Maruti Suzuki India Ltd

Your directors have pleasure in presenting the 29th annual report together with theaudited accounts for the year ended 31st March 2010.

FINANCIAL RESULTS

The Company's performance during the year is summarized below:

FINANCIAL HIGHLIGHTS

The gross revenue (net of excise) of the Company for the year was Rs. 301,198 millionas against Rs. 214,538 million in the previous year showing growth of 40%. Sales ofvehicles in the domestic market increased to 870,790 as compared to 722,144 in theprevious year showing a growth of 21%. Exports of vehicles grew at an impressive rate of111% from 70,023 to 147,575 in the current year. The overall growth was 29%.

Earnings before depreciation, interest, tax and amortization (EBDITA) stood at Rs.44,510 million against Rs. 24,333 million in the previous year.

Profit before tax (PBT) stood at Rs. 35,925 million against Rs. 16,758 million in theprevious year and profit after tax (PAT) stood at Rs. 24,976 million against Rs. 12,187million in the previous year.

DIVIDEND

The board recommends a dividend of Rs. 6.00 per equity share of Rs. 5.00 each for theyear ended 31st March 2010 amounting to Rs.1733 million.

CRISIL RATINGS

The Company has been awarded the highest financial credit rating of AAA/stable (longterm) and P1+ (short term) on its bank facilities by CRISIL. The rating underscores thefinancial strength of the Company in terms of the highest safety with regard to timelyfulfillment of its financial obligations.

QUALITY

The Company has again been awarded ISO:27001 certification by STQC Directorate(Standardization, Testing & Quality Certificate), Ministry of Communications andInformation Technology, Government of India after reassessment. The Company is thuscertified to meet international standards for maintaining information security.

The Company's plants at Gurgaon and Manesar are ISO: 14001:2004 certified. During theyear, AIB-Vincotte International Ltd., Brussels, Belgium conducted surveillance audit andrecommended continuation of the certification.

The quality management system of the Company is certified against ISO 9001:2000standard. Re-assessment of the quality systems are done at regular intervals by anaccredited third party agency.

HIGHLIGHTS OF OPERATIONS

The operations during the year are exhaustively discussed in the report on 'ManagementDiscussion and Analysis' which forms part of this annual report.

AWARDS/RECOGNITION

The Company won the following awards/recognition during the year under review:

• A-star has been rated as No.1 environment friendly small car by Germany'sprestigious VCD environmental car rating;

• ‘Manufacturer of the year' award by CNBC overdrive;

• Ritz has been awarded as the 'hatchback car of the year' by autocar UTVi and'car of the year' by Business Standard Motoring;

• 'National award for excellence in corporate governance' by Institute of CompanySecretaries of India;

• 'CII-ITC sustainability award 2009' for strong commitment to 'sustainability';

• ‘Golden peacock award' for environmental initiatives;

• Gurgaon plant has been awarded the 'gold award' by Economic Times IndiaManufacturing Excellence Awards (IMEA).

SUBSIDIARY COMPANIES AND THEIR ACCOUNTS

The Company's six subsidiaries i.e. Maruti Insurance Business Agency Limited, MarutiInsurance Distribution Services Limited, Maruti Insurance Agency Solutions Limited, MarutiInsurance Agency Network Limited, Maruti Insurance Agency Services Limited and MarutiInsurance Agency Logistics Limited are engaged in the business to sell motor insurancepolicies to owners of Maruti Suzuki vehicles.

In 2009-10, the Maruti Insurance business generated a total income of Rs. 1349.88million which includes dividend income of Rs 46.10 million earned from investments inmutual funds. Profit before tax (PBT) for 2009-10 was Rs. 635.49 million. In March 2010,Maruti Insurance business achieved the landmark figure of 10 million policies on acumulative basis since the inception of business in year 2002. 0.81 million new policiesand 1.76 million renewals were issued during the year 2009-10.

The Company's subsidiary 'True Value Solutions Limited' has contributed towards smoothoperations of business processes and supported the dealerships in enhancing the sale ofcertified pre-owned cars under the brand 'Maruti True Value'. It has contributedsignificantly to the efforts of customer retention by facilitating re-purchase of new carsand has made significant contribution towards enhancing dealers' profitability.

