NAME: MONAL JAIN

COURSE: Bachelor of Business Administration (Honours)

SEMESTER: 5

ROLL NO.: 165

TITLE: IMPACT OF INDUSTRIAL DISPUTES ON INDIAN

AUTOMOBILE SECTOR

MENTOR: MR. MMD

DATE OF SUBMISSION: NOVEMBER 21,2018

Dissertation submitted in partial fulfillment of the requirements of the

Graduate Degree in

Bachelor of Business Administration (Honours) from

J.D. Birla Institute affiliated to Jadavpur University, Kolkata.

---------------------------- ---------------------------
Signature of the Student Signature of the Mentor

Page | 1
 Date: NOVEMBER 21,2018

To,
The Controller of Examinations,
Jadavpur University,
Kolkata

Respected Sir/ Ma’am,

I, Monal Jain, take full ownership of this work, titled “Impact of Industrial
Disputes on Indian Automobile Sector”. All the references used are well acknowledged
in the Bibliography.

This research is a partial fulfillment of the requirements of Graduation Degree in

Bachelors of Business Administration (Honours) from Jadavpur University.

I have worked hard to accomplish this term paper work.

Yours sincerely,

Signature
Name: Monal Jain
Registration No.: 138137 of 16-17
Roll No.: 165

Page | 2
 DECLARATION

I hereby declare the following:

The word count of the dissertation is 8,678 words approximately.

The material contained in this dissertation is the end result of my own work. Due

acknowledgement has been given in the bibliography and references to all sources used be they

electronic, personal and printed. I am aware that my dissertation may be submitted to a

plagiarism detection service where it will be stored in a database and compared against work

submitted from this institute or from any other institute.

In the event that there is a high degree of similarity in content detected, further

investigations may lead to disciplinary actions including the cancellation of my degree

according to Jadavpur University rules and regulations.

I declare that the ethical issues have been considered, evaluated and appropriately

addressed in this research.

I agree to maintain an electronic copy or section of the dissertation to be placed on the e-

learning portal, if deemed appropriate, to allow future students the opportunity to see examples

of the past dissertations and to be able to print and download copies if they so desire.

Signature:

Page | 3
 ACKNOWLEDGEMENT

The satisfaction and euphoria that accompany the successful completion of any work would be

incomplete unless we mention some of the persons, as an expression of gratitude, which made it

possible, whose constant guidance and encouragement served as a beckon light and crowned the

efforts and success.

Our Director, Dr. J.N.Mukhopadhyaya, for his vital encouragement and support.

A project is a major milestone during the study period of a student. As such this project was a

challenge and was an opportunity to prove my caliber. It would not have been possible to see

through the undertaken project without the guidance of Prof. MMD Sir, member of the faculty,

for his full support and guidance throughout the course of research of material for the term

paper, as well as for the final compilation.

I would further like to thank the coordinators of the Learning Resource Centre of our college for

assisting me to avail the relevant books and also allowed me to carry out the necessary research

for my term paper.

My sincere thanks to the librarians and all the faculty members for their assistance and guidance

in the completion of the term paper without which it would have not been possible to complete

this term paper.

Page | 4
“IMPACT OF INDUSTRIAL DISPUTE ON INDIAN
AUTOMOBILE SECTOR ( A brief case study
on Maruti Suzuki’s Manesar plant lockout )

Page | 5
 Table of contents

Sl. No. Particulars Page No.

Chapter 1 Introduction
1.1. Abstract 4
1.2 Objectives of the Study 5
1.3 Review Of Literatures 6
1.4 Research Methodology 7
1.5 Plan Of Chapters 8
1.6 Limitations Of Study 9

Chapter 2 Industrial Disputes – A Brief Overview

2.1 Industrial Disputes – A Conceptual Study 10
2.2 Causes Of Industrial Dispute 10-12
2.3 Forms of Industrial Dispute 13-14
2.4 Impact of Industrial Disputes in India 15

Chapter 3 Indian Automobile Sector – An Overview

3.1 Automobile Sector – An Overview 16-19
3.2 Players in IAS 20
3.3 Stake-holders in IAS 21
3.4 Recent Industrial Disputes in Indian 22-24
Automobile Industry

Chapter 4 Industrial Dispute in Maruti Udyog

Limited: The ‘Manesar Plant’ Story
4.1 Maruti Udyog Ltd. – Origin 25-26
4.2 Industrial Disputes at MUL 27
4.3 Causes of Workers Dissatisfaction 28-32
4.4 Dispute Outbreaks in Immediate earlier 33
years
4.5 Main Incident of Lockout in July, 2012 33-35
4.6 Impact of the Lockout on Employees 36-37
4.7 Impact of Lockout on Company 38-41
4.8 Impact Of Lockout on Sector & Economy 42

Chapter 5 Observations & Conclusions of the Study 43-44

APPENDICES
References & Bibliography 45

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 1.1 ABSTRACT

Harmonious industrial relation is a basic necessity for any growing business

and also is a strong indicator of flourishing economy. It marks continuity of

production activity, ensures welfare of employees and the upbringing of production

house. From a broader perspective it ensures compliance in best terms with corporate

governance and alignment of interests of stakeholders, particularly employees and

management. Prosperity of workers is an unaccounted yet vital asset for any

company. Even from the accounting aspect, the HR accounting is an emerging

concept drawing opinions and discussions from various experts in the field.

Labour disputes are endemic in the auto industry of India and have affected

other manufacturers.

In recent past, where the world witnessed larger proportion of labour unrest in

the company, particularly Manesar evidenced by strikes in 2011 and major lockout in

July, 2012 that lasted for about one month is the main focus of analysis. The impact

of the same, including the loss of revenue caused, change in policies adopted

thereafter, extent of damage caused to company, its workers and the economy has

been extensively analyzed. Also, the scenario post implementation of revival

strategies has been included in the project to provide a holistic view about the entire

incident.

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 1.2 -OBJECTIVESOFTHESTUDY

The objectives of the present study are -

1. To understand various types of disputes in India.

2. To study causes of Industrial disputes in India.

3. To identify the key factors that led to the lockout of Manesar Plant of

Maruti Suzuki in 2012.

4. To analyze the impact of lockouts on its workers and the company.

5. To give business, social and historical perspective of the reasons behind the

series of incidents that took place at the Manesar plant of Maruti Udyog Limited

in 2012.

Page | 8
 1.3 - REVIEW OF LITERATURE

 P.Krishnaveni in her article focuses on historical developments, financial

analysis and various brands of Maruti Suzuki. The article highlighted the

performance of Maruti Suzuki with respect to Production, Manufacturing and

Exports of company.

 R.C.Bhargava, Seetha in their book, The Maruti Story, focuses on the journey

& developments of Maruti Suzuki India Limited. Mr.Bhargava in his book

pointed that Maruti Udyog established new standards of quality, productivity,

industrial relations and customer care in the Indian automobile industry and

the manufacturing sector at large.

