Post on 12-Jun-2018
02 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Company at a Glance
a millionpromises...
Maruti Suzuki India Limited
50%
smaller, fewer, lighter and more
beautiful.
style and design quotient
(formerly Maruti Udyog Limited), a
subsidiary of Suzuki Motor Corporation of Japan, is India's largest
passenger car company, accounting for over of the domestic car
market.
From its very inception, Maruti Suzuki has brought to India, a simple yet
powerful Japanese philosophy
The benefits of product quality, safety and cost consciousness have
been fused and filliped in order to present the Indian populace with cars
high on the . The extreme relevance of our
brands in the Indian car arena, in beat with the lifestyles and desires of
our changing nation has made us the market favourites, for over two
decades. Gaining ground from strength to strength, we are inspirited
now more than ever, to push boundaries and conquer new horizons.
54.21%Suzuki Motor
Corporation
EQUITY STRUCTURE
45.79%Others (Financial institutions, mutual funds, banks, public etc.)
03COMPANY AT A GLANCE
7,000,000
Cars produced and sold cumulatively
711,818
Our domestic car sales for 2007-08.
53,024
Our car exports for 2007-08.
2,628
The number of workshops that provide customers with maintenance support in 1220 cities.
7,090
Our employee strength (March 2008).
INR 17,308 Mn
Recorded Profit after Tax in 2007-08.
600
The number of Maruti Suzuki sales outlets in 393 towns and cities.
INR 188,238 Mn
Total income in 2007-08.
Chairman'sMessage
08 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Mr. R. C. BhargavaChairman
a millionpromises...
09CHAIRMAN'S MESSAGE
Dear Shareholder,
It gives me great pleasure to reach you through this Annual Report. My association with Maruti goes back 27 years, with a break of only a few years when I was not directly connected with the Company.
Suzuki Motor Corporation has been a pillar of strength and has unstintingly supported the Company ever since we signed the Joint Venture and
ndLicense Agreements on 2 October 1982. The Government of India
recognized this and awarded Chairman O. Suzuki with the Padma Bhushan. The role of the Government in the growth of Maruti was no less important. A partnership flourishes only when both partners add value. The Government also showed great
Maruti Suzuki is now very much on the global map, recently being rated as the fourth most reputed automobile company in the world. This has happened because of the contribution of all the stake holders of Maruti.
wisdom and foresight by gradually diluting its shareholding in the Company and listing Maruti on the stock exchange. This has created conditions for the Company to compete on equal terms with the best in the world.
The employees of Maruti, whether they are technicians, engineers or sales persons, have fully imbibed the Japanese work culture of making constant improvements, and placing the prosperity of the Company as the means of their own advancement. I believe there are very few companies in India where this kind of employee involvement, commitment and performance can be found. This should be a source of great comfort to you, because it assures the future success of the Company.
"The employees of Maruti, whether they are technicians, engineers or sales persons, have fully imbibed the Japanese work culture of making constant improvement, and placing the prosperity of the Company as the means of their own advancement."
"One of Maruti's great strengths is that we
have internal resources to finance both R&D expansion as well as
capital investments. The higher interest rates,
and the risk of making large borrowings to
finance capital costs, will not affect us."
10
The Indian automobile component industry has come of age. We now have some world class manufacturers in India and Indian companies are acquiring manufacturing companies abroad. The growth of the Indian automobile industry and of Maruti has been possible because of the support from our suppliers. We look forward to all of them growing with us.
Maruti Suzuki dealers of cars and spare parts are our interface with customers. It is through their efforts that Maruti remains by far the biggest car company in India, with a market share of 54%. I am sure that they will continue to do all that is required to maintain the leadership position of the Company.
The authorised service stations of Maruti should not be forgotten. They are spread all over India and give huge comfort to owners of Maruti vehicles because of the assurance of service support, whenever and where ever needed.
The Indian economy has grown at a compound rate of about 9% annually for the last 4 years. The automobile industry has correspondingly grown rapidly. This year, there are concerns about a slow down. The sub prime crisis in the USA, accompanied by the huge rise in crude oil prices have triggered inflationary pressures in most parts of the world, particularly the developing countries. Interest rates have gone up, and money supply is being tightened by the Central Banks. The general expectation is that industrial growth, including the sale of automobiles, will be adversely affected. So far, during the first three months of this year, the Company has done quite well recording a sale of 180,093 vehicles in the domestic market - a growth rate of 12%. The Company will continue to make all efforts to maintain a reasonable rate of growth.
Personally, I expect the GDP growth to still exceed 8% this year and, because of the excellent models which the Company has launched, to continue to do well.
Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
"Maruti is working at developing vehicles which will use cheaper alternative fuels like CNG. The R&D effort will also have to enable our vehicles to meet the new emission and safety regulations, which are to come into force in 2010."
11
Maruti Suzuki started exports in the late eighties and has since then exported cars to more than a hundred countries of the world. This year, it will re-enter the European market with a highly fuel efficient and environment friendly compact car. This car will also be sold in India and other global markets.
The car market in India is growing increasingly competitive. This is not surprising, as global manufacturers are bound to come where they see a growing market. Maruti has a strategy for the future. With Suzuki's support, an ambitious plan of building R&D capabilities has been launched. The intention is that we should be able to design small cars in India, which are best suited for the Indian market.
I do believe that with the rising price of petrol and diesel, the market for smaller cars will grow faster. This trend is already visible in the world. Maruti is working at developing vehicles which will use cheaper
alternative fuels like the CNG. The R&D effort will also have to enable our vehicles to meet the new emission and safety regulations which are to come into force in 2010.
At the same time, Suzuki's unmatched expertise will continue to help us expand and modernize our manufacturing facilities. This is essential to meet competition. One of Maruti's great strengths is that we have internal resources to finance both R&D expansion as well as capital investments. The higher interest rates, and the risk of making large borrowings to finance capital costs, will not affect us. Being somewhat conservative in financial matters does have its advantages.
The Company recognises that its real strength is its employees. All efforts will continue to keep them motivated and happy.
Long term sustained growth of a Company requires that not only
should all stake holder interests be well protected, but the environmental impact of operations recognized and properly safeguarded. This is very much a part of the Company's corporate social responsibility approach.
I thank you for the confidence and trust you have placed in the Company.
With best wishes and warm regards,
R. C. Bhargava
Chairman
CHAIRMAN'S MESSAGE
12 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Dear Shareholder,
You will be happy to know that Maruti Suzuki achieved its highest ever sales, both in the domestic and export markets, during 2007-08. It was our best year also in terms of financial performance.
Our parent company, Suzuki Motor Corporation, achieved its medium term turnover target of 3.5 trillion Yen two years ahead of schedule. It has taken a more aggressive target in its revised medium term plan. New capacities have come up in Japan and in certain overseas operations.
We have enjoyed a 25-year relationship with customers in India, and we continue to be very positive about the future of this country. We are aware that there will be
challenges from time to time, especially if macro economic factors cease to be conducive over the next year or so. But we will use our strengths, such as successful new models, a wide and reputed network, acknowledged product quality and strong customer connect, to counter these challenges.
We have laid down a clear road map to achieve an annual sale of one million cars in the domestic market and 200,000 exports by 2010-11. In addition, the management team at Maruti Suzuki has identified specific initiatives to serve customers better and ensure our leadership in the future. We have shared our thoughts in detail in the following pages.
On a personal note, I am delighted to take the role of the Managing Director
at Maruti Suzuki. I was associated with the Maruti Project, before this company was set up 25 years ago. In all, I have been directly involved with Maruti Suzuki and India for over 17 years, and followed its fortunes closely as non executive Chairman since 2002.
Yet, I am pleasantly struck by what I
have found here: high quality people,
with an amazing ability to work in a
team, supported by sound systems
and processes. I believe, the credit for
Maruti Suzuki's success should go to
its people, led by my predecessor
Mr. Jagdish Khattar. This, together
with supportive dealers, suppliers and
business partners, gives me the
confidence that we will excel in
diverse areas of our business and
fulfill our million promises.
Interview with Mr. S. Nakanishi, Managing Director & CEO
a millionpromises...
I am pleasantly struck by what I have found here: high quality people, with an
amazing ability to work in a team, supported by sound systems and processes.
13INTERVIEW WITH MR. S. NAKANISHI, MANAGING DIRECTOR & CEO
“My idea is: Let us start thinking at the next level. While strengthening our leadership in the Indian market, we have to see how we can enhance our global role and contribution in different areas.”
Our parent company is always ready to
support us whenever required with advice
as well as practical help.
I have identified certain key questions about Maruti Suzuki which I have been asked frequently by investors, media persons, our business partners and other well wishers. I have attempted to answer those questions in the following pages.
I thank you for your support and invite you to go through the contents of the Annual Report.
With best wishes and warm regards,
Shinzo Nakanishi
Q.
A.
Q.
A.
Q.
A.
Q.
A.
You have said that Maruti Suzuki is ready to play a much bigger role in Suzuki's global operations. What did you have in mind?
The year 2007-08 has been the best for Maruti Suzuki in terms of domestic sales, exports and turnover. What do you see as the way forward?
It is quite simple. Maruti Suzuki has been the leader of the Indian car market for over two decades. By focusing on India alone, it has become a major contributor to Suzuki's global turnover and profit. My idea is: Let us start thinking at the next level. While strengthening our leadership in the Indian market, we have to see how we can enhance our global role and contribution in different areas. For example, quality and productivity have improved manifold in Maruti Suzuki in the last few years. Let us now channelise it to the next level, where we become the exclusive base to manufacture small cars for Europe. The A-Star model will become a reality. Similarly, Maruti Suzuki's R & D capability has evolved. Its contribution to global design projects has been recognised, first with the Swift and now the Concept A-Star. Let us do more.
Further, Maruti Suzuki has been rated first in customer satisfaction for eight years in a row. We are sharing our experience on this with Suzuki operations worldwide. The same applies to our dealer practices, supply chain, quality processes, information technology, parts operations and so on. In each of these, we have attained a certain standard and should look to contribute to global thinking. That will enhance our capability and enable us to serve Indian customers better. While Europe is important, we need not be confined to it. Suzuki operations in South Asia, South East Asia, the Middle East and Africa can also gain from the experience and expertise of Maruti Suzuki.
Our target is to achieve annual sales of one million cars in the domestic market in 2010-11. We also want to export 200,000 cars annually by that time. We are preparing ourselves by expanding capacity to one million per annum, by October 2008. We will also encourage our suppliers and dealers to invest in new capacity. The number of our sales points will increase from about 600 now to 1,000 in three years. The workshop network will go up by 45% to service more cars on the road.
Maruti Suzuki will launch World Strategic Models like A-Star and Splash in India, so that Indian customers can continue to get global quality and design at the same time as customers in Europe and Japan. In addition, our growing inhouse capability in R & D will enable us to refresh models
and launch special editions to create excitement for the customer. Our programs to improve productivity and quality as well as reduce cost, have yielded excellent results in recent years, will continue in-house and at our suppliers.
Quite a few companies have indicated that they will launch cars well below Maruti 800. I commend their effort. But we have decided not to follow them, taking into account the trend of the Indian customer and Maruti Suzuki's specific position.
Let me explain. For over 20 years, millions of Indian people have bought Maruti Suzuki cars. Most of them, I believe, have been very happy with the overall experience and would like to continue their relationship with Maruti Suzuki. They are happy with the reliability of our cars, performance and fuel efficiency, our service support, the overall cost of ownership and so on. But these customers and their children would not like to buy the same cars from us now. Their incomes have grown. Their lifestyles have changed. They have exposure to global design, not just in cars but also in other products. Their expectations of service have gone up. Most of them would still want compact cars for practicality, but they would want these cars to be more stylish, loaded with features and superior engines and at least as reliable and fuel efficient as their earlier cars. We have decided to devote our resources and energy in meeting the needs of these customers and others like them who will upgrade from lower segment cars in the future.
Yes, there are reports that more companies will enter the premium compact and entry sedan segment. While Maruti Suzuki enjoys a strong connect with the Indian customer, we are taking specific steps to strengthen our leadership over the next 5-10 years, as well. After investing in manufacturing facilities, we are now ready to invest in marketing infrastructure and brand building. We will set up display showrooms, more like brand centres, where customers can see the entire range of Maruti Suzuki models, experience our technology, and connect better with us. Similarly, we will invest in stockyards for cars and spares in different parts of the country so that customers' needs can be served faster and better. Over the next three to five years, we will also introduce next generation engines, which will be even more fuel efficient and environment friendly.
Why is Maruti Suzuki keeping out of the ultra low cost car or the so called 1-lakh car segment?
But competition will intensify in the compact and premium compact segment as well…
14 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Q.
A.
Q.
A.
Q.
A.
Q.
A.
We will also expand our diesel programme. We are scaling up capability in R & D and setting up a centre that will be at par with Suzuki, Japan.
I do not think such a trade-off between growth and profitability is essential. We are investing in new capacity and models. We would obviously like to grow our volumes. Will it necessarily mean sacrificing profits? Perhaps not. We have had several models in the last few years that continue to show strong sales growth. They have scored on account of their bold design, top-end features and attractive price, made possible by aggressive cost targets. At the same time, there are models in the Indian car market which, despite heavy discounts, are being shunned by customers. Both growth and profitability are important and can co-exist. If you were to look at Suzuki Motor Corporation's medium term plan, for instance, you would find targets for both volume as well as profitability.
Yes, when we exported about 53,000 cars in 2007-08, that was the highest ever in our history. But we now want to take it to 200,000 cars annually by 2010-11. Our export effort will be led by Suzuki's fifth World Strategic Model, A-Star, which will be manufactured exclusively in Maruti Suzuki. It will be exported mainly to Europe, but also to other markets in the world. Maruti Suzuki has been exporting cars for more than a decade, and we find customers draw reassurance from the fact that cars manufactured by Maruti Suzuki have a place in the most demanding markets. Our immediate challenge is to create infrastructure to transport such a large number of cars and have forged partnerships for this.
Maruti Suzuki and India are obviously in focus at Suzuki headquarters. With or without me, there is a great deal of attention towards India and the interesting dynamics of customer behaviour here. Suzuki is ploughing back a large chunk of its profits from Maruti Suzuki, rather than repatriate them as dividend, which is a good indication of its positive outlook for India and Maruti.
Suzuki is well known for its technology strength, especially in mini and compact cars. In recent years, it has also evolved a new design philosophy
Will you choose growth and market share over profitability?
You also have an ambitious export plan for the future…
In your other role as director on the Board of Suzuki Motor Corporation, are you able to make any additional contribution to the growth of Maruti Suzuki?
that is more bolde and aggressive, as evident in cars like Swift and SX4. This new design philosophy has been appreciated in markets across the globe, including India. Suzuki's major contribution will continue to be in terms of providing a pipeline of new models. That is important. Unless a company has a range of models in any segment, it cannot be a serious player in that segment. Besides, together with us, Suzuki is building R & D capability within Maruti Suzuki. Suzuki's support in terms of superior manufacturing benchmarks and processes will, of course, continue. I am in a very good position to understand the capabilities, constraints and opportunities for mutual cooperation in both Suzuki and Maruti, and that should hopefully bring additional value to both companies.
I have been directly associated with Maruti Suzuki for 17 years in all, and India is almost second home. Maruti Suzuki has excellent people, and enjoys a close relationship with its partners including dealers and suppliers. These aspects are not easily visible to an outsider. Under the leadership of my predecessor, Mr. Jagdish Khattar, and with the support of Suzuki Motor Corporation, Maruti Suzuki has overcome difficult challenges over the last decade. That has made our people more confident, and also skilful and capable. I am struck by the high quality of people and their ability to work as a team to deliver on promised objectives. The challenge is to not turn complacent and continue to strengthen the culture of improvement.
One of the important thing we have done is to create a clear second line of leadership which is in-charge of five critical verticals of the organisation. Each of these verticals is headed by two Managing Executive Officers, one of whom is generally a Director on the Board. These Managing Executive Officers will together lead the Company towards achieving the goals and targets we have set for ourselves. While I, as the MD & CEO remain accountable for the performance of the organisation, ownership and decision making is shared among more people. That is in tune with my personal style, and I believe it also brings benefits to the organisation.
Finally, you have been associated with Maruti since before its inception. How does it feel to be now Managing Director?
15INTERVIEW WITH MR. S. NAKANISHI, MANAGING DIRECTOR & CEO
16 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Board of Directors
Mr. R. C. BhargavaChairman
Mr. Shinzo NakanishiManaging Director & CEO
Mr. Shuji OishiDirector & Managing Executive Officer (Marketing & Sales)
Mr. Tsuneo OhashiDirector & Managing Executive Officer (Production)
Mr. Keiichi AsaiDirector & Managing Executive Officer (Engineering)
a millionpromises...
17BOARD OF DIRECTORS
Mr. Osamu SuzukiDirector
Mr. Kenichi AyukawaDirector
Mr. Amal GanguliDirector
Ms. Pallavi ShroffDirector
Mr. Manvinder Singh BangaDirector
Mr. Davinder Singh BrarDirector
BusinessHighlights
a millionpromises...
NET SALES AND PROFIT AFTER TAX
5,4
22
11,8
91 17,3
08
178,603
120,034
90,812
-
5,000
10,000
15,000
20,000
25,000
30,000
2003-04 2005-06 2007-08-
50,000
100,000
150,000
200,000
PAT (Rs Mn) Net Sales (Rs Mn)
MARGINS
PAT (%)EBITDA (%)
15.20%
17.10% 17.50%
6.00%
9.90% 9.70%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
2003-04 2005-06 2007-08
PROFIT AND LOSS RATIOS AS % TO NET SALES
77.3%76.8%
76.4%
3.3%
1.9% 2.0%
6.2%
2.4%3.2%
70.0%
72.0%
74.0%
76.0%
78.0%
80.0%
2003-04 2005-06 2007-080.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Material Cost Employee cost Depreciation
EARNINGS PER SHARE & BOOK VALUE
41.2
59
.9
18
.8
124
189
297
-
30.0
60.0
90.0
120.0
150.0
2003-04 2005-06 2007-080
50
100
150
200
250
300
350
EPS (Rs) Book Value (Rs)
18 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
19BUSINESS HIGHLIGHTS
RETURN ON AVERAGE EQUITY
Return on Average Equity
24.00%20.50%
5.00%7.00%9.00%
11.00%13.00%15.00%17.00%19.00%21.00%23.00%25.00%
2003-04 2005-06 2007-08
16.50%
SALES VOLUME
Exports (Units) Domestic (Units)
800,000
700,000600,000
500,000400,000
300,000
100,000200,000
2003-04
42
0,9
47
51,175
527
,03
8
34,784
711,
818
53,024
2005-06 2007-08
OPERATIONAL PRODUCTIVITY (INDEXED)
Indexed Parameters
100
100
100
100
100 11
3
15
85
49
4
120
PlantManpower
Hrs./Veh InhouseWarranty
DirectPass
80
100
60
40
20
0
2001-02 2007-2008
TOTAL PASSENGER VEHICLE INDUSTRY
Multi Purpose Vehicle
Utility Vehicles
6%
16%
Passenger Cars 78%
Indu
stry
Seg
men
ts
Maruti S
uzuki's Market S
hare
46.00%100%
89.0%
1.6%
51.4%
Since inception, Maruti Suzuki has produced and sold over 7 million
vehicles including 500,000 units in exports markets. The company sold a
record 764,842 vehicles in 2007-08 including 53,024 units of exports. Maruti's revenue has grown consistently over the years. In 2006-07, it
recorded turnover of INR 145,922 million which rose to INR 178,603 million in 2007-08, displaying a growth of over 20% vis-à-vis the previous year. At the end of fiscal 2007-08, it had a market share of over 50% of the Indian passenger car market.
InhouseRejection
Directors' Report
a millionpromises...
32
thYour Directors have pleasure in presenting the 27 Annual Report
together with the Audited Accounts for the year ended
st31 March 2008.
Maruti Suzuki India Limited ANNUAL REPORT 2007-08
FINANCIAL RESULTS
The Company's performance during the year is summarised below:
3333DIRECTORS' REPORT
Gross Total Income 219,128 178,043
Profit before Tax 25,030 22,798
Provision for taxation (Incl. Prev. Year) 7,722 7,178
Profit after Tax 17,308 15,620
Balance brought forward 56,373 43,939
MSAIL (Maruti Suzuki Automobiles India Limited)
Loss: Adjusted on Amalgamation and
Transition Adjustment for Employee Benefit 0 88
Profit available for appropriation 73,681 59,471
Appropriations:
Debenture Redemption Reserve 0 17
General Reserve 1,731 1,562
Proposed Dividend 1,445 1,300
Corporate Dividend Tax 248 219
Balance carried forward to Balance Sheet 70,257 56,373
2007-08 2006-07
(Rs. in Million)
FINANCIAL HIGHLIGHTSThe gross revenue (net of excise) of the Company for the year was Rs. 188,238 million as against Rs. 152,523 million in the previous year showing an impressive growth of 23.4%. Earnings before depreciation, interest, tax and amortization (EBDITA) stood at Rs. 31,308 million against Rs. 25,888 million in the previous year, recording a jump of 20.9%.
Based on technical evaluation and market considerations, the Company has, with effect from 1st April 2007, revised the estimated useful life of certain assets which resulted in depreciation being higher by Rs. 2,122 million for the current year with a corresponding reduction in profit for the year and net fixed assets. Profit before tax (PBT) stood at Rs. 25,030 million againstRs. 22,798 million in the previous year showing a growth of 9.8% and Profit after Tax (PAT) stood atRs. 17,308 million againstRs. 15,620 million in the previous year showing a growth of 10.8%.
The Board recommends a dividend of 100% (i.e. Rs. 5 per equity share of
stRs. 5 each) for the year ended 31 March 2008 amounting to Rs. 1,445 million as against a dividend of 90% amounting to Rs. 1,300 million, paid
stfor the year ended 31 March 2007.
With the requisite approval of the members and of the Central Government, the name of the Company was changed to 'Maruti Suzuki India Limited' with effect from
th17 September 2007.
The Company has been awarded the highest financial credit-rating of
DIVIDEND
CHANGE OF NAME
CRISIL RATINGS
AAA/Stable (long term) and P1+ (short term) on its bank facilities by CRISIL. The rating underscores the financial strengths of the Company in terms of the highest safety with regard to timely fulfillment of its financial obligations.
The Company has again been awarded ISO: 27001 Certification by STQC Directorate (Standardisation, Testing & Quality Certificate), Ministry of Communications and Information Technology, Government of India afterre-assessment. The Company is thus certified to meet international standards for maintaining information security.
The Company also has an ISO 14001:2004 Certification which has been similarly awarded again on re-assessment by AIB-Vincotte International Ltd., Brussels, Belgium.
Both the Company's plants at Gurgaon and Manesar areISO: 9001 certified. The Company is subject to re-assessment at regular intervals for re-certification.
The Company's press shop has TS 16949 Certification which is also subject to re-assessment at regular intervals.
The operations during the year are exhaustively discussed in the report on Management Discussion and Analysis which forms a part of this Annual Report. Some highlights are mentioned below:
For the year 2007-08, the Company achieved its highest ever sales of
QUALITY
HIGHLIGHTS OF OPERATIONS
Vehicle Business
Domestic
711,818 vehicles in passenger cars (including MPV) and grew by 12% over 2006-07, whereas the passenger car industry growth was 11.8%.
The Company maintained its leadership position in the A2 segment with the market share remaining above 58%.The Company achieved a new leadership position in A3 segment by launching 2 new models SX4 and DZire during the year, thereby increasing its market share from 15% to 22%.
In the MUV segment, the Company launched the new Grand Vitara - a stylish, muscular and 5-seater SUV in July 2007.
In 2007-08, the Company exported 53,024 vehicles to 46 countries posting a growth of 35% over last year. The top 5 export markets were Algeria, Chile, Indonesia, Egypt and Sri Lanka. Cumulative exports crossed the landmark figure of 500,000 units.
The Company signed an agreement with the Adani group for exporting 200,000 units annually through the Mundra port in Gujarat. The Company plans to export its new model - 'A-Star' which is scheduled to launch in the last quarter of 2008-09 and also plans to invest Rs. 40 Crores in building a Pre-delivery Inspection (PDI) centre at the port.
Sales of spare parts & accessories
continued to show a healthy growth
in 2007-08 and crossed the
milestone of Rs. 1,000 crores. It
resulted in a growth of 19 % over
Exports
Spares and Accessories Business
a millionpromises...
34
Directors' Report Contd.
Maruti Suzuki India Limited ANNUAL REPORT 2007-08
the previous year. Robust growth of
service load at the dealerships, a
result of continued focus to achieve
higher levels of customer
satisfaction and presence of parts
distribution network for ensuring
easy and widespread availability of
genuine parts were the key
contributors for this performance.
The record sales performance was
affected through the Company's
vast dealership network. Including
the extension counters, total new
car sales outlet increased to 600
covering 393 cities. The Company
plans to increase the network size
to 1000 outlets in the next three
years.
In addition to this, there are 265
‘Maruti True Value’ outlets spread
across 166 cities, which are engaged
in the sale, purchase and exchange of
pre-owned cars. ‘Maruti True Value’ is
the largest organised pre-owned car
sales network in India.
The service network had a total of
2,628 service outlets including
dealer workshop as well as Maruti
Authorised Service Stations,
covering 1220 cities. The Company
plans to expand it by 45% in the
next three years.
The Company's new car
manufacturing plant at Manesar
started operations in September
2006 with an initial capacity of
100,000 units. At the end of the
year, it achieved an expanded
installed capacity of 170,000 units.
Network
New Car Manufacturing Plant
EXPANSION OF MANUFACTURING
FACILITIES
All the newly launched models
namely Swift, SX4 and DZire are
being manufactured in Manesar.
The Company plans to produce its
new export oriented model- ‘A-Star’
from the same plant and to
increase the capacity to 300,000
units by October 2008.
The Company is setting up a new
gasoline engine plant in its
Gurgaon facilities. The new engines
produced will be more fuel efficient
and help to serve the customer
better. The plant will be
commissioned by producing
engines for ‘A-Star’ followed by
other models in the coming years.
During the year under review, your
Company has entered into two joint
ventures. The first is with 'Magneti
Marelli Powertrain S.p.A.' (Magneti
Marelli) for manufacture of Electric
Control Units (ECUs). Magnetti
Marelli is a Fiat group company and
one of the largest manufacturers of
ECUs with operations in several
countries. This joint venture will
enable the Company to procure
ECUs locally which will result not
only in reduction in the cost but
also ensure a highly reliable and
regular supply of ECUs. A Joint
Venture Company was incorporated
under the name and style of
'Magneti Marelli Powertrain India
Private Limited' with equity
participation of Magnetti Marelli,
Suzuki Motor Corporation and the
Company in the ratio of 51%, 30%
and 19% respectively.
The second joint venture is with
New Engine Facility
STRATEGIC ALLIANCES Joint Venture Projects
'Futaba Industrial Co., Ltd.' (Futaba)
for manufacture of Exhaust
Systems Components (ESCs).
Futaba is the largest manufacturer
of ESCs in Japan and has
operations in many countries. This
joint venture will ensure supply of
high quality ESCs to the Company. A
Joint Venture Company was
incorporated under the name and
style of 'FMI Automotive
Components Limited’ with equity
participation from Futaba and the
Company in the ratio of 51% and
49% respectively.
The manufacturing facilities of these
Joint Ventures are located at 'Maruti
Suzuki Suppliers Park' in IMT
Manesar, Gurgaon, Haryana.
The Company intends to make itself
a manufacturing and export hub for
its various models. This will result in
exports of a considerable high
volume of products from India.
Exports of such high volume of
products require a dedicated, modern
and high quality port. To meet such
specialised requirements, the
Company entered into an
agreement with Mundra Port and
Special Economic Zone Limited
(MPSEZL) to develop a mega car
terminal at Mundra Port for export
of Company's products. This
arrangement will ensure availability
of requisite infrastructure at the
Port and export of products in an
efficient manner.
