Suzuki to up MUL efficacy, match it with Kosai plant

Suzuki Motor Corporation, which now owns 54 per cent equity in Maruti Udyog, has set fresh targets for its Indian arm to match the productivity and cost structure of its own manufacturing facility at Kosai, Japan.

The Kosai plant in Japan is Suzuki's benchmark in terms of productivity and cost management.

To meet this objective, Maruti will have to slash costs by as much as 30 per cent and raise productivity by 50 per cent by 2005 end, a senior Maruti executive said.

"We have been told the benchmark for Maruti in terms of productivity and cost standards is Suzuki's Kosai plant," he said.

The executive added that Maruti will be implementing Kaizen techniques on the manufacturing side.

In addition, various value analysis and value engineering initiatives will be undertaken to meet the targets.

However, they declined to reveal Maruti's annual targets of cost reduction, or the savings that will accrue in rupee terms.

While Maruti's success in implementing Suzuki's vision at its Gurgaon plant will result in rich benefits for the company, it is expected to be a highly difficult task, as Maruti is already known to be a lean and efficient manufacturer in the domestic auto industry.

"We are efficient in relation to other Indian manufacturers, but there is scope for improvement when compared to global standards. Success will depend on how innovative we are in cutting costs," the executive said.

The company, which had reported its first ever loss of Rs 269 crore (Rs 2.69 billion) in 2000-01, turned the corner in 2001-02 with profits of Rs 105 crore (Rs 1.05 billion) on a turnover of around Rs 9,400 crore (Rs 94 billion).

However, as raw materials account for as much as 70 per cent of an auto company's expenses, Maruti will have to go hammer and tongs after its vendors to achieve cost reduction.