 MR.VISHAL.S.RANA & DR.MURLIDHAR A.LOKHANDE in their

research article titled “PERFORMANCE EVALUATION OF MARUTI

SUZUKI INDIA LIMITED: AN OVERVIEW” published in Asia Pacific

Journal of Marketing & Management Review (Feb, 2013 ISSUE) have

enumerated growth and analysed excpansion of operations of company over

the years since inception.

Page | 9
 1.4 RESEARCH METHODOLOGY

The project is completely based on the secondary data available to me. No primary

data has been used. Great care has been taken to cover up maximum topics in order

to make this project worth reading. The following methodologies have been applied

in order to complete this project.

 Secondary data has been extracted from various periodicals, reports, articles

and well known websites.

 A detailed analysis of the facts and figures has been done in order to provide

a clear and conceptual view of the topic.

 Various graphs and diagrams have been provided in order to explain the

tables so that it is easier for every reader to understand the depth of the topic.

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 1.5 PLAN OF CHAPTERS

The study has been covered under the following chapters:-

CHAPTER-1:

It includes the abstract giving a brief outlook of the study along with the objectives of
the same. It also outlines the aspects of limitations that the study carries along with
itself.

CHAPTER-2:

It includes a detailed discussion on the conceptual, legal and practical aspects of the
Industrial Disputes. It gives a broad overview about the causes, forms and general
impacts of the industrial disputes.

CHAPTER-3:

It contains an in depth analysis of the automobile industry in India outlining the key
players and their stake in the industry. It gives a detailed account of various disputes
that arose in recent past in various automobile companies.

CHAPTER-4:

It provides a brief description about the development of MSIL (formerly - Maruti

Udyog Ltd) since its origin and its linkage to the disputes that arose at several
occasions. It focuses on the case study of the labour unrest at Maruti Suzuki India
Ltd., the major player in automobile industry.
It captures a detailed picture of the causes, the happenings and the impacts it
unleashed on the workers, company and the economy on a whole.

CHAPTER-5:

It contains the summary of the entire study and conclusions drawn there from.

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 1.6 LIMITATIONSOFTHESTUDY

Every project that is made has some limitations of its own. It is almost

impossible to cover each and every topic. The topic being such a vast one it was

important for me to cut down the matter and be as specific as I could.

Even though I have tried to cover as many scenarios as possible the following

limitations scar my project:

 The project deals with only automobile industry and more particularly to

Maruti in view of dispute happenings.

 Only secondary data forms the basis of analysis and conclusions as primary

data could not be collected due to geographical limitations and other

circumstances.

 As secondary data is the basis personal view points of authors whose articles

have been analyzed and biasness may have crept in although due care have

been taken to ensure transparency.

 Due to lack of data only one case study could be focused into in detail. The

overall impact on industry has been discussed in light of individual accounts.

 Finally the project is based on the sources available to me from the books,

periodicals and the websites. No personal interaction with any representative

of any company in sector or any expert in what-so-ever sense has not been

done.

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II. INDUSTRIAL DISPUTE :

BRIEF OVERVIEW

Industrial disputes are conflicts, disorder or unrest arising between workers

and employers on any ground. Such disputes finally result in strikes, lockouts and
mass refusal of employees to work in the organization until the dispute is resolved.
So it can be concluded that Industrial Disputes harm both parties employees and
employers and are always against the interest of both employees and the employers.

DEFINITION AS PER INDUSTRIAL DISPUTES ACT – Sec. 2 of the

Industrial Dispute Act, 1947

“Industrial Dispute is any dispute or difference between the employees and

employers or between employers and workmen or between workmen and
workmen, which is concerned with the employment or terms of employment or
with the conditions of labour of any person.”

CAUSES OF INDUSTRIAL DISPUTE:

The causes of industrial disputes can be broadly classified into two categories:

I. Economic Causes- includes the following-

o Wages,

o Bonus,

o Dearness allowance,

o Conditions of work and employment,

o Working hours,

o Leave and holidays with pay, and

o Unjust dismissals or retrenchments.

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II. Non-economic Causes- includes the following-

o Recognition of trade unions,

o Victimisation of workers,

o Ill-treatment by supervisory staff,

o Sympathetic strikes,

o Political causes, etc.

Other causes can be categorized into-

 Wages and allowances: Since the cost of living index is increasing, workers
generally bargain for higher wages to meet the rising cost of living index and
to increase their standards of living.

 Personnel and retrenchment: The personnel and retrenchment have also been
an important factor which accounted for disputes.

 Indiscipline and violence: From the given table, it is evident that the number
of disputes caused by indiscipline has shown an increasing trend.

 Bonus: Bonus has always been an important factor in industrial disputes.

 Leave and working hours: Leaves and working hours have not been so
important causes of industrial disputes.

Page | 14
III. Miscellaneous: The miscellaneous factors include :

o Inter/Intra Union Rivalry

o Charter of Demands

o Work Load

o Standing orders/rules/service conditions/safety measures

o Non-implementation of agreements and awards

o Workers’ resistance to rationalisation, introduction of new

machinery and change of place of factory.

o Non-recognition of trade union.

o Rumours spread out by undesirable elements.

o Working conditions and working methods.

o Lack of proper communication.

o Behaviour of supervisors.

o Trade union rivalry etc.

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FORMS OF INDUSTRIAL DISPUTE IN LIGHT OF
PRACTICAL INCIDENTS:

The outcome of industrial dispute is locking out from the employer side and workers

may resort to strike, lock-out, Gherao, picketing etc.

Strike: Strike is quitting work by a group of workers for getting their demands

accepted by the employer. It is a powerful tool used by the trade unions to pressurize

the management to accept their demands. Various types of strikes are:

· Economic Strike

· Sympathetic Strike

· General Strike

· Sit down Strike

· Slow Down strike

Lock Out: Lockout is the step taken by the employer to put pressure on workers.

Employer close down the workplace until the workers agree to continue the work on

the terms and conditions as given by the employer. This is a weapon available in

hands of employer and empowers him for collective bargaining and materializes his

intentions. However, a closure must not be construed as a lock out every time.

A recent case study about “Manesar Lockout of Maruti” involving this has been

covered extensively in the latter part of this project.

Gherao: Gherao is the action taken by workers under which they restrict the

employer to leave the work premises or residence. The person concerned is put away

Page | 16
in a ring made of human beings i.e. workers. Gheraos are also being adopted by

educational and others institutions. It is an illegal act according to the Law.

Picketing: When workers are not allowed to report for the work by deputing some

men at the factory gates. If picketing does not involve any violence it is

perfectly legal. It is done to bring into the notice of public that there is dispute

between workers and management. This is not much prevalent in the Indian scenario.

Lay Off: In cognate expressions this implies refusal, failure, or inability of

employer to give employment whose name appears on the muster rolls and who has

not been retrenched due to shortage of raw materials, accumulation of stocks, break

down of machinery, natural calamity etc.

Retrenchment: It means termination of the service of a workman by the employer

for reason whatsoever, except as a punishment inflicted by way of disciplinary action

other than those containing valid grounds like retirement, or termination on grounds

of ill health etc.

Page | 17
Page | 18
IMPACTS OF INDUSTRIAL DISPUTE IN INDIA:

A study by Labour Bureau Of Govt. of India gave the following statistics which

indicates that not only Maruti, but the issue of labour dispute has gripped a large

number of industrial units.

