profile of automobile & maruti

8/2/2019 Profile of Automobile & Maruti

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AUTOMOBILE INDUSTRY OVERVIEW

The Indian automobile industry, the seventh largest in the world, has

demonstrated a phenomenal growth. The industry has grown significantly

over the last ten years, during which industry volumes have increased by

3.2 times, from a level of 4.7 million numbers to 14.9 million numbers,

according to Vishnu Mathur, Director General, Society of Indian

Automobile Manufacturers (SIAM).

The industry, by virtue of its deep connects with several key

segments of the economy, occupies a prominent place in the countrys

growth canvas. It exhibits a strong multiplier effect and has the ability to

be the key driver of economic growth. A robust transportation system

plays a key role in a country's rapid economic and industrial development,

and the well-developed Indian automotive industry justifies this catalytic

role by producing a wide variety of vehicles, which include passenger

cars, light, medium and heavy commercial vehicles, multi-utility vehicles

such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc.


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Auto Industry in India Growth Drivers

The automobile sector in India has been experiencing significant

growth in the last few years on the back of factors that include:

Favorable demographic distribution with rising working population

and middle class Urbanisation

Rising affluence of the average consumer as per capita income rises -

According to McKinsey, the middle class in India will grow from 50

million to 550 million by 2025. With a tremendous growth in wealth

as the economy grows, there will be significant increases in

spending on discretionary items and consumer durables

Increasing disposable incomes in rural agri-sector

Overall GDP growth, with a rise in industrial and agricultural output

Introduction of ultra-low-cost cars

Increasing maturity of Indian original equipment manufacturers

(OEMs)

Availability of a variety of vehicle models meeting diverse needs and

preferences robust production

Greater affordability of vehicles

Easy finance schemes

Favorable government policies


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Indian Automobile market Key statistics

India's automobile industry, currently estimated to have a turnover of

US$ 73 billion, accounts for 6 per cent of its GDP, and is expected to hit a

turnover of US$ 145 billion by 2016.

The automobile industry currently contributes 22 per cent to the

manufacturing GDP and 21 per cent of the total excise collection in the

country, according to Mr Praful Patel, Minister, Heavy Industries and Public

Enterprises. In 2010-11, the total turnover and export of the automotive

Industry in India reached a new high of US$ 73 billion and US$ 11 billion

respectively. The cumulative announced investments reached US$ 30

billion during this period. He also said that the forecasted size of the Indian

Passenger Vehicle Segment is nearly 9 million units and that of 2

wheelers, close to 30 million units by 2020.

India achieved the position of the top growing passenger car

market in the world during the January-June period in 2011, overtaking

the US, which grew at 14.40 per cent, according to SIAM. In passenger

vehicles, India was the fastest growing market at 18.20 per cent during the

six month period.


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India's automobile industry is expected to grow by 11 to 13 per cent

in the fiscal year ending March 2012, according to Pawan Goenka,

President, SIAM. The industry body said that Indian automakers sold

143,370 cars in June 2011.

The four-wheel passenger vehicle market has grown impressively at

the hands of the new middle class, and there is huge opportunity, as market

penetration remains low.

Domestic market share for 2010-11

Indias automobile industry is growing fast, but two wheelers remain

a dominant category. More than 78 percent of motor vehicles on the road

are two-wheelers, their popularity driven by low price, high fuel mileage,

and an ability to drive efficiently through dense traffic. The share of

different types of vehicles during 2010-11 was passenger vehicles

(16.25), commercial vehicles (4.36), three wheelers (3.39), and two

wheelers (76.00).

Recent Investments/ Trends

The auto industry has made huge investments in the country. As per

2008-09, the total investment of auto industry in India was Rs 60,952 crore


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(US$ 13.89 billion). Another Rs 78,000 crore (US$ 17.78 billion) of new

investments have been announced by the auto industry out of which some

have already been made and the rest will come up over the next 2-3 years.

The industry, therefore, is keeping pace with the growing demand for

vehicles in all segments.

The Karnataka government has cleared investment proposals

amounting to more than Rs 8,662 crore (US$ 19.74 billion), which include

the plans of Honda Motorcycle India plans for a manufacturing unit in the

State. Mr.Murugesh Nirani, Karnataka Industries Minister, has said that

Honda Motorcycles and Scooter India would be investing Rs 1,350 crore

(US$ 307.7 million) in Narsapur Industrial area of Kolar district of the

State.

