PROJECT REPORT ON CORPORATE GOVERNANCE AND ETHICS AT [pic] Prepared By: Group C Table of Content |S. No | |Page No. | |1. |Acknowledgement |3 | |2. |Introduction & Profile of the company |4 | |3. Services offered & Values |5 | |4. |Company strategy, competitors & customer satisfaction. |6 | |5. |Corporate governance philosophy |7 | |6. |Management Structure |8 | |7. Composition of Board |8 | | |(i) Audit Committee |9 | | |(ii) Shareholders’ / Investors’ Grievance Committee |11 | |8. Corporate Policies |13 | | |(i)CSR Activities |13 | | |(ii) Environment policies |15 | | |(iii) Road Safety |16 | |9. Questionnaire |18 | |10. |Sources |21 | | | | | ACKNOWLEDGEMENT This Project report is just an effort to throw some light on the Corporate Governance, Ethics & CSR activities which organizations like M/s Maruti Suzuki is following.
This project report helps to do a critical analysis of building up Corporate Image & Identity based on Corporate Governance & CSR activities of the organization which they have achieved after satisfying their internal customers (employees) and external customers. Further, it also helps to establish a link between profitability & value which the organization has created over the years by following certain business ethical standards.
Based on the feasibility of data, we have decided to categorize the product portfolio of the company with the Indian consumer’s psyche and have tried to relate this with their present Corporate Image, Identity & Reputation. We thank our Professors & Mr. Ranjit Singh, Senior Manager- Corporate Planning & his team in diversifying our vision towards the above mentioned project. We thank them for their guidance and support. INTRODUCTION TO MARUTI SUZUKI INDIA LTD. In February 1981 Maruti Udyog Limited (now Maruti Suzuki India limited) was incorporated under the provisions of the Indian Companies Act, 1956.
It was established to meet the growing demand of a personal mode of transport caused by the lack of an efficient public transport system. A license and Joint Venture Agreement was signed between Government of India and Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in October 1982. It manufactured India’s first affordable cars. In the past twenty years it has diversified into various type of passenger cars catering to the need of different section of the population. Maruti Suzuki is India’s largest selling passenger car company. It is the market leader in India.
It is a leading four-wheeler automobile manufacturer in South Asia. Suzuki Motor Corporation of Japan holds a majority stake in the company. On 17 September 2007, Maruti Udyog was renamed to Maruti Suzuki India Limited. The company is listed on the Bombay Stock Exchange and National Stock Exchange of India. Suzuki Motor Corporation, the parent company, is a global leader in mini and compact cars for three decades. Suzuki’s technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient. The company’s headquarters remain in Gurgaon, near Delhi.
The Gurgaon plant comprises of three fully integrated, state-of–the-art production facilities spread over a sprawling 297 acres. While the three plants have a total installed capacity of 350,000 cars per year, several productivity improvements over the years have made it possible to manufacture nearly 650,000 cars per year at these facilities alone. Working towards the goal of making India a global hub for small cars, Maruti and Suzuki have drawn up an investment plan of Rs 9000 crore in India upto 2010. • Maruti Suzuki offers 10 models, ranging from the people’s car, Maruti 800, for less than Rs. 00,000 ($ 5000) ex-showroom to the premium sedan SX 4 and luxury SUV, Grand Vitara. Their turnover for the fiscal 2007-08 stood at Rs. 178603 Million, Yen 449 Billion, $ 4. 512 Billion & Profit after Tax at Rs. 17308 Million. Services offered: • Sales of automobiles • Authorized Service Stations • Maruti Insurance • Maruti Finance • Maruti True Value • End to End Fleet Management • Accessories • Maruti Driving School Values: • Creativity and innovation • Openness and learning • Fast, flexible and early mover • Customer delight • Networking and Partnership
Vision: “The leader in Indian automobile industry, creating customer delight and shareholder’s wealth; a pride of India. ” COMPANY STRATEGY & CUSTOMER SATISFACTION The company views its employees as internal customers and believes in delivering maximum satisfaction to them. It has an open culture which strives to achieve employee satisfaction through participative management, team work, sharing of information and continuous improvement. MUL is known for its flat organizational structure and its environment of trust and transparency which builds a sense of belongingness among employees. COMPETITORS • Tata Motors • Hyundai • Ford • FIAT General Motors • Honda There was a time (in late 1990’s) when Maruti faced some real competition with the entry of global players into India. Then company went back to the basics: What was it that the Indian customer desired? Maruti had the right products for India, ones with reliable quality, low cost, top performance and so on. What else could they offer their customers? It was then that we decided to focus on Customer Satisfaction. Caring for the customer, thinking from his and her point of view, building transparency in our interactions, orienting themselves to face the customer’s needs and concerns rather than the other way round.