As per available information 77 Industrial Disputes resulting in work-stoppages were

reported during January to December, 2016 in which 552994 workers were involved

and 1057584 man-days lost were reported. Besides, there were 9 disputes which

occurred due to reasons other than Industrial Disputes also. In the said disputes 1224

workers were involved and 181168 man-days were lost.

Page | 19
 AUTOMOBILEINDUSTRYININDIA
III
The automobile industry in India is world’s fourth largest, with the country currently
being the world's seventh largest commercial vehicle manufacturer. The industry
accounts for 7.1 per cent of the country's Gross Domestic Product (GDP). Indian
automobile industry has received foreign direct investments (FDI) worth US$ 17.91
billion between April 2000 and September 2017. The passenger vehicle sales in India
crossed the three million unit milestone during FY 2016-17, and is further expected
increase to 10 million units by FY20. In order to keep up with the growing demand,
several auto makers have started investing heavily in various segments of the
industry during the last few months. In addition, several initiatives by the
Government of India and the major automobile players in the Indian market are
expected to make India a leader in the 2W and Four Wheeler (4W) market in the
world by 2020.

The majority of India's car manufacturing industry is based around three

clusters in the south, west and north. The southern cluster consisting of Chennai
is the biggest with 35% of the revenue share. The western hub near Mumbai and
Pune contributes to 33% of the market and the northern cluster around the National
Capital Region contributes 32%. Chennai, with the India operations of Ford,
Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo,
and PSA Peugeot Citroën began their operations in 2014. Chennai accounts for 60%
of the country's automotive exports. Gurgaon and Manesar in Haryana form the
northern cluster where the country's largest car manufacturer, Maruti Suzuki, is
based. The Chakan corridor near Pune, Maharashtra is the western cluster with
companies like General Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata
Motors, Mercedes Benz, Land Rover, Jaguar Cars, Fiat and Force Motors having
assembly plants in the area. Aurangabad with Audi, Skoda and Volkswagen also
forms part of the western cluster. Another emerging cluster is in the state of
Gujarat with manufacturing facility of General Motors in Halol and further planned
for Tata Nano at their plant in Sanand. Ford, Maruti Suzuki and Peugeot-
Citroenplants are set to invest in Tamil Nadu. Kolkata with Hindustan Motors,

Page | 20
Noida with Honda and Bangalore with Toyota are some of the other automotive
manufacturing regions around the country.

Clusters of the Industry formed in India

Segment Wise Market Share in 16-17

14%
3%
3%

80%

Passenger Vehicle Commercial Vehicle Three Wheelers Two Wheelers

Page | 21
The world standings for the Indian automobile sector, as per the Confederation
of Indian Industry, are as follows:

 Largest three-wheeler market

 Second largest two-wheeler market
 Tenth largest passenger car market
 Fourth largest tractor market
 Seventh largest commercial vehicle market
 Fifth largest bus and truck segment

FUTURE PROSPECTS:

However, from a long-term perspective, rising incomes, improved

affordability and untapped markets present promising opportunities for automobile
manufactures in India. According to Macquaire equities research, sale of passenger
vehicles is expected to double in the next four years and growth anticipated is higher
than the 16 percent achieved in the past 10 years.

The Government recognizes the impact of the sector on the nation’s economy,
and consequently, the Automotive Mission Plan 2016-2026 launched seeks to grow
the industry to a size of Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026

 Rising incomes among Indian population will lead to increased affordability,

increasing domestic demand for vehicles, especially in the small car segment.
 Fuel economy and demand for greater fuel efficiency is a major factor that affects
consumer purchase decision that will bring leading companies across two-
wheeler and four-wheeler segment to focus on delivering performance- oriented
products.
 The Two Wheelers segment with 80 per cent market share is the leader of the
Indian Automobile market owing to a growing middle class and a young
population.

Page | 22
 Product innovation and market segmentation will channelize growth. Vehicles
based on alternative fuels will be an area of interest for both consumers and auto
makers.
 Industry will seek to augment sales by tapping into rural markets, youth, women
and luxury segments.
 The automobile industry is supported by various factors such as availability of
skilled labour at low cost, robust R&D centres and low cost steel production
 India is emerging as a strong automotive R&D hub with foreign players like
Hyundai, Suzuki, General Motors setting up base in India. This move is further
enhanced by Government’s support towards setting up centres for development
and innovation. Tata Nano’s successful entry in the Indian market has steamed up
the opportunities of growth available in alternative segments like electric cars,
vehicles run on natural gas, etc.
 The government aims to develop India as a global manufacturing as well as a
research and development (R&D) hub.
 The Indian government has shifted its focus on electric cars in order to meet the
emission reduction targets. It has aims to sell only electric cars by 2030 under the
National Electric Mobility Mission Plan which was launched in 2013.
 India's electric vehicle (EV) sales increased 37.5 per cent to 22,000 units during
FY 2015-16 and are poised to rise further on the back of cheaper energy
storage costs and the Government of India’s vision to see six million electric

and hybrid vehicles in India by 2020. 1

Media Reports, Press Releases, Department of Industrial Policy and Promotion (DIPP), Automotive
Component Manufacturers Association of India (ACMA), Society of Indian Automobile Manufacturers
(SIAM), Union Budget 2016-17

Page | 23
PLAYERS IN AUTOMOBILE INDUSTRY IN INDIA

Starting from the era when there was too slim of a variety of cars available in Indian
market, Indian automobile industry with their own technology has come up a long
way to have a diverse array of cars these days. There are a number of top automobile
companies running their operations in India, which again have a range of models in
different segments of cars.
Three car makers cornered gains in the expanding domestic car market during the
calendar year 2017. Maruti Suzuki was the biggest gainer in the world's fifth-largest
passenger vehicle market last year, followed by Tata Motors and Honda Cars. New
and successful launches helped these three car makers to expand their market.
Maruti's gain is helped by the 15 per cent growth in domestic sales (to 1.6 million
vehicles) on the back of demand for its popular models like Baleno, Brezza and the
new Dzire (launched in mid-2017).

Tata Motors clocked a growth of 18.8 per cent in domestic sales during 2017 riding
on three new launches — Hexa, Tigor, and Nexon.

Korean auto major Hyundai, the country's second-largest car maker, expanded sales
by over five per cent in 2017 in the domestic market. However, the company is
facing a capacity constraint (its plants operated at 98 per cent in 2017) and it is
visible in the single-digit growth.

The third-largest player, Mahindra and Mahindra (M&M), saw a flat performance in
sales volume during 2017 and that also brought its share down to 7.5 per cent
compared to 8.2 per cent in 2016. M&M did not launch any new product in 2017.

