maruthi suzuki company analysis report
DESCRIPTION
This project consists of detailed analysis of maruthi suzuki performanceTRANSCRIPT
COMPANY ANALYSIS REPORTON
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 1
Submitted By:
R. ANANDM.B.A. II Sem
A STUDY ON
COMPANY ANALYSIS OF MARUTHI UDYOG LTD
Submitted in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
BY
R.ANAND
MBA II SEMESTER
R.No:
08931E0027
Under the esteemed guidance of
S.A.HASEENA SULTANA
Assistant Professor KOTTAM GROUP OF INSTITUTIONS Department of Management
SRI KOTTAM TULASI REDDY MEMORIAL ENGINEERING COLLEGE OF
KONDAIR ITIKYALA MANDAL MAHABOOB NAGAR DISTRICT-519125(AP)
DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 2
DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION
SRI KOTTAM TULASI REDDY MEMORIAL
COLLEGE OF ENGINEERING
KONDAIR, ITIKYALA (MANDAL)
MAHABOOBNAGAR (DIST)-509125(A.P)
(Affiliated to J.N.T.U.H)
CERTIFICATE
This is to certify that the company analysis report entitled on “MARUTHI UDYOG
LTD” submitted by “Mr.R.ANAND” in partial fulfillment of the requirements for the award
of degree of MASTER OF BUSINESS ADMINISTRATION in Jawaharlal Nehru
Technological University –Hyd is a record of bonafide work carried out by her in this
department.
Internal guide Head of the department
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 3
CONTENTS
SNO TITLE PAGE NO
1. INTRODUCTION
2. METHODOLOGY
(a) OBJECTIVES OF THE STUDY
(b) PROFILE OF THE COMPANY
3. VISSION& MISSION
4. ANALYSIS & INTERPRETATION OF FUNCTIONAL AREAS
(a) HRM
(b) MARKETING MANAGEMENT
(C) FINANCIAL MANAGEMENT
5. FINDINGS AND CONCLUSION
6. BIBLIOGRAPHY
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 4
OBJECTIVES OF THE STUDY
The objectives of the study are:
To narrate the profile of the company
Overview of Maruti and Suzuki
Building understanding of the car market in India and various segments
Understand MUL’s product range and positioning in each segment
Understanding the basics in the automobile industry
Overview of each Maruti model and the MUL ‘Advantage’
Overview of the selling process and how to uncover needs of a customer to do need based selling
Role of financing as a sales tool and the various financing options available
Ensuring personal effectiveness
To study the HRM of the company
To enhance my knowledge about Recruitment and Selection.
To convert my theoretical knowledge into practical knowledge.
To prepare myself as a H.R. person who can easily identify the training need through his experience which is very essential quality of a H.R. Person & for the organization as well.
To enhance my knowledge about Training & Development
To analysis the Marketing Management of the Company
To study the financial position of the company
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 5
ACKNOWLEDGEMENT
The goal was fixed, moves were calculated and I moved with full of enthusiasm, vigor and keen interest. There was a time when it proved to be on up hill task, the goal seeming beyond my reach. But as work progressed my determination and will power grew stronger and completion of this work further confined my belief that,
“WHERE THERE IS A WILL THERE IS A WAY”.
It’s a sheer pleasure for me to state with candidly that this entire project is a heartily attempt
to reach maximum accuracy. I therefore take this opportunity top express my atmost
gratitude and indebtness to all who have contributed in some way
I am thankful to our guide, for her motivation, help and continuous support, which
made this company analysis happen. I am also indebted to her for her invaluable
suggestions, which made me to correct my faults and improve myself.
I express my deep sense of gratitude and thanks to B.PARIMALADEVI (Head of
Department) for her consistent support and guidance. I am also thankful to her for helping
me find and overcome many problems faced during the period.
I am very much obliged to “SRI KOTTAM TULASI REDDY MEMORIAL
COLLEGE” which has given me opportunity to carry out our project work in its premises. I
feel privileged to thank wholeheartedly our Principal, “NAYANATARA” (MA.ME).for
giving me this great opportunity.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 6
DECLARATION
I here by declare mat this project entitled “A STUDY OF COMPANY
ANALYSIS REPORT ON BRITANNIA is a bonafied work carried out by me under the
guidance of S.A.HASEENA SULTANA, Assistant professor, Dept. of Management
SKTRMC, Kondair. I also declare that report is original and not submitted to any other
university of Institution for the award of any degree of Diploma.
Date:
Place:
Signature of the student.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 7
OVERVIEW
Maruti Suzuki India Limited is a publicly listed automaker in India. It is a leading
four-wheeler automobile manufacturer in South Asia. Suzuki Motor Corporation of Japan
holds a majority stake in the company. It was the first company in India to mass-produce and
sell more than a million cars. It is largely credited for having brought in an automobile
revolution to India. It is the market leader in India and on 17 September 2007, Maruti Udyog
was renamed Maruti Suzuki India Limited. The company headquarter is in Gurgaon, Haryana
(near Delhi).
Profile
Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in 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. As of May 10, 2007, Govt. of India sold its complete share to 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 actual production commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car which at the time was the only modern car available in India, its' only competitors- the Hindustan Ambassador and Premier Padmini were both around 25 years out of date at that point. Through 2004, Maruti has produced over 5 Million vehicles. Marutis are sold in India and various several other countries, depending upon export orders. Cars similar to Marutis (but not manufactured by Maruti Udyog) are sold by Suzuki and manufactured in Pakistan and other South Asian countries.
The company annually exports more than 50,000 cars and has an extremely large domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts and Maruti Swift is the largest selling in A2 segment.
More than half the cars sold in India are Maruti cars. The company is a subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti. The rest is owned by the public and financial institutions. It is listed on the Bombay Stock Exchange and National Stock Exchange in India.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 8
Maruti Suzuki was born as a government company, with Suzuki as a minor partner to make a people's 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 and now, is Maruti’s mission to motorise India.
Partner for the Joint venture
Pressure started mounting on Indira and Sanjay Gandhi to share the details of the progress on the Maruti Project. Since country's resources were made available by mother to her son's pet project. A delegation of Indian technocrats was assigned to hunt a collaborator for the project. Initial rounds of discussion were held with the giants of the automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor Corporation was at that time a small player in the four wheeler automobile sector and had major share in the two wheeler segment. Suzuki's bid was considered negligible.
Industrial relations
For most of its history, Maruti Udyog had relatively few problems with its labour force. Its emphasis of a Japanese work culture and the modern manufacturing process, first instituted in Japan in the 1970s, was accepted by the workforce of the company without any difficulty.
Authorized service stations
Maruti is one of the companies in India which has unparalleled service network. To ensure the vehicles sold by them are serviced properly, Maruti has 2628 listed Authorized service stations and 30 Express Service Stations on 30 highways across India.
Service is a major revenue generator of the company. Most of the service stations are managed on franchise basis, where Maruti trains the local staff. Other automobile companies have not been able to match this benchmark set by Maruti. The Express Service stations help many stranded vehicles on the highways by sending across their repair man to the vehicle.
Maruti insurance
Launched in 2002 Maruti provides vehicle insurance to its customers with the help of the National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram. The service was set up the company with the inception of two subsidiaries Maruti Insurance Distributors Services Pvt. Ltd and Maruti Insurance Brokers Pvt. Limited
This service started as a benefit or value addition to customers and was able to ramp up easily. By December 2005 they were able to sell more than two million insurance policies since its inception.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 9
Maruti Finance
To promote its bottom line growth, Maruti launched Maruti Finance in January 2002. Prior to the start of this service Maruti had started two joint ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE Countrywide respectively to assist its client in securing loan.[15] Maruti tied up with ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered Bank, and Sundaram to start this venture including its strategic partners in car finance. Again the company entered into a strategic partnership with SBI in March 2003[16] Since March 2003, Maruti has sold over 12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities across India
Maruti Driving School
As part of its corporate social responsibility Maruti Udyog launched the Maruti Driving School in Delhi. Later the services were extended to other cities of India as well. These schools are modelled on international standards, where learners go through classroom and practical sessions. Many international practices like road behaviour and attitudes are also taught in these schools. Before driving actual vehicles participants are trained on simulators.
