Maruti Suzuki Limited

Introduction
Maruti means the name of the Hindu God Hanuman who is known for his strength and thus the car is known for being compact and sturdy. A partial subsidiary of the Suzuki Motor Corporation of Japan, the Maruti Suzuki India Limited is Indias largest passenger car company. It has a market share of almost over 45% in the domestic car market segment. It was the first company in India to mass produce and sell more than a million cars. It is the market leader in India and Nepal in terms of the volumes sold as well as the revenue earned. It is largely credited for bringing in an automobile revolution in India. Maruti has been the market leader in India for over 2 decades. Annually, the company exports more than 50,000 cars and has an extremely large domestic market in India selling over 730,000 cars. Maruti created history by going into production in a record 13 months. Maruti is the highest volume car manufacturer in Asia, outside Japan and Korea, having produced over 5 million vehicles by May 2005. Maruti is one of the most successful automobile joint ventures, and has made profits every year since inception till 200001. In 2000-01, although Maruti generated operating profits on an income of Rs 92.5 billion, high depreciation on new model launches resulted in a book loss.

Company History and background: The Evolution:

Marutis history of evolution can be divided into four phases: two phases during pre-liberalization period (1983-86, 1986-1992) and two phases during post-liberalization period (1992-97, 1997-2002), followed by the full privatization of Maruti in June 2003 with the launch of an initial public offering (IPO). First Phase: When Maruti introduced its first car in December 1983. During the initial years Maruti had 883 employees, a capital of Rs. 607 mn and profit of Rs. 17 mn without any tax obligation. Second Phase: The company in just about a decade (beginning of second phase in 1992) had turned itself into an automobile giant capturing about 80% of the market share in India. Employees grew to 2000 (end of first phase 1986), 3900 (end of second phase 1992) and 5700 in 1999. The profit after tax increased from Rs 18.67 mn in 1984 to Rs. 6854.54 mn in 1998 but started declining during 1997-2001. Reason for this tremendous success: During the initial days Maruti had succeded and earned tremendously only because of the wholehearted willingness of the Government of India to subscribe to Suzukis technology and the principles and practices of Japanese management. Training Phase: During the initial days large number of Indian Managers and supervisor ewer sent to Japan to learn the Japanese technology and functioning. Batches of Japanese personnel came over to Maruti to train, supervise and manage. Marutis style of management was essentially to follow Japanese management practices. Maruti Udyog Limited:

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Maruti udyog limited was born out of the need for personal mode of transport because of the lack of efficiency of public transport system in the country. Thus to meet this growing demand of private transport Maruti Udyog limited was launched through an Act of Parliament in 1983. The main objective for the launch of Maruti Udyog was modernizing the Indian automobile industry, producing fuel efficient vehicles to conserve scarce resources and producing indigenous utility cars for the growing needs of the Indian population. A license and a Joint Venture agreement were signed with the Suzuki Motor Company of Japan in Oct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest technology as well as Japanese management practices. Suzuki was preferred for the joint venture because of its track record in manufacturing and selling small cars all over the world. There was an option in the agreement to raise Suzukis equity to 40%, which it exercised in 1987. Five years later, in 1992, Suzuki further increased its equity to 50% turning Maruti into a non-government organization managed on the lines of Japanese management practices

