"Maruti does not require a new model at present" — RSSLN Bhaskarudu

Competition may have begun knocking at the doors of Maruti Udyog Limited, but its Managing Director, R.S.S.L.N. Bhaskarudu, appears quite...

Competition may have begun knocking at the doors of Maruti Udyog Limited, but its Managing Director, R.S.S.L.N. Bhaskarudu, appears quite unperturbed. Banking on the strengths of the passenger car behemoth, Bhaskarudu does not see an immediate need to either upgrade the existing technology or to bring in new models. More than competition, it’s the shrinking market that is worrying him, he tells SWATI PRASAD in an interview. Excerpts:In what ways should the consumer expect MUL to change with the incoming of competition? Are you working on new strategies or policies?

Competition is most welcome. If it is healthy, I feel the market would grow. Maruti is not going to have new policies and our policies would not change because of competition.

The new players are bringing in contemporary vehicles with the fuel injection system. The new cars qualify several safety tests that Maruti vehicles don’t. When does MUL plan to bring in new models to counter competition?

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We have recentlyupgraded four of our vehicles — Zen, Maruti 800, Esteem and Omni. Moreover, our vehicles are most widely accepted and state-of-the-art. And they are most contemporary.

There is all this talk about the fuel-injection system. But it is not required at the moment. We have been exporting vehicles with the fuel injection system. All Maruti vehicles meet the emission norms up to the year 2000. Emission norms will change after 2000 and we will add the fuel injection system only then. Why must we add to our costs at this moment?It is too early to talk about new models. We don’t require a new model at present. I cannot give a time-frame as to when MUL would bring in new models. But the company has full-support of Suzuki Motor Corporation, which is the world leader in the small car segment. They have the the best technology and they are with us.

Maruti has been accused to undertaking mere cosmetic changes in their vehicles. When would MUL technologically upgrade the models?

These are technologicallycontemporary changes. Our vehicles give the best fuel efficiency. They have been proven on the Indian roads.

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People are awaiting the new cars and are deferring purchase. Maruti dealers have been talking about a 20 to 25 per cent drop in sales during the current month. Do you have any details about such a drop in sales?

Any newness would create some anxiety. But our sales have not been affected. During the first half, we sold around 1,76,000 vehicles, as compared to around 1,73,000 during the same period last year. So MUL saw a 2 per cent growth when the passenger car segment saw a drop in sales by -2.5 per cent.

I have no sales figures for the current month. Let the month get over. But the fact is that the market is not growing and the economic situation is bad. I am not worried about the new cars in the market. I am more worried about the economic situation.

MUL recently announced sops for its dealers. These are being passed on to the customer. Dealers, in fact, are said to be sellingMaruti 800 at a discount of around Rs 4,000. Isn’t this as good as cutting the price?

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We want to give more value to the customer. We have told dealers to have their own region-specific programmes to support the customer. Each dealer and financial institution will have their own programmes. They can join hands to start their own schemes. To that extent, Maruti would give them full support. Countrywide and Citicorp are working out their own schemes.

Earlier, MUL was a product-driven organisation, now we have got to be more market- driven. And the dealers should become more aggressive.

I don’t see these sops as a means to slash the price. MUL has not taken any decision to cut prices. We don’t plan to cut prices either.

Maruti has been operating at economies of scale for a long time now. And a newcomer — Hyundai — was able to price its car at around Rs 50,000 lower than Zen. Even Maruti 800 appears costly when seen in comparison. Why are Maruti vehicles priced so high?

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It is because ofeconomies of scale that we have been able to offer vehicles at such reasonable prices. We have been able to give economies of scale to our vendors. It would not be fair on my part to comment on the prices of Santro. I am not aware of their pricing.

In a recent interview, you mentioned that MUL has undertaken a major cost cutting exercise. Is it because of wastage and abnormally high costs?

No. Cost reduction is a constant exercise. In every activity there will be some wastage. But we have to contain costs.

How many cars do you think MUL would sell this fiscal?

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During the last financial year, MUL sold around 3,54,000 units. This year, we would attain more or less the same level of sales. At the most, we would be able to sell around 3,60,000 vehicles. Due to the incoming players, additional capacity would be added without concomitant growth in the market.