Scale Structures Limited

Maruti Udyog LIMITED - managed competition successfully

Maruti Udyog Limited (MUL) was established in February 1981 by an Act of Parliament, to meet the growing demand for a mode of personal transport caused by the lack of an efficient public transport system. It was established with the objectives - the modernization of the Indian automotive industry, production of fuel-efficient vehicles to conserve scarce resources and the indigenous production of vehicles for the growing needs of the Indian population. A license and a Joint Venture agreement was signed with Suzuki Motor of Japan in October 1983, by which Suzuki acquired 26% stake and has agreed to provide technology and management practices in Japan. Suzuki was chosen for the joint venture because of its history in the manufacture and sale of small cars worldwide. There was an option in the agreement to raise funds Suzuki 40%, which was exercised in 1987. Five years later, in 1992, Suzuki has also increased its equity to 50% in Maruti turning a nongovernmental organization managed on the model of Japanese management practices.

Maruti has created history by going into production in record time of 13 months. Maruti is the leading manufacturer of high volume of cars in Asia, outside Japan and Korea, having produced more than 5 million vehicles in May 2005. Maruti is one of the most successful automotive companies joint, and has made profits every year since its creation until 2000-01. In 2000-01, while Maruti generated operating profits on an income of Rs 92.5 billion, a sharp depreciation in the launches of new models has resulted in a book loss.

COMPANY HISTORY AND BACKGROUND

Evolution

Maruti history of evolution may be considered in four phases: two phases during the pre-liberalization (1983-86, 1986-1992) and two phases during the post-liberalization (1992-97, 1997-2002), followed the full privatization of Maruti in June 2003 with the launch of an initial public offering (IPO). The first phase began when Maruti released its first car in December 1983. During the early years Maruti had 883 employees, a capital of Rs 607 mn and profit of Rs 17 mn without any tax liability. From these humble beginnings the company in just ten years (beginning the second phase in 1992) turned into a giant car to capture about 80% market share in India. Employees increased to 2000 (end of the first phase 1986), 3900 (end of the second phase 1992) and 5700 in 1999. Profit after tax rose from Rs 18.67 mn in 1984 to Rs 6854.54 mn in 1998, but began to decrease during the period 1997-2001.

During the pre-liberalization period (1983-1992) an important source of strength 's Maruti was the sincere desire of the Government of India to subscribe to the technology and principles of Suzuki and Japanese management practices. Many Indian leaders, supervisors and workers are routinely sent to the Suzuki factory in Japan for training. Maruti came more Japanese staff to train, supervise and manage. Maruti style of management units was mainly to follow the practices of Japanese management.

The road to success for Maruti was as follows:

(A team) and the recognition that the future growth of each employee and prosperity is totally dependent on the company's growth and prosperity (b) rigorous work discipline to individuals and organization ( c) continuing efforts to increase the productivity of labor and capital (d) equilibrium quality improvement and cost reduction (e.