Exports
Maruti Suzuki has helped India emerge as the fourth largest exporter of automobiles in Asia. Shown here is Maruti Gypsy in Malta.
Maruti Exports Limited is the subsidiary of Maruti Udyog Limited with its major focus on exports and it does not operate in the domestic Indian market. The first commercial consignment of 480 cars were sent to Hungary. By sending a consignment of 571 cars to the same country Maruti crossed the benchmark of 300,000 cars. Since its inception export was one of the aspects government was keen to encourage. Every political party expected Maruti to earn foreign currency.
OBJECTIVES OF THE STUDY
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 10
The objectives of the study are:
To narrate the profile of the company
Overview of Maruti and Suzuki
Building understanding of the car market in India and various segments
To study the HRM of the company
To enhance my knowledge about Recruitment and Selection.
To convert my theoretical knowledge into practical knowledge.
To prepare myself as a H.R. person who can easily identify the training need through his experience which is very essential quality of a H.R. Person & for the organization as well.
To enhance my knowledge about Training & Development To analysis the Marketing Management of the Company
Understand MUL’s product range and positioning in each segment
Understanding the basics in the automobile industry
Overview of each Maruti model and the MUL ‘Advantage’
Overview of the selling process and how to uncover needs of a customer to do need based selling
To study the financial position of the company
Role of financing as a sales tool and the various financing options available
Ensuring Company effectiveness in implementing accounting standards
Analyzing companies financial statements in ratios
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 11
PROFILE (Snap Shot)
Year of Establishment February 1981
Vision"The Leader in The Indian Automobile Industry, Creating Customer Delight and Shareholder's Wealth; A pride of India."
Industry Automotive - Four Wheelers
Listings & its codes
BSE - Code: 532500NSE - Code: MARUTI Bloomberg: MUL@IN Reuters: MRTI.BO
Joint VentureWith Suzuki Motor Company, now Suzuki Motor Corporation, of Japan in October 1982.
Registered & Corporate Office
11th Floor, Jeevan Prakash25, Kasturba Gandhi MargNew Delhi - 110001, India Tel.: +(91)-(11)-23316831 (10 lines)Fax: +(91)-(11)-23318754, 23713575 Telex: 031-65029 MUL IN
Works
Palam Gurgaon Road Gurgaon -122015 Haryana, India Tel.: +(91)-(124)-2340341-5, 2341341-5
Website www.marutiudyog.com
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 12
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 13
Type Public (BSE MARUTI, NSE MARUTI)
Founded 1981 [1]
Headquarters Gurgaon, Haryana, India
Key people Mr. Shinzo Nakanishi, Managing Director and CEO
Industry Automotive
Products Cars
Revenue ▲US$3.5 billion (2009)
Employees 6,903 [2]
Parent Suzuki
Website MarutiSuzuki.com
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 15
1981 Maruti Udyog Ltd. was incorporated.
1982 Steped into a JV with SMC of Japan.
1983 Maruti 800, a 796 cc hatchback, India's first affordable car was produced.
1984 Installed capacity reached 40,000 units. Omni, a 796 cc MUV was in production.
1985 Launch of Maruti Gypsy (970cc, 4WD off-road vehicle).
1986 Produced 100,000 vehicles (cumulative production).
1987 Exported first lot of 500 cars to Hungary.
1988 Installed capacity increased to 100,000 units.
1992 SMC increases its stake to 50 per cent.
1994 Produced the 1 millionth vehicle since the commencement of production.
1995 Second plant launched, the installed capacity reached 200,000 units.
1996 Launch of 24-hour emergency on-road vehicle service.
1997 Produced the 2 millionth vehicle since the commencement of production.
1998 Launch of website as part of CRM initiatives.
1999 Launch of Maruti - Suzuki innovative traffic beat in Delhi and Chennai as social initiatives.
2000 IDTR (Institute of Driving Training and Research) launched jointly with Delhi government to promote safe driving habits.
2001 Launch of customer information centers in Hyderabad, Bangalore, and Chennai.
2002 SMC increases its stake to 54.2 per cent.
Launch of Maruti Finance with 10 finance companies in Mumbai.
Start of Maruti True value in Mumbai. 2003 Production of 4 millionth vehicle.
Listed on BSE and NSE after a public issue oversubscribed 10 times. 2004 Maruti closed the financial year 2003-04 with an annual sale of
472122 units, the highest ever since the company began operations 20 years ago.
2005 The fiftieth lakh car rolls out in April, 2005.
2007 Swift diesel launched.
2008 World premier of concept A-star at 9th expo.
2009 Ritz has launched.
JOURNEY OF MARUTHI SUZUKI
Feb 1981 - The result, Maruti Suzuki India Limited (MSIL) was born in February
1981. Maruti Suzuki started as a government company, with Suzuki as a minor partner, to
make a people's car for middle class India. Over the years, the company's product range has
widened and ownership has changed hands. A subsidiary of Suzuki Motor Corporation
(SMC) of Japan, the Maruti Suzuki India Limited headquartered in Delhi, running with 3
vehicle assembly plants at Gurgaon and 1 vehicle assembly.
1983 Dec 14, 1983 - Maruti completes 25 years Maruti Suzuki recently completed 25 years. On December 14, 1983, the first Maruti 800, India's iconic car, rolled
off the assembly line at the company's Gurgaon plant. Since then, Maruti Suzuki has produced and sold around
2000 Nov 21, 2000 - Also, Suzuki is registered under trademark laws in various countries. They hybrid trademark 'Maruti Suzuki' has been used on products of the joint venture company in India. The Indore-based World Information Pages
had claimed that the word Maruti is name of an Indian god.
2002 Jan 25, 2002 - The rights issue will thus witness Suzuki becoming the largest shareholder in Maruti. In return for this, the Government will get a
renunciation premium for forgoing its portion of the rights in favour of Suzuki as well as control premium for giving up majority control in Maruti to the .
2003 May 31, 2003 - Osamu Suzuki, chairman & CEO, Suzuki Motor Corporation, said: "Maruti is controlled by Suzuki and will continue to be managed by
Suzuki in India." Responding to queries on the future control of Maruti, Suzuki said: "General Motors has a 20 per cent stake in Suzuki, Japan.
2004 May 2004 - Maruti Suzuki's all-conquering hatchback Swift has just added another feather to its crown by becoming the fastest car model to reach the 3-
lakh milestone. Launched in May 2005, the sporty car achieved this feat in only three years and eight months. On the occasion .
2005 June 26, 2005 - Maruti Suzuki's all-conquering hatchback Swift has just added another feather to its crown by becoming the fastest car model to reach the 3-lakh milestone. Launched in May 2005, the sporty car achieved this feat in
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 16
2006
only three years and eight months. On the occasion
Nov 13, 2006 - The former India bureaucrat is managing director of Maruti Suzuki, the Indian subsidiary of Suzuki Motor, the Japanese automaker's biggest operation outside of ... Such are the current competitive dynamics facing Maruti Suzuki in one of the fastest-growing auto markets in the world
2007 Dec 11, 2007 - India's rapidly expanding automobile market is key for Suzuki, its chairman has often said. Maruti Suzuki, in which Suzuki owns a 54.2% stake, is expanding its lineup and dealer network here. Suzuki also faces competition from global automakers like Toyota (nyse: TM - news - people ).
2008 Apr 25, 2008 - `The best year': Mr S. Nakanishi, Managing Director and CEO, Maruti Suzuki India Ltd, addressing a press conference in the Capital on ... Announcing the results, Mr Shinzo Nakanishi, the company's Managing Director, said, "The year 2007-08 was the best year in the history of Maruti."
2009 Jul 1, 2009 - MUMBAI, July 1 (Reuters) - Maruti Suzuki, India's top car maker, said its car sales rose 22.6 percent in June, up for the six month in a row, 'This month's export numbers are the highest ever monthly export volume in the company's history,' Maruti said in a statement on Wednesday. ...