In terms of approval granted by the Central Government under Section 212(8) of theCompanies Act, 1956, copy of the balance sheets, profit & loss accounts, reports ofthe board of directors and auditors of the subsidiary companies have not been attachedwith the balance sheet of the Company. These documents will be made available upon requestby any investor of the Company or subsidiary companies and shall be kept for inspection byany investor at the registered office of the Company. However, as directed by the CentralGovernment, the financial data of the subsidiaries have been furnished under“Financial Statement of Subsidiary Companies” forming part of the annual report.Further, pursuant to Accounting Standard AS - 21 issued by the Institute of CharteredAccountants of India, consolidated financial statements presented by the Company includethe financial information of its subsidiaries.

HUMAN RESOURCE DEVELOPMENT

The Company has always focused on employees' development. A total of 46200 man-days oftraining were conducted for employees across all levels during the year.

The training programmes vary according to the need of the employees at various levels.Based on the behavioral traits, some of the trainings introduced in 2009-10 were 'changingmindset-changing lives'; 'being the best'; 'emotional intelligence'; 'planning organizingproblem solving'; 'assertiveness & self confidence'; and 'conflict management'. Someof the trainings based on technical needs include 'market research'; 'capital budgeting';'risk management & hedging'; 'unigraphics'; 'business simulation games'; 'inhousequiz'; 'cost management'; 'taxation'; 'motion & time study'; 'design failure modeeffect analysis' and 'geometric designing & tolerancing'. Training for leader shiptraits include 'departmental heads convention'; 'divisional head training' and 'directorre-treat'.

The Company also has higher education schemes for its employees.

DIRECTORS

Mr. Kenichi Ayukawa, Mr. D.S.Brar and Mr. M.S.Banga, directors of the Company, retireby rotation at the ensuing annual general meeting and being eligible, offer themselves forreappointment.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under section 217(2AA) of the Companies Act, 1956, your directors confirm:

a) that there were no material departures in the applicable accounting standardsfollowed while preparing the annual accounts; b) having selected such accounting policiesand applied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theend of the financial year and of the profit of the Company for that period; c) havingtaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956, for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities; and d) havingprepared the annual accounts on a going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION , FOREIGN EXCHANGE EARNINGS AND OUTGO

A statement giving details of conservation of energy, technology absorption, foreignexchange earnings and outgo in accordance with the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules, 1988 is annexed as Annexure A.

PERSONNEL

As required by the provisions of section 217(2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975, as amended, the names and otherparticulars of the employees are set out in Annexure B to the Directors' Report. However,as per the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the annualreport is being sent to all the shareholders of the Company excluding the aforesaidinformation. Any shareholder interested in obtaining such particulars may write to theCompany Secretary at the registered office of the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard - 21 on Consolidated Financial Statementsread with Accounting Standard - 23 on Accounting for Investments in Associates andAccounting Standard - 27 on Financial Reporting for interest in Joint Ventures, theaudited consolidated financial statements are provided in the annual report.

CORPORATE GOVERNANCE

The Company has complied with the corporate governance requirements, as stipulatedunder clause 49 of the listing agreements and the stipulated certificate of compliance iscontained in this annual report.

AUDITORS

The auditors, M/s Price Waterhouse, Chartered Accountants, hold office until theconclusion of the ensuing annual general meeting and are recommended for re-appointment. Acertificate from the auditors has been received to the effect that their re-appointment,if made, would be in accordance with section 224 (1B) of the Companies Act, 1956.

COST AUDITORS

In conformity with the directives of the Central Government, the Company has appointedM/s R. J. Goel & Co., Cost Accountants, as the cost auditors under section 233B of theCompanies Act, 1956 for the audit of the cost accounts for the motor vehicles business forthe year ending 31st March 2011.

