The company has set up a committee of directors to negotiate with the 375-odd vendors on a regular basis in order to reduce costs and improve productivity, both within and outside the company.
In an interview, MUL managing director RSSLN Bhaskarudu said: "We are working both in and outside the company to reduce non-productive expenditure and to cut costs through value analysis and value engineering exercises". The company has chalked out a plan to reduce costs by:
reducing overheads and conversion costs.Though MUL has no plans to reduce the prices of its models, it plans tofund its sales promotion, product improvement and model upgradation activities by the money which will be saved by cutting down costs within the company, Bhaskarudu said.
Seeing the competition in the small car segment, the company has initiated a customer survey to find out whether the features available in the new cars, make it necessary for MUL to follow suit, and at what price can they be added on to existing Maruti models. This is because features such as a multi-point fuel injection (MPFI) system, power steering and power windows, would add to the cost of the vehicle.
The company is conducting a market survey to find out the acceptability of the additional cost on the existing models.
MUL plans to introduce MPFI system after the year 2000, as the existing models already meet the 2000 norms, and since adding on a new fuel injection system would levy an additional cost on the vehicle.
"In a price-sensitive market, the company would not like to go in for any price increases," headded.
"We do not want a price war so there are no plans to reduce the prices," he said.
The new models can only be launched after nearly two years and substantial investments would be required for developing and manufacturing them, he stated. There would also be investments in terms of additional tooling costs, fixtures and moulds, and the company may have to go in for some borrowings to fund it.
He said that the general economic situation is more worrying than the new entrants in the industry.
"With the revival of demand in the industry, the company expects to grow by a minimum of 15 to 20 per cent".
MUL grew by two per cent on a sale of 176,000 units in the first half of this fiscal compared to the corresponding period the previous year. "We have maintained a growth rate; at a time when other auto majors are slashing working days and at a period the whole industry recorded negative growth", he stated.
Regarding new models, the managing director said "we are in the process of prioritisingwhich segment to enter first; we will enter all the segments".
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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