MARUTI SUZUKI INDIA Share price

OUR BUSINESSUnless otherwise indicated all financial and statistical data relatingto the automobile industry in the following discussion are derived fromeither the CRIS INFAC Annual Review of 2001 or 2002 or the CRIS INFACCars and Utility Vehicles Review and Outlook dated May 2003. Thesedata have been rec/assified in certain respects for purposes ofpresentation. The references to prices of our products in this sectionare to the ex-showroom price in Delhi. For more information see"Certain Conventions; Use of Market Data" on page H of this Red HerringProspectus.OverviewWe are a subsidiary of Suzuki Motor Corporation the largestmanufacturer of mini passenger vehicles in Japan since fiscal 1974 interms of sales volumes with a market share of 31.6% in 2002 accordingto the Japan Mini Vehicles Association. Suzuki was also theeleventh-largest vehicle manufacturer in the world and thefourth-largest manufacturer in Japan in terms of worldwide salesvolumes in 2000 according to Automotive Intelligence. In 2002. Suzukihad a 22% share of the market in Asia for vehicles exported from Japanaccording to the Japan Automobile Manufacturers Association.Marutiwas ranked twentieth by Automotive Intelligence in terms ofworldwide sales volumes amongst vehicle manufacturers. We have beenthe largest passenger car manufacturer in India since 1986. In theIndian passenger car market in fiscal 2003 we had the highest salesvolumes of 330013 cars and a market share of 54.6%. The remainingmarket share was divided among approximately nine other manufacturers.Our market share was more than three times the share of themanufacturer ranked second in terms of sales volumes for fiscal 2002and exceeded the combined market share of other manufacturers by morethan 40%.We have a diverse product range that includes ten basic models withover 50 variants of which nine models are manufactured by us and oneis imported from Suzuki with prices ranging from approximatelyRs.200000 to approximately Rs. 1.8 million. Our wide product range issupported by an extensive sales and service network in India. Wemanufacture cars for most segments of the Indian passenger car marketand are the leading manufacturer of cars priced below Rs.500000comprising segments A and B to which we refer as the small carsegment. The small car segment constituted more than 84% of the Indianpassenger car market in fiscal 2003. In fiscal 2003 we had salesvolumes of 313905 cars in the small car segment which resulted in amarket share in that segment of 62%. We intend to continue to focus onthe small car segment which we expect will continue to be the largestsegment in the Indian passenger car market in the foreseeable future.Our competitive strengthsWe believe we are well positioned to maintain and enhance ourleadership position in the small car segment in India while continuingto offer products in most segments of the Indian market on account ofour competitive strengths which include the following:? Expertise in small car technology. As a subsidiary of Suzuki we haveaccess to globally respected technology in the small car segment. Wehave the advantage of Suzuki's expertise in all aspects of small cartechnology and design with respect to our products our manufacturingprocesses and business practices the development of our supply chainand the training of our personnel.? Extensive product portfolio. Our diverse product range includes carsin segments A B and C and utility vehicles. We manufactured five outof the ten models that were sold in the combined A and B segments inIndia in fiscal 2003. We are the only manufacturer of cars in segment A(priced below Rs.300000) where we have two models the Maruti 800 andthe Omni. The Maruti 800 has been the largest selling car in India forseveral years and continued to have the highest sales volumes of anymodel in fiscal 2003 with a market share of 23.9%. The Omni aversatile vehicle that can seat more passengers than the Maruti 800 orbe used as an ambulance or cargo vehicle had a market share of 8.3% infiscal 2003. We are also the only manufacturer to sell three distinctmodels the Zen the Alto and the WagonR in segment B (priced betweenRs.300000 and Rs.500000). We believe that our dominance in segment Aand extensive product range in segment B enables us to offer thecustomer a wider choice in the small car segment than any of ourcompetitors. In addition the absence of other manufacturers in segmentA gives our dealers greater flexibility in promoting models in segmentB.? Quality products. In November 2001 we were one of the firstautomobile manufacturers in the world to receive the ISO 9001:2000certification. We began to export products in 1988 primarily in orderto benchmark our products against international quality standards. Wehave exported products