Maruti Suzuki India

The Directors have pleasure in presenting the 27th Annual Report
 together with the Audited Accounts for the year ended 31st March 2008.
 
 FINANCIAL RESULTS
 
 The Companys performance during the year is summarised below: 
 
                                                       (Rs.in Million)
                                            2007-08        2006-07
 
 Gross Total Income                         219,128        178,043
 
 Profit before Tax                           25,030         22,798
 
 Provision for taxation (Incl. Prev. Year)    7,722          7,178
 
 Profit after Tax                            17,308         15,620
 
 Balance brought forward                     56,373         43,939
 
 MSAIL (Maruti Suzuki Automobiles India Limited)
 
 Loss: Adjusted on Amalgamation and
 
 Transition Adjustment for Employee Benefit       0             88
 
 Profit available for appropriation          73,681         59,471
 
 Appropriations:
 
 Debenture Redemption Reserve                     0             17
 
 General Reserve                              1,731          1,562
 
 Proposed Dividend                            1,445          1,300
 
 Corporate Dividend Tax                         248            219
 
 Balance carried forward to Balance Sheet    70,257         56,373
 
 FINANCIAL HIGHLIGHTS
 
 The gross revenue (net of excise) of the Company for the year was Rs.
 188,238 million as against Rs. 152,523 million in the previous year
 showing an impressive growth of 23.4%. Earnings before depreciation,
 interest, tax and amortization (EBDITA) stood at Rs. 31,308 million
 against Rs. 25,888 million in the previous year, recording a jump of
 20.9%.
 
 Based on technical evaluation and market considerations, the Company
 has, with effect from 1st April 2007, revised the estimated useful life
 of certain assets which resulted in depreciation being higher by Rs.
 2,122 million for the current year with a corresponding reduction in
 profit for the year and net fixed assets. Profit before tax (PBT) stood
 at Rs. 25.030 million against Rs. 22,798 miilion in the previous year
 showing a growth of 9.8% and Profit after Tax (PAT) stood at Rs. 17,308
 million against Rs. 15,620 million in the previous year showing a
 growth of 10.8%.
 
 DIVIDEND
 
 The Board recommends a dividend of 100% (i.e. Rs. 5 per equity share of
 Rs. 5 each) for the year ended 31st March 2008 amounting to Rs. 1,445
 million as against a dividend of 90% .  amounting to Rs. 1,300 million,
 paid for the year ended 31st March 2007.
 
 CHANGE OF NAME
 
 With the requisite approval of the members and of the Central
 Government, the name of the Company was changed to Maruti Suzuki India
 Limited with effect from 17th September 2007.
 
 CRISIL RATINGS
 
 The Company has been awarded the highest financial credit-rating of
 AAA/Stable (long term) and P1+ (short term) on its bank facilities by
 CRISIL. The rating underscores the financial strengths of the Company
 in terms of the highest safety with regard to timely fulfillment of its
 financial obligations.
 
 QUALITY
 
 The Company has again been awarded ISO: 27001 Certification by STQC
 Directorate (Standardisation, Testing & Quality Certificate), Ministry
 of Communications and Information Technology, Government of India after
 re-assessment. The Company is thus certified to meet international
 standards for maintaining information security.
 
 The Company also has an ISO 14001:2004 Certification which has been
 similarly awarded again on re-assessment by AIB-Vincotte International
 Ltd., Brussels, Belgium.
 
 Both the Companys plants at Gurgaon and Manesar are ISO: 9001
 certified. The Company is subject to re-assessment at regular intervals
 for re-certification.
 
 The Companys press shop has TS 16949 Certification which is also
 subject to re-assessment at regular intervals.
 
 HIGHLIGHTS OF OPERATIONS
 
 The operations during the year are exhaustively discussed in the report
 on Management Discussion and Analysis which forms a part of this Annual
 Report. Some highlights are mentioned below:
 
 Vehicle Business
 
 Domestic
 
 For the year 2007-08, the Company achieved its highest ever sales of
 711,818 vehicles in passenger cars (including MPV) and grew by 12% over
 2006-07, whereas the passenger car industry growth was 11.8%.
 
 The Company maintained its leadership position in the A2 segment with
 the market share remaining above 58%.The Company achieved a new
 leadership position in A3 segment by launching 2 new models SX4 and
 DZire during the year, thereby increasing its market share from 15% to
 22%.
 
 In the MUV segment, the Company launched the new Grand Vitara - a
 stylish, muscular and 5-seater SUV in July 2007.
 
