Maruti Suzuki
Content
INTRODUCTION & BACKGROUND
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As a responsible corporate citizen, Maruti Suzuki India Limited (‘Maruti’ or “the Company”) has always believed in following highest standards of Corporate Governance. Being a listed Company, every act of the Company, its Board Members and its employees is the focus of public attention and accordingly, there is a need to reinforce Maruti’s commitment towards maintaining highest standards of Corporate Governance. This Code of Business Conduct and Ethics (“Code of Conduct” or “Code”) helps ensure compliance with our standards of business conduct & ethics and also with regulatory requirements. All Senior Management Personnel are expected to read and understand this Code of Business Conduct and Ethics, uphold these standards in day-to-day activities and also comply with all applicable standards, policies and procedures of the company. This policy should be read in conjunction with applicable regulations & existing policies & procedures of the Company. You can also contact the Secretarial & Legal Department if you have any questions or clarifications.
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Company Profile (History)
Maruti Suzuki is India's number one leading automobile manufacturer 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 BJP-led government held an initial public offering of 25% of the company in June 2003. As of 10 May 2007, Govt. of India sold its complete share to 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car available in India, its only competitors- the Hindustan Ambassador and Premier Padmini were both around 25 years out of date at that point.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 Suzuki has produced over 5 Million vehicles. Maruti Suzukis are sold in India and various several other countries, depending upon export orders. Models similar to Maruti Suzukis (but not manufactured by Maruti Udyog) are sold by Suzuki Motor Corporation 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 Suzuki Alto tops the sales charts and Maruti Suzuki Swift is the largest selling in A2 segment.
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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 ("Maruti" is another name of the Hindu god, Hanuman).
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Maruti Suzuki has been the leader of the Indian car market for over two decades. Its manufacturing facilities are located at two facilities Gurgaon and Manesar south of Delhi. Maruti Suzuki’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 Suzuki cars. The company is a subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti Suzuki. The rest is owned by 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 Suzuki cars are on Indian roads since the first car was rolled out on 14 December 1983. Maruti Suzuki offers 13 models, Maruti 800, Alto, WagonR, Estilo, A-star, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Gypsy, Grand Vitara. Swift, Swift DZire, A-star and SX4 are manufactured 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. 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
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performance into a compact, lightweight engine that is clean and fuel efficient. Nearly 75,000 people are employed directly by Maruti Suzuki and its partners. It has been rated first in customer satisfaction among all car makers in India from 1999 to 2009 by J D Power Asia Pacific.
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Manufacturing Excellence
• We began our operations way back in 1983, with the Maruti 800 - the vehicle which brought about a revolution in the Indian car market. • Today, one in every two cars in India is a product of Maruti Suzuki. Our scale and manufacturing complexity have today moved to a different league from when it began. We have reached a capacity of one million cars annual production this year. This feat is entirely based on the company's constant endeavour to meet aspirations of a large and diverse demography, by providing the best through innovative products and services.
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• Today, each car from the Maruti Suzuki factories at Gurgaon, and Manesar, Haryana, North India are the tangible evidence of Quality, manufacturing standards and efficiency.
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1.Lean Manufacturing
Maruti Production System or MPS draws learning's from its parent company Suzuki Motor Corporation's concepts on `lean manufacturing' under Suzuki Production System i.e. SPS. Setting trends in new products and achieving customer delight starts with Manufacturing Excellence and Maruti's manufacturing excellence hinges around four important pillars-Cost, Quality, Safety and Productivity.
• Cost
Every employee working on the line is 'cost sensitive' and functions in capacity of a Cost Manager. He is a key contributor in suggesting how to keep costs of production under control.
• Quality
A product of poor quality requires repeated inspections, entails wastage in terms of repairs and replacements. "Do it right first time", is the principle followed to avoid wastage. To ensure quality, robots were devices and deployed especially where they reduced worker fatigue and were critical in delivering consistent quality. With consistent improvements in the plant the company was able to manufacture over 600,000 vehicles in 2006-07 with an installed capacity of just 350,000 vehicles per year.
• Safety
"Home or work place; Safety takes First Place". This has been the motto of the company where safety is
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concerned. Maruti attaches great significance to safety of its people and strongly advocates that safety at work place adds to quality of the products and improves productivity of the plant significantly. In the Japanese manufacturing system, the central role is accorded, not so much to Quality, Productivity or Cost, but to Safety.
