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Maruti Suzuki India Ltd.

BSE: 532500 Sector: Auto
NSE: MARUTI ISIN Code: INE585B01010
BSE 00:00 | 17 Jan 8264.70 182.55
(2.26%)
OPEN

8101.00

HIGH

8369.00

LOW

8101.00

NSE 00:00 | 17 Jan 8265.50 181.30
(2.24%)
OPEN

8124.80

HIGH

8368.90

LOW

8100.10

OPEN 8101.00
PREVIOUS CLOSE 8082.15
VOLUME 30322
52-Week high 8369.50
52-Week low 6301.20
P/E 62.05
Mkt Cap.(Rs cr) 249,660
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 8101.00
CLOSE 8082.15
VOLUME 30322
52-Week high 8369.50
52-Week low 6301.20
P/E 62.05
Mkt Cap.(Rs cr) 249,660
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Maruti Suzuki India Ltd. (MARUTI) - Chairman Speech

Company chairman speech

It is my pleasure to express my thoughts through the Annual Integrated Report of MarutiSuzuki India Limited

The COVID-19 pandemic took a heavy toll last year. The lack of any precedent or anadequate understanding of all the aspects of the virus called upon our experts and policymakers to be extremely flexible and innovative in dealing with problems as they arose. Ibelieve that despite our limitations of health infrastructure we did very well to containthe adverse fall out. Our grateful thanks to all concerned and especially doctors andmedical workers who worked tirelessly and at much risk to themselves.

Before proceeding further I would like to offer my sincere condolences to all who havesuffered untimely bereavements because of the COVID-19 pandemic. It is well establishedthat getting vaccinated and wearing masks is the only way known to control the pandemicand maximise individual safety. My appeal to all of you is to ensure that you and yourfamilies are fully vaccinated and continue to follow the government advisories on theprecautions that need to be taken to prevent the third and possibly other waves of theinfection.

Your Company by virtue of its unique position in the manufacturing industry believesit has a responsibility to step forward and participate in meeting any crisis. Last year Ihad mentioned that towards the end of April the government had approached us to help inscaling up the domestic production of ventilators. We had worked with M/s Agva a start-upcompany to produce the full ordered quantity of 10000 ventilators by the end of June.Again in May this year there was an urgent need for oxygen generators. This time we tookthe initiative to help scale up production and started working with three small companies.Within May itself 73 generators were produced. In June this further increased to 140units. This was almost a ten-fold increase over their normal production. 14 generatorswere donated by us as a part of CSR activities. We were assisted in the efforts toincrease production by Motherson Sumi SKH Metals and Jai Bharat Maruti all our supplierpartners.

MSIL took the lead in devising safety protocols not only for ourselves but also forour vendors and dealers. These were more comprehensive than even the governmentguidelines. As a result we were amongst the quickest to resume production and sales aslockdown conditions were relaxed. Our total production during FY 2020-21 year was1441424 compared to 1577304 in 2019-20. In Q4 of the year production was 21.6 %higher than in the corresponding quarter of the previous year. However as a result of thelockdown in Q1 of FY 2021-22 and restrictions on production and sales in several Statesduring some parts of the year the profits in the year were 25.1% lower than in 2019-20.Consequently your Board decided that dividends for the year should be proportionatelyreduced to Rs.45 per share. The cash reserves of the Company have been of great help indealing with the COVID-19 related problems and ensuring that our people did not suffer. Wewill use these reserves to establish new production facilities as soon as a few problemsare resolved.

In March 2021 we were quite optimistic about the outlook for FY2021-22. The suddennessand ferocity of the second wave of the pandemic was a surprise to all and led tolockdowns and restrictions in most parts of the country. Production and sales againdropped and the recovery that had started in the previous quarter suffered a set-back. Q1sales were limited at 353600 units. The performance in the next three quarters largelydepends on how effectively all our citizens follow the government's advice to getvaccinated and observe safety protocols. If we can avert the third wave or substantiallyreduce its effect and there are no further waves economic activities and sale of carscan improve significantly over what was achieved last year.

Your Company expects to be able to work smoothly and without disruptions as we wouldhave vaccinated over 90% of our employees and their families by the end of August. Weare urging our vendors and dealers to also do the same. The victory over COVID-19 can bestbe achieved by all of us working together and following the advice given by the governmentand experts.

Your Company is very aware of its responsibility to support the effort to reduce thecarbon footprint as fast as possible. Fortunately unlike the developed countriesemissions from cars in India are comparatively small as vehicle penetration is very low.We have to ensure that as growth takes place and more and more people are able to afforda car your Company uses technology that would take us towards our goal. Suzuki Japan isgiving priority to the development of technologies suitable for the Indian market.Research and development efforts are being accelerated and your Company would be fullyinvolved in this work. Suzuki's alliance with Toyota in Japan would prove very valuablefor this effort.