to approximately 70 countries includingcountries in Western Europe. Our products for export are manufacturedusing the same assembly line as our products for the domestic market.? Extensive sales and service network. We believe that we have thelargest network of dealers and service centers amongst carmanufacturers in India. As of March 31 2003 we had 178 authorizeddealers with 243 sales outlets in 161 cities. We estimate our car pareto be in excess of 3.5 million vehicles. To service this car pare atMarch 312003 we had 342 dealer workshops and 1545 Maruti AuthorizedService Stations or MASSs which covered 898 cities in India backed byExpress Service Centers on 30 highways across the country. In additionto the distribution of our cars our dealership network is a criticalresource in our efforts to provide customers with a "one-stop shop" forautomobiles and automobile-related products and services such asautomobile finance automobile insurance Maruti-certified pre-ownedcars available for purchase and leasing and fleet management in orderto promote customer loyalty.? Brand strength. We have been present in the Indian market for almosttwenty years and have built our brand on the basis of the values oftrust and reliability. Most of our principal competitors have beenpresent in the Indian passenger car market for a significantly shorterperiod. Certain manufacturers have ceased to manufacture certainproducts shortly after introducing them or have left the marketaltogether. In contrast we continue to support the maintenance of ourproducts. This has contributed to the strength of our brand. In 20002001 and 2002 J.D.Power Asia Pacific Inc. ranked us No. 1 in theIndia Customer Satisfaction Index which assesses customer satisfactionwith product quality and dealer service. We believe that this was thefirst time that a volume leader in the automobile industry anywhere inthe world was ranked first on the JD Power Customer Satisfaction Index.NFO Automotive's 2002 Total Customer Satisfaction Survey ranked Marutiproducts as No. 1 in the "Economy" "Premium Compact" and "EntryMid-size" segments respectively for 2002.? Integrated manufacturing facility. Our manufacturing facilitycomprises three integrated plants with flexible assembly lines locatedat Gurgaon in the northern state of Haryana. Our facility has advancedengineering capability and each plant is upgraded on an ongoing basisto improve productivity and quality. As a result our first plant setup in fiscal 1984 is technologically at par with our newer plants andis also used in the production of our new models. We believe that weare one of the most efficient among the vehicle-manufacturingfacilities of Suzuki's subsidiaries outside Japan in terms ofproductivity measured as the ratio of number of vehicles produced tonumber of employees. We have an installed capacity of 350000 vehiclesper year which is the highest among passenger car manufacturers inIndia and among the passenger car manufacturing facilities of Suzuki'ssubsidiaries outside Japan. We have consistently produced in excess ofour installed capacity in the five fiscal years ended March 31 2003.We believe that we would be able to expand our production to 500000cars per year with minimal additional capital expenditure. This wouldenable us to benefit from significant economies of scale.? Strong vendor base and higher rates of localisation. We work closelywith our vendor base for the supply of raw materials components andspare parts of our products. In order to improve quality and generateeconomies of scale we have reduced the number of our vendors ofcomponents in India from 370 as of March 31 2000 to 299 as of March31 2003 and intend to continue to reduce the number of our vendors.113 of our vendors at March 312003 were in technical collaborationwith foreign entities. As of the same date we had strategic equityinterests through joint venture agreements in 13 of our vendors whotogether supply a substantial portion of our purchases of components. Anumber of our vendors are our dedicated suppliers in that we accountfor a majority of their turnover. Vendors located within a radius of100 kilometres from our facility supply the majority of our components.The production systems of our vendors are generally aligned to our needfor a reliable and timely supply of components that meet our qualityrequirements. This has enabled us to increase the proportion oflocally-sourced lower-cost components in our models a concept werefer to as localisation. We have been able in collaboration with ourvendors to increase the rate at which we are able to localiseproduction of our new models over time. This has helped us reduce thecost of our components.? Ski/led labour and experienced management. Our highly-skilled labourforce has become increasingly productive in terms of