in Dhaka but ACI motors don’t have nay sales and spare parts center in Dhaka. For this reason customers who live around Dhaka like: Norsingdi, Gazipur, Dhamrai etc face problem because for buying sparte parts they have to go comilla showroom.

Appoint more Territory Managers: At present in ACI Motors are managing their sales in all over Bangladesh through only 6 territory managers in 6 divisions. This 6 territory mangers have to cover 64 district of Bangladesh. Under 1 territory manger there are too many districts. For example: The territory managers of Jessore have to cover 12 district which is very difficult for him mange and make proper concentration on each district.

Take aggressive promotion activities: As a new company ACI Motors is not attempting enough promotion activities as should be. They are not giving any advertisement in TV and Radio but their competitors especially TAFEE is giving TV advertisement of their tractor. ACI Motors should also increase their billboard advertisement in different district.

Conclusion:

To conclude I want to say that as a new company the performance of ACI Motors up to now is quite impressive. Although it will be very tough for ACI Motors to get the market leadership of tractor from the metal pvt Ltd by 2016. As, they have a very strong network which they build up with their working experience. But I think that their Combine Harvester, Bull power Rice Cutter and Daedong Combine harvester machine has a very good opportunity in the market and by promoting this products properly they can easily took the position of market leader of that product.