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    GURU GOBIND SINGH INDRAPRASTHA

    UNIVERSITY,KASHMERE GATE

    NEW DELHI

    ANALYSIS OVER MARUTI UDYOG LIMITED

    SUBMITTED BY:

    KANIKA PURI

    ENROL NO: 02416608909

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    CERTIFICATE

    This iscertify that this project entitled ANALYSIS OVER MARUTI

    UDYOG LIMITED has been carried out for the sole purpose of

    submission in the partial fulfillment, for Masters in Business Administration(MBA-B&I) weekend course at University School of Management Studies GGSIPU, by Kanika Puri (Enroll no.-02416608909). The matter embodiedin this project is the result of my study and survey and has not been been

    published anywhere before to the best of my knowledge and belief.

    Project Guide:

    Mr. Sanjay Dhingra

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    ACKNOWLEDGEMENT

    The satisfactions that accompany successful completion of any work wouldbe incomplete without the mention of the people who made it possible.Preliminary, I would like to thank our institution fit and also other staffmembers for giving me the opportunity to fulfill my aspiration.

    With deep sense and regard I am thankful to our training guide Mr. SanjayDhingra for his valuable guidance and remarkable patience in guiding ourwork to its fulfillment. I wish to thank my parents for their constantencouragement which is like snow, softer when it falls and longer when itdwells upon, the deeper it sinks in mind.

    I will be failing in my mission if I do not thank other people who directly orindirectly helped me in the successful completion of this project. So, myheart full thanks to all friends and staff of my college, who supported andencouraged me in preparing this project report as best as possible.

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    Contents1) Preface2)Company profile(Training center)3)Training project(Maruti udyog ltd)

    (Phase I) Evolution of the Indian Passenger Car Industry Marutis Entry into the Indian Passenger Car MarketsDomestic Car MarketDynamics of Market Car Market Classification

    y Price Based Classification

    yLength Based Classification Marutis Offering & Competitors in Different Segment Share of Segment in the Industry Financials: Trend over the years Factors Determining Competition in Indian Passenger Car Industry Factors Affecting Demand for Indian Passenger Car

    (Phase II) Industry Overview Evolution of Indian Industry

    Global Passenger Car Industry The Indian Passenger Car Industry Sector Outlook Future Scope

    (Phase III) MULs Vision MUL, S Strengths

    y Productivity & cost efficiency MULs Business Strategy

    MULs supply chain Research & Development Manufacturing process

    (4) Refrences

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    PHASE I

    Evolution of the Indian Passenger Car industry:During 1960s and the 1970s there were only two manufacturers in themarket, Hindustan Motors and Premier Automobiles with limited productioncapacities. The import of passenger cars was restricted to the State TradingCorporation (STC) and foreign diplomats.During that period the passenger car industry in India grew at a nominalCAGRof approximately 3.6%. The rate of customs duty levied on cars was225%.Today Maruti has more than 5 million satisfied customers in India and iscurrently having a share of around 54 per cent in the domestic passenger carmarket where most of the major international automobile manufacturers are

    present.

    Marutis entry into the Indian Passenger Car Market:MUL was the result of the joint venture created in February 1981 betweenJapan's Suzuki Motor Company and the Indian Government when the latterdecided to produce small, economical cars for the masses.

    The intention of the venture was to produce a 'people's car'. To get theproject off the ground MUL took over the assets of the erstwhile MarutiLtd., which was set up in 1971 and closed in 1978.

    It was on December 14, 1983 that MUL launched the first Maruti vehicle -

    the Maruti 800. The first model was the SS80, a 796cc hatchback car pricedat Rs. 47,500.Subsequently, in spite of price hikes, the car has remained within the reachof the Indian middle class and has been a runaway success. Available invibrant colures when India's passenger car population comprised mainly

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    Ambassadors and Fiats in black and white, M800 gave Indians the first tasteof global quality and reliability.

    In late1980s, Suzuki increased its equity stake in MUL from 26% to 40%and further to 50% in 1992, converting Maruti into a non-governmentcompany.

    In the years that followed, MUL consolidated its position with a line ofIndian classics, such as the eight-seat Omni, the rough-terrain Gypsy, and, inOctober 1990, a 3-box Maruti 1000. MUL took the lead in the green drive

    by launching its CNG-run Omni and Maruti 800 in 1999.MUL redefined the premium compact segment with the launch of the Zen inOctober 1993. It was the company's first 'world car, selling across multiplemarkets. A year later, the Zen had won several awards, including 'No. 1 car

    in Europe' (Auto Week, 1994),

    'No.1 import in Europe' (1997) and 'most fuel-efficient car' (ADAC).In 1999, MUL launched Baleno and WagonR. Baleno targeted the premiummid-segment while WagonRwas positioned as a multi-activity vehicle.

    In1999, to improve customer satisfaction, it even established a chain ofmodel workshops and soon after, set up customer call centers in the metros.

    In 2000, Maruti Suzuki introduced Alto - a premium small car targeting theexport market - and in October 2001, Versa, a multipurpose vehicle.

    In May 2002, Suzuki took management control of Maruti.

    In April 2003, MUL rolled out its latest offering, the Grand Vitara XL-7, aluxury SUV imported from Suzuki Motor Corporation. The Grand Vitarawas a concept that was radically different from the models that comprisedthe bulk of MUL's sales.

    Since 1980 with its product excellence, operational efficiency and customerintimacy Maruti Suzuki has been the leader in Indian passenger car market.Main objectives of MUL as set forth in their Memorandum of Associationare:

    1.To acquire and take over from GoI the right, title, and interest in relation tothe undertakings of Maruti Ltd. As\ provided for in the appropriate

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    enactment of GoI together with the liabilities of GoI so far as they arerelated to the Undertakings of the Company.

    2. To carry on the business of manufacturers of, and dealers in, automobiles,motorcars, lorries, buses, vans, motorcycles, cycle-cars, motor, scooters,carriages, amphibious vehicles, and vehicles suitable for propulsion on land,sea, or in the air or in any combination thereof and vehicles of all

    descriptions (all hereinafter comprised in the term motor and other things),whether propelled or assisted by means of petrol, diesel, spirit, steam, gas,electrical, animal, or other power, and of internal combustion and otherengines, chassis-bodies and other components, parts and accessories and allmachinery, implements, utensils, appliances, apparatus, lubricants, cements,solutions enamels and all things capable of being\ used for, in, or inconnection with manufacture, maintenance, and working of motors and other

    things or in the construction of any track or surface adapted for the usethereof.

    3.To carry on the business of garage keepers and suppliers of and dealers inpetrol, electricity and other motive power for motors and other things.

