CASE STUDY ON

MARUTI UDYOG LIMITED

INTRODUCTION:

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, Estillo and sedans DZire, SX4,
in the 'C' segment Maruti Eeco, Multipurpose 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 car which 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Padmini were both around 25 years out of date at that point.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 Suzuki are sold in India and various several other
countries, depending upon export orders. Models similar to Maruti Suzuki (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 indigenize 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 indigenize 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 subsidized 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 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.
Blue bytes News a 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.

Questions//:

1.) What do you understand about the company?

2.) What are the relations maintained by Maruti Udyog?

3.) Give your view on the hurdles faced by the Company?

4.) Write the conclusion in your own words?