Maruti Suzuki India Ltd:Annual Report 2023-24 Analysis

Maruti Suzuki India Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History #

Maruti Suzuki India Ltd. (MSIL) was established in 1981 as Maruti Udyog Limited, a company owned by the Government of India. In 1982, Suzuki Motor Corporation of Japan entered into a partnership with the Indian government to produce affordable and reliable vehicles for the Indian market.

Headquarters Location and Global Presence #

MSIL’s headquarters is located in New Delhi, India. While primarily focused on the Indian market, MSIL also exports vehicles to various countries in Africa, Latin America, and Asia.

Company Vision and Mission #

While the explicitly stated vision and mission can evolve, generally MSIL aims to be the leader in the Indian automobile industry, providing affordable, reliable, and fuel-efficient vehicles to meet the diverse needs of its customers, while maximizing shareholder value and practicing sustainable business.

Key Milestones in Their Growth Journey #

• 1983: Production of the first Maruti 800.
• 1993: Introduction of the Maruti Zen.
• 2003: Suzuki increases its stake in Maruti Udyog Limited.
• 2007: Maruti Udyog Limited is renamed Maruti Suzuki India Limited.
• 2012: Manesar plant violence impacting production.
• 2015: Introduction of premium dealerships, “Nexa.”
• 2019: Production of the 20 millionth vehicle in India.
• Ongoing: Focus on electric vehicles and hybrid technology.

Stock Exchange Listing Details and Market Capitalization #

MSIL is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). As of November 2024, market capitalization can vary significantly; refer to real-time financial data for the most current information.

Recent Financial Performance Highlights #

Recent financial results can be found on the Maruti Suzuki India Ltd website or credible financial news sources. Analyze revenue, net profit, sales volume, and profit margins.

Management Team and Leadership Structure #

The management team typically consists of:

• Chairman
• Managing Director & CEO
• Executive Directors heading various departments (e.g., Sales & Marketing, Production, Finance, R&D).

Notable Awards or Recognitions #

Maruti Suzuki has won several awards for its products, manufacturing processes, and corporate governance. These include awards for:

• Best-selling car models.
• Fuel efficiency.
• Manufacturing excellence.
• CSR initiatives.

Their Products #

Complete Product Portfolio with Categories #

• Hatchbacks: Alto, Celerio, WagonR, Swift, Ignis, Baleno
• Sedans: Dzire, Ciaz
• SUVs: Brezza, Grand Vitara, Fronx, Jimny, Ertiga, XL6
• Vans: Eeco

Flagship or Signature Product Lines #

• Maruti 800 (Past): Historically significant as the car that brought affordable personal transportation to India.
• Alto: A consistent best-seller and entry-level car.
• Swift: A popular and stylish hatchback.
• Brezza: A successful compact SUV.

Key Technological Innovations or Patents #

• Smart Hybrid Technology (SHVS): Mild hybrid technology for improved fuel efficiency.
• S-CNG Technology: Factory-fitted CNG options.
• Automatic Gear Shift (AGS): AMT (Automated Manual Transmission) technology for easier driving.
• Suzuki Connect: Telematics and connected car features.

Manufacturing Facilities and Production Capacity #

MSIL has manufacturing plants in:

• Gurugram, Haryana
• Manesar, Haryana
• Hansalpur, Gujarat

The combined production capacity is significant, typically exceeding 2 million vehicles per year. Check for updated capacity figures as they continue to expand.

Quality Certifications and Standards #

MSIL adheres to international quality standards such as:

• ISO 9001 (Quality Management System)
• ISO 14001 (Environmental Management System)
• IATF 16949 (Automotive Quality Management System)

Unique Selling Propositions or Technological Advantages #

• Affordability: Maruti Suzuki is known for producing cars that are competitively priced.
• Fuel Efficiency: A strong focus on fuel-efficient engines and technologies.
• Reliability: Maruti Suzuki vehicles are generally known for their reliability and low maintenance costs.
• Extensive Service Network: MSIL has a vast service network across India.
• High Resale Value: Maruti Suzuki cars tend to hold their value well.

Recent Product Launches or R&D Initiatives #

• New SUV models: Continued expansion in the SUV segment with models like the Fronx and Jimny.
• Electric Vehicle Development: Actively developing and planning to launch electric vehicles.
• CNG Vehicle Expansion: Increased focus on CNG-powered vehicles.
• BS VI Compliance: Upgrading engines to meet Bharat Stage VI emission standards.

Primary Customers #

Geographic Markets (Domestic vs. International) #

The primary market for Maruti Suzuki is India. MSIL also exports vehicles to various countries, but the majority of sales are within the Indian market.

Major Client Segments #

• Individual buyers: Salaried employees, business owners, families.
• Commercial fleets: Taxi operators, rental car companies.
• Government organizations: Supplying vehicles for official use.

Distribution Network and Sales Channels #

• Extensive Dealership Network: MSIL has a wide network of dealerships across India.
• NEXA: Premium dealerships for higher-end models like the Ciaz, Baleno, and Ignis.
• Online Sales Platform: Digital sales channels for online bookings and purchases.
• Rural Sales Initiatives: Focused programs to reach customers in rural areas.

Major Competitors #

Direct Competitors in India and Globally #

• Hyundai Motor India: A major competitor with a wide range of models.
• Tata Motors: Growing presence in passenger vehicles, especially SUVs and EVs.
• Mahindra & Mahindra: Strong in the SUV segment.
• Kia Motors India: Rapidly gaining market share with stylish and feature-rich cars.
• Renault-Nissan: Presence with models like the Kwid, Triber, and Magnite.

Comparative Market Share Analysis #

Maruti Suzuki holds a significant market share in the Indian passenger vehicle market, but competition is intensifying.

Competitive Advantages and Disadvantages #

Advantages:

• Strong brand recognition and trust.
• Extensive service network.
• Fuel-efficient and affordable cars.
• High resale value.

Disadvantages:

• Slower entry into the EV market compared to some competitors.
• Perception of some models as being basic or lacking premium features.