VISION & VALUES
VISION VALUES
“The leader in the Indian Automobile Industry, creating customer delight and shareholders’ wealth A pride of India.”
• CUSTOMER OBSESSION• FAST, FLEXIBLE & FAST MOVER• INNOVATION AND CREATIVITY• NETWORKING AND PARTNERSHIP• OPENNESS AND LEARNING
BOARD OF DIRECTORS
Name Designation Name Designation
R C Bhargava Chairman / Chair Person Shinzo NakanishiManaging Director & CEO
Shuji Oishi Director Tsuneo Ohashi DirectorKeilchi Asai Director Osamu Suzuki Director
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 17
Kenichi Ayukawa Director Amal Ganguli Director
Pallavi Shroff DirectorManvinder Singh Banga
Director
Davinder Singh Brar
Director Hirofumi Nagao Director
HUMAN RESOURCE MANAGEMENT: Personnel management is that part of management process which is primarily concerned with the human constituents of an
organization.Objectives: To help the organization reach its goals.
To employ the skills and abilities of the workforce efficiently.
To provide the organization with well-trained and well-motivated employees.
To increase to the fullest the employee’s job satisfaction and self-actualization.
To develop and maintain a quality of work life.
To communicate HR policies to all employees.
To be Ethically and Socially Responsive to the needs of society.
Importance:
Social significance: proper management of personnel’s, enhances their dignity by satisfying their social needs.
Professional significance: By providing healthy working environment, it promotes team work in the employees.
Significance for Individual Enterprise: It can help the organization in accomplishing.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 18
HR VISION :
Lead and Facilitate continuous Change towards organisational Excellence ; create a learning And vibrant organisation with High sense of pride amongst its Members
CULTURE BUILDING INITIATIVES
SINCE INCEPTION:
Japanese Spirit Management philosophy of Team
Common uniform
Open office
Common Canteen
FOCUS OF EFFECTIVE MANAGENENT PROCESS
Top Driven HR – MD is also Director HR HR’s role of a facilitator Line managers as HR Managers Year of the Customer –
HR INTERNAL CUSTOMER FOCUS
Focus on Internal & External Customer
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 19
HR INITIATIVES
Prepare MUL Strategic Business Plan-2000-2003; To achieve the Vision & Goal
Improve the performance Appraisal system - it’s process, skill & usage
Introduce a Potential Appraisal System
Improvements in internal & external Training & it’s effective utilisation. Training
need identification.
Systematic career planning ; Job Rotation ; Empowerment; Job enrichment
Periodic communication meeting at various level; Roll out of Vision
Raise cost consciousness for cost control and reduction
Exposure on Brand Strategy to all non- marketing staff
Retention of Talent.
INDUCTION SUCCESSION:
Transparent Recruitment & Selection process Recruitment on an All India Basis – no sectoral or Region specific Recruitment of Best available Talent in the Country
ENGINEERS – CAMPUS - IITS/RECS/RORKEE/HBTI
ALL-INDIA TEST
MBAs – IIMs/XLRI
CAs - Rank Holders
Technicians - ITI’s diploma holders after All
India Exam & Apprenticeship In MUL
Lateral Entry for Experienced Professionals
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 20
SUCCESSION PLANNING
potential & performance
vacancy – based
Open Office – Easy accessibility, Speedy
Communication and decision making
Morning Meetings
Morning Exercises
Management Committee Meetings – every
Tuesday
Single unaffiliated Union
Excellent Industrial Relations scenario – no
loss of mandays due to strike/lockout etc. in
past 5 yrs.
Maruti Udyog Sahyog Samiti – a forum for
Non-Unionised Staff
Delayered Organisation Structure
Workers(Techn. / Asst.), Supervisors,
Executives, Managers
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 21
INDUCTION PROGRAMME
Objective:
The objective of this program is to facilitate smooth induction of the new DSEs into
their place of work i.e. Maruti dealerships. This program attempts to orient the new DSEs on
a few important parameters, which are listed below:
Overview of Maruti and Suzuki:
Building understanding of the car market in India and various segments
Understand MUL’s product range and positioning in each segment
Understanding the basics in the automobile industry
Overview of each Maruti model and the MUL ‘Advantage’
Overview of the selling process and how to uncover needs of a customer to do need based selling
Role of financing as a sales tool and the various financing options available
Ensuring personal effectiveness
Understand the attributes of a good DSE
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 22
MEANING OF RECRUITMENT
It is the process of searching the potential candidate and offers him or her the job
It is positive in nature in the Indian context. Process of identifying and hiring best-qualified candidate.
RECRUITMENT PROCESS OF MARUTI UDYOG LTD:
The recruiting procedure at a Maruti dealership is as follows:
FOR A PARTICULAR DEALERSHIP
The dealership should release an advertisement.
Depending on availability of infrastructure
Interview of shortlisted/ qualified personnel
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 23
MEANING OF SELECTION:
It is the process of searching the potential candidate. It is negative in nature in the Indian context. But it is positive in the US context.
Steps in Selection Process of Maruti udyog ltd:
Selection process consists of a series of steps, at each stage, facts may come light
which may lead to the rejection of the applicant. It is a series of successive hurdles or
barriers which an applicant must cross. These hurdles or screens are designed to
eliminate an unqualified candidate at any point in the selection process There is no
standards selection procedure to be used in all organizations or for all jobs.
The complexity of selection procedures increases with the level and responsibility of
the position to be filled.
Preliminary Interview (screening applications)
Application Form
Selection Test
Employment Interview
Medical Examination
Reference Checks
Final Approval
Employment.
Induction.
Follow – up (Evaluation)
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 24
IMPORTANCE OF TRAINING
Training and Development helps in optimizing the utilization of human resource that
further helps the employee to achieve the organizational goals as well as their individual
goals.
Annual Training Plan - All Levels
Training customised to meet Organisational Objectives
Topics selected based on Vision, Values & Departmental
Feedback of Company-wide Managers
Competency Mapping to identify Individual Training Needs
Technical Training on latest Technologies abroad at SMC, Japan
STRONG FOCUS ON TRAINING INITIATIVES:
Build a Learning Organisation
Continuous Value Additions to Professional Skills
Customised Training
Training to the personnel of Business Partners
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 25
OVERSEAS TRAINING :
Training held in co-ordination with SMC, Japan and
AOTS (Assoc. for Overseas Tech. Scholarship)
(covered 1600 employees under the various schemes)
6 months SMC Training for Technicians
OJT in SMC, Japan (2 batches/yr of 50 each)
9 months Javada Training for Press, Tool & Die
Specialists - Design & Maintenance
AOTS Managerial Training (4-10weeks) for Manager &above - Managerial Best Practices
AOTS Technical Training (3.5 to 6 months) for
Supervisors & above - Technological Knowhow
R & D Training (2 yrs.) - Research on new Technologies
APPRAISAL REWARD
Appraisal:
A systematic, periodic and so far as humanly possible, an impartial rating of an employee’s excellence in matters pertaining to his present job and to his potentialities for a better job.
New Appraisal System based on KRAs &Targets
Review of Targets at regular Intervals
People Development an important KRA
REWARD
Promotions based on Performance
Productivity & Profit-linked Incentive Schemes
Training including Long-term SMC Japan Trg.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 26
Highest paid workforce in the Industry, if not the Country
LEADERSHIP
Vision, Value & Team Building Workshops for Top Management
CFT (Cross Functional Teams) of Managers for Major Thrust Areas
Managers sent to Joint Ventures to upgrade their practices to MUL standards
CAREER DESIGN
It is defined as the process of deciding on the content of a job in terms of its duties and responsibilities on the methods to be used in carrying out the job, in terms of techniques, systems and procedures and on the relationships that should exist between the job holder and his superiors, subordinates and colleagues
Performance & Potential based Appraisals
Fast Track Option for High-performers
Promotions after Managers Vacancy based
Interviews for promotions above Managers
SELECTION OF SUPERVISORS:
Performance / Attendance / Discipline record
Written Test & Interview
Job Rotation - including Inter-functional
OUTSOURCING HR:
Part of our Long-term Strategic Plan
Currently Trainers hired from outside
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 27
RETENTION EMPLOYEE WELFARE :
Employee retention is a process in which the employees are encouraged to remain
with the organization for the maximum period of time or until the completion of the project.
