Speed Breakers Galore - Maruti


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Case Details:

Case Code : MKTG001
Case Length : 7 Pages
Period : 1998 -2001
Pub Date : 2001
Teaching Note : Available
Organization : Maruti Udyog limited
Industry : Automobiles
Countries : India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"What it (MUL) did to Premier Automobiles Ltd. and Hindustan Motors is now being done to it."

- AN MUL Rival.

Empire Under Siege

Jagdish Khattar was a man in trouble. Owner of an empire under siege, Khattar, MD, Maruti Udyog Ltd. (MUL) was facing what was the biggest setback ever for the company. With all strategies backfiring, Khattar seemed to be fighting a losing battle. Problems were aplenty - the Maruti 800 segment was facing demand-erosion, Zen and its arch-rival Santro were very close in terms of volumes, the Esteem was losing ground, Baleno, Wagon R and Alto were yet to prove themselves, while the Gypsy1 was snugly ensconced in its niche. Despite the fact that MUL had the biggest range of products, the cheapest cars in the market and a service network and cost structures that were better than anyone else, it had steadily lost market share -down from 82.62% in 1998 to 52% in 2000.

With the disinvestment2 impending, Khattar was facing flak from the Government as well. With market share declining, MUL's valuation had also come down drastically. While it was valued at Rs 8,000 crore in 1996, by December 2000, the figure had touched an abysmal Rs 4,000 crore.

The Building Blocks

MUL was the largest car manufacturer in India with a market share of over 55%. It was a joint sector corporation set up by the Government of India and Suzuki Motor Corporation, Japan.

MUL was incorporated in 1981 to take over the assets of the erstwhile Maruti Ltd. set up in June 1971 and wound up by a High Court order in 1978.

The assets of Maruti Ltd. were then acquired by the Government under the Maruti Ltd. (Acquisition And Transfer of Undertakings Act, 1980)...

Excerpts >>


1] Gypsy was not a volume generating vehicle for MUL.

2] Government's policy of disinvestment in Public Sector Units, included Maruti Udyog Limited also along with other profit making PSU's.

 

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