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Maruti Suzuki Limited

“We expect that A-star will enable our company to reach a different level in our exports.
Last year, Maruti Suzuki exported 53,000 cars to over 40 countries. This was the highest
ever annual export in our history. However, with the A-star, we are targeting to make a
quantum jump, and scale up our exports to around 200,000 cars in 2010-11.”

– Shinzo Nakanishi,
Managing Director and CEO, Maruti

On 19th Nov 2008, India’s largest car maker, Maruti Suzuki launched its strategic model ‘A-star’ a
Euro V compliant model in A-segment to explore new markets in domestic as well as overseas and
primarily to boost its exports in the coming years. A-star is the fifth world strategic model of its
parent company Suzuki, as a part of its global market strategy for small cars segment and to
leverage the low cost manufacturing capabilities of the company. This car has been designed to
keeping in mind aspirations of the urban environment conscious customers. Company has used
latest technologies to make it as most fuel efficient petrol car. In addition it represents a green car,
capable of being 85% of it being recycled. This would help to make the car more acceptable.
With this launch company has the opportunity to re-launch itself in the European markets, which it
had left two years back because lack of suitable model. Now it is targeting a yearly volume of
100,000 in Europe and other parts of the world. Company had already entered into an export
contract for this new model, with Nissan a European auto giant. Company sources believe that this
would take its exports to around 200,000 cars by FY 11. In domestic front also, company expect
this model to be well accepted of its sporty and compact look, matching with the earlier success
full launched models Swift, Dzire, and SX4.
The company had already built a new technology world class manufacturing facilities at Manesar
to manufacture one million units per year. In partnership with Adani Group Company build new
export cargo infrastructure facilities to support its ambitious export plans. Maruti Suzuki wants to
celebrate their silver jubilee by exploring new growth opportunities with this launch and plans to
maintain its leadership position which it has for the last 25 years in the domestic market of Indian
Automobile Industry.

Industry Overview
The automotive industry in India was de-licensed in July 1991, which put the industry on a new
growth track, attracting foreign auto giants to set up their production facilities in India to take
advantage of various benefits the latter offered. As a result, production increased manifold – from
5.3 million units in 2001-02 to 10.8 million units in 2007-08. Other reasons that attracted global
auto manufacturers to India are – India’s huge middle class population, fast growth in earning
power, strong technological capability, and availability of trained manpower at competitive prices.
In 2006-07, the Indian automotive industry provided direct employment to more than 300,000
people, exported auto components worth around US$2.87 billion; and its contribution to the GDP
reached 5%. In recognition of the large contribution of automotive industry to the national
economy, the Indian government lifted the requirement of forging joint ventures for foreign
companies, and thereby leading the global players to establish their production facilities in India.
Maruti
2009-07
The past few years witnessed a rapid change in all the segments of the Indian passenger vehicle
industry. International competition, increase in the number of participants, and the need to counter
pressure on margins made it a buyer’s market rather than a seller’s market. Today, customers have
an array of models to choose from. Especially the customers comprising young adults with their
rising income levels, coupled with the low Equal Monthly Installments (EMIs), found vehicle
purchase affordable. With increased foreign competition in passenger vehicles, domestic
participants are quickly moving to catch up and compete with them by investing in R&D, and
improving overall efficiency. The Indian automobile market is currently dominated by
two-wheeler segment; but in future, the demand for passenger cars and commercial vehicles will
increase with industrial development and also, because India has low vehicle presence (with
passenger car stock of only around 11 per 1,000 population in 2008). Taking these factors into
consideration, automobile manufacturers now intend to provide cars in every segment with
widened price range so as to reach more potential customers.
Total capacity for passenger vehicles PV in India stood at around 2.5 million units in 2007-08
against 1.25 million units in 2002-03, a CAGR of around 15%. However, the capacity utilization
of the industry fell to around 71% in 2007-08 from 87% in 2006-07. During 2007-08, the total
capacity increased by almost 40%. This was on account of major capacity expansions undertaken
by OEMs like Honda Siel, Maruti and Hyundai towards the end of 2007-08. Moving forward, car
manufacturers announced ambitious capital expenditure plans over the next 2-3 years. Driven by
high domestic demand and increasing exports, the capacity is expected to touch 3.9 million units
by 2009-10 (CRISIL).