If they could do all that, their satisfied customers would recommend their products to their friends and relatives and themselves buy their next car from Maruti. There was nothing new about this strategy; all companies swear by customer satisfaction. The challenge for them was to go beyond words and make it all work, convert intention into action, translate an intangible mission to tangible benefits, evolve from random and one-off customer benefit gestures to a consistent and systematic effort to satisfy the customer.
They had to strive to internalize Customer Satisfaction and make it a way of life for themselves. CORPORATE GOVERNANCE PHILOSOPHY Maruti Suzuki (the Company) is fully committed to practicing sound corporate governance and upholding the highest business standards in conducting business. Being a value-driven organization, the Company has always worked towards building trust with shareholders, employees, customers, suppliers and integrity, equity, transparency, fairness, disclosure, accountability and commitment to values.
The Company fosters a culture in which high standards of ethical behavior, individual accountability and transparent disclosure are ingrained in all its business dealings and shared by its Board of Directors, Management and Employees. The Company has established systems and procedures to ensure that its Board of Directors is well-informed and well-equipped to fulfill its overall responsibilities and to provide the management with the strategic direction needed to create long-term shareholder value.
The Company has established systems & procedures to ensure that its Board of Directors is well-informed and well-equipped to fulfill its overall responsibilities and to provide the management strategic direction it needs to create long-term shareholder value. MANAGEMENT STRUCTURE: The Company has multi-tier management structure, comprising the Board of Directors at the top and followed by Managing Executive Officers, Executive Officers and Divisional Heads.
Through this, it is ensured that: • Strategic supervision is provided by the Board • Control and implementation of Company’s strategy is achieved effectively • Operational management remains focused on implementation • Information regarding the Company’s operations and financial performance are made available adequately • Delegation of decision making with accountability is achieved • Financial and operating control and integrity are maintained at an optimal level • Risk is suitably evaluated and dealt with
Composition of the Board of Directors (as on 31 March 2008): As on 31st March 2008, the Company’s Board of Directors consists of eleven members. The Chairman of the Board is a non-executive Director. The Board is made up of five executive Directors and six non-executive Directors, of whom four are independent. No Director is related to any other Director. All non-executive independent Directors are persons of eminence and bring a wide range of expertise and experience to the Board. [pic]
COMMITTEES OF THE BOARD: I. Audit Committee II. Shareholders’ / Investors’ Grievance Committee Composition of Audit Committee: [pic] The Role of the Audit Committee includes the following: 1. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. 2. Recommending the appointment and removal of Statutory Auditors, fixation of audit fee and also approval for payment for any other services. . Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to: a) Matters required being included in the Directors’ Responsibility Statement to be included in the Board’s Report in terms of Clause (2AA) of section 217 of the Companies Act, 1956. b) Changes, if any, in accounting policies and practices and reasons for the same. c) Major accounting entries involving estimates based on the exercise of judgment by the management. ) Significant adjustments made in the financial statements arising out of audit findings. e) Compliance with listing and other legal requirements relating to financial statements. f) Disclosure of any related party transactions. g) Qualifications in the draft audit report. 4. Reviewing, with the management, the quarterly/annual financial statements before submission to the Board for approval. 5. Reviewing with the management, performance of Statutory and Internal Auditors, the adequacy of internal control system. 6.
Reviewing the adequacy of internal audit function including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. 7. Discussion with Internal Auditors about any significant findings and follow up thereon. 8. Reviewing the findings of any internal investigations by the Internal Auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. . Discussion with Statutory Auditors before the audit commences, about the nature and scope of audit as well as post audit discussion to ascertain any area of concern. 10. Looking into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors. 11. Reviewing the functioning of the Whistle Blower mechanism, in case the same is required. 2. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. 13. Reviewing any other matter which may be specified as role of the Audit Committee under the amendments, if any, from time to time, to the Listing Agreement, Companies Act and other statutes. Composition of Shareholders’/Investors’ Grievance Committee [pic] Objective of this committee
The Committee oversees redressal of shareholder and investor grievances, transfer of shares, non – receipt of balance sheet, non – receipt of declared dividends and related matters. The Committee also oversees the performance of the Registrar and Transfer Agents, recommends measures for overall improvement in the quality of investors’ services, approves issue of duplicate / split / consolidation of share certificates and reviews all matters connected with the securities transfers.