French car maker Renault was the only player among the top ten to register a double-
digit volume decline of 15 per cent in 2017. Demand for Kwid, its most sold vehicle,

softened. It closed 2017 with a 3.5 per cent share against 4.5 per cent in 2016. 2

2
An article in Business Standard dated 6/01/2018

Page | 24
MARKET SHARE HELD BY THE KEY PLAYERS
List of Top Automobile Companies in India, 2017(Units Sold) 3

April - Dec
Rank Company Jan-17 Feb-17 Mar-17 Total
17
1 Maruti Suzuki 133768 120599 127695 1220460 1602522
2 Hyundai India 42017 42327 44757 398219 527320
3 Mahindra & Mahindra 20096 20605 25352 176312 242365
4 Tata Motors 14721 13957 17093 145336 191107
5 Honda cars 15592 14249 18950 129964 178755
6 Toyota 10336 11543 13796 103891 139566
7 Renault 8791 11198 12188 80315 112492
8 Ford India 7995 8338 8700 62554 87587
9 Nissan 4346 4807 5309 38928 53390
10 Volkswagen 4060 3965 4792 34979 47796

PERCENTAGE OF MARKET
SHARE
60.000% 50.348%
50.000%
40.000%
30.000%
20.000% 11.071%
10.000% 2.693%1.076%
0.506%0.198%0.080%0.031%0.009%
0.000% 0.004%

3
An article in Business Standards by Ronak Shah , Dated-11/01/2018
Page | 25
RECENT INDUSTRIAL DISPUTES IN AUTOMOBILE SECTOR
IN INDIA

 Honda Motorcycle and Scooter India, 2005 - The incident started a result of union
activity. In December of 2004, a worker was accused of trying to start a union and
was allegedly hit by a manager. Four other workers who sided with the beaten
man were sacked for "undisciplined behavior in the factory". The situation
deteriorated after another 57 employees were sacked and a total plant strike was
arranged in June 2005. This led to 1000 employees being sacked by management
and the company pressed the remaining workers into signing a declaration that
they renounce further demands and strikes, by refusing to send company busses to
pick up workers in surrounding villages. By the middle of July, the company says
it has some 200-300 workers at the plant, who are primarily recently hired contract
staff. Meanwhile, the automotive unions press the government to take action
against Honda as other local companies feel the impact of the lockout. On July
25th, around 3000 Honda workers and supporters demonstrate against the
company's actions. After trying to occupy parts of a local highway, the
demonstrators are attacked by police resulting in some 800 injuries and up to thirty
demonstrators missing or killed. Solidarity strikes take place in the area and a day
of country-wide protests was scheduled for August 1st 2005. With this threat of
civil unrest the government intervened and production at the plant starts again on
the first of the month. At the end of the strike the company had lost 1.2 Billion
Rupees ($27 Million based on 2005 exchange rate). However the Japanese
continued their hard line against the workers saying that any strike would hurt
future Japanese investment. Honda management also lobbied the Indian
government for labor reforms including that strikes would have to be announced
three weeks beforehand and that an approval of 75 percent of all workers in the
plant would be required as the legal requirement any action.
 Hyundai Motor India Limited, 2010 - This industrial action was also a result of a
foreign car maker refusing to negotiate with a union. On April 2010, over 1300
workers at the Hyundai plant in Chennai, went on strike as a result of

Page | 22
 management's refusal to negotiate a new contract with the Hyundai Motor India
Employees' Union. The management wants workers to work with a company-
appointed Works Committee. Hyundai had been charged with a number of union
violations including terminating 600 contractors just prior to their conversion to
permanent employees as well as firing workers who joined the union. This was the
third strike in 18 months, and not the last. In December 2011 nearly fifty current
and fired workers went on hunger strike to protest for the reinstatement of
employees who had been dismissed for their role in previous strikes.4
At Hyundai , around 2,000 permanent workers were given an average salary
increase (including variable pay) of Rs 14,283 over a three-year period in October
2012. That's a 45 per cent hike over the settlement made in 2009, where the
average salary increase was Rs 9,820.

 STRIKE AT HALOL FACTORY OF GENERAL MOTORS

INDIA, 2011: Nearly 900 workers had gone on an indefinite strike from the
second shift on March 16, primarily complaining on health issues as well as
protesting against transfer of employees from the Halol plant. Around 650-700
workers had resumed duty by March 25, after a dismissal threat by the
management if there was no return within 48 hours. Repeated talks had failed and
workers had gheraoed the district labour commissioner’s office in April, besides
staging protests at the state capital, Gandhinagar. The mediation centre at the state
High Court had also failed to make the two parties agree. The Halol plant was
making 190 cars per day in two shifts before the strike broke out. As production
resumed after a few days, the company was initially making around 60-70 cars per
day. By mid-April, the company had managed to get back to 150 cars per day. To
compensate for the 200 striking workers, the company had recruited close to 100-
150 temporary workers.5 The strike had received moral support from two
international agencies, the US-based Institute for Global Labour and

4
An article titled “Industrial Action in Indian Automobile sector” by Martin Murray on
www.logistics.about.com
5
An article titled “Strike at GM's Halol factory ends, with compromise deal” DATED 05 TH May, 2011
on www.businessstandard.com

Page | 23
 Human Rights, formerly known as the National Labour Committee, and the
International Metalworkers’ Federation. The Halol plant has two labour unions,
the GM Employees’ Union and the Gujarat Kamdar Mandal. The former did not
go on strike. After a six-week tussle, the strike at General Motors India’s Halol
factory, 35 km from Vadodara, was finally been called off, with the workers and
management reaching an understanding.

 HUNGER STRIKE AT BAJAJ AUTO, JANUARY, 2018

President of Bajaj Auto labour union-Vishwakalyan Kamgar Sanghatna (VKS) on
behalf of the union, went to an indefinite hunger strike from January 29, 2018, to
press for an immediate settlement of the wage agreement for workers at Chakan
and Akurdi plants.. Negotiations for the wage agreement for April 2016-March
2019 have been going on between the management and the union, but no amicable
settlement was agreed upon. Bajaj Auto and the union had signed a nine-year
agreement in May 2010, under which wages were to be reviewed every three
years. The wage agreement for the 2016-19 period was due in April 2016. Forty
meetings have been held so far. The Chakan plant has 2,500 workers, of which
1,000 are affiliated to the VKS. The company also terminated the wage hike
agreement of nine years, signed for 2010-2019 at the Akurdi plant and 100
workers were denied a wage hike. The union said the company had without the
workers’ consent deposited a one-sided hiked amount directly into the accounts of
Chakan workers. This had worked out to around Rs 10,000 to Rs 11,500 being
paid over three years FY17, FY18 and FY19, was done in October 2016 after talks
failed. KJ Zanzari, VP, motorcycle, Bajaj Auto, said the dispute was resolved and
the company would give the similar hike it had given at the Chakan plant for the
Akurdi plant as well. An MoU was signed on Friday and a formal agreement will
be signed later. This agreement will be valid till March 31, 2019, and is part of the
nine-year wage settlement signed in 2010.6

6
An article in CNBC News dated 03/02/2018

Page | 24
IV. MARUTI IN AUTOMOBILE INDUSTRY&BRIEFHISTORY

India's Top Passenger Car Makers - in terms of volumes

PASSENGER CAR MARKET SHARE IN INDIA,2017

11.33%
3.48%
4.32%
5.53%
49.60%
5.91%

7.50%

12.33%

Maruti Suzuki Hyundai Mahindra Tata Motors

Honda Toyota Renault Others

Maruti Udyog Limited (MUL) was established in February 1981, though the actual
production commenced in 1983 with the Maruti 800, based on the Suzuki Alto key
car which at the time was the only modern car available in India, its only
competitors- the Hindustan Ambassador and Premier Padmini were both around 25
years out of date at that point. Originally, 18.28% of the company was owned by the
Indian government, and 54.2% by Suzuki of Japan. The BJP- led government held an
initial public offering of 25% of the company in June 2003. As of May 2007, the
government of India sold its complete share to Indian financial institutions and no
longer has any stake in Maruti Udyog. Through 2004, Maruti Suzuki has produced
over 5 Million vehicles. Maruti Suzuki’s are sold in India and various several other
countries, depending upon export orders.

