Sales to be hurt if strike lingers, says Maruti

The country's largest car maker Maruti Suzuki India on Tuesday said its sales may be hit if strike at its Manesar plant prolongs, while it has already incurred production loss of about 3,000 units till the 4th day of stir by workers.

Even as the firm tries to find an end to the impasse, it received a shot in the arm from Haryana Labour Commissioner who termed the strike as "unwarranted" and also backed the company's decision to sack 11 employees.

"If the strike continues for a long time, it will affect our sales and will increase the current waiting period of our diesel cars," Maruti Suzuki India (MSI) chairman R C Bhargava told PTI.

The Manesar plant rolls out about 1,200 units every day in two shifts. The factory produces hatchbacks Swift and A-Star and sedans DZiRE and SX4.

While diesel versions of Swift and DZire at present have a waiting period of 3-4 months, customers are waiting for up to one and half months to take the delivery of SX4. The A-Star is MSI's flagship export model.

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"Export is also likely to be impacted if the strike prolongs... The stalemate still continues," Bhargava said.

The strike comes at a time when MSI has seen slowing down of sales in the recent past as the auto industry grapples to overcome challenges of rising fuel prices and interest rates.

In May, MSI's domestic sales grew by just 3.9 per cent to 93,519 units from 90,041 units in May, 2010.

Talking about the loss to the company, a MSI spokesperson said: "The situation is the same as yesterday... We have lost production of around 3,000 units so far since Saturday."

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As per industry estimates, the value of the loss is around Rs 150 crore (Rs 1.50 billion) till Tuesday.

Meanwhile, Haryana Labour Commissioner Satwanti Ahlawat backed the company's move to sack 11 employees, saying that "the company is within its right to terminate any employee who is creating indiscipline in the factory premises."

She said the standoff between the management and the workers was an internal matter of the firm but added workers "can form the new union as law provides for the same... But the strike by employees, which has crippled the manufacturing facility to press for new union, is not a right step."

As the strike continued, the company's scrips closed the day at Rs 1,245 per share, 1.06 per cent up apiece on the Bombay Stock Exchange.

On June 4, about 2,000 workers struck work from the second shift at Manesar facility. Production at the plant is completely stopped at present with no signs of immediate breakthrough as workers said they will continue the agitation till their demands are met.

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Striking workers are demanding the recognition of a new union -- Maruti Suzuki Employees Union (MSEU) -- formed by those working at the Manesar plant, besides retaining contract labourers for the two upcoming new units inside the complex.

 Refraining from any disciplinary action against the 11 office bearers of the new union is also another demand.

However, the company had yesterday sacked 11 employees, including eight office bearers of MSEU and three other workers, for allegedly inciting others to strike work.

The workers said the company currently has one union, Maruti Udyog Kamgar Union, which is mainly dominated by those working at the Gurgaon facility.

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A worker had said the issues at the Manesar plant are different from those of Gurgaon unit, and hence they are seeking recognition of the new union.

The company's Gurgaon plant, however, is functioning normally.

The last time the company witnessed a major strike was when workers stopped production for three months from November 2000 to January 2001.

MSI is setting up two new units with an annual installed capacity of 250,000 units each inside its Manesar facility at a total investment of Rs 3,625 crore (Rs 36.25 billion). The existing plant in Manesar can produce 350,000 units annually, while the three units in Gurgaon have a combined annual capacity of 850,000 units.