Maruti Suzuki’s Perspective on

Automotive Steel

S.D. Chhabra
Astt. General Manager (Supply Chain)
Maruti Suzuki India Limited

July 08, 2009

Contents

• Domestic Automotive Space

• Update on Maruti Suzuki India Ltd
• Maruti Suzuki’s Steel Sourcing
• Expectations from Indian Steel Mills based
on QCDDM Experience
 Domestic Automotive Space - Automotive
Investments
New Hub : Uttaranchal

NORTH

WEST

EAST
MAN

SOUTH

Plans to become the Global Small Car Hub by 2010, with more and more joining the bandwagon

Indian Automotive Industry Today

3rd largest small car manufacturer in the World
2nd Largest Two – Wheeler manufacturer in the
World
World’s largest Motorcycle manufacturer is in India
2nd Largest Tractor manufacturer in the World
8th Largest Commercial vehicle manufacturer in the
World.
9th Largest Car manufacturer in the World

India’s share in world car production in year 2005 was 1.8%

(3.20% in 2007)
Automotive Mission Plan 2016
Document prepared by
Government of India
in consultation with
ACMA & SIAM

Automotive Industry viewed as

“Locomotive for Growth”

Turnover Export
Employment
$ 35 Billion $ 4.1 Billion
to to + 25 million
$145 billion $35 billion

Automotive Will contribute 10% of the Country’s GDP

Plan 2016 and 30~35% of the Industry GDP

Auto Growth Drivers- Tariff Reduction

Net Custom Duty Excise Duty on Cars
50.00
50

40.00
40

30.00 30
%

20.00 20

10
10.00

0
0.00
01

02

03

04

05

06

07

08

09
7

9
01

02

03

04

05

06

'0

'0

'0

20

20

20

20

20

20

20

20

20
-

ar

ar

ar
ar

ar

ar

ar

ar

ar

M
M

Auto-Components Steel Big Car Small Car

Supportive Trend of Duty Structure

 Indian Automotive Industry : Projections
35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000 14.35 %
CAGR
5,000,000

-
04-05 05-06 06-07 07-08 08-09 14-15
Industry Total 8,467,853 9,743,503 11,087,997 10,853,930 11,175,479 32,334,315
Passenger Vehicles 1,209,876 1,309,300 1,545,223 1,777,583 1,838,697 3,000,000
Commercial Vehicles 353,703 391,083 519,982 549,006 417,126 1,416,079
Three Wheelers 374,445 434,423 556,126 500,660 501,030 1,514,713
Two Wheelers 6,529,829 7,608,697 8,466,666 8,026,681 8,418,626 26,403,523

Source: SIAM Data, ACMA Projections

Indian Auto-Component Industry: Projections

PROJECTED at
15% CAGR 40.00

40.00

35.00

30.00

25.00 19.00
18.00
US$ Bn

20.00 15.00
12.00
15.00 8.70
5.43 6.73
10.00

5.00
0.00
02-03 03-04 04-05 05-06 06-07 07-08 08-09 16-17
Production

Source: ACMA India

 Update on
Maruti Suzuki India Ltd.

Maruti Suzuki India Ltd. - Products

1. 12 Basic models. 5 Engine Types : 796cc, 1061cc, 1067cc, 1197cc

1298cc, 1590cc - all gasoline, 1248 cc – Diesel.
2. Latest addition to portfolio – KB10 (1067cc), KB12 (1197cc) engines
 Production Facilities

Currently 4 plants spread over 3.2 million square meters,

producing one car every 26 seconds
Plant Commissioned Capacity
Plant-1 1983 250,000
Plant-2 1994 140,000
Plant-3 1999 210,000
Plant-4 (New) 2006 250,000
Total 850,000
In addition, a New Diesel Engine Plant with a current capacity of 200,000
units started in 2006 (planned 300,000 capacity by year 2010)

Sales Trend
Total Production (in ‘000)
1200
> 1000
1000

764 792
800
.0% 667
> 15
Nos ('000)

GR 572
600 CA 540
473
333 360
400

200 158
106
22
0
1984- 1988- 1993- 1998- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2010-
85 89 94 99 03 04 05 06 07 08 09 11
Year (Apr-Mar)
 Market Share - Passenger Cars

60.00% 54.60% 54.70% 55.00%

45.40% 45.30% 45.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2006-07 2007-08 2008-09