How They Differentiate from Competitors #

• Price Point: Offers competitively priced vehicles.
• Fuel Efficiency: Markets fuel efficiency as a key benefit.
• Service Network: Largest service network in India.
• Resale Value: Known for high resale value.

Industry Challenges and Opportunities #

Challenges:

• Rising input costs and commodity prices.
• Increasing competition from domestic and international players.
• Stringent emission norms and safety regulations.
• Shift towards electric vehicles and the need for infrastructure development.

Opportunities:

• Growing Indian automotive market.
• Increasing demand for SUVs and EVs.
• Expansion in rural markets.
• Development of connected car technologies and services.

Market Positioning Strategy #

Maruti Suzuki positions itself as a provider of affordable, reliable, and fuel-efficient cars for the Indian mass market. The NEXA dealerships cater to customers seeking a more premium experience.

Future Outlook #

Expansion Plans or Growth Strategy #

• Electric Vehicle Focus: Significant investment in developing and launching EVs.
• SUV Segment Expansion: Increasing the range of SUV models to capture market share.
• Rural Market Penetration: Strengthening its presence in rural areas.
• Export Market Expansion: Exploring new export markets.

Upcoming Products or Innovations #

• Electric Vehicles: Launch of electric cars in the Indian market.
• Hybrid Technology: Further development and implementation of hybrid technologies.
• Connected Car Features: Enhanced connectivity and telematics features in its vehicles.

Sustainability Initiatives or ESG Commitments #

• Environmentally Friendly Manufacturing: Initiatives to reduce water consumption, waste generation, and carbon emissions in manufacturing plants.
• CNG Vehicles: Promoting the use of CNG-powered vehicles as a cleaner alternative to petrol and diesel.
• Renewable Energy: Increasing the use of renewable energy sources in its operations.

Industry Trends Affecting Their Business #

• Electrification: The growing demand for electric vehicles.
• Connectivity: Increasing adoption of connected car technologies.
• Autonomous Driving: Development of autonomous driving features.
• Shared Mobility: Rise of ride-sharing and car-sharing services.
• Sustainability: Increasing focus on environmental sustainability.

Long-Term Vision and Strategic Goals #

The long-term vision is to remain the leader in the Indian automobile market, while embracing new technologies, promoting sustainability, and adapting to the evolving needs of its customers. Key strategic goals include:

• Leading the transition to electric mobility.
• Strengthening its position in the SUV segment.
• Expanding its presence in rural markets.
• Enhancing customer experience through digitalization and connectivity.

Financial Analysis of Maruti Suzuki India Limited (MSIL) - FY 2023-24 #

Comprehensive Performance Overview #

3-Year Trend Analysis of Key Financial Metrics #

• Revenue: Total revenue increased by 20.97% in FY24 reaching ₹ 1,447,874 million.
• Profitability: Profit Before Tax (PBT) rose by 67.74%, reaching ₹ 170,404 million in FY24. Profit After Tax (PAT) showed a significant growth of 64.11%, increasing to ₹ 132,094 million.
• Operating EBIT Margin: Improved significantly to 9.9% in FY24.
• Return on Equity (RoE): Increased to 18.3% in FY24.
• Book Value per Share: Grew to ₹ 2,671 in FY24.
• R&D Expenditure: Increased to ₹ 9,135 million in FY24.
• Capital Employed: Rose to ₹ 839,820 million by the end of FY24.
• Debt to Equity Ratio: There is no net debt for FY24.
• Number of Vehicles Sold: Increased to 2,135,323 million units.

Business Segment Performance #

• Domestic Market: Sales volume increased by 8.52%, totaling 1,852,256 units. SUV segment showed the highest growth, increasing by 119%. MSIL commands nearly 75% of the volume in the CNG market.
• Export Market: Export volumes rose by 9.15%, achieving a record 283,067 units. The Company’s share in overall PV exports from India increased to 42%.
• Green Vehicles: Sales from green vehicles (CNG + Mild Hybrids + Strong Hybrids) contribution to overall sales increased to 42% in FY24 from 37% in FY23.

Major Strategic Initiatives and their Progress #

• Acquisition of Suzuki Motor Gujarat Private Limited (SMG): Completed, making SMG a wholly-owned subsidiary.
• Production Capacity Expansion: A fourth production line of 250,000 units announced at SMG, and a new greenfield facility in Gujarat with a capacity of a million units. Construction of a new manufacturing facility at Kharkhoda, Haryana, is progressing, aiming for an initial capacity of 250,000 units, eventually reaching one million units. The Manesar facility has also been expanded by 100,000 units.
• Product Portfolio Strengthening: Focus on strengthening the SUV product lineup, including the launch of new models like the FRONX, Jimny, and Invicto. Additionally, expanding the CNG product lineup and plans to introduce six Battery Electric Vehicles (BEVs) by FY 2030-31.
• Digitalization: Online car financing, with over 35% of customers financing their cars through this mode. Introduced the ‘Maruti Suzuki Smart Finance’ (MSSF). Over 6 lakh customers availed loans of over ₹ 45,500 crore in FY 2023-24.
• Cost Optimization Measures: Implementation of various cost optimization measures resulting in cost savings of ₹ 7,693 million.

Risk Landscape Changes #

• Increased Scale of Operations: Managing the rapid scaling of production to 4 million units per year by FY 2030-31 presents operational complexities.
• Supply Chain Disruptions: Addressed ongoing challenges in the supply of electronic components.
• Regulatory Risks: Strengthening processes to manage the increasing scale of business, and multi-dimensional regulatory landscape, and to ensure compliances.
• Cybersecurity and Data Privacy: Focus on safeguarding consumer and personal data with enhanced policies and technological solutions.

