[2019]

Vanraj Mini Tractors: Is Small

Beautiful?

EPGP-11-129
YOGENDRA SINGH RATHORE
Issues:
1. Identification of the most appropriate market segment for Vanraj Mini
Tractors
2. Which market segment would you target? Why?
Objectives:

 Analysing different market segments: Small and Marginal farmers;

Horticulture farmers.
 Selecting the most appropriate market segment for Vanraj tractors
 To determine the break-even point for Vanraj tractors

Features of Vanraj Mini-Tractor:

 Mini Tractor of 10 HP power

 Performs all functions of big tractors at lower costs
 Lesser Fuel Consumption
 Better manoeuvrability and control in farming operations
 First tractor with “Three-Wheel Convertible “ feature
 First mini Tractor with tested Power Take-Off point
Demographic Segmentation

Small Farmers and Marginal Farmers Large Farmers

 Large in number  Small in number
 Small Landholdings (Avg 1.4- 0.4  Large landholdings (Avg > 3
hectares) hectares)
 Engaged in subsistence farming  Engaged in commercial
 Uneconomical for farm farming hence earning high
mechanization income
 High levels of farm
mechanization

Geographic Segmentation:
Northern India (UP) Southern and Western India (Gujarat, MP,
Maharashtra)
 Soil is alluvial and fertile  Harder soil-literate and black soil
 Require lower horsepower  Require higher horsepower
tractors tractors
 Area under Horticulture farming:  Area under Horticulture farming:
o 1066 (‘000 hectares) o 1550 (‘000 hectares)

On the basis of land holding

1. Small and holdings:

 Most of them do not have tractors at field and this segment has huge
potential for vanraj.
 The benefits of the tractor are affordability, low maintenance cost, three
wheel convertibility and durability.
 Moreover for small tractors the sales in India are just 1 % of the total sales
this increases the lucrativeness of this segment. Few companies do produce
small tractors but their performance has not been impressive.
 Better manoeuvrability and control, it can reach every corner of the field.
 It can be used as a power take off point which enables a tractors engine to be
used as a generator.
2. Large holdings:
  Tractor’s price is half the large tractor’s price but still it can carry almost the
same amount of weight (2 tones).
 It is twice as fuel efficient as compared to the larger tractors (1.5 Litter of
diesel per hour).
 Vanraj has a “single piece casting” tractors so easy repair and easy
maintenance.

Analysis of Small and Marginal farmers sector

In India, small farmers traditionally relied upon bullocks for all their agricultural
needs. Therefore, the main competitor for Vanraj Mini tractor were bullocks rather
than other Chinese make cheap tractors which were not suitable for Indian trying
conditions.
(i) Comparative Analysis:

Average land holding of marginal farmers was 0.4 hectares and small farmers was
1.4 hectares. Hence, assuming that farmers in this segment would meet their
farming requirements with a pair of bullocks, a comparative analysis is presented
below.

(ii) Challenges:

Though, using a mechanized equipment rather than bullocks would increase

efficiency in agricultural methods, total cost incurred on Vanraj mini is 3 times
more when compared with total cost incurred on bullocks. Hence, it is not
economical for small farmers.
It is more economical for farmers to hire a big tractor. This way they would be
saving time and work more efficiently.

Analysis of Horticulture Sector:

(i) Advantages of Vanraj Mini tractor over others in horticulture

sector :
  The big tractors are unwieldy in negotiating their way through the small gap
between the lanes in horticulture farms. Vanraj’s small turning radius and
mini-size would make it easy to makeover it through the small lanes of
horticulture farms.
 The three-wheel convertibility option available in Vanraj would be of great
use in intercultural operations in Horticulture farms.
 Savings on initial cost:
Vanraj Mini tractor price= Rs 0.19 million
Least price of a Big Tractor= Rs 0.24 million
Savings= Rs 0.05 million
 Savings on fuel Cost :
Vanraj Mini Tractor consumption= 1.5 litre/hr
Average consumption of a big tractor= 4 litre/hr
Savings in fuel= 2.5 litre/hr
Savings in fuel cost= 2.5 * 33 = Rs 82.5 /hr
Hence, Horticulture sector would serve as a niche market for Vanraj
Tractors.

Estimation of market potential in Horticulture segment :

 Percentage change in area from 1991-92 to 2001-02:

Area under Fruits Area under Vegetables

Maharashtra 127.56 66.9
Gujarat 76.33 102.6
Uttar Pradesh -4.9 34.88
Madhya Pradesh -27.99 -22.66

 Horticulture sector recorded very high growth in the period from 1991-92 to
2001-02 with 50% increase of land area under fruits and 39% increase of
land area under vegetables.
 Total land under Horticulture in 2001-02= 2615.6 hectares
 Owners of such farms are well off and they can afford Vanraj as their second
tractor for their special needs where big tractors are unwieldy.
  Hence, making a reasonable assumption that 1 tractor is required for every 2
hectares ( i.e approximately 5 acres ), then number of tractors required =
1308
 Hence, estimated market potential in Horticulture = 1308 * 1.9
= Rs 24.85 crores

Suggestion:
1. Horticulture sector presents a niche market for Vanraj. It is concentrated
only in few pockets of states. Hence, Vanraj marketing should focus on
such areas to fully tap the market potential.
2. Area under Horticulture saw a decrease in states like Madhya Pradesh.
Hence, Vanraj should interact with farmers in this region, find out the
reasons and give them proper advice and hence should try to create a
market for them.
3. Market of small and marginal farmers is not a viable option according to
the cost-benefit analysis done above.