Maruti Suzuki India Limited is one of India’s oldest automobile companies and has ruled the Indian market often with over 50% market share in sales.

The automobile industry in India is highly consolidated across segments. The Herfindahl-Hirschman Index for the Indian passenger vehicle market stands at 2900, indicating a highly concentrated industry.

Maruti Suzuki India Ltd. (MSIL) is India’s largest passenger vehicle company commanding a market share of 52% in the domestic market with 1.65mn vehicles sold in FY18. It is a subsidiary of Suzuki Motor Corporation, Japan.

MSIL has two manufacturing plants with an installed capacity of 1.56mn vehicles per year. In addition, with strong demand outlook, MSIL has set up a plant in Gujarat with a capacity of 7.5L to be commissioned gradually over FY18-21 in order to achieve its target of selling 2mn vehicles by 2020.

MSIL has one of the largest sales networks with 3,426 sales outlet including NEXA and 3,570 service workshops as of January, 2019.

Maruti Suzuki Share Price

Maruti Suzuki stock

MSIL Share Price (as on 28/01/2019): 6511.05

The one-year data for the historical share price of Maruti Suzuki:

MONTH SHARE PRICE
Jan, 2019 6513.40
Dec’ 2018 7465.50
Nov’ 2018 7661.60
Oct’ 2018 6616.40
Sep’ 2018 7347.95
Aug’ 2018 9096.40
July’ 2018 9520.55
June’ 2018 8825.60
May’ 2018 8537.20
Apr’ 2018 8814.95
Mar’ 2018 8861.40
Feb’ 2018 8850.95

Key Milestones

YEAR EVENT
1983 First lot of Maruti Suzuki cars assembled
1984 Indian roads witnessed the Iconic Omni
1985 Maruti Gypsy launched
1990 Luxury sedan, Maruti 1000 launched
1993 Maruti Zen was launched
1994 Maruti Esteem launched
1999 Third manufacturing plant inaugurated
2000 Maruti was first car company to start a customer care centre
2000 Launched the Institute of Driving Training and Research
2002 Suzuki Corporation acquired a major stake in MUL
2005 Launched Swift
2007 Maruti Udyog Ltd renamed as Maruti Suzuki India Limited
2008 Launched A-star, world’s fifth strategic model
2014 Maruti Suzuki launched Nexa showroom in Delhi
2014 Launched S-Cross, India’s first premium crossover
2015 Maruti Suzuki launched Ciaz
2015 Launched Baleno, the premium hatchback
2016 Launched Brezza, the first compact Urban SUV
2016 Exported ‘Made in India’ vehicle to Japan
2017 Maruti Suzuki choosen ‘Star MNC’ at Business Standard Annual Awards

Maruti Suzuki Growth

India’s passenger vehicle market grew at 7.9% in 2017-18, against 9.2% in 2016-17. Around half the manufacturers were able to post growth but MSIL posted volume growth of 13.8% in passenger vehicles in the domestic market (against the industry growth of 7.9%). Including the Light Commercial Vehicle (LCV), the Company’s domestic sales growth stood at 14.5%.

Maruti continued to expand its network at a fast pace. During the year, the Company added 315 sales outlets, including 150 sales outlets of the commercial channel. In addition, 203 service workshops were added to the network.

The Company’s in-house R&D capability, together with strong support and commitment of SMC in providing core technology and new generation technologies, is helping the Company maintain market leadership.

baleno maruti suzuki

Focus areas for strengthening market share

Improving Efficiency

Maruti aimed to improve efficiency through technology interventions and shorter set up times. The Company undertook several measures including robot path optimization, spot re-distribution and process re-balancing to achieve higher efficiency.

Innovations

The company always believes in an innovation driven ecosystem. The ecosystem also fosters greater collaboration and participation by the workforce. This is instrumental in creating a better work environment for manufacturing.

Enhancing Flexibility

Maruti through the fresh layout of sub-stations enhanced its flexibility. Also, some new models were introduced and some were discontinued. The shift towards petrol cars required an increase of 156,593 units in the production of petrol models.

Quality

To realise the target of dispatching zero defect vehicles from its facilities, the Company regularly revisits processes, improves them and consistently adheres to them in a disciplined manner. Use of fool proofing systems such as pika-pika and pokayoke, and capturing process parameters for easier fault detection, are some of the measures to further improve quality.

