Revision as of 16:52, 26 June 2018

History

Shweta Punj , In the driver’s seat “India Today” 21/8/2017

It was India first people's car at a time when only two brands ruled the roads, the Ambassador and the Premier Padmini. The top passenger carmaker in India, with a 50.5 per cent market share, it adapted quickly to changing consumer preferences and expanded its portfolio from small cars to all segments in the passenger vehicle market. An early flag-bearer of the Make in India campaign, it exported 1.5 million vehicles to over 100 countries.

The premium hatchback, Baleno, became its first car to be manufactured in India and exported to Japan. It employs 25,000 employees and is building a sustainable profit model by reducing imports and aggressively pursuing localisation.

It all began in a makeshift workshop in Delhi's Gulabi Bagh. The year was 1966 and then prime minister Indira Gandhi's son Sanjay Gandhi had ambitions of building India's first small car. He started a car-building exercise with a few friends, with parts sourced from shops near the Jama Masjid and a motorcycle engine. The government even issued a letter of intent in September 1970, allowing Sanjay to produce up to 50,000 cars a year. But Emergency derailed the project. A year after Sanjay Gandhi's death in June 1980, Indira Gandhi revived Maruti, with Suzuki as the technology provider from Japan. Maruti is the first company that combined sleek design with technology for a superior driving experience. It played a key role in opening up the Indian auto sector to foreign players. For many, Maruti was their first car. The company has launched 36 new or refreshed models and invested Rs 2,000 crore on an R&D centre. It is also skilling the youth by collaborating with the Industrial Training Institutes.

1999: Maruti nearly bought Hyundai India

Nandini Sengupta, February 7, 2018: The Times of India

Maruti Suzuki and Hyundai Motor India (HMI) are the No. 1and No. 2 passenger vehicle companies in India, and have been arch rivals for more than two decades. But imagine what the Indian car market would have looked like if Maruti took over Hyundai India... Sounds unbelievable? But that’s exactly what nearly happened back in 1999 when HMI’s parent was battling the worst of the Asian crisis.

In his new book ‘Santro: The Car That Built A Company’, former HMI president B VR Subbu gives details of how Hyundai India almost became a wholly owned subsidiary of Maruti.

The backdrop of this neartakeover was the late-90s when HMI’s parent Hyundai Motor Company (HMC) was tackling the Asian currency crisis. At that point, “HMC had actually started looking at the possibility of a significant dilution of its equity holding in the Indian entity, even going to the extent of making specific applications to the Foreign Investment Promotion Board for offloading of 14.2% of the Rs 812-crore equity.” The book says the investment bankers handling the deal roped in Unit Trust of India (UTI) and American Insurance Group (AIG).

Though interested, however, the deal fell through on the issue of employee stock options and possible IPO of the Indian arm as well as the bigger issue of Korean banks developing cold feet. “The creditor banks of HMC worried about a debt overhang as HMC worked to offload a part of the HMI shares collateralled with them,” said Subbu.

That’s when, in mid-1999, Maruti came into the picture. “A global investment bank rumoured to be Bank of America” approached both GM and Maruti Udyog (MUL — it was still a Suzuki-government of India JV then). “SMC,” says the book, “probably did not then have the liquidity for the acquisition and in any case would have had to contend with the government of India …(in accordance with the terms of Press Note 1) if they wanted another plant in India.” The solution was to route the acquisition through MUL.

“SMC’s adviser apparently did not budge beyond Rs 30 per share offering, however, to put the MUL cheque on the table within a week of concluding the transaction,” says the book. That price was a little too low for the Koreans. As it turns out, HMI rode out the crisis as the sales of its flagship Santro model picked up speed, particularly with the launch of a Euro 2 variant even before the Euro 1 mandate. In August 1999, HMI made a cash profit and has since never looked back.