Employee retention is beneficial for the organization as well as the employee.
EMPLOYEE WELFARE:
Residential Colonies for Employees – Chakkarpur & Bhondsi
Hospitalisation Reimbursement – on actuals without Ceiling
Vehicle Loans
Household Equipment Loans
House Building Advance
Annual Advance
MUL PF Trust – for better Mgt., Service & speedy redress
Proposed MUL Pension Scheme
Learning Opportunity - Benchmark in Auto Technology
Professional Value addition through Training
Opportunity for foreign training at SMC, Japan
Job Rotation & Job enrichment
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 28
EMPLOYEE ENGAGEMENT -ESOPs
Maruti Udyog Ltd. Employees Mutual Benefit Fund Scheme Managed by a 10-
member Trust Fixed Equity of 0.26% Lock-in period of 3 years Transferable Internally
SUGGESTION SCHEME QUALITY CIRCLES:
For better quality and productivity
Through involvement of all employees and teamwork
During the year 1999-2000 :-
Suggestions Implemented - 52,054
Cost Saving (in crores) - Rs. 131.69 Crores
Number of QC Groups - 510
QC Meetings held - 7189
Target for SS & QC for 2000-01 :
Suggestions Implemented - Prod. & VI - 1implmented/employee/month
Other areas - 8.4 implemented/employee/month
Cost Saving Rs. 165 crores (25%)increase for the Company
QC Meeting - 13 meetings/QC Gp./ Year
Target - 34 marks / suggestion
Company-wide QC Groups (8-15 members per group)
Monthly QC Meetings on the First Wednesday each Month
Company-wide QC Competitions - Best Team sent to SMC
MD’s lunch with Best QC Team & Best Suggestion Winner
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 29
SUGGESTIONS : MONETARY REWARD:
Criteria - Idea
Efforts
Result : Cost reduction / Q Improvement / Productivity
Improvement
FUTURE CHALLENGES
Realigning organisation culture based on new vision & values
Objective performance management & development system
Transparent job rotation & job enrichment
Performance linked reward and recognition system
Career planning & promotion policy
Revised recruitment policy
Competency mapping
Strong fucus on training initiatives
Build a learnng organisation
Continuous value addition to professional skill
Customised training
Training to the personnel of business partners
Internal Communication
Union alignment
Employee involvment & participation
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 30
CODE OF BUSINESS CONDUCT AND ETHICS:
As a responsible corporate citizen, Maruti Suzuki India Limited (‘Maruti’ or “the
Company”) has alwaysbelieved in following highest standards of Corporate Governance.
Being a listed Company, every act of the Company, its Board Members and its employees is
the focus of public attention and accordingly, there is a need to reinforce Maruti’s
commitment towards maintaining highest standards of Corporate Governance. This Code of
Business Conduct and Ethics (“Code of Conduct” or “Code”) helps ensure compliance with
our standards of business conduct & ethics and also with regulatory requirements. All Senior
Management Personnel are expected to read and understand this Code of Business Conduct
and Ethics,
Uphold these standards in day-to-day activities and also comply with all applicable
standards, policies and procedures of the company. This policy should be read in conjunction
with applicable regulations & existing policies & procedures of the Company. You can also
contact the Secretarial & Legal Department if you have any questions or clarifications.
APPLICABILITY :
This Code of Conduct is applicable to all Senior Management Personnel which would
include the directors of the Company, the top management personnel (i.e., executive directors
& advisors at executive director level) & all functional heads (including management
personnel with direct functional reporting to directors & top management personnel). All
Senior Management Personnel are expected to comply with the letter and spirit of this Code.
The Senior Management Personnel should continue to comply with otherapplicable laws &
regulations and the relevant policies, rules and procedures of the Company.The Code comes
into immediate effect.
INTERPRETATION OF THE CODE :
In this Code the term “Relative” shall have the same meaning as defined in Section 6
of the Companies Act, 1956. In this Code, words importing the masculine shall include
feminine and words importing singular shall include the plural or vice versa. Any question or
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 31
interpretation under this Code of BusinessConduct and Ethics will be considered and dealt
with by the Board or any person authorized by the Board on their behalf.
COMPLIANCE WITH APPLICABLE LAWS & REGULATIONS :
Senior Management Personnel must comply and where applicable, oversee
compliance by employees with all the laws, rules and regulations applicable to the Company
and its employees. Each Senior Management Personnel must acquire appropriate knowledge
of the requirements relating to his duties sufficient to enable him to recognize potential non
compliance issues and to know when to seek advice from the Legal Department on specific
Company policies and procedures. No payment or transaction should be made or undertaken,
by a Senior Management Personnel or authorized or instructed to be made or undertaken by
any other person or the Company if the consequence of that transaction or payment would be
the violation of any law in force.
HONESTY, INTEGRITY & ETHICAL CONDUCT :
Senior Management Personnel shall act in accordance with the highest standards of
integrity, honesty, fairness and ethical conduct while working for the Company as well when
representing the Company. Honest conduct means conduct that is free from fraud or
deception. Integrity & ethical conduct includes ethical handling of actual or apparent
conflicts of interest between personal and professional relationships.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 32
MARKETING MANAGEMENT:
Marketing is the creation and delivery of standard of living to the society.
Objectives:
The various objectives of marketing include the following :.
Intelligent and capable application of modern marketing policies.
To develop the marketing field.
To develop guiding policies and their implementation for a good result.
To suggest solution by studying the problems relating to marketing.
To find source for further information concerning the market Problems.
To revive existing marketing function, if shortcoming are found.
To take appropriate action in the course of actions.
Importance :
Importance of marketing to the society.
Importance of marketing to the firm.
Importance of marketing in Developed Economy.
Importance of marketing in underdeveloped or Developing Economy.
Importance of marketing in a Seller’s or Buyer’s market.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 33
PRODUCTS OF MARUTHI SUZUKI :
Available Car Models Starting Price(Ex-showroom, Mumbai)
Maruti Suzuki 800 Rs. 1,97,214
Maruti Suzuki Omni Rs. 2,03,565
Maruti Suzuki Alto Rs. 2,36,843
Maruti Suzuki Zen Estilo
Rs. 3,13,085
Maruti Suzuki Wagon R Rs. 3,22,157
Maruti Suzuki Wagon R Duo Rs. 3,39,532
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 34
Maruti Suzuki A-Star Rs. 3,58,942
Maruti Suzuki Versa Rs. 3,86,953
Maruti Suzuki Ritz Rs. 4,05,872
Maruti Suzuki Swift Rs. 4,22,859
Maruti Suzuki Swift Dzire Rs. 4,82,300
Maruti Suzuki Gypsy Rs. 5,23,325
Maruti Suzuki SX4 Rs. 6,81,091
Maruti Suzuki Grand Vitara Rs. 16,92,000
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 35
4P’s OF MARUTI SUZUKI SWIFT:
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 36
PRODUCTPRODUCT
PRICEPRICE
PLACEPLACE
PROMOTIONPROMOTION
PRODUCT:
The all-new Maruti Suzuki Swift is fully loaded with a range of exciting new features. It's a perfect complement to your evolved tastes and lifestyle. And the best way to take your driving pleasure to a brand-new high.European Styling. Japanese Engineering. Dream-Like Handling.
The new Swift is a generation different from Suzuki design. Styled with a clear sense of muscularity, its one-and-a-half box, aggressive form makes for a look of stability, a sense that it is packed with energy and ready to deliver a dynamic drive.Its solid look is complemented by an equally rooted road presence and class-defining ride quality. New chassis systems allow for the front suspension lower arms, steering, gearbox and rear engine mounting to be attached to a suspension frame. You get lower road noise, and a greater feeling of stability as you sail over our roads with feather-touch ease.