vehicles producedper employee and receives training on an ongoing basis includingtraining by Suzuki. As of March 31 2003 1900 of our employees hadbeen trained at Suzuki's facilities in Japan. We have been present inthe Indian passenger car market for a significantly longer period thanmost of our principal competitors. As a result we have been able tobuild a highly-experienced management team that is familiar withconditions in the Indian passenger car market. For instance ourManaging Director has almost ten years of experience with us and mostof the heads of our divisions have more than 15 years of experiencewith us.? Capita/resources. At March 31 2003 we had cash and bank balancesand current investments amounting to Rs.10057 million. As of the samedate we had relatively low levels of outstanding indebtedness in theamount of Rs.4560 million. As a result we have relatively lowinterest expense and flexibility to raise funds if necessary for ourworking capital and capital expenditure in the future.Our Principal ObjectivesAs the leading manufacturer in the small car segment of the Indianmarket we have the following principal objectives:? To strengthen our leadership position in the small car segment of theIndian market;? To continue to expand the size of the Indian market for small cars bystrengthening and expanding our dealer network and making automobilefinancing available at competitive rates; and? To continue to benchmark ourselves against improving globalmanufacturing marketing and other practices and standards strive toincrease customer satisfaction through quality products and newinitiatives and promote the financial strength of our dealer network.Our Business StrategyWe intend to continue to focus on the small car segment while offeringproducts in most segments of the Indian passenger car market. We aim toachieve our principal objectives by pursuing the following businessstrategies:Maintain and. enhance our product range. We intend to utilize Suzuki'sexpertise in small car technology to produce new variants of ourexisting models and to upgrade our products with contemporarytechnology and features. We plan to increase the number of variants weoffer of existing models at different prices in the A and B segments.We continue to explore opportunities to launch new models in differentsegments across the Indian passenger car market.Increase reach and penetration. We plan to continue to utilize ourextensive sales and service network to increase the reach in terms ofgeographical spread and penetration in terms of sales volumes of ourproducts across India. Wecontinue to assist our existing dealers inenhancing their performance and profitability by suggestingimprovements such as increasing the number of sales executivesemployed at dealerships. Currently our wide network of MASSs primarilyprovides after- safes service. We plan to use our MASSs that arelocated in some of the more remote areas of India as sales outlets toincrease our reach and penetration in those areas. We also aim toexpand our sales and service network by increasing the total number ofour authorized dealers and MASSs and achieving wider coverage in termsof geographical area. We seek to strengthen our sales network in areaswhere we identify potential for improvement in our sales volumes.Increase availability of automobile finance. We continue to seekopportunities to expand the size of the Indian passenger car marketespecially in the small car segment. Since January 2002 we have madeavailable through our dealers finance products of eight selectfinance companies under the brand "Maruti Finance". We aggregate thefinance products provided by these companies to offer uniform financingconditions to the customer at Maruti dealerships. This increases thetransparency of the financing transactions which we believecontributes to customer satisfaction and confidence in our brand. Wehave recently entered into an agreement with the State Bank of Indiaor SB1 pursuant to which SBI will offer financing on competitive termsfor the purchase of our products using its network of more than 9000branches across India. We expect that this will promote demand for ourproducts among SBI's vast customer base and expand the size of thepassenger car market in India.Secure repeat purchases by offering a "360 degree customer experience".On the basis of our belief that securing repeat purchases from anexisting customer requires less expenditure than acquiring a newcustomer we aim to provide customers with a "one-stop shop" forautomobiles and automobile-related products and services. We intend touse our extensive sales and service network to make available to ourcustomers a wide range of Maruti-branded services at different stagesof ownership a concept we refer to as the "360 degree customerexperience". We believe