MARUTI UDYOG LIMITED

Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation

of Japan, has been the leader of the Indian car market for about
two decades. Its manufacturing plant, located some 25 km south
of New Delhi in Gurgaon, has an installed capacity of 3,50,000
units per annum, with a capability to produce about half a
millionvehicles.The company has a portfolio of 11 brands,
including Maruti 800 ,Omni, premium small car Zen, international
brands Alto and Wagon R, off-roader Gypsy, mid size Esteem,
luxury car Baleno, the MPV, Versa, Swift and Luxury SUV Grand
Vitara XL7.In recent years, Maruti has made major strides towards
its goal of becoming Suzuki Motor Corporation's R and D hub for
Asia. It has introduced upgraded versions of Wagon R, Zen and
Esteem, completely designed and styled in-house. Maruti’s
contribution as the engine of growth of the Indian auto industry,
indeed its impact on the lifestyle and psyche of an entire
generation of Indian middle class, is widely acknowledged. Its
emotional connect with the customer continues Maruti tops
customer satisfaction again for sixth year in a row according to
the J.D. Power Asia Pacific 2005 India Customer Satisfaction Index
(CSI) Study .The company has also ranked highest in India Sales
Satisfaction Study. The company's quality systems and practices
have been rated as a benchmark for the automotive industry
world-wide" by A V Belgium, global auditors for International
Organisation for Standardisation. In keeping with its leadership
position, Maruti supports safe driving and traffic management
through mass media

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messages and a state-of-the art driving training and research
institute that it manages for the Delhi Government.The
company's service businesses including sale and purchase of
preowned cars (TrueValue), lease and fleet management service
for corporates (N2N), Maruti Insurance and Maruti Finance are
now fully operational. These initiatives, besides providing total
mobility
When it comes to Indian auto industry, the first brand that comes
to Indian customer mind is Maruthi. In our paper we are
attempting to identify the future of Maruthi Udyog Ltd which is
currently the market leader. The main questions we will be
addressing are,

• Can it sustain its market share

• Will their be a decline in profits

• What can it do to keep its growth rate?

• How can it compete in the highly competitive small car

segment

• What are its strategic alternatives

We will analyze the competitors briefly concentrating more on

TATA motors, one of the fast growing Indian auto
manufacturer.Maruti Suzuki India Limited is a publicly listed
automaker in India. It is a leading four-wheeler automobile
manufacturer in South Asia. Suzuki Motor Corporation of Japan
holds a majority stake in the company. It was the first company in
India to mass-produce and sell more than a million cars. It is
largely credited for having brought in an automobile revolution to
India. It is the market leader in India. On 17 September 2007,

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Maruti Udyog was renamed to Maruti Suzuki India Limited.
The company's headquarters remain in Gurgaon, near Delhi.

Industry scenario
The Indian Car Industry
The Indian car industry can be classified on the basis of price, into
lower end small car or economy segment, higher end of the
economy segment (Rs0.25-0.45mn) mid-size segment (Rs0.45-
0.8mn), luxury/premium car segment (above Rs0.8mn). The lower
end of the economy segment includes cars like Maruti 800, Maruti
Omni and Premier Padmini. The higher end will include models
like Maruti Zen, Matiz, Hyundai Santro and Telco Indica. The mid-
sized segment currently includes models like Ford Ikon, Hyundai
Accent, Maruti Esteem, Cielo and Honda City. The luxury segment
of the car market includes such models as Mitsubishi Lancer and
Mercedes E220.

The demand for passenger cars can be segmented on the basis of

the user segment as taxi operators, government, non-government
institutions, and individual buyers. A major portion of the demand
in India accrues mainly from personal vehicle owners. Lately, the
Indian car market has seen a lot of action with a number of new
entrants wanting a share of the pie. With individual incomes on
the rise and finance being easily available, aspirations have also
grown to include a car among a family’s prized possessions. With
the Indian buyer still being price conscious, all these factors have
contributed to the rising sales graph in the small car market.

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The multi-utility vehicle (MUV) is used in transporting smaller
loads over medium and small distances, providing low fixed and
operating costs in comparison to LCVs. It can be used for
transporting both goods and passengers. Apart from these it can
be converted into an ambulance, a minivan, a pickup van or
leisure vehicle. The MUV per se is a rugged vehicle. The high steel
body, tough parts and brave interiors make it amenable to rough
handling. The high ground clearance and high power delivery
make it suitable for driving over rough terrain places, hilly
regions, deserts etc. Till the early nineties, the Government of
India was the largest MUV buyer and continues to be the single
largest segment. It is used in police, paramilitary, defense, Public
and Works Department (PWD), public sector organizations etc

The boom of 2004 can be surpassed in 2005 if the government

introduces VAT and lowers excise. Indian auto industry is
experiencing huge shifts in trends. The industry is developing at a
fast rate. The roar you hear is of the automobile industry opening
the throttle. A growth of 19 per cent in sales of all vehicles
combined is not eworthy; more so the 41 per cent rise in sales of
commercial vehicles. It is not surprising then that the annual
convention of the Society of Indian Automobile Manufacturers
(SIAM) on Thursday saw companies unveiling grand investment
plans. Investments totaling Rs 25,000 crore are planned by
biggies such as Maruti Udyog, Tata Motors, Honda-SIEL and TVS
Motor, put together. Many of these plans are already underway
and part of the investment shave been made. And the buoyant
mood is unmistakable. What's interesting is that Honda Motor and
Toyota are closer than ever before in their plans to enter the
small-car market, which appears set

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to witness explosive growth. At least four new small-cars are like
lyto enter the market in the next couple of years from Maruti,
Hyundai, General Motors, and Tata Motors, which is working on a
platform to replace the Indica. And, of course, there is the much-
awaited Rs1-lakh car from Tata Motors.

LEADING PLAYERS AND SEGMENTS IN WHICH THEY OPERATE

Manufacturer Segments
Ashok Leyland LCVs, M&HCVs, Buses
Asian Motor Works M&HCVs
Atul Auto Three wheelers
Bajaj Auto Two and Three Wheelers
BMW India Cars and MUVs
Daimler Chrysler India Cars
Eicher Motors LCVs, M&HCVs, Buses
Electrotherm India Electric Two Wheelers
Fiat India Cars
Force Motors Three Wheelers, MUVs and LCVs
Ford India Cars and MUVs
General Motors India Cars & MUVs
Hero Honda Motors Two Wheelers
Hindustan Motors Cars, MUVs and LCVs
Honda Two Wheelers, Cars and MUVs
Hyundai Motors Cars and MUVs
Kinetic Motor Two Wheelers
Mahindra & Mahindra Three Wheelers, Cars, MUVs, LCVs
Majestic Auto Three Wheelers
Maruti Suzuki Cars, MUVs
Piaggio Three Wheelers, LCVs
Reva Electric Car Co. Electric Cars
Royal Enfield Motors Two Wheelers
Scooters India Three Wheelers
Skoda Auto India Cars

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Suzuki Motorcycles Two Wheelers
Swaraj Mazda Ltd. LCVs, M&HCVSs, Buses
Tata Motors Cars, MUVs, LCVs, M&HCVs, Buses
Tatra Vectra Motors M&HCVs
Toyota Kirloskar Cars, MUVs
TVS Motor Co. Two Wheelers
Volvo India M&HCVs, Buses
Yamaha Motor India Two Wheelers

Global scenario
Car industry is one of the largest industries in the world, there are
many players in world manufacturing cars, among those are (a)
General motors, Ford in USA (b) Daimler Chrysler, Fiat, Lexus,
Volkswagen, Renault, etc. in Europe (c) Toyota, Nissan, Honda,
Hyundai and Suzuki, etc. in Asia. Global market for cars forecast
to increase by 3.8% to 50.7 m units in 2007 - an increase of
almost 1.9 m units. Biggest contribution has to come from
developing Asia (excludes Japan) and the growth of that region,
especially China. Contribution of the Pacific Rim countries to the
growing world market is, by 2009, almost an additional five
million units.

Indian scenario

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The PAL entered the Indian market in mid 90 with Premier car,
then Maruti started capturing the Indian market with help of
maruti 800 .The car industry in general has grown at a CAGR of
13.5% p.a over the last 5 years, presently, India is 11th largest
passenger car market in the world and is expected to be the 7th
largest market by 2016. The Car industry has emerged as a key
contributor to the Indian economy; currently India has low car
penetration with 3 cars in 1000 individuals. India is the fourth-
largest car market in Asia. Passenger cars come in great variety,
starting from 2-seater electric car REVA to 5-seater compact cars
like Zen, Santro, Indica, etc. They come in all ranges– economical
and luxurious. The production, sales, export figures of Indian car
industry (units/annum) of last 5 yrs are given in Annexure 1 and
sales, export figures ( revenue wise) and growth trend for last 5
yrs are given in Annexure 2.

Market information
The current market scenario is given below:

➢ Passenger car sales grew by 10.84% and crossed the 1 million mark in 2006-07
and record sales of 1,076,408 vehicles.
➢ Utility vehicles sales grew by almost 12.2% in April-May 2007 compared to
the same period last year. Various manufacturers have entered this category and
this segment is expected to grow at 20% by 2010.

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Product categorization
Categor Engine Length Market Price Exampl
y share range e
(cc) (mm)
(lacs)
%
Mini < 800 <3350 19 2-3 Reva,80
0
Small 800- 3350- 56 3-5 Alto,
car 1200 3800 zen
Mid 1100- 3800- 20 5-10 Ikon,
segment 1800 4400 accent
Executiv 1700- 4300- 3 10-20 Accord
e 2400 4850
Luxury >2400 4500- 2 >20 Bmw
5100 5series

Market Drivers in India

➢ Increase in disposable incomes.
➢ Rise in aspiration levels.
➢ Lowering interest rates.
➢ Wide variety and easy availability of financing options.
➢ High sensitivity to fuel prices.

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➢ Lack of urban & rural public transportation infrastructure
➢ Flourishing service sector
➢ Growing working population
➢ Fast paced urbanization to rise from 28% to 40% by 2020
➢ Middle class expanding by 30 - 40 million every year

Key Trends
➢ Market evolution from Mini cars to Hatchbacks to Compact
Sedans now evident.
➢ Increase in customer emphasis on aesthetics and comfort.
➢ Shrinking product life-cycles.

Government Policies and regulations

➢ In 2002, the Indian government formulated an auto policy

that aimed at promoting integrated, phased, enduring and

self-sustained growth of the Indian automotive industry
➢ Allows automatic approval for foreign equity investment
upto 100%
in the automotive sector and does not lay down any minimum
investment criteria.
➢ Lays emphasis on R & D activities carried out by
companies in India.
➢ Weighted tax deduction of upto 150% for in-house research
and R & D activities

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➢ India is expected to align its crash requirements and emission
standards with European standards in the 2008 / 09 timeframe.
➢ Presently Bharat Stage III ( Equivalent to Euro III) is mandated
in Metros and other large cities and Bharat Stage II ( Equivalent
to Euro II) for the rest of the country. Bharat Stage IV
( equivalent to Euro IV) is expected to be introduced in the
large Indian metros around 2009 and Bharat Stage III in the
rest of the country

Key players and their market share

Key players Sales Total Total
From Market number of
April- Share (in exports in
Novembe %) April 05-
r 05-06 06
2,91,182 52.2 23,043

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 1,07, 066 19.2 68,374

.
24,348 16.6 12,105

24,348 4.4 31

10,512 1.9 9,928

31536 5.7 -
and
others

Ford India Pvt. Ltd

2%

Honda Siel cars others

India Ltd. 6%
4% Maruti Udyog
Tata Motors Hyundai Motors India Ltd.
17%
Tata Motors
Maruti Udyog
52% Honda Siel cars India Ltd.
Ford India Pvt. Ltd

Hyundai Motors
others
India Ltd.
19%

Three growth drivers

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Driving these ambitious plans are three major factors. First, the
reduction in excise duty on small-cars, effected in the last Budget,
which has clearly given a leg-up to sales in that category. The
concession extended to small-cars has been the catalyst for
Honda and Toyota to take a serious look at the options available
to them in the small-car market. Second, the Free Trade
Agreement India signed with Thailand two years ago. As per the
agreement, the so-called 82 early harvest items, which include a
range of auto components, will be subject to zero duty when
imported from Thailand into India from September 1. Both Toyota
and Honda have major operations in Thailand and the FTA will
help them integrate their Thai operations into their India plans.
The option of importing critical components from their own
operations/suppliers in Thailand confers a twin advantage for the
Japanese majors.

First, the time to market can be crashed as they do not have to

wait for Indian component suppliers to invest in production
capacities and,

second, it confers a big price advantage as they can import duty-

free. And the final factor is that India is now reckoned as a low-
cost global manufacturing base for small cars; Hyundai has
already taken the lead in this respect. The Korean company's
Indian unit is a major

exporter of cars. Exports accounted for 39 per cent of total sales

in2005-06 and the stated plan is to take this to 50 per cent once
the company's second plant goes on stream in the next couple of
years.

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Maruti is developing a new small-car model for introduction in
2008both in India and abroad. Besides, its global alliance with
Nissan is also set to produce another small-car meant for the
global market and the proposed new plant in India will produce
this model for sale in India and abroad.

Commercial vehicles

Meanwhile, the commercial vehicle (CV) segment is also passing

throughsome exciting times and some realignment of forces
appears likely. TheCV industry is showing signs of evolving on the
global pattern of prime movers consisting of large, multi-axle
trucks between cities and small, one-tonne trucks for intra-city
movement. Even as the Ace from Tata Motors catalysed this
partly, sales of multi-axle, heavy trucks is showing a rising trend.