There are three variants of Maruti Suzuki Swift :
Swift LXi Swift VXi Swift ZXi
3 assist grips, 3 spoke urethane steering wheel, antenna, cabin light (3 position), console box (lower), cup holders (front 2, rear1), front door trim pockets, green tinted glass window, halogen headlamps, headlamp leveling device, heater and manual Air conditioning, OVRM (internally adjusted), rear fog lamps, wind screen wiper 2 speed plus 1 speed intermittent, tailgate opener key type, trip meter (digital display), sun visors (both sides), brake assist , child lock (rear door), high mounted stop lamp, power steering, rear seat belts etc. are the features available in this model.
Swift VXi:
Apart from the features found in other model, striking features of this model are black colored A & B pillars, 12v accessory socket in center console, day and night rear view mirror, door ajar warming lamp, driver's seatbelt warning lamp, tachometer, driver's seat belt warning lamp, vanity mirrors (sun visor co-driver side), rear seat head restraints, fabric accented door trims, central door locking (4 door), front and rear electronic windows, front fog lamps, light off/ key reminder, manual air-conditioning, key not removed warning buzzer, etc.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 37
Swift ZXi
Special features that have made this model more market friendly are rear window demister, rear parcel shelf, rear window wiper, room lamp and luggage room, keyless entry,dual front airbags, colored outside door mirror cowls, colored outside door handles, 12v accessory socket in luggage room, driver seat height adjuster, central door locking (5 doors), seat belts 3-point ELR with shoulder adjusters, seat belts front 3-point ELR with pretensioning,tailgate opener electromagnetic type etc.
PRICE:
Maruti is expected to take Hyundai heads on with the pricing of their upcoming Maruti Suzuki Swift car. After launching cars for the masses since so many years, India’s largest automobile manufacturer is now targeting the premium segment with their latest model from the Suzuki’s stable. The analysts predict the pricing of this premiumhatchback to start from Rs. 4 lakh.This price range would practically rip apart Hyundai’s offering in Getz, which is priced at a much higher tag of Rs. 4.5 lakh. Both the companies are known for their value based offerings and Maruti with their extensive service network and brand reputation for making reliable cars should get the customer’s nod over their competition.The official pricing however is still not out. However, the company is said to be studying the prospects of launching the base model at the 4-lakh price tag. There is another advantage in doing so considering in the capital city of Delhi NCR road tax on the sub 4 lakh priced cars is comparatively lower at 2%. Cars at a price higher than 4 lakh have to pay a 4% road tax.Delhi NCR is one of the major targeted markets and it might get the benefit of this policy. And if they indeed do take the chance of pricing Suzuki Swift at a considerable lower price than Hyundai Getz, they would quite likely force the competition to rethink their strategy.
PROMOTION:
When Maruti Udyog launched the Swift in May last year, the automotive industry was agog with expectation that the car had the makings of a real winner. Three versions were launched with the base variant carrying a retail tag of Rs 3.85 lakh, ex-showroom, New Delhi, and this aggressive pricing only reinforced this feeling. A year later, the company says the Swift is now the most-sold car in the first year of any car in the history of the Indian automobile industry, having totted up sales of 61,200 units.
This is higher than what Maruti had initially planned to sell. The car recorded an estimated 4,000 bookings at the time of its launch, and the initial output of 200 units a day on a two-shift basis, wasn’t enough to cope with demand.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 38
In October, the company increased capacity for the Swift which helped cut down on the waiting time from an estimated three months.
PLACE :
The car manufacturing company, called Maruti Suzuki Automobiles India Limited, is a joint venture between Maruti Udyog and Suzuki
Motor Corporation holding a 70 per cent and 30 per cent stake respectively. The Rs1,524.2 crore plant has a capacity to roll out 1 lakh cars per year with a capacity to scale up to 2.5 lakh units per annum. The car manufacturing plant will begin commercial production by the end of 2006.The engine and the transmission plant has owned by Suzuki Powertrain India Limited in which Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyog holding the balance. The ultimate total plant capacity is three lakh diesel engines. However, the initial production is 1 lakh diesel engines, 20,000 petrol engines and 1.4 lakh transmission assemblies.
SALES PERFORMANCE
:
INTERPRETATION:
The sales volumes of Maruthi Suzuki had increased randomly from 2001-2008, in 2001 it was 352,415 crores it increased to 764,842 in the year 2008.this report says that
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 39
Maruthi Suzuki has out standng it’s performance in producing and marketing its products.
MARKET SHARE :
INTERPRETATION:
Market Share:
Currently Suzuki holds 54.2% stake of Marti, the balance being held by various QIBs, PCBs
Public. On BSE, Marti has the highest market capitalization in the auto sector. We are the largest car company in the country. So far, we have produced more than
6.6 million cars. We are Suzuki's largest manufacturing facility, outside Japan offering 11 models
in over 150 variants. The turnover last year was USD 3.37 Bn employing more than 6700 employees. The high localization of parts within India is one of our distinct strengths. Where the company has 3 plants in Gurgaon facility, 4th plant was added with
the capacity of 100000 Cars Hundred thousand at Manesar in 2006-07.
The market share of Maruthi Suzuki had decreased gradually from the year 2001-
2008 due to its rigid competitors HYUNDAI and TATA motors etc.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 40
BRAND HIERARCHY OF THE COMPANY:
The Product Line:
The Indian passenger car market was divided into various segments and sub-segments
on the basis of price, size (i.e. length of the model and its weight) and other factors (including
engine capacity). MUL had a presence in all the segments and sub-segments.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 41
COMPETITORS :
Major Competitors:
Since 1985, Maruti Udyog Limited (MUL) has been the market leader in the passenger car industry in India. Its flagship product - M800 had the distinction of being the
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 42
M&M PAL HYUNDAI
FORD MISTSUBUSHI TOYOTA
HIND MOTORS GM TATA MOTORS
largest selling car model in India since its launch in December 1983.Positioned as people's car, M800 ruled the Indian passenger car market and remained unchallenged ever since it occupied the top slot, five months after its introduction In March 2003, MUL sold 20,687 units of M800, the highest ever sales by any single model in a month. It was also the highest sales since M800 debuted, surpassing its previous monthly high of 18,735 units in August 1999
For the first few months of 2004, M800 performed well, selling 15,301 units in January, 13,518 units in February and 15,540 in March. But gradually Alto, another MUL product, began eating into M800's share. Alto reported In April, its sales increased to 9,350 units and in May 2004, Alto took over M800's position as the largest selling car with sale of 10,373 units, slightly over M800's sales of 10,016 units.
Analysts felt that Alto had taken the top spot because of its price reduction in September 2003 by Rs. 23,000 followed by the launch of the non-AC Alto for Rs. 0.23 mn in the first week of April 2004. On reducing the gap between its bread and butter model M800 and its compact car Alto, MUL said it had "long term" plans for M800.
Commenting on Alto's pricing strategy, Jagdish AKhattar (Khattar), managing director of MUL, said, "The new price positioning of the Alto would cannibalize existing A1 segment product the M800 which is also considered an old model. But, the cannibalization will remain within the Maruti family and the bigger numbers will help Maruti depreciate Alto faster. Net M800 sales may be less but we would be pushing more Alto and the more we sell the Alto the faster it will depreciate."
Though industry analysts said this move would boost MUL's profits, they also expressed their views that MUL's long-term plan might be to discontinue M800 and replace the entry segment with Alto. However, Khattar clarified that MUL's pricing strategy was not meant to replace M800 with Alto. He said, "Now, we have two cars in entry-level. Maruti 800 is still a dream of Indians, how can I replace it?"
Current and Future Market Strategies:
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 43
Design small cars suitable for the Indian conditions as a strategy to beat the stiff competition with development capabilities and internal resources to finance its expansion, thereby cushioning itself 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
The Pricing Strategy :
Due to the fierce competition in the Indian passenger car industry, price emerged as an important factor affecting the purchasing decisions of customers. Since it had been in the industry for more than two decades, and as a market leader, MUL adopted aggressive pricing strategies.
