Etsuro ISHIGAMI
Fukuoka University

Contents
“ Maruti Revolution ” and Some Issues up to the mid-1990s
• From the end of 1990s onwards:
Competition and Corporate Strategy of Suzuki=Maruti
• Is Maruti the goose laying the golden eggs to Suzuki? Some Financial
Parameters

Production of Vehicles (Passgr. & Comm.):
Manufacturer-wise 2003CY
Maruti Udyog 437,347 ( ＋ 23%) 37.3%
Tata Motors 288,998 ( ＋ 37%) 24.6%
Hyundai M. I. 153,747 ( ＋ 42%) 13.1%
Mahindra & Ma. 94,782 ( ＋ 31%) 8.1%
Ashok Leyland 45,122 ( ＋ 38%) 3.8%
Toyota Kirloskar. 37,481 ( ＋ 44%) 3.2%
Ford India 18,790 ( ＋ 22%) 1.8%
Honda Siel Cars 15,737 ( ＋ 19%) 1.3%
Hindustan M. 15,654 ( － 33%) 1.3%
Eicher Motors 13,965 ( ＋ 12%) 1.2%
Total 1,172,668 100.0%

1983 Started Production, launched Maruti 800
1984 Installed Capacity reached 40000 units, launched Omni
1985 Launched Gypsy
1986 Produced 100,000 units since commencement of production
1987 Exported first lot of 500 cars to Hungary
1988 Reached installed capacity of 100,000 units
1990 Launched Sedan Maruti 1000
1991 Cumulative indigenisation of 65% for all units

1992 SMC increased its stake in Maruti to 50%
1993 Launched Zen
1994 Launched Esteem; Produced 1 million vehicles since commencement of production
1995 Plant 2 became operational, installed capacity to 200,000 units
1997 Produced 2 million units since the commencement of production
1999 Plant 3 and new press, paint and assembly shops became operational; installed capacity increased to 350,000 units;
Launched Baleno and Wagon R

2000 Launched Alto and Altura; Produced 3 million vehicles since commencement
2001 Launched Versa; Launched new business:
True Value, Maruti Finance, Maruti Insurance and N2N
2002 SMC assumes Management control
2003 Entered into Partnership with State Bank of
India; Production of 4 million vehicle;
Launched Grand Vitara XL-7;
Listed on BSE and NSE after a Public Issue oversubscribed 10 times;
Upgraded Wagon R and Zen
Sold its Record 472,000 units, and Exported
51,175 units ( ’ 03’ 04)
Exploring the feasibility of setting up new plant

2004
#SMC announced to set up a join venture with
MUL to build a manufacturing facility with an annual production capacity of 250,000, first car by early 2007; also to set up a new two-wheeler manufacturing facility both at Haryana state
#SMC announced MUL to become SMC ’ s R & D
Centre in Asia by 2007, to work out a new model for Zen for export
#To invest Rs 350 crore to set up a new diesel engine manufacturing facility with an annual production capacity of 100,000 by a licensing agreement with Fiat Auto and Adam Opel for 1.3 litre diesel engine

“ Challenge 50 ” ( ’ 01’ 02~ ’ 04’ 05)
#50 % Increase of Productivity by ’ 03’ 04.
cf. 20 hours per vehicle to complete at MUL plant:
11 hours at Kosai I plant, SMC
#Reduction of Inventory holding period from 30 days in ’ 02’ 03 to 19 days in ’ 03’ 04;
#Supplier Management: MUL has reduced its vendor base from over 350 in ’ 01’ 02 to around 220 at the end of ’ 03-
’ 04. It helped MUL enhance supply chain efficiencies by lowering the time and costs involved in dealing with more vendors.
#Local Contents (March 2004.)
Maruti 800, Omni, Alto, Wagon R, Zen, Esteem > 90%
Baleno, Versa, Gypsy: 70~85%

#Research and Development (R & D):
Rs 396 mn., 0.42 %(!!) as of net sales ( ’ 03-04)
“ In its early days, the Maruti R & D centre was primarily involved in providing technical assistance to local component manufacturers,
Over the years, the centre has developed capabilities for face lifts and body changes of current models …… .All modifications done on the new Zen model introduced by the company
2003-04 were carried out in-house by the R & D team. The dies for the new body panels were developed in-house die shop for the first time.
”

• 08/1981 Business
Partnership
• 09/2000 GM ’ s 20.3%
Equity Participation in SMC
04/2003 SMC-Fiat agreement for joint development of a new
SUV based on SMC ’ s A-
Segment Platform: both gasoline and diesel engine version. Production will start during 2005 at Magyar Suzuki in Hungary to be sold at both
Suzuki and Fiat dealers under each company ’ s own brand.
• 06/2003 Magyar
Suzuki started an
OEM supply of the new G3X Justy to
Subaru Europe N.V./
S.A.
• 08/2003 Suzuki began cars made by GM-
Daewoo Auto & Tech. at America
• 03/2004 Chevrolet
Astro manfed. At
Kosai sold in Japan

Maruti Revolution(1) Humphery et al.
[1999]
• Production of a relatively modern small car design: fuel-efficient, cheap and quality
• Location away from established industries areas: a green field site at
Gurgaon
• Achievement of scale economics
• Development of a suppliers network

• Factory Layout, similar pattern of Suzuki
• Machinery and Equipment identical
• Follow Suzuki ’ s Organisation structure
• Quality Circle introduced
• Employees informed about quality and productivity; the sense of commitment
• Feeling of Oneness
• People sent Japan and Japanese experts called to do actual work up to two years

Application of Fund
Sources of Fund
Fixed Asset
Share Capital 1,445
Gross Block 45,667
Reserve & surplus 34,467
Less Acc.Depr. 27,359
35,912
(Plus Cap.WIP) 19,057
Loans 3,119
Deferred Tax 1,833
Total 40,864
Investment 16,773
Current Asset, Loans &
Advances 20,189
Less Current Liabilities &
Provisions 15,318
Net Current Assets 4,871
40,864

Profit and Loss Account 2003-04 (Rs. Mn.)
Income
Gross Sales 112,840
Less Excise Duty 19,384
Net Sale 93,456
Income from Service 278
Other Income 3,776
Total 97,510

Raw Materials & Components 66,349 *(/Net Sales)
Purchase of Traded Goods 3,512
Consumption of Stores 536
(sub total three items 70,397 )---(75.3%)
Employees Remuneration & Bnft.2,975 ( 3.2%)
Mnfg. & Admn. Expenses 3,735 (4.0%)
Selling & Distribution Expenses 6,662 (7.1%)
Financial Expenses 457
Depreciation 4,949 (5.3%)
Total 89,812
Profit before Tax 7,698
Profit after Tax 5,421 (5.8%)