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2. Production Management System
Production Management System (PMS) was the next bold step in this direction. PMS is a strategy to achieve Manufacturing Excellence evolved through participative approach. PMS is
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A system which is people driven and ensures involvement of all levels (Managers, Executives, Supervisors ) A system which ensures ownership A system which brings in standardization of systems & processes A system which ensures Sustainability PMS has entered the fourth phase of implementation and the results have been overwhelming.
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Excellence through participative approach
PMS is a bottoms-up approach where people of the work area are encouraged to give solutions to the problems at their end. It is implemented across levels. This motivates the operator and ensures his “ownership” all through the solution finding process. The concept ensures participation and error free communication. The result is clarity of content, better understanding and openness towards feedback. These values make PMS a sustainable system.
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Clarity of the Role
One of the aspect that have bothered hierarchical structures is the clarity of the roles and responsibility across strata. Clarity on what is expected out of a supervisor, a manager or a technician at the shop floor has brought in structure and standardization to production management at Maruti. The result is that job duplication is eliminated and no manhours are lost in understanding what each person is expected to do.
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Bringing in Standardization
Through such people participation, PMS has brought in standardization that eliminates any scope of confusion at shop floor. A visual consistency across the manufacturing facilities is notable. Bins and trolleys are earmarked for tools and components. Pictorial charts explaining processes and procedures are pasted at convenient and strategic points helping shop floor employees understand various mechanisms with ease. Wherever possible a colour coding control or visual control is followed to eliminate operator errors arising out of language constraints. This helps in clear distinction of different model and its components.
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All around Gains
These processes have led to many operational improvements that have saved cost and time. At the same time these have brought in operational ease and a defined activity flow and sequence. Marching ahead towards the goal of selling a million vehicles by 2010, PMS will lead the production team towards greater enhanced productivity with perfection.
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3.
Facilities
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Gurgaon Facility
Maruti Suzuki has two state-of-the-art manufacturing facilities in India. The first facility is at Gurgaon spread over 300 acres and the other facility is at Manesar, spread over 600 acres in North India. Maruti Suzuki's facility in Gurgaon houses three fully integrated plants. Together the three plant have an installed capacity of around 700,000 units.
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K- series Plant
The Gurgaon facilities also houses the 'K' Engine Plant. Commissioned in 2008, the K-series engine plant has an installed capacity of 500,000 units. K-series engines are available in 1 liter and 1.2 liter capacities. The highly fuel efficient, technologically advanced K series engines have been very well appreciated by our customers for their performance. Several Maruti Suzuki cars such as the A-star, Estilo, Swift, Swift Dzire, Ritz and WagonR sport the K-series engines.
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Company has announced an investment of around Rs. 1250 crores to expand engine capacity by 250,000 units by 2010.
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Manesar Facility
The state of the art Manesar facility was inaugurated in February 2007. At present the Manesar plant rolls out World Strategic Models Swift, A-star, SX4 and swift DZire. There is a high degree of automation and robotic control in the press shop, weld shop and paint shop to help manufacture with acute precision, high quality and speed. The Manesar plant is designed to be flexible: diverse car models can be made here conveniently owing to automatic tool changers, centralized weld control system and numerical control machines that ensure high Quality. The plant at Manesar is the company's fourth car assembly plant and has a capacity of 300,000 cars per year. Company has announced an investment of Rs.1700 crores to expand its capacity by 250,000 units. The new facility is expected to be ready by 2011-12.
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Suzuki Powertrain
Suzuki Powertrain India Limited is a joint venture of Maruti Suzuki with Suzuki Motor Corporation, Japan.at Manesar. It manufactures world class diesel engines and transmissions for cars. SMC holds 70 per cent equity in SPIL the rest is held by Maruti Suzuki.
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This diesel engine plant has a capacity to manufacture 300,000 diesel engines a year.
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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 fastunto-death. In December the company's shareholders met in New Delhi in an AGM that lasted 30 minutes. At the same time around 1500 plant workers from the MUL's Gurgaon facility were agitating outside the company's corporate office
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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.