Industry Value Chain


Figure 1: Automobile Value Chain

Source: Icfai Research Team.


First the company conducts research on consumer wants and needs; and on the basis of results
obtained, designing of various models is done. Raw Material includes rubber, glass, steel, plastic
and aluminum. Tires, windshields, and airbags are examples of parts. While the automobile
industry as a whole has become more consolidated, the auto component sector remains highly
fragmented. Due to the combination of rising raw material costs and consumer’s search for the
lowest price, companies are looking for ways to cut costs out of the manufacturing process. Recent
trends to reduce costs include using fewer parts in each vehicle component, minimizing industrial
waste and pollution, and having parts delivered to assembly plants on a just-in-time basis.
Marketing is an integral part of the value chain. Automakers and individual dealers work together
to create national, regional, and local marketing strategies. Firms have now started advertising
more online. After production is complete, distribution takes place and automobiles are shipped to
local, national and to dealerships around the world to be sold.

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Industry Segments
The passenger vehicle market is divided broadly into the following three categories:
a. Passenger cars
b. Multi Purpose Vehicles (MPV)
c. Multi Utility Vehicles (MUV).
Depending upon the dimension, and seating capacity, Passenger Car market is divided into
6 sub-divisions with A2 and A3 further divided into two more sub-divisions each. The Utility
vehicle category is also divided further into two sub-divisions based again on the seating capacity.
They have higher load carrying capacity on varied basis as given below:
Table 1: Categories of Passenger Market in India
Category Dimension (mm) Sitting Capacity
A1: Mini Wt carrying capacity 4/6 incl driver
A2: Compact (Lower) 3401-4000 6 incl driver
A2: Compact (Upper) 3401-4000 6 incl driver
A3:Mid Size (Lower) 4001-4500 6 incl driver
A3:Mid Size (Upper) 4001-4500 6 incl driver
A4: Executive 4501-4700 6 incl driver
A5: Premium 4701-5000 6 incl driver
A6: Luxury Above 5001 6 incl driver
B1 (UV) W<= 3.5 t 7 incl driver
B2 (UV) W<= 3.5 t 9 incl driver
C (MPVs) W<= 3.5 t Van Type Vehicle
Source: SIAM.
The Passenger Vehicles (PV) market grew 14% YoY to 1,762,131 units as against 1,545,223 units
sold in 2007-08. It is largely attributed to the impressive growth in the passenger car segment in
FY2007-08. The passenger car segment contributed 80% to the total PV sales in FY2007-08.
Marketwise, healthy growth backed it in its domestic sales and exports (refer to Annexure V).
Key Players
In all the segments of the automobile industry, Maruti leads the pack with Dealer networks and
workshops across the country based on the Car-dealer networks and authorized service stations.
The key players in the industry (along with their domestic market share) are as follows:
Table 2: Key Players in Indian Automobile Industry
Manufacturers Domestic Sales Market Share
FY07 FY08 YOY % FY07 FY08
Maruti Suzuki 549,317 618,168 13 51.02 51.36
Hyandai 194,870 216,307 11 18.1 17.97
Tata Motors 179,007 167,058 –7 16.63 13.88
Honda Siel 59,452 59,452 0 5.52 4.93
Ford India 39,820 30,962 –22 3.7 2.57
General Motors 16,986 45,265 166 1.58 3.76
Mahindra Renault 25,891 2.15
Others 37,130 66,398 9 3.45 5.53
Total 1,076,582 1,203,531 12 100 100
Source: SIAM.

