Term Paper on Strategic Management of

MARUTI SUZUKI

Submitted by Assignment point

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 INTRODUCTION
1981- MARUTI UDYOG LTD was incorporated on under the
INDIAN COMPANIES ACT, 1956.
1982- License and Joint Venture agreement signed between Maruti
Udyog Ltd. & Suzuki Motor Corporation Japan(SMC).

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1987- First lot of 500 cars exported to Hungary
1992- SMC increases its stake in Maruti to 50 percent.
2002- Maruti Finance in Mumbai with 10 Finance companies is
Introduced. Children’s park inaugurated in Delhi.
SMC acquires majority stake in MUL (increases to 54.2%).
2003- IPO (JUNE- ISSUE oversubscribed 11.2 times)
Maruti gets listed on BSE and NSE- July.
2006- New car plant and the diesel engine facility commences
operations during 2006-2007 at Manesar, Haryana.
In November Maruti inaugurated a new Institute of Driving
Training and Research (IDTR) set up as a collaborative
project with Delhi Government at Sarai Kale Khan in South
Delhi.
2007- Board of Directors gave approval to new name MUL to become
Maruti Suzuki India Limited.
Corporate Social Responsibility: adopts three villages in Manesar
2008- M-800 crosses 25 lakh mark.
MSIL celebrates its Silver Jubilee.
MSIL launches National Road Safety Program.
2009- A-STAR or Suzuki Alto debuts at Geneva Motor Show sales
begins.
Capacity to manufacture expanded from 800,000 to a million
Units (Gurgaon plus Manesar plants) annually.
2010- Launched Alto K10.

2012- Maruti Ertiga, seven seater MPV R3 designed and developed in India, will compete
with Toyota Innova, Mahindra Xylo, and Tata Sumo Grande. In early 2012, Suzuki Ertiga will
be exported first to Indonesia in Completely Knock Down car.

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2014- Maruti XA Alpha will be launched

COMPANY PROFILE
Maruti Udyog Ltd. (MUL) is the first automobile company in the world to be honored with an
ISO 9000:2000 certificate. The company has a joint venture with Suzuki Motor Corporation of
Japan. It is said that the company takes only 14 hours to make a car. Few of the popular models
of MUL are Alto, Baleno, Swift, Wagon-R and Zen.

Maruti Udyog Limited (MUL), established in 1981, had a prime objective to meet the
growing demand of a personal mode of transport, which is caused due to lack of efficient public
transport system. The incorporation of the company was through an Act of Parliament.

Suzuki Motor Company of Japan was chosen from seven other prospective partners
worldwide. Suzuki was due not only to its undisputed leadership in small cars but also to
commitments to actively bring to MUL contemporary technology and Japanese management
practices (that had catapulted Japan over USA to the status of the top auto manufacturing country
in the world). at Maruti Udyog Ltd.

A license and a Joint Venture agreement were signed between Government of India and
Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in Oct 1982.

The objectives of MUL, then are as cited below:

 Modernization of the Indian Automobile Industry.

 Production of fuel-efficient vehicles to conserve scarce resources.
 Production of large number of motor vehicles which was necessary for economic growth.

In 2001, MUL became one of the first automobile companies, globally, to be honoured
with an ISO 9000:2000 certificate. The production/ R&D is spread across 297 acres with 3 fully-
integrated production facilities. The MUL plant has already rolled out 4.3 million vehicles. The
fact says that, on an average two vehicles roll out of the factory in every single minute. The
company takes approximately 14 hours to make a car. N[edit] at only this, with range of 11
models in 50 variants, Maruti Suzuki fits every car-buyer's budget and any dream.

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

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of May 10, 2007, Govt. of India sold its complete share 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.

Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is
commonly used to refer to this compact car model. Till recently the term "Maruti", in popular
Indian culture, was associated to the Maruti 800 model.

Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has
been the leader of the Indian car market for over two decades.It’s manufacturing facilities are
located at two facilities Gurgaon and Manesar south of New Delhi. Maruti’s Gurgaon facility has
an installed capacity of 350,000 units per annum. The Manesar facilities, launched in February
2007 comprise a vehicle assembly plant with a capacity of 100,000 units per year and a Diesel
Engine plant with an annual capacity of 100,000 engines and transmissions. Manesar and
Gurgaon facilities have a combined capability to produce over 700,000 units annually.