The Company is India's most awarded car Company. Some of the awards won by the Company during the year under review are:nThe prestigious Golden Peacock
Service Arrangement with Mundra Port
AWARDS/RECOGNITION
35DIRECTORS' REPORT
Award for excellence in the field
of Environment Management in
Automobile Sector.
nJD Power Customer
Satisfaction Award. This award
has been received for the 8th
time in a row.
n2007 India IQS Award for
Maruti Swift which has been
highest ranked model in the
Premium Compact car
segment.
n2007 India APEAL for Maruti
Zen Estilo which has been
highest ranked model in
Compact car segment.
n2007 India APEAL for Maruti
Swift which has been highest
ranked model in Premium
Compact car segment.
n2007 India APEAL for Maruti
SX4 which has been highest
ranked model in Midsize car
segment.
n"Car Manufacturer of the Year"
Award by NDTV.
nICICI-NDTV Profit Viewers
Choice Award for Maruti SX4 in
the Midsize car segment.
nCNBC TV-18 Autocar Midsize
Car Award for Maruti SX4.
nCNBC TV-18 Autocar Value for
Money for Maruti SX4.
nCNBC TV 18 Autocar Award for
Viewers Choice for Maruti SX4.
nCNBC TV-18 Autocar
Manufacturer Award.
n"Manufacturer of the Year"
Award in the Passenger Car
category by Auto Monitor
Awards.
SUBSIDIARY COMPANIES
In 2007-08, the insurance business
as a whole has earned a Profit
Before Tax (PBT) of Rs. 419 million,
an increase of 12% as compared to
PBT for 2006-07. The insurance
business has been able to write
more than 1.77 million policies and
collect premium of approximately
Rs. 12,500 million. Total policies
issued since inception crossed the
landmark figure of 5 million. Inspite
of the prevailing competition,
Maruti Insurance (MI) has improved
on new car penetration by 2% to
88% (out of 100 customer buying
new cars, 88 buy MI) and renewal
penetration by 11% to 70%
(measured on the base of past 3
year retails). In terms of infrastructure
upgradation, the IT application has
been upgraded to dot-net platform.
This provides greater flexibility to
handle business in de-tariffed
times and has much faster
response time which is highly
desirable with the current volumes.
An online policy renewal system has
been set up by which customers can
renew their policies themselves
through the internet and pay the
premium through credit cards. Claim
handling and payment have also
been brought online - this will be
further advanced in the coming
years.
The online systems will help its
customers in achieving fast turn
around time and will provide
improved transparency.
The premium rates were completely
de-tariffed with effect from 1st
January 2008. Keeping pace with
the market, premiums were
reduced by 20%, providing the best
value for money to the customers.
Innovative and customer friendly
products in the MI portfolio will be
offered to the customers, once the
product change is permitted by
Insurance Regulatory and
Development Authority (IRDA). The
challenges in the de-tariffed regime
are welcome with the aim to
enhance insurance services to
customers, resulting in the better
financial performance.
The subsidiary companies are
discussed below:
This Company sells insurance
policies to Maruti car owners in a
tie-up with National Insurance
Company Ltd. For 2007-08, it
recorded total revenue of
Rs. 585.65 million and PBT
Rs. 258.83 million, an increase of
59.52 % over the previous year.
This Company sells insurance
policies to Maruti car owners in a
tie-up with Bajaj Allianze General
Insurance Company Ltd. For
2007-08, it recorded total revenue
of Rs. 76.73 million and PBT
Rs. 34.91 million, an increase of
7.24 % over the previous year.
This Company sells insurance
policies to Maruti car owners in a
tie-up with New India Assurance
Company Ltd.
Maruti Insurance Business
Agency Limited
Maruti Insurance Distribution
Services Limited
Maruti Insurance Agency
Solutions Limited
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36
Directors' Report Contd.
Maruti Suzuki India Limited ANNUAL REPORT 2007-08
For 2007-08, total revenues were
Rs. 109.41 million and PBT Rs.
48.22 million, an increase of
49.5% over the previous year.
This Company sells insurance
policies to Maruti car owners in a
tie-up with Royal Sundaram Alliance
Insurance Company Ltd. For
2007-08, its total revenues were
Rs. 166.63 million and PBT Rs.
74.89 million, an increase of
53.4% over the previous year.
This Company sells insurance
policies to Maruti car owners in a
tie-up with Iffco Tokyo General
Insurance Company Ltd. In 2007-
08, being the first year of its
commercial activities, it has
generated revenue of Rs. 5.20
million and PBT Rs. 1.99 million.
This Company sells insurance
policies to Maruti car owners in a
tie-up with ICICI Lombard General
Insurance Company Ltd. The
Company was incorporated on 18th
October 2007. It has generated
revenue of Rs. 0.61 million and
earned PBT Rs. 0.10 million.
The Company has contributed
towards smooth operation of
business processes at Maruti True
Value outlets and supported the
dealerships in enhancing the sale
of certified pre-owned cars under
Maruti Insurance Agency Network
Limited
Maruti Insurance Agency Services
Limited
Maruti Insurance Agency
Logistics Limited
True Value Solutions Limited
the brand ‘Maruti True Value’. True
Value has contributed significantly
to our effort of customer retention
by facilitating repurchase of new
cars and has made significant
contribution towards enhancing
dealer profitability.
The Company's key strength is its
human capital. The Company has,
during 2007-08, spent about Rs.
10 Crores on training of its
employees.
The Company conducts programs
such as "Bulandi" and "Chunauti"
for the workmen and technicians to
enhance pride in being an
employee of the Company and also
to create team synergy. At the
middle management level, the
focus of the programs is to
inculcate leadership qualities while
at the Director level, one or more
retreats take place so that the
Directors can unwind and take a
detached view of self development
and the organisation.
The Company goes further and
trains its dealers' and vendors'
workforce. 3200 programs have
been conducted covering more
than 13000 dealers' sales persons.
The Company's "Maruti Centre of
Excellence" (MACE) is a team
dedicated to the development of
vendors' employees.
In programs like "Family Connect"
and "Parivar Milan", family
members of the employees are
invited to interact with top
HUMAN RESOURCE DEVELOPMENT
management to get a feel of the
workplace and environment. The
idea is to develop better
understanding and increase the
support and co-operation for the
employees from their families.
The outbound training programs
(OBT) encourage learning while
having fun. The training encourages
team work and teams come back
fully motivated to face future
challenges.
The Company believes in long term
sustainability initiatives in the
interest of its various stakeholders.
The detailed description on these
activities is presented in a separate
section in this Annual Report.
Mr. R.C. Bhargava assumed the
position of Chairman of the Board
on 19th December 2007.
Mr. Manvinder Singh Banga,
Mr. Amal Ganguli and Mr. Davinder
Singh Brar retire by rotation at the
ensuing Annual General Meeting
and, being eligible, offer
themselves for re-appointment.
The Company spent a long time
under the leadership of Mr. Jagdish
Khattar who always spurred on the
employees to achieve milestones
and inspired them to work as a
team. His contribution in every
sphere is enduring, distinct and
unique. The Board records its
appreciation of his outstanding
SUSTAINABILITY
DIRECTORS
37DIRECTORS' REPORT
achievements and the goodwill, the
Company has been able to earn
due to his untiring and selfless
efforts, farsightedness and
visionary skills. Mr. Khattar retired
from the office of Managing
Director and CEO in the normal
course from the close of business
on 18th December 2007.
The position of Managing Director
& CEO has been taken by
Mr. Shinzo Nakanishi, who has
about 37 years of experience with
Suzuki Motor Corporation (SMC).
The Board, whole heartedly,
welcomes Mr. Shinzo Nakanishi as
the new Managing Director & CEO
of the Company.
Mr. Tsuneo Ohashi, Mr. Keiichi Asai
and Mr. Kenichi Ayukawa were
appointed as Additional Directors.
The Board welcomes all of them
and looks forward for their
dedicated support. They hold their
office up to the date of the ensuing
Annual General Meeting and being
eligible, offer themselves for
appointment. Notices under Section
257 of the Companies Act, 1956
proposing their candidature for
appointment have been received.
During the year, Mr. Hirofumi Nagao
was re-appointed as Whole-time
Director. However, due to
withdrawal of his nomination by
SMC, Mr. Hirofumi Nagao resigned
from his office with effect from the
close of business on 10th July 2008.
Mr. Tsuneo Kobayashi and
Mr. Masayuki Osada also resigned
with effect from close of business
on 2nd December 2007 and
1st January 2008 respectively due
to withdrawal of nomination by
SMC. The Board places on record
its sincere appreciation for the
services rendered by them during
their tenure.
Mr. Toshiaki Hasuike was also
appointed as a Director on the
Board during the year but due to his
promotion at SMC, he could not
assume his office.
As required under Section 217(2AA)
of the Companies Act, 1956, the
Directors confirm having:
a) followed, in the preparation of
the Annual Accounts, the
applicable accounting
standards with proper
explanation relating to material
departures;
b) selected such accounting
policies and applied them
consistently and made
judgements and estimates that
are reasonable and prudent so
as to give a true and fair view
of the state of affairs of your
Company at the end of the
financial year and of the profit
of your Company for that
period;
c) taken proper and sufficient
care for the maintenance of
adequate accounting records
in accordance with the
provisions of the Companies
Act, 1956, for safeguarding the
assets of your Company and
DIRECTORS' RESPONSIBILITY
STATEMENT
for preventing and detecting
fraud and other irregularities;
and
d) prepared the Annual Accounts
on a going concern basis.
A statement giving details of
conservation of energy, technology
absorption, foreign exchange
earnings and outgo in accordance
with the Companies (Disclosure of
Particulars in the Report of Board of
Directors) Rules, 1988 is annexed
as Annexure A.
As required by the provisions of
Section 217(2A) of the Companies
Act, 1956, read with the Companies
(Particulars of Employees) Rules,
1975, as amended, the names and
other particulars of the employees
are set out in Annexure B to the
Directors' Report. However, as per
the provisions of Section
219(1)(b)(iv) of the Companies Act,
1956, the Annual Report is being
sent to all the shareholders of the
Company excluding the aforesaid
information. Any shareholder
interested in obtaining such
particulars may write to the
Company Secretary at the
Registered Office of the Company.
In terms of approval granted by the
CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS
AND OUTGO
PERSONNEL
SUBSIDIARY COMPANIES'
ACCOUNTS
a millionpromises...
38
Directors' Report Contd.
Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Central Government under Section
212(8) of the Companies Act,
1956, copy of the balance sheets,
profit & loss accounts, reports of
the Board of Directors and Auditors
of the subsidiaries have not been
attached with the Balance Sheet of
the Company. These documents will
be made available upon request by
any investor of the Company or
subsidiary companies and shall be
kept for inspection by any investor
at the Registered Office of the
Company. However, as directed by
the Central Government, the
financial data of the subsidiaries
have been furnished under
"Financial Statement of Subsidiary
Companies" forming part of the
Annual Report. Further, pursuant to
Accounting Standard AS - 21 issued
by the Institute of Chartered
Accountants of India, Consolidated
Financial Statements presented by
the Company includes financial
information of its subsidiaries.
In accordance with the Accounting
Standard AS - 21 on Consolidated
Financial Statements read with
Accounting Standard AS - 23 on
Accounting for Investments in
CONSOLIDATED FINANCIAL
STATEMENTS
Associates and Accounting
Standard AS - 27 on Financial
Reporting for Interest in Joint
Ventures, the Audited Consolidated
Financial Statements are provided
in the Annual Report.
The Company has complied with
the Corporate Governance
requirements, as stipulated under
Clause 49 of the Listing Agreement.
A separate section on Corporate
Governance alongwith a certificate
from the Auditors of the Company
confirming the compliance, is
annexed and forms part of this
Report.
The Auditors, M/s Price Waterhouse,
Chartered Accountants, hold office
until the conclusion of the ensuing
Annual General Meeting and are
recommended for re-appointment.
Certificate from the Auditors has
been received to the effect that their
re-appointment, if made, would be in
accordance with Section 224 (1B) of
the Companies Act, 1956.
In conformity with the directives of
the Central Government, the
CORPORATE GOVERNANCE
AUDITORS
COST AUDITORS
Company has appointed
M/s R. J. Goel & Co., Cost
Accountants, as the Cost Auditors
under Section 233B of the
Companies Act, 1956 for the audit
of the cost accounts for the motor
vehicles business for the year
ending on 31st March 2009.
The Board of Directors would like to
express its sincere thanks for the
co-operation and advice received
from the Government of India and
the Haryana Government. Your
Directors also take this opportunity
to place on record their gratitude
for timely and valuable assistance
and support received from Suzuki
Motor Corporation, Japan, as well
as from the employees of the
Company including the Japanese
staff, dealers, vendors, customers,
business associates, auto finance
companies, State Government
Authorities and all concerned,
without which it would not have
been possible to achieve all round
progress and growth of the
Company. Your Directors are
thankful to the shareholders for
their continued patronage.
ACKNOWLEDGMENT
39DIRECTORS' REPORT
For and on behalf of the Board of Directors
Shinzo Nakanishi R.C.BhargavaManaging Director Chairman& CEO
New Delhi21st July 2008
Renewable Energy Department, Haryana Government has awarded first prize for excellence in implementation of Energy Conservation measures in the industrial sector.
In 2007-08, two important investments have been made to better the environmental performance:
— New incinerator to meet the stringent emission norms as per the CPCB guidelines for safe disposal of hazardous waste.
— Expansion of hazardous waste storage pits.
A. ENERGY CONSERVATION
In pursuit of continual improvement towards energy conservation and compliance with environmental regulations, many initiatives have been taken and implemented in2007-08.
Efforts in these areas have been recognised by two awards won by the Company.
World environment foundation has declared the Company as the winner of the Golden Peacock Award for Environment Management 2007.
Directors' Report
ANNEXURE A
Information in accordance with the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988, and forming part of the Directors'
Report for the year ended 31st March 2008.
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40 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Some of the activities that contributed
to significant reduction in energy consumption are listed below:
— Energy efficient fans in cooling towers;
— Special transformer to minimise the energy losses;
— Energy efficient motors and blowers in the air washer system for shop cooling;
— Energy efficient chillers for air conditioning;
— Building Management System and Variable Air Volume System for optimised cooling in the workplaces and also reduce the energy consumption;
— Energy efficient lighting (T-5 and electronic choke);
— Energy efficient air dryers;
— Increased re-use of waste heat of combustion for running equipment.
In 2007-08, per vehicle consumption of Steam (kg/veh) and compressed air (Nm3/veh) were reduced by 0.08% and 1.93%. However consumption of electricity (kWH/veh), process gas (m3/veh) and water (m3/veh) have gone up by 0.83%, 2.18% and 8.51% respectively. The main reason for increase in the consumption is setting up of new engine plant and trial productions of new engines. The impact of power and fuel cost on manufacturing cost is 13%.
nSof styling like concept generation, model making and designing
B. RESEARCH & DEVELOPMENT (R&D)
1. Specific areas in which R&D has been carried out by the Company.
A) Building Full ModelChange Capability
A-1) Vehicle Design andDevelopment
Vehicle Design
kill enhancement in core areas
including Class A surfaces, was done. Design development capabilities for front and rear facia, front and rear underbody and interiors including seats and instrument panel were further strengthened.
nR&D demonstrated its talent and
capability by designing the Concept Car "A-Star" for showcasing at Auto Expo'08 and Geneva Motor Show'08.
nDMU (Virtual Design Review) has been added to R&D activity to enable virtual validation to reduce cycle time and development cost. Also PLM (Product Life Cycle Management) has been inducted to manage CAD, CAM and CAE data for in-house designing and also to collaborate with Suzuki Motor Corporation, Japan and suppliers.
nCMA software was developed for carrying out Target Costing. Also Design capability for components/ systems for VA-VE (Value Analysis- Value Engineering) was strengthened during the year.
nResearch in the specific areas of emission reduction and emission testing was carried out along with the Engine development for BSIV countermeasure. ECU calibration and engine performance improvements were done in order to optimise the engine performance.
nDurability testing of vehicles, vehicle components and engines was conducted. Exterior and interior parts safety and strength testing was also carried out for new model development.
Virtual Design Validation
Development and Testing
New System Development
Body Design
Engine and Transmission Design
nIn the field of alternate fuel technology, development of LPG system for MPI engine was done.
nResearch in the area of Electronic Systems and Controllers Development for new generation vehicles was carried out.
nSide Door Crush Tester - The setting up of this facility has enabled optimisation of design, reduction in time & cost required for completing the development process. Now development and homologation testing can be done in-house.
nPaint Booth for Styling Design - The facility has enabled painting of the various concept models and taking it to the final realistic stage as per the designed concept.
nDurability Tester for transmission testing - The setting up of the durability tester for endurance testing of various transmission parts was another major achievement which has enabled carrying out of all transmission related development activity in-house.
nThermal Shock Tester set up for engine dyno - With the setting up of this facility, it has been possible to evaluate in-house various parts which are subjected to thermal load/ thermal shock e.g. Cylinder Head gasket, cylinder block, piston train, seals etc. for their durability under extremely cold (-30 deg. C) & normal ambient conditions.
nUp-gradation of Performance Chassis Dynamometer Lab.-With the up-gradation, the testing facility has become more user-friendly and versatile with new software and
A-2) Facility set up for R&D
41DIRECTORS' REPORT - ANNEXURE A
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. EFFORTS IN BRIEF MADE TOWARDS TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
- Localisation, development and testing of parts for existing and new models.
- Capabilities strengthened in component and vehicle evaluation, benchmarking and design optimisation.
- Capabilities being further strengthened in area of alternative fuels like Diesel, CNG and LPG.
- VA -VE at the time of design and localisation to maximise cost benefit.
- Acquiring design and cost knowledge through teardown and benchmarking and using it in future designs and cost reduction.
- Global sourcing and advanced sourcing to get the advanced technologies into India at lower costs. (Efforts made towards technology absorption, adaptation and innovation by either local vendors and helping world-leading component suppliers to set up shop in India).
- Design and development of electronic speedometers, keyless alarm controllers for enhancing comfort and convenience.
additional thermocouple ports, analog ports, online viewing, data logging and multiple data storage. The upgraded facility is now suitable for carrying out fuel economy tests for three fuels- Petrol, Diesel and LPG.
Triaxial Suspension Simulator for designing of suspension parts - The facility has helped in designing of suspension parts for new introductions.
- Launch of SX4.
- Launch of Swift Minor.
- Launch of Swift DZire.
- Focused model cost down.
- To develop capability for full model change.
- To upgrade R&D capabilities for total evaluation of products.
- Emphasis on VA-VE & innovative cost reduction ideas to cut down costs.
- Carry out continuous up-gradation of existing models.
- Maximum localisation for achieving cost reduction in existing as well as new models.
- Compliance with Bharat Stage IV emission norm and other new regulations.
- Developing knowledge of costing of various Automotive Technologies through standard cost tables and cost benchmarking.
- Cost planning of new products coinciding with the new Product planning to put cost in the right perspective at the concept stage and give target cost to designers.
- Design in cost reduction to reduce costs from concept stage itself.
- Develop more products with alternative fuel option.
Suspension and Brakes Design
n
2. Benefits derived as a result of above R&D
3. Future plan of action
2.BENEFITS DERIVED AS A RESULT OF ABOVE EFFORTS
- Indigenisation of various vehicle aggregates at lower costs.
- Improvement and up-gradation of existing models for improved comfort, style and better value for money.
- Continuous reduction in product cost through VA-VE.
- Compliance to new regulations.
- Significant cost reduction of new model parts compared to existing models, ensuring that the new models are profitable from day one.
- Significant cost reduction obtained in existing models.
Annexure A Contd.
4. Expenditure incurred on R&D
Particulars FY'08 FY'07
(Rs. in Million)
a. Capital 312 103
b. Recurring 646 536
c. Total 958 639
d. Total R&D expenditure as a 0.44% 0.36%
Percentage of total turnover
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42 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Activities relating to exports
i) Initiatives taken to increase exports: Please refer to "Highlights of Operations - Exports" in this Report and report on Management Discussion and Analysis.
ii) Development of new export markets for products and services- Please refer to "Highlights of Operations - Exports" in this Report and report on Management Discussion & Analysis.
iii) Exports plans
The Company will resume its exports to Europe with ‘A Star’ which is expected to start from last quarter of 2008-09. The Company will continue the export of other models to non- European markets. By 2010-11, the Company plans to export 200,000 units.
3. IMPORTED TECHNOLOGY
Technology Imported 1. Integrated Audio with Audio controls on steering wheel
2. Glass Antennae
Year of Import 2007-08
Status of absorption Above technologies have been used in product introduced during the year.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO (CASH BASIS)(Rs. in Million)
a) Foreign Exchange used: Equivalent
(i) Raw materials and Components 13,355 12,256
(ii) Capital goods 10,542 823
(iii) Dies and Moulds, Maintenance spares and other items 711 500
iv) Royalty, interest, dividend and others 5,610 3,865
b) Foreign Exchange earned: Equivalent 7,812 5,015
FY'08 FY'07
43DIRECTORS' REPORT - ANNEXURE A
For and on behalf of the Board of Directors
Shinzo Nakanishi R.C.BhargavaManaging Director Chairman& CEO
New Delhi21st July 2008
Corporate Governance Report
CORPORATE GOVERNANCE PHILOSOPHYMaruti Suzuki (the Company) is fully committed to practicing sound corporate governance and upholding the highest business standards in conducting business. Being avalue-driven organisation, the Company has always worked towards building trust with shareholders, employees, customers, suppliers and other stakeholders based on the principles of good corporate governance, viz., integrity, equity, transparency, fairness, disclosure, accountability and commitment to values.
The Company fosters a culture in which high standards of ethical behaviour, individual accountability
and transparent disclosure are ingrained in all its business dealings and shared by its Board of Directors, Management and Employees. The Company has established systems and procedures to ensure that its Board of Directors is well-informed and well-equipped to fulfil its overall responsibilities and to provide the management with the strategic direction needed to create long-term shareholder value.
The Company has a multi-tier management structure, comprising the Board of Directors at the top and followed by Managing Executive Officers, Executive Officers and Divisional Heads. Through this, it is ensured that:
MANAGEMENT STRUCTURE
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44 Maruti Suzuki India Limited ANNUAL REPORT 2007-08 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
The Company has laid down a Code of Conduct for the members of the Board and
identified senior management personnel of the Company.
nStrategic supervision is provided by the Board;
nControl and implementation of Company's strategy is achieved effectively;
nOperational management remains focussed on implementation;
nInformation regarding the Company's operations and financial performance are made available adequately;
nDelegation of decision making with accountability is achieved;
nFinancial and operating control and integrity are maintained at an optimal level;
nRisk is suitably evaluated and dealt with.
As on 31st March 2008, the Company's Board of Directors
BOARD OF DIRECTORS
COMPOSITION OF THE BOARD
consists of eleven members. The Chairman of the Board is a non-executive Director. The Board is made up of five executive Directors and six non-executive Directors, of whom four are independent as given in Table 1.
No Director is related to any other Director. All non-executive independent Directors are persons of eminence and bring a wide range of expertise and experience to the Board.
S. Name of Category No. of Outside No. of Outside No. the Directors Directorship(s) Committee(s)
Public Private Member Chairman
1 Mr. R. C. Bhargava Chairman, 7 2 4 4Non-Executive
12 Mr. Shinzo Nakanishi Managing 5 2 1 --Director and CEO, Executive
3 Mr. Hirofumi Nagao Executive 3 - 2 -
4 Mr. Shuji Oishi Executive 1 1 - -25 Mr. Tsuneo Ohashi Executive 1 - - -
36 Mr. Keiichi Asai Executive 1 - - -
7 Mr. Osamu Suzuki Non-Executive 1 - - -
8 Mr. Amal Ganguli Independent 10 3 4 4
9 Ms. Pallavi Shroff Independent 4 1 - -
10 Mr. Manvinder Singh Banga Independent - - - -
11 Mr. Davinder Singh Brar Independent 2 9 1 -
stTABLE 1: Composition of the Board of Directors as on 31 March 2008
45CORPORATE GOVERNANCE REPORT
1 Appointed with effect from 19th December 2007
2 Appointed with effect from 1st January 2008
3 Appointed with effect from 29th January 2008
Notes:
a. Foreign companies, bodies corporate, private companies and companies under Section 25 of the Companies Act, 1956 are excluded for the above purpose.
b. The committees considered for the purpose are those prescribed under Clause 49 (I) (C) of the Listing Agreement.
As stipulated by Clause 49 of the Listing Agreement, none of the
Directors was a member of more than 10 committees or a Chairman of more than 5 committees across all companies in which he/she is a Director.
The Board met six times during the year-24th April 2007, 26th July 2007, 5th September 2007, 29th October 2007, 29th January 2008 and 13th March 2008. The Board meets at least once in a quarter with a gap of not more than four months between any two meetings. However, additional meetings are held whenever necessary. Table 2 gives the attendance record of the Directors at the six Board Meetings as well as the last Annual General Meeting.
BOARD MEETINGS
* Mr. Banga joined Board Meeting in July 2007 and January 2008 through tele-conference
1 Ceased to be Director with effect from 19th December 2007.
2 Ceased to be Director with effect from 26th May 2007.
3 Ceased to be Director with effect from 2nd December 2007.
4 Appointed with effect from 1st January 2008.
5 Appointed with effect from 29th January 2008.
6 Ceased to be Director with effect from 1st January 2008.
TABLE 2: Board Meeting attendance record of the Directors in 2007-2008
Name of Director Number of meetings attended(Total meetings held: 6) last AGM
Whether attended
Mr. R.C. Bhargava 6 Yes1Mr. Jagdish Khattar 4 Yes
Mr. Shinzo Nakanishi 5 Yes
Mr. Hirofumi Nagao 6 Yes2Mr. Shinichi Takeuchi 1 N.A.
3Mr. Tsuneo Kobayashi 4 Yes
Mr. Shuji Oishi 6 Yes4
Mr. Tsuneo Ohashi 2 N.A5Mr. Keiichi Asai 2 N.A
Mr. Osamu Suzuki 3 Yes
Ms. Pallavi Shroff 3 No
Mr. Amal Ganguli 6 Yes
Mr. Manvinder Singh Banga 1* No
Mr. Davinder Singh Brar 5 Yes6 Mr. Masayuki Osada 3 Yes
INFORMATION SUPPLIED TO THE BOARD
The Board has complete access to all information of the Company.Inter-alia, the following information is provided to the Board and the agenda papers for the meetings are circulated in advance of each meeting or are tabled in the course of such meeting:
nAnnual operating plans, capital & revenue budgets and updates;
nQuarterly results of the Company and its operating divisions or business segments;
nMinutes of meetings of Audit Committee and other committees of the Board;
nInformation on recruitment and remuneration of senior officers, just below the Board level, including appointment or removal of Chief Financial Officer and Company Secretary;
nMaterially important show cause, demand, prosecution and penalty notices;
nFatal or serious accidents or dangerous occurrences;
nAny materially significant effluent or pollution problems;
nAny materially relevant default in financial obligations to and by the Company or substantial non-payment for goods sold by the Company;
nAny issue which involves possible public or product liability claims of a substantial nature;
nDetails of any joint venture or collaboration agreement;
nTransactions that involve substantial payments towards goodwill, brand equity or intellectual property;
a millionpromises...
46 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Corporate Governance Report Contd.
nSignificant labour problems and their proposed solutions;
nAny significant development in the human resources and industrial relations fronts;
nSale of material nature of investments, subsidiaries, assets, which is not in the normal course of business;
nQuarterly details of foreign exchange exposure and the steps taken by management to limit the risks of adverse exchange rate movement, and
nNon-compliance of any regulatory, statutory nature or listing requirements and shareholder services such as
non-payment of dividend, delay in share transfer, etc.
Table 3 gives details of the remuneration paid to Directors during 2007-08. The Company did not advance any loans to any of its Directors in the year under review.
REMUNERATION PAID / PAYABLE TO DIRECTORS
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
Mr. Shinzo Nakanishi* None 31,59,980 15,00,328 70,000 - 47,30,308
Mr. Jagdish Khattar None 2,75,14,623 50,10,929 - - 3,25,25,552
Mr. Tsuneo Kobayashi None 77,56,583 20,87,159 - - 98,43,742
Mr. Shinichi Takeuchi None 14,88,802 7,00,820 - - 21,89,622
Mr. Hirofumi Nagao* None 96,75,214 45,00,000 - - 1,41,75,214
Mr. Shuji Oishi None 89,25,868 37,77,128 - - 1,27,02,996
Mr. M. Osada None 43,41,205 16,94,262 - - 60,35,467
Mr. Tsuneo Ohashi* None 22,57,146 969,672 - - 32,26,818
Mr. Keiichi Asai* None 16,23,370 671,311 - - 22,94,681
Mr. R. C. Bhargava None - - 1,00,000 17,60,000 18,60,000
Mr. O. Suzuki None - - 30,000 - 30,000
Mr. Amal Ganguli None - - 1,20,000 15,50,000 16,70,000
Ms. Pallavi Shroff None - - 70,000 7,75,000 8,45,000
Mr. Manvinder Singh Banga None - - 10,000 3,25,000 3,35,000
Mr. Davinder Singh Brar None - - 1,10,000 10,75,000 11,85,000
TABLE 3: Remuneration paid or payable to Directors during 2007-08
Name of Director Relation-ship with other Directors
Salary & Perquisites
Performance linked bonus
Sitting fees
Commission Total
* Subject to approval of shareholders in ensuing Annual General Meeting.