ACKNOWLEDGMENT

The board of directors would like to express its sincere thanks for the co-operationand advice received from the Government of India and the Haryana Government. Yourdirectors also take this opportunity to place on record their gratitude for timely andvaluable assistance and support received from Suzuki Motor Corporation, Japan. The boardalso places on record its appreciation for the enthusiastic cooperation, hard work anddedication of all the employees of the Company including the Japanese staff, dealers,vendors, customers, business associates, auto finance companies, state governmentauthorities and all concerned without which it would not have been possible to achieve allround progress and growth of the Company. The directors are thankful to the shareholdersfor their continued patronage.

For and on behalf of the board of directors

ANNEXURE A

Information in accordance with the Companies (Disclosure of Particulars in the Reportof Board of Directors) Rules, 1988, and forming part of the Directors' Report for the yearended 31st March 2010.

A. ENERGY CONSERVATION

The Company has continued its thrust towards compliances of environmental regulationand energy conservation to improve upon its past performance.

During the year, ISO 14001 surveillance audit was carried out by M/s AVI, Belgium andthe auditors recommended continuation of the ISO 14001 for the year.

The Company also received the prestigious ‘Golden Peacock Award’ in thecategory of 'Eco-Innovation' from World Environment Foundation.

Some of the activities carried out during the year towards environment and energyconservation are given hereunder:

1. Use of variable frequency drives for motor operation.

2. Introduction of LED lights in place of CFL / HPSV lights for illumination.

3. Motion sensors for auto operation of lights at common places in Manesar plant.

4. Optimization of equipment start up time in paint shop in Manesar plant.

5. Automatic group operation of air compressor to reduce specific electricityconsumption in Manesar plant.

6. Optimisation of water and compressed air supply pressure in Manesar plant.

7. Use of canal water in place of tube well water to the extent available in Manesarplant.

8. Natural gas supplies to Manesar plant has commenced, conversion of all equipment ofthe plant to natural gas shall result in a cleaner environment.

The energy saving initiatives helped the Company in reduction of energy and waterconsumption for the current year in comparison to last year. The per vehicle reduction inelectricity and water in Gurgaon plant was 2% and 9% respectively, whereas the reductionin Manesar plant was 22% and 27% respectively as compared to last year.

B. RESEARCH & DEVELOPMENT (R&D)

To meet ever changing customer needs, battle increasing competition from global playersand meet stricter regulatory requirements, R&D had envisaged its vision in 2002~2003in line with the Company's vision and has worked since then towards meeting it.

R&D vision is “Build on our engineering skills to design and develop carsto delight the Indian consumer and establish Maruti as the R&D hub of Suzuki MotorCorporation (SMC) in Asia outside Japan.”

The strategic objectives set up for achieving the vision are:

• Product design & development: concept car, new models & minor changeintroduction;

• Engineering capability development: design & development of full body changefollowed by development of new platform(s);

• Cost management: meet target cost for model development;

• Alternative fuel development: meet the future requirement of low emissions andfuel economy.

The Company's R&D has already achieved capability for carrying out minor change andcarrying co-design activity with SMC for new models. The next key milestone for theCompany's R&D is to develop full body change capability. Systematic efforts are on toachieve full body change capability through the following:

• Full vehicle in-house design, development and evaluation;

• Training of engineers (overseas/in-house);

• Facilities up-gradation;

• Prototype build capability; and

• Experimental projects.

One significant step in this direction has been the increase in manpower from 729 nos.in 08~09 to 968 nos. in 09~10. Further the Company's R&D has plans of increasing itsmanpower strength from 968 nos. to more than 1100 nos. in 10~11.

A1. Vehicle design and development Vehicle planning and design

• Capability in product planning from the concept stage has been enhanced bystrengthening activities of advance planning cell, which tracks the market, its changingrequirements, technology trends, future regulatory requirements and competitor activity soas to work on a competitive product roadmap.

• Capability enhancement in complete exterior design of a car is being done byactivities like design trends study for arriving at a right design language for Indianmarket.

• For interior design of full body change, the Company enhanced capability inareas of complete interior concept image generation, interior computer aided design (CAD)based computer graphics (CG), full interior buck design and layout of components based onengineering layouts and occupant packaging.

• Capability enhanced in exterior & interior design of concept car named 'R3'and in-house development of concept car.