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Regulatory Norms
Automotive Mission Plan 2006-2016
Prime Minister Dr. Manmohan Singh released India’s ‘Automotive Mission Plan’ (AMP)
2006-2016, which envisions India’s endeavors towards becoming a global auto hub. The Ministry
of Heavy Industries & Public Enterprises has drawn the AMP. The AMP calls for auto sector
investments of $40 billion over the next ten years to achieve a turnover of $145 billion from the
current $35 billion by 2016, accounting for 10 per cent of GDP. The Plan also focuses on
increasing India’s auto sector exports, which are presently worth $4.1 billion, to at least $35 billion
so as to make India a prominent player in the global market. It is a 25-point plan to make India a
global manufacturing and export hub for small cars, multi-utility vehicles, two and three-wheelers,
tractors, and auto components. The 25-point Automotive Mission Plan includes – establishment of
National Automotive Testing and R&D Infrastructure Development Project (NATRIP), several
initiatives for creation and fulfillment of automotive demands, for the betterment of society and
environment, and for acting as a catalyst in generating an additional 25 million jobs.
In 2002, the Indian Government formulated an Auto Policy aimed at promoting an integrated
growth of the industry, which involved Investment Incentives by the State Governments. Some of
the incentives that different states provide include: Customized incentives for Large Investments,
Automatic Approval for Foreign equity investment up to 100% and absence of minimum
investment criteria. Apart from these, manufacturers engaged in in-house research and R&D
activities will get weighted tax deduction up to 150%. Also Government’s emphasis on low
emission fuel auto technologies and availability of appropriate auto fuels and encouragement to
construction of safer bus/truck bodies (unorganized sector) also to 16% excise duty on body
building activity as in case of OEMs.

Performance
As a result of various regulations, the cumulative growth in the PV segment during April
2007-March 2008 was 12.17 % in the domestic market. The growth in Passenger Cars was 11.79
%, Utility Vehicles was 10.57 %, and Multi Purpose Vehicles was 21.39% during this period. The
growth in the Commercial Vehicles segment was marginal at 4.07 %. While growth in Medium &
Heavy Commercial Vehicles declined by 1.66 %, Light Commercial Vehicles recorded a growth of
12.29%. Three Wheelers sales fell by 9.71% with sales of Goods Carriers declining significantly
by 20.49% and Passenger Carriers declined by 2.13% during FY2008 compared to last year.
Automobile Exports registered a growth of 22.30% during the current financial year. The growth
was led by two-wheelers segment, which grew at 32.31 percent. Commercial Vehicles and
Passenger Vehicles exports grew by 19.10 % and 9.37% respectively. Exports of Three Wheelers
segment declined by 1.85%.

Future Outlook
Automotive industry is moving upward rapidly in the country and in Asian regions, principally due
to a saturation of the automotive industry in the western world. Indian automobile industry is
playing a major role in Asian Automobiles markets along with the Association of South-East Asian
Nations (ASEAN) and China. Various financial institutions and rating agencies analyzed the
growth rate of India’s economy and have forecast a growth in the economy in future at the rate of
8%. Although the industry bears the brunt of recession, the sales figures of December ’08 are true
indicators of global slow down. India’s growing middle class, strong economy (although recession
has hit the economy, but on an optimistic and positive note, it will soon come over and bounce
back), and trained workforce indicate a bright future for the automobile industry. All the big

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foreign players – General Motors, Mercedes Benz, Skoda Auto – are eyeing the Indian market and
all these have big plans for India and are willing to invest huge funds. Hyundai has already
invested huge amounts in India and is positioned as the small car-manufacturing hub of the world,
which reflects a spiraling demand from domestic and international markets. Auto sector is
emerging as one of the fastest growing manufacturing sectors both in India and across the globe.
As per the Automotive Mission Plan 2006-16, automobile industry’s contribution to the GDP
would increase to 10.4% by 2015 while its size is expected to be worth US$145 billion; and also
generating a total employment of 25 million by 2016.

