Maruti Suzuki India Ltd Management Discussions

Overview

In FY 2023-24, Indias economy grew by a higher-than- expected rate of 8.2% (y-o-y). This relatively higher growth rate was achieved at a time when the global economy was losing steam largely due to persistent geopolitical tensions, high inflation, soaring interest rates and the development of El Nino. To safeguard Indias economy from such shocks, the Government of India and the Reserve Bank of India (RBI) undertook diversified policy interventions. The RBI accorded utmost importance towards maintaining a fine balance between supporting economic growth and controlling inflation. It remained pragmatic in controlling volatility in the Rupee exchange rate, which was most vulnerable to external shocks. The government, on the other hand, took up astute management strategies to control the pricing of food and overall inflation. It also increased its capital expenditure and raised spending in rural areas to boost economic growth through the fiscal multiplier. Meanwhile, commercial banks continued to increase credit availability to households and industries, which acted as a major domestic demand driver. These were significant galvanising forces that led to the higher-than-expected economic growth in FY 2023-24. Consequently, India retained its rank as the fastest-growing major economy in the world. However, persistent issues, such as energy and food price volatility, and ongoing geopolitical tensions may pose downside risks to global economic performance going forward.

In FY 2023-24, Indias Passenger Vehicle (PV) sector reached an unprecedented milestone, surpassing the highest-ever annual sales of over 4 million units. Consequently, India sustained its status as the third-largest PV market globally. Yet, the growth rate within the PV industry experienced a marked deceleration in comparison to FY 2022-23. This decline in momentum can be primarily attributed to the tapering of pent-up demand and demand stress in non-premium hatchback models. Nonetheless, the introduction of new Sports Utility Vehicles (SUV) models, improved credit availability, and enhanced vehicle supply bolstered by better availability of electronic components, supported industry growth.

In the last three to four years, there has been a pronounced and sharp transition in consumer preferences towards SUVs. This shift persisted in FY 2023-24, with SUVs accounting for more than half of the market. A significant portion of the PV markets volume growth during the year was attributable to SUVs. The demand for Multi-Purpose Utility Vehicles (MPVs) remained robust as well. Conversely, the market appetite for hatchbacks and sedans has been on a downward trajectory, with the entry- level (non-premium hatchback) segment experiencing the most severe decline across all categories. This reduction in demand for non-premium hatchbacks is primarily due to affordability challenges, which have arisen from a sharp increase in prices driven by various factors such as product regulations, changes in vehicle insurance norms and increases in road taxes by various state governments.

Regarding the powertrain mix, the increased product offerings, along with the expansion of CNG infrastructure, have facilitated an upsurge in demand for Compressed Natural Gas (CNG) vehicles. Strong Hybrid Electric Vehicles (SHEVs) present a compelling value proposition to consumers by offering a lower carbon footprint, assurance of no range anxiety, among others. These benefits have led to good consumer acceptance of SHEVs. Consequently, the proportion of Strong HEVs within overall sales has increased, surpassing 2% in a relatively short period.

In FY 2023-24, Maruti Suzuki India Limited achieved several noteworthy milestones. For the first time since its establishment, the Companys total sales volume exceeded 2 million units within a single year, a first among passenger vehicle manufacturers in India. The Company expresses its sincere gratitude to every stakeholder who played a role in achieving this distinguished milestone.

During the reporting period, the Company recorded an alltime high annual sales figure of 2,135,323 vehicles, including a record export of 283,067 vehicles. The Company maintained its position as the market leader in both the domestic PV market and in exports from India. The introduction of new SUV models facilitated an increase in the Companys overall market share in FY 2023-24, relative to FY 2022-23. Specifically, within the SUV segment, it saw a market share increase from approximately 12% in FY 2022-23 to around 21% in FY 2023-24, placing the company in No.2 position in the SUV segment. Excluding SUVs, the Company holds a leadership position across all other segments. With the success of its SUV offerings, the Company is committed to achieving a leadership position in this segment as well.

Improved availability of electronic components has allowed the Company to enhance production starting Q2 of FY 2023-24, which in turn enabled it to clear the majority of its backorders.

The Companys range of CNG vehicles continued to experience robust growth. The introduction of Intelligent Electric Hybrid technology in flagship models such as the Grand Vitara and Invicto was met with positive consumer response. With support from Suzuki Motor Corporation, the Company successfully launched new models and refreshed existing ones while complying with emission regulations such as BS-VI (Phase 2), CAFE (Phase 2), and other safety standards in a timely manner.

In its pursuit of improved efficiency across business operations and to enhance customer convenience, the Company continued its focus on digitalisation. Details of these efforts will be elaborated in subsequent sections.

The Company has steadfastly pursued its commitment to sustainability. The Company had always viewed that sustainable practices and business performance are interdependent. Suzukis basic philosophy of "Sho-Sho-Kei-Tan-Bi" (an abbreviation for Japanese meaning "smaller" "fewer" "lighter" "shorter" and "neater"), enables maximising resource utilization and help reduce waste. Along with this, the Company promotes circularity in its business by practicing the principles of 3R (Reduce-Reuse-Recycle) and utilising renewable energy. This integrated approach has empowered the Company to not only continuously strengthen its competitive advantage but also to exhibit agility in adapting to evolving market dynamics. In this MD&A section, the major sustainability highlights across business functions are covered. Further details on the sustainability performance can be accessed through the disclosures specified in the Integrated Reporting section and the Business Responsibility and Sustainability Reporting (BRSR) section. The Company has prepared Business Responsibility and Sustainability Report for FY 2023-24 in compliance with the format prescribed. Kindly refer page 243 to access BRSR section.

For FY 2023-24, Maruti Suzuki improved its operating margin to 9.9% from 7.3% in FY 2022-23. Factors contributing to this expansion included operating leverage, cost reduction strategies, favourable commodity prices and foreign exchange movements, and a marginal increase in product prices.

During the year, the Company acquired Suzuki Motor Gujarat (SMG, a 100% subsidiary of parent Suzuki Motor Corporation, Japan) as one of the steps towards realising its growth strategy for FY 2030-31. The Company envisioned that in the future it would have to manage a significantly high scale of operations at multiple locations coupled with multiple powertrain technologies. The best way to manage this complex situation would be to bring

Domestic Sales

FY 2023-24 was an action-packed year for the Company. The new product launches led to the achievement of its highest- ever annual sales volume of 1,793,644 units. This includes 1,759,881 units of Passenger Vehicles and 33,763 units of Light Commercial Vehicles.

The new model launches also aided the Company to grow faster than the competition. In FY 2023-24, the Companys PV sales

all the production units under the Companys control. Making progress towards the growth strategy, the Company announced the construction of the 4^th production line with a capacity of 250,000 units at SMG. Also, the Company announced setting up another green field manufacturing facility with a capacity of 1 million units in Gujarat. In Haryana, the construction of a new manufacturing facility at Kharkhoda is progressing well. In its 1^st phase, this manufacturing facility will have an initial capacity of 250,000 units, which will be augmented eventually to reach 1 million units.

volume increased by 9.5% over the previous year, while the competition grew by 8% during the same period. In addition to the new SUV launches, the Company achieved several milestones during the year, which helped increase and sustain the excitement on the brand throughout the year. The Company continues to be the most preferred brand in the country, with 10 out of the top 15 best-selling passenger vehicles from its stable.

