History of maruti

 
 
Maruti Suzuki India Limited (MSIL, formerly known as Maruti Udyog Limited) is a subsidiary of Suzuki Motor Corporation,
Japan. MSIL has been the leader of the Indian car market for over two and a half decades. The company has two
manufacturing facilities located at Gurgaon and Manesar, south of New Delhi, India. Both the facilities have a combined
capability to produce over a 1.2 million (1,200,000) passenger car units annually. 

The company plans to expand its manufacturing capacity to 1.75 million by 2013. For this the company will be investing
around Rs. 60 Billion (Rs 6,000 Crores) over the period till 2013. 

The company offers a wide range of cars across different segments. It offers 14 brands and over 150 variants - Maruti
800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader
Gypsy, SUV Grand Vitara, sedans SX4 and Swift DZire In an environment friendly initiative, in August 2010 Maruti Suzuki
introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and
Sx4.
 

In fiscal 2009-10 Maruti Suzuki became the only Indian company to manufacture and sell One Million cars in a year.  

Maruti Suzuki has employee strength over 7,600 (as at end March 2010),

In 2009-10, the company sold a record 10,18,365 vehicles including 1,47,575 units of exports. With this, at the end of
March 2010, Maruti Suzuki had a market share of 53.3 per cent of the Indian passenger car market (including C
segment). 

Maruti Suzuki's revenue has grown consistently over the years.

Suzuki Motor Co. Ltd., now one of the big four, started
over sixty years ago in Japan making spinning looms.
Branching out into the motorcycle market, they have again
branched out into cars, vans, trucks, outboard motors and
many other types of manufacturing.

  But it is motorcycles that Suzuki is best known for,

and their arrival on the motorcycle market started in
June 1952, with a little machine, called the "Power
Free", a 36cc single-cylinder two-stroke. It had an
unprecedented feature which was the double-sprocket gear
system, which enabled the rider to pedal with the engine
assisting, pedal without engine assist, or disconnect the
pedals and run with engine power alone. The system was so
ingenious, the Patent Office granted Suzuki a financial
subsidy to continue research into motorcycle engineering.
  Nine months later, the "Power Free" got a two-speed
transmission, and was joined by a more powerful 60cc
version called the "Diamond Free." It was simple and easy
to maintain, with the engine mounted onto the front wheel
of a bicycle. Suzuki employees, who had been making
looms, were now making motorcycle parts.

  By 1954, Suzuki had made their first "real" motorcycle,

the "Colleda CO". They were producing 6,000 motorcycles
per month; Suzuki was moving on to bigger, more powerful
motorcycles. The Colleda CO was a lightweight 90cc
single-cylinder four-stroke. Winning a national Japanese
race in its first year of production ensured its future
and made it an instant success.

   In June 1954, the company changed its name from Suzuki

Jidosha Kogyo (meaning Suzuki Automotive Industries), to
Suzuki Motor Co. Ltd.

  March 1955 saw the introduction of Suzuki's largest

machine, the Colleda COX, a 125cc single-cylinder four-
stroke with more modern styling. Also introduced was a
redesigned version of the popular two-stroke Colleda,
named the Colleda ST. It came with more sophisticated
suspension and lighting. To meet the needs of the market,
it was bored out from 90 to 125cc and a great many were
sold. The forethought of the Suzuki engineers was shown
when the last models of the Colleda, made in May 1959,
were fitted with electric starters, astonishing their
European competitors.

Merger between Maruti and Suzuki

Japan's leading minicar maker Suzuki Motor Corp is all set to consolidate its car production in India by having India's
top car maker ,Maruti Udyog Ltd., its local subsidiary, buy out a joint venture between the unit and the Japanese
parent, possibly in September as a move to clear doubts about their operations synergise management.