Maruti Suzuki India Ltd: Overview


Maruti Suzuki India limited (MSIL) is the largest passenger car manufacturer in India with a
market share of over 50%. MSIL formerly Maruti Udyog Limited (MUL) was established in Feb
1981 through an act of parliament, as a government company with Suzuki Motor Corporation of
Japan holding 26 per cent stake. Its actual production commenced in 1983 with the Maruti 800 car
based on the Suzuki Alto keicer, which was the only modern car available in India at that time; its
only competitors were Hindustan Ambassador and Premier Padmini. Till 2004, it remained India’s
largest selling compact car ever since its launch while MSIL remained the Indian car market leader
for over two decades. In 2002, Government of India (GOI) ceded majority control to Suzuki
through rights issue. The GOI subsequently sold 25.6% of its stake to investors in an IPO. Now,
Suzuki owns 54.21% of Maruti.
Figure 2: Shareholding Pattern as on December 31, 2008

Source: www.bseindia.com
Suzuki chose Maruti to be its small car-manufacturing hub for the European market and also as an
R&D center. Currently, Maruti offers a gamut of cars – from entry level Maruti 800 & Alto to
stylish hatchback A-Star, Swift, Wagon R, Estillo and sedans DZire, SX4 and Sports Utility
Vehicle Grand Vitara. MSIL has two state-of-the-art manufacturing facilities in India.
The Gurgaon Facility (300 acres)
Gurgaon facility houses three fully integrated plants. The three plants have a total installed
capacity of 350,000 cars per year. Several productivity improvements or shop floor kaizens over
the year have enabled the company to manufacture nearly 700,000 cars per year at the Gurgaon
facility.
The Manesar Facility (600 acres)
Manesar facility is designed to suit Suzuki Motor Corporation (SMC) and Maruti Suzuki India
Limited’s (MSIL) global ambitions. The plant was inaugurated in February 2007. The World Car
derived from concept A-Star would be manufactured here. At present the plant rolls out World
Strategic Models – Swift, SX4, and DZire. The plant has several in-built systems and mechanisms.

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The plant at Manesar is the company’s fourth car assembly plant. It started with an initial capacity
of 100,000 cars per year and presently increased to 170,000 cars per year.
Diesel Engine Facility at Manesar
The factory is situated about 20 kilometers away from the Gurgaon car plant. The diesel engine
factory currently manufactures one-lakh engines, which is slated to scale to 3 lakh by 2010 with an
investment of Rs.2500 crore.
Table 3: Key Milestones of the Company

Year Events
2000 • The Company was awarded the Highest Exporter Award in New Delhi.
• The ICRA assigned ‘LAAA’ rating to the Rs.2 billion worth
long-term non-convertible debenture program and ‘A1+’ rating to the
Rs. One billion Commercial Paper program of the company.
2001 • Rights issue of equity in Maruti Udyog Limited, would lead to an
eventual sell-off of the Government’s equity in the passenger car joint
venture.
• Maruti Udyog launched its first factory-fitted CNG vehicle in a bid to
promote use of eco-friendly vehicles in the domestic market.
2002 • The government on May 14, 2002 set into motion big-ticket
disinvestments in 2002-03 by announcing a two-stage process to exit
from Maruti Udyog Limited, a joint venture with Suzuki Motor Company.
• Suzuki takes over control in Maruti Udyog by hiking its stake in the
company from 50% to 54.2%; Maruti Udyog becomes the subsidiary of
Suzuki.

2003 • Company included in Morgan Stanley Capital International (MSCI) India


Index.
2004 • Ties up with MRF to boost motor sports in India.
• Maruti join hands with India Times to buy and sell used cars.
• Maruti Udyog Limited’s (MUL) ties with State Bank of India for car
financing.
2005 • MUL forms JV with Suzuki to sell cars.
• Maruti tops in IQS 2005 awards.
2006 • MUL unveils new WagonR in Punjab.
2007 • On May 07, 2007, Maruti Udyog Limited has launched SX4 sedan, a
bold, muscular and feature-packed car, powered by the global M-series
engine and built on a brand new platform.
2008 • Maruti and Mundra Port and Special Economic Zone Limited (MPSEZL)
on February 20, 2008 signed an agreement for a mega car terminal at
Mundra, District Kutch, Gujarat.
• Maruti Suzuki India Limited inaugurated its next-generation KB-series
engine plant. The new series engine is another significant initiative the
Company has undertaken in its efforts to offer the latest technology to its
customers.

