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Term paper on maruti suzuki


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strategic management term paper on maruti suzuki

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Term paper on maruti suzuki

  2. 2. PESIT-BANGALORE INTRODUCTION1981- MARUTI UDYOG LTD was incorporated on under the INDIAN COMPANIES ACT, 1956.1982- License and Joint Venture agreement signed between Maruti Udyog Ltd. & Suzuki Motor Corporation Japan(SMC).1987- First lot of 500 cars exported to Hungary1992- SMC increases its stake in Maruti to 50 percent.2002- Maruti Finance in Mumbai with 10 Finance companies is Introduced. Children‟s park inaugurated in Delhi. SMC acquires majority stake in MUL (increases to 54.2%).2003- IPO (JUNE- ISSUE oversubscribed 11.2 times) Maruti gets listed on BSE and NSE- July.2006- New car plant and the diesel engine facility commences operations during 2006-2007 at Manesar, Haryana. In November Maruti inaugurated a new Institute of Driving Training and Research (IDTR) set up as a collaborative project with Delhi Government at Sarai Kale Khan in South Delhi.2007- Board of Directors gave approval to new name MUL to become Maruti Suzuki India Limited. Corporate Social Responsibility: adopts three villages in Manesar2008- M-800 crosses 25 lakh mark. MSIL celebrates its Silver Jubilee. MSIL launches National Road Safety Program.
  3. 3. 2009- A-STAR or Suzuki Alto debuts at Geneva Motor Show sales begins. Capacity to manufacture expanded from 800,000 to a million Units (Gurgaon plus Manesar plants) annually.2010- Launched Alto K10.2012- Maruti Ertiga, seven seater MPV R3 designed and developed in India, will competewith Toyota Innova, Mahindra Xylo, and Tata Sumo Grande. In early 2012, Suzuki Ertiga willbe exported first to Indonesia in Completely Knock Down car.2014- Maruti XA Alpha will be launchedCOMPANY PROFILEMaruti Udyog Ltd. (MUL) is the first automobile company in the world to be honored with anISO 9000:2000 certificate. The company has a joint venture with Suzuki Motor Corporation ofJapan. It is said that the company takes only 14 hours to make a car. Few of the popular modelsof MUL are Alto, Baleno, Swift, Wagon-R and Zen. Maruti Udyog Limited (MUL), established in 1981, had a prime objective to meet thegrowing demand of a personal mode of transport, which is caused due to lack of efficient publictransport system. The incorporation of the company was through an Act of Parliament. Suzuki Motor Company of Japan was chosen from seven other prospective partnersworldwide. Suzuki was due not only to its undisputed leadership in small cars but also tocommitments to actively bring to MUL contemporary technology and Japanese managementpractices (that had catapulted Japan over USA to the status of the top auto manufacturing countryin the world). at Maruti Udyog Ltd. A license and a Joint Venture agreement were signed between Government of India andSuzuki Motor Company (now Suzuki Motor Corporation of Japan) in Oct 1982.The objectives of MUL, then are as cited below: Modernization of the Indian Automobile Industry. Production of fuel-efficient vehicles to conserve scarce resources.
