Company Background - Maruti Suzuki

Maruti Udyog Ltd (MUL) was incorporated in February 1981 through an Act of Parliament, as a Government company with Suzuki Motor Corporation (SMC) of Japan. It was established to achieve the goals of modernization of Indian Automobile Industry, production of vehicles in large volumes and production of fuel efficient vehicles. Suzuki was an ultimate one to achieve this all because of their expertise in small cars segment.

The Joint Venture agreement was signed between Government of India and Suzuki Motor Corporation in October 1982. The Company went into production in a record time of 13 months marking the beginning of a revolution in the Indian automobile industry. The First car was rolled out for sale in December 1983. Initially, Suzuki was holding 26 per cent Stake. Now MUL is a subsidiary of Suzuki with an equity holding of 54.21 per cent.

Maruti Udyog has been the leader of the Indian car market for about two decades. Its manufacturing plant, located in Gurgaon, has an installed capacity of 3,50,000 units per annum, with a capability to produce about half a million vehicles.

Maruti produces cars with world-class contemporary Japanese Technology, suitably adapted to Indian conditions and Indian car users. It also provides users with a range of cars to suit different needs. The company has a portfolio of 11 brands, including Maruti 800, Omni, Premium small car Zen, International brands Alto and WagonR, off-roader Gypsy, mid size Esteem, Luxury car Baleno, the MPV, Versa, Swift and Luxury SUV Grand Vitara XL7.

In 2001-02, the Cabinet Committee on divestment approved the exit of Government of India from the Joint Venture, Suzuki Motor Corporation, Government of India and the Company executed a Revised Joint Venture Agreement (RJVA). Pursuant to RJVA, the company made a further issue of 1,219,512 equity shares of Rs.100 each at a premium of Rs. 3,180 share each. On 30th May, 2002, the company allotted 1,216,341 equity shares aggregating to Rs. 398.96 crores in favour of SMC, which include the portion fully renounced by GOI besides SMC's own entitlement. 3,171 Equity Shares were duly cancelled as the Maruti Udyog Limited Employees Mutual Benefit Fund decided not to subscribe its right entitlement. After this allotments, the company has become the subsidiary of SMC.

In 2002-03, Pursuant to the Revised Joint Venture, the Government of India offered 72,243,300 equity shares, equivalent of 25 per cent of the company's share capital, for sale to the public. To enable the retail investor to participate widely in this offer, the company subdivided the face value of an equity share of Rs. 100 to Rs. 5. Despite depressed sentiment in the capital market, the issue was fully subscribed within three hours of opening.

Encouraged by the overwhelming response, the GOI exercised the greenshoe option and off-loaded an additional 10 per cent of the issue or 2.5 per cent of the company's share capital.

In the same year, Maruti Udyog and Suzuki Motor Corporation had jointly set-up a Joint-Venture company under the name Suzuki Metal India Limited (SMIL) to engage in the business of, inter alia, manufacturing Aluminium die casting or low pressure casting engine parts such as cylinder blocks, transmission cases, cylinder heads for four wheelers and two wheelers. This was created with a view to reduce material cost besides ensuring a smooth and uninterrupted supply.

In 2004-05, MUL in collaboration with Suzuki Motor Corporation has established a new company Maruti Suzuki Automobiles India Ltd. (MSAIL) for setting up a new manufacturing plant at Manesar. In this new entity, the company will hold 70 per cent equity the balance will be held by SMC. The company has also started the works to set up a new Engine and Transmission facility in collaboration with Suzuki Motor for the manufacture of diesel engines, petrol engines and transmission assemblies for four wheeled vehicles. This will reduce the cost of production of cars.

In 2006, Maruti Udyog acquired the 30 per cent equity stake of SMC in Maruti Suzuki Automobiles India Ltd. Subsequently, the company decided to amalgamate MSAIL with itself. Now, it has been amalgamated with MUL.

In recent years, Maruti has made major strides towards its goal of becoming Suzuki Motor Corporation's R & D hub for Asia. It has introduced upgraded versions of WagonR Zen and Esteem, fully designed and styled in-house. Maruti's contribution in the development of the Indian auto industry is a paramount one. Maruti tops customer satisfaction again for sixth year in a row according to the J.D. Power Asia Pacific 2005 India Customer Satisfaction Index (CSI) study. The company's quality systems and practice have also been rated as a 'benchmark for the automotive industry world-wide' by A V Belgium, global auditors for International Organisation for Standardisation.

Maruti has also spread its wing in auto related service businesses. These were aimed at enhancing customer experience while building long term relationship. The company's service businesses including sale and purchase of pre owned cars (True Value), lease and fleet management service for corporates (N2N), Maruti Finance and Maruti Insurance are enabling the company to offer one-stop shop for the customers.

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