Saturday, September 01, 2012

A DRIVE TO REMEMBER?

While everyone was scampering about, frightened by the slowdown ghost, Maruti peacefully posted a 105% increase in bottomlines during FY 2009-10. Result: it Climbed 21 places to #27 on this year’s list. But can maruti repeat the magic? By Pawan Chabra

When Maruti Suzuki gave India its first Maruti 800 hatchback, in the summer of 1983, there were voices that criticised this attempt as just another government-foreign tie-up to deliver a loss-making venture. The Indian masses were then quite content with the insipid Ambassadors and Padminis burning the Indian roads in a half-sparked fashion. They disbelieved the engine horsepower of a small carmaker to deliver the bottomline goods to carve out a space for itself in the top profit-making list of corporations of India Inc. 27 years later. Call it the effect of the Japanese hi-tech partner Suzuki, or give credit to the very fact that Sanjay Gandhi gave mileage to his auto-brainchild, the newborn pony won the race. Today, it’s the white stallion of the Indian auto sector, having recorded a bottomline of `24.98 billion and a topline of `290.99 billion during FY2009-10, and ranked at a covetable #26 on B&E’s Most Profitable List 2010.

For some, the fact that Maruti has retained the indisputable brand tag in the Indian market is as confounding as the first two pages of the carmaker’s FY2009-10 Annual Report. The first page is blank. The second one has a lady clothed in a blood-red coloured garment posing as a dancer. Strangely, there is no red ink in the pages that follow, but there is much of dance and song.

What has forever worked for the company is its focus on the Indian consumer’s wants and a deep insightful understanding of their psyche. Be it its first model (Maruti 800) or the subsequent launches like Zen, Alto, Swift, Ritz, A-Star, all have received an overwhelming response from Indian buyers. It has managed to nurture and retain the perception in the minds of the Indian buyers that they are actually laying their hands on a competitively priced, good quality product, that runs on Japanese technology. Its JV with Suzuki therefore has to be given due credit, as Bhargava says, “Both the parties are bringing their respective expertise to the table, to work for the benefit of the JV, rather than looking at getting the other partner out.”

Many expected the foreign players to force Maruti to mellow down on its Indian rampage. But consistent on-field knowledge is what the player has displayed. Despite the Indian per capita incomes increasing by the day, the carmaker maintains its belief in the price-sensitive nature of the Indian masses. It is right. During the past year, it has announced the launches of alternate versions of its hit Alto (Alto K10) and the A-Star, and CNG versions of five models – the Alto, the WagonR, the Estillo, the SX4 and the EECO. To penetrate deeper into the Indian masses, the company is even scouting for better opportunities in the tier II & III locations, which accounted for 18% of its sales during the past year; two years back, this figure stood at just 3%. Translation: the small carmaker has started thinking on a bigger scale, which will grant it greater mileage even in the years to come.

Take a look at the improvements in financials of Maruti. While its net income for FY2009-10, represented a growth of 105% over the previous year, its revenues showed a jump of 40%. The result – this year, it has climbed 21 places on B&E’s Most Profitable List. The last fiscal has been the best in terms of financial performance for the company. It was also a year when it crossed the 1 million production mark for the first time. So, do we expect a similar performance this year too?


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