Maruti Suzuki India Ltd

It gives me immense pleasure to welcome all of you to this 44th annual general meeting of Maruti Suzuki India Limited. As in the last few years, and in accordance with the law, the meeting is being held in the virtual format. My assessment is that a large majority of shareholders prefer this form of the meeting.

Osamu Suzuki, our honorary Chairman and the person without whose wisdom and foresight Maruti Suzuki would not have become what it is, passed away in December 2024. Your Company held a memorial event for him. Suzuki Motor Corporation and MSIL will establish the Osamu Suzuki Centre of Excellence to enable Indian manufacturing industry to enhance its competitiveness, partly by incorporating the lessons learnt from Suzuki San.

I would like to place on record your Company's deep sympathy with the victims of the Pahalgam terror incident, our sense of outrage at this horrific event and our full support for the government's actions to show terrorists that they cannot escape the consequences of their act.

The world is experiencing a level of uncertainty perhaps never experienced before. President Trump has in many ways forced nations to rethink conventional policies and relationships. In particular, the use of tariffs in diplomacy is being seen for the first time. India, during the process of negotiating a bilateral treaty with the United States, has been subject to high tariffs. I have full confidence in the ability of our government to protect national interests and do what would be best for the country.

The situation created by the decision of the Chinese government to provide that export of rare earth magnets would need licenses has added another element of uncertainty for the automobile industry. We are hopeful that the licenses for the export of these magnets will be issued shortly. Your Company has so far managed to ensure that no production was lost due to a shortage of magnets.

Our government has entered into a landmark free trade agreement with the United Kingdom, and this should form a template for future agreements. I expect that such agreements would help in the successful implementation of our policy of seeking export markets to expand production.

The growth rate of the car industry has become a matter of considerable concern. Over the last 6 years, starting from the implementation of BS 6 standards, and followed by more strict safety and emission standards, the average growth of the industry has been 4.4% a year. In FY 2024-25, retail sales growth was 3% and in quarter1 this year there has been a de-growth of 1.3%. This slowdown in the car industry has happened despite the country experiencing the highest GDP growth amongst large countries and calls for serious consideration. Our penetration of cars at 34 per thousand of population is very low. Two-thirds of the population is dependent on two wheelers for their mobility needs. It is also well accepted that the car industry is the driver of economic growth and employment creation, as evidenced in all major developed economies.

Our attitude towards the car industry developed after independence when it was decided that car production should be discouraged as it was inappropriate in a socialist economy. Yet, China, which is a communist country, has become the largest producer of cars in the world. It treated vehicle ownership as an enabler of urban mobility and economic growth. The government offered infrastructure incentives, R&D grants, and consumer subsidies, besides other facilities, to grow this industry. As a result, between 2000 and 2017, car production grew from 2 million units a year to 25 Million units. The GDP also grew at a fast rate. In Japan, during 1955-70, rapid economic growth was accompanied by high growth of car production and sales. Should India also not adopt policies that facilitate the growth of the car industry?

Maruti was established in 1981 despite the then prevailing policy framework. The car industry was de-licensed in 1993 and reached 3.3 million units in FY 2018-19. Thereafter, European-level safety and emission standards were introduced.

Meeting European standards resulted in higher costs of production. It was possibly not realised that these higher costs, with unchanged tax rates would result in many prospective buyers of small cars being unable to afford the higher costs. The small car segment of the market has gone into a decline. Growth is taking place in the higher priced segments, but overall, the result is a slowing down of the industry. The bulk of Indian households, with per capita incomes that are less than 10% of those in Europe, cannot afford to buy the more expensive cars. It is a fallacy to think that prospective small car buyers are now moving to more expensive SUVs and that is why the segment is declining. If that were so, the overall industry should not have slowed down in this manner. Your Company has represented to government that cars should be treated as drivers of economic growth and generation of employment and policies and tax rates should be reviewed in that context. The not so well of sections of the population should also be enabled to buy safe and comfortable means of transportation.