In addition to the product launches, the introduction of new and advanced technology features was well-received by the customers. Some of these technological features were Head-up-display, 360 view camera, 6 airbags, Electronic Stability Programme (ESP) with Hill Hold Assist, panoramic sunroof, ventilated seats, Suzuki Connect Telematics Solution offering over 40 connected features, Infotainment System with advanced Voice Assist and Tire Pressure Monitoring Systems.

The demand for SUVs remained good. During the year under review, the sales of SUV vehicles grew by 119% (y-o-y) while overall sales volume grew by 9.5% (y-o-y). The company introduced 4 new models in the SUV segment. As a result, the Companys market share in the SUV segment has increased in FY 2023-24.

The intelligent electric hybrid powertrain technology offered in Grand Vitara and Invicto has been accepted well by the customers. The Strong Hybrid powertrain offers superior fuel efficiency of about 30%-35% higher than that of conventional ICE vehicles and eventually lowers the vehicles carbon emissions significantly.

In FY 2023-24, the preference for CNG vehicles increased further. During the year under review, there was growth of 52% in CNG passenger vehicles over the previous year. It is to be noted that consequent to the increase in CNG infrastructure in Southern and Eastern India, the demand for CNG vehicles has increased considerably (refer to the graph shown below). The Company was one of the first movers to adopt factory-fitted CNG powertrain technology vehicles in India. Of the 18 models sold in the domestic market, the Company offers CNG powertrain technology in 14 models, the highest-ever by any OEM in India. Consequently, the Company commands nearly 75% of the volume share in the CNG market. Going forward, the Company is optimistic on leveraging the opportunity presented by increase in CNG infrastructure to maximising the sales volume of CNG vehicles.

Overall, the customer preference towards green vehicles increased significantly during the year. The share of sales from green vehicles comprising CNG vehicles, mild hybrids and strong hybrids increased to 42% from 37% in the previous year.

The share of first-time buyers remained low during the year. In the past, the non-premium hatchback segment witnessed a higher share of first-time buyers. However, since FY 2018-19, there has been a considerable decrease in the share of this segment, leading to a decline in the proportion of first-time buyers within the Indian passenger vehicle market.

In a constant endeavour to improve convenience and offer better experience to customers, the Company added 223 sales outlets in FY 2023-24, primarily in non-urban markets. Sensing the non-urban market opportunity very early in the industry, the Company has been expanding its network over the years.

MSIL Sales Network (Nos.)

With over 2,000 outlets in non-urban markets across the country, the contribution of sales from these markets in overall sales increased to ~45% in FY 2023-24.

The Company, while already possessing a strong presence in urban markets, has further fortified its network by adding 35 NEXA sales outlets, thereby augmenting its competitive advantage. The NEXA channel, representing the Companys commitment to offering a premium car ownership experience, has commemorated eight years of successful operations. Since its inception, NEXA has achieved a significant milestone by cumulatively selling over 2.5 million cars through its extensive network, which now features 495 outlets.

For enhanced customer experience in the sales processes, the Company continued to enhance its digital footprint. Advanced digital tools provide opportunities for innovative approach towards customer engagement. The Companys virtual showroom is a testament to this. It offers an immersive experience through Virtual Reality (Metaverse), allowing customers to explore and customise vehicles from the comfort of their homes. In FY 2023-24, the Company expanded its virtual showroom experience to all its models across ARENA and NEXA sales channels.

The Company has digitalised 24 out of 26 customer interaction points while buying a car. The remaining two interaction points are the test drive and delivery of the vehicle.

The ‘Maruti Suzuki Smart Finance (MSSF), which offers online, end-to-end car finance, achieved a significant milestone of

disbursing over 1 million loans since its inception. In FY 202324, nearly 37% of the customers sourced their finance for buying cars through the MSSF platform compared with 33% in FY 2022-23.

Working on the initiative of setting up sales and service outlets on the principle of ‘CODO (Company Owned Dealer Operated), during the year, the Company activated nine outlets across the country on the land acquired by the Company. Going forward, the Company will be constructing 13 more outlets under the CODO model.

In the Light Commercial Vehicles (LCVs) segment, the Company sold 33,763 units of Super Carry during the year from its 381 commercial channel outlets in 274 cities. CNG powertrain contributes to nearly 75% of the Super Carry sales volume. During the year, a refreshed version of Super Carry with a more powerful engine was launched.

The demand for pre-owned cars during FY 2023-24 continued to see an increase and the Company achieved its highest-ever pre-owned car sales. In FY 2023-24, the Companys True Value channel sales registered a growth of nearly 20%. Post-pandemic, pre-owned car sales were declining largely due to old vehicle supply issue. The highest-ever sales in FY 2023-24 indicate a revival in this segment. A healthy pre-owned car segment sales helps drive new car sales through trade-ins, and the Company is accordingly expanding its pre-owned sales outlets. During FY 2023-24, the Company added 49 independent True Value sales outlets.

Exports

The Company achieved its highest-ever export sales of 283,067 units in FY 2023-24, a growth of ~10% over the previous year. At a time when global demand is seeing a slowdown, the rise of the Companys exports by 10% assumes a greater significance. The Company is focused and aligned with the Government of Indias vision of ‘Make in India for the World and is going all-out in its efforts to increase exports.

the Company with strong technological support and also helped leverage its vast global network to increase exports.

The Company not only emerged as Indias top passenger vehicle exporter for the third consecutive year but its strong export performance also helped arrest the decline in overall PV exports from the country. The PV exports from rest of the industry declined by 3.9%. However, with nearly 10% growth in the Companys export volume, the Company could enable the overall PV exports from the country to increase by 2%. Consequently, the Companys share in overall PV exports from the country increased to about 42% in FY 2023-24.

Export Sales Volume (PV+LCV) (units)

The Company started exporting way back in FY 1986-87, and since then, its products have earned the acceptance and appreciation of global customers for their high quality, advanced technology, reliability, superior performance, and affordability. The support of the parent company, Suzuki Motor Corporation (SMC), has been vital in this achievement. SMC has provided

With support from SMC, the Company continues to expand its product offerings for the export market. The new SUVs such as Jimny, Fronx, and Grand Vitara created excitement in the export markets, enabling the Company to increase its sales volume. The Company exports broadly its full range of products, starting from Alto, a product in the entry segment, to its most premium SUV offering, Grand Vitara.

In FY 2023-24, Africa, Latin America, the Middle East, and the ASEAN region were the top export destinations for the Company. SMCs distribution network and its continuous efforts to keep enhancing the capacity and capability of the network, coupled with the expansion of its product portfolio, helped the Company to cash in on opportunities as the demand environment turned favourable in some of the markets. Additionally, the OE supply of vehicles to Toyota through SMC in the African market also helped grow the export volume.