Page | 25
Maruti Suzuki has three manufacturing facilities in India. All manufacturing facilities
have a combined production capacity of 1,700,000 vehicles annually. The Gurgaon
manufacturing facility has three fully integrated manufacturing plants and is spread
over 300 acres (1.2 km2). The Gurgaon Facilities manufactures the Alto 800,
WagonR, Ertiga, S-Cross, Vitara Brezza, Ignis and Eeco.

The Manesar manufacturing plant was inaugurated in February 2007 and is spread
over 600 acres (2.4 km2).Initially it had a production capacity of 100,000 vehicles
annually but this was increased to 300,000 vehicles annually in October 2008. The
production capacity was further increased by 250,000 vehicles taking total production
capacity to 800,000 vehicles annually. The Manesar Plant produces the Alto 800,
Alto K10, Swift, Ciaz, Baleno, Baleno RS and Celerio.

The Gujarat manufacturing plant became operational in February 2017. The plant
current capacity is about 250,000 units per year. But with new investments Maruti
Suzuki has plan to take it to 450,000 units per year.

About 45% of all cars sold in India are made by Maruti. The company is 54.2%
owned by the Japanese multinational Suzuki Motor Corporation per cent of Maruti
Suzuki. The rest is owned by public and financial institutions. It is listed on the
Bombay Stock Exchange and National Stock Exchange of India.

In all, over six million Maruti Suzuki cars are on Indian roads since the first car was
rolled out on 14 December 1983. The Suzuki Motor Corporation, Maruti's main
stakeholder, is a global leader in mini and compact cars for three decades. Suzuki’s
strategy is to utilise light-weight, compact engines with stronger power, fuel-
efficiency and performance capabilities. Nearly 75,000 people are employed directly
by Maruti Suzuki and its partners. It has been rated first in customer satisfaction
among all car makers in India from 1999 to 2009 by J D Power Asia Pacific.

Page | 26
V. MARUTI ‘MANESAR LOCKOUT - 2012’

5.1 HISTORY OF INDUSTRIAL DISPUTE IN MARUTI

Since its founding in 1983, Maruti Udyog Limited experienced few problems
with its labour force. The Indian labour it hired readily accepted Japanese work
culture and the modern manufacturing process. In 1997, there was a change in
ownership, and Maruti became predominantly government controlled. Shortly
thereafter, conflict between the United Front Government and Suzuki started.
Labour unrest started under management of Indian central government. In 2000, a
major industrial relations issue began and employees of Maruti went on an indefinite
strike, demanding among other things, major revisions to their wages, incentives and
pensions.

Employees used slowdown in October 2000, to press a revision to their

incentive-linked pay. In parallel, after elections and a new central government led by
NDA alliance, India pursued a disinvestments policy. Along with many other
government owned companies, the new administration proposed to sell part of its
stake in Maruti Suzuki in a public offering. The worker's union opposed this sell-off
plan on the grounds that the company will lose a major business advantage of being
subsidised by the Government, and the union has better protection while the
company remains in control of the government.

The standoff between the union and the management continued through 2001.
The management refused union demands citing increased competition and lower
margins. The central government prevailed and privatized Maruti in 2002. Suzuki
became the majority owner of Maruti Udyog Limited. As of today, the government
of India sold its complete share to Indian financial institutions and no longer has any
stake in Maruti Udyog.

Page | 27
5.2 CAUSES OF DISPUTE

The Missing India connect

Since 2013, two important changes have happened at Maruti. One, Kenichi Ayukawa
the current MD & Chief Executive Officer of Maruti Suzuki has taken over the reins
from Shinzo Nakanishi. RC Bhargava, a former CEO, was made chairman in 2007.
Two, Maruti and the Indian market are also becoming increasingly important for
Suzuki Motors. Till recently, Maruti contributed more than half of the parent's
profits.

As Maruti's contribution to Suzuki has increased, the latter's tendency to control India
operations has increased. Agreed, it has an Indian chairman but Bhargava is 78 years
old. It does have many senior Indian executives who have been 'lifers' at Maruti. But
insiders who will speak on the condition of anonymity say the Japanese voice counts
and often tend to dominate crucial decisions. Culturally, Indians and Japanese are far
apart. Their sense of discipline, punctuality, employee connect too are very different.
Some loss of connect with Indians could have been a possible reason resulting in the
fiasco.

Meanwhile, from various comments as mentioned in observed articles, people

claiming to be working with Maruti suggested that the management was indeed
rightly to be blamed.

Low Wage Rates

The challenges of running manufacturing outfits have surged. Costs and wages have
increased and sales are poor & volatile. Doing business is difficult. Doing profitable
business is even more difficult. Every company is figuring out ways to bring down
costs and improve productivity. Most have contract labour to bring in flexibility and
reduce costs.

Page | 28
 LABOUR COSTS
Maruti Suzuki - Comparison Between Wages of
Contract & Permanent Workers as per 2011-2012

PARTICULARS GURGAON MANESAR

NUMBER OF WORKERS
Number Of Contract Workers 5000 1870
Number Of Permanent Workers 2032 1528
AGE OF WORKERS
Average Age Of Workers 40 yrs 26 yrs
SALARY FIGURE OF WORKERS
Average Salary Of Contract Worker Rs. 11,500/- Rs. 11,885/-
Average Salary Of a Permanent Worker:
(i) At The Entry Level 23,500/- 23,500/-

Rs. 37,000/-
(ii) Experienced Workers to Rs. 25,000/-
Rs. 38,000/-

2 to 3.3 2
DIFFERENCE
times times

According to an employee at the Manesar plant, a permanent worker with a

designation of Junior Associate-1 (JA-1) draws a total salary of about Rs 15,000-
17,000 a month.

"Out of this total amount, basic pay is Rs 5,000, travelling allowance is Rs 1,600,
HRA is around Rs 1,400 and an amount of Rs 200 for washing our clothes. The
major component is a variable performance-linked allowance of Rs 7,000-9,000.
Besides these, the workers get a fixed DA of Rs 150 every month” he claimed.

Page | 29
 According to analysis on basis of media reports 7 :-

COMPANY WISE ANALYSIS OF

EXPENDITURE ON EMPLOYEE BENEFITS
COMPANY April-June 12-13 2011-2012

Rs. 238.26 crores i.e. Rs. 843.8 crores i.e.

