Maruti Suziki

TAXILA BUSINESS SCHOOL
MARUTI UDYOG LIMITED

Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation of Japan, has
been the leader of the Indian car market for about two decades. Its
manufacturing plant, located some 25 km south of NewDelhi in Gurgaon, has an
installed capacity of 3,50,000 units perannum, with a capability to produce about
half a millionvehicles.The company has a portfolio of 11 brands, includingMaruti
800 ,Omni, premium small car Zen, international brands Alto andWagonR, off-
roader Gypsy, mid size Esteem, luxury car Baleno, theMPV, Versa, Swift and
Luxury SUV Grand Vitara XL7.In recent years, Maruti has made major strides
towards its goal ofbecoming Suzuki MotorCorporation's R and D hub for Asia. It
hasintroduced upgraded versions of WagonR, Zen and Esteem,completely
designed and styled in-house.Maruti's contribution as the engine of growthofthe
Indian autoindustry, indeed its impact on the lifestyle and psyche of an
entiregeneration of Indian middle class, is widely acknowledged. Itsemotional
connect with the customer continuesMaruti tops customer satisfaction again for
sixth year in a rowaccording to the J.D. Power Asia Pacific 2005 India
CustomerSatisfaction Index (CSI) Study.The company has also ranked highest in
India Sales SatisfactionStudy.The company's quality systems and\practices have
been rated as a"benchmark for the automotive industry world-wide" by A
VBelgium, global auditors for International Organisation for\Standardisation. In
keeping with its leadership position, Marutisupports safe driving and traffic
management through mass media
messages and a state-of-the art driving training and researchinstitute that it

manages for the Delhi Government.The company's service businesses including
sale and purchase of preowned cars (TrueValue), lease and fleet management
service forcorporates (N2N), Maruti Insurance and Maruti Finance are nowfully
operational.. These initiatives, besides providing total mobility
When it comes to Indian auto industry, the first brand that comes to Indian
customer mind is Maruthi. In our paper we are attempting to identify the future
of Maruthi Udyog Ltd which is currently the market leader. The main questions
we will be addressing are,
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Can it sustain its market share
Will their be a decline in profits
What can it do to keep its growth rate?
How can it compete in the highly competitive small car segment
What are its strategic alternatives
We will analyze the competitors briefly concentrating more on TATA motors, one
of the fast growing Indian auto manufacturer.Maruti Suzuki India Limited is a
publicly listed automaker in India. It is a leading four-wheeler automobile
manufacturer in South Asia. Suzuki Motor Corporation of Japan holds a majority
stake in the company. 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. On 17 September 2007, Maruti
Udyog was renamed to Maruti Suzuki India Limited. The company's headquarters
remain in Gurgaon, near Delhi.
Industry scenario
The Indian Car Industry
The Indian car industry can be classified on the basis of price, into lower end small
car or economy segment, higher end of the economy segment (Rs0.25-0.45mn)
mid-size segment (Rs0.45-0.8mn), luxury/premium car segment (above Rs0.8mn).
The lower end of the economy segment includes cars like Maruti 800, Maruti
Omni and Premier Padmini. The higher end will include models like Maruti Zen,
Matiz, Hyundai Santro and Telco Indica. The mid-sized segment currently includes
models like Ford Ikon, Hyundai Accent, Maruti Esteem, Cielo and Honda City. The
luxury segment of the car market includes such models as Mitsubishi Lancer and
Mercedes E220.
The demand for passenger cars can be segmented on the basis of the user
segment as taxi operators, government, non-government institutions, and
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individual buyers. A major portion of the demand in India accrues mainly from
personal vehicle owners. Lately, the Indian car market has seen a lot of action
with a number of new entrants wanting a share of the pie. With individual
incomes on the rise and finance being easily available, aspirations have also
grown to include a car among a familys prized possessions. With the Indian buyer
still being price conscious, all these factors have contributed to the rising sales
graph in the small car market.
The multi-utility vehicle (MUV) is used in transporting smaller loads over medium
and small distances, providing low fixed and operating costs in comparison to
LCVs. It can be used for transporting both goods and passengers. Apart from
these it can be converted into an ambulance, a minivan, a pickup van or leisure
vehicle. The MUV per se is a rugged vehicle. The high steel body, tough parts and
brave interiors make it amenable to rough handling. The high ground clearance
and high power delivery make it suitable for driving over rough terrain places,
hilly regions, deserts etc. Till the early nineties, the Government of India was the
largest MUV buyer and continues to be the single largest segment. It is used in
police, paramilitary, defense, Public and Works Department (PWD), public sector
organizations etc
The boom of 2004 can be surpassed in 2005 if the government introduces VAT
and lowers excise.Indian auto industry is experiencing huge shifts in trends. The
industry is developing at a fast rate. The roar you hear is of the automobile
industry opening the throttle.A growth of 19 per cent in sales of all vehicles
combined isnoteworthy; more so the 41 per cent rise in sales of
commercialvehicles. It is not surprising then that the annual convention of
theSociety of Indian Automobile Manufacturers (SIAM) on Thursday
sawcompanies unveiling grand investment plans.Investments totaling Rs 25,000
crore are planned by biggies such asMaruti Udyog, Tata Motors, Honda-SIEL and
TVS Motor, put together.Many of these plans are already underway and part of
the investmentshave been made. And the buoyant mood is unmistakeable.What's
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interesting is that Honda Motor and Toyota are closer than everbefore in their
plans to enter the small-car market, which appears set
to witness explosive growth. At least four new small-cars are likelyto enter the
market in the next couple of years from Maruti, Hyundai,General Motors, and
Tata Motors, which is working on a platform toreplace the Indica. And, of course,
there is the much-awaited Rs1-lakh car from Tata Motors.
LEADING PLAYERS AND SEGMENTS IN WHICH THEY OPERATE
Manufacturer Segments
Ashok Leyland LCVs, M&HCVs, Buses
Asian Motor Works M&HCVs
Atul Auto Three wheelers
Bajaj Auto Two and Three Wheelers
BMW India Cars and MUVs
Daimler Chrysler India Cars
Eicher Motors LCVs, M&HCVs, Buses
Electrotherm India Electric Two Wheelers
Fiat India Cars
Force Motors Three Wheelers, MUVs and LCVs
Ford India Cars and MUVs
General Motors India Cars & MUVs
Hero Honda Motors Two Wheelers
Hindustan Motors Cars, MUVs and LCVs
Honda Two Wheelers, Cars and MUVs
Hyundai Motors Cars and MUVs
Kinetic Motor Two Wheelers
Mahindra & Mahindra Three Wheelers, Cars, MUVs, LCVs
Majestic Auto Three Wheelers
Maruti Suzuki Cars, MUVs
Piaggio Three Wheelers, LCVs
Reva Electric Car Co. Electric Cars
Royal Enfield Motors Two Wheelers
Scooters India Three Wheelers
Skoda Auto India Cars
Suzuki Motorcycles Two Wheelers
Swaraj Mazda Ltd. LCVs, M&HCVSs, Buses
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Tata Motors Cars, MUVs, LCVs, M&HCVs, Buses

Tatra Vectra Motors M&HCVs
Toyota Kirloskar Cars, MUVs
TVS Motor Co. Two Wheelers
Volvo India M&HCVs, Buses
Yamaha Motor India Two Wheelers
Global scenario
Car industry is one of the largest industries in the world, there are many players in
world manufacturing cars, among those are (a) General motors, Ford in USA (b)
Daimler Chrysler, Fiat, Lexus, Volkswagen, Renault, etc. in Europe (c) Toyota,
Nissan, Honda, Hyundai and Suzuki, etc. in Asia. Global market for cars forecast to
increase by 3.8% to 50.7 m units in 2007 - an increase of almost 1.9 m units.
Biggest contribution has to come from developing Asia (excludes Japan) and the
growth of that region, especially China. Contribution of the Pacific Rim countries
to the growing world market is, by 2009, almost an additional five million units.
Indian scenario
The PAL entered the Indian market in mid 90 with Premier car, then Maruti
started capturing the Indian market with help of maruti 800 .The car industry in
general has grown at a CAGR of 13.5% p.a over the last 5 years, presently, India is
11th largest passenger car market in the world and is expected to be the 7th
largest market by 2016. The Car industry has emerged as a key contributor to the
Indian economy; currently India has low car penetration with 3 cars in 1000
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individuals. India is the fourth-largest car market in Asia. Passenger cars come in
great variety, starting from 2-seater electric car REVA to 5-seater compact cars
like Zen, Santro, Indica, etc. They come in all ranges economical and luxurious.
The production, sales, export figures of Indian car industry (units/annum) of last 5
yrs are given in Annexure 1 and sales, export figures ( revenue wise) and growth
trend for last 5 yrs are given in Annexure 2.
Market information
The current market scenario is given below:
Passenger car sales grew by 10.84% and crossed the 1 million mark in 2006-07
and record sales of 1,076,408 vehicles.
Utility vehicles sales grew by almost 12.2% in April-May 2007 compared to
the same period last year. Various manufacturers have entered this category and
this segment is expected to grow at 20% by 2010.
Product categorization
Category Engine Length Market Price range Example

share (lacs)
(cc) (mm)
%
Mini < 800 <3350 19 2-3 Reva,800
Small car 800-1200 3350-3800 56 3-5 Alto, zen
6
Mid 1100-1800 3800-4400 20 5-10 Ikon,

segment accent
Executive 1700-2400 4300-4850 3 10-20 Accord
Luxury >2400 4500-5100 2 >20 Bmw

5series
Market Drivers in India
Increase in disposable incomes.

Rise in aspiration levels.
Lowering interest rates.
Wide variety and easy availability of financing options.
High sensitivity to fuel prices.
Lack of urban & rural public transportation infrastructure
Flourishing service sector
Growing working population
Fast paced urbanization to rise from 28% to 40% by 2020
Middle class expanding by 30 - 40 million every year
Key Trends
Market evolution from Mini cars to Hatchbacks to Compact Sedans now

evident.
Increase in customer emphasis on aesthetics and comfort.
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Shrinking product life-cycles.
Government Policies and regulations
In 2002, the Indian government formulated an auto policy that aimed at

promoting integrated, phased, enduring and self-sustained growth of the
Indian automotive industry
Allows automatic approval for foreign equity investment upto 100%
in the automotive sector and does not lay down any minimum investment
criteria.
Lays emphasis on R & D activities carried out by companies in India.
Weighted tax deduction of upto 150% for in-house research and R & D
activities
India is expected to align its crash requirements and emission standards with
European standards in the 2008 / 09 timeframe.
Presently Bharat Stage III ( Equivalent to Euro III) is mandated in Metros and
other large cities and Bharat Stage II ( Equivalent to Euro II) for the rest of the
country. Bharat Stage IV ( equivalent to Euro IV) is expected to be introduced
in the large Indian metros around 2009 and Bharat Stage III in the rest of the
country
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Key players and their market share

Key players Sales From Total Market Total number
April- Share (in %) of exports in
November April 05-06
05-06
2,91,182 52.2 23,043
1,07, 066 19.2 68,374

.
24,348 16.6 12,105
24,348 4.4 31
10,512 1.9 9,928
31536 5.7 -
and
others
Ford India Pvt. Ltd

2%
Honda Siel cars others

India Ltd. 6%
4% Maruti Udyog
Tata Motors Hyundai Motors India Ltd.
17%
Tata Motors
Maruti Udyog
52% Honda Siel cars India Ltd.
Ford India Pvt. Ltd
Hyundai Motors others