ESG Initiatives and Metrics #

• Environmental Performance:
  • Increased use of renewable energy, with solar power generation capacity reaching 43.2 MWp, and plans to expand to 78.2 MWp by FY 2025-26.
  • Avoided 2.73 million metric tonnes of CO2 emissions cumulatively since 2005-06 by using green vehicles.
  • Operationalized India’s first automobile in-plant railway siding at SMG. Increased use of rail transport.
  • Recycled 3,400 million liters of water and reused 100% of steel scrap generated.
  • Products are at least 92% recyclable and 98% recoverable.
  • 94% of Tier-1 supplier plants (by value) implemented ISO 14001 environmental management systems.
• Social Performance:
  • Provided over 1 million hours of training to the workforce.
  • Spent ₹ 1,104 million on Corporate Social Responsibility (CSR) initiatives.
  • Trained 384,605 persons in road safety at Institutes of Driving Training and Research (IDTR).
  • Covered over 730,000 people under the automatic evaluation of driving skills for driver’s license issuance.
  • Supported skill development programmes, benefiting over 17,300 students.

Management Outlook #

• Growth Strategy: Ambitious plan to scale up production to 4 million units per year by FY 2030-31.
• Decarbonisation: Commitment to support India’s net-zero emissions by 2070, using multiple powertrain technologies including BEVs, Hybrids, biofuels, and CNG.
• Operational Excellence: Continued focus on cost optimization, operational efficiency, and leveraging digital technologies.
• Industry Outlook: Expectations of lower PV growth for FY 2024-25, but with potential improvement depending on economic factors.

Comparative Analysis #

• MSIL’s market share in the passenger vehicle segment increased, outperforming the industry average growth rate.
• MSIL remains the largest exporter of passenger vehicles from India.
• MSIL’s average fleet CO2 emission is one of the lowest in India.
• MSIL is the first among the PV manufacturers in India to achieve the 2 million sales milestone.

Detailed Analysis #

Maruti Suzuki India Limited - Financial Analysis #

3-Year Comparative Analysis of Assets, Liabilities, and Equity #

Consolidated Balance Sheet Data

Significant Changes in Major Line Items (>10% YoY) #

• Capital Work-in-Progress: Increased significantly (85%) due to the construction of a new manufacturing facility at Kharkhoda in Haryana.
• Investments (Non-current): Increased by 8.4% due to management of surplus funds.
• Cash and cash equivalents: Increased by 49% due to increased profit and higher cash generation.
• Borrowings(current): Decreased by 97% mainly due to repayment of the working capital demand loan.
• Other Equity: Increased significantly due to the increase in retained earnings, and securities premium.

Working Capital Trends #

• Current Ratio: Improved from 0.6 to 0.8 indicating an increase in the Company’s ability to meet its current liabilities.
• Inventory Turnover: Increased from 28.8 to 32.1 reflecting improved operations management.

Asset Quality Metrics #

• Non-Performing Assets (NPAs): Not applicable as Maruti Suzuki is not a financial institution.
• Impairment: No significant increases in impairment provisions were noted for financial assets or other assets, suggesting stable asset quality.

Debt Structure and Maturity Profile #

• Borrowings: Only current borrowings of I 331 million are reported, suggesting a minimal reliance on debt financing.
• Lease Liabilities: Maturity analysis provided shows short-term and long-term obligations. The Company holds leases for land and buildings.

Off-Balance Sheet Items #

• Contingent Liabilities: The Company has disclosed contingent liabilities totaling I 186,268 million, I 180,431 million, and I 18,962 million for FY 2023-24, 2022-23 and 2021-22 respectively, mainly related to disputed taxes and duties, and other claims.
• Commitments: The Company has contractual commitments for capital expenditure and export obligations under EPCG scheme.
• Guarantees: No explicit mention of guarantees to subsidiaries, associates or joint ventures, other than general business commitments.

Operating Performance #

Income Statement #

Revenue Breakdown by Segment/Geography with Growth Rates #

• FY 2023-24 Domestic Sales: 1,852,256 units, an 8.52% increase year-over-year.
• FY 2023-24 Export Sales: 283,067 units, a 9.15% increase year-over-year.
• FY 2023-24 Total Sales Volume: 2,135,323, 8.6% increase vs FY23.
• FY 2023-24 Revenue:
  • Vehicles: I 1,170,404 million.
  • Spare parts/dies & moulds/components: I 178,974 million.
  • Other operating revenue: 59,948.
• Revenue by Geography
  • FY 2023-24 Domestic: I 1,229,808 million.
  • FY 2023-24 Overseas: I 179,518 million.
• Green Vehicle Sales (CNG + Mild Hybrids + Strong Hybrids): 42% of overall sales in FY 2023-24, up from 37% in FY 2022-23.
• CNG Vehicle Sales (India): 481,203 units in FY 2023-24, a 52% y-o-y increase.
• Contribution of sales from Non-Urban Markets: 45%

Cost Structure Analysis #

• FY 2023-24 Cost of Materials Consumed: I 459,397 million.
• FY 2023-24 Employee Benefit Expenses: I 54,784 million.
• FY2023-24 Total Cost of Raw materials and Components:
  • Steel Coils :197,177 MT
  • Non-ferrous castings: 39,154MT
• FY 2023-24 Depreciation and Amortization: I 30,223 million.
• FY 2023-24 Other Expenses: I 186,352 million (includes items like power and fuel, rent, repairs, insurance, and transportation).
• FY 2023-24 Royality: 49,080 million.
• FY2023-24 CSR Spent: 1,104 million.

Margin Analysis (with trends) #

• FY 2023-24 Operating EBIT Margin: 9.9% (up from 7.3% in FY 2022-23, 3.5% in FY22, 3.5% in FY21, and 5.3% in FY20).
• FY 2023-24 Net Profit Margin: 9.8% (up from 7.2% in FY 2022-23).

Operating Leverage #

• The increase in profit before tax (67.74%) being significantly higher than the increase in total revenue (20.97%) suggests positive operating leverage.

EPS Analysis (Basic/Diluted) #

• FY 2023-24 Basic EPS: I 431.08 (up from I 266.46 in FY 2022-23).
• FY 2023-24 Diluted EPS: I 431.08 (up from I 266.46 in FY 2022-23).
• Book Value per share FY24: is 2,671, up from 1,999.
• EPS Standalone(INR): FY24: 431, FY23: 266, FY22:125, FY21:140, FY20: 187.