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.

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over
six million Maruti cars are on Indian roads since the first car was rolled out on December 14,
1983.

Maruti Suzuki offers 12 models, Maruti 800, Omni, Alto, Versa, Gypsy, A Star, Wagon
R, Zen Estilo, Swift, Swift Dzire, SX4, Grand Vitara. Swift, Swift dzire, A star and SX4 are
maufactured in Manesar, Grand Vitara is imported from Japan as a completely built unit (CBU),
remaining all models are manufactured in Maruti Suzuki's Gurgaon Plant.

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 Suzuki Motor Corporation, the parent company, is a global leader in mini and compact
cars for three decades. Suzuki’s technical superiority lies in its ability to pack power and
performance into a compact, lightweight engine that is clean and fuel efficient.

Maruti is clearly an “employer of choice” for automotive engineers and young managers
from across the country. Nearly 75,000 people are employed directly by Maruti and its partners.

The company vouches for customer satisfaction. For its sincere efforts it has been rated
(by customers)first in customer satisfaction among all car makers in India for nine years in a row
in annual survey by J D Power Asia Pacific.

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.

Module 2: Strategy Formulation

Vision:
Visions of any company are those values on which company works. As the MUL is
started by Governmental initiatives it tends to be more consumer oriented and hence cost
effective, but on the other hand Suzuki’s participation ensures not only need of the profit, but of
the need of maximum profit. The only way for this Nora’s dilemma of selecting principals for
company’s working vision ,was to maximize profit and reducing cost by maximizing output and
sales. Hence MUL declared its Vision as-
“The Leader in the Indian Automobile Industry, Creating Customer Delight1 and Shareholder's
Wealth2; eventually become a pride of India”

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Customer Delight1 is making sure that performance, after sales service and customer support are
best and beyond expectation. Shareholder’s wealth2 is the prime concern for running business
smoothly.MUL knows this and understands “customer is king”,

Mission:

Mission is the statement of an organization’s purpose, what it want to accomplish in the larger
environment and its goals which are specific, realistic and motivating. Missions are described
over visions and visions demand certain objectives. The main objectives/Missions of MUL are:

- Modernization of the Indian Automobile Industry.

- Developing cars faster and selling them for less.

- Production of fuel-efficient vehicles to conserve scarce resources.

-Production of large number of motor vehicles which was necessary for economic growth.

-Market Penetration, Market Development Similarly Product Development and Diversification.

- Partner relationship management, Value chain, Value delivery network.

AUTOMOBILE INDUSTRY IN INDIA:

• 11 million vehicles/year
• 1.5 million- export
• Two wheelers (75%)
• Passenger Cars- 16%
• Commercial vehicles (9%)
• US $35 billion

SWOT ANALYSIS:
Strengths:
 Strong Network
 Presence
 Brand Image
 Knowledge of the market
 Strong Partnership
Weakness:

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  Relatively new in the diesel car segment
 Image stuck on small cars
 Heavy import tariffs on imported models
 Government bureaucrats have made MUL unaccustomed to international standards or
keen competitors

Opportunities:
 High end car segment
 Overseas market
 Improve handling
 Add extra features to small segment cars
 Attracting youth
 Export small cars

Threats:
 Global players
 Worker’s strikes
 High competition

Module 3: Analysis of Company’s External Environment

Porter’s Five Force Model

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 Threat from the new players: Increasing

• Most of the major global players are present in the Indian market; few more are expected
to enter.
• Financial strength assumes importance as high are required for building capacity and
maintaining adequacy of working capital.

 Rivalry within the industry: High

• There is keen competition in select segments. (compact and mid size segments).
• New multinational players may enter the market.

