Company background Company profile
Management Shareholding pattern
Objective of Issue Financials
Requirements & Utilisation of funds Issue Details

 

Company background

Prior to Maruti Udyog`s incorporation, the Government of India (GoI) had, under the Acquisition Act, acquired the entire undertaking of Maruti. Maruti Udyog was incorporated on February 24, 1981, with the main object of acquiring and taking over from GoI the undertakings of Maruti. All the land and property of Maruti`s factory had been acquired by the Central Government under the Maruti (Acquisition and Transfer of Undertakings) Act, 1980 (The Acquisition Act).

Under The Acquisition Act, the Central Government has directed vide notification dated April 24, 1981, that the undertakings of Maruti and the right, title and interest will vest in the company known as Maruti Udyog on and from April 23, 1981.

The company`s main objects as set forth in its Memorandum of Association are:

• To acquire and take over from the GoI the right, title and interest in relation to the undertakings of Maruti as provided for in the appropriate enactment of GoI together with the liabilities of GoI so far as they are related to the undertakings of the said company.

• To carry on the business of manufacturers of, and dealers in, automobiles, motorcars, lorries, buses, vans, motorcycles, cycle-cars, motor, scooters, carriages, amphibious vehicles, and vehicles suitable for propulsion on land, sea, or in the air or in any combination thereof and vehicles of all descriptions, whether propelled or assisted by means of petrol, diesel, spirit, steam, gas, electrical, animal, or other power, and of internal combustion and other engines, chassis-bodies and other components, parts and accessories and all machinery, implements, utensils, appliances, apparatus, lubricants, cements, solutions enamels and all things capable of being used for, in, or in connection with manufacture, maintenance, and working of motors and other things or in the construction of any track or surface adapted for the use thereof.

• To carry on the business of garage keepers and suppliers of and dealers in petrol, electricity and other motive power for motors and other things.

• To carry on in the business of iron founders, mechanical engineers, and manufacturers of machinery, tool makers, brass founders, metal workers, boiler makers, mill rights, machinists, iron and steel converters, smiths, wood workers, builders, electroplaters, chromium platers, lacquerers, enamellers, painters, metallurgists, electrical engineers, and printers and to carry on any branch of manufacturing and engineering business.

Company profile

Maruti Udyog is a subsidiary of Suzuki Motor Corporation, the largest manufacturer of mini passenger vehicles in Japan since fiscal 1974, in terms of sales volumes, with a market share of 31.60 per cent in 2002, according to the Japan Mini Vehicles Association. Suzuki was also the eleventh largest vehicle manufacturer in the world and the fourth largest manufacturer in Japan in terms of worldwide sales volumes in 2000, according to Automotive Intelligence.

In 2002, Suzuki had a 22 per cent share of the market in Asia for vehicles exported from Japan, according to the Japan Automobile Manufacturers Association.

Maruti was ranked twentieth by Automotive Intelligence in terms of worldwide sales volumes amongst vehicle manufacturers. It has been the largest passenger car manufacturer in India since 1986. In the Indian passenger car market in fiscal 2002, it had the highest sales volumes of 3,39,964 cars and a market share of 58.60 per cent. The remaining market share was divided among approximately nine other manufacturers.

The company`s market share was more than three times the share of the manufacturer ranked second in terms of sales volumes for fiscal 2002, and exceeded the combined market share of other manufacturers by more than 40 per cent.

The company has a diverse product range which includes ten basic models with over 50 variants, of which nine models are manufactured by the company and one is imported from Suzuki, with prices ranging from approximately Rs 2,00,000 to approximately Rs 18 lakh. Its wide product range is supported by an extensive sales and service network in India.

The company manufactures cars for most segments of the Indian passenger car market, and is the leading manufacturer of cars priced below: Rs 5,00,000 comprising segments A and B, which is referred as the small car segment. The small car segment constituted more than 86 per cent of the Indian passenger car market in fiscal 2002. In fiscal 2002, the company had sales volumes of 3,24,371 cars in the small car segment, which resulted in a market share in that segment of 64.90 per cent.

The company intends to continue focus on the small car segment, which it expects will continue to be the largest segment in the Indian passenger car market in the foreseeable future.