India Ltd.
19%
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Three growth drivers
Driving these ambitious plans are three major factors. First, thereduction in excise
duty on small-cars, effected in the last Budget,which has clearly given a leg-up to
sales in that category. Theconcession extended to small-cars has been the catalyst
for Honda andToyota to take a serious look at the options available to them in
thesmall-car market.Second, the Free Trade Agreement India signed withThailand
two yearsago. As per the agreement, the so-called 82 early harvest items,
whichinclude a range of auto components, will be subject to zero duty
whenimported from Thailand into India from September 1. Both Toyota
andHonda have major operations in Thailand and the FTA will help themintegrate
their Thai operations into their India plans. The option ofimporting critical
components from their own operations/suppliers inThailand confers a twin
advantage for the Japanese majors.
First, thetime to market can be crashed as they do not have to wait for
Indiancomponent suppliers to invest in production capacities and,
second, itconfers a big price advantage as they can import duty-free.And the final
factor is that India is now reckoned as a low-costglobal manufacturing base for
small cars; Hyundai has already takenthe lead in this respect. The Korean
company's Indian unit is a major
exporter of cars. Exports accounted for 39 per cent of total sales in2005-06 and
the stated plan is to take this to 50 per cent once thecompany's second plant goes
on stream in the next couple of years.
Maruti is developing a new small-car model for introduction in 2008both in India

and abroad. Besides, its global alliance with Nissan isalso set to produce another
small-car meant for the global market andthe proposed new plant in India will
produce this model for sale inIndia and abroad.
Commercial vehicles
Meanwhile, the commercial vehicle (CV) segment is also passing throughsome

exciting times and some realignment of forces appears likely. TheCV industry is
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showing signs of evolving on the global pattern ofprime movers consisting of

large, multi-axle trucks between cities andsmall, one-tonne trucks for intra-city
movement. Even as the Ace fromTata Motors catalysed this partly, sales of multi-
axle, heavy trucksis showing a rising trend.
Clearly, the automotive industry is on the cusp of a long, sustainedgrowth cycle

and the dips, when they happen, may not be as damaging tothe major players as
in the past thanks to their growing internationaloperations. Domestic economic
cycles of boom and bust will be less ofa bother as these companies increase their
revenues from internationaloperations. Whether it is Tata Motors, Mahindra &
Mahindra, and TVS Motoror Bajaj Auto (to name just a few), all the major players
are nowestablishing a strong multinational presence across product segments.
HISTORY OF THE COMPANY
Maruti Udyog Limited (MUL) was established in February 1981,

though the actual production commenced in 1983. Through 2004, Maruti has
produced over 5 Million vehicles. Marutis are sold in India and various several
other countries, depending upon export orders. Cars similar to Marutis (but not
manufactured by Maruti Udyog) are sold by Suzuki in Pakistan and other South
Asian countries.
Around 1970, Sanjay Gandhi, political advisor and younger son to the then Prime
Minister of India, Indira Gandhi, envisioned the manufacture of an indigenous,
cost-effective, low maintenance compact car for the Indian middle-class. Indira
Gandhi's cabinet passed a unanimous resolution for the development and
production of a "People's Car". Sanjay Gandhi's company was christened Maruti
Limited. The name of the car was chosen as "Maruti", after a Hindu deity named
Marut.
At that time Hindustan Motors' Ambassador was the chief car, and the company
had come out with a new entrant, the Premier Padmini which was slowly gaining
a part of the market share dominated by the Ambassador. For the next ten years,
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the Indian car market had stagnated at a volume of 30,000 to 40,000 cars for the
decade ending 1983.
Sanjay Gandhi was awarded the exclusive contract and licence to design, develop
and manufacture the "People's Car". This exclusive rights of production generated
some criticism in certain quarters, which was directly targeted at Indira Gandhi.
Over the next few years, the company was sidelined due to the Bangladesh
Liberation War and emergency. In the early days under the powerful patronage of
Sanjay Gandhi, the company was provided with free land, tax breaks and funds.
Till the end of 1970s, the company had not started the production and a
prototype test model was met with criticism and skepticism. The company went
into liquidation in 1977. The media perceived it to be another area of growing
corruption. [4] Unfortunately, Maruti started to fly only after the death of Sanjay
Gandhi, when Suzuki Motors joined the Government of India as a joint venture
partner with 50% share.[5] .
After his death, Indira Gandhi decided that the project should not be allowed to
die. Maruti entered into this collaboration with Suzuki Motors, The collaboration
heralded a revolution in the Indian car industry by producing the Maruti 800. The
car went on sale on December 14, 1983. It created a record by taking 13 months
time to go from design to rolling out cars from a production line. By the year 1993
the company had sold up to 1,96,820 cars, mostly by selling its chief product the
Maruti 800s. By March 1994, it produced one million vehicles, becoming the first
Indian company to cross this milestone. It reached the two million mark in
October, 1997 and rolled out its 4 millionth vehicle, an Alto-LX, on April 19, 2003.
Suzuki Motor Company was chosen from seven prospective partnersworldwide.

This was due not only to their undisputed leadership insmall cars but also to their
commitment to actively bring to MULcontemporary technology and Japanese
management practices(which had catapulted Japan over USA to the status of the
top automanufacturing country in the world).A licence and a Joint Venture
agreement was signed between Govt ofIndia and Suzuki Motor Company (now
Suzuki Motor Corporationof Japan) in Oct 1982. MUL launched its first car
Maruti800 ondecember 14,1983 at initial price of Rs.47,500.
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Recent history
YEAR EVENTS 2006
-Indian car market leader Maruti Udyog on Feb 28, announced a price cut ranging
between Rs 13,000-22,000 across five models, including M800 and Alto, following
the cut in excise duty on small cars -MUL unveils new WagonR in Punjab
AWARD AND ACCOLADES

2005
Number one in JD Power SSI for the second consecutive year.
Number one in JD Power CSI for the sixth time in a row - the only
car to win it so many times.
M800, WagonR and Swift topped their segments in the TNS TotalCustomer
Satisfaction Study Leadership in the JD Power InitialQuality Study - Alto number
one in its segment for the 2nd time ina row, Esteem number one in its segment
for the 3rd year in a row,Swift number one in the premium compact segment.
WagonR and Esteem top their segments in the JD Power APEALstudy.
TNS ranks Maruti 4th in the Corporate Reputation Strength (CSR)study (#1 in
Auto sector)-Feb 05.
Maruti bagged the "Manufacturer of the year" award from Autocar-CNBC (2nd
time in a row)-Feb 05.
First Indian car manufacturer to reach 5 million vehicles sales.
Business World ranks Maruti among top five most respectedcompanies in India-
Oct 04.
Maruti ranked among top ten (Rank7) greenest companies in Indiaby Business
Today - Sep '04 2004
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Maruti Suzuki was No. 1 in Customer satisfaction, No. 1 in SalesSatisfaction No.1

in Product Quality (Esteem and Alto) and No. 1in Product Appeal (Esteem and
Wagon R).
No. 1 in Total Customer Satisfaction (Maruti 800, Zen and Alto).
Business World ranked us among the country's five most respectedcompanies.
Business World ranked us the country's most respected automobilecompany.

Voted Manufacturer of the year by CNBC.
Voted one of India's Greenest Companies by Business Today-AC

Nielson ORG-MARG.
Structure
Ownership
MUL India's leading automobile manufacturers and the market leader in the car
segment, both in terms of volume of vehicles sold and revenue earned is a public
sector initiative. 18.28% of the company is owned by the Indian government, and
54.2% by Suzuki of Japan. The Indian government held an Initial Public Offering of
25% of the company in June of 2003.
Ownership
Govern
others Government
ment
IPO Suzuki
IPO
others
Suzuki
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Main divisions(brand equity)

The major services offered are,
Sales of Automobiles
Authorized Service Stations
Maruti is one of the companies in India which has unparalleled service

network. To ensure the vehicles sold by them are serviced properly Maruti
had 1545 listed Authorized service stations and 30 Express Service Stations
on 30 highways across India. Service is a major revenue generator of the
company. Most of the service stations are managed on franchise basis,
where Maruti trains the local staff. Other automobile companies have not
been able to match this benchmark set by Maruti. The Express Service
stations help many stranded vehicles on the highways by sending across
their repair man to the vehicle.
Maruti Insurance
Launched in 2002 Maruti 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.
Maruti Finance
To promote its bottom line growth, Maruti launched Maruti Finance in

January 2002. Prior to the start of this service Maruti 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 tied up
with ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard
Chartered Bank, and Sundaram to start this venture including its strategic
parnters in car finance. Again the company entered into a strategic
partnership with SBI in March 2003. Since March 2003, Maruti has sold
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over 12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is

currently available in 166 cities across
Maruti TrueValue
Maruti True Value is a service offered by Maruti Udyog to its customers. It

is a market place for used Maruti Vehicles. one can Buy, Sell or Exchange
used Maruti Vehicles with the help of this service in India.
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 vehicle's life, which includes
Leasing, Maintenance, Convenience services and Remarketing.
Maruti Driving School
As part of its corporate social responsibility Maruti Udyog launched the

Maruti Driving School in Delhi. Later the services were extended to other
citites 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.
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Key personnel
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 Udyog. Joining in 1982 he held several key positions in the
company before heading the company as Managing Director. Currently he is on
the Board of Directors. After completing his five year tenure, Mr. Bhargava later
assumed the office of Part-Time Chairman. The Government nominated Mr.
S.S.L.N. Bhaskarudu as the Manging Director on August 27, 1997. Mr. Bhaskarudu
had joined Maruti 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, 1998 as Director, Productions and Projects,
1989 Director, Materials and in 1993 as Joint Managing Director.
Production Milestones
1st vehicle produced, December 1983
1,00,000 vehicles produced by August, 1986
5,00,000 vehicles produced by June, 1990
10,00,000 vehicles produced by March, 1994
15,00,000 vehicles produced by April, 1996
20,00,000 vehicles produced by October, 1997
25,00,000 vehicles produced by March, 1999
30,00,000 vehicles produced by June, 2000
35,00,000 vehicles produced by December 2001
40,00,000 vehicles produced by April, 2003
45,00,000 vehicles produced by April, 2007-2008
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OTHER PRODUCTS OF MARUTI SUZUKI

Maruti
Maruti 800 STD BS III
Maruti 800 AC BS III
Omni
5 seater Maruti Omni
8 seater Maruti Omni
LPG Maruti Omni
Maruti Alto
Alto
Alto Lx
Alto Lxi
Maruti Zen
Maruti Zen Lx
Maruti Zen Lxi
Maruti Zen Vxi
Wagon R
WagonR Lx
WagonR Lxi
WagonR Vxi
WagonR Ax
Versa
5 seater
8 seater ( DX & DX2)
Maruti Esteem
Maruti Esteem Lx
Maruti Esteem Lxi
Maruti Esteem Vxi
Baleno
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Baleno Sedan VXi

Baleno Sedan Lxi
Brands and models

Till recently whenever we think of Maruthi we think of it as 800 due to the huge
sales it achieved. It was like a symbol of luxury for the middle class. Nowsituations
are changing and people are looking at Maruthi stable for the wide range of
products they are offering. The various models and brands that are sold by
Maruthi in the order of their launch are,
Maruti 800: Launched 1983. Indias largest selling car till 2004.
Maruti Omni: Launched 1984.
Maruti Gypsy: Launched 1985.
Maruti 1000: Launched 1990
Maruti Zen: Launched 1993.Modified 2003.Production to be halted

2006New generation Zen (First generation MR Wagon in Japan) to be introduced
2006
Maruti Esteem: Launched 1994
Maruti Wagon- R: Launched 1999 Modified 2006
Maruti Baleno : Launched 1999
Maruti Alto: Launched 2000. Currently the largest selling car in India
Maruti Grand Vitara: Launched 2003
Maruti Grand Vitara XL-7
Maruti Versa: Launched 2004
Maruti Swift: Launched 2005
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BRAND PORTFOLIO OF THE COMPANY
YEAR
CLASS BRAND NAME SLOGAN
INTRODUCED
Change your life

Maruti 800 1983
Let's go
Maruti Alto 2000
Shape your world

City Car Maruti Zen Estilo 2005
Stop @ nothing
Suzuki Alto (A-star) 2008
Upcoming model in
Suzuki Splash
2009
Maruti Wagon-R 1999 For the smarter race

Super mini
Car
Maruti Suzuki Swift 2005 You're the fuel
Maruti Suzuki SX4 2007 Men are back

Compact Car
Maruti DZiRE 2008 The heart car
Play it your way

Suzuki Grand Vitara 2007
Sports Utility
Vehicle King
Maruti Gypsy 1985
Maruti Omni 1984 Fits all

Microvan
The joy of travelling
Maruti Versa 2003
together
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BRAND HIERARCHY OF THE COMPANY
MARUTI
SUZUKI
City Car
Maruti Zen Suzuki Alto

Maruti 800 Maruti Alto Suzuki Splash
Estilo (A-star)
Super mini
Car
Maruti Maruti
Wagon-R Suzuki Swift
Compact Car
Maruti
Maruti DZiRE
Suzuki SX4
Sports Utility
Vehicle
Suzuki Grand Maruti Gypsy

Vitara
Microvan
Maruti Omni Maruti Versa
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Bundle of competencies
Technology
Maruthi always introduces the best technology into its product line, in addition to
all its features which are almost standard in most cars. They introduced 16* 4
Hypertech engines across the entire Maruti Suzuki range. These are 4 valve
engines powered by 16 bit chip. This gives an ideal combination of power and
performance. They also introduced electronic power steering system (EPS) which
gives better maneuverability. Their latest introduction Swift has all the technology
like surround protection (SSP). This includes ABS, dual front airbags, collapsible
steering column, crashworthy structure etc. They also has additional features like
brake force distribution, key less entry system. The six microprocessors are
connected in a high speed canbus. This controls engine, EBS, EPS, Auto AC,
Security and dead lock and air bag. Automatic climate control, rally based
suspension system and above all the dynamic design is what the latest entrant
offers its customers. Maruti also uses latest in IT for its operations. It uses the
oracle based packages for CRM and employee feed back. Maruti also uses oracles
ERP packages for its operations. ATFCAN and Maruti are collaborating on
Canadian CNG conversion technology.
Design and development

