MARUTI SUZUKI ETHICAL AND UNETHICAL PRACTICES

MARUTI  SUZUKI ETHICAL AND UNETHICAL PRACTICES

INTRODUCTION & BACKGROUND

As a responsible corporate citizen, Maruti Suzuki India Limited (‘Maruti’ or “the Company”) has always

believed in following highest standards of Corporate Governance. Being a listed Company, every act of

the Company, its Board Members and its employees is the focus of public attention and accordingly,

there is a need to reinforce Maruti’s commitment towards maintaining highest standards of Corporate

Governance.

This Code of Business Conduct and Ethics (“Code of Conduct” or “Code”) helps ensure compliance with

our standards of business conduct & ethics and also with regulatory requirements. All Senior

Management Personnel are expected to read and understand this Code of Business Conduct and Ethics,

uphold these standards in day-to-day activities and also comply with all applicable standards, policies and

procedures of the company.

This policy should be read in conjunction with applicable regulations & existing policies & procedures of

the Company. You can also contact the Secretarial & Legal Department if you have any questions or

clarifications.

APPLICABILITY

This Code of Conduct is applicable to all Senior Management Personnel which would include the

directors of the Company, the top management personnel (i.e., executive directors & advisors at executive director level) & all functional heads (including management personnel with direct functional reporting to directors & top management personnel).

All Senior Management Personnel are expected to comply with the letter and spirit of this Code. 

The Senior Management Personnel should continue to comply with other applicable laws & regulations and the relevant policies, rules and procedures of the Company.

The Code comes into immediate effect.

INTERPRETATION OF THE CODE

In this Code the term “Relative” shall have the same meaning as defined in Section 6 of the Companies Act, 1956. 

In this Code, words importing the masculine shall include feminine and words importing

singular shall include the plural or vice versa.

Any question or interpretation under this Code of Business Conduct and Ethics will be considered and dealt with by the Board or any person authorized by the Board on their behalf.

COMPLIANCE WITH APPLICABLE LAWS & REGULATIONS

Senior Management Personnel must comply and where applicable, oversee compliance by employees

with all the laws, rules and regulations applicable to the Company and its employees.

Each Senior Management Personnel must acquire appropriate knowledge of the requirements relating to his duties sufficient to enable him to recognize potential non compliance issues and to know when to seek advice from the Legal Department on specific Company policies and procedures.

No payment or transaction should be made or undertaken, by a Senior Management Personnel or

authorized or instructed to be made or undertaken by any other person or the Company if the consequence of that transaction or payment would be the violation of any law in force.

HONESTY, INTEGRITY & ETHICAL CONDUCT

Senior Management Personnel shall act in accordance with the highest standards of integrity, honesty,

fairness and ethical conduct while working for the Company as well when representing the Company.

Honest conduct means conduct that is free from fraud or deception. Integrity & ethical conduct includes ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

Senior Management Personnel should promote ethical behavior and take steps to ensure that the Company promotes ethical behavior and also encourages employees to freely report violations of laws, rules, regulations or the Company's Code of Conduct to the appropriate personnel.

CONFLICT OF INTEREST

Senior Management Personnel must avoid and promptly disclose to the Company potential conflicts of interest regarding any matters concerning the Company (including its subsidiaries & joint ventures). 

A conflict of interest exists where the interests or benefits of Senior Management Personnel conflict with the interests or benefits of the Company.

BUSINESS INTEREST

If any Senior Management Personnel is considering investing in any customer, supplier, developer or

competitor of the Company, he or she must first take care to ensure that these investments do not

compromise on their responsibilities to the Company.

Several factors are involved in determining whether a conflict exists, including the size and nature of the investment; the Senior Management Personnel’s ability to influence the Company’s decisions; his access to confidential information of the Company and the nature of the relationship between the Company and the other Company or person.

Accordingly, it is appropriate that the Senior Management Personnel make a disclosure to the Board before making such an investment and obtains a “pre-approval”/“no objection” from the Board of Directors.

RELATED PARTY TRANSACTIONS

A Senior Management Personnel or any of his relatives/associates should not derive any undue personal benefit or advantage by virtue of his position or relationship with the Company. As a general rule, Senior.

Management Personnel should avoid conducting Company business with a relative, or with a business in which a relative is associated in any significant role. 

Any dealings with a related party must be conducted in such a way that no preferential treatment is given and adequate disclosures are made as required by law and as per the applicable policies of the Company.

GIFTS

Senior Management Personnel shall not offer, give or receive gifts from persons or entities dealing with the Company, where any such gift is perceived as intended directly or indirectly, to influence any business decision.

Senior Management Personnel of the Company shall not accept or permit any member

of his family or any other person acting on his behalf to accept any gift from Vendor, Dealer, Contractor, Suppliers and anyone having business dealings with the Company. 

The gift shall also include free boarding, transport, lodging or other service or any other pecuniary advantage when provided by any person other than a near relative or a personal friend having no official dealings with the Senior Management Personnel. 