 Exports
 
 In 2007-08, the Company exported 53,024 vehicles to 46 countries
 posting a growth of 35% over last year. The top 5 export markets were
 Algeria, Chile, Indonesia, Egypt and Sri Lanka. Cumulative exports
 crossed the landmark figure of 500,000 units.
 
 The Company signed an agreement with the Adani group for exporting
 200,000 units annually through the Mundra port in Gujarat. The Company
 plans to export its new model - A-Star which is scheduled to launch
 in the last quarter of 2008-09 and also plans to invest Rs. 40 Crores
 in building a Pre- delivery Inspection (PDI) centre at the port.
 
 Spares and Accessories Business
 
 Sales of spare parts & accessories continued to show a healthy growth
 in 2007-08 and crossed the milestone of Rs. 1,000 crores. It resulted
 in a growth of 19 % over the previous year. Robust growth of service
 load at the dealerships, a result of continued focus to achieve higher
 leveis of customer satisfaction and presence of parts distribution
 network for ensuring easy and widespread availability of genuine parts
 were the key contributors for this performance.
 
 Network
 
 The record sales performance was affected through the Companys vast
 dealership network. Including the extension counters, total new car
 sales outlet increased to 600 covering 393 cities. The Company plans to
 increase the network size to 1000 outlets in the next three years.
 
 In addition to this, there are 265 Maruti True Value outlets spread
 across 166 cities, which are engaged in the sale, purchase and exchange
 of pre-owned cars. Maruti True Value is the largest organised
 pre-owned car sales network in India.
 
 The service network had a total of 2,628 service outlets including
 dealer workshop as well as Maruti Authorised Service Stations, coverjng
 1220 cities. The Company plans to expand it by 45% in the next three
 years.
 
 EXPANSION OF MANUFACTURING FACILITIES
 
 New Car Manufacturing Plant
 
 The Companys new car manufacturing plant at Manesar started operations
 in September 2006 with an initial capacity of 100,000 units. At the end
 of the year, it achieved an expanded installed capacity of 170,000
 units.
 
 All the newly launched models namely Swift, SX4 and DZire are being
 manufactured in Manesar.
 
 The Company plans to produce its new export oriented model- A-Star
 from the same plant and to increase the capacity to 300,000 units by
 October 2008.
 
 New Engine Facility
 
 The Company is setting up a new gasoline engine plant in its Gurgaon
 facilities. The new engines produced will be more fuel efficient and
 help to serve the customer better. The plant will be commissioned by
 producing engines for A-Star followed by other models in the coming
 years.
 
 STRATEGIC ALLIANCES 
 
 Joint Venture Projects
 
 During the year under review, your Company has entered into two joint
 ventures. The first is with Magneti Marelli Powertrain S.p.A.
 (Magneti Marelli) for manufacture of Electric Control Units (ECUs).
 Magnetti Marelli is a Fiat group company and one of the largest
 manufacturers of ECUs with operations in several countries. This joint
 venture will enable the Company to procure ECUs locally which will
 result not only in reduction in the cost but also ensure a highly
 reliable and regular supply of ECUs. A Joint Venture Company was
 incorporated under the name and style of Magneti Marelli Powertrain
 India Private Limited with equity participation of Magnetti Marelli,
 Suzuki Motor Corporation and the Company in the ratio of 51%, 30% and
 19% respectively.
 
 The second joint venture is with Futaba Industrial Co., Ltd. (Futaba)
 for manufacture of Exhaust Systems Components (ESCs).  Futaba is the
 largest manufacturer of ESCs in Japan and has operations in many
 countries. This joint venture will ensure supply of high quality ESCs
 to the Company. A Joint Venture Company was incorporated under the name
 and style of FMI Automotive Components Limited with equity
 participation from Futaba and the Company in the ratio of 51% and 49%
 respectively.
 
 The manufacturing facilities of these Joint Ventures are located at
 Maruti Suzuki Suppliers Park in IMT Manesar, Gurgaon, Haryana.
 
 Service Arrangement with Mundra Port
 
 The Company intends to make itself a manufacturing and export hub for
 its various models. This will result in exports of a considerable high
 volume of products from India.  Exports of such high volume of products
 require a dedicated, modern and high quality port. To meet such
 specialised requirements, the Company entered into an agreement with
 Mundra Port and Special Economic Zone Limited (MPSEZL) to develop a
 mega car terminal at Mundra Port for export of Companys products. This
 arrangement will ensure availability of requisite infrastructure at the
 Port and export of products in an efficient manner.
 