Maruti Suzuki is outsourcing its design and development activities to India. They
are looking towards India as their design hub. Among the company's product
development challenges, the need for shorter cycle times is always at the top.
Management wants to be able to launch new models faster and reduce the time
required for minor changes and development of product variants. Another
challenge is co-development. Maruti's goal is to collaborate closely with its global
teams and suppliers on the development of new platforms and product
freshening. Other challenges include streamlining the process of vehicle
localization and enhancing quality and reliability.
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These challenges pointed directly to a product lifecycle management (PLM)

solution with capabilities for information management, process management,
knowledge capture and support for global collaboration; a PLM solution directly
addressing Maruti's business challenges. For example, PLM's information
management capabilities address the issue of the many platforms, local variants
and export destinations. Process management permits concurrent development
and faster change management and provides a platform for other process
improvements - for faster vehicle development. Knowledge capture increases
innovation and also reduces costs by increasing part re-use. PLM's collaboration
capabilities permit global development by ensuring fast and accurate
dissemination of product information. For this Maruti uses one of the leading PLM
software package by UGS.
At Maruti, styling is a cross-discipline function that requires designers, engineers

and model makers to pool their resources in a multitude of activities that have to
be performed in order to transform creative ideas into finished products. These
styling-related activities include storyboarding, conceptualizing, rendering, tape
drawing, model making, feasibility analysis, CAD data generation and Class-A
surfacing. In addition, Maruti designs new accessories and adds value to its
products interiors and exteriors
by designing/developing fabrics, colors and graphics. Some of the most recent

examples of Maruti styling are seen in change programs for the Zen, Wagon R and
Esteem product lines. Other Maruti styling efforts are in various stages of
development. Maruti used to employ a variety of software for its styling
programs, including SCAD (Suzuki CAD), Alias, Unigraphics and Catia. However,
today Marutis styling and engineering functions are doing almost all their work in
UGS NX solutions.
23
Manufacturing
Markets
Maruti has a strong domestic market presence in India. It has a market share of
47% in the domestic market. The current market share of Indian car industry is
given below, Maruti Exports Limited is the subsidary of Maruti Udyog Limited with
its major focus on exports and it does not operate in the domestic Indian market.
The first commercial consignments of 480 cars were sent to Hungary. By sending
a consignment of 571 cars to the same country Maruti crossed the benchmark of
3, 00,000 cars. Since its inception export was one of the aspects government was
keen to encourage. Angola, Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, Sri
Lanka, Uganda, Chile, Costa Rica and El Salvador are some of the markets served
by Maruti Exports.
23%
MUL
46%
Hyundai
Tata
17% Others
14%
Maruti also has markets in other countries depending on export demand. Suzuki
is selling cars similar to Maruti in Pakistan and South Asian countries. They have a
major non European market which grew 78% in 05- 06. Loss of sales in Europe is
due to stoppage of Alto which accounted for 80% of their exports and
introduction of Swift. Algeria has emerged as Maruti's largest overseas market
with sales growing from a few hundred in FY02 to over 6,500 (FY06). The
company says it may cross 9,800 this year.
24
Maruti is quite bullish on markets like, Chile, Morocco, Egypt and Sudan apart
from the neighbouring countries. The auto major expects its exports to Chile and
Morocco to go above 5,900 and 2,300, respectively, this year. Its volumes from
there have moved from under 700 in FY02 to 3,115 (FY06) and exports to Sudan
was nil two years back. "In Egypt, our numbers are estimated to grow to over
2,000 and 2,700 this year," according to Mr Khattar. In FY07 it was under 200 few
years back.
Meanwhile, Maruti is also reporting a high on current year exports to the

neighboring countries is on a high too. The company expects to export 9,200 units
to Sri Lanka this year, a growth of over 50%, 1,200 units to Nepal, over 1,175 to
Bhutan and 700 to Bangladesh. Maruti, which saw exports dip by 29% last fiscal,
also plans to launch a new export model during '08-09 , which will target the
European market. The company targets to export 1, 00,000 units of the model
annually.
Overall passenger car market registered 24.86% growth
Sales of compact cars jumped by 31.2%
Mid-size car segment grew slower at 14.7%.
The Government's small car policy seems to be yielding results, with the share of
compact cars increasing to 68.25 per cent in the April-July 2006 period compared
with 64.9 per cent in the same period last year.
Not surprisingly, compact cars emerged as the main driver of passenger car
growth in the period. While the overall passenger car market increased by 24.86
per cent to 3,24,671 units, sales of compact cars jumped by 31.2 per cent to
2,21,598 units in the April-July 2006 period. In fact, all the three major carmakers
(Maruti Udyog, Hyundai Motor, and Tata Motors) saw a sizeable jump in their
compact car sales in the period.
25
Customer segmentation and value proposition
Segmentation
Under Rs. 3 Lakhs Maruti 800, Alto, Omni

Reva
Ambassador
Fiat Palio
Hyundai Santro, Getz
Rs. 3-5 Lakhs Chevrolet Opel Corsa
Maruti Zen, Wagon R, Versa, Esteem, Gypsy
Ford Icon & Fiesta
Tata Indica, Indigo
Mahindra Bolero
Chevrolet Swing, Optra, Tavera
Hyundai Accent, Elantra
Mahindra Scorpio
Rs. 5-10 Lakhs Maruti Baleno
Toyota Corolla, Innova
Tata Safari
Mitsubishi Lancer, Lancer Cedia
Honda City
Ford Mondeo & Endeavour
Rs. 10-15 Lakhs Chevrolet Forester
Skoda Octavia Classic & Combi
Honda Civic & CR-V
Maruti Suzuki Grand Vitara
Rs. 15-30 Lakh Hyundai Sonata Embera, Terracan & Tucson
Mitsubishi Pajero
Audi A4
26
Opel Vectra
Honda Accord
Mercedes C Class
Toyota Camry
Audi A6, A8 & TT
BMW X5, 5 Series & 7 Series
Rs. 30-90 Lakhs Mercedes E Class, S Class, SLK, SL & CLS-Class
Porsche Boxster, Cayenne, 911 Carrera & Cayman S
Toyota Prado
Bentley Arnage, Continental GT & Flying Spur
Above Rs. 1 Crore Rolls Royce Phantom
Maybach
Targeting
Maruti was introduced targeting the middle class. Marutis positioning was as a
value for customer product. Its target segments are well depicted in its Product
Pyramid profit model. In product pyramid model the distinct customer segments
were identified and targeted based on a variety of factors. These factors among
many include, style, color, price preference, features etc.
The base of the pyramid is occupied by low price, high volume products like 800
where margins are slim. The apex of the pyramid is occupied by high priced, low
volume products like Baleno. Although profits were concentrated near the top,
base played a crucial role as it acted as a barrier to entry for the competitors and
also insulated the profitable area near the top.
Partnerships
Pressure started mounting on Indira Gandhi and Sanjay Gandhi to share the
details of the progress on the Maruti Project after its kickoff. Since country's
resources were made available by mother to her son's pet project. A delegation of
Indian technocrats was assigned to hunt a collaborator for the project. Initial
rounds of discussion were held with the giants of the automobile industry in
27
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.
In in the initial rounds of discussion the giants had their bosses present and in the
later rounds related to the technical discussions executives of these automobile
giants were present. 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) egos and also convinced them about
the sincerity of Suzuki's bid. In the initial days Suzuki took all steps to ensure the
government about its sincerity on the project. 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
helped Suzuki conscientiously nurse Maruti through its infancy to become one of
its flagship ventures.
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 reason for all the 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 tenure of five years.
PRODUCT LINE
Maruti 800-change your life-Around Rs.2lacs

ALTO-Lets Go-Rs.23000-Rs.290000
Omni-Fits All-Rs. 235000-248000
Zen- look at it-Rs.320000-385000
28
WagonR- for the smarter race-Rs.340000-460000

Versa-the joy of traveling together-Rs.360000-460000
Swift-youre the fuel-Rs.405000-508000
Esteem-welcome to the big world-Rs. 450000-510000
Gypsy King-Rs.550000-528000
Baleno-Owners choice-Rs.570000-652000
Suzukis Grand Vitara-SUV- Rs.16-18lacs
DEALER AND SUPPLIER NETWORK
Muls Supply Chain

MULs inputs primarily comprise raw materials and purchased components. Only
a small amount of raw material and components consumed are imported and a
much larger portion is purchased from the sources within India.
Raw Material Suppliers
The raw materials used in the manufacturing process primarily comprise steel
coils and paints. In recent years, MUL is increasingly trying to localize the
purchases of steel coils with a view to reduce cost. Earlier MUL used to follow the
tender system for the purchase of steel. Under this system, specifications were
advertised and accept the lowest price offered by a supplier who could meet the
specifications. In 2001 MUL moved to the quotation system which gives them the
flexibility to renegotiate the prices once an offer is submitted. Standard purchase
orders are issued covering a period of six months for purchase of steel from
foreign suppliers for Indian supplier the period extends up to one year.
At MUL the role of the vendors has gradually evolved from tactical to strategically
where the vendors work in close coordination with MUL to meet our long-term
goals in terms of:
component development;
quality;
delivery; and
Cost control.
In order to improve quality and generate economies of scale, MUL has reduced
the number of vendors of components in India from 370 as of March 31, 2000 to
about 100 as in 2005. In case of repair and replacements, costs of defective
components supplied are borne by the vendor.24
Delivery by Vendors
29
MUL has a delivery instruction system that provides details of the component
requirements for every 15 days, across the different variants of the various
models, to the vendors. Vendors are linked to the MUL through the Internet-
based information network, which maintains online information regarding order
status and delivery instructions. These has helped in reducing both inventory
levels and lead times required for the supply of various components and sub-
assemblies, and enable the vendors to more efficiently plan and dispatch their
products. Vendors located within a radius of 100 kilometers from the
manufacturing facility supply the majority of the components. This has enabled
the vendors to eliminate packaging and supply components directly to the
assembly line.
Reduction of Vendor Costs
In some of the major vendors MUL has implemented the MPS, which focuses on
the elimination of wasteful activities in their manufacturing processes. Vendors
are helped in areas such as improving their productivity, reducing the number of
their components that are rejected, reducing materials handling, improving their
yield from materials, and reducing their inventories. This helps reduce their costs
of production, and also reduces the costs of the components required. In addition
the work is going on to integrate the vendors into the worldwide purchase
system, or WWP, whereby a vendor may become the sole supplier for a Suzuki
product in several countries including India. This would generate economies of
scale for the vendor that will also result in the reduction of the costs.
Vendor Quality Control

Quality management system such as ISO 9000/ QS 9000 forms the basis for
producing a quality product. To assist small and medium vendors in achieving ISO
9000 certification, in 1995 MUL adopted a cluster approach wherein vendors are
grouped together, are trained in quality management and are assisted in
obtaining ISO 9000 certification. This cluster approach was extended to helping
vendors attain QS 9000 certification. Periodic vendor quality system audits are
conduct in order to ensure that quality standards are sustained.
Imported components
Imported components are mainly purchase from Suzuki
Sales network
Dealers: MUL has the largest network of dealers amongst car manufacturers in
India. As of March 31, 2003, dealers had employed more than 3,500 sales
executives. Sales network is linked with the MUL through the secure extranet-
30
based information network. The sales of spares, accessories and Automobile-

related services such as insurance and finance serve as additional sources of
revenue for the dealers. The availability of these related products and services at
sales outlets also helps to attract customers to the outlets and promotes sales of
the cars.
Agreements with our dealers MUL dealers provide services to customers such as
pre-delivery inspection of vehicles, sales of cars, after sales service, supply of
spare parts and other services that promote sales of cars within the territory for
which they are appointed. Dealers are required to maintain their outlets in
accordance with the specifications and employ well-trained sales staff.
Agreements with the dealers are usually of five years. These agreements are
generally renewable for successive terms of three years, by mutual agreement.
Enhancing dealer performance: The performance of the dealers is followed and

improvements are suggested frequently. In order to assist the dealers in
enhancing their performance and capabilities, MUL has introduced a concept of
Balanced Scorecard. Using this tool, the performance of a dealership in several
areas of operations, including sales, service, spares and accessories, financial
management and management systems is measured. Dealers who perform well
on the Balanced Scorecard are reward with a cash payment at the end of the
fiscal year. The Balanced Scorecard serves as an effective incentive for dealers
to enhance their performance.
After-sales Service Network
There are more than 400 Maruti dealer workshops and more than 1,500 Maruti
Authorized Service Stations, or MASSs, covering more than 900 cities in India. In
addition, 24-hour mobile service is also offered under thebrand Maruti On-road
Service. As a benchmark for dealers with respect to service quality and
infrastructure facilities, MUL has launched service stations under the brand
Maruti Service Masters, or MSMs. MUL also has service stations on highways in
India under the brand Express Service Stations. To promote sales of spare parts
and the availability of high quality, reliable spare parts for its products, spares are
sold under the brand name Maruti Genuine Parts, or MGP. These are
distributed through the dealer network and through the authorized sellers of the
spare parts. Many of the MASSs are at remote locations where MUL do not have
31
dealers. In order to increase the penetration, in terms of sales volumes, of its

products in these remote areas, some of the MASSs are integrate into the sales
process in order to increase sales of the cars and related products and services
such as spares and accessories, insurance and financing
distrubution
Manufacturing and distribution of cars is a process of creation and delivery of