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Sales and service network
Maruti Suzuki is one of the companies in India which has unparalleled sales and service network. As of March 2010 it has 802 dealerships across 555 towns and cities in India. To ensure the vehicles sold by them are serviced properly, Maruti Suzuki has 2,740 workshops (including dealer workshops and Maruti Authorised Service Stations) in 1,335 towns and cities. It has 30 Express Service Stations on 30 National Highways across 1,314 cities in India. The company is planning to expand the number of dealerships to 1,500 by 2015. Service is a major revenue generator of the company. Most of the service stations are managed on franchise basis, where Maruti Suzuki trains the local staff. Other automobile companies have not been able to match this benchmark set by Maruti Suzuki. The Express Service stations help many stranded vehicles on the highways by sending across their repair man to the vehicle.
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Exports
Maruti Exports Limited is the subsidiary of Maruti Suzuki with its major focus on exports and it does not operate in the domestic Indian market. The first commercial consignment of 480 cars were sent to Hungary. By sending a consignment of 571 cars to the same country Maruti Suzuki crossed the benchmark of 300,000 cars. Since its inception export was one of the aspects government was keen to encourage. Every political party expected Maruti Suzuki to earn foreign currency. Angola, Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, Sri Lanka, Uganda, Chile, Guatemala, Costa Rica and El Salvador are some of the markets served by Maruti Exports
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Net Sales And PAT
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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. Initially R.C.Bhargava, was the 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.[7] 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 Maruti Suzuki in 1983 after spending 21 years in the Public sector undertaking Bharat Heavy Electricals Limited as General Manager. Later in 1987 he was promoted as Chief General Manager, 1988 as Director, Productions and Projects, 1989 Director, Materials and in 1993 as Joint Managing Director.
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Suzuki Motor Corporation didn't attend the Annual General Meeting of the Board with the reason of it being called on a short notice.[8] Later Suzuki Motor Corporation went on record to state that Mr. 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.[9] 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 relation strained when Suzuki Motor Corporation moved to Delhi High Court to bring a stay order against the appointment of Mr. Bhaskarudu. 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.[11] Many politicians believed, and had stated in parliament that the Suzuki Motor Corporation is unwilling to localize manufacturing and reduce imports. This remains true, even today the gear boxes are still imported from Japan and are assembled at the Gurgaon facility.
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Partner for the joint venture
Sanjay Gandhi owned the Maruti Technical Services Limited, which ran into trouble and was liquidated. After the death of Sanjay Gandhi, the Indira Gandhi government assigned a delegation of Indian technocrats to hunt for a collaborator for the project. Initial rounds of discussion were held with the giants of the automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor Corporation was at that time a small player in the four wheeler automobile sector and had major share in the two wheeler segment. Suzuki's bid was considered negligible. While the major companies were personally represented in the initial rounds of discussion, Osamu Suzuki, Chairman and CEO of the company ensured that he was present in all the rounds of discussion. Osamu in an article writes that it subtly massaged their (Indian delegation's) egos and also convinced them about the sincerity of Suzuki's bid. Suzuki in return received a lot of help from the government in such matters as import clearances for manufacturing equipment (against the wishes of the Indian machine tool industry then and its own socialistic ideology), land purchase at government prices for setting up the factory Gurgaon and reduced or removal of excise tariffs. This ensured that Suzuki conscientiously nursed Maruti Suzuki through its infancy to become one of its flagship ventures.
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Maruti Insurance
Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with the help of the National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram. The service was set up the company with the inception of two subsidiaries Maruti Insurance Distributors Services Pvt. Ltd and Maruti Insurance Brokers Pvt. Limited This service started as a benefit or value addition to customers and was able to ramp up easily. By December 2005 they were able to sell more than two million insurance policies since its inception.
