Project on

MARUTI SUZUKI
 Acknowledgement

With my deep sense of gratitude, I wish to thank my instructor G.B.Sandeep, for his
guidance and helping me to complete the project on Maruti SuZuki .

CFA Anurag Kumar

Enr No. 6010010832293

Company Analysis
 Table of Contents
Acknowledgement...................................................................................................... 2
CFA Anurag Kumar....................................................................................................2
Enr No. 6010010832293.............................................................................................2
............................................................................................................................ 3
Company Analysis...................................................................................................... 3
Table of Contents....................................................................................................... 4
Preamble.................................................................................................................... 5
Background................................................................................................................ 6
a . Product and Services.............................................................................................6
Business Model...........................................................................................................6
Target Customer & Value Proposition.........................................................................6
Distribution Channel...................................................................................................7
Promotion...................................................................................................................7
Revenue Stream.........................................................................................................7
Core Capabilities.........................................................................................................7
Value Configuration....................................................................................................7
Partner Network..........................................................................................................8
Business Analysis.......................................................................................................8
5.1. Segmental Analysis.............................................................................................8
Operational Performance............................................................................................9
6.1. Sales & Sales Growth.......................................................................................9
6.1. Segmental Sales Analysis.................................................................................9
6.2. PBDIT & OPM ....................................................................................................10
Operating metrices..................................................................................................11
Financial Performance..............................................................................................12
Net Profit growth................................................................................................... 12
Debt to equity ratio...............................................................................................13
8.3. Return on Capital Employed...........................................................................13
Return of equity.....................................................................................................14
Capital market performance.....................................................................................14
10. Recent strategies................................................................................................15
 10.1. Value Drivers................................................................................................15
10.2. Growth Driver...............................................................................................15
Outlook ......................................................................................16

Source: Maruti Suzuki

Preamble
Maruti Suzuki launches Maruti SX4,Maruti Eeco, Maruti Grand Vitara, Maruti Kizashi,
alto-k10 with a K-series, 998 cc engines I.e. engines having high fuel efficiency. It
also introduces next generation CNG technology i.e. I-GPI to ensure more power &
for better ride experience. It will give safety and reliability. This will attract
customer base as k-series engines have all those feature for which customer are
waiting. The company registered net sale of Rs. 80507 mn during in 1st quarter of
2010-11 so having growth of 27% with compared to last year quarter.
Background
Incorporated in 1981 by Government of India, Maruti Suzuki is India’s largest
4 wheeler manufacturer in Indian soil. Its headquarters is in New Delhi with
installed capacity of 700,000 car/ annum in Gurgaon & in Manesar with capacity of
300,000 car/annum. The major lines of business are purchase and sale of 4
wheelers, driving school, sales of components, and true value market.

a . Product and Services

Segment Product
A1 Maruti-800
A2 Alto , Zen, Wagon-R, A-star, Swift ,Ritz , Zen Estilo
A3 D-Zire , SX4
MUV Grand Vitara , Gypsy
C Omni , Versa , Eeco
Services True value cars, Driving cars, Safety programs for customers

Business Model

Target Customer & Value Proposition

Segment Target customer Value Proposition

A1 Consumer wants to Have low cost but

purchase a car, have a durable. i.e. ever lasting
conservative mindset.
Low income group.
A2 Middle class wants to Better engine quality,
buy to show its image. Design, Space with little
extra cost.
A3 Customer looking for Comfortable car with
more enjoyable car. better design & style
MUV Consumer looking for High performance
luxurious cars , engine car
comfortable ride high
quality interior and
safety features
C Commercial purpose Lot of Space with
reasonable price
Distribution Channel
Maruti Suzuki sales network is in 790 outlets covering 549 towns and
cities. The company provides service support to customers through
2700maruti service station.

Promotion
To attract company is advertising through lucrative ads &to reach in
semi-urban & in rural areas it is reaching through local &national
newspaper, Radio. Company hoarding can be seen in busy roads & in
metropolitan region also during game company try to reach through its
logo. Company is spending a bulk of money to promote its brands
In terms of CSR company has adopted 3village in Manesar (Haryana).
Promoting motor sport in the country. Family Day Function once in
year for employee. Planted over 1000 tree nearby region.

Revenue Stream
The company receives bulk of revenue from dealers and other value
added services like driving schools, true value cars.

Core Capabilities
Gurgaon has an installed capacity of 700,000 car/annum & facilitate ‘K'
engine plant. K-series engines are available in 1 litre and 1.2 litre
capacities. & Manesar plant having capacity of 300,000 cars/annum.
The high degree of automation and robotic control in the press shop,
weld shop and paint shop to help manufacture with acute precision,
high quality and speed.

