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PROJECT

REPORT

ON
SUBMITTED TO:-

SUBMITTED BY:-

Dr. SHIPRA KHANNA

NIKHIL SHARMA

(Assistant Professor)

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TABLE OF CONTENTS

S.N.O

TOPICS

PAGES

Introduction

2- 3

History

4-7

Organizational Structure

8-10

SWOT Analysis

11 - 13

Financial Status of The Firm

14-17

Marketing Strategy Of The Company

18 22

Main Competitors Of The Company And There

23 31

Strategies
8

Suggestions And Recommendations

32 33

Summary

34-35

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References on page no 36

ACKNOWLEDGEMENT

I wish to express my sincere gratitude to Assistant Professor Dr. Shipra Khanna.


Who have motivated and help me to make this project. She gave time from her
busy schedule and was even available in odd hours.
I am also thankful to the head of the department Dr. Sandhir Sharma and my
course coordinator Mrs. Namita Bhandhari , Management Department chitkara
University for guiding us in accomplishing the work.
I my sincere thanks to my mother who always supported me at every step of my
work . And thanks for all the support provided by them in attaining my educational
goals.
I am also thankful to Mr. Vishu Sachdeva And Mr. Rahul Sachdeva without
whom my project can not be presented.

NIKHIL SHARMA
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INTRODUCTION
MarutiUdyog Limited (MUL) was established in Feb 1981 through an Act of
Parliament, to meet the growing demand of a personal mode of transport caused by
the lack of an efficient public transport system. It was established with the objectives
of - modernizing the Indian automobile industry, producing fuel efficient vehicles to
conserve scarce resources and producing indigenous utility cars for the growing needs
of the Indian population.
A license and a Joint Venture agreement were signed with the Suzuki Motor Company
of Japan in Oct 1983, by which Suzuki acquired 26% of the equity and agreed to
provide the latest technology as well as Japanese management practices. Suzuki was
preferred for the joint venture because of its track record in manufacturing and selling
small cars all over the world.
There was an option in the agreement to raise Suzukis equity to 40%, which it
exercised in 1987. Five years later, in 1992, Suzuki further increased its equity to 50%
turning Maruti into a non-government organization managed on the lines of Japanese
managementpractices.
Maruti created history by going into production in a record 13 months. Maruti is the
highest volume car manufacturer in Asia, outside Japan and Korea, having produced
over 5 million vehicles by May 2005.
Maruti is one of the most successful automobile joint ventures, and has made profits
every year since inception till 2000-01. In 2000-01, although Maruti generated
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operating profits on an income of Rs 92.5 billion, high depreciation on new model


launches resulted in a book loss.

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HISTORY
On December 14, 1983, MUL launched the first Maruti vehicle the Maruti 800.
The first model was the SS80, a 796cc hatchback car priced at Rs. 47,500.
Subsequently, in spite of price hikes, the car remained within the reach of the
Indian middle class and became a runaway success. Available in vibrant colours
when Indias passenger car population comprised mainly Ambassadors and Fiats in
black and white, M800 gave Indians the first taste of global quality and reliability.
In the 1980s, the Maruti 800 (M800) was Indias first peoples car. It caught the
fancy of the middle class. Maruti Suzuki has never looked back since. In fact, in
2004, MUL will mark its 21st year of leadership in the Indian car market. The
M800, first manufactured in 1983, has sold over 2.1 million units. Even though
competition predicts that the A segment is dying, the M800 continues to sell an
average 12,000 units per month.
TheMaruti 800 may be based on 1980s technology, but it remains very popular as
an entry-level model in India. Its obituary has been written before, but the 800 has
defied predictions of its demise. But changes to the regulatory environment in
India could finally mean the end of the road for the 800.
India's protected market meant that until the early eighties Indians hadb\essentially
three model choices in terms of automobiles: the MorrisOxfordderived Hindustan
Ambassador, the Fiat 1100 derived Premier Padmini and the Standard Herald
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derived Gazel. With all three products obsolete, qualityconstruction more of an