superior quality of vehicles to its customers at an affordable price. The very
nature of the business demands high degree of collaboration and coordination.
The success of car manufacturing business depends not only on the effective
management of its production processes, but also intelligent management of
supply, distribution and service chains. Maruti has been very efficient in managing
the supply, distribution and servicing chains. Maruti's dealer network is the
largest for tiny car manufacturer in India. Over the years Maruti has build a very
strong dealership and service network consisting of 260 showrooms and 277
dealer workshops, besides 1329 Maruti Authorized Service Stations covering 656
cities. Maruti's vehicles are now available in Australia, Europe and America.
Maruti has a very strong supplier network. It has established chain of dedicated
suppliers near to its production base, which gives them unique cost and delivery
time advantages. Maruti has implemented "Just in Time" (JIT) supply for some of
its major suppliers, Maruti's large production capacity offers scale economics in
procurement, production and distribution. The high volume of production has
provided Maruti unique bargaining power over its suppliers. Finally, Maruti has
trained and skilled workforce for rapid improvement in quality and enjoys
supplier's credibility in the industry. It has earned the reputation of delivering
quality vehicles, services and value for money.
A) TURNAROUND STRATEGIES MARUTI FOLLOWED
Maruti was the undisputed leader in the automobile utility-car segment sector,
controlling about 84% of the market till 1998. With increasing competition from
local players like Telco, Hindustan Motors, Mahindra & Mahindra and foreign
players like Daewoo, PAL, Toyota, Ford, Mitsubishi, GM, the whole auto industry
structure in India has changed in the last seven years and resulted in the declining
profits and market share for Maruti. At the same time the Indian government
32
permitted foreign car producers to invest in the automobile sector and hold
majority stakes.
In the wake of its diminishing profits and loss of market share, Maruti initiated
strategic responses to cope with Indias liberalization process and began to
redesign itself to face competition in the Indian market. Consultancy firms such as
AT Kearney & McKinsey, together with an internationally reputed OD consultant,
Dr. Athreya, have been consulted on modes of strategy and organization
development during the redesign process. The redesign process saw Maruti
complete a Rs. 4000 mn expansion project which increased the total production
capacity to over 3,70,000 vehicles per annum. Maruti executed a plan to launch
new models for different segments of the market. In its redesign plan, Maruti,
launches a new model every year, reduce production costs by achieving 85-90%
indigenization for new models, revamp marketing by increasing the dealer network
from 150 to 300 and focus on bulk institutional sales, bring down number of
vendors and introduce competitive bidding. Together with the redesign plan, there
has been a shift in business focus of Maruti. When Maruti commanded the largest
market share, business focus was to sell what we produce. The earlier focus of
the whole organization was "production, production and production" but now the
focus has shifted to "marketing and customer focus". This can be observed from
the changes in mission statement of the organization:
1984: "Fuel efficient vehicle with latest technology".
1987: "Leader in domestic market and be among global players in the overseas
market".
1997: "Creating customer delight and shareholders wealth".
Focus on customer care has become a key element for Maruti. Increasing Maruti
service stations with the scope of one Maruti service station every 25 km on a
highway. To increase its market share, Maruti launched new car models,
concentrated on marketing and institutional sales. Institutional sales, which
currently contributes to 7-8% of Marutis total sales. Cost reduction and
increasing operating efficiency were another redesign variable. Cost reduction is
being achieved by reaching an indigenization level of 85-90 percent for all the
models. This would save foreign currency and also stabilize prices that fluctuate
33
with exchange rates. However, change in the mindset was not as fast as required by
the market. Maruti planned to reduce costs, increase productivity, quality and
upgrade its technology (Euro I&II, MPFI). In addition, it followed a high volume
production of about 400,000 vehicles / year, which entailed a smooth relationship
between the workers and the managers.
Post 1999, the market structure changed drastically. Just before this change,
Maruti had wasted two crucial years (1996-1998) due to governmental
interventions and negotiation with Suzuki of Japan about the break-up of the share
holding pattern of the company. There was a change in leadership, Mr. Sato of
Suzuki became the Chairman in June 1998, and the new Mr.J. Khatter was
appointed as the new Joint MD. Khatter was a believer in consensus decision
making and participative style of management.As a result of the internal turmoil
and the changes in the external environment, Maruti faced a depleting market
share, reducing profits, and increase in inventory levels, which it had not faced in
the last 18 years.
After their fall in market share they redesigned their strategies and through their
parent company Suzuki they learned a lot.The organizational learning of Maruti
was moderately successful, the cost was relatively inexpensive as Maruti had its
strong Japanese practices to fall back upon. With the program of organizational
redesign, rationalization of cost and enhanced productivity, Maruti bounced back
to competition with 50.8% market share and 40% rise in profit for the FY2002-
2003 Current strategies of maruti suziki
I. PRICING STRATEGY - CATERING TO ALL SEGMENTS
Maruti caters to all segment and has a product offering at all price points. It has a
car priced at Rs.1,87,000.00 which is the lowest offer on road. Maruti gets 70%
business from repeat buyers who earlier had owned a Maruti car. Their pricing
strategy is to provide an option to every customer looking for up gradation in his
car. Their sole motive of having so many product offering is to be in the
consideration set of every passenger car customer in India. Here is how every
price point is covered.
34
Sl.No. BRAND VARIANTS PRICE IN DELHI (Rs.)

1 GRAND VITARA XL7 16,97,000.00
2 MARUTI BALENO Lxi 5,72,000.00
Vxi 6,42,000.00
3 MARUTI ESTEEM LX 4,66,000.00
VX 5,39,000.00
4 MARUTI VERSA DX 4,19,000.00
DX2 4,58,000.00
5 MARUTI SWIFT Lxi 3,95,000.00
Vxi 4,05,000.00
Zxi 4,85,000.00
6 MARUTI WAGON-R LX 3,35,000.00
Lxi 3,62,000.00
AX 4,63,000.00
Vxi 3,87,000.00
VXi ABS 4,20,000.00
7 MARUTI GYPSY ST 5,06,000.00
HT 5,29,000.00
8 MARUTI ZEN D 3,58,000.00
LX 3,41,000.00
Lxi 3,68,000.00
Vxi 3,93,000.00
9 MARUTI OMNI CARGO 2,05,000.00
CARGO LPG 1,83,000.00

5 SEATER 2,27,000.00
8 SEATER 2,21,000.00
XL 5 SEATER 2,19,000.00
XL 8 SEATER 2,31,000.00
35
10 MARUTI ALTO STANDARD 2,38,000.00
MARUTI ALTO LX 2,74,000.00

Lxi 2,94,000.00
11 MARUTI 800 STD. MPFI 2,14,000.00
A/C MPFI 2,37,000.00
Sundaram to bring this service for its customers. From identifying the most
suitable car coverage to virtually hassle-free claim assistance it's your dealer who
takes care of everything. Maruti Insurance is a hassle-free way for customers to
have their cars repaired and claims processed at any Maruti dealer workshop in
India.
True Value Initiative to capture used car market
Another significant development is MUL's entry into the used car market in 2001,
allowing customers to bring their vehicle to a 'Maruti True Value' outlet and
exchange it for a new car, by paying the difference. They are offered loyalty
discounts in return.This helps them retain the customer. With Maruti True Value
customer has a trusted name to entrust in a highly unorganized market and
where cheating is rampant and the biggest concern in biggest driver of sale is
trust. Maruti knows its strength in Indian market and has filled this gap of
providing trust in Indian used car market. Maruti has created a system where
dealers pick up used cars, recondition them, give them a fresh warranty, and sell
them again. All investments for True Value are made by dealers. Maruti has build
up a strong network of 172 showrooms across the nation. The used car market
has a huge potential in India. The used car market in developed markets was 2-3
times as large as the new car market.
III. REPOSITIONING OF MARUTI PRODUCTS
Whenever a brand has grown old or its sales start dipping Maruti makes some
facelifts in the models. Other changes have been made from time to time based
on market responses or consumer feedbacks or the competitor moves. Here are
the certain changes observed in different models of Maruti.
36
Omni has been given a major facelift in terms of interiors and exteriors two
months back. A new variant called Omni Cargo, which has been positioned as a
vehicle for transporting cargo and meant for small traders. It has received a very
good response from market. A variant with LPG is receiving a very good response
from customers who look for low cost of running.
Versa prices have been slashed and right now the lowest variant starts at 3.3 lacs.
They decreased the engine power from 1600cc to 1300cc and modified it again
considering consumers perception. This was a result of intensive survey done all
across the nation regarding the consumer perception of Versa.
Esteem has gone through three facelifts. A new look last year has helped boost up
the waning sales of Esteem.
Baleno was launched in 1999 at 7.2 lacs. In 2002 they slashed prices to 6.4 lacs. In
2003 they launched a lower variant as Baleno LXi at 5.46 lacs. This was to reduce
the price and attract customers.
Wagon-R was perceived as dull boxy car when it was launched. This made it a big
failure on launch. Then further modifications in engine to increase performance
and a facelift in the form of sporty looking grills on the roof. Now its of the most
successful models in Maruti stable.
Zen has been modified four times till date. They had come up with a limited
period variant called Zen Classic. That was limited period offer to boost short term
sales.
Maruti 800 has so far been facelifted two times. Once it came with MPFi
technology and other time it came up with changes in front grill, head light, rear
lights and with round curves all around.
IV. CUSTOMER CENTRIC APPROACH
37
Marutis customer centricity is very much exemplified by the five times

consecutive wins at J D Power CSI Awards. Focus on customer satisfaction is what
Maruti lives with. Maruti has successfully shed off the public- sector laid back
attitude image and has inculcated the customer-friendly approach in its
organization culture. The customer centric attitude is imbibed in its employees.
Maruti dealers and employees are answerable to even a single customer
complain. There are instances of cancellation of dealerships based on customer
feedback.
Maruti has taken a number of initiatives to serve customer well. They have even
changed their showroom layout so that customer has to walk minimum in the
showroom and there are norms for service times and delivery of vehicles. The
Dealer Sales Executive, who is the first interaction medium with the Maruti
customer when the customer walks in Maruti showroom, is trained on greeting
etiquettes. Maruti has proper customer complain handling cell under the CRM
department. The Maruti call center is another effort which brings Maruti closer to
its customer. Their Market Research department remains on its toes to study the
changing consumer behaviour and market needs.Maruti enjoys seventy percent
repeat buyers which further bolsters their claim of being customer friendly.
Maruti is investing a lot of money and effort in building customer loyalty
programmes.
V. COMMITTED TO MOTORIZING INDIA
Maruti is committed to motorizing India. Maruti is right now working towards

making things simple for Indian consumers to upgrade from two-wheelers to the
car. Towards this end, Maruti partnerships with State Bank of India and its
Associate Banks took organized finance to small towns to enable people to buy
Maruti cars. Rs. 2599 scheme was one of the outcomes of this effort.
Maruti expects the compact cars, which currently constitute around 80% of the
market, to be the engine of growth in the future. Robust economic growth,
favorable regulatory framework, affordable finance and improvements in
infrastructure favor growth of the passenger vehicles segment. The low
38
penetration levels at 7 per thousand and rising income levels will augur well for
the auto industry.
Maruti is busy fine-tuning another innovation. While researching they found that
rural people had strange notions about a car - that the EMI (equated monthly
instalments) would range between Rs 4,000 and Rs 5,000. That, plus another Rs
1,500-2,000 for monthly maintenance, another Rs 1,000 for fuel (would be the
cost of using the car). To counter that apprehension, the company is working on a
novel idea. Control over the fuel bill is in the consumer's hands. But, maintenance
need not be. Says Khattar: "What the company is doing now is saying how much
you spend on fuel is in your hands anyway. As far as the maintenance cost is
concerned, if you want it that way, we will charge a little extra in the EMI and
offer free maintenance."
VI. DISINVESTMENT AND IPO OF MARUTI UDYOG LIMITED
It was a long and tough journey, but a rewarding one at the end. A reward worth
Rs 2,424 crore, making it the biggest privatization in India till date. The size of
Marutis sell- off deal is proof of its success. On the investment of Rs 66 crore it
made in 1982, when Maruti Udyog Limited (MUL) was formally set up, the sale
represents a staggering return of 35 times The best part of the deal is the Rs 1,000
crore control premium the Government has been able to extract from Suzuki
Motor Corporation for relinquishing its hold over Indias largest car company.
Now looking at the strategy point of it for Suzuki, of course, complete control of
MUL means a lot. Maruti is its most profitable and the largest car company
outside Japan. Suzuki will now be in the drivers seat and will not have to mind
the whims and fancies of ministers and bureaucrats. Decisions will now become
quicker. The response to changing market conditions and technological needs will
be faster, says Jagdish Khattar, managing director, MUL. After the disinvestment
Suzuki became the decision maker at MUL. They flowed fund in India for the
major revamp in MUL. Quoting from the report that appeared in The Economic
Times, 4th April 2005, -
The Indian car giant Maruti Udyog Limited has finalized its two mega investment
39
plans a new car plant and an engine and transmission manufacturing plant.
Both the projects will be implemented by two different companies. At its meeting
the company's board approved a total investment of Rs3,271.9 crore for these
two ventures, which will be located in Haryana.
The above signifies when GOI was a major stakeholder in the MUL strategies
which lead to investment have had a bureaucracy factor in it but after the
disinvestment strategy followed is a TOP DOWN approach with a fast
implementation.
Suzuki's proposed two-wheeler facility in India, would start making motorcycles

and scooters by the end of 2005 through a joint venture, in which Maruti has 51
per cent stake. The two-wheeler unit will have a capacity of 250,000 units a year.
The disinvestment followed by IPO gives the insight in the fact that now all the
strategic decisions are taken by Maruti Suzuki Corporation. Disinvestment had
helped by removing the red tape and bureaucracy factor from its strategic
decision making process.
VII. REALISATION OF IMPORTANCE OF VEHICLE MAINTENANCE SERVICES

