Maruti Suzuki Essay Example

Maruti Suzuki Essay Maruti Suzuki India Limited (Hindi: ) (NSE:Â  MARUTI, BSE:Â  532500) a partial subsidiary of Suzuki Motor Corporation of Japan, is Indias 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 hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara. [3] 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 companys headquarters are located in New Delhi. [1] Contents| Type Public Traded as BSE:Â  532500 NSE:Â  MARUTI Industry Automotive Founded 1981 (as Maruti Udyog Limited) Headquarters New Delhi, India [1] Key people Mr. Shinzo Nakanishi, Managing Director and CEO Products Automobiles Revenue US$4. 8 billion (2009) Employees 6,903 [2] Parent Suzuki Motor Corporation Website MarutiSuzuki. om [edit] Profile The old logo of Maruti Suzuki India Limited. Later the logo of Suzuki Motor Corp. was also added to it To Munsiyari on a Maruti 800, Uttarakhand Himalayas Maruti Suzuki plant in Gurgaon Maruti Suzuki is India and Nepals 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, 1 8. 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. We will write a custom essay sample on Maruti Suzuki specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Maruti Suzuki specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Maruti Suzuki specifically for you FOR ONLY $16.38 $13.9/page Hire Writer 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 Indias 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. 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). 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. 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 14 models, Maruti 800, Alto, WagonR, Estilo, A-star, Ritz, Swift, S wift DZire, SX4, Omni, Eeco, Gypsy, Grand Vitara, Kizashi. Swift, Swift DZire, A-star and SX4 are manufactured in Manesar, Grand Vitara and Kizashi are imported from Japan as completely built units(CBU), remaining all models are manufactured in Maruti Suzukis 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 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. [4] [edit] 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. Suzukis 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 delegations) egos and also convinced them about the sincerity of Suzukis 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. [5] [edit] Joint venture related issues Maruti Suzukis A-Star vehicle during its unveiling in Pragati Maidan, Delhi. A-Star, Suzukis fifth global car model, was designed and is made only in India. [6] Besides being Suzukis largest subsidiary in terms of car sales, Maruti Suzuki is also Suzukis leading research and development arm outside Japan 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[7] 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. [8] 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. Suzuki Motor Corporation didnt attend the Annual General Meeting of the Board with the reason of it being called on a short notice. [9] 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. [10] 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. [11] 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 SÂ  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. 12] 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. [edit] 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 i n 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 companys shareholders met in New Delhi in an AGM that lasted 30 minutes. At the same time around 1500 plant workers from the MULs Gurgaon facility were agitating outside the companys 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. [13] [edit] Services offered [edit] Current sales of automobiles Maruti Omni Indias Corps of Military Police personnel patrolling the Wagah border crossing in the Punjab in a Maruti Gypsy. Maruti Alto Maruti Suzuki Swift Maruti Suzuki Zen Estilo Suzuki SX4 5th Generation Suzuki Alto is sold as Maruti Suzuki A-Star in India. Maruti Suzuki Swift DZire Suzuki Splash is sold as Maruti Suzuki Ritz in India. [edit] Manufactured locally 1. 800 (Launched 1983) 2. Omni (Launched 1984) . Gypsy (Launched 1985) 4. WagonR (Launched 2002) 5. Alto (Launched 2000) 6. Swift (Launched 2005) 7. Estilo (Launched 2009) 8. SX4 (Launched 2007) 9. Swift DZire (Launched 2008) 10. A-star (Launched 2008) 11. Ritz (Launched 2009) 12. Eeco (Launched 2010) 13. Alto K10(Launched 2010) [edit] Imported Suzuki Grand Vitara 1. Grand Vitara (Launched 2007) 2. Kizashi (Launched 2011) [edit] Discontinued car models 1. 1000 (1990–1994) 2. Zen (1993–2006) 3. Esteem (1994–2008) 4. Baleno (1999–2007) 5. Zen Estilo (2006–2009) 6. Versa (2001–2010) 7. Grand Vitara XL7 (2003–2007) *Source edit] Manufacturing facilities Maruti Suzuki has two state-of-the-art manufacturing facilities in India. [14] Both manufacturing facilities have a combined production capacity of 1,250,000 vehicles annually. [edit] Gurgaon Manufacturing Facility The Gurgaon Manufacturing Facility has three fully integrated manufacturing plants and is spread over 300Â  acres (1. 2Â  km2). All three plants have an installed capacity of 350,000 vehicles annually but productivity improvements have enabled it to manufacture 700,000 vehicles annually. The Gurgaon facilities also manufacture 240,000 K-Series engines annually. The entire facility is equipped with more than 150 robots, out of which 71 have been developed in-house. The Gurgaon Facilities manufactures the 800, Alto, WagonR, Estilo, Omni, Gypsy and Eeco. [edit] Manesar Manufacturing Facility The Manesar Manufacturing Plant was inaugurated in February 2007 and is spread over 600Â  acres (2. 4Â  km2). Initially it had a production capacity of 100,000 vehicles annually but this was increased to 300,000 vehicles annually in October 2008. The production capacity was further increased by 250,000 vehicles taking total production capacity to 550,000 vehicles annually. The Manesar Plant produces the A-star, Swift, Swift DZire and SX4. [edit] Sales and service network As of 31 March 2011 Maruti Suzuki has 933 dealerships across 666 towns and cities in all states and union territories of India. It has 2,946 service stations (inclusive of dealer workshops and Maruti Authorised Service Stations) in 1,395 towns and cities throughout India[15]. It has 30 Express Service Stations on 30 National Highways across 1,314 cities in India. 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. [16] [edit] 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[17] 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. [18] [edit] 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. 19] 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[20] Since March 2003, Maruti has sold over 12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities across I ndia. [21] 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[19] 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%. [22] GE Capital, HDFC and Maruti Suzuki came together in 1995 to form Maruti Countrywide. [23] 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. [edit] Maruti TrueValue Main Article: Maruti True Value Maruti True service offered by Maruti Suzuki to its customers. It is a market place for used Maruti Suzuki Vehicles. One can buy, sell or exchange used Maruti Suzuki vehicles with the help of this service in India. As of 31 March 2010 there are 341 Maruti True Value outlets. [edit] N2N Fleet Management N2N is the short form of End to End Fleet Management and provides lease and fleet management solution to corporates. Its impressive list of clients who have signed up of this service include Gas Authority of India Ltd, DuPont, Reckitt Benckiser, Sona Steering, Doordarshan, Singer India, National Stock Exchange and Transworld. This fleet management service include end-to-end solutions across the vehicles life, which includes Leasing, Maintenance, Convenience services and Remarketing. [24] [edit] Accessories Many of the auto component companies other than Maruti Suzuki started to offer components and accessories that were compatible. This caused a serious threat and loss of revenue to Maruti Suzuki. Maruti Suzuki started a new initiative under the brand name Maruti Genuine Accessories to offer accessories like alloy wheels, body cover, carpets, door visors, fog lamps, stereo systems, seat covers and other car care products. These products are sold through dealer outlets and authorized service stations throughout India. [25] [edit] Maruti Driving School A Maruti Driving School in Chennai 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. [26] 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 [edit] Issues and problems On February, 24, 2010, Maruti Suzuki India, announced recalling of 100,000 A-Star hatchbacks to fix a fuel leakage problem. he company will replace the gaskets for all 100,000 A-Star cars. [27] [edit] 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.