Senior Management Personnel should also avoid acceptance of lavish or frequent

hospitality from any individual or firm having official dealings with the Company.

BUSINESS OPPORTUNITIES

Senior Management Personnel should not exploit for their own benefit, opportunities that are discovered through the use of Corporate property, information or position unless the opportunity is disclosed fully in writing to the Company’s Board of Directors and the Board of Directors authorizes the said Senior Management Personnel to pursue such opportunity.

Further, the Senior Management Personnel must refrain from using the Company's property or information for personal gain.

CONFIDENTIALITY

Senior Management Personnel must maintain the confidentiality of sensitive information (that is not in public domain) relating to the Company which comes to their knowledge in the course of the discharge of their functions and any other confidential information about the Company that comes to them, from whatever source, except when such disclosure is authorized or legally mandated.

No Senior Management Personnel shall provide any confidential or sensitive information either formally or informally, to the press or any other publicity media, unless specifically authorized to do  so.

INSIDER TRADING

A Senior Management Personnel and his immediate family shall not derive any benefit or assist others to derive any benefit from the access to and possession of information about the company, which is not in the public domain and thus constitutes insider information.

  All the Senior Management Personnel are required to comply with the Company’s Code of Conduct on prevention of Insider trading.

EQUAL OPPORTUNITY & ANTI HARASSMENT

Maruti is committed to a policy of equal employment opportunity so as to assure that there shall be no discrimination or harassment against an employee or applicant on the grounds of race, color, religion, sex, age, marital status, disability, national origin, or any other factor made unlawful by applicable laws and regulations.

 This policy relates to all phases of employment including recruitment, hiring, placement,

promotion, transfer, compensation, benefits, training, educational, social and recreational programs and the use of Company facilities. Sexual harassment or exploitation is specifically prohibited.

  

UNETHICAL PRACTICES OF MARUTI SUZUKI

Last year, labour unrest resulted in a loss of over Rs 2,500 crore for the company. So, what’s causing Maruti such big problems at Manesar? ET Magazine looks at four reasons that could have resulted in the simmering tension between the management and workers at Maruti Suzuki.

The Missing India connect

Since 2007, two important changes have happened at Maruti. One, Shinzo Nakanishi, the current MD of Maruti Suzuki, took over the reins from Jagdish Khattar. RC Bhargava, who was a director, was made chairman. Two, Maruti and the India market are also becoming increasingly important for Suzuki Motors. Till recently, Maruti contributed more than half of the parent’s profits.

Maruti Suzuki India Ltd, India’s largest passenger vehicles maker reported its December ending earnings last Friday. The results disappointed investors as the company’s net profit declined by more than 17% on a year-over-year basis. This decline was even worse than a 10% decline in profits that the company suffered in the September ending quarter last year. This shows that all is not well with the company. Maruti’s stock experienced a free fall of 8% after the company’s announcement of results last week.

Maruti’s operating margins came at 9.8% in the last quarter, which was the lowest in the previous five years. Some of the factors that lead to a decline in profits were higher commodity prices, unfavourable currency rates and abnormally high level of discounts offering to attract customers. Rising fuel prices in the last quarter also didn’t help the cause. Besides, Maruti’s exports in the previous quarter declined by 8.5% due to lower demand and stronger US dollar against most of the currencies. Growing competition from Honda, Mahindra and Tata Motors is also impacting the company.

Not everything is lost for Maruti, however, the company still dominates the car segment and has more than a 50% share in this market. Maruti is now also looking to address the issues that impacted it in the last quarter. The company is looking to get rid of the discounts that it had to offer in the previous quarter. It provided an average discount of Rs 24,300 per model, which was 75% higher than the average of Rs 13,900 discount is offered in the year-ago quarter. The company has now realized that discounts are not an ideal way of selling cars as it changes customer behaviour and they expect even higher discounts in the coming days.

To counter competition, Maruti has recently launched a few more car variants. It launched new Ertiga in October last year; a new model of WagonR a few days back and more recently it launched new Baleno. In addition to these, Maruti’s new Swift, Swift Dzire and Ciaz models are also doing well.

Despite some of the positives, I still expect Maruti to experience headwinds in the short-term mainly due to the slowdown in the overall auto sector in India. Higher insurance costs, stiff interest rates, and a liquidity crunch are some of the factors that are weighing on this sector. However, the long-term fundamentals for Maruti look good.

CONCLUSION 

Automobile market today is very dynamic & competitive with a range of players and products.
 There are many reasons for the impressive growth of the Indian passenger car Industry.
Some of these are easy availability of vehicle finance, attractive rate of interest and convenient instalments.
 In today’s cutthroat competition it is very difficult to survive. Stiff competition has forced manufacturers to be innovative and responsive to customer demands and needs.
 Maruti Suzuki India Limited is a leading company in Indian Automobile sector which occupies prominent place due to its innovative strategic marketing, promotional, Brand positioning, advertising strategies.
 In today’s scenario the success of company lies in structuring and restructuring the marketing strategies and continuous innovation of product and services.