MARKET
In the old days, the company's operations could be boiled down to a simple three-
box flowchart. Components came from the 'vendors' to the 'factory' where they
were assembled and then sent out to the 'dealers'. In this scheme, you know
where the company's revenues come from. The new scheme is more complicated.
It revolves around the total lifetime value of a car.
Work on this began in 1999, when a MUL team, wondering about new revenue
streams, traveled across the world. Says R.S. Kalsi, general manager (new
business), MUL: "While car companies were moving from products to services,
trying to capture more of the total lifetime value of a car, MUL was just making
40
and selling cars." If a buyer spends Rs 100 on a car during its entire life, one-third
of that is spent on its purchase. Another third went into fuel. And the final third
went into maintenance. Earlier, Maruti was getting only the first one-third of the
overall stream. As the Indian market matured, customers began to change cars
faster. Says Kalsi: "So the question was, if a car is going to see three users in, say,
a life span of 10 years, how can I make sure that it comes back to me each time it
changes hands ? So Maruti has changed gears to take a big share of this final one-
third spent on maintenance. Maintenance market has a huge market potential.
Even after having fifty lakh vehicles on road Maruti is only catering to
approximately 20000 vehicles through its service stations everyday.
For this they are conducting free service workshops to encourage consumers to
come to their service stations. Maruti has increased its authorized service stations
to 1567 across 1036 cities. Every regional office is having a separate services and
maintenance department which look after the growth of this revenue stream.
VIII. PLAYING ON COST LEADERSHIP
Maruti is the price dictator in Indian automobile industry. Its the low cost
provider of car. The lowest car on road is from Maruti stable i.e. Maruti 800.
Maruti achieves this through continuous improvements in operational efficiency
and productivity.
The company has set itself (and its vendors) the target of a 50% improvement in
productivity and a 30% reduction in costs in three years. The ability to keep
lowering the prices sets Maruti apart from other players in the league. Maruti
spread the overheads over a larger base.
41
The impressive sales and profits were the result of major efforts within the
company. Maruti also increased focus on vendor management. Maruti
consolidated its vendor base. This has provided its vendors with higher volumes
and higher efficiencies. Maruti does that by working with vendors, assuring them
that for every drop in price, volumes will go up. Maruti is now encouraging its
vendors to develop R&D capability for specialized components. Based upon such
activities, product competitiveness in the market will further increase.
Maruti also made strides in applying IT to manufacturing. A new Vehicle Tracking

System improved efficiency on the shop floor and enhanced quality control. The e
Nagare system, adopted from Suzuki Motor Corporation, smoothened Marutis
Just In Time operations.
C) MAJOR FUTURE STRATEGIES
I. PHASING OUT ZEN IN 2007
The launch of Swift and phasing out Zen is a strategic move. Alto was launched
keeping in mind that it will take over Maruti 800 market in future. Perhaps being
the flagship product phasing out of Maruti 800 faced lots of resistance from
dealers all over. Another reason behind not phasing out Maruti 800 was the fear
of brand shift of customers to other competitors product. Swift was launched in
May, 2005 in the price band starting from 4 lacs. Before launch of Swift Maruti
management had decided that they will phase out Zen since it had already came
up with two modifications. The major reason behind this decision was
cannibalization of Wagon R and Swift due to overlapping of price band. It is a
rational decision to kill a product before it starts facing the decline stage in
product cycle. Maruti is offering Rs. 3000.00 more margins to dealer on the sale
of Wagon-R as compared to Zen. This is to let dealer push Wagon R instead of
Zen.
II. MARUTI PLANS FOR A BIG DIESEL FORAY
42
The new car manufacturing company, called Maruti Suzuki Automobiles India
Limited, will be a joint venture between Maruti Udyog and Suzuki Motor
Corporation holding a 70 per cent and 30 per cent stake respectively. The
Rs1,524.2 crore plant will have a capacity to roll out 1 lakh cars per year with a
capacity to scale up to 2.5 lakh units per annum. The new car manufacturing plant
will begin commercial production by the end of 2006.
Maruti would set up a diesel engine plant at Gurgaon in line with its plan to
become a major player in diesel vehicles in a couple of years. This has been done
in the wake of major competition from Tata Indica and meets the growing
demand of diesel cars in India. While the annual growth in the diesel segment was
13 per cent in the last three years, it was 19-20 per cent in the first quarter (April-
June) of the current fiscal. Maruti has currently an insignificant presence in diesel
vehicle. It will manufacture new generation CRDI (common rail direct injection)
engines in collaboration with Fiat-GM Opel and engines will be of 1200 cc. The
plant with a capacity to produce one lakh diesel engines would be operational in
2006. At present, Peugeot of France, supplies diesel engines for Maruti's Zen and
mid-sized Esteem models. This will further reduce the imported component in
Maruti vehicles, making them more competitive in the Indian market.
III. MARUTI PLANS FOR A NEW ENGINE AND TRANSMISSION PLANT
The engine and the transmission plant will be owned by Suzuki Powertrain India
Limited in which Suzuki Motor Corporation would hold 51 per cent stake and
Maruti Udyog holding the balance. The ultimate total plant capacity would be
three lakh diesel engines. However, the initial production would be 1 lakh diesel
engines, 20,000 petrol engines and 1.4 lakh transmission assemblies. Investment
in this facility will be Rs.1,747.7 crore. The commercial production will start by the
end of 2006.
IV. INDIA AS EXPORT HUB FOR MARUTI
43
Three years back as an experiment, based on the increasing design capabilities of

suppliers in countries like India, McKinsey did an exercise to figure out just how
much money could be saved if automobiles were to be made in overseas
locations like India, Mexico and South Africa -- an automobile BPO, so to speak.
The result was staggering: the industry stands to gain $ 150 billion annually in cost
savings, and an additional $ 170 billion annually in new revenues once demand
shoots up following the drop in prices, and the combination of which means a 25
per cent increase in existing revenue levels.
According to the study, over 90 per cent of automobiles today are sold in the
countries they are made in, so there's a lot of money to be made by shifting the
production overseas. Till recently, just 100,000 cars produced in low-cost
countries were exported to high-cost ones -- presumably this figure is going up
now that Altos from Maruti, Santros from Hyundai, Indicas from Tata Motors, and
Ikons from Ford, among others, are being regularly exported out of India.
Yet, as McKinsey points out, since it just costs $ 500 and just three weeks (and
both figures are falling) to ship out a car to anywhere in the world, why produce
cars in high-wage islands? If a car was produced in India instead of in Japan, the
study says, it will cost 22-23 per cent less, after factoring in higher import duties
for components/steel, lower levels of automation, and transport costs.
In August, 2003 Maruti crossed a milestone of exporting 300,000 vehicles since its
first export in 1986. Europe is the largest destination of Marutis exports and
coincidentally after the first commercial shipment of 480 units to Hungary in
1987, the 300,00 mark was crossed by the shipment of 571 units to the same
country. The top ten destination of the cumulative exports have been
Netherlands, Italy, Germany, Chile, U.K., Hungary, Nepal, Greece, France and
Poland in that order.
The Alto, which meets the Euro-3 norms, has been very popular in Europe where
a landmark 200,000 vehicle were exported till March 2003. Even in the highly
44
developed and competitive markets of Netherlands, UK, Germany, France and

Italy Maruti vehicles have made a mark. Though the main market for the Maruti
vehicles is Europe, where it is selling over 70% of its exported quantity, it is
exporting in over 70 countries.
Maruti has entered some unconventional markets like Angola, Benin, Djibouti,
Ethiopia, Morocco, Uganda, Chile, Costa Rica and El Salvador. The Middle-East
region has also opened up and is showing good potential for growth. Some
markets in this region where Maruti is, are Saudi Arabia, Kuwait, Bahrain, Qatar
and UAE.
The markets outside of Europe that have large quantities, in the current year, are
Algeria, Saudi Arabia, Srilanka and Bangladesh. Maruti exported more than 51,000
vehicles in 2003-04 which was 59% higher than last year. In the financial year
2003-04 Maruti exports contributed to more than 10% of total Maruti sales.
V. MARUTI EMERGING AS R&D HUB FOR SUZUKI MOTOR CORPORATION
Japanese auto major Suzuki is all set to convert Maruti Udyog Ltds research and
development (R&D) facility as its Asia hub by 2007 for the design and
development of new compact cars, according to a top official of the firm. The
countrys leading car manufacturer will make substantial investments to upgrade
its research and development centre at Gurgaon in Haryana for executing design
45
and development projects for Suzuki. This includes localisation, modernisation

and greater use of composite technologies in upcoming models.
The company will be hiring more software engineers and technocrats to handle
Suzukis R&D projects. Investment would be more in terms of manpower than in
infrastructure, which is already in place. Apart from working on innovative
features, the R&D teams will focus on latest technologies using CAD-CAM tools to
roll out new models that will meet the needs of MULs diverse customers in the
future.
The reasons as to why it can be good for R&D is that
Firstly the cost involved in R&D and infrastructure is low in India as

compared to other countries. Also the technical skills are abundantly available;
again at a cheaper cost.
Secondly, India is growing as an export hub along with the Indian market
growing aggressively into becoming an attractive one for investors.
Thirdly, Suzukis investment in India, is also important as it has completely
divested now as a result MUL will now become a 100% subsidiary of Suzuki in the
coming year
Advertising of maruti
Impact of Advertising for Product Presentation

Creates awareness
Provides Information
Generates Association with the audience
Helps in creating an image
Reaches large audience
Develops brand preference
Competitive weapon
Advertising moves consumers being unaware of a product or service to
finally purchasing it.
46
Advertising Strategy
Start advertising 2 weeks before launch

Advertise on all major media
TV : 10 Sec Rs. 3,50,000 (Match)
30 sec Rs. 10 to 12 lakh (Prime Time)
Magazine : Double page - Rs. 4,03,500
Full Page Rs. 2,02,500
Newspaper : Rs. 75,50,000
Hoardings : Rs. 1,10,000 per month
Radio : 10 sec Rs. 5,000
Sponsor cricket matches
Promotion at malls
Launch around a month before festivals like Diwali or
Navratri
So it was yesterday when I saw this new advertising campaign or Marketing

Campaign of Maruti Suzuki. What followed was a bit of discussion about the
AdvertisingCommercialamongus. Now, let me first describe the ad as it went

through. It was an Advertising Commercial for the most successful car brand in
India - Maruti Suzuki. It shows a typical large gathering of a family most probably
for a family function. The main characters are a mom, an infant kid, around 4-5
months old and some other relatives. The Advertising Commercial goes as
follows: The mom is busy with some work, and the infant kid is somewhere away
from her, so that she can see her from a distance, but since she is busy with the
work, she is unable to attend to her. The Advertising Commercial starts with
showing the mom busy with work and the baby starts crying. So, the mom signals
another relative (a lady) to attend the kid. Unfortunately, the kid continues to cry.
The lady then passes on the kid to the kid's father (from the gestures between the
kid's mom and the male person in the ad, it is apparent that he is the kid's father),
but no success. The cycle continues and the kid is passed on from one person or
relative to the other (uncle, aunty, grandfather, grandma, etc.) They all try all
47
methods including scolding, singing, etc., but the kid doesnt get quite. At last the
kid reaches the mom and there he is happily playing again.
The message for the Advertising Commercial comes up on screen: Always take
your Maruti Car to the MarutiAuthorizedServiceNetwork.The ad message is clear-
Maruti wants all its customers to utilize the services of its own dealer and service
networks, instead of the customers going to other brand services or going toa
roadsideun-brandedgarage. Now personally, my first impression after watching
this Advertising Campaign was It is a Good Advertising Commercial. However,
immediately came a reply from other person - kya bakwas commercial hai?.
Before we get into the details, let's observe some good and bad points of this
AdvertisingCommercialGood:
- The theme chosen is realistic - Indian Family, Function, everyone is busy,
everyone trying a hand to pacify the kid. So the ad does generate a lot of interest
- The timeline of ad is perfect - Nobody has been focussed for a longer time. It
straightaway gets to the main point - to pacify the kid
- There is a variety of methods included - someone dancing, singing, making faces,
toys and even scolding - it all looks perfect
- Finally, when the kid reaches the mom, he is happy - everyone wonders what's
happening, and there comes the Advertising Commercial Punchline conveying
themessage. Before we get into the bad part, Just wanted to mention the reaction
of others who saw the ad with me. We have a 5 months old baby at my home,
and many family members keep him busy and happy, so it was a real life scenario
for us. Moreover, mom & dad leave the kid at home in others care, if they have to
go out, and the kid stays happily - something contrary to what was shown in the
Advertising Commercial. What other members differed were the following points
(&theinferencethatcanbederived):
- Basically, it's a problem of the kid that he is not happy with other family
members. So the kid is at fault - basically meaning that the car is not easy to get
repaired if there are any problems, hence its a problem with the car itself.
- None of the other family members were able to control the kid - It is true that all
family members cannot repair (or even drive a car), but what has that to do with
goingtotheauthorizedservicenetwork? - Maruti is known for having the biggest
48
network of service stations across the country for car repair and services. But
shouldn't it be easy to fix the problems of the car by not any Tom, Dick & Harry
from a road side garage, but atleast by some known, reliable garages (like the
relatives)Overall, this advertisement campaign appears to be good to me
(personal thoughts), but as pointed above, it may be taken in a completely
different way by someone else. Remember, our is a country that gives a very high
regard to family relations - so anything can be interpreted in any way.
HR DEPARTMENT
Lead and Facilitate continuous change towards organizationalexcellence ; create

a learning and vibrant organization with highsense of pride amongst itmembers.
HR INITIATIVES
Prepare MUL Strategic Business Plan-2000-2003; To achievethe Vision & Goal
Improve the performance Appraisal system - its process, skill& usage
Introduce a Potential Appraisal System
Improvements in internal & external Training & its effectiveutilization.
Training need identification
Systematic career planning ; Job Rotation ; Empowerment;Job enrichment

