Message from the Chairman
I have great pleasure in welcoming all our shareholders to this 43rd
Annual General Meeting of the Company. This is an occasion for shareholders to not only
learn about the performance of their Company during the previous year but also about the
prospects for the current year. It also provides them an opportunity to ask questions and
to convey their thoughts and suggestions to the management. It is thus a very important
component of corporate governance. The virtual format now enables shareholders from all
over the world to participate, something that was not possible a very few years ago. This
facility has added significantly to the value of these meetings.
The recent general elections were conducted peacefully and very
smoothly. All concerned deserve high praise for their role in that happening. Industry is
also happy that the policies of the last ten years will continue to be carried forward and
the reform process strengthened. Industrial growth does require stability of policies and
a predictable work environment. We expect that the government of Prime Minister Modi will
continue its emphasis on building infrastructure, maintaining fiscal prudence, keeping
inflation under control, implementing reforms that make manufacturing more competitive and
trusting the private sector. The favourable external environment that has been created
will further facilitate foreign direct investments and exports. Your Company is confident
of steady profitable growth under these conditions.
As is known to all of you FY 2023-24 was a year when your Company was
able to achieve its best results. The Company sold over 2 million vehicles in the year,
recording its highest-ever annual sales in its history. With exports of over 280,000
vehicles, the Company continued to be the top exporter for the 3rd consecutive
year. The Company registered highest ever revenue of over H1.4 lakh crores and a net
profit of H13,209 crores in FY 2023-24. The impact of Covid and the shortage of
semi-conductors were no longer relevant. The stock market appears to like what the Company
is doing, and our share price is reflective of that. Considering all factors, your Board
has recommended a dividend of H125 per share, an increase of H35 from the previous year.
Your Company has been the industry leader since 1986-almost for 40
years. Two generations have consistently placed trust in the Maruti brand. I believe that
one of the main reasons for this has been we have always endeavoured to align our
strategies and policies with national priorities and societal needs. Our belief has been
that the Company will benefit most if, while enhancing its competitiveness, the economic
and social needs of society are also met to the maximum extent possible. Thus, our
continued efforts to manufacture low-cost small cars has been in recognition of the
economic condition of a large majority of citizens and their aspiration to own a
comfortable and safe means of transport. Even as we produce more SUVs and higher cost cars
to cater to a different market segment, we will never forget the needs of the large
numbers who cannot afford expensive cars.
We were the first to start the production of CNG cars, because they
were more economical than petrol cars as well as environmentally cleaner. They suited
users with limited incomes and also met environmental objectives. With the government
giving high priority to building infrastructure for CNG distribution, sale of CNG cars has
been rising and we expect to sell about 600,000 such cars this year.
We were the first to extend our sales and service network to rural
areas and small towns. The intention was that people in these areas of the country should
get facilities similar to what was available to those dwelling in large cities. Now about
46% of our sales come from rural areas.
From its inception your Company decided to treat vendors as our
partners and have continually helped them improve all aspects of their business. The
country now has a well-developed auto component industry that had a turnover of H6.14 lakh
crores in 2023-24 and exported parts worth H1.75 lakh crores. Huge employment and wealth
have been created and the country and society have been the beneficiaries. The competitive
ability of your Company, and its performance, owe much to the support from the component
industry.
The same concept of partnership was extended to employees of the
Company and a new work culture was introduced. This is far more equitable than what
generally prevails in the country and is consistent with the needs of society. The work
culture has been a major factor in the level of excellence that your Company has attained.
A major national objective for the car industry is to reduce carbon and
green house emission and the dependence on imported fuel. Your Company has decided that
considering our economic and social environment and the availability of resources within
the country, the best strategy would be to offer to customers cars with different
technologies and at different price levels. We will be introducing electric cars in the
next few months. The ability to rapidly expand the acceptance of such cars would depend on
the pace of infrastructure development and reduction of the cost of electric cars. This
has to largely come from localisation of production and better technology. It is also
clear that pure petrol and diesel cars are the worst in terms of carbon and greenhouse gas
emission and consumption of fuel. Therefore, while electric cars use increases, customers
should be encouraged to buy cars using strong hybrid technology, or CNG or ethanol and
biogas. Pure petrol and diesel car use should be minimised. Hybrid cars improve fuel
efficiency by about 35% to 45% and help reduce the carbon and greenhouse gas emission by
25% to 35%. CNG cars are not as clean as hybrids but are better than petrol or diesel cars
and also do not use oil. India has a very large potential for developing biogas from
agricultural, animal and human waste. Biogas is completely renewable, has no import
content and is overall, carbon negative. Production of biogas would also lead to important
benefits to the environment. For example, the burning of paddy stubble could be
substantially reduced, and cleanliness levels increased. Your Company has started work on
a trial basis to produce biogas. We look forward to government policies that would result
in rapid development of this fuel. We are also working on modifying engines of cars and
presently can use petrol blended with 20% ethanol. Technology exists to enable cars to use
higher amounts of ethanol.