    4.To carry on in the business of iron founders, mechanical engineers, andmanufacturers of machinery, tool makers, brass founders, metal workers,

    boiler makers, mill rights, machinists, iron and steel converters, smiths,wood workers, builders, electroplaters, chromium platers, lacquerers,enamellers, painters, metallurgists, electrical engineers, and printers and tocarry on any branch of manufacturing and engineering business.

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    Dynamics of Market:

    Initially Maruti was operating in the market which was the part of a closedeconomy but with the opening of economy market scenario has changed

    dramatically and is at an interesting juncture where both challenges andopportunities are immense.

    According to the statistics available, Indian car market is one of Asia'slargest and most competitive markets. Over 1,030,068 passenger cars, multiand sports utility vehicles were sold during 2003/04 resulting in the marketgrowth of about 32%. With such immense growth opportunity the Indian

    automobile market has finally caught the fancy of big players which areeager to capture the India automobile market at any cost.

    And as such Maruti is having a tough competition from the new players,including Hyundai, GM and Honda of Japan.

    In the last quarter of 1998 these new entrants in the market had launched anunprecedented assault on the B segment of the market.

    Daewoo launched the Matiz

    Hyundai launched the Santro. Santro Xing specially created a fresh

    excitement in the B segment.

    Telco launched the Indica

    Around the same time, Fiat slashed the prices of its Uno and launched aDiesel variant. Hyundai has also launched Getz.

    General Motors is also planning to launch new variants.

    F

    iat has reworked the engine of the Palio and is planning to launch anotherB segment product.

    And then, there are Honda and Toyota.

    It is also predicted that Honda Motors India will be also launching its smallcar, Life, in India.

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    Along with the intense competition there are other factors which have madethe conditions worse for Maruti.

    After almost 18 years, the 800 is on its last legs. This is particularlyimportant as Tata Motors is serious about an entry-level car at Rs 1 lakh.

    Over the years, MUL's brand value had begun to erode. It is seen as asmall-car maker only.

    Maruti was having nothing to offer to the booming market for peoplecarriers in India - Sumo, Qualis, et al. For this segment Maruti launchedVersa. Launched as a higher end alternative to the Omni, it was expected toclick. But the Versa bombed. Launched with sales expectations of a1,000units every month, it did about 100.

    The other launch, the Baleno, went up against the Hondas and theMitsubishis, and lost money from Day One.

    In an industry where cars get minor facelifts every year, a major reworkingevery two to three years, and are replaced every four or so years, the Zen hasremained almost unchanged since 1993.

    It seems that even consumer are having problem equating Maruti withpremium.

    Since MUL had exhausted all of Suzuki's high-end products, it is findingitself unable to cope with the frequent upgrades and relaunches.

    Even when the government's stake in Maruti has come down, theinterference will not decrease as seen with other institutions like VSNL andMTNL.

    Considering Hyundai's emerging status in the Indian market and the lack of

    government involvement, it could turn out to be a better pick than Maruti.

    Maruti is also facing problems linked to its higher end mid-sized (segmentC) models. Maruti's share in this segment has fallen from 30 per cent in1999-00 to 16 per cent in 2002-03.Maruti currently has three cars in segment

    C -- Esteem, Versa and the Baleno, of which the latter two have still to makea mark.

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    Maruti Suzuki is also having great difficulty in keeping its profit growingas A segment, in which Maruti Suzuki is the only player has margins as lowas 1-2% (Rs 2,000 to Rs 4,000 per car).

    As a result in recent years Maruti Suzuki has been consistently been losingout to other players like Hyundai andTelco in the compact car segment and has been reduced to the marginal

    player in all segments above B.Talking in terms of absolute figures Maruti Suzuki's share declined from61.2% in 1999 to 54.6% in 2003 and finally to 51% in 2005. Its volumeshave dropped from 3.53 lakh to 3.30 lakh even as total industry volumes(cars and utility vehicles) have shown a compounded annual growth rate of 5%.

    Car Market Classification:

    Before going further it is necessary to understand the Indian car marketclassification and the segments in which MUL operates.There are two principal systems of classification in the Indian passenger carindustry:

    Price Based Classification

    Price based classification is the widely accepted classification basis in theIndian passenger car industry.The different price segments used by Maruti were as follows:1. Segment A cars priced lower than Rs. 300,0002. Segment B cars priced between Rs. 300,000 and Rs. 500,0003. Segment C cars priced between Rs. 500,000 and Rs. 1,000,0004. Segment D cars priced between Rs. 1,000,000 and Rs. 2,500,0005. Segment E cars priced above Rs. 2,500,000

    Length Based Classification:

    In April 2002, SIAM introduced a new segmentation of cars on the basis ofthe length of the cars, in order to establish a uniform industry standard. Thenew segmentation of passenger vehicles is as follows:

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    1.Passenger cars Segment A1 (Mini) cars having a length up to 3,400mm

    Segment A2 (Compact) cars having a length of 3,401- 4,000mm Segment A3 (Mid-size) cars having a length of 4,001- 4,500mm Segment A4 (Executive) cars having a length of 4,501- 4,700mm Segment A5 (Premium) cars having a length of 4,701- 5,000mm Segment A6 (Luxury) cars having a length of more than 5,000mm

    2.Utility vehicles Weight up to 3.5 tonnesa) Seating capacity not exceeding 7 (including driver)

    b) Seating capacity between 7 and 9 (including driver) Weight up to 5 tonnesa) Seating capacity not exceeding 13 (including driver) Multi-purpose vehicles (Weight up to 3.5 tonnes).

    Domestic Car Market

    Classification of domestic car market of MUL.

    Sales Units FY07

    (Vol 000)

    FY06

    (Vol 000)

    Change (%)

    Maruti 632 522 21%

    Industry 1,159 948 22%

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    Major players in Automobile industry

    Fiat India Automobiles Pvt. Ltd

    Ford India Automobiles Pvt. Ltd General Motors India Ltd

    Hindustan Motors

    Honda SIEL Cars India Ltd

    Hyundai Motor Company Ltd.

    Skoda Auto India Pvt. Ltd

    Tata Motors

    Fiat India Automobiles Pvt. Ltd

    The latest joint venture between the car giants, Fiat Auto of Italy and India's oldest automobile manufacturer, Premier

    Automobiles Ltd. (PAL) resulted in the formation ofFiat AutomobilesPvt. Ltd.

    Which has manufacturing locations in 60 countries. This is a whollyIndian subsidiary ofFiat Auto in which Italy holds a 51% share and49% is with PAL.

    It was hoped that this new venture would produce cars which give

    good performance, are beautiful and which would be suitable forIndian conditions

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    Ford India Automobiles Pvt. Ltd

    An American company manufactures & sales automobile world wide. A company was founded by Hanery Ford. Ford introduced itself in 1988 with its Escort models in 2001. Company is having capacity 100000 vehicles per annum.