Value Configuration
Company has set up a new gasoline engine plant in Gurgaon which will
provide engine to A-Star. In MUV segment company has launched new
Grand Vitara .Maruti Suzuki introduces K-series, 998 cc engines, having
high fuel efficiencies. CNG technology engine with I-GPI to ensure safe,
reliable, clean, responsive and environment friendly situation. Maruti
Suzuki inaugurated its state-of-the-art new engine plant at Gurgaon
Partner Network
Companies received input material from steel companies, Tyre
Company and supply its product to different dealer by third party
logistics.

4.8. Cost structure

Raw materials constitute major part of expenditure i.e. 81%. As the price of raw
material fluctuate more due to rise/fall in the input material which directly affect on
manufactured goods. Company also affected by increase in other expenses.

Source:BSE
India

Business Analysis

5.1. Segmental Analysis

Company gets major revenue from A2 type’s product. As income of middle class has
increased & as this segment give social images & have better quality, design. This
type of car is comfortable and easy to drive.

Source: BSE
India
 5.2. Issue & Challenges
New product has been launched by other player. Increase in interest rate. Rise in
crude oil price. A lot differentiated product is in the market. Increase in raw material
price. To innovate new & competitive car. To increase fuel efficiency. Fluctuation in
the exchange rate. European crisis. Consumer sentiment as their attitude is wait &
watch. To achieve economies of scale by reducing the cost f the production.

Operational Performance
6.1. Sales & Sales Growth

During the quarter ended June 2010, company’s sales witnessed rise of 17.28% to
Rs 82,315.30 million compared to previous quarter. The strong growth due to decrease
in interest rate, easy financing, Increase in income level, Change in lifestyle of
people. customer loyalty, also it has got good responds from A-star car, Maruti
SX4,Maruti Eeco, Maruti Grand Vitara, Maruti Kizashim Maruti Carvo . Increase in
sales growth is due to the low base effect.

Source : BSE
India

6.1. Segmental Sales Analysis

During the quarter ended June2010, overall company’s
sales growth came from C segment. As this segment car are spacious, have design
give social symbol in competitive rate. It has high fuel efficiency. The other
segment also performed well which added company’s top line growth. Of the all
divisions one segment A1 witnessed dip as this segment car not come in the
market.
 Source: Maruti Suzuki

6.2. PBDIT & OPM

The company for the quarter ended June 2010 has witnessed dip in the margins
compared to JFM 10. This is due to the fact that cost of production increased,
increase in the royalty payment. It also reveal that cost of expenditure is more than
revenue earned.
.

OPM as % of Sale

14000 18.00
12000 16.00
14.00
10000
12.00
RS mn

8000 10.00
%

6000 8.00
6.00
4000
4.00
2000 2.00
0 0.00
AMJ 09 JAS 09 OND 09 JFM10 AMJ 10

PBDIT (LHS) OPM (RHS)

Source: BSE
India/Maruti Suzuki
6.2. Cost Structure
The company for the quarter ended June 2010 has witnessed rise in the cost
components due to rise in cost of raw material , increase in interest rate than
compare to JFM 2010 . Percentage change in raw material cost 1.47, in other 1.14,
in staff cost (.11) , In interest 0 , in depreciation (.09) , in tax (1.32).
 Cost structure as % of sale

Source : Maruti Suzuki

Operating metrices
7.1. Revenue per Vehicle
During the quarter June 2010 revenue per vehicle rose due to increase in the price
of car & increases the output capacity in Manesar plant from 1700 to 2500.
Company also launched new product which helped it in improving its sale compare
to JFM 2010.

Revenue per sale

291000
290000
Rs Lakh

289000
288000
287000
286000
285000
284000
AMJ09 AMJ10

Revenue per sale

Source: BSE India/Maruti Suzuki

7.2. PBDIT per Vehicle

During the quarter ended June2010 PBDIT per vehicle decreased due to increase in
price of raw material , increase in royalty payment & increase in competition.

PBDIT per Sales

50000
45000
40000
35000
30000
Rs Lakh

25000
20000
15000
10000
5000
0
AMJ09 AMJ10

PBDIT per Sales

Source: BSE India/Maruti

Suzuki

Financial Performance
Net Profit growth
Company profit after tax has declined in JFM 10. This is because
increase in raw material cost. The growth rate has also decline as
increase in royalty payment due to the low upfront payments. Company
other income also saw heavy decline i.e. 53.7%. Increase in competition
led to decrease in sale which affected its profit.