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Sources: Company Website.
Products and Services
Maruti offers a gamut of products, ranging from Maruti 800, Maruti Omni, Gypsy, Wagon-R,
Maruti Versa, Maruti Zen Estilo, Maruti Suzuki Swift, Maruti Suzuki SX4, Suzuki Grand Vitara,
and Maruti DZiRE. Currently, Maruti Alto is the largest selling car in India. Maruti A-star was
launched in December 2008. The upcoming model of MSIL is Maruti Splash, which will be ready
to run on the roads next year. Maruti has an unparalleled service network in India. To ensure the
vehicles they sold are serviced properly, Maruti has 2628 listed Authorized Service Stations and 30
Express Service Stations on 30 highways across India. Maruti provides vehicle insurance
(launched in 2002) to its customers in association with the National Insurance Company, Bajaj
Allianz, New India Assurance, and Royal Sundaram. As part of its corporate social responsibility,
Maruti Udyog launched the Maruti Driving School in Delhi. Later these services were extended to
other cities of India as well.
Business Model
Figure 3: Maruti Business Model

Source: Company Website, Icfai Research Team.

Company’s Strategies
Based on its Business model, Maruti has been offering various passenger cars. In most of the
segments, it is the undisputed market leader. The Company launched three new models in the year
2008, including Premium sedan SX4, a luxury Sports Utility Vehicle Grand Vitara, and an
entry-level sedan Swift DZire (in both petrol and diesel versions) even while Alto continued to be
India’s largest selling car. Maruti services businesses include sale and purchase of pre-owned cars
(True Value), lease and fleet management service for corporate (N2N), Maruti Insurance and

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Maruti Finance. The Company, in association with various banks, launched innovative financing
schemes. Regular advertising is also a major activity for the company. Maruti makes available
leasing services for corporate and other customers and it earns through this route also. Maruti’s
revenue stream includes passenger cars, automobile financing, insurance intermediary, leasing and
fleet management, pre-owned car business, and spare parts and accessories. The size of pre-owned
car market is bigger than the market for new cars; thus Maruti is actively focusing on it. Since it
has large product portfolio and better reach through its distribution networks, it engaged in
insurance intermediary activity through tie-ups with national insurance companies.
New Engine Facility
The Company is setting up a new gasoline engine plant at its Gurgaon facilities. The new engines
produced will be more fuel-efficient and help to serve the customer better. The plant will be
commissioned by producing engines for ‘A-Star’ followed by other models in the coming years. In
the year 2007-08, the Company signed two joint venture agreements with global component
manufacturers for cost reduction through localization of components for Maruti Suzuki cars. The
first was with Magneti Marelli, aimed at the production of Electronic Control Units (ECU) for
diesel engines and the second with Futaba Industrial Company, Japan, for production of exhaust
system parts. The focus area for component cost reduction is raw material yield improvement
across all manufacturing processes, like sheet metal, castings, forgings, and machining. Every
component is studied in detail and innovative ideas tried to reduce the input material weight for the
same component output. The total cost of raw material as a percentage of net sales ranges from
15% to 20%.
Performance
With the implementation of the strategies, Gross revenue of the company for FY08 stood at
Rs.188,238 million, as against Rs.152,523 million in the previous year up by 23.42% backed by
growth in volumes. The A3 segment (Sedans) helped co in increasing its market share from 15% to
22% due to a good demand for SX4 and Swift Dzire during the year. The Company maintained its
leadership position in the A2 segment with the market share remaining above 58%. While there is
intense competition for this segment, Swift drives the demand mainly. Earnings Before
Depreciation, Interest, Tax and Amortization (EBDITA) stood at Rs.31,308 million against
Rs.25,888 million in the previous year, recording a jump of 20.9%. Revision of the estimated
useful life of certain assets resulted in depreciation being higher by Rs.2,122 million for the
current year with a corresponding reduction in profit for the year and net fixed assets. Profit
Before Tax (PBT) stood at Rs.2, 5030 million against Rs.22798 million in the previous year
showing a growth of 9.8% and Profit After Tax (PAT) stood at Rs.17308 million against Rs.15,620
million in the previous year showing a growth of 10.8%.
Maruti Suzuki is leader in A1 (Mini) segment mostly Maruti 800 and its variants, and has almost
100% share, while in A2 (Compact) segment it holds nearly 60% of share and models dominating
here are namely, Alto, WagonR and Swift. In the A2, the main competitor is Hyundai Motors India
Limited with 22% market share. A3 segment is growing at scorching pace due to rise in salary
levels and demographic factors. Maruti is the market leader in this segment as well with 32%
market share. There is intense competition in this segment with slew of launches in the coming
season. Models dominating here are – SX4, Verna, Esteem and Swift Dzire. Swift Dzire is growing
in a big way (Refer to Annexure VI).
Dominance Due to Large Sales Network
Maruti enjoys the largest sales network and service network with additions made every New Year
reaching new cities and achieving scaling. The company has been taking aggressive initiatives for
targeting different segments of buyers and launching the schemes for the same. Some of them are
– ‘Wheels of India’ for state government employees, ‘First Class Offer’ for Railway employees,
‘Power Deal’ for NTPC employees, ‘Steel Wheel’ for SAIL employees, ‘Teachers’ Scheme’ and
‘Dil Se’ for Non-Resident Indians.

