FEW get the kind of opportunity that Sikandar Mustafa Khan got; and fewer make the most of an opportunity dropping in their lap. Trained as a mechanical engineer in Karachi and London, he took no time to cobble together a ‘group of executives and workers’ of Millat Tractors to bid for their company when the first government of Mian Nawaz Sharif embarked on the path of privatisation in the early 1990s.

“Being on the management of the company we knew well of its growth potential when we decided to form a group of 350 executives and staffers to bid against four rival groups to buy out Millat,” Sikandar tells Dawn in an interview.

He was working as the company’s managing director and chief executive officer (CEO) since 1985 when it was put under the hammer in 1991. “We had offered to buy 51pc holding in the company for Rs107.86 a share against its market price of only Rs50 a share at that time,” he says. “None of the other four bidders, including another employees’ group put together by the CBA Union, could match our offer,” he recalls.

‘The reduction in the sales tax will save farmers Rs30,000 on a small tractor and Rs90,000 on the large one

But the deal did not come through as easily as he had thought. The banks refused to finance the group to bridge the gap between what it had and what it offered to purchase the company. It was at that moment when top businessman and chairman of the Nishat Group/MCB Bank Mian Mohammad Mansha held Sikandar’s hand to help his group take over Millat. Mian Mansha bought five per cent holding in the company to bridge the shortfall.

That was the beginning of the story of a ‘professional turning into a successful businessman’.

Ever since Millat, which has the license to make Messy Ferguson tractors, hasn’t looked back. From a small unit at the time of its privatisation, it has become one of the most successful and important engineering sector companies. At Rs500, its share is 10 times dearer than its price on the day the management control was given to the employees led by Khan. The number of tractors produced by the company peaked a few years back from 12,000-15,000 units to 42,000 units, sales from Rs1.5bn to Rs24bn, number of jobs from 650 to 2,000, profits from 4-5pc of sales to 6-7pc and it is eyeing to become an important player in the global tractor market. What is more? The Millat has grown vertically and horizontally ever since it was given in the ‘private’ hands.

Immediately after taking over the control of the company, Sikandar began buying out the loss-making public companies like Bolan Castings and the closed-down automotive battery making Millat Industrial Products as these were considered ‘strategic’ to the growth of Millat Tractors. In the later years, he also made a major investment to set up Millat Equipment to manufacture Fork Lifts, generators, gears, drive shafts, etc. At their peak, the group sales stood at over Rs29bn.

Although the tractor industry has seen sales drop significantly, jobs cut and profits plunge over the last few years because of the enforcement of sales tax, Sikandar is hopeful that the government’s decision to reduce it from 17pc to 10pc from July 1 will go a long was in boosting sales. “We are expecting our sales to grow from the present 23,000-24,000 to 34,000-35,000 units next year,” he says.

The reduction in the sales tax will save farmers Rs30,000 on a small tractor and Rs90,000 on the large one. “The government will also benefit from the cut in sales tax rate as it will generate more revenues when the sales grow. I expect the government to keep the tax regime stable for the tractor industry to enable us plan for the future. Uncertainty and confusion always hurt the industry as we have seen in the last few years,” the chairman of the Millat Group of Companies notes. He is also critical of the previous government’s policy permitting zero-rated import of the built-up tractors. It was a bad policy for the local vending industry that the present government has reversed.

Sikandar, who has been associated with the foundry industry from the start of his career at Naya Daur Motors, is hopeful that the tractor sale will rise to 60,000 units in next one year from the present 40,0000-45,000. “The domestic tractor sales have the potential of soaring to 80,000 units - almost equal to the local installed production capacity. To further expand the market, new investments will be required in capacity expansion by both tractor makers and their suppliers,” he argues.

While the domestic sales are the bread and butter of the tractor industry, Millat is working hard on its plans to export its tractors to Africa, Europe, the Middle East, etc. “We are focusing only on improving the quality of our product for the last six months. The locally made parts meet all the quality requirements of our principal, but we are facing problems in parts we import from China. Nowadays we are looking for good (Chinese) supplier and putting in place quality checks (on the imported parts).” Pakistani tractors are said to be cheapest in the world and are being shipped out of the country to Africa, Afghanistan and Europe.

Sikandar, who is also chairman of the Pakistan Business Council, argues that private investment is essential for achieving growth. And private investors are shy of investing in the country because of myriad of problems and issues facing the economy. “We have been sucked into different issues, security and energy shortages being the most important ones. As a consequence, capital is flying out of the country. If the economy is to prosper and investment increase, the government will have to deal with these two issues and settle them once for all.”

He thinks the government is moving the economy, broadly speaking, in the right direction. It is making efforts to document the economy, bring informal sector into tax net, privatise state-owned businesses, solve energy problem and eliminate terrorism.

“Still it has a long way to go,” he contends, “and on the way it got to learn that local investment is as important for turning the economy around as foreign investment, and economic and investment policies should be made for ‘investors’ only and not for local or foreign.”

Published in Dawn, Economic & Business, June 30th, 2014