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Production halts at Maruti’s Manesar plant due to workers’ strike
The workers’ strike has disrupted production at Maruti’s Manesar facility since the second
shift of Saturday June 4, 2011. As per media reports, around 600–800 workers at the
plant have gone on strike demanding the recognition of a new union Maruti Suzuki
Employees Union (MSEU) formed by workers working at the Manesar plant, besides
retaining contract labourers for the two upcoming new units inside the complex and
reinstatement of few employees who were laid off recently. The company has, however,
termed the strike illegal as there was no prior intimation as per the rules. Meanwhile,
management has been negotiating with the workers and is hopeful of finding a solution
soon.
The Manesar facility has an annual installed capacity of 350,000 units and produces
around 1,200 vehicles per day. We believe the strike will not have much of an impact on
the company’s sales volume if the settlement is reached soon, as Maruti will make good
the lost production once the plant is operational again. Hence, we maintain our volume
and revenue estimates for the company and retain our Buy rating with a target price of
`1,506.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Production halts at Maruti’s Manesar plant due to workers’ strike
The workers’ strike has disrupted production at Maruti’s Manesar facility since the second
shift of Saturday June 4, 2011. As per media reports, around 600–800 workers at the
plant have gone on strike demanding the recognition of a new union Maruti Suzuki
Employees Union (MSEU) formed by workers working at the Manesar plant, besides
retaining contract labourers for the two upcoming new units inside the complex and
reinstatement of few employees who were laid off recently. The company has, however,
termed the strike illegal as there was no prior intimation as per the rules. Meanwhile,
management has been negotiating with the workers and is hopeful of finding a solution
soon.
The Manesar facility has an annual installed capacity of 350,000 units and produces
around 1,200 vehicles per day. We believe the strike will not have much of an impact on
the company’s sales volume if the settlement is reached soon, as Maruti will make good
the lost production once the plant is operational again. Hence, we maintain our volume
and revenue estimates for the company and retain our Buy rating with a target price of
`1,506.
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