In order to provide efficient and timely services to investors, the Board has delegated the power of approval of issue of duplicate / split / consolidation of share certificate, transfer of shares, transmission of shares, dematerialization / re-materialization of shares not exceeding 2000 equity shares per transaction to the Managing Director, Director & Managing Executive Officer and Company Secretary & Chief Legal Officer severally. The CORPORATE POLICIES could be divided into following areas: [pic] CSR ACTIVITIES:
Maruti Udyog along with Bharat Petroleum is rank highest in corporate social responsibility (CSR), according to the inaugural study by TNS Automotive, the world’s largest automotive research company and provider of custom research and analysis. Welfare Camps They organize blood donation camps along with Red Cross, in which employees donate blood. Eye check-up camps, family planning related camps and other health camps are also organized periodically. Medical support & welfare The employees of Maruti have always donated generously to people affected by natural calamities.
They contributed Rs. 2 million to rehabilitate earthquake victims in Latur. They also run a creche for the children of construction workers, which provide food shelter and education for 85 children. Education to underprivileged DPS Maruti Shiksha Kendra, an education programme for the underprivileged, was inaugurated at DPS, Maruti Kunj recently. The objective of his project is to educate the children of below poverty line (BPL) families from the nearby villages of Gurgaon district. 120 students in the age group of 5-8 years have already enrolled.
DPS Maruti Kunj is providing books, writing material and uniforms, refreshment and transport facilities to these children. Education Programme for mothers ‘Chetna’, an education programme for mothers – is an another endeavour to provide basic education to mothers of the students of DPS Maruti Kunj and surrounding villages. Majority of students at the school is first generation learners. Therefore, the concept of starting a movement of learning ‘Chetna’ for mothers has been promoted. The response has been encouraging and about 130 mothers are attending it regularly. Educational benefits:
Through the Maruti Employees Education Trust (MEET) they have set-up a well equipped modern school in association with Delhi Public School Society (DPS) at Maruti Kunj (Bhondsi), Gurgaon. This school will go a long way in providing quality education not only to the children of the employees at Maruti but also to the citizens of Gurgaon. Maruti and kids Maruti Udyog Ltd maintained and managed Children’s Park at the India Gate, is a popular learning and recreation spot among children. The park adjacent to India Gate is spread over 14 acres, is at the polygon between Dr Zakir Hussain Marg and Shah Jahan Road.
More than 2500 children visit the park every week. • Based upon the theme of EDUTAINMENT(education + entertainment). The park plays host to a variety of facilities, as science centre, a well equipped library with latest children books , a maze hedge and an open air amphitheatre and a very special herbal garden . All this is set amidst beautifully landscaped greenery. • The Musical & a story telling fountains is a major draw for the children. • Maruti Udyog Ltd regularly plays host to various activities as painting, dance and singing competitions for all junior schools. NGO’s are also welcome for conducting events for underprivileged children. ENVIRONMENT POLICY: The company has remained ahead of regulatory requirements in pursuit of environment protection and energy conservation at its manufacturing facilities, and in development of products that use fewer natural resources and are environment friendly. • Set targets for energy saving and resource conservation • Set well laid down procedures for various functional areas for resource conservation • Create awareness amongst employees and encourage them to give suggestions.
Use QC meetings for this purpose • Continuously monitor and give feedback on energy consumption trend • Use of non-conventional / natural sources of energy Energy saving technologies They took many energy saving initiatives some of them are: • Introduction of “Three-coat-one-bake painting system” which helps is lower energy consumption and yet improving the productivity levels. The green co-efficient of this system is much better than the conventional system. • Air washer pump auto operation: Automatic switching on / off the water pump of air washers by using temperature controller.
It senses the ambient temperature and switches off the pump at 280C and switches on the pump at 300C ambient temperature. • Lighting modification: Replacing 150 watt / 250 watt street light lamps by 38watt x 2 nos CFL by reducing pole height and uniform light distribution for the area between the production shops. • IGV in centrifugal compressor: Inlet Guide Veins are provided at the centrifugal compressor inlet to control the air flow as per requirement. Because of these IGVs, the air assissts the impeller to rotate thereby reduces the power consumption in unload condition of compressor.
Practicing 3R (Reduce, Reuse and Recycle) The company has been promoting 3R since its inception. As a result the company has not only been able to recycle 100% of treated waste water but also reduced fresh water consumption by 28%. The company has implemented rain water harvesting to recharge the aquifers. Also, recyclable packing for bought out components is being actively promoted. Greening of Supply Chain The company has been facilitating implementation of Environment Management System (EMS) at its suppliers’ end. Regular training programs are conducted for all the suppliers on EMS.
Surveys are conducted to assess the vendors who need more guidance. The systems and the environmental performance of suppliers are audited. ROAD SAFETY POLICY: The company has been playing a leading role for many years now in promoting road safety and safe driving in the country. The company believes that in addition to fund support, one of the best ways for corporate to fulfill their social responsibility is by offering their managerial skills to society. Maruti Driving Schools The company has also involved its dealers across the country in promoting road safety and safe driving.