Clearly, the automotive industry is on the cusp of a long,

sustained growth cycle and the dips, when they happen, may not
be as damaging to the major players as in the past thanks to their
growing international operations. Domestic economic cycles of
boom and bust will be less of a bother as these companies
increase their revenues from international operations. Whether it
is Tata Motors, Mahindra & Mahindra, and TVS Motoror Bajaj Auto
(to name just a few), all the major players are now establishing a
strong multinational presence across product segments.

HISTORY OF THE COMPANY

Maruti Udyog Limited (MUL) was established in

February 1981, though the actual production commenced in
1983. Through 2004, Maruti has produced over 5 Million vehicles.
Marutis are sold in India and various several other countries,
depending upon export orders. Cars similar to Marutis (but not

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manufactured by Maruti Udyog) are sold by Suzuki in Pakistan
and other South Asian countries.

Around 1970, Sanjay Gandhi, political advisor and younger son to

the then Prime Minister of India, Indira Gandhi, envisioned the
manufacture of an indigenous, cost-effective, low maintenance
compact car for the Indian middle-class. Indira Gandhi's cabinet
passed a unanimous resolution for the development and
production of a "People's Car". Sanjay Gandhi's company was
christened Maruti Limited. The name of the car was chosen as
"Maruti", after a Hindu deity named Marut.

At that time Hindustan Motors' Ambassador was the chief car, and
the company had come out with a new entrant, the Premier
Padmini which was slowly gaining a part of the market share
dominated by the Ambassador. For the next ten years, the Indian
car market had stagnated at a volume of 30,000 to 40,000 cars
for the decade ending 1983.

Sanjay Gandhi was awarded the exclusive contract and licence to

design, develop and manufacture the "People's Car". This
exclusive rights of production generated some criticism in certain
quarters, which was directly targeted at Indira Gandhi. Over the
next few years, the company was sidelined due to the Bangladesh
Liberation War and emergency. In the early days under the
powerful patronage of Sanjay Gandhi, the company was provided
with free land, tax breaks and funds. Till the end of 1970s, the
company had not started the production and a prototype test
model was met with criticism and skepticism. The company went
into liquidation in 1977. The media perceived it to be another

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area of growing corruption. [4] Unfortunately, Maruti started to fly
only after the death of Sanjay Gandhi, when Suzuki Motors joined
the Government of India as a joint venture partner with 50%
share.[5] .

After his death, Indira Gandhi decided that the project should not
be allowed to die. Maruti entered into this collaboration with
Suzuki Motors, The collaboration heralded a revolution in the
Indian car industry by producing the Maruti 800. The car went on
sale on December 14, 1983. It created a record by taking 13
months time to go from design to rolling out cars from a
production line. By the year 1993 the company had sold up to
1,96,820 cars, mostly by selling its chief product the Maruti 800s.
By March 1994, it produced one million vehicles, becoming the
first Indian company to cross this milestone. It reached the two
million mark in October, 1997 and rolled out its 4 millionth
vehicle, an Alto-LX, on April 19, 2003.

Suzuki Motor Company was chosen from seven prospective

partners worldwide. This was due not only to their undisputed
leadership in small cars but also to their commitment to actively
bring to MUL contemporary technology and Japanese
management practices(which had catapulted Japan over USA to
the status of the top auto manufacturing country in the world).A
licence and a Joint Venture agreement was signed between Govt.
of India and Suzuki Motor Company (now Suzuki Motor
Corporation of Japan) in Oct 1982. MUL launched its first car
Maruti800 on december 14,1983 at initial price of Rs.47,500.

Recent history

YEAR EVENTS 2006

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-Indian car market leader Maruti Udyog on Feb 28, announced a
price cut ranging between Rs 13,000-22,000 across five models,
including M800 and Alto, following the cut in excise duty on small
cars -MUL unveils new WagonR in Punjab

AWARD AND ACCOLADES

2005
· Number one in JD Power SSI for the second consecutive year.
· Number one in JD Power CSI for the sixth time in a row - the
only
car to win it so many times.
· M800, WagonR and Swift topped their segments in the TNS Total
Customer Satisfaction Study Leadership in the JD Power Initial
Quality Study - Alto number one in its segment for the 2nd time in
a row, Esteem number one in its segment for the 3rd year in a
row, Swift number one in the premium compact segment.
· WagonR and Esteem top their segments in the JD Power APEAL
study.

· TNS ranks Maruti 4th in the Corporate Reputation Strength

(CSR)study (#1 in Auto sector)-Feb 05.

· Maruti bagged the "Manufacturer of the year" award from

Autocar-CNBC (2nd time in a row)-Feb 05.

· First Indian car manufacturer to reach 5 million vehicles sales.

· Business World ranks Maruti among top five most respected

companies in India-Oct 04.

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· Maruti ranked among top ten (Rank7) greenest companies in
India by Business Today - Sep '04 2004

· Maruti Suzuki was No. 1 in Customer satisfaction, No. 1 in Sales

Satisfaction No.1 in Product Quality (Esteem and Alto) and No. 1in
Product Appeal (Esteem and Wagon R).

· No. 1 in Total Customer Satisfaction (Maruti 800, Zen and Alto).

· Business World ranked us among the country's five most

respected companies.

· Business World ranked us the country's most respected

automobile company.
· Voted Manufacturer of the year by CNBC.

· Voted one of India's Greenest Companies by Business Today-AC

Nielson ORG-MARG.

Structure

Ownership

MUL India's leading automobile manufacturers and the market

leader in the car segment, both in terms of volume of vehicles
sold and revenue earned is a public sector initiative. 18.28% of
the company is owned by the Indian government, and 54.2% by
Suzuki of Japan. The Indian government held an Initial Public
Offering of 25% of the company in June of 2003.

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 Ownership

Govern
others Government
ment
IPO Suzuki

IPO

others
Suzuki

Main divisions(brand equity)

The major services offered are,

Sales of Automobiles

Authorized Service Stations

• Maruti is one of the companies in India which has

unparalleled service network. To ensure the vehicles sold by
them are serviced properly Maruti had 1545 listed
Authorized service stations and 30 Express Service Stations
on 30 highways across India. Service is a major revenue
generator of the company. Most of the service stations are
managed on franchise basis, where Maruti trains the local
staff. Other automobile companies have not been able to
match this benchmark set by Maruti. The Express Service
stations help many stranded vehicles on the highways by
sending across their repair man to the vehicle.
Maruti Insurance

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 • Launched in 2002 Maruti provides vehicle insurance to its
customers with the help of the National Insurance Company,
Bajaj Allianz, New India Assurance and Royal Sundaram. The
service was set up the company with the inception of two
subsidiaries Maruti Insurance Distributors Services Pvt. Ltd
and Maruti Insurance Brokers Pvt. Limited. This service
started as a benefit or value addition to customers and was
able to ramp up easily. By December 2005 they were able to
sell more than two million insurance policies since its
inception.
Maruti Finance

• To promote its bottom line growth, Maruti launched Maruti

Finance in January 2002. Prior to the start of this service
Maruti had started two joint ventures Citicorp Maruti and
Maruti Countrywide with Citi Group and GE Countrywide
respectively to assist its client in securing loan. Maruti tied
up with ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak
Mahindra, Standard Chartered Bank, and Sundaram to start
this venture including its strategic parnters in car finance.
Again the company entered into a strategic partnership with
SBI in March 2003. Since March 2003, Maruti has sold over
12,000 vehicles through SBI-Maruti Finance. SBI-Maruti
Finance is currently available in 166 cities across

Maruti TrueValue

• Maruti True Value is a service offered by Maruti Udyog to its

customers. It is a market place for used Maruti Vehicles. one
can Buy, Sell or Exchange used Maruti Vehicles with the help
of this service in India.

N2N Fleet Management

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 • N2N is the short form of End to End Fleet Management and
provides lease and fleet management solution to corporates.
Its impressive list of clients who have signed up of this
service include Gas Authority of India Ltd, DuPont, Reckitt
Benckiser, Sona Steering, Doordarshan, Singer India,
National Stock Exchange and Transworld. This fleet
management service include end-to-end solutions across the
vehicle's life, which includes Leasing, Maintenance,
Convenience services and Remarketing.

Maruti Driving School

• As part of its corporate social responsibility Maruti Udyog

launched the Maruti Driving School in Delhi. Later the
services were extended to other citites of India as well.
These schools are modelled on international standards,
where learners go through classroom and practical sessions.
Many international practices like road behaviour and
attitudes are also taught in these schools. Before driving
actual vehicles participants are trained on simulators.

Key personnel

Initially R.C.Bhargava, was the managing director of the company

since the inception of the joint venture. Till today he is regarded
as instrumental for the success of Maruti Udyog. Joining in 1982

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he held several key positions in the company before heading the
company as Managing Director. Currently he is on the Board of
Directors. After completing his five year tenure, Mr. Bhargava
later assumed the office of Part-Time Chairman. The Government
nominated Mr. S.S.L.N. Bhaskarudu as the Manging Director on
August 27, 1997. Mr. Bhaskarudu had joined Maruti in 1983 after
spending 21 years in the Public sector undertaking Bharat Heavy
Electricals Limited as General Manager. Later in 1987 he was
promoted as Chief General Manager, 1998 as Director,
Productions and Projects, 1989 Director, Materials and in 1993 as
Joint Managing Director.

Production Milestones

➢ 1st vehicle produced, December 1983

➢ 1,00,000 vehicles produced by August, 1986

➢ 5,00,000 vehicles produced by June, 1990

➢ 10,00,000 vehicles produced by March, 1994

➢ 15,00,000 vehicles produced by April, 1996

➢ 20,00,000 vehicles produced by October, 1997

➢ 25,00,000 vehicles produced by March, 1999

➢ 30,00,000 vehicles produced by June, 2000

➢ 35,00,000 vehicles produced by December 2001

➢ 40,00,000 vehicles produced by April, 2003

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➢ 45,00,000 vehicles produced by April, 2007-2008

OTHER PRODUCTS OF MARUTI SUZUKI

Maruti
• Maruti 800 STD BS III
• Maruti 800 AC BS III

Omni
• 5 seater Maruti Omni
• 8 seater Maruti Omni
• LPG Maruti Omni

Maruti Alto
• Alto
• Alto Lx
• Alto Lxi

Maruti Zen
• Maruti Zen Lx
• Maruti Zen Lxi
• Maruti Zen Vxi

Wagon R
• WagonR Lx
• WagonR Lxi
• WagonR Vxi
• WagonR Ax

Versa
• 5 seater
• 8 seater ( DX & DX2)

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Maruti Esteem
• Maruti Esteem Lx
• Maruti Esteem Lxi
• Maruti Esteem Vxi

Baleno
• Baleno Sedan VXi
• Baleno Sedan Lxi

Brands and models

Till recently whenever we think of Maruthi we think of it as 800
due to the huge sales it achieved. It was like a symbol of luxury
for the middle class. Nowsituations are changing and people are
looking at Maruthi stable for the wide range of products they are
offering. The various models and brands that are sold by Maruthi
in the order of their launch are,

• Maruti 800: Launched 1983. India’s largest selling car till

2004.

• Maruti Omni: Launched 1984.

• Maruti Gypsy: Launched 1985.

• Maruti 1000: Launched 1990

• Maruti Zen: Launched 1993.Modified 2003.Production to be

halted 2006New generation Zen (First generation MR Wagon in
Japan) to be introduced 2006

• Maruti Esteem: Launched 1994

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• Maruti Wagon- R: Launched 1999 Modified 2006

• Maruti Baleno : Launched 1999

• Maruti Alto: Launched 2000. Currently the largest selling car

in India

• Maruti Grand Vitara: Launched 2003

• Maruti Grand Vitara XL-7

• Maruti Versa: Launched 2004

• Maruti Swift: Launched 2005

BRAND PORTFOLIO OF THE COMPANY

YEAR
CLASS BRAND NAME SLOGAN
INTRODUCED

Change your life

Maruti 800 1983

Let's go
Maruti Alto 2000

Shape your world

City Car Maruti Zen Estilo 2005

Suzuki Alto (A- Stop @ nothing

2008
star)

Upcoming
Suzuki Splash model in 2009

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 For the smarter
Maruti Wagon-R 1999
Super race
mini Car Maruti Suzuki
2005 You're the fuel
Swift

Maruti Suzuki SX4 2007 Men are back

Compact
Car
Maruti DZiRE 2008 The heart car

Suzuki Grand Play it your way

2007
Sports Vitara
Utility
Vehicle King
Maruti Gypsy 1985

Maruti Omni 1984 Fits all

Microvan
The joy of
Maruti Versa 2003
travelling together

BRAND HIERARCHY OF THE COMPANY

25
Bundle of competencies

Technology

Maruthi always introduces the best technology into its product

line, in addition to all its features which are almost standard in
most cars. They introduced 16* 4 Hypertech engines across the
entire Maruti Suzuki range. These are 4 valve engines powered by
16 bit chip. This gives an ideal combination of power and
performance. They also introduced electronic power steering
system (EPS) which gives better maneuverability. Their latest
introduction Swift has all the technology like surround protection
(SSP). This includes ABS, dual front airbags, collapsible steering
column, crashworthy structure etc. They also has additional
features like brake force distribution, key less entry system. The
six microprocessors are connected in a high speed canbus. This
controls engine, EBS, EPS, Auto AC, Security and dead lock and
air bag. Automatic climate control, rally based suspension system
and above all the dynamic design is what the latest entrant offers
its customers. Maruti also uses latest in IT for its operations. It
uses the oracle based packages for CRM and employee feed back.
Maruti also uses oracles ERP packages for its operations. ATFCAN
and Maruti are collaborating on Canadian CNG conversion
technology.