Cash Management #

Cash Flow and Liquidity Analysis #

Detailed OCF, ICF, FCF Components (I million) #

FY 2023-24 #

• Operating Cash Flow (OCF): 168,011
• Investing Cash Flow (ICF): (118,648)
• Financing Cash Flow (FCF): (40,619)

FY 2022-23 #

• Operating Cash Flow (OCF): 108,146
• Investing Cash Flow (ICF): (88,205)
• Financing Cash Flow (FCF): (12,084)
• Detailed: Net profit before tax and adjustements.

FY 2023-24 OCF Drivers (I million) #

• Profit Before Tax: 174,245
• Depreciation and Amortization: 52,558
• Finance cost:1,936
• Interest income, Dividend income, Net loss on sale/ discarding of property, plant, and equipment, Net gain on sale of investments in debt mutual funds, Fair Valuation gain on investment in debt mutual funds. (Total): (36,543)
• Changes in Working Capital: (6,753)
• Income Taxes Paid: (35,557)
• Increase on trade receivables, (13,099)

FY 2022-23 OCF Drivers (I million) #

• Profit Before Tax: 104,382
• Depreciation and Amortization: 48,460
• Finance cost: 2,523
• Interest income, Dividend income, Net loss on sale/ discarding of property, plant, and equipment, Net gain on sale of investments in debt mutual funds, Fair Valuation gain on investment in debt mutual funds. (Total): (17,584)
• Changes in Working Capital: (10,807)
• Income Taxes Paid: (22,647)
• Increase on trade receivables, (12,703)

FY 2023-24 ICF Drivers (I million) #

• Payments for property, plant, and equipment, and CWIP: (89,162)
• Payments for intangible assets: (2,808)
• Proceeds from the sale of property, plant, and equipment: 446
• Payments for investments in associates/joint ventures/subsidiaries: (800)
• Net cash outflow from debt mutual fund transactions: (37,772)
• Payments for purchase of unquoted investments: (260)
• Investment/Proceed in fixed deposits with banks (net): (12,046)
• Interest received: 3,722
• Dividend received: 61

FY 2022-23 ICF Drivers (I million) #

• Payments for property, plant, and equipment, and CWIP: (78,341)
• Payments for intangible assets: (2,307)
• Proceeds from the sale of property, plant, and equipment: 1,087
• Net cash inflow from debt mutual fund transactions: (48,894)
• Payments for purchase of unquoted investments (1,020)
• Investment/Proceed in fixed deposits with banks (net): 38,082
• Interest received: 3,128
• Dividend received: 60

FY 2023-24 FCF Drivers (I million) #

• Short term borrowings, Principal elements of lease payment, Finance cost paid, Payment of dividen on equity shares: (40,619).

FY 2022-23 FCF Drivers (I million) #

• Short term borrowings, Principal elements of lease payment, Finance cost paid, Payment of dividen on equity shares: (12,084).

Working Capital Management Efficiency #

• FY 2023-24: Increase in working capital driven primarily by a decrease in trade payables and increase in trade receivables.
• FY 2022-23: Increase in working capital driven primarily by an increase in trade payables and increase in trade receivables.

Dividend and Share Buyback Trends #

• FY 2023-24: Dividend payment of I 27,187 million.
• FY 2022-23: Dividend payment of I 18,125 million.
• No share buyback mentioned.
• The Board recommended a final dividend of I125 per share.

Debt Service Coverage #

*Provided data reports a Debt Service Coverage Ratio of 491 for FY24 and 315 for FY23 indicating a very strong ability to cover debt obligations, but calculation details are missing. The reduction is largely due to repayments of working capital demand loan.

Liquidity Position and Cash Conversion Cycle #

• Current Ratio: 0.8 (FY 2023-24), 0.6 (FY 2022-23). An increase, but still indicates current liabilities exceed current assets.
• Cash and Cash Equivalents: Increased significantly to I 26,595 million (FY 2023-24) from I 17,852 million (FY 2022-23).
• Debtors Turnover: 34 (FY 2023-24), 42 (FY 2022-23).
• Inventory Turnover: 32 (FY 2023-24), 29 (FY 2022-23).
• Trade Payable days: 48 days (FY 2023-24), 45 days (FY2022-23).

Operational Metrics Analysis: 3-Year Trends #

Profitability Ratios #

• Return on Equity (ROE): FY24: 18.3%, FY23: 14.1%, FY22: 7.1%. Shows a significant improving trend.
• Operating EBIT Margin: FY24: 9.9%, FY23: 7.3%, FY22: 3.5%. Indicates an improving trend in operating profitability.
• Profit After Tax (PAT) Margin: FY24: 9.8%, FY23: 7.2%, FY22: 4.5%. A substantial increase indicates improved overall profitability.

Liquidity Metrics #

• Current Ratio: FY24: 0.8, FY23: 0.6. An increasing trend, still below 1, meaning it has more current liabilities than current assets.

Efficiency Ratios #

• Inventory Turnover Ratio: FY24: 32, FY23: 29. A higher ratio, that shows it sold its inventory faster.
• Debtors Turnover: FY24: 34, FY23: 42. a decline indicates a longer time taken to collect receivables.

Leverage Metrics #

• Debt/Equity Ratio: FY24: (0.005), FY23: 0.020. The declining Negative ratio indicates no net debt, that the company has more cash & equivalents than borrowings.
• Interest Coverage Ratio: FY24: 491, FY23: 315. Higher and increasing ratio, showing more ability to meet interest obligations.

Significant Deviations Highlighted #

• Substantial improvements in profitability ratios (ROE, EBIT Margin, PAT Margin) over the three-year period.
• The Company has no net debt and improved its interest coverage capability.
• The company had a higher Inventory Turnover during the year.

Maruti Suzuki India Limited (MSIL) Financial Analysis - FY 2023-24 #

Revenue and Profitability Metrics with Growth Rates #

• Total revenue increased by 20.97% year-over-year, reaching ₹ 1,447,874 million.
• Net sales increased by 19.9% year-over-year, reaching ₹ 1,349,378.
• Profit Before Tax (PBT) grew by 67.74% year-over-year.
• Profit After Tax (PAT) increased by 64.11% year-over-year.
• Net profit margin stood at 9.8% in FY 2023-24, up from 7.2% in FY 2022-23.
• Operating EBIT Margin increased from 7.3% to 9.9%.
• Return on Equity (RoE) increased from 14.1% to 18.3%.