Various countries in the world are setting ambitious targets for the replacement ofinternal combustion engine cars by electric vehicles. We need to recognise that ourstrategy for moving towards net zero emission has to be consistent with the economic andinfrastructure conditions prevailing in the country. Two wheelers consume about 60% of thetotal petrol used for personal transportation and the emission standards for 2 wheelersthat were produced till March 2020 were lower than that for cars. The emission fromtwo-wheelers is thus much higher than from cars and the government has rightly givenpriority to electrifying two wheelers. This will require a massive effort. The acceptanceof electric cars by a large proportion of consumers faces certain problems that aredifferent from the developed countries. The per capita income in India is only about US$2000 about 5% of that in Europe and Japan. This reduces the ability of a large number ofpeople to buy expensive cars. As a result not only do two-wheelers sell in large numbersbut 77% of cars sold are less than 4 metres in length and lower in cost. No otherdeveloped country has such a high sale of small cars. Unfortunately the technologypresently available leads to electric cars being produced at a cost much higher than theconventional cars. This along with the lack of charging infrastructure makes it verydifficult to sell electric cars to people who can only afford small cars. Only 5% of carssold in India are priced at Rs.15 lakh or more. Some of the buyers of such cars can buyelectric cars but the market penetration of EVs would be very small.

I have no doubt that the large resources that are now being deployed for technologydevelopment will lead to lowering the cost of EVs and reducing dependence on Lithiumprocurement of which poses some strategic issues of national importance. The time framefor all of this to happen is not certain but meanwhile we do need to reduce import of oiland harmful emissions. Fortunately in our market conditions the use of CNG particularlyfor small cars has proved very acceptable to customers. The government has recognised theimportance of CNG as a fuel for cars and is making concerted efforts to build theinfrastructure to make CNG available in most parts of the country. Your Company will alsoseek to improve the technology for CNG cars. Hybrid technology also leads to a significantreduction in fuel consumption and emissions and is another area for our engineers to work.Thus these two technologies coupled with biofuels gives the country a means of movingtowards the final goal of net zero emission. The use of hydrogen is also an interestingalternative and should be considered specially to reduce dependence on importing Lithium.

It is a matter of some concern that the rate of growth of car sales has been steadilydeclining in the last decade. During the period 2010 to 2015 the compound annual growthrate of car sales in India dropped from the past 12.9% to 5.9% and in the next five yearperiod of 2015-2020 the growth rate further declined to 1.3%. After March 2020 theCOVID-19 pandemic has taken its toll on production and sales. The car industry constitutesabout 25% of manufacturing industry and its slowing growth would naturally impact the rateof growth of this sector. The creation of new employment would also have been impactedsince the use of cars leads to a large number of jobs being created in the service sector.

The slowing in the demand of cars is largely because the cost of acquisition byconsumers has increased due to various reasons like regulatory changes depreciation ofthe Rupee increase in cost of raw materials and taxes imposed by State governments. TheGST on cars based on the past rates of excise duty is much higher than the GST (orequivalent) in all other major countries of the world. It is unlikely that the carindustry will experience reasonable rates of growth unless the central and Stategovernments consider how to reduce the initial acquisition cost of cars.

Your Company continues to make its best efforts to reduce the carbon footprint in theproduction process and also to conserve scarce resources. The 20MW solar plant in Manesaris generating power and will reach its full output by the end of August. Efforts continueto conserve water and ensure clean emission from the production process.

The CSR budget has been fully utilised on programmes approved by your Board. Themulti-speciality hospital and the school near the Suzuki plant in Gujarat have startedoperations. These are benefiting a large number of citizens living in that area. Theefforts to improve road safety in the national capital by using technology to capturetraffic violations and the system for testing aspirants for driving licenses has provedvery effective.

Safety of all employees and associates has been an area of priority for your Company. Ihave already mentioned the vaccination drive and measures to control the pandemic. Safetyaudits are regularly carried out and systems strengthened wherever possible. During theyear under report no employee of the Company met with a fatal accident. Your Company istrying to make its entire value chain safer by working with its supplier partners to adoptOHSAS 18001/ISO 45001 safety management systems to continuously improve their OccupationalHealth and Safety practices. 89% of Tier-1 suppliers have already adopted this. We aretrying to reach deeper and have made a safety programme for Tier-2 suppliers also. Morethan 6500 machines at about 340 Tier-2 suppliers have been modified with measures forfool-proofing against human injury.

Your Company has been supporting schemes for employees owning their own houses. Duringthe year 357 number of employees were able to get houses of their own.

Our employees continue to be our strength and our management strategy of building trustand partnerships with all our associates has stood the test of time. As the country movesto accelerate manufacturing the experience of MSIL in building a competitive managementstrategy should be of use to others.

Lastly I would like to express my sincere thanks all our shareholders for theirconsistent support and understanding during these difficult days. I wish all of you a safeand healthy year ahead.

Jai Hind

R. C. Bhargava

Chairman

.