1 Maruti Suzuki
2.26% of net sales 2.43% of net sales

Rs 2,691.45 crore
Rs. 706.86 crores i.e.
2 Tata Motors i.e. 4.98% of net
6.73% of net sales
sales

Rs 1,701.78 crore
Rs 451.6 crore
3 Mahindra & Mahindra i.e. 5.42% of net
i.e. 4.88% of net sales
sales

Rs. 22.07 Crores i.e. Rs. 85.73 crore i.e.

4 Hindustan Motors
21.47% of net sales 17.30 % of net sales

Employee Benefit Expenses as a Percentage Of Net

Sales of Various Companies in Automobile Industry
For April-June 12-13

21.47

6.73
4.88
2.26

7
Article in Business Standard on 19th Feb, 2013
Page | 30
"A worker is made permanent after three years of serving as a trainee at the factory
and offered a designation of JA-1. All the employees, who had joined the plant, are
JA-1.

A trainee's monthly remuneration varies between about Rs 7,000 and Rs 11,500

depending upon seniority. Also, a contractual worker gets Rs 6,000-7,000 every
month, he added.

At Maruti's Manesar factory, 40% workers are on contract and their salary could be
half of the regular workers. Maruti is among the better pay masters, but given the
rising inflation rate workers seem to be far from being contended.

Amid all this, competitive intensity in the marketplace for Maruti has never been as
severe. Being a volume player, the only way for it to survive and flourish is to churn
out more and more cars. All this has translated into relentless pressure to improve
productivity and margins at all levels. For Maruti, this pressure is particularly high.
Not surprisingly, the Manesar plant, that churns out two top-selling models in the
Maruti stable — Swift and Dzire — is at the heart of all the strife.

Young & Restless Workers

In Haryana, young blue-collar workers have seen dramatic changes around them.
Land prices have surged as Gurgaon has become a commercial hub. Overnight,
people have become rich and their lives have transformed simply because they made
a killing selling their land. Such changes have re-calibrated worker expectation that
have seen their sleepy little hamlet transform into a city of high rises and malls in a
decade.

They are less tolerant and fairly aggressive in their expectations and how they want
to achieve it. Poor wage hikes and raging inflation have queered the pitch further,
resulting in an impatient, militant workforce, which believes in aggressive posturing.
Sonu Gujjar, the leader of the labour unrest at Maruti plant , represents that
generation. In his 20s, Gujjar organised a conference call with analysts to put forth
the workers' point of view and made headlines.
Page | 31
MSWU, which was formed after the office-bearers of the erstwhile Maruti Suzuki
Employees' Union (MSEU) had left the firm after taking a severance package of
minimum Rs 16 lakh each, received its registration number from the Haryana Labour
Department in February, 2012.

Return of the Red Flag

From its peak in the 1980s, trade unions have been on a decline in India. Trade union
bodies across the board — from Citu to AITUC — have been seeing a steady decline
over the years. It does not help that a large percentage of workers in Indian factories
are foot-loose contract workers. Over 90% of the Indians are employed in the
unorganised sector where the trade unions have been finding it difficult to make
inroads.

They have made many efforts to

spread their network among
white collar workers like BPO
employees, but with little
success. Sonu Gujjar, the face of
Maruti strike in 2011, was
reportedly backed by the
AITUC group. Expectedly, they are tapping into every possible opportunity they can
get to grow their base. Their involvement in Maruti's labour unrest signals that.

Page | 32
5.2 DISPUTE OUTBREAKS IN IMMEDIATE EARLIER YEARS

In 2011, MSI witnessed three instances of labour unrest at the Manesar plant, which
mainly produces the Swift, causing a total production loss of about 83,000 units.

In June 2011, a 13-day strike demanding the recognition of MSEU brought

production to a standstill at the plant. It was followed by another standoff between
the management and the workers on August 29 and lasted for 33 days.

In October, the company again saw its workers going on a 14-day strike that ended
after the signing of a tripartite agreement between the management, workers and
Haryana government representatives.

5.3 MAIN MANESAR LOCKOUT IN 2012 – THE

VIOLENT UNREST
On 18 July 2012, Maruti's Manesar plant was hit by violence as workers at one of its
auto factories attacked supervisors and started a fire that killed a company official
and injured 100 managers, including two Japanese expatriates. The violent mob also
injured nine policemen. The company's General Manager of Human Resources had
both arms and legs broken by his attackers, unable to leave the building that was set
ablaze, and was charred to death. The incident is the worst-ever for Suzuki since the
company began operations in India in 1983.

Since April 2012, Manesar union had strictly demanded a three-fold increase in basic
salary, a monthly conveyance allowance worth of 10000, a laundry allowance
of 3,000, a gift with every new car launch, and a house for every worker who wants
one or cheaper home loans for those who want to build their own houses. Initial
reports claimed wage dispute and a union spokesman alleged the incident may be
caste-related. According to the Maruti Suzuki Workers Union a supervisor had
abused and made discriminatory comments to a low-caste worker. These claims were
denied by the company and the police. The

Page | 33
supervisor alleged was found to belong to a tribal heritage and outside of Hindu caste
system; further, the numerous workers involved in violence were not affiliated with
caste either. Maruti said the unrest began, not over wage discussions, but after the
workers' union demanded the reinstatement of a worker who had been suspended for
beating a supervisor. The workers claim harsh working conditions and extensive
hiring of low-paid contract workers which are paid about $126 a month, about half
the minimum wage of permanent employees. Maruti employees currently earn
allowances in addition to their base wage. Company executives denied harsh
conditions and claim they hired entry-level workers on contracts and made them
permanent as they gained experience. It was also claimed that bouncers were

deployed by the company.[8]

Media Reports claimed that its interviews of witnesses present at the plant confirm
the dispute was over the suspended worker. The management insisted that they must
wait for completion of inquiry underway before they can take any action on the
employee suspended for beating up his supervisor. The management was then told,
"you will be beaten up after we get a signal." Thereafter, the workers broke up into
groups, went on to set the shop floor as well as all offices afire. They searched for
management officials and proceeded with a barbaric beating of the officials at the site
with iron rods.

The police, in its First Information Report (FIR), claimed on 21 July that Manesar
violence may be the result of a planned violence by a section of workers and union
leaders. The report claimed the worker's action was recorded on close circuit cameras
installed within the company premises. The workers took several managers and high
ranked management officials hostage. The responsible Special Investigative Team
official claimed, "some union leaders may be aware of the facts, so they burnt down
the main servers and more than 700 computers." The recorded CCTV footage has
been used to

8
. Article in The Economic Times on 23rd April, 2012, “Maruti’s Manesar unit workers demand 5 fold
rise in basic pay.”
Page | 34
determine the sequence of events and people involved. As per the FIR, police have

arrested 91 people and are searching for 55 additional accused. [ 9]

9
. An article in leading newspaper India Today On 21 st July, 2012

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IMPACT OF MANESAR LOCKOUT ON EMPLOYEES

Maruti Suzuki in its statement on the unrest announced that all work at the Manesar
plant has been suspended indefinitely. A Suzuki spokesman said Manesar violence
won't affect the auto maker's business plans for India. On 21 July 2012, citing safety
concerns, the company announced a lockout under The Industrial Disputes Act, 1947
pending results of an inquiry the company has requested of the Haryana government
into the causes of the disorder. Under the provisions of The Industrial Disputes Act
for wages, a report claimed, employees are expected to be paid for the duration of the
lockout. However, on 26 July 2012, Maruti announced employees would not be paid
for the period of lock-out in accordance with Indian labour laws. The company
further announced that it will stop using contract workers by March 2013.