Management

Details of Directors

Shinzo Nakanishi, chairman, age 55 years, was appointed as a non-retiring part-time director with effect from May 2002. Nakanishi joined Suzuki in 1971. Nakanishi is presently director (board member) and executive general manager, overseas automobile marketing in Suzuki.

Jagdish Khattar, managing director, age 60, completed his Bachelor in Arts (with Honours) degree from St Stephen`s College, University of Delhi and his LLB from Delhi University. Khattar has been an officer of the Indian Administrative Service and has more than 37 years of experience. Prior to joining the company, he served in the following positions: as an officer of the Uttar Pradesh State Government from 1965-1979; as director of the Tea Board of India, London from 1979-1983; as chairman of the Tea Board, Ministry of Commerce, from 1983-1984; as chairman and managing director of Uttar Pradesh State Cement Corporation from 1984-1986; as secretary and then chairman of the Uttar Pradesh Road Transport Corporation, Transport Department from 1986-1988; and as joint secretary in the ministry of steel, GoI from 1988-1993.

Khattar is currently the vice-president of Society of Indian Automobile Manufacturers.

Khattar joined the company on July 01, 1993 as director (marketing). He was appointed second managing director on July 01, 1999 and was nominated by GoI and appointed as managing director and chief executive officer on August 18, 1999. Prior to being appointed as the second managing director, Khattar has held the positions of executive director (marketing) and director (marketing).

Pursuant to the revised joint venture agreement, Khattar resigned and was immediately re-appointed as managing director nominated by Suzuki on May 30, 2002.

Yuichi Nakamura, joint managing director, age 62, is a Graduate from the Department of Technology, Shizuoka University. Nakamura has 40 years of experience in automobile production and engineering. He started his career with Suzuki in 1963. He was appointed plant manager of the Kosai Plant in 1989. He was in charge of the overseas production engineering division from 1991.

He was appointed joint managing director of Maruti in 1992. In 1993, Nakamura was appointed to the Suzuki board, and in 1995, he returned to the Suzuki head office in Japan (hence vacating the seat of joint managing director) and was made director and deputy executive general manager of the manufacturing division of Suzuki. He was later promoted to managing director and executive GM in 1997, and then to senior MD and executive GM of the manufacturing division in 2000.

Nakamura rejoined the Maruti Board on September 21, 2001, as joint managing director. He is responsible for the materials and engineering functions of the company.

Kinji Saito, director (marketing and sales), age 44, is a Graduate from the Hiroshima University. Saito has more than 21 years of experience in the automobile industry, through various roles in marketing research, product and sales planning, and marketing at Suzuki. Saito has been involved with the marketing aspect of Suzuki`s Indian market operations since 1995, before becoming head of Suzuki`s representative office in India in 1999.

Saito joined Maruti on May 30, 2002. He is responsible for marketing and sales functions of the company.

Shinichi Takeuchi, director (production), age 55, is a Graduate from the Department of Technology, Shizuoka University, Japan. Takeuchi has more than 32 years of experience in production engineering in the automobile industry. Takeuchi joined Suzuki in 1970. In 1989, he was appointed deputy manager of the production engineering division of Suzuki.

He was made deputy general manager in the production and engineering division in 1995, before being transferred to the Kosai Plant in 1997 as general manager. He was appointed as plant manager of the Kosai Plant in 2001. Takeuchi joined the company on September 27, 2001. He is responsible for the production activities of the company. Takeuchi is also the occupier of the factory under the Factories Act, 1948.

Motohiro Atsumi, director (finance), age 40, is a Graduate from the Department of Administration Engineering at the Keio University, Japan. Atsumi has over 17 years of experience in the automobile industry, in purchasing and finance. He joined Suzuki in 1986 and was assigned to the purchasing department. In 1992, he was transferred to the accounting department and appointed assistant manager in 1996 and deputy staff manager in 2002.

Atsumi joined the company on September 16, 2002. As head of the finance division and as a specialist in costing, he is responsible for finance related activities.

Osamu Suzuki, age 73 years, is the chairman and chief executive officer of Suzuki Motor Corporation, Japan. Suzuki was appointed as a director with effect from May 24, 1983.