    General Motors India Ltd

    General Motors India was formed in 1994 as a result of collaboration

    between General Motors Corporation and C.K. Birla Group ofCompanies. Its total investment is to the tune ofRs. 300 crores, General Motors is

    the worldwide leader in car manufacture, with a 17% share in theworld auto market.

    Its products are sold in over 170 countries, and its manufacturing base is spread across 43 countries and its annual

    production is roughly 83 lakh vehicles

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    Hindustan Motors

    An Indian Company of C.K. Birla group Established by Mr. B.M. Birla found in 1942 Has a joint venture with Mistubishi In 1954 launched its first car Ambesseder

    Serving the nation for over 50 years

    Honda Motors Co. Ltd.

    The joint venture between India's Hero Group and Honda MotorCompany.

    Hero Honda became the first name in 80s in India to make and provea point that vehicles can be driven without any pollution.

    Most fuel- efficient and largest selling vehicles due to its advanced

    use of technology and better services. Hero Honda has managed to achieve indigenization of over 95

    percent, a Honda record worldwide.

    Glamout PGM FI by Overdrive Magazine and Most TrustedCompany , by TNS Voice of the Customer Awards 2006 .

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    Hyundai Motor Company Ltd.

    Hyundai Motor India Ltd. was established in 1996 It is Korea's top automobile manufacturer, with it sales revenue

    touching 8.24 billion in 1997 It got planned to invest another $1 billion in this facility by the year

    2001

    Awarded with the benchmark ISO 14001 certification Plant is capable of producing 1, 20, 000 cars and 1,30,000 engine and

    transmission systems annually. Giving a strong competition to its rivals in the same segment

    Skoda Auto India Pvt. Ltd

    Skoda Auto is a part of the international Volkswagen Group, One of the premium automobile manufacturers in Europe. Skoda entered the Indian market in November 16, 2001. Till date Skoda Auto has introduced twelve luxury models in the Indian market

    including Skoda Superb and Skoda Laura. In 2005, the company achieved more than 25% market in the luxurysegment.

    In the same year, it had set up a network of 41 dealerships equippedwith 35 facilities spread across the country. The total sale was close to27,000.

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    Tata Motors

    Tata Motors Limited is India's largest automobile company, withrevenues ofRs. 24,000 crores in 2005-06

    Second largest in the passenger vehicles, mid size car and utility

    vehicle segments Over 3.5 million Tata vehicles is moving on Indian roads, since 1954.Its manufacturing plant is located at Jamshedpur, Pune and Lucknow

    100% share in segment -A & 42% in segment -B

    The majority of the companys revenue comes from the segment Aand segment B- the compact segment. This accounts for the 85%of the total car market in India. These two segments generate morethan 90% of the revenue for the company.

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    Marutis Offering and Competitors in Different Segments:

    MARUTI IN SEGMENT A

    MODEL LENTH BASED

    CLASSIFICATION

    1. Maruti 8002. Omni

    A1:MiniUtility vehicles

    ( MUL has 100% share in segment A )

    Maruti in segment BMODEL LENTH BASED

    CLASSIFICATION

    1.Alto

    2.WagonR

    3.Zen estilo

    4.swift

    A2: Compact

    A2: Compact

    A2: Compact

    A2: Compact

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    Competition of MUL in segment BCOMPANY NAME MODEL LENTH BASED

    CLASSIFICATION

    1.Tata Engineering &

    LocomotiveCompany Ltd

    2.Hyundai Motor CompanyLtd.

    3.Hindustan Motors

    4.Fiat India AutomobilesPvt. Ltd

    5.Chevrolet

    Indica

    Santro

    I10

    Ambassador

    Fiat Uno

    Fiat Palio

    spark

    A2: Compact

    A2: Compact

    A3: Mid-size

    A2: Compact

    A2: Compact

    A2: Compact

    A2: Compact

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    Maruti in segment C

    MODEL LENTH BASED

    CLASSIFICATION

    1.Baleno

    2.Esteem

    3.Versa

    4.Maruti gypsy

    5.Sx4

    A3: Mid-size

    A3: Mid-size

    Utility vehicles

    Utility vehicles

    A3: Mid-size

    Competition of MUL in segment C

    COMPANY

    NAME

    MODEL LENTH BASED

    CLASSIFICATION

    1.FiatIndiaAutomobiles

    Pvt. Ltd

    2.Ford IndiaAutomobiles Pvt. Ltd

    3. General MotorsIndia Ltd

    4. Honda SIEL Cars

    Fiat Siena

    Fiat Petra

    Palio Adventure

    Ikon

    Ford Fiesta

    Ford Fiesta

    Opel Corsa

    Opel Swing

    City

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

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    India Ltd

    5.Hyundai MotorCompany Ltd

    6.Mahindra and

    Mahindra

    7.Chevrolet

    8.Skoda Auto IndiaPvt. Ltd

    9.Tata Motors

    Accent

    Elantra

    Getz prime

    Verna

    logan

    Aveo

    Skoda Fabia

    Tata Indigo

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

    A3: Mid-size

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    Maruti in segment DMODEL LENTH BASED

    CLASSIFICATION

    Grand Vitara Sports utility vichle

    Competition of MUL in segment D

    Company name MODEL LENTH BASED

    CLASSIFICATION

    1.Ford IndiaAutomobiles Pvt.

    Ltd

    2.Honda SIEL CarsIndia Ltd

    3.Hyundai MotorCompany Ltd

    4.Skoda Auto IndiaPvt. Ltd

    5.Chevrolet

    Mondeo

    Accord

    Civic

    Sonata

    Octavia

    Skoda Laura

    Skoda Octavia

    Skoda Superb

    Optra

    A5: Premium

    A5: Premium

    A5: Premium

    A5: Premium

    A5: Premium

    A5: Premium

    A5: Premium

    A5: Premium

    A5: Premium

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    Share of Segment in the Industry

    Compact cars - A1 and A2 have major contribution in total car

    sales in India.