Shinzo Nakanishi, the then managing director and chief executive of Maruti Suzuki
India, said this kind of violence has never happened in Suzuki Motor Corp's entire
global operations spread across Hungary, Indonesia, Spain, Pakistan, Thailand,
Malaysia, China and the Philippines. Mr. Nakanishi went to each victim apologising
for the miseries inflicted on them by fellow workers. He announced, "We are going
to de-recognise Maruti Suzuki Workers’ Union and dismiss all workers named in
connection with the incident. We will not compromise at all in such instances of
barbaric, unprovoked violence." He also announced Maruti plans to continue
manufacturing in Manesar, that Gujarat was an expansion opportunity and not an

alternative to Manesar.10

It was reported that the company dismissed 500 permanent workers out of 1528
permanent workers accused of causing the violence. Among those left, 970 of them
had rejoined by August as production resumed. Even the 400 supervisors were
bought on line to increase the production. The company decided that on

10
www.wikipedia.com

Page | 36
basis of screening, around 1000 of 1870 contract workers would become permanent
employees.

As it turned out, the original strength before the violence was around 3,300 and post
violence it was reduced to 2,000. Therefore the company decided to give a chance to
contract workers of Gurgaon facility to become permanent employees at Manesar.

Charting a fresh path ahead in its worker-management relationship, the country’s

largest automaker Maruti Suzuki India announced a 49.25 per cent hike in worker
wages. The gross salary of an entry-level permanent worker in the company is Rs
23,500 at present. In the new wage structure, the average entry-level salary will
increase to Rs 37,800 over the next three years. For an experienced worker at
Gurgaon and Manesar, the increased salary will stand at Rs 51,800 (from Rs.

38,000/-) and Rs 39,800 (from Rs. 25,000/-), respectively.11

The hike – the steepest ever in the automaker’s 30-year history – will apply to
workers at its plants in Manesar and Gurgaon. The total wage increase will range

from Rs. 14,000 to Rs. 22,000 per worker a month (considering first year).12

Despite the bumper increments Maruti Suzuki India Ltd offered its employees at the
Gurgaon and Manesar facilities in Haryana, the company’s wage bill is expected to
remain the lowest among listed automobile companies.

“Even if the same benefits are extended to workers at Manesar, the wage hike will
have a marginal impact of around 30 basis points on the company’s margins.
Employee costs as a proportion of net sales may go up to 2.7 per cent from the
current 2.4 per cent,” said Yaresh Kothari, auto analyst at brokerage firm Angel

Broking.13

11
‘’ Business Standard, Sept. 27, 2012.
12
Article from NDTV website dated 26th September, 2012.
13
Article in Business Standard on 27th Sept. 2012
Page | 37
IMPACT OF MANESAR LOCKOUT ON COMPANY
Manesar's closure was especially painful because it is the only plant that makes the
company's hugely popular Swift hatchback, which already had a waiting list of two
months and in April was India's most popular car, outselling even Maruti's cheapest
model, the Alto, which is usually the market leader. The Swift sells 18,000 units a
month on average, while the DZire contributes 12,000. Maruti’s SX4 sedan sells
around 4,000 units every month. The company’s spokesperson had said in a
conference, a week after the incident that then Swift had a booking order of 55,000
units, while DZire has 65,000 bookings. Out of these, 80 per cent were for the diesel
variants. It was said that it almost could take 4-6 months to clear backlog from start
of production. There was no order backlog for SX4 and A-Star models, which are
also produced at the Manesar plant.

Maruti's share of the passenger car market fell 8 percentage points to 40 percent by
the time the strikes ended. The company has lost production of over 110,000 vehicles
and revenue to the tune of Rs 4,000 crore in four instances of labour trouble since
June 2011.

CHANGE IN SALES:

QUARTERLY ANALYSIS:
Segments Q2 % to Dom. Q2 % to Dom. %
FY13 sales FY12 sales Growth
Mini (Alto, A Star, 90,210 43.0% 112,848 50.7% (20.1)%
Wagon R)
Compact (Swift, Ritz) 39,631 18.9% 44,864 20.2% (11.7)%
Super Compact 26,192 12.5% 20,288 9.1% 29.1%
(Dzire)
Mid Size (SX4) 1,414 0.7% 4,392 2.0% (67.8)%
Executive (Kizashi) 14 0.01% 54 0.02% (74.1)%
Van 31,092 14.8% 37,616 16.9% (17.3)%
MUV (Gypsy, Ertiga) 21,401 10.2% 2,344 1.1% 813.0%
Domestic 209,954 100.0% 222,406 100.0% (5.6)%

** SEGMENTS MARKED IN BOLD ARE MANUFACTURED AT

MANESAR PLANT **

Page | 38
The above figures clearly state that the Manesar lockout badly influenced the volume
of sales.

Maruti, which lost Rs. 80 crore a day during the Manesar plant lockout, reported a
22.84 per cent fall in net profit for the quarter ended June 30, 2012, at Rs. 423.77
crore against Rs. 549.23 crore in the corresponding period last year.

QUARTERLY ANALYSIS

Parameter Q3 FY12 Q2 FY12 Q1 FY12

Total Volume of Sales 301,453 230,376 295,896

Total Net Sales (in Rs. Lacs) 10,95,695 807,011 10,52,924

From the above analysis it is evident that the sales figure was badly affected and
company posted a significant loss due the Manesar unrest.

Though taking a deeper look, one can also point out the comeback which Maruti
staged in the very next quarter riding on high demand for sedan Dzire and Swift
Hatchback. The internal peace and new wage settlement also boosted the incentive
for employees. The reform measures and new policies showed positive impact.

IMPACT ON EMPLOYEE COST:

Parameter Q3 FY12 Q2 FY12 Q1 FY12

Employee Benefit Expenses 24,123 Lakh 23,522 Lakh 23,826 Lakh

Employee Cost (as % of net sales) 2.2 2.9 2.3

In the insights provided by the company about its quarterly performance, it

acknowledged that the rise in the Employee’s Cost was due to the Manesar Incident.
It forced the managed to go on and plan for revision in wage decision and meetings
amongst official along with the outraged employees resulted in

Page | 39
high costs. “One time Manesar expenses” was highlighted in the quarterly results
published on the company’s website for the rise in costs related to employees. Even
when, the company suspended a large number of workers and wages were not
provided for period of lockout, the cost arose by 60 bps as analyses in by above
chart.

However, in the succeeding quarter the company posted a reduction in expenses as

number of employees came down after suspension of workers.

