Promoting Indigenizing

R C Bhargava Executive Chairman Maruti Suzuki

Do you think Indian companies have succeeded in creating value in the true sense?

Many Indian companies have created a great deal of value for its shareholders and investors. But over all I think the Indian industries have also failed to gain and extend the sentiments through the years. But I would like to add that there are multitudes of factors behind such performance.

What is your perspective on value creation? 

I believe a company needs to make continuous improvements and become more and more competitive. By doing so, they can expand their market reach all-over, which in turn will also refl ect in their turn over as well. I also want to add that they need to do this largely, without increasing any debt burden, except it should be as minimal as possible,mostly by internal resources.

Well now it’s been three to four decades that your company has been operating in India? 

What kinds of challenges have you faced here, in terms of operating? Well from last two three years the challenges that we have generally faced is the downturn in the economy. Th e cars demand is very much linked to the growth of the econmy and creation of the jobs. Th e sluggish pace, at which the economic growth is moving, needs to be changed. Job creation is certainly the one thing which is defi nitely lacking. Sentiments are turning negative, as it has been three years now since the fi nancial growth has been stagnant. Th is coupled with rising prices. We all know that in year 2011-12 and 2012-13 the gap between the petrol and diesel prices was large. And this was one reason for the lacklustre sale of the petrol cars.

So what kind of strategies have you adopted to overcome these challenges?

One the real strategy which works in this scenario is that you need to reduce cost. Th e cost increase is also linked to the depreciation of rupee. So we took it on ourselves and started the programme of ‘Indigenizing’ of our core content. Th e bulk of core content was with the vendors abroad and we needed to keep an eye on our imports as well. So to keep cost it in check we started to localise those imports which in turn curbed the cost to a certain level. It’s an on-going programme which is still being carried forward. From the last two-three quarters the margins of Maruti have defi nitely improved, though not satisfactory. I can say that indigenization has supported us to recover in these bad times.
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What’s your take on the global competition in the Indian markets?

The only way one can survive in competition is to give a better value to the customers. We have been doing it for the past couple of years now, in terms of servicing to the clients, providing good quality spare parts, perk up products that we have introduced and also reducing the cost. These strategies are being implemented and have helped us in increasing our market share.

What is your vision on the Indian economy, over the next five years?

To predict the economy over the next fi ve years is a bit diffi cult, but we need to see what the new government which comes into power holds for us. We need to see what changes and policy reforms will be implemented, will it be in favour with the industry or will it further drag the economy. Predicting right now the economic performance for the next fi ve years is a bit pre mature I would say.

If you compare Maruti Suzuki with other automobile companies, how do stand apart from your peers?

To answer that question, let me tell you that we have 42 per cent share in the car markets and the utility vehicles market put together. And we were successful in maintaining this share from the last one year, hopefully going forward you will see this number getting increased.

Going forward what will be the major growth driving factors for your company?

The first scenario which needs to be improved is the pace of the economy and a large amount of job growth should be created. Car market is dependent on these two factors. Th is can sustain the automobile market going ahead and can increase the markets going forward. But as I have already said that, one needs to give better value and services to their customers, which would invariably drive the growth.

Do you think there is a need of policy reforms to boost the overall Automobile industry?

Certainly policy reforms should take shape, and as it was proposed earlier as well, we need to keep a fitness test for old and used vehicles. Effective utilisation on some parameters is a big question mark right now.

Considering all these factors do you have any strategic plan to re-orient your company?

Recently we announced that the expansion of capacity in Gujarat will be done by Suzuki. One of the prime reasons for that is, it would give a financial back-up to the company. Th is can help us free our resources to market our products going forward.