  4. 4. Production of large number of motor vehicles which was necessary for economic growth. In 2001, MUL became one of the first automobile companies, globally, to be honouredwith an ISO 9000:2000 certificate. The production/ R&D is spread across 297 acres with 3 fully-integrated production facilities. The MUL plant has already rolled out 4.3 million vehicles. Thefact says that, on an average two vehicles roll out of the factory in every single minute. Thecompany takes approximately 14 hours to make a car. N[edit] at only this, with range of 11models in 50 variants, Maruti Suzuki fits every car-buyers budget and any dream. Maruti Suzuki is one of Indias leading automobile manufacturers and the market leaderin the car segment, both in terms of volume of vehicles sold and revenue earned. Until recently,18.28% of the company was 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 2003. Asof May 10, 2007, Govt. of India sold its complete share Indian financial institutions. With this,Govt. of India no longer has stake in Maruti Udyog. Maruti Udyog Limited (MUL) was established in February 1981, though the actualproduction commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car which atthe time was the only modern car available in India, its only competitors- the HindustanAmbassador and Premier Padmini were both around 25 years out of date at that point. Through2004, Maruti has produced over 5 Million vehicles. Marutis are sold in India and various severalother countries, depending upon export orders. Cars similar to Marutis (but not manufactured byMaruti Udyog) are sold by Suzuki and manufactured in Pakistan and other South Asiancountries. The company annually exports more than 50,000 cars and has an extremely largedomestic market in India selling over 730,000 cars annually. Maruti 800, till 2004, was theIndias largest selling compact car ever since it was launched in 1983. More than a million unitsof this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts andMaruti Swift is the largest selling in A2 segment. Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" iscommonly used to refer to this compact car model. Till recently the term "Maruti", in popularIndian culture, was associated to the Maruti 800 model. Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, hasbeen the leader of the Indian car market for over two decades.It‟s manufacturing facilities arelocated at two facilities Gurgaon and Manesar south of New Delhi. Maruti‟s Gurgaon facility hasan installed capacity of 350,000 units per annum. The Manesar facilities, launched in February2007 comprise a vehicle assembly plant with a capacity of 100,000 units per year and a DieselEngine plant with an annual capacity of 100,000 engines and transmissions. Manesar andGurgaon facilities have a combined capability to produce over 700,000 units annually.More than half the cars sold in India are Maruti cars. The company is a subsidiary of SuzukiMotor Corporation, Japan, which owns 54.2 per cent of Maruti. The rest is owned by the public
  5. 5. and financial institutions. It is listed on the Bombay Stock Exchange and National StockExchange in India.During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, oversix million Maruti cars are on Indian roads since the first car was rolled out on December 14,1983. Maruti Suzuki offers 12 models, Maruti 800, Omni, Alto, Versa, Gypsy, A Star, WagonR, Zen Estilo, Swift, Swift Dzire, SX4, Grand Vitara. Swift, Swift dzire, A star and SX4 aremaufactured in Manesar, Grand Vitara is imported from Japan as a completely built unit (CBU),remaining all models are manufactured in Maruti Suzukis Gurgaon Plant. Suzuki Motor Corporation, the parent company, is a global leader in mini and compactcars for three decades. Suzuki‟s technical superiority lies in its ability to pack power andperformance into a compact, lightweight engine that is clean and fuel efficient. Maruti is clearly an “employer of choice” for automotive engineers and young managersfrom across the country. Nearly 75,000 people are employed directly by Maruti and its partners. The company vouches for customer satisfaction. For its sincere efforts it has been rated(by customers)first in customer satisfaction among all car makers in India for nine years in a rowin annual survey by J D Power Asia Pacific. Maruti Suzuki was born as a government company, with Suzuki as a minor partner tomake a peoples car for middle class India. Over the years, the product range has widened,ownership has changed hands and the customer has evolved. What remains unchanged, then andnow, is Maruti‟s mission to motorise India.
  6. 6. Module 2: Strategy FormulationVision: Visions of any company are those values on which company works. As the MUL isstarted by Governmental initiatives it tends to be more consumer oriented and hence costeffective, but on the other hand Suzuki‟s participation ensures not only need of the profit, but ofthe need of maximum profit. The only way for this Nora‟s dilemma of selecting principals forcompany‟s working vision ,was to maximize profit and reducing cost by maximizing output andsales. Hence MUL declared its Vision as-“The Leader in the Indian Automobile Industry, Creating Customer Delight1 and ShareholdersWealth2; eventually become a pride of India”Customer Delight1 is making sure that performance, after sales service and customer support arebest and beyond expectation. Shareholder‟s wealth2 is the prime concern for running businesssmoothly.MUL knows this and understands “customer is king”,Mission:Mission is the statement of an organization‟s purpose, what it want to accomplish in the largerenvironment and its goals which are specific, realistic and motivating. Missions are describedover visions and visions demand certain objectives. The main objectives/Missions of MUL are:- Modernization of the Indian Automobile Industry.- Developing cars faster and selling them for less.- Production of fuel-efficient vehicles to conserve scarce resources.-Production of large number of motor vehicles which was necessary for economic growth.-Market Penetration, Market Development Similarly Product Development and Diversification.- Partner relationship management, Value chain, Value delivery network.AUTOMOBILE INDUSTRY IN INDIA: • 11 million vehicles/year • 1.5 million- export • Two wheelers (75%)
  7. 7. • Passenger Cars- 16% • Commercial vehicles (9%) • US $35 billionSWOT ANALYSIS:Strengths:  Strong Network  Presence  Brand Image  Knowledge of the market  Strong PartnershipWeakness:  Relatively new in the diesel car segment  Image stuck on small cars  Heavy import tariffs on imported models  Government bureaucrats have made MUL unaccustomed to international standards or keen competitorsOpportunities:  High end car segment  Overseas market  Improve handling  Add extra features to small segment cars  Attracting youth  Export small carsThreats:  Global players  Worker’s strikes  High competition Module 3: Analysis of Company‟s External EnvironmentPorter‟s Five Force Model
  8. 8.  Threat from the new players: Increasing• 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. Rivalry within the industry: High• There is keen competition in select segments. (compact and mid size segments).• New multinational players may enter the market.
