Maruti board to decide on Manesar unit

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NEW DELHI: Maruti Suzuki India Ltd’s board has sought a report on the labour unrest faced by the nation’s largest car maker and plans to review its findings and discuss, among other things, the future of its troubled Manesar factory later this month.

“The board has sought a report on the recent labour issues at our plant, which will be reviewed at the board meeting on 29 October,” said R.C. Bhargava, chairman of Maruti Suzuki. “The report will highlight the demands of the workers and will also present our side of the story.”

The board meeting is also likely to approve the company’s decision for a potential investment of up to Rs. 18,000 crore in Gujarat.

Bhargava said it was premature to say if the Manesar plant in Haryana will be eventually shut, but given the conditions, there is a possibility of reducing the company’s dependence on the Manesar plant. “The board’s decision will be the final one,” Bhargava said.

The board review follows a conference call that a group of Maruti Suzuki investors, worried about the impact of the labour unrest on the company, had with striking employees on Friday for their version of the events.

On Friday, the company’s stock dropped 2.65% to Rs. 1,028.45, a 52-week low. On Monday, however, the stock recouped part of the losses, gaining 2.39% to Rs. 1,053.05 after the company said it had started partial operations at its plants in Gurgaon and Manesar. The benchmark Sensex lost 0.34%.

Maruti Suzuki has been facing production issues because of labour trouble at the Manesar plant since June this year, leading to a production loss of at least 50,000 units and a revenue loss of at least Rs. 1,750 crore.

Workers of Maruti Suzuki India’s Manesar Plant Protest (File photo PTI)

Workers of Maruti Suzuki India’s Manesar Plant Protest (File photo PTI)

Meanwhile, with workers vacating the factory premises on Friday night, the Haryana government called for talks on Monday between the management and the striking workers.

“Responding positively to the invitation for talks, company officials met the representatives of the striking workers along with the Haryana government officials today,” the company said in a statement.

“The company’s Gurgaon plant resumed operations today; 1,700 vehicles were manufactured at Gurgaon plant,” the company said. “Production also started in a limited way at the company’s plant in Manesar.”

The striking workers ended an eight-day sit-in at the plant late on Friday after a court order. However, they continued to strike work by protesting outside the factory on Monday.

The car maker said it has started production of some of the models at its Gurgaon plant after production was halted last week because of a shortage of parts and engines.

“But only those cars, such as the Eeco family van, which do not rely on parts from strike-hit units, could be produced,” the company said.

Production at this plant will depend on the supply of diesel engines and also transmissions from Suzuki Powertrain India Ltd.

Earlier this month, Maruti Suzuki’s Manesar workers ended a month-long strike, raising hopes that the car maker will be able to step up production heading into the festive season and offset some of the recent revenue losses.

The latest strike follows a 13-day protest in June and the 33-day lockout that ended on 1 October. The second strike was the result of Maruti Suzuki’s decision to prevent workers, who hadn’t signed a good-conduct bond, from entering the factory.

The bond required workers to commit that they would “not resort to go slow, intermittent stoppage of work, stay-in-strike, work-to-rule, sabotage or otherwise indulge in any activity that would hamper the normal production in the factory”.

The company, which presently has six plants in Gurgaon and Manesar, is set to move out of north India for the first time since it started operations in 1983 as a joint venture between Suzuki Motor Corp. and the Indian government.

“We will make an announcement regarding our Gujarat plant by the end of this month after the board clears the investment proposal,” Bhargava said. “There will be a phase-wise investment. In the first phase, the production capacity will be one million units and that will require an investment of at least Rs. 6,000 crore. If the market grows, we would do another million cars with corresponding investments.”

Bhargava said the company will be developing a vendor base and that, too, will require an investment of at least Rs. 6,000 crore.

It  had reported on 18 May on Mint that Maruti Suzuki was evaluating Gujarat for setting up a manufacturing unit.

“This is a very strategic move from the company,” said Nikhil Deshpande, research analyst at Mumbai-based brokerage firm PINC Research. “It will not only give it proximity to the ports in Gujarat, but also stand out as an option in emergency situations like the one at Manesar right now.”

amrit.r@livemint.com

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