Maruti Others

Maruti Suzuki’s Steel

Sourcing
 Maruti Suzuki’s Auto Grade Steel
Sheet Consumption Pattern
600
>525
500
Quantity, '000 MT

400
362
345

300 260
243
226 195 210

200 140
120 132

100 150 152

106 120
111

0
FY2004-05 FY2005-06 FY2006-07 FY2007-08 FY2008-09 FY2010-11#

In-house Vendor's •Values are indicative

•# Projections for FY10-11

Maruti Suzuki’s
Sheet Metal Sourcing Pattern
120

100
10
80
50
60

40 90

50
20

0
Vendor In-house
•Values are indicative for 2008-09
Local Imports

As against this the component level localization percentage is above 94%

for most MSIL Models
Expectations from Indian Steel Mills
-
Based on QCDDM Experience

Expectations from Indian Steel Mills -

Quality

• Defect free supplies

• Consistency in Surface Quality for skin panel
applications
• Higher Strike rates at Steel Makers for manufacturing
of Auto grade steel, especially Skin Panels
• Close Dimensional tolerances to be maintained
• Packaging Improvements
Expectations from Indian Steel Mills -
Cost

• Automotive quality local steel should be available at

competitive prices as available to Japanese OEMs in
Japan
• Productivity Improvement to reduce cost
• Avoiding logistics related losses
• Supplies in lower tolerance zone of nominal
thickness

Expectations from Indian Steel Mills -

Delivery

• Continuous availability with long term commitment

• Short ordering lead time
• Low inventories at our plant
• 100% conformity to delivery schedules
• Coming closer to our plant through Service Centres/
Warehouses
• Flexibility in systems to manage abrupt, large
fluctuations in Market requirements
 Expectations from Indian Steel Mills
- Demand Fluctuation in 08-09
30.00%
23%
21%
20.00%

10%
10.00%
4% 4%
2%
0.00%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
-10.00% -4% -3% -3%
-8%
-13%
-20.00%

-30.00%
-32%
-40.00%
Production : variation wrt yearly average vehicle production per day

Production systems under pressure…..

…suppliers need to support

Expectations from Indian Steel Mills -

Development
• High Tensile Steel
• Galvannealed Steel
• Fuel Tank Material
• Development Lead times
 High Tensile Strength Material

HT Usage in Domestic Models HT Usage in EU Export Models

Normal Steel HT <=440 Mpa HT > 440 Mpa Normal Steel HT <=440 Mpa HT > 440 Mpa

Normal Steel 96.5% Normal Steel 55% - 65%

HT <= 440 MPa 3.5% HT <= 440 MPa 25% - 30%
HT > 440 MPa 0% HT > 440 MPa 10% - 15%

Government Regulations

The following safety regulations are in progress and

are yet to be implemented

Subject Standard Tentative

Implementation Date
Off Set Impact AIS:098
Lateral Impact AIS:099 ~ Oct 2012
Rear Impact AIS:100

With the implementation of above safety regulations, the

focus will shift more towards the usage of Ultra High
Strength steels.
Expectations from Indian Steel Mills -
Development
• High Tensile Steel
• Galvannealed Steel
• Fuel Tank Material
• Development Lead times

Galvannealed Steel

• Good Corrosion Resistance properties

• GA usage in India will go up as India is becoming a
Export hub for major auto manufacturers
• GA material is used in Export vehicles to meet the
stringent corrosion resistance requirements of
Europe
• Currently all GA requirement is being imported, as
the same has not been approved from local mills
Expectations from Indian Steel Mills -
Development
• High Tensile Steel
• Galvannealed Steel
• Fuel Tank Material
• Development Lead times

Fuel Tank Material

• In the early 1970s all fuel tanks were of Steel

• Now both Steel & plastic fuel tanks are in use
• MSIL is Currently using Terne coated & Eco-coat
steel sheets used for Fuel Tanks of all models
• The same is completely being imported to meet our
requirement as the same is not vailable with local
mills
Expectations from Indian Steel Mills -
Development
• High Tensile Steel
• Galvannealed Steel
• Fuel Tank Material
• Development Lead times

Expectations from Indian Steel Mills -

Management
• Investment in Latest Technology
• Investment in R&D
• Integrated Solutions
• Automotive Application Engineering Capabilities
• Capacity Planning
Thanks to all the Stake holders present
here for their contribution in our
growth

However we continue to expect ….. More

and Higher…to be able to deliver more
value to our customers

THANK YOU ALL