The company had products at various price points (Refer Exhibit IV for a comprehensive list of MUL's products, their variants and prices). In the early 2000s, when the passenger car industry was witnessing stagnation, MUL slashed the prices of its various models, to revive the industry.
KEY STRATEGIC INITIATIVES BY MARUTI
Turnaround Strategies Maruti Followed :
Maruti was the undisputed leader in the automobile utility-car segment sector, controlling about 84% of the market till 1998. With increasing competition from local players like Telco, Hindustan Motors, Mahindra & Mahindra and foreign players like Daewoo, PAL, Toyota, Ford, Mitsubishi, GM, the whole auto industry structure in India has changed in the last seven years and resulted in the declining profits and market share for Maruti. At the same time the Indian government permitted foreign car producers to invest in the automobile sector and hold majority stakes.
OFFERING ONE STOP SHOP TO CUSTOMERS:
Maruti has successfully developed different revenue streams without making huge investments in the form of MDS, N2N, Maruti Insurance and Maruti Finance. These help them in making the customer experience hassle free and helps building customer satisfaction.
Maruti Finance: In a market where more than 80% of cars are financed, Maruti has strategically entered into this and has successfully created a revenue stream for Maruti. This has been found to be a major driver in converting a Maruti car sale in certain cases. Finance is one of the major decision drivers in car purchase. Maruti has tied up with 8 finance companies to form a consortium. This consortium comprises Citicorp Maruti, Maruti Countrywide, ICICI Bank, HDFC Bank, Kotak Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd.( erstwhile-Ashok Leyland Finance).
Maruti Insurance :
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 44
Insurance being a major concern of car owners. Maruti has brought all car insurance needs under one roof. Maruti has tied up with National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram to bring this service for its customers. From identifying the most suitable car coverage to virtually hassle-free claim assistance it's your dealer who takes care of everything. Maruti Insurance is a hassle-free way for customers to have their cars repaired and claims processed at any Maruti dealer workshop in India.
TRUE VALUE :
Another significant development is MUL's entry into the used car market in 2001, allowing customers to bring their vehicle to a 'Maruti True Value' outlet and exchange it for a new car, by paying the difference. They are offered loyalty discounts in return.This helps them retain the customer. With Maruti True Value customer has a trusted name to entrust in a highly unorganized market and where cheating is rampant and the biggest concern in biggest driver of sale is trust.
REPOSITIONING OF MARUTI PRODUCTS :
Whenever a brand has grown old or its sales start dipping Maruti makes some facelifts in the models. Other changes have been made from time to time based on market responses or consumer feedbacks or the competitor moves. Here are the certain changes observed in different models of Maruti.
CUSTOMER CENTRIC APPROACH:
Maruti’s customer centricity is very much exemplified by the five times consecutive wins at J D Power CSI Awards. Focus on customer satisfaction is what Maruti lives with. Maruti has successfully shed off the public- sector laid back attitude image and has inculcated the customer-friendly approach in its organization culture. The customer centric attitude is imbibed in its employees. Maruti dealers and employees are answerable to even a single customer complain. There are instances of cancellation of dealerships based on customer feedback.
KEY SUCCESS FACTORS :
The Quality Advantage :
Maruti Suzuki owners experience fewer problems with their vehicles than any other car manufacturer in India (J.D. Power IQS Study 2004). The Alto was chosen No.1 in the premium compact car segment and the Esteem in the entry level mid - size car segment across 9 parameters.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 45
A Buying Experience Like No Other:
Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189 cities, with a workforce of over 6000 trained sales personnel to guide MUL customers in finding the right car.
Quality Service Across 1036 Cities :
In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7 parameters: least problems experienced with vehicle serviced, highest service quality, best in-service experience, best service delivery, best service advisor experience, most user-friendly service and best service initiation experience.
One Stop Shop :
At Maruti Suzuki, customers will find all car related needs met under one roof. Whether it is easy finance, insurance, fleet management services, exchange- Maruti Suzuki is set to provide a single-window solution for all car related needs.
The Low Cost Maintenance Advantage :
The acquisition cost is unfortunately not the only cost customers face when buying a car. Although a car may be affordable to buy, it may not necessarily be affordable to maintain, as some of its regularly used spare parts may be priced quite steeply. Not so in the case of a Maruti Suzuki. It is in the economy segment that the affordability of spares is most competitive, and it is here where Maruti Suzuki shines.
Lowest Cost of Ownership :
The highest satisfaction ratings with regard to cost of ownership among all models are all Maruti Suzuki vehicles: Zen, Wagon R, Esteem, Maruti 800, Alto and Omni.
Technological Advantage :
It has introduced the superior 16 * 4 Hypertech engines across the entire Maruti Suzuki range. This new technology harnesses the power of a brainy 16-bit computer to a fuel-efficient 4-valve engine to create optimum engine delivery. This means every Maruti Suzuki owner gets the ideal combination of power and performance from his car.
SWOT ANALYSIS OF MARUTI UDYOG
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 46
STRENGTHS :
Established distribution and after-sales networks
Understanding of the Indian market and ability to liaison with the government:-
Ability to design products with differentiating features:-
Brand Image
Experience and Know-how in technology:-
WEAKNESSES :
Lack of experience with the foreign market:-
Inexperience with foreign workforce
Heavy Import tariffs
OPPORTUNITY:
Increased purchasing power of Indian middleclass category
Govt. subsidies
Tax benefits
Foreign collaboration
THREATS :
Threats from Chinese manufacturers
Indian as well as foreign competitors
FINANCIAL MANAGEMENT
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 47
DEFINITION :
Financial management is concerned with the efficient use of an important economic resource namely Capital Funds.
Objectives:
The main objective of a business is to maximize the owner’s economy welfare. This objective can be achieved by:
Profit/EPS maximization Wealth maximization.
Profit /EPS maximization: Profit /EPS earning is the main aim of every economic activity. A business being an economic institution must earn profit to cover its costs and provide funds for growth.
Profit / EPS is the test of economic efficiency. Efficient allocation of fund. Social welfare. Internal resources for expansion. Reduction in risk and uncertainty. More competitive. Desire for controls. Basis of decision-making.
Wealth maximization: this is also known as value maximization or net present worth maximization approach, it takes into consideration the time value of money.
IMPORTANCE:
The following are the points to highlight the importance of finance.
Finance for business promotion. Finance management for optimum use firms. Use for co-operation in business activities. Useful in decision making. Determinant of business success. Measurement of business. Basis of planning, co-ordination and control. Useful to shareholders and investors.
BALANCE SHEET
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 48
DEFINITION : A Balance sheet may be described as a statement of the financial position of a concern at a given data. The financial position of a concern is revealed by its assets on a given data and its liabilities on that date. Excess of assets over liabilities represents Capital, such excess may be taken as an indicator of the financial soundness of a concern.
Balance sheet Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04Sources of fundsOwner's fund Equity share capital 144.50 144.50 144.50 144.50 144.50Share application money - - - - -Preference share capital - - - - -Reserves & surplus 8,270.90 6,709.40 5,308.10 4,234.30 3,446.70Loan fundsSecured loans 0.10 63.50 71.70 307.60 311.90Unsecured loans 900.10 567.30 - - -Total 9,315.60 7,484.70 5,524.30 4,686.40 3,903.10Uses of funds Fixed assets Gross block 7,285.30 6,146.80 4,954.60 5,053.10 4,566.70Less : revaluation reserve - - - - -Less : accumulated depreciation 3,988.80 3,487.10 3,259.40 3,179.40 2,735.90Net block 3,296.50 2,659.70 1,695.20 1,873.70 1,830.80Capital work-in-progress 736.30 238.90 92.00 42.10 74.90Investments 5,180.70 3,409.20 2,051.20 1,516.60 1,677.30Net current assets Current assets, loans & advances
3,190.50 3,956.00 3,870.70 3,097.40 2,144.40
Less : current liabilities & provisions
3,088.40 2,779.10 2,184.80 1,843.40 1,840.60
Total net current assets 102.10 1,176.90 1,685.90 1,254.00 303.80Miscellaneous expenses not written
- - - - 16.30
Total 9,315.60 7,484.70 5,524.30 4,686.40 3,903.10Notes: Book value of unquoted investments
5,169.60 3,398.10 2,040.10 1,505.50 1,666.20
Market value of quoted investments
219.50 270.40 289.80 200.10 150.90
Contingent liabilities 2,734.20 2,094.60 1,289.70 893.60 1,119.80Number of equity sharesoutstanding (Lacs)
2889.10 2889.10 2889.10 2889.10 2889.10
Interpretation : The balance sheet amount has increased gradually from the year 2004-2008 as 3,903.10 to 9,315.60 .