    22%

    7% 6%

    49%

    56%

    60%

    65% 65%

    17%19% 20%

    17% 18%

    3% 4% 3%

    8% 7% 7%

    9%13%

    4%4%

    7%7%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    2003-04 2004-05 2005-06 2006-07 H12007-08

    SegmentS

    hareinTotalIndustrySale

    A1 A2 A3 A4-A6 C

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    Market Share over the years

    More than Half of Market share from past 20 years since 1986-87

    55.06

    54.48

    55.09

    54.6

    54.816

    13.54.5

    16.8

    16.01

    17.08

    16.62

    15.4

    16.38

    14.29

    15.92

    5.1

    4.05

    2.7

    4.31

    2003-04

    2004-05

    2005-06

    2006-07

    H1 2007-08

    Maruti Hyundai Tata Honda

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    Financials: Trend over the years

    Mul, s financial trand of the year

    Financial Performance FY0

    Rs. Million FY07 FY06 Growth

    Net Sales (RsMn)

    145,922 120,034 21.6%

    PBT (Rs Mn) 22,798 17,500 30.3%PBT Margin 15.6% 14.6% 100 bpsAvg. Net Worth(Rs Mn)

    62,291 49,157 26.7%

    ROCE 35.3% 34.7% 60 bpsPAT (Rs Mn) 15,260 11,891 31.4%EPS (Rs) 54.1 41.2 31.3%

    1

    050

    1

    460

    5

    420

    8

    540

    1

    1

    891

    15

    620

    19

    322

    90,630

    110,200

    132,910147,043

    171,442

    198,480

    90,810

    0

    5000

    10000

    15000

    20000

    25000

    2001

    -02

    2002

    -03

    2003

    -04

    2004

    -05

    2005

    -06

    2006

    -07

    2007

    -08*

    RsMillions

    0

    50000

    100000

    150000

    200000

    250000

    RsMillions

    PAT Turnover

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    Estimated Financial Performance in

    FY08, 09, 10MUL has also said that it would increase the capacity of its new manaserplant to 3, 00,000 lakh units. MUL has set a target of incremental exports1,00,000 units from this new plant.

    Particular Mar 08E Mar 09E Mar 10E

    Net sales (Rs Mn)

    EBITDA (Rs Mn)

    EBITDA (%)

    PAT(Rs Mn)

    EPS (Rs) FV-Rs5

    P\E(x) at Rs798

    174730.7

    23938.1

    13.7

    17957.7

    62.1

    12.9

    213183.4

    31764.3

    14.9

    22291.2

    77.1

    10.4

    267642.5

    40414.0

    15.1

    27086.0

    93.7

    8.5

    Factors Determining Competition in the Indian Passenger Car

    Industry Price Brand image Product performance

    New model launches Distribution network After sales support. The availability of value-added after sales services.

    Factors Affecting Demand for Indian Passenger Cars

    Demand for cars depends on a number of factors. The key factors affecting

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    demand for passenger cars in India are: Fuel costs Prices of cars Per capita income Introduction of new models Incidence of duties and taxes The quality of road infrastructure. Availability and cost of consumer financing

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    PHASE II(Industry Overview :)

    Evolution of Indian Industry

    Maruti instrumental in the Growth of Indian Passenger Car

    Industry

    -

    200,000

    400,000

    600,000

    800,000

    1,000,000

    1,200,000

    1,400,000

    1970-71 1975-76 1980-81 1985-86 1990-91 1995-96 2000-01 2005-06

    Volumes

    MARUTI

    OTHERS

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    As shown in the chart, in 2000, developed economies, such as US, Japan andcountries in Western Europe, with higher income levels, had higher levels ofnew car registrations, while emerging economies, such as India andChina, with lower income levels, had lower levels of new car registrations.With rising income levels in the emerging markets it is likely that thenumber of new car registrations will also increase.

    Share Holding Pattern of MUL

    Implications of Global Trends on the Indian Passenger Car

    Market:

    As a result of rising household income and decline in interest rates, along

    with current low passenger car ownership density, many globalmanufacturers have entered the Indian market. India is generally believed tohave a high GDP growth potential aided by low cost of production andavailability of skilled manpower. The high rateof growth in the sales of passenger cars in India is driven primarily bygrowth in the sales of passenger cars priced below Rs. 500,000.

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    The Indian Passenger Car Industry:

    Regulations and Policies Related to Indian Automobile

    Market:Over the years GoI has formulated various policies and regulations for thedevelopment of the automobile industry in India.

    New Automobile PolicyIn March 2002, GoI announced the new automobile policy or NAP. Thehighlights of the policy and its effects on the manufacturers are:

    Requirement of minimum levels of indigenization was removed.

    Requirement of minimum export commitments was removed.

    Up to 100% equity ownership in Indian companies by overseasmanufacturers was permitted.

    Fiscal incentives were provided for cars less than 3.8 meters in length in

    order to establish India as the Centre in Asia for the export of small cars.

    Tax incentives, automatic approvals for investment by overseas entities inIndian entities

    Confessional duty on import of equipment was provided to entities settingup of automotive design firms n India.

    Trade RegulationsThe World Trade Organization (WTO), of which India is a member, doesnot allow quantitative restrictions or QRs (such as import licenses andimport quotas) on foreign trade. Since April 1, 2001, all QRs on automobilesare removed and imports of all categories of new and used cars are allowed.In addition, GoI has imposed several Conditions on the import of new andsed vehicles such as restrictions on the age and the residual life of the usedCar being imported, restriction on the port through which the imports are

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    allowed, requirements of certification from notified agencies regardingvarious matters, requirements pertaining to the availability of spares andServicing facilities and a requirement that the used cars can only be exportedfrom the country inwhich they have been manufactured.

    Environmental RegulationsThe Environment Protection Act, Water (Prevention and Control ofPollution) Act and the Air (Prevention and Control of Pollution) Act requirecompanies to obtain consents for emissions and discharge of effluents intothe environment. In addition, GoI notified norms relating to emission byvehicles, age of vehicles and specifications about quality and sales of fuels.These environmental regulations are increasingly driving technology

    innovation in the passenger car market.

    Environmental PolicyUnder the NAP, GoI has announced the environmental policy forautomobiles. The policys key provisions include:

    Approval of Mashelkar committee report.

    Encouragement for cars using alternative fuel technologies like CNG andelectric batteries.

    Adoption of international standards for levy of road tax such as charginghigher tax for older cars, in order to discourage the use of old vehicles. At

    present, road taxes are levied at the time of purchase and are based on thesize of the vehicle.GoI has been developing a regulatory framework to reduce pollution fromcars, through a phased introduction of emission norms. The framework asintroduced by GoI, based on the recommendations of the MashelkarCommittee Report, is as follows:

    Sale of only Bharat Stage II compliant cars in the cities of Mumbai, NewDelhi, Kolkatta and Chennai, as applicable from 2000;

    Application of Bharat Stage II norms are from April 1, 2003 to the cities ofBangalore, Hyderabad Ahmedabad, Pune, Surat, Kanpur and Agra and fromApril 1, 2005 to the whole of India;

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    Euro Stage III equivalent emission norms are to be made applicable to thecities of New Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad,Ahmedabad, Pune, Surat, Kanpur and Agra by April 2005 and Euro IVequivalent norms by April 2010; and

    Bharat Stage II and Euro III equivalent emission norms specifying qualityof petrol and diesel that can be sold in various cities that become applicableat the same time as the norms applicable to the sales of cars.