afterthought and attributes like power, safety and

comfort being last on a

manufacturer's to-do-list, the Indian automobile industry was going through what
might be termed its anthracite period in history
The company MarutiUdyog was conceived by the Indian government in 1981 as a
means of providing affordable personal transportation to Indians. Named after
Hanuman, the name of the God of Wind in Hindu mythology,Maruti was the
brainchild of the late Sanjay Gandhi, son of the then Prime Minister Indra Gandhi.
After toying with the idea of a joint venture withVolkswagen, Renault, Daihatsu and
some other majors, Suzuki was short-listed because of the Japanese major's expertise
in small cars.
The Maruti 800 based on the European Alto IV (SS80 in export markets) was
launched in December 1983 in a four-door, two-box saloon (the tailgate opened only
from the externally hinged rear window that was the access to the boot area) with a
total length of 329.5cm. The car was powered by a 796cc, three-cylinder, SOHC, 6valve, carburetted engine and had front-wheel drive. Power was 39 bhp, which
though not much, still made for a respectable power -to-weight ratio because the car
weighed slightly above 600kgs. The launch price was INR 47,500 making it the
cheapest car at that time in India.
The rivals tried to play it down on the power front, citing three cylinders to be
insufficient for taking on a five-passenger load.However, the Maruti 800 proved
everyone wrong by a long margin. It was at time of licenses in India and
manufacturers needed to get a license from thegovernment on what to make and
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what numbers to make. This used to create a huge gap between demand and supply
resulting in long waiting lists. Often waiting lists for cars would take up to three
years to clear. A Maruti 800 booked in 1984-85 would be cleared only by 1987-88.
The 800 soon notched up a huge waiting list as sales boomed.
The Maruti 800, in 1983, marked the introduction of the modern automobile into the
Indian passenger car market. People were awed by Japanese reliability, ease of
operation, refinement and fuel efficiency - attributes that the small Indian passenger
car industry, in 1983, was unable to provide

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ORGANISATIONAL STRUCTURE

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SWOT ANALYSIS OF MARUTI


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STRENGTH

OPPORTUNITIES

WEAKNESS

THREAT

Strength- TheMaruti brand name itself is one of the major strengths for Ecco as
Maruti guarantees the presence of service centers across the country. The pricing of
Ecco is optimum as it comes around 3.85 lacs (5 -seater A/C) which is an attractive
factor for the people who want to own a large car!! Also it is much lesserpriced for
a 7-seater Non-A/C segment which is one of its USPs. The tagline utility blended
with luxury is the perfect for the explanation of this big vehicle. Reduced body
height compared to Versa adds much riding safety during turns and gives better
turning radius. Powerful 1200cc engine with A/C is an added advantage in which
OMNI failed because of its 3-cylinder capacity.

Weakness The

MarutiEcco has taken out features like power steering and

power windows and other small accessories like handrest in the front etc. This is
because MSI wanted to reduce the cost factor and re-launch its dream project
VERSA. Back shocks need to be improvised as the vehicles jumps when its not
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loaded and the gear shift is not much comfortable compared to usual Maruti cars.
Interior back and dicky Pad noise is typical problem which remains the same like
OMNI. Finishing of the rear window beadings reminds auto rickshaw beading!!

Opportunity MarutiEcco

has also released a CNG variant thereby

recognizing a good opportunity to increase its sales. Besides this, there is a huge
opportunity for this vehicle to claim a big success in the market as its sales already
has shot up in the recent months. The vehicle can further position itself better with
targeted efforts to penetrate the smaller supply chain and logistics sector where the
amount of load is less and therefore it has an upper hand over dedicated Logistics
vans like Mahindra and Tata. It is also a boon for bigger families and the vehicle is
too spacious. Since its a MUV we can see many ECCO ambulances on roads.
Thus by increasing its applications, it can find better acceptance in the market.

Threats - Increasing

competition. Not only from similar vehicles but also

related competition from vehicles like Tata Ace in the supply chain sector as well
as vehicles like Tata venture and Maruti Versa. Increasing petrol prices are a big
threat to petrol vehicle sales. And the new product TATA Venture adds to it, as the
venture isdiesel and its mileage efficiency is good compared to ECCO.On the
whole Maruti ECCO is a good package which makes the owner to feel The value
for money

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FINANCIAL STATUS
Balance sheet
Mar '
Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

07

Sources of funds
Owner's fund
144.5 144.5 144.5 144.5 144.
Equity share capital

50

Share application money

Preference share capital

13,72
Reserves & surplus

3.00

11,69 9,200. 8,270 6,70


0.60

40

.90 9.40

Loan funds
63.5
Secured loans

31.20 26.50

0.10

0.10

278.1 794.9 698.8 900.1 567.


Unsecured loans
Total

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30

14,17 12,65 10,04 9,315 7,48

Mar '
Mar ' 11

Mar ' 10

Mar ' 09

6.80

6.50

3.80

Mar ' 08

07

.60 4.70

Uses of funds
Fixed assets
11,73 10,40 8,720. 7,285 6,14
Gross block
Less : revaluation reserve

7.70

6.70

60

.30 6.80
-

6,208. 5,382. 4,649. 3,988 3,48


Less : accumulated depreciation

30

00

80

.80 7.10

5,529. 5,024. 4,070. 3,296 2,65


Net block

40

70

80

.50 9.70

1,428. 387.6 861.3 736.3 238.