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 49
Analysation: This indication shows the company operations reach in wide in facing the market efficiently.
PROFIT & LOSS ACCOUNT:
Definition: Net profit represents the excess of gross profit plus other revenue incomes over sales expense including sales costs and other expenses. The debit side of P&L a/c shows the expenses and the credit side the incomes. If the total of the credit side is more, it will be net profit. And if the debit side happens to be more, it would be net loss.
P&L Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04
Operating income 18,066.8
014,806.40 12,197.90 11,046.30 9,449.50
Expenses
Material consumed 13,622.0
011,063.70 9,223.70 8,508.50 7,033.50
Manufacturing expenses
670.60 489.80 359.60 273.80 219.40
Personnel expenses 356.20 288.40 228.70 196.00 177.90
Selling expenses 560.20 499.90 356.00 369.90 666.20Adminstrative expenses
326.30 274.50 170.60 150.20 112.90
Expenses capitalised -19.80 -14.30 -6.70 -22.40 -12.80
Cost of sales15,515.5
012,602.00 10,331.90 9,476.00 8,197.10
Operating profit 2,551.30 2,204.40 1,866.00 1,570.30 1,252.40
Other recurring income
456.10 361.10 268.10 218.90 198.90
Adjusted PBDIT 3,007.40 2,565.50 2,134.10 1,789.20 1,451.30
Financial expenses 59.60 37.60 20.40 36.00 44.90
Depreciation 568.20 271.40 285.40 456.80 494.90
Other write offs - - - 16.30 72.40
Adjusted PBT 2,379.60 2,256.50 1,828.30 1,280.10 839.10Tax charges 763.30 705.30 560.90 446.50 227.70
Adjusted PAT
1,616.30 1,551.20 1,267.40 833.60 611.40
Non recurring items 37.90 -23.00 -83.70 -31.40 -151.90Other non cash adjustme
76.60 33.40 5.40 51.40 82.60
Reported net profit 1,730.80 1,561.60 1,189.10 853.60 542.10
Earnigs before 7,368.10 5,947.10 4,631.20 3,611.00 2,878.00
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 50
appropriationEquity dividend 144.50 130.00 101.10 57.80 43.30Preference dividend - - - - -Dividend tax 24.80 21.90 14.20 8.20 5.60Retained earnings 7,198.80 5,795.20 4,515.90 3,545.00 2,829.10Interpretation : The operating and non operating expenses and income are incresing gradually from the year 2004-2008
Analysation : This trend shows that company,s productivity is increasing yearly to extend its market operations.
RATIO ANALYSIS
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 51
Meaning of Ratio Analysis:
Ratio Analysis can be defined as the study and interpretation of relationships between various financial variables, by investors or lenders. It is a quantitative investment technique used for comparing a company's financial performance to the market in general. A change in these ratios helps to bring about a change in the way a company works. It helps to identify areas where the management needs to change.
Steps in Ratio Analysis:
The firs task of the financial analyst is to select the information relevant to the decision under consideration from the statements and calculates appropriate ratios.
The second step is to compare the calculated ratio with the ratios of the same firm relating to past or with the industry ratios. This step facilitates in assessing success or failure of the firm.
The third step involves interpretation, drawing of inferences and report-writing. Conclusions are drawn after comparison in the shape of report or recommended course of action.
Importance:
Ratios are useful for the following reasons:
The ratios can be used by financial managers for future financial planning. Ratios calculated for a number of years work as a guide for the future.
Ratios are useful in co-ordination which is very needed in business. The efficiency and weakness of an enterprise if communicated properly will establish a better co-ordination among areas of appreciation and control.
Ratios are used for communication of weak and good points to the concerned parties.
Ratios should be shown the better financial position of the firm. For example, better solvency ratio speaks out good financial position.
The ratios are economic barometer useful to all mentioned above as they can know the good and bad position of a company by making a comparative study of financial statement.
RATIOS Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04Per share ratios
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 52
Adjusted EPS (Rs) 55.94 53.69 43.87 28.85 21.16Adjusted cash EPS (Rs) 75.61 63.09 53.75 45.23 40.80Reported EPS (Rs) 59.91 54.07 41.16 29.55 18.76Reported cash EPS (Rs) 79.57 63.46 51.04 45.92 38.40Dividend per share 5.00 4.50 3.50 2.00 1.50Operating profit per share (Rs) 88.31 76.30 64.59 54.35 43.35Book value (excl rev res) per share (Rs)
291.28 237.23 188.73 151.56 123.74
Book value (incl rev res) per share (Rs.)
291.28 237.23 188.73 151.56 123.74
Net operating income per share (Rs) 625.34 512.49 422.20 382.34 327.07Free reserves per share (Rs) 286.28 231.89 183.18 144.13 116.91Profitability ratios Operating margin (%) 14.12 14.88 15.29 14.21 13.25Gross profit margin (%) 10.97 13.05 12.95 10.08 8.01Net profit margin (%) 9.34 10.29 9.53 7.57 5.61Adjusted cash margin (%) 11.79 12.01 12.45 11.59 12.21Adjusted return on net worth (%) 19.20 22.63 23.24 19.03 17.10Reported return on net worth (%) 20.56 22.78 21.80 19.49 15.16Return on long term funds (%) 27.35 30.74 33.47 28.12 22.71Leverage ratios Long term debt / Equity 0.05 0.08 0.01 0.06 0.08Total debt/equity 0.10 0.09 0.01 0.07 0.08Owners fund as % of total source 90.33 91.57 98.70 93.43 92.00Fixed assets turnover ratio 2.48 2.41 2.46 2.19 2.07Liquidity ratios Current ratio 1.03 1.42 1.77 1.68 1.17Current ratio (inc. st loans) 0.91 1.40 1.77 1.67 1.15Quick ratio 0.66 1.13 1.31 1.25 0.85Inventory turnover ratio 22.93 28.76 18.78 22.97 30.43Payout ratios Dividend payout ratio (net profit) 9.78 9.72 9.69 7.73 9.02Dividend payout ratio (cash profit) 7.36 8.28 7.81 4.97 4.40Earning retention ratio 89.53 90.21 90.91 92.09 92.01Cash earnings retention ratio 92.25 91.67 92.58 94.95 95.86Coverage ratios Adjusted cash flow time total debt 0.41 0.34 0.04 0.23 0.26Financial charges coverage ratio 50.46 68.23 104.61 49.70 32.32Fin. charges cov.ratio (post tax) 39.57 49.76 73.28 37.85 25.71Component ratios Material cost component (% earnings)
77.25 73.36 77.25 78.30 74.47
Selling cost Component 3.10 3.37 2.91 3.34 7.05Exports as percent of total sales 4.10 3.90 4.78 8.89 9.96Import comp. in raw mat. consumed 10.84 12.62 18.75 19.69 20.40
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 53
Long term assets / total Assets 0.74 0.61 0.49 0.52 0.62Bonus component in equity capital (%)
- - - - -
PER SHARE RATIOS:
EPS is measured by dividing the net profits after taxes and preference dividend by the total number of equity shares.
