Integrated_Report_2018_19_Low (1).pdf - 21,000,000 USTOMERS INTEGRATED REPORT 2018-19 CORPORATE OVERVIEW Company Profile Product Portfolio Performance

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Unformatted text preview: 21,000,000+ USTOMERS INTEGRATED REPORT 2018-19 CORPORATE OVERVIEW Company Profile Product Portfolio Performance Highlights 2018-19 Awards and Accolades Key Figures Message from the Chairman Message from the Managing Director & CEO Board of Directors Executive Management Team VALUE CREATION APPROACH Value Creation Process External Environment Stakeholder Engagement Material Topics Risk Management Way Forward SUSTAINABILITY PERFORMANCE Governance Mechanism Product Innovation and Stewardship Customer Engagement and Support Capacity Building of Value Chain Partners People Practices Resource Use and Management Corporate Social Responsibility GRI Content Index Alignment with UNGC Principles Independent Assurance Statement 2-23 4 8 10 12 14 16 18 20 22 STATUTORY REPORTS Board’s Report Corporate Governance Report Management Discussion & Analysis Business Responsibility Report 78-149 80 119 136 146 24-39 FINANCIAL STATEMENTS 150-292 26 28 32 34 38 39 Standalone Financial Statements Consolidated Financial Statements 152 220 40-77 42 45 51 53 57 63 68 71 73 74 REPORT PROFILE Maruti Suzuki India Limited (hereafter referred to as ‘MSIL’ or the ‘Company’) is pleased to present its 38th Annual Report for the financial year 2018-19 (1st April, 2018 to 31st March, 2019, or the ‘reporting period’). During the reporting period, the Company has transitioned to the Integrated Reporting Framework (referred to as <IR> framework) developed by the International Integrated Reporting Council (IIRC). The Securities and Exchange Board of India (SEBI) has advised top 500 listed companies to voluntarily adopt Integrated Reporting for disclosure of financial and non-financial information. This report intends to serve as a concise communication about the Company’s thoughts on business, governance, performance (financial and non-financial) and prospects in the context of its external environment. The financial information presented in this report complies with the financial and statutory data requirements of the Companies Act, 2013 (including the rules made thereunder), Indian Accounting Standards, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Secretarial Standards. It has undergone independent assurance by Deloitte Haskins & Sells LLP. The non-financial information presented in this report is based on the sustainability reporting standards of the Global Reporting Initiative (GRI Standards), and has undergone independent assurance by DNV GL Business Assurance India Private Limited. This information covers the manufacturing facilities at Gurugram and Manesar, Research & Development (R&D) facility at Rohtak, Head Office at New Delhi, regional, zonal and area offices across India, sales and distribution facilities and stockyards. Joint ventures and subsidiaries are excluded. There was no significant change in scope and boundaries of the GRI-based disclosures from the previous reporting period. The non-financial information presented in this report is based on calculation methodologies conforming to globally accepted standards. The assumptions, exclusions and restatements have been included wherever applicable. The report also describes the alignment of the Company’s performance to the United Nations’ Sustainable Development Goals (SDGs). Additionally, the report is aligned with the Ten Principles of the United Nations Global Compact (UNGC) and the National Voluntary Guidelines on Social, Environmental and Economic (NVG-SEE) Responsibilities of Businesses in India issued by the Ministry of Corporate Affairs, Government of India. Corporate Overview Company Profile 4 Product Portfolio 8 Performance Highlights 2018-19 10 Awards and Accolades 12 Key Figures 14 Message from the Chairman 16 Message from the Managing Director & CEO 18 Board of Directors 20 Executive Management Team 22 4 Corporate Overview Company Profile Product Portfolio Performance Highlights 2018-19 Company Profile The Company was established in 1981. A joint venture agreement was signed between the Government of India and Suzuki Motor Corporation (SMC), Japan in 1982. The Company became a subsidiary of SMC in 2002. In terms of production volume and sales, the Company is now SMC's largest subsidiary. SMC currently holds 56.21% of its equity stake. It is a public limited company and its shares are traded at the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Awards and Accolades Key Figures Message from the Chairman FACILITIES IN INDIA Message from the Managing Director & CEO Board of Directors Gurugram (Haryana) Zonal Offices Manufacturing Sites Executive Management Team 6 Manesar (Haryana) 6 Rohtak (Haryana) Research & Development Centre Gurugram (Haryana) Head Office Regional Offices 19 New Delhi 13 Gurugram (Haryana) Sales & Distribution Facilities Manesar (Haryana) Area Offices Hansalpur (Gujarat) 19 7 Siliguri (West Bengal) Stockyards Bengaluru (Karnataka) Nagpur (Maharashtra) Arena - Existing channel Nexa - New channel Production Capacity The Company has two state-of-the-art manufacturing facilities located in Gurugram and Manesar in Haryana, with a combined annual production capacity of ~1.58 million units per annum. Highly efficient lean manufacturing processes together with a skilled and motivated workforce leads to the manufacture of reliable and quality products. Suzuki Motor Gujarat Private Limited (SMG), a subsidiary of SMC, was set up in Hansalpur, Gujarat to cater to the increasing market demand for the Company's products and has been operational since 2017. Through this new facility, an additional annual production capacity of 0.5 million units has been made available, thereby taking the combined production capacity to a little over two million units. The SMG facility is in the process of expanding production capacity to 0.75 million units by the year 2020. The Company is responsible for the sales and distribution of units produced at the SMG facility in Gujarat. Cumulative Production (million units) March 1994 1 April 2005 5 March 2011 July 2018 10 20 5 First 10 million units in 27 years Next 10 million units in less than 8 years Roll-out of 20 millionth vehicle from the Company's manufacturing facility Unit Sales (Domestic and Export) FY’15 1,292,415 FY’16 1,429,248 FY’17 1,568,603 FY’18 1,779,574 FY’19 Figures include vehicles produced by SMG and supplied to the Company as per the contract manufacturing agreement 1,862,449 6 Corporate Overview Company Profile Product Portfolio Performance Highlights 2018-19 Awards and Accolades Key Figures GLOBAL MARKETS SERVED (BY GEOGRAPHY) Market leader in passenger vehicle segment in India Message from the Chairman INDIA 1,753,700 Message from the Managing Director & CEO Board of Directors Executive Management Team INDONESIA 14,921 URUGUAY 4,608 NEPAL 6,502 CHILE 17,637 SOUTH AFRICA 12,159 Exports to 95 countries Top 5 countries for exports Figures indicate sales in 2018-19 Other countries for exports 7 SALES AND SERVICE CHANNELS IN INDIA Sales Channels Service Channels MARUTI SUZUKI ARENA A youthful and modern destination that provides a dynamic, trendy, social and connected new-age car buying experience NEXA Premium sales channel targeted at new customer segments offering global buying experience, innovative technology and enhanced hospitality Extensive network for vehicle servicing, including value-added services such as Maruti Mobile Support vehicles, on-road assistance and Quick Response Team 2,264 360 3,614 1,859 204 1,784 TRUE VALUE Trusted destination for buyers of pre-owned cars at fair and transparent prices Fastest growing automobile retail channel in India 1,252 310 942 230 Outlets Maruti Mobile Support vehicles COMMERCIAL 1,398 Vehicles deployed for quick response 765 Cities SUPPORTING PRODUCTS AND SERVICES OFFERED In association with its subsidiaries and business partners, the Company also offers an array of supportive products and services to its customers which has helped generate and retain customer loyalty. SUPPORTING PRODUCTS AND SERVICES Maruti Genuine Accessories Maruti Driving School Maruti Insurance Maruti Auto Card Maruti Genuine Parts Maruti True Value Maruti Finance High-quality accessories at reasonable rates approved and certified by the Company for their compatibility with the various models World-class driving training using advanced simulators Single window for cashless accident repairs, hassle free services and easy claim settlement Unique loyalty reward programme designed exclusively for the Company’s customers Quality spare parts for ensuring longevity and performance of vehicle, and safety of passengers Transforming buying experience of a pre-owned car Partnering with banks and Non-Banking Financial Corporations to provide easy availability of finance 8 Corporate Overview Product Portfolio Company Profile Product Portfolio Performance Highlights 2018-19 BALENO CIAZ DZIRE VITARA BREZZA WAGONR ALTO 800 EECO GYPSY Awards and Accolades Key Figures Message from the Chairman Message from the Managing Director & CEO Board of Directors Executive Management Team 9 S-CROSS IGNIS ERTIGA SWIFT ALTO K10 CELERIO SUPER CARRY* *Super Carry is sold through Commercial Channel 10 Corporate Overview Company Profile Product Portfolio Performance Highlights 2018-19 Awards and Accolades Key Figures Message from the Chairman Message from the Managing Director & CEO Board of Directors Executive Management Team Performance Highlights 2018-19 FINANCIAL CAPITAL The Company’s growth strategy, along with disciplined allocation of capital has led to sustained financial returns. Op. EBIT (%) PAT margin (%) 9.0 17.1 ROCE (%) Dividend payout ratio (%) Book value per share (`) 9.6 23.8 ROE (%) 38.8 1,527 MANUFACTURED CAPITAL The Company uses state-of-the-art facilities and highly efficient lean manufacturing processes to manufacture reliable and quality products. Production capacity Vehicles