Maruti may announce plans for riot-hit Manesar factory

[1]

Maruti Suzuki has called a news conference on Thursday on the 'Manesar issue', a spokesman said, amid speculation the car maker will announce plans to reopen a factory where a manager was killed and more than 100 people injured in a major riot in July.

No other details were available.

The 550,000 vehicles-a-year factory in Manesar in north India, where the unit of Japan's Suzuki Motor Corp makes its best-selling Swift hatchback, has been idle since the July 18 clash between workers and management.

Labour troubles at Maruti, India's largest automaker, have put the spotlight on the country's decades-old labour laws.

Other foreign car makers such as Hyundai and Honda have seen labour unrest at their Indian plants in recent years, and industry groups have renewed calls for the government to overhaul laws they say tie their hands.

Maruti may reopen the Manesar plant either partially or fully as early as next week and may hire thousands of new workers, with hundreds of policemen ensuring security, media has said.

Maruti is losing about $15 million a day in lost production, according to analyst estimates. A one-month shutdown would cut parent Suzuki's operating profit by about 6 billion yen, equal to 5 per cent of the Japanese car maker's forecast for the year, according to analysts.

India's labour laws make it difficult for big companies to fire permanent workers so instead, companies hire contractors, to the anger of the unions. Contractors at the Manesar factory said they were paid much less than permanent workers for doing the same skilled work.

All workers at the Maruti plant had a reputation for struggling with poor living conditions, residents of the area said.

Maruti's employee expenses as a share of net sales are the lowest among the five biggest domestic automakers in India, at 2.4 per cent in the last fiscal year.

'WORKERS FACE SACK'

Police initially sought to detain all 2,500 workers who may have been present in the plant at the time of the July violence. Most of those workers fled.

Police now say only a few hundred workers may have been involved in the riot, but Maruti could face an uphill task finding enough workers to operate the plant after the violence.

The trouble flared after one employee faced disciplinary action. Company officials say workers attacked senior management during discussions, while the union said its representatives were attacked first.

Union representatives have gone to ground and were not available for comment.

Maruti may sack workers who police identify on their charge-sheet and may also give permanent status to all contract workers, television channel NDTV Profit reported.

Maruti lost $500 million in production last year because of labour unrest.

Maruti shares, valued at $6.2 billion, were down 0.41 per cent at Rs 1,180 on Thursday in a firm Mumbai market. The stock has lost about 4 per cent since the riot.