Maruti Suzuki’s Perspective on Automotive Steel

S.D. Chhabra

Astt. General Manager (Supply Chain)

Maruti Suzuki India Limited

July 08, 2009

Contents

• Domestic Automotive Space

• Update on Maruti Suzuki India Ltd

• Maruti Suzuki’s Steel Sourcing

• Expectations from Indian Steel Mills based

on QCDDM Experience

Domestic Automotive Space - Automotive

Investments

Plans to become the Global Small Car Hub by 2010, with more and more joining the bandwagon

NORTH

EAST

WEST

SOUTH

MAN

New Hub : Uttaranchal

Indian Automotive Industry Today

� 3rd largest small car manufacturer in the World

� 2nd Largest Two – Wheeler manufacturer in the World

� World’s largest Motorcycle manufacturer is in India

� 2nd Largest Tractor manufacturer in the World

� 8th Largest Commercial vehicle manufacturer in the World.

� 9th Largest Car manufacturer in the World

India’s share in world car production in year 2005 was 1.8%

(3.20% in 2007)

Automotive Industry viewed as

“Locomotive for Growth”

Automotive Mission Plan 2016

Turnover

$ 35 Billion to

$145 billion

Automotive Plan 2016

Will contribute 10% of the Country’s GDP and 30~35% of the Industry GDP

Document prepared by Government of Indiain consultation with

ACMA & SIAM

Export

$ 4.1 Billion to

$35 billion

Employment

+ 25 million

Auto Growth Drivers- Tariff Reduction

Supportive Trend of Duty Structure

Net Custom Duty

0.00

10.00

20.00

30.00

40.00

50.00

Mar

-01

Mar

-02

Mar

-03

Mar

-04

Mar

-05

Mar

-06

Mar

'07

Mar

'08

Mar

'09

Auto-Components Steel

Excise Duty on Cars

0

10

20

30

40

50

2001

2002

2003

2004

2005

2006

2007

2008

2009

%

Big Car Small Car

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

Industry Total 8,467,853 9,743,503 11,087,997 10,853,930 11,175,479 32,334,315

Passenger Vehicles 1,209,876 1,309,300 1,545,223 1,777,583 1,838,697 3,000,000

Commercial Vehicles 353,703 391,083 519,982 549,006 417,126 1,416,079

Three Wheelers 374,445 434,423 556,126 500,660 501,030 1,514,713

Two Wheelers 6,529,829 7,608,697 8,466,666 8,026,681 8,418,626 26,403,523

04-05 05-06 06-07 07-08 08-09 14-15

Indian Automotive Industry : Projections

14.35 % CAGR

Source: SIAM Data, ACMA Projections

5.43 6.738.70

12.0015.00

18.0019.00

40.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

US

$B

n

02-03 03-04 04-05 05-06 06-07 07-08 08-09 16-17

Production

PROJECTED at 15% CAGR

Indian Auto-Component Industry: Projections

Source: ACMA India

Update on

Maruti Suzuki India Ltd.

1. 12 Basic models. 5 Engine Types : 796cc, 1061cc, 1067cc, 1197cc 1298cc, 1590cc - all gasoline, 1248 cc – Diesel.

2. Latest addition to portfolio – KB10 (1067cc), KB12 (1197cc) engines

Maruti Suzuki India Ltd. - Products

Production Facilities

Currently 4 plants spread over 3.2 million square meters,

producing one car every 26 seconds

Plant Commissioned Capacity

Plant-1 1983 250,000

Plant-2 1994 140,000

Plant-3 1999 210,000

Plant-4 (New) 2006 250,000

Total 850,000

In addition, a New Diesel Engine Plant with a current capacity of 200,000 units started in 2006 (planned 300,000 capacity by year 2010)

Sales Trend

22106

158

333 360

473540

572

667

792

> 1000

764

0

200

400

600

800

1000

1200

1984-

85

1988-

89

1993-

94

1998-

99

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

2010-

11

Year (Apr-Mar)

No

s('

000)

Total Production (in ‘000)

CAGR > 15.0%

Market Share - Passenger Cars

54.60%

45.40%

54.70%

45.30%

55.00%

45.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

2006-07 2007-08 2008-09

Maruti Others

Maruti Suzuki’s Steel Sourcing

Maruti Suzuki’s Auto Grade Steel Sheet Consumption Pattern

111

120 132 140

195 210

106 120150 152

0

100

200

300

400

500

600

FY2004-05 FY2005-06 FY2006-07 FY2007-08 FY2008-09 FY2010-11#

Quantity,'000MT

In-house Vendor's

226243

345

>525

260

362

•Values are indicative

•# Projections for FY10-11

50

90

50

10

0

20

40

60

80

100

120

Vendor In-house

Local Imports

Maruti Suzuki’sSheet Metal Sourcing Pattern

•Values are indicative for 2008-09

As against this the component level localization percentage is above 94%

for most MSIL Models

Expectations from Indian Steel Mills-

Based on QCDDM Experience

Expectations from Indian Steel Mills -

Quality

• Defect free supplies

• Consistency in Surface Quality for skin panel applications

• Higher Strike rates at Steel Makers for manufacturing of Auto grade steel, especially Skin Panels

• Close Dimensional tolerances to be maintained

• Packaging Improvements

• Automotive quality local steel should be available at competitive prices as available to Japanese OEMs in Japan

• Productivity Improvement to reduce cost

• Avoiding logistics related losses

• Supplies in lower tolerance zone of nominal thickness

Expectations from Indian Steel Mills -

Cost

• Continuous availability with long term commitment

• Short ordering lead time

• Low inventories at our plant

• 100% conformity to delivery schedules

• Coming closer to our plant through Service Centres/ Warehouses

• Flexibility in systems to manage abrupt, large fluctuations in Market requirements

Expectations from Indian Steel Mills -

Delivery