Maruti strike costs govt Rs 350 crore in excise duty

A series of strikes at the country's largest carmaker Maruti Suzuki India's Manesar plant since June this year has resulted in excise revenue losses to the tune of nearly Rs 350 crore (Rs 3.50 billion) for the government, while the company has already suffered a hit of up to Rs 1,540 crore (Rs 15.40 billion).

Since the first round of strike for 13 days in June this year to the 33-day-long standoff from August 29-October 1, and the fresh strike at the Manesar plant from October 7, MSI has suffered a total production loss of 51,375 units.

According to the industry calculations, it is estimated that per car on an average, the government is losing Rs 68,000 in the form of excise duty, thereby, resulting in a total loss of Rs 349 crore (Rs billion).

The Haryana government, on the other hand, is also losing out Rs 6,000 per car on an average as sales tax, resulting in a total of Rs 30.8 crore (Rs 308 million) so far.

The revenue loss to the company from the series of strikes since June is estimated at Rs 1,540 crore.

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When contacted, a company spokesperson confirmed the production loss due to the series of strikes but declined to comment on the financial losses.

The year 2011 has proved to be a tough one for India's biggest carmaker. In June, the workers at the Manesar plant had gone on a 13-day-long strike demanding the recognition of a new union -- Maruti Suzuki Employees Union.

After it was resolved, a standoff broke out between the workers and the management on August 29 over the issue of signing of a good conduct bond, a prerequisite made for permanent workers to enter the factory premises.

On October 1, an agreement was reached to end the standoff with MSI agreeing to conditionally take back 18 trainees who were suspended. However, it refused to take back 44 regular employees against whom disciplinary action was taken and who remain under suspension.

Maruti vendors fear losses due to production cuts

With labour unrest taking toll on production at Maruti Suzuki plants, exclusive suppliers of auto components to the country's largest carmaker fear heavy losses this festival season and have sought government intervention to help resolve the issues.

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Impacted by frequent incidents of labour woes at the company, industry representatives today sought intervention of Haryana Chief Minister Bhupinder Singh Hooda to resolve the impasse and protect the investor friendly image of the state.

Industry representatives said that over 200 units supply components to Maruti's Manesar plant alone.

"The labour problem at Maruti's plant has severely impacted ancillary units and vendors which are supplying auto parts to the company," Parveen Yadav, Gurgaon Udyog Association president, said.

Terming labour woes at Maruti as 'unfortunate' for the state, vendors said that they have failed to understand the reason behind frequent strikes at the company.

"It is only during the festival season that we expect good amount of business, as car sales surge in this period, but now because of hampering of production (at Maruti), we are going to suffer heavily," Yadav said.

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A Gurgaon-based vendor pointed out that he was suffering daily loss of Rs 30 lakh (Rs 3 million) due to the labour trouble.

"I am unable to supply material to Maruti because of labour problem at Maruti Suzuki...my daily loss has reached Rs 30 lakh," said Ishwar Singh, who supplies plastic, sheet metal parts to Maruti's Manesar and Gurgaon plants.

Yadav said, "Maruti Suzuki is not a small company..it is a well known brand around the globe for car production. We demand from Haryana chief minister to intervene into this matter and put an end to labour problem at Maruti plant."

Meanwhile, Hooda, along with his ministerial colleagues, is busy in Hisar by-election on October 13.

Society of Indian Automobile Manufacturers said on Monday that it was hoping the Haryana government to intervene immediately to bring situation under control.

Maruti Suzuki on Monday said the production at its plant in Gurgaon has been affected due to strike at Suzuki Powertrain which supplies engine to Maruti Suzuki.