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Maruti Suzuki India Ltd.

BSE: 532500 Sector: Auto
NSE: MARUTI ISIN Code: INE585B01010
BSE 12:35 | 25 Feb 6491.00 22.80
(0.35%)
OPEN

6505.00

HIGH

6515.00

LOW

6420.00

NSE 12:29 | 25 Feb 6493.20 22.80
(0.35%)
OPEN

6505.40

HIGH

6510.00

LOW

6415.55

OPEN 6505.00
PREVIOUS CLOSE 6468.20
VOLUME 15984
52-Week high 7755.00
52-Week low 5447.00
P/E 31.86
Mkt Cap.(Rs cr) 196,080
Buy Price 6491.00
Buy Qty 1.00
Sell Price 6491.55
Sell Qty 7.00
OPEN 6505.00
CLOSE 6468.20
VOLUME 15984
52-Week high 7755.00
52-Week low 5447.00
P/E 31.86
Mkt Cap.(Rs cr) 196,080
Buy Price 6491.00
Buy Qty 1.00
Sell Price 6491.55
Sell Qty 7.00

Maruti Suzuki India Ltd. (MARUTI) - Chairman Speech

Company chairman speech

I am delighted to welcome our shareholders to the 38th Annual GeneralMeeting of the Company.

The recent elections have very clearly shown that economic development creation ofemployment opportunities for the youth of the country and inclusive growth are what peopleoverwhelmingly want. They have total trust in the vision and leadership of the PrimeMinister who has identified manufacturing growth as the engine for creating nationalwealth and employment. Our past history shows the importance of creating wealth to enableall citizens to enjoy a satisfactory level of life on a sustained basis. Further thelarger the employment generation the greater would be the inclusivity in the creation ofwealth and the ability to meet the aspirations of the youth. As the Prime Minister hassaid India has to rapidly grow its manufacturing sector to achieve these objectives. Anumber of steps have already been taken to promote investments and growth of competitivemanufacturing. However more needs to be done if the target of manufacturing contributing25% of the GDP by 2022 is to be achieved. This would also be an important step towards thegoal of a US$5 trillion economy. The Budget speech of the Union Finance Minister hashighlighted the important role that India Inc. has to play in achieving these goals. YourCompany has been playing a leading role in the manufacturing sector and would make everyeffort to help achieve the higher national goals.

Maruti Suzuki India Limited is an example of how people of two nations can cooperate inan enlightened manner and work with perfect team spirit for the benefit not only of thestakeholders of the Company but of both nations. In today's highly competitive world itis not easy for any nation to become a globally competitive manufacturing country. Ibelieve that team working at all levels would give India the best chance of becoming aninternationally competitive manufacturing country. Team working is possible when allsubscribe to the end objective to be achieved and work to win the trust and confidence ofthe team members. The goals for all in the nation are achieving rapid economic growthbecoming a US$5 trillion economy and creating an inclusive society. It is theresponsibility of leadership in various areas to accept these goals and help achievingthem by working as a single national team.

Team working is hard to achieve if there are wide disparities of income and consumptionbetween team members. I am happy to report that in your Company we have endeavoured tominimise disparities. The salary of the Managing Director is between 14 and 25 times thatof a workman with 35 years of service. If variable salary is included the ratio changes tobetween 17 and 30 times. This is one reason why team working in your Company has sustainedfor over 35 years and resulted in its high competitiveness.

The success of your Company has been an important factor in making India an attractiveinvestment destination for Japanese and other investors besides creating large nationalwealth and employment. The Company recognises the importance of sustaining its performanceand I propose to briefly review some of the activities intended to help in this area. Ofcourse the basic approach will be the partnership approach in our operations andstrengthening team working.

The CSR programmes have been carefully devised and are consistent with the priorityareas outlined by the Government. Besides utilising the full budget for CSR greaterattention is paid to ensure that the outcomes on the ground do not have any shortfalls.Effective implementation in a cost-effective manner is our watchword. Applicants fordriving licences are now tested on automated test tracks in Delhi. This has not onlyincreased transparency but the quality of drivers will see an improvement. Technology isalso being used to detect violations of traffic rules in Delhi and challans havemultiplied many times. Unfortunately the laws for punishing serious violations aregrossly inadequate for any real deterrent effect on errant drivers. It should be possiblefor state governments to adopt these technology-driven systems all over the country andthereby substantially increase road safety.

In the 26 villages where community development work has been taken up toilets waterATMs and rainwater harvesting are being given priority in line with national priorities.The technical education programme continues and is being expanded. In the Gujarat plant ofSuzuki Motor Corporation a 50-bedded hospital which will provide low-cost healthcare tothe people of that area is under construction. A school that will gradually expand tocover Secondary education is also being built.

Water conservation is of national importance and your Company is giving it highimportance. All used water in our plants is being recycled with the result that about 60%of the daily consumption of water is met from the recycled water. At the Gurugram plantwater harvesting activities were started many years ago and there are 11 lagoons for thispurpose. Manesar has five lagoons and the numbers will be increased to maximise rain waterharvesting.