  9. 9.  Market strength of suppliers: Low • A large number of automotive components suppliers • Automotive players are rationalizing their vendor base to achieve consistency in quality  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 manufacturersThreat from substitutes : Low to medium • Consumer preference is changing (Mini cars are being replaced by compact or mid sized cars) • Setting up integrated manufacturing facilities may require higher capital investments than establishing assembly facilities • India is also likely to increasingly serve as the sourcing base for global automotive companies, and automotive exports are likely to gain increasing importance over the medium term • competition is likely to intensify in the SUV segment in India following the launch of new models at competitive pricesModule 4: Analysis of Company‟s Resources and Competitive PositionExternal environment: PESTELPolitical environment:
  10. 10. The policies & objectives laid down by the Indian Government regarding the automobile sectorare:  Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country  Promote a globally competitive automotive industry and emerge as a global source for auto components  Establish an international hub for manufacturing small, affordable passenger cars and a key center for manufacturing Tractors and Two-wheelers in the world  Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry.Economical environment:  Sales of Passenger car has been increased to 8.45% per year.  Maruti now plans to tap the rural market, 60 per cent of which runs on cash .  Maruti has appointed 2,000 sales executives to target customers in the rural areas.  The manufacturing sector has grown at 8– 10 per cent per annum in the last few years.  More than 70 per cent of the VEHICLES purchase is on credit.  Finance availability to CV buyers has grown in scope during the last few years.Social environment: Welfare Camps Medical support & welfare Education to underprivileged Road Safety Maruti Driving Schools Adopting energy saving technologies Reducing water wastage Green Growth
  11. 11. Technological environment:  Launched CNG kit for Alto, its highest selling small car.  The company as a proactive move is all set to make its entire fleet of cars adhere to ‘end of life vehicles’ (ELV).  The company is involved with the development of small and fuel-efficient car engines.  In future, the company has high plans to increase the engine development work in India along with other R&D operations  The company uses next generation KB series Engine in its new Hatchback car A- star.  The company added Virtual Design Review to its R&D activity to enable virtual validation to reduce cycle time and development cost.  In the field of alternate fuel technology, the company developed LPG/CNG/HYBRID system for MPI engine.Ecological environment: Practicing 3 R  3R- reduce, reuse, and recycle.  Continuous process of promoting 100% recyclable and reusable car parts.  Targets reducing fresh water consumption and implement rain water harvesting.  Physical infra structure such as roads and bridges affect the use of automobiles. If there is good availability of roads or the roads are smooth With the development or evolution of alternate fuels, hybrid cars have made entry into the market.Legal environment:  Follows highest standards of Corporate Governance  Customer can contact the Secretarial & Legal Department for any questions/clarifications.  Legal compliance reporting
  12. 12. The board periodically reviews reports of compliance with all laws applicable tothe Company, as well as steps taken by the Company to rectify instances ofnon-compliances.  The Company has developed comprehensive legal compliance scheduling and management software by which specific compliance tasks are assigned to each individual. The software enables in planning and monitoring all compliance activities across the Company.Latest Plan:Fourth assembly plant will be scaled up to produce 3,00,000 cars a year by 2020.PRESENTSUPERSTAR Suzuki Cervo sport a Suzuki 660cc engine - as against Nanos 623cc - and weara tag of around Rs 1.5 lakh on road. And second car is KIZASHI which is 1700cc with 18 lakh.