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Maruti Finance
To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in January 2002. Prior to the start of this service Maruti Suzuki had started two joint ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE Countrywide respectively to assist its client in securing loan. Maruti Suzuki tied up with ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered Bank, and Sundaram to start this venture including its strategic partners in car finance. Again the company entered into a strategic partnership with SBI in March 2003 Since March 2003, Maruti has sold over 12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities across India. "Maruti Finance marks the coming together of the biggest players in the car finance business. They are the benchmarks in quality and efficiency. Combined with Maruti volumes and networked dealerships, this will enable Maruti Finance to offer superior service and competitive rates in the marketplace". — Jagdish Khattar, Managing director of Maruti Udyog Limited in a press conference announcing the launch of Maruti Finance on 7 January 2002 Citicorp Maruti Finance Limited is a joint venture between Citicorp Finance India and Maruti Udyog Limited its primary business stated by the company is "hire-purchase financing of Maruti Suzuki vehicles". Citi Finance India Limited is a wholly owned subsidiary of Citibank Overseas Investment Corporation, Delaware, which in turn is a 100% wholly owned subsidiary of Citibank N.A. Citi Finance India Limited holds 74% of the stake and Maruti Suzuki holds the remaining 26%. GE Capital, HDFC and Maruti Suzuki came together in 1995 to form Maruti Countrywide. Maruti claims that its finance program offers most competitive interest rates to its customers, which are lower by 0.25% to 0.5% from the market rates.
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Maruti Driving School
As part of its corporate social responsibility Maruti Suzuki launched the Maruti Driving School in Delhi. Later the services were extended to other cities of India as well. These schools are modelled on international standards, where learners go through classroom and practical sessions. Many international practices like road behaviour and attitudes are also taught in these schools. Before driving actual vehicles participants are trained on simulators. "We are very concerned about mounting deaths on Indian roads. These can be brought down if government, industry and the voluntary sector work together in an integrated manner. But we felt that Maruti should first do something in this regard and hence this initiative of Maruti Driving Schools." — Jagdish Khattar, at the launch ceremony of Maruti Driving School, Bangalore
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Reference
Maruti Suzuki India a partial subsidiary of Suzuki Motor Corporation of Japan, is India's largest passenger car company, accounting for over 45% of the domestic car market. The company offers a complete range of cars from entry level Maruti 800 and Alto, to stylish hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India and on 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited. The company's headquarters are located in Delhi.
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CONCLUSION
When summarizing the financial results of “MARUTI UDYOG LIMITED”. I have observed that their working is quite reasonable financial. It is very good company. There are no any debts of long term liabilities of the company. To conclude, from of the overall analysis of financial management of the company, I can say that it is financial sound and well managed three consecutive year’s shows and applauding position. I was also able to well understand my financial concepts. It was a tough task to make this project but at last I able to complete the project report of analysis of annual report of the company “MARUTI UDYOG LIMITED”.
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•
As a responsible corporate citizen, Maruti Suzuki India Limited (‘Maruti’ or “the Company”) has always believed in following highest standards of Corporate Governance. Being a listed Company, every act of the Company, its Board Members and its employees is the focus of public attention and accordingly, there is a need to reinforce Maruti’s commitment towards maintaining highest standards of Corporate Governance. This Code of Business Conduct and Ethics (“Code of Conduct” or “Code”) helps ensure compliance with our standards of business conduct & ethics and also with regulatory requirements. All Senior Management Personnel are expected to read and understand this Code of Business Conduct and Ethics, uphold these standards in day-to-day activities and also comply with all applicable standards, policies and procedures of the company. This policy should be read in conjunction with applicable regulations & existing policies & procedures of the Company. You can also contact the Secretarial & Legal Department if you have any questions or clarifications.
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1
Company Profile (History)
Maruti Suzuki is India's number one leading automobile manufacturer 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 BJP-led government held an initial public offering of 25% of the company in June 2003. As of 10 May 2007, Govt. of India sold its complete share to 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 Suzuki has produced over 5 Million vehicles. Maruti Suzukis are sold in India and various several other countries, depending upon export orders. Models similar to Maruti Suzukis (but not manufactured by Maruti Udyog) are sold by Suzuki Motor Corporation 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 Suzuki Alto tops the sales charts and Maruti Suzuki Swift is the largest selling in A2 segment.
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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 ("Maruti" is another name of the Hindu god, Hanuman).
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Maruti Suzuki has been the leader of the Indian car market for over two decades. Its manufacturing facilities are located at two facilities Gurgaon and Manesar south of Delhi. Maruti Suzuki’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 Suzuki cars. The company is a subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti Suzuki. The rest is owned by 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 Suzuki cars are on Indian roads since the first car was rolled out on 14 December 1983. Maruti Suzuki offers 13 models, Maruti 800, Alto, WagonR, Estilo, A-star, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Gypsy, Grand Vitara. Swift, Swift DZire, A-star and SX4 are manufactured 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. 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
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performance into a compact, lightweight engine that is clean and fuel efficient. Nearly 75,000 people are employed directly by Maruti Suzuki and its partners. It has been rated first in customer satisfaction among all car makers in India from 1999 to 2009 by J D Power Asia Pacific.