Hirofumi Nagao, age 50 years, was appointed as a retiring part-time director with effect from May 30, 2002. Nagao joined Suzuki in 1978. Nagao is currently the general manager (China/West Asia automobile marketing division), overseas automobile marketing division II in Suzuki.

V K Malhotra, age 56 years, is an additional secretary and financial adviser, ministry of heavy industries and public enterprises, GoI. Malhotra is an IAS officer. Malhotra was re-appointed as a retiring part-time director with effect from September 20, 2002.

S V Bhave, age 54 years, is a joint secretary, ministry of heavy industries and public enterprises, GoI. Bhave is an IAS Officer. Bhave was appointed as a retiring part-time director with effect from March 25, 2003.

Shareholding pattern

Shareholding pattern of the company before and after the offer:

Before the offer, Suzuki holds 54.20 per cent in the company and the Government the balance 45.80 per cent. Post-offer, Suzuki`s stake will remain the same, while the Government`s will fall to 20.80 per cent. With this, the public stake in the company will stand at 25 per cent.

Objective of Issue

This being an offer for sale, the objects of the offer are to list the equity shares of the company and carry out the sale of 7,22,43,300 equity shares of Rs 5 each by the selling shareholder.

Financials

I. SUMMARY OF PROFIT AND LOSS ACCOUNT, AS RESTATED

(Rs. In Millions)

For the period April 1, 2002 to December 31, 2002

Financial Year ended March 31, 2002

Financial Year ended March 31, 2001

Financial Year ended March 31, 2000

Financial Year ended March 31, 1999

Financial Year ended March 31, 1998 *

Income/ Revenue

 

 

 

 

 

 

Sales:

 

 

 

 

 

 

Of Products manufactured by the Company

60892

85153

84399

88414

75051

79108

Of Products traded in by the Company

2775

5656

4888

4737

2763

2958

 

63667

90809

89287

93151

77814

82066

Other Income/ Revenue

2543

3294

3246

3574

3992

2714

Total

66210

94103

92533

96725

81806

84780

Expenditure

 

 

 

 

 

 

Consumption of Raw Materials & Components

37299

53882

54734

52225

41034

40316

 

 

 

 

 

 

 

Cost of Spares/ Dies & moulds sold

2038

4568

4084

3936

2126

2388

 

 

 

 

 

 

 

Consumption of Stores

280

458

622

651

581

622

Excise Duty

13044

20132

22118

23256

19186

20264

Employees Remuneration & Benefits

1536

2289

2003

1873

1726

1574

Manufacturing/ Administrative and other expenses

2409

3420

3222

3272

2586

3095

Selling & Distribution expenses

4071

4821

4021

4252

3811

2758

Financial expenses

449

764

746

668

560

605

Provision for Contingencies

82

318

141

549

303

1764

 

 

 

 

 

 

 

Depreciation

2413

3429

3223

2631

1912

1864

Deferred Revenue Expenditure charged off

287

324

197

163

78

58

 

 

 

 

 

 

 

Less: Vehicles for own use

42

69

118

88

66

53

 

63866

94336

94993

93388

73837

75255

(Accretion)/ Decretion to Work-in-progress and Finished Goods

702

-1419

203

-513

126

-160

Total

64568

92917

95196

92875

73963

75095

 

 

 

 

 

 

 

Net profit before extraordinary items & prior period adjustments.

1642

1186

-2663

3850

7843

9685

Add: Net prior period adjustments

(15)

(3)

(29)

1

(2)

88

Profit/(Loss) before tax

1627

1183

-2692

3851

7841

9773

Less: Taxation – Current

148

138

2

550

2611

3254

Less: Taxation – Deferred

550

-

-

-

-

-

Net Profit/(Loss) after tax as per audited statement of accounts (A)

929

1,045

-2,694

3,301

5,230

6,519

Adjustment on account of changes in accounting policies [Refer IV(ii)(1)]

-

(362)

1,029

(753)

(31)

1,166

Impact of material adjustments and prior period items [Refer IV(ii)(1)]

(324)

202

92

(111)

247

(137)

Total Adjustments (B)

-324

-160

1,121

-864

216

1,029

Adjusted Profit/ (Loss) (A+B)

