CHAPTER-1:INTRODUCTION

1.1 INTRODUCTION

Maruti Suzuki ltd is one of the leading manufacturer of four

wheeler in Hyderabad and India, established in February 1981 with
the mission to create cars that will give it’s customer A never-had-
before driving experience along with taking care of the environment.
Maruti was a joint venture between government of India and Suzuki
motor corporation , Japan. It is quickly growing into the largest
compact car making company of India and remained so till 2004. The
company started with Suzuki holding the minor stake of the Company
while government of India holding the major stake.

On July 12, 2012, the Board of Directors of Maruti Suzuki India (MSI)
approved a proposal of merging Suzuki Powertrain India Ltd (SPIL)
with MSI. SPIL is a subsidiary of Suzuki Motor Corporation that
supplies diesel engines and transmissions to Maruti Suzuki. Suzuki
Powertrain is a subsidiary of Suzuki Motor Corporation that holds
70% of its stake and the rest of 30% is held by Maruti Suzuki India.

After the merger, the holding of Suzuki Motor Corporation will

increase from 54.2% to 56.2% in Maruti Suzuki India. Maruti Suzuki
India proposed to make a fresh issue of 13.17 million shares to Suzuki
motors in lieu of its 70% holding in Suzuki Powertrain. In the merger
process, there will not be any cash outflow as the merger would be
effected through a share swap agreement with the ratio of 1:70. It
means that Suzuki Motors will receive one share of Maruti Suzuki
India worth 5 rupees each for every 70 shares worth 10 rupees that it
holds in Suzuki Powertrain.

When the regulatory approvals and legal requirements are done then
the books of accounts of SPIL would be merged with MSI with effect
from April 2012. After the merger, MSI would bring its entire digital
engine capacity under a single management control. MSI would take
initiatives to strengthen the business and manage in controlling the
sourcing, localization, production planning, manufacturing, flexibility
and cost reduction. The merger would benefit in areas like finance,
capital structuring, administration, and consequent reduction of
transaction costs. Maruti Suzuki is the largest car company in India.

Maruti Suzuki India Limited (MSIL), a subsidiary of Suzuki Motor

Corporation, Japan, is India’s largest passenger car maker. Maruti
Suzuki is credited with having ushered in the automobile revolution
in the country. The Company is engaged in the business of
manufacturing and sale of passenger vehicles in India. Making a small
beginning with the iconic Maruti 800 car, Maruti Suzuki today has a
vast portfolio of 16 car models with over 150 variants. Maruti
Suzuki’s product range extends from entry level small cars like Alto
800, Alto K10 to the luxury sedan Ciaz. Other activities include
facilitation of preowned car sales fleet management, car financing.
The Company has manufacturing facilities in Gurgaon and Manesar in
Haryana and a state of the art R&D centre in Rohtak, Haryana.

The Company, formerly known as Maruti Udyog Limited, was

incorporated as a joint venture between the Government of India
and Suzuki Motor Corporation, Japan in February, 1981. Presently,
Suzuki Motor Corporation owns equity of 56.2%. The Company’s
shares are traded on the National Stock Exchange (NSE) and the
Bombay Stock Exchange (BSE). Maruti was also involved in various
businesses like manufacturing, sales and purchasing of motor
vehicles and parts of automobiles. Other activities of Maruti were
facilitation of pre-owned car sales, fleet management and car
financing. They have seven subsidiary companies in India are
Insurance Business Agency Ltd, Maruti Insurance Distribution
Services Ltd, Maruti Insurance agency Solution Ltd, Maruti Insurance
Agency Network Ltd, Maruti Insurance Agency services Ltd, Maruti
Insurance Agency Logistics Ltd. All these were affianced with
promotion and selling motor insurance policies to motorcycle owners
and the seventh one True Value Solution Ltd were in business of sales
of certified pre-owned motorcycles under the brand „Maruti True
Value‟. They have four manufacturing units in different areas in
Haryana state. The first commercial car from the joint venture
company was launched in 1983 called Maruti 800 which was very
popular. In 1984 they launched Maruti Omni which fits one full size
family. In 1985 they introduced Maruti Suzuki Gypsy. In 1997
company exposed to foreign market and imported 500 cars to
Hungary. In 1990 they launched three box cars with 1000cc engine;
this was the major transformation in the company. In 1992 Suzuki
Motor Corporation increased its share value to 50% in Maruti. Later
year they launched with Maruti Zen and in 1994 they introduced
Maruti Esteem into the market.

Maruti has inaugurated its second plant in 1995. In 1997, Maruti

started Maruti Service Master as model workshop to take care of its
sales in India. In 2002, Suzuki Motor Corporation increased the share
in Maruti to 54.2%. By 2002 they established 10 finance companies in
which 8 of them were finance companies and two were joint
ventures. They started a new business strategy for its purchase, sales
and trade of old cards is Maruti True Value. With the first worlds
strategic model with the help of Suzuki Motor Corporation they
launched „the SWIFT‟ in 2005.

