Maruti Udyog Limited

Maruti Suzuki India Limited , commonly referred to as Maruti, is a subsidiary company of Japanese automaker Suzuki Motor Corporation. It has a market share of 44.9% of the Indian passenger car market as of March 2011. Maruti Suzuki offers a complete range of cars from entry level Maruti 800 and Alto, to hatchback Ritz, A-Star, Swift, Wagon-R,Estillo and sedans DZire, SX4, in the 'C' segment Maruti Eeco, Multi Purpose vehicle Ertiga and Sports Utility vehicle Grand Vitara.

It was the first company in India to mass-produce and sell more than a million cars. It is largely

credited for having brought in an automobile revolution to India. It is the market leader in India,

and on 17 September 2007, Maruti Udyog Limited was renamed as Maruti Suzuki India Limited.

The company's headquarters are on Nelson Mandella Rd, New Delhi. In February 2012, the

company sold its 10th million vehicle in India.

The old logo of Maruti Suzuki India Limited. Later the logo of Suzuki Motor Corp. was also

added to it 'To Munsiyari on a Maruti 800',Uttarakhand Himalayas

Maruti Suzuki is India and Nepal's leading automobile manufacturer and the market leader in the

car segment, both in terms of volume of vehicles sold and revenue earned. Until recently,

18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan.

The BJP-led government held an initial public offering of 25% of the company in June 2003. As

of 10 May 2007, the government of India sold its complete share to Indian financial institutions

and no longer has any stake in Maruti Udyog.

Maruti Udyog Limited (MUL) was established in February 1981, though the actual production

commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei carwhich at the time was

the only modern car available in India, its only competitors- the Hindustan

Ambassador and Premier Padmini were both around 25 years out of date at that point. Through

2004, Maruti Suzuki has produced over 5 Million vehicles. Maruti Suzukis are sold in India and

various several other countries, depending upon export orders. Models similar to Maruti Suzukis

(but not manufactured by Maruti Udyog) are sold by Suzuki Motor Corporation and

manufactured in Pakistan and other South Asian country.

The company exports more than 50,000 cars annually and has an extremely large domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Currently, Maruti Suzuki Alto tops the sales charts but Maruti Suzuki's Swift has taken over this titles by 19000 models in April 2012.The company imports

diesel engines for all maruti Suzuki cars from the fiat motors the great Italian company.The German car company Volkswagen has a 19.9% non-controlling shareholding in Suzuki Motor Corporation

Joint 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 underlying reason for most issues. The success of the joint

venture led Suzuki to increase its equity from 26% to 40% in 1987, and further to 50% in 1992.

In 1982 both the venture partners had entered into an agreement to nominate their candidate for

the post of Managing Director and every Managing Director will have a tenure of five years

R.C. Bhargava was the initial managing director of the company since the inception of the joint

venture. Till today he is regarded as instrumental for the success of Maruti Suzuki. Joining in

1982 he held several key positions in the company before heading the company as Managing

Director. Currently he is on the Board of Directors. After completing his five year tenure, Mr.

Bhargava later assumed the office of Part-Time Chairman. The Government nominated Mr.

S.S.L.N. Bhaskarudu as the Managing Director on 27 August 1997. Mr. Bhaskarudu had joined

Maruti Suzuki in 1983 after spending 21 years in the Public sector undertaking Bharat Heavy

Electricals Limited as General Manager. In 1987 he was promoted as Chief General Manager. In

1988 he was named Director, Productions and Projects. The next year (1989) he was named

Director of Material and in 1993 he became Joint Managing Director.