 Market strength of suppliers: Low

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 • A large number of automotive components suppliers
• Automotive players are rationalizing their vendor base to achieve consistency in quality

 Market strength of consumers: Increasing

• Increased awareness among consumers has increased expectations. Thus the ability to
innovate is critical
• Product differentiation via new features, improved performance and after-sales support is
critical
• Increased competitive intensity has limited the pricing power of manufacturers

Threat from substitutes : Low to medium

• Consumer preference is changing (Mini cars are being replaced by compact or mid sized
cars)
• Setting up integrated manufacturing facilities may require higher capital investments than
establishing assembly facilities
• India is also likely to increasingly serve as the sourcing base for global automotive
companies, and automotive exports are likely to gain increasing importance over the
medium term
• competition is likely to intensify in the SUV segment in India following the launch of
new models at competitive prices

Module 4: Analysis of Company’s Resources and Competitive Position

External environment: PESTEL
Political environment:

The policies & objectives laid down by the Indian Government regarding the automobile sector
are:
 Exalt the sector as a lever of industrial growth and employment and to achieve a high
degree of value addition in the country
 Promote a globally competitive automotive industry and emerge as a global source for
auto components

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  Establish an international hub for manufacturing small, affordable passenger cars and a
key center for manufacturing Tractors and Two-wheelers in the world
 Ensure a balanced transition to open trade at a minimal risk to the Indian economy and
local industry.

Economical environment:
 Sales of Passenger car has been increased to 8.45% per year.
 Maruti now plans to tap the rural market, 60 per cent of which runs on cash .
 Maruti has appointed 2,000 sales executives to target customers in the rural areas.
 The manufacturing sector has grown at 8– 10 per cent per annum in the last few
years.
 More than 70 per cent of the VEHICLES purchase is on credit.
 Finance availability to CV buyers has grown in scope during the last few years.

Social environment:
 Welfare Camps

 Medical support & welfare

 Education to underprivileged

 Road Safety

 Maruti Driving Schools

 Adopting energy saving technologies

 Reducing water wastage

 Green Growth

Technological environment:
 Launched CNG kit for Alto, its highest selling small car.
 The company as a proactive move is all set to make its entire fleet of cars adhere to
‘end of life vehicles’ (ELV).
 The company is involved with the development of small and fuel-efficient car
engines.
 In future, the company has high plans to increase the engine development work in
India along with other R&D operations

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  The company uses next generation KB series Engine in its new Hatchback car A-
star.
 The company added Virtual Design Review to its R&D activity to enable virtual
validation to reduce cycle time and development cost.
 In the field of alternate fuel technology, the company developed
LPG/CNG/HYBRID system for MPI engine.

Ecological environment:
Practicing 3 R
 3R- reduce, reuse, and recycle.
 Continuous process of promoting 100% recyclable and reusable car parts.
 Targets reducing fresh water consumption and implement rain water harvesting.
 Physical infra structure such as roads and bridges affect the use of automobiles. If
there is good availability of roads or the roads are smooth With the development or
evolution of alternate fuels, hybrid cars have made entry into the market.

Legal environment:
 Follows highest standards of Corporate Governance
 Customer can contact the Secretarial & Legal Department for any
questions/clarifications.
 Legal compliance reporting
The board periodically reviews reports of compliance with all laws applicable to
the Company, as well as steps taken by the Company to rectify instances of
non-compliances.
 The Company has developed comprehensive legal compliance scheduling and
management software by which specific compliance tasks are assigned to each
individual. The software enables in planning and monitoring all compliance
activities across the Company.

Latest Plan:
Fourth assembly plant will be scaled up to produce 3,00,000 cars a year by 2020.PRESENT
SUPERSTAR Suzuki Cervo sport a Suzuki 660cc engine - as against Nano's 623cc - and wear
a tag of around Rs 1.5 lakh on road. And second car is KIZASHI which is 1700cc with 18 lakh.

