Labor Unrest at Maruti Suzuki India Limited
| Case Code: HROB160 Case Length: 17 Pages Period: 2011-2012 Pub Date: 2013 Teaching Note: Available |
Price: Rs.500 Organization: Maruti Suzuki India Limited Industry: Automotive Countries: India Themes: Industrial Relations, Collective Bargaining, Ethics |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background Note
MSIL was a subsidiary of Suzuki Motor Corporation (SMC) of Japan. In 1981, the Japanese company formed a joint venture with the Government of India known as Maruti Udyog Limited (MUL). Its first product in India was the small car, Maruti 800, launched in December 1983. Maruti 800 was the largest selling car in India till 2004. In 2002, MUL was privatized and the majority stake in the company was vested with SMC. MUL went in for a public issue in June 2003 at an offer price of Rs. 122-Rs.125 per share. The issue was oversubscribed 10 times. In 2007, the Indian government disposed of its entire stake in MUL and the latter was renamed MSIL. MSIL was India's largest passenger car manufacturer with a market share of 48.74 percent as of March 31, 2011.
Over the years, the company introduced several cars such as the Zen, the Alto, the Swift, etc. As of August 2012, two out of every five cars sold in India were MSIL's. MSIL had two production facilities, one at Gurgaon and the other at Manesar, south of Delhi, with a combined manufacturing capacity of 1.5 million cars per year as of December 31, 2012. As of August 2012, MSIL accounted for a minimum of three-tenth of SMC's pretax profit and 46% of its total output outside Japan.
The importance of the Indian operations to SMC's total operations could be gauged from the fact that for the year ended March 31, 2012, SMC manufactured 1.02 million vehicles in Japan as against 1.13 million in India. MSIL contributed 28 percent of the net profit of its Japanese parent Suzuki Motors for the year ended March 31, 2012.
As of July 2012, MSIL's Gurgaon and Manesar plants, put together, had on their rolls 4,200 permanent workers. They also employed 4,500 temporary workers, out of which 3,500 workers were supplied by four labor contractors. A monthly income of Rs.100 million accrued to these four contractors for the temporary workforce arranged by them.
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