The members of the Company had earlier approved payment of commission to non-executive Directors as permitted by the Companies Act, 1956 and in the last Annual General Meeting held on 6th September 2007, approved an increase in the overall limit of commission to Rs. 1 Crore per annum with effect from 1st April 2006. As such, the commission for 2006-07 was also paid during 2007-08 as per following details:
Name of Director Commission (2006-07)(Rs.)
Mr. R. C. Bhargava 12,60,000
Mr. Amal Ganguli 8,60,000
Ms. Pallavi Shroff 8,00,000
Mr. Manvinder Singh Banga 5,00,000
Mr. Davinder Singh Brar 8,60,000
The performance criteria defined by the Board for the Whole-time Directors including Managing Director is as under:
a) Actual achievement in terms of growth in sales, profit, etc. as compared to the previous year;
47CORPORATE GOVERNANCE REPORT
e) Compliance with listing and other legal requirements relating to financial statements.
f) Disclosure of any related party transactions.
g) Qualifications in the draft audit report.
4. Reviewing, with the management, the quarterly/annual financial statements before submission to the Board for approval.
5. Reviewing with the management, performance of Statutory and Internal Auditors, the adequacy of internal control system.
6. Reviewing the adequacy of internal audit function including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
7. Discussion with Internal Auditors about any significant findings and follow up thereon.
8. Reviewing the findings of any internal investigations by the Internal Auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.
9. Discussion with Statutory Auditors before the audit commences, about the nature and scope of audit as well as post audit discussion to ascertain any area of concern.
10. Looking into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.
11. Reviewing the functioning of the Whistle Blower mechanism, in case the same is existing.
b) Actual achievement of growth as compared to the budget approved at the beginning of the year; and
c) Growth of market share of Company's products as compared to key competitors in the Industry.
No employee of the Company is related to any Director of the Company.
Members of the Company at the Annual General Meeting held on 6th September 2007, approved payment of remuneration by way of commission to independent Directors at a sum not exceeding 1% of the net profits of the Company subject to a ceiling of Rs. 100 Lac per annum with effect from 1st April 2006 for a period not exceeding five years. The payment of commission is based on certain criteria such as attendance at the Board/ Board level committee meetings, time devoted, current trends prevailing in the industry etc.
Table 4 shows the composition of the Audit Committee. All the members of the Audit Committee are financially literate and Mr. Amal Ganguli, the Chairman, has expertise in accounting and financial management.
The Director responsible for the finance function, the head of internal audit and the representative of the Statutory, Internal and Cost Auditors are permanent invitees to the Audit
Non-Executive Directors' remuneration
I. Audit Committee
Composition
COMMITTEES OF THE BOARD
TABLE 4: Composition of Audit Committee
Name Category Designation
Mr. Amal Ganguli Independent Chairman
Mr. Shinzo Nakanishi Executive Member
Mr. Davinder Singh Brar Independent Member
Ms. Pallavi Shroff Independent Member
a millionpromises...
48 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Corporate Governance Report Contd.
Committee. Mr. Anil Rustgi, Company Secretary & Chief Legal Officer acts as the Secretary to the Audit Committee. Other Directors and members of management are also invited from time to time as appropriate.
The Role of the Audit Committee includes the following:
1. Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
2. Recommending the appointment and removal of Statutory Auditors, fixation of audit fee and also approval for payment for any other services.
3. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:
a) Matters required to be included in the Directors' Responsibility Statement to be included in the Board's Report in terms of Clause (2AA) of section 217 of the Companies Act, 1956.
b) Changes, if any, in accounting policies and practices and reasons for the same.
c) Major accounting entries involving estimates based on the exercise of judgment by the management.
d) Significant adjustments made in the financial statements arising out of audit findings.
Role
12. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
13. Reviewing any other matter which may be specified as role of the Audit Committee under the amendments, if any, from time to time, to the Listing Agreement, Companies Act and other statutes.
The Audit Committee met four times thin the year under review- on 24 April
th th2007, 25 July 2007, 29 October th2007 and 29 January 2008. Table
5 gives the details of attendance.
Table 6 shows the composition of the Shareholders' / Investors' Grievance Committee of the Company.
The Company Secretary & Chief Legal Officer acts as the Secretary to the Committee and is the Compliance Officer.
Meetings
II. Shareholders' / Investors' Grievance Committee
Composition
Objective
The Committee oversees redressal of shareholder and investor grievances, transfer of shares, non - receipt of balance sheet, non - receipt of declared dividends and related matters. The Committee also oversees the performance of the Registrar and Transfer Agents, recommends measures for overall improvement in the quality of investors' services, approves issue of duplicate / split / consolidation of share certificates and reviews all matters connected with the securities transfers.
In order to provide efficient and timely services to investors, the Board has delegated the power of approval of issue of duplicate / split / consolidation of share certificate, transfer of shares, transmission of shares, dematerialisation / rematerialisation of shares not exceeding 2000 equity shares per transaction to the Managing Director,
Director & Managing Executive Officer and Company Secretary & Chief Legal Officer severally.
Meetings
Investor Grievance Redressal
During the year, Shareholders'/ Investors' Grievance Committee met
th thtwice i.e. on 24 April 2007 and 29 October 2007. Table 7 gives the attendance record.
During the year, 34 complaints were received and resolved. No transfer of shares was pending as on 31st March 2008.
This Annual Report has a detailed report on Management Discussion and Analysis.
During the year, there were no transactions of material nature with the promoters, the Directors or the management, their subsidiaries or relatives, etc. that had potential conflict with the interest of the Company. All disclosures related to financial and commercial transactions where Directors may have a potential interest are provided to the Board, and the interested Directors do not participate in the discussion nor do they vote on such matters. None of these transactions has a potential conflict with the interests of the Company.
MANAGEMENT
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
DISCLOSURES MADE BY THE MANAGEMENT TO THE BOARD
th*Appointed as Chairman with effect from 29 October 2007.
th** Ceased to be a member with effect from 19 December 2007.
Name Nature Designation
Mr. R.C. Bhargava* Non-Executive Chairman
Mr. Jagdish Khattar** Executive Member
Mr. Shinzo Nakanishi Executive Member
Mr. Hirofumi Nagao Executive Member
Mr. Davinder Singh Brar Independent Member
TABLE 6: Composition of Shareholders'/Investors' Grievance Committee
Mr. Shinzo Nakanishi 2
Mr. Jagdish Khattar 2
Mr. Hirofumi Nagao 2
Mr. R. C. Bhargava 2
Mr. Davinder Singh Brar 2
Names Meetings attended in 2007 - 08 (Total Meetings held: 2)
TABLEShareholders' / Investors' Grievance Committee members
7: Attendance record of
49CORPORATE GOVERNANCE REPORT
TABLE 5: Attendance record of Audit Committee members
Names Status Meetings Attended in 2007 - 08 (TotalMeetings held: 4)
Mr. Amal Ganguli Chairman 4
Mr. Shinzo Nakanishi Member 3
Mr. Davinder Singh Brar Member 4
Ms. Pallavi Shroff Member 2
Board and identified senior management personnel of the Company.
The Code of Conduct has been posted on the Company's website www.marutisuzuki.com
The Code of Conduct has been circulated to all the members of the Board and senior management personnel and they have affirmed their compliance with the said Code of Conduct for the financial year
stended 31 March 2008. A declaration to this effect signed by Mr. Shinzo Nakanishi, Managing Director & CEO of the Company forms part of this report as Annexure - A.
CEO/ CFO CERTIFICATION
The Company has in place a well defined and transparent control self assessment mechanism to evaluate the effectiveness of internal controls over financial reporting. To facilitate certification by CEO/CFO for the financial year 2007-08, key internal controls over financial reporting were identified and adequately assessed to provide sufficient comfort. To ensure complete transparency and effectiveness of the self assessment, the whole process was carried out through an on line web based tool called “Controls Manager”.
RELATED PARTY TRANSACTIONS
CODE OF CONDUCT FOR THE BOARD OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL
None of the transactions with any of the related parties was in conflict with the interests of the Company. Details of transactions between the Company and its subsidiaries, fellow subsidiaries, joint ventures, associates during 2007-08 are given in Note no. 26 in Schedule 23 to the annual accounts.
All related party transactions are negotiated on an arm's length basis and are in the interests of the Company.
The Company has laid down a Code of Conduct for the members of the
a millionpromises...
50 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Corporate Governance Report Contd.
ENABLING CONTROLS SELF ASSESSMENTS THROUGH THE CONTROLS MANAGER
Process for reporting
Surveys inputs
Control Questionnaires
RACM RACM RACM *
Identify Controls
Circulate onlinecontrol
feedback
Control
DashBoard
ApprovingAuthority
Flo
w t
o U
pp
er
Hie
rarc
hy
Seek and report inputs from
control ownersControl Owners
* RACM : Risk & Control Matrix
Pages: 18 Version: FinalMajor Process (level
No. Risks / WCGWs Control Description Prevent
(P)
Detect(D)
Manual
(M) or
IT***
Frequency:
Daily,Weekly,
Monthly,
Quarterly
Annually
Key
Contr
ol:
Y/N
Control
performed
by
Control
Document
Monitoring
Control
Activity
Preliminary
Effectiveness
Rating****
Rating Justification Testing:
Y/N
Desired
Effectiveness
Rating
A Allowances/Reserv
A1 Provision for
Obsolete and Slow
1 Key factors,
assumption or
techniques used to determine excess &
obsolete inventory
reserves are
inappropriate or not
identified.
Provision for inventory
obsolescence is
based on the last known movement of
stock and is assessed
by the logistics team
Note: From Q1 2004,
the logistics team has
upgraded the SAP
reports to provide information about
average consumption
of stock of spares and
equipment, thereby
enabling a more
informed judgement
P M NA Y Finance
Controller
NA N Informal The provision
methodology and
policy has not been formally documented
Additionally, it seems
that the current
accrual is being made
for parts and
equipment to be scrapped/cannabilised
. It seems that an
assessment of NRV
value for old
equipment & spares
and End of Life products has not been
made
N Standardised
Business Unit: Finance Department - Corporate Process Owner: Idris Kaboglu (Finance Controller)
Risks & Controls MapCycle (Level 1): Accounting Process (level 3): Sub Process
Notes reference: Information & Communication:
Pages: 18 Version: FinalMajor Process (level
No. Risks / WCGWs Control Description Prevent
(P)
Detect(D)
Manual
(M) or
IT***
Frequency:
Daily,Weekly,
Monthly,
Quarterly
Annually
Key
Contr
ol:
Y/N
Control
performed
by
Control
Document
Monitoring
Control
Activity
Preliminary
Effectiveness
Rating****
Rating Justification Testing:
Y/N
Desired
Effectiveness
Rating
A Allowances/Reserv
A1 Provision for
Obsolete and Slow
1 Key factors,
assumption or
techniques used to determine excess &
obsolete inventory
reserves are
inappropriate or not
identified.
Provision for inventory
obsolescence is
based on the last known movement of
stock and is assessed
by the logistics team
Note: From Q1 2004,
the logistics team has
upgraded the SAP
reports to provide information about
average consumption
of stock of spares and
equipment, thereby
enabling a more
informed judgement
P M NA Y Finance
Controller
NA N Informal The provision
methodology and
policy has not been formally documented
Additionally, it seems
that the current
accrual is being made
for parts and
equipment to be scrapped/cannabilised
. It seems that an
assessment of NRV
value for old
equipment & spares
and End of Life products has not been
made
N Standardised
Business Unit: Finance Department - Corporate Process Owner: Idris Kaboglu (Finance Controller)
Risks & Controls MapCycle (Level 1): Accounting Process (level 3): Sub Process
Notes reference: Information & Communication:
Pages: 18 Version: Final
Major Process (level
No. Risks / WCGWs Control Description
Prevent(
P)
Detect(D)
Manual
(M) or
IT***
Frequency:
Daily,Weekly,
Monthly,
Quarterly
Annually
Key
Contr
ol:
Y/N
Control
performed
by
Control
Document
Monitoring
Control
Activity
Preliminary
Effectiveness
Rating****
Rating Justification Testing:
Y/N
Desired
Effectiveness
Rating
A Allowances/Reserv
A1 Provision for
Obsolete and Slow
1 Key factors, assumption or
techniques used to
determine excess &
obsolete inventory
reserves are inappropriate or not
identified.
Provision for inventory obsolescence is
based on the last
known movement of
stock and is assessed
by the logistics team
Note: From Q1 2004,
the logistics team has
upgraded the SAP
reports to provide
information about
average consumption of stock of spares and
equipment, thereby
enabling a more
informed judgement
P M NA Y Finance Controller
NA N Informal The provision methodology and
policy has not been
formally documented
Additionally, it seems that the current
accrual is being made
for parts and
equipment to be
scrapped/cannabilised
. It seems that an assessment of NRV
value for old
equipment & spares
and End of Life
products has not been
made
N Standardised
Business Unit: Finance Department - Corporate Process Owner: Idris Kaboglu (Finance Controller)
Risks & Controls Map
Cycle (Level 1): Accounting Process (level 3): Sub Process
Notes reference: Information & Communication:
Reviewingauthority
Key Steps
With the successful implementation of the online controls self assessment framework, the Company has become one of the few companies in India to have a transparent framework for evaluating the internal controls over financial reporting, thereby reinforcing the commitment to adopt best corporate governance practices.
As required by clause 49 of the listing agreement, the certificate duly signed by Mr. S. Nakanishi, Managing Director and Mr. Hirofumi Nagao, Director & MEO (Admin) (in charge of finance function) was placed before the Board of Directors at its meeting
thheld on 24 April 2008.
The Company has established appropriate risk assessment and minimisation procedures. The process for formulating a defined risk assessment framework encompassed, inter-alia, a methodology for assessing and identifying risks on an ongoing basis, risk prioritising, risk mitigation, monitoring plan and comprehensive reporting on management of enterprise wide risks.
An Executive Risk Management Committee (ERMC) is in place to review the risk management activities of the Company on a regular basis. The composition of the Committee includes the Managing Director and all Whole-time Directors. Risks are evaluated by ERMC. In addition to the Company level risks, ERMC also reviews, from time to time, any new risks that may arise due to market dynamics and changes in the business environment. The Audit Committee and the Board of Directors also review the status of the risk management activities in the Company.
RISK ASSESSMENT AND MINIMISATION PROCEDURE
LEGAL COMPLIANCE REPORTING
CODE FOR PREVENTION OF INSIDER TRADING PRACTICES
DETAILS OF NON COMPLIANCE
The Board periodically reviews reports of compliance with all laws applicable to the Company, as well as steps taken by the Company to rectify instances of non-compliances.
The Company has developed comprehensive legal compliance scheduling and management software by which specific compliance tasks are assigned to each individual. The software enables in planning and monitoring all compliance activities across the Company as shown below:
The Company has instituted a comprehensive Code of Conduct for its Board, senior executive, managerial staff and relevant business associates in compliance with the SEBI regulations on prevention of insider trading.
No penalties or strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital market since the listing of the Company's shares on 9th July 2003.
SUBSIDIARY COMPANIES INFORMATION
SHAREHOLDERS
RE-APPOINTMENT / APPOINTMENT OF DIRECTORS
A statement, wherever applicable, of all significant transactions and arrangements entered into by the Company's subsidiaries is presented to the Board of the Company at its meetings.
The Audit Committee of the Company reviews the financial statements and investments made by unlisted subsidiary companies. The minutes of unlisted subsidiary companies are placed before the Board.
As per the Articles of Association of the Company and relevant provisions of the Companies Act, 1956, Mr. Manvinder Singh Banga, Mr. Amal Ganguli and Mr. Davinder Singh Brar retire by rotation at the forthcoming Annual General Meeting (AGM) of the Company and being eligible, offer themselves for re appointment.
Following Directors were appointed/re-appointed/designated during the year:
51CORPORATE GOVERNANCE REPORT
Factory
Factory
REGIONAL OFFICES
MEANS OF COMMUNICATIONSnMr. R. C. Bhargava was designated as Chairman with
theffect from 19 December 2007.
nMr. Shinzo Nakanishi was appointed as Managing Director and CEO with effect
thfrom 19 December 2007.
nMr. Tsuneo Ohashi was appointed as Whole-time
st Director with effect from 1January 2008 and also re-designated as Director & Managing Executive Officer (Production).
nMr. Hirofumi Nagao was re-appointed as a Whole-time
rdDirector with effect from 23 September 2007 and also re-designated as Director & Managing Executive Officer (Administration).
nMr. Toshiaki Hasuike was appointed as Whole-time
stDirector with effect from 1 January 2008. However, due to his promotion at Suzuki Motor Corporation, he could not assume his office.
nMr. Keiichi Asai was appointed as Whole-time Director with
theffect from 29 January 2008 and also re-designated as Director & Managing Executive Officer (Engineering).
All the above appointment / re-appointments of Whole-time Directors are subject to the approval of the members in the ensuing AGM. Brief resumes of the above Directors recommended for appointment / re-appointments at the AGM are furnished in the explanatory statement of the Notice of the AGM.
Financial results are published quarterly and annually in "The Times of India", "Economic Times" and in Hindi editions of "Navbharat Times”.
All monthly sales are sent to Stock Exchanges as well as displayed on website www.marutisuzuki.com. As a good corporate governance practice, monthly sales and press releases are sent to the shareholders through their available e-mail ids.
All official news releases are sent to Stock Exchanges as wel l as displayed on the Company's website www.marutisuzuki.com.
The Company's website www.marutisuzuki.com contains a dedicated segment called 'Investors' where all information needed by shareholders is available including ECS Mandate, Nomination Form and Annual Report.
Annual Report is circulated to members and others entitled thereto like Auditors, Equity Analysts, etc.
The Corporate Filing and Dissemination System (Corp filing) is jointly owned, managed and maintained by BSE and NSE. All disclosures and communications to BSE and NSE are filed electronically through this portal. Hard copies of the said disclosures and correspondence are also filed with the Stock Exchanges.
Following e-mail ids have been exclusively dedicated for the investors queries:
msilinvestorrelations@maruti.co.inmailmanager@karvy.com. Queries relating to Annual Report may be sent to msilinvestorrelations@maruti.co.in and queries relating to transfer of shares and splitting/ consolidation /demat / remat/ of share certificates may be sent to mailmanager@karvy.com
Financial Results
Monthly Sales
News Releases
Website
Annual Report
Corporate Filing and Dissemination System
Exclusive e-mail ids for Investors
COMPANY'S SNAPSHOTIncorporation :
CIN :
Equity Structure :
No.of cars sold :(2007-08)
Profit after Tax :(2007-08)
Employee Strength :
th24 February 1981
L34103DL1981PLC011375
54.21% is held by Suzuki MotorCorporation, Japan and balance isheld by public, etc.
764,842 including53,024 exports.
INR 17,308 million
7,090 (March 2008)
a millionpromises...
52 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Corporate Governance Report Contd.
GENERAL BODY MEETINGS
The Company had passed certain special resolutions in the previous three AGM's. No special resolutions were required to be put through postal ballot last year.
ndDate: 2 September 2008
Day: Tuesday
Time: 10:00 a.m.
Venue: Airforce Auditorium, Subroto Park, New Delhi 110010
st stFinancial Year: 1 April to 31 March.
stFor the year ending 31 March 2009, results will be announced:
By end of July 2008: First quarter results.
By end of October 2008: Second quarter results.
By end of January 2009: Third quarter results.
By middle of May 2009: Fourth quarter and Annual results.
The period of book closure is from th nd20 August 2008 to 2 September
2008 (both days inclusive).
ADDITIONAL SHAREHOLDER INFORMATION
ANNUAL GENERAL MEETING
FINANCIAL YEAR
BOOK CLOSURE
DIVIDEND PAYMENT
A dividend payment of Rs. 5 per equity share will be paid on or after
nd2 September 2008, subject to the approval of the members in the Annual General Meeting.
LISTING ON STOCK EXCHANGES
The equity shares of the Company are listed on Bombay Stock Exchange Limited, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE). The annual listing fees for the year 2008-09 have been paid to both these Stock Exchanges. Table 9 lists the Company's Stock Exchange codes. The Company has also paid the annual custodial fee for the year 2008-09 to both the depositories namely, National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
Financial Year Location Date Time
2004 - 05 Airforce Auditorium, 9th September 2005 10.00 A. M.Subroto Park, New Delhi
2005 - 06 Airforce Auditorium, 5th September 2006 10.00 A. M.Subroto Park, New Delhi
2006 - 07 Airforce Auditorium, 6th September 2007 10.00 A. M.Subroto Park, New Delhi
TABLE 8: Details of the last three AGMs of the Company.
Bombay Stock Exchange Limited, Mumbai (BSE) 532500
National Stock Exchange of India Limited (NSE) MARUTI
Table 9: Stock Code
ISIN No: INE585B01010
STOCK MARKET DATA
Table 10 gives the monthly high and low prices of the Company's equity shares at the BSE and the NSE for the year 2007 08. Chart A plots the movement of Company's share prices with BSE Sensex for the year 2007-08.
Chart A
53CORPORATE GOVERNANCE REPORT
MSIL stock price performance relative to sensex
MARUTI SENSEX
10,000.00
12,000.00
14,000.00
16,000.00
18,000.00
20,000.00
22,000.00
Sen
sex
valu
e
02
-Apr
-07
16-A
pr-0
7
03
-May
-07
15-M
ay-0
7
01-J
un-0
7
15-J
un-0
7
02
-Jul
-07
16-J
ul-0
7
01-A
ug-0
7
16-A
ug-0
7
09
-Sep
-07
17-S
ep-0
7
01-O
ct-0
7
15-O
ct-0
7
01-N
ov-0
7
15-N
ov-0
7
01-J
an-0
8
15-J
an-0
8
01-F
eb-0
8
15-F
eb-0
8
03
-Mar
-08
31-M
ar-0
8
600
700
800
900
1000
1100
1200
1300
MS
IL S
hare
Pric
e (R
s.)
Maruti Suzuki India Limited ANNUAL REPORT 2007-08 54
REGISTRAR AND TRANSFER AGENT
SHARE TRANSFER SYSTEM
SHAREHOLDING PATTERN
Karvy Computershare Pvt. Limited
Plot No 17 - 24, Vittalrao Nagar
Madhapur
Hyderabad 500 081
Ph No: 040-23420815 / 818
Fax No. : 040-23420814
Mail Id: mailmanager@karvy.com
Website: www.karvy.com
The Company's shares are transferred in dematerialised form and are traded on the stock exchanges compulsorily in the demat mode. Any request for rematerialisation and / or transfer of shares in physical mode is also attended within the stipulated time.
Table 11 and 12 lists the shareholding pattern and distribution schedule of equity shares of the
stCompany as on 31 March 2008.
Bombay Stock Exchange National Stock Exchange
Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
April 2007 815.00 738.00 840.00 741.00
May 2007 843.85 780.00 848.70 751.25
June 2007 830.50 713.00 876.00 715.05
July 2007 857.90 742.55 860.00 745.00
August 2007 872.00 720.00 872.90 715.00
September 2007 1026.90 854.00 1028.00 803.55
October 2007 1252.00 900.00 1248.00 960.25
November 2007 1100.00 930.00 1100.00 930.25
December 2007 1099.00 979.00 1098.00 973.45
January 2008 1009.00 700.00 1055.00 700.00
February 2008 924.90 751.00 923.90 750.10
March 2008 945.55 795.05 944.50 790.00
TABLE 10: Monthly high & low quotation of the Company's equity share
Category No. of shares held Shareholding (%)
Promoter's holding
Promoters
- Foreign Promoters 15,66,18,440 54.21
Sub-Total (A) 15,66,18,440 54.21
Non-Promoters Holding
Institutional Investors
Mutual Funds and UTI 1,88,43,389 6.52
Banks, Financial Institutions, Insurance Companies (Central / State Govt. Institutions / Non-government Institutions) 4,80,08,194 16.62
FIIs 4,53,47,942 15.70
Sub-Total (B) 11,21,99,525 38.84
Others
Private Corporate Bodies 1,11,70,286 3.87
Indian Public (including NSDL & CDSL) 83,18,919 2.88
NRIs / OCBs 3,03,595 0.11
Trust, HUF & Others 2,99,295 0.10
Sub-Total (C) 2,00,92,095 6.95
GRAND TOTAL (A + B + C) 28,89,10,060 100.00
TABLE 11: Shareholding Pattern as on 31st March 2008
a millionpromises...
Corporate Governance Report Contd.
TOP TEN SHAREHOLDERSstList of Top-ten shareholders as on 31 March 2008 is as follows;
Name % of holding1. Suzuki Motor Corporation 54.212. Life Insurance Corporation of India 10.933. HSBC Global Investments Funds A/C HSBC 1.98
Global Investment Funds A/C Mauritius Limited4. State Bank of India (equity) 1.705. T Rowe Price International INC A/C 1.61
T Rowe New Asia Fund6. LIC of India Market Plus 1.077. LIC of India Money Plus 0.978. ICICI Prudential Life Insurance Company Limited 0.82 9. Bajaj Allianz Life Insurance Company Limited 0.5310. HDFC Standard Life Insurance Company Limited 0.50
Total 74.32
PLANT LOCATION
ADDRESS FOR CORRESPONDENCE
SECRETARIAL STANDARDS ISSUED BY THE INSTITUTE OF COMPANY SECRETARIES OF INDIA (ICSI):
The Company has four plants, three located in Palam Gurgaon Road, Gurgaon, Haryana and one located at Manesar Industrial Town, Gurgaon, Haryana.
For transfer/split/dematerialisation/ rematerialisation of shares, payment of dividend on shares and any other query relating to shares of the CompanyFor shares held in dematerialised formTo the investor's Depository Participant(s) and/orKarvy Computershare Pvt. LimitedPlot No 17 24, Vittalrao NagarMadhapurHyderabad 500 081Ph No: 040-23420815 818Fax No. : 040-23420814Mail Id: mailmanager@karvy.comWebsite: www.karvy.comFor shares held in physical form Karvy Computershare Pvt. Limited or(at the above given address) At the Company's following address:Maruti Suzuki India Limited
th11 Floor, Jeevan Prakash25 K.G.Marg, New Delhi-110001Phone no- (91)-11-23316831Email:msilinvestorrelations@maruti.co.inWebsite: www.marutisuzuki.com
ICSI is one of the premier professional bodies in India. For better corporate governance, ICSI has issued 6
stsecretarial standards as on 31 March 2008. These Secretarial Standards are recommendatory in nature. The Company observes these Secretarial Standards voluntarily.
TABLE 12: Distribution Schedule as on 31st March 2008
Shareholding Class Number of shareholders % Number of shares %
1 to 5000 109473 99.56 7963951 2.76
5,001 to 10,000 76 0.07 560125 0.19
10,001 to 20,000 71 0.06 1025837 0.36
20,001 to 30,000 35 0.03 887062 0.31
30,001 to 40,000 34 0.03 1227656 0.43
40,001 to 50,000 28 0.03 1290837 0.45
50,001 to 1,00,000 84 0.08 6233707 2.16
1,00,001 and above 157 0.14 269720885 93.34
TOTAL 109958 100 288910060 100.00
DEMATERIALISATION OF SHARES AND LIQUIDITY
SECRETARIAL AUDIT
As on 31 March 2008, 45.79% of the Company's total paid up equity capital representing 132,284,572 equity shares was held in dematerial-ised form and the balance 54.21% representing 15,66,25,488 equity shares was held in physical form. The equity shares of the Company are listed under 'specified category' in BSE and are part of Nifty in NSE.
As stipulated by the Securities and Exchange Board of India (SEBI), a qualified practicing Company Secretary carries out the secretarial audit and provides a report to reconcile the total admitted capital with the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. This audit is carried out every quarter and the report thereon is submitted to the stock exchanges and is also placed
st
before the Board of Directors. The audit, inter-alia, confirms that the total listed and paid up capital of the Company is in agreement with the aggregate of the total number of shares in dematerialised form (held with NSDL and CDSL) and total number of shares in physical form.
The Company has no outstanding GDRs / ADRs / Warrants or any Convertible instruments.
The Company has not obtained any public funding in the last three years.
The Chairman's office with required facilities is being maintained by the Company at its expense, for use by its non-executive Chairman.