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Module 5: Strategy and Competitive Advantage
Car Models:
Maruti 800(1984)

Omni

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Gypsy

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Joint venture related issues

Relationship between the Government of India, under the United Front (India) coalition
and Suzuki Motor Corporation over the joint venture was a point of heated debate in the Indian
media till Suzuki Motor Corporation gained the controlling stake. This highly profitable joint
venture that had a near monopolistic trade in the Indian automobile market and the nature of the
partnership built up till then was the underlying reason for most issues. The success of the joint
venture led Suzuki to increase its equity from 26% to 40% in 1987, and further to 50% in 1992.
In 1982 both the venture partners had entered into an agreement to nominate their candidate for
the post of Managing Director and every Managing Director will have a tenure of five years[
R.C. Bhargava was the initial managing director of the company since the inception of the joint
venture. Till today he is regarded as instrumental for the success of Maruti Suzuki. Joining in
1982 he held several key positions in the company before heading the company as Managing
Director. Currently he is on the Board of Directors. After completing his five year tenure, Mr.
Bhargava later assumed the office of Part-Time Chairman. The Government nominated Mr.
S.S.L.N. Bhaskarudu as the Managing Director on 27 August 1997. Mr. Bhaskarudu had joined

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Maruti Suzuki in 1983 after spending 21 years in the Public sector undertaking Bharat Heavy
Electricals Limited as General Manager. In 1987 he was promoted as Chief General Manager. In
1988 he was named Director, Productions and Projects. The next year (1989) he was named
Director of Materials and in 1993 he became Joint Managing Director.
Suzuki Motor Corporation didn't attend the Annual General Meeting of the Board with the
reason of it being called on a short notice. Later Suzuki Motor Corporation went on record to
state that Bhaskarudu was "incompetent" and wanted someone else. However, the Ministry of
Industries, Government of India refuted the charges. Media stated from the Maruti Suzuki
sources that Bhaskarudu was interested to indigenise most of components for the models
including gear boxes especially for Maruti 800. Suzuki also felt that Bhaskarudu was a proxy for
the Government and would not let it increase its stake in the venture.[ If Maruti Suzuki would
have been able to indigenise gear boxes then Maruti Suzuki would have been able to
manufacture all the models without the technical assistance from Suzuki. Till today the issue of
localization of gear boxes is highlighted in the press.
The relations strained when Suzuki Motor Corporation moved to Delhi High Court to bring a
stay order against Bhaskarudu's appointment. The issue was resolved in an out-of-court
settlement and both the parties agreed that R S S L N Bhaskarudu would serve up to 31
December 1999, and from 1 January 2000, Jagdish Khattar, Executive Director of Maruti Udyog
Limited would assume charges as the Managing Director.[14] Many politicians stated in
parliament that the Suzuki Motor Corporation is unwilling to localize manufacturing and reduce
imports. As of 2011 Gear boxes are still imported from Japan and are assembled at the Gurgaon
facility.

Industrial relations
For most of its history, Maruti Udyog Limited 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. But
with the change in management in 1997, when it became predominantly government controlled
for a while, and the conflict between the United Front Government and Suzuki may have been
the cause of unrest among employees. A major row broke out in September 2000 when
employees of Maruti Udyog Ltd (MUL) went on an indefinite strike, demanding among other
things, revision of the incentive scheme offered and implementation of a pension scheme.
Employees struck work for six hours in October 2000, irked over the suspension of nine
employees, going on a six-hour tools-down strike at its Gurgaon plant, demanding revision of the
incentive-linked pay and threatened to fast to death if the suspended employees were not
reinstated. About this time, the NDA government, following a disinvestments policy, proposed to
sell part of its stake in Maruti Suzuki in a public offering. The Staff union opposed this sell-off
plan on the grounds that the company will lose a major business advantage of being subsidised
by the Government.
The standoff with the management continued to December with a proposal by the management
to end the two-month long agitation rejected with a demand for reinstatement of 92 dismissed
workers, with four MUL employees going on a fast-unto-death. In December the company's
shareholders met in New Delhi in an AGM that lasted 30 minutes. At the same time around 1500

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plant workers from the MUL's Gurgaon facility were agitating outside the company's corporate
office demanding commencement of production linked incentives, a better pension scheme and
other benefits. The management has refused to pass on the benefits citing increased competition
and lower margins.

