Maruti to enter insurance, car finance

By Our Special Correspondent

NEW DELHI, SEPT. 28. For the first time in 17 years, Maruti Udyog Ltd. (MUL) today announced losses of Rs. 269 crores on its operations during 2000-01. The company, however, announced plans for entering the insurance business as well as car financing and the used car market in order to improve its balance sheet.

The loss by the company comes just two months before the company is scheduled to come out with a preferential share issue of about Rs. 400 crores, where the Government would forego its rights for consideration of a renunciation premium. The Indian Government and Suzuki Motor Corporation hold 50 per cent equity each in MUL and the Central Government had formally announced on Thursday that it would be divesting its stake in the company by the end of the current fiscal year.

The Managing Director of MUL, Mr Jagdish Khattar, told presspersons after the annual meeting of the company that plans had been drawn up to set up subsidiaries for insurance business while entering into other new areas such as used car business, car finance and corporate lease and fleet management. ``Our effort would be to break-even this fiscal. During April-August this year, we are on course of recovery,'' he said.

MUL's loss of Rs. 269 crores during 2000-01 comes on a turnover of Rs. 9,253 crores which the Managing Director attributed to `new events that have taken place beyond our control.' The operating profit was Rs. 93 crores last year. The company had posted a net profit of Rs. 330 crores on a turnover of Rs. 9,670 crores in 1999-2000.

About new models from the company, Mr. Khattar said the pilot production of `Vistaar' project, developed in alliance with the consulting firm, A. T. Kearney, would roll out within 15 days. ``We have approved a budget of Rs. 16 crores for these ventures during this fiscal,'' he said. The used car business would be run under the `True Value' brand name while the fleet management project has been branded `N2N.'

Giving out some financial results, Mr. Khattar said MUL's depreciation during 2000-01 had increased to Rs. 342 crores from Rs. 279 crores in the preceding fiscal and the amount was expected to go up in the current year. Maruti had also targeted to cut cost by Rs. 300 crores this fiscal and had received about 200 applications for the voluntary retirement scheme within three days of launch, Mr Khattar said adding most of the applications were from factory workers. The company had on September 25 launched its maiden VRS to trim its 5,700 strong workforce and improve productivity.

The MUL board also approved the induction of Mr. Y. Nakamura as Joint Managing Director and Mr. Shinichi Takeuchi as director (production) who would replace Suzuki nominees, Mr. T. Kobayashi (Joint Managing Director) and Mr. Krishan Kumar (director- engineering). Mr. Khattar said two new Indian directors would also be appointed soon in place of director (finance), Mr. A. R. Halasyam, who retired recently and to fill the vacant post of director (materials).

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Section  : Business
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