  13. 13. Module 5: Strategy and Competitive AdvantageCar Models: Maruti 800(1984)OmniGypsy
  14. 14. Joint venture related issuesRelationship between the Government of India, under the United Front (India) coalitionand Suzuki Motor Corporation over the joint venture was a point of heated debate in the Indianmedia till Suzuki Motor Corporation gained the controlling stake. This highly profitable jointventure that had a near monopolistic trade in the Indian automobile market and the nature of thepartnership built up till then was the underlying reason for most issues. The success of the jointventure 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 forthe post of Managing Director and every Managing Director will have a tenure of five years[R.C. Bhargava was the initial managing director of the company since the inception of the jointventure. Till today he is regarded as instrumental for the success of Maruti Suzuki. Joining in1982 he held several key positions in the company before heading the company as ManagingDirector. 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 Managing Director on 27 August 1997. Mr. Bhaskarudu had joinedMaruti Suzuki in 1983 after spending 21 years in the Public sector undertaking Bharat HeavyElectricals Limited as General Manager. In 1987 he was promoted as Chief General Manager. In1988 he was named Director, Productions and Projects. The next year (1989) he was namedDirector of Materials and in 1993 he became Joint Managing Director.Suzuki Motor Corporation didnt attend the Annual General Meeting of the Board with thereason of it being called on a short notice. Later Suzuki Motor Corporation went on record tostate that Bhaskarudu was "incompetent" and wanted someone else. However, the Ministry ofIndustries, Government of India refuted the charges. Media stated from the Maruti Suzukisources that Bhaskarudu was interested to indigenise most of components for the modelsincluding gear boxes especially for Maruti 800. Suzuki also felt that Bhaskarudu was a proxy for
  15. 15. the Government and would not let it increase its stake in the venture.[ If Maruti Suzuki wouldhave been able to indigenise gear boxes then Maruti Suzuki would have been able tomanufacture all the models without the technical assistance from Suzuki. Till today the issue oflocalization of gear boxes is highlighted in the press.The relations strained when Suzuki Motor Corporation moved to Delhi High Court to bring astay order against Bhaskarudus appointment. The issue was resolved in an out-of-courtsettlement and both the parties agreed that R S S L N Bhaskarudu would serve up to 31December 1999, and from 1 January 2000, Jagdish Khattar, Executive Director of Maruti UdyogLimited would assume charges as the Managing Director.[14] Many politicians stated inparliament that the Suzuki Motor Corporation is unwilling to localize manufacturing and reduceimports. As of 2011 Gear boxes are still imported from Japan and are assembled at the Gurgaonfacility.Industrial relationsFor most of its history, Maruti Udyog Limited had relatively few problems with its labour force.Its emphasis of a Japanese work culture and the modern manufacturing process, first instituted inJapan in the 1970s, was accepted by the workforce of the company without any difficulty. Butwith the change in management in 1997, when it became predominantly government controlledfor a while, and the conflict between the United Front Government and Suzuki may have beenthe cause of unrest among employees. A major row broke out in September 2000 whenemployees of Maruti Udyog Ltd (MUL) went on an indefinite strike, demanding among otherthings, revision of the incentive scheme offered and implementation of a pension scheme.Employees struck work for six hours in October 2000, irked over the suspension of nineemployees, going on a six-hour tools-down strike at its Gurgaon plant, demanding revision of theincentive-linked pay and threatened to fast to death if the suspended employees were notreinstated. About this time, the NDA government, following a disinvestments policy, proposed tosell part of its stake in Maruti Suzuki in a public offering. The Staff union opposed this sell-offplan on the grounds that the company will lose a major business advantage of being subsidisedby the Government.The standoff with the management continued to December with a proposal by the managementto end the two-month long agitation rejected with a demand for reinstatement of 92 dismissedworkers, with four MUL employees going on a fast-unto-death. In December the companysshareholders met in New Delhi in an AGM that lasted 30 minutes. At the same time around 1500plant workers from the MULs Gurgaon facility were agitating outside the companys corporateoffice demanding commencement of production linked incentives, a better pension scheme andother benefits. The management has refused to pass on the benefits citing increased competitionand lower margins.
