Wokers' strike costs Maruti Rs 540 crore revenue loss

The current strike at the Maruti Suzuki India’s Manesar plant has apparently affected the auto major Rs 540 crores since August. The figures show that production in the month of September has fallen by less than half to 10,000 units against the normal production capacity of 22,500 units a month. It is said that the company has incurred a loss of Rs 3 lakhs on every unproduced car leading to an overall loss of over Rs 360 crores in September. While in the month of September, 10,000 cars were produced, the month of August also saw a low output by 6,000 cars. However, the low production in August was mainly due to the deliberate attempts made by the workers to sabotage the operations.

The industry experts believe that Maruti India might have suffered a reduction in profit by Rs 40 crores during the past two months. The company could see a fall in the profit margins as compared to the third quarter reports of 2010. However, the consolation comes in form of the unpaid salaries to the workers involved in the agitation. This could account for atleast 2% of the net sales.

The latest strike at the Manesar plant since August has cropped up from the 13-day Maruti strike in June due to the unrecognized proposed Maruti Suzuki Employees union (MSEU). The strike is the result of the company’s initiative to get the workers sign the ‘good conduct bond’ to stop the workers from sabotaging the production. The production of the top-selling models including Maruti Swift, Maruti A –Star and Maruti SX4 are also hit due to the ongoing impasse. Despite the overwhelming response received by the Maruti Swift of over 1,00,000 bookings after August re-launch, the company had failed to make tremendous profits due to the major supply constraints.

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