Design and development

Maruti Suzuki is outsourcing its design and development activities
to India. They are looking towards India as their design hub.
Among the company's product development challenges, the need

26
for shorter cycle times is always at the top. Management wants to
be able to launch new models faster and reduce the time required
for minor changes and development of product variants. Another
challenge is co-development. Maruti's goal is to collaborate
closely with its global teams and suppliers on the development of
new platforms and product freshening. Other challenges include
streamlining the process of vehicle localization and enhancing
quality and reliability.

These challenges pointed directly to a product lifecycle

management (PLM) solution with capabilities for information
management, process management, knowledge capture and
support for global collaboration; a PLM solution directly
addressing Maruti's business challenges. For example, PLM's
information management capabilities address the issue of the
many platforms, local variants and export destinations. Process
management permits concurrent development and faster change
management and provides a platform for other process
improvements - for faster vehicle development. Knowledge
capture increases innovation and also reduces costs by increasing
part re-use. PLM's collaboration capabilities permit global
development by ensuring fast and accurate dissemination of
product information. For this Maruti uses one of the leading PLM
software package by UGS.

At Maruti, styling is a cross-discipline function that requires

designers, engineers and model makers to pool their resources in
a multitude of activities that have to be performed in order to
transform creative ideas into finished products. These styling-
related activities include storyboarding, conceptualizing,

27
rendering, tape drawing, model making, feasibility analysis, CAD
data generation and Class-A surfacing. In addition, Maruti designs
new accessories and adds value to its products’ interiors and
exteriors

by designing/developing fabrics, colors and graphics. Some of the

most recent examples of Maruti styling are seen in change
programs for the Zen, Wagon R and Esteem product lines. Other
Maruti styling efforts are in various stages of development. Maruti
used to employ a variety of software for its styling programs,
including SCAD (Suzuki CAD), Alias, Unigraphics and Catia.
However, today Maruti’s styling and engineering functions are
doing almost all their work in UGS’ NX solutions.

Manufacturing

Markets

Maruti has a strong domestic market presence in India. It has a

market share of 47% in the domestic market. The current market
share of Indian car industry is given below, Maruti Exports Limited
is the subsidary of Maruti Udyog Limited with its major focus on
exports and it does not operate in the domestic Indian market.
The first commercial consignments of 480 cars were sent to
Hungary. By sending a consignment of 571 cars to the same
country Maruti crossed the benchmark of 3, 00,000 cars. Since its
inception export was one of the aspects government was keen to

28
encourage. Angola, Benin, Djibouti, Ethiopia, Europe, Kenya,
Morocco, Sri Lanka, Uganda, Chile, Costa Rica and El Salvador are
some of the markets served by Maruti Exports.

23%
MUL
46%
Hyundai
Tata
17% Others
14%

Maruti also has markets in other countries depending on export

demand. Suzuki is selling cars similar to Maruti in Pakistan and
South Asian countries. They have a major non European market
which grew 78% in 05- 06. Loss of sales in Europe is due to
stoppage of Alto which accounted for 80% of their exports and
introduction of Swift. Algeria has emerged as Maruti's largest
overseas market with sales growing from a few hundred in FY02
to over 6,500 (FY06). The company says it may cross 9,800 this
year.

Maruti is quite bullish on markets like, Chile, Morocco, Egypt and

Sudan apart from the neighbouring countries. The auto major
expects its exports to Chile and Morocco to go above 5,900 and
2,300, respectively, this year. Its volumes from there have moved
from under 700 in FY02 to 3,115 (FY06) and exports to Sudan was
nil two years back. "In Egypt, our numbers are estimated to grow

29
to over 2,000 and 2,700 this year," according to Mr Khattar. In
FY07 it was under 200 few years back.

Meanwhile, Maruti is also reporting a high on current year exports

to the neighboring countries is on a high too. The company
expects to export 9,200 units to Sri Lanka this year, a growth of
over 50%, 1,200 units to Nepal, over 1,175 to Bhutan and 700 to
Bangladesh. Maruti, which saw exports dip by 29% last fiscal, also
plans to launch a new export model during '08-09 , which will
target the European market. The company targets to export 1,
00,000 units of the model annually.

Overall passenger car market registered 24.86% growth

Sales of compact cars jumped by 31.2%

Mid-size car segment grew slower at 14.7%.

The Government's small car policy seems to be yielding results,

with the share of compact cars increasing to 68.25 per cent in the
April-July 2006 period compared with 64.9 per cent in the same
period last year.

Not surprisingly, compact cars emerged as the main driver of

passenger car growth in the period. While the overall passenger
car market increased by 24.86 per cent to 3,24,671 units, sales of
compact cars jumped by 31.2 per cent to 2,21,598 units in the
April-July 2006 period. In fact, all the three major carmakers
(Maruti Udyog, Hyundai Motor, and Tata Motors) saw a sizeable
jump in their compact car sales in the period.

30
Customer segmentation and value proposition

Segmentation

Under Rs. 3 • Maruti 800, Alto, Omni

Lakhs • Reva

• Ambassador
• Fiat Palio
• Hyundai Santro, Getz
• Chevrolet Opel Corsa
Rs. 3-5 Lakhs • Maruti Zen, Wagon R, Versa, Esteem,
Gypsy
• Ford Icon & Fiesta
• Tata Indica, Indigo
• Mahindra Bolero
• Chevrolet Swing, Optra, Tavera
• Hyundai Accent, Elantra
• Mahindra Scorpio
Rs. 5-10 • Maruti Baleno
Lakhs • Toyota Corolla, Innova
• Tata Safari
• Mitsubishi Lancer, Lancer Cedia
• Honda City
• Ford Mondeo & Endeavour
Rs. 10-15 • Chevrolet Forester
Lakhs • Skoda Octavia Classic & Combi
• Honda Civic & CR-V

31
 • Maruti Suzuki Grand Vitara
• Hyundai Sonata Embera, Terracan &
Tucson
Rs. 15-30 • Mitsubishi Pajero
Lakh • Audi A4
• Opel Vectra
• Honda Accord
• Mercedes C Class
• Toyota Camry
• Audi A6, A8 & TT
• BMW X5, 5 Series & 7 Series
Rs. 30-90 • Mercedes E Class, S Class, SLK, SL & CLS-
Lakhs Class
• Porsche Boxster, Cayenne, 911 Carrera &
Cayman S
• Toyota Prado
• Bentley Arnage, Continental GT & Flying
Above Rs. 1 Spur
Crore • Rolls Royce Phantom
• Maybach

Targeting

Maruti was introduced targeting the middle class. Maruti’s

positioning was as a value for customer product. Its target
segments are well depicted in its Product Pyramid profit model. In
product pyramid model the distinct customer segments were
identified and targeted based on a variety of factors. These
factors among many include, style, color, price preference,
features etc.

32
The base of the pyramid is occupied by low price, high volume
products like 800 where margins are slim. The apex of the
pyramid is occupied by high priced, low volume products like
Baleno. Although profits were concentrated near the top, base
played a crucial role as it acted as a barrier to entry for the
competitors and also insulated the profitable area near the top.

Partnerships

Pressure started mounting on Indira Gandhi and Sanjay Gandhi to

share the details of the progress on the Maruti Project after its
kickoff. Since country's resources were made available by mother
to her son's pet project. A delegation of Indian technocrats was
assigned to hunt a collaborator for the project. Initial rounds of
discussion were held with the giants of the automobile industry in
Japan including Toyota, Nissan and Honda. Suzuki Motor
Corporation was at that time a small player in the four wheeler
automobile sector and had major share in the two wheeler
segment. Suzuki's bid was considered negligible.

In in the initial rounds of discussion the giants had their bosses

present and in the later rounds related to the technical
discussions executives of these automobile giants were present.
Osamu Suzuki, Chairman and CEO of the company ensured that
he was present in all the rounds of discussion. Osamu in an article
writes that it subtly massaged their (Indian delegation) egos and
also convinced them about the sincerity of Suzuki's bid. In the
initial days Suzuki took all steps to ensure the government about
its sincerity on the project. Suzuki in return received a lot of help
from the government in such matters as import clearances for
manufacturing equipment (against the wishes of the Indian
machine tool industry then and its own socialistic ideology), land

33
purchase at government prices for setting up the factory Gurgaon
and reduced or removal of excise tariffs. This helped Suzuki
conscientiously nurse Maruti through its infancy to become one of
its flagship ventures.

Relationship between the Government of India, under the United

Front (India) coalition and Suzuki Motor Corporation over the joint
venture was a point of heated debate in the Indian media till
Suzuki Motor Corporation gained the controlling stake. This highly
profitable joint venture that had a near monopolistic trade in the
Indian automobile market and the nature of the partnership built
up till then was the reason for all the issues. The success of the
joint venture led Suzuki to increase its equity from 26% to 40% in
1987 and further to 50% in 1992. In 1982 both the venture
partners had entered into an agreement to nominate their
candidate for the post of Managing Director and every Managing
Director will have tenure of five years.

PRODUCT LINE

• Maruti 800-change your life-Around Rs.2lacs

• ALTO-Let’s Go-Rs.23000-Rs.290000
• Omni-Fits All-Rs. 235000-248000
• Zen- look at it-Rs.320000-385000
• WagonR- for the smarter race-Rs.340000-460000
• Versa-the joy of traveling together-Rs.360000-460000
• Swift-you’re the fuel-Rs.405000-508000
• Esteem-welcome to the big world-Rs. 450000-510000
• Gypsy King-Rs.550000-528000
• Baleno-Owner’s choice-Rs.570000-652000
• Suzuki’s Grand Vitara-SUV- Rs.16-18lacs

DEALER AND SUPPLIER NETWORK

34
Mul’s Supply Chain
MUL’s inputs primarily comprise raw materials and purchased
components. Only a small amount of raw material and
components consumed are imported and a much larger portion is
purchased from the sources within India.
Raw Material Suppliers
The raw materials used in the manufacturing process primarily
comprise steel coils and paints. In recent years, MUL is
increasingly trying to localize the purchases of steel coils with a
view to reduce cost. Earlier MUL used to follow the tender system
for the purchase of steel. Under this system, specifications were
advertised and accept the lowest price offered by a supplier who
could meet the specifications. In 2001 MUL moved to the
quotation system which gives them the flexibility to renegotiate
the prices once an offer is submitted. Standard purchase
orders are issued covering a period of six months for purchase of
steel from foreign suppliers for Indian supplier the period extends
up to one year. ……
At MUL the role of the vendors has gradually evolved from tactical
to strategically where the vendors work in close coordination with
MUL to meet our long-term goals in terms of:
• component development;
• quality;
• delivery; and
• Cost control.
In order to improve quality and generate economies of scale, MUL
has reduced the number of vendors of components in India from
370 as of March 31, 2000 to about 100 as in 2005. In case of
repair and replacements, costs of defective components supplied
are borne by the vendor.24
Delivery by Vendors
MUL has a delivery instruction system that provides details of the
component requirements for every 15 days, across the different
variants of the various models, to the vendors. Vendors are linked
to the MUL through the Internet-based information network, which

35
maintains online information regarding order status and delivery
instructions. These has helped in reducing both inventory levels
and lead times required for the supply of various components and
sub-assemblies, and enable the vendors to more efficiently plan
and dispatch their products. Vendors located within a radius of
100 kilometers from the manufacturing facility supply the
majority of the components. This has enabled the vendors to
eliminate packaging and supply components directly to the
assembly line.
Reduction of Vendor Costs
In some of the major vendors MUL has implemented the MPS,
which focuses on the elimination of wasteful activities in their
manufacturing processes. Vendors are helped in areas such as
improving their productivity, reducing the number of their
components that are rejected, reducing materials handling,
improving their yield from materials, and reducing their
inventories. This helps reduce their costs of production, and also
reduces the costs of the components required. In addition the
work is going on to integrate the vendors into the worldwide
purchase system, or WWP, whereby a vendor may become the
sole supplier for a Suzuki product in several countries including
India. This would generate economies of scale for the vendor that
will also result in the reduction of the costs.

Vendor Quality Control

Quality management system such as ISO 9000/ QS 9000 forms
the basis for producing a quality product. To assist small and
medium vendors in achieving ISO 9000 certification, in 1995 MUL
adopted a cluster approach wherein vendors are grouped
together, are trained in quality management and are assisted in
obtaining ISO 9000 certification. This cluster approach was
extended to helping vendors attain QS 9000 certification. Periodic
vendor quality system audits are conduct in order to ensure that
quality standards are sustained.
Imported components

36
Imported components are mainly purchase from Suzuki
Sales network
Dealers: MUL has the largest network of dealers amongst car
manufacturers in India. As of March 31, 2003, dealers had
employed more than 3,500 sales executives. Sales network is
linked with the MUL through the secure extranet-based
information network. The sales of spares, accessories and
Automobile-related services such as insurance and finance serve
as additional sources of revenue for the dealers. The availability
of these related products and services at sales outlets also helps
to attract customers to the outlets and promotes sales of the
cars.