The times ahead will be challenging on many fronts. Both SMC and MSIL are determined to find the best solutions and take forward the growth of the car industry. Both companies now meet twice a year, at the Board of Director levels, so that there is better mutual understanding of all issues. The systems and processes are being streamlined to remove any duplication and maximise efficiencies. The future success of SMC and MSIL are very closely interlinked, and I believe that what is now being done would be in the best interests of growth and the shareholders of both countries.

The results of FY 2024-25 are already with you. We crossed a production level of 2 million units. The Board has recommended a dividend of I 135 per share, an increase from the _125 per share paid last year. Keeping in view our expansion plans as well as the state of the car industry, I request our shareholders to approve the proposed dividend.

Meanwhile, the Company with support from Suzuki Japan and Toyota has focussed on exports as an important constituent of future growth and higher production. In FY 2024-25, exports were in excess of 330,000 units and in Q1 exports further grew by 37%. We are now the largest exporter of cars from India. As a result, we were able to have a small growth in total production volumes. The Company is also planning to introduce two new SUVs this year and one of them is an electric car for both the domestic and export markets. The first line in Kharkhauda is in full production and the second line would be completed early in the next financial year. We are ready with plans to further increase production in the event of government favourably reviewing our representations.

Our commitment to achieve net zero is firm. The Board has constituted a Sustainability Committee to examine relevant issues and advise on how to move to achieve our goal. Over the last decade, CO2 emissions per vehicle have reduced by 19% but we expect to make faster progress with more emphasis on cleaner technologies. To an extent our progress is dependent on the electric energy generation in the country becoming cleaner at a faster rate. The government should ensure that all regulations are supportive of the common goal of net zero.

MSIL now has 79.2 MWp of solar energy. During FY 2025-26 we propose to add another 20MW of solar power. There is a need for rules prescribed by State governments being facilitative of solar generation and its movement across State boundaries.

An additional biogas plant is being established in Manesar and will be ready by December this year. Depending on its performance future investments would be considered.

The emphasis on popularising CNG cars has continued. 14 models of MSIL cars are now capable of being run on CNG. The sale of CNG cars in FY 2024-25 reached 619,890 units and the target for FY 2025-26 is 700,000 units.

An important event was the completion and inauguration by the Railway Minister of a railway siding in the Manesar plant. With this facility, cars will now be directly loaded on to wagons in the factory. The percentage of cars being sent by rail reached 24.3% at the end of FY 2024-25 and this year the target is that 26% of our sales should be transported by rail. Rail transport is much cleaner than road transport. We already have a railway siding at our SMG Gujarat factory and are also planning to have the same in Kharkhauda.

The importance of enhancing customer convenience has always been one of our basic principles. During the year FY 2024-25, we added 460 service points and the total reached 5,424. This aspect of our work continues unchanged.

The CSR activities continue to receive full attention. We have fully utilised the budget and continue to implement programmes under the heads approved by your Board. A new initiative started was to work with the Indian Agricultural Research Institute to popularise the use of fermented organic manure. This initiative could lead to large use of agricultural waste, reduce crop burning and improve the environment, lead to soil enrichment and also produce biogas for clean transportation and cooking.

The importance of providing our employees with a safe and hygienic workplace cannot be over emphasised. We continue to pay attention to this matter. We also advise employees on how to be safe when they are away from the workplace or on leave.

The capabilities of the engineering division continue to be enhanced. The number of engineers has increased to 2,844 from 2,487 last year. SMC and MSIL work very closely in this area to ensure that our customers get the very best of value. Much greater use of AI is now being made. We are also working with our supply chain partners to help them strengthen their engineering capabilities. We cannot be globally competitive without a very strong engineering base.

Your Company has always faced challenges and successfully overcome them. All our employees are highly motivated and looking forward to ensuring that MSIL not only remains the leader of the car industry but also makes a significant contribution to national goals and targets. Our employees are our strength and are responsible for the success of your Company. We have tried to ensure that our policies are always consistent with national goals and we have avoided being short-term in our decisions. This approach has worked well and will be continued. I look forward to the continued support of all our shareholders as we move forward during what may be a difficult year.

Jai Hind.

Chairman