Periodic communication meeting at various level; Roll out ofVision
Raise cost consciousness for cost control and reduction
Exposure on Brand Strategy to all non- marketing staff
Retention of Talent
CULTURE BUILDING INITIATIVES SINCE INCEPTION

Japanese Management philosophy of Team Spirit
Common uniform
Open office
Common Canteen
Open Office Easy accessibility, Speedy
49
Communication and decision making

Morning Meetings
Morning Exercises
FOCUS OF EFFECTIVE MANAGEMENT PROCESS SINCEINCEPTION

Management Committee Meetings every Tuesday
Single unaffiliated Union
Excellent Industrial Relation scenario
No loss of monday due to strike/lockout etc. in past 5 yrs.
Maruti Udyog Sahyog Samiti a forum for non unionizedstaff.
Declared organization structure Workers (Technical /Assistant.), Supervisors,
Executives, Managers
Top Driven HR MD is also Director HR
HRs role of a facilitator
Line managers as HR Managers
Year of the Customer
HR Internal Customer Focus
Focus on Internal & External Customer.
INDUCTION AND SUCCESSION
Transparent Recruitment & Selection process
Recruitment on an All India Basis no sector or regionspecific.
Engineers CAMPUS - IITs/RECs/Rorkee /HBTI
ALL-INDIA TEST
MBAs IIMs/XLRI
CAs - Rank Holders
India Exam & Apprenticeship In MUL
Lateral Entry for Experienced Professionals.
MATTER USUALLY DISCUSSED IN THE MARUTI INDUCTION
Overview of Maruti and Suzuki

Building understanding of the car market in India and varioussegments
Understand MULs product range and positioning in eachsegment
Understanding the basics in the automobile industry
Role of financing as a sales tool and the various financing options available
Ensuring personal effectiveness
Understand the attributes of a good DSE
50
Overview of each Maruti model and the MUL Advantage

Overview of the selling process and how to uncover needs of acustomer to do
need based selling
Induction program
Objective: The objective of this program is to facilitate smooth induction of the

new DSEs into their place of work i.e. Marutidealerships. This program attempts
to orient the new DSEs on a fewimportant parameters, which are listed below:
Overview of Maruti and Suzuki
. Building understanding of the car market in India and varioussegments
. Understand MULs product range and positioning in each segment
. Understanding the basics in the automobile industry Overview of each Maruti
model and the MUL Advantage Overview of the selling process and how to
uncover needs of acustomer to do need based selling
. Role of financing as a sales tool and the various financing options available
. Ensuring personal effectiveness
. Understand the attributes of a good DSE
RECRUITMENT PROCESS OF MARUTI UDYOG LTD

The recruiting procedure at a Maruti dealership is as follows: For a particular
city,For a particular Dealership The dealership should release an
advertisement.Depending on availability of infrastructureInterview of shortlisted/
qualified personnel
MEANING OF SELECTION
It is the process of searching the potential candidate. It is negative in nature in the

Indian context. But it is positive in the US context.
Steps in Selection Process of Maruti udyog ltd
Selection process consists of a series of steps, at each stage, factsmay come light
which may lead to the rejection of the applicant. It is a series of successive
hurdles or barriers which an applicant must cross.These hurdles or screens are
designed to eliminate anunqualified candidate at any point in the selection
processThere is no standards selection procedure to be used in allorganizations or
51
for all jobs. The complexity of selection procedures increases with the level and
responsibility of the positionto be filled.
.
1} Preliminary Interview (screening applications)
Initial screening is done to weed out totallyundesirable/unqualified candidates at

the outset. It is essentially asorting process in which prospective candidates are
given thenecessary information about the nature of the job and theorganization,
at the same time, the necessary information is alsoelicited from the candidates
about their education, skills,experience, salary expected and the like. It helps to
determinewhether it is worthwhile for a candidate to fill up the applicationform.
2} Application Form
Application form is a traditional and widely used device forcollecting information

from candidates. It should provide all the information relevant to selection, where
reference for caste, religion,birth place, may be avoided as it may be regarded an
evidence ofdiscrimination.
3}Selection Test
Psychological tests are being increasingly used in employeeselection, where a test

may involve some aspect of an individualsattitudes, behavior and performance.
Tests are useful when thenumber of applicants is large, as at best it reveals that
thecandidates who scored above the predetermined cutoff points arelikely to be
more successful than those scoring below the cutoffpoint.
4} Employment Interview
Interview is an essential element of selection and no selectionprocedure is

complete without one or more personal interviews,where the information
collected through application letter orapplication forms and tests can be cross-
checked in the interview,where candidates demonstrates their capabilities and
strength inrelevant to their academic credentials. selection in interview serves
threepurposes:
52
a) obtaining information about the background, education, training,work history

and interests of candidate
b) giving information to candidates about the company, the specific job and
human resource policies; and
c) establishing a friendly relationship between the employer and thecandidate so
as to motivate the successful applicant to work forthe organization.However, in
practice interview becomes a one-sided affair serving only the first purpose.
5} Medical Examination
Applicants who have crossed the above stages are sent for aphysical examination
either to the companys physician or toa medical officer approved for the
purpose. Such examination serves the following purposes:-
a) It determines whether the candidate is physically fit toperform the job, where
those who are physically unfit arerejected.
b) It reveals existing disabilities and provides a record of the employees health at
the time of selection. This record will help in settling companys liability under the
workmencompensation Act for claim for any injury.
c) It prevents the employment of people suffering from contagious diseases.
d) It identifies candidates who are otherwise suitable but require specific jobs due
to physical handicaps and allergies.
6} Reference Checks
The applicant is asked to mention in his application form, the names and
addresses of two or more persons who know him well. These may be his previous
employers, heads of education institutions or publicfigures. These people are
requested to provide their frankopinion about the candidate without incurring
any liability. In government and public sector organizations, candidates are
generally required to route their applications through their present employers, if
any. The opinion of referees can be useful in judging the future behavior and
performance of candidate, but is not advisable to rely exclusively on the referees
because they are generally biased in favor of the candidate.
53
(a) Most candidates are employed at the time of their application, and do not
wish their employers to know they are looking elsewhere.
(b) Because of prospective employer would be breaking a confidence if
he or she asked for a reference before an offer of a job had been made and
accepted.
(c) By the time an offer has been accepted, selection is over and the
reference is too late to affect it.
(d) An offer may be made subject to satisfactory references, but as most
references are received after the candidate has started work, they can only be
used to warn managers of possible faults in the candidate which in serious cases
may eventually lead to warningsfollowed by dismissal.
(e) Employers giving references are usually extremely cautious; many references
merely state the job title, the date of employment, and reasons for leaving.
(f) References are occasionally biased, giving a good reference to hasten an
employees departure or a poor one because of a grudge. Therefore, the best
references are obtained in person, where there is a chance to see whether
nonverbal behavior matches what is said. If such a meeting cannot be arranged,
telephoning is the next best alternative.
7} Final Approval
In most of the organizations, selection process is carried out by the human

resource department, where the decisions of the department are
recommendatory. The candidates shortlisted by the department are finally
approved by the executive of concerned departments or units.
8} Employment.
Employment is offered in the form of an appointment letter mentioning the post,

the rank, the salary grade, the date by which the candidate should join and other
terms and conditions in brief. In some organizations, a contract of service is
signed by both the candidate and the representative of the organization. It is at
this point where a selected applicant is handled with a letter of offer for a job:
a) The wage or salary offered must not only be appropriate to the job and
attractive to the candidate but consistent with the earnings of present
employees.
54
b) The job must be named and any special conditions stated, for instance, the first
year you will be under training at the head office, then you will be transferred to
up-country branches.
c) The candidate must know the essential conditions of employment, such as
hours of work, holidays, bonuses and fringe benefits.
d) Any provisos must be clearly stated, for example, your employment will be
subject to satisfactory references and medical examinations. Appointment is
generally made on probation of one or two years, where upon satisfactory
performance during this period, the candidate is finally confirmed in the job on
the terms employed with, whether permanent or contractual basis.
9} Induction.
The process of receiving employees when they begin work, introducing them to
the company and to their colleagues, and informing them of the activities,
customs and traditions of the company is called induction. At this juncture various
induction courses are done to new recruit in order to acclimatize them with the
new working environment.
10} Follow up (Evaluation)
All selection should be validated by follow-up, it a stage where employee is asked

how he or she feels about progress to date and the workers immediate
supervisor is asked for comments, which are compared with the notes taken at
the selection interview. If a follow-up is unfavourable it is probable that selection
has been a fault; the whole process from job specification to interview is then
reviewed to see if a better choice can be made next time.
Training
Maruti arranges the training at several intervals. The training is mandatory for all
the employees. The training schedule of all employees is maintained by the HR
manager.
EDP
In the EDP Department following are managed:
55
Post Sale Process is managed.

Sales Analysis is done.
Backup is taken time to time.
IMPORTANCE OF TRAINING
Optimum Utilization of Human Resources Training and Development helps in

optimizing the utilization of human resource that further helps the employee to
achieve the organizational goals as well as their individual goals.
Development of Human Resources Training and Development helps
to provide an opportunity and broad structure for the development of human
resources technical and behavioral skills in an organization. It also helps the
employees in attaining personal growth.
Development of skills of employees Training and Development helps in
increasing the job knowledge and skills of employees at each level. Ithelps to
expand the horizons of human intellect and an overall personality of the
employees.
Productivity Training and Development helps in increasing the productivity of
the employees that helps the organization further to achieve its long-term goal.
Team spirit Training and Development helps in inculcating the sense of team
work, team spirit, and inter-team collaborations. It helps in inculcating the zeal to
learn within the employees.
Organization Culture Training and Development helps to develop and improve
the organizational health culture and effectiveness. It helps in creating the
learning culture within the organization.
Organization Climate Training and Development helps building the positive
perception and feeling about the organization. The employees get these feelings
from leaders, subordinates, and peers.
Quality Training and Development helps in improving upon the quality of work
and work-life.
Healthy work-environment Training and Development helps in creating the
healthy working environment. It helps to build good employee, relationship so
that individual goals aligns with organizational goal.
Health and Safety Training and Development helps in improving the health
and safety of the organization thus preventing obsolescence.
Morale Training and Development helps in improving the morale of the work
force.
56
Image Training and Development helps in creating a better corporate image.

Profitability Training and Development leads to improved profitability and
more positive attitudes towards profit orientation.
Training and Development aids in organizational development i.e. Organization
gets more effective decision making and problem solving. It helps in
understanding and carrying out organizational policies
Training and Development helps in developing leadership skills, motivation,
loyalty, better attitudes, and other aspects that successful workers and managers
usually display.
Training Details
The strength of any organization is its manpower. Each organization would like to
have executives who are well trained so that they can be more productive. The
vehicle manufacturers conduct several trainings sothat they can achieve their
goals. In the Training master form, you can enter the information about the
training, which have been conducted during a particular time period. We are also
maintaining the information regarding the attendance of the executives in a
specific training. That is, how many executives out of the given list have attended
the training? With the help of these training details we are generating various MIS
reports. The details provided here can help the management to find out an
efficient person for a special task. Searching facility is also available, so you can
find out the total information of a particular training with just one click over
there.
SALES AND TRAINING DEPARTMENT OF MARUTI UDYOG Vision
Equipping MUL and Dealer Sales Fraternity with the requisite mindset,
knowledge and skills, and enhance the business value of our associates to sustain
our position of leadership and build customer loyalty to MUL
Objectives
To ensure multiple knowledge and skill development of DSEs required selling cars
and handling competition
Consultative Selling Approach.
57
Continuous Feedback and Performance monitoring.