    Mashelkar Committee RecommendationsThe key recommendations of the Mashelkar Committee Report are asfollowed: GoI should only decide the vehicular emission standards and thecorresponding fuel specifications without specifying the vehicle technology

    and the type of fuel to be used; A roadmap for the implementation of vehicular emission norms andautomobile fuel quality; Vehicles running on alternative fuels, like di-methyl ether, bio-diesel,hydrogen, LNG, CNG, electric and fuel cells, need to be encouraged, givingthe choice of fuel and vehicle technology to the customers; and Putting in place other cost effective measures, such as a comprehensiveinspection and certification systems for in-use vehicles with private sector

    participation, fitting emission reduction devices in-use vehicles, trafficmanagement and construction of bypasses.In order to meet the new emission norms, substantial investments arerequired to produce appropriate quality of fuel and vehicles. The Mashelkar

    Committee Report has estimated that the investment required for upgradingrefineries to produce Bharat Stage II automobile fuels (petrol and diesel) isestimated to be around Rs. 170 billion.An additional amount of around Rs. 180 billion would be required to

    produce Euro-III equivalent petrol and diesel. Also, the test facilitiescurrently available in the country are inadequate to meet the newregulations.

    According to SIAM estimates, the cost of setting up additional facilities totest vehicles as per the new regulations would be around Rs. 10.4 billion(excluding the cost of setting up inspection and certification centers). Hence,the Mashelkar Committee Report has recommended that preferentialtreatment be given to the oil and automobile industry in matters relating to:

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    Customs duty on imported capital goods, equipment and machinery neededfor the upgradation of technology/facilities. Excise duty on indigenously manufactured capital goods, equipment andmachinery needed for up gradation. 100% depreciation on plant and machinery set up for up gradation. Soft loans for technology modernization/upgradation projects. Adequate incentives, such as tariff differentials and other measures toenable the domestic industry to compete with imports; and Financial incentives to the manufacturers and users of electric vehicles inorder to make these vehicles competitive.

    Safety normsGoI has notified the requirement for use of safety belts in all cars. Inaddition, new noise control norms for passenger cars were notified by GoI

    and became effective from January 1, 2003. GoI has also indicated that inthen future additional safety norms will be made applicable to passenger carsto align them with international standards.

    Sector OutlookBetween fiscal 2002 and fiscal 2007, the entire Indian passenger car marketis expected to grow by approximately 9.5%, largely as a result of increasingdemand for segment B cars.

    Segment AThis is the entry-level and the most price sensitive segment. Maruti is thesole manufacturer in this segment since fiscal2000. Between fiscal 2002 andfiscal 2007, this segment is expected to post a CAGRof 2.7%.

    Segment BThis segment is expected to grow to 57.6% of the Indian passenger carmarket by fiscal 2007 at a CAGRof about12.3%. Due to the present low percapita income in India, the price and cost of ownership of cars are significantfactors that affect demand for cars in this segment.

    Segment C, D, and EThere are 11 manufacturers with approximately 20 models in thesesegments. These segments typically have low sales volumes; therefore, highgrowth rates of 11%, 19% and 35%, respectively, are expected between

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    fiscal 2002 and fiscal 2007.New model launches, growth in per capita income levels, high aspirationsand status associated with larger cars, are the key factors affecting demandfor cars in these segments.

    The Pre-Owned Car MarketThe size of the pre-owned car market in India has been estimated to be morethen the size of the new car market. The A and B segments account for

    between 70 and 80% of the total sales volumes in the pre-owned passengercar market in India. The proportion of pre-owned cars from segment B isincreasing and is expected to form the largest portion of the preowned

    passenger car market. Mid-size and large cars are less popular in the pre-owned passenger car market primarily dueto faster depreciation in value,lower fuel economy and higher maintenance costs.

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    The key factors affecting demand for pre-owned passenger car market inIndia are as follows:

    The entry of organized participants into the pre-owned passenger carmarket resulting in

    (1) A more transparent process in valuation and assessment of quality,

    (2) A more convenient means of selling or exchanging pre-owned cars and

    (3) The availability of adequate warranties.

    (4) The introduction of a large number of models in the new car market anda reduction in the holding period resulting in wider availability of recently

    introduced models in the pre-owned passenger car market.

    (5) An increase in per capita income levels in urban and rural areas and

    wider availability of consumer finance for the purchase of pre-owned cars.

    Future Scope:

    (1). The new car plant and diesel engine plant will be functional by end-2006. By 2008-09, Maruti will launch a compact car exclusively for exportaiming to sell one million units by 2010. Maruti will launch 5 new models,face lift existing models and launch new variants in the market.

    (2). A section of the media has reported that Maruti Suzuki is ready with asmall car with a 660 cc engine, positioned below the Maruti 800 and pricedat Rs 1.5 lakh.

    The company, through this press release, is denying the report. Asannounced earlier, the company has no plans to launch a car like the one

    mentioned in the report. The Project "Under A" mentioned in the reportrefers perhaps to the "A Under", the earlier code name for the A-Star model.The total investment in the new car plant was Rs 15.24 billion ($384million). The capacity of the plant will initially be 100,000 cars per annum,with a potential to scale it up to 250,000 units

    (3). The new model will be launched by end-2008," he said. "To begin with,

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    we have plans to export 100,000 units of the new model annually to Europeand the rest of the worldLeading carmaker, Maruti Suzuki India reported a marginal growth of2.20% in vehicles sales to 61,247 units in June 2008 over the same period inthe previous year. These include 4,836 vehicles for the export markets. Thecompany had sold a total of 59,917 Units.

    (4). At present, car penetration in India is about 7 cars per 1000 people,which is even less than some of our neighboring countries. There is also alarge population of two wheeler owners, who would naturally upgrade to anentry-level car. Therefore there is large latent demand for passenger carswaiting to be tapped. The compact cars will continue to dominate the

    passenger car industry in India.

    (5). The highway and road construction projects, such as the GoldenQuadrilateral Project, a highway connecting the four metropolitan areas ofKolkata, New Delhi, Mumbai and Chennai. Availability of better roadinfrastructure will also affect demand for cars.

    (6). Passenger car sales account for over 77% of total passenger vehicle

    market and UVs account for the balance.

    In fact, UVs have a higher share than what they did in the earlier years. It isstill lower compared to some of the developed countries. In USA forinstance, UVs account for 50% of the total Passenger vehicles market andinIndonesia they account for 80% of the market. Hence in the future there will

    be more and more demand for UVs hence an opportunity for MUL.