EPS = net profit after tax- preference dividend
Per share ratios 2008 2008 2007 2006 2005Adjusted EPS (Rs) 55.94 53.69 43.87 28.85 21.16Adjusted cash EPS (Rs) 75.61 63.09 53.75 45.23 40.80Reported EPS (Rs) 59.91 54.07 41.16 29.55 18.76Reported cash EPS (Rs) 79.57 63.46 51.04 45.92 38.40Dividend per share 5.00 4.50 3.50 2.00 1.50
Operating profit per share (Rs) 88.31 76.30 64.59 54.35 43.35
Book value (excl rev res) per share (Rs) 291.28 237.23 188.73 151.56 123.74Book value (incl rev res) per share (Rs.) 291.28 237.23 188.73 151.56 123.74Net operating income per share (Rs) 625.34 512.49 422.20 382.34 327.07Free reserves per share (Rs) 286.28 231.89 183.18 144.13 116.91
Interpretation: Due To Incresing Profits And Market Sustainability The Per Share Value Of Maruthi Suzuki Had Been In Incresing Trend From 2004-2009.
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Analysis: As a result of that the per share value in the market is above 1100rs.
PROFITABILITY RATIOS:
Profitability is a ratio. Being a ratio profitability is a meaningful measure and reveals the relation of different individuals items with sales of the concern. Profitability of a concern can be known through the analysis of general and overall profitability.
Gross profit ratio=Gross profit (100) /Net sales
Gross profit ratio= net sales-cost of goods sold (100) / Net sales
Profitability ratios 2008 2008 2007 2006 2005
Operating margin (%) 14.12 14.88 15.29 14.21 13.25Gross profit margin (%) 10.97 13.05 12.95 10.08 8.01Net profit margin (%) 9.34 10.29 9.53 7.57 5.61Adjusted cash margin (%) 11.79 12.01 12.45 11.59 12.21Adjusted return on net worth (%) 19.20 22.63 23.24 19.03 17.10Reported return on net worth (%) 20.56 22.78 21.80 19.49 15.16Return on long term funds (%) 27.35 30.74 33.47 28.12 22.71
Interpretation: The gross profit and net profit had increased initially from the year 2004-2007 from 8.01-13.05,5.61-10.29 and decreased in the year 2008 as 10.95 and 9.34.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 55
Analysis: Due to the implementation latest organisational aspects company increased its expenses in the year 2008.
LEVERAGE RATIOS:
Leverage ratios can be computed from the balance sheet items to determine the proportions of debt in total financing. Leverage ratios can also be calculated from the income statement items by determining the exact to which operating profits are sufficient to cover the fixed charges.
Debt –equity ratio = Long –term debit / Shareholder’s Equity
Leverage ratios 2008 2008 2007 2006 2005Long term debt / Equity 0.05 0.08 0.01 0.06 0.08Total debt/equity 0.10 0.09 0.01 0.07 0.08Owners fund as % of total source 90.33 91.57 98.70 93.43 92.00Fixed assets turnover ratio 2.48 2.41 2.46 2.19 2.07
Interpretation: The Debt Equity Ratio Is Expected To Be 2:1 Ratio But It Is In 1:2 Ratio
Analysis: This Situation Creates Insecurity To Creditor’s.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 56
LIQUIDITY RATIOS:
Liquidity means the ability of a concern to meet its current obligations as and when these become due. Thus the liquidity ratios indicate the ability of a concern to meet its short-term obligations.
Quick ratio= Quick assets / Current liabilities
Current ratio = Current assets / Current liabilities
Liquidity ratios 2008 2007 2006 2005 2004Current ratio 1.03 1.42 1.77 1.68 1.17Current ratio (inc. st loans) 0.91 1.40 1.77 1.67 1.15Quick ratio 0.66 1.13 1.31 1.25 0.85Inventory turnover ratio 22.93 28.76 18.78 22.97 30.43
Interpretation: The current ratio is in between 2:1 ratio, this is in increasing trend from initial stage. From 2004-2007 and decreased in the year 2008 as 1.03.
Analysis: One way this trend shows the, balancing of current assets and liabilities. This trend is continued even in quick ratio and liquid ratios.
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 57
PAYOUT RATIO:
This is the relationship between the returns belonging to the equity shareholders and the dividend paid to them. Thus is calculated as:
Pay out ratio = dividend per share / Earning per share
Payout ratios 2008 2008 2007 2006 2005Dividend payout ratio (net profit) 9.78 9.72 9.69 7.73 9.02Dividend payout ratio (cash profit) 7.36 8.28 7.81 4.97 4.40Earning retention ratio 89.53 90.21 90.91 92.09 92.01Cash earnings retention ratio 92.25 91.67 92.58 94.95 95.86
Interpretation: The Dividend Pay Out Ratio And Retention Ratio Is Increasing From The Year 2004-2008.
Analysis: This Is Proseperous Trend To Share Holders And Company.
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COVERAGE RATIOS
This ratio indicates the times-interest-earned. It is used to examine the firm’s debt-servicing capacity. The interest coverage ratio is the sum of net profit before interest and taxes dividend interest charges.
Coverage Ratio = sum of net profit before interest / Taxes dividend by interest charges
COVERAGE RATIOS 2008 2007 2006 2005 2004Adjusted cash flow time total debt 0.41 0.34 0.04 0.23 0.26Financial charges coverage ratio 50.46 68.23 104.61 49.70 32.32Fin. charges cov.ratio (post tax) 39.57 49.76 73.28 37.85 25.71
Interpretation: The Cash Balance Is Being Adjusted From 2004-2008 Between Creditors,
Debtors And Shareholders Dividend .
Analysis: This Is In Incresing Trend From 2004-2008.This Is Prosperous To Company And Its Stake Holders
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COMPONENT RATIOS:
This ratio ensures whether the capital employed has been effectively used or not. This is also the test of managerial efficiency and business performance. High total capital ratio is always required in the interest of the company.
Long term assets Turnover Ratio = Sales(net) / Capital employed
Component ratios 2008 2007 2006 2005 2004Material cost component (% earnings) 77.25 73.36 77.25 78.30 74.47Selling cost Component 3.10 3.37 2.91 3.34 7.05Exports as percent of total sales 4.10 3.90 4.78 8.89 9.96Import comp. in raw mat. consumed 10.84 12.62 18.75 19.69 20.40Long term assets / total Assets 0.74 0.61 0.49 0.52 0.62Bonus component in equity capital (%) - - - - -
Interpretation: The Material Cost Component Ratio Is Increasing From 2004-2008.
Analysis: As the Productivity is increasing simultaneously but the selling cost component ratio decreased gradually from the year 2004-2008,which can decline the sales percentage of company.
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FINDINGS
This company analysis done by me, brought out many findings.I would like to state some from them:Maruthi Suzuki can be termed as an greater example for merging industries (Govt. & foreign investments).
HRM:
Maruthi suzuki has finite recruiting and training procedures .
There are quality circles which can motivate employee and employer relationship.
MARKETING MANAGEMENT:
This segment is the initial cause for the sustainability of maruthi as an leader in the market of passenger cars.
Maruthi suzuki conducts r&d, in developing marketing strategies and products , which are near to customer preferences and tastes.
FINANCIAL MANAGEMENT:
As Maruthi Suzuki is an company which consists of Indian government’s capital , it follows lawful and ethical practices impractically in accounting its finance.
This company at most reaches the standard ratio in every ratio every year.
CONCLUSION
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I have analyzed the attached Balance Sheet of Maruti Suzuki India Limited (Formerly
Maruti Udyog Limited), as of Five years comparison and the related Profit and Loss
Account and Cash Flow Statement for the year ended on that dates Annexed thereto ! These
financial statements are the Responsibility of the company's management.
My pleasure is to express an opinion on these financial statements based on
analysis Those Standards An analysis includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An analysis also
includes assessing the accounting principles used and significant estimates, marketing
Techniques, HRM strategies, financial position of the Maruthi Udyog Limited.
The company analysis done by me on Maruthi Udyog Limited, sorted out that the automobile industry in India is prosperous and growing with innovating technology.
Cars in the market through different marketing strategies such as pricing strategy, products development etc. Finally “Maruthi Udyog Limited” has it financial trend in ascending order from previous four years.
Thus, Maruthi Udyog Limited, is counting its profits, and fulfilling the Social responsibility, by making its tag line to be implemented i.e
.
“Count on us”
COMPANY ANALYSIS REPORT (Maruthi Udyog Limited) 62