In collaboration with them, the company has set up 40 Maruti Driving Schools in 36 different locations across the country. These schools are equipped with world class, state of the art driving simulators offer training courses for beginners as well as refresher programs. Over 41,500 people have trained so far. The company also manages two Institutes of Driving Training & Research (IDTR) in Delhi. Setting up GUJRATI In a landmark move the company signed an MoU with the Government of Gujarat, to set up, manage and run The Gujarat Regional Automobile Training Institute (GUJRATI) at Gajadara village of Waghodia taluka in Vadodara district.
It is the first of its kind initiative in the country. The institute will not only provide driving training to tribal youth, it will also offer automobile technical training to them and help their employability. Several other state governments, such as Haryana, Bihar, Uttarakhand, Chattisgarh and West Bengal have also approached the company to set up driving training institutes in their states. The company has already signed an MoU with the Government of Haryana for setting up two driving training institutes at Rohtak and Bahadurgarh. QUESTIONNAIRE FOR CUSTOMERS ON MARUTI SUZUKI’S BRAND, IMAGE & REPUTATION
Objective: The need to study the corporate image & reputation in Indian customer is to get know-how of Maruti’s loyalty in customers. This will further help us to analyze (after we interview some people at Maruti) that the image, reputation & brand which is supported by the values & vision of the company is sustaining now or there is some bigger picture which is beyond the customer tastes & preferences. Is Maruti Suzuki your favorite brand in car-segment? For small family cars-Yes For big cars-No For luxury cars-No What do you think about the image & reputation of Maruti Suzuki in the market?
Low- no Moderate- yes High- no In which of these factors you are able to relate Maruti Suzuki with your own values? Your life style- to some extent Your passion to drive- no Your responsibility towards the environment- yes Why Maruti Suzuki has come to such a long way? Because of its features like model & design- yes Because of its services offered – yes Because of its low cost economical mileage-yes Questionnaire for Maruti Suzuki • What mechanisms are in place or being considered in your company to ensure the transparency of your governance structure? Is there any whistle blower mechanism? If yes, what reward you give to them? Kindly share with some examples? • How top management has practiced its corporate values? • How they communicated these values to its employees and how they make sure that they are following these values? • How their corporate values have led them to achieve their corporate reputation? • Do they perceive their identity as of an Indian company or a Japanese company? • Do they practice their values differently in both the countries? • How they are able to strike a balance btw their reputation, identity and values? Any instances which show their commitment towards their values? • How they were able to build their reputation over a period of time? • Does their definition of CSR different in both the countries? • How are you distinguished in your CSR policies than your competitors? • How are risk management functions organized within your organization and how are they integrated into your governance structure? • How have internal control and risk management systems and practices of your company evolved in recent years? • Is the risk management function centralized in your company?
Following are the points on which we can analyze the Corporate Ethics & Governance as well as CSR. 1) Since its inception, Maruti is very actively involved in CSR and they believe that they have come up such a long way only because of their values. They believe in shared leadership of ideas for CSR. Thus the overall impact on their financial performance has increasingly sustained over the years. Maruti is ahead of law in environmental policy which takes initiatives for automobile & fuel related policies. They provide guidance to the government on how to minimize pollution & global warming.
They formulate policies and help the government to set standards. 2) Top management believes that the five values of the company are only important & cover every aspect of the kind of business they are into. Transparency comes by following a code of conduct which is defined for senior management, middle management & the staff & workers. This they ensure by displaying it everywhere in the organization, at the shop floor, in the production & other departments and thus communicate to everyone associated with it. ) Maruti believes that since it has established joint ventures with small business units, so this has helped them integrated their CSR very effectively. They do not believe in addressing CSR by over expressing it in advertisements like TATA and only believe in the core values. 4) They also believe that their CSR is market driven. For ex- if their CSR is towards the environment by using natural sources of energy, then they would do CSR by running their gas turbines on natural gases or by using the kind of solar heating system available in the market. ) Regarding Risk Management- Maruti has hired consultants from E & Y who have established proper control system within all the levels of organization by establishing all the functions needed within the teams & department heads. They define their key research areas (KRA’s) and move accordingly. They have a RMO (Risk Management Officer) who directly reports to MD. 6) Regarding the Whistle Blower mechanism- They have recently approved and now is in place. They will provide information very soon and will mention this in their corporate values. 7) At Maruti, the assessment of the employees is done on how effectively they ere able to follow their values. This they ensure by observing their behavior in group activities and role plays. Their corporate values have helped them as they took initiatives more early then their competitors and even after Suzuki having a major stake in the organization, there is no change in the perception of values.