To employ training as a tool to achieve customer delight and customer
loyalty
Make DSEs as Car Advisors and be a single window interface with the
customer
58
FINANCIAL ANALYSIS OF THE COMPANY
Financial highlights
Parameters Q3F09 Q3F08 change
Net sale(Rs Mn) 45126 46540 -3%
Other Income -
Operating (Rs Mn) 887 853 4%
Other Income -
Non Operating 1777 854 108%
(Rs Mn)
EBITDA (Rs Mn)
4745 7839 39%
Depreciation (Rs
Mn) 1775 867 105%
Profit Before Tax 2925 6828
(Rs Mn) 57%
Profit After Tax
(Rs Mn) 2136 4670 54
EPS (Rs) 7.39 16.17 54%
59
Financial highlights
Parameters Q3Fy 09 Q3Fy08 change
Material Cost 81.14% 76.84% 4.30%
Employee Cost 2.45% 2.08% 0.37%
Selling & 3.69% 2.75% 0.94%

Distribution
expenses
Manufacturing 8.66% 5.59% 3.07%
Expenses 3.53% 2.60% 0.93%
Royalty Power & 1.18% 0.78% 0.30%
Fuel
Depreciation 3.93% 1.86% 2.07%
Ebitda 10.51% 16.84% 6.33%
PBT 6.48% 14.67% 8.19%
PAT 4.73% 10.04% 5.31%
Other Income 5.90% 3.67% 2.23%

(Operating + Non
Operating)
60
Financial Analysis (Q3FY09 vs Q3FY08)
Material cost to net sales increases by 4.30 % to 81.14%

1.7% - Higher commodity cost primarily steel
1.4% - Yen appreciating against rupee by ~ 50% appx impacting
import cost 1.4%
1.6% - Product Mix
0.8% - Higher invoice discounts
(1.0)% - favorable selling price variance

Selling & distribution expenses increased by 0.94% to 3.69%
o Selling expenses increased by 0.26% to 2.18%
o A Star launch / marketing expenditure
Distribution expenses increased by 0.68% to 1.51%

Higher ocean freight
Financial Analysis (Q3FY09 vsQ3FY08)
Manufacturing over heads increases by 3.07% to 8.66%

o Royalty increased by 0.93% to 3.53%
o Increase in average selling price (base for calculating royalty)by 11%
o Increase in number of models on which royalty is paid
o Yen appreciating against rupee by ~ 50%
Power cost increased by 0.40% to 1.18%

Higher cost of power generation at Manesar use of diesel in
place of natural gas
61
Share of units from Manesar plant out of total sales increased

Exchange Variation Rs 412 Mn
Increase in employee cost by 0.37% to 2.45%
o Increase in number of employees to 7,755 from 6,903 (Q3Fy08)
o Recruitments for K Series engine plant, expanded capacity at
Manesar and R&D
Financial Analysis (Q3FY09 vsQ3FY08)
Other Income
Rs 1,777 Mn non operational (Rs 854 Mn in Q3FY08)
Higher yields ~ 12.5% (pre tax)
One time interest on tax refunds Rs 569 Mn

Depreciation increased by 2.07% to 3.93%
Revision of useful life of fixed assets was done in Q4FY08
In Q3FY09 impact is Rs 585 Mn
Normalized depreciation is 2.64%

Average Realization (ASP) increased by 10.8% to Rs. 240,081
o Exports higher realization
o Domestic product mix
62
Cash Flow of Maruti Suzuki

------------------- in Rs. Cr. -------------------
India
Mar '04
Mar '05 Mar '06 Mar '07 Mar '08
12 mths 12 mths 12 mths 12 mths 12 mths
Net Profit Before Tax 769.80 1304.9 1750.0 2279.8 2503.0
0 0 0 0
Net Cash From 1035.9 1073.7 1222.6 2028.0 1830.4
Operating 0 0 0 0 0
Activities
Net Cash (used in)/from - -192.70 -530.70 - 3061.5

Investing Activities 1551.1 2436.8
0
Net Cash (used in)/from -234.00 -91.80 -319.70 430.00 132.30
Financing Activities
Net (decrease)/increase -749.20 789.20 372.20 21.20 1098.8

In
Cash and Cash
Equivalents
Opening Cash & Cash 989.40 240.20 1029.4 1401.6 1422.8

Equivalents
Closing Cash & Cash 240.20 1029.4 1401.0 1422.8 324.00

Equivalents
63
FINANCIAL RESULTS
The Companys performance during the year is summarised below:
(Rs.in Million)
2007-08 2006-07
Gross Total Income 219,128 178,043
Profit before Tax 25,030 22,798
Provision for taxation (Incl. Prev. Year) 7,722 7,178
Profit after Tax 17,308 15,620
Balance brought forward 56,373 43,939
MSAIL (Maruti Suzuki Automobiles India Limited)
Loss: Adjusted on Amalgamation and
Transition Adjustment for Employee Benefit 0 88
Profit available for appropriation 73,681 59,471
Appropriations:
Debenture Redemption Reserve 0 17
General Reserve 1,731 1,562
Proposed Dividend 1,445 1,300
Corporate Dividend Tax 248 219
Balance carried forward to Balance Sheet 70,257 56,373
64
FINANCIAL HIGHLIGHTS
The gross revenue (net of excise) of the Company for the year was Rs. 188,238
million as against Rs. 152,523 million in the previous year showing an impressive
growth of 23.4%. Earnings before depreciation, interest, tax and amortization
(EBDITA) stood at Rs. 31,308 million against Rs. 25,888 million in the previous
year, recording a jump of 20.9%.
Based on technical evaluation and market considerations, the Company has,
with effect from 1st April 2007, revised the estimated useful life of certain assets
which resulted in depreciation being higher by Rs. 2,122 million for the current
year with a corresponding reduction in profit for the year and net fixed assets.
Profit before tax (PBT) stood at Rs. 25.030 million against Rs. 22,798 miilion in the
previous year showing a growth of 9.8% and Profit after Tax (PAT) stood at Rs.
17,308 million against Rs. 15,620 million in the previous year showing a
growth of 10.8%.
DIVIDEND
The Board recommends a dividend of 100% (i.e. Rs. 5 per equity share of Rs. 5
each) for the year ended 31st March 2008 amounting to Rs. 1,445 million as
against a dividend of 90% . amounting to Rs. 1,300 million, paid for the year
ended 31st March 2007.
65
4Ps OF MARUTISUZUKI SWIFT
PRODUCT
PRICE
PROMOTION
PLACE
PRODUCT
Features:
The all-new Maruti Suzuki Swift is fully loaded with a range of exciting new
features. It's a perfect complement to your evolved tastes and lifestyle. And the
best way to take your driving pleasure to a brand-new high.
European Styling. Japanese Engineering. Dream-Like Handling.The new Swift is a
generation different from Suzuki design. Styledwith a clear sense of muscularity,
its one-and-a-half box, aggressive form makes for a look of stability, a sense that it
is packed with energy and ready to deliver a dynamic drive. Its solid look is
complemented by an equally rooted road presenceand class-defining ride quality.
New chassis systems allow for the front suspension lower arms, steering, gearbox
and rear engine mounting to be attached to a suspension frame. You get lower
road noise, and a greater feeling of stability as you sail over our roads with
feather-touch ease.
There are three variants of Maruti Suzuki Swift :
Swift LXi
Swift VXi
Swift ZXi
Swift LXi
3 assist grips, 3 spoke urethane steering wheel, antenna, cabin light (3 position),
console box (lower), cup holders (front 2, rear1), front door trim pockets, green
66
tinted glass window, halogen headlamps, headlamp leveling device, heater and
manual Air conditioning, OVRM (internally adjusted), rear fog lamps, wind screen
wiper 2 speed plus 1 speed intermittent, tailgate opener key type, trip
meter(digital display), sun visors (both sides), brake assist , child lock (rear door),
high mounted stop lamp, power steering, rear seat belts etc. are the features
available in this model.
Swift VXi
Apart from the features found in other model, striking features of this model are
black colored A & B pillars, 12v accessory socket in center console, day and night
rear view mirror, door ajar warming lamp, driver's seatbelt warning lamp,
tachometer, driver's seat belt warning lamp, vanity mirrors (sun visor co-driver
side), rear seat head restraints, fabric accented door trims, central door locking (4
door), front and rear electronic windows, front fog lamps, light off/ key reminder,
manual air-conditioning, key not removed warning buzzer, etc.
Swift ZXi
Special features that have made this model more market friendly are rear window
demister, rear parcel shelf, rear window wiper, room lamp and luggage room,
keyless entry,dual front airbags, colored outside door mirror cowls, colored
outside door handles, 12vaccessory socket in luggage room, driver seat height
adjuster, central door locking (5 doors), seat belts 3-point ELR with
shoulderNadjusters, seat belts front 3-point ELR with pretensioning,tailgate
opener electromagnetic type etc.
Price
Maruti is expected to take Hyundai heads on with the pricing of their upcoming
Maruti Suzuki Swift car. After launching cars for the masses since so many years,
Indias largest automobile manufacturer is now targeting the premium segment
with their latest model from the Suzukis stable. The analysts predict the pricing of
this premium hatchback to start from Rs. 4 lakh. This price range would practically
rip apart Hyundais offering in Getz, which is priced at a much higher tag of Rs. 4.5
lakh. Both the companies are known for their value based offerings and Maruti
67
with their extensive service network and brand reputation for making reliable cars
should get the customers nod over their competition. The official pricing
however is still not out. However, the company is said to be studying the
prospects of launching the base model at the 4-lakh price tag. There is another
advantage in doing so considering in the capital city of Delhi NCR road tax on the
sub 4 lakh priced cars is comparatively lower at 2%. Cars at a price higher than 4
lakh have to pay a 4% road tax. Delhi NCR is one of the major targeted markets
and it might get the
benefit of this policy. And if they indeed do take the chance ofpricing Suzuki Swift
at a considerable lower price than Hyundai Getz, they would quite likely force the
competition to rethink their strategy.
Swift LXi 416485 416485

Swift VXi 443924 443924
Swift VXi
(ABS) 464962 464962
Swift ZXi 528096 528096
PROMOTION
When Maruti Udyog launched the Swift in May last year, the automotive industry
was agog with expectation that the car had the makings of a real winner. Three
versions were launched with the base variant carrying a retail tag of Rs 3.85 lakh,
ex-showroom, New Delhi, and this aggressive pricing only reinforced this feeling.A
year later, the company says the Swift is now the most-sold car in the first year of
any car in the history of the Indian automobile industry, having totted up sales of
61,200 units. This is higher than what Maruti had initially planned to sell. The car
recorded an estimated 4,000 bookings at the time of its launch, and the initial
output of 200 units a day on a two-shift basis, wasnt enough to cope with
demand. In October, the company increased capacity for the Swift which helped
cut down on the waiting time from an estimated three months. The company
currently makes over 300 units every day. The Swift has made a real impact in the
small hatchback segment leaving its closet rival, the Getz far behind. Between
April 2005 and April 2006, Hyundai sold 16,872 units of the Getz. Maruti is now
68
gearing up for the diesel version of the Swift which is expected to debut by
October. The diesel version will benefit from the excise sops in this years buget,
and it remains to be seen how the models fares in the marketplace.
PLACE
The car manufacturing company, called Maruti Suzuki Automobiles India Limited,
is a joint venture between Maruti Udyog and Suzuki Motor Corporation holding a
70 per cent and 30 per cent stake respectively. The Rs1,524.2 crore plant has a
capacity to roll out 1 lakh cars per year with a capacity to scale up to 2.5 lakh units
per annum. The car manufacturing plant will begin commercial production by the
end of 2006.
The engine and the transmission plant has owned by Suzuki Powertrain India
Limited in which Suzuki Motor Corporation would hold 51 per cent stake and
Maruti Udyog holding the balance. The ultimate total plant capacity is three lakh
diesel engines. However, the initial production is 1 lakh diesel engines, 20,000
petrol engines and 1.4 lakh transmission assemblies.
MUMBAI - Showrooms
AUTOMOTIVE MANUFACTURERS LTD
MIDC,TTC INDL.AREA, PLOT
NO.D-234,SHIRVANE VILLAGE
BOMBAY PUNE ROAD
Autovista
257,S.V. ROAD, BANDRA (W)
MUMBAI
MAHARASHTRA
M/S SK WHEELS PVT LTD
SITE NO. D-267
TTC INDUSTRIAL AREA, MIDC
TURBHE, NAVI MUMBAI
69
NAVNIT MOTORS PVT LTD

GOKUL NAGAR
MUMBAI-AGRA ROAD,
THANE-400 061
RATAN MOTORS
23/24 BEZZOLA COMPLEX
SION-TROMBAY ROAD
CHEMBUR
SAH and SANGHI AUTO AGENCIES (P) LTD
GIRI KUNJ, 11-C N S PATKAR MARG
KEMPS CORNER
SAI SERVICE STATION LTD
PHOENIX MILL COMPOUND,
462,SENAPATI BAPAT MARG,
LOWER PAREL,
SWOT ANALYSIS OF THE COMPANY
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
STRENGTHS
The Quality Advantage
Maruti Suzuki owners experience fewer problems with their vehicles than any
other car manufacturer in India (J.D. Power\ IQS Study 2004). The Alto was
chosen No.1 in the premium compact car segment and the Esteem in the entry
level mid - size car segment across 9 parameters. The J.D. Power APEAL Study
2004 proclaimed the Wagon R no. 1 in the premium compact car segment and the
Esteem No.1 in the entry level mid - size car segment. This study measures owner
70
in terms of design, content, layout and performance of vehicles across 8

parameters.
A Buying Experience Like No Other

Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189
cities, with a workforce of over 6000 trained sales personnel to guide our
customers in finding the right car. Our high sales and customer care standards led
us to achieve the No.1 nameplate in the J.D. Power SSI Study 2004.
Quality Service Across 1036 Cities

In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7
parameters: least problems experienced with vehicle serviced, highest service
quality, best in-service experience, best service delivery, best service advisor
experience, most user-friendly service and best service initiation experience.
92% of Maruti Suzuki owners feel that work gets done right the first time during
service. The J.D. Power CSI study 2004 also reveals that 97% of Maruti Suzuki
owners would probably recommend the same make of vehicle, while 90%owners
would probably repurchase the same make of vehicle.
WEAKNESS
(Not so well-known in this segment