Generic Strategies:
 Overall cost leadership
• Low-cost-position relative to a firm’s peers
• Manage relationships throughout the entire value chain
• Differentiation
• Create products and/or services that are unique and valued
• Non-price attributes for which customers will pay a premium
• Focus strategy
• Narrow product lines, buyer segments, or targeted geographic
markets
• Attain advantages either through differentiation or cost leadership

G EN ER I C ST R AT EGI ES

Lower Cost Differentiation

S Industry wide Cost Leadership Differentiation

c
o
p Cost Focus Differentiation
Particular Focus
e Segment

Competitive Advantage

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 AN OF F ' S M AT R I X
E xi sti ng P r oduct N ew P r oduct
M a r k et Pen etr a ti on
• D i str i bu ti on Product D evel opmen t
•Expa n si on of •N ew pr odu ct –
E xi sti ng
ma n u fa ctu r i n g Spl a sh
M a r k et fa ci l i ti es

Market D evel opmen t D i ver si fi ca ti on

N ew
•Expor t s
M a r k et

The Marketing Mix

1.Product
2.Price
3.Place
4.Promotion

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There you have it, the 4 marketing p's

So now lets get a bit more explanation of the 4 marketing p's :-

1. Product - The product aspects of marketing deal with the specifications of the actual goods
or services, plus how it relates to the end users needs and wants. The range of a product normally
includes supporting elements such as warranties, guarantees, and support.

The term “product” refers to tangible, physical products as well as services. Here are some
examples of the product decisions to be made:

 Brand Name
 Functionality
 Styling
 Quality
 Safety
 Packaging
 Repairs and Support

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  Warranty
 Accessories and services
 Models and sizes

2. Price -This refers to the process of setting a price for a product, together with discounts. The
price need not be monetary; it can plainly be what is exchanged for the product or services, e.g.
time, energy, or attention. Methods of setting prices optimally are in the domain of pricing art.

Some example of pricing decisions to be made include :

 Pricing strategy (skim, penetration, etc.)

 Suggested retail price
 Volume discounts and wholesale pricing
 Cash and early payment discounts
 Seasonal pricing
 Bundling
 Price flexibility
 Price discrimination
 Allowances and deals
 Discount structure
 Distribution and retailer mark-ups

3. Place - (or distribution ): refers to how the product gets to the buyer; for instance, point-of-
sale assignment or retailing. This third P has furthermore at times been called Place, referring to
the channel by which a product or service is sold (e.g. online vs. retail), which geographic region
or industry, to which division (young adults, families, business citizens), etc. also referring to
how the surroundings in which the product is sold in can influence sales.

 Distribution channels
 Market coverage (inclusive, selective, or exclusive distribution)
 Specific channel members
 Inventory management
 Warehousing
 Distribution centers
 Order processing
 Transportation
 Reverse logistics
 Outlet location
 Sales territories

4. Promotion - This includes advertising, sales promotion, including promotional education,

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publicity, and individual selling. Branding refers to the assorted strategies of promoting the
product, brand, or company.

 Promotional strategy (push, pull, etc)

 Advertising
 Personal selling & sales force
 Sales promotions
 Public relations & publicity
 Marketing communications budget

All the 4 marketing p's are also known as "the marketing mix" furthermore are frequently used
by a marketer to plot a plan, and place the foundations of fresh projects/campaigns, it is a
astonishingly useful strategy that has been used ever since the early 1960's, and will be constant
for as long as new-found projects/campaigns are being produced

Module 6: Formulating long term and grand strategies

MARKETING STRATEGY OF MUL

 Maruti was the first company in India which studied the consumer demand and
responded to it well.

 Market segmentation policy was adopted that targeted different type of consumers with
different type of models.

 Maruti800targeted medium income group, while the deluxe model targeted rich income
group.

 Maruti van targeted businessmen and doctors(ambulance)

 The Gypsy targeted the paramilitary forces and the police.

 This resulted in complete control of maruti over the market .

 The company advertised its different products according to costumers.

 A special cell was made to make direct dealing of Gypsy with the government & the
army.

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 BCG MATRIX
STAR QUESTION MARK

SWIFT KIZASHI
SWIFT DZIRE NEW GRAND VITARA
SX4 EECO

CASH COW DOG

800
OMNI
VERSA
ALTO ZEN ESTILO
RITZ
WAGON R

Current and Future Market Strategies

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  Design small cars suitable for the Indian conditions as a strategy to beat the stiff
competition with the entry of global auto makers.