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Manufacturing Excellence
• We began our operations way back in 1983, with the Maruti 800 - the vehicle which brought about a revolution in the Indian car market. • Today, one in every two cars in India is a product of Maruti Suzuki. Our scale and manufacturing complexity have today moved to a different league from when it began. We have reached a capacity of one million cars annual production this year. This feat is entirely based on the company's constant endeavour to meet aspirations of a large and diverse demography, by providing the best through innovative products and services.
•
• Today, each car from the Maruti Suzuki factories at Gurgaon, and Manesar, Haryana, North India are the tangible evidence of Quality, manufacturing standards and efficiency.
6
1.Lean Manufacturing
Maruti Production System or MPS draws learning's from its parent company Suzuki Motor Corporation's concepts on `lean manufacturing' under Suzuki Production System i.e. SPS. Setting trends in new products and achieving customer delight starts with Manufacturing Excellence and Maruti's manufacturing excellence hinges around four important pillars-Cost, Quality, Safety and Productivity.
• Cost
Every employee working on the line is 'cost sensitive' and functions in capacity of a Cost Manager. He is a key contributor in suggesting how to keep costs of production under control.
• Quality
A product of poor quality requires repeated inspections, entails wastage in terms of repairs and replacements. "Do it right first time", is the principle followed to avoid wastage. To ensure quality, robots were devices and deployed especially where they reduced worker fatigue and were critical in delivering consistent quality. With consistent improvements in the plant the company was able to manufacture over 600,000 vehicles in 2006-07 with an installed capacity of just 350,000 vehicles per year.
• Safety
"Home or work place; Safety takes First Place". This has been the motto of the company where safety is
7
concerned. Maruti attaches great significance to safety of its people and strongly advocates that safety at work place adds to quality of the products and improves productivity of the plant significantly. In the Japanese manufacturing system, the central role is accorded, not so much to Quality, Productivity or Cost, but to Safety.
8
2. Production Management System
Production Management System (PMS) was the next bold step in this direction. PMS is a strategy to achieve Manufacturing Excellence evolved through participative approach. PMS is
• • • •
A system which is people driven and ensures involvement of all levels (Managers, Executives, Supervisors ) A system which ensures ownership A system which brings in standardization of systems & processes A system which ensures Sustainability PMS has entered the fourth phase of implementation and the results have been overwhelming.
•
Excellence through participative approach
PMS is a bottoms-up approach where people of the work area are encouraged to give solutions to the problems at their end. It is implemented across levels. This motivates the operator and ensures his “ownership” all through the solution finding process. The concept ensures participation and error free communication. The result is clarity of content, better understanding and openness towards feedback. These values make PMS a sustainable system.
•
Clarity of the Role
One of the aspect that have bothered hierarchical structures is the clarity of the roles and responsibility across strata. Clarity on what is expected out of a supervisor, a manager or a technician at the shop floor has brought in structure and standardization to production management at Maruti. The result is that job duplication is eliminated and no manhours are lost in understanding what each person is expected to do.
9
•
Bringing in Standardization
Through such people participation, PMS has brought in standardization that eliminates any scope of confusion at shop floor. A visual consistency across the manufacturing facilities is notable. Bins and trolleys are earmarked for tools and components. Pictorial charts explaining processes and procedures are pasted at convenient and strategic points helping shop floor employees understand various mechanisms with ease. Wherever possible a colour coding control or visual control is followed to eliminate operator errors arising out of language constraints. This helps in clear distinction of different model and its components.
•
All around Gains
These processes have led to many operational improvements that have saved cost and time. At the same time these have brought in operational ease and a defined activity flow and sequence. Marching ahead towards the goal of selling a million vehicles by 2010, PMS will lead the production team towards greater enhanced productivity with perfection.
10
3.
Facilities
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Gurgaon Facility
Maruti Suzuki has two state-of-the-art manufacturing facilities in India. The first facility is at Gurgaon spread over 300 acres and the other facility is at Manesar, spread over 600 acres in North India. Maruti Suzuki's facility in Gurgaon houses three fully integrated plants. Together the three plant have an installed capacity of around 700,000 units.