    (7). The enabling factors for Indian passenger car industry are all in placenamely, robust economic growth, favorable regulatory framework,availability of affordable finance and improvements in road infrastructure.However, there are some uncertainties like the growing higher oil prices,

    which could impact the auto industry.Hence the Indian auto market is at an interesting juncture where bothchallenges and opportunities are immense.

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    PHASE III

    MULs Vision

    The Leader in the Indian Automobile Industry, Creating CustomerDelightand Shareholder's Wealth; A pride of India.

    MULs Core values

    Customer Obsession

    Fast, Flexible and First Mover

    Innovation and Creativity

    Networking and Partnership

    Openness and Learning

    MULs Principal ObjectivesAs the leading player in the small car segment of the Indian market, theyhave the following principal objectives:

    To expand the size of the Indian market for small cars by strengtheningand expanding the dealer network and making automobile financingavailable at competitive rates.

    To strengthen their leadership position in the small car segment of the

    Indian market; and

    To continue to benchmark them selves against improving globalmanufacturing, marketing and other practices and standards, strive toincrease customer satisfaction through quality products and new initiatives,and promote the financial strength of their sale network.

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    MULs Competitive Strengths

    Largest Distribution and Service Network in India:

    400 showrooms covering 229 cities 150 rural format sales outlets in 143 cities 620 dealer service stations &1900 Maruti Authorized Service

    Stations Over 1190 cities covered by Service Network Widest product range in India Majority of new showrooms & workshops coming from

    existing dealers Present in Gasoline, Diesel and LPG 6 models launched in last 30 months

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    Productivity and Cost efficiency

    (1) In Manufacturing Operations

    (2) In Materials Engineering

    90.8% in FY01 75.7% in FY07

    Expertise in small car technology.As a subsidiary of Suzuki, theyhave access to globally respected technology in the small car segment. They

    have the advantage of Suzukis expertise in all aspects of small cartechnology and design, with respect to their products, manufacturing

    processes and business practices, the development of their supply chain andthe training of personnel.

    Extensive product portfolio. Their diverse product range includescars in segments A, B and C, and utility vehicles.. They are the major

    100100100100100

    110

    21

    5

    48

    82

    Plant Manpower Hrs/Veh Inhouse Warranty Inhouse Rejection Direct Pass

    Indexed

    to

    FY'02

    2001-02 2006-07

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    manufacturer of cars in segment A (priced below Rs.300, 000). The Maruti800 has been the largest selling car in India for several years, and stillcontinues to have the very high sales volumes. They also manufacturer threedistinct models, the Zen, the Alto and the WagonR, in segment B (priced

    between Rs. 300,000 and Rs.500, 000). Their dominance in segment A andextensive products range in segment B enables them to offer the customer awider choice in the small car segment than any of their competitors. In

    addition, the absence of any major manufacturers in segment ATheir dealers greater flexibility in promoting models in segment B.

    Quality products. In November 2001, MUL was one of the firstautomobile manufacturers in the world to receive the ISO 9001:2000certification. They benchmark their products against international qualitystandards. They export heir products to approximately 70 countries, which

    are manufactured using the same assembly line as that for the domesticmarket.

    Extensive sales and service networkMUL has the largest networkof dealers and service centers amongst car manufacturers in India In additionto the distribution of cars, their dealership network is a critical resource intheir efforts to provide customers with a one-stop shop for automobilesand automobile related products and services such as automobile finance,automobile insurance, Maruticertified pre-owned cars available for purchase,

    and leasing and fleet management, in order to promote customer loyalty.

    Brand strength:MUL is present in the Indian market for almost 24years and have built the brand on the basis of the values of trust andreliability in 2000, 2001 and 2002, J.D.Power Asia Pacific, Inc.19 ranked MUL the No. 1 in the India Customer Satisfaction Index, whichassesses customer satisfaction with product quality and dealer service. NFOAutomotives 2002Total Customer Satisfaction Survey ranked Maruti

    products as No. 1 in the Economy, Premium Compact and EntryMidsize segments respectively, for 2002.

    Integrated manufacturing facility.Their manufacturing facilityconsists of fully integrated plants with flexible assembly lines located atGurgaon. The facilities have advanced engineering capability and each plantis upgraded on an ongoing basis to improve productivity and quality. They

    are one of the most efficient among the vehicle manufacturing facilities of

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    Suzukis subsidiaries outside Japan in terms of productivity measured as theratio of number of vehicles produced to number of employees.

    Strongvendor base and higher rates of localization:In order toimprove quality and generate economies of scale, MUL has reduced the

    number of vendors of components in India from 370 as of March 31, 2000 toabout 100 as in 2005. As of the same date, they had strategic equity intereststhrough joint venture agreements in their vendors, who together supply a

    substantial portion of the purchases of\ components. A number of theirvendors are their dedicated suppliers in that they account for a majority oftheir turnover. Vendors located within a radius of 100 kilometers from thefacilities supply the majority of the components. The production systems oftheir vendors are generally aligned to their needs for a reliable and timely

    supply of components that meet the required quality standards. This hasenabledMUL to increase the proportion of locally sourced, lower costcomponents in their models, a concept refer to as localization.

    Skilled labour and experienced management. The labour force atMUL has become increasingly productive in terms of vehicles produced peremployee and receives training on an ongoing basis, including training bySuzuki. Due to their presence in the Indian passenger car market for asignificantly longer period they have been able to build a highly experienced

    management team that is familiar with conditions in the Indian passenger carmarket.

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    MULS basic Strengths

    (Pre -owned cars initiative over 240 outlets in 150 cities;)

    (Maruti playing the role of an aggregator)

    (Maruti-SBI alliance Strategy to expand the market)

    (Hassle Free Insurance- Penetration over 85%)

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    (Extended warranty- Penetration of ~50%)

    (Maruti Driving School Already 18500 drivers trained)

    (Auto Card - Loyalty card to over tap 5 million customers)

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    Vendor participation in cost reductionIn some of the major vendors MUL has implemented the Maruti ProductionSystem which focuses on the eliminating the wasteful activities in theirmanufacturing processes 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. Thishelps in reducing the costs of production, which also reduces then costs ofthe components being required by MUL.

    Cost reduction on warrantiesThe warranty costs of the vendors are the cost of components incurred bythem to service warranty claims arising from defects in components supplied

    by them. MUL works in association with the vendors to reduce theirwarranty cost.

    Reduction in initial investment costThrough in-house development and localized sourcing of dies, welding jigsand other equipment, introduction of flexible welding lines that can be usedfor multiple models, and in-house development of machine shop equipment,MUL tries to reduce the initial cost associated with the initial investment.

    Reduction in number ofvehicle platformsMUL currently uses six basic vehicle platforms for production. They even

    intend to reduce the number of basic vehicle platforms and increasinglyshare basic vehicle platforms among multiple models in order to spreaddevelopment costs and achieve economies of scale.