OUTSTANDING GDRS / ADRS / WARRANTS OR ANY CONVERTIBLE INSTRUMENTS, CONVERSION DATEAND LIKELY IMPACT ON EQUITY
DETAILS OF PUBLIC FUNDING OBTAINED IN THE LAST THREE YEARS
ADOPTION OF NON-MANDATORY REQUIREMENTS
55CORPORATE GOVERNANCE REPORT
a millionpromises...
Auditors' Certificate regarding compliance of conditions of Corporate Governance
To the Members of Maruti Suzuki India Limited (Formerly Maruti Udyog Limited)
We have examined the compliance of conditions of Corporate Governance by Maruti Suzuki India Limited (formerly Maruti Udyog
Limited) for the year ended March 31, 2008, as stipulated in Clause 49 of the Listing Agreement(s) of the said Company with
stock exchange(s) in India.
The compliance of conditions of Corporate Governance is the responsibility of the Company's management. Our examination was
carried out in accordance with the Guidance Note on Certification of Corporate Governance (as stipulated in Clause 49 of the
Listing Agreement), issued by the Institute of Chartered Accountants of India and was limited to procedures and implementation
thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor
an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us we certify that the Company has
complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement(s).
We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness
with which the management has conducted the affairs of the Company.
Partner Membership No: F 084451
For and on behalf of
Place: Gurgaon Price Waterhouse
Date: July 21, 2008 Chartered Accountants
ANNEXURE A
DECLARATION OF THE MANAGING DIRECTOR & CEO
This is to certify that the Company has laid down Code of Conduct for all the Board members and senior management personnel
of the Company and the same is uploaded on the website of the Company – www.marutisuzuki.com
Further, certified that the members of the Board of Directors and senior management personnel have affirmed the compliance
stwith the Code applicable to them during the year ended 31 March 2008.
thDate: 5 July 2008 Shinzo Nakanishi
Place: New Delhi Managing Director & CEO
Maruti Suzuki India Limited ANNUAL REPORT 2007-08 56
Anupam Dhawan
Our Management Team
a millionpromises...
OVERVIEWThe Indian economy grew at an impressive 9 percent in GDP during 2007-08. Of late, inflation has hardened and oil and certain other commodity prices have shot up, resulting in higher interest rates and an uncertain outlook for the very near term. However, the country's economy is still expected to continue to grow robustly, if at a slightly slower pace.
The domestic passenger car industry grew 11.8 percent in 2007-08, making this the sixth successive year of positive growth. But, industry performance during the year was
INDUSTRY OVERVIEW
inconsistent, with periods of high growth interspersed by months of low demand. Growth was model-specific, driven by select brands from different industry players as opposed to the general buoyancy witnessed during the previous year (2006-07).
The Company's domestic sale volume grew slightly more than the industry at 12 percent, and was the highest ever since inception. While continuing to lead in the A2 segment (compact cars), the Company also regained leadership of the A3 segment (sedans) after a gap of several years.
The domestic passenger car industry grew 11.8 percent in 2007-08, making this the
sixth successive year of positive growth. But, industry performance during the year
was inconsistent, with periods of high growth interspersed by months of low
demand. Growth was model-specific, driven by select brands from different
industry players.
60 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Management Discussion and Analysis
57
Strong partnerships are the backbone of our promise.
a millionpromises...
Our Steer Leaders
Mr. S. Maitra
Mr. N. Fujita
Managing Executive Officer (Supply Chain)
Executive Officer (Supply Chain)
“Our suppliers make more than 70 percent by value of a Maruti Suzuki car. They have a critical role in ensuring that our customers get global quality and design, like customers in the developed countries. We will continue collaborating with our suppliers, as we always have, to reduce cost and enhance quality. But this partnership will now do more. As Maruti Suzuki develops R & D capabilities, our suppliers will also build design and development capability in their own areas. Together, we will fulfil the promise of more models, more upgrades, more features -- at attractive prices ”
Mr. S. Y. Siddiqui
Managing Executive Officer (Administration)
“In pursuit of our ambitious growth & expansion plans amidst a competitive & tough business environment, our talent pool is going to be a key strength. We have made consistent efforts to create a positive, enabling and high performance work environment at Maruti Suzuki as a pre-requisite towards talent acquisition, talent nurturing and talent management. The people development roadmap at Maruti Suzuki also entails to build the leadership pipeline facilitating the high potentials to take up senior & top management roles, envision the future, define business innovation & strategies and lead high performing teams for us to achieve customer delight, organizational growth & strongly retain the leadership position in the Auto Industry in India.”
Mr. Mayank Pareek
Mr. S. Oishi
“
Executive Officer (Marketing & Sales)
Director & Managing Executive Officer (Marketing & Sales)
A million promises, to us, is about delighting the customer. We have the support of high quality people and systems of Maruti Suzuki, all of whom are converging to the cause of the customer. Our vast and growing network of dealers enables us to reach customers in the farthest corners. We will continue to expand this network, and also enhance the quality of customer experience with Maruti Suzuki. Fulfilling a million promises is about understanding the needs of the customer, stated and unstated, and designing our products and services around them. As India prospers, transforms, aspires and grows younger, we will remain sensitive to change, keep pace and meet commitments like we first did 25 years ago.”
Our Steer Leaders
Mr. M. M. Singh
Mr. T. Ohashi
Managing Executive Officer (Production)
Director and Managing Executive Officer (Production)
“We aspire to make cars that are consistently world class in terms of quality and cost, built by a strong, highly motivated & committed team. Maruti Suzuki is currently scaling up capacities by installing world-class equipment and machines for cars and engines. At the same time, with the blend of Japanese fundamentals & locally built new techniques, we build flexibility in our operations that allows quick product mix changes to meet changing customer requirements. Our success has always been due to our people who have shown outstanding commitment, team work and a never ending urge to improve. The man on the shop floor will continue to lead us in our journey of a million promises.”
Mr. I. V. Rao
Mr. K. Asai
Managing Executive Officer (Engineering)
Director & Managing Executive Officer (Engineering)
“Maruti Suzuki has successfully leveraged the strengths of Suzuki Motor Corporation in the areas of technology, design and quality. We have now developed capabilities in design and development, and collaborated with Suzuki engineers in designing world strategic models like Swift and SX4. Going forward, Maruti Suzuki will rapidly scale up capability and infrastructure in R & D, so we can continue to offer customers many more new models, with the same bold and aggressive design, loaded with features and priced attractively. We will continue to apply Japanese-style attention to quality and processes, both within the company and at our suppliers. Our service network, widely acknowledged for its reach and quality, will expand further and touch many more Indian customers as we move forward to fulfill a million promises.”
58 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Our Management Team
59MANAGEMENT TEAM
a millionpromises...
Mr. S. Maitra
Mr. N. Fujita
Managing Executive Officer (Supply Chain)
Executive Officer (Supply Chain)
“Our suppliers make more than 70 percent by value of a Maruti Suzuki car. They have a critical role in ensuring that our customers get global quality and design, like customers in the developed countries. We will continue collaborating with our suppliers, as we always have, to reduce cost and enhance quality. But this partnership will now do more. As Maruti Suzuki develops R & D capabilities, our suppliers will also build design and development capability in their own areas. Together, we will fulfil the promise of more models, more upgrades, more features -- at attractive prices ”
Mr. S. Y. Siddiqui
Managing Executive Officer (Administration)
“In pursuit of our ambitious growth & expansion plans amidst a competitive & tough business environment, our talent pool is going to be a key strength. We have made consistent efforts to create a positive, enabling and high performance work environment at Maruti Suzuki as a pre-requisite towards talent acquisition, talent nurturing and talent management. The people development roadmap at Maruti Suzuki also entails to build the leadership pipeline facilitating the high potentials to take up senior & top management roles, envision the future, define business innovation & strategies and lead high performing teams for us to achieve customer delight, organizational growth & strongly retain the leadership position in the Auto Industry in India.”
Mr. Mayank Pareek
Mr. S. Oishi
“
Executive Officer (Marketing & Sales)
Director & Managing Executive Officer (Marketing & Sales)
A million promises, to us, is about delighting the customer. We have the support of high quality people and systems of Maruti Suzuki, all of whom are converging to the cause of the customer. Our vast and growing network of dealers enables us to reach customers in the farthest corners. We will continue to expand this network, and also enhance the quality of customer experience with Maruti Suzuki. Fulfilling a million promises is about understanding the needs of the customer, stated and unstated, and designing our products and services around them. As India prospers, transforms, aspires and grows younger, we will remain sensitive to change, keep pace and meet commitments like we first did 25 years ago.”
Our Steer Leaders
Mr. M. M. Singh
Mr. T. Ohashi
Managing Executive Officer (Production)
Director and Managing Executive Officer (Production)
“We aspire to make cars that are consistently world class in terms of quality and cost, built by a strong, highly motivated & committed team. Maruti Suzuki is currently scaling up capacities by installing world-class equipment and machines for cars and engines. At the same time, with the blend of Japanese fundamentals & locally built new techniques, we build flexibility in our operations that allows quick product mix changes to meet changing customer requirements. Our success has always been due to our people who have shown outstanding commitment, team work and a never ending urge to improve. The man on the shop floor will continue to lead us in our journey of a million promises.”
Mr. I. V. Rao
Mr. K. Asai
Managing Executive Officer (Engineering)
Director & Managing Executive Officer (Engineering)
“Maruti Suzuki has successfully leveraged the strengths of Suzuki Motor Corporation in the areas of technology, design and quality. We have now developed capabilities in design and development, and collaborated with Suzuki engineers in designing world strategic models like Swift and SX4. Going forward, Maruti Suzuki will rapidly scale up capability and infrastructure in R & D, so we can continue to offer customers many more new models, with the same bold and aggressive design, loaded with features and priced attractively. We will continue to apply Japanese-style attention to quality and processes, both within the company and at our suppliers. Our service network, widely acknowledged for its reach and quality, will expand further and touch many more Indian customers as we move forward to fulfill a million promises.”
58 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Our Management Team
59MANAGEMENT TEAM
a millionpromises...
Our Management Team
a millionpromises...
OVERVIEWThe Indian economy grew at an impressive 9 percent in GDP during 2007-08. Of late, inflation has hardened and oil and certain other commodity prices have shot up, resulting in higher interest rates and an uncertain outlook for the very near term. However, the country's economy is still expected to continue to grow robustly, if at a slightly slower pace.
The domestic passenger car industry grew 11.8 percent in 2007-08, making this the sixth successive year of positive growth. But, industry performance during the year was
INDUSTRY OVERVIEW
inconsistent, with periods of high growth interspersed by months of low demand. Growth was model-specific, driven by select brands from different industry players as opposed to the general buoyancy witnessed during the previous year (2006-07).
The Company's domestic sale volume grew slightly more than the industry at 12 percent, and was the highest ever since inception. While continuing to lead in the A2 segment (compact cars), the Company also regained leadership of the A3 segment (sedans) after a gap of several years.
The domestic passenger car industry grew 11.8 percent in 2007-08, making this the
sixth successive year of positive growth. But, industry performance during the year
was inconsistent, with periods of high growth interspersed by months of low
demand. Growth was model-specific, driven by select brands from different
industry players.
60 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Management Discussion and Analysis
57
Strong partnerships are the backbone of our promise.
a millionpromises...
Our Steer Leaders
Year 2007-08 was the first full year of the Company's new diesel programme, and its 1.3 litre DDis engine mounted on the Swift and also on the Swift DZire, has proved to be popular with Indian customers. The Company's new model in the premium sedan segment, SX4, also registered strong performance, allaying concerns that the Company's image as a compact car leader would hamper its performance in the premium segments.
While Alto continued to be India's largest selling car, the entry level segment comprising Maruti 800 and Alto remained flat after the surge witnessed in 2006-07.
Towards the end of the fiscal year, the Company launched Swift DZire, its third new model for the year and the seventh in three years. A sedan based on the Swift platform, the DZire demonstrates the Company's growing in-house capability in design and development. It is also an example of
common platforms, enabling the Company to offer more model choice and features to customers at an attractive price.
The Company's exports were also the highest ever since inception, and grew 35 percent owing to concerted efforts to develop new markets and increase presence in existing ones.
The export portfolio, so far dominated by Alto and Maruti 800, will be bolstered with the launch of A-Star during the latter part of 2008-09. The Company has entered into a partnership with Mundra Port for a dedicated car terminal, including a stockyard and parking area, in preparation for the sharp scale-up in exports in the next few years.
The uptrend in commodity prices, notably steel, continued during the year. The Company was able to use a mix of measures to reduce cost, improve localisation and enhance efficiency to mitigate the impact.
During the last quarter, the Company adopted a new and more conservative depreciation policy assuming a lower useful life of plant and machinery, dies and IT assets. The higher depreciation provision, is a move by the Company to proactively align its financial accounting with shorter product lifecycles anticipated in the future.
In its conduct with all key stakeholders, the Company's approach continued to be one based on mutual respect, partnership and long term sustainability. The road safety programme expanded as the number of Maruti Driving Schools doubled during the year. The Company also adopted four villages in the vicinity of its Manesar Plant, and worked in partnership to improve the quality of life of the community.
The Company's investment projects, including capacity expansion at the Manesar Plant and the new KB engine plant, were well within schedule and cost estimates.
CNBC TV-18 -Autocar Award Car Manufacturer
of the year
61MANAGEMENT DISCUSSION AND ANALYSIS
MACRO FACTORS
Although the year had started with some concerns on the macro economic front, the performance was satisfactory on most parameters. GDP grew 9%, with manufacturing clocking a growth of 8.8%.
Car loan is the critical growth driver of the industry. Moves by the Reserve Bank of India and the Government to contain inflation inevitably led to a rise in interest rates. By April 2007, the interest rates had moved up by 400 basis points in 18 months.
By itself, this may not have led to a significant increase in the monthly installment paid on a car loan. But taken together with other loan repayment obligations of a household, such as home loans, the higher interest rates did become a significant additional burden on middle class families and may have deterred purchase of a new car in some cases.
Anti-inflation measures also resulted in tighter liquidity. Banks and finance companies have had to rework their loan portfolios and priorities, and allocations to retail segments including car loans have come down in some cases.
LEADERSHIP
Mr. Jagdish Khattar retired as Managing Director on December 18, 2007. He had served in that position for eight years. The Board of Directors acknowledged Mr. Khattar's contribution in leading the Company through a period of major changes in
the industry, and safeguarding its leadership and market share in an intensely competitive market.
Mr. S. Nakanishi, who had been the Chairman (non-executive) of the Company since May 2002, was appointed as the Managing Director.
62 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Mr R. C. Bhargava, a non executive Director, was appointed the Chairman of the Company.
The Company has since opted for a new management structure which clearly defines a second line of leadership, while also providing more opportunities for growth, for Indian managers.
Under the new structure, the Company has identified five critical verticals viz. Marketing & Sales,R & D, Manufacturing, Administration and Supply Chain. Each of these verticals is headed by a team of two persons, one of whom is also a Director on the Board.
This discussion and analysis is
63MANAGEMENT DISCUSSION AND ANALYSIS
structured in a way that while retaining focus on the overall business of the Company, it will separately outline key issues and the broad direction envisaged for each of these verticals.
NDTV Award Car Manufacturer
of the year
DOMESTIC MARKETThe Company launched three new models during the year, including premium sedan SX4, a luxury Sports Utility Vehicle Grand Vitara and an entry level sedan Swift DZire (in both petrol and diesel versions). With this, the Company has launched seven models in three years. During the year, the Company discontinued production of Esteem, its entry sedan launched in 1994, which enjoyed a huge customer following for its combination of unmatched performance and low cost of ownership.
Both the SX4 and Swift DZire have been received well from the start,
and have contributed to the Company regaining the leadership position in the A3 segment (sedans). In turn, this has catalysed efforts to expand the Company's image from being a leader in small cars to a manufacturer offering the full range of models to customers.
The Grand Vitara, imported in small numbers as a Completely Built Unit from Japan, further showcases the Company's ability to offer a complete portfolio of products.
The year witnessed two new model launches by competitors in the A2
BUSINESS PERFORMANCE
The Company held on to its share in the entire passenger vehicle market at 46%
and was able to increase it marginally from 51% to 51.4% in passenger cars. The
Company's share in the A2 segment (compact cars) remained above 58%. In the A3
segment, the Company's share increased to 21.9 percent, from 15.1 percent in the
previous year.
64 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Management Discussion and Analysis
segment, which accounts for the bulk of the Company's business. There was a new competitor model in the A3 segment as well. Besides, there were several new variants by competitors. While the new offerings have taken some share away from the existing ones, they have helped expand the market overall.
The passenger vehicle industry hasthree categories
nPassenger Cars
nUtility Vehicles (UV)
nMulti Purpose Vehicles (MPV)
The share of each industry segment and share of the Company in each segment are shown in the chart above. The Company held on to its share in the entire passenger vehicle market at 46% and was able to increase it marginally from 51% to 51.4% in passenger cars. The Company's share in the A2 segment (compact cars) remained
above 58%. In the A3 segment, the Company's share increased to 21.9 percent, from 15.1 percent in the previous year.
The Company's success in the market can be attributed, broadly, to the new product design philosophy emerging from Suzuki Motor Corporation, a disciplined approach to cost that enables more features at less price, and market initiatives.
The new design philosophy at Suzuki Motor Corporation, witnessed first in the Swift, is bold, aggressive and distinctly European. This philosophy is reflected in the Group's other World Strategic Models, such as SX4, Grand Vitara, A-Star and Splash. The success of the Company's new models is an indication that this new design philosophy has been well accepted by Indian customers.
In addition, the Company's new models have consistently offered
more features than comparable competitor offerings, and are very competitively priced. This has been made possible by a disciplined target cost approach towards new models, followed within the Company and at our suppliers.
In recent years, the Company has also undertaken a series of market initiatives, notably the expansion of the sales network, offering the entire range of car-related services in a convenient and transparent manner and implementing standards to improve customer service.
The success of the Company's new models, such as Swift and SX4, has strengthened the profitability of dealerships. In addition, car-related products and services like insurance, finance, extended warranty, spares and accessories have further boosted the bottomline of the network. Further, with a car population of nearly 6.5 million Maruti Suzuki cars, service
Auto Monitor Awards Car Manufacturer of
the Year
65MANAGEMENT DISCUSSION AND ANALYSIS
MARUTI'S MARKET SHARE IN EACH SEGMENT
Multi Purpose Vehicle
Utility Vehicles
6%
16%
Passenger Cars 78%
Indu
stry
Seg
men
ts
Maruti S
uzuki's Market S
hare
46.00%100%
89.0%
1.6%
51.4%
maintenance and repairs make a healthy contribution to profitability of dealerships. These factors are encouraging channel partners to reinvest in sales outlets, workshops and increasing their sales force.
A major driver of sales performance is the pre-owned car business, or TrueValue, which facilitates new car sales through exchange and trade-ins and also contributes to dealer profitability. A total of 84,323 new cars were sold in exchange, accounting for 12 percent of total new car sales.
There is some data, collected by independent market research groups, to suggest that car ownership periods are declining in the Indian market. With customers inclined to replace cars faster, exchange will be a key tool in driving sale of new cars. This trend will also boost the pre-owned car market overall, as more and better cars become available.
The Company has in place robust systems to aid dealers in monitoring and improving performance. These include Balanced Score Card, Customer Satisfaction Surveys and Dealer Profitability models. With the roll-out of the Dealer Management System, an IT-based national network, dealer's management can access a wealth of data to enable them to monitor diverse facets of their operations including customer satisfaction indices.
The Company sold 53,024 units during 2007-08. This is the highest ever export volume in a year for the Company, and marked a growth of 35 percent over the previous year. The Company's contribution
EXPORTS
towards total exports by the industry increased to 25% from 20% last year. Cumulative exports made by the Company crossed the milestone of 500,000 vehicles.
Using A-Star, a Euro V compliant model in the “A” segment, the Company plans to re-launch itself in the European markets which it had left two years earlier for want of a suitable model. The Company is targeting a yearly volume of 100,000 in Europe and other parts of the world. This model is likely to be launched overseas in the last quarter of 2008-09.
The Company has decided that while focussing on volume growth, it will enhance efforts to improve profitability from export operations.
Exports will enable the Company to be at the frontier of technology, quality and manufacturing excellence.
The Company draws competitive advantage from the fact that its car
SPARE PARTS AND ACCESSORIES
parts are priced competitively and are affordable. In recent years, the focus has been to improve access and availability by setting up a national network of spare parts distributors.
In the Accessories business, enterprising dealers have used Maruti Genuine Accessories to create customised versions of the Company's existing models. In many cases, these special edition cars have enhanced sales, improved margins and enable the Company to address younger customer profiles. Although at a nascent stage, these dealer initiatives signify the potential offered by this business.
During the year, the Company achieved a new milestone: a gross turnover of Rs 10 billion in the spares and accessories business. This marked a growth of 19 percent over the previous year.
The business is supported by a robust back end operation, which employs technology and competence in logistics to deliver on time to customers across the country.
66 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Chile
Algeria Egypt
Sri Lanka
Indonesia
67MANAGEMENT DISCUSSION AND ANALYSIS
TOP 5 & OTHER EXPORT MARKETS
In recent years, there are clear trends that customer
expectations from a car have evolved considerably. Car
customers now seek contemporary styling, international
quality and latest features that enhance their safety and
convenience, while expecting performance and fuel
efficiency, like their parents did before them.
68 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Keeping our promises by getting closer to our customers.
69
SALES NETWORK
280
182
375
227
600
393
700
600
500
400
300
200
100
2003-04 2005-06 2007-08
Sales Outlets
Cities covered
SERVICE NETWORK
1,9202,500
3,000
2003-04 2005-06 2007-08
Service points
Cities covered
1,001
2,096
1,092
2,628
1,220
2,000
1,500
1,000
500
CUSTOMER DELIGHT
During the year, the Company took forward several initiatives to retain its top position in the area of customer satisfaction. These initiatives ranged from product design and quality to network expansion, and included new service programmes to meet latent needs of customers.
In recent years, there are clear trends that customer expectations from a car have evolved considerably. Car customers now seek contemporary styling, international quality and latest features that enhance their safety and convenience, while expecting
performance and fuel efficiency, like their parents did before them.
These changing preferences are reflected in the sales data for existing segments in the car market: models and variants that promise only economy and low acquisition cost are increasingly losing out to models and variants that are rich in features, style and safety. This trend holds true across segments, including among entry level cars.
The Company's product plan is designed for these changing customer expectations. World
70 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
ET Avaya GlobalConnect Awards
Most CustomerResponsive
Company
a millionpromises...
Management Discussion and Analysis
Strategic Models like Swift and SX4, which offer bold European design and high end features are targeted specifically at these customers.
In the field, the products were supported by rapidly expanding networks. The Company has diverse networks for new cars, spares, service, pre-owned cars and so on, and all of them were in expansion mode last year to enable the Company to get closer to the customer.
In particular, the Company encouraged dealers to recruit Resident Sales Executives, dynamic youngsters from rural areas who would network with local communities and operate from there, rather than report daily to a sales showroom in an urban location.
Going forward, the Company sees its network as a source of competitive advantage. Rising real estate prices and restrictions on land use in many cities are together hampering the setting up of new car showrooms and workshops, specially in prime locations.
The Company ranked first in thCustomer Satisfaction for the 8
successive year in the annual survey by J D Power Asia Pacific. It was the only player above industry average, despite the much higher number of customers it has to serve.
Certain unique initiatives by the Company, such as the facility at service workshops to pick up and drop cars of women customers, came in for appreciation. J D Power's Survey found that customers who received such service were notably more delighted.
The Company dealers and authorized service stations serviced more than 10 million cars in the year.
At the back end, the Company took measures to improve productivity of workshops so that customers can get their cars serviced faster. This also improves dealer profitability, generating more revenues from the same fixed assets. The Express Service started by some dealers offers to complete a standard service for a customer's car in two hours.
Another innovation was Maruti Mobile Support - a special version of Versa that has been suitably modified to function as a service station. It is able to cover areas where a service station is not viable or where customers want service at their doorstep. At present, 120 Maruti Mobile Service vans are plying in more than 80 cities.
The Company used technology to meet customer needs and even delight them. Following feedback that the Company's cars were more prone to theft owing to their resale value, the Company worked on an anti-theft immobiliser or i-CATS system for all its new cars.
The Company has also ensured that the entire fleet of trucks, carrying new cars from the factory to dealerships, is GPRS-enabled. This allows dealerships to give customers a more accurate picture of when their
car is likely to be delivered, and to some extent addresses a major source of dissatisfaction among customers.
The Company's efforts to satisfy all car-related needs -- from learning to drive a car at Maruti Driving Schools to car insurance, extended warranty and eventually exchanging the existing car for a new one --- under one roof at dealerships also enhance customer satisfaction.
The Company is taking its interpretation of connect with the customer into a new paradigm. After investing in manufacturing facilities, the Company is now ready to invest in marketing infrastructure. It has identified some mega projects to build the foundation of this new initiative:
Car display showrooms or brand centres in prominent urban locations, where customers can see the entire range of models, experience technology and so on.
Car stockyards is an effort to ensure that customers are able to get their choice of model, variant and colour, in time.
Spares stockyards in select centres across the country to meet customer requirements faster.
FUTURE PROMISE
n
n
n
JD Power Customer Satisfaction Index StudyRanked Highest in
Customer Satisfaction Index 8 times in a row
JD POWER CSI SURVEY
800
600
400
900
850
750700
650
550500
450
2001 2002 2003 2004 2005 2006 20072000
100
150
71MANAGEMENT DISCUSSION AND ANALYSIS
Maruti Score
Industry Average
72 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Using technology to give our customersmore for less.
73
a millionpromises...
In recent years, the Company has accomplished
significant improvements on most operational
parameters, such as Hours per Vehicle and Direct
Pass Rate. The use of electronic tools such as
in the areas of jigs and die designs,
manufacturing feasibility simulations, automatic line
balancing, and validating factories and material flow in
virtual environment, have helped make operations cost
efficient.
Digital
Engineering Engineering
Digital
OPERATIONS
The Company produced 777,017 cars during the year, and achieved a production of 1 million in the 16 months ending March 2008. This translates into the Company rolling out a car every 22 seconds during the two-shift operation. The entire effort of Japanese best practices and Indian innovation is to ensure that manufacturing at this scale is achieved with high quality, productivity, safety and optimal cost.
In recent years, the Company has made significant improvements on most operation parameters, including Hours Per Vehicle (measure of productivity) and Direct Pass Rate
The Company is expanding into a new generation technology of light-weight, fuel-efficient and clean K-series gasoline engines.
(measure of quality). It continued to build on this and achieve incremental improvements during the year.
Innovative methods were used to secure widespread employee participation, especially in promoting all-round Safety.
A new software based system, Multi-Level Production System (MLPS), was introduced to build flexibility in operations. In-house automation continued to be a key driver of productivity. As the Company expanded manpower in line with new capacity, the technical training centre,
74 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
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Management Discussion and Analysis
PROCUREMENT
FUTURE AGENDA
About three fourth of the car, by value, is outsourced. Any improvement in the car in terms of technology and design, quality or cost has to essentially include the Company's vendors and their support.
In the year 2007-08, the Company signed two joint venture agreements with global component manufacturers for cost reduction through localisation of components for Maruti Suzuki cars. The first was with Magneti Marelli, aimed at the production of electronic control units (ECU) for diesel engines and the second with Futaba Industrial Company, Japan for production of exhaust system parts.
The Company is setting up a Suppliers Park in Manesar, close to its car plant on an area of 100 acres for Just-In-Time supplies. Both the above joint ventures are located in this Suppliers Park.
An informal Suppliers' Club has been formed by the Company's vendors and it gives a good forum for building personal relationships, understanding key issues and exchanging best practices at the CEO level. The Company organised a visit of the members to Japan for some plant visits and the Tokyo Motor Show.
In the early eighties, the Company made significant efforts in trying to develop a component industry from ground zero. Over the next two decades, about 110 foreign technology collaborations were facilitated and Maruti Suzuki
started last year, helped technicians and new joinees shorten their learning curve.
The Company is expanding into a new generation technology of light-weight, fuel-efficient and clean K-series gasoline engines. The Company has put up a state-of-the-art engine plant employing highly automated, energy efficient & environment friendly equipment for low pressure and high pressure Aluminium die casting to produce parts of the new series engines.
At present, the plant rolls out World Strategic Models such as Swift (diesel & petrol), SX4 and DZire (diesel & petrol). These models have seen buoyant market demand.