that this will help secure repeat purchases ofour products by existing customers and increase the revenue of oursales network. To this end we have launched several new businessinitiatives to make available through third party service providersand dealers under the "Maruti" brand name the following products andservices:? automobile insurance;? automobile finance;? Maruti-certified pre-owned cars available for purchase;? leasing and fleet management;? accessories; and? extended warranties.Continue to benchmark our manufacturing capabilities. We aim to furtherimprove our operating efficiencies by striving to align ourselves withSuzuki's premier manufacturing facility its Kosai plant in Japan byfiscal 2005. We have recently acquired the capability to conduct minorand major facelifts to our models and upgrade our products in terms oftechnology or features. As part of Suzuki's plans to make Maruti itsresearch and development center for cars in Asia (outside Japan) weexpect to have full model change capability by fiscal 2008. Byutilizing advanced manufacturing techniques and processes we plan tocontinue to offer technologically advanced high quality products atcompetitive prices.Continue to reduce costs to offer more competitive products. Costcompetitiveness has been and continues to be central to our strategyas the leading manufacturer in the small car segment to expand the sizeof the market by offering competitively priced high quality products.The components of this strategy are:Higher levels of localisationTypically the adoption of a new technology or the launch of a newmodel by us requires the import of components. We increase the level oflocalisation over time by working closely with our vendors in India toupgrade their capabilities which enables us to reduce costs andincrease our flexibility in pricing our products. It is our strategy tointroduce new models with a minimum of 75% localisation level andincrease the same to at least 90% within three years of introduction ofthe model. We intend to continue to increase the rate of localisationof our new models.Ven dor participation in cost reductionWe have begun working with some of our major vendors to implement the"Maruti Production System" that focuses on the elimination of wastefulactivities in their manufacturing processes. We continue to work withour vendors in areas such as improving their productivity reducing thenumber of their components that are rejected reducing materialshandling improving their yield from materials and reducing theirinventories. This helps reduce their costs of production which alsoreduces the costs of our components. We set targets with vendors forcost reduction and for the initial period of the cost reduction weshare the benefits of the reduction with the vendor to provide anadditional incentive for the vendor to reduce costs. In addition weplan to begin to integrate our vendors into the worldwide purchasesystem or WWP3 whereby a vendor may become the sole supplier for aSuzuki product in several countries including India. This wouldgenerate economies of scale for the vendor that also result inreduction of our costs.Cost reduction on warrantiesThe warranty costs of our vendors are computed as the cost ofcomponents incurred by our vendors to service warranty claims arisingfrom defects in components supplied by them. We have been able toreduce the warranty costs of our vendors per vehicle by approximately21% between fiscal 2002 and fiscal 2003. We periodically set targetsfor warranty reduction for our vendors and monitor the achievedreductions through reviews by management. In addition we have reducedour in- house warranty costs per vehicle by approximately 77% betweenfiscal 2002 and fiscal 2003.Reduction in initial investment costWe aim to reduce our initial investment cost for new models throughin-house development and localised sourcing of dies welding jigs andother equipment introduction of flexible welding lines that can beused for multiple models and in-house development of machine shopequipment. We also plan to source dies for new models and upgradedversions of existing models from sources outside India other thanJapan such as Taiwan which are typically less expensive sources thanJapan.Reduction in number of vehicle platformsWe currently use six basic vehicle platforms for production. We intendto reduce the number of our basic vehicle platforms and increasinglyshare basic vehicle platforms among multiple models in order to spreaddevelopment costs and achieve economies of scale.Achieve further cost reduction through higher productivityWe benchmark our production systems with those of Suzuki. We aim toimprove our productivity and the efficiency of our operations throughincreased in-house automation optimum utilization of production linesoutsourcing and