Comparatively less mileage-there is a also weakness of maruti suziki .milage of
maruti product is less than other.so this is a big weakness of maruti.
ESTABLISH PROPER POLICIES AND PROCEDURE FOR LEAVE
PROPER COMMUNICATION OF POLICIES TO WORKERS
ATTITUDE OF SUPERVISOR
INSTALLATION OF HIGH CAPACITY GENERATORS
71
OPPORTUNITIES
ESTABLISH PROPER POLICIES AND PROCEDURE FOR LEAVE
PROPER COMMUNICATION OF POLICIES TO WORKERS
ATTITUDE OF SUPERVISOR
INSTALLATION OF HIGH CAPACITY GENERATORS
THEARTS
Maruti has always been identified as a traditional carmaker producing value-for-

money cars and right now the biggest hurdle Maruti is facing is to shed this image.
Maruti wants to change it for a more aggressive image. Maruti Baleno has failed
due to one of the major reasons being thatcustomers could not identify Maruti
with a car as sophisticated as Maruti Baleno. Maruti is looking forward to bring
about a perception change about the company and its cars.Maruti started the
exercise with the new-look Zen, and Suzuki's decision to pick India as one of the
first markets for this radically different-looking car gave this endeavor a nethrust.
Maruti has also changed its logo at the front grill. It has replaced the traditional
Maruti logo on grill stylish M with S. The major thrust in the facelift endeavour
is with the launch of 1.3 litre Swift. Its a style statement from Maruti to Indian
market. The next threat Maruti faces is the growing competition in compact
cars.Companies like Toyota, Ford, Honda and Fiat are planning to come out with
small segment cars in near future.Ford is launching Focus and Fiesta, GM is
launching Aveo in 2006, Chevrolet is launching Spark in 2006, Hyundai is
launching its new compact car in 2006, Honda is launching Jazz in 2006, GM is has
reduced prices of its Corsa, Fiat is coming up with Panda and new Fiat Palio, Skoda
is launching Fabia. All this will pose a major threat to Maruti leadership in
compact cars. New emission norms like Bharat Stage 3 which has come into
effect from April 2005 has increased car prices by Rs.20000 and Bharat Stage 4
which is coming into force in 2007 will contribute in increasing car prices further.
This could be of concern to Maruti which is low cost provider of passenger cars.
Rise in petrol prices and growing popularity of other substitute fuels like CNG
will be another threat to Maruti. There is also a threat to Suzuki from R&D
72
investment by Toyota and Honda in Hybrid cars. Hybrid cars could run on both
petrol and gaseous fuels. There is a threat to Maruti models ageing. Maruti
models like Maruti 800 which is in market for the last twenty years and others like
Zen and Esteem which have also entered the decline phase are the other threats.
Maruti is planning phasing out Zen in 2007 and there were rumors of phasing out
Maruti 800 also. This all makes Suzuki to replace these brands with new launches .
As Swift and Wagon R are replacing the Zen market. Maruti will have to keep on
makingN modifications in its present models or its models will face extinction.
COMPETITORS OF MARUTI SUZUKI SWIFT

Hyundai
Unlike most other MNCs, Hyundai of South Korea decided to enter India with its
small car model, Santro, which it priced attractively at about $7000. Hyundai
chose to set up a fully owned subsidiary and hired some of the most reputed
executives in the Indian automotive industry. Hyundai also invested heavily in a
modern car plant near the city of Madras, in the southern part of India. The
facility can manufacture 130,000 engines, transmission sets and components per
annum. According to Business India1, What makes HMIs (Hyundai Motor India)
progress even more impressive is that the Sriperambadur plant is not another
knocked down (KD) operation but an integrated manufacturing facility. The
Santros that will roll out of this plant will be manufactured from day one and not
merely assembled. This is a historic achievement. No company has begun
operations in this manner, not even Maruti Udyog, which initially imported CKD
kits for the Maruti 800... The very essence of Hyundais strategy is to localise
heavily from day one to give it a very early cost advantage, the number one
priority in this highly price sensitive market. The Santro has been a major
success. Though not very elegant looking, the car has enough leg and head room.
Hyundai sold more than 75,000 vehicles during the period April 1999 - March
2000 and looks set to cross the 100,000 figure in the current year. During the
period January-June, 2000, Hyundai sold 45,513 units, against 21,884 in 1999.
73
Encouraged by the success of the Santro, Hyundai launched the up market Accent
model.A major worry for Hyundai is that it has just one small car in its stable.
Hyundai is pinning its hopes on luxury models such as the Sonata, priced at
around Rs 12 lakhs, but as the company's senior executives themselves admit,
such models are unlikely to sell more than 250 units per month. Hyundai is also
vulnerable because of its relatively small size, when compared to global majors
such as Ford, General Motors, Toyota, Daimler Chrysler, Volkswagen and Honda.
Telco
Founded in 1945, the Tata Engineering and Locomotive Company (Telco) is one of
the leading players in the Indian automobile industry. In its early years, Telco
manufactured only commercial vehicles, through a technical collaboration with
Mercedes Benz of Germany. Starting with the 1980s, Telco has moved into light
commercial vehicles, pick-up trucks, multi-utility vehicles, large cars and finally,
small cars. The Tata Mobile pick-up truck launched in 1988 was probably a
turning point in Telcos history. The model failed to build volumes, but gave Telco
engineers confidence in their design capabilities. Telco then launched its big cars,
Tata Sierra (1991) and Tata Estate (1992). Both these cars have been more or less
phased out, as Telco decided to take a plunge into the mass market small car
segment1.
The star in Telco's portfolio today is the small car, Indica, designed in Italy, but
manufactured in India as an almost completely indigenous effort. The car has a
distinctive look and sufficient space but its engines can probably be improved. At
the time of launch, the Indica was plagued by quality problems. Telco engineers,
however, ironed these out in quick time. Priced at just over Rs. 3 lakhs, the Indica
offers value for money and has catapulted Telco to a position in which it is one of
the few serious challengers to MUL. In the Rs 3 - 4.5 lakh price segment
consisting of the Santro, the Zen, the Matiz, the Wagon R and the Uno, Indica has
a market share of 21%. One concern expressed by analysts is Telco's staying
power. The project will not break even for some time. As Business Today2
recently remarked: "The car foray is sucking Tata Engineering into a vicious loop:
as its losses keep mounting, the breakeven target keeps getting pushed back
further. As things stand today, analysts point out that to make money, Tata will
have to sell close to one lakh cars, against the original target of 90,000 cars and
74
the project cost has escalated to over Rs 2000 crores." Some analysts even
suggest that Telco should spin off its car venture and offer a stake to a foreign car
major. Another worry for Telco is that it is dependent on just one model. To be a
serious player, the company needs a couple of additional models which would
obviously cost money.
Daewoo
Daewoo entered India in 1995 through a joint venture with the local DCM group.
Japanese car major Toyota, also had a small stake in the project. Daewoo later
hiked up its equity stake to take complete control of the venture. Daewoo's first
model for the Indian market was the Cielo. Initially, Cielo seemed to be doing
well, selling about 1000 units per month. Later, as competing models arrived,
Cielo's sales dropped sharply. Daewoo reacted by offering major discounts. This
only hurt the car's image and did little to boost sales. Daewoo attempted to learn
from its experience, by launching its small car, the Matiz in late 1998. Although
the Matiz was initially priced high, Daewoo quickly cut the price to grab market
share. The Matiz is today priced attractively and is one of the most stylish small
cars currently available in India. Daewoo has pinned its hopes on the Matiz to
make a comeback and catch up with arch rival, Hyundai. Daewoo however faces
major challenges in the months ahead. Its parent company in Korea is in big
trouble and is on the verge of being sold off. It has only one small car model. The
company's operations in India are still to stabilize, with losses of Rs. 40.14 crore
during 1998-99. In the wake of the uncertainty over the future of its parent
company, Daewoo has postponed the launch of its luxury car models, Nubira and
Leganza.
Hyundai Santro 1.1 CRDi

When Hyundai launch the Santros replacement in 2007, it will come with the
surprise addition of a 1.1 litre common rail diesel. Likely to be the cheapest car on
sale powered by a CRDi engine, this motor is the new Accents CRDi unit less one
cylinder. Incredibly powerful for its size, this 1,120cc engine produces a whopping
75bhp. Unconfirmed reports talk of overall figures, city and highway combined, in
excess of 20 kilometres a litre.
75
Hyundai Getz 1.5 CRDi
Not as attractive as the Swift, but more practical, with greater rear seat comfort
and more useable space, Hyundais diesel assault continues up the range with its
large hatch. The Getz will share its motors with the new Accent/ Verna. Hyundai
sell the Getz powered by a detuned version of the new Accent motor in the
European continent, and its likely to be the case here as well. Producing 87bhp
as against 108bhp, using two versions of the same engine will help Hyundai get a
handle on costs. The diesel Getz also qualifies for excise sops, meeting both
length and engine capacity criteria.
Tata Indica 1.3 Multijet

By the time the larger new Indica is out, the Tata-Fiat tie-up will be going full
throttle. Tata will borrow engines from Fiat with, you guessed it, the 1.3 litre
Multijet being the engine of choice. Thoroughly localised, cheaply assembled and
very capable, it will give the new Indica/ Indigo family a huge leap forward as far
as overall ability is concerned.
Conclusion
Based on these factors the various strategic alternatives were evaluated. The
areas of strategic thrust which Maruti can concentrate on are identified. The
various course of action for these strategic thrust areas and suitable matrixes
evaluate them are identified.
76
Strategic Thrusts Action Measures
Increases Scope Tap the huge component & Percentage of sales

accessories market from new products
New product Enter fast growing CV ROE,ROA

segment and global platforms
Same market
New product Expand geographically Increase in profitable

Europe and alternate energy market share
New market
Market Finding rural markets, Online Customer satisfaction

rationalization trade
Distribution Separate dealers based on Dealer profitability,

rationalization value Percentage of
cannibalization
Wallet shares Concentrate more on Percentage profit for

customer solution each business unit
HOLD ON 4 for 2when 1 lac car is Number of Maruti

introduced 800s sold
Maruti Suzuki India Ltd (MSIL) has the highest marketshare in the automobile
sector in India. To consolidate and protect its leadership position, the market
research team conducts a continuous Brand Track study with an all-India scope.
Amongst other things them survey looks at: Brand Awareness, Advertising Recall,
Product Experience, Company Image and Competition Analysis.
77
78

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TAXILA BUSINESS SCHOOL

MARUTI UDYOG LIMITED

messages and a state-of-the art driving training and researchinstitute that it

Can it sustain its market share

Will their be a decline in profits

What can it do to keep its growth rate?

How can it compete in the highly competitive small car segment

What are its strategic alternatives

The Indian Car Industry

LEADING PLAYERS AND SEGMENTS IN WHICH THEY OPERATE

Tata Motors Cars, MUVs, LCVs, M&HCVs, Buses

The current market scenario is given below:

Category Engine Length Market Price range Example

Mini < 800 <3350 19 2-3 Reva,800

Small car 800-1200 3350-3800 56 3-5 Alto, zen

Mid 1100-1800 3800-4400 20 5-10 Ikon,

Executive 1700-2400 4300-4850 3 10-20 Accord

Luxury >2400 4500-5100 2 >20 Bmw

Market Drivers in India

Increase in disposable incomes.

Market evolution from Mini cars to Hatchbacks to Compact Sedans now

Shrinking product life-cycles.

Government Policies and regulations

In 2002, the Indian government formulated an auto policy that aimed at

Key players and their market share

2,91,182 52.2 23,043

1,07, 066 19.2 68,374

24,348 16.6 12,105

10,512 1.9 9,928

Ford India Pvt. Ltd

Honda Siel cars others

Hyundai Motors others

Three growth drivers

Maruti is developing a new small-car model for introduction in 2008both in India

Meanwhile, the commercial vehicle (CV) segment is also passing throughsome

showing signs of evolving on the global pattern ofprime movers consisting of

Clearly, the automotive industry is on the cusp of a long, sustainedgrowth cycle

HISTORY OF THE COMPANY

Maruti Udyog Limited (MUL) was established in February 1981,

Suzuki Motor Company was chosen from seven prospective partnersworldwide.

YEAR EVENTS 2006

AWARD AND ACCOLADES

First Indian car manufacturer to reach 5 million vehicles sales.

Maruti Suzuki was No. 1 in Customer satisfaction, No. 1 in SalesSatisfaction No.1

No. 1 in Total Customer Satisfaction (Maruti 800, Zen and Alto).

Business World ranked us among the country's five most respectedcompanies.

Business World ranked us the country's most respected automobilecompany.

Voted one of India's Greenest Companies by Business Today-AC

Main divisions(brand equity)

Authorized Service Stations

Maruti is one of the companies in India which has unparalleled service

Launched in 2002 Maruti provides vehicle insurance to its customers with

To promote its bottom line growth, Maruti launched Maruti Finance in

over 12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is

Maruti True Value is a service offered by Maruti Udyog to its customers. It

N2N Fleet Management

Maruti Driving School

As part of its corporate social responsibility Maruti Udyog launched the

1st vehicle produced, December 1983

1,00,000 vehicles produced by August, 1986

5,00,000 vehicles produced by June, 1990

10,00,000 vehicles produced by March, 1994

15,00,000 vehicles produced by April, 1996