Capital work-in-progress

60

90

5,106. 7,176. 3,173. 5,180 3,40


Investments

70

60

30

.70 9.20

Net current assets


6,443. 3,856. 5,570. 3,190 3,95
Current assets, loans & advances

10

00

00

.50 6.00

4,331. 3,788. 3,631. 3,088 2,77


Less : current liabilities & provisions

00

40

2,112.
Total net current assets
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10 67.60

60

.40 9.10

1,938. 102.1 1,17


40

0 6.90

Mar '

Miscellaneous expenses not written

Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

07

14,17 12,65 10,04 9,315 7,48


Total

6.80

6.50

3.80

.60 4.70

Notes:
4,395.
Book value of unquoted investments

60

3,162. 5,169 3,39


11.10

20

.60 8.10

264.0 215.1 108.7 219.5 270.


Market value of quoted investments

40

5,450. 3,657. 1,901. 2,734 2,09


Contingent liabilities
Number of equity sharesoutstanding
(Lacs)

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60

20

70

.20 4.60

2889. 2889. 2889. 2889.


10

10

10

288

10 9.10

MARKETING STRATEGY OF COMPANY

A) TURNAROUND STRATEGIES MARUTI FOLLOWED

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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 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 redesignitself 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 as
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".1997:
"Creating customer delight and shareholders wealth"Focus on customer care has
become a key element for Maruti. Increasing Marutiservice stations with the scope of
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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
with exchange rates.However, change in the mindset was not as fast as required by the
market. Marutiplanned 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, Marutifaced 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.

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B) CURRENT STRATEGIES FOLLOWED BY MUL


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
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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

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COMPITITOR OF THE COMPANY AND THEIR


STRATEGY
COMPETITOR ANALYSIS
HYUNDAI MOTOR INDIA LIMITED
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Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor
Company, South Korea and is the second largest and the fastest growing car manufacturer in
India . HMIL presently markets over 25 variants of passenger cars in six segments. The
Santro in the B segment, and Getz in the B+ segmen

HYUNDAI SANTRO

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We are mainly going to concentrate on the various marketing and positioning strategies of
Hyundai Santro as against that of Maruti Zen and Alto and Hyundai Getz as against
MarutiSwift.ZHG

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POSITIONING OF SANTRO

The old positioning of the Santro was that pf a family car, this positioning
strategy was changed in around 2002 and Santro was repositioned as to that of a
smart car for young people. The target age group for the car had now shifted
from 30-35 years to 25-30 years. The repositioning followed the face-lifts the car
has been getting from time to time in the form of engine upgradation, new power
steering, automatic transmission, etc, to keep the excitement around it alive in the
highly competitive small car market. The repositioning also comes ahead of the
possible launch of a new design Santro, and the super B-segment car Getz,
sometime in 2003.The Santro was given a fresh new positioning from a
complete familycar to a sunshine car denoting a fresh new attitude and a
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changing your life positioning.As the average age of a car owner has declined
from around 30-35 three years ago to 25-30, primarily because of changing
lifestyles, cheap and easily available finance, etc. the company thought that
instead of promoting the Santro as a family car, it should be promoted as a car
that can change the life of a young person since many of the buyers were young
buyers.

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HYUNDAIS PRICING STRATEGY


With the launch of Maruti Swift recently a price war was expected to kick in .
Immediately after maruti raised prices on its debutante Hyundai Motor India hit
back with a Rs 16,000-19,000 markdown on three new variants of Santro Xing.
The company has introduced the XK and XL variants at a lower tag of Rs
3,26,999 and Rs .3,45,999 respectively.The new price variants are likely to give
Marutis existing B-segment models, Zen and WagonR a run for their money.
Hyundai has also launched a new non-AC variant of the Santro at Rs 2.79 lakh,
a tad higher than what the existing non-Ac Santro costs. The next offensive is
due from Maruti. With the Santros new price positioning, Zen and particularly
WagonR may be due for a correction, or at least a limited-period subvention. If
that happens the domino effect will kick in across the B-segment.Hyundai is
positioning its new variants on the tech platform. Strapped with 1.1 litre engine
with eRLX Active Intelligence technology, the new variants also come with new
colour-coordinated interiors, a new front grill and a 4-speed AC blower that
makes the air conditioning more efficient.

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TATA MOTORS

Established in 1945, Tata Motors is India's largest and only fully integrated
automobile company. Tata Motors began manufacturing commercial vehicles in
1954 with a 15-year collaboration agreement with Daimler Benz of Germany.