sold 2,076,000 units 1,862,449 units Including SMG INTELLECTUAL CAPITAL With the product and technology licenses received from Suzuki Motor Corporation, the Company could offer relevant products in the Indian market. New models Facelift models 2 7,128 million Patents filed / granted Designs filed / registered R&D engineers 2 100/12 35/54 R&D spend (`) 1,600 HUMAN CAPITAL The Company is focused on developing the skills, competencies, health, safety and wellbeing of its human resources, so that they may be optimally leveraged for creation of value across other capitals. Fatalities Nil Total training person-hours 1,196,822 (16% increase) Lost-time injuries Nil Unionised workforce ~100% Employee benefit expenses (`) 32,549 million 11 SOCIAL AND RELATIONSHIP CAPITAL The Company strives to maintain mutually respectful and beneficial relationships with its stakeholders such as customers, value chain partners, local communities and government, creating a favourable environment for business. Sales outlets added 316 Service centres added 211 Service staff trained Sales staff trained 50,000 + Service training facilities 130,000 + 170 (ten-fold increase) Customers touched through sales and service connect activities CSR spend (`) 1,541 million 20 million + NATURAL CAPITAL The Company strives to reduce the impact of its products and services on the environment through sustainable use of natural resources and responsible waste, wastewater and emission management practices. End-of-Life Vehicle management (ELV) Ground water consumption New WagonR meets ELV norms ahead of regulations Nearly eliminated Renewable energy initiative 5 MW solar plant being set-up Cumulative CO2 emissions saved by in-use alternate fuel driven vehicles since 2005-06 1,006,511 tonnes Water demand met through recycled water 62% Water saved through Dry Wash Systems at service workshops 996 litres per workshop per day CO2 emission reduction in new and facelift models by design 4-21% across models 12 Corporate Overview Awards and Accolades Company Profile Product Portfolio Performance Highlights 2018-19 Awards and Accolades Key Figures Message from the Chairman Message from the Managing Director & CEO Board of Directors Company of the Year, 2018 for Excellent Business Performance from Business Standard Executive Management Team R. C. Bhargava, Chairman, honoured with Lifetime Achievement Award Kenichi Ayukawa, MD and CEO, for at the CNBC - Awaaz Annual CEO Awards, 2018 Best CEO Large Companies, 2019 from Business Today (third time in a row) Swift - Indian Car of the Year (ICOTY), 2019 Ertiga Car of the Year and MPV of the Year at the Autocar Awards, 2018 Swift and Ertiga - Premium Hatchback of the Year and Best MPV of the Year respectively at the Car India Awards, 2019 Swift and Ertiga - Car of the Year and Best MPV of the Year respectively at the Auto Portal Annual Awards, 2018 13 Platinum Safety Award for Excellence in Safety Systems at the 7th FICCI Safety Systems Excellence Awards, 2018 National Safety Award, 2018 for Excellence in Industrial Safety in the automobile category, by Ministry of Labour and Employment, Government of India Greentech Safety Platinum Award, 2019 for outstanding achievements in safety management in the automobile sector Platinum Certificate Frost & Sullivan and TERI’s Sustainability 4.0 Award for Leaders Mega Large Business in Automotive Sector, 2018 for Best CSR Practices in Haryana at the First Haryana CSR Summit, 2018 Commendation for Significant Achievement at the CII - ITC Sustainability Awards, 2018 Gold Trophy in the category of Best ITI - Skill Development through PPP Model (second time in a row) at the ASSOCHAM’s Skilling India Awards, 2018 4 Good rating by The Economic Times 2 Good 4 Good CSR rating scheme, 2019 14 Corporate Overview Company Profile Key Figures Op. EBIT Product Portfolio Performance Highlights 2018-19 (%) FY'14 7.3 FY'15 8.7 FY'16 10.7 Message from the Chairman FY'17 11.6 Message from the Managing Director & CEO FY'18 11.9 FY'19 9.6 Awards and Accolades Key Figures Board of Directors Executive Management Team ROE (%) FY'14 14.1 FY'15 16.6 FY'16 19.4 FY'17 22.2 FY'18 19.8 FY'19 17.1 Dividend Payout Ratio (%) FY'14 15.2 FY'15 25.0 FY'16 23.7 FY'17 37.1 FY'18 37.7 FY'19 38.8 5-year Performance Summary (` million) PARAMETERS Net Sales Op. EBIT PBT PAT EPS (`) Dividend Per Share (`) Net Worth Current Liabilities Total Liabilities Non-current Assets Current Assets Total Assets Operating Cash Flow Free Cash Flow FY'14 FY'15 FY'16 FY'17 FY'18 FY'19 FY'19/18 (% CHANGE) 426,448 31,027 36,585 27,830 92 12 209,780 81,381 96,217 164,083 141,914 305,997 49,036 14,109 486,055 42,426 48,682 37,112 123 25 237,042 88,213 98,451 253,531 81,962 335,493 63,207 31,720 564,412 60,642 74,437 53,643 178 35 298,842 110,392 120,558 340,940 78,460 419,400 84,845 58,518 669,094 77,496 99,603 73,502 243 75 364,311 132,264 148,195 424,744 87,762 512,506 102,793 69,070 781,048 93,036 1,10,034 77,218 256 80 417,573 154,421 176,128 514,487 79,214 593,701 117,850 79,197 830,265 