TBY talks to A. Ebrahimi, Managing Director of the Iran Tractor Manufacturing Company (ITMCO).
TBY Could you give us a little background into ITMCO?
A. EBRAHIMI ITMCO was established more than 40 years ago. It started off with a single tractor assembly line, which at that time was considered sufficient for the company’s initial objective of meeting domestic needs. Since then we have grown to the point of not only supplying local demand, but also exporting our products overseas. Although we started off as a state company, we have over the past two years become a completely privately owned company.
We have 12 subsidiary companies, and we are the only company in Iran that now produces and assembles tractors. Our main production plant and head office are in Tabriz, but we also have factories for assembly in many different regions and cities across Iran.
Which tractor parts do you produce yourselves?
We produce the engines, the die-cast parts, the forged parts, everything. Our company Motor Sazan produces the engines under license from a British company, Perkins. All engine parts are made here in Iran, and our localization rate for parts is virtually 100%. The tractors are produced under a Massey-Ferguson license, but they carry the ITMCO brand, and they are all produced by us.
The mechanization rate in the local agricultural sector is steadily increasing. How has the demand for tractors evolved in the last few years?
Our Agriculture Ministry has made it an official government policy to increase the national mechanization rate to 1.1 horsepower per hectare. That rate is currently at around 0.8 horsepower. This new goal is a great opportunity to expand the market for our products, and of course it’s also a great new opportunity for farmers to make their production much more efficient.
How many tractors do you sell per year, and how much are you planning to expand production in the near future?
We sold around 30,000 units last year. Hopefully, with the government’s new strategic cap, our units per year could reach up to 35,000 this year. Our aim is to eventually double our production to 60,000 units per year.
How does the Ministry of Agriculture provide support for this mechanization plan?
The state provides loans to farmers so they can buy tractors. The state also subsidizes our production.
How have farmers responded to the new mechanization project?
They accept it wholeheartedly, because it means the modernization of the entire sector. It means more production for them for less time and effort. However, the development of mechanization isn’t only dependent on tractors, but also on combine harvesters, improved irrigation facilities, better implements, and the like. In all these areas, our agricultural sector is progressing step by step. In the last years, Iran has become self-sufficient in agricultural production. For us, the internal market is the main priority, then exports.
Which countries do you export to?
Our first priority for exports is neighboring countries like Turkey, Iraq, Afghanistan, and Tajikistan, and we export to all of them. We also export to some African countries like Kenya, Sudan, Uganda, Zimbabwe, Nigeria, Sierra Leone, and Senegal. We have a good brand name, a good reputation, and we offer very competitive prices. We also offer excellent worldwide after-sales services, because we believe this is crucial in creating brand loyalty and ensuring that when a customer wants to buy another tractor, they will buy it from us.
How large is your sales and services network?
In Iran we have over 2,200 dealers selling our products and offering after-sales service. For foreign markets, we dispatch a team of experts to train partners who can offer the necessary after-sales service for ITMCO tractor owners. We pay them the cost of the after-sales service, so we don’t make any profit from this. We offer free after-sales service for one year after purchase, or for 1,000 hours. After that a warranty applies, so we give spare parts and after-sales service by cost. We also give incentives and offer certain rewards to dealers who have the best sales figures.
Do you have production facilities in other countries as well?
Yes. Besides tractors that are exported abroad, some of the parts of our tractors are assembled in foreign countries, such as the tires, sheet metal, and the exhaust. Some countries we export to have small assembly lines, such as in Venezuela, Uganda, Senegal, and Tajikistan, where we have affiliated companies that produce brands like VENIRAN, UGIRAN, SENIRAN, and TAJIRAN, respectively. The reason we do this is so we can pack six tractors per container and thereby reduce shipping costs.
How do you think the end to energy subsidies will affect your company?
We have our own power station, and besides supplying our own energy needs, we also contribute to the Tabriz city power grid. So, we should be fine.
© The Business Year