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TATA INDICA Tata motors flagship brand

The company's passenger car range comprises the hatchback Indica, the Indigo sedan and the
Marina, its station wagon variant, in petrol and diesel versions.The Tata Indica, India's first

indigenously designed and manufactured car, was launched by Tata Motors in


1999 as part of its ongoing effort towards giving India transport solutions that
were designed for Indian conditions. Currently, the company's passenger cars and
multi-utility vehicles have a 16-per cent market share

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POSITIONING OF INDICA

Tata has positioned Indica as `more car per car'. The new car offers more space,
more style, more power and more options. Emphasizing the delivery of world
class quality. They have tried to redefine the small car market as it has been
understood in India.True to its "More car per car" positioning, the Indica CNG
offers all the core benefits of the Indica combined with the advantage of CNG.
One of the most popular advertisements on television currently, is the one where
the guy portrayed as the loveable liar, gets socked everytime he lies ; but not
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when he speaks about the Indica thus implying- must be true. Elaborating on
the campaign, the newwas launched with the intention of giving the Indica V2
brand a touch of youthfulness

TATAS PRICING STRATEGY

After the price war being triggered off by Hyundai being the first company to
introduce what came to be known as, pricing based on customer's value
perceptions , all others followed suit.Telco'sIndica came in the range of Rs2.56
lakh to Rs 3.88 lakh with 4 models. The price-points in the car market were
replaced by price-bands. The width of a price-band was a function of the size of
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the segment being targeted besides the intensity of competition. The thumb rule
being 'the higher the intensity, the wider the price-band.'

Suggestions and Recommendations


Within a few months of its launch, the Maruti 800 became the largest
selling car in India, a title it has held for every month since then, till the
month of May 2004, when its stable-mate Alto led it by a few hundred
units.Like all success stories, it is difficult to point out one single factor
that has been responsible for the car's success, but several factors stand
out, including:
The Maruti 800 is the cheapest car in the Indian market. With India
being a largely price-driven market, the 800 has become an entry
point for first time car buyers. Price difference between Maruti 800
and its nearest rival used to be about INR 50,000-100,000, which is
25-50 of the 800's price.
Over the last twenty years the 800 has established a reputation for
being trustworthy and reliable.
The Maruti 800 is simple and basic and yet sophisticated enough to
meet the requirements of safety and comfort.
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Maruti has the largest network of dealers in India, which means


that the 800 has the widest reach.
Apart from these, the 800, being a Maruti model, enjoyed a number
of benefits from the government. There were other sops (Standard
Operating Procedure) too specifically for Maruti, which helped the
company keep prices down for the 800. The Indian government is
alleged to have curbedcompetition in order to promote state-owned
Maruti. Consequently, several new car projects like Premier
Automobiles planned tie-up with Nissan to manufacture the Sunny in
the mid-80s did not receive government approval. Thus the Maruti
800 (actually up to the late 90s) did not have any real competition in
the Indian market. Along period of more than 15 years without any
real competition ensured that the 800's volumes stayed high, enough
to amortize costs of the plants and dies used For manufacturing. This
has ensured that the Maruti 800 has anaged to retain its low pricing in
a market where the nearest competitor, till a few months back, was
priced about 50% highe

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Summary
Maruti was incorporated in 1981 as a Government company. Theystarted
production in December 1983 with collaboration from Suzukiof Japan.
Initially Suzuki had 26% equity which has since increase to 40%.The
original model was replaced in the 2nd year itself with a newstreamlined
model with more leg room and better fuel efficiency. A van(now called
Omni) in two types of roof and a Jeep type vehicle Gypsy,were also
introduced in quick succession.
The various cars proved extremely popular and production hasalready
crossed 100,000 nos. which is 60% of the total production passenger car.
The company has an up to date manufacturing facilityand absorbed the
technology successfully. The foreign equity andpresence of a number of
Japanese experts has helped in the stabilization ofproduction.In the initial
stages Marutiset up a limited R&D department for a bsorbing the
technology that was being imported.
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Even at this stageMaruti made certain modifications in the imported


technology onmarket considerations e.g.Application engineering to
develop special bodies for school van,taxi, delivery van, executive van,
ambulance.Improved suspension and seating for OMNI, which was used
more as a car than a commercial vehicle.
Modifications in Gypsy and Maruti 800 to meet export requirementsof
various countriesVarious other minor improvements.In next 5 years,
Maruti plans to invest in basic test facilities for theirR&D. These
facilities are for evaluatingthe vehicle performance andmass emission
etc. as basic requirements for audit checking ofvehicles for export to
Europe.

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References
WEBSITES:
www.themaruticompany.com
www.news.bbc.co.uk
www.india-server.com
www.magindia.com
www.marutiindia.com
www.wikiinvest.com
www.open2.net

OTHERS
Annual report of maruti 2008.
Annual report of maruti 2009.
Annual report of maruti 2010.

http://money.rediff.com/companies/maruti-infrastructureltd/11610063/balance-sheet

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