Some believe that your Company has been slow to manufacture electric
vehicles. We decided to adopt a more diversified approach to meeting national objectives
and did not want to put all our eggs in one basket. The government has also accepted that
in India there is need to use different technologies. Some States, like UP have already
taken steps in this direction. We now await a policy framework that would lead to the
promotion of all technologies that result in petrol and diesel cars being replaced by cars
using other technologies.
The Kharkhauda plant has been making progress as scheduled. The first
line of 250,000 units will start production within this financial year. We have received
valuable help from the Haryana government and our grateful for their cooperation.
I am sure that the people of the State and particularly those in the
area around Kharkhauda will benefit immensely from this investment.
The selection of the second location has not been finalised yet. The
model code of conduct did cause some delay. We hope that this task would be completed in
the very near future.
The 100,000 unit expansion at Manesar has been commissioned.
The solar power generating capacity of the Company is now 48 MWp.
Projects for 30 MWp are in progress.
We have setup a pilot biogas plant at Manesar which started operating
from Jun'24. We are establishing a biogas plant at Kharkhauda and it is expected to be
commissioned in 2025. Another biogas plant is being established in UP. In Gujarat, Suzuki
is in partnership with National Dairy Development Board (NDDB) and Banas Dairy to
establish biogas plants.
Your Company has become the largest exporter of cars from India. We
have about 42% share of the export of cars from the country. The target for this year is
export of 300,000 cars.
All these actions are consistent with the national objectives of
accelerating manufacturing activity, creating large employment opportunities, meeting
environmental targets and earning foreign currency. The efforts to increase our
competitive abilities would continue unabated.
Two of the independent directors, Shri D.S. Brar and Shri R.P Singh
retire at this AGM having completed ten years. They have made very substantial
contributions to the growth of the Company and Shri Brar, as Chairman of the Audit
Committee has been outstanding. I am personally very grateful for their role in the growth
of the Company. We have proposed the names of Ms. Anjali Bansal and Ms. Ireena Vittal to
replace them. Both are highly qualified, and I am confident will add great value to the
Company. Our gender composition of the Board will also improve. We are separately
considering how to increase women employees in the factories.
No Company can really have a motivated and productive work force unless
it provides absolutely safe and hygienic working conditions. Accidents in factories,
including fires, not only create conditions for human beings being hurt and lives
endangered but can also lead to serious disruption of production. We take safety and
environment as high priority areas and have been working to get to a zero-accident
situation not only in our factories but also in those of our vendors. I am happy to report
that continuous improvements are being made.
CSR activities continue to receive the attention of the Board and the
CSR committee of the Board. The amount of H91.68 crore that was required to be spent in
2023-24 was exceeded by H24.07 crore and has been carried over to 2024-25. In this year
the required expenditure is about H165 crore, the increase reflecting the higher
profitability last year. The Board has approved new village development activities in the
Kharkhauda area and would also start similar development works when the new site for the
next plant is chosen. A new activity being undertaken is to support agricultural
universities and research institutions in carrying out extension activities in villages,
so as to popularise the use of fermented organic manure. Organic manure is a byproduct of
biogas production, and its use would reduce use of chemical fertilizers and thereby the
production of greenhouse gases. In addition, use of organic manure would lead to improving
the quality of the soil and make for higher productivity. The government is fully
supportive of this initiative.
As we implement Maruti 3.0 it is evident that technology development
would play a critical role in our future. While Suzuki is going ahead with its own R&D
Company that will concentrate on the development of new technologies, we are strengthening
our own capabilities and would concentrate on the current conventional technologies. Our
engineering manpower has now become about 2,500. The Rohtak facility is fully functional.
We are also urging all our vendors to strengthen their own engineering capabilities,
reduce dependence on imports and accelerate exports.
The coming years will witness a large addition to MSIL employees as
production moves to the 4 million car mark. It would be necessary to ensure that the
quality of people recruited is the best possible and that the subsequent training leads to
strengthening the MSIL culture of team working and customer centricity. We are paying
special attention to this matter.
The future is exciting. The Prime Minister has set an ambitious goal
for 2047 and your Company is determined to do its utmost to help in achieving the targets
that have been set. With the support of all Suzuki Japan and our employees, vendors,
dealers and associates I believe we will be able to fully play our part. We will continue
to need the support of all of you, our valued shareholders.
Jai Hind.
R. C. Bhargava
Chairman