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PRESS TRUST OF INDIA
New Delhi, Dec 6: Maruti Udyog has decided to close down its now defunct subsidiary-Maruti Sales and Service India-which was formed as a service unit and sales outlet for authorised spare parts and components.
All the functions of the venture have already been transferred to JJ Impex, a company which taken over by Maruti about a year ago, company sources said.``We are now going through the legal procedure of closing down the venture. As there was no work force employed with Maruti Sales, there will not be any problem for going ahead with the closure,'' sources said.
Maruti Sales was formed over two years ago as a subsidiary to look into service of Maruti vehicles as well as sale of spare parts and some accessories. The company expected to start its first workshop under the venture in the capital and later spread its wings across the country.``But even before we could start working towards this end, we got the offer to purchase JJ Impex, which had an already-established service infrastructure. It was muchmore feasible to buy a fully-established unit rather than set up one on our own. So we decided to go for the deal,'' the sources said. The venture, the sources added, has since been lying defunct. ``We have, therefore, now decided to go ahead and close down this subsidiary.''
However, maruti intends to retain the JJ Impex name for the service venture for the time being. ``We have not yet decided on changing the name. We have retained the name since we bought over the company a year back. At a later date, we might go ahead and change it, but not now.''
Meanwhile, Maruti has set up a tripartite joint venture with Maruti-Countrywide and Sumitomo Corporation of Japan for establishing an after-sales service workshop network across the country. The first of the workshop, being set up in delhi, will be operational by mid-1999, company sources said.
Both Sumitomo and Maruti control 47.5 per cent stake each in the venture, while the rest is held by Maruti-Countrywide. The Japanese giant and Maruti Udyog willinfuse Rs 5.5 crore each into the venture, the sources added. ``The joint venture will be managed by Maruti and would be exclusively for servicing Maruti cars. The venture would not indulge in sales of Maruti vehicles.''
The company intends to set up similar workshops across the country in a phased manner. ``We are looking at other sites and are working with Sumitomo for the same,'' the sources pointed out. The company has already received the Foreign Investment Promotion Board approval for the move. This is as part of Maruti's efforts to beef up its service network in the wake of increased competition from new entrants in the small car arena.
Meanwhile, maruti has temporarily cut back production since the first week of November in view of the recession induced slowdown in demand for vehicles. The company will be recording a 20 per cent drop in sales during November over normal levels.
The impact was particularly felt in October and the first half of November. A combination of factors affected sales ofautomobiles, including recessionary trends and requirement of permanent account number for purchase of cars.
This has compounded the usual fall in sales in the months of November and December. The production cut was made in the first week of November to avoid build-up of inventory.
In a desperate bid to counter the slowdown of sales, Maruti has also launched a major sales and marketing promotion and the company claims that the effort has paid off with an improvement in sales in the second half of November. Consequently, the company has started increasing its production.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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