MoI opposed to Millat Tractors price increase
MUSHTAQ GHUMMAN
ISLAMABAD (March 31 2006): The Ministry of Industries is opposed to price increase made by Millat Tractors Limited (MTL), manufacturer of Massey Ferguson tractors, which has increased the prices of different models by up to Rs 40,000 per tractor.
However, Ghazi Tractors Limited, one of the competitors, did not raise the prices on account of service charges or inflated steel prices.
Documents available with Business Recorder suggest that MTL had increased the prices of its different tractor models on its own, without taking the government into confidence.
The government had exempted agriculture tractors from input tax and had directed the manufacturers to sell exempted tractors against proper tax invoice with zero sales tax at prices agreed with the government.
On June, 16, 2004, MTL wrote a letter to the Ministry of Industries and Production, saying that the firm had been holding the prices of its different models for almost two years, despite pressure on account of soaring steel prices, higher exchange rate vis-a-vis pound sterling, increase in CKD, local vendor-component prices and other cost escalations.
After arguments, true or false, the company revised the prices and simply asked the concerned government departments, including the Zarai Taraqiati Bank Limited (ZTBL), to register new prices.
The price for MF-240 had been increased by 5.9 percent, followed by 7.5 percent for MF-260, 8 percent for MF-375, 6.7 percent for MF-385 and 4.5 percent for MF-385 four-wheel drive.
On April 15, 2005, the Ministry of Industries and Production wrote a letter to MTL Deputy Managing Director, saying that the trading results of the company had significantly improved during the past two to three years due to substantial increase in the sale volumes.
The ministry said that collection of extra amount, in addition to price from the customers in the guise of service charges, was unwarranted and not aligned with government policy of giving relief to the agriculture sector.
The document further shows that the ministry asked the firm not to collect additional amount from farmers, other than the actual price of Massey Ferguson tractors, in the name of service charges, and should pay back the additional amount collected, to the customers, but the company did not follow the letter.
Last year, when the price fixation case of Euro F 5880 tractor (80 hp), to be assembled locally by International Tractors Limited, the Engineering Development Board (EDB) said that a number of tractor assemblers, new entrants as well as existing, had requested for approval of their tractors prices.
The Board was of the view that, since the matter was of sensitive nature, a committee should be constituted in the ministry, with members from ZTBL and CBR, to review the cases.
An official told Business Recorder that the company was still overcharging the farmers, as the government did not take appropriate action against the company for violating the agreement. The official said that the company is now busy in convincing the top officials of different ministries to send the case to the Economic Co-ordination Committee (ECC) of the Cabinet for regularisation the addition in prices which were collected from the farmers.
Copyright Business Recorder, 2006