Service

One of the competitive advantages for the Company is its vast service network. The Company has taken its service network addition programme to new heights by adding a record number of 400 touchpoints in a year. With this, the total number of service touchpoints across the country has increased to 4,964. By leveraging its a large service network, the Company could serve 25 million vehicles in the year, its highest ever.

Over the years the Company has been coming up with several innovative formats to get further close to the customer. With growing similarities in consumer preferences over urban and non-urban centres, the Company introduced new compact- format NEXA workshops across six locations.

To make its service operations more efficient and improve convenience for various stakeholders, the Company has been constantly pursuing digitalisation programmes. On the dealer front, the Company has introduced the CRM tool, Dealer Experience Centre (DExC), which empower dealers to offer customised service recommendations using the modes of communication which is most preferred by the customer. On the customer front, the Company has put in place an AI- driven Chatbot and voicebot with features such as Anytime Assistance, regional language communication, digitalised job cards, etc. The embedded Machine Learning feature enables comprehensive support as per individual needs.

To minimise the financial burden on customers in case of unforeseen engine failures caused by waterlogging (hydrostatic lock) or adulteration in fuel, the Company introduced the Customer Convenience Package (CCP). This scheme was well appreciated by the customers, and so far over 1.1 million customers have opted for it.

The skill level of workshop personnel is a prerequisite for delivering high-quality service. For this, the Company trains workshop personnel on the global standards of Suzuki Service Qualification System (SSQS). In addition, the Company continued its efforts in training workshop personnel on the latest technologies, behavioural and soft skills. The Company could upskill over 93% of the total workshop personnel in FY 2023-24. An online practical training mode was also adopted to educate the workshop personnel at a faster pace and in a resource- efficient, effective, and convenient manner.

Aftermarket Parts and Accessories

One of the important factors towards increasing customer satisfaction during vehicle ownership is to ensure the availability of aftermarket parts and accessories - at the right time, at the right place, and the right price. With over 87,000 aftermarket parts and accessories, ensuring their availability can be a highly complex and challenging task to keep the consumers happy. To deal with this, the Company has implemented various measures such as advanced demand projection techniques, digitalisation of inventory management process as well as expansion of independent retail outlets for aftermarket parts and regional part distribution centres to ensure timely availability. As a result, the parts distribution network has expanded to 1,255 during 2023-24.

In addition to thousands of touchpoints across India, the Company is further leveraging digitalisation initiatives. In FY 2023-24, the Company introduced a new Intellisales mobile application to empower the sales executives of part distributors. This application has transformed the way aftermarket parts are ordered. Through this platform, the sales executive can take small orders from independent workshops, small retailers, and traders and supply genuine aftermarket parts to them. This enables improved availability of Maruti Suzuki Genuine Parts.

To consistently improve customer convenience, the Maruti Suzuki Genuine Accessories (MSGA) and Maruti Suzuki Genuine Parts (MSGP) websites were significantly enhanced, making it even easier for valued customers to explore the wide range of aftermarket parts and accessories and place orders from the comfort of their homes. The MSGA range is now also available in the Maruti Suzuki mobile app, further improving convenience and accessibility.

Moreover, the Company has introduced a first-of-its-kind Smart EMI for purchasing high-value accessories from the MSGA website. This customer-centric initiative provides customers with interest-free and flexible EMI options through credit cards. This has been well received by customers. In FY 2023-24, the e-commerce via the MSGA website was expanded to 450 cities, up from 290 cities previously, further extending the reach of this customer-friendly service.

New-age customers focus on unique personalisation, comfort, convenience, and luxury to transform ‘A Car to My Car that reflects their individuality. To address this growing demand, 350+ new accessories were added under MSGA during the year to fulfil the car personalisation needs of customers.

Operations

In FY 2023-24, the Company achieved its highest-ever production volume. The record-production volumes were achieved amidst a volatile business environment led by a rapid shift in customer preference towards UVs and CNG powertrain technology.

As the business landscape grows increasingly complex, interlinked, and uncertain, a company needs to adopt agility to cater to the market requirements effectively and efficiently. Over the recent years, the Company has actively pursued greater operational flexibility and accorded importance to agile methods of working.

With its established highly efficient agile manufacturing systems and effective change management processes, the Company was not only able to successfully respond to challenging market requirements but also succeeded in maintaining high levels of quality and productivity.

The demand for UVs witnessed a sharp increase MSILs sales growth across segments in FY 24 over FY 23

Recently, the complexity of manufacturing a vehicle has increased significantly due to increased features and regulations. This calls for continuous strengthening of quality management system and processes both for the new model development and mass manufacturing to ensure high-quality manufacturing. The Company places utmost reliance on preventing the generation of defects. To achieve tighter tolerances and at the same time ensure defect-free products, the Company leverages new technological solutions such as the Internet of Things (IoT) technology and machine vision systems.

Inspection systems are increasingly being shifted to the source (point of manufacturing) to prevent the outflow of defects. This significantly reduces the time required for any corrective action, leading to resource optimisation.

In the recent past, the Companys focus on exports has increased significantly. The Company exports to about 100 markets, which have different levels of product regulations. Going ahead, the Companys export volumes are going to increase further. Therefore, a growing scale, coupled with the introduction of new technology features, calls for continuous evolution of best practices for high-quality manufacturing. Customer feedback is quintessential in improving product quality. For this, in addition to the product feedback received in the domestic and export markets, the Company has collaborated with SMC to get market feedback on the products sold by SMC in its export markets. The Company started using such holistic market feedback for improving product quality. This approach will help the Company not only prevent generation of defects but also improve product reliability and ultimately, customer satisfaction.

The Company is optimistic about the growth of Indias automobile market and therefore, has aggressive expansion plans to scale up the production capacity to 4 million units per annum by FY 2030-31. In April 2024, the capacity at the Manesar facility increased by 100,000 vehicles. With this addition, the total capacity at the Manesar plant is now at 900,000 vehicles per annum. Besides, the Company has also started construction of a new manufacturing facility at Kharkhoda in Haryana. The first plant with a production capacity of 250,000 vehicles per annum is expected to be commissioned by 2025. The site will have space for capacity expansion to include three more manufacturing plants, each with a capacity of 250,000 units. In addition, the Company would be increasing the capacity at its SMG facility as well.

Conservation of Natural Resources and Environment Protection

One of the enablers of the Companys value creation is maximising the overall resource efficiency, thus leading to responsible consumption of finite materials. The Company actively practices aspects related to the circular economy such as eliminating waste, deploying the 3Rs (Reduce, Reuse and Recycle) principle, and increasing the reliance on renewable energy. The Companys commitment to preserve natural resources is reflected in every stage, right from product design to manufacturing processes and distribution to the end-of- life management.

Design for Recycling

With an objective to ensure the vehicles are not thrown away as waste at their end-of-life, the vehicles are designed for maximum recyclability and recoverability. All the vehicles currently being manufactured by the Company are at least 92% recyclable and 98% recoverable.

