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Maruti board meet details under wraps; turnover to dip 7 pc, hopes pegged on new plant

The board of directors of Maruti Udyog Limited met in New Delhi today, under a cloud of secrecy, and discussed future growth strategy in the light of a projected seven per cent drop in turnover during the current fiscal.

Company management and board members refused to comment on the meeting. ''It was a routine affair,'' one of them said.

Sources pointed out that the company's performance pursuant to the price cuts in December last year and future strategies for growth were discussed.

There was no specific reference to any new model to be rolled out, though the company has lined up four new models for the Indian market, which would hit the streets beginning mid-2000.

The board also did not discuss contentious issues relating to transfer of technology from Suzuki Motor Corporation.

Emerging out of the meeting, board members, including MUL managing director R S S L N Bhaskarudu, refused to comment on the deliberations at the meeting. ''It was a normal and internal meeting,'' was all they said in unison.

The board also took stock of the current market situation and the progress of the company's expansion plans in terms of the new unit which would be operational this month-end. Commissioning of this plant would provide Maruti with an additional capacity of 100,000 cars per annum, thereby making it feasible for the car major to produce around 450,000 vehicles a year.

This is also expected to give Maruti economies of scale and to some extent absorb the impact of price reduction on the bottomlines of the company. Bhaskarudu had earlier admitted that the company's profits would be trimmed and bottomlines affected due to the price slash.

The company has, in fact, projected to close the year with a seven per cent drop in turnover. According to an internal assessment by the car major's finance department, sales of its vehicles are also likely to drop by over five per cent during the year as against 327,240 units sold in the domestic market in 1997-98.

The net profit is likely to record a greater fall which might result in a lower payout to both the equal partners -- government of India and Suzuki Motor Corporation of Japan. The MUL board had announced a 30 per cent dividend last year having earned Rs 9.77 billion as gross profit as against Rs 8.07 billion the previous year.

UNI

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