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BW Businessworld

Committed To Recoverability

Maruti voluntarily started the process of making its domestic models comply with the EU ELV norms for recoverability and recyclability, ahead of Indian regulations.

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EVEN before the outbreak of Covid-19, the automotive industry was struggling to cope with the downturn triggered by higher fuel prices, interest rates, and insurance costs, not to speak of an increase in vehicle prices because of the transition to Bharat Stage-VI emission norms. This was compounded by the domestic economy slowing down from the second half of FY19. Maruti Suzuki’s net profit in FY 18-19 was Rs 7,297.6 crore which decreased in FY-19-20 to Rs 5,208.9 crore. The debt to equity ratio in 2019 was zero and it has increased to 0.002 in 2020. 


India’s largest automobile manufacturer, Maruti Suzuki, has also been a frontrunner in innovation. The company increased its R&D efforts in FY20, both in terms of investment and personnel and 14 per cent of its net profit was directed towards R&D. The number of R&D engineers increased from 1,600 to 1,845 during the year. The few launches from the Maruti Suzuki stable during this spell include two brand new models and six facelifted models. 

Through innovations in operations and product design, the company recorded a reduction in its product development cycle, improvement in its vehicle fuel economy, lowering of tailpipe emissions and enhancement in safety features of the vehicles. A major development from Maruti Suzuki India is the setting up of India’s first lithium ion cell and battery manufacturing facility in Gujarat, which will make batteries for hybrids and EVs.

Value Chain Approach

The company has adopted a value chain approach to improve operational efficiency, mitigate climate-related impacts and ensure business continuity. To achieve increased efficiency, about 79 per cent of Maruti’s tier-1 suppliers have plants located within a radius of 100 kilometres from its manufacturing facilities, to reduce travel time. The company has also been supporting its suppliers by helping them set up training centres. 

Climate Action

Maruti’s cumulative CO2 emissions dropped in FY20. This reduction is mostly attributed to the deployment of CNG and smart hybrid technologies, as well as the decline in production in the previous year. It is also the first manufacturer to transport automobiles through the Railways. 

Maruti clearly includes climate in its risk management strategy – a much appreciated initiative. This includes a topographic study of potential regions that could get impacted by climaterelated disasters. 

Waste Management

Maruti also scored well on waste management. In FY20, it generated 120,187 metric tonne (MT) of metallic scrap, 100 per cent of which was reused as inputs in the production process. It generated 12,713 MT hazardous waste, of which a large proportion was sent to the cement industry for co-processing and the remaining to authorised recyclers. Maruti adopted a zero-water discharge policy and recycled 3,182 million litres of waste water.

Baby Steps Towards Circularity 

In FY18, Maruti voluntarily started the process of making its domestic models comply with the EU ELV norms for recoverability and recyclability, ahead of Indian regulations. Under these norms, all models exported to the EU and Japan are minimum 95 per cent recoverable and 85 per cent recyclable. Another noteworthy circular economy initiative is Maruti’s vehicle dismantling and recycling joint venture with the Toyota Tsusho Group in Noida. Maruti Suzuki was quoted saying that more units will be added soon.

Employee Well-being

The company reported zero fatalities and zero lost time injury rate, both of which are important achievements, within the automotive industry. The CEO earns 79.8 times the average worker pay, making it the best CEOaverage worker pay ratio in the automobile sector in India. This is especially laudable in an industry where the average CEO-average worker pay ratio is a whopping 356, which is the highest across all sectors. 

On the flip side, in comparison to the employee count in the previous year, FY20 saw a decline of 16.7 per cent. Of the 33,282 employees, only about 586 are women and 35 are people with disabilities. A skewed gender ratio was also seen on the board (two women out of 11) and in the company’s senior management (three women out of 211) positions. 

Usage of Natural Resources

While Maruti Suzuki’s otherwise glowing sustainability performance is tainted by its fossil-fuel heavy energy mix (99.85), it has been taking significant strides towards improving it. For example, the installed capacity of its solar PV has increased from 1.3 MW in FY19 to 6.3 MW in FY20. The capacity is slated to further increase to 26.3 MW in the next fiscal year.