Increasing the reliance on Renewable Energy

The Company has a total of 43.2 MWp installed capacity of solar power. With this, the Company could avoid 21,455 MT of CO₂ emissions in FY 2023-24. It has plans in place to further increase the capacity of solar power by 48.15 MWp by FY 2024-25 and to 78.2 MWp by FY 2025-26. By partnering with Haryanas state electricity distribution company, the Company sources green energy at its Gurugram facility. This has resulted in the avoidance of 36,054 MT of CO₂ emissions in FY 2023-24. Overall, in FY 2023-24, nearly 16% of the electricity requirement was met through renewable sources of energy.

Promoting the 3R Principle

The 3R principle is a way of life for the Company. The Company recycles 100% of the metallic scrap, such as steel and aluminium, generated during the manufacturing of cars. The state-of-art sewage treatment plants help in the recycling of water. The Company meets two thirds of its water requirement for manufacturing cars through recycling. To promote the recycling

of commodities, the Maruti Suzuki and Toyota Tsusho Groups Vehicle Scrapping and Recycling unit commenced operations in 2021. The facility offers a hassle-free solution for customers to scrap vehicles in a safe and environmentally friendly way and can scrap 24,000 vehicles annually.

During the year, the Company enabled the recycling of about 1,100 MT of flexible plastic sheets by selling to authorised recyclers. Additionally, the Company has implemented an Extended Producer Responsibility programme of recycling the plastic packaging used in its aftermarket parts and accessories.

The Company promotes yield-improvement activities to optimise the usage of raw materials such as steel, aluminium, and other materials. To further improve the energy efficiency at some of its manufacturing facilities, the Company is actively collaborating with a start-up. The Company also takes comprehensive measures to continuously reduce the usage of packaging materials. For the export of Knocked Down (KD) kits and components, over 29% of the packaging material requirement is met through reused material.

Environment Protection

About environmental protection, the Company not only conforms to laws and regulations but also strives to stay ahead of them. Initiatives are being taken at Tier-1 suppliers facilities for education and implementation of best practices to limit the usage of hazardous substances. Besides, audits are conducted at suppliers facilities in this regard. The Company has contractual agreements with suppliers and provides green procurement guidelines to them for promoting green products. Control procedures have been established to ensure the effective implementation of guidelines by suppliers. The Company adopted the globally acclaimed International Material Data Systems (IMDS) tool to control the use of Substance of Concern (SoC).

(The Companys Sustainability Report elaborates on the initiatives undertaken in this section.)

Safety

The Company is committed to fostering a robust safety culture, driven by active engagement from both the leadership and the frontline employees.

In line with this, a three-tier safety committee, under the supervision of the MD & CEO, is making constant progress towards the improvement of safety systems. This committee structure cumulatively held 103 meetings during the year and focused on continuously strengthening occupational safety as well as improving non-occupational safety.

Participative decision-making is one of the key factors in maintaining a safe manufacturing environment. This encourages the front-line workforce to participate in safety committees, suggestion schemes, and safety audits. This inclusive approach ensures that the workforce is actively involved in identifying potential hazards and is contributing to safety improvements. The front-line workforce provided a total of 230,290 suggestions during the year for improving occupational safety.

With the intent to prevent accidents, the Company encourages its workforce to report near-miss incidents and implements appropriate measures to address them. During the year, 934 near-miss incidents were reported, and the Company has implemented suitable countermeasures for all the actionable near miss incidents.

During the year, various measures were implemented to reinforce the culture of making safety a way of life. Over 12,000 employees were trained during the year on various facets of safety such as fire safety, electrical safety, safety in office spaces, emergency preparedness, and first aid among others. The Company observes ‘Safety Month - a month-long engagement activity that also includes the families of employees and is focused on sensitising, educating, and sharing best practices related to occupational and non-occupational safety. The Company also conducted ‘Nukkad Natak (street play) to engage and create awareness regarding the importance of adhering to safety guidelines. To ensure road safety discipline and imbibe safe driving practices, the Company took various initiatives to promote and create awareness among its workforce and other stakeholders.

Quality

The expanding scale of operations, manufacturing of high-technology components, rising regulatory compliances, increasing tierisation of supplier base and evolving customer expectations on product quality makes quality management a continuous journey. Effective and efficient change management practice is one of the key factors to ensuring quality competitiveness.

The Company places utmost emphasis on understanding the needs and expectations of customers towards product quality. To capture customers voices, the Company has various engagement channels in place. With a pursuit of capturing customer voice of as many customers as possible, the Company has adopted social media listening. The telematics solution helps the Company understand the way customers use the product. This helps in collecting the right feedback and integrating it into new model development.

With regard to new model quality management, the scale of work in FY 2023-24 increased significantly over the previous year due to:

a) Increase in new model launches and product refreshers

b) Introduction of new powertrain technologies

c) Increase in regulatory compliances

Given that the Company has 18 models in its product portfolio with over 150 variants, incorporating changes for meeting regulatory compliances, especially on running or existing models, increases the scale of work substantially.

In mass manufacturing quality management, the increase in the scale of operations and change in customer preferences towards CNG vehicles and SUVs resulted in quick changeovers in product mix, affecting levelized manufacturing for both the Company and its suppliers.

The Company has put in place a robust quality management system centred on reoccurrence prevention, early detection, and prevention of the outflow of defects. By actively collaborating with suppliers and other stakeholders, and strictly adhering to robust quality management systems, the Company was able to manage the challenges described.

The Company also continued the ongoing quality management programmes detailed below to ensure improved quality of products.

A) Reinforcement of the Zero-Defect Philosophy

The Company is firmly committed to achieving quality excellence by adhering to the ‘zero-defect philosophy. Over the year, the Company has facilitated several sensitisation workshops to empower suppliers with the knowledge and best practices to achieve zero-defect production lines. In collaboration with supplier partners, the Company is conducting a thorough study to design manufacturing lines that are optimised for zero defect generation and ensure no defects are passed on should they occur.

The Company has put in place an organisation that exclusively supports supplier partners to continuously improve their quality levels. The Company observes ‘Quality Month every year to enhance quality consciousness among suppliers. Through customer product feedback, periodic surveys, and social media listening, the Company continuously assesses customers needs and expectations on product quality and takes appropriate measures to address them.

B) Quality Management During New Model Development

The Company implemented concepts such as front-loading, the Peak Production Verification Trial (PPVT), and initial flow management to ensure defect-free production of new models.

Front-loading helps arrest defects at the design and development stage, while PPVT and initial flow management help prevent defects during the mass production of a new model. The Company uses its state-of-the-art testing facility in Rohtak, Haryana, to rigorously evaluate the new models for quality performance. The testing methods and techniques are continuously being upgraded to simulate the actual market conditions.

C) Quality Management During Mass Manufacturing

To uphold superior quality standards in mass production, it is imperative to ensure:

(a) Regular maintenance of plant equipment and machinery

(b) Adequate training and development of the workforces capacity and capabilities (c) Stringent process controls (d) Implementation of fool-proofing of systems (e) Comprehensive inspection mechanisms, among other measures. The Company has instituted various initiatives to continuously enhance these aspects within its supplier network.