 Company would capitalise on Suzuki’s research and development capabilities and

internal resources to finance its expansion, thereby cushioning itself from the higher
interest rates and borrowing costs and become cost competitive.

 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 for
Europe.

Competitive Advantage of MUL

 Dealer network across the country wide dealership network allows the company to
service customers over a wider geographical area than competitors. Currently, MUL has
500 sales outlets that cover 312 cities, as compared to 162 outlets of Hyundai Motors and
140 outlets of Tata Motors.

 True Value Operations MUL providing its customers an opportunity to resale their car to
MUL or exchange with a new Maruti car under its “True Value” network has proven
really beneficial. In FY07 True Value network touched 10000 units a month and more
than 90% of that resulted in the exchange of a new car.

 Presence across segments In a car manufacturing plant, the press shop, paint shop, engine
and transmission assembly, and machine shop are used for manufacturing different
models.

 Commonality of platforms-Commonality between the platforms of various models lead to

lower product development efforts and higher benefits of economies of scale, uses only
two platforms. Strong support in R & D and Product from parent -MUL’s strength lies in
the strong parentage of SMC, Japan.

Maruti Suzuki’s Key Success Factors

 Technology-Related KSF’s

o 1. R&D facilities and Japanese collaboration.

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 o 2. Suzuki internationally known for Small cars.

o 3. Launch of World class quality cars like A-STAR and SPLASH

 Manufacturing-Related KSF’s

o Designing cars best suited for Indian market.

o Cost leadership in the market due to efficient value chain and manufacturing plants.

 Distribution-Related KSF’s

o The record sales performance was affected through the Company's vast dealership
network.

o Car sales outlet increased to 600 covering 393 cities.

o There are 265 ‘Maruti True Value’ outlets spread across 166 cities, which are
engaged in the sale, purchase and exchange of pre-owned cars. ‘Maruti True
Value’ is the largest organized pre-owned car sales network in India.

 Marketing-Related KSF’s

o Full range of cars-from entry level Maruti 800 & Alto to stylish hatchback A-star, Swift,
Wagon R, Estill and sedans DZire, SX4 and Sports Utility vehicle GrandVitara.

o Communication through advertisement is totally to the need of Indian culture

o Pan-India service network.

 Skills and Capability-The service network had a total of 2,628 service outlets including
dealer workshop as well as Maruti Authorized Service Stations, covering 1220 cities.

Module 7: Strategy Implementation

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Competitive Strategies of a market leader:
In an effort to counter competition from local and foreign players, Maruti started restructuring its
operations. The continuous decline in market share and sales forced the company to rethink its
strategy and formulate a new competitive strategy. Maruti upgraded its manufacturing facilities
to meet the foreign challenge with its claims of high-end technology. It broadened its product
portfolio and expanded its sales and service network to reach all over India. Within a year of its
launch of its Challenge 50 plan, Maruti's restructuring efforts started reflecting in its financial
performance. In the financial year 2003-04, Maruti reported a 25.2 percent increase in net sales
to Rs 90.81 billion as compared to Rs 72.53 billion in the preceding fiscal year. The net profit of
the company for 2003-04 also increased from Rs 1.46 billion in fiscal 2002-03 to Rs 5.42 billion
in fiscal 2003-04. The company was able to increase its net profit riding on the high sales growth
of Alto, which increased by over 130 per cent in fiscal 2003-04 as compared to fiscal 2002-03.