Market Share and Competitive Position #

• MSIL maintained its position as the market leader in both the domestic PV market and in PV exports from India.
• MSIL’s domestic PV sales volume increased by 9.5%, outpacing the competition’s 8% growth.
• In the SUV segment, MSIL market share increased from approximately 12% in FY 2022-23 to about 21% in FY 2023-24.
• The share of green vehicle sales (CNG + Mild Hybrids + Strong Hybrids) in MSIL’s overall sales stood at 42%.
• The Company is India’s largest exporter of passenger vehicles, with a share of nearly 42%.
• MSIL has expanded its service network to 4,964 touchpoints across 2,519 cities in brick-and-mortar format and through mobile support.

Key Products/Services Performance #

• SUV sales volume experienced a 119% y-o-y growth.
• Sales of CNG vehicles grew by 52%.
• The company offers the largest fleet of CNG vehicles in India, with 14 models.
• The company holds a market share of nearly 75% of the overall CNG segment.
• MSIL’s service network attended over 25 million vehicles.
• SMART Finance disbursed over ₹ 45,500 crore worth of loans to over 6 lakh customers.
• MSIL has 43.2 MWp of installed solar power capacity.

Geographic Distribution and Market Penetration #

• MSIL expanded its network by 223 outlets, focusing on non-urban markets.
• The company has over 2,000 outlets in non-urban markets, accounting for ~45% of sales.
• The Company is expanding presence by introducing compact-format NEXA service workshops, aiming to cover non-urban markets.
• MSIL exports to nearly 100 countries, with top 5 export destinations: South Africa, Saudi Arabia, Chile, Mexico, and the Philippines.
• Top 5 export models were Baleno, Dzire, Swift, S-Presso and Grand Vitara.
• MSIL commissioned India’s first in-plant railway siding at its Gujarat facility, capable of dispatching 300,000 cars annually to 15 destinations across India.

Operational Efficiency Metrics #

• The Company’s Zero Liquid Discharge System is adopted at manufacturing and R&D facilities and uses 233 recharge wells for ground water rejuvenation.
• The Company’s water withdrawal intensity (M3/vehicle manufactured) reduced from 1.65 in FY'23 to 1.68 in FY'24.
• The Company recycled 3.43 Million m3 of water.
• The Company reused and recycled 92,587 MT of steel scrap and 6,000 MT of non-ferrous (aluminium) scrap.
• Rail transport was used for dispatching vehicles, avoiding 2,560 MT of CO2 emissions in FY 2023-24.
• Average recyclability of materials is >92% and recoverability is >98% for products manufactured by the Company.
• Employee suggestion scheme (‘Sujhav Sangrehika’) led to savings of ₹ 7,693 mn.

Growth Initiatives and Challenges #

• MSIL plans to scale up production to 4 million units per year by FY 2030-31, presenting challenges in managing increased operational scale.
• The Company acquired Suzuki Motor Gujarat Private Limited (SMG) to consolidate production units.
• The Company announced the construction of a fourth production line of 250,000 units at SMG.
• MSIL is constructing a new manufacturing facility at Kharkhoda, Haryana, with an initial capacity of 250,000 units, expandable to 1 million units.
• MSIL plans to launch its first Battery Electric Vehicle (BEV) in 2025, with a target of six BEVs by FY 2030-31.
• MSIL is exploring multiple powertrain technologies (BEVs, Hybrids, Biofuels, CNG) to reduce carbon footprint.
• The Company plans to increase the installed capacity of solar power generation to 78.2 MWp by FY 2025-26.
• MSIL has a robust digital transformation strategy, including online smart financing (Maruti Suzuki Smart Finance), virtual showrooms (NEXAVERSE and ARENAVERSE), and AI-based tools.
• The company invested ₹ 9,135 mn in R&D.
• MSIL will significantly scale up its production to 4 million units per year by FY 2030-31.

Risk Assessment #

Strategic Risks #

• Severity: High. Scaling production to 4 million units by FY 2030-31, nearly doubling current output, poses significant strategic challenges.
• Likelihood: High. The aggressive growth target (doubling output in 7-8 years, versus 40 years for the first 2 million) increases the probability of encountering execution challenges.
• Trend: Increasing. The shift in operational scale and complexity presents a growing strategic risk.
• Mitigation Strategies: A dedicated organization for FY 2030-31 goals has been established. Digitalization is leveraged for data-driven decision-making.
• Control Effectiveness: Partially effective. Early stages, measures in place, but success dependent on rapid adaptation and scaling.
• Potential Financial Impact: The failure to manage scaling could lead to substantial financial losses.

Operational Risks #

• Severity: High. Supply chain disruptions (natural disasters, human-made disasters) directly impact production capabilities.
• Likelihood: Moderate to High. The document references past disruptions (COVID-19, semiconductor shortages) and ongoing geopolitical tensions.
• Trend: Stable but with potential for volatility. Geopolitical and supply chain uncertainties persist.
• Mitigation Strategies: Alternate suppliers, increased focus on localization, temporary inventory increases, use of technology for prevention and suppression of fire.
• Control Effectiveness: Moderate. Mitigation strategies are in place, but external factors remain a threat.
• Potential Financial Impact: Major disruptions could halt production, leading to significant revenue losses.

Financial Risks #

• Severity: Moderate. Exposure to fluctuating commodity prices (steel, aluminum, etc.) and foreign exchange rates (Yen, USD, Euro) are mentioned, directly impacting input costs.
• Likelihood: High. Commodity prices and forex rates are inherently volatile.
• Trend: Stable, but subject to market conditions.
• Mitigation Strategies: Hedging instruments (forward contracts, options) are used, along with strategies such as bundling of sourcing and Value Analysis/Value Engineering (VA/VE).
• Control Effectiveness: Partially effective. Hedging mitigates some risk, but exposure remains.
• Potential Financial Impact: Unfavorable movements can impact profitability. Cost optimization measures are cited to mitigate inflationary impacts, with cost savings from employee suggestion schemes.