Additionally, the Company proactively promotes a culture that prioritises the identification of root causes. Quality feedback from the market is meticulously analysed, and upon identifying the precise root cause, swift corrective measures are implemented to mitigate recurrence. Furthermore, the Company is implementing a part-traceability system to accurately identify vehicles that may be affected by potential quality issues.

D) Recall Management

During the year, in the interest of its customers, the Company recalled some of its vehicles and took immediate corrective measures to reduce inconvenience to customers. The number of vehicles recalled have been reduced by 39% over FY 2021-22.

Human Resources

Company Philosophy

The Company constantly strives to promote a safe, healthy, and happy workplace. It creates and instils a culture of partnership among its employees. The empowerment of human resource to acquire knowledge and build capability, grow, and prosper in a healthy work environment is the guiding philosophy of the Companys HR policies. With people-centric policy interventions, a constant two-way communication led by the MD & CEO to promote participative decision-making and various welfare measures are undertaken from time to time. A testimony to the participative decision-making was that, in FY 2023-24, the employees provided a record 1 million suggestions to improve systems and processes related to safety, quality, productivity, and cost. Motivated human resources have been making strong contributions in responding to business challenges successfully. Much of the organisational progress in the last 40 years is because of the values and the culture that has been imbibed among its employees.

Listening Organisation

One of the success factors of the Company is its ability to understand the needs, concerns and expectations of its employees and take quick measures to address them. To enable this, the Company has put in place various engagement channels with varied degrees of engagement ranging from survey-based engagement to the highest form of engagement based on collaboration (Refer to the Stakeholder engagement section on page 70 to know more about employee engagement channels). In addition, to listen to the feedback of the employees on a real-time basis, the Company has also introduced a chatbot, ‘Amber, which is positioned as the Chief Listening Officer. With the superannuation of first-generation employees, the workforce is becoming younger. In line with their needs and expectations, the Company has implemented measures such as working from home, flexible working hours, and improvements in maternity and paternity leave policy.

Employee Health and Well-being

The Company places utmost importance on maintaining and improving the physical and mental well-being of its employees. In addition to the routine wellness programme on emotional, spiritual, and psychological well-being, during the year, the Company collaborated with ‘Art of Living to encourage physical transformation and well-being. About 500 employees benefitted from this programme in FY 2023-24. To promote the importance of physical health among the employees, including their families, events such as marathons and stepathlons were organised. By collaborating with several hospitals, the Company provides free annual health check-ups for the employees and their spouses. The Company has also tied up with an external partner to

provide free online health consultations with the best doctors across India for employees and their families. During the year, the services were expanded to enable consultations for mental, emotional and social wellness as well.

Capability Development

During the year, routine trainings around capability improvement, career development, and transition assistance programmes were conducted. Towards upskilling the workforce on the new and emerging technology trends, the Company collaborated with the top IITs in India. In addition, utmost importance has been placed on inculcating a digitalisation mindset among employees to not only ensure business continuity but also to promote a culture of innovation.

The Companys new-age Learning Management System (LMS) was much appreciated by employees. The LMS uses artificial intelligence and Machine Learning to recommend relevant upskilling programmes based on the roles and responsibilities of an employee. The employee can also undertake self-paced training programmes through the exhaustive e-learning courses available internally or through external Learning Experience Platforms (LXPs) free of cost. Till FY 2023-24, over 2,500 employees enrolled under various upskilling programmes through LXPs.

Over a decade, the Company has been partnering with various academic institutions to provide access to undergraduate and postgraduate programmes to its employees. Based on employee feedback, the Company introduced new courses, increased the number of institutes it partnered with, and increased the number of available seats, thus benefiting a larger number of employees. Eligible employees who complete the higher education programmes are considered for promotions to take up higher responsibilities.

Courses	Courses taken by	Number of employees benefitted so far under higher education programmes offered by the Company
Diploma programme	Workers	638
B.Tech programme	Supervisors	376
MBA/M.Tech programme	Managers	244
Total		1,258

Industrial Relations Environment

The Company strives to ensure stable and cordial industrial relations through effective communication, participation of employees in important decisions, and various employee welfare programmes. Regular two-way communication, led by the MD & CEO, with employees across various levels keeps them informed on the overall business scenario and provides them with a strong platform to exchange views.

Freedom of Association and Collective Bargaining

The Company promotes freedom of association and collective bargaining. There are a total of three workers unions. The Company allows collective bargaining and actively collaborates with all the unions. During the year, elections to elect workforce union representatives at the vehicle manufacturing facility at Manesar were conducted in a smooth manner.

Compensation

The Company offers industry-leading benefits with the average compensation being higher than the industry benchmark. The Companys compensation policies are gender-neutral. To improve productivity and help achieve business goals, the Company also put in place a structured performance-based incentive pay structure that covers all categories of employees for all levels.

Employee Welfare

The Company values its employees, who are considered to be an essential part of its progress. The Company contributes 1% of the previous years Profit After Tax to a fund exclusively earmarked for employee welfare. The fund is used to provide welfare measures, such as housing loan subsidies, educational support for employees children, developing common infrastructure facilities in employee housing projects, and to provide social security measures, such as post-retirement medical benefits for employees as well as their spouses. At the housing project being undertaken in Dharuhera, Haryana, 275 houses have been delivered to employees.

u Apartments in iviaruti Suzuki Enclave

Multi-layered Connect

For larger connect and welfare of employees families, the Company has a calendar of events, which includes expert career counselling for employees children, a gala family day, and plant visits for family members. To engage with the families of employees, communication done through an in-house magazine and MD & CEO messages on special occasions play an important role.

Gender Diversity and Inclusion

The Company promotes gender diversity and provides equal opportunity to all. Various welfare measures are taken to support and encourage female employees. During the year, the Company deployed the first batch of women workforce on the production shopfloor. This initiative assumes greater significance given the limited availability of women workforce in the country, especially in the skills that are required for performing production operations. Over the past few years, the Company has taken measures to train women on the shopfloor-specific skillsets.

Grievance Redressal Mechanism

To address any grievances reported by its workforce, including the temporary workforce, the Company has a well-structured grievance redressal mechanism in place. Periodic grievance redressal camps are organised to address their issues.

Awards and Recognition

Maruti Suzuki has been recognised at the prestigious Industry Academia Conference (IAC) Corporate Awards 2024 under the Private Sector Category for pioneering work in ‘Sculpting Talent for Tomorrow.

Supporting Business Partners

The Company has put in place an exclusive organisation to improve the human resource and industrial relations practices of its business partners such as its suppliers, dealers, and transporters. The interventions are centred around providing relevant skill training. Through multi-stakeholder initiative programmes, the Company focuses on creating a talent pool for its supplier and dealer partners. For more information on the initiatives and outcome of these programmes, kindly refer to page 59 of the Integrated Report.

During FY 2023-24, the Company provided over 1,381,088 person-hours of training for its employees and the workforce of its business partners.