Demand for two-wheelers from six of the eight domestic mobike

manufacturers rose 16 per cent in June to more than 880,000 units,

compared to 761,000 units in June 2010.

Australia is looking at possibilities of building better relations

between its world-class firms and rapidly growing Indian automotive

industries with an objective to create new export opportunities.


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Pune-based Force Motors has signed an agreement with Daimler

AG, under which Daimler will supply technology for the development of

a multi-purpose vehicle (MPV) by Force Motors

Swedish automobile manufacturer Volvo Cars Corp is looking at

introducing corporate editions of its luxury sedans S60 and S80 to shore up

volumes in the Indian automobile market.

French car maker PSA Peugeot Citroen has selected a site near

Sriperumbudur, to the west of Chennai, in Tamil Nadu for setting up its car

plant. The company is planning to invest Rs 4,000 crore (US$ 911.72

million) in an integrated automobile project.

Toyota has launched its first made-for-India small car, the Etios, Liva,

in the intensely competitive hatchback segment. The car, priced between

Rs 399,000 and 599,000 (US$9,094 and 13,653), will compete with

Maruti Suzuki Swift, Hyundai i20, Volkswagen Polo and Ford Figo.

Auto industry in India Government Initiatives

With the gradual liberalization of the automobile sector since 1991,

the number of manufacturing units in India has grown progressively.


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Currently, 100 per cent Foreign Direct Investment (FDI) is

permissible under automatic route in this sector including passenger car

segment. The import of technology/technological upgradation on the

royalty payment of 5 per cent without any duration limit and lump sum

payment of US$ 2 million is also allowed under automatic route in this

sector.

The automobile industry is delicensed, and import of components is

freely allowed.

With an objective of accelerating and sustaining growth in the

automotive sector and to steer, co-ordinate and synergise the efforts of

all stakeholders, the Automotive Mission Plan (AMP) 2006-2016 was

prepared. The plan aims at making India global automotive hub. The AMP

2006-2016 aims at doubling the contribution of automotive sector in GDP

by taking the turnover to US$ 145 billion and providing additional

employment to 25 million people by 2016.

In the long term, the government has expressed plans to follow a two

pronged strategy for spurring automotive Research &Development

(R&D). The first is aimed at addressing the existing infrastructure gap

in the field domain of automotive testing and homologation through the


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Departments flagship National Automotive Testing and R&D

Infrastructure Project(NATRiP), which is being implemented at a cost of Rs

2,288 crores (US$ 521.5 million), and is expected to be completed by the

end of 2012. The second part of the strategy is aimed at leveraging the

investments being made in NATRiP facilities for collaborative R&D with

the industry, especially for the small and medium enterprises (SMEs) in the

auto component space.

Further, with the recent announcement of the launch of the

National Mission for Electric Mobility and the setting up of the National

Council and Board for Electric Mobility, Mr Patel emphasized on the

commitment of the government for early adoption of electric vehicles,

including hybrid vehicles, and the manufacturing of these vehicles and their

components.

The government is considering setting up two automotive

manufacturing hubs spread over 10,000 acres each in central and

eastern India. The new hubs, aimed at consolidating India's position as

an important destination for low-cost automotive production, will be in

addition to the three existing zones Haryana, Maharashtra and Tamil

Nadu.


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Auto Industry in India Road Ahead

The aut omotive industry is at the core of Indias manufacturing

economy - India is all set to become one of the worlds most

attractive automotive markets for both manufacturers and consumers.

The resulting benefits to society, such as economic growth, increased

jobs, and stability for families employed by the automotive industry, are

significant.

The long-term potential for growth of the auto industry is very

favorable, on account of low vehicle penetration in the country. As

income levels rise and easy finance is available, the industry will

continue to see a healthy growth rate. SIAM estimates that the growth of the

auto industry in FY12 will be in the region of 12-15 per cent.


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COMPANY PROFILE

Maruti Suzuki India Limited (MSIL), formerly known as Maruti

Udyog Limited, a subsidiary of Suzuki Motor Corporation of Japan, is

India's largest passenger car company, accounting for over 50 per cent of

the domestic car market. Maruti Udyog Limited was incorporated in 1981

under the provisions of Indian Companies Act 1956 and the government of

India selected Suzuki Motor Corporation as the joint venture partner for the

company. In 1982 a JV was signed between Government of India and

Suzuki Motor Corporation.