    Lowering the cost of ownership:MUL seeks to reduce theConsumers cost of ownership of their cars, which comprises the cost of

    purchase, fuel consumption, maintenance, including spare parts and repairs,insurance, and resale value. MUL is trying to achieve this by:

    manufacture high quality, fuel-efficient, cars; Price cars, spare parts and accessories, and extended warranties,competitively; make automobile finance more easily available to the consumer oncompetitive terms;

    make maintenance services, including spare parts, accessories and repairs,widely available through the extensive sales and service network;

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    offer automobile insurance and other automobile-related services throughthe sales and service network; and Create a market for Maruti-certified pre-owned cars through Maruti TrueValue business.

    New Business Initiatives

    As the largest manufacturer and leader in the small car segment, Maruti hadcontinually seek new ways to utilize vast car parc, range of products andextensive sales and service network to expand the size of the passenger carmarket in India. Maruti recently launched new initiatives to develop themarket for automobile insurance, automobile finance, leasing and fleetmanagement, and pre-owned cars. They are aiming to provide customers

    with a one-stop shop for automobiles and automobile-related products and

    services, and build on wide customer base and extensive sales and servicenetwork to make available to their customers a wide range of Marutibrandedservices at different stages of ownership, which they refer as the 360 degreecustomer experience. In the nine months ended December 31, 2002, theirnew business initiatives generated net revenue ofRs. 44 million.

    Muls Supply Chain

    MULs inputs primarily comprise raw materials and purchased components.Only a small amount of raw material and components consumed areimported and a much larger portion is purchased from the sources withinIndia.

    Raw Material Suppliers

    The raw materials used in the manufacturing process primarily comprisesteel coils and paints. In recent years,MUL is increasingly trying to localize the purchases of steel coils with aview to reduce cost. Earlier MUL used to follow the tender system for the

    purchase of steel. Under this system, specifications were advertised andaccept the lowest price offered by a supplier who could meet the

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    specifications. In 2001 MUL moved to the quotation system which givesthem 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 periodextends up to one year. .At MUL the role of the vendors has gradually evolved from tactical tostrategically 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 ofMarch 31, 2000 to about 100 as in 2005.

    In case of repair and replacements, costs of defective components suppliedare borne by the vendor.

    Delivery by VendorsMUL has a delivery instruction system that provides details of thecomponent requirements for every 15 days, across the different variants ofthe various models, to the vendors. Vendors are linked to the MUL throughthe Internet-based information network, which maintains online informationregarding order status and delivery instructions. These has helped inreducing both inventory levels and lead times required for the supply of

    various components and sub-assemblies, and enable the vendors to moreefficiently plan and dispatch their products.

    Vendors located within a radius of 100 kilometers from the manufacturingfacility supply the majority of the components. This has enabled the vendors

    to eliminate packaging and supply components directly to the assembly line.

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    VendorQuality ControlQuality management system such as ISO 9000/ QS 9000 forms the basis for

    producing a quality product. To assist small and medium vendors inachieving ISO 9000 certification, in 1995 MUL adopted a cluster approach

    wherein vendors are grouped together, are trained in quality managementand are assisted in obtaining ISO 9000 certification. This cluster approachwas extended to helping vendors attain QS 9000 certification. Periodicvendor quality system audits are conduct in order to ensure that qualitystandards are sustained.

    Imported components

    Imported components are mainly purchase from Suzuki.

    Sales network

    Dealers: MUL has the largest network of dealers amongst carmanufacturers in India. As of March 31, 2003, dealers had employed morethan 3,500 sales executives. Sales network is linked with the MUL throughthe 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 ofthese related products and services at sales outlets also helps to attractcustomers to the outlets and promotes sales of the cars.

    Agreements with our dealersMUL dealers provide services tocustomers such as pre-delivery inspection of vehicles, sales of cars, aftersales service, supply of spare parts and other services that promote sales of

    cars within the territory for which they are appointed. Dealers are required tomaintain 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 threeyears, by mutual agreement.

    Enhancing dealer performance:The performance of the dealers isfollowed and improvements are suggested frequently. In order to assist thedealers in enhancing their performance and capabilities, MUL has

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    introduced a concept of Balanced Scorecard. Using this tool, theperformance of a dealership in several areas of operations, including sales,service, spares and accessories, financial management and managementsystems is measured.

    Dealers who perform well on the Balanced Scorecard are reward with acash payment at the end of the fiscal year. The Balanced Scorecard serves

    as an effective incentive for dealers to enhance their performance.

    After-sales Service NetworkThere are more than 400 Maruti dealer workshops and more than 1,500Maruti Authorized Service Stations, or MASSs, covering more than 900cities in India. In addition, 24-hour mobile service is also offered under the

    brand Maruti On-road Service. As a benchmark for dealers with respect toservice quality and infrastructure facilities, MUL has launched servicestations under the brand Maruti Service Masters, or MSMs. MUL also hasservice stations on highways in India under the brand Express ServiceStations. To promote sales of spare parts and the availability of highquality, reliable spare parts for its products, spares are sold under the brandname Maruti Genuine Parts or MGP. These are distributed through thedealer network and through the authorized sellers of the spare parts. Many ofthe MASSs are at remote locations where MUL do not have dealers. In orderto increase the penetration, in terms of sales volumes, of its products in theseremote areas, some of the MASSs are integrate into the sales process inorder to increase sales of the cars and related products and services such asspares and accessories, insurance and financing the company decided to

    move to an open environment. It drew up a plan that detailed the newinfrastructure and the applications to be run on the network. At the veryoutset, it decided to go for fiber optic cabling, even though fiber was justintroduced in India at that time. This gives them the fiber's reliability andscalability. They now have an infrastructure that can scale to supportapplications which can be added in future.

    Before a car is produced, the systems at the shop floor connect to a centraldatabase and query it about the car model that needs to be manufactured.The response from the database takes less than a few seconds, so that the\assembly line can start running. For this, two critical issues taken care of are: Reliability and throughput.To ensure reliability, MUL chose a meshed network, so that if one link goesdown, the shop floor and the data center can still communicate through an

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    alternative route. Theentire infrastructure is geared towards ensuring that\the shop floor can run in real time.MUL has also implemented an enterprise management system, calledUnicenter TNG." The software monitors all links. If something goes down,an automatic complaint is logged into MUL's internal call center.The IT applications MUL runs are mostly enterprise wide. Some of thecritical or major applications include materials for making and dispatching

    cars and spares to distributors. MUL distributors, who interact with thecompany daily, also use a Web-based application to log in theirrequirements for new cars, spares and accessories.

    They can also track the status of their order. In fact, the system is beingexpanded to offer finance, insurance and other intangibles to customers. Allthese applications run on the Internet and connect to the databases in

    Gurgaon.