The Company is focusing on expanding solar energy use. The initial 1.3 MW plant is nowbeing supplemented by a 5 MW solar energy plant that will be commissioned this financialyear. The Board has sanctioned another 20 MW solar energy plant at Manesar and this islikely to be commissioned in 2021. The monitoring of all emissions from the chimneys inthe factories is being done on a real-time basis. This enables the Company to takecorrective actions if and when required without any delay.

Your Company is fully committed to help the Government's programme for reducing theconsumption of oil and achieving cleaner environmental standards. We had started in thisdirection many years ago with the introduction of factory-fitted CNG vehicles. Theproduction of such cars increased by 40% in 2018-19 and this year is targeted to increaseby near 50%. The Government has also announced a large programme for increasing CNGoutlets and this should result in the steady increase in CNG vehicle sales. A majorGovernment initiative is the conversion of petrol and diesel driven vehicles to electricvehicles. Suzuki with the support of Toyota is working on developing electric vehicles.However the challenges for electric vehicles in India arising mainly from batterytechnology and infrastructure limitations are likely to result in electric vehicleacceptance by customers being slow in the short term. Meanwhile the objective of reducingoil consumption and pollution would be met by CNG vehicles hybrid cars and the increasinguse of biofuels. Since India is a fast-growing market for cars unlike most parts of theworld there is a need for using all these technologies.

The automobile industry started the year 2018-19 on a very promising note and our firstand second quarters were very good. However from the third quarter the market softenedsubstantially and even the festive season did not witness any revival of consumerinterest. Till now there is still no revival of demand and this slowdown appears to beaffecting not only car sales but all other sectors of the automobile industry as well.While the weak demand situation is unfortunate we need to recognise that such downturnsdo happen from time to time all over the world. Such occasions while posing challengesalso provide an opportunity to review what we are doing and to find ways of becoming moreefficient and cost-effective. Your Company is trying to do exactly that. Reduce costsbecome more efficient strengthen marketing strategies and give customers more value.Towards this end the expansion of the service and sales outlets in rural areas continuesto be given priority.

The slowdown in the second half of last year resulted in your Company not being able tomeet its initial estimate of double-digit growth for the year. While we maintained ourmarket share the net profit declined marginally by 2.9% to Rs 75006 million. The Boardhas decided to recommend a dividend of Rs 80 per share the same as last year for yourapproval.

In Gujarat the second production line is fully functional while the third line willbe commissioned in 2020. The actual volume of production in Gujarat would be in accordancewith the market demand.

As you are aware the entire industry has to move to BSVI standards by the end of thisfinancial year. Stricter standards of safety have also come into force. Your Company hasalready introduced a number of models that meet the BSVI norms and will continue to do sofor the remaining models. The changeover of the entire range of vehicles to BSVI will becompleted well within the prescribed time period. The safety standards will also be metwell in time. The higher safety and emission norms have resulted in higher costs and anincrease in customer prices. One fallout of the higher costs of meeting BSVI norms is thedecision to discontinue diesel vehicles up to 1.3 litre-engine capacity by the end of thisyear.

I believe that this change from BSIV to BSVI norms and the impact on smaller dieselvehicles is one factor that is resulting in the lower sale of cars this year. However themarket response to the BSVI vehicles that have been introduced has been excellent andcustomers appreciate new technology and the ‘greenness' of the vehicles. Theincreased sale of petrol and CNG vehicles in the future should more than compensate forthe discontinuance of diesel vehicles.

The election results have resulted in sentiment continuing to be very positive for thegrowth of the economy. The Government has already taken a number of good steps whichshould result in the economic growth becoming stronger from the next few months. My beliefis that we are near the bottom of the downward cycle and the economy and car sales shouldstart to accelerate in the near future. The fiscal year 2021 should again see your Companycoming back to its usual rate of growth. We are continuing to build our sales and serviceinfrastructure as well as production capacity for the future.

The introduction of new models is on track and will continue according to schedule. Thedevelopment work at the Rohtak centre continues to increase and the number of engineers inR&D by the end of the year will rise to 1800.

The strength of the Company continues to be all its highly motivated employees thesupply chain and the network or dealers. Year after year they have shown that having thecommon goal of increasing the competitiveness of our products; and growing the company isbest achieved by all working together as a team. Suzuki Japan continues to support us inevery possible way for which we are all grateful. The cooperation between Toyota andSuzuki is giving your Company access to technology required for electric vehicledevelopment introducing higher performance hybrid vehicles and in several other areas.Your Company has already started supplying cars to Toyota India for sale and this isleading to higher production and sale by Maruti. Customers also have more sale and servicepoints to cater to their needs. Your Company will be able to get the benefit from theproduction capacity of Toyota India in future and this will help in meeting the increasesin market demand. I believe this partnership will be of great benefit to all of us.

The trust and confidence displayed by you our valued shareholders has always been asource of great strength to all in the Company. We look forward to this support as yourCompany continues to lead the growth of the automobile industry and manufacturing in theIndia of tomorrow.

Jai Hind.

R. C. Bhargava
Chairman