  16. 16. Generic Strategies: Overall cost leadership • Low-cost-position relative to a firm‟s peers • Manage relationships throughout the entire value chain • Differentiation • Create products and/or services that are unique and valued • Non-price attributes for which customers will pay a premium • Focus strategy • Narrow product lines, buyer segments, or targeted geographic markets • Attain advantages either through differentiation or cost leadership G EN ER IC S T R AT EG IES Lower Cost Differentiation S Industry wide Cost Leadership Differentiation c o p Cost Focus Differentiation Particular Focus e Segment Competitive Advantage
  17. 17. AN O FF S M AT R IX Ex i s t i n g P r o d u c t N ew P r od u ct Ma r k e t P e n e t r a t i on • D i s t r i b u t i on Product D e v e l op m e n t •Exp a n s i on of •N e w p r od u c t – Ex i s t i n g m a n u fa c t u r i n g S p la sh Ma r k e t fa c i l i t i e s Market D e v e l op m e n t D i v e r s i fi c a t i on N ew •E xpor t s Ma r k e t The Marketing Mix1.Product2.Price3.Place4.Promotion
  18. 18. There you have it, the 4 marketing psSo now lets get a bit more explanation of the 4 marketing ps :-1. Product - The product aspects of marketing deal with the specifications of the actual goodsor services, plus how it relates to the end users needs and wants. The range of a product normallyincludes supporting elements such as warranties, guarantees, and support.The term “product” refers to tangible, physical products as well as services. Here are someexamples of the product decisions to be made:  Brand Name  Functionality  Styling  Quality
  19. 19.  Safety  Packaging  Repairs and Support  Warranty  Accessories and services  Models and sizes2. Price -This refers to the process of setting a price for a product, together with discounts. Theprice need not be monetary; it can plainly be what is exchanged for the product or services, e.g.time, energy, or attention. Methods of setting prices optimally are in the domain of pricing art.Some example of pricing decisions to be made include :  Pricing strategy (skim, penetration, etc.)  Suggested retail price  Volume discounts and wholesale pricing  Cash and early payment discounts  Seasonal pricing  Bundling  Price flexibility  Price discrimination  Allowances and deals  Discount structure  Distribution and retailer mark-ups3. Place - (or distribution ): refers to how the product gets to the buyer; for instance, point-of-sale assignment or retailing. This third P has furthermore at times been called Place, referring tothe channel by which a product or service is sold (e.g. online vs. retail), which geographic regionor industry, to which division (young adults, families, business citizens), etc. also referring tohow the surroundings in which the product is sold in can influence sales.  Distribution channels  Market coverage (inclusive, selective, or exclusive distribution)  Specific channel members  Inventory management  Warehousing  Distribution centers
  20. 20.  Order processing  Transportation  Reverse logistics  Outlet location  Sales territories4. Promotion - This includes advertising, sales promotion, including promotional education,publicity, and individual selling. Branding refers to the assorted strategies of promoting theproduct, brand, or company.  Promotional strategy (push, pull, etc)  Advertising  Personal selling & sales force  Sales promotions  Public relations & publicity  Marketing communications budgetAll the 4 marketing ps are also known as "the marketing mix" furthermore are frequently usedby a marketer to plot a plan, and place the foundations of fresh projects/campaigns, it is aastonishingly useful strategy that has been used ever since the early 1960s, and will be constantfor as long as new-found projects/campaigns are being producedModule 6: Formulating long term and grand strategies MARKETING STRATEGY OF MUL Maruti was the first company in India which studied the consumer demand and responded to it well. Market segmentation policy was adopted that targeted different type of consumers with different type of models. Maruti800targeted medium income group, while the deluxe model targeted rich income group. Maruti van targeted businessmen and doctors(ambulance)
  21. 21. The Gypsy targeted the paramilitary forces and the police. This resulted in complete control of maruti over the market . The company advertised its different products according to costumers. A special cell was made to make direct dealing of Gypsy with the government & the army. BCG MATRIX STAR QUESTION MARK SWIFT KIZASHI SWIFT DZIRE NEW GRAND VITARA SX4 EECO CASH COW DOG 800 OMNI VERSA ALTO ZEN ESTILO RITZ WAGON RCurrent and Future Market Strategies