The Manesar manufacturing plant was inaugurated in February 2007

and is spread over 600 acres (2.4Km2).[22] Initially it had a
production capacity of 100,000 vehicles annually but this was
increased to 300,000 vehicles annually in October 2008. The
production capacity was further increased by 250,000 Vehicles taking
total production capacity to 800,000 vehicles annually.[24] The
Manesar plant produces The Alto, Swift, Ciaz, Baleno and Celerio. On
25 June 2012, Haryana State Industries and Infrastructure
Development Corporation demanded Maruti Suzuki to pay an
additional Rs 235 crore for enhanced land Acquisition for its Haryana
plant expansion. The agency reminded Maruti that failure to pay the
amount Would lead to further proceedings and vacating the
enhanced land acquisition.

In 2012, the company decided to merge Suzuki Powertrain India

Limited (SPIL) with itself. SPIL was Started as a JV by Suzuki Motor
Corp. Along with Maruti Suzuki. It has the facilities available for
Manufacturing diesel engines and transmissions. The demand for
transmissions for all Maruti Suzuki cars Is met by the production from
SPIL.

In 2017, the new Suzuki Motor Gujarat facility was opened. This third
facility is not owned by Maruti Suzuki, But instead wholly owned by
Suzuki Motor Corporation. Despite that, the plant supplied vehicles
to Maruti Without any additional cost. Located in Hansalpur,
Ahmedabad, the plant has the total annual capacity of 500,000 units
The Government of India partially departed the business in 2003 and
then sold all of its remaining shares to Suzuki Motor Corporation in
2007.

1:2 Review of literature

Agarwal, Nidhi (2015) The study focus on the comparative financial

performance of Maruti Suzuki and Tata motors ltd . The financial data
and information required for the study are drawn from the various
annual report of the companies.

The liquidity and leverage analysis of both the firms are done to
analyse the leverage position four ratios are considered namely ,
capital gearing, debt-equity, total debt and proprietary ratios. The
result show that Tata motors ltd has to increase the portion of
proprietors fund in business to improve long term solvency position.

Chacko and Selvaraj : concluded that there may be a number of

factors which are responsible for the changing purchase preference
of the consumer in four-wheelers. Among those variables – safety,
maintenance, mileage, easy mode of financing and easy driving are
found to be pointed influencing buying preference of consumers.
With the rapid and consistent growth in the price of the fuel
consumers are more conscious about mileage. So they highly prefer
mileage while buying a car. This study found that consumers also
prefer easy mode of financing a car. With the growing competition in
automobile sector, companies are providing easy financing facility to
grab maximum of consumers. This allows consumers from a middle
income group to conveniently own a car by giving easy installments
which is also forcing consumers to buy a car. Lastly, it was found that
consumers also prefer model while purchasing a car.

Mishra : observed that mostly, Tata customers purchased cars on

loan and using them for personal purpose. It is also seen that mostly
people recommend to their friends and relatives who have car, to
adopt preventive maintenance of car from authorized dealer only
once it completes one year and up to five years. In terms of level of
customer satisfaction, it was found that the customers are mostly
satisfied with price, design, safety, mileage, interior space, status
brand name, comfort level, spares part and aftersale service. Finding
also indicates that the most influencing factor for customer
satisfaction in the case of Tata Motors were price, mileage and
interior space. Talking of competitiveness among cars is concern it is
seen that customer mostly prefers Maruti car as more loyal than Tata
Motors.

1:3 objective of the study/scope

The study is based on Maruti arena ltd company Kohima Nagaland .

The interest of the various groups related to a firm is affected by the
financial performance of the firm. So, it is much of significance to
analyse the financial performance of the company. The study focus
on the overall financial performance and position of the company.
The study gives some information about the financial growth of the
company and it also displays the firm’s stability.
Maruti Suzuki Limited is a publicly listed automaker in nagaland. It is
a leading four-wheeler automobile manufacturer in state. Suzuki
Motor Corporation of Japan holds a majority stake in the company. It
was the first company in India to mass-produce and sell more than a
million cars. It is largely credited for having brought in an automobile
revolution to India. It is the market leader in India and as well as on
Nagaland. On 17 September 2007, Maruti Udyog was renamed
Maruti Suzuki India Limited. The company headquarter is in Gurgaon,
Haryana (near Delhi).

The old logo of Maruti Suzuki India Limited. Later the logo of Suzuki
Motor Corp. Was also added to it. Maruti Suzuki is one of India‟s
leading automobile manufacturers and the market leader in the car
segment, both in terms of volume of vehicles sold and revenue
earned. Until recently, 18.28% of the company was owned by the
Indian government, and 54.2% by Suzuki of Japan. The Indian
government held an initial public offering of 25% of the company in
June 2003. As of 10 May 2007, Govt. Of India sold its complete share
to Indian financial institutions. With this, Govt. Of India no longer has
stake in Maruti Udyog.