Agreements with our dealers MUL dealers provide services to

customers such as pre-delivery inspection of vehicles, sales of
cars, after sales service, supply of spare parts and other services
that promote sales of cars within the territory for which they are
appointed. Dealers are required to maintain their outlets in
accordance with the specifications and employ well-trained sales
staff. Agreements with the dealers are usually of five years. These
agreements are generally renewable for successive terms of
three years, by mutual agreement.

Enhancing dealer performance: The performance of the

dealers is followed and improvements are suggested frequently.
In order to assist the dealers in enhancing their performance and
capabilities, MUL has introduced a concept of “Balanced
Scorecard”. Using this tool, the performance of a dealership in
several areas of operations, including sales, service, spares
and accessories, financial management and management
systems is measured. Dealers who perform well on the “Balanced
Scorecard” are reward with a cash payment at the end of the
fiscal year. The “Balanced Scorecard” serves as an effective
incentive for dealers to enhance their performance.

37
After-sales Service Network

There are more than 400 Maruti dealer workshops and more than
1,500 Maruti Authorized Service Stations, or MASSs, covering
more than 900 cities in India. In addition, 24-hour mobile service
is also offered under thebrand “Maruti On-road Service”. As a
benchmark for dealers with respect to service quality and
infrastructure facilities, MUL has launched service stations under
the brand “Maruti Service Masters, or MSMs. MUL also has service
stations on highways in India under the brand “Express Service
Stations”. To promote sales of spare parts
and the availability of high quality, reliable spare parts for its
products, spares are sold under the brand name “Maruti Genuine
Parts”, or MGP. These are distributed through the dealer network
and through the authorized sellers of the spare parts. Many of the
MASSs are at remote locations where MUL do not have dealers. In
order to increase the penetration, in terms of sales volumes, of its
products in these remote areas, some of the MASSs are integrate
into the sales process in order to increase sales of the cars and
related products and services such as spares and accessories,
insurance and financing

distrubution

Manufacturing and distribution of cars is a process of creation and

delivery of superior quality of vehicles to its customers at an
affordable price. The very nature of the business demands high
degree of collaboration and coordination. The success of car
manufacturing business depends not only on the effective
management of its production processes, but also intelligent
management of supply, distribution and service chains. Maruti
has been very efficient in managing the supply, distribution and
servicing chains. Maruti's dealer network is the largest for tiny car
manufacturer in India. Over the years Maruti has build a very
strong dealership and service network consisting of 260

38
showrooms and 277 dealer workshops, besides 1329 Maruti
Authorized Service Stations covering 656 cities. Maruti's vehicles
are now available in Australia, Europe and America.
Maruti has a very strong supplier network. It has established
chain of dedicated suppliers near to its production base, which
gives them unique cost and delivery time advantages. Maruti has
implemented "Just in Time" (JIT) supply for some of its major
suppliers, Maruti's large production capacity offers scale
economics in procurement, production and distribution. The high
volume of production has provided Maruti unique bargaining
power over its suppliers. Finally, Maruti has trained and skilled
workforce for rapid improvement in quality and enjoys supplier's
credibility in the industry. It has earned the reputation of
delivering quality vehicles, services and value for money.
A) TURNAROUND STRATEGIES MARUTI FOLLOWED

Maruti was the undisputed leader in the automobile utility-car segment sector,
controlling about 84% of the market till 1998. With increasing competition from
local players like Telco, Hindustan Motors, Mahindra & Mahindra and foreign
players like Daewoo, PAL, Toyota, Ford, Mitsubishi, GM, the whole auto industry
structure in India has changed in the last seven years and resulted in the declining
profits and market share for Maruti. At the same time the Indian government
permitted foreign car producers to invest in the automobile sector and hold
majority stakes.

In the wake of its diminishing profits and loss of market share, Maruti initiated
strategic responses to cope with India’s liberalization process and began to
redesign itself to face competition in the Indian market. Consultancy firms such as
AT Kearney & McKinsey, together with an internationally reputed OD consultant,
Dr. Athreya, have been consulted on modes of strategy and organization
development during the redesign process. The redesign process saw Maruti

39
complete a Rs. 4000 mn expansion project which increased the total production
capacity to over 3,70,000 vehicles per annum. Maruti executed a plan to launch
new models for different segments of the market. In its redesign plan, Maruti,
launches a new model every year, reduce production costs by achieving 85-90%
indigenization for new models, revamp marketing by increasing the dealer network
from 150 to 300 and focus on bulk institutional sales, bring down number of
vendors and introduce competitive bidding. Together with the redesign plan, there
has been a shift in business focus of Maruti. When Maruti commanded the largest
market share, business focus was to “sell what we produce”. The earlier focus of
the whole organization was "production, production and production" but now the
focus has shifted to "marketing and customer focus". This can be observed from
the changes in mission statement of the organization:

1984: "Fuel efficient vehicle with latest technology".

1987: "Leader in domestic market and be among global players in the overseas
market".

1997: "Creating customer delight and shareholders wealth".

Focus on customer care has become a key element for Maruti. Increasing Maruti
service stations with the scope of one Maruti service station every 25 km on a
highway. To increase its market share, Maruti launched new car models,
concentrated on marketing and institutional sales. Institutional sales, which
currently contributes to 7-8% of Maruti’s total sales. Cost reduction and
increasing operating efficiency were another redesign variable. Cost reduction is
being achieved by reaching an indigenization level of 85-90 percent for all the
models. This would save foreign currency and also stabilize prices that fluctuate
with exchange rates. However, change in the mindset was not as fast as required by
the market. Maruti planned to reduce costs, increase productivity, quality and

40
upgrade its technology (Euro I&II, MPFI). In addition, it followed a high volume
production of about 400,000 vehicles / year, which entailed a smooth relationship
between the workers and the managers.

Post 1999, the market structure changed drastically. Just before this change,
Maruti had wasted two crucial years (1996-1998) due to governmental
interventions and negotiation with Suzuki of Japan about the break-up of the share
holding pattern of the company. There was a change in leadership, Mr. Sato of
Suzuki became the Chairman in June 1998, and the new Mr.J. Khatter was
appointed as the new Joint MD. Khatter was a believer in consensus decision
making and participative style of management.As a result of the internal turmoil
and the changes in the external environment, Maruti faced a depleting market
share, reducing profits, and increase in inventory levels, which it had not faced in
the last 18 years.

After their fall in market share they redesigned their strategies and through their
parent company Suzuki they learned a lot.The organizational learning of Maruti
was moderately successful, the cost was relatively inexpensive as Maruti had its
strong Japanese practices to fall back upon. With the program of organizational
redesign, rationalization of cost and enhanced productivity, Maruti bounced back
to competition with 50.8% market share and 40% rise in profit for the FY2002-
2003 Current strategies of maruti suziki

I. PRICING STRATEGY - CATERING TO ALL SEGMENTS

Maruti caters to all segment and has a product offering at all price
points. It has a car priced at Rs.1,87,000.00 which is the lowest
offer on road. Maruti gets 70% business from repeat buyers who
earlier had owned a Maruti car. Their pricing strategy is to provide

41
an option to every customer looking for up gradation in his car.
Their sole motive of having so many product offering is to be in
the consideration set of every passenger car customer in India.
Here is how every price point is covered.

Sl.N BRAND VARIANTS PRICE IN DELHI (Rs.)

o.
1 GRAND VITARA XL7 16,97,000.00
2 MARUTI BALENO Lxi 5,72,000.00

Vxi 6,42,000.00
3 MARUTI ESTEEM LX 4,66,000.00

VX 5,39,000.00
4 MARUTI VERSA DX 4,19,000.00
DX2 4,58,000.00
5 MARUTI SWIFT Lxi 3,95,000.00

Vxi 4,05,000.00
Zxi 4,85,000.00
6 MARUTI WAGON- LX 3,35,000.00
R

42
 Lxi 3,62,000.00
AX 4,63,000.00
Vxi 3,87,000.00
VXi ABS 4,20,000.00
7 MARUTI GYPSY ST 5,06,000.00

HT 5,29,000.00
8 MARUTI ZEN D 3,58,000.00

LX 3,41,000.00
Lxi 3,68,000.00
Vxi 3,93,000.00
9 MARUTI OMNI CARGO 2,05,000.00

CARGO LPG 1,83,000.00

5 SEATER 2,27,000.00
8 SEATER 2,21,000.00
XL 5 SEATER 2,19,000.00
XL 8 SEATER 2,31,000.00
10 MARUTI ALTO STANDARD 2,38,000.00

43
 MARUTI ALTO LX 2,74,000.00
Lxi 2,94,000.00
11 MARUTI 800 STD. MPFI 2,14,000.00
A/C MPFI 2,37,000.00

Sundaram to bring this service for its customers. From identifying the most
suitable car coverage to virtually hassle-free claim assistance it's your dealer who
takes care of everything. Maruti Insurance is a hassle-free way for customers to
have their cars repaired and claims processed at any Maruti dealer workshop in
India.
True Value – Initiative to capture used car market
Another significant development is MUL's entry into the used car
market in 2001, allowing customers to bring their vehicle to a
'Maruti True Value' outlet and exchange it for a new car, by
paying the difference. They are offered loyalty discounts in
return.This helps them retain the customer. With Maruti True
Value customer has a trusted name to entrust in a highly
unorganized market and where cheating is rampant and the
biggest concern in biggest driver of sale is trust. Maruti knows its
strength in Indian market and has filled this gap of providing trust
in Indian used car market. Maruti has created a system where
dealers pick up used cars, recondition them, give them a fresh
warranty, and sell them again. All investments for True Value are
made by dealers. Maruti has build up a strong network of 172
showrooms across the nation. The used car market has a huge
potential in India. The used car market in developed markets was
2-3 times as large as the new car market.
III. REPOSITIONING OF MARUTI PRODUCTS

44
Whenever a brand has grown old or its sales start dipping Maruti
makes some facelifts in the models. Other changes have been
made from time to time based on market responses or consumer
feedbacks or the competitor moves. Here are the certain changes
observed in different models of Maruti.

Omni has been given a major facelift in terms of interiors and

exteriors two months back. A new variant called Omni Cargo,
which has been positioned as a vehicle for transporting cargo and
meant for small traders. It has received a very good response
from market. A variant with LPG is receiving a very good response
from customers who look for low cost of running.

Versa prices have been slashed and right now the lowest variant
starts at 3.3 lacs. They decreased the engine power from 1600cc
to 1300cc and modified it again considering consumers
perception. This was a result of intensive survey done all across
the nation regarding the consumer perception of Versa.

Esteem has gone through three facelifts. A new look last year
has helped boost up the waning sales of Esteem.

Baleno was launched in 1999 at 7.2 lacs. In 2002 they slashed

prices to 6.4 lacs. In 2003 they launched a lower variant as
Baleno LXi at 5.46 lacs. This was to reduce the price and attract
customers.

Wagon-R was perceived as dull boxy car when it was launched.

This made it a big failure on launch. Then further modifications in
engine to increase performance and a facelift in the form of

45
sporty looking grills on the roof. Now it’s of the most successful
models in Maruti stable.

Zen has been modified four times till date. They had come up
with a limited period variant called Zen Classic. That was limited
period offer to boost short term sales.

Maruti 800 has so far been facelifted two times. Once it came
with MPFi technology and other time it came up with changes in
front grill, head light, rear lights and with round curves all around.

IV. CUSTOMER CENTRIC APPROACH

Maruti’s customer centricity is very much exemplified by the five
times consecutive wins at J D Power CSI Awards. Focus on
customer satisfaction is what Maruti lives with. Maruti has
successfully shed off the public- sector laid back attitude image
and has inculcated the customer-friendly approach in its
organization culture. The customer centric attitude is imbibed in
its employees. Maruti dealers and employees are answerable to
even a single customer complain. There are instances of
cancellation of dealerships based on customer feedback.
Maruti has taken a number of initiatives to serve customer well.
They have even changed their showroom layout so that customer
has to walk minimum in the showroom and there are norms for
service times and delivery of vehicles. The Dealer Sales
Executive, who is the first interaction medium with the Maruti
customer when the customer walks in Maruti showroom, is
trained on greeting etiquettes. Maruti has proper customer
complain handling cell under the CRM department. The Maruti call
center is another effort which brings Maruti closer to its customer.
Their Market Research department remains on its toes to study

46
the changing consumer behaviour and market needs.Maruti
enjoys seventy percent repeat buyers which further bolsters their
claim of being customer friendly. Maruti is investing a lot of
money and effort in building customer loyalty programmes.
V. COMMITTED TO MOTORIZING INDIA

Maruti is committed to motorizing India. Maruti is right now

working towards making things simple for Indian consumers to
upgrade from two-wheelers to the car. Towards this end, Maruti
partnerships with State Bank of India and its Associate Banks took
organized finance to small towns to enable people to buy Maruti
cars. Rs. 2599 scheme was one of the outcomes of this effort.
Maruti expects the compact cars, which currently constitute
around 80% of the market, to be the engine of growth in the
future. Robust economic growth, favorable regulatory framework,
affordable finance and improvements in infrastructure favor
growth of the passenger vehicles segment. The low penetration
levels at 7 per thousand and rising income levels will augur well
for the auto industry.
Maruti is busy fine-tuning another innovation. While researching
they found that rural people had strange notions about a car -
that the EMI (equated monthly instalments) would range between
Rs 4,000 and Rs 5,000. That, plus another Rs 1,500-2,000 for
monthly maintenance, another Rs 1,000 for fuel (would be the
cost of using the car). To counter that apprehension, the company
is working on a novel idea. Control over the fuel bill is in the
consumer's hands. But, maintenance need not be. Says Khattar:
"What the company is doing now is saying how much you spend
on fuel is in your hands anyway. As far as the maintenance cost is

47
concerned, if you want it that way, we will charge a little extra in
the EMI and offer free maintenance."
VI. DISINVESTMENT AND IPO OF MARUTI UDYOG LIMITED

It was a long and tough journey, but a rewarding one at the end.
A reward worth Rs 2,424 crore, making it the biggest privatization
in India till date. The size of Maruti’s sell- off deal is proof of its
success. On the investment of Rs 66 crore it made in 1982, when
Maruti Udyog Limited (MUL) was formally set up, the sale
represents a staggering return of 35 times The best part of the
deal is the Rs 1,000 crore control premium the Government has
been able to extract from Suzuki Motor Corporation for
relinquishing its hold over India’s largest car company. Now
looking at the strategy point of it – for Suzuki, of course, complete
control of MUL means a lot. Maruti is its most profitable and the
largest car company outside Japan. Suzuki will now be in the
driver’s seat and will not have to mind the whims and fancies of
ministers and bureaucrats. “Decisions will now become quicker.
The response to changing market conditions and technological
needs will be faster,” says Jagdish Khattar, managing director,
MUL. After the disinvestment Suzuki became the decision maker
at MUL. They flowed fund in India for the major revamp in MUL.
Quoting from the report that appeared in The Economic Times, 4th
April 2005, -

The Indian car giant Maruti Udyog Limited has finalized its two
mega investment plans — a new car plant and an engine and
transmission manufacturing plant. Both the projects will be
implemented by two different companies. At its meeting the
company's board approved a total investment of Rs3,271.9 crore
for these two ventures, which will be located in Haryana.