Engineering

In the PV industry, the product is central to the growth and success of any organisation. At present Indias PV market is witnessing a disruption driven by increasing stringency in product regulations, changing customer preferences, and increasing competitive intensity. With the strong support and guidance of Suzuki Motor Corporation (SMC), the Companys engineering function is working in the following key focus areas:

1. Introduction of New Products

In recent years, Indian customers have been increasingly preferring UVs, particularly SUVs. In FY 2023-24, the SUV segment accounted for over 50% of the market. The Company has responded by launching new models, refreshers, special editions, and new variants. Of the 5 models introduced by the Company: Invicto, Grand Vitara, Jimny, Brezza, and Fronx, four were SUVs. The Company addresses a broader customer segment, stretching beyond the SUV segment. Accordingly, the Company also developed a product in hatchback segment, the fourth generation Swift, which was launched in May 2024. All the newly launched products are fresh in design, high in performance, reliable, and equipped with new technologies and features that make the product safe, affordable, and environmentally friendly, bringing delight to the Indian customer. Going forward, the Company is working to further expand its SUV portfolio.

2. Introduction and Expansion of Advanced Features and Technologies

In line with customer preference, the Company is expanding features and technologies in its offerings.

The Company is expanding and introducing a host of technological features in its products to continuously improve the aspects related to safety, comfort and convenience. These features include six airbags (driver, co-driver, side, and curtain), electronic stability programme (ESP) and hill-hold assist, a built-in next-gen telematics system (Suzuki-Connect), Head-Up Display, 360-degree view camera, sunroof, ventilated seats, powered tailgate, 9-inch infotainment system, tyre pressure monitoring system (TPMS), an all-new full digital instrument cluster, and wireless charger, among others.

Keeping in mind the convenience of customers and their affordability, the Company offers various Automatic Transmission technologies ranging from Auto Gear Shift to 6-speed Automatic Transmission (with paddle shifters) to e-CVT technology. Besides, based on Suzukis legendary All-Wheel Drive (AWD) and 4-Wheel Drive (4WD) technologies, the Company offers various drivetrain technologies as well.

Automatic Transmission and Drivetrain Technologies

	Auto Gear Shift	4-speed Automatic Transmission	6-speed Automatic Transmission with paddle shifters	e-CVT Technology	Suzuki AWD Allgrip Select	Suzuki 4WD Allgrip Pro
2021-22	?	?
2022-23	?	?	?	?	?
2023-24	?	?	?	?	?	?

* Refers to the technology available in the products during the particular year.

3. Reducing Carbon Footprint of the Fleet

The Company is committed to completely support Indias ambition of Carbon Net Zero by 2070 and any intermediate targets before 2070. In the automobile business, the largest share of CO₂ emissions is contributed by products. While the Company is focusing on minimising emissions across its business activities, reducing CO₂ emissions of its products is one of the top priorities of the Company. As a result, the Company had the lowest carbon emission fleet among all car manufacturers in the country (as per the Annual Fuel Consumption Compliance Report in FY 2021-22, published by MoRTH). This CO₂ data has been under government monitoring since FY 2016-17.

Reducing the overall carbon emissions cannot be achieved until the entire fleet of cars produced is involved in the

carbon reduction efforts. Hence the Company strategy is to deploy all technologies so that the entire fleet volume is covered:

Introducing Battey Electric Vehicles

The Company revealed the concept of its first electric vehicle (eVX) at the Auto Expo 2023 and Bharat Mobility Expo 2024, with an expected launch in 2025. The concept eVX is a mid-size electric SUV concept offering futuristic design elements and advanced technological features. The eVX will be powered by a 60kWh battery pack offering up to 550 km of driving range. The parent company (SMC), to fortify the EV portfolio, has committed a huge R&D investment. The Company is expected to get as many as 6 EV models.

While the Company is focusing on BEVs, it might not be able to replace its entire fleet of cars immediately. Though the estimates vary, it would be a reasonable assumption that until 2030, at least 85% of the cars sold in India could be non-BEVs. Any meaningful carbon reduction cannot be achieved if this 85% of the car population is not addressed. The car industry needs more solutions that are quickly scalable and affordable to reduce carbon from the entire fleet. In addition to BEVs, the Company will deploy multiple technologies across the entire fleet.

A) Reducing Carbon Footprint by Enhancing Fuel Efficiency of IC Engine Vehicles

The Company, with the support of SMC, has been able to progressively improve the fuel efficiency of IC engine vehicles. With the support of SMC, the Company has developed a new Z-series powertrain that provides exceptional fuel efficiency and lower carbon emissions. The All-New Swift is being offered with the new Z-series powertrain. With this, the Company improved the fuel efficiency of Swifts Automatic Transmission by approximately 14%, with respect to its predecessor.

B) Promoting CNG Powertrain Technology

Besides being low-carbon emission vehicles that incur low running cost, CNG fuel vehicles also help in reducing the countrys import bill. This is a win-win situation for the customer, the environment, and the government. With the governments increased focus on expanding CNG distribution infrastructure across the country, the demand for CNG vehicles is growing. The Company offers CNG options in 14 models and commands nearly 3/4^th of the market share of CNG vehicles in the industry.

C) Deploying Hybrid Electric Technologies

The Company has been offering mild hybrid electric technology for over 9 years now. In FY 2022-23, the Company introduced the Strong Hybrid Electric Vehicle (SHEV). This will significantly help reduce the carbon emission of the IC Engine vehicle without the need for charging infrastructure. SHEVs are self-charging and have the potential to scale up quickly. At present, the Company offers SHEV technologies in Grand Vitara and Invicto.

D) Exploring Biofuels such as CBG, Ethanol, and Flex Fuels

Compressed Biogas (CBG), Ethanol (E20 or 20% blending of ethanol in gasoline), and Flex Fuel Vehicles (FFV) seem to be other promising options driving carbon emission reduction. This is especially because the country has a good amount of agricultural biomass required to produce these green fuels. This would also be in the interest of Indian farmers. E20 is already a priority for the government as well. The Company is exploring all these technologies by undertaking a technical and commercial feasibility study to find the best solution for customers. During the year, in the Bharat Mobility show, the Company displayed Indias first flex-fuel, mass-segment prototype car, the Wagon R FFV. This vehicle will be able to run on an ethanol blend ranging from 20% to 85%. Ethanol fuels are biogenic as they are largely manufactured by using plant-based sources. Therefore, FFV technology can help reduce carbon emissions by approximately 79% in comparison with vehicles that run on gasoline fuel. In Indias context, the Company is working on CBG, which is another promising solution for carbon reduction that the Company is working on.