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The Company is ranked first for Customer Satisfaction for eight successive years in the annual
survey conducted by J D Power Asia Pacific. It was the only player above industry average despite
the large number of customers it has to serve. The Company dealers and authorized service
stations serviced more than 10 million cars in the year.

Segmental Analysis
Vehicle Business Domestic
In Domestic market, Maruti fared well in 2007-08 as compared to 2006-07. But in FY09, its sales
figures are found sliding recording the largest fall in August and November 2008, where it
registered negative growth due to negligible demand from consumer side (Refer to Annexure VII).

A2 is the Driver Segment


A2 (Compact) segment is the main driver of growth. Although this year (FY09) particularly the
first quarter overall sales figures declined somewhat the A2 segment is still main driver and the
product mix is nearly about 66.5%. In A2 growth driver is mainly Alto and much growth is
observed in swift in recent months. Foray into alternate fuel segments (with LPG powered Wagon
R and diesel powered Swift) saw a very encouraging response from customers (Refer to Annexure VII).

Exports

Exports show considerably good increase in volumes due to focus on compact cars. The company
is boosting exports by adding markets such as Indonesia, Chile and Egypt for its existing models
like M800, Alto and Zen and by launching the ‘A Star’ to cater exclusively to Europe. Company
has an export target of 250,000 cars per year by 2010-11(Refer to Annexure VII).

Spares and Accessories Business


The company draws competitive advantage from the fact that its car parts are priced
competitively and affordable. In FY08, the company achieved new milestone of a gross
turnover of Rs.10 billion in the spares and accessories business. This marked a growth of 19%
over the previous year. Company established spares stockyard in select centers across the
country to meet customer requirements faster. The business is supported by a robust back end
operation, which employs technology and competence in logistics to deliver on time to
customers across the country.

Service Business
The service business of the company, after some initial wavering, has now taken off. It aims at
enhancing all customer-related services in a transparent manner under one roof. Company believes
in offering the entire range of car-related services in a convenient and transparent manner and
implementing standards to improve customer service. Further, with a car population of nearly 6.5
million Maruti Suzuki cars, service maintenance and repairs make a healthy contribution to
profitability of dealerships.

Pre-Owned Car Business


The pre-owned car business, or True Value is a major driver of sales performance, which facilitates
new car sales through exchange and trade-ins and also contributes to dealer profitability. In FY 08
a total of 84,323 new cars were sold in exchange, accounting for 12 percent of total new car sales.