reduction in materials handling.Lowering the cost of ownership. Through our business strategies weseek to reduce the consumer's cost of ownership of our cars whichcomprises the cost of purchase fuel consumption maintenanceincluding spare parts and repairs insurance and resale value. Inorder to achieve this we will use our ability to:? manufacture high quality fuel-efficient cars;? price our cars spare parts and accessories and extended warrantiescompetitively;? make automobile finance more easily available to the consumer oncompetitive terms;? make maintenance services including spare parts accessories andrepairs widely available through our extensive sales and servicenetwork;? offer automobile insurance and other automobile-related servicesthrough our sales and service network; and? create a market for Maruti-certified pre-owned cars through our"Maruti True Value" business.ManufacturingThe core focus areas of our manufacturing division are:? benchmarking ourselves against global standards to efficientlymanufacture quality products; and? building a strong and motivated work force by emphasizing safetyeducation and continuous improvement of our manufacturing capabilitiesand those of our vendors.Our Manufacturing Facility and Process FacilityOur manufacturing facility comprises three integrated plants withflexible assembly lines located at Gurgaon in the northern state ofHaryana. The first plant was set up in fiscal 1984 with an initialinstalled capacity to produce 20000 vehicles per annum which wasaugmented to 130000 by fiscal 1991. Installed capacity was furtherincreased with the second plant becoming operational in fiscal 1995 to200000 vehicles per year. In fiscal 1996 with capacity increases ineach plant installed capacity increased to 250000. With the thirdplant becoming operational in March 1999 installed capacity increasedto 350000 vehicles per year which is the highest among passenger carmanufacturers in India and among the passenger car manufacturingfacilities of Suzuki's subsidiaries outside Japan.Our facility has advanced engineering capability and is upgraded on anongoing basis to improve productivity and quality. We have 17manufacturing shops and are capable of producing more than 50 variantsof the nine basic models manufactured with different specificationswithin the same day. This is possible due to our informationtechnology-enabled vehicle build sequence system and vehicle trackingsystem. Under the vehicle build sequence system at the productionplanning stage requirements are communicated via our intranet(internally) and our extranet (to vendors) in advance as to the timeand place for delivery of components and other production inputs inorder to fulfill production targets. Our vehicle tracking systemmonitors and records the implementation of the planning duringproduction.OUR HISTORYPrior to our incorporation Gol had under the Acquisition Actacquired the entire undertaking of Maruti Limited. We were incorporatedon February 24 1981 with the main object of acquiring and taking overfrom Gol the undertakings of Maruti Limited. All the land and propertyof Maruti Ltd's factory had been acquired by the Central Governmentunder the Maruti Ltd (Acquisition and Transfer of Undertakings) Act1980 "The Acquisition Act". Under "The Acquisition Act" the CentralGovernment has directed vide notification date April 241981 that theundertakings of Maruti Ltd and the right title and interest shall vestin the company known as Maruti Udyog Ltd. on and from April 23 1981.Our main objects as set forth in our Memorandum of Association are:? To acquire and take over from Gol the right title and interest inrelation to the undertakings of Maruti Ltd. as provided for in theappropriate enactment of Gol together with the liabilities of Gol sofar as they are related to the Undertakings of the said Company.? To carry on the business of manufacturers of and dealers inautomobiles motorcars lorries buses vans motorcycles cycle-carsmotor scooters carriages amphibious vehicles and vehicles suitablefor propulsion on land sea or in the air or in any combinationthereof and vehicles of all descriptions (all hereinafter comprised inthe term "motor and other things") whether propelled or assisted bymeans of petrol diesel spirit steam gas electrical animal orother power and of internal combustion and other engineschassis-bodies and other components parts and accessories and allmachinery implements utensils appliances apparatus lubricantscements solutions enamels and all things capable of being used forin or in connection with manufacture maintenance and working ofmotors and other things or in the construction of any track or surfaceadapted for the use thereof.? To carry on the business of garage keepers and suppliers of anddealers in petrol electricity and other motive