The company has two manufacturing facilities located at Gurgaon and

Manesar, south of New Delhi, India. Both the facilities have a combined

capability to produce over a 1.2 million vehicles annually. The company

plans to expand its manufacturing capacity to 1.75 million by 2013.

The Manesar facility has been made to suit Suzuki Motor

Corporation (SMC) and Maruti Suzuki India Limited's (MSIL) global

ambitions. At present this plant rolls out World Strategic Models: Swift, A-

star & SX4 and DZire. The plant has several in-built systems and

mechanisms.


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Suzuki Powertrain India Limited, the diesel engine plant at

Manesar is SMC's & Maruti's first and perhaps the only plant designed to

produce world class diesel engine and transmissions for cars. The plant is

under a joint venture company, called Suzuki Powertrain India Limited

(SPIL) in which SMC holds 70 per cent equity the rest is held by MSIL.

This facility has an initial capacity to manufacture 100,000 diesel engines

a year. This has been scaled up to 300,000 engines per annum by 2010.

MSILs parent company, Suzuki Motor Corporation has been 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. Product quality, safety

and cost consciousness are embedded into their manufacturing process,

which they have inherited from their parent company.

Maruti Suzuki exports entry-level models across the globe to over

100 countries and the focus has been to identify new markets. Some

important markets include Latin America, Africa and South East Asia.

In 2010-11, the Company sold 1,271,005 vehicles, registering a

growth of 24.8% over the previous year. This comprised 1,132,739 vehicles


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in the domestic market and 138,266 vehicles in the international market.

Cumulatively, the Company has produced 10 million vehicles. It rolled out

its 10 millionth vehicle on 15 th March, 2011, a signicant landmark for the

Company and the automobile industry in India. The Companys total income

(Net of Excise) for the year 2010-11 was Rs. 375,224 million, a growth of

24.6% over scal 2009 -10. The Company has a strong balance sheet with

reserves and surplus of Rs. 137,230 million and a debt equity ratio of 0.02 as

on 31st

March, 2011.

NATURE OF THE COMPANY OWNERSHIP

Maruti Suzuki is a public limited company listed on the Bombay

Stock Exchange Limited and National Stock Exchange of India Limited.

SMC is the majority shareholder with 54.21% equity stake in the Company.

For the shareholding pattern of the Company, refer to page 50 of the

Corporate Governance section of the Annual Report.

ORGANISATIONAL STRUCTURE

Maruti Suzuki has a multi-tier management structure, comprising a

Board of Directors at the top, followed by ve business vertical heads


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reporting to the Managing Director. The business verticals of the Company

are Marketing & Sales, Engineering, Production, Administration and

Supply Chain. For more information on the organisational structure and the

leadership team of Maruti Suzuki, refer to page 38 of the Corporate

Governance section of the report.


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ORGANISATIONAL STRUCTURE


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MANUFACTURING FACILITIES

Maruti Suzuki has two manufacturing facilities in Haryana, one each

at Gurgaon and Manesar, with a combined manufacturing capability of over

1.25 million vehicles per annum, which is much beyond the installed

capacity of 1 million vehicles.

Gurgaon Plant

The Gurgaon facility contains three fully integrated plants with a

combined installed manufacturing capacity of over 700,000 vehicles per

annum. it also has a state-of-the-art K-series engine casting plant with a

capacity of 7.80 lakh engines per annum.

Manesar Plant

The Manesar facility was started in February, 2007 and has one plant

with a capacity of 300,000 vehicles per annum. Two more plants are

presently under construction at Manesar.


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R & D Capabilities

The Company is gradually enhancing its R&D capabilities. It has over

1,000 R&D engineers. The R&D team is working closely with SMC

engineers on new product design and development. It has also initiated work

on setting up a test course for R&D purposes at Rohtak, Haryana.

SUPPLIER BASE

The Company has worked through the year with its suppliers to

develop new products, refresh existing ones and achieve higher localisation

levels to reduce costs. As on 31st March, 2011, the Company had a

supplier base of 260, including 19 joint venture companies where the

Company holds a strategic equity stake.

DOMESTIC SALES AND SERVICE NETWORK

Over the years, the Company has expanded its sales and service

network to cover the length and breadth of the country. Amongst car

manufacturers in India, Maruti Suzuki has the largest sales and service

network. As on 31st March 2011, it had 933 sales outlets in 668 cities and

2,946 service workshops in 1,395 cities. The service network of the


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Company includes dealer workshops, Maruti Authorised Service Stations

(MASSs), Maruti Service Masters (MSMs) and Maruti Service Zones

(MSZs).