In addition, the fifth World Strategic Model derived from Concept A-Star would also roll out from the Manesar facility later this year. The next fiscal year is also critical as the Company targets to export 200,000 units by 2010.
In view of these developments, the plant's capacity was enhanced from an initial 100,000 units per annum to 170,000 units per annum during the year 2007-08. The Company is committed to achieve a capacity of 300,000 units per annum by October this year.
This year, the Company actively deployed the latest tools like Digital Engineering in the areas of jigs and die design; manufacturing feasibility simulations, automatic line balancing and validating factories and material flow in a virtual environment.
EXPANSION INTO NEW TECHNOLOGIES AT GURGAON
EXPANSION OF CAPACITY AT MANESAR
CAPABILITY BUILDING
engineers worked closely with the vendors' engineers to enable to deliver cars which are both high quality and cost competitive. Now, the relationship has matured and most direct vendors or Tier 1 vendors are competent enough to work on their improvement, but there is major scope for modernization of some sections of Tier 2 vendors. The Company has identified this as an opportunity for further quality, upgradation and cost reduction.
The second focus area for component cost reduction is raw material yield improvement across all manufacturing processes, like sheet metal, castings, forgings and machining. Every component is studied in detail and innovative ideas are tried, to reduce the input material weight for the same component output. The total cost of raw material as a percentage of net sales ranges from 15% to 20%.
Nikkei Monozukuri Award
In recognition of craftsmanship- and technology-related excellence to Manesar Plant
75MANAGEMENT DISCUSSION AND ANALYSIS
Maruti Suzuki India Limited ANNUAL REPORT 2007-08 76
Innovation is our impetus, world class cars our goal.
The new design philosophy at Maruti Suzuki, witnessed first in
the Swift, is bold, aggressive and distinctly European. This
philosophy is reflected in the Group's other World Strategic
Models, such as SX4, Grand Vitara, A-Star and Splash. The
success of the Company's new models is an indication that this
new design philosophy has been well accepted by Indian
customers.
a millionpromises...
77
During the year, the Company took decisive steps towards building design and development capability, in-house. The number of engineers in R & D went up from 258, at the start of the year, to 398 engineers by the end of the year.
The Company's R & D capability has evolved in recent years, as evident in the face-lifts given to existing models. The Company's engineers have also collaborated with Suzuki counterparts in the design of World Strategic Models, notably the Swift. Upgrading engine systems to meet stricter emission norms and
The medium term objective is to develop capability for full model change and
launch a model, over the next 3-5 years. In the meantime, growing in-house
capability is enabling the Company to launch face-lifts and special editions of
existing models at a much faster pace.
introducing alternate fuel options have also been handled independently by the Company.
Suzuki will continue to provide new models to the Company for launch in India. While developing a full range of products, Suzuki is in a unique position to offer a range of compact cars. This is likely to be a competitive advantage for the Company for many years, especially against new entrants in the compact car segment.
At the same time, the Company has taken a decision to develop its in-house capability with the support of
R&D
78 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Number of Engineers in R&D
NUMBER OF ENGINEERS IN R&D
25
8
2006-07 2007-08 2010-11
39
8
100
0
1200
1000
800
600400
200
0e
a millionpromises...
Management Discussion and Analysis
that have an important role in achieving this goal, have also taken suitable measures to support this effort.
During the Auto Expo in New Delhi in January 2008, the Company showcased a Concept version of its forthcoming model, A-Star. Adding to the excitement was the fact that two young designers from the Company were part of the Suzuki-Maruti team that created the Concept A-Star, and they were duly feted and acknowledged by visitors.
For young aspirants in design and engineering colleges, the Concept A-Star was a window to the excitingR & D work happening at the Company. By choosing New Delhi for the global launch of Concept A-Star, Suzuki reinforced its commitment to India.
As the Company develops capability in-house, it also expects that suppliers in key areas will also scale up their R & D effort. In
Suzuki. In line with this, the number of engineers will be scaled up to 1000 by 2010. The Company will also set up an R & D centre and test track, at par with the facility at Suzuki, Japan.
The medium term objective is to develop capability for full model change and launch a model, over the next 3-5 years. In the meantime, growing in-house capability is enabling the Company to launch face-lifts and special editions of existing models at a much faster pace.
To develop capabilities, engineers are being provided exposure to live projects in Suzuki, Japan. Over 90 engineers have so far done long term training programs at Suzuki, for periods ranging between six months to two years. This process will be speeded up significantly to meet the goal of full model change capability.
Following clear direction and commitment from the management, functions such as Human Resources,
recent years, the Company has gained by involving suppliers early in the process of new product development.
This model of concurrent engineering has enabled the Company to launch World Strategic Models like Swift and SX4 in India at almost the same time as Europe and Japan. It has also helped meet stringent cost and localisation targets at launch, while enhancing capability and exposure among suppliers. An all-round scale up in design and development capability could yield more such benefits in the medium term.
The Company is extending its R&D capability development plan backwards to its Tier 1 vendors. It has established a Computer Aided Engineering platform shared among key vendors, the Company and Suzuki, Japan.
Auto Monitor Awards Young Achievers Award to
Rajesh Gogu & Saurabh Singh for designing Concept A-Star
79MANAGEMENT DISCUSSION AND ANALYSIS
Our people make the difference.
80 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
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The Company was able to keep its retention levels well above
industry benchmarks. This was a result of several focused
efforts by the Company. Shop floor workers, normally confined
to technical training, were trained in behavioral attributes as
well. Sales managers were given exposure to manufacturing
tools like root cause analysis and problem solving.
The 360 Degree Feedback Program, which started with senior
management last year, covered more managers and executives
this year.
81
With the Company expanding its manufacturing capacity and market network, and scaling up R & D capability, there was focus on recruiting people across all levels and roles. The Company's image as a respected and caring corporation, offering challenging assignments and growth opportunities, helped attract talented youngsters.
The Company was able to keep its retention levels well above industry benchmarks. This was a result of several focused efforts by the Company.
While training targets in terms of man days were exceeded, what is more
important is that people- development initiatives in general were made more
effective and relevant. There were customised training programs in strategy and
leadership for general managers.
While training targets in terms of man days were exceeded, what is more important is that people- development initiatives in general were made more effective and relevant. There were customised training programs in strategy and leadership for general managers.
Shop floor workers, normally confined to technical training, were trained in behavioral attributes as well. Sales managers were given exposure to manufacturing tools like root cause analysis and problem solving. Employees in supervisory roles were encouraged to make performance
THE MARUTIAN
82 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
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Management Discussion and Analysis
old as the Company, continued to make a significant contribution to business performance. Employees implemented a record 108,885 suggestions during 2007-08, as against 85,428 suggestions received previous year.
This has lead to net savings of worth Rs. 666 million in 2007-08 as against Rs. 509 million in 2006-07.
The number of employees increased from 5,521 employees (March 2007) to 7,090 (March 2008). Much of this growth was accounted for by shop floor workers in line with capacity expansion at the Manesar Plant.
Industrial Relations were cordial throughout the year and no man days were lost on account of strikes or disruptions.
appraisals and feedback more effective and transparent, and were trained suitably.
The 360 Degree Feedback Program, which started with senior management last year, covered more managers and executives this year.
The Company introduced a program enabling select employees to pursue higher education in management and technical fields. The policy of a fast track for a small number of employees, introduced last year, also helped retention.
Many of the above initiatives were based on feedback from employees, stated and unstated, obtained during frequent communication meetings and two-way interactions. The Company strengthened the concept of Stay Interviews (as opposed to exit interviews), to understand employee aspirations, delight factors and areas for improvement.The Suggestions Scheme, which is as
The INSSAN Awards Highest number of suggestions
per employee
83MANAGEMENT DISCUSSION AND ANALYSIS
278 321
509666
-10000
40000
90000
140000
190000
240000
2004-05 2005-06 2006-07 2007-080100200300400500600700800
No. of Suggestions Cost Saving (Rs Mn)
72
04
6
85
42
8
108
88
5
762
01
SUGGESTION & SAVINGS
All critical processes like product development,
manufacturing, upstream and downstream
supply chain in the organisation benefit from
the Company’s IT System to handle the
complexity of multiple models and variants,
maintain lean inventory levels and enhanced
process efficiency.
84 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
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The IT factor.
85
In recent years, the Company has used IT to enhance interface with the customer. It has deployed a world class Dealer Management Solution across its vast network of dealers throughout the country. The solution has helped dealer managements to access a wide range of information about their operations, as also customer satisfaction and feedback.
Information security continues to be a focus area and comprehensive security policy and procedures are reviewed on regular basis. The Company got the ISO 27001 Certification renewed during the year.
The Company now has a world class data center. It incorporates best practices of
data centre infrastructure encompassing fire, flood & earthquake safety with
multiple level of access control to ensure high availability & information security to
the organisation.
The Company now has a world class data center. It incorporates best practices of data centre infrastructure encompassing fire, flood & earthquake safety with multiple level of access control to ensure high availability & information security to the organisation. A comprehensive set of operational policy & procedures are in place to monitor the data center.
INFORMATION TECHNOLOGY
86 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
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Management Discussion and Analysis
87MANAGEMENT DISCUSSION AND ANALYSIS
One of Maruti's great strengths is
that we have internal resources to
finance both R&D expansion as well
as capital investments. The higher
interest rates, and the risk of making
large borrowings to finance capital
costs, will not affect us.
88 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
We're financially equipped to deliver on our promise.
89
REVISION OF USEFUL LIFE OFASSETS HIGHER DEPRECIATION
Based on technical evaluations and considering various market trends like shortening of product life cycles, the Company has, with effect from April 1, 2007, revised the estimated useful life of certain Plant and Machinery from between 9 - 13 years to between 8 -11 years, of dies and jigs from 5 years to 4 years and Electronic Data Processing Equipment from 6 years to 3 years. This change has resulted in additional depreciation of Rs. 2,122 million for the current year with a corresponding reduction in profit for the year and net fixed assets.
FINANCIAL PERFORMANCE
The guiding principle of the Company's treasury investments is safety and
prudence. In view of this, the Company invested its surplus funds in debt schemes
of mutual funds and short-term bank fixed deposits. This has enabled the Company
to earn reasonable and stable returns in a volatile interest rate scenario.
PROVISION FOR FOREIGN CURRENCY DERIVATIVE INSTRUMENTS
Pursuant to the announcement on "Accounting for Derivatives" issued by Institute of Chartered Accountants of India in March 2008, the Company has made a provision aggregating Rs. 505 million during the current year, computed on the 'Mark-to-Market' basis, on the derivative instruments outstanding as at March 31, 2008. Foreign currency covers are taken to reduce exposure to changes in exchange rates.
90 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
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Management Discussion and Analysis
TABLE 1. MSIL's abridged profit and loss account for 2007-08 (Rs. million)
Parameters 2007-08 2006-07
1 Gross Sales 209,493 171,442
Vehicles 197,990 161,367
Spares, dies, moulds 11,503 10,075
2 Excise duty 30,890 25,520
3 Net sales (1-2) 178,603 145,922
4 Income from services 759 617
5 Total operating income 179,362 146,539
6 Other income 8,876 5,984
7 Total income 188,238 152,523
8 Consumption of raw materials &components, stores & traded goods 136,468 110,494
9 Employee costs 3,562 2,884
10 Manufacturing, administrative and other costs 11,298 8,258
11 Selling and distribution expenses 5,602 4,999
12 Financial expenses 596 376
13 Depreciation 5,682 2,714
14 Total expenditure 163,208 129,725
15 PBT (7-14) 25,030 22,798
16 Current tax 7,509 6,089
17 Deferred tax 26 897
18 Fringe benefit tax 98 67
19 Previous year tax 89 125
20 PAT (15-16-17-18-19) 17,308 15,620
9191MANAGEMENT DISCUSSION AND ANALYSIS
Parameters 2007-08 2006-07 Change
Material cost 76.41% 75.72% -0.69%
Employee cost 1.99% 1.98% -0.01%
Manufacturing & admin expenses 6.33% 5.66% -0.67%
Selling and distribution expenses 3.14% 3.43% +0.29%
EBITDA 17.53% 17.74% -0.21%
Depreciation 3.18% 1.86% -1.32%
PBT 14.01% 15.62% -1.61%
TABLE 2. Financial Performance Ratios (As a Percentage of Net Sales)
TABLE 4. Income from investment of surplus fund (Rs. million)
Interest on fixed deposits 645 318
Dividend from debt mutual funds 1,637 1,467
Profit from sale of investments 898 389
Total 3,180 2,174
2007-08 2006-07
WORKING CAPITAL MANAGEMENT
TREASURY OPERATIONS
Around 75% of the Company's components by value are outsourced, and manufacturing is undertaken based on Just-In-Time (JIT) inventory principles. Working capital management, therefore, plays a key role in the Company's operations. The inventory turnover ratio of the Company has increased from 13.9 in 2006-07 to 15.7 in 2007-08. The average receivables holding period has decreased from 11.7 days in 2006-07 to 9.4 days in 2007-08.
The Company has efficiently managed its surplus funds through careful treasury operations. The guiding principle of the Company's treasury investments is safety and prudence. In view of this, the Company invested its surplus funds in debt schemes of mutual funds and short-term bank fixed deposits. This has enabled the Company to earn reasonable and stable returns in a volatile interest rate scenario. Table 3 lists the different portfolios, while Table 4 lists the returns on these investments of surplus funds.
INTERNAL CONTROLS AND ADEQUACY
The Company has a proper and adequate system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition, and that all transactions are authorised, recorded and reported correctly. The internal control system is designed to ensure that financial and other records are reliable for preparing financial information and other data, and for
92
maintaining accountability of assets. The internal control system is supplemented by an extensive program of internal audits, reviews by management, and documented policies, guidelines and procedures.
TABLE 3. Investment of surplus funds (Rs. million)
Bank fixed deposits 0 0% 13,080 28.6%
Debt mutual fund units 48,656 100% 32,657 71.4%
Total 48,656 100% 32,753 100.0%
31-Mar-08 % of total 31-Mar-07 % of total
Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
93MANAGEMENT DISCUSSION AND ANALYSIS
The Company operates in an environment which is affected by various factors some of which are controllable while some are outside the control of the Company. The activity of risk management in the Company is reviewed by the audit committee through a sub committee, Executive Risk Management Committee (ERMC). The ERMC includes Managing Director & CEO and all Managing Executive Officers of the Company. It reviews the risk management activities of the Company on a regular basis in addition to scanning for any new risks that may arise due to changes in the business environment. While the
possibility of a negative impact from one or more risks can not be totally precluded the Company proactively takes reasonable steps and makes efforts to mitigate significant risks that may affect it.
The demand for the Company's products is affected by changes in the macro economic conditions like interest rates, excise duty rates, inflation, oil prices, etc. Over the last few months, there have been significant changes in the economic environment. There have been positives like excise duty reduction on
MACRO ECONOMIC FACTORS
RISK FACTORS
The Company has established an appropriate risk management framework. All such
risks have been identified and categorised based on their nature and significance.
The detailed mitigation plans for each such risk have been formulated, effected and
reviewed periodically.
94 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Management Discussion and Analysis
compact cars, personal income tax reduction and some negatives like hardening of interest rates and oil price escalation. Though the Company is exposed to all these factors, the Company's presence in diverse product segments, in diverse geographies and in diverse fuel segments helps to spread the risk.
A number of global and homegrown vehicle manufacturers are working on and launching new products, using various technologies. The consumer will have more products to choose from and as a result there is a risk of low acceptance of the Company's products. The Company is conscious of this fact. Till now, it has been able to satisfy Indian customers and guard its market share despite intensifying competition. It has a package of products, network presence and downstream services which helps to make its offering attractive to the customer. It has also identified R&D and customer connect initiatives to build its competitive advantage further.
The Company is making heavy investment in the areas of capacity expansion, R&D and marketing infrastructure. Sustained demand of products is critical to generate returns on such investments. Capacity utilisation shall be a key parameter to ensure business viability both for the Company and its channel partners. The Company has been quite calibrated in putting up investments in the past. It also does a careful cost benefit analysis to ensure, the investment generates a competitive advantage to help secure volumes.
As domestic competition intensifies, skilled manpower becomes critical. Acquisition and retention of key
COMPETITION PRODUCT LAUNCHES
INVESTMENTS AND UTILISATION
TALENT ACQUISITION AND RETENTION
managerial and technical talent has become a challenge for the industry and the corporate sector. The Company is focusing in a major way on its people environment and people connect, and implementing a wide range of training and development programs to enable younger managers to deliver more value.
The Company's manufacturing facilities, its critical information systems and supplier units are geographically centralised in the State of Haryana. Any natural calamity such as earthquake, or man made factors like industrial relations problems and political uncertainty may significantly impair the business operations of the Company. The Company has taken specific steps for information systems continuity as stated in the IT section. The Company follows a sourcing policy which amongst other factors, balances the twin objectives of economies of scale and de-risking of component supplies. The Company enjoys excellent industrial relations with its employees owing to people connect initiatives. At the same time, it remains vigilant.
Raw Material and Components comprise almost three fourth of the total sales price of a car.
In addition to procuring steel and aluminium directly for the Company's in-house operations, some commodity procurement is also done by its suppliers as inputs to the components and assemblies supplied to the Company. The main
GEOGRAPHIC CONCENTRATION
COMMODITY PRICE RISK
risk to the Company is from price movements in steel and ferrous materials, aluminum, plastics, rubber and precious metals like platinum, palladium and rhodium.
The total commodity content in the car as a percentage of net sales varies between 15 percent to20 percent by cost. While the Company does not have much room in price negotiation on commodities, in the past five years it has been able to employ some initiatives to control and reduce its material cost to net sales ratio from 82.3 percent to 76.4 percent despite heavy commodity price increases. These initiatives include a program on raw material yield improvement and consolidation of raw material purchase along with its suppliers. In addition, the Company has an elaborate and structured program of cost reduction across the entire supply chain.
To deal with such risks and more, the Company has established an appropriate risk management framework. All such risks have been identified and categorised based on their nature and significance. The detailed mitigation plans for each such risk have been formulated, effected and reviewed periodically.
95MANAGEMENT DISCUSSION AND ANALYSIS
The Company attained its highest ever domestic sales and exports during the year. There were many positive developments during the year that augur well for the future: the success of new models including two in the sedan segment, customer appreciation for the new Suzuki design philosophy of bold and aggressive cars, success of the Company's new diesel program, a sales and workshop network that is profitable and growing, scale-up in R & D strength and of course, top ratings in customer satisfaction for eight years in a row.
By all accounts, competition will intensify in the future as more players enter, new models are launched and new market segments are created. In particular, with several markets internationally
remaining flat or showing slow growth, global manufacturers are directing investments and focus towards the Indian market.
Besides, the government has systematically created a conducive environment for the passenger car industry, particularly compact cars, further encouraging investments from global players.
While the Company enjoys a strong customer connect and has an excellent track record, it is approaching the future afresh and taking nothing for granted.
The Company has laid down a clear roadmap for the next three years, and is working towards a target of domestic sale of 1 million units and exports of 200,000 units by2010-11.
OUTLOOK
96 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Management Discussion and Analysis
By all accounts, competition will intensify in the future. While the Company enjoys a strong customer connect and has an excellent track record, it is approaching the future afresh and taking nothing for granted.
past few years. While there is some reversal in the macro environment, it remains to be seen whether this is a short term phenomenon or a more sustained shift in the trend. The Company has decided on certain critical initiatives to retain leadership in the long term. These include investments in marketing infrastructure such as brand centres and regional stockyards for cars and parts, all of which will enhance customer satisfaction. The development of in-house R & D capability, combined with strong support from Suzuki in terms of models, technology and best practices, will also help the Company strengthen leadership in the future.
It is expanding capacity, strengthening the network, recruiting talent, working on next generation engines and enhancing its cost and productivity initiatives to attain these targets. The new model launch plan remains aggressive: the Company is committed to launch two World Strategic Models, A-Star and Splash, in India over the next 12-15 months.
Macro economic factors like GDP growth, inflation, interest rates, currency changes, fiscal policies and commodity prices have a strong bearing on the Company's business. Barring commodity prices, the other factors have been, by and large, positive for the passenger car industry over the
97MANAGEMENT DISCUSSION AND ANALYSIS
DISCLAIMERStatements in this management discussion and analysis describing the Company's objectives, projections, estimates and expectations are categorised as 'forward looking statements' within the meaning of applicable laws and regulations.
Actual results may differ substantially or materially from those expressed or implied.
Important developments that could affect the Company's operations include a downward trend in the domestic auto - industry, rise in input costs, exchange rate fluctuations, and significant changes in the political and economic environment in India, environmental standards, tax laws, litigation and labour relations.
Since inception, the Company has proactively taken
care of the needs and sustainable growth of its
stakeholders and they in turn, have supported the
Company in achieving its vision and business results
year after year. As a result, sustainability has become
an integral part of the Company's approach to
business and decision making.
98 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
4060
80 100 120140
160
180
OFF
Sensitivity towards all stakeholders.
99
Sustainability
The Company is currently evolving a comprehensive Sustainability Policy and Guidelines to ensure that while working to enhance shareholder wealth, interest of stakeholders continues to act as a guide for actions and decisions in the future as well.
Sustainability at Maruti Suzuki refers to sum total of all the actions and initiatives
undertaken by the Company for its long-term survival and growth.
To achieve longterm sustainability and prosperity the Company has nurtured a
socially responsible behaviour towards its various stakeholders.
OUR STAKEHOLDERS
OUR CUSTOMERS
Sustainability begins with customers. The Company has a robust customer feedback system through which it
100
Business Partners
ShareholdersInvestors
Environment
Employees
Customers
LocalCommunity
Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
assesses the changing aspirations and requirements of customers. Over the past two decades, the Company has been successful in bringing out products that not just meet but exceed customer's expectations.
The aspiration to give more for less to the customers has given the Company a competitive edge in competitive times. The VA-VE initiatives (Value Analysis & Value Engineering) pursued aggressively by the Company in partnership with suppliers have helped the Company reduce cost of making a car without compromising on quality. Every year the Company celebrates company wide Quality Month awareness programmes in association with its suppliers. While VA-VE efforts continue all through out the year, the Company also observes a VA-VE month every year, during which it is able to create more awareness and consciousness towards the cause.
A wide and deep service network spread across the country has helped
the Company reach customers not only in metro cities but also in semi-urban, Tier-2 and Tier-3 cities.
In addition, the Company introduced many new initiatives such as car pick & drop facility by service workshops for women car owners, Maruti Mobile Support to offer door step car servicing, Express Service bays, special bays that can offer maintenance service in less than 2 hours, and so on.
The Company has a stringent customer complaint monitoring system. Besides period syndicated surveys, the Company systematically compiles customer feedback and ratings on a daily basis. The findings are reported in the weekly Management Committee Meeting.
This has regularly led to improvements in product quality, features, processes and customer interface. For example, feedback that Maruti Suzuki cars were more prone to theft owing to high resale value led
101SUSTAINABILITY
the Company to develop and install an anti-theft device- the immobiliser system called i-CATS in all its new cars, much before regulatory requirement. The Company was first among all car manufacturers in the country to offer this safety device in compact cars.
In manufacturing where a sizeable percentage of inputs are bought from vendors and suppliers, the ability to continuously improve quality and reduce costs is directly dependent on vendors doing the same.
In light of this statement, the Company guides suppliers in adopting latest technologies, and transfers its best practices in the areas of productivity improvement, quality enhancement and cost reduction.
The Company has set up Maruti Centre for Excellence (MACE) in collaboration with some of its suppliers to achieve these objectives.
OUR PARTNERS - SUPPLIERS
Golden Peacock Award For excellence in the field of
Environment Management
Sustainability Contd.
With the help of MACE, now the Company is assisting its direct suppliers in upgrading their sub-suppliers or (Tier-2 suppliers).
Most of the suppliers and joint venture companies are located near Company's manufacturing facilities in Gurgaon and Manesar, which are sensitive areas from Industrial Relations perspective.
Therefore, the Company has identified Industrial Relations and Human Resource as two important areas of interventions with suppliers. The HR team of MSIL maintains very close interaction with them on almost regular basis.
The Company has been passionately building its sales and service network since its inception.
The Company has set up 16 Regional Training Centres across the country to continuously upgrade skills of dealer employees as per new technologies and customers' requirements.
In recent years, the Company has conducted a comprehensive national survey of its dealer employees to gauge their level of satisfaction. By many accounts, this is a rare initiative by any principal company. Based on the results of the survey, the Company formed a cross functional team of senior management from sales, network development and HR to identify an action plan to improve satisfaction levels of dealer employees. One of the initiatives, for instance, was providing car loans at low rates of interest for good performers with repayment guarantee provided by the dealer.
The Company has put in place a strong mechanism for Corporate Governance to enhance confidence of its large number
OUR PARTNERS - DEALERS
SHAREHOLDERS AND INVESTORS
of shareholders and investors in the Company. The Company complies with all guidelines of SEBI, Stock exchange, etc.
The Company has enforced highly conducive working environment for its employees. MSIL does not support favouritism in recruitment, promotion, providing compensation, or termination based on caste, religion, gender or age. The Company offers equal opportunity for growth to all employees.
During the year, the Company finalised its policy on affirmative action as per the guidelines laid down by Confederation of Indian Industries.
In March, the Company celebrated a month long Safety Awareness Drive.
The drive aimed to sensitise employees and their families towards
EMPLOYEES
SAFETY POLICY
importance of safe working place,
safer homes and need for safer traveling. The drive coincided with the National Safety Month, and was led by members of the top management.
The theme of this year's Safety Drive was Hum sab ka ek hi sankalp, suraksha pratham suraksha pratham. (Together let us pledge Safety First, Safety First).
Giving high priority to work place safety, Maruti Suzuki firmly believes that a plant designed to be safe is far more productive than otherwise. In light of this fact, the Company has undertaken concerted initiatives to eliminate work place mishaps, over the last 25 years.
One of the most exciting exercise of this annual drive is that the employees themselves identify areas, activities and operations that could be unsafe or hazardous. Named as Kekken Yuichi Training, the end result of the exercise is that the employee suggests
102 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
measures that are appropriate to make the work place hazard free. The Company has a vigilant policy in place that monitors issues of work place safety on a weekly basis.
The Company has remained ahead of regulatory requirements in pursuit of environment protection and energy conservation at its manufacturing facilities, and in development of products that use fewer natural resources and are environment friendly.
Total energy consumption at the facilities has come down by 26 percent compared to the beginning of the decade.
The Company credited the Just-in-Time philosophy adopted and internalised by the employees as the prime reason that helped to excel in this direction.
ENVIRONMENT
From the perspective of capacity expansion, 2007-08 was one of the busiest years for the Company.
The Company commissioned a new plant for KB series engines at Gurgaon facility and the annual capacity of the Manesar plant was enhanced from 100,000 units to 170,000 units during 2007-08.
Despite capacity enhancements the Company closely monitored its power and water consumption.
While power consumption was lower by 30 percent and the Water consumption stood 61 percent lower that the levels of 2000-01.
The CO (Carbon Dioxide) emissions 2
per vehicle (produced during manufacturing) are lower by 38 percent compared to 2000-01 levels.
103SUSTAINABILITY
ADOPTING ENERGY SAVING TECHNOLOGIES
While the Company continues to improve energy saving initiatives through numerous Kaizens (continuous improvements) on the shop floor, the thrust on adopting energy saving technologies has increased phenomenally.
Three-coat-one-bake painting system: The Company introduced the three-coat-one-bake system at its Manesar facilities.
In this state-of-the-art painting system, three wet-on-wet coats are applied and baked together. Conventional painting systems use two baking steps before the final finish. This facilitates lower energy consumption and yet improves the productivity levels.
The green co-efficient of this system is much better than that of the conventional system.
PRACTICING 3R (REDUCE, REUSE AND RECYCLE)
GREENING OF SUPPLY CHAIN
COMMUNITY INITIATIVES
ROAD SAFETY
The Company has been promoting 3R since its inception. As a result the Company has not only been able to recycle 100% of treated waste water but also reduced fresh water consumption by 28%. The Company has implemented rain water harvesting to recharge the aquifers. Also, recyclable packing for bought out components is being actively promoted.
The Company has been facilitating implementation of Environment Management System (EMS) at its suppliers' end. Regular training programmes are conducted for all the suppliers on EMS. Surveys are conducted to assess the vendors who need more guidance. The systems and the environmental performance of suppliers are audited.
The Company works closely with local communities around its manufacturing facilities to improve their quality of life. The Company has adopted four villages surrounding its Manesar plant - Kasan, Dhana, Alihar and Baas Kusla and launched sustainable livelihood programmes for under privileged communities. The initiatives are focused on four key areas: Health, Education, Employment Generation through Vocational Trainings & Basic Infrastructure Development.