Suzuki and Maruti Udyog set up Maruti Suzuki Automobiles India Ltd. (MSAIL) in April last year, with the Japanese
carmaker putting up 30 percent and the subsidiary 70 percent of its capital, in order to build Suzuki's second auto
assembly plant in the country.MUL holds 70 per cent stake in MSAIL while Suzuki Motor Corporation (SMC), Japan,
holds the remaining 30 per cent. MUL will buy out the entire 30 per cent stake held by SMC in MSAIL. This was
decided by MUL’s Board of Directors at a meeting today.
Company’s managing Director Jagdish Khattar Without disclosing the financial transactions involved in buying out the
30 per cent stake of its parent in MSAIL said “ merger would be completed by September, ahead of the scheduled
commercial production from the new facility “. In the original arrangement finalized in September 2004, MSAIL was
set up as a subsidiary to operate the new car plant in Manesar. The new car plant at Manesar is coming up at an
investment of Rs. 15,242 million. The capacity of the plant would initially be 100,000 cars per annum, with a plan to
scale it up to 250,000 cars per annum by 2008-09.
The new car plant would begin commercial production on schedule, by the end of 2006.
This merger will add value for shareholders and eliminate all potential issues relating to inter-company transactions. ”
It will retain all the benefits of the earlier arrangement and enable the management to focus on critical issues of
business operation," MUL Chairman S Nakanishi said after the Board approved the proposal.
Following the news, shares in Maruti climbed more than 4 percent to 878.20 rupees in a weak Mumbai market. We
view this development very positively as the creation of MSAIL had raised concerns (about) the logic of creating a
new subisidary when the ramp up could take place in Maruti itself," said Kalpesh Parekh, a senior analyst at ASK-
Raymond James."Also, there were some concerns pertaining to the marketing and distribution tie-up between the
two," he said. "Now, the concerns are clearly addressed, adding value to shareholders”
This merger will help Suzuki so that it can more flexibly and quickly respond to trends in the expanding Indian marke

STRENGTH
MUL is in a leadership position in the market.
 Major strength of MUL is having largest network of dealers and after sales service caters in the
country.
 Self competing product range in small car segment
 Maruti 800
 Omni
 Alto
 Zen
 Wagon R
 Good promotional strategy is adopted by MUL to transform its thoughts to the people about its
products
 Baleno: “Missed the flight catch Baleno† The most comfortable Car even in long
drives.
 Esteem: “My Daddy’s Big Car” Affordable mid size car
 Alto: “Lets Go” The fuel efficient and affordable car
 After Sales Service “Kya yanha Maruti Service Station hai” Availibility of service
stations even in the remotest place in the country.
 Refurbished Cars: MUL has also entered into second hand car market with a brand
name â€œMaruti True Value”.
 Loyal Customer Base is another big strength of MUL. In JD Power survey, MUL has been
awarded consequently 5th year for best customer satisfaction.
 Strong Brand Value
 Availability of raw material
Weakness
 Lack of having products in mid size car segment could result in shifting of loyal customers who
has a desire to upgrade their cars.
 Low interior quality in side the cars.
 Labour Laws and Labour Unions are not in a good form in India.
 Government intervention due to having share in MUL.
Opportunity
 MUL may encash the opportunity to enter again into the diesel segment of the cars to compete its
nearest competitor TATA in diesel segment of small cars. Though MUL launched Zen in diesel
version but it was not successful.
 MUL has launched its LPG version of Wagon R and it was a good move simultaneously MUL can
start R&D on  electric cars for a much better substitute of the fuel.
 Economic growth of the country is sound and promising in future.
 Liberal policies of GOI.
 Big Market: Domestic and Abroad
Threat
 Tata Motors is planning to launch a car with a price tag of Rs. 1 Lac and that could give a big
impact on sales of MUL
 HMIL is a challenger and trying hard to achieve number one position in the market.
 China may give a good competition as they are also planning to enter into car segment.

maruti suzuki SWOT Analysis:

Strengths 
what strengths does the company has
 
  Brand Image
Weaknesses 
  Reliable and cheap. Established brand in Indian market.
Diseconomies to scale
Great service and nationwide penetration.
No online presence
 Experience in Indian market 
Not diversified
 Very old player in Indian market. First major player. 
 
  Established distribution & after sales networks
 product for many segment of market
Opportunities  Threats 
Acquisitions Competition
Innovation Cheaper technology
 External changes
Online (government, politics, taxes, etc)
Product and services expansion Lower cost competitors or
Takeovers imports
Targeting Higher Middle Class requirements Price wars
Product substitution
Maruti Suzuki: Synergies

Investment Rationale

Synergies Expected with Volkswagen

Volkswagen acquisition of a strategic stake in Suzuki, the parent company of Maruti Suzuki
India, brings a lot of synergies between Maruti and Volkswagen, as the latter enters the
Indian markets. The two companies are exploring possibilities to integrate their backend
operations to take advantage of Maruti’s market hold and Volkswagen’s technical know-how.
Also Volkswagen’s current production levels are much lower than the installed capacity while
Maruti is facing capacity constraints, thus the possibility of a capacity sharing cannot be
ruled out.

Operating at above 100% capacity

The company has an installed capacity of 1 million vehicles per annum and is operating at
above 100% capacity level by de-bottlenecking its capacity constraints and running the
plants at their maximum efficiency. The company has planned capacity expansion which
shall be commissioned by FY12.

