Maruti Suzuki :Manesar plant to resumes production on Aug 21: Nomura research,

Manesar plant to resume production from August 21 under heavy
security cover
In a press conference today, Maruti announced that it will resume
production at its Manesar plant from August 21 under heavy security
cover. With this resumption, the shutdown will have lasted for around 1
month – broadly in-line with what we were building into our numbers. As
per an investigation conducted by the company, they will fire 500 regular
workers who were involved in the misconduct on 18 July. Further, the
company will no longer employ contract workers on the production line;
however, MSIL will keep 20% of the total workforce on short-term
agreements. According to today’s announcement, current contract
workers (1,869 employees) will be given an opportunity to join the
company as regular (ie, permanent/non-contract) workers provided they
meet the company requirements.

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Production will get ramped up gradually
As per the company, about 300 workers will resume production from
August 21; the company will aim to manufacture 150 cars daily initially
as compared to full capacity of around 1,600 cars daily. Production will
increase gradually as the company hires more workers, in our view. If
everything goes smoothly, we believe the company may take another
month to achieve full production. In our view, the company may be able
to largely make up for lower production later on during the year. Hence,
our estimates are unchanged at this stage.
Do not expect significant stock reaction; maintain Neutral
We believe expectations around the resumption of production have been
built in to the share price from last week. Therefore, we do not expect
any significant stock reaction on this announcement. Maintain Neutral.
Other key points
 Total workforce at Manesar was around 3,400 workers; of which 1,869
workers were on a contract basis; the remainder were regular
employees.
 Police have arrested around 154 employees thus far, including 12
union leaders who are suspected to have been involved in misconduct
at the plant on 18 July, 2012. Investigation is ongoing and police may
make more arrests.
 Haryana state government has provided extensive security
arrangements to the company: 1) Rapid Action Force of 500 police
personnel headed by a senior police officer near the Manesar area of
which 200 personnel will be inside the Manesar plant area; 2) 40
personal security officers (PSOs) have been provided for the safety of
managers, supervisors and where necessary the workers; and
3) security arrangements have been made at the residences of the
employees that management believes may be at risk for possible
threats.