48
The above signifies when GOI was a major stakeholder in the MUL
strategies which lead to investment have had a bureaucracy
factor in it but after the disinvestment strategy followed is a TOP
DOWN approach with a fast implementation.

Suzuki's proposed two-wheeler facility in India, would start

making motorcycles and scooters by the end of 2005 through a
joint venture, in which Maruti has 51 per cent stake. The two-
wheeler unit will have a capacity of 250,000 units a year.

The disinvestment followed by IPO gives the insight in the fact

that now all the strategic decisions are taken by Maruti Suzuki
Corporation. Disinvestment had helped by removing the red tape
and bureaucracy factor from its strategic decision making
process.

VII. REALISATION OF IMPORTANCE OF VEHICLE

MAINTENANCE SERVICES MARKET

In the old days, the company's operations could be boiled down to

a simple three-box flowchart. Components came from the
'vendors' to the 'factory' where they were assembled and then
sent out to the 'dealers'. In this scheme, you know where the
company's revenues come from. The new scheme is more
complicated. It revolves around the total lifetime value of a car.

Work on this began in 1999, when a MUL team, wondering about

new revenue streams, traveled across the world. Says R.S. Kalsi,
general manager (new business), MUL: "While car companies

49
were moving from products to services, trying to capture more of
the total lifetime value of a car, MUL was just making and selling
cars." If a buyer spends Rs 100 on a car during its entire life, one-
third of that is spent on its purchase. Another third went into fuel.
And the final third went into maintenance. Earlier, Maruti was
getting only the first one-third of the overall stream. As the Indian
market matured, customers began to change cars faster. Says
Kalsi: "So the question was, if a car is going to see three users in,
say, a life span of 10 years, how can I make sure that it comes
back to me each time it changes hands ? So Maruti has changed
gears to take a big share of this final one-third spent on
maintenance. Maintenance market has a huge market potential.
Even after having fifty lakh vehicles on road Maruti is only
catering to approximately 20000 vehicles through its service
stations everyday.

For this they are conducting free service workshops to encourage

consumers to come to their service stations. Maruti has increased
its authorized service stations to 1567 across 1036 cities. Every
regional office is having a separate services and maintenance
department which look after the growth of this revenue stream.

VIII. PLAYING ON COST LEADERSHIP

50
Maruti is the price dictator in Indian automobile industry. It’s the
low cost provider of car. The lowest car on road is from Maruti
stable i.e. Maruti 800. Maruti achieves this through continuous
improvements in operational efficiency and productivity.

The company has set itself (and its vendors) the target of a 50%
improvement in productivity and a 30% reduction in costs in three
years. The ability to keep lowering the prices sets Maruti apart
from other players in the league. Maruti spread the overheads
over a larger base.

The impressive sales and profits were the result of major efforts
within the company. Maruti also increased focus on vendor
management. Maruti consolidated its vendor base. This has
provided its vendors with higher volumes and higher efficiencies.
Maruti does that by working with vendors, assuring them that for
every drop in price, volumes will go up. Maruti is now encouraging
its vendors to develop R&D capability for specialized components.
Based upon such activities, product competitiveness in the
market will further increase.

Maruti also made strides in applying IT to manufacturing. A new

Vehicle Tracking System improved efficiency on the shop floor
and enhanced quality control. The e Nagare system, adopted
from Suzuki Motor Corporation, smoothened Maruti’s Just In Time
operations.

C) MAJOR FUTURE STRATEGIES

51
I. PHASING OUT ZEN IN 2007

The launch of Swift and phasing out Zen is a strategic move. Alto
was launched keeping in mind that it will take over Maruti 800
market in future. Perhaps being the flagship product phasing out
of Maruti 800 faced lots of resistance from dealers all over.
Another reason behind not phasing out Maruti 800 was the fear of
brand shift of customers to other competitor’s product. Swift was
launched in May, 2005 in the price band starting from 4 lacs.
Before launch of Swift Maruti management had decided that they
will phase out Zen since it had already came up with two
modifications. The major reason behind this decision was
cannibalization of Wagon R and Swift due to overlapping of price
band. It is a rational decision to kill a product before it starts
facing the decline stage in product cycle. Maruti is offering Rs.
3000.00 more margins to dealer on the sale of Wagon-R as
compared to Zen. This is to let dealer push Wagon R instead of
Zen.

II. MARUTI PLANS FOR A BIG DIESEL FORAY

The new car manufacturing company, called Maruti Suzuki

Automobiles India Limited, will be a joint venture between Maruti
Udyog and Suzuki Motor Corporation holding a 70 per cent and 30
per cent stake respectively. The Rs1,524.2 crore plant will have a
capacity to roll out 1 lakh cars per year with a capacity to scale
up to 2.5 lakh units per annum. The new car manufacturing plant
will begin commercial production by the end of 2006.

Maruti would set up a diesel engine plant at Gurgaon in line with

its plan to become a major player in diesel vehicles in a couple of
years. This has been done in the wake of major competition from

52
Tata Indica and meets the growing demand of diesel cars in India.
While the annual growth in the diesel segment was 13 per cent in
the last three years, it was 19-20 per cent in the first quarter
(April-June) of the current fiscal. Maruti has currently an
insignificant presence in diesel vehicle. It will manufacture new
generation CRDI (common rail direct injection) engines in
collaboration with Fiat-GM Opel and engines will be of 1200
cc. The plant with a capacity to produce one lakh diesel engines
would be operational in 2006. At present, Peugeot of France,
supplies diesel engines for Maruti's Zen and mid-sized Esteem
models. This will further reduce the imported component in Maruti
vehicles, making them more competitive in the Indian market.

III. MARUTI PLANS FOR A NEW ENGINE AND

TRANSMISSION PLANT

The engine and the transmission plant will be owned by Suzuki

Powertrain India Limited in which Suzuki Motor Corporation would
hold 51 per cent stake and Maruti Udyog holding the balance. The
ultimate total plant capacity would be three lakh diesel engines.
However, the initial production would be 1 lakh diesel engines,
20,000 petrol engines and 1.4 lakh transmission assemblies.
Investment in this facility will be Rs.1,747.7 crore. The
commercial production will start by the end of 2006.

IV. INDIA AS EXPORT HUB FOR MARUTI

Three years back as an experiment, based on the increasing

design capabilities of suppliers in countries like India, McKinsey

53
did an exercise to figure out just how much money could be
saved if automobiles were to be made in overseas locations like
India, Mexico and South Africa -- an automobile BPO, so to speak.
The result was staggering: the industry stands to gain $ 150
billion annually in cost savings, and an additional $ 170 billion
annually in new revenues once demand shoots up following the
drop in prices, and the combination of which means a 25 per cent
increase in existing revenue levels.
According to the study, over 90 per cent of automobiles today are
sold in the countries they are made in, so there's a lot of money
to be made by shifting the production overseas. Till recently, just
100,000 cars produced in low-cost countries were exported to
high-cost ones -- presumably this figure is going up now that Altos
from Maruti, Santros from Hyundai, Indicas from Tata Motors, and
Ikons from Ford, among others, are being regularly exported out
of India.
Yet, as McKinsey points out, since it just costs $ 500 and just
three weeks (and both figures are falling) to ship out a car to
anywhere in the world, why produce cars in high-wage islands? If
a car was produced in India instead of in Japan, the study says, it
will cost 22-23 per cent less, after factoring in higher import
duties for components/steel, lower levels of automation, and
transport costs.

In August, 2003 Maruti crossed a milestone of exporting 300,000

vehicles since its first export in 1986. Europe is the largest
destination of Maruti’s exports and coincidentally after the first
commercial shipment of 480 units to Hungary in 1987, the 300,00
mark was crossed by the shipment of 571 units to the same

54
country. The top ten destination of the cumulative exports have
been Netherlands, Italy, Germany, Chile, U.K., Hungary, Nepal,
Greece, France and Poland in that order.

The Alto, which meets the Euro-3 norms, has been very popular in
Europe where a landmark 200,000 vehicle were exported till
March 2003. Even in the highly developed and competitive
markets of Netherlands, UK, Germany, France and Italy Maruti
vehicles have made a mark. Though the main market for the
Maruti vehicles is Europe, where it is selling over 70% of its
exported quantity, it is exporting in over 70 countries.

Maruti has entered some unconventional markets like Angola,

Benin, Djibouti, Ethiopia, Morocco, Uganda, Chile, Costa Rica and
El Salvador. The Middle-East region has also opened up and is
showing good potential for growth. Some markets in this region
where Maruti is, are Saudi Arabia, Kuwait, Bahrain, Qatar and
UAE.

The markets outside of Europe that have large quantities, in the

current year, are Algeria, Saudi Arabia, Srilanka and Bangladesh.

55
Maruti exported more than 51,000 vehicles in 2003-04 which was
59% higher than last year. In the financial year 2003-04 Maruti
exports contributed to more than 10% of total Maruti sales.

V. MARUTI EMERGING AS R&D HUB FOR SUZUKI MOTOR

CORPORATION

Japanese auto major Suzuki is all set to convert Maruti Udyog

Ltd’s research and development (R&D) facility as its Asia hub by
2007 for the design and development of new compact cars,
according to a top official of the firm. The country’s leading car
manufacturer will make substantial investments to upgrade its
research and development centre at Gurgaon in Haryana for
executing design and development projects for Suzuki. This
includes localisation, modernisation and greater use of composite
technologies in upcoming models.

The company will be hiring more software engineers and

technocrats to handle Suzuki’s R&D projects. Investment would
be more in terms of manpower than in infrastructure, which is
already in place. Apart from working on innovative features, the
R&D teams will focus on latest technologies using CAD-CAM tools
to roll out new models that will meet the needs of MUL’s diverse
customers in the future.

The reasons as to why it can be good for R&D is that

➢ Firstly the cost involved in R&D and infrastructure is low in

India as compared to other countries. Also the technical skills are
abundantly available; again at a cheaper cost.

56
➢ Secondly, India is growing as an export hub along with the
Indian market growing aggressively into becoming an attractive
one for investors.
Thirdly, Suzuki’s investment in India, is also important as it has
completely divested now as a result MUL will now become a 100%
subsidiary of Suzuki in the coming year

Advertising of maruti

Impact of Advertising for Product Presentation

• Creates awareness
• Provides Information
• Generates Association with the audience
• Helps in creating an image
• Reaches large audience
• Develops brand preference
• Competitive weapon
Advertising moves consumers being unaware of a product or
service to
finally purchasing it.

Advertising Strategy

• Start advertising 2 weeks before launch

• Advertise on all major media
TV : 10 Sec – Rs. 3,50,000 (Match)
30 sec – Rs. 10 to 12 lakh (Prime Time)
Magazine : Double page - Rs. 4,03,500
Full Page – Rs. 2,02,500
Newspaper : Rs. 75,50,000
Hoardings : Rs. 1,10,000 per month
Radio : 10 sec – Rs. 5,000

57
• Sponsor cricket matches
• Promotion at malls
• Launch around a month before festivals like Diwali or
Navratri

So it was yesterday when I saw this new advertising campaign

or Marketing Campaign of Maruti Suzuki. What followed was a
bit of discussion about the

AdvertisingCommercialamongus. Now, let me first describe the

ad as it went through. It was an Advertising Commercial for the
most successful car brand in India - Maruti Suzuki. It shows a
typical large gathering of a family most probably for a family
function. The main characters are a mom, an infant kid, around 4-
5 months old and some other relatives. The Advertising
Commercial goes as follows: The mom is busy with some work,
and the infant kid is somewhere away from her, so that she can
see her from a distance, but since she is busy with the work, she
is unable to attend to her. The Advertising Commercial starts
with showing the mom busy with work and the baby starts crying.
So, the mom signals another relative (a lady) to attend the kid.
Unfortunately, the kid continues to cry. The lady then passes on
the kid to the kid's father (from the gestures between the kid's
mom and the male person in the ad, it is apparent that he is the
kid's father), but no success. The cycle continues and the kid is
passed on from one person or relative to the other (uncle, aunty,
grandfather, grandma, etc.) They all try all methods including

58
scolding, singing, etc., but the kid doesnt get quite. At last the kid
reaches the mom and there he is happily playing again.
The message for the Advertising Commercial comes up on
screen: Always take your Maruti Car to the
MarutiAuthorizedServiceNetwork.The ad message is clear- Maruti
wants all its customers to utilize the services of its own dealer
and service networks, instead of the customers going to other
brand services or going toa roadsideun-brandedgarage. Now
personally, my first impression after watching this Advertising
Campaign was It is a Good Advertising Commercial.
However, immediately came a reply from other person - kya
bakwas commercial hai?.