605

885

-1,573

2,437

5,446

7,548

Transfer from Investment allowance reserve

-

-

-

13

22

158

Carry forward Profit/(Loss) from previous year

23,058

22,489

25,093

22,625

18,142

12,599

Add: Accounting policy changes and prior period adjustments pertaining to previous years **

-

-

-

-

-

106

Profit available for appropriation

23,663

23,374

23,520

25,075

23,610

20,411

Less:

 

 

 

 

 

 

Debenture Redemption Reserve

-

176

-

-

-

-

 

 

 

 

 

 

 

General Reserve

-

105

-

332

530

670

Proposed Dividend

-

397

-

331

397

397

Corporate Dividend Tax

-

-

2

73

44

40

Deferred Tax adjusted in General Reserve ***

-

(362)

1,029

(754)

14

1,162

Profit/ (Loss) transferred to Balance Sheet

23,663

23,058

22,489

25,093

22,625

18,142

II. SUMMARY OF ASSETS AND LIABILITIES, AS RESTATED

The assets and liabilities of the Company as at the end of each financial year i.e. March 31, 2002, 2001, 2000, 1999, 1998 audited by us and presented to the members and as at December 31, 2002 prepared and approved by the Board of Directors and examined and found correct by us and after making such adjustments/ regroupings and subject to the notes appearing hereinafter are as set out below:

(Rs. In Millions)

 

31-Dec-2002

31-Mar-2002

31-Mar-2001

31-Mar-2000

31-Mar-1999

31-Mar-1998

A. Fixed assets:

 

 

 

 

 

 

Gross Block

45224

43847

38667

34999

23636

18172

 

 

 

 

 

 

 

Less: Accumulated Depreciation

21925

19546

16196

13242

10618

8717

 

 

 

 

 

 

 

Net Block

23299

24301

22471

21757

13018

9455

Add: Capital Work in Progress

90

724

3684

2342

1105

835

 

 

 

 

 

 

 

Total

23389

25025

26155

24099

14123

10290

B. Investments:

10632

968

955

3974

4845

9695

C. Current Assets, Loans & Advance:

 

 

 

 

 

 

Inventories

5344

6811

8655

9902

5784

5758

Sundry Debtors

5960

8393

6755

4663

2766

2614

Cash & Bank balances

229

719

876

317

8169

1335

Other Current Assets

605

479

716

1039

1079

994

Loans & Advances

3544

4604

5508

4225

5364

5146

Total

15682

21006

22510

20146

23162

15847

D. Liabilities & Provisions:

 

 

 

 

 

 

Current Liabilities & Provisions

13515

14199

12504

14095

15027

13795

Deferred Tax (Asset)/Liability

1615

1065

703

1732

978

992

Secured Loans

3115

3951

5615

864

218

287

Unsecured Loans

1440

2609

5506

4597

749

549

 

 

 

 

 

 

 

Total

19685

21824

24328

21288

16972

15623

E. Net Worth (A+B+C-D)

30018

25175

25292

26931

25158

20209

Net Worth Represented By

F. Share Capital

1445

1323

1323

1323

1323

1323

G. Reserves and Surplus

Capital Reserve

15

15

15

15

15

14

Share Premium

4241

373

373

373

373

373

Investment Allowance Reserve

-

-

-

-

13

35

Debenture Redemption Reserve

176

176

-

-

-

-

General Reserve

1422

1422

1679

650

1072

528

Profit & Loss Account

23663

23058

22489

25093

22625

18142

Total

29517

25044

24556

26131

24098

19092

H. Miscellaneous Expenditure to the extent not written off

944

1192

587

523

263

206

I. Net Worth (F+G-H)

30018

25175

25292

26931

25158

20209

Requirements & Utilisation of funds

The company will not receive any proceeds from the offer since the government will receive the same on the sale of its 25 per cent stake in Maruti.

Issue Details

7,22,43,300 equity shares of Rs 5 each will be offered to the public. Sebi has granted its approval for retention of over-subscription over and above the limit of 10 per cent.

Of the above, 4,33,45,900 equity shares will be allocated on a discretionary basis to qualified institutional buyers, 1,08,36,500 equity shares to wholesale investors and 1,80,60,900 to retail investors.

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