Engineering Design

• Capability in the field of engine development was enhanced with the design anddevelopment of the new 'K12M' and 'G12' engine and the up-gradation of the Company'svehicles to meet BSIV norms. This was the result of enormous R&D efforts and hours ofdesign, validation and testing.

• Capability enhancement in transmission design and development with theimplementation of cable type gear shift mechanism in the Company's vehicles to improve thegear shift feeling.

• Research in area of frugal electronic systems in cost sensitive models like EECOandAlto.

• Capability in the area of body in white (BIW) design has taken the next leap inits journey of achieving the full body change capability in coming years. This willenvisage capability to engineer the BIW, interior trims, instrument panel, NVH (NoiseVibration & Harshness) and lighting system & seats for the vehicle.

• Research in the area of new materials i.e. steel & polymer for BIW/interiorapplications has helped in evaluating and using stronger, lighter & safer materialscontributing towards unmatched safety, fuel efficiency & performance of the vehicleslikeA-star, Alto, etc.

• Capability in area of brake design & development has been enhanced with theintroduction of latest global technologies in the Company's vehicles. These were supportedby advanced technologies in the field of testing & manufacturing of parts to providehigh performance & quality parts to meet growing expectations & rigorous demandsof brake system in India's rigorous traffic conditions.

• Capability enhancement in new platform design and development while working onnew platform for new 'Wagon-R'.

• Capability enhancement in areas such as instrument panel, door, fuel tank &seating systems was done for carrying out full body change.

• Skills have been upgraded for evaluation of customer perception/feedback forergonomics, seating comfort and other parameters of interior design for incorporating themin design from conceptual stage.

• The capability in the field of design and development of fuel injection system,storage vessels, safety features like micro switch and structural frames for alternatefuel vehicles.

• Design and development of hybrid & electric concepts of SX4 hybrid and EECOelectric models.

• Developing capability for making prototype vehicles for design validation.

• Presentation of engineering design studies in the international platforms likeSAE (Society of Automotive Engineers) International, SIAM (Society of Indian AutomobileManufacturers) & others during the last years, has given a global outlook to theCompany's engineers.

Virtual design validation

To enhance the virtual validation skills and reduce design cycle time and developmentcost, digital engineering & engineering information management techniques are beingeffectively used.

Digital engineering

• The Company has strengthened its capability on virtual engineering by carryingout crash, NVH, strength and computation fluid dynamics (CFD) simulations for new modeldevelopment activity as well as up gradation of existing models using various simulationtools.

• The computer aided engineering (CAE) simulations are carried out for fullvehicle and the component levels.

Engineering information management

• The increased focus on R&D requires knowledge management strategy whereinthe knowledge gained is harnessed effectively for future needs. Knowledge basedengineering techniques have been employed wherein knowledge base of various designprocesses have been maintained. This has reduced the time taken by a designer/engineer foriterative design processes and capture expertise knowledge to come up with accurateresults in the minimum span of time.

• The PLM (Product Life Cycle Management) system has been optimally utilized withthe increase of “Team- center Community Usage” for information exchange withsuppliers.

• Tear down data management software is used to manage the component levelbenchmark data and that has resulted in carrying out VAVE (Value Analysis ValueEngineering) effectively during the year.

• To streamline the process of technical specification repository, a web baseddocument 'life-cycle management system' is under implementation.

Development and testing

• Research in the specific areas of emission reduction and emission testing werecarried out together with the engine development for BSIV countermeasure. ECU (EngineControl Unit) calibration and engine performance improvements were done in order tooptimize the engine performance.

• Fatigue analysis and endurance testing of vehicles, vehicle systems &engines were conducted. Exterior & interior parts safety & strength testing werealso carried out for new model development.

• Passive homologation testing of domestic and export models were conductedin-house.

• As part of the Company's consciousness towards environment, all the models arebeing made ELV (End of Life Vehicle) compliant. The Company shares the honors of being the2nd company in world to comply with RRR (Reuse-Recycle-Recovery) norms.

A2. Facility set up for R&D

NVH

• Semi anechoic chamber: An anechoic chamber is a shielded room designed toattenuate sound or electromagnetic energy for testing under controlled environment and lowambient noise conditions for better analysis / faster identification of problem areas andimplementation.