79,804 1,04,656 75,006 248 80 461,415 141,503 167,903 505,702 123,616 629,318 65,932 18,932 6.3 -14.2 -4.9 -2.9 -2.9 10.5 -8.4 -4.7 -1.7 56.1 6.0 -44.1 -76.1 Note: FY’16, FY’17 and FY’18 figures are as per Ind-AS. 15 PAT Margin (%) FY'14 6.5 FY'15 7.6 FY'16 9.5 FY'17 11.0 FY'18 9.9 FY'19 9.0 ROCE (%) FY'14 18.2 FY'15 21.6 FY'16 26.9 FY'17 30.1 FY'18 28.1 FY'19 23.8 Book Value Per Share (`) FY'14 694 FY'15 785 FY'16 989 FY'17 1,206 FY'18 1,382 FY'19 1,527 16 Corporate Overview Message from the Chairman Company Profile world, it is not easy for any nation to become a globally competitive manufacturing country. I believe that team working at all levels would give India the best chance of becoming an internationally competitive manufacturing country. Team working is possible when all subscribe to the end objective to be achieved and work to win the trust and confidence of the team members. The goals for all in the nation are achieving rapid economic growth, becoming a US$5 trillion economy and creating an inclusive society. It is the responsibility of leadership in various areas to accept these goals and help achieving them by working as a single national team. Product Portfolio Performance Highlights 2018-19 Awards and Accolades Key Figures Message from the Chairman Message from the Managing Director & CEO Board of Directors Executive Management Team Team working is hard to achieve if there are wide disparities of income and consumption between team members. I am happy to report that, in your Company, we have endeavoured to minimise disparities. The salary of the Managing Director is between 14 and 25 times that of a workman with 35 years of service. If variable salary is included the ratio changes to between 17 and 30 times. This is one reason why team working in your Company has sustained for over 35 years and resulted in its high competitiveness. I am delighted to welcome our shareholders to the 38th Annual General Meeting of the Company. The recent elections have very clearly shown that economic development, creation of employment opportunities for the youth of the country and inclusive growth are what people overwhelmingly want. They have total trust in the vision and leadership of the Prime Minister, who has identified manufacturing growth as the engine for creating national wealth and employment. Our past history shows the importance of creating wealth to enable all citizens to enjoy a satisfactory level of life on a sustained basis. Further, the larger the employment generation the greater would be the inclusivity in the creation of wealth and the ability to meet the aspirations of the youth. As the Prime Minister has said, India has to rapidly grow its manufacturing sector to achieve these objectives. A number of steps have already been taken to promote investments and growth of competitive manufacturing. However, more needs to be done if the target of manufacturing contributing 25% of the GDP by 2022 is to be achieved. This would also be an important step towards the goal of a US$5 trillion economy. The Budget speech of the Union Finance Minister has highlighted the important role that India Inc. has to play in achieving these goals. Your Company has been playing a leading role in the manufacturing sector and would make every effort to help achieve the higher national goals. Maruti Suzuki India Limited is an example of how people of two nations can cooperate in an enlightened manner and work with perfect team spirit for the benefit not only of the stakeholders of the Company but of both nations. In today’s highly competitive The success of your Company has been an important factor in making India an attractive investment destination for Japanese and other investors, besides creating large national wealth and employment. The Company recognises the importance of sustaining its performance and I propose to briefly review some of the activities intended to help in this area. Of course, the basic approach will be the partnership approach in our operations and strengthening team working. The CSR programmes have been carefully devised and are consistent with the priority areas outlined by the Government. Besides utilising the full budget for CSR, greater attention is paid to ensure that the outcomes on the ground do not have any shortfalls. Effective implementation, in a cost-effective manner, is our watchword. Applicants for driving licences are now tested on automated test tracks in Delhi. This has not only increased transparency, but the quality of drivers will see an improvement. Technology is also being used to detect violations of traffic rules in Delhi and challans have multiplied many times. Unfortunately, the laws for punishing serious violations are grossly inadequate for any real deterrent effect on errant drivers. It should be possible for state governments to adopt these technology-driven systems all over the country and thereby substantially increase road safety. In the 26 villages where com...
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