The Company has accelerated its efforts towards carbon reduction technologies as seen in the table here:

	New Generation K-series Engine	S-CNG Technology	Mild Hybrid Technology	Strong Hybrid Electric Vehicle Technology	ICE Compatibility with E20 fuel	Booster Jet Turbo Engine	All new Z-series Engine	Flex Fuel Vehicle	Electric Vehicle
2021-22	?	?	?
2022-23	?	?	?	?	?			Prototype developed, displayed at Auto Expo 2023	eVX prototype displayed at Auto Expo 2023
2023-24	?	?	?	?	?	?	?	Prototype displayed at Bharat Mobility show 2024	eVX prototype displayed at Bharat Mobility show 2024 (Launch in 2025)

* Refers to the technology available in the products during the particular year.

4. Rohtak R&D Centre

The dynamic and evolving regulatory environment demands a strong capacity and capability to simultaneously meet the emerging needs of the market as well as regulatory requirements. The Company is working to meet ever-evolving regulatory requirements for its products, primarily around emissions and safety. The state-of-the-art R&D test track and testing facilities at Rohtak enable the quick evaluation and development of products.

Supply Chain Management

The supply chain for car manufacturing is quite complex and spread geographically with significant interlinkages. In the last few years, pandemic-led disruptions and geo-political tensions have stressed these supply chains. The disruption was relatively higher when it came to the availability of electronic components due to semiconductor shortages. Due to the several measures taken by the Company in the recent past, the availability of electronic components improved considerably in FY 2023-24.

As a result, the Company could register its highest-ever annual production volume.

Supplier partners play an important role in achieving the Companys growth plan of manufacturing 4 million units by FY 2030-31. The Company is collaborating with supplier partners to identify the best possible configuration for their operations, which will not only effectively manage the increased scale of operations but also improve their competitiveness.

Cost Optimisation

One of the objectives of the Companys cost optimisation programme is to help offset cost pressure on account of inflation in various cost elements to the extent possible to maintain stable prices of the products. This customer-centric approach helps maintain competitiveness.

During the year, the Company experienced cost pressure on account of inflation in various cost elements and new regulations. To offset these cost pressures to a certain extent, the Company undertook several initiatives such as the localisation of direct and indirect imports, value engineering and analysis, yield

improvement, energy efficiency improvement and tighter control on overheads. The Company continues to collaborate with the supplier partners in various cost-optimisation and efficiency- improvement activities.

The Company was able to achieve a significant amount of cost savings on account of the suggestion scheme through which employees contribute to idea generation and its implementation. During the year, the Company achieved the highest-ever cost savings of I 7,693 million on account of such efforts.

Logistics

The Company has been making consistent progress in transforming its inbound and outbound logistics operations to become more greener, safer and competitive.

The Company has been using railways to dispatch vehicles since 2014. FY 2023-24 was a milestone year when it came to using the railways to dispatch vehicles. In this year, the Company also commissioned Indias first automobile in-plant railway siding at its Gujarat plant, and it was inaugurated by the Honourable Prime Minister of India, Shri Narendra Modi.

The railway dispatch capacity from Gujarat has now increased to 300,000 cars, connecting 15 destinations across India. This development will result in reducing 50,000 truck trips, leading to a savings of 35 million litres of fossil fuel and avoidance of 1,660 MT of CO₂ emissions per year.

The facility has been registered under the Government of Indias ambitious Gati Shakti initiative. MSIL has collaborated with Gujarat Rail Infrastructure Development (G-RIDE), a joint venture between the Government of Gujarat and Indian Railways, along with Gujarat Industrial Development Corporation (GIDC), to develop this facility. The Company is also developing railway sliding at its Manesar facility as well.

In the FY 2023-24, the Company achieved a remarkable milestone by dispatching 447,750 vehicles through rail mode. It is the highest ever railway dispatch in a year. This represents a growth of approximately 34% over FY 2022-23.

Since 2014, the railways have dispatched over 1.85 million vehicles, resulting in the elimination of over 260,000 truck trips, saving millions of litres of fossil fuel, and preventing emission of over 9,200 MT of Co2. For dispatching vehicles within India, the Company targets to increase the share of dispatches using railways to 35% by FY 2030-31, compared with 21.5% in FY 2023-24.

Truck on Train Concept

To further make its logistics green and efficient, the Company has conducted successful trials for the dispatch of spare

parts and accessories using the innovative ‘Truck on Train concept. This multimodal method helps to address the first and last-mile connectivity constraints in using rail logistics. The concept involves loading trucks carrying goods onto a flat rail wagon, which delivers the combined benefits of road and rail transportation. The trucks are then transported along the Western Dedicated Freight Corridor from our Haryana plants to Gujarat. This hybrid logistics model significantly reduces the carbon footprint by minimising road travel and leveraging the energy efficiency of railways for long-haul freight transportation.

Modernisation of Fleet of Car Carriers

In addition to the reduction of CO₂ emission in the logistics operations, the Company is focusing on limiting mass emission (NOx/SOx) as well. In this regard, efforts are being made to modernise the fleet compatible with BS-VI emission standard from BS-IV. Various awareness sessions were planned with logistics service providers showcasing the benefits of new-age technology focusing on carbon emission reduction, low carrier breakdown and low maintenance compared to the old fleet. The Company also facilitated the addition of fabricators to reduce the demand and supply gap.

Driver Training

The Company prioritised the safety, health, and well-being of its driver partners by providing training sessions. During the year, over 229,000 drivers and co-drivers were covered through online and offline sessions.

Financial Performance

The Company registered Net Sales of I 1,349,378 million and Profit after Tax of I 1,32,094 million, a growth of 64.1% over the previous year.

Abridged profit and loss account for 2023-24 (I million)

Parameters	FY 2023-24	FY 2022-23	Change
1 Volumes (Nos.)
Domestic	1,852,256	1,706,831
Export	283,067	259,333
Total	2,135,323	1,966,164	8.6%
2 Vehicles	1,170,404	983,198
3 Spare parts/ dies & moulds/ components	178,974	141,810
4 Net sales (2+3)	1,349,378	1,125,008
5 Other operating revenue	59,948	50,221
6 Other income	38,548	21,613
7 Total revenue (4+5+6)	1,447,874	1,196,842	21.0%
8 Consumption of raw materials, components & traded goods	1,004,179	861,062
9 Employee benefit expenses	54,784	46,051
10 Finance Costs	1,932	1,866
11 Depreciation and amortisation	30,223	28,233
12 Other expenses	186,352	158,039
13 Total expenses	1,277,470	1,095,251	16.6%
14 Profit before tax (7-13)	170,404	101,591	67.7%
15 Current tax	36,311	22,475
16 Deferred tax	1,999	(1,376)
17 Profit after tax (14-15-16)	132,094	80,492	64.1%

Table 2: Financial Performance - Ratios (As a Percentage of Net Sales)

Parameters	FY 2023-24	FY 2022-23	Change (%)
Material cost	74.4%	76.5%	(2.1)
Employee benefit expenses	4.1%	4.1%	-
Depreciation and amortisation	2.2%	2.5%	(0.3)
Other expenses	13.8%	14.0%	(0.2)
Profit before tax	12.6%	9.0%	3.6
Profit after tax	9.8%	7.2%	2.6

 

Particulars	FY24	FY23	Change	Remarks where change more than 25%
(i) Debtors Turnover (No of Times)	34	42	-19%
(ii) Inventory Turnover (No of Times)	32	29	10%
(iii) Interest Coverage Ratio	491	315	56%
(iv) Current Ratio	0.8	0.6	33%	Increase is due to higher investment in mutual funds and fixed deposits.
(v) Debt Equity Ratio	(0.005)	0.020	-125%	There is no net debt during the year resulting in a decrease in debt-equity ratio
(vi) Operating Profit Margin (%)	9.9%	7.3%	36%	Mainly due to higher volumes and profitability achieved during the year
(vii) Net Profit Margin (%)	9.8%	7.2%	36%
Return on Net Worth	18.3%	14.1%	30%

Treasury Operations

The Company has efficiently managed its surplus funds through prudent and cautious treasury operations. The guiding principle of the Companys treasury investments is to keep the safety and liquidity of investments over and above returns. Given this, the Company invested its surplus funds in debt schemes of mutual funds and fixed deposits with banks. This has enabled the Company to earn reasonable and stable returns.