power for motors andother things.? To carry on in the business of iron founders mechanical engineersand manufacturers of machinery tool makers brass founders metalworkers boiler makers mill rights machinists iron and steelconverters smiths wood workers builders electroplaters chromiumplaters lacquerers enamellers painters metallurgists electricalengineers and printers and to carry on any branch of manufacturing andengineering business.Our activities are carried out and in the past have been carried out inaccordance with the objects as specified in our Memorandum ofAssociation.BackgroundIn fiscal 1984 we commenced operations and entered the Indianpassenger car market with our Maruti 800 model a fuel- efficient carwith modern styling and features relative to the other passenger carmodels being sold in the Indian passenger car market at the time. Inthe following decade we periodically introduced new models to addressdifferent market segments and had five passenger car models and oneutility vehicle by November 1994. Competition during this period waslargely restricted to long-standing passenger car manufacturers inIndia such as Premier Automobiles and Hindustan Motors. In a marketthat was primarily driven by supply our sales volumes grew at a CAGRof approximately 20% from fiscal 1985 to fiscal 1993. This wassignificantly higher than the 7% CAGR of the Indian passenger vehicleindustry in the same period according to Association of IndianAutomobile Manufacturers. From fiscal 1986 we have been the largestmanufacturer in the Indian passenger car industry. By fiscal 1991 ourinstalled capacity was 130000 vehicles per year.The competitive environment changed in 1993 when the Gol delicensed thepassenger car industry and permitted foreign entities to set upautomobile manufacturing facilities in India through joint ventureswith Indian entities. This led to the entry of several global anddomestic automobile manufacturers into the industry. Driven partly bythe success of our Zen model launched in fiscal 1994 we continued tomaintain our leadership position in the domestic market and had amarket share of approximately 74% in fiscal 1995.Between fiscal 1993 and fiscal 1997 demand for passenger carsincreased at a CAGR of approximately 24%. The increase was primarilydue to the availability of new models high demand from the corporatesector and increased availability of affordable consumer financing.Given our leadership position in the market we were well positioned tobenefit from the expansion of the passenger car market by introducingnew models and pro-actively increasing our manufacturing capacity tomeet the growing demand. Our installed capacity increased with oursecond plant becoming operational in fiscal 1995 to 200000 vehiclesper year and further increased to 250000 in fiscal 1996 with capacityincreases in each plant. However during the period from 1995 to 1998primarily due to a dispute between our shareholders we were not ableto introduce new models expand our installed capacity or prepare forthe advent of new emission norms.During the period from November 1994 to December 1999 when we did notlaunch a new model competitors launched and gained market share fortheir own models in the rapidly growing B segment. Immediatelyfollowing the settlement of the dispute between our shareholders inJune 1998 we initiated our capital-intensive strategy of new modelintroduction as well as capacity expansion to address the growingmarket in a highly competitive environment. As a long-term strategy werapidly expanded our product portfolio launching the WagonR and Balenoin December 1999 the Alto in September 2000 and the Versa in October2001. Thus in the short span of 22 months from December 1999 welaunched four new models in addition to certain variants. We expandedour installed capacity to 350000 with our third plant becomingoperational in March 1999. The expansion of capacity and launch ofthese models and variants required substantial capital investment overa relatively short period resulting in relatively higher depreciation.In addition the cost of components for the new models was relativelyhigh due to low levels of localization early in the life of the models.Further we incurred substantial additional cost in developing enginesfor many of our models in order to comply with the Bharat Stage Iemission norms which first became applicable from June 1999 and BharatStage II emission norms which first became applicable in April 2000. Inthe shorter term these factors adversely affected our profitabilityand contributed to our loss before tax in fiscal 2001.Towards the end of fiscal 2001 and thereafter the positive effects ofour long-term business strategy were visible through our improvingfinancial performance. We believe that the major factors thatcontributed towards