Future Outlook

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By scrutinizing the its segmental performance backed by Government’s policy to encourage the
auto component manufacturers made Suzuki to take up the decision to source compact cars from
India and sell them in Europe. And A-Star is the latest one on Suzuki’s map to achieve that dream.
The diesel engine plant in Manesar is established to give this a fillip. Also, the Company is
focusing on the global compact car segment besides maintaining its domestic share.
Due to fluctuations in steel prices, raw material costs as percentage of sales had risen in previous
three quarters and considering the global trend may continue. Currently, fall in commodity prices
will help MSIL to benefit from 1QFY10, as 2HFY09 will continue to witness higher RM cost due
to inventory, contracts and adverse currency movement on imports The situation needs to be
addressed by better production planning, which include entering into long-term sourcing contracts,
hedging the risks and resorting to value analysis, and value engineering to reduce wastages and
cost. Maruti is already taking steps in the right direction. Also better localization will definitely
lead to cut in costs and improved efficiency.
Easy availability of low cost finance is a key demand driver for automobile sector. However, the
sharp fall in commodity prices, clogging up of inventory lines, liquidity crunch faced by the Indian
banking system, drying up the other funds sources and uncertainty with respect to demand
prompted the Indian corporate to either abandon or defer their Capex plans and go slow on fresh
Capex announcements.
Unlike two wheeler or commercial vehicle sector, PV market is fairly fragmented. There are 14
players and more than 80 models in the market. So, there exists high competition in the segment.
Increased competition has led to fierce price competition, which in turn has resulted in reduced
margins for players. Now with increase in the cost of inputs, competition can result in further
reduction in the profitability.

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ANNEXURE I
Additional Information
• The sales of the company will grow at the rate of 9.5%, 20% and 20% annually for the
FY09, FY10 and FY11 respectively.
• Cost of goods sold will continue to remain same for FY09 and will be 82% and 80% for
next two years.
• The rate of dep. will be 6.5% on gross assets for the FY09, FY10and FY11 respectively.
• Financial charges of the company for the next three years will be 8%.
• Other income for the next three years will be 5% for next three years.
• The effective tax rate will be 31%.
• Assets turnover ratio of the company will be 1.34, 1.32 and 1.33 for next three years.
• Current assets turnover ratio for the FY 09, 10 and 2011 will be 5.09, 5.01 and
5.01respectively.
• Current ratio will be 1.17, 1.20 and 1.23 for the three consecutive years.
• Perpetual growth rate for the company will be 8%.
• Risk free rate -10 year bond rate 7.6%.
• Risk premium country wise-7%.
• Company plans to invest Rs. 20,000 million CAPEX in capacity expansion in the each next
three years.
Source: Icfai Research Team.

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ANNEXURE II
Profit and Loss Account of Maruti Suzuki for FY 2006, FY 2007 and FY 2008
Rs. in million

Particulars FY06 FY07 FY08

Net Sales 120522 146539 179362


% Growth 10% 22% 22%
Total Operating Income 124814 152523 188238
% Growth 10% 22% 23%
EXPENDITURES
Staff Costs 4644 2884.2 3562
Other Manufacturing/Operating costs 98772.4 122284 146494
Miscellaneous Expenses 839.6 1466.8 6874
Total Expenditures 104256 126635 156930
% of Net Sales 87% 86% 87%
EBITDA 16266 19904 22432
Depreciation & Amortization 2854 2714 5681.7
EBIT 13412 17190 16750.3
Financial Charges 204 376 596.2
Other Income 4292 5984 8876
PBT 17500 22798 25030.1
Pre-tax Margin % 15% 16% 14%
Tax 5609 7178 7722.3
Adjusted PAT 11891 15620 17307.8
Extraordinary Income 0 0 0
Reported PAT 11891 15620 17307.8
Source: Company Annual Report.