• Gear noise tester: The gear noise tester measures vibration and noise of aspecimen - transaxle, transmission or differential while applying rotational and torqueloads to the test specimens.

Engine and transmission testing

New mass emission lab: Additional facility for testing vehicle exhaust emission levelhas been set up. This lab is in addition to existing four mass emission labs. New lab willhelp in gearing up for future emission norms. The stringency of emission norms andincreasing numbers of model for which development is required, indicate the requirement ofnew gasoline emission test facility.

Vehicle Performance

• Brake noise chassis dynamometer with environment chamber: Brake noisedynamometers can simulate the mass, inertia and performance capabilities of a vehicle. Italso allows laboratory simulation of braking situations under varied driving conditions.This will result in improved braking performance with reduced development cost & time.

• Hydraulic actuators: Four actuators have been installed to reduce the lead timefor evaluation of chassis / suspension parts. This will result in faster part localizationand new source development.

New design software and licenses

• 103 licenses for CAD (Computer Aided Design) designing have been procured toenhance designing capability of Company's engineers.

II. BENEFITS DERIVED AS A RESULT OF

ABOVE R&D

a) Launch of Ritz

b) Launch of K12M engine

c) BSIV compliance - Omni, Alto, Swift,

A-Star, SX4, Zen Estilo

d) Launch of EECO

e) Zen Estilo minor change

f) SX4 minor change

g) Focused VA/VE

h) Future new model & engine development

i) ELV compliance

j) Next level of rust countermeasure

III. FUTURE PLAN OF ACTION

• To develop capability for full model change in all aspects - planning, design,development and testing.

• To develop more products with alternative fuel option.

• Compliance to safety and emission regulation such as offset, side impact, etc.

• Carry out continuous up gradation of existing models.

• To build the Company's knowledge base and its image on technology by designingand showcasing projects in auto exhibitions.

• Emphasis on VA/VE & innovative cost reduction ideas to cut down costs.

• Developing costing knowledge of various automotive technologies through standardcost tables and cost benchmarking.

• Cost planning of new products right at the new product planning stage to putcost in right perspective during the concept stage and give target cost to designers.

• Emphasis on focused cost down models for competitiveness.

IV. EXPENDITURE INCURRED ON R&D

Efforts in brief made towards technology absorption, adaptation and innovation

• Design of components & systems including design review process.

• Component & sub component level localization, development and testing ofparts for existing & new models.

• Capabilities enhanced in component and vehicle evaluation, benchmarking anddesign optimization.

• Capabilities being further enhanced in area of alternative fuels.

• VE (Value Engineering) at time of design to maximize cost benefit.

• Acquiring design & cost knowledge through teardown and benchmarking andusing it in future design & cost reduction.

Benefits derived as a result of above efforts

• High localization content in various vehicles has resulted in lower costs.

• Up-gradation of existing models for improved comfort, style and better value formoney.

• Continuous reduction in product cost through VA/VE (value analysis/ valueengineering).

• Significant cost reduction of parts of new model compared to existing models,ensuring that the new models are profitable from day one.

• Continuous quality up-gradation and weight reduction in products.

Technology inducted

The Company has been a pioneer in offering latest technologies at affordable prices toits customers. As a market leader, the Company intends to keep this momentum in future.

Technology imported

• VVT (Variable Valve Timing) for ensuring better drivability to the customers.

• Detent pin technology for providing smooth, precise and almost effortless gearshift feeling.

• Year of Import: 2009-10

• Status of absorption: Above technologies have been used in products introducedduring the year.

D. FOREIGN EXCHANGE EARNINGS & OUTGO (CASH BASIS)

Activities relating to exports

i) Initiatives taken to increase exports: The Company's exports grew 111% by exporting147,575 units. It was the first time in its history that the Company crossed the 100,000vehicle exports mark. On a cumulative basis, the exports crossed 700,000 units.

ii) Development of new export markets for products and services: South Africa, HongKong and Norway were added as new markets during the year.

iii) Exports plans: The Company will continue to export 'A-Star' and other models.

For and on behalf of the board of directors