  22. 22. Design small cars suitable for the Indian conditions as a strategy to beat the stiff competition with the entry of global auto makers. Company would capitalise on Suzuki’s research and development capabilities and internal resources to finance its expansion, thereby cushioning itself from the higher interest rates and borrowing costs and become cost competitive. Company’s plan to stay away from the ultra low-cost segment. Maruti Suzuki is looking to make India an exclusive base to manufacture small cars for Europe. Design small cars suitable for the Indian conditions as a strategy to beat the stiff competition with the entry of global auto makers. Company would capitalise on Suzuki‟s research and development capabilities and internal resources to finance its expansion, thereby cushioning itself from the higher interest rates and borrowing costs and become cost competitive. Company‟s plan to stay away from the ultra low-cost segment. Maruti Suzuki is looking to make India an exclusive base to manufacture small cars for Europe.Competitive Advantage of MUL
  23. 23.  Dealer network across the country wide dealership network allows the company to service customers over a wider geographical area than competitors. Currently, MUL has 500 sales outlets that cover 312 cities, as compared to 162 outlets of Hyundai Motors and 140 outlets of Tata Motors.  True Value Operations MUL providing its customers an opportunity to resale their car to MUL or exchange with a new Maruti car under its “True Value” network has proven really beneficial. In FY07 True Value network touched 10000 units a month and more than 90% of that resulted in the exchange of a new car.  Presence across segments In a car manufacturing plant, the press shop, paint shop, engine and transmission assembly, and machine shop are used for manufacturing different models.  Commonality of platforms-Commonality between the platforms of various models lead to lower product development efforts and higher benefits of economies of scale, uses only two platforms. Strong support in R & D and Product from parent -MUL‟s strength lies in the strong parentage of SMC, Japan.Maruti Suzuki’s Key Success Factors  Technology-Related KSF‟s o 1. R&D facilities and Japanese collaboration. o 2. Suzuki internationally known for Small cars. o 3. Launch of World class quality cars like A-STAR and SPLASH  Manufacturing-Related KSF‟s o Designing cars best suited for Indian market. o Cost leadership in the market due to efficient value chain and manufacturing plants.  Distribution-Related KSF‟s
  24. 24. o The record sales performance was affected through the Companys vast dealership network. o Car sales outlet increased to 600 covering 393 cities. o There are 265 „Maruti True Value‟ outlets spread across 166 cities, which are engaged in the sale, purchase and exchange of pre-owned cars. „Maruti True Value‟ is the largest organized pre-owned car sales network in India.  Marketing-Related KSF‟s o Full range of cars-from entry level Maruti 800 & Alto to stylish hatchback A-star, Swift, Wagon R, Estill and sedans DZire, SX4 and Sports Utility vehicle GrandVitara. o Communication through advertisement is totally to the need of Indian culture o Pan-India service network.  Skills and Capability-The service network had a total of 2,628 service outlets including dealer workshop as well as Maruti Authorized Service Stations, covering 1220 cities.Module 7: Strategy ImplementationCompetitive Strategies of a market leader:In an effort to counter competition from local and foreign players, Maruti started restructuring itsoperations. The continuous decline in market share and sales forced the company to rethink itsstrategy and formulate a new competitive strategy. Maruti upgraded its manufacturing facilitiesto meet the foreign challenge with its claims of high-end technology. It broadened its productportfolio and expanded its sales and service network to reach all over India. Within a year of itslaunch of its Challenge 50 plan, Marutis restructuring efforts started reflecting in its financialperformance. In the financial year 2003-04, Maruti reported a 25.2 percent increase in net salesto Rs 90.81 billion as compared to Rs 72.53 billion in the preceding fiscal year. The net profit ofthe company for 2003-04 also increased from Rs 1.46 billion in fiscal 2002-03 to Rs 5.42 billionin fiscal 2003-04. The company was able to increase its net profit riding on the high sales growthof Alto, which increased by over 130 per cent in fiscal 2003-04 as compared to fiscal 2002-03.