The Company has been playing a leading role for many years now in promoting road safety and safe driving in the Country. The Company believes that in addition to monetary support, one of the best ways for corporates to fulfill their social responsibility is by offering their managerial skills to society.
In line with this, the Company manages two Institutes of Driving Training & Research (IDTR) in Delhi and Maruti Driving Schools across the country. Through these facilities, the Company has brought international standards in driving training and state-of-the-art training infrastructure in the country.
The first major step towards promoting road safety was in the year 2000 when Delhi Government invited the Company to manage the Institute of Driving Training and Research (IDTR) and start driving training courses. The Company introduced training facilities and infrastructure including world-class driving test tracks, advanced computer simulators and training modules as per international standards at the institute, which is spread over an area of 14.5 acres. Regular research in road safety and safe driving was also started at the Institute. In 2006, the second IDTR was set up to promote road safety by primarily targeting non-commercial drivers and impart driving training to them. This Institute is also equipped with the same facilities and infrastructure as made available in the first IDTR.
In a landmark move, the Company signed an MoU with the Government of Gujarat, to set up, manage and run The Gujarat Regional Automobile Training Institute ( to be referred as GUJARATI) at Gajadara village of Waghodia taluka in Vadodara district.
It is the first of its kind initiative in the country. The Institute will not only provide driving training to tribal youth, it will also offer automobile technical training to them and help their employability.
SETTING UP GUJARATI
Several other state governments, such as Haryana, Bihar, Uttarakhand, Chattisgarh and West Bengal have also approached the Company to set up driving training institutes in their states. The Company has already signed an MoU with the Government of Haryana for setting up two driving training institutes at Rohtak and Bahadurgarh.
The Company has also involved its dealers across the Country in promoting road safety and safe driving. In collaboration with them, the Company has set up 34 Maruti Driving Schools in 32 different locations across the Country. These schools are equipped with world class, state-of-the-art driving simulators and offer beginners as well as refresher training programmes. Over 35,000 people have been trained so far.
MARUTI DRIVING SCHOOLS
104 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
105AUDITORS' REPORT
TO THE MEMBERS OF MARUTI SUZUKI INDIA LIMITED
(Formerly Maruti Udyog Limited)
1. We have audited the attached Balance Sheet of Maruti Suzuki India Limited (Formerly Maruti Udyog Limited), as at 31st March, 2008, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of 'The Companies Act, 1956' of India (the 'Act') and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we further report that:
i) (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items, except furniture and fixtures, office appliances and certain other assets aggregating to Rupees 398 million, over a period of three years, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. Pursuant to the programme, the fixed assets have been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed.
(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the company during the year.
ii) (a) The inventory (excluding materials lying with vendors)has been physically verified by the management during the year. In respect of inventory lying with the vendors, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.
(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.
iii) The company has not taken or granted any loans, secured or unsecured, from / to companies, firms or other parties covered in the register maintained under Section 301 of the Act.
iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.
v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered into the register maintained under Section 301 of the Act.
Auditors' Report
MARUTI SUZUKI INDIA LTD.
106 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
(b) In our opinion and according to the information and explanations given to us, there are no transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time. In respect of purchase of goods and materials including components from the holding company, the prices paid for these items are not comparable as these are of special nature.
vi) The company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provisions of the Act and the rules framed there under.
vii) In our opinion, the company has an internal audit system commensurate with its size and nature of its business.
viii) We have broadly reviewed the books of account maintained by the company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
ix) (a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the company is generally regular in depositing undisputed statutory dues in respect of provident fund, investor education and protection fund, employees' state insurance, income tax, sales-tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the records of the company examined by us, the particulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess as at March 31, 2008 which have not been deposited on account of a dispute have been stated in Note 33 on schedule 23.
x) The company has no accumulated losses as at March 31, 2008 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.
xi) According to the records of the company examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to any bank or debenture holders as at the balance sheet date.
xii) The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
xiii) The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the company.
xiv) In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments.
xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the company, for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the company.
xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.
xvii) On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment.
xviii) The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.
xix) The company has no outstanding debentures as at the year end.
xx) The company has not raised any money by public issue during the year.
a millionpromises...
107AUDITORS' REPORT
xxi) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management.
4. Further to our comments in paragraph 3 above, we report that:
(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report have been prepared in compliance with the applicable accounting standards referred to in sub-section(3C) of Section 211 of the Act;
(e) On the basis of written representations received from the directors as on March 31st 2008 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March 2008;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Anupam DhawanMembership Number-F084451PartnerFor and on behalf of
Place:New Delhi Price WaterhouseDate: April 24, 2008 Chartered Accountants
MARUTI SUZUKI INDIA LTD.
108 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
This is the Balance Sheet referred to The Schedules referred to above form anin our report of even date. integral part of the Balance Sheet.
ANUPAM DHAWAN SHINZO NAKANISHI HIROFUMI NAGAO ANIL RUSTGIMembership Number - F 084451 Managing Director & CEO Director & Managing Company Secretary Partner Executive officer - Admin & Chief Legal Officer For and on behalf ofPRICE WATERHOUSEChartered AccountantsNew DelhiApril 24, 2008
Balance Sheet As at 31st March, 2008
(Rs in Million)
AS AT31.03.07
SCHEDULE AS AT 31.03.08
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
LOAN FUNDS
DEFERRED TAX (Note 19 on Schedule 23)
Total
APPLICATION OF FUNDS
FIXED ASSETS
INVESTMENTS
CURRENT ASSETS, LOANS AND ADVANCES
LESS: CURRENT LIABILITIES AND PROVISIONS
Total
SIGNIFICANT ACCOUNTING POLICIES
NOTES TO ACCOUNTS
Capital 1 1,445 1,445
Reserves and Surplus 2 82,709 84,154 67,094 68,539
Secured Loans 3 1 635
Unsecured Loans 4 9,001 9,002 5,673 6,308
Deferred Tax Liabilities 2,697 2,776
Deferred Tax Assets (996) 1,701 (1,101) 1,675
94,857 76,522
5
Gross Block 72,853 61,468
Less: Depreciation (39,888) (34,871)
32,965 26,597
Capital Work-In-Progress 6 7,363 40,328 2,507 29,104
7 51,807 34,092
Inventories 8 10,380 7,014
Sundry Debtors 9 6,555 7,474
Cash and Bank Balances 10 3,240 14,228
Other Current Assets 11 331 384
Loans and Advances 12 10,403 9,241
30,909 38,341
Current Liabilities 13 24,492 20,110
Provisions 14 3,695 4,905
28,187 25,015
Net Current Assets 2,722 13,326
94,857 76,522
22
23
109PROFIT AND LOSS ACCOUNT
MARUTI SUZUKI INDIA LTD.
Profit and Loss Account For the year ended 31st March, 2008
This is the Profit & Loss Account referred to The Schedules referred to above form anin our report of even date. integral part of the Profit & Loss Account.
ANUPAM DHAWAN SHINZO NAKANISHI HIROFUMI NAGAO ANIL RUSTGIMembership Number - F 084451 Managing Director & CEO Director & Managing Company Secretary Partner Executive officer - Admin & Chief Legal Officer For and on behalf ofPRICE WATERHOUSEChartered AccountantsNew DelhiApril 24, 2008
INCOME
TotalEXPENDITURE
Total
TotalEarnings before interest, depreciation, tax and amortizations (EBIDTA)
Profit before Tax
Profit after Tax
SIGNIFICANT ACCOUNTING POLICIESNOTES TO ACCOUNTS
Gross Sales 15 209,493 171,442less: Excise Duty 30,890 25,520Net Sales 178,603 145,922Income from Services [Net of expenses Rs 208 million 759 617(previous year Rs 705 million)]Other Income 16 8,876 5,984
188,238 152,523
Consumption of Raw Materials and Components 130,342 101,374(Note 4 on Schedule 23)Purchase of Traded Goods 7,771 6,159Consumption of Stores 1,470 1,097Employees Remuneration and Benefits 17 3,562 2,884Manufacturing, Administrative and Other Expenses 18 11,298 8,258Selling and Distribution Expenses 19 5,602 4,999
160,045 124,771Less: Vehicles/ Dies for Own Use 198 143Add : (Increase) /Decrease to Work-in-progress and Finished Goods and Spare Parts 21 (2,917) 2,007
156,930 126,63531,308 25,888
Interest 20 596 376Depreciation (Note 24 on Schedule 23) 5 5,682 2,714
6,278 3,09025,030 22,798
Less : Tax Expense - Current Tax 7,509 6,089- Deferred Tax (Note 19 on Schedule 23 ) 26 897- Fringe Benefit Tax 98 67- Previous Years 89 125
17,308 15,620Add: Brought forward from previous year's accounts 56,373 43,939Less: Loss of Maruti Suzuki Automobile India Limited adjusted on - 84amalgamationLess: Impact of transition adjustment for 'Employee Benefit' - 4Profit available for appropriation 73,681 59,471Less: Appropriation :
Debenture Redemption Reserve - 17General Reserve 1,731 1,562Proposed Dividend 1,445 1,300Corporate Dividend Tax 248 219
Balance carried forward to Balance Sheet 70,257 56,373Basic/Diluted Earnings Per Share (in Rupees) (Note 18 on Schedule 23) 59.91 54.06
2223
SCHEDULE
(Rs in Million)
For the year ended
31.03.07
For the year ended
31.03.08
110 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
A. Cash flow from Operating Activities:
Adjustments for:
Operating Profit before Working Capital changes
Adjustments for changes in Working Capital :
Cash generated from Operating Activities
Net Cash from Operating Activities
B. Cash flow from Investing Activities:
Net Cash from Investing Activities
Net Profit before Tax 25,030 22,798
Depreciation 5,682 2,714
Interest Expense 596 376
Interest Income (1,408) (1,109)
Dividend Income (1,668) (1,528)
Net Loss on Sale / discarding of Fixed Assets 24 4
Profit on sale of Investments (898) (389)
Debts / Advances Written off - 22
Provision for diminution in value of investment 26
Provisions no longer required written back (855) (459)
Opening Loss of MSAIL adjusted from opening surplus on amalgamation - (84)
Impact of transition provision of Accounting Standard 15 - (5)
Employee Benefit
Mark to Market loss on Derivatives 505 -
27,034 22,340
- (Increase)/Decrease in Sundry Debtors 919 (1,035)
- (Increase)/Decrease in Other Current Assets, Loans & Advances (1,191) (1,523)
- (Increase)/Decrease in Inventories (3,366) 1,798
- Increase/(Decrease) in Current Liabilities and Provisions 3,555 5,170
26,951 26,750
- Taxes (Paid) (Net of TDS) (8,647) (6,352)
18,304 20,398
Purchase of Fixed Assets (16,999) (14,073)
Sale of Fixed Assets 69 123
Sale of investments 170,123 109,253
Purchase of investments (186,966) (122,444)
Interest received 1,490 1,127
Dividend received 1,668 1,528
(30,615) (24,486)
Cash Flow Statement For the year Ended 31st March, 2008
(Rs in Million)
For the year ended
31.03.08
For the year ended
31.03.07
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111CASH FLOW STATEMENT
(Rs in Million)
For the year ended
31.03.07
This is the Cash Flow Statement referred toin our report of even date.
ANUPAM DHAWAN SHINZO NAKANISHI HIROFUMI NAGAO ANIL RUSTGIMembership Number - F 084451 Managing Director & CEO Director & Managing Company Secretary Partner Executive officer - Admin & Chief Legal Officer For and on behalf ofPRICE WATERHOUSEChartered AccountantsNew DelhiApril 24, 2008
C. Cash flow from Financing Activities:
Net Cash from Financing Activities
Net Increase/(Decrease) in Cash & Cash Equivalents
Cash and Cash Equivalents as at 1st April (Opening Balance)
Cash and Cash Equivalents as at 31st March (Closing Balance)
Cash and Cash Equivalents comprise
Proceeds from Short term borrowings 3,999 233
Proceeds from Long term borrowings - 5,675
Repayment of Short term borrowings (634) (317)
Interest paid (743) (280)
Dividend paid (1,299) (1,011)
1,323 4,300
(10,988) 212
14,228 14,016
3,240 14,228
3,240 14,228
Cash, Cheques in hand 1,339 946
Balance with Scheduled Banks in Current Accounts 1,633 202
Balance with Scheduled Banks in Deposit Accounts - 13,080
Balance with Other Banks in Current Accounts 268 -
Notes :
1 The above Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard -3 on "Cash Flow Statement" issued by the Institute of Chartered Accountants of India.
2 Cash and Cash Equivalent includes Rs 3 Million (Previous Year Rs. 2 Million) in respect of unclaimed dividend, the balance of which is not available to the company.
3 Figures in bracket represents cash outflow.
For the year ended
31.03.08
MARUTI SUZUKI INDIA LTD.
112 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
SCHEDULE 1 - SHARE CAPITAL
Authorised Capital
SCHEDULE 3 - SECURED LOANS
LONG TERM LOANS
FROM OTHERS
SHORT TERM LOANS
- FROM BANKS
- FROM OTHERS
744,000,000 Equity Shares of Rs. 5 each (Previous year 3,720 3,720
744,000,000 equity shares of Rs. 5 each)
ISSUED, SUBSCRIBED AND PAID UP CAPITAL 1,445 1,445
288,910,060 Equity Shares of Rs. 5 each (Previous year
288,910,060 equity shares of Rs. 5 each) fully paid up
Of the above -
- 8,840,000 Equity Shares of Rs. 5 each
(Previous year 8,840,000 equity shares of Rs. 5 each)
were issued for consideration other than cash.
-156,618,440 Equity Shares of Rs. 5 each
(Previous year 156,618,440 equity shares of Rs. 5 each)
are held by Suzuki Motor Corporation,
the Holding Company and its nominees 1,445 1,445
Balance as at 1st Additions Transfer toApril, 2007 during the General
Year Reserve
SCHEDULE 2 - RESERVES AND SURPLUS
Share Premium Account 4,241 - - 4,241
Debenture Redemption Reserve 100 - 100 -
General Reserve 6,380 1,831 - 8,211
Balance as per Profit and Loss Account 56,373 13,884 - 70,257
67,094 15,715 100 82,709
Loan from Sundaram Finance Limited 1 2
(Secured against vehicles taken on finance lease)
(Payable within 1 Year Rs 0 Million - Previous Year Rs 1 Million)
Cash Credit/Working Capital Demand Loans/Rupee Loans - 233
secured by pari passu first charge on the stock, book debts and
other current assets.
9% Non-Convertible Debentures- Series II secured by mortgage - 400
on specific Buildings and Plant and Machinery
(Redeemed at par on 4th December 2007)
1 635
Balance as at31st March
2008
(Rs in Million)
AS AT31.03.07
Schedules
(Rs in Million)
AS AT31.03.07
AS AT 31.03.08
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AS AT 31.03.08
113SCHEDULES
(Rs in Million)
AS AT31.03.07
AS AT 31.03.08
SCHEDULE 4 - UNSECURED LOANS
SHORT TERM LOANS - FROM BANKS
LONG TERM LOANS - FROM BANKS
SCHEDULE 6 - CAPITAL WORK-IN-PROGRESS
Export Credit 3,999 -
Foreign Currency Loans * 5,002 5,673
(Loan from Japan Bank of International Corporation and
Bank of Tokyo Mitsubishi) *(Guaranteed by Suzuki Motor Corporation ,
Japan, the Holding Company)
9,001 5,673
Plant and Machinery 3,653 1,048
Civil Work-in-Progress 576 447
Capital Advances 3,134 1,012
7,363 2,507
(Rs in Million)
AS AT 31.03.08
AS AT31.03.07
MARUTI SUZUKI INDIA LTD.
SCHEDULE 5 - FIXED ASSETS (Note 23, 24 and 29 on Schedule 23)
Particulars Gross Block at Cost Depreciation Net Block
AS AT Additions Deductions/ UP TO For the Deductions/ AS AT01.04.07 Adjustments 01.04.07 year Adjustments 01.04.07
Freehold land (Note 1 & 4) 1,274 - - 1,274 - - - - 1,274 1,274
Leasehold land 570 - - 570 4 - - 4 566 566
Building (Note 2) 4,243 1,210 (1) 5,452 836 137 (1) 972 4,480 3,407
Plant and Machinery (Note 3) 53,727 10,330 (648) 63,409 33,269 5,106 (635) 37,740 25,669 20,458
Electronic Data ProcessingEquipment 949 277 (4) 1,222 529 337 (4) 862 360 420
Furniture , Fixtures and Office Appliances 332 81 (1) 412 150 23 - 173 239 182
Vehicles:
- Owned 370 245 (104) 511 82 78 (25) 135 376 288
- Leased 3 - - 3 1 1 - 2 1 2
Total 61,468 12,143 (758) 72,853 34,871 5,682 (665) 39,888 32,965 26,597
Previous Year Figures 49,546 12,486 (564) 61,468 32,594 2,714 (437) 34,871 26,597
(1) Cost of land amounting to Rs. 4 million (Previous year Rs. 4 million) is not yet registered in the name of the Company. A part of this land has been made available to group companies.
(2) Cost of building amounting to Rs. 32 million (Previous year Rs. 32 million) is not yet registered in the name of the Company.
(3) Plant and Machinery includes pro-rata cost amounting to Rs. 374 million (Previous year Rs. 374 million) of a Gas Turbine jointly owned by the Company with its group companies and other companies.
(4) Freehold Land includes 600 acres of land allotted to the Company by Haryana State Industrial Development Corporation , a part of which has been made available to group companies.
(5) Additions include Rs. Nil interest capitalised on foreign currency loan (Previous year Rs 101 million)
AS AT UP TO AS AT31.03.08 31.03.08 31.03.08
114 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
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Schedules Contd.
(Rs in Million)
AS AT31.03.07
SCHEDULE 7 - INVESTMENTS
SCHEDULE 8 - INVENTORIES
SCHEDULE 9 - SUNDRY DEBTORS
(Note 30 on Schedule 23)
Trade Investments :
Long Term:
Quoted Equity Shares (Fully Paid) 111 111
Unquoted Equity Shares (Fully Paid) 3,037 1,321
Investment in Subsidiary Companies
Unquoted Equity Shares (Fully Paid) 3 3
Other Investments:
Long Term (Unquoted) :
Mutual Funds 37,710 24,052
Current (Unquoted) :
Mutual Funds 10,946 8,605
51,807 34,092
Aggregate Value of Unquoted Investments 51,696 33,981
Aggregate Value of Quoted Investments 111 111
Market Value of Quoted Investments 2,195 2,704
Components and Raw Materials
In transit/under inspection 1,053 1,498
With vendors 120 117
At factory 2,204 3,377 1,747 3,362
Stores and Spares
Vehicles 877 818
Machinery 20 23
Consumables 67 58
In transit/under inspection 25 989 18 917
Tools at factory 147 138
Dies and Moulds 0 41
Work-in-Progress 459 309
Finished Goods 5,408 2,247
10,380 7,014
(Note 21 on Schedule 23)
Debts outstanding for more than six months
Unsecured - Considered Good 1,128 1,017
- Considered Doubtful 266 273
1,394 1,290
Less: Provision for Doubtful Debts 266 1,128 273 1,017
Other Debts :
Secured 318 378
Unsecured - Considered Good 5,109 6,079
6,555 7,474
AS AT 31.03.08
115SCHEDULES
(Rs in Million)
AS AT31.03.07
AS AT 31.03.08
SCHEDULE 10 - CASH AND BANK BALANCES
SCHEDULE 11 - OTHER CURRENT ASSETS
SCHEDULE 12 - LOANS AND ADVANCES
Cash in hand 4 5
Cheques in hand 1,335 941
Bank balances with Scheduled Banks in :
Current Accounts:* 1,633 202
Deposit Accounts: - 13,080
Bank balances with Other Banks 268 -
3,240 14,228
*Includes unclaimed dividend amounting to Rs. 3 Million(Previous Year Rs. 2 Million)
Bank balances with Other Banks
Bank - ABN Amro Bank Ltd - Current Account 226 -
Bank-Mizuho Corporation Bank Ltd - Current Account 42 -
Interest accrued on Deposits, Loans and Advances
Secured - Considered Good 40 42
- Considered Doubtful 6 6
46 48
Less: Provision for Doubtful Interest 6 40 6 42
Unsecured - Considered Good 119 199
- Considered Doubtful 1 1
120 200
Less: Provision for Doubtful Interest 1 119 1 199
Claims - Unsecured
Considered Good 172 143
Considered Doubtful 43 56
215 199
Less: Provision for Doubtful Claims 43 172 56 143
331 384
(Notes 21 & 22 on Schedule 23)
Loans
Secured - Considered Good 45 47
- Considered Doubtful 9 11
54 58
Less: Provision for Doubtful Loans 9 45 11 47
Unsecured - Considered Good 1,594 362
- Considered Doubtful 1 1
1,595 363
Less: Provision for Doubtful Loans 1 1,594 1 362
MARUTI SUZUKI INDIA LTD.
116 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
(Rs in Million)
AS AT31.03.07
AS AT 31.03.08
Advances recoverable in cash or in kind
or for value to be received:
Unsecured - Considered Good 2,813 2,275
- Considered Doubtful 72 72
2,885 2,347
Less: Provision for Doubtful Advances 72 2,813 72 2,275
Deposits - Considered Good unless otherwise stated
Balance with Customs, Port Trust and other
Government Authorities 5,896 6,546
Inter Corporate Deposits Considered Doubtful 140 140
Less :Provision for Doubtful Deposits 140 - 140 -
Other Deposits 55 11
10,403 9,241
Sundry Creditors (Note 20 on Schedule 23)
Due to Micro and Small enterprises 234 176
Others 8,315 8,549 8,920 9,096
Advances from Customers/Dealers 737 440
Book Overdraft 3,525 928
Unclaimed Dividend * 3 2
Other Liabilities 10,157 7,604
Deposits from Dealers, Contractors and Others 1,425 1,797
Interest Accrued but not due on :
Loans - 12
Others 96 96 231 243
24,492 20,110
*Not due to be credited to the Investor Education and Protection Fund
(Note 25 and 27 on Schedule 23)
Litigation related provisions 596 710
Leave Encashment/ Gratuity 457 441
Warranty & Product Recall 253 541
Proposed Dividend 1,445 1,300
Corporate Dividend Tax 246 219
Others Provisions 273 539
Taxation (Net of Advance-tax Rs 7,470 million - Previous Year Rs 5,709 Million) 425 1,155
3,695 4,905
SCHEDULE 13 - CURRENT LIABILITIES
SCHEDULE 14 - PROVISIONS
a millionpromises...
Schedules Contd.
117SCHEDULES
(Rs in Million)
For theyear ended
31.03.07
SCHEDULE 15 - SALES
SCHEDULE 16 - OTHER INCOME
SCHEDULE 17 - EMPLOYEES REMUNERATION AND BENEFITS
SCHEDULE 18 - MANUFACTURING, ADMINISTRATIVE AND OTHER EXPENSES
Vehicles 197,990 161,367
Spare Parts / Dies and Moulds / Components 11,503 10,075
209,493 171,442
Interest on:
a) Fixed Deposits / Securities (Gross) (Includes TDS of 645 318 Rs. 146 Million - previous year Rs. 69 million)
b) Receivables from Dealers (Gross) (includes TDS 423 339of Rs. 35 Million - previous year Rs. 22 million)
c) Advances to Vendors (Gross) (Includes TDS of 317 190Rs. 65 Million - previous year Rs. 43 million)
d) Others 23 1,408 262 1,109
Sale of Scrap (Net of Excise) 1,616 1,206
Sales Tax Benefit 136 319
Miscellaneous Receipts (Gross) (Includes TDS of Rs. 8 Million - previous year Rs.3 million ) 1,183 750
Profit on Sale of Investments:
Long Term Investments 849 337
Short Term Investments 49 898 52 389
Dividend:
Trade Investments - Long Term 31 61
Others 1,637 1,668 1,467 1,528
Provisions no longer required written back 855 459
Recovery of Service Charges 346 291
Less: Repair Cost of Damaged Vehicles 44 302 67 224
Exchange Variation (Net) 810 -
8,876 5,984
Salaries ,Wages ,Allowances and Other Benefits 3,134 2,551
(Net of Staff cost recovered Rs 64 million - previous year Rs 43 million)
Contribution to Provident and Other Funds 181 156
Staff Welfare Expenses 242 173
Group Insurance 5 4
3,562 2,884
Power and Fuel (Net of amount recovered Rs 574 million, previous year Rs 362 million) 1,473 974
Rent 72 65
Rates, Taxes and Fees 7 5
For theyear ended
31.03.08
MARUTI SUZUKI INDIA LTD.
118 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
(Rs in Million)
AS AT 31.03.08
For theyear ended
31.03.07
Insurance 73 65
Repairs and Maintenance :
Plant and Machinery 281 251
Building 137 106
Others 90 508 81 438
Royalty 4,952 3,673
Tools / Machinery Spares Charged Off 774 517
Net Loss on Sale/discarding of Fixed Assets 24 4
Bad Debts/Advances Written Off - 22
Exchange Variation (Net) - 94
Loss on Mark to Market of derivatives 505 -
(Note 28 on Schedule 23)
Diminution in value of investment 26 -
Other Miscellaneous Expenses 2,884 2,401
11,298 8,258
Advertisement and Sales Promotion 3,730 3,389
Warranty & Product Recall 254 234
Transportation and Distribution Expenses 1,618 1,376
5,602 4,999
Interest
Fixed :
Foreign Currency Loans 425 238
Debentures 21 446 44 282
Others 150 94
596 376
Work-in-Progress
Opening Stock 309 248
Less: Closing Stock 459 (150) 309 (61)
Finished Goods
Opening Stock 2,247 4,857
Less: Closing Stock 5,408 2,247
(3,161) 2,610
Less: Excise Duty on Increase/ (Decrease) of Finished Stock (446) (2,715) 424 2,186
Spare Parts-Traded
Opening Stock 690 573
Less: Closing Stock 742 (52) 691 (118)
(2,917) 2,007
SCHEDULE 19 - SELLING AND DISTRIBUTION EXPENSES
SCHEDULE 20 - INTEREST
SCHEDULE 21 - (INCREASE) /DECREASE IN WORK-IN-PROGRESS, FINISHED GOODS & SPARE PARTS
For theyear ended
31.03.08
a millionpromises...
Schedules Contd.
119SCHEDULES
SCHEDULE 22 - SIGNIFICANT ACCOUNTING POLICIES
1) BASIS FOR PREPARATION OF ACCOUNTS
2) REVENUE RECOGNITION
3) FIXED ASSETS
4) BORROWING COSTS
5) DEPRECIATION
6) INVENTORIES
7) INVESTMENTS
These financial statements have been prepared to comply in all material respects with all the applicable accounting principles in India, the applicable accounting standard notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.
Domestic and export sales are recognised on transfer of significant risks and rewards to the customer which takes place on dispatch of goods from the factory / stockyard / storage area and port respectively.
Fixed assets (except freehold land which is carried at cost) are carried at cost of acquisition or construction or at manufacturing cost (in case of own manufactured assets) in the year of capitalisation less accumulated depreciation.
Assets acquired under finance lease are capitalized at the lower of their fair value and the present value of minimum lease payments.
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised till the month in which each asset is put to use as part of the cost of that asset.
a) Fixed assets except leasehold land and vehicles are depreciated on straight line method on a pro-rata basis from the month in which each assets is put to use.
Depreciation has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956 except for certain fixed assets where, based on the management's estimate of the useful life of the assets, higher depreciation has been provided on the straight line method at the following useful life:
Plant and Machinery: 8 - 11 Years
Dies and Jigs 4 Years
Electronic Data Processing Equipments 3 Years
In respect of assets whose useful life has been revised, the unamortised depreciable amount is charged over the revised remaining useful life of the assets.
b) Leasehold assets viz land & vehicles are amortised over the period of lease.
c) Plant and machinery, the written down value of which at the beginning of the year is Rs. 5,000 or less, and other assets, the written down value of which at the beginning of the year is Rs. 1,000 or less, are depreciated at the rate of 100%. Assets purchased during the year costing Rs 5000 or less are depreciated at the rate of 100%.
d) In case the historical cost of an asset undergoes a change due to an increase or decrease in related long term liability on account of foreign exchange fluctuations, change in duties etc., the depreciation on the revised unamortised depreciable amount is provided prospectively over the residual useful life of the asset. From 1st April 2007 onwards, an increase or decrease in long term liability related to assets on account of foreign exchange fluctuations is charged to revenue.(Also refer note 24 on Schedule 23)
a) Inventories are valued at the lower of cost, determined on the weighted average basis, and net realisable value.
b) Tools are written off over a period of three years except for tools valued at Rs. 5,000 or less individually which are charged off to revenue in the year of purchase.
c) Machinery spares (other than those supplied along with main plant and machinery, which are capitalized and depreciated accordingly) are charged to revenue on consumption except those valued at Rs. 5,000 or less individually, which are charged off to revenue in the year of purchase.