Compliance/Regulatory Risks #

• Severity: High. The document refers to “multidimensional and dynamic regulatory landscape.” Non-compliance can lead to fines, liabilities, and reputational damage.
• Likelihood: Moderate. Continuous evolution of regulations (product, environmental, safety, data privacy) requires ongoing adaptation.
• Trend: Increasing. Regulatory landscape is becoming more complex.
• Mitigation Strategies: Strengthened IT-enabled controls, early warning systems, real-time tracking mechanisms, continuous strengthening of systems, processes.
• Control Effectiveness: Appears effective. The Company states that, “The Company is compliant with all the applicable statutory compliances.”
• Potential Financial Impact: The penalties for non-compliance could be substantial, including potential liability.

Emerging Risks #

Cybersecurity Risks #

• Severity: High. The risk of cybercrime and downtime, information security threats.
• Likelihood: Increasing. Due to the increase in digitalization of sales and service processes.
• Trend: Growing. The expanding digital footprint and interconnected systems increase vulnerability.
• Mitigation Strategies: Establishment of a Security Operations Centre (SOC), sandboxing technology, vulnerability assessment, penetration testing, data leak prevention, and user awareness programs.
• Control Effectiveness: Moderate. Measures are proactive, but constant vigilance is needed.
• Potential financial impact: High.

Personal Data Privacy Risks #

• Severity: High. Potential for legal liabilities, reputational damage from breaches.
• Likelihood: Increasing. Due to expansion of business operations.
• Trend: Growing. Increased customer interaction points are creating more exposure.
• Mitigation Strategies: Implementation of policies, a governance structure, and technological solutions.
• Control Effectiveness: The Company is actively implementing measures.
• Potential Financial Impact: The penalties and customer compensations could be substantial.

Technological Disruption #

• Severity: High. The Company must adapt quickly to evolving technologies in order to satisfy the regulatory and customer demands.
• Likelihood: Increasing. The EV market and alternate fuels may disrupt the ICE market.
• Trend: Growing. The Company plans to expand into the EV market.
• Mitigation: Working to launch six BEVs by FY 2030-31, the Company has also started a pilot biogas plant at its Manesar Facility.
• Control Effectivenes: Moderate to high, the company is actively adapting to the change.
• Potential Financial Impact: The risk to missing out on a changing market and customer preference could be substantial.

Strategic Direction #

Long-Term Strategic Goals and Progress #

• Scale production to 4 million units annually by FY 2030-31.
• Increase exports to make India a significant global export hub.
• Acquired Suzuki Motor Gujarat Private Limited (SMG) to consolidate production.
• Launch first Battery Electric Vehicles (BEV) in 2025, with six BEV models by FY 2030-31.
• Achieve powertrain mix by FY30-31: BEV (15%), Hybrids (25%), and CNG, bio-fuels & conventional engines (60%).
• Increase renewable energy for manufacturing to 78 MWp by FY 2025-26.
• Increase vehicle dispatches using railways to 35% by FY 2030-31.

Competitive Advantages and Market Positioning #

• Market leader in Passenger Vehicles (PV) in India and largest PV exporter.
• Approximately 42% share of passenger vehicle exports from India in FY 2023-24.
• Nearly 75% of the volume share in the CNG vehicle market.
• Offers factory-fitted S-CNG technology for several products.
• SUV segments contributed to about 50% of PV sales in FY 2023-24.
• SUV market share increased from approximately 12% (FY 2022-23) to around 21% (FY 2023-24).
• Extensive nationwide network for vehicle servicing and repairs.
• Access to new-age technologies through Suzuki Motor Corporation.

Innovation Initiatives and R&D Effectiveness #

• R&D expenditure: ₹9,135 million in FY 2023-24 (up from ₹7,650 million in FY 2022-23).
• Filed 133 patents and granted 424 in FY 2023-24.
• 2,487 R&D engineers as of FY 2023-24.
• Introduced new-age technology features.
• Utilizes computer vision systems and AI-based technology in ADTT’s.
• Developed HAMS (Harnessing Auto Mobile for Safety) for evaluating driving license applicants.
• Sources lithium-ion battery packs from the TDSG facility for Mild Hybrid vehicles.
• Implemented technologies like Artificial Intelligence, Internet of Things, RFID.
• Organization to support supplier partners for quality improvement.

M&A Strategy and Execution #

• Acquired Suzuki Motor Gujarat Private Limited (SMG) in November 2023.
• Transaction executed through a share swap.
• Aligns with strategy to control all production facilities.

Management’s Track Record in Execution #

• Grew faster than the competition, strengthening market leadership in passenger vehicles.
• Achieved 48 MWp of solar power capacity from 26.3 MWp in FY 2022-23.
• Added 223 sales outlets and 400 service touchpoints.
• Became India’s first OEM to offer online end-to-end car finance service.
• In FY24, ~37% of customers financed their car using online mode.

Capital Allocation Strategy #

• Recommended a dividend of ₹125 per share for FY 2023-24.
• Installed capacity for solar power generation to 48.15 MWp by FY 2024-25, and 78.2 MWp by FY 2025-26
• Capital expenditures directed towards new model development, technology upgrades, and R&D.
• Investments in renewable energy projects (solar power) and waste management initiatives.
• Capital expenditure towards commissioning of renewable energy initiatives (solar power, biogas) was reported as ₹120.8 crore in FY 2023-24.
• Surplus funds are primarily invested in debt schemes of mutual funds and fixed deposits with banks.
• Capital allocated to expand and improve the sales and service network.

Organizational Changes and Their Impact #

• Acquisition of SMG expected to streamline operations and improve efficiency.
• A dedicated organization has been established to achieve the goals set for FY2030-31.
• Nearly 90% of Tier-I suppliers (by value) have implemented ISO-45001 based occupational health and safety management systems.
• Established a pilot biogas plant at its Manesar facility.
• Operationalised India’s first automobile in-plant railway siding at Suzuki Motor Gujarat Private Limited (SMG).
• Setting up Japan India Institute for Manufacturing (JIM) and by adopting 22 Industrial Training Institutes (ITIs) nationwide
• Operationalised India’s first automobile in-plant railway siding at Suzuki Motor Gujarat.

