Maruti Suzuki again runs into massive loses after 2011 strikes

Monday 23 July 2012, 11:41 AM by

The conflict, which claimed the life of a Senior Manager at Maruti Suzuki, witnessed 90 of its employee behind the bars with the entire workforce being scrutinised. Mishap happened at the Manesar plant of Maruti Suzuki India Limited (MSIL) has put it in a tight spot. With the event, the company will be garnering loses worth USD 12-16 millions every day, owing to the shut-down of its facility that may extend up to several weeks. Police has pinpointed the entire 3,000 strong workforce of the Manesar plant to be remanded for the said incident. The confrontation left the largest car maker of the country helpless with a part of its assembly line being damaged.

Nine months before, MSIL ramped up USD 500 million worth of loses, following the labour strikes. The recent violence has again surrounded a shadow on its production and has left the investors relentless. ICICI Securities, a brokerage firm, stated, “Whenever production resumes, the morale of the executives deployed at the plant would be one of apprehension, fear.”

The officials of Maruti Suzuki have not yet revealed that when the production at the unit will commence, however, the parent Japanese car maker, Suzuki Motor revealed that the plant will stay shut on July 21, 2012 as well. However, an official of MSIL exposed that the facility will remain closed for the next two days as well. He said, “Part of the manufacturing area is burned, the whole building is burned, and the people who are running the factory are injured and admitted in the hospital, so it will take a little time.”

Reinitiating the operations at plant is not easy, considering the fact that the police is actively seeking the whole employee base with more than a dozen managers being injured. Over 50 per cent of Maruti Suzuki's net worth, translating to more than USD 570 million eroded as it shares dipped by 8.9 per cent, which was considered as the highest one day fall in past two years. However, the shares revived a bit on July 20, 2012 after gaining 2.7 per cent.

According to the reports, Haryana government is contemplating to lockdown the factory for a prolonged period, though it will be totally the company's decision to decide when to kick-off the production again. Principal Secretary, Industries, state government, Y.S. Mallik, said, “It is difficult to assess at this point of time as to when the plant would start functioning normally.”

India is not new to the situations of labour unrest as the country has witnessed quite a few protests and sit-in demonstrations by worker unions, political parties as well as campaign groups. However, the riot at the Manesar plant was one of the goriest and has sparked negative sentiments from everywhere. Society of Indian Automobile Manufacturers (SIAM), stated, “Such acts of violence sully the image of India as a manufacturing base, as an investment destination.”