Before we get into the details, let's observe some good and bad
points of this AdvertisingCommercialGood:
- The theme chosen is realistic - Indian Family, Function, everyone
is busy, everyone trying a hand to pacify the kid. So the ad does
generate a lot of interest
- The timeline of ad is perfect - Nobody has been focussed for a
longer time. It straightaway gets to the main point - to pacify the
kid
- There is a variety of methods included - someone dancing,
singing, making faces, toys and even scolding - it all looks perfect
- Finally, when the kid reaches the mom, he is happy - everyone
wonders what's happening, and there comes the Advertising
Commercial Punchline conveying themessage. Before we get
into the bad part, Just wanted to mention the reaction of others
who saw the ad with me. We have a 5 months old baby at my
home, and many family members keep him busy and happy, so it

59
was a real life scenario for us. Moreover, mom & dad leave the kid
at home in others care, if they have to go out, and the kid stays
happily - something contrary to what was shown in the
Advertising Commercial. What other members differed were
the following points (&theinferencethatcanbederived):
- Basically, it's a problem of the kid that he is not happy with
other family members. So the kid is at fault - basically meaning
that the car is not easy to get repaired if there are any problems,
hence its a problem with the car itself.
- None of the other family members were able to control the kid -
It is true that all family members cannot repair (or even drive a
car), but what has that to do with
goingtotheauthorizedservicenetwork? - Maruti is known for having
the biggest network of service stations across the country for car
repair and services. But shouldn't it be easy to fix the problems of
the car by not any Tom, Dick & Harry from a road side garage,
but atleast by some known, reliable garages (like the
relatives)Overall, this advertisement campaign appears to be
good to me (personal thoughts), but as pointed above, it may be
taken in a completely different way by someone else. Remember,
our is a country that gives a very high regard to family relations -
so anything can be interpreted in any way.

HR DEPARTMENT

60
Lead and Facilitate continuous change towards
organizationalexcellence ; create a learning and vibrant
organization with highsense of pride amongst itmembers.
HR INITIATIVES
• Prepare MUL Strategic Business Plan-2000-2003; To achievethe
Vision & Goal
• Improve the performance Appraisal system - it’s process, skill&
usage
• Introduce a Potential Appraisal System
• Improvements in internal & external Training & it’s
effectiveutilization.

Training need identification

• Systematic career planning ; Job Rotation ; Empowerment;Job

enrichment
• Periodic communication meeting at various level; Roll out
ofVision
• Raise cost consciousness for cost control and reduction
• Exposure on Brand Strategy to all non- marketing staff
• Retention of Talent

CULTURE BUILDING INITIATIVES SINCE INCEPTION

Japanese Management philosophy of Team Spirit
• Common uniform
• Open office
• Common Canteen
• Open Office – Easy accessibility, Speedy
• Communication and decision making
• Morning Meetings
• Morning Exercises

FOCUS OF EFFECTIVE MANAGEMENT PROCESS

SINCEINCEPTION
• Management Committee Meetings – every Tuesday

61
• ·Single unaffiliated Union
• Excellent Industrial Relation scenario
• No loss of monday due to strike/lockout etc. in past 5 yrs.
• Maruti Udyog Sahyog Samiti – a forum for non unionizedstaff.
• Declared organization structure Workers (Technical /Assistant.),
Supervisors, Executives, Managers
• Top Driven HR – MD is also Director HR
• HR’s role of a facilitator
• Line managers as HR Managers
• Year of the Customer –
• HR Internal Customer Focus
• Focus on Internal & External Customer.
INDUCTION AND SUCCESSION
• Transparent Recruitment & Selection process
• Recruitment on an All India Basis – no sector or regionspecific.
• Engineers – CAMPUS - IITs/RECs/Rorkee /HBTI
• ALL-INDIA TEST
• MBAs – IIMs/XLRI
• CAs - Rank Holders
• India Exam & Apprenticeship In MUL
• Lateral Entry for Experienced Professionals.

MATTER USUALLY DISCUSSED IN THE MARUTI INDUCTION

• Overview of Maruti and Suzuki

• Building understanding of the car market in India and
varioussegments
• Understand MUL’s product range and positioning in
eachsegment
• Understanding the basics in the automobile industry
• Role of financing as a sales tool and the various financing
options available
• Ensuring personal effectiveness
• Understand the attributes of a good DSE
• Overview of each Maruti model and the MUL ‘Advantage’

62
• Overview of the selling process and how to uncover needs of
acustomer to do need based selling

Induction program

Objective: The objective of this program is to facilitate smooth

induction of the new DSEs into their place of work i.e.
Marutidealerships. This program attempts to orient the new DSEs
on a fewimportant parameters, which are listed below: Overview
of Maruti and Suzuki
. Building understanding of the car market in India and
varioussegments
. Understand MUL’s product range and positioning in each
segment
. Understanding the basics in the automobile industry Overview of
each Maruti model and the MUL ‘Advantage’ Overview of the
selling process and how to uncover needs of acustomer to do
need based selling
. Role of financing as a sales tool and the various financing
options available
. Ensuring personal effectiveness
. Understand the attributes of a good DSE

RECRUITMENT PROCESS OF MARUTI UDYOG LTD

The recruiting procedure at a Maruti dealership is as follows: For a
particular city,For a particular Dealership The dealership should
release an advertisement.Depending on availability of
infrastructureInterview of shortlisted/ qualified personnel

MEANING OF SELECTION

It is the process of searching the potential candidate. It is

negative in nature in the Indian context. But it is positive in the
US context.

63
Steps in Selection Process of Maruti udyog ltd

Selection process consists of a series of steps, at each stage,

factsmay come light which may lead to the rejection of the
applicant. It is a series of successive hurdles or barriers which an
applicant must cross.These hurdles or screens are designed to
eliminate anunqualified candidate at any point in the selection
processThere is no standards selection procedure to be used in
allorganizations or for all jobs. The complexity of selection
procedures increases with the level and responsibility of the
positionto be filled.
.
1} Preliminary Interview (screening applications)

Initial screening is done to weed out

totallyundesirable/unqualified candidates at the outset. It is
essentially asorting process in which prospective candidates are
given thenecessary information about the nature of the job and
theorganization, at the same time, the necessary information is
alsoelicited from the candidates about their education,
skills,experience, salary expected and the like. It helps to
determinewhether it is worthwhile for a candidate to fill up the
applicationform.

2} Application Form

Application form is a traditional and widely used device

forcollecting information from candidates. It should provide all the
information relevant to selection, where reference for caste,
religion,birth place, may be avoided as it may be regarded an
evidence ofdiscrimination.

3}Selection Test

64
Psychological tests are being increasingly used in
employeeselection, where a test may involve some aspect of an
individual’sattitudes, behavior and performance. Tests are useful
when thenumber of applicants is large, as at best it reveals that
thecandidates who scored above the predetermined cutoff points
arelikely to be more successful than those scoring below the
cutoffpoint.

4} Employment Interview

Interview is an essential element of selection and no

selectionprocedure is complete without one or more personal
interviews,where the information collected through application
letter orapplication forms and tests can be cross-checked in the
interview,where candidates demonstrates their capabilities and
strength inrelevant to their academic credentials. selection in
interview serves threepurposes:
a) obtaining information about the background, education,
training,work history and interests of candidate
b) giving information to candidates about the company, the
specific job and human resource policies; and
c) establishing a friendly relationship between the employer and
thecandidate so as to motivate the successful applicant to work
forthe organization.However, in practice interview becomes a
one-sided affair serving only the first purpose.

5} Medical Examination

Applicants who have crossed the above stages are sent for
aphysical examination either to the company’s physician or toa
medical officer approved for the purpose. Such examination
serves the following purposes:-

65
a) It determines whether the candidate is physically fit toperform
the job, where those who are physically unfit arerejected.
b) It reveals existing disabilities and provides a record of the
employee’s health at the time of selection. This record will help in
settling company’s liability under the workmencompensation Act
for claim for any injury.
c) It prevents the employment of people suffering from
contagious diseases.
d) It identifies candidates who are otherwise suitable but require
specific jobs due to physical handicaps and allergies.

6} Reference Checks

The applicant is asked to mention in his application form, the

names and addresses of two or more persons who know him
well. These may be his previous employers, heads of education
institutions or public figures. These people are requested to
provide their frank opinion about the candidate without incurring
any liability. In government and public sector organizations,
candidates are generally required to route their applications
through their present employers, if any. The opinion of referees
can be useful in judging the future behavior and performance of
candidate, but is not advisable to rely exclusively on the referees
because they are generally biased in favor of the candidate.

(a) Most candidates are employed at the time of their application,

and do not wish their employers to know they are looking
elsewhere.
(b) Because of prospective employer would be breaking a
confidence if
he or she asked for a reference before an offer of a job had been
made and accepted.
(c) By the time an offer has been accepted, selection is over and
the
reference is too late to affect it.

66
(d) An offer may be made ‘subject to satisfactory references’, but
as most references are received after the candidate has started
work, they can only be used to warn managers of possible faults
in the candidate which in serious cases may eventually lead to
warnings followed by dismissal.
(e) Employers giving references are usually extremely cautious;
many references merely state the job title, the date of
employment, and reasons for leaving.
(f) References are occasionally biased, giving a good reference to
hasten an employee’s departure or a poor one because of a
grudge. Therefore, the best references are obtained in person,
where there is a chance to see whether nonverbal behavior
matches what is said. If such a meeting cannot be arranged,
telephoning is the next best alternative.

7} Final Approval

In most of the organizations, selection process is carried out by

the human resource department, where the decisions of the
department are recommendatory. The candidates shortlisted by
the department are finally approved by the executive of
concerned departments or units.

8} Employment.

Employment is offered in the form of an appointment letter

mentioning the post, the rank, the salary grade, the date by
which the candidate should join and other terms and conditions in
brief. In some organizations, a contract of service is signed by
both the candidate and the representative of the organization. It
is at this point where a selected applicant is handled with a letter
of offer for a job:
a) The wage or salary offered must not only be appropriate to the
job and attractive to the candidate but consistent with the
earnings of present employees.

67
b) The job must be named and any special conditions stated, for
instance, the first year you will be under training at the head
office, then you will be transferred to up-country branches.
c) The candidate must know the essential conditions of
employment, such as hours of work, holidays, bonuses and fringe
benefits.
d) Any provisos must be clearly stated, for example, your
employment will be subject to satisfactory references and
medical examinations. Appointment is generally made on
probation of one or two years, where upon satisfactory
performance during this period, the candidate is finally confirmed
in the job on the terms employed with, whether permanent or
contractual basis.

9} Induction.

The process of receiving employees when they begin work,

introducing them to the company and to their colleagues, and
informing them of the activities, customs and traditions of the
company is called induction. At this juncture various induction
courses are done to new recruit in order to acclimatize them with
the
new working environment.

10} Follow – up (Evaluation)

All selection should be validated by follow-up, it a stage where

employee is asked how he or she feels about progress to date and
the worker’s immediate supervisor is asked for comments, which
are compared with the notes taken at the selection interview. If a
follow-up is unfavourable it is probable that selection
has been a fault; the whole process from job specification to
interview is then reviewed to see if a better choice can be made
next time.

68
Training

Maruti arranges the training at several intervals. The training is

mandatory for all the employees. The training schedule of all
employees is maintained by the HR manager.

EDP

In the EDP Department following are managed:

➢ Post Sale Process is managed.
➢ Sales Analysis is done.
➢ Backup is taken time to time.

IMPORTANCE OF TRAINING

Optimum Utilization of Human Resources – Training and

Development helps in optimizing the utilization of human
resource that further helps the employee to achieve the
organizational goals as well as their individual goals.
• Development of Human Resources – Training and Development
helps
to provide an opportunity and broad structure for the
development of human resources’ technical and behavioral skills
in an organization. It also helps the employees in attaining
personal growth.
• Development of skills of employees – Training and Development
helps in increasing the job knowledge and skills of employees at
each level. Ithelps to expand the horizons of human intellect and
an overall personality of the employees.
• Productivity – Training and Development helps in increasing the
productivity of the employees that helps the organization further
to achieve its long-term goal.
• Team spirit – Training and Development helps in inculcating the
sense of team work, team spirit, and inter-team collaborations. It
helps in inculcating the zeal to learn within the employees.