ESG Analysis of MSIL #

Environmental Metrics and Targets #

• MSIL aims to expand its installed solar power generation capacity to 78.2 MWp by FY 2025-26, up from 43.2 MWp in FY 2023-24.
• The Company avoided over 2.7 million metric tonnes of CO2 emissions since FY 2005-06 by deploying CNG, mild hybrid, and strong hybrid technologies.
• 42% of total sales in FY 2023-24 were from green vehicles (CNG, mild hybrids, strong hybrids), up from 37% in FY 2022-23.
• MSIL aims to launch its first Battery Electric Vehicle (BEV) in 2025 and add six BEVs to its portfolio in the Indian market by FY 2030-31.
• The share of captive solar power and sourced green electricity consumption increased from 6.9% in FY 2022-23 to 15.6% in FY 2023-24.
• Pilot Biogas plant commenced and will offset approximately 190 tonnes of CO2 per annum.
• MSIL achieved a 92% material recyclability rate and 98% recoverability rate for its manufactured vehicles.
• The Company reused 30% of sand requirements for sand cores in casting.
• MSIL recycled 3,400 million litres of water in its manufacturing facilities.
• There was a Zero use of groundwater at manufacturing and R&D facilities.
• 100% of steel scrap generated (92,587 MT) was sent for recycling.
• 14,985 MT of hazardous waste co-processed.
• Cumulative 9,200 MT of CO2 emissions were avoided using railway logistics for vehicle dispatches in the past ten years.

Social Responsibility Programs #

• MSIL spent I 1,104 million on Corporate Social Responsibility (CSR) in FY 2023-24.
• Social development programs were conducted across 28 villages.
• Over 100,000 people from over 400 nearby villages have received healthcare services from the multi-specialty hospital in Sitapur, Gujarat, since its inception.
• 26 water ATMs were set up to benefit over 37,000 households across 25 villages.
• The Company’s waste management program benefited over 10,800 households across ten villages.
• Over 4.8 million people have been trained in road safety in the last 22 years, including over 384,605 people trained in FY 2023-24.
• Over 730,000 people were covered under automatic skill evaluation.
• Over 13,400 youth were trained across 22 Industrial Training Institutes (ITIs) adopted by the Company.
• Japan-India Institute of Manufacturing provided training to 1,700+ student trainees since inception.
• Employee benefit expenses were I 54,784 million.
• 1,381,088 training person-hours were provided.
• The Company received 1,004,324 suggestions from employees.

Governance Structure and Effectiveness #

• The Board of Directors consists of 12 members.
• Board committees include Audit, Stakeholders Relationship, Corporate Social Responsibility, Nomination and Remuneration, and Risk Management.
• Nine Board meetings were held during FY 2023-24.
• The average attendance of Directors at Board meetings was 96.30%.
• Over 100 sessions on compliance education were conducted.
• Four complaints were received under the Prevention of Sexual Harassment (POSH) policy, all of which were closed as per the policy.
• There are 18 members in the internal committes related to POSH.
• The Company has a Whistle Blower policy.

Sustainability Investments and ROI #

• MSIL invested I 120.8 crore towards commissioning of renewable energy initiatives like solar power and biogas and has pledged to boost the investment approximately to INR 450 crore over the next three years, beginning with FY 2024-25.

ESG Ratings and Awards #

• MSIL has one of the lowest average fleet CO2 emission in India.
• ASSOCHAM Healthcare Summit and Awards 2023 Best CSR Excellence Award in Healthcare
• Golden Peacock Award for Excellence in Corporate Social Responsibility
• Responsible Business of the Year Award

Regulatory Compliance and Future Preparations #

• All tested vehicles met regulatory standards for Conformity of Production (COP) and In-Service tailpipe emissions (ISC).
• The Company is compliant with existing emission regulations, including BS-VI (Phase 2) and CAFE (Phase 2).
• The Company’s vehicles are already compatible with up to E20 fuel (20% ethanol blend).
• The company is working towards a new manufacturing facility at Kharkhoda in Haryana.
• 100,000 unit expansion at Manesar has been commisioned.
• Solar power generation increased to 48MWp from 26.3 MWp. 30MWp is in progress.
• Pilot biogas plant at Manesar started operating from June 2024 and is expected to be commissioned in 2025.
• Acquired Suzuki Motor Gujarat Private Limited (SMG).

Future Projections and Guidance #

Management Guidance and Assumptions #

• Management assumes India will be the third-largest passenger vehicle market with a lower growth rate in FY 2024-25.
• Management has prepared internal targets based on their assessment, which may have risks.
• Management expects a double-digit growth in sales volume.
• Management expects that the production capacity of 4 million units per year will make operating more complex.
• Management has stated, aligned with Suzuki, battery electric vehicles will represent 15% of sales by FY 2030-2031, hybrid will be 25% and CNG, biofuel and combustion engines will be 60%.
• Management expects exports to increase.
• Management assumes its strategies will allow it to perform above the market.

Market Growth Forecasts #

• India’s Passenger Vehicle (PV) market growth is expected to be lower in FY 2024-25 than in FY 2023-24.
• India’s PV market to remain healthy.
• The SUV segment’s contribution to PV sales increased, reaching approximately 50% in FY 2023-24.
• The CNG vehicle segment grew by 52% in FY 2023-24 over the previous year.
• The overall PV export from India grew 2%.

Planned Strategic Initiatives #

• The Company plans to scale up its production capacity to 4 million units per year by FY 2030-31.
• Expansion of product portfolio, with a focus on aspirational, environment friendly and safer products.
• Introduction of Battery Electric Vehicles (BEVs) in the Indian market in 2025 and plans to launch 6 by FY 2030-31.
• Launch of an Ethanol Flex Fuel Vehicle and exploration of Compressed BioGas (CBG) use.
• Introduction of products with robust hybrid powertrain technology.
• Expansion of the CNG product lineup.
• Increased focus on digital marketing and targeted marketing techniques.
• Expansion of warehouses and part distribution centers.
• Network expansion to reach customers and new markets.
• Scaling up the pre-owned car business.
• Increasing exports.
• Partnering with start-ups to co-create technological solutions.
• Pursuing multiple carbon footprint-reduction technologies.
• Pursuing Industry 4.0 to continuously improve product quality.
• Using data analytics for effective and efficient decision-making.