Attractive Valuations
The stock is trading at a historically lower P/E of 13x its FY11 expected EPS of Rs. 97 and
11x its FY12 expected EPS of 112. We believe that the company being a leader in the
passenger car segment with more than 50% market share should command higher
valuations & should be trading at around 15x FY11E. We recommend a hold on Maruti
with a 12M target of Rs 1449 and potential upside of 11%.

The German car manufacturer Volkswagen, in the wake of the announcement it

made recently stating that it has bought 19.2 percent stake in the Japanese
automotive major Suzuki Motor Corporation, is brimming with the idea of
working in tandem with the Indian subsidiary, Maruti Suzuki for the
development of a compact car below Polo.

According to Christian Klingler, Board Member, Volkswagen Group, the German

firm will utilise the synergy of Maruti Suzuki for an array of joint projects in the
coming days. While talking to the media after the launch of its newest sedan,
Vento he said the firm has already commenced the work on developing a new
small car, below Polo in pricing and might as well draw synergy from Maruti
Suzuki in developing the new product, as the latter has a world of experience in
developing hatchback cars.
Maruti Suzuki financial results
 
New Delhi, January 23, 2010
The Board of Directors of Maruti Suzuki India Limited approved the financial results for the third
quarter of 2009-10 (October- December 2009) here today.

The company achieved net sales (net of excise) of Rs 73,338 million during the third quarter of 2009-
10. This is an increase of 62.5 per cent as compared to third quarter 2008-09.

Net Profit during the Q3 of 2009-10 was Rs 6,875 million, an increase of 221.9 per cent compared to
the same quarter in previous year.

The results of the quarter have to be seen in the context of the low base in the same quarter in fiscal
2008-09. 

In the October–December 2009 quarter, favourable conditions in the domestic market supported by the
government's stimulus package and ease of automobile finance helped achieve good sales. Commodity
prices were favorable for a major part of the last quarter but started to harden in the last few weeks.

During the quarter, exports, led by the A-star, continued to be strong. The scrappage schemes offered by
some European governments, an appreciating Euro and efforts in the non-European markets resulted in
the growth in exports. 

Capacity Expansion 

The Board of Directors approved investment in capacity expansion at Manesar. The details of the
investment are:
 Investment will be about Rs 1700 Crores (about Rs 17,000 million)
 The additional capacity will be 250,000 cars per annum.
 The additional capacity will begin commercial production by April 2012.

Maruti Suzuki currently has a capability to manufacturer a million units at its existing facilities at
Gurgaon (0.7 million) and Manesar (0.3 million). 

Overview 

The company remains cautiously optimistic about sale volumes in the current quarter. The margins
would be under pressure due to introduction of BSIV technology in the large volume models and
hardening of commodity prices. The focus on cost reduction and Kaizen in operations continues. 

Unit Sales 

In the October-December 2009 quarter, Maruti Suzuki's domestic sales volume grew by 37.8 per cent to
218,910 units, led by Alto and WagonR. During the quarter the company launched a refreshed SX4 with
BSIV compliance and an automatic transmission option. 
During the quarter, Maruti Suzuki's volume in the domestic A2 segment grew by 38.6 per cent, while in
the A3 segment the sales volume grew by 41.7 per cent as compared to sales in October–December
2008. 

The company's exports during the October-December 2009 quarter grew by over 167 per cent to 39,116
units. The company had exported 14,634 units in October-December 2008 period.
 
Maruti Suzuki financials for 2008-09
Total Income up 14.28 per cent; Premium compacts and sedan segment drive topline growth
New Delhi, April 24, 2009
India's number one carmaker Maruti Suzuki India Limited today announced its financial results for the
quarter ending March 31, 2009 and for the full year 2008-09.

Fiscal 2008-09 

The company's Total Income (Net of Excise) (Income from Operations plus Other Income) for the
financial year 2008-09 climbed to Rs 21,453.8 Crore. This is the highest Total Income (Net of Excise)
ever in the company's history, and marks a growth of 14.28 per cent over 2007-08. The growth in Total
Income (Net of Excise) included higher realisations, largely contributed by the company's popular
hatch-back Swift and premium sedan Swift Dzire (Diesel and Petrol variants).
Net Profit during the year stood at Rs 1,218.7 Crore, down 29.6 per cent over 2007-08. The company's
EBDITA for the year stood at Rs 2,433.4 Crore, a fall of about 22 per cent over the previous year. 

During the year, commodity prices went up sharply and remained high for most part of the year. Forex
fluctuations were also adverse and impacted the bottomline significantly. 

In recent months, commodity prices have eased. 

With regard to foreign currency exposure, the company's exports in 2009-10 are expected to be higher
and cover its imports. 

Dividend

The Board of Directors recommended a dividend of 70 per cent for 2008-09. (Fiscal 2007-08: 100 per
cent).