Corporate Governance:
In India, 'Corporate Governance' standards for listed companies are stipulated by Securities and
Exchange Board of India ( SEBI) through a special provision- Clause 49 of the Listing
Agreement .As a conscious and vigilant organization, Maruti Suzuki had initiated good
'Corporate Governance' practices even before Clause 49 became applicable and these practices
form an integral part of the company’s governance culture. The Company strives to foster a
corporate culture in which high standards of ethical behavior, individual accountability and
transparent disclosure are ingrained in all its business dealings and shared by its Board of
Directors, Management and Employees.
The Company has established systems & procedures to ensure that its Board of Directors is well-
informed and well-equipped to fulfill its overall responsibilities and to provide the management
strategic direction it needs to create long-term shareholder value.
On its Board, the Company has four non-Executive- Independent Directors of high stature from
varied backgrounds, who bring with them rich experience and high ethical standards.
In recent years, the Company has evolved a Control Self Assessment mechanism to evaluate the
effectiveness of internal controls over financial reporting.
Key internal controls over financial reporting were identified and put to self assessment by
control owners in the form of Self Assessment Questionnaires through a web based
onlinetoolcalled"ControlManagers". .
With the successful implementation of the online Controls Self Assessment framework, the
Company has become one of the few companies in India to have a transparent framework for
evaluating the effectiveness of internal controls over financial reporting. The initiative further
reinforces the commitment of the Company to adopt best corporate governance practices.

Corporate Social Responsibility

Maruti Suzuki has adopted a CSR policy, which serves as a guiding tool for the management and
the employees in steering Maruti Suzuki towards long term sustained growth in harmony along
with the interests of the stakeholder.

The role of the CSR department is to professionalize CSR activities in Maruti Suzuki and
strengthen the mechanisms involving the activities. Significant efforts have been taken to
contribute to society at large, through its corporate activities, especially in the areas of Road

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Safety and Vocational Training. Maruti Suzuki has set up dedicated teams with requisite
expertise to steer the social projects.
CSR POLICY:

"While working to enhance shareholder wealth, Maruti Suzuki will regularly engage with all stakeholders to as
their needs and through its products, services, conduct and management initiatives, promote their sustained gro
and well - being"

Policy Guidelines

Company will follow responsible business practices in all its functions and operations and
strive to implement them at its
suppliers, dealers and other business partners.
Company will continue to remain ahead of law in pursuit of environment protection and ene
conservation at its manufacturing
facilities, and in development of products that use fewer natural resources and are environm
friendly.
Company will be deeply committed towards the welfare of its employees, their families
communities around its operations to
improve quality of life as a whole.
Company will develop products and services that fulfills the aspirations of customers, bui
strong and lasting bond with them,
proactively support them during natural calamities, delight them with after sales services
availability of spares.
Company will continue to provide technological and managerial support to its suppliers
dealers to further their profitable and
sustainable growth.
As an expression of thanks to the local community and the people of the country Company
undertake initiatives that might not be
directly linked to its business.
Company will partner with government, NGOs, business partners to contribute positively tow
economic and human
development of the society especially underprivileged people.
Company will encourage and recognize its employees for volunteering in the community in
spirit of serving and sharing their
expertise and skills.
Company will strive to constantly build organizational capabilities, like any other compete
position suitable people and have a
proper organizational structure to ensure implementation of CSR policy, guidelines and program
Company will engage with reputed external agencies for audit of its CSR activities for the purp
of identifying areas of
improvement, authenticity of data and reporting.
Company will monitor the progress on various CSR programs in a structured manner, docum
the performance against the set
targets and publish a report every year on its CSR performance and share with its key stakehold

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Module 8: Strategic Review and Audit:

Stake Holders:
 Employees and their families
 Customers and their families
 Shareholders and investors.
 Dealers Suppliers and other Business partners.
 Local community and society
 Environment and regulatory authorities

Operations management at maruti Suzuki:

Maruti Udyog Ltd (Maruti), a joint venture between Suzuki Motors of Japan (eleventh largest
vehicle manufacturer in the world and the fourth largest manufacturer in Japan) and the Indian
government, is the leader in India's automobile market. Maruti has the widest product range
among Indian car manufacturers, with ten basic models and more than 50 variants. In 2003,
Maruti produced 359,960 vehicles, operating at a capacity utilisation of 103%, against the
industry average of 57.8%. Even though Maruti is well ahead of its other rivals, its market share
has been declining. As competition intensifies, Maruti has realised the importance of getting
closer to its customers. The company has launched various initiatives to improve customer
service. Maruti has improved its operational efficiency by increasing productivity, cutting costs
and launching new products. By its quality initiatives, Maruti has reduced its defects per vehicle
significantly.

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