Maruti Udyog Ltd was incorporated on February 24, 1981, but its history can be traced back to 1971. Sanjay Gandhi launched Maruti Motors Ltd, a private company, which would design, manufacture and assemble small cars. The firm was dissolved in 1977, but later resurrected by Indira Gandhi under her nationalisation drive, paving the way for a new public sector entity that went on to become India’s largest passenger car manufacturer.
She handpicked the best talent from private and public sector enterprises to lead Maruti. While Sumant Moolgaokar, legendary chairman of Telco (currently Tata Motors), was roped in as non-executive chairman, V Krishnamurthy, the man who turned around BHEL, was appointed vice chairman-cum-managing director.
After signing a joint venture agreement with Japanese auto major Suzuki Motor Corporation on October 2, 1982, Maruti successfully targeted the ‘middle-class’ population in India. It also signed a licence agreement on technology transfer between Maruti Udyog and Suzuki Motor Corp.
The company rolled out its first people’s car, Maruti 800, a 796 cc hatchback, in December 1983. The vehicle went on to rule Indian roads for two decades. With 44 percent market share, Maruti Suzuki today produces one passenger car every 12 seconds or 1.5 million vehicles a year.
“The start of Maruti heralded the era of high-end engineering, providing jobs in large numbers,” says FR Singhvi, joint managing director, Sansera Engineering Pvt Ltd, an auto components manufacturer. “More importantly, the finance for purchase of cars was first introduced by Maruti in the country through the banking network.”
Vikram Kirloskar, president, Society of Indian Automobile Manufacturers, adds: “Maruti brought about a change in manufacturing in India. Indian industry had gained skills in local content and the ability to make anything in small quantities.” He contrasts that with the fact that India exported more than half a million cars last year, a little more than China. That speaks of the progress made, he says.
“Thirty years ago, Maruti brought affordable and reliable ‘mobility for the masses’ with the launch of Maruti 800. Thanks to its initiative, the auto industry has emerged as a major contributor to the Indian economy, accounting for almost seven percent of the GDP,” says Navin Paul, executive vice president, Original Equipment Sales, automotive technology, Bosch India.
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(This story appears in the 22 August, 2014 issue of Forbes India. To visit our Archives, click here.)