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ANNEXURE III
Balance Sheet of Maruti Suzuki for the FY 2006, FY 2007 and FY 2008
Rs. in Million

Particulars 2006 2007 2008


Sources of Funds
Shareholder’s fund
Capital 1445 1445 1445
Reserve and Surplus 53081 67094 82709
Loan Funds
Secured Loans 717 635 1
Unsecured Loans 0 5673 9001
Deffered Tax 779 1675 1701
Total Liabilities 56022 76522 94857
Application of Funds
Fixed Assets
Gross Block 49546 61468 72853
Less: Depreciation 32594 34871 39888
Net block 16952 26597 32965
Capital work in progress 920 2507 7363
Total Fixed Assets 17872 29104 40328
Investments 20512 34092 51807
Current Assets Loans and Advances
Inventories 8812 7014 10380
Sundry Debtors 6461 7474 6555
Cash and bank Balances 14016 14228 3240
Other current Assets 458 384 331
Loans and Advances 7662 9241 10403
Total Current Assets 37409 38341 30909
Less : Current liabilities and provisions
Liabilities 15058 20110 24492
Provisions 4713 4905 3695
Net current assets 17638 13326 2722
Total Assets 56022 76522 94857
Source: Company Annual Report.

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ANNEXURE IV
Maruti Suzuki Stock Price, Sensex and
Auto Index Values from January 2006 to December 2008
Month Sensex Auto Index Maruti
January 2006 9,919.89 4,506.53 756.85
February 2006 10,370.24 4,998.68 822.60
March 2006 11,279.96 5,322.73 874.35
April 2006 12,042.56 5,548.91 924.10
May 2006 10,398.61 4,812.05 734.85
June 2006 10,609.25 4,753.58 797.60
July 2006 10,743.88 4,476.87 786.50
August 2006 11,699.05 4,944.95 861.40
September 2006 12,454.42 5,365.72 981.20
October 2006 12,961.90 5,357.22 968.55
November 2006 13,696.31 5,321.85 924.95
December 2006 13,786.91 5,518.50 927.35
January 2007 14,090.92 5,515.36 936.60
February 2007 12,938.09 5,109.38 839.70
March 2007 13,072.10 4,869.13 819.70
April 2007 13,872.37 4,998.71 803.10
May 2007 14,544.46 5,012.28 817.65
June 2007 14,650.51 4,739.57 743.10
July 2007 15,550.99 4,933.83 843.15
August 2007 15,318.60 4,878.05 868.20
September 2007 17,291.10 5,332.26 999.55
October 2007 19,837.99 5,507.17 1,073.55
November 2007 19,363.19 5,469.50 1,012.35
December 2007 20,286.99 5,667.45 990.05
January 2008 17,648.71 4,832.48 848.70
February 2008 17,578.72 4,887.17 867.20
March 2008 15,644.44 4,524.77 829.55
April 2008 17,287.31 4,726.00 741.90
May 2008 16,415.57 4,355.76 764.50
June 2008 13,461.60 3,585.62 617.75
July 2008 14,355.75 3,679.51 574.90
August 2008 14,564.53 4,001.23 650.40
September 2008 12,860.43 3,674.98 687.15
October 2008 9,788.06 2,685.62 564.45
November 2008 9,092.72 2,330.56 535.85
December 2008 9,647.31 2,444.71 520.10
Source: www.bseindia.com.

112
Maruti
2009-07
ANNEXURE V
Passenger Vehicles Sales in India

Passenger Vehicles
Source: SIAM.

113
Maruti
2009-07
ANNEXURE VI
Market Share A2 Segment, in nos. (FY08)

Source: SIAM.
Market Share in A3 Segment for FY 08 (In nos.)

Source: SIAM.

114
Maruti
2009-07
ANNEXURE VII
Passenger Vehicles Domestic Monthly Sales

Monthly Sales of Passengers Vehicles

Export Volume Monthly

Source: Company Website.

115
Maruti
2009-07
References
1. www.marutisuzuki.com
2. www.siam.com
3. www.atma.com
4. www.acma.com
5. www.bseindia.com
6. www.automotive.com
7. www.businessline.in
8. www.businessstandard.com
9. www.economictimes.com
10. www.wikiedia.com
11. www.moneycontrol.com
12. www.rbi.org.in
13. www.dhi.nic.in.

116