Current investments are valued at the lower of cost and fair value. Long-term investments are valued at cost except in the case of a permanent diminution in their value, in which case the necessary provision is made.
MARUTI SUZUKI INDIA LTD.
120 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
8) RESEARCH AND DEVELOPMENT
9) FOREIGN CURRENCY TRANSLATIONS
10) RETIREMENT BENEFIT COSTS
11) CUSTOMS DUTY
12) GOVERNMENT GRANTS
13) DEFERRED TAXES
Revenue expenditure on research and development is charged off against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as an addition to fixed assets and depreciated accordingly.
a) Foreign currency transactions are recorded at the exchange rates prevailing at the date of transaction. Exchange differences arising on settlement of transactions, are recognised as income or expense in the year in which they arise.
b) At the balance sheet date, all assets, other than fixed assets and liabilities denominated in foreign currency, are reported at the exchange rates prevailing at the balance sheet date.
c) In case of forward foreign exchange contracts where an underlying asset or liability exists at the balance sheet date, the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense over the life of the contract.
d) In case of forward foreign exchange contracts taken for highly probable /forecast transactions, the net loss, if any, calculated on 'Mark to Market' principle as at the balance sheet date is recorded.
e) Profit or loss arising on cancellation or renewal of a forward contract is recognised as income or expense in the year in which such cancellation or renewal is made.
The Company has Defined Contribution Plans for post employment benefits namely Provident Fund and Superannuation Fund which are recognised by the income tax authorities. These Funds are administered through Trusts and the Company's contributions thereto are charged to revenue every year. The Company also maintains insurance policy to fund a post-employment medical assistance scheme, which is a Defined Contribution plan administered by The New India Insurance Company Limited. The Company's contribution to State Plans namely Employees' State Insurance Fund and Employees' Pension Scheme are charged to revenue every year.
The Company has Defined Benefit Plans namely leave encashment/ compensated absence, Gratuity, Interest on Provident Fund and Retirement Allowance for employees, the liability for which is determined on the basis of an actuarial valuation at the end of the year. The Gratuity Fund is recognised by the income tax authorities and are administered through Trusts.
Termination benefits are recognised as an expense immediately.
Gains and losses arising out of actuarial valuations are recognised immediately in the Profit and Loss Account as income or expense.
Customs duties available as drawback are debited to purchases and credited to income on export of vehicles.
Government grants are recognised in the profit and loss account in accordance with the related scheme and in the period in which these are accrued.
Tax expense for the period, comprising current tax, fringe benefit tax and deferred tax, is included in determining the net profit/ (loss) for the year.
Current tax is recognised based on assessable profit computed in accordance with the Income Tax Act and at the prevailing tax rate.
Deferred tax is recognized for all timing differences. Deferred tax assets are carried forward to the extent it is reasonably / virtually certain that future taxable profit will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed at each balance sheet date and written down/ written up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted at the balance sheet date.
a millionpromises...
Schedules Contd.
121SCHEDULES
14) IMPAIRMENT OF ASSETS
15) PROVISIONS AND CONTINGENCIES
SCHEDULE 23 - NOTES TO ACCOUNTS
1) Contingent Liabilities:
At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognised in the profit and loss account to the extent the carrying amount exceeds the recoverable amount.
The Company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation cannot be made.
a) Claims against the Company disputed and not acknowledged as debts:
i. Sales-tax demands of Rs.50 million (Previous year Rs.50 million). Against this, the Company has deposited a sum of Rs. 2 million (Previous year Rs. 2 million) under protest.
ii. Excise duty demands/show-cause notices of Rs. 3,130 million (Previous year Rs. 2,592 million). Against this, the Company has deposited a sum of Rs. 27 million (Previous year Rs. 27 million) under protest.
iii. Customs duty demands of Rs. 118 million (Previous year Rs. 118 million).Against this, the Company has deposited a sum of Rs. 22 million (Previous year Rs. 22 million) under protest.
iv. Income-tax demands of Rs. 9,905 million (Previous year Rs. 8,157 million). Against this, the Company has deposited a sum of Rs. 4,745 million under protest (Previous year Rs. 4,869 million).
v. Service-tax demands of Rs. 253 million (Previous year Rs. 797 million).
vi. Claims against the Company for recovery of Rs 639 million (Previous year Rs. 776 million) lodged by various parties.
b) A guarantee given to HDFC Limited for term loan of Rs.300 million (Previous year Rs.300 million) given by HDFC Limited to Maruti Employees Co-operative House Building Society Limited, Bhondsi. Against this, the contingent liability as at the year-end is Rs. Nil (Previous year Rs. Nil).
c) As co-lessee in agreements entered into between various vendors of the Company, as lessee, and banks as lessors for leasing of dies and moulds of certain models aggregating Rs.2 million (Previous year Rs. 2 million).
d) A guarantee given to HDFC Bank Limited against Non-Fund based facilities granted by the bank to a group company Suzuki Powertrain India Limited of Rs. 2,000 million (Previous year Rs. 2,000 million). Against this, the balance outstanding as at the year-end is Rs. 194 million. (Previous year Rs. 26 million)
e) A guarantee given to HSBC Limited against Non-Fund based facilities granted by the bank to a group company Suzuki Powertrain India Limited of Rs. 3,000 million (Previous year Rs. 3,000 million). Against this, the balance outstanding as at the year-end is Rs. 1,543 million. (Previous year Rs. 101 million)
f) The amounts shown in the item (a) represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.
The amount shown in items (b) to (e) represent guarantees given in the normal course of the Company's operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.
2) Outstanding commitments under Letters of Credit established by the Company aggregate to Rs 2,764 million (Previous year Rs. 1,050 million).
MARUTI SUZUKI INDIA LTD.
122 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
3) Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided for, amount to Rs.12,692 million (Previous year Rs. 8,076 million).
4) a) Consumption of raw materials and components has been computed by adding purchases to the opening stock and deducting closing stock verified physically by the management.
b) Consumption of raw material and components includes a provision of Rs. 26 million (Previous year Rs. 56 million) on account of estimated reversal of tax benefit on quantity differences on inputs.
5) The Company was granted sales tax benefit in accordance with the provisions of Rule 28C of Haryana General Sales Tax Rules, 1975 for the period from 1st August, 2001 to 31st July, 2015. The ceiling amount of concession to be availed of during entitlement period is Rs.5,644 million. Till 31st March 2008, the Company has availed of sales tax benefit amounting to Rs. 1,605 million (Previous year Rs. 1,469 million).
6) The Company is primarily in the business of manufacture, purchase and sale of motor vehicles and spare parts ("automobiles"). The other activities of the Company comprise facilitation of Pre-Owned Car sales, Fleet Management and Car Financing. The income from these activities, which are incidental to the Company's business, is not material in financial terms but contribute significantly in generating the demand for the products of the Company. Accordingly, segment information has not been disclosed.
7) The following expenses incurred on Research and Dev-
elopement are included under respective account heads:
8) a) MANAGERIAL REMUNERATION
Employees Remuneration and Benefits 171 154Other Expenses of Manufacturing and 475 382Administration (Including Depreciationon Research and Development assets)
646 536
Salaries and Allowances 35.14 30.95Commission / Performance linked Bonus 26.95 20.80Contribution to Provident Fund 2.19 0.67Gratuity and Leave Encashment Paid 15.17 0.47Estimated value of Perquisites 14.25 14.25
93.70 * 67.14
*Includes profit linked bonus amounting to Rs 11.42 million which is subject to approval of shareholders
*Includes remuneration aggregating Rs 3.2 million paid to a director whose appointment is subject to approval of the shareholders and Rs 6.9 million paid to 2 directors whose appointment is subject to approval of the shareholders and the Central Government.
b) Computation of net profit in accordance with Section 349/ 198 of the Companies Act, 1956
Profit before Taxation 25,030 22,798Add: Depreciation as per accounts 5,682 2,714
Managerial Remuneration Whole Time Directors 88 67Commission to Non-Whole Time Directors 6 -Directors' Sitting Fees (rounded off) 0 0Provision for Diminution in value of Investment 26 -Net Loss on Sale/discarding of Fixed Assets 24 5,826 4 2,785
30,856 25,583
(Rs in Million)
2006-072007-08
Schedules Contd.
123SCHEDULES
(Rs in Million)(Rs in Million)
2006-072007-08
Less: Depreciation as per Section 350 of Companies Act,1956 5,682 2,714Provision no longer required written back 855 459 Profit on Sale of Investments 898 7,435 389 3,562 Net Profit as per Sections 349/350 23,421 22,021Maximum Commission payable to Non-Whole-time Directors @ 1% on Rs. 23421 234 220 million (Previous Year 1% on Rs. 22,021 million) Restricted to 6 -
Statutory Audit 6.83 6.33Other Audit Services / Certification 0.65 0.16Reimbursement of Expenses 0.34 0.11* excluding service tax
Raw Materials and Components 13,279 12,902Capital Goods 8,753 680Maintenance Spares 237 111Dies and Moulds 263 466Other items 79 71
Fees for Technical Services (Net of TDS) 631 417Traveling Expenses 107 96Royalty (Net of TDS) 3,834 2,594Others 333 210
Export of Goods (FOB basis) 7,413 5,781
705 548No. of non-resident shareholders 5 5
No. of shares for which dividend remitted 156,618,440 156,618,440
i) RAW MATERIALS AND COMPONENTSImported 14,138 12,803Indigenous 116,204 88,571
130,342 101,374PERCENTAGE OF TOTAL CONSUMPTIONImported 11% 13%Indigenous 89% 87%
ii) MACHINERY SPARESImported 246 133Indigenous 351 233
597 366PERCENTAGE OF TOTAL CONSUMPTIONImported 41% 36%Indigenous 59% 64%
9) AUDITORS' REMUNERATION*
10) CIF VALUE OF IMPORTS
11) EXPENDITURE IN FOREIGN CURRENCY (CASH BASIS)
12) EARNINGS IN FOREIGN CURRENCY
13) DIVIDEND REMITTED IN FOREIGN CURRENCY (CASH BASIS)Dividend for the year 2006-07 (Previous year 2005-06)
14) VALUE OF IMPORTED AND INDIGENOUSMATERIALS CONSUMED
MARUTI SUZUKI INDIA LTD.
124 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
15) LICENSED CAPACITY, INSTALLED CAPACITY AND ACTUAL PRODUCTION
16) SALES, OPENING STOCK AND CLOSING STOCK
17) STATEMENT OF RAW MATERIALS AND COMPONENTS CONSUMED
PRODUCT UNIT LICENSED INSTALLED ACTUAL
CAPACITY CAPACITY** PRODUCTION
Passenger Cars and
Light Duty Utility Vehicles Nos. - * 520,000 777,017
( - )* (450,000) (667,048)
Notes
* Licensed Capacity is not applicable from 1993-94.
Previous Year figures are in brackets.
**Installed Capacity is as certified by the management and relied upon by the auditors, being a technical matter.
PRODUCT SALES OPENING STOCK CLOSING STOCK
QTY.(Nos.) VALUE QTY.(Nos.) VALUE QTY.(Nos.) VALUE
Passenger Vehicles 764,842 197,990 11,976 2,247 24,174 5,408
(674,924) (161,367) (20,378) (4,857) (11,976) (2,247)
Spare Parts / Components * 11,026 * 818 * 877
* (9,303) * (684) * (818)
Dies and Moulds * 477 * 41 * 0
* (72) * (36) * (41)
Notes :
1. Purchase of traded goods comprise Vehicles, Spares, Components and Dies and Moulds. During the year 1,016 Vehicles (Previous year Nil) were purchased.
2. Closing Stock of vehicles is after adjustment of 23 vehicles (Previous Year - 41) totally damaged.
3. Sales quantity excludes own use vehicles 981 Nos. (Previous Year - 425 Nos.)
4. Sales quantity excludes sample vehicles 69 Nos. (Previous Year - 60 Nos.)
5. Previous Year figures are in brackets.
* In view of the innumerable sizes/numbers (individually less than 10%) of the components, Spare parts and Dies and moulds it is not possible to give quantitative details.
(Rs in Million)
a millionpromises...
Schedules Contd.
(Rs in Million)
2007-08 2006-07
GROUP OF MATERIAL UNIT QTY. AMOUNT QTY. AMOUNT
Steel Coils MT 154,880 5,713 123,529 4,702
Ferrous Castings MT 23,624 1,693 22,844 1,422
Non-ferrous Castings MT 13,260 2,344 10,880 2,024
Other Components * 119,302 * 92,051
Paints K.LTR 5,809 4,957
MT 3,654 1,290 3,061 1,175
130,342 101,374
* In view of the innumerable sizes/numbers (individually less than 10%) of the components, it is not possible to give quantitative details.
125SCHEDULES
(Rs in Million)
(Rs in Million)
2006-07
Net Profit after tax attributable to shareholders (in Million Rupees) 17,308 15,620
Weighted Average Number of Equity Shares Outstanding during the year 288,910,060 288,910,060
Nominal value per share (In Rupees) 5.00 5.00
Basic/Diluted Earnings Per Share (In Rupees) 59.91 54.06
Major Components of Deferred Tax arising on account of temporary timing differences along with their movement as at March 31, 2008 are :
20) The Balance due to Micro and Small Scale Enterprises as at March 31, 2008 is Rs. 233 Million (Amount due less than 30 days). A sum of Rs. 0 Million (rounded off) due to these enterprises is under reconciliation as at March 31, 2008. The Company pays its vendors within 30 days and no interest during the year has been paid or is payable under the terms of The Micro, Small and Medium Enterprises Development Act, 2006.
2006-07
Sundry Debtors
Balance at year end
Suzuki Powertrain India Limited 407 451
Suzuki France SA 4 -
S Iberica (including Suzuki Madrid) 0 3
Suzuki GB PLC 10 6
Suzuki Italia SPA 1 -
Suzuki International Europe GMBH 19 9
Suzuki Philippines 1 31
P T Indomobil 10 201
Loans and Advances
Suzuki Powertrain India Limited 472 465
Maximum Balance During the Year 598 566
Suzuki Motorcycle India Limited 2 -
Maximum Balance During the Year 2 -
2007-08
2007-08
18) STATEMENT OF EARNINGS PER SHARE
19) DEFERRED TAX
21) AMOUNT DUE FROM COMPANIES UNDER THE SAME MANAGEMENT
MARUTI SUZUKI INDIA LTD.
Movement During
Assets 31.03.07 the year
Provision for Doubtful debts / advances 184 (22) 162
Contingent Provisions 494 1 495
Others 423 (84) 339
Total (A) 1,101 (105) 996
Liabilities
Depreciation on Fixed Assets 2,296 (307) 1,989
Exchange gain on account of restatement of ECB - 228 228
Allowances under Income Tax Act, 1961 468 - 468
Deferred Revenue Expenditure 12 - 12
Total (B) 2,776 (79) 2,697
Net Deferred Tax Liability (B) - (A) 1,675 26 1,701
Previous Year 779 896 1,675
31.03.08
126 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
22) LOANS AND ADVANCES IN NATURE OF LOANS GIVEN TO SUBSIDIARIES AND ASSOCIATES ETC:
As at Maximum As at Maximum31.3.08 Balance 31.3.07 Balance
Name of Company during the year during the year
Suzuki Powertrain India Limited Associate 248 341 341 442
23) The Company normally acquires vehicles under Finance Leases with the respective underlying assets as security. Minimum lease payments outstanding as of 31st March 2008 in respect of these assets are as follows.
Minimum Lease payments outstanding as on 31st March 08 in respect of assets taken on operating leases are as follows.
24) Based on technical evaluation and market considerations, the Company has, with effect from April 1, 2007, revised the estimated useful life of certain Plant and Machinery from 9 - 13 Years to 8 -11 years, Dies and Jigs from 5 Years to 4 Years and Electronic Data Processing Equipment from 6 Years to 3 Years. This has resulted in depreciation being higher by Rs 2,122 Million for the current year with a corresponding reduction in profit for the year and net fixed assets.
25) The Company has calculated the various benefits provided to employees as under
A. Defined Contribution Plans
a) Superannuation Fund
b) Post Employment Medical Assistance Scheme.
c) Provident Fund
During the year the Company has recognised the following amounts in the Profit and Loss account :-
(In Rs. Million)
Employers Contribution to Superannuation Fund* 19
Employers Contribution to Post Employment Medical Assistance Scheme. 1
Provident Fund 86
Due Lease Payment Minimum Lease
Outstanding as on Payments31st March 08
Within One Year 1 0 1
Later than one Year but less than five Years 1 0 0
2 0 1
Total Minimum Interest not due Present Value of
Total
Due Contingent Rent Lease Payment Outstanding as on
31st March 08
Within One Year 1 1
Later than one Year but less than five Years 1 1
Total Minimum
Minimum Lease Payment Contingent Rent
Paid During the year 1 1
Charged to Profit and Loss Account 1 1
a millionpromises...
Schedules Contd.
(Rs in Million)
127SCHEDULES
B. State Plans
a). Employers contribution to Employees' State Insurance.*
b). Employers contribution to Employees' Pension Scheme 1995.*
During the year the Company has recognised the following amounts in the Profit and Loss account :-
(In Rs. Million)
Employers contribution to Employees' State Insurance.* 4
Employers contribution to Employees' Pension Scheme 1995.* 34
* Included in Contribution to Provident and Other Funds under Employee Remuneration and Benefits (Refer schedule 17)
C. Defined Benefit Plans
a) Employees' Gratuity Fund.
b) Leave Encashment/ Compensated Absence.
c) Retirement Allowance
In accordance with Accounting Standard 15 (revised 2005), an actuarial valuation was carried out in respect of the aforesaid defined benefit plans based on the following assumptions.
In calculating the leave encashment/ compensated absence liability 23% of the leave has been assumed to be availed of/ encashed during the year.
Estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
Leave Encashment/ Employees RetirementCompensated Absence Gratuity Fund Allowance
Discount Rate (per annum) 8.50% 8.50% 8.50%
Rate of increase in compensation levels 6.00% 6.00% 6.00%
Rate of return on plan assets. Not Applicable 8.50% Not Applicable
Expected Average remaining working
lives of employees (years) 21 21 21
Leave Encashment/ Employees RetirementCompensated Absence Gratuity Fund Allowance
Present value obligation as at April,01, 2007 441 484 22
Interest cost 31 40 -
Past Service cost - - -
Current service cost 59 27 3
Curtailment cost - - -
Settlement cost - - -
Benefits Paid 80 23 -
Actuarial (gain)/ loss on Obligations (22) (4) -
Present value obligation as at March,31, 2008 429 524 25
MARUTI SUZUKI INDIA LTD.
128 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Employees Gratuity Fund
Fair value of Plan Assets as at April,01, 2007 456
Expected return on Plan Assets 39
Contributions -
Benefits Paid 23
Actuarial gain/ (loss) on Obligations 19
Fair value of Plan Assets as at March,31, 2008 491
Changes in the Fair value of Plan Assets
March 31, 2008 March 31, 2007
Leave Employees Retirement Leave Employees Retirement Encashment/ Gratuity Fund Allowance Encashment/ Gratuity Fund Allowance
Compensated Compensated Absence Absence
Present value obligation 429 524 25 441 484 22
Fair value of Plan Assets - 491 - 456
Surplus/ (Deficit) (429) (33) (25) (441) (28) (22)
Unfunded Net Asset/(Liability) recognised in Balance Sheet. (429) (25) (441) (22)
Reconciliation of Present value of Defined Benefit Obligation and Fair value of Assets
Leave Encashment/ Employees Retirement Compensated Absence Gratuity Fund Allowance
Current Service Cost 59 27 3
Past Service Cost - - -
Interest Cost 31 40 -
Expected return on Plan Assets - (39)
Curtailment Cost - -
Settlement Cost
Net Actuarial (gain)/ loss recognised during the year (22) (23) -
Total Expense recognised in Profit & Loss Account 68 5 3
Expenses Recognised in Profit & Loss Account
* Included in Salaries, Wages, Allowances and Other Benefits under Employee Remuneration and Benefits (Refer schedule 17)
(a) Debt Funds 465
(b) Special Deposit with RBI 52
(c) Others 2
Total 519
Constitution of Plan Assets Gratuity
The return on the investment is the nominal yield available on the format of investment as applicable to Approved Gratuity Fund under Rule 101 of Income Tax Act 1962.
Estimated Contribution on account of Gratuity for FY2008-09 will be Rs.3 Million.
Schedules Contd.
129SCHEDULES
MARUTI SUZUKI INDIA LTD.2
6)
STA
TE
ME
NT
OF
TR
AN
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CT
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ITH
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ark
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MI A
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bs
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y M
an
ag
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ne
lM
r S
hin
zo N
aka
nis
hi (
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ine
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n 1
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De
c.2
00
7)
Mr. J
ag
dis
h K
ha
tta
r (R
etir
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18
th D
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20
07
)M
r. K
ob
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i (R
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2n
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20
07
)M
r. H
iro
fum
i Na
ga
oM
r. M
asa
yaki
Osa
da
(R
esi
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on
1st
Ja
n.2
00
8)
Mr
Tsu
ne
o O
ha
shi (
Jo
ine
d o
n 1
st J
an
.20
08
)M
r K
eiic
hi A
sai (
Jo
ine
d o
n 2
9th
Ja
n.2
00
8)
Mr. S
hin
ich
i Ta
keu
chi (
Re
sig
ne
d o
n 2
6th
Ma
y 2
00
7)
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yuji
Ois
hi
As
so
cia
tes
A
sah
i In
dia
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ss L
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ara
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ro M
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ub
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ncl
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td.
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--
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78
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Ca
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74
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in M
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d-
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1-
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71
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--
65
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--
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66
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--
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--
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Su
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n-
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10
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--
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2
Su
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.-
--
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--
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1,9
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78
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83
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70
5
--
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83
--
78
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--
70
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-7
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Su
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Co
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--
4,9
31
--
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31
--
-3
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3
--
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,93
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3,6
73
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73
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55
4-
-5
54
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40
5
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--
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40
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Mr S
hin
zo N
aka
nis
hi (
Join
ed o
n 1
9th
Dec.
2007)
--
--
-5
5-
--
--
--
Mr. J
agdis
h K
hattar (R
etir
ed o
n 1
8th
Dec.
2007)
--
--
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33
3-
--
--
21
21
Mr. K
ob
yash
i (R
esi
gn
ed
on
2n
d D
ec.
20
07
)-
--
--
10
10
--
--
-6
6
Mr. H
iro
fum
i N
ag
ao
--
--
-1
41
4-
--
--
14
1
4
Mr. M
asa
yaki
Osa
da (R
esi
gned o
n 1
st J
an.2
008)
--
--
-6
6-
--
--
--
Mr. T
sun
eo
Oh
ash
i ( J
oin
ed
on
1st
Ja
n.2
00
8)
--
--
-3
3-
--
--
- -
\Mr
Ke
iich
i Asa
i ( J
oin
ed
on
29
th J
an
.20
08
)-
--
--
22
--
--
--
-
Mr.
Shin
ichi T
ake
uch
i (R
esi
gned o
n 2
6th
May
2007)
--
--
-2
2-
--
--
14
14
Mr. S
yuji
Ois
hi
--
--
-1
31
3-
--
--
13
13
Mr. K
injo
Sa
ito-
--
--
--
--
--
-0
0
--
--
-8
88
8-
--
--
68
68
No
te:
Oth
er
Inc
om
e
Fin
an
ce
in
co
me
/ c
om
mis
sio
n/D
ivid
en
d
To
tal
Oth
er
Mis
c In
co
me
To
tal
Ex
pe
nd
itu
re
Pu
rch
as
es
of
go
od
s
To
tal
Pro
po
se
d D
ivid
en
d
To
tal
Ro
ya
lty
To
tal
Re
ce
ivin
g o
f s
erv
ice
s
To
tal
To
tal
Ma
na
ge
ria
l R
em
un
era
tio
n
To
tal
130 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Schedules Contd.
(Rs
in M
illio
n)
131SCHEDULES
MARUTI SUZUKI INDIA LTD.
(Rs. in Million)
Name of the Company Interest / Face Value Face Value Number Number Dividend Rupees Rupees AS AT AS AT AS AT AS AT
%age 31.03.2008 31.03.2007 31.03.2008 31.03.2007 31.03.2008 31.03.2007
Long Term Trade Investments:
Quoted Equity Shares (Fully Paid) :
Unquoted Equity Shares (Fully Paid) :
Asahi India Glass Limited 1 1 17,760,000 17,760,000 2 2
Bharat Seats Limited 2 10 4,650,000 465,000 5 5
Denso India Limited 10 10 2,862,758 2,862,758 73 73
Jay Bharat Maruti Limited 5 5 6,340,000 3,170,000 16 16
Machino Plastics Limited 10 10 941,700 941,700 5 5
Sona Koyo Steering Systems Limited 2 2 6,900,000 3,450,000 10 10
111 111
Caparo Maruti Limited 10 10 2,500,000 2,500,000 25 25
Citicorp Maruti Finance Limited 10 10 25,999,990 25,999,990 260 260
Climate Systems India Limited 100 100 518,700 518,700 52 52
J.J. Impex (Delhi) Private Limited 10 10 4,323,750 4,323,750 72 72
Krishna Maruti Limited 10 10 670,000 670,000 7 7
SKH Metals Limited 10 10 2,645,000 2,645,000 49 49
Maruti Countrywide Auto Financial Services Pvt. Limited 10 10 10,400,000 10,400,000 104 104
Nippon Thermostat (India) Limited 10 10 125,000 125,000 1 1
Mark Exhaust Systems Limited 10 10 4,437,465 4,437,465 57 57
Bellsonica Auto Component India Private Limited 100 100 3,540,000 360,000 354 36
Suzuki Powertrain India Limited (Company under same management) 10 10 172,800,000 76,200,000 1,728 762
Magneti Marelli Powertrain India Pvt. Limited 10 - 1,710,000 - 17 -
FMI Automotive Components Limited 10 - 44,100,000 - 441 -
3,167 1,425
Less :Provision for diminution in value 130 104
3,037 1,321
27) THE COMPANY HAS THE FOLLOWING PROVISIONS IN THE BOOKS OF ACCOUNT AS ON 31.03.2008 :
30) THE DETAILS OF INVESTMENT AS PER SCHEDULE 7 ARE PROVIDED BELOW :
a) Litigation related provisions pertain to the estimated outflow in respect of disputes with various government authorities .The information required by AS 29, Provisions, Contingent Liabilities and Contingent Assets' has not been disclosed on the grounds that it can be expected to prejudice the interest of the company.
b) Warranty and product recall provisions relate to the estimated outflow in respect of warranty and recall cost for products sold during the year. Due to the very nature of such costs, it is not possible to estimate the timing / uncertainties relating to their outflows as well as the expected reimbursements from such estimates.
c) Other provisions relate to excise duty, export obligation and guarantees, etc. given. Due to the very nature of such costs, it is not possible to estimate the timing / uncertainties relating to their outflows as well as the expected reimbursements from such estimates.
28) Pursuant to the announcement on "Accounting for Derivatives" issued by Institute of Chartered Accountants of India in March 2008, the Company has accounted for net losses aggregating Rs 505 million during the current year, computed on 'Mark-to-Market' basis, on the derivative instruments outstanding as at March 31, 2008.The Company does not hold or issue derivative financial instruments for trading or speculative purposes.
29) Pursuant to the issuance of the Companies (Accounting Standard) Rules, 2006 by the Central Government on December 7, 2006, exchange gain amounting to Rs 451 million, on payables for fixed assets acquired in foreign currency has been credited to Profit and Loss account.