Suzuki Motor Corporation didn't attend the Annual General Meeting of the Board with the

reason of it being called on a short notice. Later Suzuki Motor Corporation went on record to

state that Bhaskarudu was "incompetent" and wanted someone else. However, the Ministry of

Industries, Government of India refuted the charges. Media stated from the Maruti Suzuki

sources that Bhaskarudu was interested to indigenise most of components for the models

including gear boxes especially for Maruti 800. Suzuki also felt that Bhaskarudu was a proxy for

the Government and would not let it increase its stake in the venture. If Maruti Suzuki would

have been able to indigenise gear boxes then Maruti Suzuki would have been able to

manufacture all the models without the technical assistance from Suzuki. Till today the issue of

localization of gear boxes is highlighted in the press

Relations

Since its founding in 1983, Maruti Udyog Limited experienced few problems with its labour

force. The Indian labour it hired readily accepted Japanese work culture and the modern

manufacturing process. In 1997, there was a change in ownership, and Maruti became

predominantly government controlled. Shortly thereafter, conflict between the United Front

Government and Suzuki started. Labour unrest started under management of Indian central

government. In 2000, a major industrial relations issue began and employees of Maruti went on

an indefinite strike, demanding among other things, major revisions to their wages, incentives

and pensions.

Employees used slowdown in October 2000, to press a revision to their incentive-linked pay. In

parallel, after elections and a new central government led by NDA alliance, India pursued a

disinvestments policy. Along with many other government owned companies, the new

administration proposed to sell part of its stake in Maruti Suzuki in a public offering. The

worker's union opposed this sell-off plan on the grounds that the company will lose a major

business advantage of being subsidised by the Government, and the union has better protection

while the company remains in control of the government.The standoff between the union and the

management continued through 2001. The management refused union demands citing increased

competition and lower margins. The central government prevailed and privatized Maruti in 2002.

Suzuki became the majority owner of Maruti Udyog Limited.

Hurdles

On 24 February 2010, Maruti Suzuki India announced recalling of 100,000 A-Star hatchbacks to

fix a fuel leakage problem. the company will replace the gaskets for all 100,000 A-Star cars.

Maruti Exports Limited is the subsidiary of Maruti Suzuki with its major focus on exports and it

does not operate in the domestic Indian market. The first commercial consignment of 480 cars

were sent to Hungary. By sending a consignment of 571 cars to the same country Maruti Suzuki

crossed the benchmark of 300,000 cars. Since its inception export was one of the aspects

government was keen to encourage.s] Every political party expected Maruti Suzuki to earn

foreign currency. Angola, Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, Nepal, Sri Lanka,

Uganda, Chile, Guatemala, Costa Rica and El Salvador are some of the markets served by Maruti

Exports.

The Brand Trust Report published by Trust Research Advisory has ranked Maruti Suzuki in the

seventh position in 2011 and the sixth position in 2012 among the brands researched in India.

Bluebytes Newsa news research agency, rated Maruti Suzuki as India's Most Reputed Car

Company in their Reputation Benchmark Study] conducted for the Auto (Cars) Sector which

launched in April 2012.

Synopsis

The case attempts to analyse the industry from the view point of Maruti Udyog Limited which

has been the leading player in India for the last two decades.Over the years,although the

company has managed to maintain its numero uno position, it has constantly faced the challenge

of decreasing market share from 80%in the 1990s to around 51% by the end of the financial year

2007. The rating for the company about its quality of products and services has gone into a tail

spin.The company started by carving out a niche for itself by being a cost leader. It followed a

‘value-for-money’ pricing strategy. This it was able to achieve through the indigenization of its

vehicles and a strong supplier as well as distribution network. New players in the market like

Hyundai India Limited and Tata Motors decided to tap the sentiments of customers who

perceived cars as something more than a more than a mode of transport. Maruti Suzuki has tried

to meet competition by coming out with utility variants like Omni,Gypsy etc.and upgraded

versions such as Zen,Alto etc. but it has managed to change the mind set of the people who still

perceive MUL to be a mass-based car manufacturer. That MUL has not been able to meet the

people expectations is evident from its decreasing market share.The biggest dilemma before

MUL’s management is to whether change its corporate profile or further strengthen its core

competency of low cost manufacturing through improved productivity, economies of scale

focused value analysis and value engineering efforts, leaner operations and tighter inventory

controls. Aprecedent has already been set with the announcement of the Rs.1 lakh car by Tata

Motors which has re-define the small car market. sin the market.In order to maintain a

competitive edge in the market,Maruti should continue to nurture and strengthen its relationship

with its dealers. The oeners of Maruti cars enjoy the privilege of easy availability of spares and

accessories and a wide network of authorized service points.