•
K- series Plant
The Gurgaon facilities also houses the 'K' Engine Plant. Commissioned in 2008, the K-series engine plant has an installed capacity of 500,000 units. K-series engines are available in 1 liter and 1.2 liter capacities. The highly fuel efficient, technologically advanced K series engines have been very well appreciated by our customers for their performance. Several Maruti Suzuki cars such as the A-star, Estilo, Swift, Swift Dzire, Ritz and WagonR sport the K-series engines.
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Company has announced an investment of around Rs. 1250 crores to expand engine capacity by 250,000 units by 2010.
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•
Manesar Facility
The state of the art Manesar facility was inaugurated in February 2007. At present the Manesar plant rolls out World Strategic Models Swift, A-star, SX4 and swift DZire. There is a high degree of automation and robotic control in the press shop, weld shop and paint shop to help manufacture with acute precision, high quality and speed. The Manesar plant is designed to be flexible: diverse car models can be made here conveniently owing to automatic tool changers, centralized weld control system and numerical control machines that ensure high Quality. The plant at Manesar is the company's fourth car assembly plant and has a capacity of 300,000 cars per year. Company has announced an investment of Rs.1700 crores to expand its capacity by 250,000 units. The new facility is expected to be ready by 2011-12.
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Suzuki Powertrain
Suzuki Powertrain India Limited is a joint venture of Maruti Suzuki with Suzuki Motor Corporation, Japan.at Manesar. It manufactures world class diesel engines and transmissions for cars. SMC holds 70 per cent equity in SPIL the rest is held by Maruti Suzuki.
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This diesel engine plant has a capacity to manufacture 300,000 diesel engines a year.
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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 fastunto-death. In December the company's shareholders met in New Delhi in an AGM that lasted 30 minutes. At the same time around 1500 plant workers from the MUL's Gurgaon facility were agitating outside the company's corporate office
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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.
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Sales and service network
Maruti Suzuki is one of the companies in India which has unparalleled sales and service network. As of March 2010 it has 802 dealerships across 555 towns and cities in India. To ensure the vehicles sold by them are serviced properly, Maruti Suzuki has 2,740 workshops (including dealer workshops and Maruti Authorised Service Stations) in 1,335 towns and cities. It has 30 Express Service Stations on 30 National Highways across 1,314 cities in India. The company is planning to expand the number of dealerships to 1,500 by 2015. Service is a major revenue generator of the company. Most of the service stations are managed on franchise basis, where Maruti Suzuki trains the local staff. Other automobile companies have not been able to match this benchmark set by Maruti Suzuki. The Express Service stations help many stranded vehicles on the highways by sending across their repair man to the vehicle.
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Exports
Maruti Exports Limited is the subsidiary of Maruti Suzuki with its major focus on exports and it does not operate in the domestic Indian market. The first commercial consignment of 480 cars were sent to Hungary. By sending a consignment of 571 cars to the same country Maruti Suzuki crossed the benchmark of 300,000 cars. Since its inception export was one of the aspects government was keen to encourage. Every political party expected Maruti Suzuki to earn foreign currency. Angola, Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, Sri Lanka, Uganda, Chile, Guatemala, Costa Rica and El Salvador are some of the markets served by Maruti Exports
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Net Sales And PAT
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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. Initially R.C.Bhargava, was the 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.[7] 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 Maruti Suzuki in 1983 after spending 21 years in the Public sector undertaking Bharat Heavy Electricals Limited as General Manager. Later in 1987 he was promoted as Chief General Manager, 1988 as Director, Productions and Projects, 1989 Director, Materials and in 1993 as Joint Managing Director.
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Suzuki Motor Corporation didn't attend the Annual General Meeting of the Board with the reason of it being called on a short notice.[8] Later Suzuki Motor Corporation went on record to state that Mr. 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.[9] 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 relation strained when Suzuki Motor Corporation moved to Delhi High Court to bring a stay order against the appointment of Mr. Bhaskarudu. 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.[11] Many politicians believed, and had stated in parliament that the Suzuki Motor Corporation is unwilling to localize manufacturing and reduce imports. This remains true, even today the gear boxes are still imported from Japan and are assembled at the Gurgaon facility.