Source: BSE India

Debt to equity ratio
D/E ratio has declined from 0.98 to 0.07 in 2006-07 to 2008-09. It is
good for company health. As large D/E means company is paying large
money as interest. It reflect that the company able to reduce the cost
on capital. Company had paid its debt. It shows that company is good
for investment as it has low degree of leverage.

Source: BSE India

8.3. Return on Capital Employed

Trends of ROCE show that it will fall in coming years. I.e. profitability of
company will decline due to increase in competition & hike in raw material
cost. Investment is not good in the short rub but in the long run it is will
give better return as company has
large penetration & new product will increase its sale & give competitive
edge over other players.
Trends of ROCE

36
35
34
33
32
%

31
30
29
28
27
2006-07 2007-08 2008-09

Trends of ROCE

Source: Maruti Suzuki/BSE

India
 Return of equity
Decline in ROE means shareholder return is decreasing as the profitability of
company is decreasing. It means that profitability of company decline due to
increase in competition. Trends show that it will decline in coming years due to
fluctuation in exchange rate, rise in oil prices, effect of new
players.

Source: BSE India/Maruti Suzuki

Capital market performance

The price of Maruti Suzuki fluctuates with respect of Sensex. As loyalty payments
rise due to low upfront payments. Rise in oil price & raw material affected share
price. Increase in interest rate, customer sentiment:
 wait & watch. New and diversified product is coming at competitive cost.Volume of
company is good and this would help the price to regain its position. Royalty
payment has affected the share prices adversely. Share price crosses 200 point in
sep 2009 after that it decline and not able to cross 200 points but strong volume
support the price to remain in between 150-200 price level

. Source: BSE India

10. Recent strategies

10.1. Value Drivers
Inbound Logistics i.e. the receiving and warehousing of raw materials, and their
distribution to manufacturing. MUL’s inputs primarily comprise raw materials and
purchased components. , It is increasing its supply chain efficiencies. It is expanding
its production capacity in Manesar Plant from (1700-2500) Crores to meet
increasing demand. In order to improve quality and generate economies of scale,
MUL has reduced the number of vendors of components in India. By lowering the
time and cost involved in dealing with more vendors, they have increased their
supply chain efficiencies.

10.2. Growth Driver

Maruti Suzuki is going to launch a variety of product like Maruti Carvo, Maruti SX4,
Maruti Grand Vitara, Maruti Kizashi to attract different customer base. They have
introduced K-series & CNG engine which would increase fuel efficiency and is also
environment friendly. Company has invested 1700 crore for enhancing production.
Prudent business approach and foresightedness helped company to handle the
tough situation calmly and maintain its production, sales and market share. Despite
the market slow down it won performance awards for customer satisfaction and
product quality. sales and service network has increased. Maruti Suzuki plan to
increase its sale in rural area to improve its performance.

Sale trend of automobile

Source : SIAM India

Outlook
Indian economies are growing at faster pace and many players
entering in this market because demand is increasing also
income level and style of living. India is one of the most
important emerging car economies in the world today.
Government liberalized policy drawn attention of foreigner.
100% FDI has boosted industry and help in expansion.
Government has collaborate with private player to build highway
has improved infrastructure condition & is also beneficial for
auto industry. A large venture capital are investing in Indian
economy as it has huge untapped market & showing a good sign
to improve its situation. Skill and efficiency of labour has
increased which help in increasing production. The Indian auto
industry is still in nascent stage so major investment can be
seen now a days also product quality with design. As large
player are entering market is pushed towards production.
In case of Maruti Suzuki , it is facing challenges from Tata Nano , Ford fiego in small
& cheap car because it has drawn attention to customer having low income level .
Maruti has implemented JIT for its suppliers. To improve demand company is
launching new model, expanding supplier & dealer base & also expanding its
footprint over the other countries. The control over cost & superior quality provides
Maruti Suzuki rooms to be flexible, As it has economies of scale , vast network &
close relation with customer & advantage over cost will help company to capture
and to grow at faster rate. Company volume is growing at a good rate so this will
provide edge to the company over its competitor. New product will give it chance to
regain its market position.
Company planned project executed smoothly in current scenario and this is helping
company to improve its customer base. The company partnership with stakeholder
help in ensuring & sustaining growth . From the chart it is clear that growth
prospect of automobile industry is bright as income level is increasing, availability
of easy financing. JNNURM for commercial vehicles. 100% FDI allowed to boost this
sector This would help in expansion & improving demand.

Potential Vehicle sale in India 2015-

2016

Source : SIAM India

Thank You