    Research and Development

    R&D activities of Maruti have the twin objectives of reducing product costsby developing capabilities of local vendors and becoming a regional R&Dhub for all Suzuki operations.The company has adopted a focused model cost reduction technique.

    Maruti has been continuously engaging in Value Analysis/ValueEngineering (VA/VE) activities across its operations. Some areas in which

    MUL carry out research and development are localization and developmentof components, cost reduction measures such asVA/VE, development of alternate fuel (CNG and LPG) vehicles,

    performance-benchmarking to certain parameters such as noise, ridehandling and braking and development of power-steering for certain models.MUL regularly upgrade its models and also launch variants by addingfeatures developed through research and development.All this has resulted in significant reduction in the investment required for

    the modifications.As part of Suzukis plans to make Maruti its research and developmentcenter for cars in Asia (outside Japan), it is expected to have full modelchange capability by fiscal 2007.

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    transmission assemblies. The plant will supply diesel engines to Maruti aswell as export engines to Suzuki subsidiaries in Europe and Asia. This plant,which will be set up at a cost of 17.5 billion rupees, will begin production bythe end of 2006. Suzuki would undertake a feasibility study to set up agearbox production unit in India. This unit would be set up under SuzukiMetals India, which is would be renamed as Suzuki Engineering India.Marutis facility has advanced engineering capability and is upgraded on an

    ongoing basis to improve productivity and quality. Maruti have 17manufacturing shops and are capable of producing more than 50 variants ofthe nine basic models manufactured, with different specifications, within thesame day. This is possible due toour information technology-enabledvehicle build sequence system and vehicle tracking system.Under the vehicle build sequence system, at the production planning stage,requirements are communicated via our intranet (internally) and our extranet

    (to vendors) in advance as to the time and place for delivery of componentsand other production inputs in order to fulfill production targets. Our vehicletracking system monitors and records the implementation of the planningduring production.

    UtilitiesMaruti do not have to rely on outside sources of power as they have a 60-megawatt gas turbine captive power plant, which has multi-fuel capability.They also have our own reverse osmosis water treatment plant and effluentand sewage treatment plant.

    Productivity

    Improving productivity is an ongoing effort at Maruti, through the Maruti

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    production system, or MPS, which is derived from the Suzuki productionsystem, and focuses on elimination of wasteful activities taking place duringmanufacturing processes. In addition to MPS activities, in-house automation,increasing utilization of production lines, outsourcing of low value-addition

    jobs and reduction in materials handling have contributed to improvementsin the productivity of there employees and the efficiency of there operations.As shown in the table below, Marutis employee productivity, measured as

    the ratio of production volume in a fiscal year to the number of itspermanent employees at the end of the fiscal year, increased byapproximately 79% from fiscal 1995 to fiscal 2002.

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    Manufacturing Process

    The manufacturing process at Maruti facility is depicted below:The production of a car at Maruti facility occurs in the following stages:

    Press Shop: Press shop has five transfer presses and two blanking lines. Inthe press shop, steel coils are cut to the required size and panels are prepared

    by pressing them between various die sets such as doors, roofs and bonnet.An anti-rust coat is applied at this stage.

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    Weld Shop: There are three welding shops with 122 six-axis robots and 25in-house manufactured two-to-four axis robots. In this shop, various pressmetal components manufactured in the previous stage are spot-weldedtogether to form the body shell. Various parts such as the floor panel, side panel,

    doors and bonnet are sub assembled in this shop. Subsequently, the assembledparts undergo final welding. The welded body is sent to the paint shopthrough a conveyor.Paint Shop: There are three paint shops, within one of which the final outer

    body is fully painted by robots. In the paint shop, the body undergoesvarious pre-treatment and electro deposition painting processes to provide ahigh corrosion resistance to the body. The car body is given an intermediateor primer coat before applying the storing 32n topcoat paint. The

    intermediate and the final coat are applied by using automatic electrostaticspray-painting machines (micro bells) and robots, followed by a baking

    process.

    Assembly Shop:Maruti has highly flexible assembly lines, which cansimultaneously handle a large number of variants as well as adapt tosequence changes. The painted bodies proceed for final assembly in threestages. The first stage is the trim line wherein various components such asroof head lining, windshield glass and interior trim components are fitted.Thereafter, the car is transferred to an overhead conveyor, the chassis line,wherein components such as the engine, gearbox and front and rear axles are

    assembled on the underbody. The vehicle is then lowered to the final line onits own wheels and here components and parts such as seats, the steering

    wheel and the battery are fitted. The completely assembled vehicle finallyrolls out of the assembly lines to the final inspection stages.

    Machine and engine shops: Assembling and testing of engines takesplace at engine shops and carry out precision machining of enginecomponents in our machine shops.

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    License agreements with Suzuki

    Suzuki has several license agreements with Maruti under which it has, since

    Marutis inception:

    Provides with technical know-how, assistance and information for themanufacture, sale and after-sales service of various products and parts.

    Supplied components to Marutis passenger cars.

    Deputed technical personnel to their facility;

    Help them to develop manufacturing processes and integrate certain

    Japanese management practices such as kaizen, which is Japanese forcontinuous improvement, in various plants.

    Training of personnel.

    Help them to develop and manage the supply chain for their products.Maruti in return had agreed with Suzuki that amongst other things:

    Maruti will not manufacture in, or export products covered by agreements

    with Suzuki to, any territory except those permitted by Suzuki.

    Maruti will not enter into agreements with any other manufacturer to sellany product or part that competes with any product or part covered by thelicense agreements with Suzuki.

    Maruti will not otherwise sell, distribute or promote the sale of any productthat competes with products covered by the license agreements with Suzuki.Suzuki will not be liable to Maruti for damages arising from the use of thelicensed information and disclaims responsibility for all representations andwarranties made by them with respect to the licensed products

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    - 59 -

    CONCLUSION

    Where es M rutistand na WOT (strengths, weaknesses,pp rtunitiesandthreats)analysis?

    Onthe p sitiveside, with uzukiholdinga percent controllingstakein MUL,one canexpectasubstantialreductionin costs withroyaltiesandtransferpricesbeing elteddown.Thegrowingriskofnon-acceptanceofnew launchesinthe arketplacefurtheraccentuatesthisrisk which could anifestinyetanotherfinancialyear, whenthe company'sbottomlineslippedintothered.

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    REFRENCES

    1. www.indiainfoline.com

    2. www.indiamart.com3. www.google.com4. www.marutisuzuki.com5. www.p4magzine.com6. www.wikipedia.com7. www.business.rediffmail.com8. www.team-bhp.com9. www.mouthshut.com10.www.knowindia.com