Maruti Udyog Limited (MUL) was established in February 1981,

though the actual production commenced in 1983 with the Maruti
800, based on the Suzuki Alto kei car which at the time was the only
modern car available in India, its‟ only competitors- the Hindustan
Ambassador and Premier Padmini were both around 25 years out of
date at that point. Through 2004, Maruti has produced over 5 Million
vehicles. Marutis are sold in Nagaland and India and various several
other countries, depending upon export orders. Models similar to
Marutis (but not manufactured by Maruti Udyog) are sold by Suzuki
and manufactured in Pakistan and other South Asian countries.
The company annually exports more than 50,000 cars and has an
extremely large domestic market in India selling over 730,000 cars
annually. Maruti 800, till 2004, was the India’s largest selling compact
car ever since it was launched in 1983. More than a million units of
this car have been sold worldwide so far. Currently, Maruti Alto tops
the sales charts and Maruti Swift is the largest selling in A2 segment.

Due to the large number of Maruti 800s sold in the Nagaland, the
term “Maruti” is commonly used to refer to this compact car model.
Till recently the term “Maruti”, in popular Indian culture, was
associated to the Maruti 800 model.

Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation

of Japan, has been the leader of the Indian car market for over two
decades. Its manufacturing facilities are located at two facilities
Gurgaon and Manesar south of New Delhi. Maruti‟s Gurgaon facility
has an installed capacity of 350,000 units per annum. The Manesar
facilities, launched in February 2007 comprise a vehicle assembly
plant with a capacity of 100,000 units per year and a Diesel Engine
plant with an annual capacity of 100,000 engines and transmissions.
Manesar and Gurgaon facilities have a combined capability to
produce over 700,000 units annually.

More than half the cars sold in India as well as in nagaland are Maruti
cars. The company is a subsidiary of Suzuki Motor Corporation,
Japan, which owns 54.2 per cent of Maruti. The rest is owned by the
public and financial institutions. It is listed on the Bombay Stock
Exchange and National Stock Exchange in India.
During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024
were exported. In all, over six million Maruti cars are on Indian roads
since the first car was rolled out on 14 December 1983.

Maruti Suzuki offers 15 models, Maruti 800, Omni,Esteem, Baleno,

Alto, Versa, Ritz, Gypsy, A Star, Wagon R, Zen Estilo, Swift, Swift Dzire,
SX4, and Grand Vitara. Swift, Swift dzire, A star and SX4 are
manufactured in Manesar, Grand Vitara is imported from Japan as a
completely built unit (CBU), remaining all models are manufactured
in Maruti Suzuki’s Gurgaon Plant.

Suzuki Motor Corporation, the parent company, is a global leader in

mini and compact cars for three decades. Suzuki’s technical
superiority lies in its ability to pack power and performance into a
compact, lightweight engine that is clean and fuel efficient.

Maruti is clearly an “employer of choice” for automotive engineers

and young managers from across the country. Nearly 75,000 people
are employed directly by Maruti and its partners.

The company vouches for customer satisfaction. For its sincere

efforts it has been rated (by customers)first in customer satisfaction
among all car makers in India for ten years in a row in annual survey
by J D Power Asia Pacific.

Maruti Suzuki was born as a government company, with Suzuki as a

minor partner to make a people’s car for middle class India. Over the
years, the product range has widened, ownership has changed hands
and the customer has evolved. What remains unchanged, then and
now, is Maruti‟s mission to motorise India. „To Munsiyari on a Maruti
800‟, Uttarakhand Himalayas Maruti Suzuki plant in Gurgaon.

1.4 PRODUCT PROFILE

Model Production Image Outlet

Wagon R 1999–Present Arena

Alto. 2000–Present Arena

Swift 2005–Present Arena

Ertiga. 2012–Present Arena

Celerio 2014–Present Arena

Ciaz. 2014–Present NEXA

Baleno 2015–Present NEXA

S-Cross. 2015–Present NEXA

Vitara Brezza 2016–Present Arena

Dzire 2017–Present Arena

Ignis 2017–Present NEXA

XL6. 2019–Present NEXA

S- presso 2019–Present Arena

Maruti Suzuki is the leading car manufacturer in India. Started of as a

semi-government company, Maruti Suzuki has gained a lot of trust
amongst Indian car buyers. It sells the highest number of cars and
also has the largest sales and service network. Maruti is the leader in
small cars segment. In fact, it even has the largest offering in
hatchbacks for the Indian car market. This is collaboration between,
the Indian company Maruti and Japanese technology partner is
Suzuki. The company was earlier called as Maruti Udyog Private
Limited. The company had a major market share of the Indian car
market, until several new car brands made it. However, it continues
to dominate the Indian car market.