IMPACT ON DEPRECIATION:

Key Financial Ratios (% of Net Sales)

Parameter Q2 FY12 Q1 FY12 Change

bps

Op. EBIDTA 6.3 7.5 (80)

Depreciation 4.3 3.2 110
PBT 3.5 5.0 (150)

The company suffered massively due to violence caused at Manesar facility. Large
number of fixed assets employed was destructed by the enraged workers during the
violence. The losses caused by the arson brought an unusual trend in financial
statement presented by company. The company reported an increase in depreciation
on account of the loss caused by fire that was set as part of violence.

IMPACT ON PROFIT LEVEL:

Key Financial Ratios (% of Net Sales)

Parameter Q2 FY12 Q1 FY12 Change

bps
Material Cost 81.9 79.7 220
Employee Cost 2.9 2.3 60
Selling & Distribution expenses 2.9 2.6 30
Manufacturing expenses 8.9 10.3 (140)
Royalty 5.4 6.2 (80)

Page | 40
 Op. EBIDTA 6.3 7.5 (80)
Depreciation 4.3 3.2 110
PBT 3.5 5.0 (150)
PAT 2.8 4.0 (120)
Other Non-Op. Income 1.9 1.1 80

The company reported a 22.84 per cent fall in net profit for the quarter ended June
30, 2012, at Rs. 423.77 crore against Rs. 549.23 crore in the corresponding period
last year.

Performance Of Shares After Lockout was lifted

Shares of Maruti Suzuki India rose nearly 4 per cent on the bourses when the 14-day-
long lockout at the company’s Manesar’s plant was called off.

Following the development, the company’s shares jumped 3.88 per cent to Rs
1,117.55 on the BSE and were the best performer among the Sensex blue-chips.

Similarly, on the NSE, the stock surged 3.71 per cent to Rs 1,117.50. 14

After the company resumed production at the plant on 21 August, saying it would
produce 150 vehicles on the first day, less than 10% of its capacity. Analysts said that
the shutdown was costing the company market share as well as the goodwill.

As per Wage Settlement in month of September, it was estimates available with

industry experts, the wage bill of Maruti Suzuki, the country’s largest car maker, was
expected to increase by Rs 65-70 crore after the increments in wages and salaries

declared on 25th Sept. 2012.

14 The Hindu Business Line on 21st Oct, 2012 in article, “Maruti stock jumps as strike at

Manesar unit ends”

Page | 41
IMPACT OF MANESAR INCIDENT ON SECTOR & ECONOMY

Investors knocked $700 million off the value of India's largest car maker and shares
in parent Suzuki Motor Corp were down over by 10 percent since a riot at the factory
killed one manager, injured scores more and landed more than 90 people in jail.

Around 100 of the 150 companies in Manesar that supply parts to Maruti have seen
their business affected by the shutdown, said Manmohan Gaind, the then general
secretary of the Manesar Industries Welfare Association (MIWA), a lobby group.15

However, steep wage hikes at Maruti set a benchmark for others. Mahindra &
Mahindra confirmed receiving a notice from the employees' union at the facility in
March, 2013. The workers at the Nashik plant have been reportedly protesting for
higher wages after the three-year wage pact lapsed earlier in February,2013 .

The tool-down strike at Mahindra & Mahindra's Nashik plant, which started on 5th
March, 2013 evening over new wage settlement agreement, disrupted production at
the plant. The facility, which manufactured models like Bolero, Scorpio, Xylo,
Quanto and Verito, suffered a production loss of 500 units because of the tool down.

Since the verdict on the Maruti case, over a lakh workers from over 40 factories in
this region have joined various forms of protests including lunch boycotts at factory
canteens. Similar protest were also seen in Chennai and other major centres of
industry. The workers have demanded fair compensation for the 117 acquitted
workers, reinstatement of the workers and the acquittal of the workers found guilty

by the Session Court.16

15
In an article titled, “History repeating for Maruti as supply strain looms” by Henry Foy.
16
In an article “The Life Of Labour” in The Wire Magazine dated 19/03/2017

Page | 42
VERDICT, SUMMARY & CONCLUSIONS OF THE STUDY

Though bail is the norm in all cases, the session’s court and Haryana High Court
rejected the bail plea of the workers citing the grave nature of crime. The Haryana
High Court in rejecting the bail plea, had even observed that, “The incident is a most
unfortunate occurrence which has lowered the reputation of India in the estimation of
the world. Foreign investors are not likely to invest money in India out of fear of
labour unrest”. The manner of the prosecution and the slow pace of trail led the
International Commission for Labour Rights, to categorically state that the labour
department “failed in its duty to serve as an impartial and effective administrative
and adjudicators’ body regarding labour matters” and recommend that the workers be
released and reinstated with immediate effect, while an impartial judicial probe is
ordered into the events. Denied bail for nearly three years, the workers found their
lives entirely overturned. Many hailed from rural backgrounds and were primary
breadwinners. The long wait has been more severe a punishment than an adverse
verdict. On 10th March, 2017 the Gurgaon sessions court acquitted 117 workers and
convicted 31 workers in the sensational Maruti Suzuki riots case, including all the
main office bearers of the Maruti Suzuki Workers Union. The quantum of
punishment differs: 13 workers were sentenced to life imprisonment, 4 were given 5
years imprisonment and the remaining 14 were let off with what they had already
served.

India has strict labour laws, but their application is widely sidestepped by hiring low-
wage contract workers. Manesar violence adds to India's recent incidents of labour
disputes turning to violence. Analysts claim recent incidents like Manesar violence
suggest a need for urgent reform of archaic Indian labour laws, the rigid rules on hiring
and layoffs, which harm the formal sector and discourage investment in India.
Government mandated procedures for labour dispute resolution are currently very
slow, with tens of thousands of cases pending for years. The government of India is
being asked to recognise that incidents such as Manesar violence indicate a structural
sickness which must be solved nationally.

Page | 43
Though, the prime cause for the same is debatable, varying according to versions from
different viewpoints; the difference in wage rate and political agenda was a key reason
for dissatisfaction among employees. This is substantiated by the fact that major
reforms were brought and discussions centered mainly on the hiring of cheaply
available contract labour.

Though laws have been made with a view to provide security to workers from being
exploited, they are far from achieving their objectives as conflicts arise continuously
and regularly in industrial units.

AREA OF SCOPE OF IMPROVEMENT IN STUDY:

The Study could have been enriched and value enhanced, had primary data been
accessible. Direct interviews with management, spokesperson and labour Union
members could have provided a deeper insight of the picture. The project also has a
scope for comparison between the strategies of peer competitors and Maruti. An
indepth analysis could have been possible on the change in stance of management of
various auto companies towards handling labour issues, if larger time period was
provided in which comments from analysts etc could be drawn and a conclusion
formed.

Page | 44
APPENDICES

REFERENCES & BIBLIOGRAPHY

BOOKS:

1. Economic & Labour Law (ICSI) for CS Executive, pp 584-610

NEWSPAPERS:
1. The Business Standard

2. The Economic Times

3. The Hindu Business Line

WEBSITES:

1. www.bseindia.com

2. www.marutisuzuki.com

3. www.moneycontrol.com

4. www.wikipedia.com

5. www.labourbureau.nic.in

6. www.motorbeam.com

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