The Path to Success for Maruti was as follows: (a) Teamwork and recognition that each employees future growth and prosperity is totally dependent on the companys growth and prosperity (b) strict work discipline for individuals and the organization (c) constant efforts to increase the productivity of labor and capital (d) steady improvements in quality and reduction in costs (e) customer orientation (f) long-term objectives and policies with the confidence to realize the goals (g) respect of law, ethics and human beings. The path to success in short is the adoption of the Japanese management practices in India. Attaining an Identity: Maruti started giving uniforms of similar colour and fabric to all its employees, thus attained a unique identity. All the employees ate in the same canteen. They commuted in the same buses without any discrimination in seating arrangements. Employees reported early in shifts so that there were no time loss in-between shifts. Attendance approximated around 94-95%. The plant had an open office system and practiced on-the-job training, quality circles, kaizen activities, team work and job- rotation. Near-total transparency was introduced in the decision making process. There were laid-down norms, principles and procedures for group decision making. These practices were unheard of in other Indian organizations but they worked well in Maruti. During the pre- liberalization period the focus was solely on production. Employees were handsomely rewarded with increasing bonus as Maruti produced more and sold more in a sellers market commanding an almost monopoly situation. Current portfolio: The company has a diverse portfolio that includes: the Maruti 800; the Omni; a premium small car, Zen; the international brands, Alto and WagonR; an off-roader,

Maruti Suzuki Limited

Gypsy; the mid-size Esteem; a luxury car, Baleno; an MPV, Versa; a premium subcompact car, Swift; and a luxury SUV, Grand Vitara XL7. The companys 11 base platforms encompass 300 variants for 100 export destinations. Current scenario of the Car market in India: Major Players: Bajaj Tempo Limited, DaimlerChrysler India Private Limited, Fiat India Automotive Private Limited, Ford India Limited, General Motors India Limited, Hindustan Motors Limited, Honda Siel Cars India Limited, Hyundai Motor India Limited, Mahindra & Mahindra Limited, Maruti Udyog Limited, Skoda Auto India Limited, Tata Motors Limited, Toyota Kirloskar Motors Limited.

Thus Maruti Suzuki limited currently has the larger market share.

Maruti Suzuki Limited

Competitive forces in the Indian Passenger Car Market: (Porters 5 force model)
Threat from the new players: Increasing y y y y Most of the major global players are present in the Indian market; few more are expected to enter. Financial strength assumes importance as high are required for building capacity and maintaining adequacy of working capital. Access to distribution network is important. Lower tariffs in post WTO may expose Indian companies to threat of imports. Market strength of consumers: Increasing Increased awareness among consumers has increased expectations. Thus the ability to innovate is critical. Product differentiation via new features, improved performance and after-sales support is critical. Increased competitive intensity has limited the pricing power of manufacturers.

Market strength of suppliers: Low A large number of automotive components suppliers. Automotive players are rationalizing their vendor base to achieve consistency in quality.

Rivalry within the industry: High There is keen competition in select segments. (compact and mid size segments). New multinational players may enter the market.

Threat from substitutes: Low to medium With consumer preferences changing, inter product substitution is taking place (Mini cars are being replaced by compact or mid sized cars).

The Key Success Factors Of Maruti : (1)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.

Maruti Suzuki Limited

(2)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 MUL customers in finding the right car. (3)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. (4)One Stop Shop At Maruti Suzuki, customers will find all car related needs met under one roof. Whether it is easy finance, insurance, fleet management services, exchange- Maruti Suzuki is set to provide a singlewindow solution for all car related needs. (5) The Low Cost Maintenance Advantage The acquisition cost is unfortunately not the only cost customers face when buying a car. Although a car may be affordable to buy, it may not necessarily be affordable to maintain, as some of its regularly used spare parts may be priced quite steeply. Not so in the case of a Maruti Suzuki. It is in the economy segment that the affordability of spares is most competitive, and it is here where Maruti Suzuki shines. (6)Lowest Cost of Ownership The highest satisfaction ratings with regard to cost of ownership among all models are all Maruti Suzuki vehicles: Zen, Wagon R, Esteem, Maruti 800, Alto and Omni. (7) Technological Advantage It has introduced the superior 16 * 4 Hypertech engines across the entire Maruti Suzuki range. This new technology harnesses the power of a brainy 16-bit computer to a fuel-efficient 4-valve engine to create optimum engine delivery. This means every Maruti Suzuki owner gets the ideal combination of power and performance from his car.