 AWARDS/RECOGNITION
 
 The Company is Indias most awarded car Company. Some of the awards won
 by the Company during the year under review are: ¦ The prestigious
 Golden Peacock Award for excellence in the field of Environment
 Management in Automobile Sector.
 
 - JD Power Customer Satisfaction Award. This award has been received
 for the 8th time in a row.
 
 - 2007 India IQS Award for Maruti Swift which has been highest ranked
 model in the Premium Compact car segment.
 
 - 2007 India APEAL for Maruti Zen Estilo which has been highest ranked
 model in Compact car segment.
 
 - 2007 India APEAL for Maruti Swift which has been highest ranked model
 in Premium Compact car segment.
 
 - 2007 India APEAL for Maruti SX4 which has been highest ranked model
 in Midsize car segment.
 
 - Car Manufacturer of the Year Award by NDTV.
 
 - ICICI-NDTV Profit Viewers Choice Award for Maruti SX4 in the Midsize
 car segment.
 
 - CN BC TV-18 Autocar Midsize Car Award for Maruti SX4.
 
 - CNBC TV-18 Autocar Value for Money for Maruti SX4.
 
 - CNBC TV 18 Autocar Award for Viewers Choice for Maruti SX4.
 
 - CNBC TV-18 Autocar Manufacturer Award.
 
 - Manufacturer of the Year Award in the Passenger Car category by
 Auto Monitor Awards.
 
 SUBSIDIARY COMPANIES
 
 In 2007-08, the insurance business as a whole has earned a Profit
 Before Tax (PBT) of Rs. 419 million, an increase of 12% as compared to
 PBT for 2006-07. The insurance business has been able to write more
 than 1.77 million policies and collect premium of approximately Rs.
 12,500 million. Total policies issued since inception crossed the
 landmark figure of 5 million. Inspite of the prevailing competition,
 Maruti Insurance (Ml) has improved on new car penetration by 2% to 88%
 (out of 100 customer buying new cars, 88 buy Ml) and renewal
 penetration by 11% to 70% (measured on the base of past 3 year
 retails).
 
 In terms of infrastructure upgradation, the IT application has been
 upgraded to dot-net platform.  This provides greater flexibility to
 handle business in de-tariffed times and has much faster response time
 which is highly desirable with the current volumes.  An online policy
 renewal system has been set up by which customers can renew their
 policies themselves through the internet and pay the premium through
 credit cards. Claim handling and payment have also been brought online
 this will be further advanced in the coming years.
 
 The online systems will help its customers in achieving fast turn
 around time and will provide improved transparency.
 
 The premium rates were completely de-tariffed with effect from 1st
 January 2008. Keeping pace with the market, premiums were reduced by
 20%, providing the best value for money to the customers.  Innovative
 and customer friendly products in the Ml portfolio will be offered to
 the customers, once the product change is permitted by Insurance
 Regulatory and Development Authority (IRDA). The challenges in the
 de-tariffed regime are welcome with the aim to enhance insurance
 services to customers, resulting in the better financial performance.
 
 The subsidiary companies are discussed below:
 
 Maruti Insurance Business Agency Limited
 
 This Company sells insurance policies to Maruti car owners in a tie-up
 with National Insurance Company Ltd. For 2007-08, it recorded total
 revenue of Rs. 585.65 million and PBT Rs. 258.83 million, an increase
 of 59.52 % over the previous year.
 
 Maruti Insurance Distribution Services Limited
 
 This Company sells insurance policies to Maruti car owners in a tie-up
 with Bajaj Allianze General Insurance Company Ltd. For 2007-08, it
 recorded total revenue of Rs. 76.73 million and PBT Rs. 34.91 million,
 an increase of 7.24 % over the previous year.
 
 Maruti insurance Agency Solutions Limited
 
 This Company sells insurance policies to Maruti car owners in a tie-up
 with New India Assurance Company Ltd.
 
 For 2007-08, total revenues were Rs. 109.41 million and PBT Rs.  48.22
 million, an increase of 49.5% over the previous year.
 
 Maruti Insurance Agency Network Limited
 
 This Company sells insurance policies to Maruti car owners in a tie-up
 with Royal Sundaram Alliance Insurance Company Ltd. For 2007-08, its
 total revenues were Rs. 166.63 million and PBT Rs.  74.89 million, an
 increase of 53.4% over the previous year.
 