Capital Expenditure Plans #

• Construction of a new manufacturing facility at Kharkhoda, Haryana, with an initial phase capacity of 250,000 units, eventually reaching 1 million units.
• Investment of I 450 Crores in renewable energy projects.
• Construction of a fourth production line of 250,000 units at SMG.
• Setting up another greenfield manufacturing facility in Gujarat with a capacity of a million units.
• Setting up a in-plant railway siding in Manesar and Kharkhoda.
• Investment of I 1,208 million during FY2023-24 in renewable energy initiatives.

Efficiency Improvement Targets #

• Increasing the use of renewable energy, targeting 78.2 MWp of solar power generation capacity by FY 2025-26.
• Increasing the share of vehicle dispatches using railways to 35% by FY 2030-31.
• Implementation of innovative and alternative technologies to improve energy efficiency.
• Continuous effort to achieve high localization.
• Cost optimization through value analysis, value engineering and employee suggestion scheme.

Potential Challenges and Opportunities #

• Challenges:

  • Increased operational complexities due to scaling up production and multiple powertrain technologies.
  • Meeting evolving regulatory requirements on vehicle safety, emissions, and cybersecurity.
  • Supply chain disruptions, including potential shortages of electronic components.
  • Managing the risks associated with the increased scale of operations.
  • Maintaining compliance with a dynamic regulatory landscape.
  • Safeguarding consumer and personal data.
  • Risk related to existing and upcoming regulations.
  • Addressing the affordability issues in non-premium hatchback segment.

• Opportunities:

  • Growing preference for SUVs, providing an opportunity to strengthen product lineup and increase market share.
  • Expansion of the CNG network nationwide, creating increased demand for CNG vehicles.
  • Leveraging SMC’s partnership with Toyota Motor Corporation for export growth.
  • Co-creating technological solutions with start-ups to improve customer convenience and operational efficiency.
  • Contribution to a circular economy through end-of-life vehicle management and recycling initiatives.
  • Becoming an exporter of cars.

Scenario Analysis and Sensitivity to Key Assumptions #

• Scenario: Softening of Interest Rates, Inflation, and Fuel Prices: A positive impact on PV industry prospects is projected. This is directly related to the affordability factor influencing consumer purchasing power.
• Scenario: Geopolitical Situation Normalization: A positive effect on the PV industry is expected, reducing supply chain risks and promoting economic stability.
• Scenario: Successful Implementation of Growth Strategy: The Company anticipates achieving significant operational scale (4 million units per year by FY 2030-31) and increasing operational complexities, necessitating effective management of resources and stakeholder partnerships. The assumptions are that the strategy will be accepted.
• Assumption: Powertrain Mix by FY 2030-31: The projected mix (15% BEVs, 25% Hybrids, 60% CNG/Biofuels/ICE) assumes continued consumer preference for multiple powertrain technologies and government policies that support all alternative fuel technologies.
• Sensitivity: Deviation in interest rates, inflation, commodity prices, fuel prices or increased regulation could adversely affect the projected outcomes.
• Sensitivity: Changes in consumer preferences, away from the projected fuel type distribution, could pose a risk.
• Sensitivity: Failure to implement planned initiatives may lead to a negative impact on financial performance.

Audit & Compliance #

Audit and Regulatory Analysis #

Auditor’s Opinion and Qualifications #

• The auditor’s opinion on the standalone and consolidated financial statements is unmodified.
• The auditor’s report includes a modification stating that the accounting software used by the Company and one of its subsidiaries, did not have the feature of recording audit trail (edit log facility), or did not have the feature enabled, throughout the year.

Key Accounting Policies and Changes #

• The financial statements are prepared under the historical cost convention on an accrual basis, except for certain financial instruments measured at fair value.
• No new standards or amendments to existing standards notified by the Ministry of Corporate Affairs (MCA) were applicable from April 1, 2024.

Internal Control Effectiveness #

• The auditor’s report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.
• The Report notes use of Control Self Assesment.

Regulatory Compliance Status #

• The Company is compliant with all applicable laws, including labor, environmental, industrial, financial, IT, corporate laws, and regulations for listed companies under the Companies Act, 2013, and SEBI Regulations.
• The Company is compliant with Secretarial Standards SS-1 and SS-2.
• There were no significant non-compliances or sanctions imposed by regulatory authorities during the reporting period.

Legal Proceedings and Their Potential Impact #

• There are pending litigations related to Income Tax and Excise Duty, involving significant management judgment to estimate financial impact.
• There are ongoing appeals with the Competition Commission of India (CCI) regarding alleged anti-competitive practices, with penalties imposed but stayed pending appeal.

Related Party Transactions #

• The Company has a policy on related party transactions, and material transactions are disclosed.
• Significant transactions with related parties include purchases of goods from Suzuki Motor Corporation, Japan (SMC) (holding Company), and its subsidiaries.
• Sales of goods are also made to related parties, including fellow subsidiaries.
• SMG became a wholly owned subsidiary of the Company.

Subsequent Events #

• The Company acquired Suzuki Motor Gujarat Private Limited (SMG), making it a wholly-owned subsidiary. The consideration was discharged through the issuance of the Company’s equity shares to SMC on a preferential basis.

Analysis of Accounting Quality #

• The usage of accounting software not fullfilling requirments of audit trial feature poses a risk to the quality of financial record-keeping, and ability to ensure reliability and traceability.
• The assesment of uncertain tax positions involves significant judgement.

Regulatory Risk Assessment #

• The Company faces regulatory risks primarily from ongoing litigations with tax authorities, which could result in financial liabilities.
• Pending legal matters with the Competition Commission of India represent a regulatory risk related to anti-competitive practices.