69
• Organization Culture – Training and Development helps to
develop and improve the organizational health culture and
effectiveness. It helps in creating the learning culture within the
organization.
• Organization Climate – Training and Development helps building
the positive perception and feeling about the organization. The
employees get these feelings from leaders, subordinates, and
peers.
• Quality – Training and Development helps in improving upon the
quality of work and work-life.
• Healthy work-environment – Training and Development helps in
creating the healthy working environment. It helps to build good
employee, relationship so that individual goals aligns with
organizational goal.
• Health and Safety – Training and Development helps in
improving the health and safety of the organization thus
preventing obsolescence.
• Morale – Training and Development helps in improving the
morale of the work force.
• Image – Training and Development helps in creating a better
corporate image.
• Profitability – Training and Development leads to improved
profitability and more positive attitudes towards profit orientation.
• Training and Development aids in organizational development
i.e. Organization gets more effective decision making and
problem solving. It helps in understanding and carrying out
organizational policies
• Training and Development helps in developing leadership skills,
motivation, loyalty, better attitudes, and other aspects that
successful workers and managers usually display.

Training Details

70
The strength of any organization is its manpower. Each
organization would like to have executives who are well trained
so that they can be more productive. The vehicle manufacturers
conduct several trainings sothat they can achieve their goals. In
the Training master form, you can enter the information about the
training, which have been conducted during a particular time
period. We are also maintaining the information regarding the
attendance of the executives in a specific training. That is, how
many executives out of the given list have attended the training?
With the help of these training details we are generating various
MIS
reports. The details provided here can help the management to
find out an efficient person for a special task. Searching facility is
also available, so you can find out the total information of a
particular training with just one click over there.

SALES AND TRAINING DEPARTMENT OF MARUTI UDYOG

Vision

“Equipping MUL and Dealer Sales Fraternity with the requisite

mindset, knowledge and skills, and enhance the business value of
our associates to sustain our position of leadership and build
customer loyalty to MUL”

Objectives

To ensure multiple knowledge and skill development of DSEs

required selling cars and handling competition
➢ Consultative Selling Approach.
➢ Continuous Feedback and Performance monitoring.
➢ To employ training as a tool to achieve customer delight and
customer loyalty
➢ Make DSEs as Car Advisors and be a single window interface
with the customer

71
FINANCIAL ANALYSIS OF THE COMPANY

72
Financial highlights

Parameters Q3’F09 Q3’F08 change

Net sale(Rs 45126 46540 -3%

Mn)

Other Income -
Operating (Rs
887 853 4%
Mn)
Other Income -
Non Operating
1777 854 108%
(Rs Mn)

EBITDA (Rs
Mn)
4745 7839 39%

73
 Depreciation
(Rs Mn)
1775 867 105%
Profit Before 2925 6828
Tax (Rs Mn)
57%
Profit After Tax

(Rs Mn) 2136 4670 54

EPS (Rs) 7.39 16.17 54%

Financial highlights

Parameters Q3’Fy 09 Q3’Fy08 change

Material Cost 81.14% 76.84% 4.30%

74
Employee Cost 2.45% 2.08% 0.37%

Selling & 3.69% 2.75% 0.94%

Distribution
expenses
Manufacturing 8.66% 5.59% 3.07%
Expenses
3.53% 2.60% 0.93%
Royalty Power
1.18% 0.78% 0.30%
& Fuel
Depreciation 3.93% 1.86% 2.07%

Ebitda 10.51% 16.84% 6.33%

PBT 6.48% 14.67% 8.19%

PAT 4.73% 10.04% 5.31%

Other Income 5.90% 3.67% 2.23%

(Operating +
Non Operating)

Financial Analysis (Q3FY09 vs Q3FY08)

75
 Material cost to net sales increases by 4.30 % to
81.14%
 1.7% - Higher commodity cost primarily steel
 1.4% - Yen appreciating against rupee by ~ 50%
appx impacting
import cost –1.4%
 1.6% - Product Mix
 0.8% - Higher invoice discounts
 (1.0)% - favorable selling price variance

 Selling & distribution expenses increased by 0.94% to
3.69%
○ Selling expenses increased by 0.26% to 2.18%
○ A Star launch / marketing expenditure

 Distribution expenses increased by 0.68% to 1.51%

 Higher ocean freight

Financial Analysis (Q3FY09 vsQ3FY08)

 Manufacturing over heads increases by 3.07% to

8.66%
○ Royalty increased by 0.93% to 3.53%
○ Increase in average selling price (base for calculating
royalty)by 11%
○ Increase in number of models on which royalty is paid
○ Yen appreciating against rupee by ~ 50%

76
 Power cost increased by 0.40% to 1.18%
 Higher cost of power generation at Manesar –use
of diesel in place of natural gas
 Share of units from Manesar plant out of total
sales increased
 Exchange Variation Rs 412 Mn
 Increase in employee cost by 0.37% to 2.45%
○ Increase in number of employees to 7,755 from
6,903 (Q3Fy08)
○ Recruitments for K Series engine plant, expanded
capacity at
Manesar and R&D

Financial Analysis (Q3FY09 vsQ3FY08)

 Other Income
 Rs 1,777 Mn non operational (Rs 854 Mn in
Q3FY08)

 Higher yields ~ 12.5% (pre tax)

 One time interest on tax refunds Rs 569 Mn

 Depreciation increased by 2.07% to 3.93%
 Revision of useful life of fixed assets was done in
Q4FY08

 In Q3FY09 impact is Rs 585 Mn

 Normalized depreciation is 2.64%

 Average Realization (ASP) increased by 10.8% to Rs.
240,081
○ Exports –higher realization

77
 ○ Domestic –product mix

Cash Flow of Maruti Suzuki

------------------- in Rs. Cr. -------------------
India

Mar '04

Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

78
Net Profit Before Tax 769.80 1304.9 1750.0 2279.8 2503.0
0 0 0 0

Net Cash From 1035.9 1073.7 1222.6 2028.0 1830.4

Operating 0 0 0 0 0
Activities

Net Cash (used in)/from - -192.70 -530.70 - 3061.5

Investing Activities 1551.1 2436.8
0

Net Cash (used in)/from -234.00 -91.80 -319.70 430.00 132.30

Financing Activities

Net (decrease)/increase -749.20 789.20 372.20 21.20 1098.8

In

Cash and Cash

Equivalents

Opening Cash & Cash 989.40 240.20 1029.4 1401.6 1422.8

Equivalents

Closing Cash & Cash 240.20 1029.4 1401.0 1422.8 324.00

Equivalents

79
FINANCIAL RESULTS

The Companys performance during the year is summarised

below:

(Rs.in Million)
2007-08
2006-07

Gross Total Income 219,128

178,043

Profit before Tax 25,030

22,798

Provision for taxation (Incl. Prev. Year) 7,722

7,178

Profit after Tax 17,308

15,620

Balance brought forward 56,373

43,939

MSAIL (Maruti Suzuki Automobiles India Limited)

Loss: Adjusted on Amalgamation and

Transition Adjustment for Employee Benefit 0

88

80
 Profit available for appropriation 73,681
59,471

Appropriations:

Debenture Redemption Reserve 0

17

General Reserve 1,731

1,562

Proposed Dividend 1,445

1,300

Corporate Dividend Tax 248

219

Balance carried forward to Balance Sheet 70,257 56,373

FINANCIAL HIGHLIGHTS

The gross revenue (net of excise) of the Company for the year
was Rs. 188,238 million as against Rs. 152,523 million in the
previous year showing an impressive growth of 23.4%. Earnings
before depreciation, interest, tax and amortization (EBDITA)
stood at Rs. 31,308 million against Rs. 25,888 million in the
previous year, recording a jump of 20.9%.
Based on technical evaluation and market considerations, the
Company has, with effect from 1st April 2007, revised the
estimated useful life of certain assets which resulted in
depreciation being higher by Rs. 2,122 million for the current
year with a corresponding reduction in profit for the year and net
fixed assets. Profit before tax (PBT) stood at Rs. 25.030 million
against Rs. 22,798 miilion in the previous year showing a growth

81
of 9.8% and Profit after Tax (PAT) stood at Rs. 17,308 million
against Rs. 15,620 million in the previous year showing a
growth of 10.8%.

DIVIDEND

The Board recommends a dividend of 100% (i.e. Rs. 5 per equity

share of Rs. 5 each) for the year ended 31st March 2008
amounting to Rs. 1,445 million as against a dividend of 90% .
amounting to Rs. 1,300 million, paid for the year ended 31st
March 2007.

4P’s OF MARUTISUZUKI SWIFT

82
➢ PRODUCT
➢ PRICE
➢ PROMOTION
➢ PLACE
PRODUCT
Features:
The all-new Maruti Suzuki Swift is fully loaded with a range of
exciting new features. It's a perfect complement to your evolved
tastes and lifestyle. And the best way to take your driving
pleasure to a brand-new high.
European Styling. Japanese Engineering. Dream-Like
Handling.The new Swift is a generation different from Suzuki
design. Styledwith a clear sense of muscularity, its one-and-a-half
box, aggressive form makes for a look of stability, a sense that it
is packed with energy and ready to deliver a dynamic drive. Its
solid look is complemented by an equally rooted road
presenceand class-defining ride quality. New chassis systems
allow for the front suspension lower arms, steering, gearbox and
rear engine mounting to be attached to a suspension frame. You
get lower road noise, and a greater feeling of stability as you sail
over our roads with feather-touch ease.
There are three variants of Maruti Suzuki Swift :
➢ Swift LXi
➢ Swift VXi
➢ Swift ZXi

83
➢ Swift LXi
3 assist grips, 3 spoke urethane steering wheel, antenna, cabin
light (3 position), console box (lower), cup holders (front 2, rear1),
front door trim pockets, green tinted glass window, halogen
headlamps, headlamp leveling device, heater and manual Air
conditioning, OVRM (internally adjusted), rear fog lamps, wind
screen wiper 2 speed plus 1 speed intermittent, tailgate opener
key type, trip meter(digital display), sun visors (both sides), brake
assist , child lock (rear door), high mounted stop lamp, power
steering, rear seat belts etc. are the features available in this
model.

➢ Swift VXi
Apart from the features found in other model, striking features of
this model are black colored A & B pillars, 12v accessory socket in
center console, day and night rear view mirror, door ajar warming
lamp, driver's seatbelt warning lamp, tachometer, driver's seat
belt warning lamp, vanity mirrors (sun visor co-driver side), rear
seat head restraints, fabric accented door trims, central door
locking (4
door), front and rear electronic windows, front fog lamps, light off/
key reminder, manual air-conditioning, key not removed warning
buzzer, etc.

➢ Swift ZXi
Special features that have made this model more market friendly
are rear window demister, rear parcel shelf, rear window wiper,
room lamp and luggage room, keyless entry,dual front airbags,
colored outside door mirror cowls, colored outside door handles,
12vaccessory socket in luggage room, driver seat height adjuster,
central door locking (5 doors), seat belts 3-point ELR with
shoulderNadjusters, seat belts front 3-point ELR with
pretensioning,tailgate opener electromagnetic type etc.

84
 Price

Maruti is expected to take Hyundai heads on with the pricing of

their upcoming Maruti Suzuki Swift car. After launching cars for
the masses since so many years, India’s largest automobile
manufacturer is now targeting the premium segment with their
latest model from the Suzuki’s stable. The analysts predict the
pricing of this premium hatchback to start from Rs. 4 lakh. This
price range would practically rip apart Hyundai’s offering in Getz,
which is priced at a much higher tag of Rs. 4.5 lakh. Both the
companies are known for their value based offerings and Maruti
with their extensive service network and brand reputation for
making reliable cars should get the customer’s nod over their
competition. The official pricing however is still not out. However,
the company is said to be studying the prospects of launching the
base model at the 4-lakh price tag. There is another advantage in
doing so considering in the capital city of Delhi NCR road tax on
the sub 4 lakh priced cars is comparatively lower at 2%. Cars at a
price higher than 4 lakh have to pay a 4% road tax. Delhi NCR is
one of the major targeted markets and it might get the
benefit of this policy. And if they indeed do take the chance
ofpricing Suzuki Swift at a considerable lower price than Hyundai
Getz, they would quite likely force the competition to rethink their
strategy.

Swift LXi 416485 416485

Swift VXi 443924 443924
Swift VXi
(ABS) 464962 464962
Swift ZXi 528096 528096

85
 PROMOTION

When Maruti Udyog launched the Swift in May last year, the
automotive industry was agog with expectation that the car had
the makings of a real winner. Three versions were launched with
the base variant carrying a retail tag of Rs 3.85 lakh, ex-
showroom, New Delhi, and this aggressive pricing only reinforced
this feeling.A year later, the company says the Swift is now the
most-sold car in the first year of any car in the history of the
Indian automobile industry, having totted up sales of 61,200
units. This is higher than what Maruti had initially planned to sell.
The car
recorded an estimated 4,000 bookings at the time of its launch,
and the initial output of 200 units a day on a two-shift basis,
wasn’t enough to cope with demand. In October, the company
increased capacity for the Swift which helped cut down on the
waiting time from an estimated three months. The company
currently makes over 300 units every day. The Swift has made a
real impact in the small hatchback segment leaving its closet
rival, the Getz far behind. Between April 2005 and April 2006,
Hyundai sold 16,872 units of the Getz. Maruti is now
gearing up for the diesel version of the Swift which is expected to
debut by October. The diesel version will benefit from the excise
sops in this year’s buget, and it remains to be seen how the
models fares in the marketplace.

PLACE

86
The car manufacturing company, called Maruti Suzuki
Automobiles India Limited, is a joint venture between Maruti
Udyog and Suzuki Motor Corporation holding a 70 per cent and 30
per cent stake respectively. The Rs1,524.2 crore plant has a
capacity to roll out 1 lakh cars per year with a capacity to scale
up to 2.5 lakh units per annum. The car manufacturing plant will
begin commercial production by the end of 2006.