our return to profitability in fiscal 2002 were anincrease in the localization levels in our new models improvement inmanufacturing and vendor productivity our cost reduction measures andimplementation of the new performance-based incentive scheme for ouremployees in January 2001.We believe that our market share of 83.1% in fiscal 1998 declined to57.6% 58.6% and 54.6% in fiscal 2001 2002 and 2003 respectivelyprimarily due to the gain of market share by three models launched bycompetitors in the rapidly growing B segment prior to our launch of newmodels in December 1999 and thereafter. However with the introductionof our new models in the B segment the Alto and Wagon R our marketshare increased to 58.6% in fiscal 2002. Since fiscal 2001 while ouroverall market share has continued to fluctuate our market share insegment B has grown from 31.3% in fiscal 2000 to 36.9% 40.3% and 38.6%in fiscal 2001 2002 and 2003 respectively.Evaluation of Factors Affecting Our OperationsSeveral factors have affected our results of operations in the past andmay continue to do so in the future including:CompetitionAs the number of international and domestic automobile manufacturers inthe Indian passenger car market has increased in recent years withseveral new entrants competition has been intense in the Indianpassenger car market. While our product range includes products in eachof segments A B and C we focus primarily on the A and B segments ofthe passenger car market in India which together constituted more than84% of sales volumes in the Indian passenger car market in fiscal 2003.The sales of the Maruti 800 and Omni our A segment models contributea substantial portion of our revenue. In fiscal 2001 2002 and 2003sales of the Maruti 800 comprised 45.3% 42.5% and 43.4% respectivelyof our domestic sales volumes. We are currently the only manufacturerthat sells passenger cars in the A segment. In segment B we competeprimarily with Hyundai Telco and Fiat. Sales of the Zen Alto andWagonR our models in the B segment comprised 36.5% of our domesticsales volumes in fiscal 2003. Our market share in segment B was 36.9%40.3% and 38.6% in fiscal 2001 2002 and 2003 respectively. Our salesvolumes in the combined A and B segments comprised 95.1 % of ourdomestic sales volumes in fiscal 2003.The segments for cars priced above Rs.500000 which togetherconstituted approximately 16% of the Indian passenger car market infiscal 2003 are significantly more fragmented than the small carsegment with several players competing for what has been a relativelysmall share of the passenger car market in terms of sales volumes.Sales of the Esteem Versa and Baleno our models in the C segmentcomprised 4% of our domestic sales volumes in fiscal 2003. Otherplayers in segment C include Hyundai Ford Honda General MotorsHindustan Motors Telco and Fiat. Our market share in segment C was18.9% 19.6% and 16% in fiscal 2001 2002 and 2003 respectively.In the future we may also face competition from other domestic andinternational manufacturers that enter into the A and B segmentsincluding international manufacturers that have been successful inforeign markets for cars of a similar size but are yet to enter thesesegments in India. However substantial investments are required inorder to set up manufacturing facilities with the scale required tocompete effectively in the Indian passenger car market especially inthe small car segment. We believe that this has contributed to theconcentration of relatively few players in the small car segment incomparison with greater fragmentation in the C and D segments. Ourmanufacturing facility has an installed capacity of 350000 vehiclesper year. We have in each of the five fiscal years ended March 312003 produced in excess of our installed capacity. We believe thatwith minimal capital expenditure we would be able to produce more than500000 vehicles per year. While we had a capacity utilization ofapproximately 102% in fiscal 2002 the average capacity utilizationamong the major players in the Indian passenger car industry wasapproximately 58%. We had a capacity utilisation of approximately 103%in fiscal 2003.Details of DirectorsShinzo Nakanishi Chairman of our Company age 55 years was appointedas a non-retiring part-time Director of our Company with effect fromMay 2002. Mr. Nakanishi joined Suzuki in 1971. Mr. Nakanishi ispresently Director (Board Member) and Executive General ManagerOverseas Automobile Marketing in Suzuki.Jagdish Khattar Managing Director age 60 completed his Bachelor inArts (with Honours) degree from St.' Stephen's College University ofDelhi and his LL.B from the Delhi University. Mr. Khattar has been anofficer of the Indian Administrative Service or IAS and has more than37 years of experience. Prior to joining us he served in the followingpositions: as an officer of the Uttar Pradesh State Government from1965 to 1979; as director of the Tea Board of India London from 1979to 1983; as chairman of the Tea Board Ministry of Commerce from 1983to 1984; as chairman and managing director of the Uttar Pradesh StateCement Corporation from 1984 to 1986; as secretary and then chairman ofthe Uttar Pradesh Road Transport Corporation Transport Department from1986 to 1988); and as joint secretary in the Ministry of Steel Golfrom 1988 to 1993. Mr. Khattar is currently the Vice President of theSociety of Indian Automobile Manufacturers.Mr. Khattar joined us on July 11993 as Director (Marketing). He wasappointed Second Managing Director on July 11999 and was nominated byGol and appointed as Managing Director and Chief Executive Officer onAugust 18 1999. Prior to being appointed as the Second ManagingDirector Mr. Khattar has held the positions of ExecutiveDirector(Marketing) and Director (Marketing). Pursuant to the RevisedJoint Venture Agreement Mr. Khattar resigned and was immediatelyre-appointed as Managing Director nominated by Suzuki on May 30 2002.JunzoSugimori Joint Managing Director aged 61 is a Graduate from theDepartment of Economics Osaka University Japan. Mr. Sugimori has 38years of experience in sales marketing and administration. He startedhis career with Suzuki in 1965. After serving in various positions inSuzuki and its associate companies in Indonesia Canada and the USA heassumed charge as General Manager of the Overseas Automobile MarketingDivision in charge of the North American market in 1991 and in chargeof Asia and Oceania market in 1995 before being appointed as a Boardmember of Suzuki in 1997. He was dispatched to our Company as Director(Marketing & Sales) in 1999 for a period of three years until 2002.Before assuming charge as Joint Managing Director of our Company witheffect from April 19 2003 responsible for finance human resourcesinformation technology corporate services and vigilance he wasDirector of Indian Affairs Overseas Automobile Marketing Division atSuzuki.Kinji Saito Director (Marketing and Sales) age 44 is a Graduate fromthe Hiroshima University. Mr. Saito has more than 21 years ofexperience in the automobile industry through various roles inmarketing research product and sales planning and marketing atSuzuki. Mr. Saito has been involved with the marketing aspect ofSuzuki's Indian market operations since 1995 before becoming Head ofSuzuki's Representative Office in India in 1999.Mr. Saito joined Maruti on May 30 2002. He is responsible formarketing and sales functions of our Company.Shinichi Takeuchi Joint Managing Director age 55 is a Graduate fromthe Department of Technology Shizuoka University Japan. Mr. Takeuchihas more than 32 years of experience in production engineering in theautomobile industry. Mr. Takeuchi joined Suzuki in 1970. In 1989 hewas appointed Deputy Manager of the Production Engineering Division ofSuzuki. He was made Deputy General Manager in the Production andEngineering Division in 1995 before being transferred to the KosaiPlant in 1997 as General Manager. He was appointed as Plant Manager ofthe Kosai Plant in 2001.Mr. Takeuchi joined us on September 27 2001 as Director (Production)and with effect from April 19 2003 he has been appointed JointManaging Director in charge of Production Production EngineeringSupply Chain and Engineering. He is responsible for the productionactivities of our Company. Mr. Takeuchi is also the occupier of ourfactory under the Factories Act 1948.Motohiro Atsumi Director (Finance) age 40 is a Graduate from theDepartment of Administration Engineering at the Keio University Japan.Mr. Atsumi has over 17 years of experience in the automobile industryin purchasing and finance. He joined Suzuki in 1986 and was assigned tothe Purchasing Department. In 1992 he was transferred to theAccounting Department and appointed Assistant Manager in 1996 andDeputy Staff Manager in 2002.Mr. Atsumi joined us on September 16 2002. As head of our Financedivision and as a specialist in costing he is responsible for ourfinance-related activities.Osamu Suzuki age 73 years is the Chairman and Chief Executive Officerof Suzuki Motor Corporation Japan. Mr. Suzuki was appointed as aDirector of our Company with effect from May 24 1983.Kirofumi Nagao age 50 years was appointed as a retiring part-timeDirector of our Company with effect from May 30 2002. Mr. Nagaojoined Suzuki in 1978. Mr. Nagao is currently the General Manager(China/West Asia Automobile Marketing Division) Overseas AutomobileMarketing Division II in Suzuki.S. V. Bhave age 54 years is a Joint Secretary Ministry of HeavyIndustries & Public Enterprises Gol. Mr. Bhave is an IAS Officer. Mr.Bhave was appointed as a retiring part-time Director of our Companywith effect from March 25 2003.