Map is indicative, not to scale Some states have more than one regional office and area office


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Besides selling and servicing vehicles, the Company provides its

customers services like automobile nance, genuine spare parts and

accessories, extended warranty and certied pre -owned cars. The Company

had 353 True Value pre-owned car outlets in 208 cities as on 31st March,

2011.

EXPORT SALES AND MARKETS

Maruti Suzukis rst export assignment was a batch of 500 cars to

Hungary in September, 1987. Since then, the export portfolio of the

Company has been consistently expanding. In the reporting year, the

Company exported to 78 countries in Europe, Asia, Latin America, Africa

and Oceania.


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Besides selling and servicing vehicles, the Company provides its

customers services like automobile nance , genuine spare parts and

accessories, extended warranty and certied pre -owned cars. The Company

had 353 True Value pre-owned car outlets in 208 cities as on 31st March,

2011.

Product range includes

It offers cars from entry level Maruti 800 & Alto to stylish

hatchback Ritz, A star, Swift, Wagon R, Estillo and sedans DZire, SX4 and

Sports Utility vehicle Grand Vitara.

Maruti 800

Alto

Alto K10

Omni

Gypsy

Zen Estilo

Wagon R

Versa

A-star

Ritz


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SX4

Swift

Dzire

Eeco

Grand Vitara

MILESTONE OF THE COMPANY :

Year Achievement

1981 Maruti Udyog Ltd. incorporat ed under provisions of the Indian Companies Act, 1956

1982 Signed License and JV agreement signed with Suzuk i MotorCorporation

1983 Launched Maruti 800

1984 Launched Omni 1985 Launched Gypsy

1986 Produced 100,000 vehicles

1987 Exported rst lot of 500 cars to Hungar y

1990 Launched Indias rst sedan, Maruti 1000

1992 SMCincreased its stake in Maruti Udyog Limited to 50%

1993 Launched Zen

1994 Produced 1 million cars Launched Esteem

1996 Launched 24-hour Maruti-On-Road Service (MOS)


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1999 Produced 2 million cars Launched Baleno Launched Wagon R

2000 Launched IDTR jointlywith the Delhi government to promote saf e

driving (A CSR initiative) Launched Alto

2001 Launched Versa Launched Maruti True Value (pre-owned car business)

2002 Inaugurat ed Children s Park in Delhi (A CSR Initiative) MC increased its stake in Maruti to 54.2%

2003 Launched Grand Vitara Produced 4 million cars Listed on Bombay Stock Exchange and National Stock Exchange

2005 Launched Swif t

2006 Maruti launched Dil Se a special programme f or Indians living abroad , to facilitate them to gift Maruti cars on line to friends andrelatives back at home .

MOUsigned with Government of Haryana to set up IDTR Inaugurated 2nd IDTR at Delhi (A CSR initiative)

Launched Zen Estilo Produced 6 million cars

2007 Launched Swif t Diesel Inaugurated the f our th assembly line and diesel engine plant at

Mansear Launched rural scheme Ghar Ghar Mein Maruti; Mera Sapna Maruti

launched Launched SX4 First Citizen, Dr. A.P.J. Abdul Kalam visits Maruti s facilities

Maruti Udyog Limited renamed Maruti Suzuk i India Limited MOUsigned with Government of Gujarat to set up Driving andTechnical Training Institute f or tribal youth in Gujarat (A CSR initiative)

Initiated communit y development programmes in 4 villages in Manesar (A CSR initiative)


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2008 Launched Swif t DZire Inaugurat ed K10Bengine plant at Gurgaon Launched A-star Completed 25 years of operations in India

Launched National Road Safety Mission (A CSRinitiative) 2009 Firstshipment of A-stars dispat ched from Mudra por t f or overseas

markets Signed MoU with Government of Uttarakhand to set up IDTR (A CSR

initiative) Laid the f oundation of tw o IDTRsin Haryana (A CSR initiative) Launched Ritz Produced 8 millionth car Haryana Government allotted 700 acres for R&Dcomplex at Rohta Launched Estilo Launched IDTRsat Uttarrakhand and Gujarat ( ACSR initiative)

2010 Launched Eeco Achieved landmark of producing one million cars in one year Launched Alto K10 CNG i-GPIGreen range launched - SX4,Estilo, WagonR, Eeco, Alto

2011 Launched Kizashi Launched SX4 Diesel Produced 10 million cars

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