Description Balance as Additions Utilized/ Reversed on 31.03.07 during the year during the year
a) Litigation related provisions 710 45 159 596
b) Warranty / Product Recall 541 130 418 253
c) Others 529 46 315 260
Balance as on 31.03.08
132 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
(Rs. in Million)
Name of the Company Interest / Face Value Face Value Number Number Dividend Rupees Rupees AS AT AS AT AS AT AS AT
%age 31.03.2008 31.03.2007 31.03.2008 31.03.2007 31.03.2008 31.03.2007
Unquoted Equity Shares in Subsidiary Companies (Fully Paid) :
Other Long Term Investments :
Unquoted Redeemable Preference Shares (Fully Paid) :
Units of Debt Mutual Funds :
Long Term (Unquoted)
Maruti Insurance Business Agency Limited * 10 10 50,000 50,000 0 0
Maruti Insurance Distribution Services Limited 10 10 50,000 50,000 0 0
True Value Solutions Limited 10 10 50,000 50,000 0 0
Maruti Insurance Agencies Solutions Limited 10 10 50,000 50,000 0 0
Maruti Insurance Agencies Network Limited 10 10 50,000 50,000 0 0
Maruti Insurance Agency Services Limited 10 10 50,000 50,000 0 0
Maruti Insurance Agency Logistic Limited 10 - 50,000 0 - 3
3 3
* Formerly known as Maruti Insurance Brokers Limited
Western Paques (India) Limited 14.50% 100 100 500,000 500,000 50 50
50 50
Less :Provision for diminution in value 50 50
- -
ABN Amro FTP Series 2 Growth - 10.0 - 15,000,000 - 150
ABN Amro FTP Series 4 17 Month Growth 10.0 10.0 15,000,000 15,000,000 150 150
ABN Amro FTP Series 5 13 Month Growth 10.0 10.0 15,000,000 15,000,000 150 150
ABN Amro FTP Series 8 yearly Plan E Inst Growth 10.0 - 15,000,000 - 150 -
ABN Amro FTP Series 10 Plan E Inst Growth 10.0 - 10,000,000 - 100 -
Birla Fixed Term Plan Series H Growth - 10.0 - 15,000,000 - 150
Birla FTP Series O Growth 10.0 10.0 15,000,000 15,000,000 150 150
Birla FTP Series AE Growth 10.0 - 20,000,000 - 200 -
Birla FTP Series AR Growth 10.0 - 10,000,000 - 100 -
Canbank Fixed Maturity Plan Growth 10.0 10.0 10,000,000 10,000,000 100 100
DBS Chola FMP Series 6 ( 371 days Plan ) Growth 10.0 10.0 10,000,000 10,000,000 100 100
DSP ML FTP Series 3A Growth - 1,000.0 - 150,000 - 150
DSP ML FMP 12.5 M Series 1 Inst Growth 10 - 40,000,000 - 400 -
DSP ML FMP 13 M Series 1 Inst Growth 10 - 30,000,000 - 300 -
DSP ML FMP 15 M Series 2 Inst Growth 10 - 15,000,000 - 150 -
DSP ML FTP Series 3F Dividend 1,000 - 100,000 - 100 -
Deutsche Fixed Term Fund Serie 5 Growth - 10 - 15,000,000 - 150
DWSFixed Term Fund Series 18 Inst Plan Growth 10 10 10,000,000 10,000,000 100 100
DWS Fixed Term Fund Series 21 Inst Plan Growth 10 10 20,000,000 20,000,000 200 200
DWS Fixed Term Fund Series 24 Inst Plan Growth 10 10 25,000,000 25,000,000 250 250
DWS Fixed Term Fund Series 25 Inst Plan Growth 10 10 15,000,000 15,000,000 150 150
DWS Fixed Term Fund Series 35 Inst Plan Growth 10 - 15,000,000 - 150 -
DWS Fixed Term Fund Series 41 Inst Plan Growth 10 - 10,000,000 - 100 -
DWS Fixed Term Fund Series 46 Inst Plan Growth 10 - 20,000,000 - 200 -
DWS Fixed Term Fund Series 47 Inst Plan Growth 10 - 20,000,000 - 200 -
HDFC FMP 13 M March 06 (1) Inst Growth - 10 - 15,000,000 - 150
HDFC FMP 14 M March 07 (3) Growth 10 10 20,000,000 20,000,000 200 200
HDFC FMP 16 M Jan 07 (3) Growth 10 10 15,000,000 15,000,000 150 150
HSBC fixed Term Series 21 Growth 10 10 15,000,000 15,000,000 150 150
HSBC fixed Term Series 23 Growth 10 10 10,000,000 10,000,000 100 100
HSBC Fixed Term Series 4 Growth - 10 - 15,000,000 - 150
ING FMP Series 32 Growth 10 - 20,000,000 - 200 -
a millionpromises...
Schedules Contd.
133SCHEDULES
MARUTI SUZUKI INDIA LTD.
(Rs. in Million)
Name of the Company Interest / Face Value Face Value Number Number Dividend Rupees Rupees AS AT AS AT AS AT AS AT
%age 31.03.2008 31.03.2007 31.03.2008 31.03.2007 31.03.2008 31.03.2007
JM Fixed maturity fund series IV Yearly plan growth 10 10 10,000,000 10,000,000 100 100
JM Fixed maturity fund series VII 13 Month plan 1inst growth 10 - 20,000,000 - 200 -
JM Fixed maturity fund series XI 13 Month plan 1inst growth 10 - 10,000,000 - 100 -
Kotak FMP 13M Series 1 Inst Growth 10 10 20,000,000 20,000,000 200 200
Kotak FMP 13M Series 2 Inst Growth 10 10 15,000,000 15,000,000 150 150
Kotak FMP 15M Series 1 Growth - 10 - 10,000,000 - 100
Kotak FMP 15M Series 2 Growth 10 10 10,000,000 10,000,000 100 100
Kotak FMP 16M Series 1 Growth 10 10 10,000,000 10,000,000 100 100
Kotak FMP Series 13 Growth - 10 - 15,000,000 - 150
Kotak FMP Series XIV Growth - 10 - 10,000,000 100
Kotak FMP 14M Series 3 Growth 10 - 10,000,000 - 100 -
Kotak FMP 14M Series 4 Growth 10 - 10,000,000 - 100 -
Kotak FMP 13M Series 3 Growth 10 - 20,000,000 - 200 -
Kotak FMP 15M Series 4 Growth 10 - 30,000,000 - 300 -
LIC MF FMP Series 15 13 months Growth - 10 - 25,000,000 - 250
LIC MF FMP Series 19 13 months Growth 10 10 25,000,000 25,000,000 250 250
LIC MF FMP Series 20 14 months Growth 10 10 15,000,000 15,000,000 150 150
LIC MF FMP Series 21 15 months Growth 10 10 15,000,000 15,000,000 150 150
LIC MF FMP Series 5 Growth - 10 - 15,000,000 - 150
LIC MF FMP Series 32 13 months Growth 10 - 25,000,000 - 250 -
LIC MF FMP Series 34 16 months Growth 10 - 30,000,000 - 300 -
Lotus India FMP 14 Month Series 3 Growth 10 - 12,000,000 120 -
Lotus India FMP 14 Month Series 2 Growth 10 - 10,000,000 - 10 -
Lotus India FMP 13 Month Series 4 Growth 10 - 10,000,000 - 100 -
Lotus India FMP 375 days Series 7 Growth 10 - 10,000,000 - 100 -
Principal PNB Fixed Maturity Plan - 385 Days Series 1 Inst Growth - 10 - 15,000,000 - 150
Principal PNB Fixed Maturity Plan - 460 Days Series 1 Growth - 10 - 15,000,000 - 150
Principal PNB Fixed maturity plan (FMP 31) Series III Nov 06 Growth - 10 - 25,000,000 - 250
Principal PNB Fixed maturity plan (FMP 33) 540 days Series I Jan 07 Growth 10 10 25,000,000 25,000,000 250 250
Principal PNB Fixed maturity plan (FMP 36) 460 days Series III March 07 Growth 10 10 20,000,000 20,000,000 200 200
Principal PNB Fixed maturity plan (FMP 44)540 days Series II March 08 Growth 10 - 12,000,000 - 120 -
Pru ICICI FMP series 34 One year plan B IP growth 10 10 25,000,000 25,000,000 250 250
Pru ICICI FMP series 34 Sixteen month IP growth 10 10 25,000,000 25,000,000 250 250
Pru ICICI FMP series 35 Thirteen months Plan B IP growth 10 10 20,000,000 20,000,000 200 200
Pru ICICI FMP series 37 Fourteen months IP growth 10 10 20,000,000 20,000,000 200 200
Prudential ICICI FMP - 16 Month Inst Growth XXVIII - 10 - 10,000,000 - 100
ICICI Prudential FMP series 41 14 M Growth 10 - 10,000,000 - 100 -
ICICI Prudential FMP series 43 13 M Plan D Growth 10 - 10,000,000 - 100 -
Reliance Fixed horizon fund II Annual Plan Plan Series VI Inst Growth 10 10 20,000,000 20,000,000 200 200
Reliance Fixed horizon fund III Annual Plan Plan Series I Inst Growth 10 10 40,000,000 40,000,000 400 400
Reliance Fixed horizon fund III Annual Plan Plan Series IV Inst Growth 10 10 40,000,000 40,000,000 400 400
Reliance Fixed horizon fund IV Series 5 Inst Growth 10 - 50,000,000 - 500 -
Reliance Fixed horizon fund IV Series 6 Inst Growth 10 - 40,000,000 - 400 -
Reliance Fixed horizon fund IV Series 7 Inst Growth 10 - 50,000,000 - 500 -
Reliance Fixed horizon fund VI Series 3 Inst Growth 10 - 40,000,000 - 400 -
Reliance Fixed horizon fund VI Series 4 Inst Growth 10 - 60,000,000 - 600 -
Reliance Fixed horizon fund VI Series 6 Inst Growth 10 - 35,000,000 - 350 -
SBI Debt fund series (13 months II) March 07 Growth 10 10 20,000,000 20,000,000 200 200
SBI Debt fund series (13 months) March 07 Growth 10 10 20,000,000 20,000,000 200 200
134 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
SBI Debt fund series (13 months) 7 March 08 Growth 10 - 60,000,000 - 600 -
Standard Chartered Fixed Maturity - 2nd Plan - Growth - 10 - 15,000,000 - 150
Standard Chartered fixed maturity 10th Plan Growth - 10 - 10,000,000 - 100
Standard Chartered fixed maturity Plan Yearly Series 3 Growth 10 10 20,000,000 20,000,000 200 200
Standard Chartered fixed maturity Plan Yearly Series 5 Growth 10 10 20,000,000 20,000,000 200 200
Standard Chartered fixed maturity Plan Yearly Series 17 Growth 10 10 - 15,000,000 - 150 -
Standard Chartered fixed maturity Plan Yearly Series 19 Growth 10 10 - 25,000,000 - 250 -
Standard Chartered fixed maturity Plan Yearly Series 20 Growth10 10 - 25,000,000 - 250 -
Sundaram BNP Paribas FTP Series 32 Growth 10 - 15,000,000 - 150 -
Sundaram BNP Paribas FTP 367 days plan 1 Growth 10 - 12,000,000 - 120 -
Sundaram BNP Paribas FTP plan D Growth 10 - 10,000,000 - 100 -
Sundaram BNP Paribas FTP plan E Growth 10 - 10,000,000 - 100 -
Tata Fixed horizon fund series 7 scheme B Growth Inst plan 10 10 20,000,000 20,000,000 200 200
Tata Fixed horizon fund series 7 scheme D Growth Inst plan 10 10 10,000,000 10,000,000 100 100
Tata Fixed Horizon Series 2 - Plan C 18 Months Growth - 10 - 10,000,000 - 100
Tata Fixed Horizon Series 3 - Scheme D Growth - 10 - 10,000,000 - 100
Templeton fixed horizon fund series I 15 Month Plan Growth 10 10 20,000,000 20,000,000 200 200
Templeton Fixed Tenure Fund Serie V 13 month Growth - 10 - 15,000,000 - 150
Templeton Fixed Tenure Fund Serie VII Plan C Growth 10 - 30,000,000 - 300 -
UTI Fixed Term Income Fund Series 1 Plan 18 Q4 Growth - 10 - 15,000,000 - 150
Birla Cash Plus Inst Premium Growth - 10 - 90,412,073 - 1,000
Birla sunlife liquid plus inst growth 10 - 114,877,934 - 1,750 -
Canliquid Institutional Growth - 10 - 19,597,852 - 250
Deutsche Money Plus Fund Inst Growth 10 10 77,637,983 77,637,983 800 800
DSP ML Liquidity Fund Inst Growth - 1,000 - 988,427 - 1,000
HDFC Floating rate income fund short term wholesale growth 10 - 109,853,894 - 1,500 -
HDFC Liquid Fund premium plus plan Growth 10 10 33,406,382 33,406,382 500 500
HSBC Liquid plus fund Inst Plus Growth 10 10 96,558,755 96,558,755 1,000 1,000
ICICI Prudential Flexible income plan growth 10 - 93,861,613 - 1,400 -
ING Vysay Liquid fund Super Inst Plan growth 10 10 89,830,413 89,830,413 1,000 1,000
JM Money Manager Fund Super Plus Plan Growth 10 - 154,666,149 - 1,750 -
Kotak Flexi debt Growth 10 - 19,772,537 - 250 -
Kotak Liquid Inst Premium Growth 10 10 19,814,143 73,250,089 300 1,050
LIC MF Floating Rate fund Growth - 10 - 22,478,982 - 250
LIC MF Liquid Plan Growth - 10 - 79,317,397 - 1,000
Lotus India Liquid plus fund Inst growth 10 - 45,302,165 - 500 -
Principal CMF Liquid Inst Premium Growth 10 10 34,244,816 103,485,709 400 1,150
Principal floating rate fund FMP Inst Growth 10 - 121,682,041 - 1,550
Prudential ICICI Floating Rate Plan Option D Growth - 10 - 49,646,240 - 502
Prudential ICICI Liquid Plan Super Inst Growth 10 10 182,568,132 281,202,539 2,000 3,000
Reliance Liquid Plus fund Inst growth 1,000 - 1,878,155 - 2,050 -
Reliance liquidity fund growth 10 10 44,632,098 44,632,098 500 500
Sundaram Money Fund Super Inst Growth - 10 - 13,709,993 - 200
Tata Floater Fund growth 10 - 125,295,574 - 1,500 -
Tata liquid fund SHIP growth 10 1,000 362,940 362,940 500 500
UTI Liquid cash plan Inst plan growth 10 1,000 406,207 406,207 500 500
UTI Liquid plus fund Inst plan Growth 1,000 - 1,622,514 - 1,750 -
37,710 24,052
(Rs. in Million)
Name of the Company Interest / Face Value Face Value Number Number Dividend Rupees Rupees AS AT AS AT AS AT AS AT
%age 31.03.2008 31.03.2007 31.03.2008 31.03.2007 31.03.2008 31.03.2007
a millionpromises...
Schedules Contd.
135SCHEDULES
(Rs. in Million)
Name of the Company Interest / Face Value Face Value Number Number Dividend Rupees Rupees AS AT AS AT AS AT AS AT
%age 31.03.2008 31.03.2007 31.03.2008 31.03.2007 31.03.2008 31.03.2007
Current (Unquoted)
SBI Premier Liquid fund super inst plan div 10 - 44,151,268 - 467 -
Birlasunlife liquid plus fund inst div 10 - 2,344,064 - 23 -
Deutsche Credit Opportunities cash Fund dividend 10 - 77,846,260 - 785 -
HSBC Liquid plus fund Inst Plus div 10 - 46,847,263 - 470 -
JM Money Manager Fund Super Plus Plan Div 10 - 33,028,345 - 333 -
Kotak Flexi debt div 10 - 962,826 - 10 -
LIC MF Liquid Plus Fund Div 10 - 133,189,703 - 1,333 -
Lotus India liquid plus fund inst div 10 - 18,228,226 - 183 -
ICICI Prudential Flexible income plan div 10 - 5,138,366 - 52 -
Principal floating rate fund FMP Inst div 10 - 42,521,703 - 426 -
Reliance Liquid Plus fund Inst div 1,000 - 39,305 - 39 -
Sundaram BNP Paribas liquid plus fund super inst plan div 10 - 8,436,818 - 86 -
Tata Floater Fund Div 10 - 15,263,137 - 154 -
Templeton India Ultra Short Bond Fund Inst Plan Div 10 - 50,182,446 - 503 -
UTI Liquid plus fund Inst plan div 1,000 - 1,317,839 - 1,319 -
Birla FMP Series 2 quarterly Div payout - 10 - 24,927,709 - 250
Birla FTP HY Series 1 Div payout - 10 - 10,000,000 - 100
Birla FTP Series 5 quarterly Div payout - 10 - 20,000,000 - 200
Birla FTP Series 6 quarterly Div payout - 10 - 25,000,000 - 250
Birla Sunlife interval income inst quarterly S2 Inst Div 10 - 51,276,782 - 513 -
Birla Sunlife interval income inst quarterly S3 Inst Div 10 - 50,339,408 - 503 -
Birla Sunlife interval income inst quarterly S8 Inst Div 10 - 40,381,501 - 404 -
DBS Chola FMP Series 6 (Quarterly Plan 3) Dividend - 10 - 20,000,000 - 200
DSP ML FTA Series 1 I Dividend - 1,000 - 150,000 - 150
DWS Fixed Term Fund Series 23 Dividend - 10 - 25,000,000 - 250
HSBC Interval Fund Plan 1 Inst Div 10 - 20,141,904 - 201 -
ING Vysya Fixed maturity series XX Div - 10 - 10,000,000 - 100
ING Vysya Fixed maturity series XXI Div - 10 - 10,000,000 - 100
JM Fixed maturity fund series IV quarterly plan 2F 1 Dividend - 10 - 15,170,984 - 152
JM interval fund quarterly plan 3 Inst Div 10 - 18,169,199 - 182 -
JM interval fund quarterly plan 6 Inst Div 10 - 20,127,180 - 201 -
Kotak FMP 3M Series 10 Dividend - 10 - 25,243,621 - 252
Kotak FMP 3M Series 8 Dividend - 10 - 35,482,058 - 355
Kotak FMP 6M Series 2 Dividend - 10 - 15,373,789 - 154
Kotak quarterly interval plan series 3 div 10 - 19,995,601 - 200 -
Kotak quarterly interval plan series 4 div 10 - 30,124,433 - 301 -
Kotak quarterly interval plan series 5 div 10 - 59,725,819 - 597 -
Lotus India FMP 3 Month Series 22 div 10 - 25,329,353 - 253 -
Lotus India FMP 3 Month Series 23 div 10 - 15,140,031 - 151 -
Principal PNB Fixed maturity plan (FMP 34) 91 days Series VII Feb 07 Dividend - 10 - 25,000,000 - 250
Principal PNB Fixed maturity plan (FMP 35)91 days Series VIII Feb 07 Dividend - 10 - 20,000,000 - 200
Principal PNB Fixed maturity plan (FMP 38) 91 days Series IX Dividend - 10 - 20,000,000 - 200
Pru ICICI FMP series 34 Three month plus plan A Div - 10 - 50,903,464 - 509
Pru ICICI FMP series 35 Three month plan A Div - 10 - 50,680,000 - 507
MARUTI SUZUKI INDIA LTD.
136 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
Pru ICICI FMP series 35 Three month plan B Div - 10 - 50,492,485 - 505
Pru ICICI FMP series 35 Three month plan C Div - 10 - 25,000,000 - 250
Reliance Fixed horizon fund I Quarterly Plan Series IV Div - 10 - 50,000,000 - 500
Reliance Fixed horizon fund II Quarterly Plan Series I Div - 10 - 40,000,000 - 400
Reliance Fixed horizon fund II Quarterly Plan Series II Div - 10 - 50,000,000 - 500
SBI Debt fund series (90 days) February 07 Dividend - 10 - 20,000,000 - 200
Standard Chartered fixed maturity Plan Quarterly Series 3 Div - 10 - 25,369,000 - 254
Standard Chartered fixed maturity Plan Quarterly Series 4 Div - 10 - 20,220,800 - 202
Standard Chartered fixed maturity Plan Quarterly Series 5 Div - 10 - 25,211,750 - 252
Standard Chartered fixed maturity Plan Quarterly Series 25 Div 10 - 35,303,009 - 353 -
Sundaram BNP Paribas FTP Series XXII 90 days Dividend - 10 - 15,000,000 - 150
Sundaram BNP Paribas FTP Series XXIII 90 days Dividend - 10 - 10,000,000 - 100
Sundaram BNP Paribas interval fund quarterly plan c Dividend10 10 24,993,752 - 250 -
Sundaram BNP Paribas FTP 90 days Series 3 inst Dividend 10 - 15,000,000 - 150 150
Tata Fixed horizon fund series 8 scheme D Div IP - 10 - 10,000,000 - 100
Tata Fixed horizon fund series 8 scheme E Div IP - 10 - 15,211,390 - 152
Tata Fixed horizon fund series 8 scheme F Div RP - 10 - 20,180,904 - 202
Tata Fixed horizon fund series 17 scheme D Div 10 - 50,373,888 - 504 -
UTI FMP Half yearly series HFMP / 1206 Dividend - 10 - 20,360,339 - 204
UTI FMP Quarterly series QFMP / 0107/1 Dividend - 10 - 20,281,444 - 203
UTI FMP Quarterly series QFMP / 0207/1 Dividend - 10 - 25,251,756 - 252
10,946 8,605
Less: Provision for diminution: 0 0
10,946 8,605
(Rs in Million)
Name of the Company / Mutual Fund Face Value Purchase Cost Sale /Redemption
Proceeds
Units of Mutual Funds 145,725 150,805 150,852
145,725 150,805 150,852
Previous Year: 96,785 98,940 98,987
31) FOLLOWING SHORT TERM INVESTMENTS WERE PURCHASED AND REDEEMED / SOLD DURING THE YEAR:
(Rs. in Million)
Name of the Company Interest / Face Value Face Value Number Number Dividend Rupees Rupees AS AT AS AT AS AT AS AT
%age 31.03.2008 31.03.2007 31.03.2008 31.03.2007 31.03.2008 31.03.2007
Schedules Contd.
137SCHEDULES
(Rs. In Million)
MARUTI SUZUKI INDIA LTD.
32) STATEMENT ON ASSETS ,LIABILITIES ,INCOME & EXPENSES OF JOINT VENTURES
Detail of Assets
Detail of Liabilities
Detail of Income
Detail of Expenses
Details of Contingent Liabilities
Details of th Company's share in the Joint Venture Assets ,Liabilities ,Income & Expenses as required by Accounting Standard 27 " Financial Reporting of Interest in Joint Venture " is as indicated below.
SI. No Name of Company % Ownership Country of Interest Incorporation
1 J.J Impex (Delhi) Private Limited 49.13 India
2 Mark Exhaust Systems Limited 44.37 India
3 Bellsonica Auto Components India Limited 30.00 India
4 FMI Automotive India Limited 49.00 India
2006-07
Fixed Assets - Gross Block 707 661
Accumulated Depreciation 280 235
Net Block 427 426
Capital Work-in-Progress 383 27
Investments 0 1 Inventories 108 111
Sundry Debtors 115 124
Cash and Bank Balances 554 70
Other Current Assets 7 0
Loans and Advances 92 41
Deferred Tax Assets 2 9
Secured Loans 125 169
Unsecured 268 228
Current Liabilities 331 183
Provisions 4 1 Deferred Tax Liabilities 45 46
Sales(Net) 1,840 1,493
Income from services 73 60
Other income 35 19
Consumption of Raw Material and Components 1,349 1,061
Purchase of Traded Goods 50 65
Employees Remuneration and Benefits 81 61
Manufacturing Administrative and Other Expenses 152 93
Selling and Distribution Expenses 11 9
Financial Expenses 29 28
Depreciation 46 42
(Increase) / Decrease to Work in progress and Finished Goods 7 (13)
Tax Expense Current 7 3
Tax Expense Deffered 7 6
Claims against the Company lodged by various parties 3 3
Capital commitments 155 2
Outstanding commitments under letter of credit 17 20
2007-08
138 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
a millionpromises...
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Schedules Contd.
139
Registration No. 11,375 of 1980-81 State Code 55
Balance Sheet Date 31-03-08
(Amount in Rupees Million) Public Issue Right Issue
Nil Nil
Bonus Issue Private Placement
Nil Nil
(Amount in Rupees Million) Total Liabilities Total Assets
94,857 94,857
Sources of Funds Paid-up Capital Reserve & Surplus
1,445 82,709
Secured Loans Unsecured Loans
1 9,001
Application of Funds
Net Fixed Assets Investments
40,328 51,807
Net Current Assets Misc. Expenditure
2,722 -
Accumulated Losses Nil
(Amount in Rupees Million) Turnover Total Expenditure
209,493 184,463
Profit Before Tax Profit After Tax
25,030 17,308
Earning per share in Rs. Dividend rate
(Face Value Rs.5) 100%
59.91
(As per monetary terms)
Item Code No.(ITC Code) 8703.00
Product Description Motor Cars
I. Registration Details
II. Capital Raised During the year
III. Position of Mobilisation and Deployment of Funds
IV. Performance of Company
V. Generic Name of Principal Product of Company
MARUTI SUZUKI INDIA LTD.
Balance Sheet Abstract And Company's General Business Profile
BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE
140 Maruti Suzuki India Limited ANNUAL REPORT 2007-08
Name of the Subsidiary Company Maruti Maruti True Value Maruti Maruti Maruti Maruti
Insurance Insurance Solutions Insurance Insurance Insurance Insurance
Distribution Business Limited Agencies Agencies Agencies Logistics
Services Agency Solutions Network Services Limited
Limited Limited Limited Limited Limited
The financial year of the subsidiary 31st March 2008 31st March 2008 31st March 2008 31st March 2008 31st March 2008 31st March2008
company ended on
Number of shares in the subsidiary
company held by Maruti Suzuki India
Limited at the above date 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Extent of Holding 100% 100% 100% 100% 100% 100% 100%
The net aggregate of profit/(loss)
of the subsidiary company so far as
these concern the members of
Maruti Suzuki India Limited:
i) dealt with in the accounts of Maruti
Suzuki India Limited amounted to :
a) For subsidiary's financial year
ended on March 31st,2008 Nil Nil Nil Nil Nil Nil Nil
b) For previous financial years
of the subsidiary since it become
subsidiary of
Maruti Suzuki India Limited Nil Nil Nil Nil Nil Nil Nil
ii) not dealt with in the accounts of
Maruti Suzuki India Limited amounted to:
a) For subsidiary's financial year
ended on March 31st, 2008 Rs. 22,283,573 Rs. 162,605,780 Rs. (-) 2,265,115 Rs. 30,324,565 Rs. 46,783,197 Rs.1,246,117 Rs. 34,801
b) For previous financial years
of the subsidiary since it become
subsidiary of
Maruti Suzuki India Limited Rs. 59,428,359 Rs. 344,705,595 Rs.4,358,665 Rs. 45,819,961 Rs 57,896,604 Rs. (-) 59,470 Nil
31st March 2008
New Delhi SHINZO NAKANISHI HIROFUMI NAGAO ANIL RUSTGI
April 24, 2008 Managing Director & CEO Director & Managing Company Secretary
Executive officer - Admin & Chief Legal Officer
a millionpromises...
Statement Pursuant to Section 212 of the Companies Act, 1956, Relating to Subsidiary Companies
No Particulars MarutiInsurance Insurance Insurance Insurance Insurance Solutions InsuranceBusiness Distribution Agency Agency Agency Ltd. Agency
Agency Services Network Solutions Services Logistics Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.
1 Capital 500,000 500,000 500,000 500,000 500,000 500,000 500,000
2 Reserves & Surpluses 507,311,375 81,711,932 104,679,801 76,144,526 1,186,647 2,093,550 34,801
3 Total Assets 507,811,375 82,211,932 105,179,801 76,644,526 1,686,647 2,593,550 534,801
4 Total Liabilities 507,811,375 82,211,932 105,179,801 76,644,526 1,686,647 2,593,550 534,801
5 Investments 258,639,022 64,848,412 54,533,345 35,059,050 - - -
6 Turnover Income 585,650,665 76,729,570 166,634,757 109,408,122 5,202,174 38,994 613,691
7 Profit Before Tax 258,831,595 34,913,181 74,891,710 48,217,850 1,996,117 (2,452,955) 104,801
8 Tax 87,662,436 11,500,000 25,000,000 16,000,000 750,000 45,239 70,000
9 Prior Period Item 8,563,379 1,129,608 3,108,513 1,893,285 - (233,079) -
10 Profit After Tax 162,605,780 22,283,573 46,783,197 30,324,565 1,246,117 (2,265,115) 34,801
Maruti Maruti Maruti Maruti True Value Maruti
(Amount in Rs)
Directors' ReportFinancial Statement of Subsidiary Companies 2007-08