 Maruti Insurance Agency Services Limited
 
 This Company sells insurance policies to Maruti car owners in a tie-up
 with Iffco Tokyo General Insurance Company Ltd. In 2007- 08. being the
 first year of its commercial activities, it has generated revenue of
 Rs. 5.20 million and PBT Rs, 1.99 million.
 
 Maruti insurance Agency Logistics Limited This Company sells insurance
 policies to Maruti car owners in a tie-up with ICICI Lombard General
 Insurance Company Ltd. The Company was incorporated on 18th October
 2007. It has generated revenue of Rs. 0.61 million and earned PBT Rs.
 0.10 million.
 
 True Value Solutions Limited
 
 The Company has contributed towards smooth operation of business
 processes at Maruti True Value outlets and supported the dealerships in
 enhancing the sale of certified pre-owned cars under the brand Maruti
 True Value. True Value has contributed significantly to our effort of
 customer retention by facilitating repurchase of new cars and has made
 significant contribution towards enhancing dealer profitability.
 
 HUMAN RESOURCE DEVELOPMENT
 
 The Companys key strength is its human capital. The Company has,
 during 2007-08, spent about Rs.  10 Crores on training of its
 employees.
 
 The Company conducts programs such as Bulandi and Chunauti for the
 workmen and technicians to enhance pride in being an employee of the
 Company and also to create team synergy. At the middle management
 level, the focus of the programs is to inculcate leadership qualities
 while at the Director level, one or more retreats take place so that
 the Directors can unwind and take a detached view of self development
 and the organisation.
 
 The Company goes further and trains its dealers and vendors
 workforce. 3200 programs have been conducted covering more than 13000
 dealers sales persons.  The Companys Maruti Centre of Excellence
 (MACE) is a team dedicated to the development of vendors employees.
 
 In programs like Family Connect and Parivar Milan, family members
 of the employees are invited to interact with top management to get a
 feel of the workplace and environment. The idea is to develop better
 understanding and increase the support and co-operation for the
 employees from their families.
 
 The outbound training programs (OBT) encourage learning while having
 fun. The training encourages team work and teams come back fully
 motivated to face future challenges.
 
 SUSTAINABILITY
 
 The Company believes in long term sustainability initiatives in the
 interest of its various stakeholders.  The detailed description on
 these activities is presented in a separate section in this Annual
 Report.
 
 DIRECTORS
 
 Mr. R.C. Bhargava assumed the position of Chairman of the Board on 19th
 December 2007.
 
 Mr. Manvinder Singh Banga, Mr. Amal Ganguli and Mr. Davinder Singh Brar
 retire by rotation at the ensuing Annual General Meeting and, being
 eligible, offer themselves for re-appointment.
 
 The Company spent a long time under the leadership of Mr. Jagdish
 Khattar who always spurred on the employees to achieve milestones and
 inspired them to work as a team. His contribution in every sphere is
 enduring, distinct and unique. The Board records its appreciation of
 his outstanding achievements and the goodwill, the Company has been
 able to earn due to his untiring and selfless efforts, farsightedness
 and visionary skills. Mr. Khattar retired from the office of Managing
 Director and CEO in the normal course from the close of business on
 18th December 2007.
 
 The position of Managing Director & CEO has been taken by Mr. Shinzo
 Nakanishi, who has about 37 years of experience with Suzuki Motor
 Corporation (SMC).  The Board, whole heartedly, welcomes Mr. Shinzo
 Nakanishi as the new Managing Director & CEO of the Company.
 
 Mr. Tsuneo Ohashi, Mr. Keilchi Asai and Mr. Kenichi Ayukawa were
 appointed as Additional Directors.  The Board welcomes all of them and
 looks forward for their dedicated support. They hold their office up to
 the date of the ensuing Annual General Meeting and being eligible,
 offer themselves for appointment. Notices under Section 257 of the
 Companies Act, 1956 proposing their candidature for appointment have
 been received.
 
 During the year, Mr. Hirofumi Nagao was re-appointed as Whole-time
 Director. However, due to withdrawal of his nomination by SMC, Mr.
 Hirofumi Nagao resigned from his office with effect from the close of
 business on 10th July 2008.  Mr. Tsuneo Kobayashi and Mr. Masayuki
 Osada also resigned with effect from close of business on 2nd December
 2007 and 1st January 2008 respectively due to withdrawal of nomination
 by SMC. The Board places on record its sincere appreciation for the
 services rendered by them during their tenure.
 