The engine and the transmission plant has owned by Suzuki

Powertrain India Limited in which Suzuki Motor Corporation would
hold 51 per cent stake and Maruti Udyog holding the balance. The
ultimate total plant capacity is three lakh diesel engines.
However, the initial production is 1 lakh diesel engines, 20,000
petrol engines and 1.4 lakh transmission assemblies.

MUMBAI - Showrooms
➢ AUTOMOTIVE MANUFACTURERS LTD
MIDC,TTC INDL.AREA, PLOT
NO.D-234,SHIRVANE VILLAGE
BOMBAY PUNE ROAD
➢ Autovista
257,S.V. ROAD, BANDRA (W)
MUMBAI
MAHARASHTRA
➢ M/S SK WHEELS PVT LTD
SITE NO. D-267
TTC INDUSTRIAL AREA, MIDC
TURBHE, NAVI MUMBAI
➢ NAVNIT MOTORS PVT LTD
GOKUL NAGAR
MUMBAI-AGRA ROAD,
THANE-400 061
➢ RATAN MOTORS

87
23/24 BEZZOLA COMPLEX
SION-TROMBAY ROAD
CHEMBUR
➢ SAH and SANGHI AUTO AGENCIES (P) LTD
GIRI KUNJ, 11-C N S PATKAR MARG
KEMPS CORNER
➢ SAI SERVICE STATION LTD
PHOENIX MILL COMPOUND,
462,SENAPATI BAPAT MARG,
LOWER PAREL,

SWOT ANALYSIS OF THE COMPANY

➢ STRENGTHS
➢ WEAKNESSES
➢ OPPORTUNITIES
➢ THREATS
STRENGTHS
The Quality Advantage
Maruti Suzuki owners experience fewer problems with their
vehicles than any other car manufacturer in India (J.D. Power\ IQS
Study 2004). The Alto was chosen No.1 in the premium compact
car segment and the Esteem in the entry level mid - size car
segment across 9 parameters. The J.D. Power APEAL Study 2004
proclaimed the Wagon R no. 1 in the premium compact car
segment and the Esteem No.1 in the entry level mid - size car
segment. This study measures owner in terms of design, content,
layout and performance of vehicles across 8 parameters.

88
A Buying Experience Like No Other
Maruti Suzuki has a sales network of 307 state-of -the-art
showrooms across 189 cities, with a workforce of over 6000
trained sales personnel to guide our customers in finding the right
car. Our high sales and customer care standards led us to achieve
the No.1 nameplate in the J.D. Power SSI Study 2004.

Quality Service Across 1036 Cities

In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest
across all 7 parameters: least problems experienced with vehicle
serviced, highest service quality, best in-service experience, best
service delivery, best service advisor
experience, most user-friendly service and best service initiation
experience.
92% of Maruti Suzuki owners feel that work gets done right the
first time during service. The J.D. Power CSI study 2004 also
reveals that 97% of Maruti Suzuki owners would probably
recommend the same make of vehicle, while 90%owners would
probably repurchase the same make of vehicle.

WEAKNESS

• (Not so well-known in this segment

• Comparatively less mileage-there is a also weakness of maruti
suziki .milage of
maruti product is less than other.so this is a big weakness of
maruti.
• ESTABLISH PROPER POLICIES AND PROCEDURE FOR LEAVE

• PROPER COMMUNICATION OF POLICIES TO WORKERS

• ATTITUDE OF SUPERVISOR

89
• INSTALLATION OF HIGH CAPACITY GENERATORS

OPPORTUNITIES
• ESTABLISH PROPER POLICIES AND PROCEDURE FOR LEAVE

• PROPER COMMUNICATION OF POLICIES TO WORKERS

• ATTITUDE OF SUPERVISOR

• INSTALLATION OF HIGH CAPACITY GENERATORS

THEARTS

Maruti has always been identified as a traditional carmaker

producing value-for-money cars and right now the biggest hurdle
Maruti is facing is to shed this image. Maruti wants to change it
for a more aggressive image. Maruti Baleno has failed due to one
of the major reasons being thatcustomers could not identify
Maruti with a car as sophisticated as Maruti Baleno. Maruti is
looking forward to bring about a perception change about the
company and its cars.Maruti started the exercise with the new-
look Zen, and Suzuki's decision to pick India as one of the
first markets for this radically different-looking car gave this
endeavor a nethrust. Maruti has also changed its logo at the front
grill. It has replaced the traditional Maruti logo on grill ‘stylish ‘M’
with S’. The major thrust in the facelift endeavour is with the
launch of 1.3 litre Swift. It’s a style statement from Maruti to
Indian

90
market. The next threat Maruti faces is the growing
competition in compact cars.Companies like Toyota, Ford,
Honda and Fiat are planning to come out with small segment cars
in near future.Ford is launching Focus and Fiesta, GM is launching
Aveo in 2006, Chevrolet is launching Spark in 2006, Hyundai is
launching its new compact car in 2006, Honda is launching Jazz in
2006, GM is has reduced prices of its Corsa, Fiat is coming up with
Panda and new Fiat Palio, Skoda is launching Fabia. All this will
pose a major threat to Maruti leadership in compact cars. New
emission norms like Bharat Stage 3 which has come into effect
from April 2005 has increased car prices by Rs.20000 and Bharat
Stage 4 which is coming into force in 2007 will contribute in
increasing car prices further. This could be of concern to Maruti
which is low cost provider of passenger cars.
Rise in petrol prices and growing popularity of other
substitute fuels like CNG will be another threat to Maruti. There
is also a threat to Suzuki from R&D investment by Toyota and
Honda in Hybrid cars. Hybrid cars could run on both petrol and
gaseous fuels. There is a threat to Maruti models ageing. Maruti
models like Maruti 800 which is in market for the last twenty
years and others like Zen and Esteem which have also entered
the decline phase are the other threats. Maruti is planning
phasing out Zen in 2007 and there were rumors of phasing out
Maruti 800 also. This all makes Suzuki to replace these brands
with new launches . As Swift and Wagon R are replacing the Zen
market. Maruti will have to keep on makingN modifications in its
present models or its models will face extinction.

COMPETITORS OF MARUTI SUZUKI SWIFT

Hyundai

91
Unlike most other MNCs, Hyundai of South Korea decided to enter
India with its small car model, Santro, which it priced attractively
at about $7000. Hyundai chose to set up a fully owned subsidiary
and hired some of the most reputed executives in the Indian
automotive industry. Hyundai also invested heavily in a modern
car plant near the city of Madras, in the southern part of India.
The facility can manufacture 130,000 engines, transmission sets
and components per annum. According to Business India1, “What
makes HMI’s (Hyundai Motor India) progress even more
impressive is that the Sriperambadur plant is not another knocked
down (KD) operation but an integrated manufacturing facility.
The Santros that will roll out of this plant will be manufactured
from day one and not merely assembled. This is a historic
achievement. No company has begun operations in this manner,
not even Maruti Udyog, which initially imported CKD kits for the
Maruti 800... The very essence of Hyundai’s strategy is to localise
heavily from day one to give it a very early cost advantage, the
number one priority in this highly price sensitive market.” The
Santro has been a major success. Though not very elegant
looking, the car has enough leg and head room. Hyundai sold
more than 75,000 vehicles during the period April 1999 - March
2000 and looks set to cross the 100,000 figure in the current
year. During the period January-June, 2000, Hyundai sold 45,513
units, against 21,884 in 1999. Encouraged by the success of the
Santro, Hyundai launched the up market Accent model.A major
worry for Hyundai is that it has just one small car in its stable.
Hyundai is pinning its hopes on luxury models such as the Sonata,
priced at around Rs 12 lakhs, but as the company's senior
executives themselves admit, such models are unlikely to sell
more than 250 units per month. Hyundai is also vulnerable

92
because of its relatively small size, when compared to global
majors such as Ford, General Motors, Toyota, Daimler Chrysler,
Volkswagen and Honda.

Telco

Founded in 1945, the Tata Engineering and Locomotive Company

(Telco) is one of the leading players in the Indian automobile
industry. In its early years, Telco manufactured only commercial
vehicles, through a technical collaboration with Mercedes Benz of
Germany. Starting with the 1980s, Telco has moved into light
commercial vehicles, pick-up trucks, multi-utility vehicles, large
cars and finally, small cars. The Tata Mobile pick-up truck
launched in 1988 was probably a turning point in Telco’s history.
The model failed to build volumes, but gave Telco engineers
confidence in their design capabilities. Telco then launched its
big cars, Tata Sierra (1991) and Tata Estate (1992). Both these
cars have been more or less phased out, as Telco decided to take
a plunge into the mass market small car segment1.
The star in Telco's portfolio today is the small car, Indica,
designed in Italy, but manufactured in India as an almost
completely indigenous effort. The car has a distinctive look and
sufficient space but its engines can probably be improved. At the
time of launch, the Indica was plagued by quality problems. Telco
engineers, however, ironed these out in quick time. Priced at just
over Rs. 3 lakhs, the Indica offers value for money and has
catapulted Telco to a position in which it is one of the few serious
challengers to MUL. In the Rs 3 - 4.5 lakh price segment
consisting of the Santro, the Zen, the Matiz, the Wagon R and the
Uno, Indica has a market share of 21%. One concern expressed
by analysts is Telco's staying power. The project will not break
even for some time. As Business Today2 recently remarked: "The
car foray is sucking Tata Engineering into a vicious loop: as its

93
losses keep mounting, the breakeven target keeps getting pushed
back further. As things stand today, analysts point out that to
make money, Tata will have to sell close to one lakh cars, against
the original target of 90,000 cars and the project cost has
escalated to over Rs 2000 crores." Some analysts even suggest
that Telco should spin off its car venture and offer a stake to a
foreign car major. Another worry for Telco is that it is dependent
on just one model. To be a serious player, the company needs a
couple of additional models which would obviously cost money.

Daewoo

Daewoo entered India in 1995 through a joint venture with the

local DCM group. Japanese car major Toyota, also had a small
stake in the project. Daewoo later hiked up its equity stake to
take complete control of the venture. Daewoo's first model for the
Indian market was the Cielo. Initially, Cielo seemed to be doing
well, selling about 1000 units per month. Later, as competing
models arrived, Cielo's sales dropped sharply. Daewoo reacted
by offering major discounts. This only hurt the car's image and
did little to boost sales. Daewoo attempted to learn from its
experience, by launching its small car, the Matiz in late 1998.
Although the Matiz was initially priced high, Daewoo quickly cut
the price to grab market share. The Matiz is today priced
attractively and is one of the most stylish small cars currently
available in India. Daewoo has pinned its hopes on the Matiz to
make a comeback and catch up with arch rival, Hyundai. Daewoo
however faces major challenges in the months ahead. Its parent
company in Korea is in big trouble and is on the verge of being
sold off. It has only one small car model. The company's
operations in India are still to stabilize, with losses of Rs. 40.14

94
crore during 1998-99. In the wake of the uncertainty over the
future of its parent company, Daewoo has postponed the launch
of its luxury car models, Nubira and Leganza.

Hyundai Santro 1.1 CRDi

When Hyundai launch the Santro’s replacement in 2007, it will
come with the surprise addition of a 1.1 litre common rail diesel.
Likely to be the cheapest car on sale powered by a CRDi engine,
this motor is the new Accent’s CRDi unit less one cylinder.
Incredibly powerful for its size, this 1,120cc engine produces a
whopping 75bhp. Unconfirmed reports talk of overall figures, city
and highway combined, in excess of 20 kilometres a litre.

Hyundai Getz 1.5 CRDi

Not as attractive as the Swift, but more practical, with greater

rear seat comfort and more useable space, Hyundai’s diesel
assault continues up the range with its large hatch. The Getz will
share its motors with the new Accent/ Verna. Hyundai sell the
Getz powered by a detuned version of the new Accent motor in
the European continent, and it’s likely to be the case here as well.
Producing 87bhp
as against 108bhp, using two versions of the same engine will
help Hyundai get a handle on costs. The diesel Getz also qualifies
for excise sops, meeting both length and engine capacity criteria.

Tata Indica 1.3 Multijet

By the time the larger new Indica is out, the Tata-Fiat tie-up will
be going full throttle. Tata will borrow engines from Fiat with, you
guessed it, the 1.3 litre Multijet being the engine of choice.
Thoroughly localised, cheaply assembled and very capable, it will
give the new Indica/ Indigo family a huge leap forward as far as
overall ability is concerned.

95
 Conclusion

Based on these factors the various strategic alternatives were

evaluated. The areas of strategic thrust which Maruti can
concentrate on are identified. The various course of action for
these strategic thrust areas and suitable matrixes evaluate them
are identified.

Strategic Action Measures

Thrusts
Increases Tap the huge Percentage of
Scope component & sales from new
accessories market products
New product Enter fast growing CV ROE,ROA
segment and global
Same market
platforms
New product Expand geographically Increase in
– Europe and alternate profitable market
New market
energy share

96
 Market Finding rural markets, Customer
rationalization Online trade satisfaction
Distribution Separate dealers based Dealer
rationalization on value profitability,
Percentage of
cannibalization
Wallet shares Concentrate more on Percentage profit
customer solution for each business
unit
HOLD ON “4 for 2”when 1 lac car Number of Maruti
is introduced 800s sold

Maruti Suzuki India Ltd (MSIL) has the highest marketshare in the
automobile sector in India. To consolidate and protect its
leadership position, the market research team conducts a
continuous Brand Track study with an all-India scope. Amongst
other things them survey looks at: Brand Awareness, Advertising
Recall, Product Experience, Company Image and Competition
Analysis.

97