Table 3 lists the investment of surplus funds while Table 4 lists the return on these surplus funds.

Table 3: Investment of surplus funds (I million)

	31-03-24	31-03-23
Debt Mutual Fund	533,203	458,525
Fixed Deposits	4,350	-
Total	537,553	458,525

Table 4: Income from investment of surplus fund

(I million)

	31-03-24	31-03-23
Interest on fixed deposits	43	1,459
Income from investment in	36,906	19,088
debt mutual funds
Total	36,949	20,547

Foreign Exchange Risk Management

The Company is exposed to the risks associated with fluctuations in foreign exchange rates mainly on the import of components, raw materials and export of vehicles. The Company has a well-structured exchange risk management policy. It manages exchange risk by using appropriate hedge instruments judiciously depending on market conditions and the view on currency.

Internal Controls and Adequacy

The Company has a proper and adequate system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition, and that all transactions are authorised, recorded and reported correctly. The internal control system is designed to ensure that financial and other records are reliable for preparing financial information and other data, and for maintaining accountability of assets. The internal control system is supplemented by an extensive programme of internal audits, reviews by management, and documented policies, guidelines and procedures.

Risks Associated with Increased Scale of Operations

The Company aspires to scale up its production to 4 million units by FY 2030-31. This is nearly twice the scale over the 2 million units production achieved in FY 2023-24. While the Company has taken nearly 40 years to increase its scale to 2 million units per annum, the scaling up to the next 2 million units would be done in 7-8 years, which is nearly 5 times faster. To realise this growth plan, while the resource requirements, such as human capital, financial capital and know-how, would increase steeply, the time required for making decisions would need to come down. Besides, the stakeholder partners such as suppliers, dealers, and transporters, would also need to scale up in line with the Companys plan. The Company is collaborating with its stakeholder partners to pre-empt the challenges associated with rapid scaling up and managing the increased scale of operations.

Ensuring Continuity in Component Supplies

The Company has over 400 Tier-1 suppliers and nearly 1,500 Tier-2 suppliers, spread across geographies. Therefore, one of the largest sources of business continuity risk is the risk of disruption of component supplies. Driven by pandemic-led disruptions and geo-political tensions, the Company faced supply issues mainly because of shortages of electronic components. Through meticulous planning, maintaining constant communication with the top management of suppliers, developing alternate sources, and optimising the usage of semiconductors in electronic components, the Company was able to significantly improve the availability of electronic components in FY 2023-24.

The Company is also working on an ongoing programme called the ‘Vendor Comprehensive Excellence Programme to improve the capability of suppliers, including risk management, across various business functions. A few areas covered under the comprehensive supplier assessment are fire safety, industrial relations management, quality improvement, financial prudence, water logging, succession planning, and minimising single-location supply dependence. The Companys strong focus on the localisation of components is also a part of its risk mitigation strategy.

Strengthening the Capacity and Capability for Future Product Development

Driven by a) new model launches, b) product refreshers, c) offering several advanced technology-based solutions to enhance safety, comfort, and convenience and d) carrying out several regulatory requirements on a wider product portfolio with multiple powertrain options, the demand increased not only for capacity of resources, such as human resource and testing facilities, but also for acquiring the appropriate capabilities to carry out the necessary development work. The Company is working towards enhancing the skills of its engineering human resources and is also implementing a multitude of measures to motivate and retain the talent.

Cybersecurity

Over the past several years, the Company has made conscious and concerted efforts towards countering cybersecurity threats across its business. The Company has put in place a robust cybersecurity management framework. Measures such as educating the employees to reinforce and increase their awareness of phishing attacks and proactive monitoring through appropriate technology interventions are being undertaken to continuously enhance the security of the information assets and ensure business continuity.

Safeguarding Consumer and Personal data

By the virtue of its business operations ranging from manufacturing to sales to service, a lot of personal data gets generated. Therefore, to safeguard the consumer and personal data, the Company strengthens its policies, governance structure and technological solutions from time to time.

For more information on Risk Management, refer to page 80 of the Integrated Report.

India is developing fast and has an ambitious target to become a developed nation (Viksit Bharat) by 2047. The focus of the government on the manufacturing sector as the single largest lever for the economic and employment growth is highly appropriate. The automobile industry is a very large part of the manufacturing sector and has both a responsibility and the opportunity towards this growth. The Company is conscious of this. Being the largest manufacturer, it has partnered with India in its journey from almost nowhere in the car market to become the 3^rd largest car market of the world.

The Company will continue to partner with India in its ambitious plan of Viksit Bharat. The growth plan of the Company should be in line with the Governments philosophy of ‘Inclusive development, which must be not only good for the economy, but also promote the well-being of environment and society.

The Company must make efforts towards lowering carbon footprint and eventually become net-zero in line with the Governments target. This is required to be done both in our products and our operations including those of our partners.

The Maruti Suzuki 3.0 depicts a new growth phase for the Company, during which the Company would be scaling the production from 2 million to 4 million units per annum. Another very important pillar of Companys growth will be exports. On decarbonisation, the Company will deploy multiple technologies to reduce carbon footprint in totality.

The Company is working towards steeply increasing its scale of operations while at the same time achieving the decarbonisation objective. Hence, to progress towards the growth plan, the Company would need to adopt scale with speed and skill. This will require not only leveraging the existing skills but also building new skills including in technologies like AI, digital, industry 5.0, among others. Skills in these areas are being actively developed in the Company.

In FY 2023-24, Indias PV market reached an all-time high of 4.2 million units. On this elevated base, the growth for PVs in FY 2024-25 may not be high. Any softening in interest rates, inflation and fuel prices, normal monsoon, normalisation of geopolitical situation, etc. may improve the prospects of the passenger vehicle industry. While the growth journey may not be very smooth and the growth path may have year on year variations, the focus of the Company will continue building capability that is required to achieve its medium to longterm growth objectives. The Company is building capability all across the organisation including in areas such as product development, new technologies, and multiple powertrains comprising BEVs, Hybrids, Biofuels, CNG and ICEs with low carbon footprint.