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Maruti’s Manesar crisis deters projected growth, shareholders accuse management

It was the workers strike that had irked Maruti in 2011, then the recent violence and now the shareholders are accusing the car makers of its failure in addressing labor issues. Notably, the Manesar plant of Maruti remained closed for almost a month leading to sever disruption of production of Maruti Swift and Swift Dzire car and Maruti’s share tumbled following the negative sentiment. Also the loss of production has resulted in severe impact on the overall Maruti car sales in India and Maruti A Star exports were also said to have been affected.

At a recent meeting of the Maruti management and the share holders, the latter rebuked the management for not handling the labor issues properly and that is why the riot spurred at the plant last month leading to the death of one personnel and injuring 100 others. However, the worst thing the share holders were irked at was the consequent loss of production and decrease in profits due to the outage. It is said that the waiting period of the Swift and Dzire cars elongated to over six months due to the no production at the plant and this will also impact the sale of the car during Diwali. However, Maruti has restarted the production at the plant but it is said that it will be only after a fortnight that the full production will take shape.

In order to sense such incidents beforehand, Maruti share holders also told the management during the meeting that Maruti should step up its internal intelligence so that such brewing angst could be sniffed early. This will help better resolution of the labor issues and in future it will be assured that no such incidents happen again. Due to the outage, it is said that Maruti will not be able to achieve its 10 percent growth. Meanwhile the outage has resulted in loss of production of over 30,000 cars and a loss of revenue of over Rs 1500 crore to the company.