 Mr. Toshiaki Hasuike was also appointed as a Director on the Board
 during the year but due to his promotion at SMC, he could not assume
 his office.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 As required under Section 217(2AA) of the Companies Act, 1956, the
 Directors confirm having:
 
 a) followed, in the preparation of the Annua! Accounts, the applicable
 accounting standards with proper explanation relating to material
 departures;
 
 b) selected such accounting policies and applied them consistently and
 made judgements and estimates that are reasonable and prudent so as to
 give a true and fair view of the state of affairs of your Company at
 the end of the financial year and of the profit of your Company for
 that period;
 
 c) taken proper and sufficient care for the maintenance of adequate
 accounting records in accordance with the provisions of the Companies
 Act, 1956, for safeguarding the assets of your Company and for
 preventing and detecting fraud and other irregularities; and
 
 d) prepared the Annual Accounts on a going concern basis.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 A statement giving details of conservation of energy, technology
 absorption, foreign exchange earnings and outgo in accordance with the
 Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988 is annexed as Annexure A.
 
 PERSONNEL
 
 As required by the provisions of Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975,
 as amended, the names and other particulars of the employees are set
 out in Annexure B to the Directors Report. However, as per the
 provisions of Section 219(l)(b)(iv) of the Companies Act, 1956, the
 Annual Report is being sent to all the shareholders of the Company
 excluding the aforesaid information. Any shareholder interested in
 obtaining such particulars may write to the Company Secretary at the
 Registered Office of the Company.
 
 SUBSIDIARY COMPANIES ACCOUNTS
 
 In terms of approval granted by the Central Government under Section
 212(8) of the Companies Act, 1956, copy of the balance sheets, profit &
 loss accounts, reports of the Board of Directors and Auditors of the
 subsidiaries have not been attached with the Balance Sheet of the
 Company. These documents will be made available upon request by any
 investor of the Company or subsidiary companies and shall be kept for
 inspection by any investor at the Registered Office of the Company.
 However, as directed by the Central Government, the financial data of
 the subsidiaries have been furnished under Financial Statement of
 Subsidiary Companies forming part of the Annual Report. Further,
 pursuant to Accounting Standard AS - 21 issued by the Institute of
 Chartered Accountants of India, Consolidated Financial Statements
 presented by the Company includes financial information of its
 subsidiaries.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 In accordance with the Accounting Standard AS - 21 on Consolidated
 Financial Statements read with Accounting Standard AS - 23 on
 Accounting for Investments in Associates and Accounting Standard AS -
 27 on Financial Reporting for Interest in Joint Ventures, the Audited
 Consolidated Financial Statements are provided in the Annual Report.
 
 CORPORATE GOVERNANCE
 
 The Company has complied with the Corporate Governance requirements, as
 stipulated under Clause 49 of the Listing Agreement.  A separate
 section on Corporate Governance alongwith a certificate from the
 Auditors of the Company confirming the compliance, is annexed and forms
 part of this Report.
 
 AUDITORS
 
 The Auditors, M/s Price Waterhouse, Chartered Accountants, hold office
 until the conclusion of the ensuing Annual Genera! Meeting and are
 recommended for re-appointment.  Certificate from the Auditors has been
 received to the effect that their re-appointment, if made, would be in
 accordance with Section 224 (IB) of the Companies Act, 1956.
 
 COST AUDITORS
 
 In conformity with the directives of the Central Government, the
 Company has appointed M/s R. J. Goel & Co., Cost Accountants, as the
 Cost Auditors under Section 233B of the Companies Act, 1956 for the
 audit of the cost accounts for the motor vehicles business for the year
 ending on 31st March 2009.
 
 ACKNOWLEDGMENT
 
 The Board of Directors would like to express its sincere thanks for the
 co-operation and advice received from the Government of India and the
 Haryana Government. Your Directors also take this opportunity to place
 on record their gratitude for timely and valuable assistance and
 support received from Suzuki Motor Corporation. Japan, as well as from
 the employees of the Company including the Japanese staff, dealers,
 vendors, customers, business associates, auto finance companies. State
 Government Authorities and all concerned, without which it would not
 have been possible to achieve all round progress and growth of the
 Company. Your Directors are thankful to the shareholders for their
 continued patronage.
 
 For and on behalf of the Board of Directors
 
 Shinzo Nakanishi                  R.C.Bhargava
 Managing Director & CEO              Chairman
 
 New Delhi
 21st July 2008