Maruti Suzuki Limited

STAKEHOLDER ANALYSIS The company believes that the prosperity of the stakeholders is important for the overall success. EMPLOYEES AND THEIR FAMILIES In order to improve relationship with the employees and their families, the company lays emphasis on improving communication and following activities are held in order to strengthen the bond. y Divisional Communication Champions and Meetings A two way communication tool between the top management and the employees organized monthly Human Resources Initiatives Development Committees (HRIDC)- The committee consists of members from various levels and they discuss all policies before implementation (once in two months) Employee counseling, coaching and mentoring- Senior management with their guidance and support help the new members adapt and excel in their respective fields Parivar Milan Families of supervisors and technicians are invited every month to visit the factory and interact with management. Family Connect Programme - Through Transactional Analysis and Image Theatre, interpersonal communication is promoted.( organized quarterly) Inter Divisional Cricket, Football and Badminton Tournaments organized annually Motor Sports Event - Maruti Suzuki desert storm and Maruti Suzuki Raid-de-Himalaya. Family Day Function Annual function Suggestion Scheme and Quality Circles (QCs) 360 Degree Feedback Annually for succession planning

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CUSTOMER ENGAGEMENT The company believes that success can come only by listening to the customer and fulfilling the customer needs. Following activities ensure customer participation and help the company meet customer expectation y Brand Track - Customized surveys help the company assess the brand perception among customers

Maruti Suzuki Limited

y Customer Meets Organized by regional managers with dealers to assess customer satisfaction Customer Satisfaction Feedback- On the lines of JD Power CSI and SSI Surveys Mega Services Camps - To resolve complaints on the spot Customer Care Cell A dedicated 24X7 toll free number to register customer complaints Product Clinics Organized before the launch of every product for a specific product feedback

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SHAREHOLDERS AND INVESTORS

Investments in products, services and facilities are judiciously done keeping in mind the growth of the company.

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Annual General Meeting convened annually in accordance with the Companys Act Investors Relations (IR) Ongoing Cell Ongoing communication via press releases, emails and telephone calls. Dissemination of information is done via One on One meeting and Investors meet.

SUPPLIERS

The company engages with suppliers to maintain global quality standards. y y y y y Maruti Centre of Excellence (MACE)- Ongoing activity to upgrade the suppliers Guidance on Financial Matters Regular guidance on financial issues such as fund management, Base II norms Supplier Club Ongoing activity where the top management engages with a select group of suppliers to discuss operational and social issues Quality Month Auditing of quality systems done in November which is observed as quality month Value Analysis Value Engineering (VA-VE) Month - To enhance cost competitiveness July is observed as VA-VE month

Maruti Suzuki Limited

y y y y Quality Circle (QC) Competition Best performing supplier is awarded in this annual competition JV HR Meeting Twice in a month, meeting is held between HR teams of Maruti Suzuki and JV to discuss issues relating to HR and Industrial relations Vendor Conference Annual meeting between Suppliers CEO and Marutis top management Vendor Gemba Visit to the Maruti Suzuki facilities arranged for Vendor CEOs

DEALERS

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Balanced Score Card (BSC) Dealer performance is measured, improved and rewarded quarterly Dealer Management Systems (DMS) - IT based network system that helps in carrying out business transactions smoothly Dealer Conference Annual event where dealer CEOs discuss the future path Inventory Management Active steps are taken to keep the inventory at minimum level s Guidance on Business and Financial Matters - Territory Sales Manager and Territory Service Manager provide guidance on fund management, manpower development and business processes

COMMUNITY

4 villages around Manesar plant have been adopted by the company where it works in close association with an NGO y y y y y Engagement with elected community leaders for planning and carrying out social activities Engagement with women and elderly people through health camp At least one camp is organized per month in association with PHC and ESI health care Engagement with village youth Vocational training provided to unemployed youth Engagement with school children Community feedback on environment Feedback taken annually and necessary actions are taken

Maruti Suzuki Limited