  25. 25. Corporate Governance:In India, Corporate Governance standards for listed companies are stipulated by Securities andExchange Board of India ( SEBI) through a special provision- Clause 49 of the ListingAgreement .As a conscious and vigilant organization, Maruti Suzuki had initiated goodCorporate Governance practices even before Clause 49 became applicable and these practicesform an integral part of the company‟s governance culture. The Company strives to foster acorporate culture in which high standards of ethical behavior, individual accountability andtransparent disclosure are ingrained in all its business dealings and shared by its Board ofDirectors, Management and Employees.The Company has established systems & procedures to ensure that its Board of Directors is well-informed and well-equipped to fulfill its overall responsibilities and to provide the managementstrategic direction it needs to create long-term shareholder value.On its Board, the Company has four non-Executive- Independent Directors of high stature fromvaried backgrounds, who bring with them rich experience and high ethical standards.In recent years, the Company has evolved a Control Self Assessment mechanism to evaluate theeffectiveness of internal controls over financial reporting.Key internal controls over financial reporting were identified and put to self assessment bycontrol owners in the form of Self Assessment Questionnaires through a web basedonlinetoolcalled"ControlManagers". .With the successful implementation of the online Controls Self Assessment framework, theCompany has become one of the few companies in India to have a transparent framework forevaluating the effectiveness of internal controls over financial reporting. The initiative furtherreinforces the commitment of the Company to adopt best corporate governance practices.Corporate Social ResponsibilityMaruti Suzuki has adopted a CSR policy, which serves as a guiding tool for the management andthe employees in steering Maruti Suzuki towards long term sustained growth in harmony alongwith the interests of the stakeholder.The role of the CSR department is to professionalize CSR activities in Maruti Suzuki andstrengthen the mechanisms involving the activities. Significant efforts have been taken tocontribute to society at large, through its corporate activities, especially in the areas of RoadSafety and Vocational Training. Maruti Suzuki has set up dedicated teams with requisiteexpertise to steer the social projects.CSR POLICY:"While working to enhance shareholder wealth, Maruti Suzuki will regularly engage with all stakeholders to astheir needs and through its products, services, conduct and management initiatives, promote their sustained groand well - bePolicy Guidelines
  26. 26. Company will follow responsible business practices in all its functions and operations and strive to implement them at its suppliers, dealers and other business partners. Company will continue to remain ahead of law in pursuit of environment protection energy conservation at its manufacturing facilities, and in development of products that use fewer natural resources and are environm friendly. Company will be deeply committed towards the welfare of its employees, their families communities around its operations to improve quality of life as a whole. Company will develop products and services that fulfills the aspirations of customers, bui strong and lasting bond with them, proactively support them during natural calamities, delight them with after sales services availability of spares. Company will continue to provide technological and managerial support to its suppliers dealers to further their profitable and sustainable growth. As an expression of thanks to the local community and the people of the country Company undertake initiatives that might not be directly linked to its business. Company will partner with government, NGOs, business partners to contribute positively tow economic and human development of the society especially underprivileged people. Company will encourage and recognize its employees for volunteering in the community in spirit of serving and sharing their expertise and skills. Company will strive to constantly build organizational capabilities, like any other compete position suitable people and have a proper organizational structure to ensure implementation of CSR policy, guidelines and program Company will engage with reputed external agencies for audit of its CSR activities for the purp of identifying areas of improvement, authenticity of data and reporting. Company will monitor the progress on various CSR programs in a structured manner, docum the performance against the set targets and publish a report every year on its CSR performance and share with its key stakeholdModule 8: Strategic Review and Audit:Stake Holders:  Employees and their families  Customers and their families  Shareholders and investors.
  27. 27.  Dealers Suppliers and other Business partners.  Local community and society  Environment and regulatory authoritiesOperations management at maruti Suzuki:Maruti Udyog Ltd (Maruti), a joint venture between Suzuki Motors of Japan (eleventh largestvehicle manufacturer in the world and the fourth largest manufacturer in Japan) and the Indiangovernment, is the leader in Indias automobile market. Maruti has the widest product rangeamong Indian car manufacturers, with ten basic models and more than 50 variants. In 2003,Maruti produced 359,960 vehicles, operating at a capacity utilisation of 103%, against theindustry average of 57.8%. Even though Maruti is well ahead of its other rivals, its market sharehas been declining. As competition intensifies, Maruti has realised the importance of gettingcloser to its customers. The company has launched various initiatives to improve customerservice. Maruti has improved its operational efficiency by increasing productivity, cutting costsand launching new products. By its quality initiatives, Maruti has reduced its defects per vehiclesignificantly.