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Partner for the joint venture
Sanjay Gandhi owned the Maruti Technical Services Limited, which ran into trouble and was liquidated. After the death of Sanjay Gandhi, the Indira Gandhi government assigned a delegation of Indian technocrats to hunt for a collaborator for the project. Initial rounds of discussion were held with the giants of the automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor Corporation was at that time a small player in the four wheeler automobile sector and had major share in the two wheeler segment. Suzuki's bid was considered negligible. While the major companies were personally represented in the initial rounds of discussion, Osamu Suzuki, Chairman and CEO of the company ensured that he was present in all the rounds of discussion. Osamu in an article writes that it subtly massaged their (Indian delegation's) egos and also convinced them about the sincerity of Suzuki's bid. Suzuki in return received a lot of help from the government in such matters as import clearances for manufacturing equipment (against the wishes of the Indian machine tool industry then and its own socialistic ideology), land purchase at government prices for setting up the factory Gurgaon and reduced or removal of excise tariffs. This ensured that Suzuki conscientiously nursed Maruti Suzuki through its infancy to become one of its flagship ventures.
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Maruti Insurance
Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with the help of the National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram. The service was set up the company with the inception of two subsidiaries Maruti Insurance Distributors Services Pvt. Ltd and Maruti Insurance Brokers Pvt. Limited This service started as a benefit or value addition to customers and was able to ramp up easily. By December 2005 they were able to sell more than two million insurance policies since its inception.
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Maruti Finance
To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in January 2002. Prior to the start of this service Maruti Suzuki had started two joint ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE Countrywide respectively to assist its client in securing loan. Maruti Suzuki tied up with ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered Bank, and Sundaram to start this venture including its strategic partners in car finance. Again the company entered into a strategic partnership with SBI in March 2003 Since March 2003, Maruti has sold over 12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities across India. "Maruti Finance marks the coming together of the biggest players in the car finance business. They are the benchmarks in quality and efficiency. Combined with Maruti volumes and networked dealerships, this will enable Maruti Finance to offer superior service and competitive rates in the marketplace". — Jagdish Khattar, Managing director of Maruti Udyog Limited in a press conference announcing the launch of Maruti Finance on 7 January 2002 Citicorp Maruti Finance Limited is a joint venture between Citicorp Finance India and Maruti Udyog Limited its primary business stated by the company is "hire-purchase financing of Maruti Suzuki vehicles". Citi Finance India Limited is a wholly owned subsidiary of Citibank Overseas Investment Corporation, Delaware, which in turn is a 100% wholly owned subsidiary of Citibank N.A. Citi Finance India Limited holds 74% of the stake and Maruti Suzuki holds the remaining 26%. GE Capital, HDFC and Maruti Suzuki came together in 1995 to form Maruti Countrywide. Maruti claims that its finance program offers most competitive interest rates to its customers, which are lower by 0.25% to 0.5% from the market rates.
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Maruti Driving School
As part of its corporate social responsibility Maruti Suzuki launched the Maruti Driving School in Delhi. Later the services were extended to other cities of India as well. These schools are modelled on international standards, where learners go through classroom and practical sessions. Many international practices like road behaviour and attitudes are also taught in these schools. Before driving actual vehicles participants are trained on simulators. "We are very concerned about mounting deaths on Indian roads. These can be brought down if government, industry and the voluntary sector work together in an integrated manner. But we felt that Maruti should first do something in this regard and hence this initiative of Maruti Driving Schools." — Jagdish Khattar, at the launch ceremony of Maruti Driving School, Bangalore
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Reference
Maruti Suzuki India a partial subsidiary of Suzuki Motor Corporation of Japan, is India's largest passenger car company, accounting for over 45% of the domestic car market. The company offers a complete range of cars from entry level Maruti 800 and Alto, to stylish hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India and on 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited. The company's headquarters are located in Delhi.
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CONCLUSION
When summarizing the financial results of “MARUTI UDYOG LIMITED”. I have observed that their working is quite reasonable financial. It is very good company. There are no any debts of long term liabilities of the company. To conclude, from of the overall analysis of financial management of the company, I can say that it is financial sound and well managed three consecutive year’s shows and applauding position. I was also able to well understand my financial concepts. It was a tough task to make this project but at last I able to complete the project report of analysis of annual report of the company “MARUTI UDYOG LIMITED”.
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