Volume Mix of Maruti Suzuki

Alto 15%
Swift 10%
Wagon-R 9%
Dzire 13%
Celerio 5%
Baleno 11%
Ciaz 3%
Ertiga 4%
Brezza 8%
LCV 1%
Others 14%
Exports 7%

Key Financial Highlights

Parameters FY’ 17 FY’ 18 % change
Net Sales 669094 781048 16.7%
EBIT 77496 93036 20.1%
PBT 99603 110034 10.5%
PAT 73502 77218 5.1%
EPS 243 256 5.1%
Net Worth 364311 417573 14.6%
Current Liabilities 132264 154421 16.8%
Total Liabilities 148195 176128 18.8%
Non Current Assets 424744 514487 21.1%
Current Assets 87762 79214 -9.7%
Total Assets 512506 593701 15.8%
Operating Cash Flow 102793 117850 14.6%
Free Cash Flow 69070 79197 14.7%

Highlights of FY 2017-18

Quarter 1 (Q1)

  • Enhances employability of country’s youth: Announced to set up Automobile Skill Enhancement Centres (ASECs) across 15 government run ITIs to train 30,000 youth in automobile related jobs over five years.
  • Launched all new Dzire: Authentic sedan styling, plush interiors, superior comfort and convenience features take India’s best selling sedan to a whole new level

Quarter 2 (Q2)

  • Introduced Maruti Suzuki ARENA: The new corporate identity for the retail sales channel to excite, delight and serve customers by leveraging the power of digital technology.
  • Redefined NEXA services in India: Customer experience in after-sales service is taken to the next level with plush workshops, digital ‘health cards’ for cars and premium lounges.

Quarter 3 (Q3)

  • Launched CelerioX: The bold, sporty and trendy extension of the Celerio family is a synonym of modern and progressive design and technology.
  • Launched S-Cross: Launched premium urban offering, S-Cross in all-new, bold and assertive form. Gets the acclaimed DDiS200 Smart Hybrid Technology.

Quarter 4 (Q4)

  • Alto hits another milestone: India’s most-loved car continues to rule the entry segment and achieves the unique feat of 35 lakh cumulative sales.
  • Revelation at AutoExpo: All-new Swift gets a grand reception at Auto Expo 2018. The third generation of the iconic brand is launched 
in style. Also offered with acclaimed Auto Gear Shift technology.

Major Automobile Players in Market

COMPANY MARKET SHARE
Maruti Suzuki 52%
Hyundai 15%
Mahindra 7%
Tata Motors 6%
Honda 5%
Toyota 4%
Renault 3%
Ford 3%
Others 4%

Financial Highlights of 9M FY’ 19

Sales Volume 1403970 Vehicle
Net Sales 622890 Mn
PBT 81535 Mn
PAT 57050 Mn

Pros and Cons affecting the figures of Maruti Suzuki

Positive Factors

  • Cost reduction efforts
  • Higher fair value gain on invested surplus

Negative

  • Higher selling expense
  • Higher depreciation expense due to the introduction of new models and new engine
  • Adverse commodity prices
  • Higher costs in resources and capacities which were earlier planned to enable a higher estimated growth
  • Adverse foreign exchange variation

Future Growth Plan

Maruti majorly plans to work in the following areas:

  • Strong product portfolio
  • Demand environment
  • Interest rates
  • Fuel prices
  • Commodity prices
  • Foreign exchange

Maruti Suzuki is striving to post double digit growth for the 5th consecutive year in the domestic market. The 2nd plant in Suzuki Motor Gujarat is expected to be operational in Q4 of 2018-19 and the Company is taking steps to overcome any capacity challenges.

While there is still uncertainty on issues such as government policy, regulation, charging infrastructure and battery cost viability with respect to petroleum, Maruti has planned for the launch of hybrid and electric vehicles and is studying the eco-system required to support these technologies.

A lot of technology and guidance will have to be sought from SMC, Japan. The Company is confident of continuing its leadership in the new paradigm.

Mutual funds holding Maruti Suzuki India Limited Shares

  • Axis Long Term Equity Fund
  • ICICI Pru Bluechip Fund
  • DSP Top 100 Equity Fund – Reg
  • Reliance Equity Hybrid Fund

Disclaimer: the views expressed here are of the author and not those of Groww.