Enter the office of an information technology provider and you will find at least 20 engineers working on building new-age telematics units that connect with smartphones. They’re meant for Maruti cars...
The company is building connected apps for Maruti Suzuki to support its “Nexa” platform of cars like the Suzuki Baleno and the S-Cross, which have been received extremely well in the market.
Maruti Suzuki which sells well over 1 million cars in this country did not see a slowdown even during the crisis of 2009 and is not going to see a crisis in India anytime soon. “The company focuses on functionality and now with its new platforms, it has taken its design and service delivery to the next level,” says C.V. Raman, executive director of engineering at Maruti Suzuki India. No wonder the company figures on the top of the list of the Most Respected Companies survey conducted by BW Businessworld, along with consulting firm TNS.
Sustained Performance
This $9-billion company sold 1.03 million cars in the financial year 2014-15, which was 1.4 per cent more than the sales performance in 2013-14. In May, 2014 it rolled out its 15 millionth vehicle, thereby announcing its dominant position in the Indian market where it will remain so for the next decade. Its closest competitor, Hyundai, sold close to 420,688 units in 2014-15.
“The Indian economy, although slowing, is still one of the largest consumers markets. This, the automobile industry cannot ignore,” says Mohit Arora, executive director of J. D. Power Asia Pacific.
The reason for Maruti’s success in this market is also because of its ability to ramp up to more than 1,400 dealerships across the country. Enter one of its new dealerships called “Nexa” and you will find a whole new bunch of swanky salesman using tablets to show you the features of the car digitally. The customer also gets an app which allows him connect with the Maruti Suzuki over the life cycle of ownership. The data generated by the app will allow Maruti to connect its entire organisation, from design to production to service, to build products that remain ahead of competition.
“All automobile OEMs are building design thinking processes and are rolling out connected experiences on smart phones for consumers for the last decade,” says Vijay Ratnapharke, MD of Robert Bosch Engineering India. He adds that such services will allow an OEM to understand their consumers driving habits and in the long run the app will connect to the car’s data, which could then be used for predictive maintenance of the vehicle rather than time and distance bound checks or services.
Financially, Maruti Suzuki is one of the powerhouses in the automobile sector. Its net cash from operating activity is as large as Rs 6,400 crore, of which it has invested back a little more than Rs 4,000 crore. Its turnover for the second quarter was Rs 13,933 crore, a 3.79 per cent jump over the first quarter when its turnover was Rs 13,424 crore.
New Entity
While everything is running smoothly, Maruti still has to address the interests of the minority shareholder. In December 2013 when the company made the proposal that Suzuki would create a new entity called Suzuki Motor Gujarat where it would make an investment of Rs 3,000 crore in a plant. The plant would in turn sell cars to Maruti on a cost-plus basis. The minority shareholders, including retail investors, who own 23 per cent have blocked such a move saying that this investment would erode shareholder value and increase the interests of Suzuki because it could take more money back to its parent. SEBI called for a vote on this which was conducted in November 2015, an d Maruti is yet to post the results.
If more than 51 percent of the minority shareholders accept the investment from Suzuki, the deal would sail through else the investment will have to be made by Maruti Suzuki India Limited. As this copy goes to print the results are yet to be announced.
Nevertheless the fact that the company is addressing the issues of minority shareholders shows that the company is indeed a most respected company.
vishal@businessworld.in
(This story was published in BW | Businessworld Issue Dated 11-01-2016)
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